Skillsoft Corp. (NYSE:SKIL) Q3 2024 Results Conference Call December 5, 2023 5:00 PM ET Company Participants Chad Lyne - Head of IR Jeff Tarr - CEO Richard Walker - CFO Conference Call Participants Ken Wong - Oppenheimer Sheldon McMeans - Barclays Raj Sharma - B. Riley Operator Greetings, and welcome to the Skillsoft Corp Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation [Ope ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2023 or Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38960 Skillsoft Corp. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpora ...

Skillsoft Corp. (NYSE:SKIL) Q2 2024 Earnings Conference Call September 11, 2023 5:00 PM ET Company Participants Chad Lyne - Head of Investor Relations Jeff Tarr - Chief Executive Officer Rich Walker - Chief Financial Officer Conference Call Participants Robert Simmons - D.A. Davidson Sheldon McMeans - Barclays Raj Sharma - B. Riley Kenneth Wong - Oppenheimer Thomas Singlehurst – Citi Operator Greetings and welcome to Skillsoft Second Quarter 2024 Financial Results Conference Call. At this time, all particip ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38960 Skillsoft Corp. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporatio ...

Skillsoft Corp. (NYSE:SKIL) Q1 2024 Earnings Conference Call June 6, 2023 5:00 PM ET Company Participants Chad Lyne - Head of IR Jeff Tarr - CEO Rich Walker - CFO Conference Call Participants Ken Wong - Oppenheimer Raj Sharma - B. Riley Robert Simmons - D.A. Davidson Sheldon McMeans - Barclays Thomas Singlehurst - Citi Operator Greetings and welcome to Skillsoft Corp. First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session ...

Revenue Performance - Total revenues for the three months ended April 30, 2023, were $135.6 million, a slight increase of 0.5% compared to $134.8 million for the same period in 2022[152]. - SaaS and subscription revenues from the Content & Platform segment increased by 10.3% to $93.6 million, up from $84.9 million in the prior year[152]. - Instructor-Led Training revenues decreased by 18.3% to $37.0 million, down from $45.2 million in the same period last year[152]. - The acquisition of Codecademy contributed to revenue growth, with approximately 40 million registered learners on the platform[143]. Operating Expenses - Total operating expenses decreased by 5.1% to $170.9 million, compared to $180.1 million for the three months ended April 30, 2022[153]. - General and administrative expenses decreased by 13.8% to $25.3 million, down from $29.3 million in the prior year[153]. - Acquisition-related costs significantly decreased by 89.6% to $1.4 million, compared to $13.3 million in the same period last year[153]. - Compensation and benefits in selling and marketing expenses rose by 22.9% to $33,834,000 for the three months ended April 30, 2023, up from $27,524,000 in 2022[158]. - Total content and software development expenses increased by 4.3% to $17,035,000 for the three months ended April 30, 2023, compared to $16,331,000 in the same period of 2022[157]. Financial Performance - The company reported an operating loss of 26.1% for the three months ended April 30, 2023, an improvement from a loss of 33.7% in the same period of 2022[146]. - Interest expense increased by 38.4% to $15,936,000 for the three months ended April 30, 2023, compared to $11,514,000 in 2022, primarily due to additional term loans and higher interest rates[166]. - The effective income tax rate for the three months ended April 30, 2023, was 9.1%, significantly lower than the 49.2% rate in the same period of 2022[170]. Cash Flow and Liquidity - Cash and cash equivalents on hand as of April 30, 2023, totaled $178,000,000, with expectations to fund operations and working capital needs for at least the next twelve months[173]. - The company reported a net cash increase of $9.5 million for the three months ended April 30, 2023, compared to a decrease of $88.3 million for the same period in 2022[181]. - Cash flows from operating activities increased to $21.5 million in the first three months of fiscal 2024, up from $7.9 million in the same period of fiscal 2023[182]. - Cash flows from investing activities included $2.7 million for internally developed software in the first quarter of fiscal 2024, while $198.7 million was spent on the Codecademy acquisition in the same period of fiscal 2023[183]. Debt and Financing - The company has a $480 million term loan facility scheduled to mature on July 16, 2028, which was used to refinance existing debt[174]. - The scheduled maturities of the company's debt total $601 million, with $8 million due in the remainder of fiscal 2024[187]. - The company incurred up to $160 million of Term B-1 Loans under the Amended Credit Agreement, with an applicable margin of 4.25% for base rate borrowings and 5.25% for SOFR borrowings[176]. - The company received $157.1 million in net proceeds from the Term Loan Facility on April 4, 2022, which was used for the Codecademy acquisition[185]. Strategic Actions - The sale of the SumTotal business for $200 million in cash was completed, allowing the company to focus on its core business[144]. - A gain of $55.9 million was recorded from the sale of the SumTotal business, completed on August 15, 2022, with final net proceeds of $174.9 million[169]. - The company completed the sale of its SumTotal business for net proceeds of $174.9 million, with a mandatory prepayment of $31.4 million made in August 2022[178]. - The company authorized a share repurchase program of up to $30 million, with $10.9 million spent to repurchase 5,995,530 shares by April 19, 2023[180]. Restructuring and Future Expectations - Restructuring charges for the first quarter of fiscal 2024 totaled $5.2 million, primarily related to lease termination and employee severance costs[164]. - The company expects to have sufficient qualifying expenditures to avoid additional mandatory prepayment of the remaining SumTotal proceeds by August 15, 2023[178]. Sensitivity Analysis - A hypothetical 100 basis point increase or decrease in interest rates would result in approximately $3.4 million additional or lower pre-tax interest expense on an annualized basis[210]. - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $0.6 million increase or decrease in interest income on an annualized basis[211]. - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $9.9 million increase or decrease in the fair value adjustment of hedge instruments[212]. - A hypothetical 10% increase or decrease in current exchange rates would have resulted in an impact of approximately $1.8 million on pre-tax income (loss) on an annualized basis[213].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38960 Skillsoft Corp. (Exact name of registrant as specified in its charter) Delaware 83-4388331 (State or other jurisdiction ...

Financial Data and Key Metrics Changes - Full year bookings were $607 million, down approximately 3% year-over-year, with GAAP revenue at $555 million and pro forma revenue at $563 million, reflecting a slight decline of 1% year-over-year [27][39][58] - Adjusted EBITDA from continuing operations was $107 million for the full year, representing a margin of 19% of GAAP revenue, with a GAAP net loss of $725 million for the year, including a significant noncash goodwill impairment charge [27][40][41] Business Line Data and Key Metrics Changes - Skillsoft Content segment bookings grew 5% year-over-year to $409 million, with strong performance in coaching, which more than doubled bookings during the year [7][39] - Instructor-led training (ILT) bookings were $199 million for the full year, down 16% year-over-year, primarily due to reductions in customer subsidies [20][58] Market Data and Key Metrics Changes - The deferred revenue balance increased to $281 million, up 8% year-over-year, indicating a positive outlook for future revenue [22][100] - The company reported a dollar retention rate (DRR) of approximately 100% for fiscal 2023, up from 97% in the prior year, suggesting improved customer satisfaction and retention [29][94] Company Strategy and Development Direction - The company aims to build a leader in enterprise learning through strengths in platform, content, and go-to-market strategies, focusing on workforce transformation and tech skills [17][41] - Investments in content, platform, and go-to-market strategies are expected to drive growth and enhance customer satisfaction, with a particular focus on generative AI and personalized learning experiences [13][15][35] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a dynamic macro environment with challenges such as high inflation and rising interest rates but expressed confidence in the company's momentum and pipeline for fiscal 2024 [19][22] - The company remains committed to executing its strategic priorities and believes the investment thesis is compelling due to a large and growing market with structural tailwinds [17][41] Other Important Information - The company has made significant strides in enhancing its Codecademy product suite, launching new subscription products and features aimed at upskilling and career development [11][28] - The company has been recognized for its AI-driven learning experiences, receiving awards for its innovative use of AI in education [14][36] Q&A Session Summary Question: Demand trends in Q4 and fiscal year 2024 - Management noted that growth was strongest in the subscription business, which is capital light and has high retention rates, with broad-based growth across tech, leadership, and compliance areas [50] Question: Insights on win backs and customer retention - Management highlighted successful win backs of large accounts, emphasizing the value of their multimodal solutions tailored to customer needs [73] Question: Pricing and ARPU trends - Management indicated that while there is price pressure in some segments, there is significant growth in areas focused on strategic reskilling and workforce transformation, which are less price-sensitive [87] Question: Dynamics driving DRR improvement - The improvement in DRR was attributed to migrating customers to the Percipio platform, cross-selling, and upselling efforts, with expectations for continued improvement [94] Question: Free cash flow expectations relative to EBITDA - Management provided context on free cash flow expectations, indicating a path to positive free cash flow in fiscal 2024, with a focus on balancing investment and profitability [95]

[PART I — FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION%20-%20UNAUDITED) This section presents the unaudited condensed consolidated financial statements and related disclosures for Skillsoft Corp [Item 1. Unaudited Financial Statements](index=6&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, reflecting recent acquisitions, divestitures, and a significant goodwill impairment [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant decrease in total assets and shareholders' equity primarily due to goodwill impairment and reclassification of divested assets Balance Sheet Items (in thousands) | Balance Sheet Items (in thousands) | October 31, 2022 | January 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,595,401** | **$2,221,948** | | Goodwill | $462,080 | $795,811 | | Intangible assets, net | $769,680 | $793,859 | | **Total Liabilities** | **$1,021,526** | **$1,162,050** | | Long-term debt | $582,870 | $462,185 | | **Total Shareholders' Equity** | **$573,875** | **$1,059,898** | | Accumulated deficit | ($918,714) | ($247,229) | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations reveal a massive operating and net loss for the quarter and nine months ended October 31, 2022, primarily due to a substantial impairment charge Statements of Operations (in thousands) | (in thousands) | Three Months Ended Oct 31, 2022 | Three Months Ended Oct 31, 2021 | | :--- | :--- | :--- | | Total revenues | $139,390 | $140,153 | | Impairment of goodwill and intangible assets | $570,887 | $0 | | Operating loss | ($608,702) | ($10,447) | | Gain on sale of business | $53,756 | $0 | | Net loss | ($528,343) | ($42,855) | Statements of Operations (in thousands) | (in thousands) | Nine Months Ended Oct 31, 2022 (Successor) | Combined Nine Months Ended Oct 31, 2021 (Successor & Predecessor) | | :--- | :--- | :--- | | Total revenues | $414,803 | $318,114 | | Impairment of goodwill and intangible assets | $641,362 | $0 | | Operating loss | ($764,718) | ($66,677) | | Gain on sale of business | $53,756 | $0 | | Net loss | ($671,485) | ($103,972) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement indicates net cash used in operating and investing activities, partially offset by cash provided from financing activities, resulting in a net increase in cash Statements of Cash Flows (in thousands) | (in thousands) | Nine Months Ended Oct 31, 2022 (Successor) | | :--- | :--- | | Net cash used in operating activities | ($23,561) | | Net cash used in investing activities | ($40,199) | | Net cash provided by financing activities | $83,690 | | **Net increase in cash, cash equivalents and restricted cash** | **$13,107** | - Key investing activities included the acquisition of Codecademy (net cash used of **$198.8 million**) and the sale of SumTotal (net cash received of **$172.0 million**)[28](index=28&type=chunk) - Key financing activities included proceeds from the issuance of term loans (**$157.1 million** net) and repayments on the accounts receivable facility (**$33.2 million**)[28](index=28&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies, business combinations, the SumTotal divestiture, and significant impairment charges - The company acquired Codecademy on April 4, 2022, for a total purchase price of **$386.0 million**, consisting of cash and stock[61](index=61&type=chunk)[63](index=63&type=chunk) - The SumTotal business was sold on August 15, 2022, for approximately **$200 million**, resulting in a preliminary gain on sale of **$53.8 million**, and is now reported as a discontinued operation[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The company recorded a total goodwill impairment of **$641.4 million** in the nine months ended October 31, 2022, with **$570.9 million** recorded in the third quarter alone, due to a decline in stock price, underperformance of Global Knowledge, and macroeconomic uncertainty[87](index=87&type=chunk)[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting the impact of strategic moves, revenue trends, the significant goodwill impairment, and liquidity - The sale of the SumTotal business for **$200 million** is intended to sharpen the company's focus on its core corporate digital learning business[200](index=200&type=chunk)[201](index=201&type=chunk) - Q3 revenue decreased **0.5% YoY**, as a **22.1%** decline in Global Knowledge non-subscription revenue offset a **12.8%** increase in Content SaaS subscription revenue[211](index=211&type=chunk)[212](index=212&type=chunk) - A goodwill impairment of **$570.9 million** was recorded in Q3 2022 due to a substantial decline in stock price, deterioration in equity markets, increased interest rates, and underperformance of the Global Knowledge business[227](index=227&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=80&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is omitted as permissible for a smaller reporting company - Not applicable as a smaller reporting company[266](index=266&type=chunk) [Item 4. Controls and Procedures](index=80&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of October 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of October 31, 2022, the company's disclosure controls and procedures were effective[268](index=268&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[269](index=269&type=chunk) [PART II — OTHER INFORMATION](index=82&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other miscellaneous information [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) A stockholder complaint related to the Codecademy acquisition was dismissed, and the company is not currently involved in other material legal proceedings - A stockholder complaint filed in relation to the Codecademy acquisition was dismissed on May 29, 2022[108](index=108&type=chunk)[271](index=271&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor highlights that the share repurchase program may not be fully consummated or enhance long-term shareholder value - A new risk factor was added regarding the share repurchase program, noting it may not be fully completed and may not enhance shareholder value[273](index=273&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its share repurchase activity under the new program, including shares purchased and remaining authorization Share Repurchase Activity (in millions) | Period | Total shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased (in millions) | | :--- | :--- | :--- | :--- | | September 1-30, 2022 | 645,248 | $2.2205 | $28.6 | - On September 7, 2022, the Board authorized a repurchase program for up to **$30 million** of its Class A common stock[138](index=138&type=chunk)[275](index=275&type=chunk) [Item 3. Defaults Upon Senior Securities](index=82&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[276](index=276&type=chunk) [Item 4. Mine Safety Disclosures](index=84&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[277](index=277&type=chunk) [Item 5. Other Information](index=84&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[278](index=278&type=chunk) [Item 6. Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment agreements and officer certifications - Lists exhibits filed with the report, including certifications by the Principal Executive Officer and Principal Financial Officer[280](index=280&type=chunk)

Skillsoft Corp. (NYSE:SKIL) Q3 2023 Earnings Conference Call December 6, 2022 5:00 PM ET Company Participants Eric Boyer - Senior Vice President and Head of Investor Relations Jeff Tarr - Chief Executive Officer Rich Walker - Chief Financial Officer Conference Call Participants Sheldon McMeans - Barclays Bank PLC Thomas Singlehurst - Citigroup Inc. Rajiv Sharma - B. Riley Securities, Inc. Nancy Liu - Oppenheimer & Co. Robert Simmons - D.A. Davidson & Co. Arvind Ramnani - Piper Sandler & Co. Operator Hello, ...