Skillsoft (SKIL) - 2026 Q2 - Quarterly Results

Fiscal 2026 Second Quarter Financial Results Overview Executive Summary Skillsoft achieved Q2 FY26 TDS revenue growth and positive free cash flow, revising full-year guidance due to market softness - Achieved a fourth consecutive quarter of revenue growth in the TDS enterprise solution, reinforcing the durability and potential of the core business[4] - Economic uncertainty continued into Q2, weighing on revenue, primarily due to weaker discretionary demand for live training[4] - Accelerating execution to reimagine learning, with September announcements introducing AI Innovation based products and a reshaped go-to-market strategy[4] - Revised full-year revenue guidance range to account for softness in federal and live learning spending[5] - Generated positive free cash flow year-to-date and remains on track to deliver on adjusted EBITDA and free cash flow targets for the balance of the year[5] Fiscal 2026 Second Quarter Select Metrics and Financial Measures Skillsoft reported a 3% year-over-year decrease in total revenue for Q2 FY26, reaching $129 million, with improved GAAP net loss | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Total Revenue | $129 | $132 | -3% | | Talent Development Solutions (TDS) Revenue | $101 | $101 | 0% | | Global Knowledge (GK) Revenue | $28 | $31 | -10% | | GAAP Net Loss | ($24) | ($40) | Improved | | GAAP Net Loss per share | ($2.78) | ($4.84) | Improved | | Adjusted EBITDA | $28 | $28 | 0% | | Adjusted EBITDA Margin | 22% | 21% | +1 pp | | Free Cash Flow (Q2) | ($23) | ($16) | Worsened | | Free Cash Flow (YTD) | $4 | N/A | Positive | Fiscal 2026 Second Quarter Business Highlights Key business achievements in Q2 FY26 included positive Free Cash Flow, expanded market reach, and significant growth in technology and AI learners - Achieved positive Free Cash Flow in both the year-to-date and last-twelve-month periods[9] - Announced availability in AWS Marketplace, simplifying and accelerating the purchasing process[9] - Expanded reach through partnership with Salesforce to bring Skillsoft CAISY™ agent actions to Agentforce and the Salesforce ecosystem[9] - Achieved 50% year-over-year increase in technology learners, 74% increase in AI learners, and 158% increase in total AI learning hours on the Skillsoft platform[9] Full-Year Fiscal 2026 Financial Outlook Skillsoft revised its full-year fiscal 2026 financial outlook, projecting GAAP Revenue between $510 million and $530 million | Metric | Full-Year Fiscal 2026 Outlook | | :----- | :---------------------------- | | GAAP Revenue | $510 million – $530 million | | Adjusted EBITDA | $112 million – $118 million | Segment Reporting Changes The company adjusted segment reporting components in Q4 FY25 to enhance transparency and peer comparability - Changes made to segment result components in Q4 FY25 to increase transparency and improve segment comparability to peers[10] - All prior period comparatives have been recast to conform to the current presentation[10] Company Information Webcast and Conference Call Information Skillsoft hosted a conference call and webcast on September 9, 2025, to discuss financial results, with a replay available - Skillsoft hosted a conference call and webcast on September 9, 2025, at 5:00 p.m. Eastern Time to discuss financial results[11] - A replay of the event will be available for twelve months on the Investor Relations section of Skillsoft's website[11] About Skillsoft Skillsoft empowers organizations and learners with personalized, AI-powered learning experiences to address skill gaps and future-proof workforces - Skillsoft (NYSE: SKIL) empowers organizations and learners with personalized, interactive, AI-powered learning experiences and enterprise-ready solutions[12] - The platform helps customers solve complex business challenges like bridging skill gaps, improving talent retention, driving digital transformation, and future-proofing the workforce[12] - Skillsoft is the talent development partner for thousands of organizations, including 60% of the Fortune 1000, serving over 105 million learners globally[12] Investor and Media Contacts Contact information for investor relations and media inquiries is provided - Investors can contact Ross Collins or Stephen Poe at SKIL@alpha-ir.com[25] - Media inquiries can be directed to Cameron Martin at cameron.martin@skillsoft.com[25] Non-GAAP Financial Measures and Key Performance Metrics Introduction and Rationale Skillsoft utilizes non-GAAP financial measures and key performance metrics to supplement GAAP information for performance evaluation and comparability - Non-GAAP measures and key performance metrics are used by analysts and investors to evaluate companies and provide insight into U.S. GAAP financial disclosures[13] - Management uses these measures to assess operating performance, financial leverage, resource allocation, and to provide normalized period-to-period comparisons[13] - Non-GAAP measures have limitations as analytical tools, are not GAAP presentations, and should not be considered alternatives to GAAP profit/loss or operating cash flows[13] - Quantitative reconciliations for forward-looking non-GAAP financial measures are not provided due to variability and difficulty in making accurate forecasts[15] Key Performance Metric: Dollar Retention Rate (DRR) Dollar Retention Rate (DRR) measures the long-term value of customer contracts and the ability to retain and expand revenue from existing customers - DRR represents subscription renewals, upgrades, churn, and downgrades for existing customers divided by their beginning total renewable base[16] - DRR is used to measure the long-term value of customer contracts and the ability to retain and expand revenue from existing customers[17] Non-GAAP Financial Measure Definitions This section defines various non-GAAP financial measures used by Skillsoft, primarily excluding non-cash and discrete items for enhanced comparability Adjusted Net Income (Loss) Adjusted net income (loss) excludes non-cash items, discrete and event-specific costs, and certain accounting income/expenses - Adjusted net income (loss) excludes non-cash items, discrete and event-specific costs not representing normal cash operating expenses, and certain accounting income/expenses[18] - Exclusions include impairment charges, amortization of acquired intangible assets, acquisition and integration related costs, restructuring charges, transformation costs, system migration costs, long-term incentive compensation expenses, executive exit costs, fair value adjustments, and other (income) expense, net[18] Adjusted EBITDA Adjusted EBITDA is defined as net income (loss) with specific exclusions, including amortization, depreciation, and income taxes - Adjusted EBITDA is defined as net income (loss) excluding the same items as adjusted net income (loss), plus additional exclusions[19] - Additional exclusions for Adjusted EBITDA are amortization of intangible assets (other than those recognized as part of business combination accounting), depreciation expense, and provision for (benefit from) income taxes[19] Other Adjusted Operating Measures This section defines other adjusted operating measures including adjusted total operating expenses, free cash flow, and adjusted net leverage - Adjusted total operating expenses exclude depreciation, long-term incentive compensation, system migration, and transformation costs[19] - Free cash flow is defined as net cash provided by (used in) operating activities less net purchases of property and equipment and internally developed software[19] - Adjusted net leverage is defined as current maturities of long-term debt, plus borrowings under accounts receivable facility, plus long-term debt, less cash and equivalents and restricted cash, divided by adjusted EBITDA for the preceding twelve-month period[19] Unaudited Condensed Consolidated Financial Statements Balance Sheets As of July 31, 2025, Skillsoft reported total assets of $969.4 million, with a decrease in total liabilities and shareholders' equity | Metric (in thousands) | July 31, 2025 | January 31, 2025 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Total assets | $969,426 | $1,106,069 | ($136,643) | | Total liabilities | $927,000 | $1,012,223 | ($85,223) | | Total shareholders' equity (deficit) | $42,453 | $93,846 | ($51,393) | | Accounts receivable, net | $96,778 | $178,989 | ($82,211) | | Deferred revenue (current