Financial Performance Overview

Skillsoft Corp. is a leading provider of enterprise learning solutions, offering a comprehensive suite of content, platforms, and services to help organizations and their employees develop critical skills and unlock their potential. The company operates through two main segments: Talent Development Solutions and Global Knowledge.

For the three and nine months ended October 31, 2024, Skillsoft reported total revenues of $137.2 million and $397.2 million, respectively, representing a 1.2% and 4.4% decrease compared to the same periods in 2023. This decline was primarily driven by weaker market demand and a higher mix of reseller business in the Global Knowledge segment, which offset growth in the Talent Development Solutions segment.

Despite the revenue decline, Skillsoft has been actively managing its costs and implementing a comprehensive resource reallocation plan announced in July 2024. This plan is expected to result in more than $45 million in annualized cost savings, which the company plans to partially reinvest in strategic growth initiatives.

Segment Performance

The Talent Development Solutions segment, which provides content learning solutions, an AI-driven online learning platform, and individualized coaching, saw revenues increase by 1.1% and decrease by 0.7% in the three and nine-month periods, respectively, compared to the prior year. This segment’s performance reflects Skillsoft’s efforts to capitalize on the market shift from learning and skills to talent development.

The Global Knowledge segment, which offers IT and business skills training solutions, experienced a 9.5% and 16.2% decline in revenues for the three and nine-month periods, respectively, compared to the prior year. This was primarily due to weaker market demand and a higher mix of reseller business, which is recorded in revenue net of fees.

Cost Management and Operational Efficiency

Skillsoft has been proactive in managing its costs and improving operational efficiency. The company’s comprehensive resource reallocation plan, announced in July 2024, is expected to result in more than $45 million in annualized cost savings. These savings are being achieved through various initiatives, including workforce reductions, facility consolidation, and other restructuring activities.

The company’s operating expenses decreased by 7.8% and 9.4% in the three and nine-month periods, respectively, compared to the prior year. This was driven by reductions in cost of revenues, content and software development, selling and marketing, and general and administrative expenses.

Skillsoft’s focus on cost management and operational efficiency is aimed at improving the company’s profitability and competitiveness in the market.

Financial Position and Liquidity

As of October 31, 2024, Skillsoft had $97.9 million in cash and cash equivalents on hand. The company has funded its operations primarily through cash collected from customers and proceeds from its Term Loan Facility, supplemented by borrowings under its accounts receivable facility.

In November 2024, Skillsoft amended its accounts receivable facility to extend the maturity, reduce the fixed component of the interest rate, increase the highest advance rate, and allow for more flexibility in borrowings and repayments. This amendment provides the company with additional liquidity and financial flexibility.

Skillsoft’s long-term debt, primarily consisting of the Term Loan Facility, had a fair value of $480.0 million as of October 31, 2024. The company has also entered into interest rate swap agreements to mitigate the variability of cash flows in interest payments on a portion of its variable-rate debt.

Overall, Skillsoft’s financial position and liquidity remain strong, and the company expects to have sufficient internal and external sources of funding to support its operations and strategic initiatives for the foreseeable future.

Outlook and Future Prospects

Skillsoft’s comprehensive resource reallocation plan, announced in July 2024, is a key initiative aimed at improving the company’s operational efficiency and profitability. By reducing costs and reallocating resources, Skillsoft expects to reinvest up to half of the $45 million in annualized cost savings into strategic growth initiatives.

The company’s focus on talent development solutions, including its Percipio platform and individualized coaching offerings, positions it well to capitalize on the market shift from learning and skills to talent development. Skillsoft’s ability to leverage modern technologies, such as generative AI, to enhance its solutions and address evolving customer needs will also be a key driver of future growth.

In the Global Knowledge segment, Skillsoft will continue to optimize its business model and explore opportunities to better align its offerings with market demand. The company’s commitment to providing relevant and up-to-date skills training through various delivery modalities, both on a transactional and subscription basis, remains a priority.

Overall, Skillsoft’s strategic initiatives, cost management efforts, and focus on innovation and customer-centricity position the company for long-term success in the enterprise learning and talent development market.