Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

Skillsoft Reports Financial Results for the Fourth Quarter and Full Year of Fiscal 2023

Skillsoft Corp. (NYSE: SKIL) ("Skillsoft" or the "Company"), a leading platform for transformative learning experiences, today announced its financial results for the fourth quarter and full fiscal year ended January 31, 2023. The Company also provided its financial outlook for the full fiscal 2024 year.

"Fiscal 2023 was a transformative year for Skillsoft as we strengthened and repositioned the business for the future," said Jeffrey R. Tarr, Skillsoft's Chief Executive Officer. "We established a leading position in technical skills training with the acquisition of Codecademy and focused our portfolio on the high growth enterprise learning market with the divestiture of SumTotal. I am confident that we have the right assets and capabilities and are uniquely positioned to deliver on the skilling and workforce transformation needs of the world's largest and most complex organizations."

Fiscal 2023 Fourth Quarter Select Metrics and Financials from Continuing Operations (1)

• Skillsoft Content segment Bookings grew 4% year-over-year on a constant currency basis. Global Knowledge segment Bookings were down 13% year-over-year on a constant currency basis, but grew 2% sequentially from Q3.
• Fourth quarter GAAP Revenue of $140 million grew 3% year-over-year. On a pro forma, constant currency basis, Revenue declined 2% year-over-year, with Skillsoft Content segment Revenue growth of 3% year-over-year, while Global Knowledge segment Revenue was down 10% year-over-year and up 2% sequentially from Q3.
• Fourth quarter GAAP Net Loss of $53 million. Adjusted EBITDA from continuing operations of $22 million, reflecting a margin of 16% of GAAP Revenue.
• LTM Skillsoft Content Dollar Retention Rate was approximately 100% in the quarter, up from approximately 97% in the year-ago period.

Fiscal 2023 Full Year Select Metrics and Financials from Continuing Operations (1)

• Skillsoft Content segment Bookings grew 5% year-over-year on a constant currency basis. Global Knowledge segment Bookings were down 16% year-over-year on a constant currency basis.
• Fiscal 2023 GAAP Revenue of $555 million. On a pro forma, constant currency basis, Revenue declined 1% year-over-year, with Skillsoft Content segment Revenue growth of 5% year-over-year, while Global Knowledge segment Revenue was down 11% year-over-year.
• Fiscal 2023 GAAP Net Loss of $725 million. Adjusted EBITDA from continuing operations of $107 million, reflecting a margin of 19% of GAAP Revenue. Pro Forma Adjusted EBITDA of $102 million, reflecting a margin of 18% of Pro Forma Revenue.
• Repurchased 1.6 million shares through January 31, 2023, under the Company's $30 million share repurchase program.
• Ended the year with $170 million of cash and cash equivalents and net leverage of 4.5x Pro Forma Adjusted EBITDA.

"We are proud of our teams' efforts to return the Company to year-over-year Bookings growth in our Skillsoft Content segment, while also bringing greater stability to our Global Knowledge segment in the second half of the year," said Richard G. Walker, Skillsoft's Chief Financial Officer. "Although we are mindful of the global macroeconomic headwinds, we expect to continue to build on the important progress we made in fiscal 2023 to focus on profitable and durable growth. With a strong balance sheet and a healthy liquidity profile, we expect to continue to invest organically in further differentiating our immersive, AI-powered learning platform and our best-in-class content library, while also driving meaningful free cash flow generation during the year."

Full-Year Fiscal 2024 Financial Outlook (2)

The following table reflects Skillsoft's financial outlook for the full-year fiscal 2024 ended January 31, 2024, based on current market conditions, expectations, and assumptions:

Key Operational Metrics and Non-GAAP Financial Measures(3)

Webcast and Conference Call Information

Skillsoft will host a conference call and webcast today at 5:00 p.m. Eastern Time to discuss its financial results. To access the call, dial (877) 413?9278 from the United States and Canada or (215) 268?9914 from international locations. The live event can be accessed from the Investor Relations section of Skillsoft's website at investor.skillsoft.com. A replay will be available for six months.

About Skillsoft

Skillsoft delivers transformative learning experiences that propel organizations and people to grow together. The Company partners with enterprise organizations and serves a global community of learners to prepare today's employees for tomorrow's economy. With Skillsoft, customers gain access to blended, multimodal learning experiences that do more than build skills, they grow a more capable, adaptive, and engaged workforce. Through a portfolio of best-in-class content, a platform that is personalized and connected to customer needs, world-class tech, and a broad ecosystem of partners, Skillsoft drives continuous growth and performance for employees and their organizations by overcoming critical skill gaps and unlocking human potential. Learn more at www.skillsoft.com.

NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE METRICS

We track the non-GAAP financial measures and key performance metrics that we believe are key financial measures of our success. Non-GAAP measures and key performance metrics are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures and key performance metrics when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company's capital structure on its performance. However, non-GAAP measures and key performance metrics have limitations as analytical tools. Because not all companies use identical calculations, our presentation of non-GAAP financial measures and key performance metrics may not be comparable to other similarly titled measures of other companies. They are not presentations made in accordance with U.S. GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP.

We have provided at the back of this release reconciliations of our historical non-GAAP financial measures to the comparable GAAP measures. We do not reconcile our forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible; and because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is available to us without unreasonable efforts. For the same reasons, we are unable to address the probable significance of the unavailable information. We provide non-GAAP financial measures that we believe will be achieved, however we cannot accurately predict all of the components of the adjusted calculations and the U.S. GAAP measures may be materially different than the non-GAAP measures.

We disclose the following non-GAAP financial measures and key performance metrics in this press release because we believe these non-GAAP financial measures and key performance metrics provide meaningful supplemental information. Excluding the effects of these items in non-GAAP measures would assist investors in analyzing and assessing past and future operating performance and comparison of operating results across reporting periods.

• Bookings - Bookings in any particular period represents the dollar value of orders received during that period and reflects (i) subscription renewals, upgrades, churn, and downgrades to existing customers, (ii) non- subscription services, and (iii) sales to new customers. Bookings generally represents a customer's annual obligation (versus the life of the contract), and, for the subscription business, revenue is recognized for such bookings over the following 12 months. We use bookings to measure and monitor current period business activity with respect to our ability to sell subscriptions and services to our platform. Bookings are adjusted and presented on a pro forma basis as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021, to enhance comparability.
• Pro Forma Revenue ? Pro Forma Revenue is defined as GAAP revenue adjusted in accordance with Regulation S-X, Article 11 as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021, to enhance comparability. Pro Forma Revenue is reconciled to the reported GAAP revenue for all the periods presented.
• Dollar Retention Rate ("DRR") - For existing customers at the beginning of a given period, DRR represents subscription renewals, upgrades, churn, and downgrades in such period divided by the beginning total renewable base for such customers for such period. Renewals reflect customers who renew their subscription, inclusive of auto-renewals for multi-year contracts, while churn reflects customers who choose to not renew their subscription. Upgrades include orders from customers that purchase additional licenses or content (e.g., a new Leadership and Business module), while downgrades reflect customers electing to decrease the number of licenses or reduce the size of their content package. Upgrades and downgrades also reflect changes in pricing. We use our DRR to measure the long-term value of customer contracts as well as our ability to retain and expand the revenue generated from our existing customers.
• Adjusted Net Income/(Loss) - Adjusted Net Income/(Loss) is defined as GAAP Net Income/(Loss) excluding non-cash items, discrete and event-specific costs that do not represent normal, recurring, cash operating expenses necessary for our business operations, and certain accounting income and/or expenses that management believes are necessary to enhance the comparability and are useful in assessing our operating performance, include the following (all net of the related tax effects):
  • Stock-based compensation expense ? Non-cash expense associated with stock-based compensation.
  • Impairment of goodwill and intangible assets ? Non-cash impairment charges associated with goodwill and intangible assets are unusual and of non-recurring charges.
  • Restructuring charges ? Severance costs and the abandonment of right-of-use assets resulted from the acquisition integration process and cost saving initiatives.
  • Fair value adjustments ? Mark-to-market adjustments of warrants and hedge instruments.
  • Foreign currency impact ? Unrealized and realized foreign exchange gains or losses due to fluctuations in exchange rates.
  • Acquisition and integration related costs ? Non-recurring costs incurred to effectuate an acquisition, including contingent compensation expenses, and integration related costs.
  • Transformation costs ? Non-recurring costs incurred to transform our operations through significant strategic non-ordinary course transactions.
  • System migration costs ? Non-recurring costs of temporary resources needed for the migration of content and customers from our legacy system to a global platform.
  • Gain on sale of business ? Non-recurring gain from the sale of SumTotal.
  • Income from discontinued operations ? Income from discontinued operations that do not reflect our current operating performance.
• Adjusted EBITDA - Adjusted EBITDA is defined as Adjusted Net Loss excluding interest expense or income, benefit from or provision for income taxes, depreciation and amortization expense.
• Pro Forma Adjusted Net Income/(Loss) ? Pro Forma Adjusted Net Income/(Loss) is defined as Adjusted Net Income/(Loss) adjusted in accordance with Regulation S-X, Article 11 as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021, to enhance comparability.
• Pro Forma Adjusted EBITDA ? Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA adjusted in accordance with Regulation S-X, Article 11 as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021, to enhance comparability.

Forward Looking Statements

This document includes statements that are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook (including bookings, revenue and adjusted EBITDA), our product development and planning, our pipeline, future capital expenditures, share repurchases, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services, competitive strengths, the benefits of new initiatives, growth of our business and operations, and our ability to successfully implement our plans, strategies, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as "may," "will," "would," "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "forecast," "seek," "outlook," "target," "goal," "probably," or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of Skillsoft's management and are subject to significant risks and uncertainties. All forward-looking disclosure is speculative by its nature, and we caution you against unduly relying on these forward-looking statements.

There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including:

• the demand for, and acceptance of, our products and for technology learning solutions delivered online;
• our ability to compete successfully in competitive markets and changes in the competitive environment in our industry and the markets in which we operate;
• the impact of U.S. and worldwide economic trends, financial market conditions, geopolitical events, natural disasters, climate change, public health crises, political crises, or other catastrophic events on our business, liquidity, financial condition and results of operations;
• our ability to market existing products and develop new products;
• our reliance on third parties to provide us with learning content, subject matter expertise and content productions and the impact on our business if our relationships with these third parties are terminated;
• our ability to attract and retain key employees and qualified technical and sales personnel;
• our reliance on vendor subsidies in certain portions of our instructor-led training;
• our ability to successfully identify, consummate and achieve strategic objectives in connection with our acquisition opportunities and realize the benefits expected from acquisitions, including our recent acquisitions of Global Knowledge, Pluma and Codecademy;
• fluctuations in our future operating results;
• a failure of our information technology infrastructure or any significant breach of security, including in relation to the migration of our key platforms from our systems to cloud storage;
• our reliance on vendor subsidies in certain portions of our instructor-led training;
• future regulatory, judicial and legislative changes in our industry;
• our ability to comply with laws and regulations applicable to our business, including shifting global privacy, data protection, and cyber and information security laws and regulations, as well as state privacy and data protection laws;
• a failure to achieve and maintain effective internal control over financial reporting;
• fluctuations in foreign currency exchange rates;
• our ability to protect or obtain intellectual property rights;
• the impact of our indebtedness on our financial position and operating flexibility;
• our ability to meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;
• our ability to successfully defend ourselves in legal proceedings; and
• our ability to continue to meet applicable listing standards.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see the risk factors included in our Form 10?K to be filed with the SEC for the fiscal year ended January 31, 2023 and in our other filings with the SEC.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved. Annualized, pro forma, projected, and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. Additionally, statements as to market share, industry data, and our market position are based on the most currently available data available to us and our estimates regarding market position or other industry data included in this document or otherwise discussed by us involve risks and uncertainties and are subject to change based on various factors, including as set forth above.

 

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News published on 11 april 2023 at 16:10 and distributed by: