Skillsoft Reports Financial Results for the Second Quarter of Fiscal 2024
- Year-over-year growth in Bookings and Revenue
- Increase in Dollar Retention Rate
- None.
- Delivered year-over-year growth in total Company Bookings and Revenue.
-
Content & Platform segment Bookings increased
7% and Revenue grew4% . -
Dollar Retention Rate increased three percentage points to
101% on an LTM basis. - Reaffirmed its financial outlook for the full fiscal year-ended January 31, 2024.
“Skillsoft executed well in the quarter, delivering improved top-line performance with growth in both Bookings and Revenue,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “In our primarily SaaS-based Content & Platform segment, Bookings increased
Tarr added, “The reskilling revolution is impacting nearly every company and industry around the globe, as organizations seek to enable their talent to succeed in an increasingly dynamic era marked by digital transformation, occupational disruption, and now the emergence of generative AI. We believe these structural shifts are unlocking new long-term growth opportunity for Skillsoft as we enable organizations to grow and thrive with a future-fit workforce that is skilled and ready for the jobs of tomorrow.”
Fiscal 2024 Second Quarter Select Metrics and Financials from Continuing Operations (1)(2)
-
Total Bookings grew
4% led by7% growth in the Content & Platform segment, partially offset by a1% decline in Instructor-Led Training segment Bookings. -
GAAP Revenue of
$141 million 1% , with4% growth in Content & Platform segment GAAP Revenue to$103 million 9% decline in Instructor-Led Training segment GAAP Revenue to$38 million -
GAAP net loss of
$32 million $121 million $0.20 $0.74 -
Pro forma Adjusted Net Loss of
$29 million $24 million $0.18 $0.14 -
Adjusted EBITDA from continuing operations of
$25 million 18% of GAAP revenue. -
Ended the quarter with
$148 million
Fiscal 2024 Second Quarter Business Highlights
-
LTM Content & Platform Dollar Retention Rate was approximately
101% in the quarter, up from approximately98% in the year-ago period. Quarterly Content & Platform Dollar Retention Rate was approximately99% , up from approximately98% in the year-ago period. - Released a beta version of Skillsoft CAISY™ (Conversion AI Simulator), an innovative generative AI-based tool for simulating business and leadership conversational skills through experiential, active learning.
- Launched a ChatGPT Learning Journey, the first in a series of generative AI courses designed to equip organizations and the workforce with the skills required to use the technology productively and ethically.
- Announced significant enhancements to our Codecademy technology skilling solution, including an expanded content library of more than 6,000 courses covering the most in-demand technology skills, new interactive learning and practice formats, and access to more than 500 Skill Benchmarks to assess, index, and track workforce skills development.
- Released our C-Suite Perspectives report, revealing a pressing skills crisis in critical areas of business, including cybersecurity, data science, and artificial intelligence, and providing C-level leaders with a roadmap to help them build agile, future-fit teams through transformative learnings.
Full-Year Fiscal 2024 Financial Outlook (2)
The following table reflects Skillsoft’s reaffirmed financial outlook for the full-year fiscal 2024 ended January 31, 2024, based on current market conditions, expectations, and assumptions:
Bookings |
|
|
|
GAAP revenue |
|
|
|
Adjusted EBITDA |
|
|
|
(1) |
|
Growth calculated relative to the comparable prior year period unless otherwise noted. |
(2) |
|
See “Non-GAAP Financial Measures and Key Performance Metrics” below for the definitions of our key operational and non-GAAP metrics and how they are calculated and more information regarding the fact that the Company is unable to reconcile forward-looking non-GAAP measures without unreasonable efforts. We have provided at the back of this release reconciliations of our historical non-GAAP financial measures to the comparable GAAP measures. |
| Key Operational Metrics and Non-GAAP Financial Measures (3) (in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
Change |
|
|
|
|
Change |
||||||||||||||||||||||
|
Three Months Ended |
|
|
Constant |
Six Months Ended |
|
|
Constant |
||||||||||||||||||||||||
|
July 31, |
Change |
Currency |
July 31, |
Change |
Currency |
||||||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
Dollar |
Percent |
% |
|
2023 |
|
|
2022 |
|
Dollar |
Percent |
% |
||||||||||||||
Bookings (4) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Content & Platform |
$ |
83,123 |
|
$ |
77,380 |
|
$ |
5,743 |
|
|
|
|
$ |
147,655 |
|
$ |
137,526 |
|
$ |
10,129 |
|
|
|
|
||||||||
Instructor-Led Training |
|
46,058 |
|
|
46,493 |
|
|
(435 |
) |
(1)% |
|
(1)% |
|
89,994 |
|
|
102,158 |
|
|
(12,164 |
) |
(12)% |
|
(10)% |
||||||||
Total bookings |
$ |
129,181 |
|
$ |
123,873 |
|
$ |
5,308 |
|
|
|
|
$ |
237,649 |
|
$ |
239,684 |
|
$ |
(2,035 |
) |
(1)% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
GAAP revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Content & Platform |
$ |
103,188 |
|
$ |
98,753 |
|
$ |
4,435 |
|
|
|
|
$ |
201,761 |
|
$ |
188,539 |
|
$ |
13,222 |
|
|
|
|
||||||||
Instructor-Led Training |
|
37,999 |
|
|
41,821 |
|
|
(3,822 |
) |
(9)% |
|
(9)% |
|
74,980 |
|
|
86,874 |
|
|
(11,894 |
) |
(14)% |
|
(12)% |
||||||||
Total |
$ |
141,187 |
|
$ |
140,574 |
|
$ |
613 |
|
|
|
|
$ |
276,741 |
|
$ |
275,413 |
|
$ |
1,328 |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Pro forma revenue (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Content & Platform |
$ |
103,188 |
|
$ |
98,753 |
|
$ |
4,435 |
|
|
|
|
$ |
201,761 |
|
$ |
196,597 |
|
$ |
5,164 |
|
|
|
|
||||||||
Instructor-Led Training |
|
37,999 |
|
|
41,821 |
|
|
(3,822 |
) |
(9)% |
|
(9)% |
|
74,980 |
|
|
86,874 |
|
|
(11,894 |
) |
(14)% |
|
(12)% |
||||||||
Total pro forma revenue |
$ |
141,187 |
|
$ |
140,574 |
|
$ |
613 |
|
|
|
|
$ |
276,741 |
|
$ |
283,471 |
|
$ |
(6,730 |
) |
(2)% |
|
(1)% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
GAAP net income (loss) |
$ |
(31,999 |
) |
$ |
(121,499 |
) |
$ |
89,500 |
|
NA |
|
NA |
$ |
(76,223 |
) |
$ |
(143,142 |
) |
$ |
66,919 |
|
NA |
|
NA |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Pro forma Non-GAAP operating expenses (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Pro forma Non-GAAP costs of revenues |
$ |
40,047 |
|
$ |
34,704 |
|
$ |
5,343 |
|
|
|
|
$ |
77,623 |
|
$ |
73,169 |
|
$ |
4,454 |
|
|
|
|
||||||||
Pro forma Non-GAAP content and software development expenses |
|
15,556 |
|
|
15,402 |
|
|
154 |
|
|
|
|
|
29,862 |
|
|
33,867 |
|
|
(4,005 |
) |
(12)% |
|
(11)% |
||||||||
Pro forma Non-GAAP selling and marketing expenses |
|
40,560 |
|
|
39,925 |
|
|
635 |
|
|
|
|
|
84,403 |
|
|
81,402 |
|
|
3,001 |
|
|
|
|
||||||||
Pro forma Non-GAAP general and administrative expenses |
|
19,596 |
|
|
17,958 |
|
|
1,638 |
|
|
|
|
|
37,797 |
|
|
42,768 |
|
|
(4,971 |
) |
(12)% |
|
(11)% |
||||||||
Total pro forma Non-GAAP operating expenses |
$ |
115,759 |
|
$ |
107,989 |
|
$ |
7,770 |
|
|
|
|
$ |
229,685 |
|
$ |
231,206 |
|
$ |
(1,521 |
) |
(1)% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Pro forma adjusted net income (loss) & adjusted EBITDA (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Pro forma adjusted net income (loss) |
$ |
(29,441 |
) |
$ |
(23,703 |
) |
$ |
(5,738 |
) |
NA |
|
NA |
$ |
(59,494 |
) |
$ |
(35,202 |
) |
$ |
(24,292 |
) |
NA |
|
NA |
||||||||
Pro forma adjusted net income (loss) per share |
$ |
(0.18 |
) |
$ |
(0.14 |
) |
$ |
(0.04 |
) |
NA |
|
NA |
$ |
(0.37 |
) |
$ |
(0.23 |
) |
$ |
(0.14 |
) |
NA |
|
NA |
||||||||
Pro forma adjusted EBITDA |
$ |
25,428 |
|
$ |
32,585 |
|
$ |
(7,157 |
) |
(22)% |
|
(22)% |
$ |
47,056 |
|
$ |
52,265 |
|
$ |
(5,209 |
) |
(10)% |
|
(9)% |
||||||||
Pro forma adjusted EBITDA % of pro forma revenue |
|
18 |
% |
|
23 |
% |
|
|
|
|
17 |
% |
|
18 |
% |
|
|
|
||||||||||||||
| _______________ | ||
(3) |
|
See "Non-GAAP Financial Measures and Key Performance Metrics" below for the definitions of our key operational and non-GAAP metrics and how they are calculated. |
(4) |
|
For the six months ended July 31, 2022, the unaudited Pro Forma financial information is presented in accordance with Regulation S-X, Article 11 to enhance comparability for all periods by including operating results for Codecademy as if the merger had closed on February 1, 2022. |
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
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
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
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.
- 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 Codecademy had merged on February 1, 2022, 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 Codecademy had merged on February 1, 2022, 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 (including the related tax effects):
- Stock-based compensation expense – Non-cash expense associated with stock-based compensation.
- 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.
- Income from discontinued operations – Income from discontinued operations that do not reflect our current operating performance.
- (Gain) loss on sale of business - gain or loss on non-routine sale of business.
- Impairment charges - non-cash goodwill, intangible or other asset impairment charges.
- 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.
- Non-GAAP operating expenses – GAAP operating expenses, less depreciation, stock-based compensation, system migration costs, transformation costs, other non-cash charges and pro forma adjustments, as applicable.
- 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 Codecademy had merged on February 1, 2022, to enhance comparability.
- Pro forma adjusted net income (loss) per share – Pro forma adjusted net income (loss) per share is defined as adjusted net income (loss) defined above divided by weighted average common shares outstanding.
- Pro forma adjusted EBITDA – Pro forma adjusted EBITDA is defined as adjusted EBITDA adjusted in accordance with Regulation S-X, Article 11 as if Codecademy had merged on February 1, 2022, to enhance comparability.
- Pro forma adjusted EBITDA % of pro forma revenue – Pro forma adjusted EBITDA % of pro forma revenue is defined as pro forma adjusted EBITDA defined above as a percentage of pro forma revenue defined above.
Cautionary Notes Regarding 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, adjusted EBITDA, and free cash flow), 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.
Factors that could cause or contribute to such differences include those described under “Part I - Item 1A. Risk Factors” in our Form 10‑K for the fiscal year ended January 31, 2023. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in our other periodic filings with the Securities and Exchange Commission. The forward-looking statements contained in this document represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements, or otherwise.
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.
SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except number of shares) |
||||||||
|
|
July 31, 2023 |
|
January 31, 2023 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
147,927 |
|
|
$ |
170,359 |
|
Restricted cash |
|
|
4,918 |
|
|
|
7,197 |
|
Accounts receivable, net of allowance for credit losses of approximately |
|
|
110,499 |
|
|
|
183,592 |
|
Prepaid expenses and other current assets |
|
|
49,014 |
|
|
|
44,596 |
|
Total current assets |
|
|
312,358 |
|
|
|
405,744 |
|
Property and equipment, net |
|
|
7,244 |
|
|
|
10,150 |
|
Goodwill |
|
|
457,967 |
|
|
|
457,744 |
|
Intangible assets, net |
|
|
667,875 |
|
|
|
738,066 |
|
Right-of-use assets |
|
|
9,277 |
|
|
|
14,633 |
|
Other assets |
|
|
23,353 |
|
|
|
16,350 |
|
Total assets |
|
$ |
1,478,074 |
|
|
$ |
1,642,687 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current maturities of long-term debt |
|
$ |
6,404 |
|
|
$ |
6,404 |
|
Borrowings under accounts receivable facility |
|
|
40,092 |
|
|
|
39,693 |
|
Accounts payable |
|
|
14,139 |
|
|
|
18,338 |
|
Accrued compensation |
|
|
24,587 |
|
|
|
34,325 |
|
Accrued expenses and other current liabilities |
|
|
30,145 |
|
|
|
41,474 |
|
Lease liabilities |
|
|
3,883 |
|
|
|
4,198 |
|
Deferred revenue |
|
|
224,143 |
|
|
|
280,676 |
|
Total current liabilities |
|
|
343,393 |
|
|
|
425,108 |
|
|
|
|
|
|
||||
Long-term debt |
|
|
579,639 |
|
|
|
581,817 |
|
Warrant liabilities |
|
|
1,109 |
|
|
|
4,754 |
|
Deferred tax liabilities |
|
|
68,123 |
|
|
|
73,976 |
|
Long-term lease liabilities |
|
|
10,357 |
|
|
|
11,947 |
|
Deferred revenue - non-current |
|
|
2,440 |
|
|
|
1,778 |
|
Other long-term liabilities |
|
|
10,081 |
|
|
|
11,551 |
|
Total long-term liabilities |
|
|
671,749 |
|
|
|
685,823 |
|
Commitments and contingencies |
|
|
|
|
||||
Shareholders’ equity: |
|
|
|
|
||||
Shareholders’ common stock - Class A common shares, |
|
|
14 |
|
|
|
14 |
|
Additional paid-in capital |
|
|
1,535,648 |
|
|
|
1,521,574 |
|
Accumulated deficit |
|
|
(1,048,416 |
) |
|
|
(972,193 |
) |
Treasury shares |
|
|
(10,891 |
) |
|
|
(2,845 |
) |
Accumulated other comprehensive income (loss) |
|
|
(13,423 |
) |
|
|
(14,794 |
) |
Total shareholders’ equity |
|
|
462,932 |
|
|
|
531,756 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,478,074 |
|
|
$ |
1,642,687 |
|
SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Three Months Ended |
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
|
July 31, 2023 |
|
July 31, 2022 |
|
July 31, 2023 |
|
July 31, 2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
141,187 |
|
|
$ |
140,574 |
|
|
$ |
276,741 |
|
|
$ |
275,413 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Costs of revenues |
|
|
40,467 |
|
|
|
34,998 |
|
|
|
78,291 |
|
|
|
73,008 |
|
Content and software development |
|
|
17,863 |
|
|
|
19,693 |
|
|
|
34,898 |
|
|
|
36,026 |
|
Selling and marketing |
|
|
40,411 |
|
|
|
41,848 |
|
|
|
86,338 |
|
|
|
81,410 |
|
General and administrative |
|
|
25,085 |
|
|
|
26,367 |
|
|
|
50,381 |
|
|
|
55,711 |
|
Amortization of intangible assets |
|
|
39,221 |
|
|
|
45,200 |
|
|
|
77,466 |
|
|
|
84,758 |
|
Impairment of goodwill |
|
|
— |
|
|
|
70,475 |
|
|
|
— |
|
|
|
70,475 |
|
Acquisition-related costs |
|
|
937 |
|
|
|
8,452 |
|
|
|
2,328 |
|
|
|
21,764 |
|
Restructuring |
|
|
2,501 |
|
|
|
4,323 |
|
|
|
7,719 |
|
|
|
8,279 |
|
Total operating expenses |
|
|
166,485 |
|
|
|
251,356 |
|
|
|
337,421 |
|
|
|
431,431 |
|
Operating income (loss) |
|
|
(25,298 |
) |
|
|
(110,782 |
) |
|
|
(60,680 |
) |
|
|
(156,018 |
) |
Other income (expense), net |
|
|
(934 |
) |
|
|
80 |
|
|
|
(1,309 |
) |
|
|
1,132 |
|
Fair value adjustment of warrants |
|
|
793 |
|
|
|
6,846 |
|
|
|
3,645 |
|
|
|
16,952 |
|
Fair value adjustment of hedge instruments |
|
|
6,935 |
|
|
|
(15,065 |
) |
|
|
7,205 |
|
|
|
(15,065 |
) |
Interest income |
|
|
871 |
|
|
|
10 |
|
|
|
1,516 |
|
|
|
170 |
|
Interest expense |
|
|
(16,255 |
) |
|
|
(11,470 |
) |
|
|
(32,191 |
) |
|
|
(23,007 |
) |
Income (loss) before provision for (benefit from) income taxes |
|
|
(33,888 |
) |
|
|
(130,381 |
) |
|
|
(81,814 |
) |
|
|
(175,836 |
) |
Provision for (benefit from) income taxes |
|
|
(1,889 |
) |
|
|
(3,065 |
) |
|
|
(6,273 |
) |
|
|
(25,402 |
) |
Income (loss) from continuing operations |
|
|
(31,999 |
) |
|
|
(127,316 |
) |
|
|
(75,541 |
) |
|
|
(150,434 |
) |
Gain (loss) on sale of business |
|
|
— |
|
|
|
— |
|
|
|
(682 |
) |
|
|
— |
|
Income (loss) from discontinued operations, net of tax |
|
|
— |
|
|
|
5,817 |
|
|
|
— |
|
|
|
7,292 |
|
Net income (loss) |
|
$ |
(31,999 |
) |
|
$ |
(121,499 |
) |
|
$ |
(76,223 |
) |
|
$ |
(143,142 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
Ordinary – Basic and diluted - continuing operations |
|
$ |
(0.20 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.98 |
) |
Ordinary – Basic and diluted - discontinued operations |
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
|
0.05 |
|
Ordinary – Basic and diluted |
|
$ |
(0.20 |
) |
|
$ |
(0.74 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.93 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Ordinary – Basic and diluted |
|
|
160,098 |
|
|
|
164,089 |
|
|
|
160,836 |
|
|
|
153,442 |
|
SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||
|
|
|
|
|
||||
|
|
Six Months Ended |
|
Six Months Ended |
||||
|
|
July 31, 2023 |
|
July 31, 2022 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
(76,223 |
) |
|
$ |
(143,142 |
) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
||||
Share-based compensation |
|
|
14,955 |
|
|
|
16,915 |
|
Depreciation and amortization |
|
|
2,761 |
|
|
|
3,897 |
|
Amortization of intangible assets |
|
|
77,466 |
|
|
|
91,103 |
|
Provision for credit loss expense (recovery) |
|
|
4 |
|
|
|
113 |
|
Provision for (benefit from) income taxes – non-cash |
|
|
(6,913 |
) |
|
|
(36,535 |
) |
Non-cash interest expense |
|
|
1,024 |
|
|
|
1,053 |
|
Non-cash lease and property and equipment impairment charges |
|
|
4,808 |
|
|
|
— |
|
Gain (loss) on sale of business |
|
|
682 |
|
|
|
— |
|
Fair value adjustment of warrants |
|
|
(3,645 |
) |
|
|
(16,952 |
) |
Impairment of goodwill and intangible assets |
|
|
— |
|
|
|
70,475 |
|
Unrealized (gain) loss on derivative instrument |
|
|
(7,205 |
) |
|
|
15,065 |
|
Change in assets and liabilities, net of effects from acquisitions: |
|
|
|
|
||||
Right-of-use assets |
|
|
145 |
|
|
|
1,977 |
|
Accounts receivable |
|
|
73,172 |
|
|
|
82,783 |
|
Prepaid expenses and other current assets |
|
|
(520 |
) |
|
|
(7,492 |
) |
Accounts payable |
|
|
(4,241 |
) |
|
|
(2,559 |
) |
Accrued expenses, including long-term |
|
|
(17,379 |
) |
|
|
(23,066 |
) |
Lease liabilities |
|
|
(1,081 |
) |
|
|
96 |
|
Deferred revenues |
|
|
(55,825 |
) |
|
|
(66,734 |
) |
Net cash provided by (used in) operating activities |
|
|
1,985 |
|
|
|
(13,003 |
) |
Cash flows from investing activities: |
|
|
|
|
||||
Purchase of property and equipment |
|
|
(3,406 |
) |
|
|
(3,528 |
) |
Internally developed software - capitalized costs |
|
|
(5,951 |
) |
|
|
(5,721 |
) |
Sale of SumTotal, net of cash transferred |
|
|
(5,137 |
) |
|
|
— |
|
Acquisition of Codecademy, net of cash received |
|
|
— |
|
|
|
(198,633 |
) |
Net cash used in investing activities |
|
|
(14,494 |
) |
|
|
(207,882 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Shares repurchased for tax withholding upon vesting of restricted stock-based awards |
|
|
(881 |
) |
|
|
(1,718 |
) |
Payments to acquire treasury stock |
|
|
(8,046 |
) |
|
|
— |
|
Proceeds from issuance of term loans, net of fees |
|
|
— |
|
|
|
157,088 |
|
Proceeds from accounts receivable facility, net of borrowings |
|
|
399 |
|
|
|
(39,154 |
) |
Principal payments on Term loans |
|
|
(3,202 |
) |
|
|
(3,202 |
) |
Net cash provided by (used in) financing activities |
|
|
(11,730 |
) |
|
|
113,014 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(472 |
) |
|
|
(4,646 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(24,711 |
) |
|
|
(112,517 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
177,556 |
|
|
|
168,923 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
152,845 |
|
|
$ |
56,406 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
147,927 |
|
|
$ |
43,344 |
|
Restricted cash |
|
|
4,918 |
|
|
|
5,300 |
|
Cash attributable to discontinued operations |
|
|
— |
|
|
|
7,762 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
152,845 |
|
|
$ |
56,406 |
|
SKILLSOFT CORP. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Three Months Ended |
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
|
July 31, 2023 |
|
July 31, 2022 |
|
July 31, 2023 |
|
July 31, 2022 |
||||||||
Revenues, as reported |
|
$ |
141,187 |
|
|
$ |
140,574 |
|
|
$ |
276,741 |
|
|
$ |
275,413 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss), as reported |
|
$ |
(31,999 |
) |
|
$ |
(121,499 |
) |
|
$ |
(76,223 |
) |
|
$ |
(143,142 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations, net of tax |
|
|
— |
|
|
|
(5,817 |
) |
|
|
— |
|
|
|
(7,292 |
) |
Gain (loss) on sale of business |
|
|
— |
|
|
|
— |
|
|
|
682 |
|
|
|
— |
|
Impairment of goodwill and intangible assets |
|
|
— |
|
|
|
70,475 |
|
|
|
— |
|
|
|
70,475 |
|
Acquisition-related costs |
|
|
937 |
|
|
|
8,452 |
|
|
|
2,328 |
|
|
|
21,764 |
|
Restructuring |
|
|
2,501 |
|
|
|
4,323 |
|
|
|
7,719 |
|
|
|
8,279 |
|
Foreign currency impact |
|
|
1,225 |
|
|
|
— |
|
|
|
1,694 |
|
|
|
(1,171 |
) |
Fair value adjustment of warrants |
|
|
(793 |
) |
|
|
(7,066 |
) |
|
|
(3,645 |
) |
|
|
(16,952 |
) |
Fair value adjustment of hedge instruments |
|
|
(6,935 |
) |
|
|
15,065 |
|
|
|
(7,205 |
) |
|
|
15,065 |
|
Stock-based compensation expense |
|
|
5,831 |
|
|
|
10,017 |
|
|
|
14,955 |
|
|
|
18,510 |
|
Transformation costs |
|
|
323 |
|
|
|
1,746 |
|
|
|
1,450 |
|
|
|
2,597 |
|
System migration costs |
|
|
403 |
|
|
|
2,352 |
|
|
|
1,070 |
|
|
|
3,964 |
|
Tax impact of non-GAAP adjustments |
|
|
(934 |
) |
|
|
(1,751 |
) |
|
|
(2,319 |
) |
|
|
(3,143 |
) |
Adjusted net income (loss) from continuing operations |
|
|
(29,441 |
) |
|
|
(23,703 |
) |
|
|
(59,494 |
) |
|
|
(31,046 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
|
15,384 |
|
|
|
11,460 |
|
|
|
30,675 |
|
|
|
22,837 |
|
Expense (benefit from) income taxes, excluding tax impacts above |
|
|
(955 |
) |
|
|
(1,314 |
) |
|
|
(3,954 |
) |
|
|
(22,259 |
) |
Depreciation |
|
|
1,219 |
|
|
|
942 |
|
|
|
2,363 |
|
|
|
2,360 |
|
Amortization of intangible assets |
|
|
39,221 |
|
|
|
45,200 |
|
|
|
77,466 |
|
|
|
84,758 |
|
Adjusted EBITDA from continuing operations |
|
$ |
25,428 |
|
|
$ |
32,585 |
|
|
$ |
47,056 |
|
|
$ |
56,650 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP operating margin % |
|
|
(17.9 |
)% |
|
|
(78.8 |
)% |
|
|
(21.9 |
)% |
|
|
(56.6 |
)% |
Amortization of intangible assets |
|
|
27.9 |
% |
|
|
32.1 |
% |
|
|
28.1 |
% |
|
|
30.8 |
% |
Impairment of goodwill and intangible assets |
|
|
0.0 |
% |
|
|
50.1 |
% |
|
|
0.0 |
% |
|
|
25.6 |
% |
Acquisition-related costs |
|
|
0.7 |
% |
|
|
6.0 |
% |
|
|
0.8 |
% |
|
|
7.9 |
% |
Restructuring |
|
|
1.8 |
% |
|
|
3.1 |
% |
|
|
2.8 |
% |
|
|
3.0 |
% |
Stock-based compensation expense |
|
|
4.1 |
% |
|
|
7.1 |
% |
|
|
5.4 |
% |
|
|
6.7 |
% |
Transformation costs |
|
|
0.2 |
% |
|
|
1.2 |
% |
|
|
0.5 |
% |
|
|
0.9 |
% |
System migration costs |
|
|
0.3 |
% |
|
|
1.7 |
% |
|
|
0.4 |
% |
|
|
1.4 |
% |
Depreciation |
|
|
0.9 |
% |
|
|
0.7 |
% |
|
|
0.9 |
% |
|
|
0.9 |
% |
Other |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Adjusted EBITDA margin % |
|
|
18.0 |
% |
|
|
23.2 |
% |
|
|
17.0 |
% |
|
|
20.6 |
% |
SKILLSOFT CORP. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - continued (in thousands, unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
GAAP costs of revenues |
|
$ |
40,467 |
|
|
$ |
34,998 |
|
|
$ |
78,291 |
|
|
$ |
73,007 |
|
Depreciation |
|
|
(182 |
) |
|
|
(278 |
) |
|
|
(333 |
) |
|
|
(752 |
) |
Stock-based compensation |
|
|
(238 |
) |
|
|
(16 |
) |
|
|
(335 |
) |
|
|
(29 |
) |
Codecademy pro forma (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
943 |
|
Non-GAAP costs of revenues |
|
|
40,047 |
|
|
|
34,704 |
|
|
|
77,623 |
|
|
|
73,169 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP content and software development |
|
|
17,863 |
|
|
|
19,693 |
|
|
|
34,898 |
|
|
|
36,024 |
|
Depreciation |
|
|
(141 |
) |
|
|
(81 |
) |
|
|
(191 |
) |
|
|
(201 |
) |
Stock-based compensation |
|
|
(1,763 |
) |
|
|
(1,858 |
) |
|
|
(3,775 |
) |
|
|
(3,433 |
) |
System migration |
|
|
(403 |
) |
|
|
(2,352 |
) |
|
|
(1,070 |
) |
|
|
(3,964 |
) |
Codecademy pro forma (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,441 |
|
Non-GAAP content and software development |
|
|
15,556 |
|
|
|
15,402 |
|
|
|
29,862 |
|
|
|
33,867 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP selling and marketing |
|
|
40,411 |
|
|
|
41,848 |
|
|
|
86,338 |
|
|
|
81,409 |
|
Depreciation |
|
|
(412 |
) |
|
|
(181 |
) |
|
|
(679 |
) |
|
|
(453 |
) |
Stock-based compensation |
|
|
667 |
|
|
|
(1,742 |
) |
|
|
(1,014 |
) |
|
|
(3,219 |
) |
Transformation |
|
|
(106 |
) |
|
|
— |
|
|
|
(242 |
) |
|
|
— |
|
Codecademy pro forma (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,665 |
|
Non-GAAP selling and marketing |
|
|
40,560 |
|
|
|
39,925 |
|
|
|
84,403 |
|
|
|
81,402 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP general and administrative |
|
|
25,085 |
|
|
|
26,367 |
|
|
|
50,381 |
|
|
|
55,715 |
|
Depreciation |
|
|
(484 |
) |
|
|
(402 |
) |
|
|
(1,160 |
) |
|
|
(954 |
) |
Stock-based compensation |
|
|
(4,497 |
) |
|
|
(6,401 |
) |
|
|
(9,831 |
) |
|
|
(11,829 |
) |
Transformation |
|
|
(508 |
) |
|
|
(1,606 |
) |
|
|
(1,593 |
) |
|
|
(2,559 |
) |
Codecademy pro forma (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,395 |
|
Non-GAAP general and administrative |
|
|
19,596 |
|
|
|
17,958 |
|
|
|
37,797 |
|
|
|
42,768 |
|
|
|
|
|
|
|
|
|
|
||||||||
Total GAAP operating expenses |
|
|
123,826 |
|
|
|
122,906 |
|
|
|
249,908 |
|
|
|
246,155 |
|
Depreciation |
|
|
(1,219 |
) |
|
|
(942 |
) |
|
|
(2,363 |
) |
|
|
(2,360 |
) |
Stock-based compensation |
|
|
(5,831 |
) |
|
|
(10,017 |
) |
|
|
(14,955 |
) |
|
|
(18,510 |
) |
System migration |
|
|
(403 |
) |
|
|
(2,352 |
) |
|
|
(1,070 |
) |
|
|
(3,964 |
) |
Transformation (2) |
|
|
(614 |
) |
|
|
(1,606 |
) |
|
|
(1,835 |
) |
|
|
(2,559 |
) |
Codecademy pro forma (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,444 |
|
Total Non-GAAP operating expenses |
|
$ |
115,759 |
|
|
$ |
107,989 |
|
|
$ |
229,685 |
|
|
$ |
231,206 |
|
| _______________ | ||
(1) |
For the six months ended July 31, 2022, the unaudited pro forma financial information is presented in accordance with Regulation S-X, Article 11 to enhance comparability for all periods by including operating results for Codecademy as if the merger had closed on February 1, 2022. |
|
(2) |
This line item does not agree to the amounts reflected on preceding table due to certain transformation expenses not being reflected in GAAP operating expenses. |
|
SKILLSOFT CORP. PRO FORMA REVENUE (in thousands) |
||||||||||||||||
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue, as reported |
|
$ |
141,187 |
|
|
$ |
140,574 |
|
|
$ |
276,741 |
|
|
$ |
275,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pro forma adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue from acquisitions (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,058 |
|
Pro forma revenue (2) |
|
$ |
141,187 |
|
|
$ |
140,574 |
|
|
$ |
276,741 |
|
|
$ |
283,471 |
|
| _______________ | ||
(1) |
|
Revenue from acquisitions for the six months ended July 31, 2022 only includes Codecademy's revenue for the period from February 1, 2022 to April 4, 2022 as its post-acquisition revenue is included in the GAAP revenue. |
(2) |
|
Pro forma revenue is presented in Note 3 "Business Combinations" of the Notes to Unaudited Condensed Consolidated Financial Statements included in our Form 10-Q to be filed with the SEC for the quarterly period ended July 31, 2023 in accordance with Regulation S-X, Article 11. |
SKILLSOFT CORP. PRO FORMA ADJUSTED NET INCOME (LOSS) (in thousands) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted net income (loss) from continuing operations (1) |
|
$ |
(29,441 |
) |
|
$ |
(23,703 |
) |
|
$ |
(59,494 |
) |
|
$ |
(31,046 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Pro forma adjustments |
|
|
|
|
|
|
|
|
||||||||
Adjusted net income (loss) from acquisitions (2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,156 |
) |
Pro forma adjusted net income (loss) |
|
$ |
(29,441 |
) |
|
$ |
(23,703 |
) |
|
$ |
(59,494 |
) |
|
$ |
(35,202 |
) |
Pro forma adjusted net income (loss) per share |
|
$ |
(0.18 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.23 |
) |
| _______________ | ||
(1) |
|
See RECONCILIATION OF NON-GAAP FINANCIAL MEASURES within this press release for more details. |
(2) |
|
Adjusted net income (loss) from acquisitions for the six months ended July 31, 2022 only includes Codecademy's adjusted net income (loss) for the period from February 1, 2022 to April 4, 2022 as its post-acquisition adjusted net income (loss) is included in the adjusted net income (loss) from continuing operations. |
SKILLSOFT CORP. PRO FORMA ADJUSTED EBITDA (in thousands) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Pro forma adjusted EBITDA |
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA from continuing operations (1) |
|
$ |
25,428 |
|
|
$ |
32,585 |
|
|
$ |
47,056 |
|
|
$ |
56,650 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pro forma adjustments: |
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA from acquisitions (2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,385 |
) |
Pro forma adjusted EBITDA |
|
$ |
25,428 |
|
|
$ |
32,585 |
|
|
$ |
47,056 |
|
|
$ |
52,265 |
|
Pro forma adjusted EBITDA % of pro forma revenue |
|
|
18 |
% |
|
|
23 |
% |
|
|
17 |
% |
|
|
17 |
% |
| _______________ | ||
(1) |
|
See RECONCILIATION OF NON-GAAP FINANCIAL MEASURES within this press release for more details. |
(2) |
|
Adjusted EBITDA from acquisitions for the six months ended July 31, 2022 includes Codecademy's adjusted EBITDA for the period from February 1, 2022 to April 4, 2022 as its post-acquisition adjusted EBITDA is included in the adjusted EBITDA from continuing operations. |
SKILLSOFT CORP. FREE CASH FLOW RECONCILIATION (in thousands) |
||||||||
|
|
|
||||||
|
|
Six Months Ended July 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
Free cash flow reconciliation |
|
|
|
|
||||
Net cash provided by (used in) operating activities |
|
$ |
1,985 |
|
|
$ |
(13,003 |
) |
Purchase of property and equipment |
|
|
(3,406 |
) |
|
|
(3,528 |
) |
Internally developed software - capitalized costs |
|
|
(5,951 |
) |
|
|
(5,721 |
) |
Total free cash flow |
|
$ |
(7,372 |
) |
|
$ |
(22,252 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230911255888/en/
Investors and Media
Chad W. Lyne
SVP, Strategic Finance & Investor Relations Officer
chad.lyne@skillsoft.com
Source: Skillsoft Corp.
