Skillsoft Reports Strong Financial Results for the Fourth Quarter and Fiscal Year of 2022

Rhea-AI Summary

Skillsoft Corp. (NYSE: SKIL) reported a 7% growth in bookings for fiscal year 2022, exceeding previous guidance. The company posted a GAAP revenue of $665 million despite a net loss of $113 million. The fourth quarter showed a 5% increase in bookings, with GAAP revenue at $166 million and adjusted EBITDA rising 24% to $36 million. Looking ahead, Skillsoft expects adjusted revenue between $765 million and $790 million and bookings of up to $825 million for fiscal 2023, signaling strong growth expectations.

Positive

• Bookings growth of 7% exceeding guidance.
• Fourth quarter GAAP revenue increased to $166 million.
• Adjusted revenue for fiscal 2022 reached $698 million, up 1%.
• Adjusted EBITDA rose by 2% to $167 million.

Negative

• GAAP net loss of $113 million for fiscal 2022.
• Decline in Skillport bookings by 44% for Q4.

Bookings Growth of 7% for the Fiscal Year

Provides Fiscal 2023 Guidance Reflecting Solid Bookings and Accelerating Revenue Growth

Closes Codecademy Acquisition which is Expected to Accelerate Growth in Tech & Dev Business

BOSTON--(BUSINESS WIRE)-- Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a global leader in corporate digital learning, today announced its financial results for the fourth quarter and full year of fiscal 2022 ended January 31, 2022. The Company also provided fiscal 2023 guidance.

“We had a great finish to a monumental year for the new Skillsoft, helping us deliver full year bookings growth of 7%, exceeding guidance and putting the Company on a solid growth trajectory,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “We exited the year with strong momentum, which we believe positions us well to deliver solid bookings, accelerated revenue growth, and industry-leading profitability in fiscal 2023.”

Mr. Tarr added, “Since returning Skillsoft to the public market in June, we moved extremely fast in setting the Company up for success as we recapitalized our balance sheet, assembled a world-class management team and board of directors, closed three acquisitions, made foundational growth investments, and delivered strong fiscal 2022 results. I want to thank our entire team for their tireless efforts during a period of tremendous change as we formed the new Skillsoft and positioned the Company to extend our lead in corporate digital learning.”

Fiscal 2022 Fourth Quarter Financial Highlights¹

• Grew bookings 5%;
• Delivered GAAP revenue of $166 million and GAAP net income of $8 million;
• Grew adjusted revenue 2% to $176 million with adjusted EBITDA of $36 million, up 24% compared to the prior year;² and
• Delivered combined Percipio and dual deployment dollar retention rate of 103%.

Fiscal 2022 Full Year Financial Highlights¹

• Grew bookings 7%;
• Delivered GAAP revenue of $665 million and GAAP net loss of $113 million;
• Returned to adjusted revenue growth of 1% to $698 million with adjusted EBITDA of $167 million, up 2% compared to the prior year;² and
• Delivered combined Percipio and dual deployment dollar retention rate of 104%.

		Outlook
Bookings		$790 million to $825 million
Adjusted Revenue		$765 million to $790 million
Adjusted EBITDA		Approximately $167 million

• We expect Fiscal 2024 adjusted EBITDA growth of at least low double digits.

Key Operational Metrics and Non-GAAP Financial Measures

Bookings

The following table sets forth unaudited bookings for the three and twelve months ended January 31, 2022 and 2021 as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31:

		Three Months						Twelve Months
(In thousands)		Ended January 31,			Change			Ended January 31,			Change
		2022	2021		$	%		2022	2021		$	%
Content and Global Knowledge
Percipio		$55,802	$32,207		$23,595	73%		$106,078	$63,852		$42,226	66%
Dual Deployment and Coaching		89,207	97,897		(8,690)	-9%		184,563	173,654		10,909	6%
Skillport		14,957	26,764		(11,807)	-44%		39,275	80,719		(41,444)	-51%
Total Subscription		$159,966	$156,868		$3,098	2%		$329,916	$318,225		$11,691	4%
Services and One-Time Orders		7,871	6,859		1,012	15%		18,779	16,189		2,590	16%
Total Content		$167,837	$163,727		4,110	3%		$348,695	$334,414		14,280	4%
Global Knowledge		59,533	53,090		6,443	12%		250,020	214,316		35,704	17%
Total Content & Global Knowledge		$227,370	$216,817		$10,553	5%		$598,715	$548,730		$49,984	9%
SumTotal
Subscription		$33,317	$32,765		$552	2%		$97,869	$101,051		($3,182)	-3%
Services and One-Time Orders		7,590	6,822		768	11%		24,814	22,698		2,116	9%
Total SumTotal		$40,907	$39,587		$1,320	3%		$122,683	$123,749		($1,066)	-1%
Total		$268,277	$256,404		$11,873	5%		$721,398	$672,479		$48,918	7%

Dollar Retention Rate

The following table sets forth dollar retention rates (“DRR”) for the last twelve month (“LTM”) period ended January 31, 2022 and for the three month periods ended January 31, 2022 and 2021 as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31:

		January 31
		LTM	2022	2021
Percipio		99%	99%	102%
Dual Deployment		106%	105%	100%
Percipio + Dual Deployment		104%	103%	101%
Skillport		67%	66%	74%
Total Content Business		97%	98%	94%
SumTotal Business		99%	102%	93%

Capital Structure

The following table sets forth Skillsoft’s cash and cash equivalents and long-term debt as of January 31, 2022:

(In thousands)	January 31, 2022
Assets
Cash and Equivalents	$154,672
Liabilities
Long-Term Debt	$466,985
(includes current portion and consists of $478,800 of outstanding principal less unamortized issuance costs and original issue discount)

Weighted average shares outstanding during the period from October 31, 2021 to January 31, 2022 were 133.2 million.

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.

Annual Meeting Date

The Board of Directors of Skillsoft has established Thursday, June 23, 2022 as the date of the Company’s 2022 Annual Meeting of Stockholders. The 2022 Annual Meeting will be held virtually by means of remote communication. The details of the virtual annual meeting, including how stockholders can log into the virtual meeting, vote and submit questions, will be disclosed in the Company’s definitive proxy statement for the 2022 Annual Meeting to be filed with the Securities and Exchange Commission.

Any stockholder seeking to bring business before the 2022 Annual Meeting or to nominate a director must provide timely notice, as set forth in the Company’s Amended and Restated Bylaws. Specifically, written notice of any proposed business or nomination must be delivered to the Company’s Secretary no later than the close of business on April 16th which is the tenth day following this public announcement of the date of the 2022 Annual Meeting). Any notice of proposed business or nomination must comply with the specific requirements set forth in the Amended and Restated Bylaws.

About Skillsoft

Skillsoft (NYSE: SKIL) is a global leader in corporate digital learning, focused on transforming today’s workforce for tomorrow’s economy. The Company provides enterprise learning solutions designed to prepare organizations for the future of work, overcome critical skill gaps, drive demonstrable behavior-change, and unlock the potential in their people. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, including one of the broadest and deepest libraries of leadership & business skills, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered through Percipio, its award-winning, AI-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective. Learn more at www.skillsoft.com.

NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE METRICS

We track several 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 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.

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. These forward-looking statements include information about possible or assumed future results of our operations. 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, adjusted revenue, and adjusted EBITDA), our product development and planning, our pipeline, future capital expenditures, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services and competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, 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,” “projects,” “forecasts,” “seeks,” “outlook,” “target,” “goals,” “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. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.

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:

• our ability to realize the benefits expected from the business combination between Skillsoft, Churchill Capital Corp. II, and Global Knowledge, and other recent transactions, including our acquisitions of Pluma and Codecademy;
• the impact of U.S. and worldwide economic trends, financial market conditions, geopolitical events, natural disasters, climate change, public health crises, the ongoing COVID-19 pandemic (including any variant), political crises, or other catastrophic events on our business, liquidity, financial condition and results of operations;
• our ability to attract and retain key employees and qualified technical and sales personnel;
• 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;
• fluctuations in our future operating results;
• our ability to successfully identify, consummate, and achieve strategic objectives in connection with our acquisition opportunities and realize the benefits expected from the acquisition;
• the demand for, and acceptance of, our products and for cloud-based technology learning solutions in general;
• our ability to compete successfully in competitive markets and changes in the competitive environment in our industry and the markets in which we operate;
• our ability to market existing products and develop new products;
• 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;
• future regulatory, judicial, and legislative changes in our industry;
• our ability to comply with laws and regulations applicable to our business;
• 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;
• our ability to raise additional capital;
• 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 the Company’s S-1 amendment filed on July 29, 2021 and subsequent filings with the SEC including our Form 10-K to be filed with the SEC for the fiscal year ended January 31, 2022.

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.

Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless required by applicable law. With regard to these risks, uncertainties, and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.

^[1] Growth calculated compared to the prior year as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31, 2021.

^[2] Signifies non-GAAP measures. See “Non-GAAP Financial Measures and Key Performance Metrics” in this release.

^[3] See “Non-GAAP Financial Measures and Key Performance Metrics.” The Company is unable to reconcile forward-looking non-GAAP measures without unreasonable efforts.

SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
		Successor				Predecessor (SLH)
		January 31, 2022				January 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	154,672			$	71,479
Restricted cash			14,251				2,964
Accounts receivable, less reserves of approximately $173 and $294 as of January 31, 2022 and January 31, 2021 respectively			212,463				179,784
Prepaid expenses and other current assets			45,837				30,326
Total current assets			427,223				284,553
Property and equipment, net			18,084				13,780
Goodwill			871,504				495,004
Intangible assets, net			869,487				728,633
Right of use assets			19,925				15,131
Deferred tax asset			976				—
Other assets			15,725				8,636
Total assets		$	2,222,924			$	1,545,737
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt		$	4,800			$	5,200
Borrowings under accounts receivable facility			74,629				17,022
Accounts payable			25,661				7,425
Accrued compensation			51,115				36,375
Accrued expenses and other current liabilities			51,017				23,125
Lease liabilities			6,895				4,740
Deferred revenue			331,605				257,549
Total current liabilities			545,722				351,436
Long-term debt			462,185				510,236
Warrant liabilities			28,199				900
Deferred tax liabilities			100,887				81,008
Long term lease liabilities			13,355				13,155
Deferred revenue - non-current			1,248				3,035
Other long-term liabilities			11,430				5,998
Total long-term liabilities			617,304				614,332
Commitments and contingencies			—				—
Shareholders’ equity:
(Predecessor SLH) Shareholders’ common stock- Class A and Class B common shares, $0.01 par value: 1,000,000,000 shares authorized (800,000,000 Class A, 200,000,000 Class B) at January 31, 2021; 4,000,000 shares issued and outstanding (3,840,000 Class A, 160,000 Class B) at January 31, 2021			—				40
(Successor) Shareholders’ common stock- Class A common shares, $0.0001 par value: 375,000,000 shares authorized and 133,258,027 shares issued and outstanding at January 31, 2022			11				—
Additional paid-in capital			1,306,146				674,333
Accumulated deficit			(247,229)				(93,722)
Accumulated other comprehensive income (loss)			970				(682)
Total shareholders’ equity			1,059,898				579,969
Total liabilities and shareholders’ equity		$	2,222,924			$	1,545,737

SKILLSOFT CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
		Successor				Predecessor (SLH)
		Three Months				Three Months
		Ended				Ended
		January 31, 2022				January 31, 2021
Revenues:
Total revenues		$	166,182			$	71,795
Operating expenses:
Costs of revenues			49,517				25,016
Content and software development			20,366				19,109
Selling and marketing			43,939				37,092
General and administrative			26,810				11,561
Amortization of intangible assets			38,836				23,934
Recapitalization and acquisition-related costs			6,512				7,703
Restructuring			2,602				4,261
Total operating expenses			188,582				128,676
Operating loss			(22,400)				(56,881)
Other expense, net			(542)				(165)
Fair value adjustment of warrants			37,164				—
Interest income			64				15
Interest expense			(7,001)				(12,041)
Income (loss) before benefit from income taxes			7,285				(69,072)
Benefit from income taxes			(617)				(14,064)
Net income (loss)			7,902				(55,008)
Income (loss) per share:
Class A and B – Basic and Diluted (Predecessor (SLH))			*				(13.75)
Ordinary – Basic and Diluted (Successor)			0.06				*
Weighted average common share outstanding:
Class A and B – Basic and Diluted (Predecessor (SLH))			*				4,000
Ordinary – Basic and Diluted (Successor)			133,216				*

SKILLSOFT CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
		Fiscal 2022							Fiscal 2021							Fiscal 2020
		Successor				Predecessor (SLH)			Predecessor (SLH)				Predecessor (PL)			Predecessor (PL)
		From				From			From				From
		June 12, 2021 to				February 1, 2021			August 28, 2020				February 1, 2020			Fiscal year ended
		January 31, 2022				to June 11, 2021			to January 31, 2021				to August 27, 2020			January 31, 2020
Revenues:
Total revenues		$	427,754			$	139,636		$	108,768			$	273,851		$	514,021
Operating expenses:
Costs of revenues			126,414				35,881			40,898				52,160			96,044
Content and software development			46,682				24,084			30,028				38,986			67,951
Selling and marketing			106,110				41,940			55,285				75,028			140,785
General and administrative			72,004				17,217			21,636				37,455			57,356
Amortization of intangible assets			95,922				50,902			39,824				34,378			96,359
Impairment of intangible assets			—				—			—				332,376			440,598
Recapitalization and acquisition-related costs			20,194				6,938			15,928				32,099			16,244
Restructuring			3,696				(703)			4,341				1,179			1,900
Total operating expenses			471,022				176,259			207,940				603,661			917,237
Operating loss			(43,268)				(36,623)			(99,172)				(329,810)			(403,216)
Other (expense) income, net			(1,850)				(493)			552				1,268			(5,120)
Fair value adjustment of warrants			17,441				900			2,900				—			—
Interest income			94				64			24				105			306
Interest expense			(24,366)				(16,820)			(19,960)				(168,341)			(429,963)
Reorganization items, net			—				—			—				3,329,245			—
(Loss) income before (benefit from) provision for income taxes			(51,949)				(52,972)			(115,656)				2,832,467			(837,993)
(Benefit from) provision for income taxes			(5,143)				(3,708)			(21,934)				68,455			11,212
Net (loss) income		$	(46,806)			$	(49,264)		$	(93,722)			$	2,764,012		$	(849,205)
Net loss per share class (Predecessor (SLH) only)
Net loss for Class A						$	(47,293)		$	(89,973)
Loss on modifications of terms of participation rights held by Class B shareholders and warrants							—			(5,900)
Net loss attributable to Class A						$	(47,293)		$	(95,873)
Net loss for Class B						$	(1,971)		$	(3,749)
Gain on modifications of terms of participation rights held by Class B shareholders and warrants							—			5,900
Net income attributable to Class B						$	(1,971)		$	2,151
(Loss) income per share:
Ordinary – Basic and Diluted (PL)			*				*			*			$	27,612.51		$	(8,483.57)
Class A – Basic and Diluted (SLH)			*			$	(12.32)		$	(24.97)				*			*
Class B – Basic and Diluted (SLH)			*			$	(12.32)		$	13.44				*			*
Ordinary – Basic and Diluted (Successor)		$	(0.35)				*			*				*			*
Weighted average common share outstanding:
Ordinary – Basic and Diluted (PL)			*				*			*				100.1			100.1
Class A – Basic and Diluted (SLH)			*				3,840			3,840				*			*
Class B– Basic and Diluted (SLH)			*				160			160				*			*
Ordinary – Basic and Diluted (Successor)			133,143				*			*				*			*

SKILLSOFT CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
		Fiscal 2022							Fiscal 2021							Fiscal 2020
		Successor				Predecessor (SLH)			Predecessor (SLH)				Predecessor (PL)			Predecessor (PL)
		June 12, 2021				February 1, 2021			August 28, 2020				February 1, 2020
		through				through			through				through			Fiscal year ended
		January 31, 2022				June 11, 2021			January 31, 2021				August 27, 2020			January 31, 2020
Cash flows from operating activities:
Net (loss) income		$	(46,806)			$	(49,264)		$	(93,722)			$	2,764,012		$	(849,205)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Share-based compensation			14,664				—			—				—			83
Depreciation and amortization			6,556				3,572			3,604				5,864			9,716
Amortization of intangible assets			95,922				50,902			39,824				34,378			96,359
Change in bad debt reserve			(912)				(174)			294				24			(42)
(Benefit from) provision for income taxes – non-cash			14,378				(5,886)			(23,140)				66,234			5,759
Non-cash interest expense			817				487			671				2,407			5,687
Impairment of intangible assets			—				—			—				332,376			440,598
Fair value adjustment to warrants			(17,441)				(900)			(2,900)				—			—
Right-of-use asset			6,159				748			2,690				1,594			—
Impairment of note receivable from related parties			—				—			—				—			5,367
Unrealized loss on derivative instrument			—				—			—				—			4,062
Non-cash reorganization items, net			—				—			—				(3,353,326)			—
Changes in current assets and liabilities, net of effects from acquisitions:
Accounts receivable			(85,397)				88,622			(103,385)				116,478			23,678
Prepaid expenses and other current assets			(18,497)				1,828			(6,394)				66			(2,547)
Accounts payable			4,245				(4,866)			(31)				(7,909)			(6,581)
Accrued expenses, including long-term			785				(18,592)			21,327				145,816			250,798
Lease liability			(7,736)				(1,301)			(3,272)				(2,332)			—
Deferred revenue			61,487				(31,365)			172,614				(101,765)			(21,145)
Net cash provided by (used in) operating activities			28,224				33,811			8,180				3,917			(37,413)
Cash flows from investing activities:
Purchase of property and equipment			(6,286)				(641)			(2,326)				(3,105)			(10,353)
Internally developed software - capitalized costs			(3,712)				(2,350)			(2,126)				(3,819)			(7,047)
Acquisition of Global Knowledge, net of cash received			(156,926)				—			—				—			—
Acquisition of Skillsoft, net of cash received			(386,035)				—			—				—			—
Acquisition of Pluma, net of cash received			(18,646)				—			—				—			—
Net cash used in investing activities			(571,605)				(2,991)			(4,452)				(6,924)			(17,400)
Cash flows from financing activities:
Borrowings under revolving line of credit, net of repayments			—				—			—				19,500			55,400
Borrowings under DIP Facility			—				—			—				60,000			—
Proceeds from Exit Facility borrowing			—				—			—				50,000			—
Debt issuance costs associated with DIP and Exit facilities			—				—			—				(19,524)			—
Shares repurchased for tax withholding upon vesting of restricted stock-based awarded			(1,417)				—			—				—			—
Proceeds from equity investment (PIPE)			530,000				—			—				—			—
Proceeds from issuance of term loans, net of fees			467,399				—			—				—			—
Principal payments on capital lease obligation			(994)				(370)			(414)				(532)			(756)
Proceeds from accounts receivable facility, net of borrowings			40,352				16,577			(32,049)				(35,787)			9,798
Principal payments on Term loans			(1,200)				—			—				—			—
Repayment of First and Second Out loans			(608,700)				(1,300)			—				—			(6,641)
Net cash provided by (used in) financing activities			425,440				14,907			(32,463)				73,657			57,801
Effect of exchange rate changes on cash and cash equivalents			(1,619)				203			863				(2,139)			348
Net (decrease) increase in cash, cash equivalents and restricted cash			(119,560)				45,930			(27,872)				68,511			3,336
Cash, cash equivalents and restricted cash, beginning of period			288,483				74,443			102,315				33,804			30,468
Cash, cash equivalents and restricted cash, end of period		$	168,923			$	120,373		$	74,443			$	102,315		$	33,804
Supplemental disclosure of cash flow information:
Cash and cash equivalents		$	154,672			$	117,299		$	71,479			$	92,009		$	18,799
Restricted cash			14,251				3,074			2,964				10,306			15,005
Cash, cash equivalents and restricted cash, end of period		$	168,923			$	120,373		$	74,443			$	102,315		$	33,804

We use key performance metrics to help us evaluate our performance and make strategic decisions. Additionally, we believe these metrics are useful as a supplement to investors in evaluating the Company’s ongoing operational performance and trends. These key performance metrics are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled metrics presented by other companies.

Annualized Recurring Revenue (“ARR”)

ARR represents the annualized recurring value of all active subscription contracts at the end of a reporting period. We believe ARR is useful for assessing the performance of our recurring subscription revenue base and identifying trends affecting our business.

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.

Bookings

Bookings in any particular period represents 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.

SKILLSOFT CORP.
KEY OPERATING METRICS
Bookings
		Three Months						Twelve Months
(In thousands)		Ended January 31,			Change			Ended January 31,			Change
		2022	2021		$	%		2022	2021		$	%
Content and Global Knowledge
Percipio		$55,802	$32,207		$23,595	73%		$106,078	$63,852		$42,226	66%
Dual Deployment and Coaching		89,207	97,897		(8,690)	-9%		184,563	173,654		10,909	6%
Skillport		14,957	26,764		(11,807)	-44%		39,275	80,719		(41,444)	-51%
Total Subscription		$159,966	$156,868		$3,098	2%		$329,916	$318,225		$11,691	4%
Services and One-Time Orders		7,871	6,859		1,012	15%		18,779	16,189		2,590	16%
Total Content		$167,837	$163,727		4,110	3%		$348,695	$334,414		14,280	4%
Global Knowledge		59,533	53,090		6,443	12%		250,020	214,316		35,704	17%
Total Content & Global Knowledge		$227,370	$216,817		$10,553	5%		$598,715	$548,730		$49,984	9%
SumTotal
Subscription		$33,317	$32,765		$552	2%		$97,869	$101,051		($3,182)	-3%
Services and One-Time Orders		7,590	6,822		768	11%		24,814	22,698		2,116	9%
Total SumTotal		$40,907	$39,587		$1,320	3%		$122,683	$123,749		($1,066)	-1%
Total		$268,277	$256,404		$11,873	5%		$721,398	$672,479		$48,918	7%

Annualized Recurring Revenue
		January 31,		January 31,
(In thousands)		2022		2021
CONTENT AND GLOBAL KNOWLEDGE ARR
Percipio ARR		$        109,169		$          75,802
Dual Deployment ARR		176,787		161,327
Skillport ARR		34,869		80,245
Total Content ARR		320,825		317,374
Global Knowledge ARR		13,027		10,504
Total Content & Global Knowledge ARR		333,852		327,878
SUMTOTAL ARR
SumTotal ARR		97,476		99,148
Total ARR		$        431,328		$        427,026

Dollar Retention Rate
		January 31
		LTM	2022	2021
Percipio		99%	99%	102%
Dual Deployment		106%	105%	100%
Percipio + Dual Deployment		104%	103%	101%
Skillport		67%	66%	74%
Total Content Business		97%	98%	94%
SumTotal Business		99%	102%	93%

Non-GAAP Financial Measures – Adjusted Revenue
	$000s		Skillsoft and Global Knowledge Combined
			Three Months Ended January 31,				Twelve Months Ended January 31,
			2022		2021		2022		2021
	Consolidated
	Adjusted subscription revenue		$ 104,837		$ 107,369		$ 416,652		$ 430,423
	Adjusted non-subscription revenue		11,437		11,721		43,962		43,881
	Adjusted Global Knowledge revenue		60,219		54,576		237,484		216,631
	Total Consolidated adjusted revenue		176,493		173,666		698,098		690,935
	Content Business
	Adjusted subscription revenue		81,607		82,896		323,700		329,471
	Adjusted non-subscription revenue		4,708		5,031		17,369		16,650
	Total Content Business adjusted revenue		86,315		87,928		341,069	#	346,121
	Global Knowledge Business
	Virtual and on-demand		47,229		41,556		193,508		150,674
	Classroom and all other		12,990		13,021		43,975		65,957
	Total Global Knowledge adjusted revenue		60,219		54,576		237,484		216,631
	SumTotal Business
	Adjusted subscription revenue		23,230		24,472		92,952		100,951
	Adjusted non-subscription revenue		6,729		6,690		26,593		27,232
	Total SumTotal adjusted revenue		$ 29,959		$ 31,162		$ 119,545		$ 128,183
	The table above reflects a product level view of revenue whereas in prior quarters we showed revenue based on the contracting business unit, which is slightly different due to cross selling.

SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
		For the Three Months Ended January 31, 2022
						Non-GAAP Revenue Adjustments (1)
		Skillsoft Corp.
									Combined
Revenues:
Total revenues		$	166,182			$	10,311		$	176,493
Operating expenses
Cost of revenues			49,517				10,311			59,828
Content and software development			20,366							20,366
Selling and marketing			43,939							43,939
General and administrative			26,810							26,810
Amortization of intangible assets			38,836							38,836
Recapitalization and acquisition-related costs			6,512							6,512
Restructuring			2,602							2,602
Total operating expenses			188,582				10,311			198,893
Operating loss:		$	(22,400	)		$	-		$	(22,400	)
Other income (expense), net			(542	)						(542	)
Fair value adjustment of warrants			37,164							37,164
Interest income			64							64
Interest expense			(7,001	)						(7,001	)
Income before benefit from income taxes			7,285				-			7,285
Benefit from income taxes			(617	)						(617	)
Net income		$	7,902			$	-		$	7,902
EBITDA Computation
Interest expense, net		$	6,937						$	6,937
Benefit from income taxes			(617	)						(617	)
Depreciation and amortization			41,082							41,082
EBITDA			55,304				-			55,304
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs			2,004							2,004
Plus: Recapitalization and acquisition-related costs			6,512							6,512
Plus: Restructuring and contract terminations			2,602							2,602
Plus: Integration and migration related			680							680
Plus: Warrant fair value adjustment and foreign currency			(35,799	)						(35,799	)
Plus: Stock-based compensation expense			5,630							5,630
Plus: Other add backs			(735	)						(735	)
Adjusted EBITDA		$	36,198			$	-		$	36,198

(1) Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
		For the Three Months Ended January 31, 2021
										Non-GAAP Revenue Adjustments (1)
		Predecessor (SLH)				Global Knowledge
														Combined
Revenues:
Total revenues		$	71,795			$	47,248			$	54,623			$	173,666
Operating expenses
Cost of revenues			25,016				23,980				7,329				56,325
Content and software development			19,109				606								19,715
Selling and marketing			37,092				10,901								47,993
General and administrative			11,561				9,952								21,513
Amortization of intangible assets			23,934				1,803								25,737
Recapitalization and transaction-related costs			7,703				-								7,703
Restructuring			4,261				1,537								5,798
Total operating expenses			128,676				48,779				7,329				184,784
Operating loss:		$	(56,881	)		$	(1,531	)		$	47,294			$	(11,118	)
Other income, net			(165	)			(1,699	)							(1,864	)
Interest income			15				-								15
Interest expense			(12,041	)			(11,685	)							(23,726	)
Loss before (benefit from) provision for income taxes			(69,072	)			(14,915	)			47,294				(36,693	)
(Benefit from) provision for income taxes			(14,064	)			919								(13,145	)
Net loss		$	(55,008	)		$	(15,834	)		$	47,294			$	(23,548	)
EBITDA Computation
Interest expense, net		$	12,026			$	11,685							$	23,711
(Benefit from) provision for income taxes			(14,064	)			919								(13,145	)
Depreciation and amortization			26,029				3,017								29,046
EBITDA			(31,017	)			(213	)			47,294				16,064
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs			(943	)			91								(852	)
Plus: Recapitalization and transaction-related costs			7,703				719								8,422
Plus: Restructuring and contract terminations			4,261				1,064								5,325
Plus: Integration and migration related			(1,941	)			383								(1,558	)
Plus: Foreign currency and other non-cash expense			57				676								733
Plus: Impact of fresh-start and purchase accounting			44,637				-				(47,294	)			(2,657	)
Plus: Stock-based compensation expense			-				-								-
Plus: Other add backs			2,338				1,369								3,707
Adjusted EBITDA		$	25,095			$	4,089			$	-			$	29,184

(1) Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
		For the Twelve Months Ended January 31, 2022
		For the Period from 2/1/21 to 6/11/21				For the Period from 2/1/21 to 6/11/21				For the Period from 6/12/21 to 1/31/22				Non-GAAP Revenue Adjustments(2)
		Global Knowledge				Skillsoft				Skillsoft Corp.(1)								Combined
Revenues:
Total revenues		$	71,932			$	139,636			$	427,754			$	58,776			$	698,098
Operating expenses
Cost of revenues			34,698				35,881				126,414				32,967				229,960
Content and software development			492				24,084				46,682								71,258
Selling and marketing			16,404				41,940				106,110								164,454
General and administrative			19,765				17,217				72,004								108,986
Amortization of intangible assets			2,646				50,902				95,922								149,470
Recapitalization and acquisition-related costs			-				6,938				20,194								27,132
Restructuring			2,764				(703	)			3,696								5,757
Total operating expenses			76,769				176,259				471,022				32,967				757,017
Operating loss:		$	(4,837	)		$	(36,623	)		$	(43,268	)		$	25,809			$	(58,919	)
Other income (expense), net			624				407				(1,850	)							(819	)
Fair value adjustment of warrants			-				-				17,441								17,441
Interest income			-				64				94								158
Interest expense			(11,970	)			(16,820	)			(24,366	)							(53,156	)
Reorganization items, net			-				-				-								-
Loss before provision for (benefit from) income taxes			(16,183	)			(52,972	)			(51,949	)			25,809				(95,295	)
Provision for (benefit from) income taxes			359				(3,708	)			(5,143	)							(8,492	)
Net loss		$	(16,542	)		$	(49,264	)		$	(46,806	)		$	25,809			$	(86,803	)
EBITDA Computation
Interest expense, net		$	11,970			$	16,756			$	24,272							$	52,998
Provision for (benefit from) income taxes			359				(3,708	)			(5,143	)							(8,492	)
Depreciation and amortization			4,119				54,474				102,478								161,071
EBITDA			(94	)			18,258				74,801				25,809				118,774
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs			28				1,153				5,911								7,092
Plus: Recapitalization and acquisition-related costs			8,862				6,938				20,194								35,994
Plus: Restructuring and contract terminations			2,884				(703	)			3,696								5,877
Plus: Integration and migration related			-				1,160				2,063								3,223
Plus: Warrant fair value adjustment and foreign currency			377				134				(15,085	)							(14,574	)
Plus: Impact of fresh-start and purchase accounting			-				23,395				-				(25,809	)			(2,414	)
Plus: Stock-based compensation expense			-				-				14,664								14,664
Plus: Other add backs			(1,119	)			(300	)			(538	)							(1,957	)
Adjusted EBITDA		$	10,938			$	50,035			$	105,706			$	-			$	166,679

(1) GAAP results of Skillsoft Corp. include Global Knowledge subsequent to June 11, 2021.
									(2) Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
		For the Twelve Months Ended January 31, 2021
		For the Period from 2/1/20 to 1/31/21		For the Period from 2/1/20 to 8/27/20		For the Period from 8/28/20 to 1/31/21		Non-GAAP Revenue Adjustments (1)
		Global Knowledge		Predecessor (PL)		Predecessor (SLH)
										Combined
Revenues:
Total revenues		$ 189,440		$ 273,851		$ 108,768		$ 118,876		$ 690,935
Operating expenses
Cost of revenues		102,507		52,160		40,898		28,991		224,556
Content and software development		2,357		38,986		30,028		200		71,571
Selling and marketing		41,797		75,028		55,285		700		172,810
General and administrative		34,138		37,455		21,636				93,229
Amortization of intangible assets		15,052		34,378		39,824				89,254
Impairment of intangible assets		59,553		332,376		-				391,929
Recapitalization and acquisition-related costs		-		32,099		15,928				48,027
Restructuring		7,910		1,179		4,341				13,430
Total operating expenses		263,314		603,661		207,940		29,891		1,104,806
Operating loss:		$ (73,874)		$ (329,810)		$ (99,172)		$ 88,985		$ (413,871)
Other expense (income), net		(1,855)		1,268		3,452				2,865
Interest income				105		24				129
Interest expense		(32,678)		(168,341)		(19,960)				(220,979)
Reorganization items, net		-		3,329,245		-				3,329,245
Loss before provision for (benefit from) income taxes		(108,407)		2,832,467		(115,656)		88,985		2,697,389
Provision for (benefit from) income taxes		186		68,455		(21,934)		-		46,707
Net loss		$ (108,593)		$ 2,764,012		$ (93,722)		$ 88,985		$ 2,650,682
EBITDA Computation
Interest expense, net		$ 32,678		$ 168,236		$ 19,936				$ 220,850
Provision for (benefit from) income taxes		186		68,455		(21,934)				46,707
Depreciation and amortization		21,097		41,751		41,919				104,767
Impairment of goodwill and intangible assets		59,553		332,376		-				391,929
EBITDA		4,921		3,374,830		(53,801)		88,985		3,414,935
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs		2,122		11,034		2,089				15,245
Plus: Recapitalization and acquisition-related costs		4,094		31,363		16,664				52,121
Plus: Restructuring and contract terminations		5,400		1,181		4,339				10,920
Plus: Integration and migration related		391		3,379		(976)				2,794
Plus: Foreign currency and other non-cash expense		647		(1,119)		(3,099)				(3,571)
Plus: Impact of fresh-start and purchase accounting		-		(3,329,245)		86,079		(88,986)		(3,332,152)
Plus: Stock-based compensation expense		-		-		-				-
Plus: Other add backs		1,540		(33)		2,028				3,535
Adjusted EBITDA		$ 19,115		$ 91,390		$ 53,323		$ (1)		$ 163,827

(1) Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220406005930/en/

Investors

Eric Boyer

Senior Vice President, Investor Relations

eric.boyer@skillsoft.com

Media

Nancy Coleman

Senior Vice President, Corporate Communications

nancy.coleman@skillsoft.com

Source: Skillsoft Corp.

FAQ

What were Skillsoft's bookings results for fiscal 2022?

Skillsoft reported a bookings growth of 7%, reaching a total of $721 million.

What is Skillsoft's revenue guidance for fiscal 2023?

Skillsoft expects adjusted revenue for fiscal 2023 to be between $765 million and $790 million.

How did Skillsoft perform in the fourth quarter of fiscal 2022?

In Q4, Skillsoft achieved a GAAP revenue of $166 million and a net income of $8 million.

What is the adjusted EBITDA for Skillsoft in fiscal 2022?

Skillsoft's adjusted EBITDA for fiscal 2022 was $167 million, marking a 2% increase.

What does Skillsoft's financial outlook look like for fiscal 2024?

Skillsoft anticipates adjusted EBITDA growth of at least low double digits for fiscal 2024.