Skillsoft Reports Strong Financial Results for the Third Quarter of Fiscal 2022

Rhea-AI Summary

Skillsoft Corp. (NYSE: SKIL) reported solid third quarter results for fiscal 2022, exceeding expectations with a 7% growth in total bookings and a 6% increase in adjusted revenue to $179 million. The company raised its full-year outlook for bookings to $700-$720 million and adjusted revenue to $685-$700 million, primarily driven by strong performance across all segments. Despite a GAAP net loss of $43 million, the adjusted EBITDA stood at $49 million. Skillsoft's migration to its Percipio platform is progressing, with 86% of annual recurring revenue now on Percipio.

Positive

• Bookings increased 7% year-over-year, with significant growth in Content and Global Knowledge segments.
• Adjusted revenue rose 6% to $179 million, indicating strong demand for digital learning solutions.
• Full-year outlook for bookings raised to $700-$720 million and adjusted revenue to $685-$700 million, reflecting better-than-expected performance.
• Percipio platform migration advanced, with 86% of content annual recurring revenue now on Percipio.

Negative

• GAAP net loss of $43 million in the quarter, which may signal underlying profitability challenges.
• Adjusted EBITDA remained flat year-over-year at $49 million due to increased growth investments and higher expenses.

Raises Full Year Outlook Following Stronger than Expected Results

Extends Leadership Position with New Customer Wins and Significant Product Momentum with Percipio Bookings up 60%

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 third quarter of fiscal 2022 ended October 31, 2021. The Company delivered bookings growth in each of its business segments and grew revenue. Skillsoft raised its full year outlook for bookings and adjusted revenue and updated its outlook for adjusted EBITDA to the midpoint of the previous range.

“We delivered another strong quarter, driving bookings and adjusted revenue growth above expectations and executing on our strategic priorities,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “We grew each of our segments, won new blue-chip customers and advanced our migration to Percipio. We also signed new strategic alliances and launched new content and platform features, further increasing the value we deliver to our customers.”

Mr. Tarr added, “In our first two quarters as a public company, we recapitalized the business, assembled a world-class management team and board of directors, completed two acquisitions, and made foundational investments in content, platform and go-to-market. We continue to advance our vision of being the most highly valued provider of learning solutions and preparing the workforce of today with the skills for tomorrow.”

Updated Full Year Fiscal 2022 Outlook¹

		Updated Outlook		Previous Outlook
Bookings		$700 million to $720 million		$690 million to $710 million
Adjusted Revenue		$685 million to $700 million		$670 million to $690 million
Adjusted EBITDA		Approximately $165 million		$155 million to $175 million

Skillsoft increased its bookings and adjusted revenue outlook for full year fiscal 2022 primarily to reflect better than expected performance through the first three quarters of the year.

The adjusted EBITDA outlook at the middle of the original outlook range reflects the Company’s growth investments in content, platform, and go-to-market capabilities, contributing to the higher than expected bookings and adjusted revenue growth.

Fiscal 2022 Third Quarter Financial Highlights²

• Grew bookings 7%, with Content up 6%, Global Knowledge up 11%, Content and Global Knowledge combined up 8% and SumTotal up 3%;
• Delivered GAAP revenue for the reported period of $171 million and GAAP net loss of $43 million;
• Grew adjusted revenue³ 6% to $179 million with adjusted EBITDA³ of $49 million, in line with the prior year due to growth investment, synergy timing related to the delay in the closing of the Global Knowledge transaction, and higher D&O insurance costs;
• Delivered combined Percipio and dual deployment dollar retention rate of 101%; and
• Advanced platform migration to Percipio, with 86% of Skillsoft Content annual recurring revenue on Percipio or Percipio dual deployment, up from 81% last quarter and 68% in the prior year period.

Key Operational Metrics and Non-GAAP Financial Measures

Bookings (previously Order Intake)

The following table sets forth unaudited bookings for the three and nine months ended October 31, 2021 and 2020 as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on October 31:

$000s		Three Months Ended October 31,				Change				Nine Months Ended October 31,				Change
		2021		2020		$		%		2021		2020		$		%
Content and Global Knowledge
Percipio		$17,742		$11,063		$6,679		60%		$50,276		$31,645		$18,631		59%
Dual Deployment & Coaching		53,661		36,348		17,313		48%		95,357		75,757		19,600		26%
Skillport		2,270		21,883		(19,613)		-90%		24,318		53,955		(29,637)		-55%
Total Subscription		$73,672		$69,294		$4,379		6%		$169,951		$161,357		$8,594		5%
Services & One-Time Bookings		4,620		4,319		301		7%		10,908		9,330		1,578		17%
Total Content		$78,293		$73,613		$4,680		6%		$180,859		$170,687		$10,171		6%
Global Knowledge		61,690		55,419		6,271		11%		190,488		161,225		29,262		18%
Total Content & Global Knowledge		$139,983		$129,032		$10,951		8%		$371,346		$331,913		$39,434		12%
SumTotal
Subscription		$22,472		$21,830		$642		3%		$64,552		$68,286		($3,734)		-5%
Services & One-Time Bookings		6,423		6,262		161		3%		17,224		15,876		1,348		8%
Total SumTotal		$28,895		$28,092		$803		3%		$81,776		$84,162		($2,386)		-3%
Total		$168,878		$157,124		$11,754		7%		$453,122		$416,075		$37,048		9%

Dollar Retention Rate

The following table sets forth dollar retention rates (“DRR”) for the last twelve month (“LTM”) period ended October 31, 2021 and for the three month periods ended October 31, 2021 and 2020 as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on October 31:

		October 31
		LTM		2021		2020
Percipio		100%		107%		100%
Dual Deployment		103%		100%		105%
Percipio + Dual Deployment		102%		101%		104%
Skillport		72%		75%		83%
Total Content Business		95%		98%		96%
SumTotal Business		96%		101%		99%

Capital Structure

The following table sets forth Skillsoft’s cash and cash equivalents and long-term debt as of October 31, 2021:

$000s		October 31, 2021
Assets
Cash and Equivalents		$80,671
Liabilities
Long-Term Debt		$467,796
(including current portion)

Weighted average shares outstanding during the period from July 31, 2021 to October 31, 2021 were 133,116,361.

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 (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;
• the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;
• the impact of the ongoing COVID-19 pandemic (including any variant) on our business, operating results and financial condition;
• 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;
• the impact of natural disasters, public health crises, political crises, or other catastrophic events;
• our ability to attract and retain key employees and qualified technical and sales personnel;
• 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.

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 See “Non-GAAP Financial Measures and Key Performance Metrics.” The Company does not reconcile forward-looking non-GAAP measures.

2 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 October 31, 2021.

3 Signifies non-GAAP measure. See “Non-GAAP Financial Measures and Key Performance Metrics” in this release.

SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
		Successor				Predecessor (SLH)
		October 31, 2021				January 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents		$	80,671			$	71,479
Restricted cash			2,680				2,964
Accounts receivable, less reserves of approximately $2,173 and $294 as of October 31, 2021 and January 31, 2021 respectively			136,890				179,784
Prepaid expenses and other current assets			42,066				30,326
Total current assets			262,307				284,553
Property and equipment, net			17,253				13,780
Goodwill			872,291				495,004
Intangible assets, net			904,797				728,633
Right of use assets			21,928				15,131
Deferred tax asset			—				—
Other assets			10,083				8,636
Total assets		$	2,088,659			$	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			11,080				17,022
Accounts payable			31,472				7,425
Accrued compensation			38,681				36,375
Accrued expenses and other current liabilities			55,772				23,125
Lease liabilities			7,687				4,740
Deferred revenue			246,188				257,549
Total current liabilities			395,680				351,436
Long-term debt			462,996				510,236
Warrant liabilities			65,363				900
Deferred tax liabilities			91,497				81,008
Long term lease liabilities			15,209				13,155
Deferred revenue - non-current			1,883				3,035
Other long-term liabilities			9,699				5,998
Total long-term liabilities			646,647				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 133,164,526 shares issued and outstanding at October 31, 2021			11				—
Additional paid-in capital			1,301,319				674,333
Accumulated deficit			(255,132	)			(93,722	)
Accumulated other comprehensive income (loss)			134				(682	)
Total shareholders’ equity			1,046,332				579,969
Total liabilities and shareholders’ equity		$	2,088,659			$	1,545,737

SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
		Quarter-to Date Results
		Fiscal 2022				Fiscal 2021
		Successor				Predecessor (SLH)				Predecessor (PL)
		Three Months Ended October 31, 2021				From August 28, 2020 to October 31, 2020				From August 1, 2020 to August 27, 2020
Revenues:
Total revenues		$	170,559			$	36,973			$	38,687
Operating expenses:
Costs of revenues			48,891				15,882				6,329
Content and software development			16,437				10,919				5,208
Selling and marketing			39,938				18,193				8,259
General and administrative			28,120				10,075				5,440
Amortization of intangible assets			37,064				15,890				4,230
Recapitalization and acquisition-related costs			3,687				8,225				64
Restructuring			777				80				38
Total operating expenses			174,914				79,264				29,568
Operating (loss) income			(4,355	)			(42,291	)			9,119
Other (expense) income, net			(611	)			717				(541	)
Fair value adjustment of warrants			(36,838	)			2,900				—
Interest income			18				9				21
Interest expense			(7,510	)			(7,919	)			(1,287	)
Reorganization items, net			—				—				3,339,837
Loss (income) before (benefit from) provision for income taxes			(49,296	)			(46,584	)			3,347,149
(Benefit from) provision for income taxes			(6,441	)			(7,870	)			78,254
Net (loss) income			(42,855	)			(38,714	)			3,268,895
(Loss) income per share:
Ordinary – Basic and Diluted (PL)			*				*				32,656.29
Class A and B – Basic and Diluted (SLH)			*				(9.68	)			*
Ordinary – Basic and Diluted (Successor)			(0.32	)			*				*
Weighted average common share outstanding:
Ordinary – Basic and Diluted (PL)			*				*				100.1
Class A and B – Basic and Diluted (SLH)			*				4,000				*
Ordinary – Basic and Diluted (Successor)			133,116				*				*
*Not applicable
The accompanying notes are an integral part of these consolidated financial statements.

SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
		Year-to Date Results
		Fiscal 2022								Fiscal 2021
		Successor				Predecessor (SLH)				Predecessor (SLH)				Predecessor (PL)
		From June 12, 2021 to October 31, 2021				From February 1, 2021 to June 11, 2021				From August 28, 2020 to October 31, 2020				From February 1, 2020 to August 27, 2020
Revenues:
Total revenues		$	261,572			$	139,636			$	36,973			$	273,851
Operating expenses:
Costs of revenues			76,897				35,881				15,882				52,160
Content and software development			26,316				24,084				10,919				38,986
Selling and marketing			62,171				41,940				18,193				75,028
General and administrative			45,194				17,217				10,075				37,455
Amortization of intangible assets			57,087				50,902				15,890				34,378
Impairment of intangible assets			—				—				—				332,376
Recapitalization and acquisition-related costs			13,682				6,938				8,225				32,099
Restructuring			1,093				(703	)			80				1,179
Total operating expenses			282,440				176,259				79,264				603,661
Operating loss			(20,868	)			(36,623	)			(42,291	)			(329,810	)
Other (expense) income, net			(1,308	)			(493	)			717				1,268
Fair value adjustment of warrants			(19,723	)			900				2,900				—
Interest income			30				64				9				105
Interest expense			(17,366	)			(16,820	)			(7,919	)			(168,341	)
Reorganization items, net			—				—				—				3,329,245
Loss (income) before (benefit from) provision for income taxes			(59,235	)			(52,972	)			(46,584	)			2,832,467
(Benefit from) provision for income taxes			(4,527	)			(3,708	)			(7,870	)			68,455
Net (loss) income			(54,708	)			(49,264	)			(38,714	)			2,764,012
(Loss) income per share:
Ordinary – Basic and Diluted (PL)			*				*				*				27,612.51
Class A and B – Basic and Diluted (SLH)			*				(12.32	)			(9.68	)			*
Ordinary – Basic and Diluted (Successor)			(0.41	)			*				*				*
Weighted average common share outstanding:
Ordinary – Basic and Diluted (PL)			*				*				*				100.1
Class A and B – Basic and Diluted (SLH)			*				4,000				4,000				*
Ordinary – Basic and Diluted (Successor)			133,096				*				*				*
*Not applicable
The accompanying notes are an integral part of these consolidated financial statements.

SKILLSOFT CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
		Fiscal 2022									Fiscal 2021
		Successor					Predecessor (SL)				Predecessor (SL)					Predecessor (PL)
		June 12, 2021 through October 31, 2021					February 1, 2021 through June 11, 2021				August 28, 2020 through October 31, 2020					February 1, 2020 through August 27, 2020
Cash flows from operating activities:
Net (loss) income		$	(54,708	)			$	(49,264	)		$	(38,714	)			$	2,764,012
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Share-based compensation			9,034					—				—					—
Depreciation and amortization			4,309					3,572				1,509					5,864
Amortization of intangible assets			57,087					50,902				15,890					34,378
Change in bad debt reserve			(668	)				(174	)			186					24
(Benefit from) provision for income taxes – non-cash			(9,937	)				(5,886	)			(8,214	)				66,234
Non-cash interest expense			913					487				143					2,407
Impairment of intangible assets			—					—				—					332,376
Fair value adjustment to warrants			19,723					(900	)			(2,900	)				—
Right-of-use asset			3,473					748				1,245					1,594
Non-cash reorganization items, net			—					—				—					(3,353,326	)
Changes in current assets and liabilities, net of effects from acquisitions:
Accounts receivable			(8,446	)				88,622				(24,396	)				116,478
Prepaid expenses and other current assets			(5,002	)				1,828				(4,017	)				66
Accounts payable			(1,636	)				(4,866	)			3,776					(7,909	)
Accrued expenses, including long-term			13,962					(18,592	)			11,888					145,816
Lease liability			(4,046	)				(1,301	)			(1,510	)				(2,332	)
Deferred revenue			(24,599	)				(31,365	)			47,987					(101,765	)
Net cash (used in) provided by operating activities			(541	)				33,811				2,873					3,917
Cash flows from investing activities:
Purchase of property and equipment			(4,351	)				(641	)			(1,340	)				(3,105	)
Internally developed software - capitalized costs			(2,293	)				(2,350	)			(908	)				(3,819	)
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			(568,251	)				(2,991	)			(2,248	)				(6,924	)
Cash flows from financing activities:
Borrowings under revolving line of credit, net of repayments			—					—				—					19,500
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			(614	)				—				—					—
Proceeds from equity investment (PIPE)			530,000					—				—					—
Proceeds from issuance of term loans, net of fees			464,290					—				—					—
Principal payments on capital lease obligation			(407	)				(370	)			(162	)				(532	)
Proceeds from accounts receivable facility, net of borrowings			(23,198	)				16,577				(28,909	)				(35,787	)
Repayment of First and Second Out loans			(605,591	)				(1,300	)			—					—
Net cash provided by (used in) financing activities			364,480					14,907				(29,071	)				73,657
Effect of exchange rate changes on cash and cash equivalents			(820	)				203				699					(2,139	)
Net (decrease) increase in cash, cash equivalents and restricted cash			(205,132	)				45,930				(27,747	)				68,511
Cash, cash equivalents and restricted cash, beginning of period			288,483					74,443				102,315					33,804
Cash, cash equivalents and restricted cash, end of period		$	83,351				$	120,373			$	74,568				$	102,315
Supplemental disclosure of cash flow information:
Cash and cash equivalents		$	80,671				$	117,299			$	70,836				$	92,009
Restricted cash			2,680					3,074				3,732					10,306
Cash, cash equivalents and restricted cash, end of period		$	83,351				$	120,373			$	74,568				$	102,315
The accompanying notes are an integral part of these consolidated financial statements.

Key Performance Metrics

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 (previously referred to as order intake) 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
$000s		Three Months Ended October 31,						Nine Months Ended October 31,
		2021			2020			2021			2020
CONTENT AND GLOBAL KNOWLEDGE BOOKINGS
Percipio Bookings		$	17,742		$	11,063		$	50,276		$	31,645
Dual Deployment & Coaching Bookings			53,661			36,348			95,357			75,757
Skillport Bookings			2,270			21,883			24,318			53,955
Total Subscription Bookings			73,673			69,294			169,951			161,357
Services & One-Time Bookings			4,620			4,319			10,908			9,330
Global Knowledge Bookings			61,690			55,419			190,488			161,225
Total Content & Global Knowledge Bookings			139,983			129,032			371,347			331,912
SUMTOTAL BOOKINGS
Subscription Bookings			22,472			21,830			64,552			68,286
Services & One-Time Bookings			6,423			6,262			17,224			15,876
Total			28,895			28,092			81,776			84,162
Total Bookings		$	168,877		$	157,124		$	453,123		$	416,074

Annualized Recurring Revenue
$000s		October 31, 2021			January 31, 2021
CONTENT AND GLOBAL KNOWLEDGE ARR
Percipio ARR		$	90,638		$	75,802
Dual Deployment ARR			184,825			161,327
Skillport ARR			46,106			80,245
Total Content ARR			321,568			317,374
Global Knowledge ARR			13,407			10,504
Total Content & Global Knowledge ARR			334,975			327,878
SUMTOTAL ARR
SumTotal ARR			95,519			99,148
Total ARR		$	430,494		$	427,026

Dollar Retention Rate
		October 31
		LTM		2021		2020
Percipio		100%		107%		100%
Dual Deployment		103%		100%		105%
Percipio + Dual Deployment		102%		101%		104%
Skillport		72%		75%		83%
Total Content Business		95%		98%		96%
SumTotal Business		96%		101%		99%

Non-GAAP Financial Measures – Adjusted Revenue
$000s		Skillsoft and Global Knowledge Combined
		Three Months Ended October 31,						Nine Months Ended October 31,
		2021			2020			2021			2020
CONSOLIDATED
Adjusted subscription revenue		$	106,055		$	107,924		$	311,815		$	323,054
Adjusted non-subscription revenue			11,298			10,518			32,525			32,161
Adjusted Global Knowledge revenue			61,523			50,839			177,265			162,055
Total Consolidated adjusted revenue			178,876			169,281			521,605			517,270
CONTENT BUSINESS
Adjusted subscription revenue			82,523			82,953			242,093			246,575
Adjusted non-subscription revenue			4,424			3,995			12,661			11,619
Total Content Business adjusted revenue			86,947			86,947			254,754			258,194
GLOBAL KNOWLEDGE BUSINESS
Virtual and on-demand			48,717			36,719			146,280			109,119
Classroom and all other			12,806			14,120			30,985			52,936
Total Global Knowledge adjusted revenue			61,523			50,839			177,265			162,055
SUMTOTAL BUSINESS
Adjusted subscription revenue			23,532			24,971			69,722			76,479
Adjusted non-subscription revenue			6,874			6,523			19,864			20,542
Total SumTotal adjusted revenue5		$	30,406		$	31,495		$	89,586		$	97,021

5 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. We intend to present product level views going forward which we believe provides the most accurate depiction of the underlying trends in our business.

SKILLSOFT CORP. RECONCILIATION OF NON-GAAP FINANICAL MEASURES (in thousands, unaudited)
		For the Three Months Ended October 31, 2021
		Skillsoft Corp.				Non-GAAP Revenue Adjustments (1)			Combined
REVENUES:
Total revenues		$	170,559			$	8,317		$	178,876
Operating expenses
Cost of revenues			48,891				8,317			57,208
Content and software development			16,437							16,437
Selling and marketing			39,938							39,938
General and administrative			28,120							28,120
Amortization of intangible assets			37,064							37,064
Recapitalization and acquisition-related costs			3,687							3,687
Restructuring			777							777
Total operating expenses			174,914				8,317			183,231
Operating loss:		$	(4,355	)		$	-		$	(4,355	)
Other income (expense), net			(37,449	)						(37,449	)
Interest income			18							18
Interest expense			(7,510	)						(7,510	)
Reorganization items, net			-							-
Loss before provision for (benefit from) income taxes			(49,296	)			-			(49,296	)
Provision for (benefit from) income taxes			(6,441	)						(6,441	)
Net loss		$	(42,855	)		$	-		$	(42,855	)
EBITDA COMPUTATION
Interest expense, net		$	7,492						$	7,492
Provision for (benefit from) income taxes			(6,441	)						(6,441	)
Depreciation and amortization			39,668							39,668
Impairment of goodwill and intangible assets			-							-
EBITDA			(2,136	)			-			(2,136	)
ADJUSTED EBITDA COMPUTATION
Plus: Non-recurring retention and consulting costs			3,892							3,892
Plus: Recapitalization and acquisition-related costs			3,687							3,687
Plus: Restructuring and contract terminations			777							777
Plus: Integration and migration related			883							883
Plus: Warrant fair value adjustment and foreign currency			37,391							37,391
Plus: Stock-based compensation expense			4,217							4,217
Plus: Other add backs			554							554
Adjusted EBITDA		$	49,265			$	-		$	49,265
(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 FINANICAL MEASURES (in thousands, unaudited)
		For the Three Months Ended October 31, 2020
		For the Period from 8/1/20 to 10/31/20				For the Period from 8/1/20 to 8/27/20				For the Period from 8/28/20 to 10/31/20
		Global Knowledge				Predecessor (PL)				Predecessor (SLH)				Non-GAAP Revenue Adjustments (1)				Combined
Revenues:
Total revenues		$	43,690			$	38,687			$	36,973			$	49,931			$	169,281
Operating expenses
Cost of revenues			24,470				6,329				15,882				7,148				53,829
Content and software development			231				5,208				10,919								16,358
Selling and marketing			10,978				8,259				18,193								37,430
General and administrative			8,100				5,440				10,075								23,615
Amortization of intangible assets			9,526				4,230				15,890								29,646
Impairment of goodwill and intangible assets			4,520																4,520
Recapitalization and acquisition-related costs			-				64				8,225								8,289
Restructuring			2,066				38				80								2,184
Total operating expenses			59,891				29,568				79,264				7,148				175,871
Operating loss:		$	(16,201	)		$	9,119			$	(42,291	)		$	42,783			$	(6,590	)
Other income, net			625				(541	)			3,617								3,701
Interest income			-				21				9								30
Interest expense			(6,431	)			(1,287	)			(7,919	)							(15,637	)
Reorganization items, net							3,339,837				-								3,339,837
Loss before provision for (benefit from) income taxes			(22,007	)			3,347,149				(46,584	)			42,783				3,321,341
Provision for (benefit from) income taxes			(944	)			78,254				(7,870	)							69,440
Net loss		$	(21,063	)		$	3,268,895			$	(38,714	)		$	42,783			$	3,251,901
EBITDA COMPUTATION
Interest expense, net		$	6,431			$	1,266			$	7,910			$	-			$	15,607
Provision for (benefit from) income taxes			(944	)			78,254				(7,870	)			-				69,440
Depreciation and amortization			10,455				6,484				15,890				-				32,829
Impairment of goodwill and intangible assets			4,520				-				-				-				4,520
EBITDA			(601	)			3,354,899				(22,784	)			42,783				3,374,297
ADJUSTED EBITDA COMPUTATION
Plus: Non-recurring retention and consulting costs			669				1,549				3,032								5,250
Plus: Recapitalization and acquisition-related costs			2,671				(672	)			8,961								10,960
Plus: Restructuring and contract terminations			1,397				40				78								1,515
Plus: Integration and migration related			-				2,212				965								3,177
Plus: Foreign currency and other non-cash expense			(982	)			(229	)			(3,156	)							(4,367	)
Plus: Impact of fresh-start and purchase accounting			-				(3,339,838	)			41,442				(42,783	)			(3,341,179	)
Plus: Stock-based compensation expense			-				-				-								-
Plus: Other add backs			187				(247	)			(310	)							(370	)
Adjusted EBITDA		$	3,341			$	17,714			$	28,228			$	-			$	49,283
(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 FINANICAL MEASURES (in thousands, unaudited)
		For the Nine Months Ended October 31, 2021
		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 10/31/21
		Global Knowledge				Skillsoft				Skillsoft Corp.(1)				Non-GAAP Revenue Adjustments(2)				Combined
Revenues:
Total revenues		$	71,932			$	139,636			$	261,572			$	48,465			$	521,605
Operating expenses
Cost of revenues			34,698				35,881				76,897				22,874				170,350
Content and software development			492				24,084				26,316								50,892
Selling and marketing			16,404				41,940				62,172								120,516
General and administrative			19,765				17,217				45,194								82,176
Amortization of intangible assets			2,646				50,902				57,087								110,635
Recapitalization and acquisition-related costs			-				6,938				13,682								20,620
Restructuring			2,764				(703	)			1,093								3,154
Total operating expenses			76,769				176,259				282,440				22,874				558,343
Operating loss:		$	(4,837	)		$	(36,623	)		$	(20,868	)		$	25,591			$	(36,737	)
Other income, net			624				407				(21,031	)							(20,000	)
Interest income			-				64				30								94
Interest expense			(11,970	)			(16,820	)			(17,366	)							(46,156	)
Loss before benefit from income taxes			(16,183	)			(52,972	)			(59,235	)			25,591				(102,799	)
Provision for (benefit from) income taxes			359				(3,708	)			(4,527	)							(7,876	)
Net loss		$	(16,542	)		$	(49,264	)		$	(54,708	)		$	25,591			$	(94,923	)
EBITDA COMPUTATION
Interest expense, net		$	11,970			$	16,756			$	17,336							$	46,062
Benefit from income taxes			359				(3,708	)			(4,527	)							(7,876	)
Depreciation and amortization			4,119				54,474				61,396								119,989
EBITDA			(94	)			18,258				19,497				25,591				63,252
ADJUSTED EBITDA COMPUTATION
Plus: Non-recurring retention and consulting costs			28				1,153				1,551								2,732
Plus: Recapitalization and acquisition-related costs			8,862				6,938				16,038								31,838
Plus: Restructuring and contract terminations			2,884				(703	)			1,093								3,274
Plus: Integration and migration related			-				1,160				1,383								2,543
Plus: Warrant fair value adjustment and foreign currency			377				134				20,714								21,225
Plus: Impact of fresh-start and purchase accounting			-				23,395				-				(25,591	)			(2,196	)
Plus: Stock-based compensation expense			-				-				9,034								9,034
Plus: Other add backs			(1,119	)			(300	)			198								(1,221	)
Adjusted EBITDA		$	10,938			$	50,035			$	69,508			$	-			$	130,481
(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 FINANICAL MEASURES (in thousands, unaudited)
		For the Nine Months Ended October 31, 2020
		For the Period from 2/1/20 to 10/31/20				For the Period from 2/1/20 to 8/27/20				For the Period from 8/28/20 to 10/31/20
		Global Knowledge				Predecessor (PL)				Predecessor (SLH)				Non-GAAP Revenue Adjustments (1)				Combined
Revenues:
Total revenues		$	142,192			$	273,851			$	36,973			$	64,254			$	517,270
Operating expenses
Cost of revenues			78,527				52,160				15,882				19,862				166,431
Content and software development			1,751				38,986				10,919								51,656
Selling and marketing			30,896				75,028				18,193								124,117
General and administrative			24,186				37,455				10,075								71,716
Amortization of intangible assets			13,249				34,378				15,890								63,517
Impairment of intangible assets			59,553				332,376				-								391,929
Recapitalization and acquisition-related costs			-				32,099				8,225								40,324
Restructuring			6,373				1,179				80								7,632
Total operating expenses			214,535				603,661				79,264				19,862				917,323
Operating loss:		$	(72,343	)		$	(329,810	)		$	(42,291	)		$	44,392			$	(400,053	)
Other income (expense), net			(156	)			1,268				3,617								4,729
Interest income			-				105				9								114
Interest expense			(20,993	)			(168,341	)			(7,919	)							(197,253	)
Reorganization items, net							3,329,245				-								3,329,245
Loss before benefit from income taxes			(93,493	)			2,832,467				(46,584	)			44,392				2,736,783
Provision for (benefit from) income taxes			(733	)			68,455				(7,870	)			-				59,852
Net loss		$	(92,759	)		$	2,764,012			$	(38,714	)		$	44,392			$	2,676,931
EBITDA COMPUTATION
Interest expense, net		$	20,993			$	168,236			$	7,910							$	197,139
Benefit from income taxes			(733	)			68,455				(7,870	)							59,852
Depreciation and amortization			18,080				41,751				15,890								75,721
Impairment of goodwill and intangible assets			59,553				332,376				-								391,929
EBITDA			5,134				3,374,830				(22,784	)			44,392				3,401,572
ADJUSTED EBITDA COMPUTATION
Plus: Non-recurring retention and consulting costs			2,031				11,034				3,032								16,097
Plus: Recapitalization and acquisition-related costs			3,375				31,363				8,961								43,699
Plus: Restructuring and contract terminations			4,336				1,181				78								5,595
Plus: Integration and migration related			8				3,379				965								4,352
Plus: Foreign currency and other non-cash expense			(29	)			(1,119	)			(3,156	)							(4,304	)
Plus: Impact of fresh-start and purchase accounting			-				(3,329,245	)			41,442				(44,392	)			(3,332,195	)
Plus: Stock-based compensation expense			-				-				-								-
Plus: Other add backs			171				(33	)			(310	)							(172	)
Adjusted EBITDA		$	15,026			$	91,390			$	28,228			$	-			$	134,644
(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/20211213005985/en/

Investors

James Gruskin

james.gruskin@skillsoft.com

Media

Caitlin Leddy

caitlin.leddy@skillsoft.com

Source: Skillsoft Corp.

FAQ

What were Skillsoft's financial results for the third quarter of fiscal 2022?

Skillsoft reported a 7% increase in bookings and $179 million in adjusted revenue for Q3 fiscal 2022.

What is the updated full-year outlook for bookings and revenue for Skillsoft?

Skillsoft raised its full-year outlook to $700-$720 million for bookings and $685-$700 million for adjusted revenue.

How did Skillsoft perform in terms of customer retention?

Skillsoft reported a combined dollar retention rate of 101% for Percipio and dual deployment.

What was the adjusted EBITDA reported by Skillsoft for the third quarter?

Skillsoft's adjusted EBITDA for the third quarter was $49 million, unchanged from the previous year.