- Delivered strong improvements in Adjusted EBITDA and Free Cash
Flow
- Grew Content & Platform segment Revenue 3% and increased
LTM Bookings 4%
- Increased LTM Dollar Retention Rate three percentage points to
101%
Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a
leading platform for transformative learning experiences, today
announced its financial results for the third quarter of fiscal
2024 ended October 31, 2023.
“Skillsoft delivered another quarter of growth in our core
SaaS-based Content & Platform segment while showing meaningful
improvement in Adjusted EBITDA and Free Cash Flow,” said Jeffrey R.
Tarr, Skillsoft’s Chief Executive Officer. “I am proud of our
progress seizing the opportunity represented by generative AI, with
innovative new solutions like Skillsoft CAISY™ and generative AI
Aspire Learning Journeys. We are extending our leadership position
in helping enterprises succeed in a skills-centric economy, while
enabling knowledge workers to thrive in a world that’s being
reshaped by rapid technological change.”
Fiscal 2024 Third Quarter Select Metrics and Financials from
Continuing Operations (1)(2)
- Grew LTM Content & Platform segment Bookings 4% compared to
the prior year LTM period.
- Instructor-Led Training segment Bookings were flat sequentially
and declined 4% compared to the prior year.
- GAAP Revenue of $139 million was flat to prior year, with 3%
growth in Content & Platform segment GAAP Revenue to $101
million, offset by a 9% decline in Instructor-Led Training segment
GAAP Revenue to $38 million.
- GAAP net loss of $28 million compared to a GAAP net loss of
$528 million in the prior year. GAAP net loss per share of $3.45
compared to a GAAP net loss per share of $64.29 in the prior
year.
- Pro forma Adjusted Net Loss of $23 million compared to a pro
forma Adjusted Net Loss of $49 million in the prior year. Pro forma
Adjusted Net Loss per share of $2.82 compared to a pro forma
Adjusted Net Loss per share of $5.96 in the prior year.
- Adjusted EBITDA from continuing operations of $30 million,
reflecting a margin of 21% of GAAP revenue, up from 20% in the
prior year.
- Ended the quarter with $130 million of cash and cash
equivalents.
Fiscal 2024 Third Quarter Business Highlights
- LTM Content & Platform Dollar Retention Rate was
approximately 101% in the quarter, up from approximately 98% in the
year-ago period. Quarterly Content & Platform Dollar Retention
Rate was approximately 99%, up from approximately 96% in the
year-ago period.
- Announced the general availability of Skillsoft CAISY™
(Conversation AI Simulator), an innovative AI-powered skills
trainer for the enterprise, delivering coaching at scale that
allows employees to practice crucial business conversations to
develop interpersonal and leadership skills.
- Launched new generative AI Aspire Learning Journeys, which
offer multi-modal learning paths that promote AI literacy, and
generative AI Skill Benchmarks, which assess learner proficiency
and provide personalized learning recommendations that deepen AI
mastery and application.
- Recognized with two Training Magazine Network Choice Awards in
the Leadership Development and Learning Portal categories,
confirming Skillsoft’s market leadership in empowering enterprises
with the talent-driven competitive edge required to thrive.
- Received multiple awards for leadership and innovation in the
Instructor-Led Training business, including recognition as AWS’
2023 North American Training Partner of the Year, Cisco’s 2023
Global Learning Partner of the Year and Digital Acceleration
Partner of the Year, Red Hat EMEA’s Training Reseller of the Year
and Certified Training Partner of the Year, and VMware’s Partner
Delivery Excellence Award in the MEA region.
“Our performance in the third quarter reflected our commitment
to delivering profitable growth, with approximately 500 basis
points of Adjusted EBITDA margin expansion since the first
quarter,” said Richard G. Walker, Skillsoft’s Chief Financial
Officer. “As we take a more measured view of our Instructor-Led
Training segment for the remainder of the year, we now expect to
deliver Bookings and Revenue approximately at the bottom of our
full-year outlook. We believe our continuous focus on strong
profitability will allow us to deliver Adjusted EBITDA at the top
of the outlook.”
(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)
Three Months Ended
Nine Months Ended
October 31,
Change
October 31,
Change
2023
2022
Dollar
Percent
2023
2022
Dollar
Percent
Bookings (4)
Continuing operations:
Content & Platform
$
85,756
$
84,784
$
972
1%
$
233,411
$
222,310
$
11,101
5%
Instructor-Led Training
45,992
47,786
(1,794
)
(4)%
$
135,985
149,944
(13,959
)
(9)%
Total bookings
$
131,748
$
132,570
$
(822
)
(1)%
$
369,396
$
372,254
$
(2,858
)
(1)%
GAAP revenue
Continuing operations:
Content & Platform
$
101,132
$
97,968
$
3,164
3%
$
302,893
$
286,507
$
16,386
6%
Instructor-Led Training
37,824
41,422
(3,598
)
(9)%
112,804
128,296
(15,492
)
(12)%
Total
$
138,956
$
139,390
$
(434
)
(0)%
$
415,697
$
414,803
$
894
0%
Pro forma revenue (4)
Continuing operations:
Content & Platform
$
101,132
$
97,968
$
3,164
3%
$
302,893
$
294,565
$
8,328
3%
Instructor-Led Training
37,824
41,422
(3,598
)
(9)%
112,804
128,296
(15,492
)
(12)%
Total pro forma revenue
$
138,956
$
139,390
$
(434
)
(0)%
$
415,697
$
422,861
$
(7,164
)
(2)%
GAAP net income (loss)
$
(27,736
)
$
(528,343
)
$
500,607
(95)%
$
(103,959
)
$
(671,485
)
$
567,526
(85)%
Pro forma non-GAAP operating expenses
(4)
Pro forma non-GAAP costs of revenues
$
36,199
$
36,365
$
(166
)
(0)%
$
113,822
$
109,534
$
4,288
4%
Pro forma non-GAAP content and software
development expenses
14,063
14,999
(936
)
(6)%
43,925
48,866
(4,941
)
(10)%
Pro forma non-GAAP selling and marketing
expenses
42,393
42,528
(135
)
(0)%
126,796
123,930
2,866
2%
Pro forma non-GAAP general and
administrative expenses
16,540
17,646
(1,106
)
(6)%
54,337
60,414
(6,077
)
(10)%
Total pro forma non-GAAP operating
expenses
$
109,195
$
111,538
$
(2,343
)
(2)%
$
338,880
$
342,744
$
(3,864
)
(1)%
Pro forma adjusted net income (loss)
& adjusted EBITDA (4)
Continuing operations:
Pro forma adjusted net income
(loss)
$
(22,697
)
$
(48,981
)
$
26,284
NA
$
(82,191
)
$
(84,183
)
$
1,992
NA
Pro forma adjusted net income (loss)
per share
$
(2.82
)
$
(5.96
)
$
3.14
NA
$
(10.22
)
$
(10.71
)
$
0.50
NA
Pro forma adjusted EBITDA
$
29,761
$
27,852
$
1,909
7%
$
76,817
$
80,117
$
(3,300
)
(4)%
Pro forma adjusted EBITDA % of pro
forma revenue
21
%
20
%
18
%
19
%
(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 nine months ended October 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 the United States and Canada or
(215) 268‑9914 from international locations. The live event can be
accessed from the Investor Relations section of Skillsoft’s website
at investor.skillsoft.com. A replay will be available for six
months.
About Skillsoft
Skillsoft delivers transformative learning experiences that
propel organizations and people to grow together. The Company
partners with enterprise organizations and serves a global
community of learners to prepare today’s employees for tomorrow’s
economy. With Skillsoft, customers gain access to blended,
multimodal learning experiences that do more than build skills,
they grow a more capable, adaptive, and engaged workforce. Through
a portfolio of high-quality content, an AI-enabled platform that is
personalized and connected to customer needs, and a broad ecosystem
of partners, Skillsoft drives continuous growth and performance for
employees and their organizations by overcoming critical skills
gaps, unlocking human potential, and transforming the workforce.
Learn more at www.skillsoft.com.
Non-GAAP Financial Measures And Key Performance
Metrics
We track the non-GAAP financial measures and key performance
metrics that we believe are key financial measures of our success.
Non-GAAP measures and key performance metrics are frequently used
by securities analysts, investors, and other interested parties in
their evaluation of companies comparable to us, many of which
present non-GAAP measures and key performance metrics when
reporting their results. These measures can be useful in evaluating
our performance against our peer companies because we believe the
measures provide users with valuable insight into key components of
U.S. GAAP financial disclosures. For example, a company with higher
U.S. GAAP net income may not be as appealing to investors if its
net income is more heavily comprised of gains on asset sales.
Likewise, excluding the effects of interest income and expense
moderates the impact of a company’s capital structure on its
performance. However, non-GAAP measures and key performance metrics
have limitations as analytical tools. Because not all companies use
identical calculations, our presentation of non-GAAP financial
measures and key performance metrics may not be comparable to other
similarly titled measures of other companies. They are not
presentations made in accordance with U.S. GAAP, are not measures
of financial condition or liquidity, and should not be considered
as an alternative to profit or loss for the period determined in
accordance with U.S. GAAP or operating cash flows determined in
accordance with U.S. GAAP. As a result, these performance measures
should not be considered in isolation from, or as a substitute
analysis for, results of operations as determined in accordance
with U.S. GAAP.
We have provided at the back of this release reconciliations of
our historical non-GAAP financial measures to the comparable GAAP
measures. We do not reconcile our forward-looking non-GAAP
financial measures to the corresponding U.S. GAAP measures, due to
variability and difficulty in making accurate forecasts and
projections and/or certain information not being ascertainable or
accessible; and because not all of the information necessary for a
quantitative reconciliation of these forward-looking non-GAAP
financial measures to the most directly comparable U.S. GAAP
financial measure is available to us without unreasonable efforts.
For the same reasons, we are unable to address the probable
significance of the unavailable information. We provide non-GAAP
financial measures that we believe will be achieved, however we
cannot accurately predict all of the components of the adjusted
calculations and the U.S. GAAP measures may be materially different
than the non-GAAP measures.
We disclose the following non-GAAP financial measures and key
performance metrics in this press release because we believe these
non-GAAP financial measures and key performance metrics provide
meaningful supplemental information.
- 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 accompanying 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 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 resulting 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
currency 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.
Reclassifications
Certain amounts reported in prior years have been reclassified
to conform to the presentation in the current year. These
reclassifications had no effect on total assets, total liabilities,
total stockholders' equity, or net income (loss) for the prior
year.
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 sales 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 purposes
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 current 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)
October 31, 2023
January 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
129,806
$
170,359
Restricted cash
6,953
7,197
Accounts receivable, net of allowance for
credit losses of approximately $426 and $221 as of October 31, 2023
and January 31, 2023, respectively
110,833
183,592
Prepaid expenses and other current
assets
52,505
44,596
Total current assets
300,097
405,744
Property and equipment, net
7,773
10,150
Goodwill
457,768
457,744
Intangible assets, net
630,403
738,066
Right of use assets
8,614
14,633
Other assets
20,316
16,350
Total assets
$
1,424,971
$
1,642,687
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current maturities of long-term debt
$
6,404
$
6,404
Borrowings under accounts receivable
facility
40,486
39,693
Accounts payable
14,999
18,338
Accrued compensation
22,988
34,325
Accrued expenses and other current
liabilities
28,545
41,474
Lease liabilities
3,591
4,198
Deferred revenue
203,588
280,676
Total current liabilities
320,601
425,108
Long-term debt
578,560
581,817
Warrant liabilities
4
4,754
Deferred tax liabilities
64,056
73,976
Long-term lease liabilities
9,506
11,947
Deferred revenue - non-current
2,208
1,778
Other long-term liabilities
10,088
11,551
Total long-term liabilities
664,422
685,823
Commitments and contingencies
Shareholders’ equity:
Shareholders’ common stock - Class A
common shares, $0.0001 par value: 18,750,000 shares authorized and
8,362,774 shares issued and 8,062,997 shares outstanding at October
31, 2023, and 8,264,308 shares issued and 8,182,794 shares
outstanding at January 31, 2023
1
1
Additional paid-in capital
1,543,063
1,521,587
Accumulated equity (deficit)
(1,076,152
)
(972,193
)
Treasury stock, at cost- 299,777 and
81,514 shares as of October 31, 2023 and January 31, 2023,
respectively
(10,891
)
(2,845
)
Accumulated other comprehensive income
(loss)
(16,073
)
(14,794
)
Total shareholders’ equity
439,948
531,756
Total liabilities and shareholders’
equity
$
1,424,971
$
1,642,687
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
Three Months Ended
Nine Months Ended
Nine Months Ended
October 31, 2023
October 31, 2022
October 31, 2023
October 31, 2022
Revenues:
Total revenues
$
138,956
$
139,390
$
415,697
$
414,803
Operating expenses:
Costs of revenues
36,407
36,655
114,698
109,662
Content and software development
16,126
17,252
51,024
53,276
Selling and marketing
43,983
44,680
130,321
126,089
General and administrative
22,308
28,281
72,689
83,994
Amortization of intangible assets
38,620
43,438
116,086
128,196
Impairment of goodwill and intangible
assets
—
570,887
—
641,362
Acquisition-related costs
510
4,889
2,838
26,653
Restructuring
873
2,010
8,592
10,289
Total operating expenses
158,827
748,092
496,248
1,179,521
Operating income (loss)
(19,871)
(608,702)
(80,551)
(764,718)
Other income (expense), net
19
1,601
(1,290)
2,733
Fair value adjustment of warrants
1,105
9,128
4,750
26,080
Fair value adjustment of hedge
instruments
3,981
20,314
11,186
5,249
Interest income
1,060
69
2,576
239
Interest expense
(16,492)
(14,556)
(48,683)
(37,541)
Income (loss) before provision for
(benefit from) income taxes
(30,198)
(592,146)
(112,012)
(767,958)
Provision for (benefit from) income
taxes
(2,462)
(8,832)
(8,735)
(34,234)
Income (loss) from continuing
operations
(27,736)
(583,314)
(103,277)
(733,724)
Gain (loss) on sale of business
—
53,756
(682)
53,756
Income (loss) from discontinued
operations, net of tax
—
1,215
—
8,483
Net income (loss)
$
(27,736)
$
(528,343)
$
(103,959)
$
(671,485)
Net income (loss) per share:
Ordinary – Basic and diluted - continuing
operations
$
(3.45)
$
(70.98)
$
(12.84)
$
(93.38)
Ordinary – Basic and diluted -
discontinued operations
—
6.69
(0.08)
7.92
Ordinary – Basic and diluted
$
(3.45)
$
(64.29)
$
(12.92)
$
(85.46)
Weighted average common shares
outstanding:
Ordinary – Basic and diluted
8,047
8,218
8,044
7,857
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
Nine Months Ended
October 31, 2023
October 31, 2022
Cash flows from operating activities:
Net income (loss)
$
(103,959
)
$
(671,485
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Share-based compensation
22,917
25,311
Depreciation and amortization
2,629
5,323
Amortization of intangible assets
116,086
134,541
Provision for credit loss expense
(recovery)
205
275
Provision for (benefit from) income taxes
– non-cash
(10,270
)
(43,115
)
Non-cash interest expense
1,546
1,550
Non-cash lease and property and equipment
impairment charges
4,265
—
(Gain) loss on sale of business
682
(53,756
)
Fair value adjustment of warrants
(4,750
)
(26,080
)
Impairment of goodwill and intangible
assets
—
641,362
Fair value adjustment of hedge
instruments
(11,186
)
(5,249
)
Change in assets and liabilities, net of
effects from acquisitions:
Right-of-use assets
2,184
4,302
Accounts receivable
70,645
76,821
Prepaid expenses and other current
assets
2,726
(617
)
Accounts payable
(3,283
)
(3,052
)
Accrued expenses and other liabilities,
including long-term
(20,820
)
(23,378
)
Lease liabilities
(3,048
)
(2,261
)
Deferred revenues
(75,250
)
(84,053
)
Net cash provided by (used in) operating
activities
(8,681
)
(23,561
)
Cash flows from investing activities:
Purchase of property and equipment
(3,753
)
(4,713
)
Internally developed software -
capitalized costs
(8,055
)
(8,639
)
Sale of SumTotal, net of cash
transferred
(5,137
)
171,995
Acquisition of Codecademy, net of cash
received
—
(198,842
)
Net cash used in investing activities
(16,945
)
(40,199
)
Cash flows from financing activities:
Shares repurchased for tax withholding
upon vesting of restricted stock-based awards
(1,441
)
(2,603
)
Payments to acquire treasury stock
(8,046
)
(1,433
)
Proceeds from issuance of term loans, net
of fees
—
157,088
Proceeds from accounts receivable
facility, net of borrowings
793
(33,168
)
Principal payments on Term loans
(4,803
)
(36,194
)
Net cash provided by (used in) financing
activities
(13,497
)
83,690
Effect of exchange rate changes on cash
and cash equivalents
(1,674
)
(6,823
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(40,797
)
13,107
Cash, cash equivalents and restricted
cash, beginning of period
177,556
168,923
Cash, cash equivalents and restricted
cash, end of period
$
136,759
$
182,030
Supplemental disclosure of cash flow
information:
Cash and cash equivalents
$
129,806
$
174,708
Restricted cash
6,953
7,322
Cash, cash equivalents and restricted
cash, end of period
$
136,759
$
182,030
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands,
unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2023
2022
2023
2022
Revenues, as reported
$
138,956
$
139,390
$
415,697
$
414,803
Net income (loss), as reported
$
(27,736)
$
(528,343)
$
(103,959)
$
(671,485)
Income from discontinued operations, net
of tax
—
(1,215)
—
(8,483)
Gain (loss) on sale of business
—
(53,756)
682
(53,756)
Impairment of goodwill and intangible
assets
—
570,887
—
641,362
Acquisition-related costs
510
4,889
2,838
26,653
Restructuring
873
2,010
8,592
10,289
Foreign currency impact
(181)
(1,052)
1,513
(2,223)
Fair value adjustment of warrants
(1,105)
(9,128)
(4,750)
(26,080)
Fair value adjustment of hedge
instruments
(3,981)
(20,314)
(11,186)
(5,249)
Stock-based compensation expense
7,962
8,396
22,917
26,906
Transformation costs
1,053
4,671
2,503
7,266
System migration costs
510
384
1,580
4,348
Tax impact of non-GAAP adjustments
(602)
(27,294)
(2,921)
(30,459)
Adjusted net income (loss) from
continuing operations
(22,697)
(49,865)
(82,191)
(80,911)
Interest expense, net
15,432
14,487
46,107
37,302
Expense (benefit from) income taxes,
excluding tax impacts above
(1,860)
18,462
(5,814)
(3,775)
Depreciation
266
1,330
2,629
3,690
Amortization of intangible assets
38,620
43,438
116,086
128,196
Adjusted EBITDA from continuing
operations
$
29,761
$
27,852
$
76,817
$
84,502
GAAP operating margin %
(14.3)%
(436.7)%
(19.4)%
(184.4)%
Amortization of intangible assets
27.7%
31.2%
28.0%
30.9%
Impairment of goodwill and intangible
assets
0.0%
409.6%
0.0%
154.6%
Acquisition-related costs
0.4%
3.5%
0.7%
6.4%
Restructuring
0.6%
1.4%
2.1%
2.5%
Stock-based compensation expense
5.7%
6.0%
5.5%
6.5%
Transformation costs
0.8%
3.4%
0.6%
1.8%
System migration costs
0.4%
0.3%
0.4%
1.0%
Depreciation
0.2%
1.0%
0.6%
0.9%
Other
0.0%
0.0%
0.0%
0.0%
Adjusted EBITDA margin %
21.4%
20.0%
18.5%
20.4%
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - continued
(in thousands, unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2023
2022
2023
2022
Operating expenses:
GAAP costs of revenues
$
36,407
$
36,655
$
114,698
$
109,662
Depreciation
(80
)
(208
)
(413
)
(960
)
Stock-based compensation
(128
)
(82
)
(463
)
(111
)
Codecademy pro forma (1)
—
—
—
943
Non-GAAP costs of revenues
36,199
36,365
113,822
109,534
GAAP content and software development
16,126
17,252
51,024
53,276
Depreciation
22
(87
)
(169
)
(287
)
Stock-based compensation
(1,575
)
(1,782
)
(5,350
)
(5,216
)
System migration
(510
)
(384
)
(1,580
)
(4,348
)
Codecademy pro forma (1)
—
—
—
5,441
Non-GAAP content and software
development
14,063
14,999
43,925
48,866
GAAP selling and marketing
43,983
44,680
130,321
126,089
Depreciation
(160
)
(202
)
(839
)
(655
)
Stock-based compensation
(1,421
)
(1,915
)
(2,435
)
(5,134
)
Transformation
(9
)
(35
)
(251
)
(35
)
Codecademy pro forma (1)
—
—
—
3,665
Non-GAAP selling and marketing
42,393
42,528
126,796
123,930
GAAP general and administrative
22,308
28,281
72,689
83,994
Depreciation
(48
)
(833
)
(1,208
)
(1,788
)
Stock-based compensation
(4,838
)
(4,617
)
(14,669
)
(16,445
)
Transformation
(882
)
(5,185
)
(2,475
)
(7,742
)
Codecademy pro forma (1)
—
—
—
2,395
Non-GAAP general and administrative
16,540
17,646
54,337
60,414
Total GAAP operating expenses
118,824
126,868
368,732
373,021
Depreciation
(266
)
(1,330
)
(2,629
)
(3,690
)
Stock-based compensation
(7,962
)
(8,396
)
(22,917
)
(26,906
)
System migration
(510
)
(384
)
(1,580
)
(4,348
)
Transformation (2)
(891
)
(5,220
)
(2,726
)
(7,777
)
Codecademy pro forma (1)
—
—
—
12,444
Total Non-GAAP operating expenses
$
109,195
$
111,538
$
338,880
$
342,744
(1)
For the nine months ended October 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 October
31,
Nine Months Ended October
31,
2023
2022
2023
2022
Revenue, as reported
$
138,956
$
139,390
$
415,697
$
414,803
Pro forma adjustments
Revenue from acquisitions (1)
—
—
—
8,058
Pro forma revenue (2)
$
138,956
$
139,390
$
415,697
$
422,861
(1)
Revenue from acquisitions for the nine
months ended October 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 October 31, 2023
in accordance with Regulation S-X, Article 11.
SKILLSOFT CORP. PRO
FORMA ADJUSTED NET INCOME (LOSS) (in thousands)
Three Months Ended October
31,
Nine Months Ended October
31,
2023
2022
2023
2022
Adjusted net income (loss) from
continuing operations (1)
$
(22,697)
$
(49,865)
$
(82,191)
$
(80,911)
Pro forma adjustments
Interest adjustment for debt prepayment
(2)
—
925
—
925
Tax impact of adjustments above
—
(41)
—
(41)
Adjusted net income (loss) from
acquisitions (3)
—
—
—
(4,156)
Pro forma adjusted net income
(loss)
$
(22,697)
$
(48,981)
$
(82,191)
$
(84,183)
Pro forma adjusted net income (loss)
per share
$
(2.82)
$
(5.96)
$
(10.22)
$
(10.71)
(1)
See RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES within this press release for more details.
(2)
Under the terms of our Amended Credit
Agreement, the net proceeds attributable to the sale of SumTotal
required a mandatory prepayment of $31.4 million. Interest expense
under the Amended Credit Agreement is adjusted for the
prepayment.
(3)
Adjusted net income (loss) from
acquisitions for the nine months ended October 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 October
31,
Nine Months Ended October
31,
2023
2022
2023
2022
Pro forma adjusted EBITDA
Adjusted EBITDA from continuing operations
(1)
$
29,761
$
27,852
$
76,817
$
84,502
Pro forma adjustments:
Adjusted EBITDA from acquisitions (2)
—
—
—
(4,385
)
Pro forma adjusted EBITDA
$
29,761
$
27,852
$
76,817
$
80,117
Pro forma adjusted EBITDA % of pro
forma revenue
21
%
20
%
18
%
19
%
(1)
See RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES within this press release for more details.
(2)
Adjusted EBITDA from acquisitions for the
nine months ended October 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)
Nine Months Ended October
31,
2023
2022
Free cash flow reconciliation
Net cash provided by (used in) operating
activities
$
(8,681
)
$
(23,561
)
Purchase of property and equipment
(3,753
)
(4,713
)
Internally developed software -
capitalized costs
(8,055
)
(8,639
)
Total free cash flow
$
(20,489
)
$
(36,913
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231205520473/en/
Investors and Media Chad W. Lyne SVP, Strategic Finance
& Investor Relations Officer chad.lyne@skillsoft.com
Skillsoft (NYSE:SKIL)
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