Skillsoft reports financial results for the second quarter of fiscal year 2023
Boston--(business wire)--skillsoft corp. (nyse: skil) (“skillsoft” or the “company”), a leading platform for transformative learning experiences, today announced its financial results for the second quarter of fiscal 2023 ended july 31, 2022. “i am pleased to report our fifth consecutive quarter of skillsoft subscription content bookings growth,” said jeffrey r. tarr, skillsoft’s chief executive officer. “i’m also pleased the board of directors authorized a share repurchase which reflects the strength of our balance sheet and cash flows along with confidence in our strategy and expectations for the business. we believe acquiring skillsoft equity is the best use of capital available to us at this time.” fiscal 2023 second quarter select financials from continuing operations1 skillsoft content segment bookings growth of 5% at constant currency for the quarter, and 12% for the fiscal first half. on a ltm basis q2 bookings growth for the content segment was 9% at constant currency. skillsoft ltm content dollar revenue retention of 98%, up 3 percentage points. global knowledge segment bookings decline of 21% at constant currency for the quarter, and 17% for the fiscal first half due in part to a post covid recovery in the prior year. gaap revenue of $140.6 million, up 27% compared to the prior year. adjusted revenue of $148.4 million, down 5% and down 2% on a constant currency basis due to global knowledge results. gaap net loss of $127.3 million and adjusted ebitda of $32.6 million, down 5% and up 1% on a constant currency basis. share repurchase authorization the board of directors has authorized skillsoft to repurchase up to $30 million of its class a common stock. under the program, skillsoft may purchase shares in the open market, in private negotiated transactions, or by other means from time to time. the timing and amount of any shares purchased will be based upon a variety of factors, including the share price of class a common stock, general market conditions, alternative uses for capital, skillsoft’s financial performance, and other considerations. the share repurchase program does not obligate skillsoft to purchase any minimum number of shares, and the program may be suspended, modified, or discontinued at any time without prior notice. outlook commentary we are revising our outlook ranges to reflect the sale of sumtotal, foreign exchange impact, lower fundamentals primarily due to the performance of our transactional global knowledge business, and some macro-economic uncertainty. full year fiscal 2023 outlook2 ($ in millions) previous outlook sumtotal impact foreign exchange impact lower fundamentals updated outlook bookings $790 to $825 ($127) ($15) ($70) $580 to $615 adjusted revenue $765 to $790 ($123) ($15) ($70) $545 to $580 adjusted ebitda ~ $167 ($37) ($4) ($20) $105 to $125 key operational metrics and non-gaap financial measures from continuing operations bookings the following table sets forth unaudited bookings for the three months and six months ended july 31, 2022 and 2021 as if pre-combination skillsoft and global knowledge had been combined and the skillsoft content line in the prior year includes codecademy bookings as if the acquisition had closed on april 5, 2021: 2022 2021 2022 2021 $ 77,380 $ 74,801 $ 2,579 3 % 5 % $ 128,449 $ 116,636 $ 11,813 10 % 12 % 46,493 63,541 (17,048 ) -27 % -21 % 102,158 128,798 (26,640 ) -21 % -17 % 123,873 138,342 (14,469 ) -10 % -7 % 230,607 245,434 (14,827 ) -6 % -3 % adjusted revenue gaap revenue was $140.6 million and $110.3 million for the three months ended july 31, 2022 and 2021, respectively, and $275.4 million and $178.0 million for the six months ended july 31, 2022 and 2021, respectively. the following table sets forth unaudited adjusted revenue for the three months and six months ended july 31, 2022 and 2021 as if pre-combination skillsoft and global knowledge had been combined and the skillsoft content line in the prior year includes codecademy bookings as if the acquisition had closed on april 5, 2021: 2022 2021 2022 2021 $ 98,754 $ 95,791 $ 2,963 3 % 5 % $ 188,539 $ 180,860 $ 7,679 4 % 6 % $ 49,628 $ 60,976 ($ 11,348 ) -19 % -13 % $ 101,013 115,742 ($ 14,729 ) -13 % -8 % $ 148,382 $ 156,767 $ (8,385 ) -5 % -2 % $ 289,552 $ 296,602 ($ 7,050 ) -2 % 0 % dollar retention rate the following table sets forth dollar retention rates (“drr”) for the last twelve-month (“ltm”) period ended july 31, 2022 and july 31, 2021 and for the three month periods ended july 31, 2022 and 2021: july 31 ltm 2022 ltm 2021 q2 2022 q2 2021 skillsoft content (continuing operations) 98% 95% 98% 99% adjusted ebitda and adjusted net income net loss from continuing operations was $127.3 million and $23.9 million for the three months ended july 31, 2022 and 2021, respectively, and $150.4 million and $59.8 million for the six months ended july 31, 2022 and 2021, respectively. the following table sets forth adjusted ebitda and adjusted net income for the three and six month periods ended july 31, 2022 and 2021. see full reconciliation and adjusting items in the tables on pages 11 to 14. 2022 2021 2022 2021 $32,585 $34,323 ($1,738) -5% 1% $56,650 $62,939 ($6,289) -10% -5% $15,393 $22,636 ($7,243) -32% $45,145 $38,710 $6,435 17% n/a 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 webcast replay will be available at the same site for six months. a telephone replay will be available by dialing (877) 660-6853 or international dial-in (201) 612-7415 conference id 13732286, beginning about three hours after call’s end, running through september 13th, 2022. 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. adjusted net income or loss adjusted net income or loss is defined as net income or loss plus or minus primarily non-cash items and other items that management does not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, amortization related to acquired intangible assets, restructuring and impairment charges, acquisition-related costs, financing related costs, other gains and losses, and discontinued operations, all net of the related tax effects. 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. 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, adjusted revenue, and adjusted ebitda), our product development and planning, our pipeline, future capital expenditures, share repurchases, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services and competitive strengths, goals, 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. 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, and disposition of sumtotal; 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, including shifting global privacy, data protection, and cyber and information security laws and regulations, as well as state privacy and data protection laws, such as those in california, colorado, and virginia; 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 implement our share repurchase program successfully; our ability to successfully defend ourselves in legal proceedings; and our ability to continue to meet applicable listing standards. the foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. for more information, please see the risk factors included in our form 10-k 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 do not undertake to 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, 2022 and includes codecademy for both years as if the acquisition had occurred as of april 5, 2021. constant currency results represent current year period local currency amounts translated at prior year foreign exchange rates. continuing operations excludes sumtotal results for all periods presented as a result of the sale on august 15, 2022. 2 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) 43,344 138,176 5,300 14,015 98,522 173,876 45,355 37,082 44,079 64,074 236,600 427,223 12,583 11,475 1,032,706 795,811 826,511 793,859 16,310 17,988 11,284 10,780 156,043 164,812 2,292,037 2,221,948 37,795 4,800 35,477 74,629 22,412 24,159 19,710 40,822 48,799 47,757 5,036 6,387 214,482 259,701 74,734 87,467 458,445 545,722 583,975 462,185 11,247 28,199 15,065 — 83,474 99,395 13,505 11,750 1,280 1,248 11,638 11,125 2,092 2,426 722,276 616,328 — — 14 11 1,504,428 1,306,146 (390,371 ) (247,229 ) (2,755 ) 970 1,111,316 1,059,898 2,292,037 2,221,948 skillsoft corp. unaudited consolidated statements of operations (in thousands, except per share amounts) 140,574 75,466 34,814 34,998 22,290 6,949 19,693 6,208 4,510 41,848 19,650 10,905 26,367 16,824 4,652 45,200 18,493 14,575 70,475 — — 8,452 9,900 4,927 4,323 287 (910 ) 251,356 93,652 45,608 (110,782 ) (18,186 ) (10,794 ) 80 (992 ) 304 6,846 17,115 800 (15,065 ) — — 10 9 53 (11,470 ) (9,265 ) (5,354 ) (130,381 ) (11,319 ) (14,991 ) (3,065 ) (1,996 ) (464 ) (127,316 ) (9,323 ) (14,527 ) 5,817 (2,531 ) 2,668 (121,499 ) (11,854 ) (11,859 ) * * (3.63 ) * * 0.67 * * (2.96 ) (0.78 ) (0.07 ) * 0.04 (0.02 ) * (0.74 ) (0.09 ) * * * 4,000 164,089 133,059 * skillsoft corp. unaudited consolidated statements of operations (in thousands, except per share amounts) 275,413 75,466 102,494 73,008 22,290 22,043 36,026 6,208 15,012 81,410 19,650 34,401 55,711 16,824 16,471 84,758 18,493 46,492 70,475 — — 21,764 9,900 6,641 8,279 287 (576 ) 431,431 93,652 140,484 (156,018 ) (18,186 ) (37,990 ) 1,132 (992 ) (167 ) 16,952 17,115 900 (15,065 ) — — 170 9 60 (23,007 ) (9,265 ) (16,763 ) (175,836 ) (11,319 ) (53,960 ) (25,402 ) (1,996 ) (3,521 ) (150,434 ) (9,323 ) (50,439 ) 7,292 (2,531 ) 1,175 (143,142 ) (11,854 ) (49,264 ) * * (12.61 ) * * * * (12.32 ) (0.98 ) (0.07 ) * 0.05 (0.02 ) * (0.93 ) (0.09 ) * * * 4,000 153,442 133,059 * skillsoft corp. unaudited consolidated statements of cash flows (in thousands) (143,142 ) (11,854 ) (49,264 ) 16,915 4,817 — 3,897 1,705 3,572 91,103 20,023 50,902 113 (170 ) (174 ) (36,535 ) 1,239 (5,886 ) 1,053 434 487 (16,952 ) (17,115 ) (900 ) 1,977 1,445 748 70,475 — — 15,065 — — 82,783 6,963 88,622 (7,492 ) (13,065 ) 3,379 (2,559 ) 5,175 (6,417 ) (23,066 ) 18,026 (18,592 ) 96 (1,690 ) (1,301 ) (66,734 ) (15,195 ) (31,365 ) (13,003 ) 738 33,811 (3,528 ) (75 ) (641 ) (5,721 ) (881 ) (2,350 ) (198,633 ) — — — (156,926 ) — — (386,035 ) — — (18,646 ) — (207,882 ) (562,563 ) (2,991 ) (1,720 ) — — — 530,000 — 157,088 464,290 — — (137 ) (370 ) (39,152 ) (9,456 ) 16,577 (3,202 ) — — — (605,591 ) (1,300 ) 113,014 379,106 14,907 (4,646 ) (250 ) 203 (112,517 ) (182,969 ) 45,930 168,923 288,483 74,443 56,406 105,514 120,373 43,344 90,772 117,299 5,300 14,742 3,074 7,762 — — 56,406 105,514 120,373 skillsoft corp. reconciliation of non-gaap financial measures (in thousands) $ 140,574 $ 7,808 $ 148,382 34,998 7,808 42,806 19,693 - 19,693 41,848 - 41,848 26,367 - 26,367 45,200 - 45,200 70,475 - 70,475 8,452 - 8,452 4,323 - 4,323 251,356 7,808 259,164 $ (110,782 ) $ - $ (110,782 ) 80 - 80 6,846 - 6,846 (15,065 ) - (15,065 ) 10 - 10 (11,470 ) - (11,470 ) (130,381 ) - (130,381 ) (3,065 ) - (3,065 ) (127,316 ) - (127,316 ) 5,817 - 5,817 $ (121,499 ) $ - $ (121,499 ) 45,200 - 45,200 70,475 - 70,475 8,452 - 8,452 4,323 - 4,323 (7,066 ) - (7,066 ) 15,065 - 15,065 10,017 - 10,017 (3,757 ) - (3,757 ) (5,817 ) - (5,817 ) $ 15,393 $ - $ 15,393 692 - 692 11,460 - 11,460 942 - 942 4,098 - 4,098 $ 32,585 $ - $ 32,585 22 % skillsoft corp. reconciliation of non-gaap financial measures (in thousands) $ 275,413 $ 14,139 $ 289,552 73,008 14,139 87,147 36,026 - 36,026 81,410 - 81,410 55,711 - 55,711 84,758 - 84,758 70,475 - 70,475 21,764 - 21,764 8,279 - 8,279 431,431 14,139 445,570 $ (156,018 ) $ - $ (156,018 ) 1,132 - 1,132 16,952 - 16,952 (15,065 ) - (15,065 ) 170 - 170 (23,007 ) - (23,007 ) (175,836 ) - (175,836 ) (25,402 ) - (25,402 ) (150,434 ) - (150,434 ) 7,292 7,292 $ (143,142 ) $ - $ (143,142 ) 84,758 - 84,758 70,475 - 70,475 21,764 - 21,764 8,279 - 8,279 (18,123 ) - (18,123 ) 15,065 - 15,065 18,510 - 18,510 (5,149 ) - (5,149 ) (7,292 ) - (7,292 ) $ 45,145 $ - $ 45,145 (20,253 ) - (20,253 ) 22,837 - 22,837 2,360 - 2,360 6,561 - 6,561 $ 56,650 $ - $ 56,650 20 % skillsoft corp. reconciliation of non-gaap financial measures (in thousands) $ 25,255 $ 34,814 $ 75,466 $ 10,923 $ 146,458 $ 10,309 $ 156,767 11,836 6,949 22,290 6,468 47,543 258 4,510 6,208 - 10,976 5,398 10,905 19,650 - 35,953 10,765 4,652 16,824 - 32,241 1,063 14,575 18,493 - 34,131 - 4,927 9,900 - 14,827 146 (910 ) 287 - (477 ) 29,466 45,608 93,652 6,468 175,194 $ (4,211 ) $ (10,794 ) $ (18,186 ) $ 4,455 $ (28,736 ) (852 ) 304 (992 ) - (1,540 ) - 800 17,115 - 17,915 - 53 9 - 62 (1,901 ) (5,354 ) (9,265 ) - (16,520 ) (6,964 ) (14,991 ) (11,319 ) 4,455 (28,819 ) 481 (464 ) (1,996 ) (1,979 ) (7,445 ) (14,527 ) (9,323 ) 4,455 (26,840 ) - 2,668 (2,531 ) 137 $ (7,445 ) $ (11,859 ) $ (11,854 ) $ 4,455 $ (26,703 ) $ 1,063 $ 14,575 $ 18,493 $ - $ 34,131 4,455 (4,455 ) 7,469 4,927 9,900 - 22,296 266 (910 ) 287 - (357 ) - (1,179 ) (16,377 ) - (17,556 ) - - 4,817 - 4,817 608 3,106 2,432 - 6,145 - (2,668 ) 2,531 - (137 ) $ 1,961 $ 10,447 $ 10,229 $ - $ 22,636 (127 ) (3,570 ) (4,428 ) - (8,124 ) 1,901 5,301 9,256 - 16,458 467 557 1,006 - 2,030 709 460 154 - 1,323 $ 4,911 $ 13,195 $ 16,217 $ - $ 34,323 23 % skillsoft corp. reconciliation of non-gaap financial measures (in thousands) $ 71,932 $ 102,494 $ 75,466 $ 33,640 $ 283,532 $ 13,070 $ 296,602 34,698 22,043 22,290 14,557 93,588 492 15,012 6,208 - 21,712 16,404 34,401 19,650 - 70,455 19,765 16,471 16,824 - 53,060 2,646 46,492 18,493 - 67,631 - 6,641 9,900 - 16,541 2,764 (576 ) 287 - 2,475 76,769 140,484 93,652 14,557 325,462 $ (4,837 ) $ (37,990 ) $ (18,186 ) $ 19,083 $ (41,930 ) 624 (167 ) (992 ) - (535 ) - 900 17,115 - 18,015 - 60 9 - 69 (11,970 ) (16,763 ) (9,265 ) - (37,998 ) (16,183 ) (53,960 ) (11,319 ) 19,083 (62,379 ) (359 ) (3,521 ) (1,996 ) - (5,876 ) (15,824 ) (50,439 ) (9,323 ) 19,083 (56,503 ) - 1,175 (2,531 ) - (1,356 ) $ (15,824 ) $ (49,264 ) $ (11,854 ) $ 19,083 $ (57,859 ) $ 2,646 $ 46,492 $ 18,493 $ - $ 67,631 19,083 (19,083 ) - 8,862 6,641 9,900 - 25,403 2,884 (576 ) 287 - 2,595 - (1,001 ) (16,377 ) - (17,378 ) - - 4,817 - 4,817 (319 ) 10,033 2,432 - 12,145 - (1,175 ) 2,531 - 1,356 $ (1,751 ) $ 30,233 $ 10,229 $ - $ 38,710 (40 ) (13,554 ) (4,428 ) - (18,021 ) 11,970 16,703 9,256 - 37,929 1,473 1,776 1,006 - 4,255 (714 ) 626 154 - 66 $ 10,938 $ 35,784 $ 16,217 $ - $ 62,939 22 %
