- Delivered year-over-year growth in total Company Bookings and
Revenue.
- Content & Platform segment Bookings increased 7% and
Revenue grew 4%.
- Dollar Retention Rate increased three percentage points to 101%
on an LTM basis.
- Reaffirmed its financial outlook for the full fiscal year-ended
January 31, 2024.
Skillsoft 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
2024 ended July 31, 2023.
“Skillsoft executed well in the quarter, delivering improved
top-line performance with growth in both Bookings and Revenue,”
said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “In our
primarily SaaS-based Content & Platform segment, Bookings
increased 7%, Revenue growth accelerated to 4%, and LTM Dollar
Retention Rate came in at 101%, up from 98% in the year-ago period,
driven by our investments in platform, content and
go-to-market.”
Tarr added, “The reskilling revolution is impacting nearly every
company and industry around the globe, as organizations seek to
enable their talent to succeed in an increasingly dynamic era
marked by digital transformation, occupational disruption, and now
the emergence of generative AI. We believe these structural shifts
are unlocking new long-term growth opportunity for Skillsoft as we
enable organizations to grow and thrive with a future-fit workforce
that is skilled and ready for the jobs of tomorrow.”
Fiscal 2024 Second Quarter Select Metrics and Financials from
Continuing Operations (1)(2)
- Total Bookings grew 4% led by 7% growth in the Content &
Platform segment, partially offset by a 1% decline in
Instructor-Led Training segment Bookings.
- GAAP Revenue of $141 million grew under 1%, with 4% growth in
Content & Platform segment GAAP Revenue to $103 million, offset
by a 9% decline in Instructor-Led Training segment GAAP Revenue to
$38 million.
- GAAP net loss of $32 million compared to a GAAP net loss of
$121 million in the prior year. GAAP net loss per share of $0.20
compared to a GAAP net loss per share of $0.74 in the prior
year.
- Pro forma Adjusted Net Loss of $29 million compared to a pro
forma Adjusted Net Loss of $24 million in the prior year. Pro forma
Adjusted Net Loss per share of $0.18 compared to a pro forma
Adjusted Net Loss per share of $0.14 in the prior year.
- Adjusted EBITDA from continuing operations of $25 million,
reflecting a margin of 18% of GAAP revenue.
- Ended the quarter with $148 million of cash and cash
equivalents.
Fiscal 2024 Second 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 98% in the
year-ago period.
- Released a beta version of Skillsoft CAISY™ (Conversion AI
Simulator), an innovative generative AI-based tool for simulating
business and leadership conversational skills through experiential,
active learning.
- Launched a ChatGPT Learning Journey, the first in a series of
generative AI courses designed to equip organizations and the
workforce with the skills required to use the technology
productively and ethically.
- Announced significant enhancements to our Codecademy technology
skilling solution, including an expanded content library of more
than 6,000 courses covering the most in-demand technology skills,
new interactive learning and practice formats, and access to more
than 500 Skill Benchmarks to assess, index, and track workforce
skills development.
- Released our C-Suite Perspectives report, revealing a pressing
skills crisis in critical areas of business, including
cybersecurity, data science, and artificial intelligence, and
providing C-level leaders with a roadmap to help them build agile,
future-fit teams through transformative learnings.
Full-Year Fiscal 2024 Financial Outlook (2)
The following table reflects Skillsoft’s reaffirmed financial
outlook for the full-year fiscal 2024 ended January 31, 2024, based
on current market conditions, expectations, and assumptions:
Bookings
$610 million to $640 million
GAAP revenue
$555 million to $585 million
Adjusted EBITDA
$100 million to $105 million
(1)
Growth calculated relative to the
comparable prior year period unless otherwise noted.
(2)
See “Non-GAAP Financial Measures
and Key Performance Metrics” below for the definitions of our key
operational and non-GAAP metrics and how they are calculated and
more information regarding the fact that the Company is unable to
reconcile forward-looking non-GAAP measures without unreasonable
efforts. We have provided at the back of this release
reconciliations of our historical non-GAAP financial measures to
the comparable GAAP measures.
Key Operational Metrics and
Non-GAAP Financial Measures (3) (in thousands,
except per share amounts)
Change
Change
Three Months Ended
Constant
Six Months Ended
Constant
July 31,
Change
Currency
July 31,
Change
Currency
2023
2022
Dollar
Percent
%
2023
2022
Dollar
Percent
%
Bookings (4)
Continuing operations:
Content & Platform
$
83,123
$
77,380
$
5,743
7%
7%
$
147,655
$
137,526
$
10,129
7%
8%
Instructor-Led Training
46,058
46,493
(435
)
(1)%
(1)%
89,994
102,158
(12,164
)
(12)%
(10)%
Total bookings
$
129,181
$
123,873
$
5,308
4%
4%
$
237,649
$
239,684
$
(2,035
)
(1)%
0%
GAAP revenue
Continuing operations:
Content & Platform
$
103,188
$
98,753
$
4,435
4%
4%
$
201,761
$
188,539
$
13,222
7%
8%
Instructor-Led Training
37,999
41,821
(3,822
)
(9)%
(9)%
74,980
86,874
(11,894
)
(14)%
(12)%
Total
$
141,187
$
140,574
$
613
0%
0%
$
276,741
$
275,413
$
1,328
0%
2%
Pro forma revenue (4)
Continuing operations:
Content & Platform
$
103,188
$
98,753
$
4,435
4%
4%
$
201,761
$
196,597
$
5,164
3%
3%
Instructor-Led Training
37,999
41,821
(3,822
)
(9)%
(9)%
74,980
86,874
(11,894
)
(14)%
(12)%
Total pro forma revenue
$
141,187
$
140,574
$
613
0%
0%
$
276,741
$
283,471
$
(6,730
)
(2)%
(1)%
GAAP net income (loss)
$
(31,999
)
$
(121,499
)
$
89,500
NA
NA
$
(76,223
)
$
(143,142
)
$
66,919
NA
NA
Pro forma Non-GAAP operating expenses
(4)
Pro forma Non-GAAP costs of revenues
$
40,047
$
34,704
$
5,343
15%
16%
$
77,623
$
73,169
$
4,454
6%
8%
Pro forma Non-GAAP content and software
development expenses
15,556
15,402
154
1%
2%
29,862
33,867
(4,005
)
(12)%
(11)%
Pro forma Non-GAAP selling and marketing
expenses
40,560
39,925
635
2%
1%
84,403
81,402
3,001
4%
4%
Pro forma Non-GAAP general and
administrative expenses
19,596
17,958
1,638
9%
9%
37,797
42,768
(4,971
)
(12)%
(11)%
Total pro forma Non-GAAP operating
expenses
$
115,759
$
107,989
$
7,770
7%
7%
$
229,685
$
231,206
$
(1,521
)
(1)%
0%
Pro forma adjusted net income (loss)
& adjusted EBITDA (4)
Continuing operations:
Pro forma adjusted net income
(loss)
$
(29,441
)
$
(23,703
)
$
(5,738
)
NA
NA
$
(59,494
)
$
(35,202
)
$
(24,292
)
NA
NA
Pro forma adjusted net income (loss)
per share
$
(0.18
)
$
(0.14
)
$
(0.04
)
NA
NA
$
(0.37
)
$
(0.23
)
$
(0.14
)
NA
NA
Pro forma adjusted EBITDA
$
25,428
$
32,585
$
(7,157
)
(22)%
(22)%
$
47,056
$
52,265
$
(5,209
)
(10)%
(9)%
Pro forma adjusted EBITDA % of pro
forma revenue
18
%
23
%
17
%
18
%
_______________
(3)
See "Non-GAAP Financial Measures
and Key Performance Metrics" below for the definitions of our key
operational and non-GAAP metrics and how they are calculated.
(4)
For the six months ended July 31,
2022, the unaudited Pro Forma financial information is presented in
accordance with Regulation S-X, Article 11 to enhance comparability
for all periods by including operating results for Codecademy as if
the merger had closed on February 1, 2022.
Webcast and Conference Call Information
Skillsoft will host a conference call and webcast today at 5:00
p.m. Eastern Time to discuss its financial results. To access the
call, dial (877) 413‑9278 from 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 best-in-class content, a platform that is
personalized and connected to customer needs, world-class tech, and
a broad ecosystem of partners, Skillsoft drives continuous growth
and performance for employees and their organizations by overcoming
critical skill gaps and unlocking human potential. Learn more at
www.skillsoft.com.
NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE
METRICS
We track the non-GAAP financial measures and key performance
metrics that we believe are key financial measures of our success.
Non-GAAP measures and key performance metrics are frequently used
by securities analysts, investors, and other interested parties in
their evaluation of companies comparable to us, many of which
present non-GAAP measures and key performance metrics when
reporting their results. These measures can be useful in evaluating
our performance against our peer companies because we believe the
measures provide users with valuable insight into key components of
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 services to our platform. Bookings are
adjusted and presented on a pro forma basis as if Codecademy had
merged on February 1, 2022, to enhance comparability.
- Pro forma revenue – Pro forma revenue is defined as GAAP
revenue adjusted in accordance with Regulation S-X, Article 11 as
if Codecademy had merged on February 1, 2022, to enhance
comparability. Pro forma revenue is reconciled to the reported GAAP
revenue for all the periods presented.
- Dollar retention rate (“DRR”) - For
existing customers at the beginning of a given period, DRR
represents subscription renewals, upgrades, churn, and downgrades
in such period divided by the beginning total renewable base for
such customers for such period. Renewals reflect customers who
renew their subscription, inclusive of auto-renewals for multi-year
contracts, while churn reflects customers who choose to not renew
their subscription. Upgrades include orders from customers that
purchase additional licenses or content (e.g., a new Leadership and
Business module), while downgrades reflect customers electing to
decrease the number of licenses or reduce the size of their content
package. Upgrades and downgrades also reflect changes in pricing.
We use our DRR to measure the long-term value of customer contracts
as well as our ability to retain and expand the revenue generated
from our existing customers.
- Adjusted net income (loss) - Adjusted net income (loss)
is defined as GAAP net income (loss) excluding non-cash items,
discrete and event-specific costs that do not represent normal,
recurring, cash operating expenses necessary for our business
operations, and certain accounting income and/or expenses that
management believes are necessary to enhance the comparability and
are useful in assessing our operating performance, include the
following (including the related tax effects):
- Stock-based compensation expense – Non-cash expense associated
with stock-based compensation.
- Restructuring charges – Severance costs and the abandonment of
right-of-use assets resulted from the acquisition integration
process and cost saving initiatives.
- Fair value adjustments – Mark-to-market adjustments of warrants
and hedge instruments.
- Foreign currency impact – Unrealized and realized foreign
exchange gains or losses due to fluctuations in exchange
rates.
- Acquisition and integration related costs – Non-recurring costs
incurred to effectuate an acquisition, including contingent
compensation expenses, and integration related costs.
- Transformation costs – Non-recurring costs incurred to
transform our operations through significant strategic non-ordinary
course transactions.
- System migration costs – Non-recurring costs of temporary
resources needed for the migration of content and customers from
our legacy system to a global platform.
- Income from discontinued operations – Income from discontinued
operations that do not reflect our current operating
performance.
- (Gain) loss on sale of business - gain or loss on non-routine
sale of business.
- Impairment charges - non-cash goodwill, intangible or other
asset impairment charges.
- Adjusted EBITDA - Adjusted EBITDA is defined as adjusted
net loss excluding interest expense or income, benefit from or
provision for income taxes, depreciation and amortization
expense.
- Non-GAAP operating expenses – GAAP operating expenses,
less depreciation, stock-based compensation, system migration
costs, transformation costs, other non-cash charges and pro forma
adjustments, as applicable.
- Pro forma adjusted net income (loss) – Pro forma
adjusted net income (loss) is defined as adjusted net income (loss)
adjusted in accordance with Regulation S-X, Article 11 as if
Codecademy had merged on February 1, 2022, to enhance
comparability.
- Pro forma adjusted net income (loss) per share – Pro
forma adjusted net income (loss) per share is defined as adjusted
net income (loss) defined above divided by weighted average common
shares outstanding.
- Pro forma adjusted EBITDA – Pro forma adjusted EBITDA is
defined as adjusted EBITDA adjusted in accordance with Regulation
S-X, Article 11 as if Codecademy had merged on February 1, 2022, to
enhance comparability.
- Pro forma adjusted EBITDA % of pro forma revenue – Pro
forma adjusted EBITDA % of pro forma revenue is defined as pro
forma adjusted EBITDA defined above as a percentage of pro forma
revenue defined above.
Cautionary Notes Regarding Forward Looking Statements
This document includes statements that are, or may be deemed to
be, “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to
be covered by the safe harbors created by those laws. All
statements, other than statements of historical facts, that address
activities, events or developments that we expect or anticipate may
occur in the future, including such things as our outlook
(including bookings, revenue, adjusted EBITDA, and free cash flow),
our product development and planning, our pipeline, future capital
expenditures, share repurchases, financial results, the impact of
regulatory changes, existing and evolving business strategies and
acquisitions and dispositions, demand for our services, competitive
strengths, the benefits of new initiatives, growth of our business
and operations, and our ability to successfully implement our
plans, strategies, objectives, expectations and intentions are
forward-looking statements. Also, when we use words such as “may,”
“will,” “would,” “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “plan,” “project,” “forecast,” “seek,” “outlook,”
“target,” “goal,” “probably,” or similar expressions, we are making
forward-looking statements. Such statements are based upon the
current beliefs and expectations of Skillsoft’s management and are
subject to significant risks and uncertainties. All forward-looking
disclosure is speculative by its nature, and we caution you against
unduly relying on these forward-looking statements.
Factors that could cause or contribute to such differences
include those described under “Part I - Item 1A. Risk Factors” in
our Form 10‑K for the fiscal year ended January 31, 2023. These
factors should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements included in our
other periodic filings with the Securities and Exchange Commission.
The forward-looking statements contained in this document represent
our estimates only as of the date of this filing and should not be
relied upon as representing our estimates as of any subsequent
date. While we may elect to update these forward-looking statements
in the future, we specifically disclaim any obligation to do so,
whether to reflect actual results, changes in assumptions, changes
in other factors affecting such forward-looking statements, or
otherwise.
Although we believe that the assumptions underlying our
forward-looking statements are reasonable, any of these
assumptions, and therefore also the forward-looking statements
based on these assumptions, could themselves prove to be
inaccurate. Given the significant uncertainties inherent in the
forward-looking statements included in this document, our inclusion
of this information is not a representation or guarantee by us that
our objectives and plans will be achieved. Annualized, pro forma,
projected and estimated numbers are used for illustrative purpose
only, are not forecasts and may not reflect actual results.
Additionally, statements as to market share, industry data and our
market position are based on the most currently available data
available to us and our estimates regarding market position or
other industry data included in this document or otherwise
discussed by us involve risks and uncertainties and are subject to
change based on various factors, including as set forth above.
SKILLSOFT CORP.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of
shares)
July 31,
2023
January 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
147,927
$
170,359
Restricted cash
4,918
7,197
Accounts receivable, net of allowance for
credit losses of approximately $225 and $221 as of July 31, 2023
and January 31, 2023, respectively
110,499
183,592
Prepaid expenses and other current
assets
49,014
44,596
Total current assets
312,358
405,744
Property and equipment, net
7,244
10,150
Goodwill
457,967
457,744
Intangible assets, net
667,875
738,066
Right-of-use assets
9,277
14,633
Other assets
23,353
16,350
Total assets
$
1,478,074
$
1,642,687
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current maturities of long-term debt
$
6,404
$
6,404
Borrowings under accounts receivable
facility
40,092
39,693
Accounts payable
14,139
18,338
Accrued compensation
24,587
34,325
Accrued expenses and other current
liabilities
30,145
41,474
Lease liabilities
3,883
4,198
Deferred revenue
224,143
280,676
Total current liabilities
343,393
425,108
Long-term debt
579,639
581,817
Warrant liabilities
1,109
4,754
Deferred tax liabilities
68,123
73,976
Long-term lease liabilities
10,357
11,947
Deferred revenue - non-current
2,440
1,778
Other long-term liabilities
10,081
11,551
Total long-term liabilities
671,749
685,823
Commitments and contingencies
Shareholders’ equity:
Shareholders’ common stock - Class A
common shares, $0.0001 par value: 375,000,000 shares authorized and
160,467,809 shares issued and outstanding at July 31, 2023, and
163,655,881 shares issued and outstanding at January 31, 2023
14
14
Additional paid-in capital
1,535,648
1,521,574
Accumulated deficit
(1,048,416
)
(972,193
)
Treasury shares
(10,891
)
(2,845
)
Accumulated other comprehensive income
(loss)
(13,423
)
(14,794
)
Total shareholders’ equity
462,932
531,756
Total liabilities and shareholders’
equity
$
1,478,074
$
1,642,687
SKILLSOFT CORP.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share
amounts)
Three
Months
Ended
Three
Months
Ended
Six
Months
Ended
Six
Months
Ended
July 31,
2023
July 31,
2022
July 31,
2023
July 31,
2022
Revenues:
Total revenues
$
141,187
$
140,574
$
276,741
$
275,413
Operating expenses:
Costs of revenues
40,467
34,998
78,291
73,008
Content and software development
17,863
19,693
34,898
36,026
Selling and marketing
40,411
41,848
86,338
81,410
General and administrative
25,085
26,367
50,381
55,711
Amortization of intangible assets
39,221
45,200
77,466
84,758
Impairment of goodwill
—
70,475
—
70,475
Acquisition-related costs
937
8,452
2,328
21,764
Restructuring
2,501
4,323
7,719
8,279
Total operating expenses
166,485
251,356
337,421
431,431
Operating income (loss)
(25,298
)
(110,782
)
(60,680
)
(156,018
)
Other income (expense), net
(934
)
80
(1,309
)
1,132
Fair value adjustment of warrants
793
6,846
3,645
16,952
Fair value adjustment of hedge
instruments
6,935
(15,065
)
7,205
(15,065
)
Interest income
871
10
1,516
170
Interest expense
(16,255
)
(11,470
)
(32,191
)
(23,007
)
Income (loss) before provision for
(benefit from) income taxes
(33,888
)
(130,381
)
(81,814
)
(175,836
)
Provision for (benefit from) income
taxes
(1,889
)
(3,065
)
(6,273
)
(25,402
)
Income (loss) from continuing
operations
(31,999
)
(127,316
)
(75,541
)
(150,434
)
Gain (loss) on sale of business
—
—
(682
)
—
Income (loss) from discontinued
operations, net of tax
—
5,817
—
7,292
Net income (loss)
$
(31,999
)
$
(121,499
)
$
(76,223
)
$
(143,142
)
Net income (loss) per share:
Ordinary – Basic and diluted - continuing
operations
$
(0.20
)
$
(0.78
)
$
(0.47
)
$
(0.98
)
Ordinary – Basic and diluted -
discontinued operations
—
0.04
—
0.05
Ordinary – Basic and diluted
$
(0.20
)
$
(0.74
)
$
(0.47
)
$
(0.93
)
Weighted average common shares
outstanding:
Ordinary – Basic and diluted
160,098
164,089
160,836
153,442
SKILLSOFT CORP.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months
Ended
Six Months
Ended
July 31,
2023
July 31,
2022
Cash flows from operating activities:
Net income (loss)
$
(76,223
)
$
(143,142
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Share-based compensation
14,955
16,915
Depreciation and amortization
2,761
3,897
Amortization of intangible assets
77,466
91,103
Provision for credit loss expense
(recovery)
4
113
Provision for (benefit from) income taxes
– non-cash
(6,913
)
(36,535
)
Non-cash interest expense
1,024
1,053
Non-cash lease and property and equipment
impairment charges
4,808
—
Gain (loss) on sale of business
682
—
Fair value adjustment of warrants
(3,645
)
(16,952
)
Impairment of goodwill and intangible
assets
—
70,475
Unrealized (gain) loss on derivative
instrument
(7,205
)
15,065
Change in assets and liabilities, net of
effects from acquisitions:
Right-of-use assets
145
1,977
Accounts receivable
73,172
82,783
Prepaid expenses and other current
assets
(520
)
(7,492
)
Accounts payable
(4,241
)
(2,559
)
Accrued expenses, including long-term
(17,379
)
(23,066
)
Lease liabilities
(1,081
)
96
Deferred revenues
(55,825
)
(66,734
)
Net cash provided by (used in) operating
activities
1,985
(13,003
)
Cash flows from investing activities:
Purchase of property and equipment
(3,406
)
(3,528
)
Internally developed software -
capitalized costs
(5,951
)
(5,721
)
Sale of SumTotal, net of cash
transferred
(5,137
)
—
Acquisition of Codecademy, net of cash
received
—
(198,633
)
Net cash used in investing activities
(14,494
)
(207,882
)
Cash flows from financing activities:
Shares repurchased for tax withholding
upon vesting of restricted stock-based awards
(881
)
(1,718
)
Payments to acquire treasury stock
(8,046
)
—
Proceeds from issuance of term loans, net
of fees
—
157,088
Proceeds from accounts receivable
facility, net of borrowings
399
(39,154
)
Principal payments on Term loans
(3,202
)
(3,202
)
Net cash provided by (used in) financing
activities
(11,730
)
113,014
Effect of exchange rate changes on cash
and cash equivalents
(472
)
(4,646
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(24,711
)
(112,517
)
Cash, cash equivalents and restricted
cash, beginning of period
177,556
168,923
Cash, cash equivalents and restricted
cash, end of period
$
152,845
$
56,406
Supplemental disclosure of cash flow
information:
Cash and cash equivalents
$
147,927
$
43,344
Restricted cash
4,918
5,300
Cash attributable to discontinued
operations
—
7,762
Cash, cash equivalents and restricted
cash, end of period
$
152,845
$
56,406
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands, unaudited)
Three
Months
Ended
Three
Months
Ended
Six
Months
Ended
Six
Months
Ended
July 31,
2023
July 31,
2022
July 31,
2023
July 31,
2022
Revenues, as reported
$
141,187
$
140,574
$
276,741
$
275,413
Net income (loss), as reported
$
(31,999
)
$
(121,499
)
$
(76,223
)
$
(143,142
)
Income from discontinued operations, net
of tax
—
(5,817
)
—
(7,292
)
Gain (loss) on sale of business
—
—
682
—
Impairment of goodwill and intangible
assets
—
70,475
—
70,475
Acquisition-related costs
937
8,452
2,328
21,764
Restructuring
2,501
4,323
7,719
8,279
Foreign currency impact
1,225
—
1,694
(1,171
)
Fair value adjustment of warrants
(793
)
(7,066
)
(3,645
)
(16,952
)
Fair value adjustment of hedge
instruments
(6,935
)
15,065
(7,205
)
15,065
Stock-based compensation expense
5,831
10,017
14,955
18,510
Transformation costs
323
1,746
1,450
2,597
System migration costs
403
2,352
1,070
3,964
Tax impact of non-GAAP adjustments
(934
)
(1,751
)
(2,319
)
(3,143
)
Adjusted net income (loss) from
continuing operations
(29,441
)
(23,703
)
(59,494
)
(31,046
)
Interest expense, net
15,384
11,460
30,675
22,837
Expense (benefit from) income taxes,
excluding tax impacts above
(955
)
(1,314
)
(3,954
)
(22,259
)
Depreciation
1,219
942
2,363
2,360
Amortization of intangible assets
39,221
45,200
77,466
84,758
Adjusted EBITDA from continuing
operations
$
25,428
$
32,585
$
47,056
$
56,650
GAAP operating margin %
(17.9
)%
(78.8
)%
(21.9
)%
(56.6
)%
Amortization of intangible assets
27.9
%
32.1
%
28.1
%
30.8
%
Impairment of goodwill and intangible
assets
0.0
%
50.1
%
0.0
%
25.6
%
Acquisition-related costs
0.7
%
6.0
%
0.8
%
7.9
%
Restructuring
1.8
%
3.1
%
2.8
%
3.0
%
Stock-based compensation expense
4.1
%
7.1
%
5.4
%
6.7
%
Transformation costs
0.2
%
1.2
%
0.5
%
0.9
%
System migration costs
0.3
%
1.7
%
0.4
%
1.4
%
Depreciation
0.9
%
0.7
%
0.9
%
0.9
%
Other
0.0
%
0.0
%
0.0
%
0.0
%
Adjusted EBITDA margin %
18.0
%
23.2
%
17.0
%
20.6
%
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES - continued
(in thousands, unaudited)
Three Months Ended
July 31,
Six Months Ended
July 31,
2023
2022
2023
2022
Operating expenses:
GAAP costs of revenues
$
40,467
$
34,998
$
78,291
$
73,007
Depreciation
(182
)
(278
)
(333
)
(752
)
Stock-based compensation
(238
)
(16
)
(335
)
(29
)
Codecademy pro forma (1)
—
—
—
943
Non-GAAP costs of revenues
40,047
34,704
77,623
73,169
GAAP content and software development
17,863
19,693
34,898
36,024
Depreciation
(141
)
(81
)
(191
)
(201
)
Stock-based compensation
(1,763
)
(1,858
)
(3,775
)
(3,433
)
System migration
(403
)
(2,352
)
(1,070
)
(3,964
)
Codecademy pro forma (1)
—
—
—
5,441
Non-GAAP content and software
development
15,556
15,402
29,862
33,867
GAAP selling and marketing
40,411
41,848
86,338
81,409
Depreciation
(412
)
(181
)
(679
)
(453
)
Stock-based compensation
667
(1,742
)
(1,014
)
(3,219
)
Transformation
(106
)
—
(242
)
—
Codecademy pro forma (1)
—
—
—
3,665
Non-GAAP selling and marketing
40,560
39,925
84,403
81,402
GAAP general and administrative
25,085
26,367
50,381
55,715
Depreciation
(484
)
(402
)
(1,160
)
(954
)
Stock-based compensation
(4,497
)
(6,401
)
(9,831
)
(11,829
)
Transformation
(508
)
(1,606
)
(1,593
)
(2,559
)
Codecademy pro forma (1)
—
—
—
2,395
Non-GAAP general and administrative
19,596
17,958
37,797
42,768
Total GAAP operating expenses
123,826
122,906
249,908
246,155
Depreciation
(1,219
)
(942
)
(2,363
)
(2,360
)
Stock-based compensation
(5,831
)
(10,017
)
(14,955
)
(18,510
)
System migration
(403
)
(2,352
)
(1,070
)
(3,964
)
Transformation (2)
(614
)
(1,606
)
(1,835
)
(2,559
)
Codecademy pro forma (1)
—
—
—
12,444
Total Non-GAAP operating expenses
$
115,759
$
107,989
$
229,685
$
231,206
_______________
(1)
For the six months ended July 31,
2022, the unaudited pro forma financial information is presented in
accordance with Regulation S-X, Article 11 to enhance comparability
for all periods by including operating results for Codecademy as if
the merger had closed on February 1, 2022.
(2)
This line item does not agree to
the amounts reflected on preceding table due to certain
transformation expenses not being reflected in GAAP operating
expenses.
SKILLSOFT CORP.
PRO FORMA REVENUE
(in thousands)
Three Months Ended
July 31,
Six Months Ended
July 31,
2023
2022
2023
2022
Revenue, as reported
$
141,187
$
140,574
$
276,741
$
275,413
Pro forma adjustments
Revenue from acquisitions (1)
—
—
—
8,058
Pro forma revenue (2)
$
141,187
$
140,574
$
276,741
$
283,471
_______________
(1)
Revenue from acquisitions for the
six months ended July 31, 2022 only includes Codecademy's revenue
for the period from February 1, 2022 to April 4, 2022 as its
post-acquisition revenue is included in the GAAP revenue.
(2)
Pro forma revenue is presented in
Note 3 "Business Combinations" of the Notes to Unaudited Condensed
Consolidated Financial Statements included in our Form 10-Q to be
filed with the SEC for the quarterly period ended July 31, 2023 in
accordance with Regulation S-X, Article 11.
SKILLSOFT CORP.
PRO FORMA ADJUSTED NET INCOME
(LOSS)
(in thousands)
Three Months Ended
July 31,
Six Months Ended
July 31,
2023
2022
2023
2022
Adjusted net income (loss) from
continuing operations (1)
$
(29,441
)
$
(23,703
)
$
(59,494
)
$
(31,046
)
Pro forma adjustments
Adjusted net income (loss) from
acquisitions (2)
—
—
—
(4,156
)
Pro forma adjusted net income
(loss)
$
(29,441
)
$
(23,703
)
$
(59,494
)
$
(35,202
)
Pro forma adjusted net income (loss)
per share
$
(0.18
)
$
(0.14
)
$
(0.37
)
$
(0.23
)
_______________
(1)
See RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES within this press release for more details.
(2)
Adjusted net income (loss) from
acquisitions for the six months ended July 31, 2022 only includes
Codecademy's adjusted net income (loss) for the period from
February 1, 2022 to April 4, 2022 as its post-acquisition adjusted
net income (loss) is included in the adjusted net income (loss)
from continuing operations.
SKILLSOFT CORP.
PRO FORMA ADJUSTED
EBITDA
(in thousands)
Three Months Ended
July 31,
Six Months Ended
July 31,
2023
2022
2023
2022
Pro forma adjusted EBITDA
Adjusted EBITDA from continuing operations
(1)
$
25,428
$
32,585
$
47,056
$
56,650
Pro forma adjustments:
Adjusted EBITDA from acquisitions (2)
—
—
—
(4,385
)
Pro forma adjusted EBITDA
$
25,428
$
32,585
$
47,056
$
52,265
Pro forma adjusted EBITDA % of pro
forma revenue
18
%
23
%
17
%
17
%
_______________
(1)
See RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES within this press release for more details.
(2)
Adjusted EBITDA from acquisitions
for the six months ended July 31, 2022 includes Codecademy's
adjusted EBITDA for the period from February 1, 2022 to April 4,
2022 as its post-acquisition adjusted EBITDA is included in the
adjusted EBITDA from continuing operations.
SKILLSOFT CORP.
FREE CASH FLOW
RECONCILIATION
(in thousands)
Six Months Ended
July 31,
2023
2022
Free cash flow reconciliation
Net cash provided by (used in) operating
activities
$
1,985
$
(13,003
)
Purchase of property and equipment
(3,406
)
(3,528
)
Internally developed software -
capitalized costs
(5,951
)
(5,721
)
Total free cash flow
$
(7,372
)
$
(22,252
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230911255888/en/
Investors and Media Chad W. Lyne SVP, Strategic Finance
& Investor Relations Officer chad.lyne@skillsoft.com
Skillsoft (NYSE:SKIL)
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