Skillsoft Corp. (SKIL) 2025 Q2 Earnings Call Summary

Optimistic Highlights

• Operational Execution

Early signs of operational execution are encouraging, with notable progress in implementing strategic initiatives.

• Customer Wins

Secured a scalable, multilingual solution for a global professional services firm and reconnected with key customers in cybersecurity and financial services sectors.

• AI Innovations

Launched AI Accelerator program and new AI-driven learning experiences, including an AI assistant for Codecademy and customizable AI simulations.

• Financial Discipline

Improved adjusted EBITDA and margin expansion year-over-year, driven by continued expense discipline.

• Board Appointments

Welcomed three new directors to the Board, bringing valuable experience and fresh perspectives.

Pessimistic Highlights

• Revenue Decline

Total company revenue of $132 million was down 6% year-over-year.

• Global Knowledge Segment

Global Knowledge revenue of $31 million was down 20% year-over-year, impacted by weaker demand trends and the exit of the UK apprenticeship business.

• Dollar Retention Rate

LTM dollar retention rate decreased to approximately 98% from 101% in the prior year, mainly due to budget constraints at public sector customers.

• GAAP Net Loss

GAAP net loss of $40 million compared to a net loss of $32 million in the prior year.

• Free Cash Flow

Negative free cash flow of $5.7 million for the six months ending in the second quarter, though improved from the prior year.

Company Outlook

• Reaffirmed Guidance

Reaffirmed full-year revenue guidance of $510 million to $525 million and adjusted EBITDA of $105 million to $110 million.

• Free Cash Flow

Expected free cash flow for the full year to be approximately negative $15 million, inclusive of restructuring charges.

• Strategic Focus

Continued focus on fixing the basics and investing to grow, with a goal of achieving profitable growth in the next fiscal year.

• Market Growth

Anticipates growth in the Talent Development Solutions segment, with market data showing continued growth in selected sub-segments.

Q & A Highlights

• Q: Ken Wong (Oppenheimer & Company)

  When we think about the operational changes you're trying to put in place, would you say that you have all the executives in place now to implement that plan? And then considering it just rolled out in Q3, would Q3 be too early to get a read on how things are going, or are we going to have to wait until the end of the fiscal year?

  A: Ron Hovsepian

  The three new hires help get the senior team in place to execute the plan. We look forward to giving a proper update on the next call and expect some early directional returns.

• Q: Ken Wong (Oppenheimer & Company)

  Considering the impact of the implementations don't kick in until 3Q, is that the quarter where you would assume that free cash flow will trough? And any rough sense of the potential headwinds from the implementation costs?

  A: Richard Walker

  The second half of the year will benefit from expense actions identified. Reaffirming full-year guidance gives context. We will redeploy resources to both fixing the basics and investing to grow.

• Q: Raj Sharma (B. Riley Securities)

  Are the cost and restructuring reductions an alignment to a lower potential sales level in the industry? And how is the global knowledge turnaround going?

  A: Ron Hovsepian

  No indication of a structural decline in the Talent Development Solutions business. The market data shows continued growth. For Global Knowledge, it's early, but we see opportunities in blended learning journeys and multimodal approaches.

  A: Richard Walker

  Cost reductions are proactive measures to prioritize spending and align resources with growth opportunities. The market and opportunities remain strong.