Release Date: June 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Skillsoft Corp (SKIL, Financial) experienced growth within its Talent Development Solutions (TDS) segment for three consecutive quarters, indicating a positive trend in this area.
- The company delivered improvement in adjusted EBITDA and free cash flow, showcasing enhanced profitability and financial health.
- Skillsoft Corp (SKIL) is actively investing in its business, with expectations of positive free cash flow and top-line growth for the full fiscal year.
- The company expanded its leadership team, including the appointment of a new Chief Financial Officer and Chief Marketing Officer, which is expected to strengthen execution and strategic focus.
- Skillsoft Corp (SKIL) continues to expand its product offerings, including enhancements to its AI capabilities and the launch of new features like the Percipio certification dashboard, which are expected to drive learner engagement and differentiation.
Negative Points
- Skillsoft Corp (SKIL) faced macroeconomic uncertainty, leading to lower discretionary spending by customers and elongated decision-making processes, impacting revenue.
- The company's Global Knowledge revenue declined by approximately 15.7% year over year, primarily due to softer demand within the US public sector.
- Total revenue for the first quarter was down approximately 2.8% year over year, indicating challenges in maintaining growth across all segments.
- The company experienced a GAAP net loss of $38 million in the first quarter, compared to $27.6 million in the prior year, reflecting ongoing financial challenges.
- Skillsoft Corp (SKIL) anticipates a reversal of its strong first-quarter free cash flow performance in the second quarter due to seasonality and timing of collections and disbursements.
Q & A Highlights
Q: What gives Skillsoft confidence in reiterating its full-year target despite macro uncertainty and elongated sales cycles?
A: John Frederick, CFO, explained that Skillsoft's Talent Development Solutions (TDS) segment has shown growth for three consecutive quarters, providing confidence. The Global Knowledge (GK) segment, despite a decline, has a strong deal pipeline and recurring relationships that offer visibility. Assuming market stabilization, Skillsoft decided to reaffirm its P&L guidance.
Q: How does Skillsoft plan to manage the business dynamics and achieve its reiterated guidance?
A: Ronald Hovsepian, CEO, noted that discretionary spending, particularly in live learning and coaching, was impacted. However, the last month of the quarter showed positive trends, boosting confidence. The company aims to adapt to market uncertainties as part of the new normal, similar to how it managed during COVID-19.
Q: What is the next phase for Skillsoft after stabilizing the business?
A: Ronald Hovsepian emphasized that the focus is on executing the current year's plans and then accelerating growth. The strategic direction is set, and the company is concentrating on product plans, go-to-market strategies, and sales coverage. The goal is to enhance marketing and sales capabilities to drive future growth.
Q: Can you provide insights into the strong free cash flow performance in Q1 and expectations for the rest of the year?
A: John Frederick highlighted that Q1 benefited from strong cash collections and timing of disbursements. While Q2 is expected to see a reversal of some benefits, the company remains on track for its full-year free cash flow expectations. The strong Q1 performance was primarily driven by seasonality and effective cash management.
Q: How is Skillsoft addressing the softness in government spending, particularly in the US federal sector?
A: Ronald Hovsepian noted that discretionary spending in the federal sector impacted live learning revenue. However, there is positive activity in European public sectors. The company is closely monitoring the situation, especially regarding workforce reductions, and remains steady in its approach to government business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
