Skillsoft Corp
For the period ended Oct 31, 2024. Filed Dec 10, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Oct 31, 2024 · Filed Dec 10, 2024
SKIL$3.36-7.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-07-31; filed 2024-09-09.
0001437749-24-028757
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-10-31; filed 2024-12-10.
0001437749-24-037110
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 109 previous paragraphs and 109 current paragraphs.
90 unchanged; 19 reworded; 0 added; 0 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Reworded paragraphs (19)
Previous wording
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the financial condition of Skillsoft Corp. as of July 31, 2024, compared with January 31, 2024, and the results of operations for the three and six months ended July 31, 2024, compared with the corresponding periods in 2023. Unless otherwise stated or the context otherwise requires, “Skillsoft”, “Company”, “we”, “our” or “us” refers to Skillsoft Corp. and its consolidated subsidiaries.
Current wording
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the financial condition of Skillsoft Corp. as of October 31, 2024, compared with January 31, 2024, and the results of operations for the three and nine months ended October 31, 2024, compared with the corresponding periods in 2023. Unless otherwise stated or the context otherwise requires, “Skillsoft”, “Company”, “we”, “our” or “us” refers to Skillsoft Corp. and its consolidated subsidiaries.
Previous wording
The total decline in revenues, when comparing the three and six months ended July 31, 2024 and 2023, in our Global Knowledge segment was primarily due to weaker market demand, as well as a higher mix of reseller business, which is recorded in revenue net of fees. When comparing these same periods, the reduction in our Talent Development Solutions segment total revenues was primarily the result of actions taken by us to focus on the more profitable parts of this market.
Current wording
The total decline in revenues, when comparing the three and nine months ended October 31, 2024 and 2023, in our Global Knowledge segment was primarily due to weaker market demand, as well as a higher mix of reseller business, which is recorded in revenue net of fees. For Talent Development Solutions, when comparing the three months ended October 31, 2024 and 2023, revenues increased due to our efforts to capitalize on the market shift from learning and skills to talent development, which we discussed at the Company's July 11, 2024 Investor Day. When comparing the nine months ended October 31, 2024 and 2023, the slight reduction in our Talent Development Solutions segment total revenues was primarily the result of actions taken by us to focus on the more profitable parts of this market, mostly offset by capitalizing on the aforementioned market shift to achieve revenue growth.
Previous wording
The decreases in courseware, instructor fees and outside services and compensation and benefits, when comparing the three and six months ended July 31, 2024 to the same periods in 2023, were primarily attributable to the decline in our Talent Development Solutions and Global Knowledge segment revenues as discussed inSubscription and Non-Subscription Revenue above. The decrease in facilities and utilities expenses, when comparing the three and six months ended July 31, 2024 to the same period in 2023, was primarily attributable to cost savings from consolidation of our facilities.
Current wording
The decreases in courseware, instructor fees and outside services and compensation and benefits, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, were primarily attributable to the comprehensive resource reallocation plan discussed above and the decline in our Global Knowledge segment revenues as discussed inSubscription and Non-Subscription Revenue above. The decrease in facilities and utilities expenses, when comparing the three and nine months ended October 31, 2024 to the same period in 2023, was primarily attributable to cost savings from consolidation of our facilities. These decreases were partially offset by the increase in hosting and software maintenance, which were primarily due to investments in technology.
Previous wording
The decreases in compensation and benefits, when comparing the three and six months ended July 31, 2024 to the same periods in 2023, were primarily a result of lower headcount (a portion of which was attributable to the comprehensive resource reallocation plan discussed above)andlower stock-compensation expense due to forfeitures and lower grants of share-based payment awards. The decrease in facilities and utilities expenses, when comparing these same periods, was primarily attributable to cost savings from consolidation of our facilities.
Current wording
The decreases in compensation and benefits and consulting and outside services, when comparing the nine months ended October 31, 2024 to the same periods in 2023, were primarily attributable to the comprehensive resource reallocation plan discussed above andlower stock-compensation expense due to forfeitures and lower grants of share-based payment awards. The decrease in facilities and utilities expenses, when comparing these same periods, was primarily attributable to cost savings from consolidation of our facilities. These decreases were partially offset by the increase in software maintenance, which were primarily due to investments in technology.
Previous wording
The decreases in advertising and promotions and consulting and outside services, when comparing the three and six months ended July 31, 2024 to the same periods in 2023, were primarily attributable to proactive reductions in branding initiatives and paid media spend. The decrease in facilities and utilities expenses, when comparing the three and six months ended July 31, 2024 to the same periods in 2023, was primarily attributable to cost savings from consolidation of our facilities. These decreases were partially offset by the increase in software maintenance, which was primarily the result of investments in our go-to-market transformation activities and enablement programs. In addition, the increase in compensation and benefits, when comparing the three and six months ended July 31, 2024 to the same period in 2023, was primarily due to a S&M executive forfeiture of a share-based payment award that lowered stock-compensation expense during the three months ended July 31, 2023.
Current wording
The decreases in compensation and benefits, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, were primarily attributable to the comprehensive resource reallocation plan discussed above, partially offset by the result of an S&M executive's forfeiture of a share-based payment award that lowered stock-compensation expense during the nine months ended October 31, 2023. The decreases in advertising and promotions and consulting and outside services, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, were primarily attributable to proactive reductions in branding initiatives and paid media spend. The decrease in facilities and utilities expenses, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, were primarily attributable to cost savings from consolidation of our facilities. These decreases were partially offset by the increase in software maintenance, which was primarily the result of investments in our go-to-market transformation activities and enablement programs.
Previous wording
The decreases in compensation and benefits, when comparing the three and six months ended July 31, 2024 to the same periods in 2023, were primarily a result of lower stock-compensation expense due to forfeitures and lower grants of share-based payment awards, partially offset by severance costs for the former Chief Executive Officer whose employment with the Company ended on May 9, 2024. The Company's integration and restructuring activities, including cost savings from consolidation of our facilities and lower insurance also contributed to the overall decline in G&A expenses. When comparing these same periods, the reduction in consulting and outside services were partially offset by an increases to compensation and benefits (even though it declined in total as discussed above). Further, while increases in software maintenance, when comparing these same periods, primarily reflect investments in technology.
Current wording
The decreases in compensation and benefits, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, were primarily attributable to the comprehensive resource reallocation plan discussed above andlower stock-compensation expense due to forfeitures and lower grants of share-based payment awards. These decreases, when comparing the nine months ended October 31, 2024 to the same period in 2023, was partially offset by severance costs for the former Chief Executive Officer whose employment with the Company ended on May 9, 2024. The Company's integration and restructuring activities, including cost savings from consolidation of our facilities and lower insurance, also contributed to the overall decline in G&A expenses. When comparing the nine months ended October 31, 2024 to the same period in 2023, the reduction in consulting and outside services was partially captured by an increase to compensation and benefits expense, even though compensation and benefits expense declined in total as discussed above. Further, the increases in software maintenance, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, primarily reflect investments in technology.
Previous wording
The decrease in amortization of intangible assets, when comparing the three and six months ended July 31, 2024 to the same periods in 2023, was primarily due to certain intangible assets becoming fully amortized or written down as a result of impairment during the fourth quarter of fiscal 2024.
Current wording
The decrease in amortization of intangible assets, when comparing the three and nine months ended October 31, 2024 to the same periods in 2023, was primarily due to certain intangible assets becoming fully amortized or written down as a result of impairment during the fourth quarter of fiscal 2024.
Previous wording
As discussed above, on July 11, 2024, the Company announced a comprehensive resource reallocation plan. In connection with this plan and the acquisition integration process and our workplace flexibility policy, we continued our initiatives and commitment to reduce our costs and better align operating expenses with existing economic conditions and our operating model to improve operating efficiency, competitiveness and business profitability. These included workforce reductions and consolidation of facilities as we adopted new work arrangements for certain locations. The restructuring charges for the three and six months ended July 31, 2024 totaling $11.3 million and $12.3 million, respectively, are substantially all related toseverance costs of terminated employees and lease termination and lease impairment charges. The restructuring charges for the three and six months ended July 31, 2023 totaling $2.5 million and $7.7 million, respectively, were substantially all related toseverance costs of terminated employees and lease termination and lease impairment charges.
Current wording
As discussed above, on July 11, 2024, the Company announced a comprehensive resource reallocation plan. In connection with this plan and the acquisition integration process and our workplace flexibility policy, we continued our initiatives and commitment to reduce our costs and better align operating expenses with existing economic conditions and our operating model to improve operating efficiency, competitiveness and business profitability. These included workforce reductions and consolidation of facilities as we adopted new work arrangements for certain locations. The restructuring charges for the three and nine months ended October 31, 2024 totaling $3.1 million and $15.4 million, respectively, are substantially all related toseverance costs of terminated employees and lease termination and lease impairment charges. The restructuring charges for the three and nine months ended October 31, 2023 totaling $0.9 million and $8.6 million, respectively, were substantially all related toseverance costs of terminated employees and lease termination and lease impairment charges.
Previous wording
The other income (expense), net was primarily the foreign exchange gains and losses (specifically, resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities), which fluctuates as the U.S. dollar appreciates or depreciates against other currencies. Interest income for the three and six months ended July 31, 2024 compared to the corresponding prior year periods, increased primarily due to the use of money market investments to realize increased returns on cash balances. The increase in interest expense, when comparing the three and six months ended July 31, 2024 to the corresponding periods in 2023, was primarily due to higher interest rates. As a result of the interest rate swaps we executed on June 17, 2022, we have a fixed cash interest rate of 8.94% on $300 million of our outstanding term loans.
Current wording
The other income (expense), net was primarily the foreign exchange gains and losses (specifically, resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities), which fluctuates as the U.S. dollar appreciates or depreciates against other currencies. Interest income for the nine months ended October 31, 2024 compared to the corresponding prior year period, increased primarily due to the use of money market investments to realize increased returns on cash balances. The decrease in interest expense, when comparing the three and nine months ended October 31, 2024 to the corresponding periods in 2023, was primarily due to the decision to reduce the borrowings under the accounts receivable facility during the three months ended October 31, 2024. As a result of the interest rate swaps we executed on June 17, 2022, we have a fixed cash interest rate of 8.94% on $300 million of our outstanding term loans.
Previous wording
The gains attributable to warrants are primarily a result of the Company's underlying common stock performance during the three and six months ended July 31, 2023. As of January 31, 2024, the fair value of our liability-classified warrants was insignificant, however prior to then they were marked-to-market at each balance sheet date, with gains and losses being recorded in current period earnings.
Current wording
The gains attributable to warrants are primarily a result of the Company's underlying common stock performance during the three and nine months ended October 31, 2023. As of January 31, 2024, the fair value of our liability-classified warrants was insignificant, however prior to then they were marked-to-market at each balance sheet date, with gains and losses being recorded in current period earnings.
Previous wording
The gains (losses) reflected for the change in value of the interest rate swaps are primarily attributable to increases (decreases) in the expectation for one-month SOFR interest rates through June 5, 2027, during the six months ended July 31, 2024 and 2023.
Current wording
The gains (losses) reflected for the change in value of the interest rate swaps are primarily attributable to increases (decreases) in the expectation for one-month SOFR interest rates through June 5, 2027, during the nine months ended October 31, 2024 and 2023.
Previous wording
The effective income tax rate for the three and six months ended July 31, 2024 and 2023 differed from the United States federal statutory rate of 21.0% due primarily to the impact of non-deductible items, foreign rate differential, changes in uncertain tax positions, and changes in the valuation allowance on the Company’s deferred tax assets.
Current wording
The effective income tax rate for the three and nine months ended October 31, 2024 and 2023 differed from the United States federal statutory rate of 21.0% due primarily to the impact of non-deductible items, foreign rate differential, changes in uncertain tax positions, and changes in the valuation allowance on the Company’s deferred tax assets.
Previous wording
As of July 31, 2024, we had $122.7 million of cash and cash equivalents on hand. Our investment policy is approved by the Board of Directors and reviewed annually by the Audit Committee. Our current investment policy’s primary objectives when investing excess cash are, in order of importance: (1) preservation of capital and protection of principal; (2) maintenance of liquidity that is sufficient to meet cash flow needs; and (3) maximize rate of return. Pursuant to this policy, as of July 31, 2024, most of our cash and cash equivalents were held at large financial institutions with high rating agency designations and our exposure to regional banks was not significant. We have funded operations primarily through the use of cash collected from our customers and the proceeds received from the Term Loan Facility, supplemented with borrowings under our accounts receivable facility. Our cash requirements vary depending on factors such as the growth of the business, changes in working capital and capital expenditures. We expect to operate the business and execute our strategic initiatives principally with funds generated from operations and supplemented by borrowings up to a maximum of $75.0 million under our accounts receivable facility. We anticipate that we will have sufficient internal and external sources of liquidity to fund operations and anticipated working capital and other expected cash needs for at least the next twelve months, as well as for the foreseeable future with capital sources currently available.
Current wording
As of October 31, 2024, we had $97.9 million of cash and cash equivalents on hand. Our investment policy is approved by the Board of Directors and reviewed annually by the Audit Committee. Our current investment policy’s primary objectives when investing excess cash are, in order of importance: (1) preservation of capital and protection of principal; (2) maintenance of liquidity that is sufficient to meet cash flow needs; and (3) maximize rate of return. Pursuant to this policy, as of October 31, 2024, most of our cash and cash equivalents were held at large financial institutions with high rating agency designations and our exposure to regional banks was not significant. We have funded operations primarily through the use of cash collected from our customers and the proceeds received from the Term Loan Facility, supplemented with borrowings under our accounts receivable facility. Our cash requirements vary depending on factors such as the growth of the business, changes in working capital and capital expenditures. We expect to operate the business and execute our strategic initiatives principally with funds generated from operations and supplemented by borrowings up to a maximum of $75.0 million under our accounts receivable facility. We anticipate that we will have sufficient internal and external sources of liquidity to fund operations and anticipated working capital and other expected cash needs for at least the next twelve months, as well as for the foreseeable future with capital sources currently available.
Previous wording
We also have access to up to $75.0 million of borrowings under our accounts receivable facility, where borrowing can be made against eligible accounts receivable, with advance rates between 50.0% and 85.0%. Borrowings under the facility bear interest at 3.11% per annum plus the applicable Term SOFR rate. The maturity date of the accounts receivable facility is the earlier of (i) December 27, 2024 or (ii) 90 days prior to the maturity of any corporate debt. The accounts receivable facility requires a minimum outstanding balance of $10 million at all times. Based on seasonality of billings and the characteristics of accounts receivable, some of which are not eligible for advances, we are not always able to access the full $75.0 million available capacity. As of July 31, 2024, $40.4 million was drawn under our accounts receivable facility.
Current wording
We also have access to up to $75.0 million of borrowings under our accounts receivable facility. In November 2024, the accounts receivable facility was amended to, among other things, extend the maturity to the earlier of (i) November 26, 2029 or (ii) 90 days prior to the maturity of any corporate debt, reduce the fixed component of the interest rate to 2.61% per annum from 3.11% per annum, increase the highest advance rate from 85% to 90%, reduce the minimum outstanding balance requirement from $10 million to $1 million, and allow for ad hoc borrowings and repayments. Based on seasonality of billings and the characteristics of accounts receivable, some of which are not eligible for advances, we are not always able to access the full $75.0 million available capacity. As of October 31, 2024, $10.0 million was drawn under our accounts receivable facility.
Previous wording
The increase in cash flows from operating activities in the six months ended July 31, 2024 compared to the same period in 2023, was primarily the result of the timing of working capital settlements.
Current wording
The increase in cash flows from operating activities in the nine months ended October 31, 2024 compared to the same period in 2023, was primarily attributable to the comprehensive resource reallocation plan discussed above and the result of the timing of working capital settlements.
Previous wording
Cash flows from investing activities in the six months ended July 31, 2024 include$8.8 million of cash payments for internally developed software.
Current wording
Cash flows from investing activities in the nine months ended October 31, 2024 include$13.0 million of cash payments for internally developed software.
Previous wording
Cash flows from investing activities for the six months ended July 31, 2023 include $5.6 millionof cash payments for internally developed software and net cash transferred of $5.1 million related to the completion of the SumTotal sale.
Current wording
Cash flows from investing activities for the nine months ended October 31, 2023 include $8.1 millionof cash payments for internally developed software and net cash transferred of$5.1 million related to the completion of the SumTotal sale.
Previous wording
The decrease in cash flows used in investing activities was primarily due to the purchase of property and equipment and the sale of our former SumTotal business during the six months ended July 31, 2023, partially offset by our increased investment in internally developed software during the six months ended July 31, 2024.
Current wording
The decrease in cash flows used in investing activities was primarily due to the purchase of property and equipment and the sale of our former SumTotal business during the nine months ended October 31, 2023, partially offset by our increased investment in internally developed software during the nine months ended October 31, 2024.
Previous wording
The decrease in cash flows used in financing activities was primarily due to the acquisition of treasury stock during the six months ended July 31, 2023, partially offset by payments on our accounts receivable facility during the six months ended July 31, 2024.
Current wording
The increase in cash flows used in financing activities was primarily due to payments on our accounts receivable facility during the nine months ended October 31, 2024, partially offset by the acquisition of treasury stock during the nine months ended October 31, 2023.