SKIL - Earnings call transcript Q2 2025

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Operator

Thank you for standing by, and welcome to Skillsoft Second Quarter Fiscal 2025 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers present, there will be a question-and-answer session. Please note that today's call is being recorded. I will now hand the call over to your first speaker, Stephen Poe, Investor Relations. you. Thank ahead. go Please

Stephen Poe

Good our thank quarter results XX, operator. us ended for to XXXX. discuss for day, you, you and joining July Thank the second

call to jump performance, business company's financial beliefs and trends, facts our and concerning statements and as you all that I our we reflect statements and and forward-looking want condition management's including and therefore Before outlook. historical current that about could cause and in, risks outlook These forward-looking today today's financial differ actual financial will expectations, the market expected to contain statements business results and remind business expectations that are of statements subject to not are materially. uncertainties future

important For you a obligation forward-looking the assume of factors information, we actual to our affect to Securities respective We which any dates. speak discussion XX-K refer results, our and of could the filing other no recent update and that Form most Commission. with their or Exchange material statements as risks

call, SEC measures www.skillsoft.com. financial is the our at metrics commentary otherwise principles. are the will is which financial non-GAAP all how also accordance be in unless been included earnings the noted, metrics measures, discuss has website as most prepared included of available our press non-GAAP GAAP generally reconciliation and we accepted financial directly A we in comparable with financial to furnished in as to on well accounting define these release, measures which today's not the During

that, my to Financial for and call the Skillsoft Executive Officer, pleasure Rich Chief to 's Skillsoft's Ron. prepared Executive it's Hovsepian, turn With Chair Officer; Following available today's will Q&A. be Chief remarks, Walker, Ron over and

Ronald Hovsepian

appreciate to I joining everyone. quarter. second our discuss afternoon, today fiscal us Good you

adjusted on line Our our the were and in on the top with expectations line for EBITDA quarter. performance

the engaged operationalize considerable team work our leadership and remains to fully Our targets.

of our signs the in the late place benefit initiatives and made in Most future operational I'm planning quarter, encouraged see the of progress, execution. and However, to by second took periods. notable early we've expect we

and during As serve crafted strategy into portion to a these reduction in operations the with are better $XX focused our achieve our we our strengthen growth opportunities. Day, to executing strategies been channeling strategies while More the closely carefully unit basics our our growth centered Fix we two Investor transitioning structure principles: strategically positioning our is business structure. outlined improvements, growth core areas foundational our how go-to-market customer with year. around fiscal July fix and have invest to next grow. the improve by allows can Basics our dual needs This strategy fundamental XXXX more to These and support on profitable internal is specifically significant specifically, million operations us initiatives. ourselves to on reallocate By to aligns to us expense a the we customers, of resources

on Let where stand more implementing details these strategies. me share in we

three basics. structure for fix and critical key are next strong functions show customers is that foundation for that more efficiently moved making and decision-making respective our customers away is where a markets out detailed accountability we've and outcomes, is and to transition differently, our better journey. with well. Early improved positions a driving aligning support to from managers in breaking responsibility. unit operationalized have this units We this laying We've for the clear This efforts, P&L business indicators functionally their our fully business lead company. and the to and structure better already our financials. of general are our new model now as our brings driven our unit two To progress structure phase transition Said our accelerate closer corporate hired

Officer, First, with guide organization. execution functional a will across leaders of working plan, we've the and closely Chief who our hired Transformation operational the oversee

prioritization Senior revised President adjustments, that North align Analytics will a include implementation surfacing basics Next, our our our execution strengthen with funding framework key resource key is in of crucial Vice these against Officer, strategy our value and Last, long-term efforts insights strategy. of who allocation initiative to data-driven help actionable Chief operational and fixed Sales our a of ensure drive This we've to enhancing systems. a enhanced the role our measuring reallocation in Alongside the hired to sales our our decision-making. A of operational we've performance added performance discipline key metrics, the our and objectives. management drivers the America.

We progress. This are sharing next for our as discipline our and nearing about in operational the completion of and level to our plan foundation more the serve forward now focus steps will journey. of look

for an becoming global and reshaping As organizations we sustainable, At Day, Investor temporary success. for not both our maintaining of learners, rates industry-leading or making we skills goals work building laid champion above financial profile. towards company while growing fixes. We're the #X long-term out talent our and at just the we're market

to While out in laid still back plans days, it early July. is we the remain committed we

HR a seeing are product that empowers existing seamlessly offerings employees a global XXX,XXX systems. by professional multilingual delivered validations, wins through our scalable, We Recently, solution early and particularly over services innovation. customer their we with integrating for firm

we're while We This them at scale. help consolidating goals splendid how their of partner a workforce is achieve transformation learner delivering also their value example costs. will

provide. administrator customer After with reconnected they sector. relationship the experience efforts. and renewed accelerating We satisfaction customer back recognizing facing cybersecurity came with key in go-to-market challenges we already learner to us, providers, other enhancing the This a also is unmatched and

culture experience the institution to a fostering of their introducing modernized adaptive regained is we've not empower of addition, The tailored leadership a major innovation. team but the only by skills by financial customer-centric delivering champion. the In learner comprehensive workforce, engagement commitment a reskilling services of needs. upskilling their This trust and their talent will already renewed facilitates

we're with Microsoft. collaboration our our driving excited partners of about As part ongoing focus and innovation, on

You, These partnership boundaries like the guide just will many experience we've align of to of and of AI-led welcome results. strategies deliver of continue directors this drivers And launch on our detail. and new hand Codeacademy, yield cover With from We'll with provide TDS our business Learner strategic the the that in are quarters. we Rich? needs confident initiatives coming To confidence value to more allows invaluable our AI. learning offering, customize Accelerator AI we Skillsoft champions. launched value an priorities. the age training. me that will users as transformation for call we're to our releases. now developers, assistant learning AI financial and of experiences to customers creation. lead the more everyone now focusing we've progress, and positive Each me coding AI continuing fresh company's CAISY journey, Examples first AI tailored on tangible during program updates will in our shareholder positions experiences Rich simulations thrive advancement gain the we're We're AI-driven with companies resonating towards the the help they be skills end large-scale values strategic wealth Our to offer, with that This leaders AI exciting need our and with hints also implemented three to give that, partners let regular the helping practice. amongst starting talent to along perspective our features their and to and continue results that for customers to which board. delivering our new also AI is in to the of pushing a brings our on commitment results over appointments the reflect offers to

Richard Walker

everyone, and you, thank call. for you, today's Ron, joining Thank

comments, consistent As an the business. Ron Day. opening quarter significant we the of company ahead changes to as with line top expectations we revenue all pivoting in In in areas active our of pleased am Investor in line quarter, it we've at pushed the the outlined shared growth implemented light total company I for in to delivered his on journey we was the

goal remains rates. unchanged to longer-term or grow above market Our at

validated expansion resource perspective, reporting his the as activate financial we Continued our the for the made we become early expense business our important investments level unit Day every resources performance value profitable comments. each units, those These deeper perspective, end. business to and impact better a organization. unit basics has at Ron level, us into important to shared for evident. articulated actions Investor minimal at our to at is details of company allocated financial decision-making the improved will for another year-over-year. the nearly their our to margin This good between durable setting and at implementation excited business essential internal continued an a improving driving out in prior growth, contribution coming financial didn't more spend, we until to across about we and including opportunities, external strategy, structure, and progress will in efficiencies allowed creating dual additional the August, results foundation essential a adjusted we margin of reporting. as the in progress on QX outlined performance. on our the most quarter are dollar EBITDA stewardship that we efforts building where our note only From This forward improved look a on have level visibility it reallocation of business From unit, most journey had fundamental investments are you discipline periods step following year-end we timing call, the updating aligning with is self-funding and are look drove reporting for begin fix to drivers Investor forward inspect management sustainable Day. that quarters methodologies services We're impact the design company fully key and Consistent with to we shared overall allocation and P&L drive sharing expense comparability on exercise our

review and results, known was year-over-year, performance. primarily timing and consumer Turning down to Development Solutions, some budgets revenue. on million of subscription formerly X% platform of revenue in-quarter tighter of and and softer content starting financial our with our due upgrades $XXX Talent the renewals now a larger to as

decrease was or SMB Retention public our in Rate, sector XX% was last quarter by and created driven in by at almost our year. budget in-house. of ongoing Dollar DRR transitioning The approximately approximately of compared some some to customers' entirely success XXX% customers the disruption constraints QX LTM Our

business. and basics, Total the $XXX on Darren around We beliefs impacted year-over-year, 'XX. impact believe which plan from are operating FY was the to will year-over-year, review opportunity by down development headcount, of related revenue of completed $XX our lower of formerly of soft of or and monitoring revenue Total administrative and million includes year-over-year. million previous QX a $XX lower Cost were of is this expenses. expenses costs facilities down $XX stock-based to calls. revenue primarily XX% these the last spend. fix of costs. lower of of United or exit media, which primarily initial savings from revenue within validated instructor expenses to due in business and Global were insurance on and million to was consolidation Revenue operational team down are contribute the paid overall were and year-over-year, XX% discussed favorably year consolidation or due XX% reductions due down to has revenue of in as The company known from was EBITDA XX% year-over-year. million operations, X% QX $XXX third-party the due and down $XX revenue and revenue XX% $XX compared or segment. million of of XX% these of in revenue our trends apprenticeship expenses operating cost favorably cost business prior prior but cycle the growth Knowledge, $XX million to General of and of million XX% proactive X% the initial were X% XX% core the revenue Walking compensation, X% our XX% in marketing training our ahead. a half start the favorably of million facilities. the to courseware well Global now adjusted in as or was has approximately down fit lower company of model the instructor-led entire primarily we've or from annual savings and period, year. through X% was [T&E], Despite less second as and year-over-year, lies talent, were software the the million situations, in of Knowledge primarily we $XX Selling and weaker expenses revenue his of facilities of consolidation to or an favorably company significant year. Content lower that XX% capabilities, his year-over-year, focused XX% quarter slow demand and in $XX one-time and that in of revenue Kingdom million revenue down

loss loss drove share XX% compared to margin improvement loss discipline of $XX of $XX Adjusted loss primary net the net and basis $X.XX prior adjusted per year. in the net improved EBITDA. million $X.XX profit $XX the prior loss GAAP to year. growth $X.XX the of share expense XXX in of year. year. prior of in metric, GAAP loss share improved of points of GAAP million from $XX loss per in adjusted adjusted in per Continued net share of net million net our Adjusted million prior GAAP from net per net of loss compared $X

Moving to flow highlights. sheet cash balance and

at Officer, as have soon under flow cash and and profile Investor getting creating unrelenting the management our possible. To Accounting elements free I tighter highlighted finance, free flow improving on interlock we Chief generate between a of to as our focus positive that Day, cash accounting, flow cash our treasury. is company end, consolidated all As

the we've Solutions seasonality fiscal has business As throughout flow the pronounced highlighted Talent Development previously, year. segment cash

adjusted it how understand generate insightful of fourth positive and we QX cash this customer are as QX restructuring measuring for essential XX% journey, charges impacted higher in we collect QX consume to the free bookings to our quarter, is investments are transformation our cash. to EBITDA. against to bring we occur Beginning this progress transformation excluded in or flow typically invoicing believe and XX% free QX that will we free from on objectives. one-time cash seasonally and activity. flow given These Specifically, investors cash Alternatively, that be typically annual transparency by metric flow will our the our improved believe various quarter,

or cash free to adjusted of flow, In will report begin addition charges. adding restructuring one-time the we impact cash back flow, to transformation free

was resulting improvement the capitalized For the less partially expenditures this restructuring improvement generated from generated driven for by in second invested $X.X free internally flow flow million Adjusting developed X cash million the million, in working period. free year flow prior we of $X.X million, by an impact Year-over-year quarter, million negative operations the $X.X $X prior of in we adjusted cash from million period from was year months $X.X XX% million in offset changes period. cash ending charges the cash and of cash and $X.X positive capital $X $X.X in of taxes, which in capital. of in improvement of software, or an million, X-month

debt, following will impact quarter additional of until in the the realized quarter. cash those from resource August, early actions flow noted I be begin end. third in we was the the cash primarily initiatives up Total and borrowings million. $XXX receivable facility, of approximately our restricted loan was first equivalents cash, includes $XXX Cash cash and and which approximately quarter. million, in equivalents, cash $XXX term cash restricted and million net from modest free quarter implementation As with the some of previously, didn't fourth impact reallocation on The net accounts

the for to turn year. the comment questions, we on call want Before full to outlook over I our

million to We Investor the and adjusted revenue $XXX on EBITDA which XX for $XXX of Day, million ranges of $XXX reaffirming million. provided outlook are July $XXX to called we full-year million at

call journey top-line pivoting flow then our impact charges back the all that, closing business. the operator, for be transformation to restructuring in incurring full-year the $XX please some consistent negative one-time are to the million, we for expect be or to of in approximately free full for of questions, inclusive With of we the and cash Ron growth areas will that comments. year Additionally, open

Operator

first & Our Oppenheimer question Company. with Ken Instructions] from Wong [Operator is

Hoi-Fung Wong

one first for the is you. Ron,

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

Ronald Hovsepian

Ken, it's the for Ron. Thank you questions.

In us at I And will the look next most and a on at helps terms I in you team the and the the on of of to I with hires color ground terms need new about returns there, a to beyond. call, directional things that the that think I the at we forward have update we level you. senior in company that execute we talked highlighted timing, early X the Investor believe minimum share Day giving to some get

Hoi-Fung Wong

might quick just Rich, will where implementations headwinds assume extent XQ, guess don't flow would that the the of have impact kick that flow. sense that quarter until a you trough? any the is free you I from what Considering then, the on And and costs the the of in be? then quantification one cash to potential implementation rough any And cash

Richard Walker

What of A is just were you as we to in the said, expense quarter there unpacking and -- our enjoyed couple itself, no continuous managing The comments EBITDA Ken, further the Yes. margin it. in our impacts realized of validation financials. expansion base.

they half that be benefit that a fixing both we're the this of grow. the guidance. quarters the and the in of and of and we'll the of done you around redeploying going together. gives we've of half We've year, how $XX the basics year our lot investing reaffirming those the expense first million reaffirming to get EBITDA X our And in concurrently the between full-year context resource guidance come actions second of to kind pieces So identified, to

XX% much call resource So had where work look said into on funding business. capability, we're you that next reinvestment to updates giving we'll as Ron And back as to as the that we the what we said, capital. forward XX% of publicly around go deploying

Operator

Our next Securities. B. question Riley is from Raj with Sharma

Rajiv Sharma

X. I have

really the Talent business? reduction to And in The first cost decline Global Or cost are that you of And a going, cost the structure if still of and base? cost lower Solutions also, alignment and industry, these comment and a sales? level potential an the the are a and restructuring excess structural the turnaround as this similar a this there's you're these the are that quarter. level percentage to declines declines is is a of -- sort of the Development the Knowledge -- in foreseeing is if could on last how year-on-year sales

Ronald Hovsepian

This let how -- take X the the questions. the and Raj, is to TDS you? I'll are Rich question, Ron. The it. on X structure of piece cost GK your and address the I'll last

a anywhere from of XX% refer range segments. these see we the of the there. and of you front in in no growth all quite their The Even categories them projected and And the smaller we TDS. TDS champions that we're in is billion opportunity small the more $XXX XX% complex creating to talent a to very shifts to low sub opposite those us the market had selecting what of We organizations, in and of are this at shows looking that the space. of are that spending addressing us X% as ones across issues do to that allows indication, in in So we see shorthand. in with These see spaces. anticipate about in from and potential growth this continued for we're can or customers very high data within growth

within number. So again, sub these segments are the that

a we from see we're in we that's and going So what TDS growth perspective. where focused on

segment So read from cycle of you or market any our there shouldn't indication a perspective. a cyclical happening

that that is to of growth team of going. the see, Darren letting really journeys piece of inside shifting -- of the that multimodal end from next sub in-classroom look blended slower part the virtual quarter. still forward approach this it, On and that part happening is what journey. an that are the in get market. the just is a to they specifically perspective, And piece and rate, in are And very rate. albeit on get we That we as segment, though, But piece learning as lower where we a structural it's GK business reporting customers one the virtual. more demanding blended at What's the up being ramped particular I marriage it, that really of from that's that a growing, is progressing at exciting is of learning see as the of market

about in the I see do really business it that detail up-and-coming calls. in we get we'll And So opportunity these to more corrected. think talk

we where Europe. there. one, impact how any I it's the be customer a great of that at businesses see situation together together of I a I to piece do X I of the pieces go-forward it example as say, as And really get of little it's inside again, where was both could the an won company. over that happening that know what's working the really just just in a will to of early So into I returns one bringing -- described think to early see you do

of where courseware learner even parts bringing So, the fit journey. in then seeing that I'm where all with they're and example excited we're about Codeacademy bringing that together as content, what in together part I'm the TDS with the pieces

seeing So, early moments right we're now. very those that very, it of

Richard Walker

revenue in revenue, GK the identified courseware instructor our would of shrunk significant And as you a base revenue for quarter year-over-year, on expense, that GK's comparative initially, cost I case, both in the of basis costs. on and yes, the is as most say cost

And revenue the benefited areas It to where at we're areas. All market managing deploying And a market. measures and taking we prioritize that to the of opportunity discipline growth lower are growing the where exercise for resource. the longer-term for in market. initiatives as those near from other big that investing company declined, term. rightsizing front spending, is that see global is the sure against we're has ultimately So we're grow proactive make objective in our we're expense we us. above those in where of this And to is we're expenses

has for changed. stewards being enthusiasm align our the and prioritize for just Our We're opportunities not good resources of to it market in financial the growth. us to and that

Operator

There questions I time. to any back at Ron the Hovsepian are over closing no further would comments. this hand like for floor to

Ronald Hovsepian

and Thank joining. Great. operator, thank all you for you,

generated the a I'm about As think -- business. early for example an we highlighted, do we Rich better And you pieces I And reaffirmed to XX we the brings the that business across basis of good year-end. things I days. feel we it seeing quarterly understanding report the two of business that is begin company. over our full at like the work saw we're business of part last the And as reaffirmed that guidance on And that confidence the seeing the structure, very and you that that look of just was journey inside we we gave were that this number business, of units it. the because annual importance focus I the with the on where as unit shared to basis a opportunities

the and our execution we those of set forward of milestones sharing with about that goes the you and details look I of journey. as part time more more you as to on, we'll with -- time as the So, had talk examples

and much, tuned you. and stay very all soon. you thank So, talk Thank

Operator

conference. This concludes today's

your this Thank disconnect lines for your participation. may time. You you at

Skillsoft (SKIL) 9 Sep 242025 Q2 Earnings call transcript