Latest News by Industry
BOSTON--(BUSINESS WIRE)--Dec 6, 2022--
Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a leading platform for transformative learning experiences, today announced its financial results for the third quarter of fiscal 2023 ended October 31, 2022.
“Q3 results were in-line with our expectations, and we reaffirmed our full year guidance as we continue to be on track for strong bookings and revenue in Q4 which is our largest quarter of the year,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “I’m also pleased that we were able to grow our Global Knowledge segment bookings sequentially in the quarter and sustain double digit revenue growth in our Codecademy business.”
Fiscal 2023 Third Quarter Select Metrics and Financials from Continuing Operations 1
Outlook Commentary
We are reaffirming our outlook but moving to a GAAP revenue presentation to conform to GAAP accounting not due to a change in the fundamentals of the business. As such our GAAP revenue guidance excludes approximately $25 million to $30 million of reseller fees. Our other ranges remain the same.
Full Year Fiscal 2023 Outlook 2 ($ millions)
Bookings | $580 to $615 | ||
GAAP Revenue | $520 to $550 | ||
Adjusted EBITDA | $105 to $125 |
_______________________________________
1 Growth calculated compared to the prior year noted on a pro forma presentation basis as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021. Constant currency results represent current year period local currency amounts translated at prior year foreign exchange rates. Continuing operations excludes SumTotal results for all periods presented as a result of the sale on August 15 th.
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.
Key Operational Metrics and Non-GAAP Financial Measures
Bookings
The unaudited bookings for the three and nine months ended October 31, 2022 and 2021 in the following table are adjusted and presented on a pro forma basis as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021. The Skillsoft content line includes Codecademy bookings.
Three Months | Change (ConstantCurrency) | Nine Months | Change (ConstantCurrency) | ||||||||||||||||||||||||||
| (In thousands) | Ended October 31, | Change | Ended October 31, | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | % | 2022 | 2021 | $ | % | % | ||||||||||||||||||||
| Continuing operations: | |||||||||||||||||||||||||||||
| Skillsoft Content | $ | 84,784 | $ | 90,646 | $ | (5,862 | ) | -6% | -4% | $ | 222,310 | $ | 214,666 | $ | 7,644 |
| 4% | 6% | |||||||||||
| Global Knowledge |
| 47,786 |
| 61,690 |
| (13,904 | ) | -23% | -16% |
| 149,944 |
| 190,488 |
| (40,544 | ) | -21% | -16% | |||||||||||
| Total | $ | 132,570 | $ | 152,336 | $ | (19,766 | ) | -13% | -9% | $ | 372,254 | $ | 405,154 | $ | (32,900 | ) | -8% | -5% | |||||||||||
|
Pro Forma Revenue 3
Pro forma revenue was $139 million and $151 million for the three months ended October 31, 2022 and 2021, respectively, and $423 million and $441 million for the nine months ended October 31, 2022 and 2021, respectively. The unaudited pro forma revenue for the three and nine months ended October 31, 2022 and 2021 in the following table are adjusted and presented on a pro forma basis as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021. The Skillsoft content line includes Codecademy revenue. See the full reconciliation to GAAP revenue to Pro Forma Revenue in the table on pages 13.
| SKILLSOFT CORP. | ||||||||||||||||||||||||||||
PRO FORMA REVENUE 3 | ||||||||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||||||
Three Months | Change (ConstantCurrency) | Nine Months | Change (ConstantCurrency) | |||||||||||||||||||||||||
Ended October 31, | Change | Ended October 31, | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | % | 2022 | 2021 | $ | % | % | |||||||||||||||||||
| Continuing operations: | ||||||||||||||||||||||||||||
| Skillsoft Content | $ | 97,968 | $ | 98,060 | $ | (92 | ) | 0% | 3% | $ | 294,565 | $ | 286,208 | $ | 8,357 |
| 3% | 5% | ||||||||||
| Global Knowledge | $ | 41,422 | $ | 53,206 | $ | (11,784 | ) | -22% | -15% | $ | 128,296 | $ | 154,392 | $ | (26,096 | ) | -17% | -11% | ||||||||||
| Pro Forma Revenue | $ | 139,390 | $ | 151,266 | $ | (11,876 | ) | -8% | -3% | $ | 422,861 | $ | 440,600 | $ | (17,739 | ) | -4% | -1% | ||||||||||
Dollar Retention Rate
The following table sets forth dollar retention rates (“DRR”) for the last twelve-month (“LTM”) period ended October 31, 2022 and 2021 and for the three month periods ended October 31, 2022 and 2021:
October 31 | ||||||||
LTM 2022 | LTM 2021 | Q3 2022 | Q3 2021 | |||||
| Skillsoft Content (continuing operations) | 98% | 95% | 96% | 98% | ||||
Pro Forma Adjusted Net Loss and Pro Forma Adjusted EBITDA 3
The Pro Forma Adjusted Net Income and Pro Forma Adjusted EBITDA for the three and nine months ended October 31, 2022 and 2021 in the following table are adjusted and presented on a pro forma basis as if Skillsoft, Global Knowledge and Codecademy had merged on February 1, 2021. See the full reconciliation and adjusting items in the tables on pages 11 to 14.
_______________________________________
3 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 Skillsoft, Global Knowledge and Codecademy as if the mergers had closed on February 1, 2021. The unaudited pro forma financial information excludes any cost or growth synergies that Skillsoft may have achieved as a result of the mergers.
| SKILLSOFT CORP. | ||||||||||||||||||||||||||||||||
PRO FORMA ADJUSTED NET LOSS AND EBITDA 3 | ||||||||||||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||||||||||
Three Months | Change (Constant Currency) | Nine Months | Change (Constant Currency) | |||||||||||||||||||||||||||||
Ended October 31, | Change | Ended October 31, | Change | |||||||||||||||||||||||||||||
2022 | 2021 | $ | % | % | 2022 | 2021 | $ | % | % | |||||||||||||||||||||||
| Continuing operations: | ||||||||||||||||||||||||||||||||
| Pro Forma Adjusted Net Loss | $ | (30,704 | ) | $ | (9,119 | ) | $ | (21,585 | ) | 237% | NA | $ | (84,183 | ) | $ | (60,019 | ) | $ | (24,164 | ) | 40% | NA | ||||||||||
| Pro Forma Adjusted EBITDA | $ | 28,086 |
| $ | 32,937 |
| $ | (4,851 | ) | -15% | -8% | $ | 80,117 |
| $ | 89,050 |
| $ | (8,933 | ) | -10% | -4% | ||||||||||
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 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. Excluding the effects of these items in non-GAAP measures would assist investors in analyzing and assessing past and future operating performance and comparison of operating results across reporting periods.
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 and adjusted EBITDA), 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 and competitive strengths, goals, 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.
There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including:
The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see the risk factors included in our Form 10-K filed with the SEC for the fiscal year ended January 31, 2022 and in our other filings with the SEC.
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.
Our forward-looking statements speak only as of the date made and we do not undertake to update these forward-looking statements unless required by applicable law. With regard to these risks, uncertainties, and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.
SKILLSOFT CORP. | |||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(IN THOUSANDS, EXCEPT NUMBER OF SHARES) | |||||||||
October 31, 2022 | January 31, 2022 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 174,708 |
| $ | 138,176 |
| |||
| Restricted cash | 7,322 |
| 14,015 |
| |||||
| Accounts receivable, less reserves of approximately $393 and $125 as of October 31, 2022 and January 31, 2022 respectively | 102,440 |
| 173,876 |
| |||||
| Prepaid expenses and other current assets | 38,027 |
| 37,082 |
| |||||
| Current assets associated with discontinued operations | — |
| 64,074 |
| |||||
| Total current assets | 322,497 |
| 427,223 |
| |||||
| Property and equipment, net | 10,657 |
| 11,475 |
| |||||
| Goodwill | 462,080 |
| 795,811 |
| |||||
| Intangible assets, net | 769,680 |
| 793,859 |
| |||||
| Right of use assets | 14,046 |
| 17,988 |
| |||||
| Fair value of hedge instruments | 5,249 |
| — |
| |||||
| Other assets | 11,192 |
| 10,780 |
| |||||
| Non-current assets associated with discontinued operations | — |
| 164,812 |
| |||||
| Total assets | $ | 1,595,401 |
| $ | 2,221,948 |
| |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current maturities of long-term debt | $ | 6,404 |
| $ | 4,800 |
| |||
| Borrowings under accounts receivable facility | 41,461 |
| 74,629 |
| |||||
| Accounts payable | 20,950 |
| 24,159 |
| |||||
| Accrued compensation | 18,858 |
| 40,822 |
| |||||
| Accrued expenses and other current liabilities | 31,578 |
| 47,757 |
| |||||
| Lease liabilities | 4,271 |
| 6,387 |
| |||||
| Deferred revenue | 197,907 |
| 259,701 |
| |||||
| Current liabilities associated with discontinued operations | 8,000 |
| 87,467 |
| |||||
| Total current liabilities | 329,429 |
| 545,722 |
| |||||
| Long-term debt | 582,870 |
| 462,185 |
| |||||
| Warrant liabilities | 2,119 |
| 28,199 |
| |||||
| Deferred tax liabilities | 77,055 |
| 99,395 |
| |||||
| Long term lease liabilities | 11,976 |
| 11,750 |
| |||||
| Deferred revenue - non-current | 667 |
| 1,248 |
| |||||
| Other long-term liabilities | 17,410 |
| 11,125 |
| |||||
| Long-term liabilities associated with discontinued operations | — |
| 2,426 |
| |||||
| Total long-term liabilities | 692,097 |
| 616,328 |
| |||||
| Commitments and contingencies | — |
| — |
| |||||
| Shareholders’ equity: | |||||||||
| Shareholders’ common stock - Class A common shares, $0.0001 par value: 375,000,000 shares authorized and 164,316,842 shares issued and outstanding at October 31, 2022 and 133,258,027 shares issued and outstanding at January 31, 2022 | 14 |
| 11 |
| |||||
| Additional paid-in capital | 1,511,940 |
| 1,306,146 |
| |||||
| Accumulated deficit | (918,714 | ) | (247,229 | ) | |||||
| Treasury stock at cost, 645,428 shares at October 31, 2022 | (1,433 | ) | — |
| |||||
| Accumulated other comprehensive (loss) income | (17,932 | ) | 970 |
| |||||
| Total shareholders’ equity | 573,875 |
| 1,059,898 |
| |||||
| Total liabilities and shareholders’ equity | $ | 1,595,401 |
| $ | 2,221,948 |
| |||
SKILLSOFT CORP. | ||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||||||
Successor | Successor | |||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
October 31, 2022 | October 31, 2021 | |||||||
| Revenues: | ||||||||
| Total revenues | $ | 139,390 |
| $ | 140,153 |
| ||
| Operating expenses: | ||||||||
| Costs of revenues | 36,655 |
| 39,052 |
| ||||
| Content and software development | 17,252 |
| 10,462 |
| ||||
| Selling and marketing | 44,680 |
| 35,046 |
| ||||
| General and administrative | 28,281 |
| 27,452 |
| ||||
| Amortization of intangible assets | 43,438 |
| 34,406 |
| ||||
| Impairment of goodwill and intangible assets | 570,887 |
| — |
| ||||
| Recapitalization and acquisition-related costs | 4,889 |
| 3,407 |
| ||||
| Restructuring | 2,010 |
| 775 |
| ||||
| Total operating expenses | 748,092 |
| 150,600 |
| ||||
| Operating loss | (608,702 | ) | (10,447 | ) | ||||
| Other income (expense), net | 1,601 |
| (661 | ) | ||||
| Fair value adjustment of warrants | 9,128 |
| (36,838 | ) | ||||
| Fair value adjustment of hedge instruments | 20,314 |
| — |
| ||||
| Interest income | 69 |
| 9 |
| ||||
| Interest expense | (14,556 | ) | (6,997 | ) | ||||
| Loss before provision for (benefit from) income taxes | (592,146 | ) | (54,934 | ) | ||||
| Provision for (benefit from) provision for income taxes | (8,832 | ) | (6,168 | ) | ||||
| Loss from continuing operations | (583,314 | ) | (48,766 | ) | ||||
| Gain on sale of business | 53,756 |
| — |
| ||||
| Income from discontinued operations, net of tax | 1,215 |
| 5,911 |
| ||||
| Net loss | $ | (528,343 | ) | $ | (42,855 | ) | ||
| Income (loss) per share: | ||||||||
| Ordinary – Basic and Diluted (Successor) - continuing operations | (3.54 | ) | (0.37 | ) | ||||
| Ordinary – Basic and Diluted (Successor) - discontinued operations | 0.33 |
| 0.04 |
| ||||
| Ordinary – Basic and Diluted (Successor) | $ | (3.21 | ) | $ | (0.32 | ) | ||
| Weighted average common share outstanding: | ||||||||
| Ordinary – Basic and Diluted (Successor) | 164,467 |
| 133,116 |
| ||||
SKILLSOFT CORP. | |||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | |||||||||||||
Year to Date Results | |||||||||||||
Fiscal 2023 | Fiscal 2022 | ||||||||||||
Successor | Successor | Predecessor (SLH) | |||||||||||
Nine Months | From | From | |||||||||||
Ended | June 12, 2021 to | February 1, 2021 to | |||||||||||
October 31, 2022 | October 31, 2021 | June 11, 2021 | |||||||||||
| Revenues: | |||||||||||||
| Total revenues | $ | 414,803 |
| $ | 215,620 |
| $ | 102,494 |
| ||||
| Operating expenses: | |||||||||||||
| Costs of revenues | 109,662 |
| 61,342 |
| 22,043 |
| |||||||
| Content and software development | 53,276 |
| 16,679 |
| 15,012 |
| |||||||
| Selling and marketing | 126,089 |
| 54,739 |
| 34,401 |
| |||||||
| General and administrative | 83,994 |
| 44,281 |
| 16,471 |
| |||||||
| Amortization of intangible assets | 128,196 |
| 52,899 |
| 46,492 |
| |||||||
| Impairment of goodwill and intangible assets | 641,362 |
| — |
| — |
| |||||||
| Recapitalization and acquisition-related costs | 26,653 |
| 13,305 |
| 6,641 |
| |||||||
| Restructuring | 10,289 |
| 1,062 |
| (576 | ) | |||||||
| Total operating expenses | 1,179,521 |
| 244,307 |
| 140,484 |
| |||||||
| Operating loss | (764,718 | ) | (28,687 | ) | (37,990 | ) | |||||||
| Other income (expense), net | 2,733 |
| (1,653 | ) | (167 | ) | |||||||
| Fair value adjustment of warrants | 26,080 |
| (19,723 | ) | 900 |
| |||||||
| Fair value adjustment of hedge instruments | 5,249 |
| — |
| — |
| |||||||
| Interest income | 239 |
| 18 |
| 60 |
| |||||||
| Interest expense | (37,541 | ) | (16,322 | ) | (16,763 | ) | |||||||
| Loss before benefit from income taxes | (767,958 | ) | (66,367 | ) | (53,960 | ) | |||||||
| Benefit from income taxes | (34,234 | ) | (8,165 | ) | (3,521 | ) | |||||||
| Loss from continuing operations | (733,724 | ) | (58,202 | ) | (50,439 | ) | |||||||
| Gain on sale of business | 53,756 |
| — |
| — |
| |||||||
| Income from discontinued operations, net of tax | 8,483 |
| 3,494 |
| 1,175 |
| |||||||
| Net loss | $ | (671,485 | ) | $ | (54,708 | ) | $ | (49,264 | ) | ||||
| Income (loss) per share: | |||||||||||||
| Class A and B – Basic and Diluted (SLH) - Continuing operations | * | * | (12.61 | ) | |||||||||
| Class A and B – Basic and Diluted (SLH) - Discontinued operations | * | * | 0.29 |
| |||||||||
| Class A and B – Basic and Diluted (SLH) | * | * | $ | (12.32 | ) | ||||||||
| Ordinary – Basic and Diluted (Successor) - Continuing operations | (4.78 | ) | (0.44 | ) | * | ||||||||
| Ordinary – Basic and Diluted (Successor) - Discontinued operations | 0.41 |
| 0.03 |
| * | ||||||||
| Ordinary – Basic and Diluted (Successor) | $ | (4.37 | ) | $ | (0.41 | ) | * | ||||||
| Weighted average common share outstanding: | |||||||||||||
| Class A and B – Basic and Diluted (SLH) | * | * | 4,000 |
| |||||||||
| Ordinary – Basic and Diluted (Successor) | 153,523 |
| 133,116 |
| * | ||||||||
SKILLSOFT CORP. | |||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
(IN THOUSANDS) | |||||||||||||
Fiscal 2023 | Fiscal 2022 | ||||||||||||
Successor | Successor | Predecessor (SLH) | |||||||||||
Nine Months | From | From | |||||||||||
Ended | June 12, 2021 to | February 1, 2021 to | |||||||||||
October 31, 2022 | October 31, 2021 | June 11, 2021 | |||||||||||
| Cash flows from operating activities: | |||||||||||||
| Net loss | $ | (671,485 | ) | $ | (54,708 | ) | $ | (49,264 | ) | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||
| Share-based compensation | 25,311 |
| 9,034 |
| — |
| |||||||
| Depreciation and amortization | 5,323 |
| 4,309 |
| 3,572 |
| |||||||
| Amortization of intangible assets | 134,541 |
| 57,087 |
| 50,902 |
| |||||||
| Change in bad debt reserve | 275 |
| (668 | ) | (174 | ) | |||||||
| Benefit from income taxes – non-cash | (43,115 | ) | (9,937 | ) | (5,886 | ) | |||||||
| Non-cash interest expense | 1,550 |
| 913 |
| 487 |
| |||||||
| Fair value adjustment to warrants | (26,080 | ) | 19,723 |
| (900 | ) | |||||||
| Right-of-use asset | 4,302 |
| 3,473 |
| 748 |
| |||||||
| Impairment of goodwill | 641,362 |
| — |
| — |
| |||||||
| Unrealized gain on derivative instrument | (5,249 | ) | — |
| — |
| |||||||
| Gain on sale of business | (53,756 | ) | — |
| — |
| |||||||
| Changes in current assets and liabilities, net of effects from acquisitions: | |||||||||||||
| Accounts receivable | 76,821 |
| (8,446 | ) | 88,622 |
| |||||||
| Prepaid expenses and other current assets | (617 | ) | (5,002 | ) | 3,379 |
| |||||||
| Accounts payable | (3,052 | ) | (1,636 | ) | (6,417 | ) | |||||||
| Accrued expenses, including long-term | (23,378 | ) | 13,962 |
| (18,592 | ) | |||||||
| Lease liability | (2,261 | ) | (4,046 | ) | (1,301 | ) | |||||||
| Deferred revenue | (84,053 | ) | (24,599 | ) | (31,365 | ) | |||||||
| Net cash (used in) provided by operating activities | (23,561 | ) | (541 | ) | 33,811 |
| |||||||
| Cash flows from investing activities: | |||||||||||||
| Purchase of property and equipment | (4,713 | ) | (4,351 | ) | (641 | ) | |||||||
| Internally developed software - capitalized costs | (8,639 | ) | (2,293 | ) | (2,350 | ) | |||||||
| Sale of SumTotal, net of cash transferred | 171,995 |
| — |
| — |
| |||||||
| Acquisition of Codecademy, net of cash acquired | (198,842 | ) | — |
| — |
| |||||||
| Acquisition of Global Knowledge, net of cash received | — |
| (156,926 | ) | — |
| |||||||
| Acquisition of Skillsoft, net of cash received | — |
| (386,035 | ) | — |
| |||||||
| Acquisition of Pluma, net of cash received | — |
| (18,646 | ) | — |
| |||||||
| Net cash used in investing activities | (40,199 | ) | (568,251 | ) | (2,991 | ) | |||||||
| Cash flows from financing activities: | |||||||||||||
| Shares repurchased for tax withholding upon vesting of restricted stock-based awarded | (2,603 | ) | (614 | ) | — |
| |||||||
| Purchase of treasury stock | (1,433 | ) | — |
| — |
| |||||||
| Proceeds from equity investment (PIPE) | — |
| 530,000 |
| — |
| |||||||
| Proceeds from issuance of term loans, net of fees | 157,088 |
| 464,290 |
| — |
| |||||||
| Principal payments on capital lease obligation | — |
| (407 | ) | (370 | ) | |||||||
| (Payments on) proceeds from accounts receivable facility, net of borrowings | (33,168 | ) | (23,198 | ) | 16,577 |
| |||||||
| Principal payments on term loans | (36,194 | ) | — |
| — |
| |||||||
| Repayment of First and Second Out loans | — |
| (605,591 | ) | (1,300 | ) | |||||||
| Net cash provided by financing activities | 83,690 |
| 364,480 |
| 14,907 |
| |||||||
| Effect of exchange rate changes on cash and cash equivalents | (6,823 | ) | (820 | ) | 203 |
| |||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 13,107 |
| (205,132 | ) | 45,930 |
| |||||||
| Cash, cash equivalents and restricted cash, beginning of period | 168,923 |
| 288,483 |
| 74,443 |
| |||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 182,030 |
| $ | 83,351 |
| $ | 120,373 |
| ||||
| Supplemental disclosure of cash flow information: | |||||||||||||
| Cash and cash equivalents | $ | 174,708 |
| $ | 80,671 |
| $ | 117,299 |
| ||||
| Restricted cash | 7,322 |
| 2,680 |
| 3,074 |
| |||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 182,030 |
| $ | 83,351 |
| $ | 120,373 |
| ||||
SKILLSOFT CORP. | ||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
(in thousands, unaudited) | ||||||||
Successor | Successor | |||||||
Three Months Ended October 31, 2022 | Three Months Ended October 31, 2021 | |||||||
| Net loss, as reported | $ | (528,343 | ) | $ | (42,855 | ) | ||
| Income from discontinued operations, net of tax |
| (1,215 | ) |
| (5,911 | ) | ||
| Gain on sale of business |
| (53,756 | ) |
| - |
| ||
| Impairment of goodwill and intangible assets |
| 570,887 |
|
| - |
| ||
| Recapitalization and acquisition-related costs |
| 4,889 |
|
| 3,407 |
| ||
| Restructuring |
| 2,010 |
|
| 775 |
| ||
| Foreign currency impact |
| (1,102 | ) |
| 610 |
| ||
| Warrant fair value adjustment |
| (9,128 | ) |
| 36,838 |
| ||
| Fair value adjustment of hedge instruments |
| (20,314 | ) |
| - |
| ||
| Stock-based compensation expense |
| 8,396 |
|
| 4,217 |
| ||
| Transformation costs |
| 4,223 |
|
| 3,018 |
| ||
| System migration costs |
| 1,116 |
|
| 1,357 |
| ||
| Tax impact of non-GAAP adjustments |
| (8,367 | ) |
| (5,639 | ) | ||
| Adjusted net loss from continuing operations | $ | (30,704 | ) | $ | (4,183 | ) | ||
| Interest expense, net |
| 14,487 |
|
| 6,988 |
| ||
| Expense from income taxes, excluding tax impacts above |
| (465 | ) |
| (529 | ) | ||
| Depreciation |
| 1,330 |
|
| 1,517 |
| ||
| Amortization of intangible assets |
| 43,438 |
|
| 34,406 |
| ||
| Adjusted EBITDA from continuing operations | $ | 28,086 |
| $ | 38,199 |
| ||
| GAAP Operating Margin % |
| -436.7 | % |
| -7.5 | % | ||
| Amortization of intangible assets |
| 31.2 | % |
| 24.5 | % | ||
| Impairment of goodwill and intangible assets |
| 409.6 | % |
| 0.0 | % | ||
| Recapitalization and acquisition-related costs |
| 3.5 | % |
| 2.4 | % | ||
| Restructuring |
| 1.4 | % |
| 0.6 | % | ||
| Stock-based compensation expense |
| 6.0 | % |
| 3.0 | % | ||
| Transformation costs |
| 3.0 | % |
| 2.2 | % | ||
| System migration costs |
| 0.8 | % |
| 1.0 | % | ||
| Depreciation |
| 1.0 | % |
| 1.1 | % | ||
| Adjusted EBITDA Margin % |
| 20.1 | % |
| 27.3 | % | ||
SKILLSOFT CORP. | |||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||
(in thousands, unaudited) | |||||||||||||
Fiscal 2023 | Fiscal 2022 | ||||||||||||
Successor | Successor | Predecessor (SLH) | |||||||||||
Nine Months Ended October 31, 2022 | From June 12, 2021 to October 31, 2021 | From February 1, 2021 to June 11, 2021 | |||||||||||
| Net loss, as reported | $ | (671,485 | ) | $ | (54,708 | ) | $ | (49,264 | ) | ||||
| Income from discontinued operations, net of tax |
| (8,483 | ) |
| (3,494 | ) |
| (1,175 | ) | ||||
| Gain on sale of business |
| (53,756 | ) |
| - |
|
| - |
| ||||
| Impairment of goodwill and intangible assets |
| 641,362 |
|
| - |
|
| - |
| ||||
| Recapitalization and acquisition-related costs |
| 26,653 |
|
| 13,305 |
|
| 6,641 |
| ||||
| Restructuring |
| 10,289 |
|
| 1,062 |
|
| (576 | ) | ||||
| Foreign currency impact |
| (2,223 | ) |
| 1,427 |
|
| (102 | ) | ||||
| Warrant fair value adjustment |
| (26,080 | ) |
| 19,723 |
|
| (900 | ) | ||||
| Fair value adjustment of hedge instruments |
| (5,249 | ) |
| - |
|
| - |
| ||||
| Stock-based compensation expense |
| 26,906 |
|
| 9,034 |
|
| - |
| ||||
| Transformation costs |
| 7,266 |
|
| 2,888 |
|
| 901 |
| ||||
| System migration costs |
| 4,348 |
|
| 2,010 |
|
| 1,253 |
| ||||
| Tax impact of non-GAAP adjustments |
| (30,459 | ) |
| (6,084 | ) |
| (471 | ) | ||||
| Adjusted net loss from continuing operations | $ | (80,911 | ) | $ | (14,837 | ) | $ | (43,693 | ) | ||||
| Interest expense, net |
| 37,302 |
|
| 16,304 |
|
| 16,703 |
| ||||
| Expense from income taxes, excluding tax impacts above |
| (3,775 | ) |
| (2,081 | ) |
| (3,050 | ) | ||||
| Depreciation |
| 3,690 |
|
| 2,523 |
|
| 1,776 |
| ||||
| Amortization of intangible assets |
| 128,196 |
|
| 52,899 |
|
| 46,492 |
| ||||
| Adjusted EBITDA from continuing operations | $ | 84,502 |
| $ | 54,808 |
| $ | 18,228 |
| ||||
| GAAP Operating Margin % |
| -184.4 | % |
| -13.3 | % |
| -37.1 | % | ||||
| Amortization of intangible assets |
| 30.9 | % |
| 24.5 | % |
| 45.4 | % | ||||
| Impairment of goodwill and intangible assets |
| 154.6 | % |
| 0.0 | % |
| 0.0 | % | ||||
| Recapitalization and acquisition-related costs |
| 6.4 | % |
| 6.2 | % |
| 6.5 | % | ||||
| Restructuring |
| 2.5 | % |
| 0.5 | % |
| -0.6 | % | ||||
| Stock-based compensation expense |
| 6.5 | % |
| 4.2 | % |
| 0.0 | % | ||||
| Transformation costs |
| 1.8 | % |
| 1.3 | % |
| 0.9 | % | ||||
| System migration costs |
| 1.0 | % |
| 0.9 | % |
| 1.2 | % | ||||
| Depreciation |
| 0.9 | % |
| 1.2 | % |
| 1.7 | % | ||||
| Adjusted EBITDA Margin % |
| 20.4 | % |
| 25.4 | % |
| 17.8 | % | ||||
SKILLSOFT CORP. | ||||||||||||
PRO FORMA REVENUE | ||||||||||||
(IN THOUSANDS) | ||||||||||||
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
| GAAP revenue, as reported: | ||||||||||||
| Successor | $ | 139,390 | $ | 140,153 | $ | 414,803 | $ | 215,620 | ||||
| Predecessor (SLH) |
| 102,494 | ||||||||||
| Proforma adjustments: | ||||||||||||
| Deferred revenue fair value adjustment (1) |
| 19,291 | ||||||||||
| Revenue from acquisitions (2) |
| 11,113 |
| 8,058 |
| 103,195 | ||||||
| Proforma Revenue (3) | $ | 139,390 | $ | 151,266 | $ | 422,861 | $ | 440,600 |
(1) Adjustment for the period from February 1, 2021 to June 11, 2021 as if the deferred revenue was not reduced to fair value per the fresh-start reporting requirements. |
(2) Revenue from acquisitions for the nine months ended October 31, 2021 includes Global Knowledge's revenue for the period from February 1, 2021 to June 11, 2021, which was disclosed on Form 8-K filed with the SEC on December 14, 2021, and Codecademy's revenue as if the acquisition had closed on February 1, 2021. Revenue from acquisitions for the three months ended October 31, 2021 includes Codecademy's revenue for the period from August 1, 2021 to October 31, 2021. Revenue from acquisitions for the nine months ended October 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. |
(3) Proforma Revenue is presented in Note 3 "Business Combinations" of the Notes to Unaudited Condensed Consolidated Financial Statements for the quarterly period ended October 31, 2022 in accordance with Regulation S-X, Article 11. |
SKILLSOFT CORP. | ||||||||||||||||
PRO FORMA ADJUSTED NET LOSS | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
| Adjusted net loss from continuing operations (1) | ||||||||||||||||
| Successor | $ | (30,704 | ) | $ | (4,183 | ) | $ | (80,911 | ) | $ | (14,837 | ) | ||||
| Predecessor (SLH) |
| (43,693 | ) | |||||||||||||
| Proforma adjustments: | ||||||||||||||||
| Deferred revenue fair value adjustment (2) |
| 19,291 |
| |||||||||||||
| Deferred commissions fair value adjustment (2) |
| (2,414 | ) | |||||||||||||
| Interest adjustment for debt prepayment (3) |
| 441 |
|
| 925 |
|
| 518 |
| |||||||
| Tax impact of adjustments above |
| (50 | ) |
| (41 | ) |
| (1,689 | ) | |||||||
| Adjusted net loss from acquisitions (4) |
| (5,328 | ) |
| (4,156 | ) |
| (17,195 | ) | |||||||
| Pro Forma Adjusted Net Loss | $ | (30,704 | ) | $ | (9,119 | ) | $ | (84,183 | ) | $ | (60,019 | ) |
(1) See RECONCILIATION OF NON-GAAP FINANCIAL MEASURES within this press release for more details. |
(2) Adjustments for the period from February 1, 2021 to June 11, 2021 as if the deferred revenue and deferred commissions were not reduced to fair value per the fresh-start reporting requirements. |
(3) Under the terms of our Amended Credit Agreement, the net proceeds attributable to the sale of SumTotal required a mandatory prepayment of $31.4 million. Interest expense under the Amended Credit Agreement is adjusted for the prepayment. |
(4) Adjusted net loss from acquisitions for the nine months ended October 31, 2021 includes Global Knowledge's adjusted net loss for the period from February 1, 2021 to June 11, 2021, which as disclosed on Form 8-K filed with the SEC on December 14, 2021, and Codecademy's adjusted net loss as if the acquisition had closed on February 1, 2021. Adjusted net loss from acquisitions for the three months ended October 31, 2021 includes Codecademy's adjusted net loss for the period from August 1, 2021 to October 31, 2021. Adjusted net loss from acquisitions for the nine months ended October 31, 2022 only includes Codecademy's adjusted net loss for the period from February 1, 2022 to April 4, 2022 as its post-acquisition adjusted net loss is included in the adjusted net loss from continuing operations. |
SKILLSOFT CORP. | |||||||||||||||
PRO FORMA ADJUSTED EBITDA | |||||||||||||||
(IN THOUSANDS) | |||||||||||||||
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Adjusted EBITDA from continuing operations (1) | |||||||||||||||
| Successor | $ | 28,086 | $ | 38,199 |
| $ | 84,502 |
| $ | 54,808 |
| ||||
| Predecessor (SLH) |
| 18,228 |
| ||||||||||||
| Proforma adjustments: | |||||||||||||||
| Deferred revenue fair value adjustment (2) |
| 19,291 |
| ||||||||||||
| Deferred commissions fair value adjustment (2) |
| (2,414 | ) | ||||||||||||
| Adjusted EBITDA from acquisitions (3) |
| (5,262 | ) |
| (4,385 | ) |
| (863 | ) | ||||||
| Pro Forma Adjusted EBITDA | $ | 28,086 | $ | 32,937 |
| $ | 80,117 |
| $ | 89,050 |
|
(1) See RECONCILIATION OF NON-GAAP FINANCIAL MEASURES within this press release for more details. |
(2) Adjustments for the period from February 1, 2021 to June 11, 2021 as if the deferred revenue and deferred commissions were not reduced to fair value per the fresh-start reporting requirements. |
(3) Adjusted EBITDA from acquisitions for the nine months ended October 31, 2021 includes Global Knowledge's adjusted EBITDA for the period from February 1, 2021 to June 11, 2021, which as disclosed on Form 8-K filed with the SEC on December 14, 2021, and Codecademy's adjusted EBITDA as if the acquisition had closed on February 1, 2021. Adjusted EBITDA from acquisitions for the three months ended October 31, 2021 includes Codecademy's adjusted EBITDA for the period from August 1, 2021 to October 31, 2021. Adjusted EBITDA from acquisitions for the nine months ended October 31, 2022 only 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. |
View source version on businesswire.com:https://www.businesswire.com/news/home/20221206005412/en/
CONTACT: Investors
Eric Boyer
Senior Vice President, Investor Relations
eric.boyer@skillsoft.comMedia
Nancy Coleman
Senior Vice President, Corporate Communications
nancy.coleman@skillsoft.com
KEYWORD: UNITED STATES NORTH AMERICA MASSACHUSETTS
INDUSTRY KEYWORD: TECHNOLOGY SECURITY OTHER TECHNOLOGY SOFTWARE INTERNET CONTINUING TRAINING DATA MANAGEMENT EDUCATION
SOURCE: Skillsoft Corp.
Copyright Business Wire 2022.
PUB: 12/06/2022 04:07 PM/DISC: 12/06/2022 04:07 PM
http://www.businesswire.com/news/home/20221206005412/en