Skillsoft (SKIL) 2026년 4분기 실적 발표 회의록

Image source: The Motley Fool.

Date

2026년 4월 7일 오후 5시(미국 동부 시간)

Call participants

- Executive Chair and Chief Executive Officer — Ronald Hovsepian

- Chief Financial Officer — John Frederick

- Vice President, Investor Relations — Nick Teves

Full Conference Call Transcript

Nick Teves: Thank you, operator. Good day, and thank you for joining us to discuss our results for the fourth quarter ended January 31, 2026. Before we jump in, I want to remind you that today's call will contain forward-looking statements about the company's business outlook and our expectations that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements concerning financial and business trends, our expected future business and financial performance, financial condition and market outlook.

These forward-looking statements and all statements that are not historical facts reflect management's current beliefs, expectations and assumptions and therefore, are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions, forecasts, estimates or projections in the forward-looking statements made today. For a discussion on the material risks and other important factors that could affect our actual results, we refer you to our most recent Form 10-K and other documents that we file with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates.

During the call, unless otherwise noted, all financial metrics we discuss other than revenue will be non-GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles. For example, listeners should be cautioned that references to phrases such as adjusted EBITDA and free cash flow denote non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures.

Presentation of the most directly comparable financial measures determined in accordance with GAAP as well as the definitions, uses and reconciliations of non-GAAP financial measures included in today's commentary to the most directly comparable GAAP financial measures is included in our earnings press release, which has been furnished to the SEC on Form 8-K and is available at www.sec.gov and is also available on our website at www.skillsoft.com. Following today's prepared remarks, Ron Hovsepian, Skillsoft's Executive Chair and Chief Executive Officer; and John Frederick, Skillsoft's Chief Financial Officer, will be available for Q&A. With that, it's my pleasure to turn the call over to Ron.

Ronald Hovsepian: Thanks, Nick, and good afternoon. Thank you to everyone for joining us today. Over the past 18 months, we have worked through two important and related efforts at Skillsoft. First, we undertook a strategic transformation to reposition the company for where the market is going. Second, during FY 2026, we made meaningful operational progress against that strategy while navigating a very challenging external environment. Let me start with the strategic transformation. We began with a comprehensive assessment of the market, where the customer demand was heading and where Skillsoft could differentiate in a durable way. That work confirmed 3 foundational assets in the business: our content, our platform and our data.

Those assets give us a credible foundation to evolve from a traditional learning company into an AI-native skills platform built for the enterprise needs. From there, we put in place a clear transformation plan and applied sharper prioritization with greater discipline to capital allocation. Using that same discipline, we reduced gross costs by approximately $45 million and reinvested roughly half of that into areas that we believe would matter most for long-term value creation, primarily go-to-market capabilities and AI-driven product innovation. FY 2026 was about turning that strategy into execution. And I want to be clear on the context. We made progress while operating against a backdrop of significant macro and geopolitical uncertainty.

Earlier in this year, bookings were affected by executive orders, DOGE-related actions and broader disruption in parts of the government market. As the year progressed, that uncertainty was compounded by additional global geopolitical instability and a more cautious enterprise spending environment. Despite that, we made substantial operational progress. We advanced our product road map, including the release of an upgraded version of CAISY, our AI simulation offering. We announced our new AI-native platform in September, and we brought it to general availability in February.

Since launch, we have secured 15 paying customers, and we are also using the platform internally in our own operations, which is helping us refine the experience and accelerate learning from the market while becoming more efficient as a company. At the same time, we continue to simplify and focus on the business. We further streamlined the cost structure, improved efficiency and maintained prioritization and disciplined capital allocation with the outcome of generating positive free cash flow. Just as important, FY 2026 demonstrated the financial durability of the business as we operated with discipline and continue to fund our transformation in a highly uncertain environment.

That same discipline also led us to initiate a strategic review of Global Knowledge, which remains underway as we continue to focus capital and management attention on the areas of the portfolio with the strongest growth, margin and cash flow characteristics, particularly TDS. As we sit here today, I think there are 3 things that matter most. First, the strategic transformation was necessary with the AI disruption. And that transformation is well underway as we reposition the company around AI-native and AI-enabled skills platform model. And that positioning is increasingly resonating with customers. Second, FY 2026, we represented substantial operational progress.

We improved focus, advanced the platform, made the cost base leaner and more directed, strengthened execution discipline and delivered positive free cash flow, all while continuing to manage through a meaningful market disruption. Third, we're beginning to see evidence that this work is gaining traction. Our platform is winning customers. Our AI capabilities are seeing strong engagement, and we believe our TDS Enterprise business has reached a revenue inflection point. When we look at the market, many companies are talking about skills and many of them are talking about AI. What we believe differentiates Skillsoft is our ability to bring together content, platform, data and AI in a way that is usable, governed and scalable for the enterprise.

Our differentiation comes down to 3 things. First, our skills intelligence. We have a deep and structured body of enterprise learning data mapped to roles, domains and job-relevant use cases, which gives us a meaningful foundation for a skills-based development. Second, the integration of content, platform and data. We are not offering a narrow point solution. We are delivering an integrated system that can help customers move from learning activity to workforce capability and measurable outcomes. Third, our ability to operationalize AI in the enterprise environments. Customers are not looking for AI as a feature by itself.

They are looking for trusted partners that can help them apply AI securely, responsibly and in ways that improve workforce readiness in a measurable way. All of this is delivered through our AI-native skills Percipio Platform, which brings together learning content, skills data and measurement into a unified system. It can serve as the front end of a learner relationship or as the back end of the skills management process, giving customers flexibility in how they deploy it in their enterprise environments. That is exactly how we are seeing it in the market. One concern we sometimes hear is whether AI could reduce the relevance of categories like ours. What we are seeing suggests the opposite.

AI is increasing the urgency of workforce readiness. It is widening the skills gap faster than many organizations can close it and driving demand for solutions that can translate into AI true role-based execution. This is not just conceptual, it is showing up in customer behavior in platform usage and in buying decisions. For example, one of Singapore's largest telecommunications providers selected Skillsoft through a competitive RFP process to support an AI-led workforce transformation mandate, not simply to extend a content relationship. Across the organization's entire user base, Skillsoft is helping support role redesign, develop AI capabilities and embed learning into the flow of work.

Early activation includes persona-based learning for an internal AI academy and pilots around AI augmented job redesign. We saw something similar with a large global health care organization, which entered into a multiyear partnership with Skillsoft to help operationalize an AI-first operating model. They are using Skillsoft to translate AI advancements into role-specific capabilities and move from fragmented learning approaches toward a more centralized and business-aligned skills model. We're also seeing a strong signals in our own engagement data. AI skill benchmark completions increased 994% year-over-year. AI content completions increased 261% year-over-year. AI Journey completions increased 222% year-over-year. CAISY learners increased 146% year-over-year and CAISY launches or engagement increased by 341% year-over-year.

To us, that matters because it reflects active scaled behavior tied directly to workforce transformation. It suggests that AI is not displacing the need for skills development, it is increasing it. And as enterprise move faster on AI, they're also becoming more aware of the risks of moving without verified workforce capability. AI without demonstrable skills can create a real business risk, including poor decision-making, compliance exposure and lower productivity. That is the one reason buyers are becoming more focused on ROI, measurable outcomes and trusted platforms that can support enterprise execution at scale. So when I step back, I would frame FY '26 this way.

It was a year of significant strategic and operational progress in a highly uncertain environment. We continued transforming the company. We advanced our AI-native platform and broader AI capabilities. We sharpened the operating model. We demonstrated financial durability, we improved execution discipline, and we began to see clear evidence of the traction in the market. There's still work ahead, but the direction is increasingly clear. We are building a more focused company, a more differentiated AI-native platform in a market where the need for skills-based workforce transformation is growing, and that demand continues to build. We believe Skillsoft is increasingly well positioned to translate that market shift into durable growth.

With that, let me turn the call over to John to cover our financial results in more detail. John?

John Frederick: Thank you, Ron, and good afternoon, everyone. As a reminder, and as noted at the opening of the call, consistent with prior quarters, this section covers non-GAAP measures unless otherwise stated. During mid-fiscal '25, we presented our strategic and financial road map to the Street. For fiscal '25 through fiscal '26, our stated financial objectives were: first, $45 million of annualized expense reduction in fiscal '25. This was achieved. Second, margin expansion in fiscal '25 and '26. This was also achieved. Third, return to top line growth in fiscal '26. This was achieved for TDS Enterprise, but not for Learner or for GK, which informed decisions around the latter 2 businesses.

And finally, fourth, positive free cash flow generation in fiscal '26. This was achieved for fiscal '25 and for fiscal '26. While macroeconomic disruption and minor operational time delays impacted bookings and revenue during fiscal '26, the company delivered on its structural objectives of cost reduction, margin expansion and cash generation, validating that the transformation strategy presented at Investor Day is indeed on track. Now turning to the results. Revenue for TDS was $102.6 million for the fourth quarter, nearly flat year-over-year, with growth in our Enterprise Solutions business offsetting a continued drag from our B2C learner product. Global Knowledge revenue of $28 million in the quarter was down approximately $2.9 million or 9.4% year-over-year.

The trends we've seen earlier in the year for demand and instructor-led training have continued. Total revenue of $130.7 million in the fourth quarter was down $3.1 million or 2.3% year-over-year. Our TDS LTM dollar retention rate, or DRR, as of the fourth quarter was 98% compared to 105% in the prior year quarter. Customer retention improved year-over-year, while customer upgrade rates declined more, reflecting a challenging year-over-year comparable period. Going forward, we believe that the release of the new platform should enable us to move back to historical upgrade rates and beyond. Now I'll walk you through our expense measures, which taken as a whole, continue to see year-over-year improvements.

Cost of revenue was $34.2 million in the fourth quarter or 26% of revenue, up 2.5% year-over-year, reflecting higher labs and certification spending resulting from higher customer utilization. We have changed the way we structure some of these agreements to avoid these overruns in the future. Content and software development expenses of $12.8 million in the quarter or 10% of revenue were down approximately 5% year-over-year. These improvements largely reflected productivity gains from leveraging AI and sharper focus. Selling and marketing expenses of $37.5 million in the fourth quarter or 29% of revenue were down approximately 5.6% year-over-year, resulting largely from lower program spending, reflecting our drive for capital allocation discipline.

General and administrative expenses were $15 million in the fourth quarter or 11% of revenue, down approximately 13% year-over-year, reflecting lower headcount and vendor spending, continuing our drive for a leaner, more efficient cost structure. Once we complete the GK strategic assessment process, we believe we can streamline the cost structure further. Total operating expenses were $99.5 million in the fourth quarter or 76% of revenue and were down $4.3 million or 4.2% year-over-year. Adjusted EBITDA of $31.2 million was up approximately 4% compared to $29.9 million last year, with adjusted EBITDA margin as a percentage of revenue for the quarter at