Skillsoft Corp ((SKIL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Skillsoft Corp’s recent earnings call presented a mixed sentiment, reflecting both promising advancements and notable challenges. The company highlighted significant progress in AI-driven platform development and customer retention, yet faced setbacks in the Global Knowledge segment and overall financial performance. While strategic initiatives are on a promising path, immediate financial metrics indicate struggles.
AI-Driven Platform Development
Skillsoft launched its next-generation Precipio platform, which integrates content, blended learning, hands-on practice, and skills intelligence. The initial customer response has been strong, and the company remains optimistic about meeting its commitments for FY ’27 and beyond.
Enterprise Customer Engagement
The company reported a 105% dollar retention rate in Q3 for deals involving subject matter experts, with large customer enterprises showing an impressive 115% dollar retention rate, indicating strong engagement and satisfaction among enterprise clients.
AI Adoption and Operational Efficiency
Skillsoft has leveraged AI for over 50% of its content design, curation, and production, leading to reductions in headcount and vendor costs. This strategic move has contributed to a year-over-year improvement in operating expenses.
Public Sector Win
Skillsoft secured a significant European public sector award in France, valued at up to $25 million over four years, marking a notable achievement in expanding its public sector footprint.
Revenue Decline
The company reported total revenue of $129 million in Q3, a decrease of $8.2 million or 6% year-over-year. This decline was primarily driven by challenges in the Global Knowledge segment.
Global Knowledge Segment Challenges
The Global Knowledge segment accounted for 73% of the revenue decline while representing only 22% of total revenue. It experienced a 17.6% year-over-year revenue drop and negatively impacted EBITDA.
Free Cash Flow Issues
Skillsoft faced a negative free cash flow of $23.6 million for the quarter, compared to a positive $4.1 million in the prior year, with a significant portion attributed to the performance of the Global Knowledge segment.
Increased GAAP Net Loss
The company reported a GAAP net loss of $41.3 million in Q3, up from $23.6 million in the prior year, primarily due to a non-cash goodwill impairment loss of $20.8 million related to the Global Knowledge segment.
Forward-Looking Guidance
Skillsoft’s guidance for future growth involves several strategic decisions. Despite a 6% year-over-year revenue decline, the company is optimistic about its transition to an AI-powered platform and content model. The focus is on enterprise solutions and large customer adoption, with a 115% dollar retention rate in Q3. Skillsoft anticipates a positive free cash flow of between $0 and $5 million for fiscal 2026, excluding the impact of the Global Knowledge segment. The company is also considering transitioning the Global Knowledge segment to a partnership model to better align with growth goals and market needs.
In summary, Skillsoft’s earnings call highlighted a mixed sentiment with both advancements and challenges. The company’s strategic initiatives, particularly in AI and enterprise engagement, show promise, yet immediate financial metrics reveal areas of concern, particularly within the Global Knowledge segment. Investors will be keenly watching how Skillsoft navigates these challenges and leverages its strategic initiatives for future growth.