Skillsoft Corp ((SKIL)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Skillsoft Corp’s recent earnings call paints a picture of optimism, as the company surpasses revenue and EBITDA expectations while making strides in its transformation plan. Despite challenges such as a decline in Global Knowledge revenue and a GAAP net loss, improvements in these areas compared to the previous year provide a positive outlook.
Revenue and EBITDA Exceed Expectations
Skillsoft reported strong financial results for the fourth quarter and the fiscal year, with revenue surpassing the high end of their guidance and adjusted EBITDA reaching the upper end of the projected range. This performance underscores the company’s effective financial management and strategic execution.
Strong Dollar Retention Rate
The company achieved a dollar retention rate (DRR) of 105% in the fourth quarter, bringing the last 12 months’ DRR to 100%. This marks a 200 basis point improvement from previous quarters, highlighting Skillsoft’s ability to retain its customer base effectively.
Transformation Plan Progress
Skillsoft’s transformation strategy, focusing on ‘fix the basics’ and ‘invest to grow,’ is progressing well. The company has achieved $45 million in annualized expense reductions, with a portion of these savings being reinvested to fuel growth.
Positive Free Cash Flow
The company generated positive free cash flow of $11.6 million for fiscal year 2025, marking an improvement of $27 million from the previous year. This achievement is a testament to Skillsoft’s enhanced operational efficiency and financial health.
Major Customer Wins
Skillsoft secured significant deals with major clients like Honda and Virgin Media-O2, focusing on digital transformation and creating a robust learning ecosystem. These wins demonstrate the company’s competitive edge and market relevance.
Global Knowledge Revenue Decline
Despite the positive trends, Global Knowledge revenue declined by 15% year-over-year, with a more pronounced negative impact from foreign exchange rates in the fourth quarter. This remains a challenge for the company moving forward.
GAAP Net Loss
Skillsoft reported a GAAP net loss of $31.1 million in the fourth quarter and $121.9 million for the full year. However, this represents an improvement from the previous year, indicating progress in mitigating losses.
Continued Challenges in Revenue Growth
Total revenue for fiscal year 2025 was down approximately 4% year-over-year, reflecting ongoing challenges in achieving top-line growth. This underscores the need for continued strategic initiatives to drive revenue.
Forward-Looking Guidance
Looking ahead, Skillsoft’s guidance reflects a positive outlook. The company expects fiscal year 2026 revenue to range between $530 million and $545 million, with adjusted EBITDA between $112 million and $118 million. Skillsoft aims to generate positive free cash flow of $13 million to $18 million and plans to shift up to 20% of go-to-market and product resources into the enterprise market segment, emphasizing growth through strategic investments.
In summary, Skillsoft Corp’s earnings call reveals a company on the path to transformation, with strong financial results and strategic initiatives paving the way for future growth. While challenges remain, particularly in revenue growth and Global Knowledge revenue, the overall sentiment is optimistic, with a clear focus on customer retention and operational improvements.