Fiscal 2026 Second Quarter Financial Results Overview [Executive Summary](index=1&type=section&id=executive-summary) Skillsoft achieved Q2 FY26 TDS revenue growth and positive free cash flow, revising full-year guidance due to market softness - Achieved a **fourth consecutive quarter of revenue growth** in the TDS enterprise solution, reinforcing the durability and potential of the core business[4](index=4&type=chunk) - Economic uncertainty continued into Q2, weighing on revenue, primarily due to weaker discretionary demand for live training[4](index=4&type=chunk) - Accelerating execution to reimagine learning, with September announcements introducing AI Innovation based products and a reshaped go-to-market strategy[4](index=4&type=chunk) - Revised full-year revenue guidance range to account for softness in federal and live learning spending[5](index=5&type=chunk) - Generated positive free cash flow year-to-date and remains on track to deliver on adjusted EBITDA and free cash flow targets for the balance of the year[5](index=5&type=chunk) [Fiscal 2026 Second Quarter Select Metrics and Financial Measures](index=1&type=section&id=fiscal-2026-second-quarter-select-metrics-and-financial-measures) Skillsoft reported a 3% year-over-year decrease in total revenue for Q2 FY26, reaching $129 million, with improved GAAP net loss | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Total Revenue | $129 | $132 | -3% | | Talent Development Solutions (TDS) Revenue | $101 | $101 | 0% | | Global Knowledge (GK) Revenue | $28 | $31 | -10% | | GAAP Net Loss | ($24) | ($40) | Improved | | GAAP Net Loss per share | ($2.78) | ($4.84) | Improved | | Adjusted EBITDA | $28 | $28 | 0% | | Adjusted EBITDA Margin | 22% | 21% | +1 pp | | Free Cash Flow (Q2) | ($23) | ($16) | Worsened | | Free Cash Flow (YTD) | $4 | N/A | Positive | [Fiscal 2026 Second Quarter Business Highlights](index=1&type=section&id=fiscal-2026-second-quarter-business-highlights) Key business achievements in Q2 FY26 included positive Free Cash Flow, expanded market reach, and significant growth in technology and AI learners - Achieved positive Free Cash Flow in both the year-to-date and last-twelve-month periods[9](index=9&type=chunk) - Announced availability in AWS Marketplace, simplifying and accelerating the purchasing process[9](index=9&type=chunk) - Expanded reach through partnership with Salesforce to bring Skillsoft CAISY™ agent actions to Agentforce and the Salesforce ecosystem[9](index=9&type=chunk) - Achieved **50% year-over-year increase in technology learners**, **74% increase in AI learners**, and **158% increase in total AI learning hours** on the Skillsoft platform[9](index=9&type=chunk) [Full-Year Fiscal 2026 Financial Outlook](index=1&type=section&id=full-year-fiscal-2026-financial-outlook) Skillsoft revised its full-year fiscal 2026 financial outlook, projecting GAAP Revenue between $510 million and $530 million | Metric | Full-Year Fiscal 2026 Outlook | | :----- | :---------------------------- | | GAAP Revenue | $510 million – $530 million | | Adjusted EBITDA | $112 million – $118 million | [Segment Reporting Changes](index=2&type=section&id=segment-reporting-changes) The company adjusted segment reporting components in Q4 FY25 to enhance transparency and peer comparability - Changes made to segment result components in Q4 FY25 to increase transparency and improve segment comparability to peers[10](index=10&type=chunk) - All prior period comparatives have been recast to conform to the current presentation[10](index=10&type=chunk) Company Information [Webcast and Conference Call Information](index=3&type=section&id=webcast-and-conference-call-information) Skillsoft hosted a conference call and webcast on September 9, 2025, to discuss financial results, with a replay available - Skillsoft hosted a conference call and webcast on September 9, 2025, at 5:00 p.m. Eastern Time to discuss financial results[11](index=11&type=chunk) - A replay of the event will be available for twelve months on the Investor Relations section of Skillsoft's website[11](index=11&type=chunk) [About Skillsoft](index=3&type=section&id=about-skillsoft) Skillsoft empowers organizations and learners with personalized, AI-powered learning experiences to address skill gaps and future-proof workforces - Skillsoft (NYSE: SKIL) empowers organizations and learners with personalized, interactive, AI-powered learning experiences and enterprise-ready solutions[12](index=12&type=chunk) - The platform helps customers solve complex business challenges like bridging skill gaps, improving talent retention, driving digital transformation, and future-proofing the workforce[12](index=12&type=chunk) - Skillsoft is the talent development partner for thousands of organizations, including **60% of the Fortune 1000**, serving over **105 million learners globally**[12](index=12&type=chunk) [Investor and Media Contacts](index=6&type=section&id=investor-and-media-contacts) Contact information for investor relations and media inquiries is provided - Investors can contact Ross Collins or Stephen Poe at SKIL@alpha-ir.com[25](index=25&type=chunk) - Media inquiries can be directed to Cameron Martin at cameron.martin@skillsoft.com[25](index=25&type=chunk) Non-GAAP Financial Measures and Key Performance Metrics [Introduction and Rationale](index=3&type=section&id=introduction-and-rationale) Skillsoft utilizes non-GAAP financial measures and key performance metrics to supplement GAAP information for performance evaluation and comparability - Non-GAAP measures and key performance metrics are used by analysts and investors to evaluate companies and provide insight into U.S. GAAP financial disclosures[13](index=13&type=chunk) - Management uses these measures to assess operating performance, financial leverage, resource allocation, and to provide normalized period-to-period comparisons[13](index=13&type=chunk) - Non-GAAP measures have limitations as analytical tools, are not GAAP presentations, and should not be considered alternatives to GAAP profit/loss or operating cash flows[13](index=13&type=chunk) - Quantitative reconciliations for forward-looking non-GAAP financial measures are not provided due to variability and difficulty in making accurate forecasts[15](index=15&type=chunk) [Key Performance Metric: Dollar Retention Rate (DRR)](index=3&type=section&id=key-performance-metric-dollar-retention-rate-drr) Dollar Retention Rate (DRR) measures the long-term value of customer contracts and the ability to retain and expand revenue from existing customers - DRR represents subscription renewals, upgrades, churn, and downgrades for existing customers divided by their beginning total renewable base[16](index=16&type=chunk) - DRR is used to measure the long-term value of customer contracts and the ability to retain and expand revenue from existing customers[17](index=17&type=chunk) [Non-GAAP Financial Measure Definitions](index=4&type=section&id=non-gaap-financial-measure-definitions) This section defines various non-GAAP financial measures used by Skillsoft, primarily excluding non-cash and discrete items for enhanced comparability [Adjusted Net Income (Loss)](index=4&type=section&id=adjusted-net-income-loss) Adjusted net income (loss) excludes non-cash items, discrete and event-specific costs, and certain accounting income/expenses - Adjusted net income (loss) excludes non-cash items, discrete and event-specific costs not representing normal cash operating expenses, and certain accounting income/expenses[18](index=18&type=chunk) - Exclusions include impairment charges, amortization of acquired intangible assets, acquisition and integration related costs, restructuring charges, transformation costs, system migration costs, long-term incentive compensation expenses, executive exit costs, fair value adjustments, and other (income) expense, net[18](index=18&type=chunk) [Adjusted EBITDA](index=5&type=section&id=adjusted-ebitda) Adjusted EBITDA is defined as net income (loss) with specific exclusions, including amortization, depreciation, and income taxes - Adjusted EBITDA is defined as net income (loss) excluding the same items as adjusted net income (loss), plus additional exclusions[19](index=19&type=chunk) - Additional exclusions for Adjusted EBITDA are amortization of intangible assets (other than those recognized as part of business combination accounting), depreciation expense, and provision for (benefit from) income taxes[19](index=19&type=chunk) [Other Adjusted Operating Measures](index=5&type=section&id=other-adjusted-operating-measures) This section defines other adjusted operating measures including adjusted total operating expenses, free cash flow, and adjusted net leverage - Adjusted total operating expenses exclude depreciation, long-term incentive compensation, system migration, and transformation costs[19](index=19&type=chunk) - Free cash flow is defined as net cash provided by (used in) operating activities less net purchases of property and equipment and internally developed software[19](index=19&type=chunk) - Adjusted net leverage is defined as current maturities of long-term debt, plus borrowings under accounts receivable facility, plus long-term debt, less cash and equivalents and restricted cash, divided by adjusted EBITDA for the preceding twelve-month period[19](index=19&type=chunk) Unaudited Condensed Consolidated Financial Statements [Balance Sheets](index=7&type=section&id=balance-sheets) As of July 31, 2025, Skillsoft reported total assets of $969.4 million, with a decrease in total liabilities and shareholders' equity | Metric (in thousands) | July 31, 2025 | January 31, 2025 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Total assets | $969,426 | $1,106,069 | ($136,643) | | Total liabilities | $927,000 | $1,012,223 | ($85,223) | | Total shareholders' equity (deficit) | $42,453 | $93,846 | ($51,393) | | Accounts receivable, net | $96,778 | $178,989 | ($82,211) | | Deferred revenue (current

Core Insights - Skillsoft (SKIL) is set to release its second-quarter fiscal 2026 results on September 9, after market close, and has consistently surpassed the Zacks Consensus Estimate in the past four quarters with an average earnings surprise of 93.8% [1] Group 1: Q2 Expectations - The Zacks Consensus Estimate for Skillsoft's revenues is $129.2 million, indicating a 2.3% decline compared to the same quarter last year [2][9] - The Talent Development Solutions segment is expected to show revenue growth due to strong AI capabilities and recent product launches, such as the Percipio certification dashboard and Codecademy [4][9] Group 2: Macroeconomic Factors - The U.S. annual inflation rate remained stable at 2.7% in June and July, up from 2.4% in May, but the implementation of tariffs may increase the cost of goods sold, potentially raising inflation and leading to reduced government spending [3] - These macroeconomic conditions are anticipated to negatively impact the Global Knowledge segment, particularly due to a decline in U.S. public sector discretionary live learning spending [3] Group 3: Earnings Prediction Model - The current model does not predict an earnings beat for Skillsoft, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3, indicating a hold position [5][6]

Industry Overview - The Technology Services industry ranks within the top 40% of Zacks Ranked Industries and is expected to outperform the market over the next three to six months [1][8] - The industry is mature with strong demand for services, leading to significant growth in the first half of 2025, which is likely to continue in the second half [1][3] Market Trends - The global shift toward digitization is creating opportunities in markets such as 5G, blockchain, and artificial intelligence (AI) [3] - Companies are rapidly adopting generative AI, machine learning (ML), and data science to gain competitive advantages [3][4] - There is robust demand for multi-cloud-enabled software solutions as businesses transition from legacy platforms to modern cloud-based infrastructure [3] Company Highlights Coherent Corp. (COHR) - Coherent is positioned in the industrial, communications, electronics, and instrumentation markets, offering diversified applications [7] - Expected revenue and earnings growth rates for the current year are 11.5% and 29.3%, respectively, with a 4.1% improvement in the Zacks Consensus Estimate for current-year earnings over the last 30 days [9] Vimeo Inc. (VMEO) - Vimeo provides cloud-based video software solutions, including video hosting, management, and analytics [10][11] - Expected revenue and earnings growth rates for the next year are 6.2% and over 100%, respectively, with no change in the Zacks Consensus Estimate for next-year earnings over the last 60 days [12] Skillsoft Corp. (SKIL) - Skillsoft offers personalized learning experiences and operates in two segments: Talent Development Solutions and Global Knowledge [13][14] - Expected revenue and earnings growth rates for the current year are 1.2% and -157%, respectively, with a 54.8% improvement in the Zacks Consensus Estimate for current-year earnings over the last 60 days [15] Vontier Corp. (VNT) - Vontier focuses on transportation and mobility solutions, operating through three segments: Mobility Technologies, Repair Solutions, and Environmental and Fueling Solutions [16] - Expected revenue and earnings growth rates for the current year are 0.1% and 9%, respectively, with a 2.9% improvement in the Zacks Consensus Estimate for current-year earnings over the last seven days [17] SPX Technologies Inc. (SPXC) - SPX Technologies is a diversified supplier in the HVAC and detection and measurement markets, operating in two segments [18] - Expected revenue and earnings growth rates for the current year are 12.7% and 17%, respectively, with a 3.2% improvement in the Zacks Consensus Estimate for current-year earnings over the last seven days [19]

Core Viewpoint - Skillsoft Corp. (SKIL) has experienced significant selling pressure, resulting in a 30.2% decline over the past four weeks, but analysts anticipate better earnings than previously expected, indicating a potential turnaround for the stock [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to determine if a stock is oversold, with readings below 30 indicating oversold conditions [2]. - SKIL's current RSI reading is 28.35, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5]. Group 2: Fundamental Indicators - There has been a strong consensus among sell-side analysts to raise earnings estimates for SKIL, leading to a 52.8% increase in the consensus EPS estimate over the last 30 days [7]. - An upward trend in earnings estimate revisions typically correlates with price appreciation in the near term [7]. Group 3: Analyst Ratings - SKIL holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8].

Core Viewpoint - Skillsoft Corp. (SKIL) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, making it a valuable tool for investors [2][3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to price movements based on their buying or selling actions [3]. Skillsoft's Earnings Outlook - The recent upgrade for Skillsoft indicates an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. - Over the past three months, the Zacks Consensus Estimate for Skillsoft has increased by 46.1%, reflecting analysts' growing confidence in the company's earnings potential [7]. Zacks Rank System - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - Skillsoft's upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [9].

Financial Data and Key Metrics Changes - Total revenue for Q1 was $124.2 million, down approximately $3.6 million or 2.8% year over year [19] - Adjusted EBITDA was $22.1 million or 17.8% of revenue, up from $18.9 million or 14.8% of revenue in the prior year [21] - GAAP net loss was $38 million compared to $27.6 million in the prior year, with GAAP net loss per share at $4.57 compared to $3.42 [22] - Free cash flow was $26.2 million, an improvement of $15.8 million from $10.4 million in the prior year [23] Business Line Data and Key Metrics Changes - Talent Development Solutions (TDS) revenue was $99.1 million, up 1% year over year [18] - Global Knowledge (GK) revenue was $25.1 million, down approximately $4.7 million or 15.7% year over year, impacted by softer demand in the public sector [18][19] - TDS dollar retention rate for Q1 was 99%, compared to 100% last quarter and 99% one year ago [19] Market Data and Key Metrics Changes - There was a decline in U.S. public sector discretionary live learning spending, while large-scale non-U.S. public sector deals increased [10] - The company is investing in international growth, particularly in sectors like AI, cloud computing, and cybersecurity [11] Company Strategy and Development Direction - The company is focused on executing its transformation plan and driving success for customers and learners [5][8] - A renewed focus on go-to-market strategy is emphasized, with new leadership additions aimed at enhancing brand awareness and demand [6][7] - The company aims to return to top-line growth and deliver continued margin expansion while generating positive free cash flow [16] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty leading to lower discretionary spending and elongated decision-making processes [8][16] - Confidence in the business strategy was reinforced by positive feedback from customer events and a strong deal pipeline [15][38] - The outlook for the full fiscal year remains unchanged, with expectations for revenue between $530 million and $545 million [26] Other Important Information - The company is closely monitoring macroeconomic conditions and potential impacts on business [26] - The first quarter is typically the highest seasonal free cash flow quarter, with expectations of cash usage in the second quarter [23][24] Q&A Session Summary Question: What are the underlying KPIs that give confidence in the full-year target? - Management highlighted the growth in TDS and a strong deal pipeline in GK, suggesting potential for improvement if the market stabilizes [30][32] Question: How should we think about the government business and its recent softness? - Management noted that discretionary spending in the U.S. federal sector impacted revenue, but there is positive activity in European public sectors [48][50] Question: What changes or improvements can be expected under the new CFO? - The focus will be on integrating finance into every decision and aligning it with go-to-market strategies to drive growth [54]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $124.2 million, down approximately $3.6 million or 2.8% year over year [18] - Adjusted EBITDA was $22.1 million or 17.8% of revenue, up from $18.9 million or 14.8% of revenue in the prior year [20] - GAAP net loss was $38 million compared to $27.6 million in the prior year, with GAAP net loss per share at $4.57 compared to $3.42 [21] - Free cash flow improved to $26.2 million compared to $10.4 million in the prior year, reflecting an increase of $15.8 million [22] Business Line Data and Key Metrics Changes - Revenue for Talent Development Solutions (TDS) was $99.1 million, up 1% year over year [17] - Global Knowledge revenue was $25.1 million, down approximately $4.7 million or 15.7% year over year, impacted by softer demand in the public sector [17][18] - TDS dollar retention rate for the first quarter was 99%, compared to 100% last quarter and 99% one year ago [18] Market Data and Key Metrics Changes - There was a decline in U.S. Public sector discretionary live learning spending, while large scale non-U.S. Public sector deals increased [9][10] - The company is investing in international growth, particularly in sectors like AI, cloud computing, and cybersecurity [10] Company Strategy and Development Direction - The company is focused on executing its transformation plan and driving success for customers and learners [5][8] - A renewed focus on go-to-market strategy is emphasized, with new leadership additions aimed at enhancing brand awareness and demand [6][8] - The company aims to return to top-line growth and deliver continued margin expansion while generating positive free cash flow [15][24] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty leading to lower discretionary spending and elongated decision-making processes [7][15] - Confidence in the business strategy was reinforced by positive feedback from customer events and a strong deal pipeline [14][36] - The company expects to see most growth in the back half of the fiscal year, contingent on market stabilization [8][24] Other Important Information - The company is closely monitoring macroeconomic conditions and potential impacts on business [24] - The leadership team has been expanded with the addition of a new Chief Marketing Officer to enhance marketing efforts [6] Q&A Session Summary Question: What are you seeing in the underlying KPI or deals that give you confidence in reiterating the full year target? - Management expressed confidence in TDS growth and noted a positive deal pipeline in GK, contingent on market stabilization [30] Question: Is there a component of GK being worse and TDS better in your underlying assumptions? - Management acknowledged that discretionary spending was impacted in Q1, particularly in live learning, but noted improvements in the last month of the quarter [32][33] Question: What is the next phase of the business transformation process? - Management indicated that the focus will shift towards increasing growth rates and enhancing go-to-market strategies [35][36] Question: Can you provide context on the government business and its performance? - Management noted softness in U.S. Federal discretionary spending but observed good activity in European public sectors [47][48] Question: What specific changes or improvements can we expect with the new CFO? - The new CFO emphasized the importance of integrating finance into all business decisions to support go-to-market strategies [52]

Financial Performance - Talent Development Solutions (TDS) revenue grew by 1% to $99.1 million compared to the prior year[27] - Global Knowledge (GK) revenue declined by 16% in Q1 FY2026[31] - Total revenue decreased by 3% year-over-year to $124.2 million in Q1 FY2026[30, 31] - Adjusted EBITDA increased by $3 million, or 17%, year-over-year to $22.1 million in Q1 FY2026[34] - Adjusted EBITDA margin improved by 300 basis points year-over-year to 18% in Q1 FY2026[27, 34] - Free cash flow increased by $15.7 million year-over-year to $26.2 million in Q1 FY2026, driven by working capital timing[33, 34] Business Highlights and Strategy - The company reaffirms its fiscal year 2026 outlook, projecting both revenue and Adjusted EBITDA growth[14] - TDS segment has achieved three consecutive quarters of revenue growth[18] - The company is executing a transformation plan focused on expense reduction, margin expansion, and a return to topline growth[20] - The company estimates a $400 billion market opportunity in talent development, with a shift towards a talent development lifecycle approach[22]

[PART I — FINANCIAL INFORMATION - UNAUDITED](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION%20-%20UNAUDITED) [Item 1. Unaudited Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) Skillsoft reported Q1 2025 revenues of $124.2 million, a net loss of $38.0 million, and a decrease in total assets to $1.02 billion [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $1.02 billion as of April 30, 2025, driven by reductions in accounts receivable and intangible assets, while liabilities and equity also declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | April 30, 2025 | January 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $127,841 | $100,766 | | Accounts receivable, net | $95,988 | $178,989 | | Total current assets | $277,837 | $332,853 | | Goodwill | $317,071 | $317,071 | | Intangible assets, net | $401,967 | $427,221 | | **Total assets** | **$1,022,486** | **$1,106,069** | | **Liabilities & Equity** | | | | Deferred revenue (current) | $243,788 | $282,295 | | Total current liabilities | $324,915 | $376,982 | | Long-term debt | $572,232 | $573,267 | | **Total liabilities** | **$959,837** | **$1,012,223** | | **Total shareholders' equity (deficit)** | **$62,649** | **$93,846** | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Revenues decreased to $124.2 million, operating loss improved to $18.2 million, but net loss widened to $38.0 million due to fair value adjustments Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | | :--- | :--- | :--- | | Total revenues | $124,201 | $127,793 | | Total operating expenses | $142,387 | $151,625 | | Operating income (loss) | $(18,186) | $(23,832) | | Net income (loss) | $(38,049) | $(27,636) | | Net income (loss) per share (Basic and diluted) | $(4.57) | $(3.42) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to $31.3 million, while investing and financing activities used $5.1 million and $2.0 million respectively, ending with $130.9 million cash Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $31,298 | $14,937 | | Net cash provided by (used in) investing activities | $(5,134) | $(4,517) | | Net cash provided by (used in) financing activities | $(1,953) | $(4,252) | | Net increase (decrease) in cash | $27,595 | $3,081 | | Cash, cash equivalents and restricted cash, end of period | $130,932 | $149,604 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the company's segment structure, significant financial balances, legal proceedings, share repurchase authorization, and recent management changes - The company operates through two reportable segments: Talent Development Solutions (TDS) and Global Knowledge (GK)[36](index=36&type=chunk) - A derivative lawsuit challenging the Codecademy acquisition was dismissed in February 2025, with the dismissal becoming final[53](index=53&type=chunk) - The Board authorized a **$10 million** share repurchase program, but no shares were repurchased as of April 30, 2025[66](index=66&type=chunk) - John Frederick was appointed as the new Chief Financial Officer effective May 15, 2025[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 2.8% revenue decline driven by the GK segment, offset by TDS growth, and a 6.1% decrease in operating expenses due to cost savings, while maintaining sufficient liquidity - A comprehensive resource reallocation plan (CRRP) generated approximately **$45 million** in annualized cost savings[132](index=132&type=chunk) - The GK segment revenue declined **15.7%** year-over-year, while the TDS segment revenue increased **1.1%** year-over-year[131](index=131&type=chunk) - The company expects current cash, operating cash flow, and available credit to fund operations for at least the next twelve months[150](index=150&type=chunk) [Results of Operations](index=31&type=section&id=MD%26A_Results_of_Operations) Total revenue decreased to $124.2 million, driven by a 15.7% decline in GK segment revenue, while operating expenses fell 6.1%, leading to an improved operating loss but a wider net loss Segment Revenue and Contribution Profit (in thousands) | Segment | Metric | Q1 2026 | Q1 2025 | % Change | | :--- | :--- | :--- | :--- | :--- | | **TDS** | Revenues | $99,148 | $98,075 | 1.1% | | | Business unit contribution profit | $68,479 | $66,458 | 3.0% | | **GK** | Revenues | $25,053 | $29,718 | (15.7)% | | | Business unit contribution profit | $8,603 | $11,153 | (22.9)% | Operating Expense Changes (in thousands) | Expense Category | Q1 2026 | Q1 2025 | % Change | | :--- | :--- | :--- | :--- | | Cost of revenues | $32,247 | $34,471 | (6.5)% | | Selling and marketing | $39,609 | $42,292 | (6.3)% | | General and administrative | $22,952 | $25,309 | (9.3)% | | **Total operating expenses** | **$142,387** | **$151,625** | **(6.1)%** | [Liquidity and Capital Resources](index=39&type=section&id=MD%26A_Liquidity_and_Capital_Resources) The company maintains $127.8 million in cash, supported by a $586.6 million term loan and a $75.0 million A/R facility, with operating cash flow increasing to $31.3 million - The company has an outstanding principal balance of **$586.6 million** on its Initial Term Loans, maturing in July 2028[151](index=151&type=chunk)[155](index=155&type=chunk) - The company has access to a **$75.0 million** Accounts Receivable Facility, with **$1.0 million** drawn as of April 30, 2025[160](index=160&type=chunk)[161](index=161&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2026 | Q1 2025 | | :--- | :--- | :--- | | Net cash from operating activities | $31,298 | $14,937 | | Net cash from investing activities | $(5,134) | $(4,517) | | Net cash from financing activities | $(1,953) | $(4,252) | [Critical Accounting Estimates](index=43&type=section&id=MD%26A_Critical_Accounting_Estimates) Critical accounting estimates involve significant judgment in revenue recognition, valuation and impairment testing of intangible assets and goodwill, and accounting for income taxes - Revenue recognition requires judgment in allocating transaction prices for contracts with multiple performance obligations[175](index=175&type=chunk) - Impairment testing of goodwill and intangible assets relies on significant estimates, and changes could lead to future impairment charges[183](index=183&type=chunk)[184](index=184&type=chunk) - Accounting for income taxes involves significant estimates for deferred tax assets and uncertain tax positions[186](index=186&type=chunk)[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from interest rate and foreign currency fluctuations, with hypothetical changes impacting pre-tax interest expense by $2.9 million and pre-tax income by $3.0 million respectively - A **100 basis point** change in interest rates would impact annual pre-tax interest expense by approximately **$2.9 million**[191](index=191&type=chunk) - The company uses interest rate swaps on a notional amount of **$300.0 million** to manage interest rate risk[191](index=191&type=chunk) - A **10%** change in foreign currency exchange rates would impact annual pre-tax income by approximately **$3.0 million**[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of April 30, 2025, with no material changes to internal control over financial reporting - Disclosure controls and procedures were concluded to be effective as of April 30, 2025[196](index=196&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter[197](index=197&type=chunk) [PART II — OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings, including the dismissal of a stockholder derivative lawsuit, is incorporated by reference from Note 6 - Legal proceedings information is incorporated by reference from Note 6 – "Commitments and Contingencies"[201](index=201&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the previously disclosed Annual Report on Form 10-K - No material changes to risk factors were disclosed from the 2025 Form 10-K[202](index=202&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[203](index=203&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[206](index=206&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and new employment agreements

Revenue Performance - Total revenue for the first quarter of fiscal 2026 was $124 million, down 3% from the prior year[9]. - Talent Development Solutions (TDS) revenue was $99 million, up 1% from the prior year, marking the third consecutive quarter of growth for this segment[9][10]. - Global Knowledge (GK) revenue was $25 million, down 16% from the prior year[9]. - Total revenues for the three months ended April 30, 2025, were $124,201, a decrease of 5.0% compared to $127,793 for the same period in 2024[29]. - Total revenues for Q1 2025 were $124,201, a decrease of 2.5% from $127,793 in Q1 2024[32]. - Talent Development Solutions revenue was $99,148 in Q1 2025, slightly up from $98,075 in Q1 2024, with a contribution margin of 69.1%[34]. - Global Knowledge revenue decreased to $25,053 in Q1 2025 from $29,718 in Q1 2024, with a contribution margin of 34.3%[34]. Financial Losses and Income - GAAP net loss was $38 million, compared to a net loss of $28 million in the prior year, with a net loss per share of $4.57[9]. - Net loss for the three months ended April 30, 2025, was $(38,049), compared to a net loss of $(27,636) in the same period of 2024, reflecting a 37.5% increase in losses[29]. - The company reported a basic and diluted net income (loss) per share of $(4.57) for the three months ended April 30, 2025, compared to $(3.42) for the same period in 2024[29]. - The net income margin for Q1 2025 was (30.6)%, compared to (21.6)% in Q1 2024, highlighting ongoing challenges[32]. Cash Flow and Financial Health - Free cash flow for the quarter was $26 million, significantly up from $10 million in the prior year[9]. - The company anticipates the second quarter to be the lowest free cash flow quarter as working capital normalizes[6]. - Net cash provided by operating activities for the three months ended April 30, 2025, was $31,298, compared to $14,937 for the same period in 2024, reflecting a 109.5% increase[31]. - Free cash flow for Q1 2025 was $26,164, significantly higher than $10,420 in Q1 2024, indicating improved cash generation[41]. - Adjusted free cash flow (levered) for Q1 2025 was $31,144, compared to $13,502 in Q1 2024, demonstrating strong financial health[41]. Operational Efficiency - Adjusted EBITDA was $22 million, reflecting a margin of 18% of revenue, compared to $19 million and 15% in the prior year[9]. - Adjusted EBITDA for Q1 2025 increased to $22,131, up 16.3% from $18,898 in Q1 2024[32]. - Total GAAP operating expenses decreased to $108,910 in Q1 2025 from $117,578 in Q1 2024, reflecting cost management efforts[36]. - Adjusted total operating expenses for Q1 2025 were $102,070, down from $108,895 in Q1 2024, indicating improved operational efficiency[36]. Company Outlook and Recognition - The company reaffirmed its fiscal 2026 outlook, expecting GAAP revenue between $530 million and $545 million and Adjusted EBITDA between $112 million and $118 million[8]. - Skillsoft was recognized as "Most Dedicated to Employee Growth" in the Digiday WorkLife Awards, emphasizing its commitment to employee development[10]. - Skillsoft CAISY™, an AI-powered coach, is now available in over 40 languages, enhancing the company's product offerings[10]. Balance Sheet Highlights - Cash and cash equivalents as of April 30, 2025, were $127,841, up from $100,766 as of January 31, 2025, indicating a 26.9% increase[27]. - Total assets decreased to $1,022,486 as of April 30, 2025, from $1,106,069 as of January 31, 2025, representing a decline of 7.6%[27]. - Total current liabilities decreased to $324,915 as of April 30, 2025, from $376,982 as of January 31, 2025, a reduction of 13.8%[27]. - Deferred revenue as of April 30, 2025, was $243,788, down from $282,295 as of January 31, 2025, a decrease of 13.6%[27]. - Total shareholders' equity (deficit) decreased to $62,649 as of April 30, 2025, from $93,846 as of January 31, 2025, a decline of 33.2%[27].