Skillsoft (SKIL)2024-09-09 20:08Financial Performance - Total revenues for the three months ended July 31, 2024, were $132.2 million, a decrease of 6.3% compared to $141.2 million for the same period in 2023[113]. - SaaS subscription revenues for the Talent Development Solutions segment decreased by 2.4% to $95.6 million for the three months ended July 31, 2024, compared to $98.0 million in the prior year[113]. - Non-subscription revenues decreased by 15.2% to $36.6 million for the three months ended July 31, 2024, compared to $43.2 million in the same period in 2023[113]. - The operating loss for the three months ended July 31, 2024, was (14.6)%, an improvement from (18.1)% in the same period in 2023[107]. Cost Management - Operating expenses as a percentage of total revenues decreased from 118.1% in July 2023 to 114.6% in July 2024[107]. - The cost of revenues decreased by 19.8% to $32.5 million for the three months ended July 31, 2024, compared to $40.5 million in the prior year[115]. - Total operating expenses decreased by $14.9 million, or 9.0%, compared to the previous period, totaling $151.6 million[116]. - Content and software development expenses decreased by $2.870 million, or 16.1%, for the three months ended July 31, 2024, totaling $14.993 million[118]. - Selling and marketing expenses increased slightly by $0.273 million, or 0.7%, for the three months ended July 31, 2024, totaling $40.684 million[120]. - General and administrative expenses saw a decline due to lower stock-compensation expenses and cost savings from facility consolidation[122]. - Total G&A expenses for the three months ended July 31, 2024, decreased by $5.69 million (22.7%) compared to the same period in 2023, totaling $19.395 million[128]. Strategic Initiatives - The company announced a resource reallocation plan expected to result in over $45 million of annualized cost savings, with plans to reinvest up to half in strategic growth initiatives[114]. - The company utilizes generative Artificial Intelligence (GenAI) to enhance its learning solutions and address emerging customer needs[105]. Cash Flow and Liquidity - The company had $122.7 million in cash and cash equivalents as of July 31, 2024, with expectations to fund operations and working capital needs for at least the next twelve months[136]. - Cash flows from operating activities for the six months ended July 31, 2024, provided $3.497 million, an increase from $1.985 million in the same period of 2023[143]. - Cash flows used in investing activities for the six months ended July 31, 2024, were $9.195 million, compared to $14.494 million in the prior year, reflecting a decrease due to the sale of the SumTotal business[145]. Tax and Interest - The effective income tax rate for the three months ended July 31, 2024, was impacted by non-deductible items and foreign rate differentials, resulting in a provision of $(2.056) million, an increase of $167,000 (8.8%) from the prior year[138]. - Interest income increased by $174,000 (20.0%) for the three months ended July 31, 2024, totaling $1.045 million, compared to $871,000 in the same period of 2023[129]. Debt and Obligations - As of July 31, 2024, the total contractual obligations amount to $602.9 million, including $591.4 million in term loan facilities and $11.5 million in operating leases[147]. - A hypothetical 100 basis point increase in interest rates would result in approximately $3.3 million additional pre-tax interest expense annually[164]. - The company has entered into two fixed-rate interest rate swap agreements to convert $300.0 million of variable rate debt to a fixed rate[164]. Revenue Recognition - The company recognizes revenue from cloud-based solutions on a straight-line basis over the contract term, typically ranging from one to three years[153]. - Revenue from virtual, on-demand, and classroom training is recognized in the period services are rendered[154]. Other Financial Metrics - Other income (expense), net improved by $516,000 (55.2%) for the three months ended July 31, 2024, resulting in a loss of $418,000 compared to a loss of $934,000 in the prior year[129]. - A share repurchase authorization for up to $10 million of Class A common stock was approved on July 10, 2024, with no shares repurchased as of July 31, 2024[141]. - The company recorded a gain of $55.9 million from the sale of its SumTotal business, completed on August 15, 2022, after adjustments[134].