Skillsoft (SKIL)2024-12-10 21:08Financial Performance - Total revenues for the three months ended October 31, 2024, were $137.225 million, a decrease of 1.2% compared to $138.956 million for the same period in 2023[146]. - SaaS subscription revenues for Talent Development Solutions increased by 1.1% to $97.123 million for the three months ended October 31, 2024, compared to $96.085 million in 2023[146]. - Non-subscription revenues decreased by 6.5% to $40.102 million for the three months ended October 31, 2024, compared to $42.871 million in 2023[146]. - The Global Knowledge segment's revenues decreased by 9.5% to $34.227 million for the three months ended October 31, 2024, compared to $37.824 million in 2023[146]. - The Talent Development Solutions segment's revenues for the nine months ended October 31, 2024, decreased by 0.7% to $285.927 million compared to $287.936 million in 2023[146]. Operating Expenses - Operating expenses as a percentage of total revenues decreased from 114.4% in the three months ended October 31, 2023, to 106.8% in the same period of 2024[139]. - Total operating expenses decreased by $12,425, or 7.8%, for the three months ended October 31, 2024, compared to the same period in 2023[150]. - Content and software development expenses decreased by $1,189, or 7.4%, for the three months ended October 31, 2024, compared to the same period in 2023[152]. - Selling and marketing expenses decreased by $4,368, or 9.9%, for the three months ended October 31, 2024, compared to the same period in 2023[154]. - Total cost of revenues decreased by $2,095, or 5.8%, for the three months ended October 31, 2024, compared to the same period in 2023[151]. - Compensation and benefits in content and software development decreased by $2,876, or 7.6%, for the nine months ended October 31, 2024, compared to the same period in 2023[152]. - Advertising and promotions in selling and marketing decreased by $2,274, or 30.0%, for the three months ended October 31, 2024, compared to the same period in 2023[154]. - Facilities and utilities expenses in content and software development decreased by $270, or 8.6%, for the nine months ended October 31, 2024, compared to the same period in 2023[151]. - The comprehensive resource reallocation plan contributed to the decreases in various expense categories[152]. Resource Allocation and Investments - The company announced a resource reallocation plan expected to result in more than $45 million of annualized cost savings, with plans to reinvest up to half in strategic growth initiatives[148]. - The company is investing in technology, which has led to increased software maintenance costs despite overall expense reductions[152]. - Cash flows from investing activities included $13.0 million for internally developed software in the nine months ended October 31, 2024, compared to $8.1 million in the same period of 2023[180]. - The company invested significantly in internally developed software, with cash payments increasing from $8.1 million in 2023 to $13.0 million in 2024[180]. Cash and Financing - As of October 31, 2024, the company had $97.9 million in cash and cash equivalents[168]. - The company has access to up to $75.0 million of borrowings under its accounts receivable facility, with $10.0 million drawn as of October 31, 2024[175]. - Net cash provided by operating activities for the nine months ended October 31, 2024 was $12.2 million, compared to a cash used of $8.7 million in the same period of 2023[178]. - Cash flows used in financing activities increased primarily due to payments on the accounts receivable facility, totaling $40.8 million for the nine months ended October 31, 2024[183]. Shareholder Actions - The Board of Directors authorized a share repurchase of up to $10 million for Class A common stock, effective from July 11, 2024[176]. - The company has not yet repurchased any shares under the authorized share repurchase program as of October 31, 2024[176]. Tax and Income - The effective income tax rate for the nine months ended October 31, 2024, was impacted by non-deductible items and changes in the valuation allowance on deferred tax assets[167]. - Interest income for the nine months ended October 31, 2024, was $2.897 million, an increase of 12.5% compared to $2.576 million for the same period in 2023[161]. - Other income (expense), net for the three months ended October 31, 2024, was $(538) thousand, a decrease of 2931.6% compared to $31 thousand for the same period in 2023[161]. Restructuring and Charges - Restructuring charges for the three months ended October 31, 2024, totaled $3.1 million, compared to $0.9 million for the same period in 2023[160]. Market and Currency Impact - A hypothetical 100 basis point increase in interest rates would result in approximately $3.0 million additional pre-tax interest expense annually[206]. - A 10% increase in foreign currency exchange rates would have impacted pre-tax income by approximately $3.0 million on an annualized basis[209]. - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $0.5 million increase or decrease in interest income on an annualized basis[207]. - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $7.0 million increase or decrease in the fair value adjustment of interest rate swaps at a point in time[208]. - A hypothetical 10% increase or decrease in current exchange rates would have resulted in an impact of approximately $3.0 million on pre-tax income (loss) on an annualized basis[209]. Business Overview - The company serves approximately 60% of the Fortune 1000, focusing on leadership, business skills, technology skills, and compliance[134]. - The community of learners has grown to over 90 million in more than 150 countries, learning in over 30 languages[136]. - The company recognized revenue from cloud-based solutions on a straight-line basis over the contract term, typically ranging from one to three years[191]. - The company recorded a gain of $55.9 million from the sale of its SumTotal business, completed on August 15, 2022[166].