Skillsoft (SKIL)2023-06-05 16:00Revenue Performance - Total revenues for the three months ended April 30, 2023, were $135.6 million, a slight increase of 0.5% compared to $134.8 million for the same period in 2022[152]. - SaaS and subscription revenues from the Content & Platform segment increased by 10.3% to $93.6 million, up from $84.9 million in the prior year[152]. - Instructor-Led Training revenues decreased by 18.3% to $37.0 million, down from $45.2 million in the same period last year[152]. - The acquisition of Codecademy contributed to revenue growth, with approximately 40 million registered learners on the platform[143]. Operating Expenses - Total operating expenses decreased by 5.1% to $170.9 million, compared to $180.1 million for the three months ended April 30, 2022[153]. - General and administrative expenses decreased by 13.8% to $25.3 million, down from $29.3 million in the prior year[153]. - Acquisition-related costs significantly decreased by 89.6% to $1.4 million, compared to $13.3 million in the same period last year[153]. - Compensation and benefits in selling and marketing expenses rose by 22.9% to $33,834,000 for the three months ended April 30, 2023, up from $27,524,000 in 2022[158]. - Total content and software development expenses increased by 4.3% to $17,035,000 for the three months ended April 30, 2023, compared to $16,331,000 in the same period of 2022[157]. Financial Performance - The company reported an operating loss of 26.1% for the three months ended April 30, 2023, an improvement from a loss of 33.7% in the same period of 2022[146]. - Interest expense increased by 38.4% to $15,936,000 for the three months ended April 30, 2023, compared to $11,514,000 in 2022, primarily due to additional term loans and higher interest rates[166]. - The effective income tax rate for the three months ended April 30, 2023, was 9.1%, significantly lower than the 49.2% rate in the same period of 2022[170]. Cash Flow and Liquidity - Cash and cash equivalents on hand as of April 30, 2023, totaled $178,000,000, with expectations to fund operations and working capital needs for at least the next twelve months[173]. - The company reported a net cash increase of $9.5 million for the three months ended April 30, 2023, compared to a decrease of $88.3 million for the same period in 2022[181]. - Cash flows from operating activities increased to $21.5 million in the first three months of fiscal 2024, up from $7.9 million in the same period of fiscal 2023[182]. - Cash flows from investing activities included $2.7 million for internally developed software in the first quarter of fiscal 2024, while $198.7 million was spent on the Codecademy acquisition in the same period of fiscal 2023[183]. Debt and Financing - The company has a $480 million term loan facility scheduled to mature on July 16, 2028, which was used to refinance existing debt[174]. - The scheduled maturities of the company's debt total $601 million, with $8 million due in the remainder of fiscal 2024[187]. - The company incurred up to $160 million of Term B-1 Loans under the Amended Credit Agreement, with an applicable margin of 4.25% for base rate borrowings and 5.25% for SOFR borrowings[176]. - The company received $157.1 million in net proceeds from the Term Loan Facility on April 4, 2022, which was used for the Codecademy acquisition[185]. Strategic Actions - The sale of the SumTotal business for $200 million in cash was completed, allowing the company to focus on its core business[144]. - A gain of $55.9 million was recorded from the sale of the SumTotal business, completed on August 15, 2022, with final net proceeds of $174.9 million[169]. - The company completed the sale of its SumTotal business for net proceeds of $174.9 million, with a mandatory prepayment of $31.4 million made in August 2022[178]. - The company authorized a share repurchase program of up to $30 million, with $10.9 million spent to repurchase 5,995,530 shares by April 19, 2023[180]. Restructuring and Future Expectations - Restructuring charges for the first quarter of fiscal 2024 totaled $5.2 million, primarily related to lease termination and employee severance costs[164]. - The company expects to have sufficient qualifying expenditures to avoid additional mandatory prepayment of the remaining SumTotal proceeds by August 15, 2023[178]. Sensitivity Analysis - A hypothetical 100 basis point increase or decrease in interest rates would result in approximately $3.4 million additional or lower pre-tax interest expense on an annualized basis[210]. - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $0.6 million increase or decrease in interest income on an annualized basis[211]. - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $9.9 million increase or decrease in the fair value adjustment of hedge instruments[212]. - A hypothetical 10% increase or decrease in current exchange rates would have resulted in an impact of approximately $1.8 million on pre-tax income (loss) on an annualized basis[213].