Results Exceed Expectations with Bookings1 Up 18%
Percipio Bookings Up 47%, Highlighting New Product Momentum and Successful Platform Migration
Acquired Pluma for $22 Million, Adding Valuable Digital Coaching and Professional Development Solution for Emerging Leaders
Recruited Experienced Leadership Team to Oversee Execution of Strategic Priorities, Accelerate Growth and Drive Value Creation
BOSTON–(BUSINESS WIRE)–Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a global leader in corporate digital learning, today announced its financial results for the second quarter of fiscal 2022 ended July 31, 2021. The Company’s results exceeded its expectations, and Skillsoft raised its bookings and adjusted revenue guidance for the full year.
“We are pleased with Skillsoft’s strong performance during our initial quarter as a public company,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “We delivered double-digit bookings growth, won multiple new blue-chip customers, and acquired fast-growing digital coaching platform Pluma, enabling us to offer an on-demand, executive-quality leadership development solution to our customers, which include approximately 70% of the Fortune 1000.”
Mr. Tarr added, “We see substantial opportunity to extend our leadership in the rapidly expanding and highly fragmented corporate learning industry as we innovate and invest in growth. Our new leadership team is executing well against our strategic priorities, and we are well-positioned to create significant value for our customers, shareholders and other stakeholders.”
Fiscal 2022 Second Quarter Financial Highlights2
Strong bookings growth across all three business segments, with Content up 9%, Global Knowledge up 30% and SumTotal up 15%; bookings in Content and Global Knowledge combined were up 19%, and total bookings were up 18%;
GAAP3 revenue for the reported period was $106 million and GAAP net loss was $49 million;
Adjusted revenue of $176 million grew 5% and adjusted EBITDA of $43 million grew 2%;
Combined Percipio and dual deployment dollar retention rate of 103% compared to 102%; and
Refinanced long-term debt, reducing annual cash interest expense by approximately $25 million.
Updated Full Year Fiscal 2022 Outlook
Updated Outlook
Previous Outlook
Bookings
$690 million to $710 million
$660 million to $690 million
Adjusted Revenue
$670 million to $690 million
$645 million to $675 million
Adjusted EBITDA
Unchanged
$155 million to $175 million
1 Bookings is identical to what the Company previously referred to as “order intake” and includes (i) subscription renewals, upgrades, churn, and downgrades to existing customers, (ii) non-subscription services, and (iii) sales to new customers. Bookings generally represents a customer’s annual obligation (versus the life of the contract), and, for the subscription business, revenue is recognized for such bookings over the following 12 months.
2 Growth calculated as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on July 31, 2021.
3 GAAP results include the periods from May 1, 2021 to June 11, 2021 (predecessor) and June 12, 2021 to July 31, 2021 (successor) and reflect the impact of business combination accounting on revenue.
Skillsoft increased its bookings and adjusted revenue outlook for full year fiscal 2022 primarily to reflect better than expected performance in the first half of the year.
The unchanged adjusted EBITDA outlook reflects the Company’s growth investments in content, platform and go-to-market capabilities. Additionally, the Company experienced a delay in realizing business combination synergies due to the timing of transaction close and higher than anticipated D&O insurance costs.
Key Operational Metrics and Non-GAAP Financial Measures
Bookings (previously Order Intake)
The following table sets forth unaudited bookings for the three and six months ended July 31, 2021 and 2020 as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on July 31:
Bookings (previously Order Intake)
Three Months
Six Months
$000s
Ended July 31,
Change
Ended July 31,
Change
2021
2020
$
%
2021
2020
$
%
Content and Global Knowledge
Percipio
$15,423
$10,465
$4,958
47%
$32,534
$20,582
$11,952
58%
Dual Deployment
31,827
26,734
5,093
19%
41,696
39,409
2,287
6%
Skillport
12,730
18,160
(5,430)
-30%
22,048
32,072
(10,024)
-31%
Total Subscription
$59,980
$55,359
$4,621
8%
$96,278
$92,063
$4,215
5%
Services and One-Time Orders
3,716
3,206
510
16%
6,288
5,011
1,276
25%
Total Content
$63,696
$58,565
5,131
9%
$102,565
$97,075
5,490
6%
Global Knowledge
63,541
48,769
14,772
30%
128,798
105,806
22,992
22%
Total Content + Global Knowledge
$127,237
$107,334
$19,903
19%
$231,363
$202,881
$28,482
14%
SumTotal
Subscription
$21,308
$19,606
$1,702
9%
$42,081
$46,457
($4,376)
-9%
Services and One-Time Orders
6,150
4,313
1,837
43%
10,801
9,614
1,187
12%
Total SumTotal
$27,458
$23,919
$3,539
15%
$52,882
$56,071
($3,189)
-6%
Total
$154,695
$131,253
$23,442
18%
$284,245
$258,952
$25,293
10%
Dollar Retention Rate
The following table sets forth dollar retention rates (“DRR”) for the last twelve month (“LTM”) period ended July 31, 2021 and for the three month periods ended July 31, 2021 and 2020 as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on July 31:
July 31
LTM
2021
2020
Percipio
99%
99%
102%
Dual Deployment
102%
104%
102%
Percipio + Dual Deployment
101%
103%
102%
Skillport
78%
88%
68%
Total Content Business
95%
99%
88%
SumTotal Business
96%
99%
79%
Capital Structure
The following table sets forth Skillsoft’s cash and cash equivalents and long-term debt as of July 31, 2021:
$000s
July 31,
2021
Assets
Cash and Equivalents
$90,772
Liabilities
Long-Term Debt
$467,399
(including current portion)
Weighted average shares outstanding during the period from June 12, 2021 to July 31, 2021 were 133,059,021.
Webcast and Conference Call Information
Skillsoft will host a conference call and webcast today at 5:00 p.m. Eastern Time to discuss its financial results. To access the call, dial (877) 413-9278 from the United States and Canada or (215) 268-9914 from international locations. The live event can be accessed from the Investor Relations section of Skillsoft’s website at investor.skillsoft.com. A replay will be available for six months.
About Skillsoft
Skillsoft (NYSE: SKIL) is a global leader in corporate digital learning, focused on transforming today’s workforce for tomorrow’s economy. The Company provides enterprise learning solutions designed to prepare organizations for the future of work, overcome critical skill gaps, drive demonstrable behavior-change, and unlock the potential in their people. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, including one of the broadest and deepest libraries of leadership & business skills, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered through Percipio, its award-winning, AI-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective. Learn more at www.skillsoft.com.
NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE METRICS
We track several non-GAAP financial measures and key performance metrics that we believe are key financial measures of our success. Non-GAAP measures and key performance metrics are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures and key performance metrics when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company’s capital structure on its performance. However, non-GAAP measures and key performance metrics have limitations as analytical tools. Because not all companies use identical calculations, our presentation of non-GAAP financial measures and key performance metrics may not be comparable to other similarly titled measures of other companies. They are not presentations made in accordance with U.S. GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP.
We do not reconcile our forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible; and because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is available to us without unreasonable efforts. For the same reasons, we are unable to address the probable significance of the unavailable information. We provide non-GAAP financial measures that we believe will be achieved, however we cannot accurately predict all of the components of the adjusted calculations and the U.S. GAAP measures may be materially different than the non-GAAP measures.
Forward Looking Statements
This document includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook, our product development and planning, our pipeline, future capital expenditures, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services and competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, our ability to successfully implement our plans, strategies, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as “may,” “will,” “would,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “projects,” “forecasts,” “seeks,” “outlook,” “target,” goals,” “probably,” or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of Skillsoft’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.
There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including:
our ability to realize the benefits expected from the business combination between Skillsoft, Churchill Capital Corp. II and Global Knowledge;
the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;
the impact of the ongoing COVID-19 pandemic on our business, operating results and financial condition;
fluctuations in our future operating results;
our ability to successfully identify, consummate and achieve strategic objectives in connection with our acquisition opportunities and realize the benefits expected from the acquisition;
the demand for, and acceptance of, our products and for cloud-based technology learning solutions in general;
our ability to compete successfully in competitive markets and changes in the competitive environment in our industry and the markets in which we operate;
our ability to market existing products and develop new products;
a failure of our information technology infrastructure or any significant breach of security;
the effects of pending and future legislation;
future regulatory, judicial and legislative changes in our industry;
our ability to comply with laws and regulations applicable to our business;
the impact of natural disasters, public health crises, political crises, or other catastrophic events;
our ability to attract and retain key employees and qualified technical and sales personnel;
fluctuations in foreign currency exchange rates;
our ability to protect or obtain intellectual property rights;
our ability to raise additional capital;
the impact of our indebtedness on our financial position and operating flexibility;
our ability to successfully defend ourselves in legal proceedings;
our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting; and
our ability to continue to meet applicable listing standards.
The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see the risk factors included in Churchill Capital Corp. II’s Annual Report on Form 10-K/A for the year ended December 31, 2020 in Part I, Item 1A and in the registration statement on Form S-4 filed by Churchill Capital Corp. II and declared effective by the Securities and Exchange Commission (the “SEC”) on May 27, 2021, and subsequent filings with the SEC.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. Additionally, statements as to market share, industry data and our market position are based on the most currently available data available to us and our estimates regarding market position or other industry data included in this document or otherwise discussed by us involve risks and uncertainties and are subject to change based on various factors, including as set forth above.
Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless required by applicable law. With regard to these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
Successor
Predecessor (SLH)
July 31, 2021
January 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
90,772
$
71,479
Restricted cash
14,742
2,964
Accounts receivable, less reserves of approximately $2,662 and $294 as of July 31, 2021 and January 31, 2021, respectively
120,980
179,784
Prepaid expenses and other current assets
48,584
30,326
Total current assets
275,078
284,553
Property and equipment, net
15,055
13,780
Goodwill
761,177
495,004
Intangible assets, net
946,731
728,633
Right of use assets
24,578
15,131
Deferred tax asset
3,710
—
Other assets
8,092
8,636
Total assets
$
2,034,421
$
1,545,737
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Current maturities of long-term debt
$
3,600
$
5,200
Borrowings under accounts receivable facility
24,822
17,022
Accounts payable
34,514
7,425
Accrued compensation
41,097
36,375
Accrued expenses and other current liabilities
62,473
23,125
Lease liabilities
9,662
4,740
Deferred revenue
165,900
257,549
Total current liabilities
342,068
351,436
Long-term debt
463,799
510,236
Warrant liabilities
28,525
900
Deferred tax liabilities
116,462
81,008
Long term lease liabilities
16,098
13,155
Deferred revenue – non-current
1,749
3,035
Other long-term liabilities
5,045
5,998
Total long-term liabilities
631,678
614,332
Commitments and contingencies
–
–
Shareholders’ equity :
(Predecessor SLH) Shareholders’ common stock- Class A and Class B common shares, $0.01 par value: 1,000,000,000 shares authorized (800,000,000 Class A, 200,000,000 Class B) at January 31, 2021; 4,000,000 shares issued and outstanding (3,840,000 Class A, 160,000 Class B) at January 31, 2021
–
40
(Successor) Shareholders’ common stock- Class A common shares, $0.0001 par value: 375,000,000 shares authorized and 133,059,021 shares issued and outstanding at July 31, 2021
11
–
Additional paid-in capital
1,297,716
674,333
Accumulated deficit
(237,958)
(93,722)
Accumulated other comprehensive income (loss)
906
(682)
Total shareholders’ equity
1,060,675
579,969
Total liabilities and shareholders’ equity
$
2,034,421
$
1,545,737
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Successor
Predecessor (SLH)
Predecessor (PL)
From
From
From
June 12, 2021
to July 31, 2021
May 1, 2021 to
June 11, 2021
February 1,
2021 to June
11, 2021
Three months
ended July 31, 2020
Six months ended
July 31, 2020
Revenues:
Total revenues
$
57,912
47,935
139,636
116,835
235,164
Operating expenses:
Cost of revenues
28,006
11,360
35,881
21,618
45,831
Content and software development
9,878
7,477
24,084
16,835
33,778
Selling and marketing
22,234
13,438
41,940
34,033
66,769
General and administrative
17,073
4,855
17,217
15,324
32,015
Amortization of intangible assets
20,023
15,959
50,902
12,779
30,148
Impairment of goodwill and intangible assets
–
–
–
–
332,376
Recapitalization and transaction-related costs
9,995
5,006
6,938
16,659
32,035
Restructuring
316
(1,240
)
(703
)
771
1,141
Total operating expenses
107,525
56,855
176,259
118,019
574,093
Operating loss
(49,613
)
(8,920
)
(36,623
)
(1,184
)
(338,929
)
Other (expense) income, net
(697
)
(41
)
(493
)
898
1,809
Fair value adjustment of warrants
17,115
800
900
–
–
Interest income
12
54
64
65
84
Interest expense, net
(9,856
)
(5,371
)
(16,820
)
(61,076
)
(167,054
)
Reorganization items, net
–
–
–
(10,593
)
(10,593
)
Loss before benefit from income taxes
(43,039
)
(13,478
)
(52,972
)
(71,890
)
(514,683
)
Benefit from income taxes
(5,504
)
(1,619
)
(3,708
)
(909
)
(9,800
)
Net loss
$
(37,535
)
(11,859
)
(49,264
)
(70,981
)
(504,883
)
Loss per share:
Ordinary – Basic and Diluted (Predecessor (PL))
*
*
*
$
(709.10
)
$
(5,043.79
)
Class A and B – Basic and Diluted (Predecessor (SLH))
*
$
(2.96
)
$
(12.32
)
*
*
Ordinary – Basic and Diluted (Successor)
$
(0.28
)
*
*
*
*
Weighted average common share outstanding:
Ordinary – Basic and Diluted (Predecessor (PL))
*
*
*
100.1
100.1
Class A and B – Basic and Diluted (Predecessor (SLH))
*
4,000
4,000
*
*
Ordinary – Basic and Diluted (Successor)
133,059
*
*
*
*
*Not applicable
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Successor
Predecessor (SLH)
Predecessor (PL)
From
From
June 12, 2021 to
July 31, 2021
February 1, 2021 to
June 11, 2021
Six months ended
July 31, 2020
Cash flows from operating activities:
Net loss
$
(37,535)
$
(49,264)
$
(504,883)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation
4,817
–
–
Depreciation
1,705
3,572
5,120
Amortization of intangible assets
20,023
50,902
30,148
Change in bad debt reserve
(170)
(174)
19
Provision for (benefit from) income taxes – non-cash
(6,180)
(5,886)
(11,478)
Non-cash interest expense
434
487
2,829
Impairment of goodwill and intangible assets
–
–
332,376
Right-of-use assets amortizations
1,445
748
1,435
Fair value adjustment to warrants
(17,115)
(900)
–
Non-cash reorganization items, net
–
–
4,818
Changes in current assets and liabilities, net of effects from acquisitions:
Accounts receivable
6,963
88,622
93,124
Prepaid expenses and other assets
(13,065)
3,379
(9,265)
Accounts payable
5,175
(6,417)
(5,520)
Accrued expenses and non-current liabilities
18,026
(18,592)
159,565
Lease liability
(1,690)
(1,301)
(1,942)
Deferred revenue
17,905
(31,365)
(84,773)
Net cash provided by operating activities
738
33,811
11,573
Cash flows from investing activities:
Purchases of property and equipment
(75)
(641)
(2,985)
Internal use software development costs
(881)
(2,350)
(3,401)
Acquisition of Skillsoft, net of cash received
(386,035)
–
–
Acquisition of Global Knowledge, net of cash received
(156,926)
–
–
Acquisition of Pluma, net of cash received
(18,646)
–
–
Net cash used in investing activities
(562,563)
(2,991)
(6,386)
Cash flows from financing activities:
Borrowings under revolving line of credit, net of repayments
–
–
19,500
Borrowings under DIP Facility
–
–
60,000
Proceeds from issuance of Term Loan, net of fees
464,290
–
–
Proceeds from equity investment (PIPE)
530,000
–
–
Principal repayments of capital lease obligations
(137)
(370)
(430)
Repayments of accounts receivable facility, net of borrowings
(9,456)
16,577
(19,270)
Repayments of First and Second Out loans
(605,591)
(1,300)
–
Net cash provided by financing activities
379,106
14,907
59,800
Effect of exchange rate changes on cash and cash equivalents
(250)
203
(2,264)
Net (decrease) increase in cash, cash equivalents and restricted cash
(182,969)
45,930
62,723
Cash, cash equivalents and restricted cash, beginning of period
288,483
74,443
33,804
Cash, cash equivalents and restricted cash, end of period
$
105,514
$
120,373
$
96,527
Key Performance Metrics
We use key performance metrics to help us evaluate our performance and make strategic decisions. Additionally, we believe these metrics are useful as a supplement to investors in evaluating the Company’s ongoing operational performance and trends. These key performance metrics are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled metrics presented by other companies.
Annualized Recurring Revenue (“ARR”)
ARR represents the annualized recurring value of all active subscription contracts at the end of a reporting period. We believe ARR is useful for assessing the performance of our recurring subscription revenue base and identifying trends affecting our business.
Contacts
Investors
James Gruskin
james.gruskin@skillsoft.com
Media
Caitlin Leddy
caitlin.leddy@skillsoft.com