NYSE:SKIL Skillsoft Q1 2026 Earnings Report $16.57 +1.41 (+9.33%) As of 09:41 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. ProfileEarnings History Skillsoft EPS ResultsActual EPS-$0.23Consensus EPS -$2.06Beat/MissBeat by +$1.83One Year Ago EPS-$3.37Skillsoft Revenue ResultsActual Revenue$124.20 millionExpected Revenue$130.97 millionBeat/MissMissed by -$6.77 millionYoY Revenue GrowthN/ASkillsoft Announcement DetailsQuarterQ1 2026Date6/9/2025TimeBefore Market OpensConference Call DateMonday, June 9, 2025Conference Call Time5:00PM ETUpcoming EarningsSkillsoft's Q2 2026 earnings is scheduled for Monday, September 8, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Skillsoft Q1 2026 Earnings Call TranscriptProvided by QuartrJune 9, 2025 ShareLink copied to clipboard.Key Takeaways Skillsoft appointed John Frederick as CFO and Rayann Reese as CMO, bolstering leadership with deep company experience and marketing expertise. First-quarter revenue fell 2.8% year-over-year to $124.2 million, with Global Knowledge live learning down 15.7% amid soft discretionary public-sector spending. Talent Development Solutions grew 1% YoY for the third consecutive quarter, reflecting strong demand for skills-based programs across large enterprise clients. Adjusted EBITDA improved to $22.1 million (17.8% margin) and free cash flow surged to $26.2 million, supporting reinvestment in go-to-market and product initiatives. Management reiterated FY26 guidance of $530 million–$545 million in revenue, $112 million–$118 million in adjusted EBITDA and $13 million–$18 million in free cash flow, assuming market stabilization. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallSkillsoft Q1 202600:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipantsPresentationSkip to Participants Operator00:00:00Greetings, and thank you for standing by, and welcome to Skillsoft's First Quarter Fiscal twenty twenty six Results and Conference Call. At this time, all participants are in a listen only mode. After the speakers present, there will be a question and answer session. Please note that today's call is being recorded. I would now like to hand the conference over to your speaker, Stephen Poe, Investor Relations. Thank you, Stephen. You may begin. Stephen PoeInvestor Relations at Skillsoft00:00:25Thank you, operator. Good day, and thank you for joining us to discuss our results for the first quarter ended 04/30/2025. Before we jump in, I want to remind you that today's call will contain forward looking statements about the company's business outlook and our expectations, including statements concerning financial and business trends, our expected future business and financial performance, financial condition and market outlook. These forward looking statements and all statements that are not historical facts reflect management's current beliefs and expectations as of today and therefore are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of the material risks and other important factors that could affect our actual results, we refer you to our most recent Form 10 ks filing with the Securities and Exchange Commission. Stephen PoeInvestor Relations at Skillsoft00:01:11We assume no obligation to update any forward looking statements or information which speak as of their respective dates. During the call, unless otherwise noted, all financial metrics we discuss will be non GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non GAAP financial measures included in today's commentary to the most directly comparable GAAP financial measures as well as how we define these metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at www.skillsoft.com. Following today's prepared remarks, Ron Hefsefian, Skillsoft's Executive Chair and Chief Executive Officer and John Frederick, Skillsoft's Chief Financial Officer will be available for Q and A. With that, it's my pleasure to turn the call over to Ron. Ronald HovsepianCEO & Executive Chair at Skillsoft00:02:02Thanks, Stephen. Good afternoon and thank you for joining us. I'm very pleased to start today's call with the introduction of John Frederick as our new CFO. Since rejoining Skillsoft in August of last year, he has overseen the company's business planning, working closely with the leadership team to refine and help drive the implementation of our transformation plan. From 2018 through 2021, he served as Skillsoft's Chief Administrative Officer, which included leading the finance team and previously he held executive positions at Sum Total Systems, a Skillsoft business acquired by Cornerstone in 2022 and others. Ronald HovsepianCEO & Executive Chair at Skillsoft00:02:46John's deeply familiar with Skillsoft. His experience leading finance organizations and a growth oriented mindset make him a natural choice to serve as our next CFO. I look forward to continuing to work closely with John as we build on our recent progress, drive success for our customers and learners and unlock further shareholder value as we execute our strategic plan. I'd like to also extend a sincere thank you to Rich Walker for his significant contributions and dedication to Skillsoft over the past four years. Rich has been a key member of the Skillsoft management team and we wish him all the best in his future endeavors. Ronald HovsepianCEO & Executive Chair at Skillsoft00:03:27In addition to welcoming John as our CFO, we expanded our leadership team with the addition of our new Chief Marketing Officer, Rayann Reese. Rayann is responsible for overseeing our global marketing efforts, helping drive demand and enhance brand awareness among organizations and learners who are on their talent transformation journey. She has extensive experience in the technology sector and her passion for powerful storytelling and driving transformation will help accelerate our go to market strategy, which is a key focus for Skillsoft going forward. Collectively, these leadership additions bring renewed focus and execution strength. With that, let me jump into our first quarter, which as a reminder is our seasonally smallest revenue quarter of the year. Ronald HovsepianCEO & Executive Chair at Skillsoft00:04:18As expected, we experienced macro uncertainty, which translated into lower discretionary spending by our customers and slightly elongated decision making. This directly impacted our live learning revenue in the quarter, which includes our global knowledge instructor led training and TDS coaching products. Yet we saw a continuation of growth within our TDS segment, a trend we've seen since the third quarter of last fiscal year. Additionally, we delivered improvement in our adjusted EBITDA and free cash flow. While we continue to drive improved financial results, we're also delivering strong progress against our transformation commitments. Ronald HovsepianCEO & Executive Chair at Skillsoft00:05:05Let me provide you an update on our progress in a few key areas. We are actively investing capital into our business. With reinvestment happening predominantly in the first half of this fiscal year, we expect to see positive free cash flow and top line growth for the full fiscal year, both of which we committed to at our July 2024 Investor Day. We expect most of this growth to come in the back half of this year. We continue to execute our go to market strategy. Ronald HovsepianCEO & Executive Chair at Skillsoft00:05:38In Global Knowledge for the first quarter, we saw a decline in U. S. Public sector discretionary live learning spending. However, we saw an increase in large scale non U. S. Ronald HovsepianCEO & Executive Chair at Skillsoft00:05:49Public sector deals where we are investing in international growth. Common themes were upscaling in AI, cloud computing, software development, cybersecurity and data analytics. We saw an example of a large European bank that is working with Skillsoft to introduce a blended program that leverages Skillsoft's full capabilities of digital learning, live learning, hands on learning and skill measurement. This demonstrates our differentiated value proposition to our customers through our multimodal interactive learning experience offerings. Within our TDS segment, we have had three consecutive quarters of revenue growth. Ronald HovsepianCEO & Executive Chair at Skillsoft00:06:34We believe our value proposition is resonating especially with customers that are transitioning to being a skills based organization. One example of this is a leading financial services company that is undergoing a significant strategic evolution aimed at enhancing agility and future readiness. As part of this initiative, they have partnered with Skillsoft to deliver a comprehensive skills development program leveraging Skillsoft's content, platform and services to identify and bridge skill gaps across the organization. This effort is key to their vision for a dynamic talent ecosystem, one that prioritizes continuous learning, empowers employees and strengthens the company's competitive edge in a rapidly changing business landscape. As it relates to our product strategy, we continue to expand our product offerings in the first quarter. Ronald HovsepianCEO & Executive Chair at Skillsoft00:07:36Let me highlight a few key examples of how we are delivering comprehensive interactive learning experiences on a global scale for both organizations and learners. Skillsoft's Trecipio robust AI capabilities continue to build differentiation and strong learner engagement. Skillsoft's Casey, our award winning AI powered coach is now available for learners in over 40 languages. Our AI assistant is also now localized and available in all languages that our platform supports. Skillsoft's Precipio certification dashboard was released. Ronald HovsepianCEO & Executive Chair at Skillsoft00:08:18Clients can now see how many learners are pursuing certifications, how much time it is taking and the progress each learner is making. in addition to offering a world class one on one coaching experience, our platform allows clients coaching programs to administer and operate with both internal and external coaches. This Skillsoft coaching platform offering an open approach to learning allows organizations to scale their internal coaching programs through coach selection, scheduling and dashboards that measure success. Lastly, Skillsoft's Codecademy was a launch partner for Uconnect's class module product, which helps students fill skill gaps and gain industry specific knowledge. Uconnect provides career center services for over 400 universities. Ronald HovsepianCEO & Executive Chair at Skillsoft00:09:15Codecademy is also evolving to better meet the needs of upskillers with an end to end certification hub and granular skill tracking. Collectively, these transformation actions are driving improved financial results and delivering better outcomes for our clients and learners. During this past quarter, we hosted several customer events across the globe with multiple key accounts and prospects. These conversations provided me with further confidence in our business strategy and validates the key actions we are taking. Looking forward to the balance of our fiscal twenty twenty six, we are closely monitoring the macroeconomic environment as certain verticals are experienced heightened customer caution. Ronald HovsepianCEO & Executive Chair at Skillsoft00:10:01While we are seeing some elongation and decision making and softening in discretionary spend, we are continuing to strategically focus our resources in key growth areas. And as John will touch on shortly, we are reiterating our outlook for the full fiscal year. I am confident we will return the company to top line growth and delivered continued margin expansion this year, while generating positive free cash flow. With that, now let me hand the call over to John to cover our financial results in more detail. John? John FrederickCFO at Skillsoft00:10:37Thank you, Ron, and good afternoon, everyone. I'm pleased to join today's call as Skillsoft's new Chief Financial Officer. I'm excited to continue working alongside such a talented and dedicated team and look forward to further accelerating our growth transformation. While we're still progressing through our multi quarter transformation journey, I'm pleased that we once again delivered improved profitability and positive free cash flow. Let me turn to a detailed review of our financial results, starting with revenue. John FrederickCFO at Skillsoft00:11:11Revenue for Talent Development Solutions, TDS, was $99,100,000 in the first quarter, up 1% year over year. Our TDS performance continues to benefit from our efforts to capitalize on the evolving market shift from traditional learning and skills development toward more comprehensive talent development solutions. Global Dollar's revenue of $25,100,000 in the quarter was down approximately $4,700,000 or 15.7% year over year. As Ron commented earlier, we saw softer demand within the public sector, which impacted GK in the quarter. We also had a higher mix of reseller business for GK in this quarter, which is recognized net of fees. John FrederickCFO at Skillsoft00:11:58More importantly, GK remains on track with its transformation journey, and we're excited by our pipeline of opportunities, especially large global public sector deals. Provided the market stabilizes, we expect continued improvement, which should support our goal of returning the total company to growth. Total revenue of $124,200,000 in the first quarter was down approximately $3,600,000 or 2.8% year over year. Our TDS LTM dollar retention rate, or DRR, for the first quarter was 99%. This compares to 100% last quarter and ninety nine percent one year ago. John FrederickCFO at Skillsoft00:12:40Now I'll walk through our expenses, which saw a reduction across the board as a result of our reduction initiatives that we executed in the back half of last year. Cost of revenue of $32,000,000 for the first quarter or 26% of revenue was down approximately 6.5% year over year. These decreases were driven primarily by lower variable costs and the impacts of our cost reduction efforts. Content and software development expenses of $12,900,000 in the quarter or 10% of revenue were down approximately 8.4% year over year. These improvements were driven by the continued productivity gains we're seeing from our investment to leverage AI. John FrederickCFO at Skillsoft00:13:26Selling and marketing expenses of $38,400,000 in the quarter or 31% of revenue were down approximately 5.5% year over year. General and administrative expenses were $18,800,000 in the first quarter or 15% of revenue, down approximately 6% year over year. Total operating expenses of $102,100,000 in the first quarter or 82% of revenue were down approximately 6,800,000 or 6.2% year over year. Despite the lower revenue base compared to the prior year period, we once again delivered higher profitability. Adjusted EBITDA of $22,100,000 or 17.8% of revenue was up $3,200,000 compared to $18,900,000 or 14.8% of revenue in the year ago period. John FrederickCFO at Skillsoft00:14:21Cost reduction efforts in the back half of last year drove further margin improvement in the first quarter. GAAP net loss was $38,000,000 in the first quarter compared to $27,600,000 in the prior year. GAAP net loss per share was $4.57 per share compared to $3.42 per share in the prior year. Adjusted net income of $2,500,000 in the first quarter compared to an adjusted net loss of $390,000 in the prior year. Adjusted net income per share of $0.30 for the first quarter compared to an adjusted net loss of $05 in the prior year. John FrederickCFO at Skillsoft00:15:01Moving to cash flow and balance sheet highlights. As we've continuously highlighted, one of our key focus areas is improving free cash flow and getting the company to generate consistent positive free cash flow. In Q1, we generated $31,300,000 of cash flow from operations and invested $5,100,000 in capital expenditures and capitalized internally developed software, resulting in free cash flow of $26,200,000 compared to $10,400,000 in the prior year period, an improvement of $15,800,000 While we're encouraged by our strong free cash flow in the quarter, I want to make two points as it relates to free cash flow. The has to do with normal seasonality. Our first quarter is our highest seasonal free cash flow quarter, whereas our second quarter is traditionally our lowest. John FrederickCFO at Skillsoft00:15:54Secondly, in Q1, we benefited from the timing of collections and certain disbursements and would expect to see much of that benefit reverse in the second quarter, in fact, a cash usage in the second quarter. However, we remain on track for the full fiscal year 2026. Cash, cash equivalents and restricted cash was 131,000,000 at quarter end. Total gross debt, which includes borrowings on our term loan and accounts receivable facility was $580,000,000 at the end of Q1, down slightly from approximately $581,000,000 at the end of fiscal 'twenty five. With a strong cash flow performance in the quarter, we kept borrowings on our accounts receivables facility to the minimum amount of $1,000,000 and in fact, billed cash. John FrederickCFO at Skillsoft00:16:47Total net debt, which includes borrowings on our term loan and accounts receivables facility, net of cash, cash equivalents and restricted cash, was approximately $449,000,000 down from approximately $477,000,000 at the end of the fourth quarter. Turning to our outlook for the full year. As Ron already mentioned, we're reiterating our previously communicated guidance ranges for fiscal 'twenty six. As a reminder, we expect revenue in a range of $530,000,000 to $545,000,000 and adjusted EBITDA of $112,000,000 to $118,000,000 We will continue to monitor the current market conditions and the policy changes that could potentially materially impact the business. While we expect to reverse most of our first quarter free cash flow generation in the second quarter and use cash in that quarter, we remain confident in our ability to again drive positive free cash flow in fiscal 'twenty six and reiterate our expectation of free cash flow in a range of $13,000,000 to $18,000,000 for the full year. John FrederickCFO at Skillsoft00:17:57With that, operator, please open up the call to questions. Operator00:18:03Thank you. And with that, we will be conducting a question and answer session. And our question comes from the line of Ken Wong with Oppenheimer and Company. Please proceed with your question. Ken WongManaging Director at Oppenheimer & Co. Inc.00:18:37Fantastic. John, congratulations on the role and welcome to the team. I think this question could go to either you or Ron. But you guys called out heightened macro uncertainty, little erosion on discretionary spend and longer sales cycles. I guess what are you seeing in the underlying KPI or if there's deals that have closed since the quarter ended that gives you confidence in reiterating that full year target? John FrederickCFO at Skillsoft00:19:06Ken, hi, this is John. I'll take the stab of the question, and thanks for the kind words. Pretty excited to be here. I think I'll just give you kind of a higher order sort of answer, and I'll progressively drill down just a little bit. As I think about the outlook, I've been on the job for about three weeks now, and this has really been whether or not we can hit the guidance for the year, it's really been consuming a lot of my mindshare. John FrederickCFO at Skillsoft00:19:37When I break down the pieces into the two business segments, I think about TDS for a we've grown three quarters in a row. So I feel good about that so far. We had some nice recurring revenue coming off of the Q4 bookings. So that gave me some confidence. So overall, I feel pretty good about our biggest business segment, TDS. John FrederickCFO at Skillsoft00:20:00So the focus for me to try to really answer that question is really around GK. From a GK perspective, last year, we declined for the full year in the mid teens. But when you look at the back half in isolation, there was really a positive derivative that was happening. The clients were starting to soften, and that was giving us some confidence. And then enter the market uncertainty, we saw Q1 kind of go back to a reversion of last year's declines. John FrederickCFO at Skillsoft00:20:34And if you index on some of the live learning challenges that Ron highlighted in some of his comments, our performance in GK really speaks to both the resilience of the early strategy shifts and perhaps even more so to the resilience of the go to market team. So when I start to think about contextualizing my confidence, I start looking at the deal pipeline. We've got a nice large deal pipeline in GK specifically, some good recurring relationships that provide some visibility. So provided that the live learning market stabilizes, there's a reasonable thesis for GK to resume its improvement. So overall, assuming the market the macro market stabilizes, we decided to reaffirm the P and L guidance. Ken WongManaging Director at Oppenheimer & Co. Inc.00:21:26Got it. And in your underlying assumptions, I guess, is there some component of GK's maybe a little worse, TDS a little better and on the balance you can arrive at the reiteration? Or is it kind of the business dynamic remains similar to how you were thinking a couple of months back? And hopefully, things stabilize and then we get there. Does that question somewhat make sense? Or have to reword if necessary? Ronald HovsepianCEO & Executive Chair at Skillsoft00:22:00Yes, this is Ron. I'll just jump in for a on it. As I look at the business, as John highlighted, the discretionary spending for us is what came under attack in Q1 for from when I talked to some other people, the same thing. There's not a lot of activity in discretionary spending. So to bring that to life, Ken, that is both our that's really under the category we call live learning, which would include GK and our coaching business. Ronald HovsepianCEO & Executive Chair at Skillsoft00:22:26Those two pieces are where we felt it in Q1. What I will say is we saw at the last month of the quarter, we saw things heading back in the right direction. So that's where my confidence, I'll just jump in here for a where my confidence comes back saying, okay, we're working our way through this thing. The uncertainty thing, my hope is that that becomes just part of the market normal now, like we dealt with COVID as an example, right? And that's where my head is heading to. Ronald HovsepianCEO & Executive Chair at Skillsoft00:23:02And that's why we stayed, as John had indicated, right with our guidance. Ken WongManaging Director at Oppenheimer & Co. Inc.00:23:07Okay, perfect. Thanks a lot for that context, Ron. Then Ron, maybe sticking with you. Look, you guys have done a fantastic job in terms of cleaning up the business. It feels like we have stabilized for the most part. Ken WongManaging Director at Oppenheimer & Co. Inc.00:23:23What's next? Like how should we think about kind of what's phase two of this process? And any thoughts on how we should think about a timeline there? Ronald HovsepianCEO & Executive Chair at Skillsoft00:23:35Sure. This year is the most important year of my life like it is every time, right? The for the company. So as we look at it, delivering this year really is important, Ken, as we go along. As we execute against the year, what we'll do is we'll really start to plan on now cranking that growth rate up further, right? Ronald HovsepianCEO & Executive Chair at Skillsoft00:24:00That's the goal here. And I'm excited about what I see in the strategy that we laid out. I'm excited about where we can take the business. The reaction we're getting from I just hosted two customer dinners, one in London, one in New York. And the feedback from Officers of very large companies we were with is very, very positive. Ronald HovsepianCEO & Executive Chair at Skillsoft00:24:24The one in London, in particular, was 15 prospects in the room, which is very interesting to hear their view of where the market is going. And we heard words like right on the money. Now we have to do is translate that into our go to market and our product strategy. So what you see with announcements like Rayann and other things taking over our marketing, that's an area that needs a lot of improvement for us as a company. I didn't want to go get ahead of ourselves too early there until we built out what we were doing strategically. Ronald HovsepianCEO & Executive Chair at Skillsoft00:24:58That is now strategic direction is set. We're good on that. We're now very focused on the product plans, the go to market plans, and most importantly, the sales coverage or the overall go to market approach. That's where all the energy is going now. Timeline, that takes a little longer to build out those strategic capabilities for how we're going to sell. Ronald HovsepianCEO & Executive Chair at Skillsoft00:25:18But they're all that foundation is being poured in parallel with delivering this year. John FrederickCFO at Skillsoft00:25:22And when you think about how we're sequencing this, and Ron summarized it nicely, that we came up with a way to pay for all the transformation efforts that we needed to do. We did that through the resource reallocations last year, that's fully implemented. We're seeing the benefits you saw that in operating expenses coming down year over year. The half of the year is really all around investing in our go to market and products as Ron discussed. And then in the back half, that's where we start to see the benefits from what should be a multiyear set of benefits from the investments we're making in growth today. John FrederickCFO at Skillsoft00:26:01So we're really focused on trying to get through this investment phase as quickly as we can so we can have the proper go to market coverage, the proper tools in market, the proper marketing in market to grow revenue. Ken WongManaging Director at Oppenheimer & Co. Inc.00:26:19Got it. Got it. And then John, I wanted to touch on free cash flow. Obviously, very strong quarter. You highlighted maybe a little bit of kind of collections timing benefited and you already laid out the 2Q dynamics of reversing. Ken WongManaging Director at Oppenheimer & Co. Inc.00:26:34Mean, when we cut through all of that commentary, is the right interpretation that free cash flow was still kind of above expectation? And to the extent that it was, maybe help us think through some of the moving pieces besides the kind of the earlier collections that might have caused that? Was it the bookings upside? Was it just more aggressive spend management? How should we think through like what the back half could look like as we lap that 2Q downtick seasonally? John FrederickCFO at Skillsoft00:27:03Yes. It's a great question, Ken. So if you think about the seasonality of our bookings, we have within TDS, we've got a 45% to fifty fourth quarter that's collected in Q1. So big seasonality there. I'd say that our cash collections performance was very, very good in the quarter. John FrederickCFO at Skillsoft00:27:27I mean, really, really good in the quarter. In fact, I'd say it's going be hard to repeat. But when you look at our disbursements timing, just kind of breaking through the pieces, we had some timing of some big payables that went out in the May. So we had a bit of timing on the disbursement side. When you look at over the year, you heard me talk about the fact that it's going to a bunch of that's going to reverse in Q2. John FrederickCFO at Skillsoft00:28:01And naturally, when you give guidance at 13,000,000 to $18,000,000 that would infer that we're going to use cash in the balance of the year. And the good news is we've collected the cash upfront, and we'll just use the cash to run the business operations throughout the year as we go. But the bookings before was really the biggest catalyst for having a really, really big Q1. Ken WongManaging Director at Oppenheimer & Co. Inc.00:28:27Okay, understood. And then perhaps just a little context on the government business. I think that seems to be kind of one area that you called out maybe seeing a little more softness than anticipated. Any context you can provide us? Has that started to pick back up now that maybe Doge is no longer a thing or maybe it still will be, but what might have been the contributors to that slower government spend and how we should think about it going forward? Ronald HovsepianCEO & Executive Chair at Skillsoft00:29:00So there's two parts to the government journey and you hit one of them, which is Doge. The part was the executive orders that we talked about on the calls in the past, Ken. In terms of that, we're still not seeing a material impact to our revenue overall. Now, what we saw was what I mentioned earlier in the federal, in the Fed space, I did see, we did see the discretionary spend hit the live learning piece of it. And that primarily the hit we took came from the federal sector, right? Ronald HovsepianCEO & Executive Chair at Skillsoft00:29:37That came from U. S. Federal sector. Interestingly enough, we're seeing actually good activity in Europe in their federal sectors, their public sector, excuse me. We're actually seeing good uptick there in that business in the quarter. Ronald HovsepianCEO & Executive Chair at Skillsoft00:29:53So when I look at it, we're in good shape there for the moment on the executive orders. Now to your point, there's a workforce reduction, right? And those numbers we're still assessing right now as those things come in, because that's, as you've seen in the news, that's become very fluid, right, as to what that means in terms of number of employees in the government. So we're holding, we're paying very close attention and holding steady right now until we understand it more. The government's a big, you know, big, big, big business in the world for, in the world, in our world, and it's a piece of ours. Ronald HovsepianCEO & Executive Chair at Skillsoft00:30:33It's a notable piece of ours, but it's not, we're not going to, you know, over rotate. We're staying steady. We're keeping a calm hand on it, watching it very, very closely. But discretionary is what got hit revenue wise. Doge impact is TBD. Ken WongManaging Director at Oppenheimer & Co. Inc.00:30:51Got it. John FrederickCFO at Skillsoft00:30:51It's also interesting. Adding to that, Ken, real quick is the pressure that we saw on discretionary, including the coaching piece of the business. Notwithstanding those pressures, TDS still managed to grow on its own. So I think it's helpful to kind of comment on the resilience of it. John FrederickCFO at Skillsoft00:31:13And this is while this is a full year, we were running a full year business in the end. It was interesting and frankly comforting to see the resilience in that business. Ken WongManaging Director at Oppenheimer & Co. Inc.00:31:26Got it. Got it. Last thing for me, I don't want to completely monopolize the time today. John, obviously, you've been here before. You're now taking the reins on in the CFO seat. Ken WongManaging Director at Oppenheimer & Co. Inc.00:31:41Anything that you're specifically focused on, any either changes, improvements that we can expect, now that you're helming the finance office? John FrederickCFO at Skillsoft00:31:54So I think there's kind of a broader conversation around the company, around transforming the business, around getting everything aligned and organized, really to work as an integrated unit across the company. So that integration piece is going to be something that the team has already heard and that we're all working together to try to drive, which is to say, we want to infuse finance into every decision that we make in the company, but do it in a way that connects with what we have to do from a go market and from a product perspective. So just absolutely everything that we do is going to be go to market driven with us acting as a support feature to the team. Ken WongManaging Director at Oppenheimer & Co. Inc.00:32:43Perfect. I'll I'll pass the mic. Ronald HovsepianCEO & Executive Chair at Skillsoft00:32:49Thank you. Ken, appreciate it. Operator, I believe that is it for our analysts. Operator00:32:58Great. Yes, thank you. And I'd like to pass it back to Ron Hofsepien for closing remarks. Ronald HovsepianCEO & Executive Chair at Skillsoft00:33:04Great. Thank you. I appreciate everyone. And as I look at Q1 and I look to Q2, it was an interesting first quarter given all the signals that we received in the market, especially obviously from the macro uncertainties, macroeconomic uncertainties that were generated. That said, I thought the business performed fairly well. Ronald HovsepianCEO & Executive Chair at Skillsoft00:33:28There's areas where we can continue to improve and we are improving those areas. So go to market remains the top priority as John had highlighted for us. And we're going to continue to drive that throughout the year. John in his prepared remarks made a reference to a number of investments that we anticipate really seeing the benefits in Q3 and Q4 in particular. And I am excited about what I'm seeing there, both at a recruiting level, as well as the reaction from the customers. Ronald HovsepianCEO & Executive Chair at Skillsoft00:34:01So with that, we'll get back to work on Q2. And I really appreciate it. We'll talk soon. Thank you. Operator00:34:09Thank you. And with that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.Read moreParticipantsExecutivesStephen PoeInvestor RelationsRonald HovsepianCEO & Executive ChairJohn FrederickCFOAnalystsKen WongManaging Director at Oppenheimer & Co. Inc.Powered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Skillsoft Earnings HeadlinesEarnings call transcript: Skillsoft sees growth in TDS amid revenue dip in Q1 2025June 11, 2025 | uk.investing.comSkillsoft Corp. (NYSE:SKIL) Q1 2026 Earnings Call TranscriptJune 11, 2025 | msn.comElon’s BIGGEST warning yet?Tesla's About to Prove Everyone Wrong... Again Back in 2018, when Jeff Brown told everyone to buy Tesla… The "experts" said Elon was finished and Tesla was headed for bankruptcy. Now they're saying the same thing, but Jeff has uncovered Tesla's next breakthrough.June 26 at 2:00 AM | Brownstone Research (Ad)Skillsoft Teams Up With Salesforce (NYSE:CRM) To Elevate AI-Powered Customer Support And EngagementJune 11, 2025 | finance.yahoo.comSkillsoft and Salesforce Partner to Build More Effective Customer Support Teams Through AI-Powered LearningJune 11, 2025 | businesswire.comSkillsoft Stock Falls as Softer Discretionary Spending Hits SalesJune 10, 2025 | marketwatch.comSee More Skillsoft Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Skillsoft? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Skillsoft and other key companies, straight to your email. Email Address About SkillsoftSkillsoft (NYSE:SKIL) provides content and platform and instructor-led training services in the United States and internationally. The company's Content & Platform segment engages in the sale, marketing, and delivery of its content learning solutions in areas, such as leadership and business, technology and developer, and compliance comprising individualized coaching, as well as technical skill areas. This segment also offers Percipio, an AI-driven online learning platform that delivers a learning experience through SaaS solutions. Its Instructor-Led Training segment provides training solutions, including information technology and business skills for corporations and their employees by guiding its customers throughout their lifelong technology learning journey by offering relevant and up-to-date skills training through instructor-led and self-paced, vendor certified, and other proprietary offerings. The company markets and sells their offerings to businesses of many sizes, government agencies, educational institutions, and resellers. 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PresentationSkip to Participants Operator00:00:00Greetings, and thank you for standing by, and welcome to Skillsoft's First Quarter Fiscal twenty twenty six Results and Conference Call. At this time, all participants are in a listen only mode. After the speakers present, there will be a question and answer session. Please note that today's call is being recorded. I would now like to hand the conference over to your speaker, Stephen Poe, Investor Relations. Thank you, Stephen. You may begin. Stephen PoeInvestor Relations at Skillsoft00:00:25Thank you, operator. Good day, and thank you for joining us to discuss our results for the first quarter ended 04/30/2025. Before we jump in, I want to remind you that today's call will contain forward looking statements about the company's business outlook and our expectations, including statements concerning financial and business trends, our expected future business and financial performance, financial condition and market outlook. These forward looking statements and all statements that are not historical facts reflect management's current beliefs and expectations as of today and therefore are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of the material risks and other important factors that could affect our actual results, we refer you to our most recent Form 10 ks filing with the Securities and Exchange Commission. Stephen PoeInvestor Relations at Skillsoft00:01:11We assume no obligation to update any forward looking statements or information which speak as of their respective dates. During the call, unless otherwise noted, all financial metrics we discuss will be non GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non GAAP financial measures included in today's commentary to the most directly comparable GAAP financial measures as well as how we define these metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at www.skillsoft.com. Following today's prepared remarks, Ron Hefsefian, Skillsoft's Executive Chair and Chief Executive Officer and John Frederick, Skillsoft's Chief Financial Officer will be available for Q and A. With that, it's my pleasure to turn the call over to Ron. Ronald HovsepianCEO & Executive Chair at Skillsoft00:02:02Thanks, Stephen. Good afternoon and thank you for joining us. I'm very pleased to start today's call with the introduction of John Frederick as our new CFO. Since rejoining Skillsoft in August of last year, he has overseen the company's business planning, working closely with the leadership team to refine and help drive the implementation of our transformation plan. From 2018 through 2021, he served as Skillsoft's Chief Administrative Officer, which included leading the finance team and previously he held executive positions at Sum Total Systems, a Skillsoft business acquired by Cornerstone in 2022 and others. Ronald HovsepianCEO & Executive Chair at Skillsoft00:02:46John's deeply familiar with Skillsoft. His experience leading finance organizations and a growth oriented mindset make him a natural choice to serve as our next CFO. I look forward to continuing to work closely with John as we build on our recent progress, drive success for our customers and learners and unlock further shareholder value as we execute our strategic plan. I'd like to also extend a sincere thank you to Rich Walker for his significant contributions and dedication to Skillsoft over the past four years. Rich has been a key member of the Skillsoft management team and we wish him all the best in his future endeavors. Ronald HovsepianCEO & Executive Chair at Skillsoft00:03:27In addition to welcoming John as our CFO, we expanded our leadership team with the addition of our new Chief Marketing Officer, Rayann Reese. Rayann is responsible for overseeing our global marketing efforts, helping drive demand and enhance brand awareness among organizations and learners who are on their talent transformation journey. She has extensive experience in the technology sector and her passion for powerful storytelling and driving transformation will help accelerate our go to market strategy, which is a key focus for Skillsoft going forward. Collectively, these leadership additions bring renewed focus and execution strength. With that, let me jump into our first quarter, which as a reminder is our seasonally smallest revenue quarter of the year. Ronald HovsepianCEO & Executive Chair at Skillsoft00:04:18As expected, we experienced macro uncertainty, which translated into lower discretionary spending by our customers and slightly elongated decision making. This directly impacted our live learning revenue in the quarter, which includes our global knowledge instructor led training and TDS coaching products. Yet we saw a continuation of growth within our TDS segment, a trend we've seen since the third quarter of last fiscal year. Additionally, we delivered improvement in our adjusted EBITDA and free cash flow. While we continue to drive improved financial results, we're also delivering strong progress against our transformation commitments. Ronald HovsepianCEO & Executive Chair at Skillsoft00:05:05Let me provide you an update on our progress in a few key areas. We are actively investing capital into our business. With reinvestment happening predominantly in the first half of this fiscal year, we expect to see positive free cash flow and top line growth for the full fiscal year, both of which we committed to at our July 2024 Investor Day. We expect most of this growth to come in the back half of this year. We continue to execute our go to market strategy. Ronald HovsepianCEO & Executive Chair at Skillsoft00:05:38In Global Knowledge for the first quarter, we saw a decline in U. S. Public sector discretionary live learning spending. However, we saw an increase in large scale non U. S. Ronald HovsepianCEO & Executive Chair at Skillsoft00:05:49Public sector deals where we are investing in international growth. Common themes were upscaling in AI, cloud computing, software development, cybersecurity and data analytics. We saw an example of a large European bank that is working with Skillsoft to introduce a blended program that leverages Skillsoft's full capabilities of digital learning, live learning, hands on learning and skill measurement. This demonstrates our differentiated value proposition to our customers through our multimodal interactive learning experience offerings. Within our TDS segment, we have had three consecutive quarters of revenue growth. Ronald HovsepianCEO & Executive Chair at Skillsoft00:06:34We believe our value proposition is resonating especially with customers that are transitioning to being a skills based organization. One example of this is a leading financial services company that is undergoing a significant strategic evolution aimed at enhancing agility and future readiness. As part of this initiative, they have partnered with Skillsoft to deliver a comprehensive skills development program leveraging Skillsoft's content, platform and services to identify and bridge skill gaps across the organization. This effort is key to their vision for a dynamic talent ecosystem, one that prioritizes continuous learning, empowers employees and strengthens the company's competitive edge in a rapidly changing business landscape. As it relates to our product strategy, we continue to expand our product offerings in the first quarter. Ronald HovsepianCEO & Executive Chair at Skillsoft00:07:36Let me highlight a few key examples of how we are delivering comprehensive interactive learning experiences on a global scale for both organizations and learners. Skillsoft's Trecipio robust AI capabilities continue to build differentiation and strong learner engagement. Skillsoft's Casey, our award winning AI powered coach is now available for learners in over 40 languages. Our AI assistant is also now localized and available in all languages that our platform supports. Skillsoft's Precipio certification dashboard was released. Ronald HovsepianCEO & Executive Chair at Skillsoft00:08:18Clients can now see how many learners are pursuing certifications, how much time it is taking and the progress each learner is making. in addition to offering a world class one on one coaching experience, our platform allows clients coaching programs to administer and operate with both internal and external coaches. This Skillsoft coaching platform offering an open approach to learning allows organizations to scale their internal coaching programs through coach selection, scheduling and dashboards that measure success. Lastly, Skillsoft's Codecademy was a launch partner for Uconnect's class module product, which helps students fill skill gaps and gain industry specific knowledge. Uconnect provides career center services for over 400 universities. Ronald HovsepianCEO & Executive Chair at Skillsoft00:09:15Codecademy is also evolving to better meet the needs of upskillers with an end to end certification hub and granular skill tracking. Collectively, these transformation actions are driving improved financial results and delivering better outcomes for our clients and learners. During this past quarter, we hosted several customer events across the globe with multiple key accounts and prospects. These conversations provided me with further confidence in our business strategy and validates the key actions we are taking. Looking forward to the balance of our fiscal twenty twenty six, we are closely monitoring the macroeconomic environment as certain verticals are experienced heightened customer caution. Ronald HovsepianCEO & Executive Chair at Skillsoft00:10:01While we are seeing some elongation and decision making and softening in discretionary spend, we are continuing to strategically focus our resources in key growth areas. And as John will touch on shortly, we are reiterating our outlook for the full fiscal year. I am confident we will return the company to top line growth and delivered continued margin expansion this year, while generating positive free cash flow. With that, now let me hand the call over to John to cover our financial results in more detail. John? John FrederickCFO at Skillsoft00:10:37Thank you, Ron, and good afternoon, everyone. I'm pleased to join today's call as Skillsoft's new Chief Financial Officer. I'm excited to continue working alongside such a talented and dedicated team and look forward to further accelerating our growth transformation. While we're still progressing through our multi quarter transformation journey, I'm pleased that we once again delivered improved profitability and positive free cash flow. Let me turn to a detailed review of our financial results, starting with revenue. John FrederickCFO at Skillsoft00:11:11Revenue for Talent Development Solutions, TDS, was $99,100,000 in the first quarter, up 1% year over year. Our TDS performance continues to benefit from our efforts to capitalize on the evolving market shift from traditional learning and skills development toward more comprehensive talent development solutions. Global Dollar's revenue of $25,100,000 in the quarter was down approximately $4,700,000 or 15.7% year over year. As Ron commented earlier, we saw softer demand within the public sector, which impacted GK in the quarter. We also had a higher mix of reseller business for GK in this quarter, which is recognized net of fees. John FrederickCFO at Skillsoft00:11:58More importantly, GK remains on track with its transformation journey, and we're excited by our pipeline of opportunities, especially large global public sector deals. Provided the market stabilizes, we expect continued improvement, which should support our goal of returning the total company to growth. Total revenue of $124,200,000 in the first quarter was down approximately $3,600,000 or 2.8% year over year. Our TDS LTM dollar retention rate, or DRR, for the first quarter was 99%. This compares to 100% last quarter and ninety nine percent one year ago. John FrederickCFO at Skillsoft00:12:40Now I'll walk through our expenses, which saw a reduction across the board as a result of our reduction initiatives that we executed in the back half of last year. Cost of revenue of $32,000,000 for the first quarter or 26% of revenue was down approximately 6.5% year over year. These decreases were driven primarily by lower variable costs and the impacts of our cost reduction efforts. Content and software development expenses of $12,900,000 in the quarter or 10% of revenue were down approximately 8.4% year over year. These improvements were driven by the continued productivity gains we're seeing from our investment to leverage AI. John FrederickCFO at Skillsoft00:13:26Selling and marketing expenses of $38,400,000 in the quarter or 31% of revenue were down approximately 5.5% year over year. General and administrative expenses were $18,800,000 in the first quarter or 15% of revenue, down approximately 6% year over year. Total operating expenses of $102,100,000 in the first quarter or 82% of revenue were down approximately 6,800,000 or 6.2% year over year. Despite the lower revenue base compared to the prior year period, we once again delivered higher profitability. Adjusted EBITDA of $22,100,000 or 17.8% of revenue was up $3,200,000 compared to $18,900,000 or 14.8% of revenue in the year ago period. John FrederickCFO at Skillsoft00:14:21Cost reduction efforts in the back half of last year drove further margin improvement in the first quarter. GAAP net loss was $38,000,000 in the first quarter compared to $27,600,000 in the prior year. GAAP net loss per share was $4.57 per share compared to $3.42 per share in the prior year. Adjusted net income of $2,500,000 in the first quarter compared to an adjusted net loss of $390,000 in the prior year. Adjusted net income per share of $0.30 for the first quarter compared to an adjusted net loss of $05 in the prior year. John FrederickCFO at Skillsoft00:15:01Moving to cash flow and balance sheet highlights. As we've continuously highlighted, one of our key focus areas is improving free cash flow and getting the company to generate consistent positive free cash flow. In Q1, we generated $31,300,000 of cash flow from operations and invested $5,100,000 in capital expenditures and capitalized internally developed software, resulting in free cash flow of $26,200,000 compared to $10,400,000 in the prior year period, an improvement of $15,800,000 While we're encouraged by our strong free cash flow in the quarter, I want to make two points as it relates to free cash flow. The has to do with normal seasonality. Our first quarter is our highest seasonal free cash flow quarter, whereas our second quarter is traditionally our lowest. John FrederickCFO at Skillsoft00:15:54Secondly, in Q1, we benefited from the timing of collections and certain disbursements and would expect to see much of that benefit reverse in the second quarter, in fact, a cash usage in the second quarter. However, we remain on track for the full fiscal year 2026. Cash, cash equivalents and restricted cash was 131,000,000 at quarter end. Total gross debt, which includes borrowings on our term loan and accounts receivable facility was $580,000,000 at the end of Q1, down slightly from approximately $581,000,000 at the end of fiscal 'twenty five. With a strong cash flow performance in the quarter, we kept borrowings on our accounts receivables facility to the minimum amount of $1,000,000 and in fact, billed cash. John FrederickCFO at Skillsoft00:16:47Total net debt, which includes borrowings on our term loan and accounts receivables facility, net of cash, cash equivalents and restricted cash, was approximately $449,000,000 down from approximately $477,000,000 at the end of the fourth quarter. Turning to our outlook for the full year. As Ron already mentioned, we're reiterating our previously communicated guidance ranges for fiscal 'twenty six. As a reminder, we expect revenue in a range of $530,000,000 to $545,000,000 and adjusted EBITDA of $112,000,000 to $118,000,000 We will continue to monitor the current market conditions and the policy changes that could potentially materially impact the business. While we expect to reverse most of our first quarter free cash flow generation in the second quarter and use cash in that quarter, we remain confident in our ability to again drive positive free cash flow in fiscal 'twenty six and reiterate our expectation of free cash flow in a range of $13,000,000 to $18,000,000 for the full year. John FrederickCFO at Skillsoft00:17:57With that, operator, please open up the call to questions. Operator00:18:03Thank you. And with that, we will be conducting a question and answer session. And our question comes from the line of Ken Wong with Oppenheimer and Company. Please proceed with your question. Ken WongManaging Director at Oppenheimer & Co. Inc.00:18:37Fantastic. John, congratulations on the role and welcome to the team. I think this question could go to either you or Ron. But you guys called out heightened macro uncertainty, little erosion on discretionary spend and longer sales cycles. I guess what are you seeing in the underlying KPI or if there's deals that have closed since the quarter ended that gives you confidence in reiterating that full year target? John FrederickCFO at Skillsoft00:19:06Ken, hi, this is John. I'll take the stab of the question, and thanks for the kind words. Pretty excited to be here. I think I'll just give you kind of a higher order sort of answer, and I'll progressively drill down just a little bit. As I think about the outlook, I've been on the job for about three weeks now, and this has really been whether or not we can hit the guidance for the year, it's really been consuming a lot of my mindshare. John FrederickCFO at Skillsoft00:19:37When I break down the pieces into the two business segments, I think about TDS for a we've grown three quarters in a row. So I feel good about that so far. We had some nice recurring revenue coming off of the Q4 bookings. So that gave me some confidence. So overall, I feel pretty good about our biggest business segment, TDS. John FrederickCFO at Skillsoft00:20:00So the focus for me to try to really answer that question is really around GK. From a GK perspective, last year, we declined for the full year in the mid teens. But when you look at the back half in isolation, there was really a positive derivative that was happening. The clients were starting to soften, and that was giving us some confidence. And then enter the market uncertainty, we saw Q1 kind of go back to a reversion of last year's declines. John FrederickCFO at Skillsoft00:20:34And if you index on some of the live learning challenges that Ron highlighted in some of his comments, our performance in GK really speaks to both the resilience of the early strategy shifts and perhaps even more so to the resilience of the go to market team. So when I start to think about contextualizing my confidence, I start looking at the deal pipeline. We've got a nice large deal pipeline in GK specifically, some good recurring relationships that provide some visibility. So provided that the live learning market stabilizes, there's a reasonable thesis for GK to resume its improvement. So overall, assuming the market the macro market stabilizes, we decided to reaffirm the P and L guidance. Ken WongManaging Director at Oppenheimer & Co. Inc.00:21:26Got it. And in your underlying assumptions, I guess, is there some component of GK's maybe a little worse, TDS a little better and on the balance you can arrive at the reiteration? Or is it kind of the business dynamic remains similar to how you were thinking a couple of months back? And hopefully, things stabilize and then we get there. Does that question somewhat make sense? Or have to reword if necessary? Ronald HovsepianCEO & Executive Chair at Skillsoft00:22:00Yes, this is Ron. I'll just jump in for a on it. As I look at the business, as John highlighted, the discretionary spending for us is what came under attack in Q1 for from when I talked to some other people, the same thing. There's not a lot of activity in discretionary spending. So to bring that to life, Ken, that is both our that's really under the category we call live learning, which would include GK and our coaching business. Ronald HovsepianCEO & Executive Chair at Skillsoft00:22:26Those two pieces are where we felt it in Q1. What I will say is we saw at the last month of the quarter, we saw things heading back in the right direction. So that's where my confidence, I'll just jump in here for a where my confidence comes back saying, okay, we're working our way through this thing. The uncertainty thing, my hope is that that becomes just part of the market normal now, like we dealt with COVID as an example, right? And that's where my head is heading to. Ronald HovsepianCEO & Executive Chair at Skillsoft00:23:02And that's why we stayed, as John had indicated, right with our guidance. Ken WongManaging Director at Oppenheimer & Co. Inc.00:23:07Okay, perfect. Thanks a lot for that context, Ron. Then Ron, maybe sticking with you. Look, you guys have done a fantastic job in terms of cleaning up the business. It feels like we have stabilized for the most part. Ken WongManaging Director at Oppenheimer & Co. Inc.00:23:23What's next? Like how should we think about kind of what's phase two of this process? And any thoughts on how we should think about a timeline there? Ronald HovsepianCEO & Executive Chair at Skillsoft00:23:35Sure. This year is the most important year of my life like it is every time, right? The for the company. So as we look at it, delivering this year really is important, Ken, as we go along. As we execute against the year, what we'll do is we'll really start to plan on now cranking that growth rate up further, right? Ronald HovsepianCEO & Executive Chair at Skillsoft00:24:00That's the goal here. And I'm excited about what I see in the strategy that we laid out. I'm excited about where we can take the business. The reaction we're getting from I just hosted two customer dinners, one in London, one in New York. And the feedback from Officers of very large companies we were with is very, very positive. Ronald HovsepianCEO & Executive Chair at Skillsoft00:24:24The one in London, in particular, was 15 prospects in the room, which is very interesting to hear their view of where the market is going. And we heard words like right on the money. Now we have to do is translate that into our go to market and our product strategy. So what you see with announcements like Rayann and other things taking over our marketing, that's an area that needs a lot of improvement for us as a company. I didn't want to go get ahead of ourselves too early there until we built out what we were doing strategically. Ronald HovsepianCEO & Executive Chair at Skillsoft00:24:58That is now strategic direction is set. We're good on that. We're now very focused on the product plans, the go to market plans, and most importantly, the sales coverage or the overall go to market approach. That's where all the energy is going now. Timeline, that takes a little longer to build out those strategic capabilities for how we're going to sell. Ronald HovsepianCEO & Executive Chair at Skillsoft00:25:18But they're all that foundation is being poured in parallel with delivering this year. John FrederickCFO at Skillsoft00:25:22And when you think about how we're sequencing this, and Ron summarized it nicely, that we came up with a way to pay for all the transformation efforts that we needed to do. We did that through the resource reallocations last year, that's fully implemented. We're seeing the benefits you saw that in operating expenses coming down year over year. The half of the year is really all around investing in our go to market and products as Ron discussed. And then in the back half, that's where we start to see the benefits from what should be a multiyear set of benefits from the investments we're making in growth today. John FrederickCFO at Skillsoft00:26:01So we're really focused on trying to get through this investment phase as quickly as we can so we can have the proper go to market coverage, the proper tools in market, the proper marketing in market to grow revenue. Ken WongManaging Director at Oppenheimer & Co. Inc.00:26:19Got it. Got it. And then John, I wanted to touch on free cash flow. Obviously, very strong quarter. You highlighted maybe a little bit of kind of collections timing benefited and you already laid out the 2Q dynamics of reversing. Ken WongManaging Director at Oppenheimer & Co. Inc.00:26:34Mean, when we cut through all of that commentary, is the right interpretation that free cash flow was still kind of above expectation? And to the extent that it was, maybe help us think through some of the moving pieces besides the kind of the earlier collections that might have caused that? Was it the bookings upside? Was it just more aggressive spend management? How should we think through like what the back half could look like as we lap that 2Q downtick seasonally? John FrederickCFO at Skillsoft00:27:03Yes. It's a great question, Ken. So if you think about the seasonality of our bookings, we have within TDS, we've got a 45% to fifty fourth quarter that's collected in Q1. So big seasonality there. I'd say that our cash collections performance was very, very good in the quarter. John FrederickCFO at Skillsoft00:27:27I mean, really, really good in the quarter. In fact, I'd say it's going be hard to repeat. But when you look at our disbursements timing, just kind of breaking through the pieces, we had some timing of some big payables that went out in the May. So we had a bit of timing on the disbursement side. When you look at over the year, you heard me talk about the fact that it's going to a bunch of that's going to reverse in Q2. John FrederickCFO at Skillsoft00:28:01And naturally, when you give guidance at 13,000,000 to $18,000,000 that would infer that we're going to use cash in the balance of the year. And the good news is we've collected the cash upfront, and we'll just use the cash to run the business operations throughout the year as we go. But the bookings before was really the biggest catalyst for having a really, really big Q1. Ken WongManaging Director at Oppenheimer & Co. Inc.00:28:27Okay, understood. And then perhaps just a little context on the government business. I think that seems to be kind of one area that you called out maybe seeing a little more softness than anticipated. Any context you can provide us? Has that started to pick back up now that maybe Doge is no longer a thing or maybe it still will be, but what might have been the contributors to that slower government spend and how we should think about it going forward? Ronald HovsepianCEO & Executive Chair at Skillsoft00:29:00So there's two parts to the government journey and you hit one of them, which is Doge. The part was the executive orders that we talked about on the calls in the past, Ken. In terms of that, we're still not seeing a material impact to our revenue overall. Now, what we saw was what I mentioned earlier in the federal, in the Fed space, I did see, we did see the discretionary spend hit the live learning piece of it. And that primarily the hit we took came from the federal sector, right? Ronald HovsepianCEO & Executive Chair at Skillsoft00:29:37That came from U. S. Federal sector. Interestingly enough, we're seeing actually good activity in Europe in their federal sectors, their public sector, excuse me. We're actually seeing good uptick there in that business in the quarter. Ronald HovsepianCEO & Executive Chair at Skillsoft00:29:53So when I look at it, we're in good shape there for the moment on the executive orders. Now to your point, there's a workforce reduction, right? And those numbers we're still assessing right now as those things come in, because that's, as you've seen in the news, that's become very fluid, right, as to what that means in terms of number of employees in the government. So we're holding, we're paying very close attention and holding steady right now until we understand it more. The government's a big, you know, big, big, big business in the world for, in the world, in our world, and it's a piece of ours. Ronald HovsepianCEO & Executive Chair at Skillsoft00:30:33It's a notable piece of ours, but it's not, we're not going to, you know, over rotate. We're staying steady. We're keeping a calm hand on it, watching it very, very closely. But discretionary is what got hit revenue wise. Doge impact is TBD. Ken WongManaging Director at Oppenheimer & Co. Inc.00:30:51Got it. John FrederickCFO at Skillsoft00:30:51It's also interesting. Adding to that, Ken, real quick is the pressure that we saw on discretionary, including the coaching piece of the business. Notwithstanding those pressures, TDS still managed to grow on its own. So I think it's helpful to kind of comment on the resilience of it. John FrederickCFO at Skillsoft00:31:13And this is while this is a full year, we were running a full year business in the end. It was interesting and frankly comforting to see the resilience in that business. Ken WongManaging Director at Oppenheimer & Co. Inc.00:31:26Got it. Got it. Last thing for me, I don't want to completely monopolize the time today. John, obviously, you've been here before. You're now taking the reins on in the CFO seat. Ken WongManaging Director at Oppenheimer & Co. Inc.00:31:41Anything that you're specifically focused on, any either changes, improvements that we can expect, now that you're helming the finance office? John FrederickCFO at Skillsoft00:31:54So I think there's kind of a broader conversation around the company, around transforming the business, around getting everything aligned and organized, really to work as an integrated unit across the company. So that integration piece is going to be something that the team has already heard and that we're all working together to try to drive, which is to say, we want to infuse finance into every decision that we make in the company, but do it in a way that connects with what we have to do from a go market and from a product perspective. So just absolutely everything that we do is going to be go to market driven with us acting as a support feature to the team. Ken WongManaging Director at Oppenheimer & Co. Inc.00:32:43Perfect. I'll I'll pass the mic. Ronald HovsepianCEO & Executive Chair at Skillsoft00:32:49Thank you. Ken, appreciate it. Operator, I believe that is it for our analysts. Operator00:32:58Great. Yes, thank you. And I'd like to pass it back to Ron Hofsepien for closing remarks. Ronald HovsepianCEO & Executive Chair at Skillsoft00:33:04Great. Thank you. I appreciate everyone. And as I look at Q1 and I look to Q2, it was an interesting first quarter given all the signals that we received in the market, especially obviously from the macro uncertainties, macroeconomic uncertainties that were generated. That said, I thought the business performed fairly well. Ronald HovsepianCEO & Executive Chair at Skillsoft00:33:28There's areas where we can continue to improve and we are improving those areas. So go to market remains the top priority as John had highlighted for us. And we're going to continue to drive that throughout the year. John in his prepared remarks made a reference to a number of investments that we anticipate really seeing the benefits in Q3 and Q4 in particular. And I am excited about what I'm seeing there, both at a recruiting level, as well as the reaction from the customers. Ronald HovsepianCEO & Executive Chair at Skillsoft00:34:01So with that, we'll get back to work on Q2. And I really appreciate it. We'll talk soon. Thank you. Operator00:34:09Thank you. And with that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.Read moreParticipantsExecutivesStephen PoeInvestor RelationsRonald HovsepianCEO & Executive ChairJohn FrederickCFOAnalystsKen WongManaging Director at Oppenheimer & Co. Inc.Powered by