0001774675 Skillsoft Corp. false --01-31 Q3 2024 558 562 0.0001 0.0001 18,750,000 18,750,000 8,576,683 8,276,906 8,380,436 8,080,659 299,777 299,777 0 0 0 0 0.0001 0 4 10 12 3 4 3 4 2 1 3 0 2 2 0 0 0 0 3 false false false false Reflects the number of shares that would vest based on achieving the “Target” level of performance. Intended to be settled in cash upon vesting. Expected to be recognized over a weighted-average period of 0.7 years. 00017746752024-02-012024-10-31 xbrli:shares 00017746752024-12-05 thunderdome:item iso4217:USD 00017746752024-10-31 00017746752024-01-31 iso4217:USDxbrli:shares 00017746752024-08-012024-10-31 00017746752023-08-012023-10-31 00017746752023-02-012023-10-31 0001774675skil:CommonStockOutstandingMember2023-01-31 0001774675us-gaap:TreasuryStockCommonMember2023-01-31 0001774675us-gaap:AdditionalPaidInCapitalMember2023-01-31 0001774675us-gaap:RetainedEarningsMember2023-01-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-31 00017746752023-01-31 0001774675skil:CommonStockOutstandingMember2023-02-012023-04-30 0001774675us-gaap:AdditionalPaidInCapitalMember2023-02-012023-04-30 0001774675us-gaap:RetainedEarningsMember2023-02-012023-04-30 0001774675us-gaap:TreasuryStockCommonMember2023-02-012023-04-30 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-02-012023-04-30 00017746752023-02-012023-04-30 0001774675skil:CommonStockOutstandingMember2023-04-30 0001774675us-gaap:TreasuryStockCommonMember2023-04-30 0001774675us-gaap:AdditionalPaidInCapitalMember2023-04-30 0001774675us-gaap:RetainedEarningsMember2023-04-30 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-30 00017746752023-04-30 0001774675skil:CommonStockOutstandingMember2023-05-012023-07-31 0001774675us-gaap:AdditionalPaidInCapitalMember2023-05-012023-07-31 0001774675us-gaap:RetainedEarningsMember2023-05-012023-07-31 0001774675us-gaap:TreasuryStockCommonMember2023-05-012023-07-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-05-012023-07-31 00017746752023-05-012023-07-31 0001774675skil:CommonStockOutstandingMember2023-07-31 0001774675us-gaap:TreasuryStockCommonMember2023-07-31 0001774675us-gaap:AdditionalPaidInCapitalMember2023-07-31 0001774675us-gaap:RetainedEarningsMember2023-07-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-31 00017746752023-07-31 0001774675skil:CommonStockOutstandingMember2023-08-012023-10-31 0001774675us-gaap:AdditionalPaidInCapitalMember2023-08-012023-10-31 0001774675us-gaap:RetainedEarningsMember2023-08-012023-10-31 0001774675us-gaap:TreasuryStockCommonMember2023-08-012023-10-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-08-012023-10-31 0001774675skil:CommonStockOutstandingMember2023-10-31 0001774675us-gaap:TreasuryStockCommonMember2023-10-31 0001774675us-gaap:AdditionalPaidInCapitalMember2023-10-31 0001774675us-gaap:RetainedEarningsMember2023-10-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-31 00017746752023-10-31 0001774675skil:CommonStockOutstandingMember2024-01-31 0001774675us-gaap:TreasuryStockCommonMember2024-01-31 0001774675us-gaap:AdditionalPaidInCapitalMember2024-01-31 0001774675us-gaap:RetainedEarningsMember2024-01-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-31 0001774675skil:CommonStockOutstandingMember2024-02-012024-04-30 0001774675us-gaap:AdditionalPaidInCapitalMember2024-02-012024-04-30 0001774675us-gaap:RetainedEarningsMember2024-02-012024-04-30 0001774675us-gaap:TreasuryStockCommonMember2024-02-012024-04-30 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-02-012024-04-30 00017746752024-02-012024-04-30 0001774675skil:SoftwareLuxembourgHoldingAndPointWellPredecessorMemberskil:CommonStockOutstandingMember2024-04-30 0001774675skil:SoftwareLuxembourgHoldingAndPointWellPredecessorMemberus-gaap:TreasuryStockCommonMember2024-04-30 0001774675skil:SoftwareLuxembourgHoldingAndPointWellPredecessorMemberus-gaap:AdditionalPaidInCapitalMember2024-04-30 0001774675skil:SoftwareLuxembourgHoldingAndPointWellPredecessorMemberus-gaap:RetainedEarningsMember2024-04-30 0001774675skil:SoftwareLuxembourgHoldingAndPointWellPredecessorMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-30 0001774675skil:SoftwareLuxembourgHoldingAndPointWellPredecessorMember2024-04-30 0001774675skil:CommonStockOutstandingMember2024-05-012024-07-31 0001774675us-gaap:AdditionalPaidInCapitalMember2024-05-012024-07-31 0001774675us-gaap:RetainedEarningsMember2024-05-012024-07-31 0001774675us-gaap:TreasuryStockCommonMember2024-05-012024-07-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-05-012024-07-31 00017746752024-05-012024-07-31 0001774675skil:CommonStockOutstandingMember2024-07-31 0001774675us-gaap:TreasuryStockCommonMember2024-07-31 0001774675us-gaap:AdditionalPaidInCapitalMember2024-07-31 0001774675us-gaap:RetainedEarningsMember2024-07-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-31 00017746752024-07-31 0001774675skil:CommonStockOutstandingMember2024-08-012024-10-31 0001774675us-gaap:AdditionalPaidInCapitalMember2024-08-012024-10-31 0001774675us-gaap:RetainedEarningsMember2024-08-012024-10-31 0001774675us-gaap:TreasuryStockCommonMember2024-08-012024-10-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-08-012024-10-31 0001774675skil:CommonStockOutstandingMember2024-10-31 0001774675us-gaap:TreasuryStockCommonMember2024-10-31 0001774675us-gaap:AdditionalPaidInCapitalMember2024-10-31 0001774675us-gaap:RetainedEarningsMember2024-10-31 0001774675us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-10-31 0001774675skil:TermLoanFacilityMember2024-02-012024-10-31 0001774675skil:TermLoanFacilityMember2023-02-012023-10-31 utr:Y 0001774675us-gaap:DevelopedTechnologyRightsMember2024-10-31 0001774675us-gaap:DevelopedTechnologyRightsMember2024-01-31 0001774675us-gaap:CustomerRelatedIntangibleAssetsMember2024-10-31 0001774675us-gaap:CustomerRelatedIntangibleAssetsMember2024-01-31 0001774675us-gaap:TrademarksAndTradeNamesMember2024-10-31 0001774675us-gaap:TrademarksAndTradeNamesMember2024-01-31 0001774675skil:PublishingRightsMember2024-10-31 0001774675skil:PublishingRightsMember2024-01-31 0001774675us-gaap:OrderOrProductionBacklogMember2024-10-31 0001774675us-gaap:OrderOrProductionBacklogMember2024-01-31 0001774675skil:SkillsoftTrademarkMember2024-10-31 0001774675skil:SkillsoftTrademarkMember2024-01-31 0001774675skil:ContentPlatformMember2024-01-31 0001774675skil:InstructorledTrainingMember2024-01-31 0001774675skil:ContentPlatformMember2024-02-012024-10-31 0001774675skil:InstructorledTrainingMember2024-02-012024-10-31 0001774675skil:ContentPlatformMember2024-10-31 0001774675skil:InstructorledTrainingMember2024-10-31 0001774675skil:TalentDevelopmentSolutionsSegmentMember2024-08-012024-10-31 0001774675skil:TalentDevelopmentSolutionsSegmentMember2023-08-012023-10-31 0001774675skil:TalentDevelopmentSolutionsSegmentMember2024-02-012024-10-31 0001774675skil:TalentDevelopmentSolutionsSegmentMember2023-02-012023-10-31 0001774675skil:GlobalKnowledgeSegmentMember2024-08-012024-10-31 0001774675skil:GlobalKnowledgeSegmentMember2023-08-012023-10-31 0001774675skil:GlobalKnowledgeSegmentMember2024-02-012024-10-31 0001774675skil:GlobalKnowledgeSegmentMember2023-02-012023-10-31 0001774675skil:LegalProceedingsAndClaimsMember2024-10-31 0001774675skil:IndemnificationsOrCommitmentsMember2024-08-012024-10-31 0001774675skil:IndemnificationsOrCommitmentsMember2024-10-31 0001774675skil:TermLoanFacilityMember2024-10-31 0001774675skil:TermLoanFacilityMember2024-01-31 0001774675skil:AccountsReceivableFacilityMember2024-10-31 xbrli:pure 0001774675skil:AccountsReceivableFacilityMemberus-gaap:SubsequentEventMember2024-11-01 0001774675skil:AccountsReceivableFacilityMember2024-02-012024-10-31 0001774675skil:AccountsReceivableFacilityMemberus-gaap:SubsequentEventMember2024-11-012024-11-01 0001774675skil:AccountsReceivableFacilityMembersrt:MinimumMember2024-10-31 0001774675skil:AccountsReceivableFacilityMembersrt:MinimumMemberus-gaap:SubsequentEventMember2024-11-01 0001774675us-gaap:CommonClassAMember2024-10-31 0001774675us-gaap:CommonClassCMember2024-10-31 0001774675us-gaap:CommonClassAMember2024-07-10 0001774675us-gaap:CommonClassAMember2024-08-012024-10-31 0001774675skil:The2020OmnibusIncentivePlanMember2021-06-30 0001774675skil:The2020OmnibusIncentivePlanMember2024-10-31 0001774675skil:InducementPlanMember2024-10-31 0001774675us-gaap:EmployeeStockOptionMemberskil:The2020OmnibusIncentivePlanMember2021-06-302021-06-30 utr:D 0001774675us-gaap:EmployeeStockOptionMemberskil:The2020OmnibusIncentivePlanMemberskil:DaysFollowingTerminationOfEmploymentOrServiceMember2021-06-302021-06-30 utr:M 0001774675us-gaap:EmployeeStockOptionMemberskil:The2020OmnibusIncentivePlanMemberskil:MonthsFollowingOptioneesDeathOrDisabilityMember2021-06-302021-06-30 00017746752022-02-012023-01-31 0001774675us-gaap:EmployeeStockOptionMember2024-10-31 0001774675us-gaap:EmployeeStockOptionMember2024-08-012024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMember2024-08-012024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMembersrt:MaximumMember2024-08-012024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2024-01-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2023-01-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2024-02-012024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2024-08-012024-10-31 0001774675skil:MarketbasedRestrictedStockUnitsMBRSUsMembersrt:MinimumMember2024-08-012024-10-31 0001774675skil:MarketbasedRestrictedStockUnitsMBRSUsMembersrt:MaximumMember2024-08-012024-10-31 0001774675skil:MarketbasedRestrictedStockUnitsMBRSUsMember2024-01-31 0001774675skil:MarketbasedRestrictedStockUnitsMBRSUsMember2024-02-012024-10-31 0001774675skil:MarketbasedRestrictedStockUnitsMBRSUsMember2024-10-31 0001774675skil:MarketbasedRestrictedStockUnitsMBRSUsMember2024-08-012024-10-31 0001774675skil:PerformancebasedRestrictedStockUnitsMember2024-08-012024-10-31 0001774675skil:PerformancebasedRestrictedStockUnitsMembersrt:MinimumMember2024-08-012024-10-31 0001774675skil:PerformancebasedRestrictedStockUnitsMembersrt:MaximumMember2024-08-012024-10-31 0001774675skil:PerformancebasedRestrictedStockUnitsMember2024-01-31 0001774675skil:PerformancebasedRestrictedStockUnitsMember2024-02-012024-10-31 0001774675skil:PerformancebasedRestrictedStockUnitsMember2024-10-31 0001774675skil:LiabilityclassifiedPerformanceAwardMember2024-10-31 0001774675skil:LiabilityclassifiedPerformanceAwardMember2024-08-012024-10-31 0001774675us-gaap:CostOfSalesMember2024-08-012024-10-31 0001774675us-gaap:CostOfSalesMember2023-08-012023-10-31 0001774675us-gaap:CostOfSalesMember2024-02-012024-10-31 0001774675us-gaap:CostOfSalesMember2023-02-012023-10-31 0001774675us-gaap:ResearchAndDevelopmentExpenseMember2024-08-012024-10-31 0001774675us-gaap:ResearchAndDevelopmentExpenseMember2023-08-012023-10-31 0001774675us-gaap:ResearchAndDevelopmentExpenseMember2024-02-012024-10-31 0001774675us-gaap:ResearchAndDevelopmentExpenseMember2023-02-012023-10-31 0001774675us-gaap:SellingAndMarketingExpenseMember2024-08-012024-10-31 0001774675us-gaap:SellingAndMarketingExpenseMember2023-08-012023-10-31 0001774675us-gaap:SellingAndMarketingExpenseMember2024-02-012024-10-31 0001774675us-gaap:SellingAndMarketingExpenseMember2023-02-012023-10-31 0001774675us-gaap:GeneralAndAdministrativeExpenseMember2024-08-012024-10-31 0001774675us-gaap:GeneralAndAdministrativeExpenseMember2023-08-012023-10-31 0001774675us-gaap:GeneralAndAdministrativeExpenseMember2024-02-012024-10-31 0001774675us-gaap:GeneralAndAdministrativeExpenseMember2023-02-012023-10-31 0001774675skil:SubscriptionContractsMembersrt:MinimumMember2024-08-012024-10-31 0001774675skil:SubscriptionContractsMembersrt:MaximumMember2024-08-012024-10-31 0001774675skil:SAASAndSubscriptionServicesMember2024-08-012024-10-31 0001774675skil:SAASAndSubscriptionServicesMember2023-08-012023-10-31 0001774675skil:SAASAndSubscriptionServicesMember2024-02-012024-10-31 0001774675skil:SAASAndSubscriptionServicesMember2023-02-012023-10-31 0001774675skil:VirtualOndemandAndClassroomAndIndividualizedCoachingMember2024-08-012024-10-31 0001774675skil:VirtualOndemandAndClassroomAndIndividualizedCoachingMember2023-08-012023-10-31 0001774675skil:VirtualOndemandAndClassroomAndIndividualizedCoachingMember2024-02-012024-10-31 0001774675skil:VirtualOndemandAndClassroomAndIndividualizedCoachingMember2023-02-012023-10-31 0001774675skil:ProfessionalServicesMember2024-08-012024-10-31 0001774675skil:ProfessionalServicesMember2023-08-012023-10-31 0001774675skil:ProfessionalServicesMember2024-02-012024-10-31 0001774675skil:ProfessionalServicesMember2023-02-012023-10-31 0001774675country:US2024-08-012024-10-31 0001774675country:US2023-08-012023-10-31 0001774675country:US2024-02-012024-10-31 0001774675country:US2023-02-012023-10-31 0001774675us-gaap:EMEAMember2024-08-012024-10-31 0001774675us-gaap:EMEAMember2023-08-012023-10-31 0001774675us-gaap:EMEAMember2024-02-012024-10-31 0001774675us-gaap:EMEAMember2023-02-012023-10-31 0001774675skil:OtherAmericasMember2024-08-012024-10-31 0001774675skil:OtherAmericasMember2023-08-012023-10-31 0001774675skil:OtherAmericasMember2024-02-012024-10-31 0001774675skil:OtherAmericasMember2023-02-012023-10-31 0001774675srt:AsiaPacificMember2024-08-012024-10-31 0001774675srt:AsiaPacificMember2023-08-012023-10-31 0001774675srt:AsiaPacificMember2024-02-012024-10-31 0001774675srt:AsiaPacificMember2023-02-012023-10-31 0001774675us-gaap:NonUsMember2024-08-012024-10-31 0001774675us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-10-31 0001774675us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-10-31 0001774675us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-10-31 0001774675us-gaap:FairValueMeasurementsRecurringMember2024-10-31 0001774675us-gaap:InterestRateSwapMember2022-06-17 0001774675us-gaap:InterestRateSwapMember2024-08-012024-10-31 0001774675us-gaap:InterestRateSwapMember2024-02-012024-10-31 0001774675us-gaap:InterestRateSwapMember2023-08-012023-10-31 0001774675us-gaap:InterestRateSwapMember2023-02-012023-10-31 0001774675us-gaap:FairValueInputsLevel2Member2024-10-31 0001774675skil:ContentPlatformMember2024-08-012024-10-31 0001774675skil:ContentPlatformMember2023-08-012023-10-31 0001774675skil:ContentPlatformMember2024-02-012024-10-31 0001774675skil:ContentPlatformMember2023-02-012023-10-31 0001774675skil:InstructorledTrainingMember2024-08-012024-10-31 0001774675skil:InstructorledTrainingMember2023-08-012023-10-31 0001774675skil:InstructorledTrainingMember2024-02-012024-10-31 0001774675skil:InstructorledTrainingMember2023-02-012023-10-31 0001774675skil:TalentDevelopmentSolutionsSegmentMember2024-10-31 0001774675skil:TalentDevelopmentSolutionsSegmentMember2024-01-31 0001774675skil:GlobalKnowledgeSegmentMember2024-10-31 0001774675skil:GlobalKnowledgeSegmentMember2024-01-31 0001774675country:US2024-10-31 0001774675country:US2024-01-31 0001774675us-gaap:NonUsMember2024-10-31 0001774675us-gaap:NonUsMember2024-01-31 0001774675us-gaap:WarrantMember2024-08-012024-10-31 0001774675us-gaap:WarrantMember2023-08-012023-10-31 0001774675us-gaap:WarrantMember2024-02-012024-10-31 0001774675us-gaap:WarrantMember2023-02-012023-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2024-08-012024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2023-08-012023-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2024-02-012024-10-31 0001774675us-gaap:RestrictedStockUnitsRSUMember2023-02-012023-10-31 0001774675skil:LiabilityclassifiedPerformanceAwardMember2024-08-012024-10-31 0001774675skil:LiabilityclassifiedPerformanceAwardMember2023-08-012023-10-31 0001774675skil:LiabilityclassifiedPerformanceAwardMember2024-02-012024-10-31 0001774675skil:LiabilityclassifiedPerformanceAwardMember2023-02-012023-10-31 0001774675us-gaap:EmployeeStockOptionMember2024-08-012024-10-31 0001774675us-gaap:EmployeeStockOptionMember2023-08-012023-10-31 0001774675us-gaap:EmployeeStockOptionMember2024-02-012024-10-31 0001774675us-gaap:EmployeeStockOptionMember2023-02-012023-10-31 0001774675skil:OfftheshelfProductsMemberskil:MihLearningsBvMember2022-12-31 0001774675skil:OfftheshelfProductsMemberskil:MihLearningsBvMember2022-12-012022-12-31
 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2024

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from          to          

Commission File Number: 001-38960

 


 

Skillsoft Corp.

(Exact name of registrant as specified in its charter)

 

Delaware83-4388331

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

 

300 Innovative Way, Suite 2210

Nashua, NH 03062

(Address of principal executive offices) (Zip Code)

 

Tel: (603) 821-3902

(Registrants telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareSKILNew York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐Accelerated filer
Non-accelerated filer ☐Smaller reporting company 
Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

The number of shares of registrant’s common stock outstanding as of December 5, 2024 was 8,283,555.

 

 

 

 

 

 

 

SKILLSOFT CORP.

 

FORM 10-Q

FOR THE QUARTER ENDED October 31, 2024

INDEX

 

  PAGE NO.
PART I — FINANCIAL INFORMATION - UNAUDITED  

Item 1. Unaudited Financial Statements:

2

Unaudited Condensed Consolidated Balance Sheets as of October 31, 2024 and January 31, 2024

2

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended October 31, 2024 and 2023

3

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended October 31, 2024 and 2023

4

Unaudited Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the three and nine months ended October 31, 2024 and 2023

5

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2024 and 2023

7

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3. Quantitative and Qualitative Disclosures about Market Risk

26

Item 4. Controls and Procedures

26

PART II — OTHER INFORMATION

27

Item 1. Legal Proceedings

27

Item 1A. Risk Factors

27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 3. Defaults Upon Senior Securities

27

Item 4. Mine Safety Disclosures

27

Item 5. Other Information

27

Item 6. Exhibits

28

SIGNATURES

29

 

 

 

 

CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Form 10-Q”) 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. All statements, other than statements of historical facts, are forward-looking statements. These forward-looking statements include but are not limited to, statements 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, future capital expenditures, financial results, the impact of regulatory changes, our current and evolving business strategies, including with respect to acquisitions and dispositions, demand for our services, our competitive strengths, the benefits of new initiatives, growth of our business and operations, the effectiveness of our products, the outcome of litigation proceedings and claims, the state and future of skilling in the workplace, 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”, “project”, “forecast”, “seek”, “outlook”, “target”, "goal”, “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 materially from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature, and we caution you against unduly relying on these forward-looking statements.

 

Factors that could cause or contribute to such differences include those described under “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10‑K (as amended) for the fiscal year ended January 31, 2024 (the “2024 Form 10-K”). These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in the Annual Report and in our other periodic filings with the Securities and Exchange Commission. The forward-looking statements contained in this Form 10-Q represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements, or otherwise, except as required by law.

 

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 purposes only, are not forecasts and may not reflect actual results. 

 

INDUSTRY AND MARKET DATA

 

Within this Form 10-Q, we reference information and statistics regarding market share, industry data and our market position. Certain of this information has been obtained from various independent third-party sources, including independent industry publications, news reports, reports by market research firms and other independent sources. We believe that these external sources and estimates are reliable but have not independently verified them. In addition, certain of this information and statistics are based on our own internal surveys and assessments, which are developed in good faith using reasonable estimates. These data are based on the most current information available to us and our estimates regarding market position or other industry statistics 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.

 

 

1

 

PART I FINANCIAL INFORMATION

 

ITEM 1. UNAUDITED FINANCIAL STATEMENTS.

 

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except number of shares and per share amounts)

 

  

October 31, 2024

  

January 31, 2024

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $97,921  $136,308 

Restricted cash

  3,881   10,215 

Accounts receivable, net of allowance for credit losses of approximately $558 and $562 as of October 31, 2024 and January 31, 2024, respectively

  102,498   185,638 

Prepaid expenses and other current assets

  55,834   53,170 

Total current assets

  260,134   385,331 

Property and equipment, net

  3,543   6,639 

Goodwill

  317,071   317,071 

Intangible assets, net

  456,692   539,293 

Right of use assets

  5,054   8,044 

Other assets

  11,037   17,256 

Total assets

 $1,053,531  $1,273,634 

LIABILITIES AND SHAREHOLDERS' EQUITY

        

Current liabilities:

        

Current maturities of long-term debt

 $6,404  $6,404 

Borrowings under accounts receivable facility

  10,009   44,980 

Accounts payable

  21,159   14,512 

Accrued compensation

  28,325   31,774 

Accrued expenses and other current liabilities

  22,370   29,939 

Lease liabilities

  2,088   3,049 

Deferred revenue

  203,646   282,570 

Total current liabilities

  294,001   413,228 
         

Long-term debt

  574,312   577,487 

Deferred tax liabilities

  44,099   52,148 

Long-term lease liabilities

  6,839   9,251 

Deferred revenue - non-current

  1,823   2,402 

Other long-term liabilities

  11,977   13,531 

Total long-term liabilities

  639,050   654,819 

Commitments and contingencies

          

Shareholders’ equity:

        

Shareholders’ common stock - Class A common shares, $0.0001 par value: 18,750,000 shares authorized and 8,576,683 shares issued and 8,276,906 shares outstanding at October 31, 2024, and 8,380,436 shares issued and 8,080,659 shares outstanding at January 31, 2024

  1   1 

Additional paid-in capital

  1,559,547   1,551,005 

Accumulated equity (deficit)

  (1,412,279)  (1,321,478)

Treasury stock, at cost - 299,777 shares as of October 31, 2024 and January 31, 2024

  (10,891)  (10,891)

Accumulated other comprehensive income (loss)

  (15,898)  (13,050)

Total shareholders’ equity

  120,480   205,587 

Total liabilities and shareholders’ equity

 $1,053,531  $1,273,634 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2

 

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

   

Three Months Ended October 31,

   

Nine Months Ended October 31,

 
   

2024

   

2023

   

2024

   

2023

 

Revenues:

                               

Total revenues

  $ 137,225     $ 138,956     $ 397,241     $ 415,697  

Operating expenses:

                               

Costs of revenues

    34,312       36,407       101,254       114,698  

Content and software development

    14,937       16,126       45,436       51,024  

Selling and marketing

    39,615       43,983       122,591       130,321  

General and administrative

    21,686       22,308       66,390       72,689  

Amortization of intangible assets

    31,826       38,620       95,197       116,086  

Acquisition and integration related costs

    931       510       3,349       2,838  

Restructuring

    3,095       873       15,361       8,592  

Total operating expenses

    146,402       158,827       449,578       496,248  

Operating income (loss)

    (9,177 )     (19,871 )     (52,337 )     (80,551 )

Other income (expense), net

    (538 )     19       1,261       (1,290 )

Fair value adjustment of warrants

          1,105             4,750  

Fair value adjustment of interest rate swaps

    (822 )     3,981       418       11,186  

Interest income

    924       1,060       2,897       2,576  

Interest expense

    (15,845 )     (16,492 )     (48,538 )     (48,683 )

Income (loss) before provision for (benefit from) income taxes

    (25,458 )     (30,198 )     (96,299 )     (112,012 )

Provision for (benefit from) income taxes

    (1,859 )     (2,462 )     (5,498 )     (8,735 )

Income (loss) from continuing operations

    (23,599 )     (27,736 )     (90,801 )     (103,277 )

Gain (loss) on sale of business

                      (682 )

Net income (loss)

  $ (23,599 )   $ (27,736 )   $ (90,801 )   $ (103,959 )
                                 

Net income (loss) per share:

                               

Basic and diluted - continuing operations

  $ (2.86 )   $ (3.45 )   $ (11.11 )   $ (12.84 )

Basic and diluted - discontinued operations

                      (0.08 )

Basic and diluted

  $ (2.86 )   $ (3.45 )   $ (11.11 )   $ (12.92 )

Weighted average common shares outstanding:

                               

Basic and diluted

    8,239,564       8,047,497       8,170,344       8,043,712  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

 

   

Three Months Ended October 31,

   

Nine Months Ended October 31,

 
   

2024

   

2023

   

2024

   

2023

 

Comprehensive income (loss):

                               

Net income (loss)

  $ (23,599 )   $ (27,736 )   $ (90,801 )   $ (103,959 )

Foreign currency adjustment, net of tax

    (25 )     (2,650 )     (2,848 )     (1,279 )

Total comprehensive income (loss)

  $ (23,624 )   $ (30,386 )   $ (93,649 )   $ (105,238 )

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)

(in thousands, except number of shares)

 

                                                   

Accumulated

   

Total

 
   

Number of Shares

           

Additional

   

Accumulated

           

Other

   

Shareholders'

 
          In     Common     Paid-in     Equity     Treasury     Comprehensive     Equity  
   

Issued

   

Treasury

   

Stock

   

Capital

   

(Deficit)

   

Stock

   

Income (Loss)

   

(Deficit)

 

Balance January 31, 2023

    8,264,308       (81,514 )   $ 1     $ 1,521,587     $ (972,193 )   $ (2,845 )   $ (14,794 )   $ 531,756  

Stock-based compensation

                      9,128                         9,128  

Common stock issued

    22,538                                            

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (8,131 )                 (289 )                       (289 )

Repurchase of common stock

          (218,263 )                       (8,046 )           (8,046 )

Translation adjustment

                                        875       875  

Net income (loss)

                            (44,224 )                 (44,224 )

Balance April 30, 2023

    8,278,715       (299,777 )     1       1,530,426       (1,016,417 )     (10,891 )     (13,919 )     489,200  

Stock-based compensation

                      5,827                         5,827  

Common stock issued

    67,693                                            

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (23,241 )                 (592 )                       (592 )

Translation adjustment

                                        496       496  

Net income (loss)

                            (31,999 )                 (31,999 )

Balance July 31, 2023

    8,323,167       (299,777 )     1       1,535,661       (1,048,416 )     (10,891 )     (13,423 )     462,932  

Stock-based compensation

                      7,962                         7,962  

Common stock issued

    60,878                                            

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (21,271 )                 (560 )                       (560 )

Repurchase of common stock

                                               

Translation adjustment

                                        (2,650 )     (2,650 )

Net income (loss)

                            (27,736 )                 (27,736 )

Balance October 31, 2023

    8,362,774       (299,777 )   $ 1     $ 1,543,063     $ (1,076,152 )   $ (10,891 )   $ (16,073 )   $ 439,948  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT) - continued

(in thousands, except number of shares)

 

                                                   

Accumulated

   

Total

 
   

Number of Shares

           

Additional

   

Accumulated

           

Other

   

Shareholders'

 
          In     Common     Paid-in     Equity     Treasury     Comprehensive     Equity  
   

Issued

   

Treasury

   

Stock

   

Capital

   

(Deficit)

   

Stock

   

Income (Loss)

   

(Deficit)

 

Balance January 31, 2024

    8,380,436       (299,777 )   $ 1     $ 1,551,005     $ (1,321,478 )   $ (10,891 )   $ (13,050 )   $ 205,587  

Stock-based compensation

                      7,153                         7,153  

Common stock issued

    20,596                                            

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (6,934 )                 (82 )                       (82 )

Translation adjustment

                                        (2,887 )     (2,887 )

Net income (loss)

                            (27,636 )                 (27,636 )

Balance April 30, 2024

    8,394,098       (299,777 )     1       1,558,076       (1,349,114 )     (10,891 )     (15,937 )     182,135  

Stock-based compensation

                      (814 )                       (814 )

Common stock issued

    158,368                                            

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (47,637 )                 (397 )                       (397 )

Translation adjustment

                                        64       64  

Net income (loss)

                            (39,566 )                 (39,566 )

Balance July 31, 2024

    8,504,829       (299,777 )     1       1,556,865       (1,388,680 )     (10,891 )     (15,873 )     141,422  

Stock-based compensation

                      3,255                         3,255  

Common stock issued

    112,496                                            

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (40,642 )                 (573 )                       (573 )

Repurchase of common stock

                                                 

Translation adjustment

                                        (25 )     (25 )

Net income (loss)

                            (23,599 )                 (23,599 )

Balance October 31, 2024

    8,576,683       (299,777 )   $ 1     $ 1,559,547     $ (1,412,279 )   $ (10,891 )   $ (15,898 )   $ 120,480  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6

 

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

   

Nine Months Ended October 31,

 
   

2024

   

2023

 

Cash flows from operating activities:

               

Net income (loss)

  $ (90,801 )   $ (103,959 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

               

Amortization of intangible assets

    95,197       116,086  

Stock-based compensation

    9,985       22,917  

Depreciation

    2,404       2,629  

Non-cash interest expense

    1,628       1,546  

Non-cash property, equipment, software and lease impairment charges

    2,495       4,265  

Provision for credit loss expense (recovery)

    (4 )     205  

(Gain) loss on sale of business

          682  

Provision for (benefit from) deferred income taxes – non-cash

    (8,080 )     (10,270 )

Fair value adjustment of warrants

          (4,750 )

Fair value adjustment of interest rate swaps

    (418 )     (11,186 )

Change in assets and liabilities:

               

Accounts receivable

    82,877       70,645  

Prepaid expenses and other assets, including long-term

    4,258       2,726  

Right-of-use assets

    1,632       2,184  

Accounts payable

    6,693       (3,283 )

Accrued expenses and other liabilities, including long-term

    (12,819 )     (20,820 )

Lease liabilities

    (3,387 )     (3,048 )

Deferred revenues

    (79,446 )     (75,250 )

Net cash provided by (used in) operating activities

    12,214       (8,681 )

Cash flows from investing activities:

               

Purchase of property and equipment

    (820 )     (3,753 )

Proceeds from sale of property and equipment

    10        

Internally developed software - capitalized costs

    (13,018 )     (8,055 )

Sale of SumTotal, net of cash transferred

          (5,137 )

Net cash provided by (used in) investing activities

    (13,828 )     (16,945 )

Cash flows from financing activities:

               

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

    (1,052 )     (1,441 )

Payments to acquire treasury stock

          (8,046 )

Proceeds from (payments on) accounts receivable facility

    (34,971 )     793  

Principal payments on term loans

    (4,803 )     (4,803 )

Net cash provided by (used in) financing activities

    (40,826 )     (13,497 )

Effect of exchange rate changes on cash and cash equivalents

    (2,281 )     (1,674 )

Net increase (decrease) in cash, cash equivalents and restricted cash

    (44,721 )     (40,797 )

Cash, cash equivalents and restricted cash, beginning of period

    146,523       177,556  

Cash, cash equivalents and restricted cash, end of period

  $ 101,802     $ 136,759  

Supplemental disclosure of cash flow information:

               

Cash and cash equivalents

  $ 97,921     $ 129,806  

Restricted cash

    3,881       6,953  

Cash, cash equivalents and restricted cash, end of period

  $ 101,802     $ 136,759  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

7

 

 

SKILLSOFT CORP.

UNAUDITED SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

(in thousands)

 

   

Nine Months Ended October 31,

 
   

2024

   

2023

 

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

               

Cash paid for interest

  $ 48,362     $ 50,583  

Cash paid (received) for income taxes, net of refunds

    2,399       6,262  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

8

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

(1)    Description of Business and Basis of Presentation

 

Description of Business

 

Skillsoft Corp. (together with its consolidated subsidiaries, “Skillsoft”, “we”, “us”, “our” and the “Company”) has been listed on the New York Stock Exchange under the ticker symbol “SKIL” since June 14, 2021. Through a portfolio of high-quality content, an AI-enabled platform that is personalized and connected to customer needs, and a broad ecosystem of partners, Skillsoft drives continuous growth and performance for employees and their organizations by overcoming critical skills gaps, unlocking human potential, and developing the workforce.

 

With more than 150,000 expert-led skills-building courses in modalities ranging from video and audio to instructor-led training, coaching, practice labs, and a generative Artificial Intelligence (“GenAI”)-powered conversation simulator, Skillsoft offers transformative learning experiences for leaders to frontline workers, readers to hands-on learners.

 

References in the accompanying footnotes to the Company’s fiscal year refer to the fiscal year ended January 31 of that year (e.g., fiscal 2024 is the fiscal year ended January 31, 2024).

 

SumTotal

 

Refer to Note 4 “Discontinued Operations” in our fiscal 2024 Form 10-K for information regarding the SumTotal business and its 2022 sale.

 

Principles of Consolidation and Basis of Financial Statement Preparation

 

The accompanying condensed consolidated financial statements include the accounts of Skillsoft Corp. and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

 

These financial statements are unaudited. However, in the opinion of management, the condensed consolidated financial statements reflect all normal and recurring adjustments necessary for their fair statement. Interim results are not necessarily indicative of results expected for any other interim period or a full year. We prepared the accompanying unaudited condensed consolidated financial statements in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, include all information and footnotes necessary for a complete presentation of operations, comprehensive income (loss), financial position, changes in shareholders’ equity (deficit) and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The financial statements contained in these interim financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2024 Form 10-K. 

 

Certain amounts reported in prior years have been reclassified to conform to the presentation in the current year. These reclassifications had no effect on total assets, total liabilities, total shareholders’ equity (deficit), or net income (loss) for the prior years.

 

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and has and may in the future take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will cease to qualify as an emerging growth company as of January 31, 2025. As a result, beginning with our Form 10-K for fiscal 2025, we will be subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act and our independent registered public accounting firm will formally attest to the effectiveness of our internal controls over financial reporting.

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from our estimates.

 

 

(2)    Summary of Significant Accounting Policies

 

The Company’s significant accounting policies are discussed in Note 2—Summary of Significant Accounting Policies included in the 2024 Form 10-K and should be read in connection with the reading of these interim unaudited financial statements.

 

Recently Issued Accounting Guidance

 

In December 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which will require disclosure of significant segment expenses and other segment items. The Company will adopt this guidance effective in our Form 10-K for the fiscal year ending  January 31, 2025. We are currently evaluating the impact of this amended disclosure guidance.

 

In December 2023, the FASB also issued ASU 2023-09, Improvements to Income Tax Disclosures, which will require additional information in the rate reconciliation table and additional disclosures about income taxes paid. The Company will adopt this guidance effective February 1, 2025. We are currently evaluating the impact of this amended disclosure guidance.

 

In November 2024, the FASB also issued ASU 2024-03, Disaggregation of Income Statement Expenses, which will require the disclosure of additional information about specific expense categories in the notes to the financial statements. The Company will adopt this guidance effective January 31, 2027. We are currently evaluating the impact of this amended disclosure guidance. 

 

9

 
 

(3)    Intangible Assets

 

Intangible assets consisted of the following (dollars in thousands and weighted average remaining life in years):

 

  

October 31, 2024

  

January 31, 2024

 
  

Weighted Average Remaining Life

  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted Average Remaining Life

  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

 

Developed software/courseware

  2.0  $363,319  $222,305  $141,014   2.7  $355,247  $172,578  $182,669 

Customer contracts/relationships

  8.9   268,658   87,686   180,972   9.5   269,300   59,091   210,209 

Trademarks and trade names

  11.7   52,732   9,206   43,526   12.4   52,863   6,184   46,679 

Publishing rights

  1.6   41,100   27,834   13,266   2.4   41,100   21,668   19,432 

Backlog

  1.2   49,700   48,331   1,369   1.9   49,700   45,941   3,759 

Skillsoft trademark

  Indefinite   76,545      76,545   Indefinite   76,545      76,545 

Total intangible assets

     $852,054  $395,362  $456,692      $844,755  $305,462  $539,293 

 

Amortization expense related to the existing finite-lived intangible assets is expected to be as follows (in thousands) for the fiscal years ending January 31:

 

  

Amortization Expense

 

2025 (three months remaining)

 $31,952 

2026

  124,611 

2027

  79,084 

2028

  38,378 

2029

  28,308 

Thereafter

  77,814 

Total future amortization

 $380,147 

 

Amortization expense related to intangible assets in the aggregate was $31.8 million, $95.2 million, $38.6 million and $116.1 million for the three and nine months ended October 31, 2024 and the three and nine months ended October 31, 2023, respectively.

 

A roll forward of goodwill is as follows (in thousands):

 

  

Talent Development Solutions

  

Global Knowledge

  

Consolidated

 

Goodwill January 31, 2024

 $287,650  $29,421  $317,071 

Increase (decrease)

         

Goodwill October 31, 2024

 $287,650  $29,421  $317,071 
             

Accumulated impairment, October 31, 2024

 $698,405  $84,694  $783,099 
 

(4)    Taxes

 

For the three and nine months ended October 31, 2024, for continuing operations, the Company recorded a tax benefit of $1.9 million and $5.5 million, respectively, on a pretax loss of $25.5 million and $96.3 million, respectively. For the three and nine months ended October 31, 2023, for continuing operations, the Company recorded a tax benefit of $2.5 million and $8.7 million, respectively, on a pretax loss of $30.2 million and $112.0 million, respectively. For each period, the tax benefit reflects the effect of non-deductible items, current period changes in the Company’s valuation allowance on its deferred tax assets and the impact of foreign tax rate differential.

 

(5)    Restructuring

 

During the three and nine months ended October 31, 2024 and October 31, 2023, the Company’s management approved and initiated plans to reduce its cost structure and better align operating expenses with existing economic conditions and the Company’s operating model. These strategic initiatives included the comprehensive resource reallocation plan the Company announced on July 11, 2024. 

 

The following is a summary of restructuring charges by segment for the three and nine months ended October 31, 2024 and October 31, 2023 (in thousands):

 

  

Three Months Ended October 31,

  

Nine Months Ended October 31,

 
  

2024

  

2023

  

2024

  

2023

 

Talent Development Solutions

 $1,645  $123  $11,659  $5,563 

Global Knowledge

  1,450   750   3,702   3,029 

Total

 $3,095  $873  $15,361  $8,592 

 

These restructuring charges are presented separately in the accompanying condensed consolidated statements of operations. The restructuring charges for the nine months ended October 31, 2024 and October 31, 2023 are substantially all related to severance costs of terminated employees and lease termination and lease impairment chargesAs of  October 31, 2024 and January 31, 2024, the Company had restructuring charge liabilities of $3.7 million and $3.3 million, respectively. Management anticipates further restructuring charges during the remainder of fiscal 2025 as the identified resource reallocation measures initiated in mid- July 2024 are fully implemented.

 

10

 
 

(6)    Commitments and Contingencies

 

Litigation

 

On November 21, 2023, the Company was named as a nominal defendant in a shareholder derivative action filed in the Delaware Court of Chancery captioned Norcross v. Prosus N.V., et al. The plaintiff, a Company shareholder, alleges that the Company's directors and controlling shareholders breached their fiduciary duties to plaintiffs by causing the Company to acquire Codecademy at an above-market price. Plaintiff seeks monetary damages as compensation for the harm caused by the alleged breaches. We currently cannot estimate any possible loss that may result from this action.

 

In addition, the Company is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business including those relating to commercial and contractual disputes, employment matters, intellectual property, and other business matters. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as determined in accordance with GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our condensed consolidated financial statements. Currently, there are no material amounts accrued. While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect the Company’s financial position, results of operations or cash flows.

 

Guarantees

 

The Company’s software license arrangements and hosting services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company’s product documentation under normal use and circumstances. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property right. The Company has entered into service level agreements with some of its hosted application customers warranting certain levels of uptime reliability and such agreements permit those customers to receive credits against monthly hosting fees or terminate their agreements in the event that the Company fails to meet those levels for an agreed upon period of time.

 

To date, the Company has not incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements. 

 

 

(7)    Long-Term Debt

 

Debt consisted of the following (in thousands):

 

  

October 31, 2024

  

January 31, 2024

 

Term Loan - current portion

 $6,404  $6,404 

Current maturities of long-term debt

 $6,404  $6,404 
         

Term Loan - long-term portion

 $583,394  $588,197 

Original issue discount - long-term portion

  (5,886)  (6,942)

Deferred financing costs - long-term portion

  (3,196)  (3,768)

Long-term debt

 $574,312  $577,487 

 

The Company’s debt outstanding as of October 31, 2024 matures as shown below (in thousands):

 

Future principal payments due for fiscal years ending January 31:

    

2025 (three months remaining)

 $1,601 

2026

  4,803 

2027

  6,404 

2028

  8,005 

2029

  568,985 

Thereafter

   

Total payments

  589,798 

Current portion

  (6,404)

Unamortized original issue discount and issuance costs

  (9,082)

Long-term portion

 $574,312 

 

Refer to Note 14 “Long-Term Debt” in our 2024 Form 10-K for information regarding the Company's term loan and accounts receivable facility (prior to the amendment discussed below).

 

We also have access to up to $75.0 million of borrowings under our accounts receivable facility. In November 2024, the accounts receivable facility was amended to, among other things, extend the maturity to the earlier of (i) November 26, 2029 or (ii) 90 days prior to the maturity of any corporate debt, reduce the fixed component of the interest rate to 2.61% per annum from 3.11% per annum, increase the highest advance rate from 85% to 90%, reduce the minimum outstanding balance requirement from $10 million to $1 million, and allow for ad hoc borrowings and repayments. Based on seasonality of billings and the characteristics of accounts receivable, some of which are not eligible for advances, we are not always able to access the full $75.0 million available capacity. The reserve balance associated with the accounts receivable facility was $1.5 million on  October 31, 2024 and is classified as restricted cash on the condensed consolidated balance sheet. The interest rate on borrowings outstanding under the accounts receivable facility was 7.82% on  October 31, 2024. As of October 31, 2024, $10.0 million was drawn under the accounts receivable facility and is classified as a current liability on the balance sheet. 

 

11

 
 

(8)    Shareholders Equity

 

Common Stock

 

As of October 31, 2024, the Company’s authorized share capital consisted of 18,750,000 shares of Class A common stock and 10,000,000 shares of preferred stock, with a par value $0.0001 each, and 8,576,683 shares of Class A common stock were issued, and 8,276,906 shares were outstanding. As of October 31, 2024, the Company had no shares of preferred stock or Class C common stock outstanding. Except as required by law, holders of shares of Class C common stock are not entitled to vote any such shares.

 

Subject to applicable law, the Company may declare dividends to be paid ratably to holders of Class A common stock out of the Company’s assets that are legally available to be distributed as dividends in the discretion of the Company’s board of directors. Holders of Class C common stock are generally not entitled to dividends.

 

Warrants

 

Refer to Note 16 “Shareholders’ Equity” in our 2024 Form 10-K, for information related to the equity and liability-classified warrants.

 

Share Repurchase Authorization

 

On July 10, 2024, the Company’s board of directors authorized Skillsoft to repurchase up to $10 million of its Class A common stock, with an objective to manage potential dilution from future vesting of employee equity grants. The share repurchase authorization will terminate on July 11, 2028 and does not obligate the Company to purchase any minimum number of shares of Common Stock, and the authorization may be suspended, modified, or discontinued at any time without prior notice. As of October 31, 2024, no Class A common stock had been repurchased under the share repurchase authorization.

 

Accumulated Other Comprehensive Income (Loss)

 

Accumulated Other Comprehensive Income (Loss) associated with foreign currency translation adjustments consisted of the following (in thousands):

 

  

Three Months Ended October 31,

 
  

2024

  

2023

 
  

Before Tax

  

Income Tax

  

Net

  

Before Tax

  

Income Tax

  

Net

 

Balance as of beginning-of-period

 $(15,873) $  $(15,873) $(13,423) $  $(13,423)

Translation adjustment

  (25)     (25)  (2,650)     (2,650)

Balance as of end-of-period

 $(15,898) $  $(15,898) $(16,073) $  $(16,073)

   

  

Nine Months Ended October 31,

 
  

2024

  

2023

 
  

Before Tax

  

Income Tax

  

Net

  

Before Tax

  

Income Tax

  

Net

 

Balance as of beginning-of-period

 $(13,050) $  $(13,050) $(14,794) $  $(14,794)

Translation adjustment

  (2,848)     (2,848)  (1,279)     (1,279)

Balance as of end-of-period

 $(15,898) $  $(15,898) $(16,073) $  $(16,073)

  

 

 

(9)    Stock-Based Compensation

 

Equity Incentive Plans

 

In June 2021, Skillsoft adopted the 2020 Omnibus Incentive Plan (“2020 Plan”). The 2020 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards, and cash-based incentive awards to employees, directors, and consultants of the Company. Under the 2020 Plan, 655,295 shares were initially made available for issuance. The 2020 Plan includes an annual increase on January 1 each year beginning on January 1, 2022, in an amount equal to 5.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. The Compensation Committee may act prior to January 1 of a given year to provide that there will be no January 1 increase for such year or that the increase for such year will be a lesser number of shares of common stock than provided for in the 2020 Plan. As of October 31, 2024, a total of 948,801 shares of common stock were available for issuance under the 2020 Plan.

 

In May 2024, Skillsoft adopted the Skillsoft Corp. 2024 Employment Inducement Incentive Award Plan (the “Inducement Plan”). The Inducement Plan provides for the inducement grants of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards, and cash-based incentive awards to new hires, or individuals being rehired following a bona fide period of non-employment with the Company, in compliance with Section 303A.08 of the New York Stock Exchange Listed Company Manual. As of October 31, 2024, a total of 110,000 shares of common stock were available for issuance under the Inducement Plan.

 

Stock Options

 

Under the 2020 Plan, all employees are eligible to receive incentive share options, and all employees, directors and consultants are eligible to receive non-statutory share options. The options generally vest over four years and have a term of ten years. Vested options under the plan generally expire not later than 90 days following termination of employment or service or twelve months following an optionee’s death or disability. The fair value of stock options is determined on the grant date and amortized over the vesting period on a straight-line basis.

 

The following summarizes the stock option activity for the nine months ended October 31, 2024:

 

          

Weighted -

     
      

Weighted -

  

Average

     
      

Average

  

Remaining

  

Aggregate

 
      

Exercise

  

Contractual

  

Intrinsic Value

 
  

Shares

  

Price

  

Term (Years)

  

(in thousands)

 

Outstanding, January 31, 2024

  88,850  $215.00   7.4  $ 

Granted

            

Exercised

            

Forfeited

  (17,649)  215.00       

Expired

  (40,451)  215.00       

Outstanding, October 31, 2024

  30,750   215.00   6.6    
                 

Vested and exercisable, October 31, 2024

  24,986   215.00   6.6    

 

The total unrecognized equity-based compensation costs related to the stock options was $0.3 million based on the $67.23 weighted average grant date fair value of the options, which is expected to be recognized over a weighted-average period of 0.6 years.

 

12

 

Time-Based Restricted Stock Units

 

Restricted stock units (“RSUs”) represent a right to receive one share of the Company’s common stock that is both non-transferable and forfeitable unless and until certain conditions are satisfied. Other than RSUs granted to our non-employee directors, which vest upon the earlier of the anniversary of the grant date and the Company’s next annual meeting of stockholders, RSUs generally vest ratably over a three or four-year period, subject to continued employment through each anniversary. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a straight-line basis.

 

The following summarizes the time-based RSU activity for the nine months ended October 31, 2024:

 

      

Weighted -

  

Aggregate

 
      

Average Grant

  

Intrinsic Value

 
  

Shares

  

Date Fair Value

  

(in thousands)

 

Unvested balance, January 31, 2024

  735,998  $64.77  $10,319 

Granted

  1,094,736   15.07    

Vested

  (291,460)  66.13    

Forfeited

  (158,901)  63.43    

Unvested balance, October 31, 2024

  1,380,373   25.22   21,078 

 

The total unrecognized stock-based compensation costs related to time-based RSUs was $29.2 million, which is expected to be recognized over a weighted-average period of 2.8 years.

 

Market-Based Restricted Stock Units

 

Market-based restricted stock units (“MBRSUs”) vest over a three or four-year performance period, subject to continued employment through each anniversary and achievement of market conditions, specifically the Company’s stock price and an objective relative total shareholder return. The fair value of MBRSUs that include vesting based on market conditions are estimated using the Monte Carlo valuation method. Compensation cost for these awards is recognized based on the grant date fair value which is recognized over the vesting period using the accelerated attribution method.

 

The following summarizes the MBRSUs activity for the nine months ended October 31, 2024:

 

      

Weighted -

  

Aggregate

 
      

Average Grant

  

Intrinsic Value

 
  

Shares

  

Date Fair Value

  

(in thousands)

 

Unvested balance, January 31, 2024

  182,742  $72.60  $2,562 

Granted

  10,000   12.94    

Vested

         

Forfeited

  (84,919)  78.79    

Unvested balance, October 31, 2024

  107,823   62.19   1,646 

 

The total unrecognized stock-based compensation costs related to MBRSUs was $1.0 million, which is expected to be recognized over a weighted-average period of 1.0 years.

 

Performance-Based Restricted Stock Units

 

Performance-based restricted stock units (“PBRSUs”) vest over a two-year period, subject to continued employment through each anniversary and achievement of specified corporate goals during a less than one-year performance-period. The expense and shares for our PBRSU awards depends on achievement of specified results and the ultimate expense and shares can range from 0% to 200% of target.

 

The following summarizes the PBRSUs activity for the nine months ended October 31, 2024:

 

      

Weighted -

  

Aggregate

 
      

Average Grant

  

Intrinsic Value

 
  

Shares

  

Date Fair Value

  

(in thousands)

 

Unvested balance, January 31, 2024

    $  $ 

Granted (1)

  10,000   11.25    

Vested

         

Forfeited

         

Unvested balance, October 31, 2024

  10,000   11.25   153 

 

(1) Reflects the number of shares that would vest based on achieving the “Target” level of performance.

 

The total unrecognized stock-based compensation costs related to PBRSUs was $0.1 million, which is expected to be recognized over a weighted-average period of 0.5 years.

 

Liability-Classified Market-Based Awards 

 

In the third quarter of fiscal 2025, the Company granted market-based awards, intended to be settled in cash upon vesting. These awards are classified as liabilities and remeasured at fair value using a Monte Carlo simulation, weighted for the service period completed, at each reporting date. The market-based awards potentially vest over two-year to four-year service periods, subject to continued employment and from a market perspective the appreciation of the Company’s share price.

 

The following summarizes the liability-classified performance award balances as of  October 31, 2024 (in thousands):

 

Estimated liability

 $391 

Estimated unrecognized compensation cost (1)

  3,475 

 

(1) Expected to be recognized over a weighted-average period of 0.7 years.

 

13

 

Stock-Based Compensation Expense

 

The following summarizes the classification of stock-based compensation expense in the condensed consolidated statements of operations (in thousands):

 

  

Three Months Ended October 31,

  

Nine Months Ended October 31,

 
  

2024

  

2023

  

2024

  

2023

 

Cost of revenues

 $149  $128  $447  $463 

Content and software development

  1,268   1,569   3,472   5,325 

Selling and marketing

  898   1,421   2,951   2,436 

General and administrative (1)

  1,331   4,845   3,115   14,693 

Total

 $3,646  $7,963  $9,985  $22,917 

 

(1) Stock-based compensation expense during the nine months ended October 31, 2024 was reduced by $6.0 million due to forfeitures of share-based payments, including unvested equity-based awards associated with the former Chief Executive Officer whose employment with the Company ended on May 9, 2024.

 

 

(10)    Revenue