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Skillsoft (SKIL)

Filed: 14 Dec 21, 4:13pm

Exhibit 99.1

Skillsoft Reports Strong Financial Results for the Third Quarter of Fiscal 2022

Raises Full Year Outlook Following Stronger than Expected Results

Extends Leadership Position with New Customer Wins and Significant Product Momentum with Percipio Bookings up 60%

BOSTON – December 14, 2021 – Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a global leader in corporate digital learning, today announced its financial results for the third quarter of fiscal 2022 ended October 31, 2021. The Company delivered bookings growth in each of its business segments and grew revenue. Skillsoft raised its full year outlook for bookings and adjusted revenue and updated its outlook for adjusted EBITDA to the midpoint of the previous range.

“We delivered another strong quarter, driving bookings and adjusted revenue growth above expectations and executing on our strategic priorities,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “We grew each of our segments, won new blue-chip customers and advanced our migration to Percipio. We also signed new strategic alliances and launched new content and platform features, further increasing the value we deliver to our customers.”

Mr. Tarr added, “In our first two quarters as a public company, we recapitalized the business, assembled a world-class management team and board of directors, completed two acquisitions, and made foundational investments in content, platform and go-to-market. We continue to advance our vision of being the most highly valued provider of learning solutions and preparing the workforce of today with the skills for tomorrow.”

Updated Full Year Fiscal 2022 Outlook1

Updated Outlook

Previous Outlook

Bookings

$700 million to $720 million

$690 million to $710 million

Adjusted Revenue

$685 million to $700 million

$670 million to $690 million

Adjusted EBITDA

Approximately $165 million

$155 million to $175 million

Skillsoft increased its bookings and adjusted revenue outlook for full year fiscal 2022 primarily to reflect better than expected performance through the first three quarters of the year.

The adjusted EBITDA outlook at the middle of the original outlook range reflects the Company’s growth investments in content, platform, and go-to-market capabilities, contributing to the higher than expected bookings and adjusted revenue growth.

Fiscal 2022 Third Quarter Financial Highlights2

Grew bookings 7%, with Content up 6%, Global Knowledge up 11%, Content and Global Knowledge combined up 8% and SumTotal up 3%;
Delivered GAAP revenue for the reported period of $171 million and GAAP net loss of $43 million;
Grew adjusted revenue3 6% to $179 million with adjusted EBITDA3 of $49 million, in line with the prior year due to growth investment, synergy timing related to the delay in the closing of the Global Knowledge transaction, and higher D&O insurance costs;


1 See “Non-GAAP Financial Measures and Key Performance Metrics.” The Company does not reconcile forward-looking non-GAAP measures.

2 Growth calculated compared to the prior year as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on October 31, 2021.

3 Signifies non-GAAP measure. See “Non-GAAP Financial Measures and Key Performance Metrics” in this release.

Page 1 of 16


Delivered combined Percipio and dual deployment dollar retention rate of 101%; and
Advanced platform migration to Percipio, with 86% of Skillsoft Content annual recurring revenue on Percipio or Percipio dual deployment, up from 81% last quarter and 68% in the prior year period.

Key Operational Metrics and Non-GAAP Financial Measures

Bookings (previously Order Intake)

The following table sets forth unaudited bookings for the three and nine months ended October 31, 2021 and 2020 as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on October 31:

(In thousands)

Three Months
Ended October 31,

Change

Nine Months
Ended October 31,

Change

    

2021

    

2020

    

$

    

%

    

2021

    

2020

    

$

    

%

  

Content and Global Knowledge

Percipio

$

17,742

$

11,063

$

6,679

60

%  

$

50,276

$

31,645

$

18,631

59

%

Dual Deployment and Coaching

53,661

36,348

17,313

48

%  

95,357

75,757

19,600

26

%

Skillport

2,270

21,883

(19,613)

-90

%  

24,318

53,955

(29,637)

-55

%

Total Subscription

$

73,673

$

69,294

$

4,379

6

%  

$

169,951

$

161,357

$

8,594

5

%

Services and One-Time Orders

4,620

4,319

301

7

%  

10,908

9,330

1,578

17

%

Total Content

$

78,293

$

73,613

4,680

6

%  

$

180,859

$

170,687

10,172

6

%

Global Knowledge

61,690

55,419

6,271

11

%  

190,488

161,225

29,262

18

%

Total Content & Global Knowledge

$

139,983

$

129,032

$

10,951

8

%  

$

371,346

$

331,913

$

39,434

12

%

SumTotal

Subscription

$

22,472

$

21,830

$

642

3

%  

$

64,552

$

68,286

($3,734)

-5

%

Services and One-Time Orders

6,423

6,262

161

3

%  

17,224

15,876

1,348

8

%

Total SumTotal

$

28,895

$

28,092

$

803

3

%  

$

81,776

$

84,162

($2,386)

-3

%

Total

$

168,878

$

157,124

$

11,754

7

%  

$

453,122

$

416,075

$

37,048

9

%

Dollar Retention Rate

The following table sets forth dollar retention rates (“DRR”) for the last twelve month (“LTM”) period ended October 31, 2021 and for the three month periods ended October 31, 2021 and 2020 as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on October 31:

October 31

    

LTM

    

2021

    

2020

 

Percipio

100

%  

107

%  

100

%

Dual Deployment

103

%  

100

%  

105

%

Percipio + Dual Deployment

102

%  

101

%  

104

%

Skillport

72

%  

75

%  

83

%

Total Content Business

95

%  

98

%  

96

%

SumTotal Business

96

%  

101

%  

99

%

Page 2 of 16


Capital Structure

The following table sets forth Skillsoft’s cash and cash equivalents and long-term debt as of October 31, 2021:

(In thousands)

    

October 31, 2021

 

Assets

Cash and Equivalents

$

80,671

Liabilities

Long-Term Debt

$

467,796

(including current portion)

Weighted average shares outstanding during the period from July 31, 2021 to October 31, 2021 were 133,116,361.

Webcast and Conference Call Information

Skillsoft will host a conference call and webcast today at 5:00 p.m. Eastern Time to discuss its financial results. To access the call, dial (877) 413-9278 from the United States and Canada or (215) 268-9914 from international locations. The live event can be accessed from the Investor Relations section of Skillsoft’s website at investor.skillsoft.com. A replay will be available for six months.

About Skillsoft

Skillsoft (NYSE: SKIL) is a global leader in corporate digital learning, focused on transforming today’s workforce for tomorrow’s economy. The Company provides enterprise learning solutions designed to prepare organizations for the future of work, overcome critical skill gaps, drive demonstrable behavior-change, and unlock the potential in their people. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, including one of the broadest and deepest libraries of leadership & business skills, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered through Percipio, its award-winning, AI-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective. Learn more at www.skillsoft.com.

NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE METRICS

We track several non-GAAP financial measures and key performance metrics that we believe are key financial measures of our success. Non-GAAP measures and key performance metrics are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures and key performance metrics when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company’s capital structure on its performance. However, non-GAAP measures and key performance metrics have limitations as analytical tools. Because not all companies use identical calculations, our presentation of non-GAAP financial measures and key performance metrics may not be comparable to other similarly titled measures of other companies. They are not presentations made in accordance with U.S. GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP.

Page 3 of 16


We do not reconcile our forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible; and because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is available to us without unreasonable efforts. For the same reasons, we are unable to address the probable significance of the unavailable information. We provide non-GAAP financial measures that we believe will be achieved, however we cannot accurately predict all of the components of the adjusted calculations and the U.S. GAAP measures may be materially different than the non-GAAP measures.

Forward Looking Statements

This document includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook (including bookings, adjusted revenue and adjusted EBITDA), our product development and planning, our pipeline, future capital expenditures, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services and competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, our ability to successfully implement our plans, strategies, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as “may,” “will,” “would,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “projects,” “forecasts,” “seeks,” “outlook,” “target,” goals,” “probably,” or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of Skillsoft’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.

There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including:

our ability to realize the benefits expected from the business combination between Skillsoft, Churchill Capital Corp. II and Global Knowledge;
the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;
the impact of the ongoing COVID-19 pandemic (including any variant) on our business, operating results and financial condition;
fluctuations in our future operating results;
our ability to successfully identify, consummate and achieve strategic objectives in connection with our acquisition opportunities and realize the benefits expected from the acquisition;
the demand for, and acceptance of, our products and for cloud-based technology learning solutions in general;
our ability to compete successfully in competitive markets and changes in the competitive environment in our industry and the markets in which we operate;
our ability to market existing products and develop new products;
a failure of our information technology infrastructure or any significant breach of security, including in relation to the migration of our key platforms from our systems to cloud storage;
future regulatory, judicial and legislative changes in our industry;
our ability to comply with laws and regulations applicable to our business;
the impact of natural disasters, public health crises, political crises, or other catastrophic events;
our ability to attract and retain key employees and qualified technical and sales personnel;
fluctuations in foreign currency exchange rates;
our ability to protect or obtain intellectual property rights;

Page 4 of 16


our ability to raise additional capital;
the impact of our indebtedness on our financial position and operating flexibility;
our ability to meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;
our ability to successfully defend ourselves in legal proceedings; and
our ability to continue to meet applicable listing standards.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see the risk factors included in the Company’s S-1 amendment filed on July 29, 2021 and subsequent filings with the SEC.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. Additionally, statements as to market share, industry data and our market position are based on the most currently available data available to us and our estimates regarding market position or other industry data included in this document or otherwise discussed by us involve risks and uncertainties and are subject to change based on various factors, including as set forth above.

Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless required by applicable law. With regard to these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.

Investors

James Gruskin

james.gruskin@skillsoft.com

Media

Caitlin Leddy

caitlin.leddy@skillsoft.com

Page 5 of 16


SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

Successor

Predecessor (SLH)

    

October 31, 2021

  

  

January 31, 2021

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

80,671

$

71,479

Restricted cash

 

2,680

 

2,964

Accounts receivable, less reserves of approximately $2,173 and $294 as of October 31, 2021 and January 31, 2021 respectively

 

136,890

 

179,784

Prepaid expenses and other current assets

 

42,066

 

30,326

Total current assets

 

262,307

 

284,553

Property and equipment, net

 

17,253

 

13,780

Goodwill

 

872,291

 

495,004

Intangible assets, net

 

904,797

 

728,633

Right of use assets

 

21,928

 

15,131

Deferred tax asset

 

Other assets

 

10,083

 

8,636

Total assets

$

2,088,659

$

1,545,737

LIABILITIES AND SHAREHOLDER’S EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Current maturities of long-term debt

$

4,800

$

5,200

Borrowings under accounts receivable facility

 

11,080

 

17,022

Accounts payable

 

31,472

 

7,425

Accrued compensation

 

38,681

 

36,375

Accrued expenses and other current liabilities

 

55,772

 

23,125

Lease liabilities

 

7,687

 

4,740

Deferred revenue

 

246,188

 

257,549

Total current liabilities

 

395,680

 

351,436

Long-term debt

 

462,996

 

510,236

Warrant liabilities

 

65,363

 

900

Deferred tax liabilities

 

91,497

 

81,008

Long term lease liabilities

 

15,209

 

13,155

Deferred revenue - non-current

 

1,883

 

3,035

Other long-term liabilities

 

9,699

 

5,998

Total long-term liabilities

 

646,647

 

614,332

Commitments and contingencies

 

 

Shareholders’ equity:

 

  

 

  

(Predecessor SLH) Shareholders’ common stock- Class A and Class B common shares, $0.01 par value: 1,000,000,000 shares authorized (800,000,000 Class A, 200,000,000 Class B) at January 31, 2021; 4,000,000 shares issued and outstanding (3,840,000 Class A, 160,000 Class B) at January 31, 2021

 

40

(Successor) Shareholders’ common stock- Class A common shares, $0.0001 par value: 375,000,000 shares authorized and 133,164,526 shares issued and outstanding at October 31, 2021

 

11

Additional paid-in capital

 

1,301,319

 

674,333

Accumulated deficit

 

(255,132)

 

(93,722)

Accumulated other comprehensive income (loss)

 

134

 

(682)

Total shareholders’ equity

 

1,046,332

 

579,969

Total liabilities and shareholders’ equity

$

2,088,659

$

1,545,737

Page 6 of 16


SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

    

Quarter-to Date Results

Fiscal 2022

Fiscal 2021

Successor

Predecessor (SLH)

Predecessor (PL)

Three Months

From

From

Ended

August 28, 2020

August 1, 2020

    

October 31, 2021

to October 31, 2020

  

  

to August 27, 2020

Revenues:

 

  

  

 

  

Total revenues

$

170,559

$

36,973

 

$

38,687

Operating expenses:

 

  

  

 

  

Costs of revenues

 

48,891

15,882

 

6,329

Content and software development

 

16,437

10,919

 

5,208

Selling and marketing

 

39,938

18,193

 

8,259

General and administrative

 

28,120

10,075

 

5,440

Amortization of intangible assets

 

37,064

15,890

 

4,230

Recapitalization and acquisition-related costs

3,687

8,225

64

Restructuring

777

80

 

38

Total operating expenses

174,914

79,264

 

29,568

Operating (loss) income

(4,355)

(42,291)

 

9,119

Other (expense) income, net

(611)

717

 

(541)

Fair value adjustment of warrants

(36,838)

2,900

 

Interest income

18

9

 

21

Interest expense

(7,510)

(7,919)

 

(1,287)

Reorganization items, net

 

3,339,837

(Loss) income before (benefit from) provision for income taxes

 

(49,296)

(46,584)

 

3,347,149

(Benefit from) provision for income taxes

 

(6,441)

(7,870)

 

78,254

Net (loss) income

(42,855)

(38,714)

 

3,268,895

(Loss) income per share:

 

  

  

 

  

Ordinary – Basic and Diluted (PL)

 

*

*

32,656.29

Class A and B – Basic and Diluted (SLH)

 

*

(9.68)

 

*

Ordinary – Basic and Diluted (Successor)

(0.32)

*

 

*

Weighted average common share outstanding:

 

  

  

 

  

Ordinary – Basic and Diluted (PL)

 

*

*

 

100.1

Class A and B – Basic and Diluted (SLH)

 

*

4,000

 

*

Ordinary – Basic and Diluted (Successor)

 

133,116

*

 

*


*Not applicable

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

Page 7 of 16


SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

    

Year-to Date Results

Fiscal 2022

Fiscal 2021

Successor

Predecessor (SLH)

Predecessor (SLH)

Predecessor (PL)

From

From

From

From

June 12, 2021 to

February 1, 2021

August 28, 2020

February 1, 2020

    

October 31, 2021

  

  

to June 11, 2021

    

to October 31, 2020

  

  

to August 27, 2020

Revenues:

 

  

  

  

 

  

Total revenues

$

261,572

$

139,636

$

36,973

 

$

273,851

Operating expenses:

 

  

 

  

  

 

  

Costs of revenues

 

76,897

 

35,881

15,882

 

52,160

Content and software development

 

26,316

 

24,084

10,919

 

38,986

Selling and marketing

 

62,171

 

41,940

18,193

 

75,028

General and administrative

 

45,194

 

17,217

10,075

 

37,455

Amortization of intangible assets

 

57,087

 

50,902

15,890

 

34,378

Impairment of intangible assets

 

332,376

Recapitalization and acquisition-related costs

13,682

6,938

8,225

32,099

Restructuring

1,093

(703)

80

 

1,179

Total operating expenses

282,440

176,259

79,264

 

603,661

Operating loss

(20,868)

(36,623)

(42,291)

 

(329,810)

Other (expense) income, net

(1,308)

(493)

717

 

1,268

Fair value adjustment of warrants

(19,723)

900

2,900

 

Interest income

30

64

9

 

105

Interest expense

(17,366)

(16,820)

(7,919)

 

(168,341)

Reorganization items, net

 

3,329,245

(Loss) income before (benefit from) provision for income taxes

 

(59,235)

 

(52,972)

(46,584)

 

2,832,467

(Benefit from) provision for income taxes

 

(4,527)

 

(3,708)

(7,870)

 

68,455

Net (loss) income

(54,708)

(49,264)

(38,714)

 

2,764,012

(Loss) income per share:

 

  

 

  

  

 

  

Ordinary – Basic and Diluted (PL)

 

*

 

*

*

27,612.51

Class A and B – Basic and Diluted (SLH)

 

*

 

(12.32)

(9.68)

 

*

Ordinary – Basic and Diluted (Successor)

(0.41)

*

*

 

*

Weighted average common share outstanding:

 

  

 

  

  

 

  

Ordinary – Basic and Diluted (PL)

 

*

 

*

*

 

100.1

Class A and B – Basic and Diluted (SLH)

 

*

 

4,000

4,000

 

*

Ordinary – Basic and Diluted (Successor)

 

133,096

 

*

*

 

*


* Not applicable

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

Page 8 of 16


SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

    

Fiscal 2022

Fiscal 2021

Successor

Predecessor (SL)

  

Predecessor (SL)

  

  

Predecessor (PL)

June 12, 2021

February 1, 2021

August 28, 2020

February 1, 2020

through

through

through

through

October 31, 2021

  

  

June 11, 2021

    

October 31, 2020

August 27, 2020

Cash flows from operating activities:

Net (loss) income

$

(54,708)

$

(49,264)

$

(38,714)

$

2,764,012

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

 

 

  

 

  

 

  

Share-based compensation

 

9,034

Depreciation and amortization

4,309

3,572

1,509

5,864

Amortization of intangible assets

57,087

50,902

15,890

34,378

Change in bad debt reserve

(668)

(174)

186

24

(Benefit from) provision for income taxes – non-cash

(9,937)

(5,886)

(8,214)

66,234

Non-cash interest expense

913

487

143

2,407

Impairment of intangible assets

332,376

Fair value adjustment to warrants

19,723

(900)

(2,900)

Right-of-use asset

3,473

748

1,245

1,594

Non-cash reorganization items, net

(3,353,326)

Changes in current assets and liabilities, net of effects from acquisitions:

  

  

  

Accounts receivable

 

(8,446)

88,622

(24,396)

116,478

Prepaid expenses and other current assets

 

(5,002)

1,828

(4,017)

66

Accounts payable

 

(1,636)

 

(4,866)

 

3,776

(7,909)

Accrued expenses, including long-term

 

13,962

 

(18,592)

 

11,888

 

145,816

Lease liability

 

(4,046)

 

(1,301)

 

(1,510)

 

(2,332)

Deferred revenue

 

(24,599)

 

(31,365)

 

47,987

 

(101,765)

Net cash (used in) provided by operating activities

 

(541)

 

33,811

 

2,873

 

3,917

Cash flows from investing activities:

 

  

 

  

 

  

 

  

Purchase of property and equipment

 

(4,351)

 

(641)

 

(1,340)

 

(3,105)

Internally developed software - capitalized costs

 

(2,293)

 

(2,350)

 

(908)

 

(3,819)

Acquisition of Global Knowledge, net of cash received

(156,926)

Acquisition of Skillsoft, net of cash received

(386,035)

Acquisition of Pluma, net of cash received

 

(18,646)

Net cash used in investing activities

 

(568,251)

 

(2,991)

 

(2,248)

 

(6,924)

Cash flows from financing activities:

 

  

 

  

 

  

 

  

Borrowings under revolving line of credit, net of repayments

 

19,500

Borrowings under DIP Facility

 

60,000

Proceeds from Exit Facility borrowing

50,000

Debt issuance costs associated with DIP and Exit facilities

(19,524)

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

(614)

Proceeds from equity investment (PIPE)

 

530,000

Proceeds from issuance of term loans, net of fees

 

464,290

Principal payments on capital lease obligation

 

(407)

 

(370)

 

(162)

(532)

Proceeds from accounts receivable facility, net of borrowings

 

(23,198)

 

16,577

 

(28,909)

 

(35,787)

Repayment of First and Second Out loans

 

(605,591)

 

(1,300)

 

Net cash provided by (used in) financing activities

 

364,480

 

14,907

 

(29,071)

 

73,657

Effect of exchange rate changes on cash and cash equivalents

 

(820)

 

203

 

699

 

(2,139)

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

 

(205,132)

 

45,930

 

(27,747)

 

68,511

Cash, cash equivalents and restricted cash, beginning of period

 

288,483

 

74,443

 

102,315

 

33,804

Cash, cash equivalents and restricted cash, end of period

$

83,351

$

120,373

$

74,568

$

102,315

Supplemental disclosure of cash flow information:

Cash and cash equivalents

$

80,671

$

117,299

$

70,836

$

92,009

Restricted cash

2,680

3,074

3,732

10,306

Cash, cash equivalents and restricted cash, end of period

$

83,351

$

120,373

$

74,568

$

102,315

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

Page 9 of 16


Key Performance Metrics

We use key performance metrics to help us evaluate our performance and make strategic decisions. Additionally, we believe these metrics are useful as a supplement to investors in evaluating the Company’s ongoing operational performance and trends. These key performance metrics are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled metrics presented by other companies.

Annualized Recurring Revenue (“ARR”)

ARR represents the annualized recurring value of all active subscription contracts at the end of a reporting period. We believe ARR is useful for assessing the performance of our recurring subscription revenue base and identifying trends affecting our business.

Dollar Retention Rate (“DRR”)

For existing customers at the beginning of a given period, DRR represents subscription renewals, upgrades, churn, and downgrades in such period divided by the beginning total renewable base for such customers for such period. Renewals reflect customers who renew their subscription, inclusive of auto-renewals for multi-year contracts, while churn reflects customers who choose to not renew their subscription. Upgrades include orders from customers that purchase additional licenses or content (e.g., a new Leadership and Business module), while downgrades reflect customers electing to decrease the number of licenses or reduce the size of their content package. Upgrades and downgrades also reflect changes in pricing. We use our DRR to measure the long-term value of customer contracts as well as our ability to retain and expand the revenue generated from our existing customers.

Bookings

Bookings (previously referred to as order intake) in any particular period represents orders received during that period and reflects (i) subscription renewals, upgrades, churn, and downgrades to existing customers, (ii) non- subscription services, and (iii) sales to new customers. Bookings generally represents a customer’s annual obligation (versus the life of the contract), and, for the subscription business, revenue is recognized for such bookings over the following 12 months. We use bookings to measure and monitor current period business activity with respect to our ability to sell subscriptions and services to our platform.

Page 10 of 16


SKILLSOFT CORP.

KEY OPERATING METRICS

Bookings

Three Months
Ended October 31,

Nine Months
Ended October 31,

(In thousands)

    

2021

    

2020

    

2021

    

2020

 

Content and Global Knowledge

Percipio

$

17,742

$

11,063

$

50,276

$

31,645

Dual Deployment and Coaching

53,661

36,348

95,357

75,757

Skillport

2,270

21,883

24,318

53,955

Total Subscription Bookings

$

73,673

$

69,294

$

169,951

$

161,357

Services and One-Time Bookings

4,620

4,319

10,908

9,330

Global Knowledge Bookings

61,690

55,419

190,488

161,225

Total Content & Global Knowledge Bookings

$

139,983

$

129,032

$

371,347

$

331,912

SumTotal

Subscription Bookings

$

22,472

$

21,830

$

64,552

$

68,286

Services and One-Time Bookings

6,423

6,262

17,224

15,876

Total SumTotal Bookings

$

28,895

$

28,092

$

81,776

$

84,162

Total Bookings

$

168,877

$

157,124

$

453,123

$

416,074

Annualized Recurring Revenue

October 31,

January 31,

(In thousands)

    

2021

    

2021

 

Content and Global Knowledge

Percipio

$

90,638

$

75,802

Dual Deployment

184,825

161,327

Skillport

46,106

80,245

Total Content

$

321,568

$

317,374

Global Knowledge

13,407

10,504

Total Content and Global Knowledge

$

334,975

$

327,878

SumTotal

$

95,519

$

99,148

Total Annualized Recurring Revenue

$

430,494

$

427,026

Page 11 of 16


Dollar Retention Rate

October 31

    

LTM

    

2021

    

2020

 

Percipio

100

%  

107

%  

100

%

Dual Deployment

103

%  

100

%  

105

%

Percipio + Dual Deployment

102

%  

101

%  

104

%

Skillport

72

%  

75

%  

83

%

Total Content Business

95

%  

98

%  

96

%

SumTotal Business

96

%  

101

%  

99

%

Non-GAAP Financial Measures – Adjusted Revenue

Skillsoft and Global Knowledge Combined

(In thousands)

Three Months
Ended October 31,

Nine Months
Ended October 31,

    

2021

    

2020

    

2021

    

2020

 

Consolidated

Adjusted subscription revenue

$

106,055

$

107,924

$

311,815

$

323,054

Adjusted non-subscription revenue

11,298

10,518

32,525

32,161

Adjusted Global Knowledge revenue

61,523

50,839

177,265

162,055

Total Consolidated adjusted revenue

178,876

169,281

521,605

517,270

Content Business

Adjusted subscription revenue

82,523

82,953

242,093

246,575

Adjusted non-subscription revenue

4,424

3,995

12,661

11,619

Total Content Business adjusted revenue

86,947

86,947

254,754

258,194

Global Knowledge Business

Virtual and on-demand

48,717

36,719

146,280

109,119

Classroom and all other

12,806

14,120

30,985

52,936

Total Global Knowledge adjusted revenue

61,523

50,839

177,265

162,055

SumTotal Business

Adjusted subscription revenue

23,532

24,971

69,722

76,479

Adjusted non-subscription revenue

6,874

6,523

19,864

20,542

Total SumTotal adjusted revenue4

$

30,406

$

31,495

$

89,586

$

97,021


4 The table above reflects a product level view of revenue whereas in prior quarters we showed revenue based on the contracting business unit, which is slightly different due to cross selling. We intend to present product level views going forward which we believe provides the most accurate depiction of the underlying trends in our business.

Page 12 of 16


SKILLSOFT CORP.

RECONCILIATION OF NON-GAAP FINANICAL MEASURES

(in thousands, unaudited)

For the Three Months Ended October 31, 2021

Non-GAAP

Revenue

    

Skillsoft Corp.

    

Adjustments (1)

    

Combined

Revenues:

Total revenues

$

170,559

$

8,317

$

178,876

Operating expenses

  

Cost of revenues

48,891

8,317

57,208

Content and software development

16,437

16,437

Selling and marketing

39,938

39,938

General and administrative

28,120

28,120

Recapitalization and transaction-related costs

Amortization of intangible assets

37,064

37,064

Recapitalization and acquisition-related costs

3,687

3,687

Restructuring

777

777

Total operating expenses

174,914

8,317

183,231

Operating loss:

$

(4,355)

$

$

(4,355)

Other income (expense), net

(611)

(611)

Fair value adjustment of warrants

(36,838)

(36,838)

Interest income

18

18

Interest expense

(7,510)

(7,510)

Loss before provision for income taxes

(49,296)

(49,296)

Provision for income taxes

(6,441)

(6,441)

Net loss

$

(42,855)

$

$

(42,855)

EBITDA Computation

Interest expense, net

$

7,492

$

$

7,492

(Benefit from) provision for income taxes

(6,441)

(6,441)

Depreciation and amortization

39,668

39,668

Impairment of goodwill and intangible assets

EBITDA

(2,136)

(2,136)

Adjusted EBITDA Computation

Plus: Non-recurring retention and consulting costs

3,892

3,892

Plus: Recapitalization and acquisition-related costs

3,687

3,687

Plus: Restructuring and contract terminations

777

777

Plus: Integration and migration related

883

883

Plus: Warrant fair value adjustment and foreign currency

37,391

37,391

Plus: Stock-based compensation expense

4,217

4,217

Plus: Other add backs

554

554

Adjusted EBITDA

$

49,265

$

$

49,265


(1)Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

Page 13 of 16


SKILLSOFT CORP.

RECONCILIATION OF NON-GAAP FINANICAL MEASURES

(in thousands, unaudited)

For the Three Months Ended October 31, 2020

For the

For the

For the

Period from

Period from

Period from

Non-GAAP

8/1/20 to 10/31/20

8/1/20 to 8/27/20

8/28/20 to 10/31/20

Revenue

  

Global Knowledge

  

Predecessor (PL)

  

Predecessor (SLH)

  

Adjustments (1)

  

Combined

Revenues:

Total revenues

$

43,690

$

38,687

$

36,973

$

49,931

$

169,281

Operating expenses

  

  

Cost of revenues

24,470

6,329

15,882

7,148

53,829

Content and software development

231

5,208

10,919

16,358

Selling and marketing

10,978

8,259

18,193

37,430

General and administrative

8,100

5,440

10,075

23,615

Amortization of intangible assets

9,526

4,230

15,890

29,646

Impairment of intangible assets

4,520

4,520

Recapitalization and acquisition-related costs

64

8,225

8,289

Restructuring

2,066

38

80

2,184

Total operating expenses

59,891

29,568

79,264

7,148

175,871

Operating loss:

$

(16,201)

$

9,119

$

(42,291)

$

42,783

$

(6,590)

Other (expense) income, net

625

(541)

717

801

Fair value adjustment of warrants

2,900

2,900

Interest income

21

9

30

Interest expense

(6,431)

(1,287)

(7,919)

(15,637)

Reorganization items, net

3,339,837

3,339,837

(Loss) income before provision for (benefit from) income taxes

(22,007)

3,347,149

(46,584)

42,783

3,321,341

(Benefit from) provision for income taxes

(944)

78,254

(7,870)

69,440

Net (loss) income

$

(21,063)

$

3,268,895

$

(38,714)

$

42,783

$

3,251,901

EBITDA Computation

Interest expense, net

$

6,431

$

1,266

$

7,910

$

$

15,607

(Benefit from) provision for income taxes

(944)

78,254

(7,870)

69,440

Depreciation and amortization

10,455

6,484

15,890

32,829

Impairment of goodwill and intangible assets

4,520

4,520

EBITDA

(601)

3,354,899

(22,784)

42,783

3,374,297

Adjusted EBITDA Computation

Plus: Non-recurring retention and consulting costs

669

1,549

3,032

5,250

Plus: Recapitalization and transaction-related costs

2,671

(672)

8,961

10,960

Plus: Restructuring and contract terminations

1,397

40

78

1,515

Plus: Integration and migration related

2,212

965

3,177

Plus: Warrant fair value adjustment and foreign currency

(982)

(229)

(3,156)

(4,367)

Plus: Impact of fresh-start and purchase accounting

(3,339,838)

41,442

(42,783)

(3,341,179)

Plus: Stock-based compensation expense

Plus: Other add backs

187

(247)

(310)

(370)

Adjusted EBITDA

$

3,341

$

17,714

$

28,228

$

$

49,283


(1)Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

Page 14 of 16


SKILLSOFT CORP.

RECONCILIATION OF NON-GAAP FINANICAL MEASURES

(in thousands, unaudited)

For the Nine Months Ended October 31, 2021

For the

For the

For the

Period from

Period from

Period from

Non-GAAP

2/1/21 to 6/11/21

2/1/21 to 6/11/21

6/12/21 to 10/31/21

Revenue

  

Global Knowledge

  

Skillsoft

  

Skillsoft Corp.(1)

  

Adjustments(2)

  

Combined

Revenues:

Total revenues

$

71,932

$

139,636

$

261,572

$

48,465

$

521,605

Operating expenses

  

Cost of revenues

34,698

35,881

76,897

22,874

170,350

Content and software development

492

24,084

26,316

50,892

Selling and marketing

16,404

41,940

62,171

120,515

General and administrative

19,765

17,217

45,194

82,176

Amortization of intangible assets

2,646

50,902

57,087

110,635

Recapitalization and acquisition-related costs

6,938

13,682

20,620

Restructuring

2,764

(703)

1,093

3,154

Total operating expenses

76,769

176,259

282,440

22,874

558,342

Operating loss:

$

(4,837)

$

(36,623)

(20,868)

$

25,591

$

(36,737)

Other income, net

624

407

(1,308)

(277)

Fair value adjustment of warrants

(19,723)

(19,723)

Interest income

64

30

94

Interest expense

(11,970)

(16,820)

(17,366)

(46,156)

Loss before provision for (benefit from) income taxes

(16,183)

(52,972)

(59,235)

25,591

(102,799)

Provision for (benefit from) income taxes

359

(3,708)

(4,527)

(7,876)

Net loss

$

(16,542)

$

(49,264)

(54,708)

$

25,591

$

(94,923)

EBITDA Computation

Interest expense, net

$

11,970

$

16,756

$

17,336

$

$

46,062

Benefit from income taxes

359

(3,708)

(4,527)

(7,876)

Depreciation and amortization

4,119

54,474

61,396

119,989

EBITDA

(94)

18,258

19,497

25,591

63,252

Adjusted EBITDA Computation

Plus: Non-recurring retention and consulting costs

28

1,153

1,551

2,732

Plus: Recapitalization and acquisition-related costs

8,862

6,938

16,038

31,838

Plus: Restructuring and contract terminations

2,884

(703)

1,093

3,274

Plus: Integration and migration related

1,160

1,383

2,543

Plus: Warrant fair value adjustment and foreign currency

377

134

20,714

21,225

Plus: Impact of fresh-start and purchase accounting

23,395

(25,591)

(2,196)

Plus: Stock-based compensation expense

9,034

9,034

Plus: Other add backs

(1,119)

(300)

198

(1,221)

Adjusted EBITDA

$

10,938

$

50,035

$

69,508

$

$

130,481


(1)GAAP results of Skillsoft Corp. include Global Knowledge subsequent to June 11, 2021.
(2)Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

Page 15 of 16


SKILLSOFT CORP.

RECONCILIATION OF NON-GAAP FINANICAL MEASURES

(in thousands, unaudited)

For the Nine Months Ended October 31, 2020

For the

For the

For the

Period from

Period from

Period from

Non-GAAP

2/1/20 to 10/31/20

2/1/20 to 8/27/20

8/28/20 to 10/31/20

Revenue

    

Global Knowledge

  

Predecessor (PL)

  

Predecessor (SLH)

  

Adjustments (1)

  

Combined

Revenues:

Total revenues

$

142,192

$

273,851

$

36,973

$

64,254

$

517,270

Operating expenses

  

  

Cost of revenues

78,527

52,160

15,882

19,862

166,431

Content and software development

1,751

38,986

10,919

51,656

Selling and marketing

30,896

75,028

18,193

124,117

General and administrative

24,186

37,455

10,075

71,716

Amortization of intangible assets

13,249

34,378

15,890

63,517

Impairment of intangible assets

59,553

332,376

391,929

Recapitalization and acquisition-related costs

32,099

8,225

40,324

Restructuring

6,373

1,179

80

7,632

Total operating expenses

214,535

603,661

79,264

19,862

917,322

Operating loss:

$

(72,343)

$

(329,810)

$

(42,291)

$

44,392

$

(400,052)

Other income (expense), net

(156)

1,268

717

1,829

Fair value adjustment of warrants

2,900

2,900

Interest income

105

9

114

Interest expense

(20,993)

(168,341)

(7,919)

(197,253)

Reorganization items, net

3,329,245

3,329,245

(Loss) income before (benefit from) provision for income taxes

(93,492)

2,832,467

(46,584)

44,392

2,736,783

(Benefit from) provision for income taxes

(733)

68,455

(7,870)

59,852

Net (loss) income

$

(92,759)

$

2,764,012

$

(38,714)

$

44,392

$

2,676,931

EBITDA Computation

Interest expense, net

20,993

168,236

7,910

$

197,139

(Benefit from) provision for income taxes

(733)

68,455

(7,870)

59,852

Depreciation and amortization

18,080

41,751

15,890

75,721

Impairment of goodwill and intangible assets

59,553

332,376

391,929

EBITDA

5,134

3,374,830

(22,784)

44,392

3,401,572

Adjusted EBITDA Computation

Plus: Non-recurring retention and consulting costs

2,031

11,034

3,032

16,097

Plus: Recapitalization and acquisition-related costs

3,375

31,363

8,961

43,699

Plus: Restructuring and contract terminations

4,336

1,181

78

5,595

Plus: Integration and migration related

8

3,379

965

4,352

Plus: Warrant fair value adjustment and foreign currency

(29)

(1,119)

(3,156)

(4,304)

Plus: Impact of fresh-start and purchase accounting

(3,329,245)

41,442

(44,392)

(3,332,195)

Plus: Stock-based compensation expense

Plus: Other add backs

171

(33)

(310)

(172)

Adjusted EBITDA

$

15,026

91,390

$

28,228

$

$

134,644


(1)Non-GAAP revenue adjustments include the add back of (i) non-cash deferred revenue fair value adjustments and (ii) reseller fees, which are presented on a net basis in GAAP revenue.

Page 16 of 16