Skillsoft Corp.

’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

In this Form 10-Q, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), “Skillsoft”, “we”, “our” or “us” refers to Skillsoft Corp. and its consolidated subsidiaries. This MD&A should be read in conjunction with: (i) the unaudited condensed consolidated financial statements and the accompanying notes presented in “Part I – Item 1. Financial Statements” of this Form 10-Q (the "Interim Financial Statements"), (ii) our consolidated financial statements, notes thereto, and the related MD&A contained in our 2026 Form 10-K; and (iii) the disclosure under “Cautionary Notes Regarding Forward-Looking Statements” and “Risk Factors” in this Form 10-Q and in the 2026 Form 10-K. The consolidated financial statements contained in the 2026 10-K are referred to herein as the “2026 AFS”.

 

General

 

Skillsoft® provides a skills management platform and associated learning solutions that are designed to help organizations manage the human and artificial intelligence (“AI”) skills lifecycle, including visibility into the skills they have and the skills they need, closing skills gaps, matching skills to work, and understanding how skills development impacts business performance. 

 

In fiscal 2026, we evolved from a content-centric model to an integrated skills management platform, where we leveraged our market-leading curated learning content and connected it to capabilities in content creation, skills benchmarking, AI-assisted learning, and role-based development journeys.

 

We believe that Skillsoft’s unique capabilities, described below, set us apart as a trusted partner for workforce transformation and preparedness:

 

●	End-to-End Skills Management: A unified platform that combines content, skills mapping, benchmarking, analytics, and administrative controls to support workforce skill visibility, development, validation, and deployment.
●	Blended Learning Experiences Across Modalities: Digital courses, interactive AI simulations, coaching, instructor-led training, bootcamps, practice labs, and assessments delivered within a centralized learner and administrative experience designed to support applied skill development.
●	In-Platform Content Creation: Enterprise tools designed to enable customers to create, customize, update, and publish learning experiences, including courses, simulations, and skill benchmarks, while maintaining intellectual property (“IP”) protection and governance over their proprietary content.
●	Embedded AI Functionality: AI capabilities integrated into personalization, simulation, benchmarking, content creation, and learner assistance within enterprise learning frameworks.
●	Enterprise-Scale Infrastructure: Security, compliance capabilities, and system integrations designed to support large, distributed organizations operating across regions and regulatory environments.
●	Measurement and Insights: Benchmarking and analytics that help to provide visibility into workforce capability, identified skills gaps, and development progress in relation to organizational priorities.

 

For more details, refer to “Part I – Item 1. Business” in our 2026 Form 10-K.

 

Significant Event

 

On April 30, 2026, we committed to a plan to sell our Global Knowledge instructor-led training (“GK”) business. As previously disclosed, we entered into a definitive agreement (the “Sale Agreement”) on May 20, 2026 to sell our GK business to an affiliate of Enduring Ventures (the “Buyer”), representing a significant milestone in our transformation. The consideration that we are to receive under the Sale Agreement is described in detail in our Current Report on Form 8-K dated May 21, 2026. The transaction is subject to customary closing conditions, including regulatory approvals, and is currently expected to close in the fiscal quarter ending July 31, 2026, although we cannot assure closing in a timely manner, or at all.

 

Results of Operations

 

Our results of operations as reported in our Interim Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

 

The following sets forth certain items from our unaudited condensed consolidated statements of operations as a percentage of total revenues for the periods indicated:

 

	Three Months Ended April 30,
	2026				2025
Revenues:
Total revenues		100.0	%			100.0	%
Operating expenses:
Costs of revenues		16.8	%			16.7	%
Content and software development expenses		13.8	%			13.4	%
Selling and marketing expenses		28.5	%			30.0	%
General and administrative expenses		17.0	%			19.4	%
Amortization of intangible assets		31.3	%			30.4	%
Acquisition and integration related costs		0.0	%			0.5	%
Restructuring		1.4	%			1.0	%
Total operating expenses		108.8	%			111.4	%
Operating loss		(8.8	)%			(11.4	)%
Other income (expense), net		2.7	%			(0.9	)%
Fair value adjustment of interest rate swaps		1.3	%			(4.3	)%
Interest income		0.6	%			0.5	%
Interest expense		(14.5	)%			(14.5	)%
Income (loss) before provision for (benefit from) income taxes		(18.7	)%			(30.6	)%
Provision for (benefit from) income taxes		1.1	%			(0.7	)%
Income (loss) from continuing operations		(19.8	)%			(29.9	)%

 

 

Segment Information

 

Effective April 30, 2026, following the classification of the Global Knowledge ("GK) business as held for sale and discontinued operations, Skillsoft operates as a single reportable segment, Talent Development Solutions ("TDS"). Skillsoft's Chief Executive Officer, who serves as the Chief Operating Decision Maker, evaluates performance and allocates resources based primarily on TDS revenue and Adjusted EBITDA. See Note 13, Segment Information, for additional information regarding Skillsoft's reportable segment and the reconciliation of Adjusted EBITDA to income (loss) from continuing operations.

 

Information regarding our TDS segment for the periods indicated is set forth below (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
Revenues	$	94,498			$	99,148	$	(4,650	)		(4.7	)%
Adjusted costs of revenues		15,739				16,271		(532	)		(3.3	)%
Adjusted content and software development expenses		12,674				12,097		577			4.8	%
Adjusted selling and marketing expenses		26,270				28,666		(2,396	)		(8.4	)%
Adjusted general and administrative expenses		13,175				15,275		(2,100	)		(13.7	)%
Adjusted EBITDA	$	26,640			$	26,839	$	(199	)		(0.7	)%

 

Revenues

 

We provide enterprise customers with subscription-based access to learning skills development delivered through two platform offerings: (i) our enterprise-focused Skills Management Platform, which provides organizations with subscription-based access to learning and workforce capability development tools, and (ii) our Learner Platform, which provides interactive, practice-based technology skill development experiences for individual learners.

 

Our Skills Management Platform is delivered primarily through subscription-based agreements that provide enterprise customers with access to our multi-modal learning offerings and related platform capabilities. Customers subscribe to curated learning content across leadership and business, technology, and compliance subject areas, delivered through multiple modalities including digital courses, coaching, bootcamps, practice labs, simulations, and assessments. Subscription arrangements may include varying combinations of content libraries and delivery modalities, reflecting enterprise scope and user needs. Customers may also purchase expanded access to additional platform capabilities, including content creation and skills benchmarking tools. Contracts are typically multi-year agreements and priced based on enterprise scope, number of users, and product configuration.

 

Our Learner Platform provides interactive, practice-based experiences focused primarily on technology skill development. The platform supports direct-to-consumer selling and delivery options, offering hands-on learning environments that emphasize applied skill development. The technology underlying this platform has also been deployed as an extension of our Skills Management Platform to support enterprise customers.

 

Subscription and Professional Services and Other Revenues

 

Software as a service (“SaaS”) Subscription Revenue. Represents revenue generated from contracts specifying a minimum fixed fee for services delivered over the life of the contract to both enterprise and consumer customers. Enterprise revenue is derived from subscription arrangements with organizations that provide access to Skillsoft’s learning and talent development solutions to their employees, members or students. Consumer revenue is derived from subscriptions purchased directly by individual learners for personal and professional development. The initial term of enterprise contracts is generally one to three years and is usually non-cancellable for the term of the subscription. The fixed fee is commonly paid upfront on an annual basis. These contracts typically consist of subscriptions to our various offerings which provide access to our SaaS platforms, associated content and services, and individualized coaching, over the contract term.

 

Professional Services and Other Revenue. Professional services revenue primarily consists of implementation, integration, consulting, and other services provided to customers in connection with deployment and optimization of our learning and talent development solutions. Other revenue consists of revenue streams that are ancillary to our core offerings, including project-based work and related one-time incidentals. The professional services and other revenue non-subscription services complement our subscription business in creating strong and comprehensive customer relationships.

 

The following is a summary of our net revenues by type for the periods indicated (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
SaaS and subscription services:
Enterprise	$	81,443			$	84,684	$	(3,241	)		(3.8	)%
Consumer		7,087				8,971		(1,884	)		(21.0	)%
Professional services and other		5,968				5,493		475			8.6	%
Total net revenues	$	94,498			$	99,148	$	(4,650	)		(4.7	)%

 

 

Total revenue decreased for the three months ended April 30, 2026 compared with the three months ended April 30, 2025, primarily due to macroeconomic uncertainty and elongated enterprise purchasing cycles, including within certain government-related end markets, which contributed to more cautious discretionary spending on learning and development initiatives during the first quarter of fiscal 2027, as well as declines in our consumer business reflecting continued moderation in demand for direct-to-consumer offerings.

 

Operating Expenses

 

Summary of operating expenses

 

The following provides select operating expenses (in thousands, except percentages), which are discussed in the associated captions that immediately follow:

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
Costs of revenues	$	15,889			$	16,516	$	(627	)		(3.8	)%
Content and software development expenses		13,052				13,324		(272	)		(2.0	)%
Selling and marketing expenses		26,960				29,748		(2,788	)		(9.4	)%
General and administrative expenses		15,994				19,182		(3,188	)		(16.6	)%
Amortization of intangible assets		29,561				30,106		(545	)		(1.8	)%
Acquisition and integration related costs		—				523		(523	)		(100.0	)%
Restructuring		1,341				1,016		325			32.0	%
Total operating expenses	$	102,797			$	110,415	$	(7,618	)		(6.9	)%

 

Costs of revenues

 

Costs of revenues consists primarily of employee salaries and benefits for hosting operations, professional service and customer support personnel; royalties; hosting and software maintenance services; facilities and utilities costs; consulting services; and instructor fees, course materials, logistics costs and overhead costs associated with virtual, in-classroom, and on-demand training solutions. The following provides details regarding the changes in components of costs of revenues (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
Compensation and benefits	$	7,787			$	8,101	$	(314	)		(3.9	)%
Courseware, instructor fees and outside services		5,036				5,531		(495	)		(8.9	)%
Hosting and software maintenance		2,925				2,748		177			6.4	%
Facilities, utilities and other		141				136		5			3.7	%
Total costs of revenues	$	15,889			$	16,516	$	(313	)		(1.9	)%

 

Costs of revenues is variable and generally correlates with revenue volume and the mix of products and services, as different offerings carry different margin profiles. The decrease in compensation and benefits and courseware, instructor fees and outside services, when comparing the three months ended April 30, 2026 to the corresponding period in 2025, was primarily attributable to lower revenue, partially offset by lower-margin offerings. Hosting and software maintenance increased year-over-year, primarily reflecting continued investments in technology and increasing third-party costs.

 

Content and software development expenses

 

Content and software development expenses include costs associated with the development of new products and the enhancement of existing products, consisting primarily of employee salaries and benefits; development-related professional services; facilities costs; depreciation; and software maintenance costs. The following provides details regarding the changes in components of content and software development expenses (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
Compensation and benefits	$	10,032			$	10,179	$	(147	)		(1.4	)%
Consulting and outside services		1,397				1,569		(172	)		(11.0	)%
Software maintenance		1,403				1,346		57			4.2	%
Facilities, utilities and other		220				230		(10	)		(4.3	)%
Total content and software development expenses	$	13,052			$	13,324	$	(272	)		(2.0	)%

 

The decreases in compensation and benefits, when comparing the three months ended April 30, 2026 to the prior year period, were attributable to lower stock-compensation expense due to forfeitures and lower grants of share-based payment awards. The decreases in consulting and outside services expenses, when comparing the three months ended April 30, 2026 to the prior year period, are primarily due to cost savings from our restructuring initiatives. Hosting and software maintenance increased year-over-year, primarily reflecting increasing third-party costs.

 

 

Selling and marketing expenses

 

Selling and marketing (“S&M”) expenses consist primarily of employee compensation and benefits for selling, marketing and pre-sales support personnel; commissions and travel expenses; advertising and promotional expenses; consulting and outside services; facilities costs; depreciation; and software maintenance costs. The following provides details regarding the changes in components of S&M expenses (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
Compensation and benefits	$	20,055			$	23,573	$	(3,518	)		(14.9	)%
Advertising and promotions		3,978				3,080		898			29.2	%
Software maintenance		2,331				2,553		(222	)		(8.7	)%
Consulting and outside services		365				401		(36	)		(9.0	)%
Facilities, utilities and other		231				141		90			63.8	%
Total S&M expenses	$	26,960			$	29,748	$	(2,788	)		(9.4	)%

 

The decrease in compensation and benefits, when comparing the three months ended April 30, 2026 to the corresponding period in 2025, primarily reflected cost savings from our continued optimization of our go-to-market model and sales coverage strategy. The increases in advertising and promotions, when comparing the three months ended April 30, 2026 to the corresponding period in 2025, were primarily attributable to higher investments in targeted demand generation and marketing programs.

 

General and administrative

 

General and administrative (“G&A”) expenses consist primarily of employee salaries and benefits for executive, finance, administrative, and legal personnel; audit, legal and consulting fees; insurance; franchise, sales and property taxes; facilities costs; and depreciation. The following provides details regarding the changes in components of G&A expenses (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase			Percent
	2026				2025		(Decrease)			Change
Compensation and benefits	$	10,170			$	11,525	$	(1,355	)		(11.8	)%
Consulting and outside services		4,100				5,848		(1,748	)		(29.9	)%
Insurance		485				532		(47	)		(8.8	)%
Facilities, utilities and other		214				95		119			125.3	%
Software maintenance		742				976		(234	)		(24.0	)%
Franchise, sales, and property tax		283				206		77			37.4	%
Total G&A expenses	$	15,994			$	19,182	$	(3,188	)		(16.6	)%

 

Compensation and benefits and consulting and outside services expenses decreased during the three months ended April 30, 2026 compared to the prior year period, primarily due to cost savings resulting from our restructuring initiatives. In addition, compensation and benefits decreased due to reduced stock-based compensation expense driven by forfeitures and lower grants. 

 

Amortization of intangible assets

 

Intangible assets arising from business combinations consist of developed technology, customer-related intangibles, trade names and other identifiable intangible assets with finite lives. These intangible assets are amortized over the estimated useful lives of such assets. We also capitalize certain internal use software development costs related to our SaaS platforms incurred during the application development stage. The internal use software is amortized on a straight-line basis over its estimated useful life.

 

Amortization of intangible assets, when comparing the three months ended April 30, 2026 to the same period in 2025, decreased primarily due to certain intangible assets becoming fully amortized, partially offset by increases in amortization of capitalized internal use software development costs.

 

Impairment of goodwill and intangible assets

 

Refer to Note 4 “Intangible Assets” to the 2026 AFS for information regarding impairment review requirements and assumption uncertainty. This process was completed for the three months ended April 30, 2026, and we concluded that there were no impairment indicators related to the intangible assets of our continuing operations (our TDS reporting unit). For information regarding goodwill, intangible assets and long-lived assets impairments associated with discontinued operations (our former GK reporting unit), see Note 3, "Discontinued Operations and Assets Held for Sale" to the Interim Financial Statements.

Acquisition and integration related costs

 

Acquisition and integration related costs consist of professional fees for legal, investment banking and other advisor costs incurred in connection with the business combinations completed in April 2022 and the subsequent integration related activities. Changes in these costs primarily reflect fluctuations in the level of integration activities incurred during each period.

 

Restructuring

 

In connection with Skillsoft's activities with respect to the sale of its GK business, which was classified as held for sale and discontinued operations as of April 30, 2026, the implementation of our comprehensive resource reallocation plan, and our workplace flexibility policy, we continued to execute initiatives aimed at reducing costs and aligning our operating expenses with current economic conditions and our evolving operating model. These initiatives were intended to enhance operating efficiency, competitiveness, and overall profitability, and included workforce reductions and facility closures and consolidations. Our restructuring charges recognized during the three months ended April 30, 2026 totaling $1.3 million were primarily associated with professional fees in connection with our sale efforts relating to the GK business, employee termination costs, and contract termination costs. Our restructuring charges recognized during the three months ended April 30, 2025 totaling $1.0 million were primarily associated with the employee termination costs.

 

In addition, the sale of our GK business may include additional workforce reductions, facility closures and consolidations, the exit or modification of certain contracts, and/or other actions intended to improve operating efficiency or rationalize our cost structure, any or all of which may be material. We will continue to evaluate our cost structure and operating model to align operating expenses with existing economic conditions, which could result in further restructuring actions.

 

 

Interest and other

 

Interest and other, net, consists of gain or loss on derivative instruments, interest income, interest expense, and other expenses and income (in thousands, except percentages):

 

	Three Months Ended April 30,							Dollar Increase		Percent
	2026				2025			(Decrease)		Change
Other income (expense), net	$	2,606			$	(917	)	$	3,523		(384.2	)%
Interest income		545				468			77		16.5	%
Interest expense		(13,748	)			(14,396	)		648		(4.5	)%

 

Other income (expense), net consists primarily of the foreign exchange gains and losses (specifically, resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities), which fluctuate as the U.S. dollar appreciates or depreciates against other currencies. Interest income for the three months ended April 30, 2026 compared to the same period in 2025 increased primarily due to higher money market balances. The decrease in interest expense, when comparing the three months ended April 30, 2026 to the corresponding period in 2025, was primarily due to lower average interest rates for our borrowings. As a result of our interest rate swaps agreements, described below, we have a fixed cash interest rate of 8.94% on $300 million of our outstanding term loans. 

 

Fair value adjustment of interest rate swaps

 

We entered into two fixed-rate interest rate swap agreements on June 17, 2022 for a combined notional amount of $300 million and a maturity date of June 5, 2027. The objective of the interest rate swaps is to eliminate fluctuations in cash flows for interest payments on $300 million of variable rate debt attributable to changes in the benchmark one-month Secured Overnight Financing Rate (“SOFR”) interest rates. The interest rate swaps are not designated for hedge accounting and are carried on the unaudited condensed consolidated balance sheets at their fair value. Unrealized gains and losses from changes in fair value of the interest rate swaps, which arise from variations in the forward-looking yield curve, are included in the caption “fair value adjustment of interest rate swaps” in the statements of operations as they occur.

 

The gains (losses) reflected for the change in value of the interest rate swaps during the three months ended April 30, 2026 and 2025 are primarily attributable to increases (decreases) in the expectation for one-month SOFR interest rates through June 5, 2027.

 

Provision for (benefit from) income taxes

 

The following provides select provision for (benefit from) income taxes information (in thousands, except percentages):

 

	Three Months Ended April 30,						Dollar Increase		Percent
	2026				2025		(Decrease)		Change
Provision for (benefit from) income taxes	$	1,044