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Skillsoft Reports Strong Financial Results for the Fourth Quarter and Fiscal Year of 2022

Bookings Growth of 7% for the Fiscal Year

Provides Fiscal 2023 Guidance Reflecting Solid Bookings and Accelerating Revenue Growth

Closes Codecademy Acquisition which is Expected to Accelerate Growth in Tech & Dev Business

Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a global leader in corporate digital learning, today announced its financial results for the fourth quarter and full year of fiscal 2022 ended January 31, 2022. The Company also provided fiscal 2023 guidance.

“We had a great finish to a monumental year for the new Skillsoft, helping us deliver full year bookings growth of 7%, exceeding guidance and putting the Company on a solid growth trajectory,” said Jeffrey R. Tarr, Skillsoft’s Chief Executive Officer. “We exited the year with strong momentum, which we believe positions us well to deliver solid bookings, accelerated revenue growth, and industry-leading profitability in fiscal 2023.”

Mr. Tarr added, “Since returning Skillsoft to the public market in June, we moved extremely fast in setting the Company up for success as we recapitalized our balance sheet, assembled a world-class management team and board of directors, closed three acquisitions, made foundational growth investments, and delivered strong fiscal 2022 results. I want to thank our entire team for their tireless efforts during a period of tremendous change as we formed the new Skillsoft and positioned the Company to extend our lead in corporate digital learning.”

Fiscal 2022 Fourth Quarter Financial Highlights1

  • Grew bookings 5%;
  • Delivered GAAP revenue of $166 million and GAAP net income of $8 million;
  • Grew adjusted revenue 2% to $176 million with adjusted EBITDA of $36 million, up 24% compared to the prior year;2 and
  • Delivered combined Percipio and dual deployment dollar retention rate of 103%.

Fiscal 2022 Full Year Financial Highlights1

  • Grew bookings 7%;
  • Delivered GAAP revenue of $665 million and GAAP net loss of $113 million;
  • Returned to adjusted revenue growth of 1% to $698 million with adjusted EBITDA of $167 million, up 2% compared to the prior year;2 and
  • Delivered combined Percipio and dual deployment dollar retention rate of 104%.

 

 

Outlook

 

Bookings

 

$790 million to $825 million

 

Adjusted Revenue

 

$765 million to $790 million

 

Adjusted EBITDA

 

Approximately $167 million

 

 

 

 

 

  • We expect Fiscal 2024 adjusted EBITDA growth of at least low double digits.

Key Operational Metrics and Non-GAAP Financial Measures

Bookings

The following table sets forth unaudited bookings for the three and twelve months ended January 31, 2022 and 2021 as if pre-combination Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31:

Three Months Twelve Months
(In thousands) Ended January 31, Change Ended January 31, Change

2022

2021

 

$

%

 

2022

2021

 

$

%

Content and Global Knowledge
Percipio

$55,802

$32,207

$23,595

73%

$106,078

$63,852

$42,226

66%

Dual Deployment and Coaching

89,207

97,897

(8,690)

-9%

184,563

173,654

10,909

6%

Skillport

14,957

26,764

(11,807)

-44%

39,275

80,719

(41,444)

-51%

Total Subscription

$159,966

$156,868

$3,098

2%

$329,916

$318,225

$11,691

4%

Services and One-Time Orders

7,871

6,859

1,012

15%

18,779

16,189

2,590

16%

Total Content

$167,837

$163,727

4,110

3%

$348,695

$334,414

14,280

4%

Global Knowledge

59,533

53,090

6,443

12%

250,020

214,316

35,704

17%

Total Content & Global Knowledge

$227,370

$216,817

$10,553

5%

$598,715

$548,730

$49,984

9%

 
SumTotal
Subscription

$33,317

$32,765

$552

2%

$97,869

$101,051

($3,182)

-3%

Services and One-Time Orders

7,590

6,822

768

11%

24,814

22,698

2,116

9%

Total SumTotal

$40,907

$39,587

$1,320

3%

$122,683

$123,749

($1,066)

-1%

 
Total

$268,277

$256,404

$11,873

5%

$721,398

$672,479

$48,918

7%

Dollar Retention Rate

The following table sets forth dollar retention rates (“DRR”) for the last twelve month (“LTM”) period ended January 31, 2022 and for the three month periods ended January 31, 2022 and 2021 as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31:

January 31
LTM

2022

2021

 
Percipio

99%

99%

102%

Dual Deployment

106%

105%

100%

Percipio + Dual Deployment

104%

103%

101%

Skillport

67%

66%

74%

Total Content Business

97%

98%

94%

SumTotal Business

99%

102%

93%

Capital Structure

The following table sets forth Skillsoft’s cash and cash equivalents and long-term debt as of January 31, 2022:

(In thousands) January 31, 2022
Assets
Cash and Equivalents

$154,672

 
Liabilities
Long-Term Debt

$466,985

(includes current portion and consists of $478,800 of outstanding principal less unamortized issuance costs and original issue discount)

Weighted average shares outstanding during the period from October 31, 2021 to January 31, 2022 were 133.2 million.

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.

Annual Meeting Date

The Board of Directors of Skillsoft has established Thursday, June 23, 2022 as the date of the Company’s 2022 Annual Meeting of Stockholders. The 2022 Annual Meeting will be held virtually by means of remote communication. The details of the virtual annual meeting, including how stockholders can log into the virtual meeting, vote and submit questions, will be disclosed in the Company’s definitive proxy statement for the 2022 Annual Meeting to be filed with the Securities and Exchange Commission.

Any stockholder seeking to bring business before the 2022 Annual Meeting or to nominate a director must provide timely notice, as set forth in the Company’s Amended and Restated Bylaws. Specifically, written notice of any proposed business or nomination must be delivered to the Company’s Secretary no later than the close of business on April 16th which is the tenth day following this public announcement of the date of the 2022 Annual Meeting). Any notice of proposed business or nomination must comply with the specific requirements set forth in the Amended and Restated Bylaws.

About Skillsoft

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

NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE METRICS

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

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

Forward Looking Statements

This document includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook (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, and other recent transactions, including our acquisitions of Pluma and Codecademy;
  • the impact of U.S. and worldwide economic trends, financial market conditions, geopolitical events, natural disasters, climate change, public health crises, the ongoing COVID-19 pandemic (including any variant), political crises, or other catastrophic events on our business, liquidity, financial condition and results of operations;
  • our ability to attract and retain key employees and qualified technical and sales personnel;
  • our reliance on third parties to provide us with learning content, subject matter expertise, and content productions and the impact on our business if our relationships with these third parties are terminated;
  • 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;
  • a failure to achieve and maintain effective internal control over financial reporting;
  • fluctuations in foreign currency exchange rates;
  • our ability to protect or obtain intellectual property rights;
  • our ability to raise additional capital;
  • the impact of our indebtedness on our financial position and operating flexibility;
  • our ability to 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 including our Form 10-K to be filed with the SEC for the fiscal year ended January 31, 2022.

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.

[1] 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 January 31, 2021.

[2] Signifies non-GAAP measures. See “Non-GAAP Financial Measures and Key Performance Metrics” in this release.

[3] See “Non-GAAP Financial Measures and Key Performance Metrics.” The Company is unable to reconcile forward-looking non-GAAP measures without unreasonable efforts.

SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
 
Successor Predecessor (SLH)
January 31, 2022 January 31, 2021
ASSETS
Current assets:
Cash and cash equivalents $

154,672

$

71,479

Restricted cash

14,251

2,964

Accounts receivable, less reserves of approximately $173 and $294 as of January 31, 2022 and January 31, 2021 respectively

212,463

179,784

Prepaid expenses and other current assets

45,837

30,326

Total current assets

427,223

284,553

Property and equipment, net

18,084

13,780

Goodwill

871,504

495,004

Intangible assets, net

869,487

728,633

Right of use assets

19,925

15,131

Deferred tax asset

976

Other assets

15,725

8,636

Total assets $

2,222,924

$

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

74,629

17,022

Accounts payable

25,661

7,425

Accrued compensation

51,115

36,375

Accrued expenses and other current liabilities

51,017

23,125

Lease liabilities

6,895

4,740

Deferred revenue

331,605

257,549

Total current liabilities

545,722

351,436

 
Long-term debt

462,185

510,236

Warrant liabilities

28,199

900

Deferred tax liabilities

100,887

81,008

Long term lease liabilities

13,355

13,155

Deferred revenue - non-current

1,248

3,035

Other long-term liabilities

11,430

5,998

Total long-term liabilities

617,304

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 133,258,027 shares issued and outstanding at January 31, 2022

11

Additional paid-in capital

1,306,146

674,333

Accumulated deficit

(247,229)

(93,722)

Accumulated other comprehensive income (loss)

970

(682)

Total shareholders’ equity

1,059,898

579,969

Total liabilities and shareholders’ equity $

2,222,924

$

1,545,737

SKILLSOFT CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
Successor Predecessor (SLH)
Three Months Three Months
Ended Ended
January 31, 2022 January 31, 2021
Revenues:
Total revenues $

166,182

$

71,795

Operating expenses:
Costs of revenues

49,517

25,016

Content and software development

20,366

19,109

Selling and marketing

43,939

37,092

General and administrative

26,810

11,561

Amortization of intangible assets

38,836

23,934

Recapitalization and acquisition-related costs

6,512

7,703

Restructuring

2,602

4,261

Total operating expenses

188,582

128,676

Operating loss

(22,400)

(56,881)

Other expense, net

(542)

(165)

Fair value adjustment of warrants

37,164

Interest income

64

15

Interest expense

(7,001)

(12,041)

Income (loss) before benefit from income taxes

7,285

(69,072)

Benefit from income taxes

(617)

(14,064)

Net income (loss)

7,902

(55,008)

 
Income (loss) per share:
Class A and B – Basic and Diluted (Predecessor (SLH)) *

(13.75)

Ordinary – Basic and Diluted (Successor)

0.06

*
Weighted average common share outstanding:
Class A and B – Basic and Diluted (Predecessor (SLH)) *

4,000

Ordinary – Basic and Diluted (Successor)

133,216

*
SKILLSOFT CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
Fiscal 2022 Fiscal 2021 Fiscal 2020
Successor Predecessor (SLH) Predecessor (SLH) Predecessor (PL) Predecessor (PL)
From From From From
June 12, 2021 to February 1, 2021 August 28, 2020 February 1, 2020 Fiscal year ended
January 31, 2022 to June 11, 2021 to January 31, 2021 to August 27, 2020 January 31, 2020
Revenues:
Total revenues $

427,754

$

139,636

$

108,768

$

273,851

$

514,021

Operating expenses:
Costs of revenues

126,414

35,881

40,898

52,160

96,044

Content and software development

46,682

24,084

30,028

38,986

67,951

Selling and marketing

106,110

41,940

55,285

75,028

140,785

General and administrative

72,004

17,217

21,636

37,455

57,356

Amortization of intangible assets

95,922

50,902

39,824

34,378

96,359

Impairment of intangible assets

332,376

440,598

Recapitalization and acquisition-related costs

20,194

6,938

15,928

32,099

16,244

Restructuring

3,696

(703)

4,341

1,179

1,900

Total operating expenses

471,022

176,259

207,940

603,661

917,237

Operating loss

(43,268)

(36,623)

(99,172)

(329,810)

(403,216)

Other (expense) income, net

(1,850)

(493)

552

1,268

(5,120)

Fair value adjustment of warrants

17,441

900

2,900

Interest income

94

64

24

105

306

Interest expense

(24,366)

(16,820)

(19,960)

(168,341)

(429,963)

Reorganization items, net

3,329,245

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

(51,949)

(52,972)

(115,656)

2,832,467

(837,993)

(Benefit from) provision for income taxes

(5,143)

(3,708)

(21,934)

68,455

11,212

Net (loss) income $

(46,806)

$

(49,264)

$

(93,722)

$

2,764,012

$

(849,205)

 
Net loss per share class (Predecessor (SLH) only)
Net loss for Class A $

(47,293)

$

(89,973)

Loss on modifications of terms of participation rights held by Class B shareholders and warrants

(5,900)

Net loss attributable to Class A $

(47,293)

$

(95,873)

 
Net loss for Class B $

(1,971)

$

(3,749)

Gain on modifications of terms of participation rights held by Class B shareholders and warrants

5,900

Net income attributable to Class B $

(1,971)

$

2,151

 
(Loss) income per share:
Ordinary – Basic and Diluted (PL) * * * $

27,612.51

$

(8,483.57)

Class A – Basic and Diluted (SLH) * $

(12.32)

$

(24.97)

* *
Class B – Basic and Diluted (SLH) * $

(12.32)

$

13.44

* *
Ordinary – Basic and Diluted (Successor) $

(0.35)

* * * *
Weighted average common share outstanding:
Ordinary – Basic and Diluted (PL) * * *

100.1

100.1

Class A – Basic and Diluted (SLH) *

3,840

3,840

* *
Class B– Basic and Diluted (SLH) *

160

160

* *
Ordinary – Basic and Diluted (Successor)

133,143

* * * *
SKILLSOFT CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
 
Fiscal 2022 Fiscal 2021 Fiscal 2020
Successor Predecessor (SLH) Predecessor (SLH) Predecessor (PL) Predecessor (PL)
June 12, 2021 February 1, 2021 August 28, 2020 February 1, 2020
through through through through Fiscal year ended
January 31, 2022 June 11, 2021 January 31, 2021 August 27, 2020 January 31, 2020
Cash flows from operating activities:
Net (loss) income $

(46,806)

$

(49,264)

$

(93,722)

$

2,764,012

$

(849,205)

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

14,664

83

Depreciation and amortization

6,556

3,572

3,604

5,864

9,716

Amortization of intangible assets

95,922

50,902

39,824

34,378

96,359

Change in bad debt reserve

(912)

(174)

294

24

(42)

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

14,378

(5,886)

(23,140)

66,234

5,759

Non-cash interest expense

817

487

671

2,407

5,687

Impairment of intangible assets

332,376

440,598

Fair value adjustment to warrants

(17,441)

(900)

(2,900)

Right-of-use asset

6,159

748

2,690

1,594

Impairment of note receivable from related parties

5,367

Unrealized loss on derivative instrument

4,062

Non-cash reorganization items, net

(3,353,326)

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

(85,397)

88,622

(103,385)

116,478

23,678

Prepaid expenses and other current assets

(18,497)

1,828

(6,394)

66

(2,547)

Accounts payable

4,245

(4,866)

(31)

(7,909)

(6,581)

Accrued expenses, including long-term

785

(18,592)

21,327

145,816

250,798

Lease liability

(7,736)

(1,301)

(3,272)

(2,332)

Deferred revenue

61,487

(31,365)

172,614

(101,765)

(21,145)

Net cash provided by (used in) operating activities

28,224

33,811

8,180

3,917

(37,413)

Cash flows from investing activities:
Purchase of property and equipment

(6,286)

(641)

(2,326)

(3,105)

(10,353)

Internally developed software - capitalized costs

(3,712)

(2,350)

(2,126)

(3,819)

(7,047)

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

(571,605)

(2,991)

(4,452)

(6,924)

(17,400)

Cash flows from financing activities:
Borrowings under revolving line of credit, net of repayments

19,500

55,400

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

(1,417)

Proceeds from equity investment (PIPE)

530,000

Proceeds from issuance of term loans, net of fees

467,399

Principal payments on capital lease obligation

(994)

(370)

(414)

(532)

(756)

Proceeds from accounts receivable facility, net of borrowings

40,352

16,577

(32,049)

(35,787)

9,798

Principal payments on Term loans

(1,200)

Repayment of First and Second Out loans

(608,700)

(1,300)

(6,641)

Net cash provided by (used in) financing activities

425,440

14,907

(32,463)

73,657

57,801

Effect of exchange rate changes on cash and cash equivalents

(1,619)

203

863

(2,139)

348

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

(119,560)

45,930

(27,872)

68,511

3,336

Cash, cash equivalents and restricted cash, beginning of period

288,483

74,443

102,315

33,804

30,468

Cash, cash equivalents and restricted cash, end of period $

168,923

$

120,373

$

74,443

$

102,315

$

33,804

Supplemental disclosure of cash flow information:
Cash and cash equivalents $

154,672

$

117,299

$

71,479

$

92,009

$

18,799

Restricted cash

14,251

3,074

2,964

10,306

15,005

Cash, cash equivalents and restricted cash, end of period $

168,923

$

120,373

$

74,443

$

102,315

$

33,804

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 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.

SKILLSOFT CORP.
KEY OPERATING METRICS
 
 
Bookings
 
Three Months Twelve Months
(In thousands) Ended January 31, Change Ended January 31, Change

2022

2021

 

$

%

 

2022

2021

 

$

%

Content and Global Knowledge
Percipio

$55,802

$32,207

$23,595

73%

$106,078

$63,852

$42,226

66%

Dual Deployment and Coaching

89,207

97,897

(8,690)

-9%

184,563

173,654

10,909

6%

Skillport

14,957

26,764

(11,807)

-44%

39,275

80,719

(41,444)

-51%

Total Subscription

$159,966

$156,868

$3,098

2%

$329,916

$318,225

$11,691

4%

Services and One-Time Orders

7,871

6,859

1,012

15%

18,779

16,189

2,590

16%

Total Content

$167,837

$163,727

4,110

3%

$348,695

$334,414

14,280

4%

Global Knowledge

59,533

53,090

6,443

12%

250,020

214,316

35,704

17%

Total Content & Global Knowledge

$227,370

$216,817

$10,553

5%

$598,715

$548,730

$49,984

9%

 

 

SumTotal

 

 

Subscription

$33,317

$32,765

$552

2%

$97,869

$101,051

($3,182)

-3%

Services and One-Time Orders

7,590

6,822

768

11%

24,814

22,698

2,116

9%

Total SumTotal

$40,907

$39,587

$1,320

3%

$122,683

$123,749

($1,066)

-1%

 

 

Total

$268,277

$256,404

$11,873

5%

$721,398

$672,479

$48,918

7%

Annualized Recurring Revenue
 
January 31, January 31,
(In thousands)

2022

 

2021

CONTENT AND GLOBAL KNOWLEDGE ARR
Percipio ARR

 $        109,169

 $          75,802

Dual Deployment ARR

           176,787

           161,327

Skillport ARR

             34,869

 

             80,245

Total Content ARR

           320,825

           317,374

Global Knowledge ARR

             13,027

             10,504

Total Content & Global Knowledge ARR

           333,852

           327,878

 
SUMTOTAL ARR
SumTotal ARR

             97,476

             99,148

 
Total ARR

 $        431,328

 $        427,026

Dollar Retention Rate
January 31
LTM

2022

2021

 
Percipio

99%

99%

102%

Dual Deployment

106%

105%

100%

Percipio + Dual Deployment

104%

103%

101%

Skillport

67%

66%

74%

Total Content Business

97%

98%

94%

SumTotal Business

99%

102%

93%

Non-GAAP Financial Measures – Adjusted Revenue
 
$000s Skillsoft and Global Knowledge Combined
Three Months

Ended January 31,
Twelve Months

Ended January 31,

2022

2021

2022

2021

Consolidated
Adjusted subscription revenue

$ 104,837

$ 107,369

$ 416,652

$ 430,423

Adjusted non-subscription revenue

11,437

11,721

43,962

43,881

Adjusted Global Knowledge revenue

60,219

54,576

237,484

216,631

Total Consolidated adjusted revenue

176,493

173,666

698,098

690,935

 
Content Business
Adjusted subscription revenue

81,607

82,896

323,700

329,471

Adjusted non-subscription revenue

4,708

5,031

17,369

16,650

Total Content Business adjusted revenue

86,315

87,928

341,069

#

346,121

 
Global Knowledge Business
Virtual and on-demand

47,229

41,556

193,508

150,674

Classroom and all other

12,990

13,021

43,975

65,957

Total Global Knowledge adjusted revenue

60,219

54,576

237,484

216,631

 
SumTotal Business
Adjusted subscription revenue

23,230

24,472

92,952

100,951

Adjusted non-subscription revenue

6,729

6,690

26,593

27,232

Total SumTotal adjusted revenue

$ 29,959

$ 31,162

$ 119,545

$ 128,183

 
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.
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
 
 
For the Three Months Ended January 31, 2022
Non-GAAP

Revenue

Adjustments (1)
Skillsoft Corp.
Combined
Revenues:
Total revenues

$

166,182

 

$

10,311

$

176,493

 

Operating expenses
Cost of revenues

 

49,517

 

 

10,311

 

59,828

 

Content and software development

 

20,366

 

 

20,366

 

Selling and marketing

 

43,939

 

 

43,939

 

General and administrative

 

26,810

 

 

26,810

 

Amortization of intangible assets

 

38,836

 

 

38,836

 

Recapitalization and acquisition-related costs

 

6,512

 

 

6,512

 

Restructuring

 

2,602

 

 

2,602

 

Total operating expenses

 

188,582

 

 

10,311

 

198,893

 

Operating loss:

$

(22,400

)

$

-

$

(22,400

)

Other income (expense), net

 

(542

)

 

(542

)

Fair value adjustment of warrants

 

37,164

 

 

37,164

 

Interest income

 

64

 

 

64

 

Interest expense

 

(7,001

)

 

(7,001

)

Income before benefit from income taxes

 

7,285

 

 

-

 

7,285

 

Benefit from income taxes

 

(617

)

 

(617

)

Net income

$

7,902

 

$

-

$

7,902

 

 
EBITDA Computation
Interest expense, net

$

6,937

 

$

6,937

 

Benefit from income taxes

 

(617

)

 

(617

)

Depreciation and amortization

 

41,082

 

 

41,082

 

EBITDA

 

55,304

 

 

-

 

55,304

 

 
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs

 

2,004

 

 

2,004

 

Plus: Recapitalization and acquisition-related costs

 

6,512

 

 

6,512

 

Plus: Restructuring and contract terminations

 

2,602

 

 

2,602

 

Plus: Integration and migration related

 

680

 

 

680

 

Plus: Warrant fair value adjustment and foreign currency

 

(35,799

)

 

(35,799

)

Plus: Stock-based compensation expense

 

5,630

 

 

5,630

 

Plus: Other add backs

 

(735

)

 

(735

)

Adjusted EBITDA

$

36,198

 

$

-

$

36,198

 

(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.
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
 
For the Three Months Ended January 31, 2021
Non-GAAP

Revenue

Adjustments (1)
Predecessor

(SLH)
Global

Knowledge
Combined
Revenues:
Total revenues

$

71,795

 

$

47,248

 

$

54,623

 

$

173,666

 

Operating expenses
Cost of revenues

 

25,016

 

 

23,980

 

 

7,329

 

 

56,325

 

Content and software development

 

19,109

 

 

606

 

 

19,715

 

Selling and marketing

 

37,092

 

 

10,901

 

 

47,993

 

General and administrative

 

11,561

 

 

9,952

 

 

21,513

 

Amortization of intangible assets

 

23,934

 

 

1,803

 

 

25,737

 

Recapitalization and transaction-related costs

 

7,703

 

 

-

 

 

7,703

 

Restructuring

 

4,261

 

 

1,537

 

 

5,798

 

Total operating expenses

 

128,676

 

 

48,779

 

 

7,329

 

 

184,784

 

Operating loss:

$

(56,881

)

$

(1,531

)

$

47,294

 

$

(11,118

)

Other income, net

 

(165

)

 

(1,699

)

 

(1,864

)

Interest income

 

15

 

 

-

 

 

15

 

Interest expense

 

(12,041

)

 

(11,685

)

 

(23,726

)

Loss before (benefit from) provision for income taxes

 

(69,072

)

 

(14,915

)

 

47,294

 

 

(36,693

)

(Benefit from) provision for income taxes

 

(14,064

)

 

919

 

 

(13,145

)

Net loss

$

(55,008

)

$

(15,834

)

$

47,294

 

$

(23,548

)

 
EBITDA Computation
Interest expense, net

$

12,026

 

$

11,685

 

$

23,711

 

(Benefit from) provision for income taxes

 

(14,064

)

 

919

 

 

(13,145

)

Depreciation and amortization

 

26,029

 

 

3,017

 

 

29,046

 

EBITDA

 

(31,017

)

 

(213

)

 

47,294

 

 

16,064

 

 
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs

 

(943

)

 

91

 

 

(852

)

Plus: Recapitalization and transaction-related costs

 

7,703

 

 

719

 

 

8,422

 

Plus: Restructuring and contract terminations

 

4,261

 

 

1,064

 

 

5,325

 

Plus: Integration and migration related

 

(1,941

)

 

383

 

 

(1,558

)

Plus: Foreign currency and other non-cash expense

 

57

 

 

676

 

 

733

 

Plus: Impact of fresh-start and purchase accounting

 

44,637

 

 

-

 

 

(47,294

)

 

(2,657

)

Plus: Stock-based compensation expense

 

-

 

 

-

 

 

-

 

Plus: Other add backs

 

2,338

 

 

1,369

 

 

3,707

 

Adjusted EBITDA

$

25,095

 

$

4,089

 

$

-

 

$

29,184

 

(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.
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
 
For the Twelve Months Ended January 31, 2022
For the

Period from

2/1/21 to 6/11/21
For the

Period from

2/1/21 to 6/11/21
For the

Period from

6/12/21 to 1/31/22
Non-GAAP

Revenue

Adjustments(2)
 
 
Global Knowledge Skillsoft Skillsoft Corp.(1) Combined
Revenues:
Total revenues

$

71,932

 

$

139,636

 

$

427,754

 

$

58,776

 

$

698,098

 

Operating expenses
Cost of revenues

 

34,698

 

 

35,881

 

 

126,414

 

 

32,967

 

 

229,960

 

Content and software development

 

492

 

 

24,084

 

 

46,682

 

 

71,258

 

Selling and marketing

 

16,404

 

 

41,940

 

 

106,110

 

 

164,454

 

General and administrative

 

19,765

 

 

17,217

 

 

72,004

 

 

108,986

 

Amortization of intangible assets

 

2,646

 

 

50,902

 

 

95,922

 

 

149,470

 

Recapitalization and acquisition-related costs

 

-

 

 

6,938

 

 

20,194

 

 

27,132

 

Restructuring

 

2,764

 

 

(703

)

 

3,696

 

 

5,757

 

Total operating expenses

 

76,769

 

 

176,259

 

 

471,022

 

 

32,967

 

 

757,017

 

Operating loss:

$

(4,837

)

$

(36,623

)

$

(43,268

)

$

25,809

 

$

(58,919

)

Other income (expense), net

 

624

 

 

407

 

 

(1,850

)

 

(819

)

Fair value adjustment of warrants

 

-

 

 

-

 

 

17,441

 

 

17,441

 

Interest income

 

-

 

 

64

 

 

94

 

 

158

 

Interest expense

 

(11,970

)

 

(16,820

)

 

(24,366

)

 

(53,156

)

Reorganization items, net

 

-

 

 

-

 

 

-

 

 

-

 

Loss before provision for (benefit from) income taxes

 

(16,183

)

 

(52,972

)

 

(51,949

)

 

25,809

 

 

(95,295

)

Provision for (benefit from) income taxes

 

359

 

 

(3,708

)

 

(5,143

)

 

(8,492

)

Net loss

$

(16,542

)

$

(49,264

)

$

(46,806

)

$

25,809

 

$

(86,803

)

 
EBITDA Computation
Interest expense, net

$

11,970

 

$

16,756

 

$

24,272

 

$

52,998

 

Provision for (benefit from) income taxes

 

359

 

 

(3,708

)

 

(5,143

)

 

(8,492

)

Depreciation and amortization

 

4,119

 

 

54,474

 

 

102,478

 

 

161,071

 

EBITDA

 

(94

)

 

18,258

 

 

74,801

 

 

25,809

 

 

118,774

 

 
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs

 

28

 

 

1,153

 

 

5,911

 

 

7,092

 

Plus: Recapitalization and acquisition-related costs

 

8,862

 

 

6,938

 

 

20,194

 

 

35,994

 

Plus: Restructuring and contract terminations

 

2,884

 

 

(703

)

 

3,696

 

 

5,877

 

Plus: Integration and migration related

 

-

 

 

1,160

 

 

2,063

 

 

3,223

 

Plus: Warrant fair value adjustment and foreign currency

 

377

 

 

134

 

 

(15,085

)

 

(14,574

)

Plus: Impact of fresh-start and purchase accounting

 

-

 

 

23,395

 

 

-

 

 

(25,809

)

 

(2,414

)

Plus: Stock-based compensation expense

 

-

 

 

-

 

 

14,664

 

 

14,664

 

Plus: Other add backs

 

(1,119

)

 

(300

)

 

(538

)

 

(1,957

)

Adjusted EBITDA

$

10,938

 

$

50,035

 

$

105,706

 

$

-

 

$

166,679

 

(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.
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
 
For the Twelve Months Ended January 31, 2021
For the

Period from

2/1/20 to 1/31/21
For the

Period from

2/1/20 to 8/27/20
For the

Period from

8/28/20 to 1/31/21
Non-GAAP

Revenue

Adjustments (1)
Global

Knowledge
Predecessor (PL) Predecessor

(SLH)
Combined
Revenues:
Total revenues

$ 189,440

$ 273,851

$ 108,768

$ 118,876

$ 690,935

Operating expenses
Cost of revenues

102,507

52,160

40,898

28,991

224,556

Content and software development

2,357

38,986

30,028

200

71,571

Selling and marketing

41,797

75,028

55,285

700

172,810

General and administrative

34,138

37,455

21,636

93,229

Amortization of intangible assets

15,052

34,378

39,824

89,254

Impairment of intangible assets

59,553

332,376

-

391,929

Recapitalization and acquisition-related costs

-

32,099

15,928

48,027

Restructuring

7,910

1,179

4,341

13,430

Total operating expenses

263,314

603,661

207,940

29,891

1,104,806

Operating loss:

$ (73,874)

$ (329,810)

$ (99,172)

$ 88,985

$ (413,871)

Other expense (income), net

(1,855)

1,268

3,452

2,865

Interest income

105

24

129

Interest expense

(32,678)

(168,341)

(19,960)

(220,979)

Reorganization items, net

-

3,329,245

-

3,329,245

Loss before provision for (benefit from) income taxes

(108,407)

2,832,467

(115,656)

88,985

2,697,389

Provision for (benefit from) income taxes

186

68,455

(21,934)

-

46,707

Net loss

$ (108,593)

$ 2,764,012

$ (93,722)

$ 88,985

$ 2,650,682

 
EBITDA Computation
Interest expense, net

$ 32,678

$ 168,236

$ 19,936

$ 220,850

Provision for (benefit from) income taxes

186

68,455

(21,934)

46,707

Depreciation and amortization

21,097

41,751

41,919

104,767

Impairment of goodwill and intangible assets

59,553

332,376

-

391,929

EBITDA

4,921

3,374,830

(53,801)

88,985

3,414,935

 
Adjusted EBITDA Computation
Plus: Non-recurring retention and consulting costs

2,122

11,034

2,089

15,245

Plus: Recapitalization and acquisition-related costs

4,094

31,363

16,664

52,121

Plus: Restructuring and contract terminations

5,400

1,181

4,339

10,920

Plus: Integration and migration related

391

3,379

(976)

2,794

Plus: Foreign currency and other non-cash expense

647

(1,119)

(3,099)

(3,571)

Plus: Impact of fresh-start and purchase accounting

-

(3,329,245)

86,079

(88,986)

(3,332,152)

Plus: Stock-based compensation expense

-

-

-

-

Plus: Other add backs

1,540

(33)

2,028

3,535

Adjusted EBITDA

$ 19,115

$ 91,390

$ 53,323

$ (1)

$ 163,827

(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.

 

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