Executive Summary
Skillsoft reported QQ1 2026 revenue of $124.2 million, down 2.8% year over year, in the seasonally smallest quarter of the fiscal year. Talent Development Solutions (TDS) delivered modest growth of 1% YoY to $99.1 million, while Global Knowledge (GK) declined ~15.7% YoY to $25.1 million, reflecting softer discretionary live-learning demand in the public sector and a higher mix of reseller revenue. Despite a softer top-line start, Skillsoft posted a meaningful improvement in profitability metrics, with adjusted EBITDA of $22.1 million (8.7% of revenue? wait – the reported margin was 17.8% of revenue, consistent with the press commentary) and positive free cash flow of $26.2 million for the quarter, supported by disciplined cost controls and working-capital timing. GAAP net loss widened to $38.0 million, driven by non-operational items and transformations, while EPS remained negative at -$4.57. The company reaffirmed its full-year guidance, projecting revenue of $530–$545 million and adjusted EBITDA of $112–$118 million, and guiding for positive annual free cash flow between $13 and $18 million, albeit with anticipated Q2 cash use given seasonality and collections timing.
Management emphasized ongoing transformation investments in H1 2026 (go-to-market, product development, and international expansion) with expected back-half benefits as the organization scales growth initiatives. The pipeline remains robust in GK for large global public-sector deals, and the TDS franchise continues to exhibit resilience and recurring revenue attributes. The combination of a strong free-cash-flow profile, a clear path to margin expansion, and a focused product strategy (Percipio AI, CAISY coach in 40+ languages, certification dashboard, and coaching platform) supports a cautiously optimistic investment thesis, contingent on stabilization in macro discretionary spend and execution of the growth plan.
Overall, Skillsoft’s QQ1 performance underscores the company’s ability to generate positive cash flow and reduce cost structure during a challenged macro environment, while maintaining a clear strategic path toward topline growth and margin expansion as it completes its multi-quarter transformation.
Key Performance Indicators
QoQ: -30.19% | YoY:48.94%
QoQ: -22.32% | YoY:-37.68%
QoQ: -21.87% | YoY:-33.63%
Key Insights
Revenue: $124.2 million in Q1 2026, down 2.8% YoY (YoY revenue change: -2.81%; QoQ change not disclosed in the press release). Segment mix: TDS $99.1 million (+1% YoY); GK $25.1 million (-15.7% YoY). Gross margin: 74.04% (gross profit $91.95 million on $124.2 million revenue). Operating expenses: $102.1 million (82% of revenue), with COGS and SG&A optimization contributing to margin improvements. EBITDA: $7.63 million (EBITDA) with an EBITDA margin reported at 6.14% of revenue; Adjusted EBIT...
Financial Highlights
Revenue: $124.2 million in Q1 2026, down 2.8% YoY (YoY revenue change: -2.81%; QoQ change not disclosed in the press release). Segment mix: TDS $99.1 million (+1% YoY); GK $25.1 million (-15.7% YoY). Gross margin: 74.04% (gross profit $91.95 million on $124.2 million revenue). Operating expenses: $102.1 million (82% of revenue), with COGS and SG&A optimization contributing to margin improvements. EBITDA: $7.63 million (EBITDA) with an EBITDA margin reported at 6.14% of revenue; Adjusted EBITDA: $22.1 million (18.0% of revenue). Net income: -$38.05 million; net income margin: -30.63%. Diluted EPS: -$4.57. DRR (LTM) 99% (first quarter). Free cash flow: $26.2 million for the quarter; cash flow from operations: $31.3 million; capital expenditures and software capitalization: $5.1 million; cash balance end of period: $131.0 million; gross debt: $580 million; net debt: ~$449 million. Cash flow commentary: Q1 benefited from working-capital timing and collections, with expectations of a Q2 cash outflow reversal. Guidance: Full-year revenue guidance of $530–$545 million and Adjusted EBITDA $112–$118 million; Free cash flow expected $13–$18 million for the full year, noting Q2 typically weak for cash flow due to seasonality.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
124.20M |
-2.81% |
-7.14% |
| Gross Profit |
91.95M |
48.94% |
-30.19% |
| Operating Income |
-18.19M |
14.89% |
7.91% |
| Net Income |
-38.05M |
-37.68% |
-22.32% |
| EPS |
-4.57 |
-33.63% |
-21.87% |
Management Commentary
Key management takeaways from the QQ1 2026 earnings call:
- Transformation and investment cadence: The leadership emphasized ongoing investments in the first half of fiscal 2026 to fund growth initiatives, with expected benefits in the back half of the year. John Frederick stated that the first half of the year is “really all around investing in our go-to-market and products,” with benefits to follow in the back half as the investment cycle matures.
- Guidance reaffirmation amid macro uncertainty: Ron Hovsepian re-emphasized confidence in the full-year outlook, noting that the company expects to return to top-line growth and margin expansion while generating positive free cash flow, despite near-term discretionary spend softness. He also described ongoing international growth efforts within GK and the broader global go-to-market strategy.
- Segment commentary and resilience: John Frederick highlighted that TDS has grown for three consecutive quarters, and GK is experiencing improved activity in Europe despite U.S. federal discretionary softness. The company remains focused on capture of large public-sector deals and expansion of multimo dal learning experiences via Percipio.
- Product and platform enhancements: The call emphasized Percipio’s AI capabilities (CAISY available in 40 languages), the new Percipio certification dashboard, and expanded coaching capabilities to scale internal coaching programs. These features are positioned to drive learner engagement and multi-modal learning outcomes, potentially supporting higher retention and expansion.
- Market environment and cadence: The management acknowledged macro caution and elongated decision cycles but stressed that the current pipeline and recent customer events reinforce confidence in their strategy and the potential for GK and TDS to regain momentum as market conditions stabilize.
we are reiterating our outlook for the full fiscal year
— Ronald W. Hovsepian
The first half of the year is really all around investing in our go-to-market and products, and then in the back half, we start to see the benefits from the investments we're making in growth today
— John Wilbert Frederick
Forward Guidance
Management reaffirmed fiscal 2026 guidance: Revenue in the range of $530 million to $545 million and Adjusted EBITDA of $112 million to $118 million. Free cash flow is guided to $13 million to $18 million for the full year, with an expectation of much of Q2 being cash negative due to typical seasonality and timing of collections/disbursements. The company expects most growth to emerge in the back half of fiscal 2026 as investments in go-to-market, product enhancements, and international expansion begin to bear fruit. Key factors that could influence achievability include: (1) stabilization of the live-learning discretionary spend and public sector demand in GK, (2) continued execution of the TDS growth strategy and customer retention, and (3) the speed at which back-half expansion initiatives translate into revenue, savings, and working-capital improvements. Investor takeaway: the trajectory hinges on stabilizing macro conditions, the strength and timing of large GK deals, and the ongoing leverage from AI-enabled learning platforms to accelerate adoption and upsell within existing accounts.