EPS of $-3.75 increased by 87.7% from previous year
Gross margin of 98.5%
Net income of -31.11M
""We delivered solid fourth quarter and fiscal year results with revenue exceeding the high end of our guidance range and adjusted EBITDA at the upper end of the range."" - Ron Hovsepian
Skillsoft delivered a solid QQ4 2025 performance with a pivot toward growth under way, translating into a revenue beat relative to guidance but with a mixed margin backdrop driven by segment mix and ongoing transformation investments. Total quarterly revenue was $133.8 million, down 2.8% year over year, as Talent Development Solutions (TDS) grew 1% YoY to $102.8 million while Global Knowledge (GK) declined about 13% YoY to $30.9 million. For the full year, revenue totaled about $531 million, down roughly 4% YoY. The company achieved positive free cash flow in FY25 (adjusted) and ended the year with a healthier liquidity position, while debt remained elevated but trending toward a more favorable leverage profile.
Management underscored a deliberate pivot to enterprise growth, guided by a two-pronged strategy: fix the basics (operational execution, productivity, margin expansion) and invest to grow (reallocate resources toward enterprise go-to-market and products). They highlighted several catalysts, including AI-enabled capabilities (CAISY), Percipio platform enhancements, and broader enterprise content integrations (SAP, Pluralsight, Big Think+, Oracle, Docebo). The company also flagged ongoing macro headwinds and policy uncertainty, notably in the tariff environment, which management intends to monitor and manage while maintaining an execution focus. The FY26 guidance envisions revenue of $530–545 million and adjusted EBITDA of $112–118 million, with positive free cash flow of $13–18 million, signaling a return to topline growth and modest margin expansion as the year unfolds.”}
Key Performance Indicators
Revenue
133.75M
QoQ: -2.53% | YoY:-2.75%
Gross Profit
131.71M
98.47% margin
QoQ: 27.98% | YoY:32.93%
Operating Income
-19.75M
QoQ: -115.19% | YoY:91.34%
Net Income
-31.11M
QoQ: -31.81% | YoY:87.32%
EPS
-3.75
QoQ: -31.12% | YoY:87.66%
Revenue Trend
Margin Analysis
Key Insights
Q4 2025 revenue: $133.8 million, down 2.8% YoY; full-year revenue: $531 million, down 4% YoY.
TDS (Talent Development Solutions) Q4 revenue: $102.8 million, up 1% YoY; full-year TDS: $405.5 million, essentially flat vs FY24.
GK (Global Knowledge) Q4 revenue: $30.9 million, down ~13% YoY; full-year GK: $125.4 million, down ~15% YoY.
Gross margin: Q4 gross profit $131.711 million on revenue $133.753 million; gross margin ~98.47% for the quarter (and for the year, ~98.5% reflected by gross profit margin).
Operating expenses: Q4 total operating expenses $103.8 million (78% of revenue); full-year operating expenses $421.9 million (79% of revenue).
Financial Highlights
Revenue and profitability summary:
- Q4 2025 revenue: $133.8 million, down 2.8% YoY; full-year revenue: $531 million, down 4% YoY.
- TDS (Talent Development Solutions) Q4 revenue: $102.8 million, up 1% YoY; full-year TDS: $405.5 million, essentially flat vs FY24.
- GK (Global Knowledge) Q4 revenue: $30.9 million, down ~13% YoY; full-year GK: $125.4 million, down ~15% YoY.
- Gross margin: Q4 gross profit $131.711 million on revenue $133.753 million; gross margin ~98.47% for the quarter (and for the year, ~98.5% reflected by gross profit margin).
- Operating expenses: Q4 total operating expenses $103.8 million (78% of revenue); full-year operating expenses $421.9 million (79% of revenue).
- EBITDA and cash flow: Q4 Adjusted EBITDA $29.9 million (22% of revenue); full-year Adjusted EBITDA $109.1 million (21% of revenue). GAAP net loss Q4: $31.1 million; full-year GAAP net loss: $121.9 million. Adjusted net income for FY25: $35 million; Adjusted diluted EPS: $4.33 for the year.
- Free cash flow: Q4 2025 free cash flow $13.2 million; FY25 positive adjusted free cash flow of $33 million after restructuring charges; FY25 actual free cash flow $11.6 million; cash and equivalents at period end: $103 million; gross debt $581 million; net debt $477 million; gross debt leverage improved to ~5.3x.
- Guidance for FY26: Revenue $530–545 million; Adjusted EBITDA $112–118 million; Free cash flow $13–18 million; Unlevered free cash flow $71–76 million.
- Key operational metrics: DRR (dollar retention rate) 105% in Q4, LTM DRR 100% for FY25; bookings cadence historically skewed to Q4 (45–50% annual bookings in Q4).
- Strategic indicators: CAISY AI simulator surpassed 1 million launches; Percipio enables enterprise certification paths; new integrations with SAP, Pluralsight, Big Think+, Oracle, Docebo; GK margin mix dynamics expected to improve as Skillsoft shifts more content in-house and moves toward higher-margin enterprise solutions.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
133.75M
-2.75%
-2.53%
Gross Profit
131.71M
32.93%
27.98%
Operating Income
-19.75M
91.34%
-115.19%
Net Income
-31.11M
87.32%
-31.81%
EPS
-3.75
87.66%
-31.12%
Key Financial Ratios
currentRatio
0.88
grossProfitMargin
98.5%
operatingProfitMargin
-14.8%
netProfitMargin
-23.3%
returnOnAssets
-2.81%
returnOnEquity
-33.1%
debtEquityRatio
6.28
operatingCashFlowPerShare
$2.16
freeCashFlowPerShare
$1.61
priceToBookRatio
2.62
priceEarningsRatio
-1.98
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Themes and management insights from the earnings call:
- Transformation progress and growth pivot: Ron Hovsepian emphasized that Skillsoft delivered results at the high end of guidance and that the transformation plan remains on track, with a focus on fixing the basics and investing to grow. Quote: "we delivered solid fourth quarter and fiscal year results with revenue exceeding the high end of our guidance range and adjusted EBITDA at the upper end of the range. We continue to remain on track with the transformation plan... positioning us well to return to growth in fiscal 2026."
- Enterprise-focused go-to-market: The company is retooling GTM to a more enterprise-centric approach, planning to shift up to 20% of GTM and product resources into the enterprise segment, with a greater emphasis on large enterprise customers and integrated product capabilities.
- CAISY and Percipio enhancements: CAISY exceeded 1 million launches; customers can author their own AI simulations; Percipio now supports end-to-end certifications and certification program management; integration partners expanded to SAP Talent Intelligence Hub and others. Quote: Rich Walker noted the progress: "The award-winning AI-powered coach, Skillsoft CAISY, recently hit a major milestone with over 1 million launches."
- Large deal momentum and real-world installs: GK top 10 deals approached $6 million in TCV; TDS top 10 deals were about $22 million in TCV, with several multi-year commitments; customer wins include Honda and Virgin Media-O2, illustrating traction at the enterprise level.
- Financial discipline and reinvestment: Management highlighted $45 million in annualized expense reductions in FY25, with 40–50% reinvested into growth initiatives; most reinvestment expected in H1 FY26 to support back-half growth. Quote: Rich Walker: "we are pivoting to investing for growth and we will continue to reinvest in FY26 with most investment in the first half of the year to enable growth in the back half."
- DRR durability and policy uncertainty: The Q&A underscored ongoing macro uncertainty (tariffs and policy changes) and the potential impact on decision cycles, though management indicated the guidance already reflects current expectations and that the company remains focused on execution. Ron noted: "as things play through and develop, it may have an impact going forward... the duration and the depth of this uncertainty" remain unknown.
- 2026 seasonality and profitability trajectory: Management reiterated that Q1 tends to be the smallest quarter; revenue growth is expected to be partly offset by seasonality and the timing of bookings; margins were projected to improve sequentially as growth investments begin to bear fruit in H2 FY26 and into FY27.Quote: Rich Walker on seasonality: "The first quarter is always our smallest quarter... that pattern existed in FY25 and you can assume it will continue in FY26."
"We delivered solid fourth quarter and fiscal year results with revenue exceeding the high end of our guidance range and adjusted EBITDA at the upper end of the range."
— Ron Hovsepian
"We are pivoting to investing for growth and generating positive free cash flow for FY '26."
— Rich Walker
Forward Guidance
Outlook and assessment:
- Base case guidance for FY26: Revenue of $530–545 million; Adjusted EBITDA of $112–118 million; Free cash flow of $13–18 million; Unlevered free cash flow of $71–76 million. This reflects a deliberate pivot back to topline growth with margin expansion and free cash flow generation as the transformation progresses.
- Growth drivers and catalysts:
- Enterprise GTM expansion: Up to 20% of GTM/product resources redirected to enterprise clients, focusing on large-scale skill development and capability-building across Percipio, GK, and TDS offerings.
- Product and AI acceleration: CAISY AI simulations, certifications, and expanded platform integrations (SAP Talent Intelligence Hub; Oracle, Docebo, Pluralsight, Big Think+) to widen addressable market and upsell opportunities.
- Certification and credentials ecosystem: Percipio-based certification paths and Codecademy collaboration enhance learner value and potential for cross-sell across businesses.
- Key customer wins and expansion: Honda and Virgin Media-O2 illustrate traction with large enterprises that can scale over multi-year cycles.
- Risks and monitorables:
- Macroeconomic and regulatory uncertainty: Tariff-related effects on enterprise investment cycles could elongate sales cycles; management intends to monitor and adjust as needed.
- Execution risk of the transformation: The speed and effectiveness of investments in GTM, product, and content partnerships will determine the pace of margin expansion and revenue growth.
- FX exposure and mix risk: GK declines and TDS mix shifts can pressure near-term margins; the company notes FX had a modest positive EBITDA impact in FQ4 and FY25.
- Assessment: The guidance signals a disciplined return-to-growth trajectory with meaningful cash flow improvement as the company completes its transformation. Investor focus should be on (a) the rate and durability of enterprise bookings, (b) CAISY-driven monetization/upsell potential, and (c) the pace of margin expansion driven by product mix and higher-margin enterprise engagements.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SKIL Focus
98.47%
-14.80%
-33.10%
-1.98%
PRDO
80.00%
21.10%
3.28%
13.82%
APEI
54.00%
13.10%
4.27%
7.36%
IH
67.20%
6.41%
2.76%
1.21%
ATGE
57.90%
17.80%
3.61%
12.81%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Baseline scenario supports a constructive long-term stance: Skillsoft is transitioning from a mature, growth-constrained phase to a growth-oriented, enterprise-focused model backed by a robust product roadmap (CAISY, Percipio certifications) and strategic partnerships. The FY26 guidance implies modest top-line growth and margin expansion as the company processes its resource reallocation and executes on big-ticket enterprise wins. The most important catalysts are (1) sustained enterprise bookings and expansions from Honda, Virgin Media-O2, and other large customers; (2) monetization of CAISY-enabled simulations and higher-margin enterprise services; (3) continued expansion of platform integrations that deepen stickiness and cross-sell opportunities.
Valuation considerations: The company’s current enterprise value multiple is negative in the provided data, reflecting net debt and market perception of ongoing transformation costs. A re-rating is plausible if Skillsoft executes on the growth plan, demonstrates durable DRR, and delivers sustained FCF generation. The balance sheet remains leveraged, but with improving leverage and liquidity, allowing continued reinvestment in growth while preserving downside protection.
Investment recommendation: Cautiously constructive. Favor exposure to Skillsoft on the expectation of accelerating enterprise bookings, successful monetization of CAISY and Percipio enhancements, and margin stabilization as the company progresses through FY26. Monitor: (1) enterprise booking pace and Q1 seasonality effects, (2) CAISY adoption and upsell opportunities, (3) integration execution with partners, (4) tariff/regulatory developments, and (5) DRR durability beyond FY25.
Key Investment Factors
Growth Potential
High potential from enterprise GTM pivot, CAISY-enabled AI simulations, and Percipio certifications. Incremental revenue should accrue as enterprise adoption deepens and new integrations (SAP, Oracle, Docebo, Pluralsight, Big Think+) broaden content and LMS ecosystem.
Profitability Risk
Execution risk of resource reallocation; macro policy uncertainty (tariffs) potentially elongating sales cycles; GK margin volatility due to mix and partner variability; elevated debt and moderate leverage (5.3x gross debt) could pressure balance sheet if growth initiatives underperform.
Financial Position
Healthy cash position ($103m cash and equivalents); improving leverage trend (gross debt $581m, net debt $477m; leverage ~5.3x as of Q4 FY25); positive free cash flow expected in FY26; positive adjusted FCF of $33m in FY25 despite transformation costs.
SWOT Analysis
Strengths
AI-enabled, scalable learning platform (Percipio) with CAISY coach; enterprise-scale content and multi-modal delivery
Strong enterprise focus evidenced by large deals (GK: ~$6m TCV top 10; TDS: ~$22m top 10) and marquee customers (Honda, Virgin Media-O2)
Broad enterprise integrations and content partners (SAP, Pluralsight, Big Think+, Oracle, Docebo)
Significant gross margin stability driven by high-value service mix and efficient cost structure
Weaknesses
Material GAAP net losses (FY25 net loss $121.9m) and negative EBITDA on a GAAP basis in Q4 (EBITDA -$118.8m) due to non-cash/acquired intangible amortization and transformation-related costs
GK revenue declines and FX sensitivity; mix-dependent margin risk
Debt burden and leverage (~5.3x) limits near-term flexibility if growth initiatives underperform
Reliance on Q4 bookings cadence (historical 45-50% of annual bookings in Q4) exposes Q1 to seasonality risk
Opportunities
Expansion of enterprise GTM (up to 20% resource shift) to accelerate growth in enterprise segments
Monetization of CAISY through cross-sell into sales enablement, customer success, and content operations
Certification-based contracts and credentialing programs to increase stickiness and renewals
Global footprint expansion via new integrations and content partners to broaden addressable market
Potential productivity improvements and margin expansion as the mix shifts toward higher-margin enterprise solutions
Threats
Macro headwinds and tariff/regulatory uncertainty affecting enterprise spend
Competitive intensity in corporate learning platforms and AI-enabled training
FX volatility impacting reported revenue and margins in non-US markets
Prolonged sales cycles in large enterprise deals in a cautious macro environment
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