Slides
Page 1
Earnings Supplement September 9, 2026 Q2 FY2027
Page 2
2 2 This document (and the presentation to which it relates) 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. For all such statements, we claim the protection of the safe harbor for forward-looking statements provided by such sections and the Private Securities Litigation Reform Act of 1995, where applicable. All statements, other than statements of historical facts, are forward-looking statements. These forward-looking statements include, but are not limited to, statements that address activities, events or developments that we expect or anticipate may occur in the future, including statements with respect to our guidance and outlook, our product development and planning, our pipeline, future capital expenditures and capital allocation, future share repurchases, anticipated financial results, the impact of regulatory changes, our current and evolving business strategies and their anticipated impact, including with respect to the disposition of our Global Knowledge ("GK") business, demand for our services, our competitive position, the benefits of new initiatives, growth of our business and operations, the effectiveness of our products, the outcomes of litigation proceedings and claims, the state and future of skilling in the workplace, our ability to successfully implement our plans, strategies, and objectives, our ability to regain and/or maintain compliance with New York Stock Exchange listing standards, and our expectations and intentions. Forward-looking statements may, without limitation, be preceded by, followed by, or include words such as “may,” “will,” “would,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “contemplate,” “continue,” “project,” “forecast,” “seek,” “outlook,” “target,” “goal,” “objective,” “potential,” “possible,” “probable,” or similar expressions, employ such future or conditional verbs as “may,” “might,” “will,” “could,” “should,” or “would,” or may otherwise be indicated as forward- looking statements by grammatical construction, phrasing or context. 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 materially from those set forth in the forward-looking statements. All forward-looking disclosures are speculative by their nature, and we caution you against unduly relying on these forward-looking statements. Factors, many of which are beyond our control, that could cause or contribute to such differences include those described under “Part I - Item 1A. Risk Factors” and “Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (“2026 Form 10-K”), as well as “Part II – Item 1A. Risk Factors and Item 2. MD&A” in our Quarterly Report on Form 10-Q for the fiscal quarter ended Jul 31, 2026 ("2027 Q2 Form 10-Q"). These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in the 2026 Form 10-K, in the 2027 Q2 Form 10-Q, in this document, and in our other filings with the Securities and Exchange Commission ("SEC"). The forward-looking statements contained in this document represent our estimates only as of the date of this document and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements, or otherwise, except as required by law. You are advised, however, to review any further factors and risks we describe in reports we file from time to time with the SEC after the date hereof. 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 (or presentation to which it relates), 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 not guarantees or assurances of future performance and may not reflect (and may be materially different from) actual results. Additionally, statements as to market share, industry data and our market position are based on the most current data available to us and our estimates regarding market position or other industry statistics 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. All forward-looking statements contained herein are expressly qualified in their entirety by the foregoing cautionary statements. Note Regarding Non-GAAP Financial Measures This presentation includes non-GAAP financial measures. Non-GAAP financial measures do not have any standardized meanings prescribed by U.S. GAAP and may not be comparable to similar measures presented by other public companies. Non-GAAP financial measures are not measures of performance under U.S. GAAP and should not be considered in isolation or as a substitute for any U.S. GAAP financial measures. We do not provide reconciliations for forward-looking non-GAAP financial measures. Forward-looking non-GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures. See the Appendix for further detail. Cautionary Notes Regarding Forward Looking Statements
Page 3
3 3 1. Opening Remarks 2. Business Update 3. Q2 Fiscal 2027 Financial Highlights 4. Q&A 5. Closing Remarks Today’s Call Webcast Details Webcast Link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=7wBcSLNY Audio Dial-in: Toll-free (877) 407-3138 | International: (201) 389-0928
Page 4
4 Ron Hovsepian Today’s Presenters Executive Chairman & Chief Executive Officer Ron Kisling Nick Teves Chief Financial Officer Investor Relations
Page 5
5 The secondquartermarkedanotherimportantstepin Skillsoft’stransformation. Withthe Global Knowledgedivestiturecomplete,we arenowa simpler,morefocusedcompanycenteredon our coreenterpriseopportunityand the continueddevelopmentof our AI-nativeskillsmanagement platform. We areseeingencouragingprogressin customerengagement,earlyplatformadoption andpipelineexpansion,whilethegeneralavailabilityofLXDesignStudioisanimportantexampleof howwearebringingdifferentiated,AI-enabledcapabilitiestocustomers. AsAIcontinuestoreshapeworkforcerequirements,organizationsincreasinglyneedbetterwaysto identifyskillsgaps,closethosegapswithtargeteddevelopment,andmeasureworkforcereadiness. We believeSkillsoftis wellpositionedto addressthat needthroughthe combinationof trusted contentandourAI-nativetechnologyplatform. At thesametime,addressingourdebtstructureis ourtopfinancialpriorityandweareapproachingthatworkwithdisciplinewhilecontinuingtofocus onprofitability,freecashflow,andlong-termvaluecreationforallstakeholders. Ron Hovsepian Executive Charmain & Chief Executive Officer Ron Kisling Chief Financial Officer I am encouragedby the progresswe made on profitabilityduring the quarter. Our enterprisebusinesscontinuesto performas planned,whileacceleratingpressurein the consumerbusinessis reflectedin our revisedfiscal2027 revenueoutlook. We remain focusedondisciplinedexecutionandactivelymanagingourcoststructure,whichallowsus tomaintainourAdjustedEBITDA(1)andFreeCashFlow(1) guidance. “ “ ” ” 1 - Denotes a non-GAAP financial measure. See “Note Regarding Non-GAAP Financial Measures.” Also see the Appendix for the defin ition and uses of this non-GAAP financial measure and a reconciliation to the most directly comparable GAAP financial measure for specified periods.
Page 6
6 ▪ Global Knowledge segment classified as Discontinued Operations ▪ Results reflect Skillsoft's Continuing Operations and prior periods have been recast to conform presentation, except Free Cash Flow(1) which includes both continuing and discontinued operations ▪ In July 2026, Skillsoft completed the sale of its Global Knowledge business to Enduring Ventures ▪ AI-based LX Design Studio capability reached general availability, enabling customers to turn their own expertise into custom courses, assessments, and interactive practice experiences within the Skillsoft Platform ▪ By the end of the second quarter, the number of CAISY learners increased 23% year over year, while the number of organizations using CAISY grew 9% reflecting growing demand for AI-enabled practice and skills development ▪ Launched early access to Skillsoft AI Coach, a new personalized coaching experience helps employees sharpen the skills the business needs to execute and drive outcomes at scale Recent Business Highlights 1 - Denotes a non-GAAP financial measure. See “Note Regarding Non-GAAP Financial Measures.” Also see the Appendix for the definition and uses of this non-GAAP financial measure and a reconciliation to the most directly comparable GAAP financial measure for specified periods.
Page 7
7 Q2 FY2027 Financial Highlights Q2 FY27 Revenue $98.2M 3% vs. Prior Year LTM Dollar Retention Rate1 98% 1% vs. Prior Year Q2 FY27 Adjusted EBITDA2 % of Revenue2 $33.4M 34% ~320bps vs. Prior Year ▼▼ ▼ 1 - See Appendix, for "Key Performance Metric" for the definition of DRR and LTM DRR, how it is calculated, and the rationale forits use. 2 - Denotes a non-GAAP financial measure. See “Note Regarding Non-GAAP Financial Measures.” Also see the Appendix for the definitionand uses of this non-GAAP financial measure and a reconciliation to the most directly comparable GAAP financial measure for specified periods.
Page 8
8 Revenue (compared to Q2 ‘26) ▪ Total revenue declined 2.9% in Q2 ’27 ▪ Geographic mix: 75% United States, 15% EMEA, 10% rest of world for Q2 ’27 ▪ Expected softness in Consumer business reflected in YoY decline ▪ Underlying enterprise business performing in-line with expectations ▪ Revenue from labor-based offerings improved in Q2 '27 ▪ Completed Global Knowledge divestiture provides a cleaner view of the go-forward business. $103.0 ▼1% YoY $102.8 ▲2% YoY $99.1 ▲1% YoY $101.2 ▲1% YoY $100.8 ▼<1% YoY $102.6 ▼2% YoY $94.5 ▼<1% YoY $98.2 ▼3% YoY Q3 '25 Q4 '25 Q1 '26 Q2 '26 Q3 '26 Q4 '26 Q1 '27 Q2'27 Ongoing declines in consumer business; Revenue from labor-based offerings improved in the quarter Note: $ in millions; totals may not match due to rounding.
Page 9
9 Adjusted EBITDA1 Free Cash Flow 1 & Total Operating Expenses1 ▪ Q2 ‘27 Adjusted EBITDA1 of $33.4M, up $2.2M or 7% YoY ▪ Q2 ‘27 Adjusted EBITDA margin1 of 34%, up ~320 basis points YoY ▪ Q2 ’27 Free Cash Flow1 of ($20.5)M, improved $2.1M YoY ▪ Q2 ‘27 Adjusted Total Operating Expenses1 of $64.8M. Adjusted EBITDA margin¹ expanded despite lower revenue, supported by reduced operating expenses and continued cost discipline, reiterated FY’27 Free Cash Flow¹ guidance reflects management’s confidence in the cash generation profile of the simplified go-forward business Q2'26 Q2'27 Free Cash Flow1 ($Ms) $31.2 31% $33.4 34% Q2'26 Q2'27 Adjusted EBITDA1 ($Ms) Up $2.2M YoY Improved $2.1M YoY Note: $ in millions; totals may not match due to rounding. 1 - Denotes a non-GAAP financial measure. See “Note Regarding Non-GAAP Financial Measures.” Also see the Appendix for the definition and uses of this non-GAAP financial measure and a reconciliation to the most directly comparable GAAP financial measure for specified periods. ($22.6) ($20.5)
Page 10
Appendix
Page 11
11 Reconciliation of Non-GAAP Financial Measures In addition to disclosing detailed operating results in accordance with U.S. GAAP, Skillsoft provides supplementary non -GAAP financial measures to consider in evaluating our operating performance. We track the non -GAAP financial measures that we believe are key financial measures of our success. Non -GAAP measures 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 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. In addition, management uses these non-GAAP financial measures to assess operating performance, financial leverage and the effective use and allocation of resources; to provide more normalized period-to-period comparisons of operating results; to enhance investors’ understanding of the core operating results of our business; and to set management incentive targets. We believe investors use both U.S. GAAP and non-GAAP financial measures to assess management's decisions associated with our priorities and capital allocation, as well as t o analyze how our business operates in, or responds to, macroeconomic trends or other events that impact our core operations. We disclose the non-GAAP financial measures included in this document because we believe that they provide meaningful supplemental information. However, non -GAAP financial measures have limitations as analytical tools. Because not all companies use identical calculations, our presentation of non -GAAP financial measures 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 altern ative 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 non-GAAP financial measures should not be considered in isolation fr om, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP. Beginning in the first quarter of fiscal 2027, Skillsoft classified its GK segment as discontinued operations. As a result, c ommencing with the fiscal quarter ended April 30, 2026, adjusted net income and adjusted EBITDA are intended to measure continuing operations only, and therefore exclude the operating results of our former GK segment. Accordingly, as of April 30, 2026, these non-GAAP financial measures are reconciled to income(loss) from continuing operations, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP, rather than net income(loss). This change aligns Skillsoft’s non-GAAP measures with the results of its ongoing business. Note that all financial measures included below (other than free cash flow and adjusted free cash flow (levered), which each include both continuing and discontinued operations, relate only to continuing operations. Prior -period amounts have been recast to conform to the current presentation. The non -GAAP financial measures included in this press release are: adjusted net income; adjusted net income per share; adjusted net income margin % (i.e., adjusted net income as a percentage of revenue); adjusted EBITDA; adjusted EBITDA margin % (i.e., adjusted EBITDA as a percentage of revenue); adjusted total operating expenses; adjusted costs of revenues; adjusted content and software development expenses; adjusted selling and marketing expenses; adjusted general and administrative expenses; free cash flow, and adjusted free cash flow (levered). We have provided at the back of this document reconciliations of these non -GAAP financial measures to the most directly comparable U.S. GAAP financial measures for the three and six month periods ended July 31, 2026 and 2025. We do not reconcile our forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial me asures, 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 reconc iliation of these forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures is available to us without unreasonable efforts. For the same reasons, we are unable to address the probab le 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 finan cial measures may be materially different than the non-GAAP financial measures. We disclose the following non-GAAP financial measures in our press release and/or this presentation because we believe these non -GAAP financial measures provide meaningful supplemental information. ▪ Adjusted net income - is defined as net income (loss) from continuing operations excluding non -cash items, discrete and event-specific costs that do not represent normal cash operating expenses necessary for our business operations, and certain accounting income and/or expenses. Management believes these exclusions enhance the comparability of our results from period to period, and as compared to peers, and are useful in assessing our operating performance, and consist of the following (including the related tax effects), when applicable to the periods presente d: ▪ Impairment charges – Non-cash goodwill and intangible asset impairment charges. ▪ Amortization of acquired intangible assets – Non-cash amortization expense of finite-lived intangible assets recognized as a par t of business combination accounting. ▪ Acquisition and integration related costs – Costs incurred to effectuate an acquisition, including contingent compensation expen ses, and integration -related costs. ▪ Restructuring charges – Charges related to strategic cost saving initiatives, including severance costs, losses associated with the abandonment of right-of-use assets, and contract termination costs. ▪ Transformation costs – Costs incurred to transform our operations through significant strategic non -ordinary course transactions. ▪ Litigation and regulatory matters expenses – Charges associated with certain litigation, regulatory, compliance and investigativ e matters and related costs including legal settlements, fines, penalties, remediation costs, professional fees and other directly-attributable expenses arising from specific proceedings, inquiries, investigations, or noti ces, including those from regulatory bodies or listing authorities. These matters are evaluated periodically, and excluded where they are determined to be outside of the ordinary course of business and not reflective of o ngoing operations, based on factors such as frequency, complexity, nature of relief sought, and applicable counterparty. ▪ Long-term incentive compensation expenses – Charges associated with long-term incentive compensation programs, including stock -based compensation, cash awards tied to stock performance, and awards granted in - lieu of stock that are intended to be settled in cash. ▪ Executive exit costs – Costs associated with the departure of executives. ▪ Fair value adjustments – Mark-to-market adjustments of interest rate swap agreements. ▪ Other (income) expense, net – Unrealized and realized gains or losses primarily resulting from fluctuations of U.S. dollar appre ciating or depreciating against other currencies, and impairments associated with property and equipment and other tangible assets when their carrying values are not recoverable.
Page 12
12 Reconciliation of Non-GAAP Financial Measures ▪ Adjusted net income per share is defined as adjusted net income divided by the number of diluted weighted average shares outs tanding, and adjusted net income margin % is defined as adjusted net income as a percentage of revenue. ▪ Adjusted EBITDA is defined as net income(loss) from continuing operations excluding (when applicable to the periods presented ) the same exclusions set forth above for the determination of adjusted net income plus the additional exclusions set forth below. Management believes these exclusions enhance the comparability of our results from period to peri od, and as compared to peers, and are useful in assessing our operating performance. The additional exclusions are: ▪ Amortization of intangible assets and capitalized internally developed software – Non-cash amortization expense for finite-lived intangible assets other than those recognized as a part of business combination accounting. ▪ Interest expense, net - Gross interest expense offset by interest income ▪ Depreciation expense – Non-cash depreciation expense for property and equipment assets. ▪ Provision for (benefit from) income taxes – Current and deferred federal, state and foreign income tax expense (benefit). ▪ Adjusted EBITDA margin % is defined as adjusted EBITDA as a percentage of revenue. ▪ Adjusted costs of revenues, adjusted content and software development expenses, adjusted selling and marketing expenses, and adjusted general and administrative expenses are defined as, respectively, costs of revenues from continuing operations, content and software development expenses from continuing operations, selling and marketing expenses f rom continuing operations, and general and administrative expenses from continuing operations excluding in each case (where applicable): depreciation expense, long -term incentive compensation expense, transformation costs, litigation and regulatory matters expenses, and executive exit costs. ▪ Adjusted total operating expenses are defined as the sum of adjusted costs of revenues, adjusted content and software development expenses, adjusted selling and marketing expenses, and adjusted general and administrative expenses. ▪ Free cash flow is defined as net cash provided by (used in) operating activities less net purchases of property and equipment and internally developed software. Note that free cash flow does not represent residu al cash flow available to Skillsoft for discretionary expenditures. ▪ Adjusted free cash flow (levered) is defined as free cash flow plus the cash impact of the charges excluded in the determination of adjusted EBITDA. Note that adjusted free cash flow (levered) does not represent residual cash flow available to Skillsoft for discretionary expenditures. Key Performance Metric •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 downgrade s 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. LTM DRR is the DRR for the preceding twelve months from the period referenced.
Page 13
13 13 Reconciliation of Non- GAAP Financial Measures
Page 14
14 14 Reconciliation of Non-GAAP Financial Measures