Skillsoft Corp. (SKIL) Q3 2026 Earnings Call Transcript
Revenue for TDS $100.8 million for the third quarter, down 2.1% year-over-year. Around 70% of the decline came from our B2C learner product, which represents around 9% of TDS revenue. The learner business struggles with changes in organic search algorithms, hampering lead generation and customer acquisition. The larger portion of our business, Enterprise Solutions, was down approximately 1%, reflecting customer churn earlier in the year.
Global Knowledge (GK) revenue $28.2 million in the quarter, down approximately $6 million or 17.6% year-over-year. The decline is due to softening demand, a shift in customer preferences towards blended learning, and spending reductions from the U.S. government shutdown.
Total revenue $129 million in the third quarter, down $8.2 million or 6% year-over-year. The decline is attributed to the performance of GK and the B2C learner product.
Cost of revenue $35.1 million in the third quarter or 27% of revenue, up 3.1% year-over-year. The increase is due to higher labs and certification spending and cloud-related costs resulting from higher customer utilization.
Content and software development expenses $13.7 million in the quarter or 11% of revenue, down approximately 2.4% year-over-year. The decrease is due to productivity gains from leveraging AI and sharper focus.
Selling and marketing expenses $35.2 million for the third quarter or 27% of revenue, down approximately 7.1% year-over-year. The reduction is due to lower headcount and improved productivity from transformation efforts.
General and administrative expenses $17.1 million in the third quarter or 13% of revenue, down approximately 11.9% year-over-year. The decrease is due to lower headcount and vendor spending, demonstrating improved productivity.
Total operating expenses $101 million in the third quarter or 78% of revenue, down $4.3 million or 4.1% year-over-year. The reduction reflects overall cost management and productivity improvements.
Adjusted EBITDA $28 million, down about 12% compared to $31.9 million last year. Adjusted EBITDA margin as a percentage of revenue for the quarter was 21.7% compared to 23.3% last year. GK contributed negative $3.3 million to EBITDA, driving most of the reduction.
GAAP net loss $41.3 million in the third quarter compared to $23.6 million in the prior year period. The increase is primarily due to a noncash goodwill impairment loss of $20.8 million related to GK.
Adjusted net income $14.3 million in the third quarter compared to $11.3 million in the prior year. Adjusted net income per share was $1.65 compared to $1.37 in the prior year.
Free cash flow Negative $23.6 million compared to a positive $4.1 million in the prior year period. About 3/4 of the cash utilization represented timing and reverses in Q4, with the remaining balance related to GK performance.
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