Skillsoft (NYSE:SKIL) reported second-quarter fiscal 2027 revenue of $98.2 million, down 2.9% from the prior-year period, as continued weakness in its consumer business offset relative stability in its enterprise operations.
The company, which completed the divestiture of its Global Knowledge business, said it is now focused on its Talent Development Solutions operation and an AI-native skills management platform for enterprise customers. Management also reduced its full-year revenue outlook while maintaining its adjusted EBITDA and free-cash-flow guidance.
Revenue Decline Driven by Consumer Business
Dollar retention rate improved to 95% from 94% in the year-earlier quarter, while last-12-month dollar retention was 98%, compared with 99% a year earlier.
Kisling said the consumer business, which has been focused on coding-related learning, is facing broader consumer-market weakness as well as an increasing effect from AI and AI agents on demand for code-development training.
“We’re seeing an accelerated impact of AI on the consumer business,” Kisling said in response to an analyst question. He added that the company continues to operate the business with an emphasis on profitability and expects it to remain a contributor to the bottom line despite top-line dislocation.
Chief Executive Officer Ron Hovsepian said the Global Knowledge sale simplifies the company and allows management to direct more capital and attention toward its enterprise platform opportunity. The former Global Knowledge business will remain an important partner for customers seeking instructor-led training, he said.
Profitability Improved as Expenses Fell
Adjusted EBITDA from continuing operations rose 7% year over year to $33.4 million. Adjusted EBITDA margin improved to 34% of revenue from 31% in the prior-year quarter.
Adjusted total operating expenses declined $5.1 million, or 7%, to $64.8 million. Selling and marketing expense fell approximately 12% year over year to $25.4 million, which Kisling attributed to lower spending following a redesign of the company’s go-to-market approach. Content and software development expense declined about 8% to $11.5 million, while general and administrative expense was flat at $12.8 million.
The company reported a GAAP net loss from continuing operations of $15 million, compared with a $18 million loss in the previous year’s second quarter. GAAP loss per share from continuing operations was $1.67, compared with a $2.10 loss per share a year earlier.
Adjusted net income was $10.5 million, or $1.17 per share, down from $13.6 million, or $1.59 per share, in the prior-year period.
Consolidated free cash flow was negative $20.5 million, improving from negative $22.6 million a year earlier. Kisling noted that the company typically consumes cash during its fiscal second and third quarters because of the seasonality of cash collections, then generates positive cash flow in the first and fourth quarters.
AI Platform Rollout and Enterprise Demand
Hovsepian said the company is seeing early customer interest in its broader enterprise platform offering, which combines learning content, skills management and AI-enabled development tools. The company remains on track to reach $5 million in platform bookings by the end of fiscal 2027, he said.
During the quarter, Skillsoft made its AI-based LX Design Studio generally available. The feature is intended to allow customers to create custom courses, assessments and interactive practice experiences using their own expertise. In early adopter testing from February through June, the company said the tool reduced the production time for comparable interactive courses from two to three weeks to three to five days.
The company also launched early access for AI Coach in July. More than 30 customers were identified for early access, with seven organizations already piloting the offering, including global technology, telecommunications and financial-services companies, Hovsepian said.
Usage of CAISY, Skillsoft’s AI conversation simulator, also expanded. The number of CAISY learners rose 23% year over year at the end of the second quarter, while the number of organizations using the product increased 9%.
Hovsepian said customer conversations have shifted toward workforce skills, skills intelligence and how AI affects work across an organization. He added that Skillsoft’s platform can be adopted incrementally and is designed to integrate with customers’ existing systems rather than requiring a large-scale replacement cycle.
Guidance Reduced; Debt Remains Priority
Skillsoft reduced fiscal 2027 revenue guidance to a range of $380 million to $390 million, from a previous range of $388 million to $406 million, citing the accelerated negative dynamics in its consumer business.
However, the company maintained adjusted EBITDA guidance from continuing operations of $108 million to $116 million, or approximately 28% of revenue. It also maintained its outlook for free cash flow from continuing operations of $14 million to $22 million.
At the end of the quarter, cash equivalents and restricted cash totaled $93.1 million. Gross debt was $575 million, while net debt was approximately $481 million.
Management said addressing upcoming debt maturities remains its top financial priority. Following the Global Knowledge sale, the company has formed a special board committee and engaged advisers in preparation for discussions with lenders. Kisling said the company expects to engage “very soon,” though management did not provide a public timetable or discuss potential outcomes.
The Global Knowledge disposition is expected to consume about $15 million of fiscal 2027 cash flow from operations, transaction-related costs and stranded costs, including $12 million incurred through July 31. The company also expects approximately $4 million of third-party advisory cash outflows in the third quarter related to the sale process.
About Skillsoft (NYSE:SKIL)
Skillsoft (NYSE: SKIL) is a leading provider of corporate digital learning solutions designed to help organizations develop skills and drive performance. The company offers a range of cloud-based learning platforms and content libraries that cover technical training, leadership development, compliance, and productivity applications. Skillsoft’s flagship platform, Percipio, delivers micro-learning modules, video tutorials, books and audiobooks, hands-on labs and simulations, and practice assessments within a unified interface that can be accessed on desktop or mobile devices.
Skillsoft’s content spans IT certification preparation, software development, cloud computing, cybersecurity, project management, and a variety of professional skills such as communication, management and sales.
