Release Date: June 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Skillsoft Corp (SKIL, Financial) has a significant market opportunity with long-term structural tailwinds in the enterprise learning market.
- The company has successfully expanded relationships with major clients, including a global staffing provider and a European financial services company.
- Skillsoft Corp (SKIL) has implemented a dual business unit structure to enhance decision-making and operational efficiency.
- The company has onboarded new leadership, including Darren Bance, to drive improvements in the instructor-led training segment.
- Skillsoft Corp (SKIL) reported positive free cash flow of $10 million in the first quarter, indicating strong cash management.
Negative Points
- First-quarter financial results were below expectations, with total revenue down 6% year over year.
- Instructor-led training revenue decreased by 20% year over year, impacting overall performance.
- The company faced tighter budgets and softer consumer subscription performance, affecting content and platform revenue.
- LTM dollar retention rate dropped to approximately 99%, compared to 101% in the same quarter last year.
- General and administrative expenses increased by 10% year over year, partly due to the absence of prior year benefits.
Q & A Highlights
Q: Just thinking about the restructuring, how should we think about the magnitude of these organizational changes and the timeline for recovery?
A: (Ronald Hovsepian, CEO) We are focusing on operational discipline and strategic alignment. Early wins are possible, and we are moving swiftly to address issues. We reaffirm our full-year outlook despite a softer start, as we believe in our ability to shore up performance in the near term.
Q: Can you provide any color around booking growth?
A: (Rich Walker, CFO) We no longer disclose bookings metrics based on investor feedback and industry practice. Our revenue performance reflects our internal expectations, and we are focused on improving execution.
Q: Is the instructor-led training (ILT) business structurally challenged, and what are the main issues?
A: (Ronald Hovsepian, CEO) The ILT market is growing, but we face execution issues, particularly in marketing and fill rates. We need a more local focus in marketing and better execution on attendance. These are operational matters that we can address quickly.
Q: How should we think about the dollar-based retention rate (DRR) for the content and platform business?
A: (Rich Walker, CFO) The DRR was impacted by a large upgrade last year and a government funding cut this quarter. We expect DRR to improve over the year. Our largest customers have DRRs over 105%, and we are implementing new retention strategies for lower-end customers.
Q: Are there any specific industries more impacted by the enterprise renewal rate slowdown?
A: (Ronald Hovsepian, CEO) We haven't seen any industry-specific trends, except for the government sector due to budget cuts. The DRR is within the norm, and we expect it to improve over the year.
Q: Can you provide metrics on user engagement and AI-related apps on the platform?
A: (Rich Walker, CFO) Usage metrics are less important now; customers focus on outcomes. We are measuring outcomes related to workforce transformation, leadership development, and career mobility. We will discuss this more at our Investor Day.
Q: What are the main issues with the ILT business, and when can we expect a turnaround?
A: (Ronald Hovsepian, CEO) The ILT business faces operational issues, particularly in marketing and attendance. We are addressing these quickly and expect improvements. The business can move fast, and we are focused on increasing margins and product bundling.
Q: Is there any geographical divergence in performance?
A: (Ronald Hovsepian, CEO) We haven't seen significant geographical trends. Asia is showing good growth, and Europe is stable. The ILT business has consistent negative performance, which we are addressing.
Q: Are you losing market share in the content and platform segment?
A: (Ronald Hovsepian, CEO) We are performing well in certain categories and are focusing on cost-effective customer acquisition. We will provide more details at our Investor Day.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
