Skillsoft Corp. Q4 FY2025 earnings call

• Transformation strategy focuses on 'fix the basics' (improved operational execution, productivity, margin expansion) and 'invest to grow' (reallocation of resources to return to or above market growth rates). Target to shift up to 20% of go-to-market and product resources to enterprise market segment.
• Product strategy: Built out enterprise features and integrations in Percipio platform; Skillsoft CAISY hit 1 million launches; Percipio allows creating certification paths; optimized coaching experience and expanded integrations.
• Go-to-market strategy: GK's top 10 deals in Q4 had $6M total contract value; TDS's top 10 deals had $22M total contract value; focus on enterprise sales and product innovation.

Talent Development Solutions (TDS) revenue in Q4 was $102.8 million, up 1% YOY, and $405.5 million for FY '25, essentially flat to FY '24. LTM dollar retention rate (DRR) for FY '25 returned to 100% due to a strong Q4 DRR of 105%. Global Knowledge (GK) revenue in Q4 was $30.9 million, down 13% YOY, and $125.4 million for FY '25, down 15% YOY. Sequential improvement in GK's revenue decline was noted in the second half of FY '25.

• FY '26 revenue expected to be $530 million to $545 million.
• FY '26 adjusted EBITDA expected to be $112 million to $118 million.
• FY '26 free cash flow expected to be $13 million to $18 million, with unlevered free cash flow of $71 million to $76 million.

• Macro-economic environment: Potential impacts from evolving government policies, which may materially affect the business. Uncertainty around the duration and depth of market conditions.

Q: Ken Wong asks about impact of tariff news on customer base.

A: Ron Hovsepian discusses federal contractor status, preparedness, and different customer reactions to regulations.

Q: Ken Wong asks about EBITDA guidance and margin expansion.

A: Ron and Rich discuss revenue growth pivot, EBITDA leverage, and reinvestment in the business.

Q: Ken Wong asks about go-to-market transformation and big deal activity.

A: Ron talks about product and go-to-market strategy validation, sales team shifts, and enterprise squad enhancements.

Q: Ken Wong asks about CAISY test customers and monetization.

A: Ron discusses customer engagement, professional services group hiring, and excitement around AI simulator capabilities.

Q: Ken Wong asks about Global Knowledge margin and future trends.

A: Ron explains margin mix issues, progress in stabilizing top line, and plans to improve margins in FY '26.

Q: Ken Wong asks about DRR durability.

A: Rich and Ron discuss DRR improvement, contract durability, and continued focus on customer success and compliance.

Q: Ken Wong asks about growth priority vs. EBITDA/cash flow.

A: Ron states focus on profitable growth, leveraging balance sheet and liquidity to invest in growth opportunities.