Skillsoft cuts fiscal 2027 revenue outlook amid consumer segment drag

Skillsoft Corp. reported second-quarter fiscal 2027 revenue of $98.2 million, a decrease of 2.9% year over year, according to data provided by GN markets/earnings (en-US). The decline was primarily attributed to ongoing weakness in the company’s consumer coding business, which offset relative stability in its enterprise operations. Despite the top-line contraction, profitability metrics improved as cost reductions lifted adjusted EBITDA by 7% to $33.4 million, expanding the margin to 34% from 31% in the prior-year period.

Management responded to the revenue softness by lowering its full-year fiscal 2027 revenue guidance to a range of $380 million to $390 million. However, the company maintained its previously issued outlook for adjusted EBITDA and free cash flow. The strategic pivot follows the completion of the divestiture of the Global Knowledge business, allowing Skillsoft to concentrate capital and management attention on its Talent Development Solutions operation and an AI-native skills management platform for enterprise customers.

Consumer segment drives revenue contraction

Chief Financial Officer Ron Kisling stated that the core enterprise business declined by approximately 1% year over year, indicating that the broader revenue drop was driven almost entirely by the consumer segment. Dollar retention rates showed mixed signals, with the current rate improving to 95% from 94% in the year-earlier quarter, while the last-12-month dollar retention slipped to 98% from 99% a year earlier. Kisling noted that the consumer business, focused on coding-related learning, is facing a dual headwind of broader market weakness and shifting demand patterns.

The company is experiencing an accelerated impact from artificial intelligence and AI agents on the demand for code-development training. Kisling acknowledged that AI is altering the landscape for consumer-facing coding skills. Despite this structural shift, management emphasized that the consumer business remains a contributor to the bottom line, with operations prioritizing profitability over top-line growth. The company expects the segment to continue supporting net income despite the dislocation in revenue.

Cost reductions boost adjusted EBITDA margin

Adjusted total operating expenses declined by $5.1 million, or 7%, to $64.8 million, directly contributing to the expansion in EBITDA margins. Selling and marketing expenses fell approximately 12% year over year to $25.4 million, a reduction Kisling attributed to lower spending following a redesign of the company’s go-to-market approach. Content and software development expenses decreased by about 8% to $11.5 million, while general and administrative expenses remained flat at $12.8 million.

On a GAAP basis, Skillsoft reported a net loss from continuing operations of $15 million, an improvement from the $18 million loss in the previous year's second quarter. The GAAP loss per share from continuing operations narrowed to $1.67 from $2.10 a year earlier. Adjusted net income stood at $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, an improvement from negative $22.6 million a year earlier, with Kisling noting that these figures reflect typical seasonal cash collection patterns.

Strategic focus shifts to enterprise AI

Chief Executive Officer Ron Hovsepian stated that the sale of Global Knowledge simplifies the company’s structure and allows management to direct more capital toward its enterprise platform opportunity. The former Global Knowledge business will remain a partner for customers seeking instructor-led training, but Skillsoft is now focused on its AI-native skills management platform. Management is advancing the rollout of this AI platform while prioritizing discussions around the company’s approximately $575 million in gross debt and upcoming maturities.