v3.26.1
Note 13 - Segment Information
 3 Months Ended
Apr. 30, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

(13)    Segment Information

 

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Skillsoft's chief operating decision maker (“CODM”) is its Chief Executive Officer. No operating segments have been aggregated to determine our reportable segment.

 

As of April 30, 2026, our CODM organizes Skillsoft's business, manages resource allocation and measures performance through one operating and reportable segment: our TDS segment (described below). Skillsoft previously had two operating and reportable segments: TDS and GK. On April 30, 2026, we committed to a plan to sell the business of our GK segment, and determined that such business met the criteria to be classified as held for sale and as discontinued operations. Accordingly, the historical results of our former GK segment are presented as discontinued operations, and as such, have been excluded from continuing operations in the unaudited condensed consolidated statements of operations and segment results for all periods presented. See Note 3 “Discontinued Operations and Assets Held for Sale” for additional information.

 

In connection with Skillsoft’s transition to a single reportable segment, the CODM changed the measures used to evaluate segment performance and allocate resources from segment revenues and business unit contribution profit to TDS revenue and adjusted EBITDA. Prior-period amounts have been recast to conform to the current presentation (segment revenue determinations are unchanged). Adjusted EBITDA is determined by subtracting the following from TDS revenue: adjusted costs of revenues, adjusted content and software development expenses, adjusted selling and marketing expenses, and adjusted general and administrative operating expenses. Each adjusted expenses measure equals the corresponding expense reflected on our unaudited condensed consolidated statements of operations, excluding in each case the following items (when applicable), which our CODM does not consider in measuring segment performance:

 

 ●

Depreciation expenses – Costs of property and equipment recorded to expense over their respective estimated useful lives on a straight-line basis.

 ●

Long-term incentive compensation expenses – Charges associated with long-term incentive compensation programs, including stock-based compensation, cash awards tied to stock performance, and awards granted in lieu of stock that are intended to be settled in cash.

 ●Litigation and regulatory matters expenses – Charges associated with certain litigation, regulatory, compliance and investigative matters.

 

 ●Executive exit costs – Costs associated with the departure of executives.
 ●

Transformation costs – Costs incurred to transform our operations through significant strategic non-ordinary course transactions.

 

Adjusted EBITDA excludes the following (when applicable), as the CODM does not consider them in measuring segment performance: non-cash goodwill and intangible asset impairment charges; amortization of intangible assets; acquisition and integration-related costs; restructuring expenses; other income (expense), net; interest rate swap fair value adjustments; interest income; and interest expense. Segment performance is not evaluated based on segment asset or liability information.

 

Our TDS segment is delivered through two complementary platform offerings: (i) our enterprise-focused Skills Management Platform, which provides organizations with subscription-based access to learning and workforce capability development tools, and (ii) our Learner Platform, which provides interactive, practice-based technology skill development experiences for individual learners and enterprise teams.

 

The following reconciles adjusted EBITDA to GAAP income (loss) from continuing operations for the periods presented (in thousands):

 

 

  

Three Months Ended April 30,

 
  

2026

  

2025

 

TDS

        

Revenues

 $94,498  $99,148 

Adjusted costs of revenues

  15,739   16,271 

Adjusted content and software development expenses

  12,674   12,097 

Adjusted selling and marketing expenses

  26,270   28,666 

Adjusted general and administrative expenses

  13,175   15,275 

Adjusted EBITDA

  26,640   26,839 

Excluded from all adjusted operating expenses above:

        

Depreciation

  343   320 

Long-term incentive compensation expenses

  2,950   4,539 

Litigation and regulatory matters expenses

  373   — 

Transformation costs

  371   1602 

Amortization of intangible assets

  29,561   30,106 

Acquisition and integration related costs

  —   523 

Restructuring expenses

  1,341   1,016 

Operating income (loss)

  (8,299)  (11,267)

Other income (expense), net

  2,606   (917)

Fair value adjustment of interest rate swaps

  1,245   (4,256)

Interest income

  545   468 

Interest expense

  (13,748)  (14,396)

Income (loss) before provision for (benefit from) income taxes

  (17,651)  (30,368)

Provision for (benefit from) income taxes

  1,044   (741)

Income (loss) from continuing operations

 $(18,695) $(29,627)

 

The following sets forth our TDS segment assets as of the period presented (in thousands):

 

  

April 30, 2026

  

January 31, 2026

 

TDS

 $799,863  $881,839 

 

Skillsoft’s long-lived assets are primarily located in the United States. Long-lived assets located in any individual foreign country are not material.