v3.26.1
Note 13 - Segment Information
 6 Months Ended
Jul. 31, 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, Skillsoft operates as a single operating and reportable segment. Our CODM organizes Skillsoft's business, manages resource allocation and measures performance on a consolidated basis. 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” 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 revenue from continuing operations (which we refer to herein as "revenue"), income (loss) from continuing operations, and adjusted EBITDA from continuing operations (which we refer to herein as "adjusted EBITDA"). Income (loss) from continuing operations is the measure of segment profit (loss) determined on a basis most consistent with the measurement principles used in our unaudited condensed consolidated statements of operations. Adjusted EBITDA is an additional measure of segment profit (loss) used by the CODM to evaluate segment performance and allocate resources. 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 revenue: adjusted costs of revenues, adjusted content and software development expenses, adjusted selling and marketing expenses, and adjusted general and administrative operating expenses. The foregoing adjusted expense measures are defined as costs of revenues, content and software development expenses, selling and marketing expenses, and general and administrative operating expenses (in each case from continuing operations) reflected in our unaudited condensed consolidated statements of operations, respectively, but excluding in each case the following items (when applicable), which our CODM does not consider in measuring adjusted EBITDA:

 

 ●

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 that are determined to be outside of the ordinary course of business, and not reflective of ongoing operations.
 ●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 adjusted EBITDA: 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 business 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 presents income (loss) from continuing operations, adjusted EBITDA, a reconciliation between the two, and significant segment expenses for the periods presented (in thousands):

 

  

Three Months Ended July 31,

  

Six Months Ended July 31,

 
  

2026

  

2025

  

2026

  

2025

 

Revenues

 $98,248  $101,185  $192,746  $200,333 

Adjusted costs of revenues

  15,135   15,796   30,874   32,067 

Adjusted content and software development expenses

  11,460   12,467   24,134   24,564 

Adjusted selling and marketing expenses

  25,400   28,913   51,670   57,579 

Adjusted general and administrative expenses

  12,825   12,794   26,000   28,069 

Adjusted EBITDA

  33,428   31,215   60,068   58,054 

Excluded from all adjusted operating expenses above:

                

Depreciation

  316   336   659   656 

Long-term incentive compensation expenses

  2,182   3,718   5,132   8,257 

Litigation and regulatory matters expenses

  248   —   621   — 

Transformation costs

  1,406   1,004   1,777   2,606 

Amortization of intangible assets

  21,537   29,875   51,098   59,981 

Acquisition and integration related costs

  —   769   —   1,292 

Restructuring expenses

  4,365   1,613   5,706   2,629 

Operating income (loss)

  3,374   (6,100)  (4,925)  (17,367)

Other income (expense), net

  1,627   331   4,233   (586)

Fair value adjustment of interest rate swaps

  758   2,128   2,003   (2,128)

Interest income

  697   465   1,242   933 

Interest expense

  (14,240)  (14,962)  (27,988)  (29,358)

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

  (7,784)  (18,138)  (25,435)  (48,506)

Provision for (benefit from) income taxes

  7,209   (153)  8,253   (894)

Income (loss) from continuing operations

 $(14,993) $(17,985) $(33,688) $(47,612)

 

Significant segment expenses consist of adjusted costs of revenues, adjusted content and software development expenses, adjusted selling and marketing expenses, and adjusted general and administrative operating expenses (each as set forth above). Other segment items (also set forth above) consist of (when applicable) each of the exclusions described above to determine the adjusted expense measures (depreciation, long-term incentive compensation expenses, litigation and regulatory matters expenses, transformation costs), as well as 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.

 

The following sets forth our assets from continuing operations as of the period presented (in thousands):

 

  

July 31, 2026

  

January 31, 2026

 

Continuing operations

 $766,527  $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.