Skillsoft (SKIL +3.63%), a leading provider of enterprise digital learning and talent development solutions, released results for its fiscal 2026 second quarter on Sept. 9, 2025. The earnings update showed ongoing resilience in its core Talent Development Solutions (TDS) business and robust engagement with AI-based training, but also persistent revenue pressure, particularly in its Global Knowledge (GK) segment during the first half of fiscal 2026. Management reduced its full-year revenue outlook for fiscal 2026 due to softer-than-anticipated demand, signaling a cautious approach for the rest of fiscal 2026.
Overall, the quarter highlighted a mix of operational stability and ongoing challenges tied to discretionary learning budgets.
| Metric | Q2 FY2026 | Q2 FY2025 | Y/Y Change |
|---|---|---|---|
| Adjusted EPS | $0.92 | $0.87 | 5.7% |
| Revenue | $128.8 million | $132.2 million | (2.6%) |
| Adj. EBITDA | $28.32 million | $28.35 million | (0.1%) |
| TDS revenue | $101.2 million | $101.7 million | (0.5%) |
| Free cash flow | ($22.6 million) | ($16.1 million) | N/A |
Source: Skillsoft. Note: Fiscal 2026's second quarter ended July 31, 2025. Fiscal 2025's Q2 ended July 31, 2024.
About Skillsoft and Its Focus Areas
Skillsoft offers digital learning solutions to help organizations upskill their workforces. Its main offerings span online courses, AI-driven platform features, and instructor-led training for enterprise clients. The company serves over 105 million learners and is used by about 60% of the Fortune 1000.
In recent years, Skillsoft has focused on expanding its technological capabilities, especially in artificial intelligence (AI) and data-driven instruction. Its Percipio platform uses AI to personalize learning and integrate with major human capital management systems. Key success for Skillsoft depends on growing corporate demand for skills transformation, product innovation, and the ability to demonstrate clear return on investment for its clients.
Quarterly Performance: Revenue, Segment Trends, and Operational Progress
Skillsoft reported revenue of $128.8 million, down 3% from the prior year. The TDS (Talent Development Solutions) segment, which delivers core digital platform content and AI-based learning tools, was nearly flat year over year at $101.2 million. The Global Knowledge (GK) segment, which focuses mostly on instructor-led and live training, declined 10% to $27.6 million, reflecting continued weaker demand for live learning. Management specifically pointed to ongoing softness in discretionary spending, particularly in the public sector and “live” or instructor-led learning, as reasons for these trends.
In contrast, adjusted EBITDA -- earnings before interest, taxes, depreciation, and amortization, excluding non-core items -- totaled $28.3 million, consistent with the prior year's result and representing a 22% adjusted EBITDA margin (up from 21%). Adjusted EPS rose to $0.92 from $0.87 year over year. However, Free cash flow (non-GAAP) was negative $22.6 million, a larger outflow than one year ago. Management noted this reflects seasonal cash dynamics, with positive free cash flow generated year-to-date in FY2026, but volatility quarter by quarter.
Segment details showed resilience as well as pressure points. The TDS segment delivered its fourth consecutive quarter of revenue growth in its enterprise solution subset, despite the overall segment being flat. Contribution margin for TDS stayed near 70% (non-GAAP). The GK segment faced a sharper profit squeeze -- contribution margin fell from 43.2% to 36.1%, and contribution profit dropped to $9,966,000 (non-GAAP). This underscores the vulnerability of instructor-led training to shifts in discretionary budgets. On the balance sheet, deferred revenue—payments received for future services—dropped from $282.3 million at FY2025 year-end to $215.3 million, a decline attributed partly to normal seasonality but also possibly lower renewals.
Skillsoft continued investing in technology, with rapid user growth in AI-related offerings. The number of "technology learners" using the Skillsoft platform rose 50% year over year, while the count of AI learners increased 74% year over year and AI learning hours surged 158% year over year. The company highlighted key partnership moves, such as enabling Skillsoft products on Amazon Web Services (AWS) Marketplace and expanding integrations with Salesforce, to bolster reach and product stickiness. Management signaled a coming launch of new AI innovation-based products to strengthen its platform and ecosystem play.
The competitive landscape remains active. Skillsoft faces rivalry from companies such as LinkedIn Learning, Pluralsight, and Coursera, whose digital learning platforms also target enterprise clients. Flat TDS results amid strong skills demand indicate the need for Skillsoft to turn rising engagement into sustainable revenue growth. The historical decline in GK revenue remains a drag, reflecting both persistent macroeconomic factors and long-term shifts toward fully digital or hybrid upskilling models.
Outlook and What to Watch
Management updated its guidance in the earnings release, cutting full-year revenue expectations for FY2026 to between $510 million and $530 million. This is a downward revision from the previous $530 million–$545 million range. The company cited ongoing softness in live learning and federal sector spending as key drivers for the change. Adjusted EBITDA guidance, however, remains at $112 million–$118 million, indicating continued focus on profitability and operating discipline despite top-line headwinds. The company did not outline solid quarterly guidance for the remainder of fiscal 2026.
For the rest of the year, investors will be watching whether Skillsoft can convert growth in AI-powered engagement and new partnerships into revenue and bookings momentum. Key areas of focus include measurable outcomes from technology offerings and updates on enterprise customer expansion. With the next set of AI product announcements slated for September, future quarters will be crucial for the company to demonstrate that its investments are translating into sustained top-line growth.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
