XML 30 R19.htm IDEA: XBRL DOCUMENT v3.25.3
Note 12 - Segment Information
 9 Months Ended
Oct. 31, 2025
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

(12)    Segment Information

 

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise that earn revenue and incur expenses, for which discrete financial information is available, and whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) in determining how to allocate resources and to assess performance. Skillsoft’s CODM is its Chief Executive Officer. No operating segments have been aggregated to determine our reportable segments.

 

Our CODM organizes Skillsoft's business, manages resource allocation and measures performance through two operating and reportable segments: Talent Development Solutions (“TDS” formerly known as Content & Platform) and Global Knowledge (“GK” formerly known as Instructor-Led Training). These two businesses, described below, are highly complementary and give Skillsoft a differentiated value proposition. The CODM uses segment revenues, segment (“business unit”) contribution profit and business unit contribution margin (business unit contribution profit as a percentage of business unit revenue) to evaluate segment performance and allocate resources. There are no intercompany revenue transactions reported between our reportable segments. When our segments enter into transactions to provide products and services to third parties, revenue is generally allocated to our segments based on relative value. 

 

Business unit contribution profit is determined by subtracting the following from segment revenue: business unit costs of revenues, business unit content and software development expenses, and with respect to our TDS segment, business unit product research and management expenses, which are defined as the costs of revenues, content and software development expenses, and product research and management expenses attributable to each segment, respectively (as described below), but excluding in each case the following items, as our CODM does not consider them in measuring segment performance:

 

 ●

Depreciation expenses – Cost 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.

 ●

System migration costs – Costs of temporary resources needed for the migration of content and customers from our legacy system to a global platform.

 

In determining business unit costs of revenues, business unit content and software development expenses, and business unit product research and management expenses, identifiable costs and expenses are allocated directly to the applicable segment while other costs and expenses, including indirect costs and certain corporate charges, are allocated to our segments based on an analysis of the relative usage or benefit derived therefrom by each segment.

 

Business unit contribution profit excludes the following, as these items are managed and reviewed by the CODM at the company level: selling and marketing expenses; general and administrative expenses; amortization of intangible assets; impairment of goodwill; acquisition and integration-related costs; restructuring expenses; net other income (expense); interest rate swap fair value adjustments; interest income; and interest expense. Although business unit contribution profit and business unit contribution margin are used to evaluate the performance of our segments, we may incur operating costs in one segment that may also benefit the other segment. Operating segment performance is not evaluated based on segment asset or liability information. Our accounting policies for segment reporting are the same as those applied to Skillsoft as a whole.

 

The TDS segment is comprised of a strong foundation of products and customers, with its enterprise-grade solution serving customers and employees worldwide. TDS Learner is a world-renowned consumer scale and experience learner platform that serves learners worldwide. We deliver AI-led, interactive, and multi-modal experiences, a premium technology learning brand, outcome-based learning through benchmarks, enterprise grade security and integrations, and extensive coverage of topics across business, technology, and compliance skills.

 

The GK segment is centered around instructor-led training, or live learning, with face-to-face delivery by experienced trainers, both in-person and virtually. GK is a live learning partner for corporations with a large, but focused, schedule of vendor-authored and certified courses utilizing certified instructors. The quality and consistency of trainers, the access to quality content and interactive labs from the world’s largest vendors, and a market-leading blended proposition with TDS, define GK's uniqueness in the market. Our GK segment has strong partnerships with the world’s leading technology companies and certification authorities.

 

As previously disclosed, in the fourth quarter of fiscal 2025, our CODM made changes to the components used to determine segment results to increase transparency and improve segment comparability to peers. We believe that business unit contribution profit as currently defined is a key financial indicator of the performance of our segments. The changes did not impact our consolidated financial statements.

 

The following reconciles business unit contribution profit to GAAP net income (loss), recast for the prior-year periods to reflect our segments under the new structure, for the periods presented (in thousands):

 

  

Three Months Ended October 31,

  

Nine Months Ended October 31,

 
  

2025

  

2024

  

2025

  

2024

 

TDS

                

Revenues

 $100,798  $102,998  $301,131  $302,725 

Business unit costs of revenues

  17,698   14,763   49,765   46,481 

Business unit content and software development expenses

  13,020   13,149   37,585   39,944 

Business unit product research and management expenses

  2,153   2,429   6,751   6,314 

Business unit contribution profit

  67,927   72,657   207,030   209,986 

GK

                

Revenues

  28,200   34,227   80,890   94,516 

Business unit costs of revenues

  17,374   19,257   50,032   53,959 

Business unit content and software development expenses

  650   857   2,112   2,095 

Business unit contribution profit

  10,176   14,113   28,746   38,462 

Consolidated

                

Revenues

  128,998   137,225   382,021   397,241 

Business unit costs of revenues

  35,072   34,020   99,797   100,440 

Business unit content and software development expenses

  13,670   14,006   39,697   42,039 

Business unit product research and management expenses

  2,153   2,429   6,751   6,314 

Business unit contribution profit

  78,103   86,770   235,776   248,448 

Business unit product research and management expenses

  (2,153)  (2,429)  (6,751)  (6,314)

Excluded from cost of revenues and content and software development expenses:

                

Depreciation

  162   123   468   491 

Long-term incentive compensation expenses

  164   1,100   2,661   3,602 

System migration

  —   —   —   118 

Selling and marketing expenses

  36,078   39,615   115,278   122,591 

General and administrative expenses

  21,175   21,686   63,594   66,390 

Amortization of intangible assets

  32,068   31,826   95,120   95,197 

Impairment of goodwill

  20,771   —   20,771   — 

Acquisition and integration related costs

  17   931   1,327   3,349 

Restructuring expenses

  4,150   3,095   7,653   15,361 

Operating income (loss)

  (34,329)  (9,177)  (64,345)  (52,337)

Other income (expense), net

  (1)  (538)  (2,508)  1,261 

Fair value adjustment of interest rate swaps

  (1,478)  (822)  (3,606)  418 

Interest income

  487   924   1,470   2,897 

Interest expense

  (14,757)  (15,845)  (44,115)  (48,538)

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

  (50,078)  (25,458)  (113,104)  (96,299)

Provision for (benefit from) income taxes

  (8,799)  (1,859)  (9,988)  (5,498)

Net income (loss)

 $(41,279) $(23,599) $(103,116) $(90,801)

 

Our segment assets primarily consist of cash and cash equivalents, accounts receivable, prepaid expenses, deferred taxes, property and equipment, goodwill and intangible assets. The following sets forth our segment assets as of the periods presented (in thousands):

 

  

October 31, 2025

  

January 31, 2025

 

TDS

 $847,763  $1,026,295 

GK

  49,819   79,774 

Total assets

 $897,582  $1,106,069