Skillsoft Q2 FY2026 slides: AI learning surges amid revenue headwinds

Introduction & Market Context

Skillsoft Corp (NYSE:SKIL) presented its Q2 FY2026 earnings results on September 9, 2025, revealing a mixed performance as the company continues to navigate macroeconomic headwinds while advancing its strategic transformation initiatives. The learning technology provider reported a slight revenue decline but maintained stable profitability metrics while highlighting significant growth in AI-related learning engagement.

The company operates in what it estimates as a $400 billion Talent Development Lifecycle market, with approximately $300 billion representing the current addressable market growing at 8% CAGR, and an additional expansion opportunity exceeding $100 billion with a 14% CAGR.

As shown in the following market opportunity visualization from the company’s presentation:

Quarterly Performance Highlights

Skillsoft reported total revenue of $128.8 million for Q2 FY2026, representing a 3% decline compared to the same period last year. The company’s performance varied across its two main business segments, with Talent Development Solutions showing relative stability while Global Knowledge experienced more significant challenges.

The Talent Development Solutions segment, which accounts for 79% of total revenue, reported $101.2 million in revenue, down less than 1% year-over-year. Meanwhile, the Global Knowledge segment, representing 21% of revenue, declined 10% to $27.6 million. Geographically, 65% of revenue came from the United States, 26% from EMEA, and 9% from the rest of the world.

The following chart illustrates Skillsoft’s revenue performance by segment over the past eight quarters:

Despite the revenue challenges, Skillsoft maintained its profitability with Q2 FY2026 Adjusted EBITDA of $28.3 million, flat year-over-year, while improving its Adjusted EBITDA margin to 22%, up 60 basis points compared to the prior year. The company reported a negative Free Cash Flow of $22.6 million for the quarter, which it attributed to normal seasonality trends and timing of collections and disbursements.

The following visualization shows the company’s profitability and cash flow metrics:

Skillsoft’s key financial highlights for the quarter include a Last Twelve Months Dollar Retention Rate of approximately 99%, representing a 1% improvement from the prior year. The company also reduced its Adjusted Operating Expenses by 3% year-over-year to $100.5 million, demonstrating its focus on cost discipline.

The following slide summarizes the Q2 FY2026 financial highlights:

Strategic Initiatives

Skillsoft highlighted several strategic achievements during the quarter, including significant growth in AI-related learning engagement. The company reported a 50% year-over-year increase in technology learners, a 74% increase in AI learners, and a remarkable 158% increase in total AI learning hours.

The company also expanded its market reach through new partnerships, announcing availability in AWS Marketplace and a collaboration with Salesforce to bring Skillsoft CAISY agent actions to Agentforce and the Salesforce ecosystem.

Skillsoft’s transformation plan is divided into two phases: FY25-FY26 and FY27+. The near-term phase focuses on expense reduction, margin expansion, returning to topline growth, and free cash flow generation through a dual business unit structure and improved operational execution. The longer-term strategy emphasizes AI-centric product innovation, optimized routes to market, and a scaled partner ecosystem to achieve above-market growth.

The following slide outlines Skillsoft’s transformation plan:

The company’s investment thesis centers around leveraging its asset portfolio, implementing operational improvements to achieve profitable growth, and executing a growth strategy to capitalize on market opportunities.

Forward-Looking Statements

Skillsoft’s management expressed cautious optimism about the company’s outlook despite ongoing economic uncertainties. CEO Ron Hovsepian acknowledged the challenging environment but highlighted the company’s transformation strategy and revenue growth potential. Meanwhile, CFO John Frederick emphasized cost discipline and working capital management, noting that while the company has revised its full-year revenue guidance range, it remains committed to its adjusted EBITDA and free cash flow targets.

The company expects to generate positive free cash flow for fiscal year 2026, ending the quarter with $103.4 million in cash, cash equivalents, and restricted cash. Skillsoft’s long-term vision is to create shareholder value through an industry-leading financial profile with above-market growth, profitability, and free cash flow generation.

Skillsoft’s reconciliation of non-GAAP financial measures provides additional context for evaluating the company’s performance:

As Skillsoft continues to execute its transformation strategy in a challenging macroeconomic environment, investors will be watching closely to see if the company’s investments in AI-driven learning and operational efficiency improvements can drive a return to sustainable growth and enhanced profitability in the quarters ahead.

Full presentation:

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