Skillsoft Corp. Goodwill & Intangibles Disclosure

(4) Intangible Assets

Intangible assets consisted of the following (in thousands, except for remaining life):

Amortization expense related to our existing finite-lived intangible assets is expected to be as follows (in thousands) for the fiscal years ended January 31:

Amortization expense related to intangible assets in the aggregate was $127.3 million for fiscal 2026, $127.2 million for fiscal 2025, and $152.5 million for fiscal 2024. 

Our goodwill as of the dates indicated is as follows (in thousands):

Impairment Review Requirements and Assumption Uncertainty

Skillsoft monitors adverse events, conditions or changes in circumstances that indicate impairment of the definite-lived (amortizable) intangible assets of each of our reporting units. When such events, conditions or changes in circumstances occur, we assess the recoverability of the assets by comparing the undiscounted future cash flows attributable to the intangible assets to their carrying amount. If the undiscounted future cash flows are less than the carrying amount, an impairment charge based on the excess of the carrying amount over the fair value of the assets is recorded. Fair value is estimated using income- and market-based valuation techniques that require significant judgment regarding future cash flows, discount rates, and market participant assumptions. Because these estimates are inherently uncertain, actual results may differ from the assumptions used in the analysis, which could materially affect the determination of fair value in future periods.

Skillsoft evaluates impairment for indefinite-lived intangible assets, including goodwill, on an annual impairment test date ( January 1) or more frequently if there are indicators of impairment. In connection with the goodwill and indefinite-lived intangible assets impairment evaluation, Skillsoft may first consider qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount. If Skillsoft determines that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount, or elects to bypass this qualitative assessment, a comparison of the carrying value of the reporting unit or indefinite-lived intangible asset to its fair value is completed. If the carrying value exceeds the fair value, an impairment loss equal to the difference (for goodwill, not to exceed the amount of goodwill allocated to the reporting unit) is recorded.

The fair value of our reporting units is determined using a weighted average valuation model using the income approach (discounted cash flow approach) and the market approach. These approaches require management to make certain assumptions based upon information available at the time the valuations are performed. Actual results could differ materially from these assumptions. Management endeavors to use assumptions that are reflective of what a market participant would have used in calculating fair value considering the current economic conditions. This process was followed for our impairment test of intangible assets completed during fiscal 2026, 2025, and 2024.

The fair value of our indefinite-lived trademark intangible (our only indefinite-lived intangible asset other than goodwill) is determined using an income approach referred to as the relief-from-royalty method. The relief-from-royalty method requires management to estimate the portion of our earnings attributable to this trademark based on a royalty rate we would have paid for the use of the asset if we did not own it. The determination of fair value involves significant estimates and assumptions, including projected revenue growth rates, the royalty savings rate, and the discount rate applied to future cash flows, which are forward-looking and could be affected by future economic and market conditions. This process was followed during our impairment test completed during fiscal 2026, 2025, and 2024.

In determining reporting units, Skillsoft first identifies its operating segments, and then assesses whether any components of these segments constitute a business for which discrete financial information is available and where the CODM regularly reviews the operating results. Our CEO determined that this was not the case, and that our reporting units coincided with our segments.

During the fourth quarter of fiscal 2026, we identified triggering events indicating that the carrying value of our TDS reporting unit may not be recoverable. These events were primarily attributable to a prolonged and significant decline in Skillsoft’s stock price and market capitalization. The decline reflected, in part, broader market conditions affecting the corporate digital learning and talent development industry, including heightened budget scrutiny by enterprise customers, longer purchasing and sales cycles, and increasing competition among digital learning platforms and other technology-enabled training solutions. These industry dynamics contributed to weaker market sentiment toward companies in our sector and a sustained decrease in our market capitalization relative to the carrying value of our reporting unit. In addition, these factors contributed to an increase in the discount rate used in our valuation analysis. Additionally, but to a lesser extent, during the fourth quarter of fiscal 2026, our estimated future revenues for the TDS reporting unit declined, particularly within our consumer business associated with our Learner Platform, reflecting updated expectations regarding demand trends and customer purchasing behavior within the digital learning market.

As of January 1, 2026, we estimated the fair value of our indefinite-lived trademark intangible using the relief-from-royalty method discussed in Impairment Review Requirements and Assumption Uncertainty above and, as of such date, determined that the fair value was lower than the carrying value. As a result, management recorded a $10.9 million non-cash impairment for the indefinite-lived trademark intangible for the three months ended January 31, 2026. This impairment charge is included under impairment of goodwill and intangible assets” in the consolidated statements of operations. After the impairment charge, the indefinite-lived trademark intangible associated with the TDS reporting unit had a carrying value of $65.6 million. Changes in the key assumptions, discussed in Impairment Review Requirements and Assumption Uncertainty above, could materially affect the estimated fair value of the indefinite-lived trademark intangible asset and result in additional future impairment charges.

No Impairment During the Fiscal Year Ended January 31, 2025

As of January 1, 2025, we estimated the fair value of the TDS and GK reporting units, which are the same as our segments, as of such date, the fair value was in excess of the carrying value for each reporting unit.

As of January 1, 2025, we estimated the fair value of our indefinite-lived trademark intangible using the relief-from-royalty method discussed in Impairment Review Requirements and Assumption Uncertainty above and, as of such date, the fair value was in excess of the carrying value. However, the excess was not significant and changes in the key assumptions, discussed in Impairment Review Requirements and Assumption Uncertainty above, could materially affect the estimated fair value of the indefinite-lived trademark intangible asset and result in future impairment charges.

Impairments During the Fiscal Year Ended January 31, 2024

During the fourth quarter of fiscal 2024, we identified triggering events for impairment primarily attributable to the impact of the observed prolonged and substantial decline in Skillsoft’s stock price and market capitalization, industry analysis and observable industry multiples, which increased our discount rate assumption. In addition, the estimated future cash flows for our two reporting units declined. These declines when comparing fiscal 2024 to fiscal 2023 were due primarily to: (i) increased competition that drove down the growth experience and expectations for the industry in which the TDS reporting unit operates; and (ii) our GK reporting unit experiencing continued declines in bookings and GAAP revenues.

For the reasons discussed above, for our identifiable intangibles subject to amortization, management believed there were unfavorable changes to assumptions and factors that occurred during fiscal 2024 that would indicate impairment or a change in the remaining useful life. Our estimated undiscounted future cash flows attributable to the amortizable intangibles were projected to be less than the carrying values for the GK reporting unit. Therefore, we updated the fair values for all of our identifiable intangibles, including the indefinite-lived intangible in our TDS reporting unit, that are fair valued using the income approach, as of January 1, 2024. We compared the fair values to their carrying values, which resulted in aggregate impairment losses of $60.5 million during the fourth quarter of fiscal 2024. 

Management next estimated the fair value of the TDS and GK reporting units using the weighted average valuation model discussed in Impairment Review Requirements and Assumption Uncertainty above. For the reasons discussed above, the discount rate applied to the analysis increased from the prior year, which drove a lower fair value of our reporting units, resulting in goodwill being impaired for the TDS and GK reporting units as of January 1, 2024, as the fair values fell below their respective carrying values. As such, Skillsoft recorded goodwill impairment of $129.1 million for the TDS reporting unit and $12.6 million for the GK reporting unit during the fourth quarter of fiscal 2024.