Skillsoft Corp. Segments Disclosure

(19) 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 management resource allocation and measures performance through two operating and reportable segments: Talent Development Solutions (“TDS”) and Global Knowledge (“GK”). These two businesses, described below, are highly complementary. 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. Business unit costs of revenues, business unit content and software development expenses, and business unit product research and management expenses 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 – 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.
	●	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 and intangible assets; 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.

 

Our TDS segment 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.

 

Our GK segment provides instructor-led training delivered both in-person and virtually. GK offers vendor-authored and certified courses delivered by certified instructors. The portfolio focuses on technology and professional certification training, including access to authorized content and interactive labs from leading technology vendors, with Leadership and Management content also available. GK maintains longstanding partnerships with major technology companies and certification authorities, which support the delivery of accredited and certification-aligned programs.

 

Combined, the TDS and GK segments provide enterprise customers with subscription-based access to learning, skills development, and instructor-led training solutions delivered through a unified platform environment.

 

The following reconciles business unit contribution profit to GAAP net income (loss) for the periods presented (in thousands):

 

		Twelve Months Ended January 31,
		2026				2025				2024
TDS
Revenues		$	403,745			$	405,530			$	404,850
Business unit costs of revenues			66,005				61,183				65,426
Business unit content and software development expenses			49,850				52,875				56,551
Business unit product research and management expenses			8,868				9,001				7,278
Business unit contribution profit			279,022				282,471				275,595
GK
Revenues			108,929				125,464				148,387
Business unit costs of revenues			67,949				72,593				86,416
Business unit content and software development expenses			2,643				2,637				2,752
Business unit contribution profit			38,337				50,234				59,219
Consolidated
Revenues			512,674				530,994				553,237
Business unit costs of revenues			133,954				133,776				151,842
Business unit content and software development expenses			52,493				55,512				59,303
Business unit product research and management expenses			8,868				9,001				7,278
Business unit contribution profit			317,359				332,705				334,814
Business unit product research and management expenses			(8,868	)			(9,001	)			(7,278	)
Excluded from cost of revenues and content and software development expenses:
Depreciation			628				693				789
Long-term incentive compensation expenses			3,189				5,537				7,080
System migration			—				118				2,174
Selling and marketing expenses			153,495				162,879				170,982
General and administrative expenses			80,649				92,364				95,896
Amortization of intangible assets			127,346				127,216				152,511
Impairment of goodwill and intangible assets			31,716				—				202,233
Acquisition and integration related costs			1,379				4,247				5,063
Restructuring expenses			17,318				18,273				13,978
Operating income (loss)			(89,493	)			(69,621	)			(308,614	)
Other income (expense), net			(3,696	)			677				(1,986	)
Fair value adjustment of warrants			—				—				4,754
Fair value adjustment of interest rate swaps			(3,733	)			1,287				2,756
Interest income			1,859				3,526				3,557
Interest expense			(58,470	)			(63,516	)			(65,335	)
Income (loss) before provision for (benefit from) income taxes			(153,533	)			(127,647	)			(364,868	)
Provision for (benefit from) income taxes			(13,709	)			(5,739	)			(16,265	)
Net income (loss) from continuing operations			(139,824	)			(121,908	)			(348,603	)
Gain (loss) on sale of business			—				—				(682	)
Net income (loss)		$	(139,824	)		$	(121,908	)		$	(349,285	)

 

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):

 

			As of January 31,
		2026				2025
TDS		$	881,839			$	1,026,295
GK			81,279				79,774
Total assets		$	963,118			$	1,106,069

 

The following sets forth our long-lived tangible assets by geographic region as of the periods presented (in thousands):

 

			As of January 31,
		2026				2025
United States		$	1,494			$	1,374
Rest of world			1,650				1,822
Total long-lived tangible assets		$	3,144			$	3,196

 

Skillsoft’s long-lived assets are primarily located in the United States. Long-lived assets located in any individual foreign country are not material.