Skillsoft 2026 Q3 Earnings Deepened Losses Amid Strategic Shifts

Skillsoft reported Q3 2026 earnings with a non-GAAP EPS beat but revenue shortfall. The company withdrew consolidated guidance due to Global Knowledge (GK) uncertainties while maintaining TDS targets. Strategic focus on AI-driven transformation and partnership-driven GK exit underscores operational repositioning.

Revenue

Skillsoft’s total revenue declined 6.0% year-over-year to $129 million, driven by a 17.6% drop in Global Knowledge revenue to $28.2 million. Talent Development Solutions (TDS) revenue fell 2.1% to $100.8 million, with 70% of the decline attributed to underperforming B2C learner products. The TDS segment remains central to the company’s growth strategy, while GK’s struggles highlight ongoing operational challenges.

Earnings/Net Income

The company’s net loss widened to $41.28 million in Q3 2026, a 74.9% increase from $23.60 million in the prior year. Earnings per share turned negative at $4.74, worsening from $2.86. Sustained losses over five consecutive years underscore persistent financial pressure despite strategic cost-cutting and AI integration efforts. The widened losses reflect structural challenges in both revenue generation and profitability.

Post-Earnings Price Action Review

A strategy of buying Skillsoft shares on earnings release dates and holding for 30 days outperformed benchmarks over three years, delivering a 157.54% return versus 67.26%. The 90.29% excess return highlights market responsiveness to earnings events, supported by a 42.81% CAGR and zero maximum drawdown. However, recent price trends show a 30.29% MTD decline, contrasting with the strategy’s historical resilience.

CEO Commentary

Ron Hovsepian emphasized Skillsoft’s AI-driven transformation, with the Percipio platform addressing skills gaps through AI simulations and unified learning. Challenges persist in revitalizing Global Knowledge, which contributed 73% of the revenue decline. Strategic priorities include leaner cost structures, go-to-market reshaping, and AI integration to enhance customer retention. The CEO expressed cautious optimism for FY2027, citing platform general availability and partnership-driven models.

Guidance

Skillsoft provided TDS revenue guidance of $400–410 million and adjusted EBITDA of $112–116 million for FY2026, reflecting 28% EBITDA margins. Consolidated guidance was withdrawn due to GK’s uncertainty. Free cash flow projections fell to $0–5 million, below prior estimates, due to GK-related costs. Leadership anticipates FY2027 growth from platform launches, strategic partnerships, and AI-driven content innovations.

Additional News

Skillsoft’s Global Knowledge segment received a 2025 AWS Partner Award for EMEA Training Partner of the Year, recognizing its role in advancing cloud and technical skills. Meanwhile, CEO Ron Hovsepian’s strategic review of GK concluded a partnership-driven model is preferable to continued ownership, with alternatives being explored. Separately, the company’s non-GAAP EPS of $1.65 in Q3 exceeded estimates by $0.39, though revenue missed by $2.6 million.

Guidance Adjustments

Skillsoft’s FY2026 TDS revenue targets remain unchanged at $400–410 million, with adjusted EBITDA guidance of $112–116 million. However, consolidated metrics are no longer provided due to GK’s strategic review. Free cash flow projections for FY2026 are now $0–5 million, down from prior $13–18 million estimates, reflecting elevated costs linked to GK restructuring. Leadership remains optimistic about FY2027, citing platform availability and AI-driven content as growth catalysts.