Skillsoft's AI Ambition: Can $530M+ FY2026 Revenue Be Achieved?

The Numbers Tell a Story of Resilience—and Ambition

Skillsoft Corp. (SKIL) has set an ambitious target for fiscal year 2026: revenue between $530 million and $545 million, a modest rebound from FY2025’s $531 million. While this represents a mere 2.6% growth at best, the guidance underscores a strategic pivot toward AI-driven innovation to counteract headwinds in legacy businesses.

The company’s FY2025 results were mixed: Talent Development Solutions (TDS), its core AI-enabled learning platform, grew slightly to $406 million, while the Global Knowledge (GK) segment—focused on instructor-led training—declined 15.5% to $125 million. This bifurcation highlights Skillsoft’s struggle to modernize amid a shift toward digital-first learning.

AI: The Engine of Transformation

Skillsoft’s bet on AI is central to its growth narrative. The launch of Skillsoft CAISY™, an AI-powered simulator with 1 million learner launches and 100 enterprise design partners, signals early traction in high-margin solutions. The platform’s integration with SAP Talent Intelligence Hub and partnerships with Cisco, CompTIA, and others position Skillsoft as a leader in workforce skill measurement and compliance training.

Key AI initiatives include:
- AI Learning Assistant: Personalizes content recommendations, boosting user engagement.
- AI Coding Assistant: Provides real-time coding feedback, targeting tech upskilling demands.
- Compliance Suite: Mitigates enterprise risks via competency-based training.

These tools are already generating wins: $22 million in TDS contracts in Q4 FY2025 alone, with multi-year deals focused on skill measurement and certification paths.

Financial Health: Progress Amid Challenges

Skillsoft’s profitability improved significantly in FY2025. Adjusted EBITDA rose to $109 million (21% margin), up from $105 million (19% margin) in FY2024, driven by cost-cutting and margin discipline. Debt also declined to $581 million, with $103 million in cash, improving financial flexibility.

However, the GK segment’s decline remains a drag. Its FY2025 revenue fell to $125 million, reflecting a broader industry shift away from traditional training. Management’s plan to reallocate 20% of non-GAAP expenses toward growth initiatives like AI suggests a deliberate effort to offset this drag.

The Roadblocks: GK’s Decline and Macroeconomic Uncertainty

While AI initiatives show promise, Skillsoft faces hurdles. The GK segment’s structural decline—now accounting for just 23.5% of total revenue—is unlikely to reverse. Management must accelerate TDS adoption to compensate.

Moreover, macroeconomic pressures could dampen enterprise spending on training. CFO Rich Walker noted that the “evolving macro environment” remains a risk, though Skillsoft’s focus on high-value, subscription-based TDS contracts provides some resilience.

Valuation and Investor Takeaways

Skillsoft’s stock has underperformed peers like Cornerstone OnDemand (CSOD) and Degreed, trading at a price-to-sales ratio of 2.1x versus industry averages of 3.5x+. This reflects skepticism about its ability to grow revenue sustainably.

Conclusion: A Tightrope Walk Toward Growth

Skillsoft’s FY2026 revenue target hinges on three factors:
1. AI monetization: CAISY’s 1 million launches are impressive, but converting pilots into recurring revenue will determine TDS’s growth.
2. Margin expansion: The $112M–$118M adjusted EBITDA target assumes further cost discipline, achievable if TDS’s higher margins offset GK losses.
3. Customer retention: With a dollar retention rate (DRR) unreported but likely pressured by GK’s decline, Skillsoft must upsell TDS features to existing clients.

The path to $545 million is narrow. If AI initiatives can deliver 5–7% TDS growth annually and GK’s decline slows to 5%+, the upper end of guidance is achievable. However, macroeconomic headwinds or delayed AI adoption could push results toward the lower bound.

Investors should monitor two metrics: TDS contract value growth (target: $22M+ in top deals) and free cash flow conversion, which turned positive in FY2025 but must stabilize in FY2026.

In summary, Skillsoft’s FY2026 targets are realistic but demanding. The company has laid the groundwork with margin improvements and AI innovation, but execution will determine whether it becomes a leader in the $400 billion corporate learning market—or a cautionary tale of disruption in transition.