Skillsoft sees margin gains and free cash flow growth despite revenue dip in first quarter of fiscal 2026

Learning platform Skillsoft has reported Q1 FY26 financial results, posting a 3% drop in revenue but strong cash flow and continued growth in its Talent Development Solutions segment.

Skillsoft reported $124 million in total revenue for the first quarter of fiscal 2026, a 3 percent decline year-over-year. The company posted a GAAP net loss of $38 million, compared to a $28 million loss in the same quarter last year. Net loss per share was $4.57, versus $3.42 a year ago.

Despite the revenue dip, the company delivered adjusted EBITDA of $22 million, up from $19 million in the prior year. The margin expanded to 18 percent from 15 percent. Free cash flow rose to $26 million, more than doubling from $10 million a year earlier.

Skillsoft provides AI-powered, enterprise learning solutions to 95 million users worldwide.

Segment performance varies across TDS and GK units

The Talent Development Solutions (TDS) segment, Skillsoft’s largest business unit, generated $99 million in revenue, an increase of 1 percent compared to the previous year. This marks the third consecutive quarter of growth for TDS.

The Global Knowledge (GK) segment posted $25 million in revenue, down 16 percent year-over-year. According to the company, discretionary spending softness weighed on GK, particularly in U.S. markets, although there was reported growth in non-U.S. public sector clients and a strong forward pipeline.

Ron Hovsepian, executive chair and CEO at Skillsoft, says: “We are pleased to have delivered first quarter results in line with expectations despite a challenging economic environment, particularly a softening of discretionary spending which disproportionately impacts our Global Knowledge business segment.

“This performance reflects the strength of our strategy, which is designed to return the company to at or above market growth rates. The multi-quarter growth we are seeing in TDS, our largest business segment, reinforces our confidence in our ability to achieve top line growth this year.”

Outlook remains unchanged amid cautious optimism

Skillsoft has reaffirmed its full-year fiscal 2026 outlook, with revenue guidance between $530 million and $545 million and adjusted EBITDA projected in the $112 million to $118 million range. While first-quarter free cash flow was notably strong, the company expects the second quarter to be the lowest for free cash flow as working capital normalizes.

John Frederick, chief financial officer at Skillsoft, says: “We delivered continued improvement in profitability and free cash flow despite heightened macroeconomic volatility. Based on our current view of the market, we are reaffirming our fiscal 2026 outlook which calls for both revenue and Adjusted EBITDA growth.

“We are pleased by our strong free cash flow in the quarter which was largely driven by seasonal changes in working capital. Conversely, we anticipate the second quarter to be our lowest free cash flow quarter as working capital normalizes. We remain on track to meet our prior free cash flow expectations for the full year.”