Skillsoft Corp. (SKIL)

CIK: 0001774675. SIC: 7372 Services-Prepackaged Software. Latest 10-K as of: 2026-04-07.

SIC breadcrumb: Services > Business Services > SIC 7372 Services-Prepackaged Software

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1774675. Latest filing source: 0001437749-26-011602.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001774675.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-06-09. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001774675.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001437749-26-019986.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-06-09. Report date: 2026-04-30.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Form 10-Q, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), “Skillsoft”, “we”, “our” or “us” refers to Skillsoft Corp. and its consolidated subsidiaries. This MD&A should be read in conjunction with: (i) the unaudited condensed consolidated financial statements and the accompanying notes presented in “Part I – Item 1. Financial Statements” of this Form 10-Q (the "Interim Financial Statements"), (ii) our consolidated financial statements, notes thereto, and the related MD&A contained in our 2026 Form 10-K; and (iii) the disclosure under “Cautionary Notes Regarding Forward-Looking Statements” and “Risk Factors” in this Form 10-Q and in the 2026 Form 10-K. The consolidated financial statements contained in the 2026 10-K are referred to herein as the “2026 AFS”.

General

Skillsoft® provides a skills management platform and associated learning solutions that are designed to help organizations manage the human and artificial intelligence (“AI”) skills lifecycle, including visibility into the skills they have and the skills they need, closing skills gaps, matching skills to work, and understanding how skills development impacts business performance. 

In fiscal 2026, we evolved from a content-centric model to an integrated skills management platform, where we leveraged our market-leading curated learning content and connected it to capabilities in content creation, skills benchmarking, AI-assisted learning, and role-based development journeys.

We believe that Skillsoft’s unique capabilities, described below, set us apart as a trusted partner for workforce transformation and preparedness:

●

End-to-End Skills Management: A unified platform that combines content, skills mapping, benchmarking, analytics, and administrative controls to support workforce skill visibility, development, validation, and deployment.

●

Blended Learning Experiences Across Modalities: Digital courses, interactive AI simulations, coaching, instructor-led training, bootcamps, practice labs, and assessments delivered within a centralized learner and administrative experience designed to support applied skill development.

●

In-Platform Content Creation: Enterprise tools designed to enable customers to create, customize, update, and publish learning experiences, including courses, simulations, and skill benchmarks, while maintaining intellectual property (“IP”) protection and governance over their proprietary content.

●

Embedded AI Functionality: AI capabilities integrated into personalization, simulation, benchmarking, content creation, and learner assistance within enterprise learning frameworks.

●

Enterprise-Scale Infrastructure: Security, compliance capabilities, and system integrations designed to support large, distributed organizations operating across regions and regulatory environments.

●

Measurement and Insights: Benchmarking and analytics that help to provide visibility into workforce capability, identified skills gaps, and development progress in relation to organizational priorities.

For more details, refer to “Part I – Item 1. Business” in our 2026 Form 10-K.

Significant Event

On April 30, 2026, we committed to a plan to sell our Global Knowledge instructor-led training (“GK”) business. As previously disclosed, we entered into a definitive agreement (the “Sale Agreement”) on May 20, 2026 to sell our GK business to an affiliate of Enduring Ventures (the “Buyer”), representing a significant milestone in our transformation. The consideration that we are to receive under the Sale Agreement is described in detail in our Current Report on Form 8-K dated May 21, 2026. The transaction is subject to customary closing conditions, including regulatory approvals, and is currently expected to close in the fiscal quarter ending July 31, 2026, although we cannot assure closing in a timely manner, or at all.

Results of Operations

Our results of operations as reported in our Interim Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The following sets forth certain items from our unaudited condensed consolidated statements of operations as a percentage of total revenues for the periods indicated:

Three Months Ended April 30,

2026

2025

Revenues:

Total revenues

100.0

%

100.0

%

Operating expenses:

Costs of revenues

16.8

%

16.7

%

Content and software development expenses

13.8

%

13.4

%

Selling and marketing expenses

28.5

%

30.0

%

General and administrative expenses

17.0

%

19.4

%

Amortization of intangible assets

31.3

%

30.4

%

Acquisition and integration related costs

0.0

%

0.5

%

Restructuring

1.4

%

1.0

%

Total operating expenses

108.8

%

111.4

%

Operating loss

(8.8

)%

(11.4

)%

Other income (expense), net

2.7

%

(0.9

)%

Fair value adjustment of interest rate swaps

1.3

%

(4.3

)%

Interest income

0.6

%

0.5

%

Interest expense

(14.5

)%

(14.5

)%

Income (loss) before provision for (benefit from) income taxes

(18.7

)%

(30.6

)%

Provision for (benefit from) income taxes

1.1

%

(0.7

)%

Income (loss) from continuing operations

(19.8

)%

(29.9

)%

20

Table of Contents

Segment Information

Effective April 30, 2026, following the classification of the Global Knowledge ("GK) business as held for sale and discontinued operations, Skillsoft operates as a single reportable segment, Talent Development Solutions ("TDS"). Skillsoft's Chief Executive Officer, who serves as the Chief Operating Decision Maker, evaluates performance and allocates resources based primarily on TDS revenue and Adjusted EBITDA. See Note 13, Segment Information, for additional information regarding Skillsoft's reportable segment and the reconciliation of Adjusted EBITDA to income (loss) from continuing operations.

Information regarding our TDS segment for the periods indicated is set forth below (in thousands, except percentages):

Three Months Ended April 30,

Dollar Increase

Percent

2026

2025

(Decrease)

Change

Revenues

$

94,498

$

99,148

$

(4,650

)

(4.7

)%

Adjusted costs of revenues

15,739

16,271

(532

)

(3.3

)%

Adjusted content and software development expenses

12,674

12,097

577

4.8

%

Adjusted selling and marketing expenses

26,270

28,666

(2,396

)

(8.4

)%

Adjusted general and administrative expenses

13,175

15,275

(2,100

)

(13.7

)%

Adjusted EBITDA

$

26,640

$

26,839

$

(199

)

(0.7

)%

Revenues

We provide enterprise customers with subscription-based access to learning skills development delivered through two 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.

Our Skills Management Platform is delivered primarily through subscription-based agreements that provide enterprise customers with access to our multi-modal learning offerings and related platform capabilities. Customers subscribe to curated learning content across leadership and business, technology, and compliance subject areas, delivered through multiple modalities including digital courses, coaching, bootcamps, practice labs, simulations, and assessments. Subscription arrangements may include varying combinations of content libraries and delivery modalities, reflecting enterprise scope and user needs. Customers may also purchase expanded access to additional platform capabilities, including content creation and skills benchmarking tools. Contracts are typically multi-year agreements and priced based on enterprise scope, number of users, and product configuration.

Our Learner Platform provides interactive, practice-based experiences focused primarily on technology skill development. The platform supports direct-to-consumer selling and delivery options, offering hands-on learning environments that emphasize applied skill development. The technology underlying this platform has also been deployed as an extension of our Skills Management Platform to support enterprise customers.

Subscription and Professional Services and Other Revenues

Software as a service (“SaaS”) Subscription Revenue. Represents revenue generated from contracts specifying a minimum fixed fee for services delivered over the life of the contract to both enterprise and consumer customers. Enterprise revenue is derived from subscription arrangements with organizations that provide access to Skillsoft’s learning and talent development solutions to their employees, members or students. Consumer revenue is derived from subscriptions purchased directly by individual learners for personal and professional development. The initial term of enterprise contracts is generally one to three years and is usually non-cancellable for the term of the subscription. The fixed fee is commonly paid upfront on an annual basis. These contracts typically consist of subscriptions to our various offerings which provide access to our SaaS platforms, associated content and services, and individualized coaching, over the contract term.

Professional Services and Other Revenue. Professional services revenue primarily consists of implementation, integration, consulting, and other services provided to customers in connection with deployment and optimization of our learning and talent development solutions. Other revenue consists of revenue streams that are ancillary to our core offerings, including project-based work and related one-time incidentals. The professional services and other revenue non-subscription services complement our subscription business in creating strong and comprehensive customer relationships.

The following is a summary of our net revenues by type for the periods indicated (in thousands, except percentages):

Three Months Ended April 30,

Dollar Increase

Percent

2026

2025

(Decrease)

Change

SaaS and subscription services:

Enterprise

$

81,443

$

84,684

$

(3,241

)

(3.8

)%

Consumer

7,087

8,971

(1,884

)

(21.0

)%

Professional services and other

5,968

5,493

475

8.6

%

Total net revenues

$

94,498

$

99,148

$

(4,650

)

(4.7

)%

21

Table of Contents

Total revenue decreased for the three months ended April 30, 2026 compared with the three months ended April 30, 2025, primarily due to macroeconomic uncertainty and elongated enterprise purchasing cycles, including within certain government-related end markets, which contributed to more cautious discretionary spending on learning and development initiatives during the first quarter of fiscal 2027, as well as declines in our consumer business reflecting continued moderation in demand for direct-to-consumer offerings.

Operating Expenses

Summary of operating expenses

The following provides select operating expenses (in thousands, except percentages), which are discussed in the associated captions that immediately follow:

Three Months Ended April 30,

Dollar Increase

Percent

2026

2025

(Decrease)

Change

Costs of revenues

$

15,889

$

16,516

$

(627

)

(3.8

)%

Content and software development expenses

13,052

13,324

(272

)

(2.0

)%

Selling and marketing expenses

26,960

29,748

(2,788

)

(9.4

)%

General and administrative expenses

15,994

19,182

(3,188

)

(16.6

)%

Amortization of intangible assets

29,561

30,106

(545

)

(1.8

)%

Acquisition and integration related costs

—

523

(523

)

(100.0

)%

Restructuring

1,341

1,016

325

32.0

%

Total operating expenses

$

102,797

$

110,415

$

(7,618

)

(6.9

)%

Costs of revenues

Costs of revenues consists primarily of employee salaries and benefits for hosting operations, professional service and customer support

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-04-07. Report date: 2026-01-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the accompanying notes appearing in Item 8 of this Annual Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Skillsoft’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in Part I, Item 1A of this Annual Report.

Significant Transaction

On August 15, 2022, we completed the sale of our SumTotal business to a third party. The disposal of SumTotal assets met the criteria to be reported as held for sale and discontinued operations. The April 2023 final working capital adjustments are included in the captions “gain (loss) on sale of business” on the consolidated statements of operations separate from the results of continuing operations and “Sale of SumTotal, net of cash transferred” within investing activities on the consolidated statements of cash flows for fiscal 2024.

Results of Operations

Our consolidated results of operations as reported in our Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

The following sets forth certain items from our consolidated statements of operations as a percentage of total revenues for the periods indicated:

Twelve Months Ended

Twelve Months Ended

January 31,

Percentage

January 31,

Percentage

2026

2025

Change

2025

2024

Change

Revenues:

Total revenues

100.0

%

100.0

%

0.0

%

100.0

%

100.0

%

0.0

%

Operating expenses:

Costs of revenues

26.3

%

25.4

%

0.9

%

25.4

%

27.7

%

(2.3

)%

Content and software development

10.9

%

11.4

%

(0.5

)%

11.4

%

12.3

%

(0.9

)%

Selling and marketing

29.9

%

30.7

%

(0.8

)%

30.7

%

30.8

%

(0.1

)%

General and administrative

15.7

%

17.4

%

(1.7

)%

17.4

%

17.3

%

0.1

%

Amortization of intangible assets

24.8

%

24.0

%

0.8

%

24.0

%

27.6

%

(3.6

)%

Impairment of goodwill and intangible assets

6.2

%

0.0

%

6.2

%

0.0

%

36.6

%

(36.6

)%

Acquisition and integration related costs

0.3

%

0.8

%

(0.5

)%

0.8

%

0.9

%

(0.1

)%

Restructuring

3.4

%

3.4

%

0.0

%

3.4

%

2.5

%

0.9

%

Total operating expenses

117.5

%

113.1

%

4.4

%

113.1

%

155.7

%

(42.6

)%

Operating loss

(17.5

)%

(13.1

)%

(4.4

)%

(13.1

)%

(55.7

)%

42.6

%

Other income (expense), net

(0.8

)%

0.1

%

(0.9

)%

0.1

%

(0.4

)%

0.5

%

Fair value adjustment of warrants

0.0

%

0.0

%

0.0

%

0.0

%

0.9

%

(0.9

)%

Fair value adjustment of interest rate swaps

(0.7

)%

0.2

%

(0.9

)%

0.2

%

0.5

%

(0.3

)%

Interest income

0.4

%

0.7

%

(0.3

)%

0.7

%

0.6

%

0.1

%

Interest expense

(11.4

)%

(12.0

)%

0.6

%

(12.0

)%

(11.8

)%

(0.2

)%

Income (loss) before provision for (benefit from) income taxes

(30.0

)%

(24.1

)%

(5.9

)%

(24.1

)%

(65.9

)%

41.8

%

Provision for (benefit from) income taxes

(2.7

)%

(1.1

)%

(1.6

)%

(1.1

)%

(2.9

)%

1.8

%

Income (loss) from continuing operations

(27.3

)%

(23.0

)%

(4.3

)%

(23.0

)%

(63.0

)%

40.0

%

Gain (loss) on sale of business

0.0

%

0.0

%

0.0

%

0.0

%

(0.1

)%

0.1

%

Net income (loss)

(27.3

)%

(23.0

)%

(4.3

)%

(23.0

)%

(63.1

)%

40.1

%

19

See Note 19 “Segment Information” to our Consolidated Financial Statements for information regarding our segments, including a reconciliation of segment (“business unit”) contribution profit to net income (loss) for the periods presented in the consolidated statements of operations. Segment (“business unit”) contribution profit and segment (“business unit”) contribution margin are the measures used by our Chief Operating Decision Maker (“CODM”), who is our Chief Executive Officer, to allocate resources and to assess the performance of our segments. 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 (allocated as described in Note 19 “Segment Information”), but excluding in each case the following items, as our CODM does not consider them in the measurement of 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.

Business unit contribution margin is defined as the business unit contribution profit of a segment divided by that segment’s revenue.

Information regarding each reportable segment for the periods indicated is set forth below (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

TDS:

Revenues

$

403,745

$

405,530

$

(1,785

)

(0.4

)%

$

405,530

$

404,850

$

680

0.2

%

Business unit contribution profit

279,022

282,471

(3,449

)

(1.2

)%

282,471

275,595

6,876

2.5

%

Business unit contribution margin

69.1

%

69.7

%

(0.6

)%

69.7

%

68.1

%

1.6

%

GK:

Revenues

$

108,929

$

125,464

$

(16,535

)

(13.2

)%

$

125,464

$

148,387

$

(22,923

)

(15.4

)%

Business unit contribution profit

38,337

50,234

(11,897

)

(23.7

)%

50,234

59,219

(8,985

)

(15.2

)%

Business unit contribution margin

35.2

%

40.0

%

(4.8

)%

40.0

%

39.9

%

0.1

%

Revenues

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.

Our TDS segment is delivered through two 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.

Our Skills Management Platform is delivered primarily through subscription-based agreements that provide enterprise customers with access to our multi-modal learning offerings and related platform capabilities. Customers subscribe to curated learning content across leadership and business, technology, and compliance subject areas, delivered through multiple modalities including digital courses, coaching, bootcamps, practice labs, simulations, and assessments. Subscription arrangements may include varying combinations of content libraries and delivery modalities, reflecting enterprise scope and user needs. Customers may also purchase expanded access to additional platform capabilities, including content creation and skills benchmarking tools. Contracts are typically multi-year and priced based on enterprise scope, number of users, and product configuration.

Our Learner Platform provides interactive, practice-based experiences focused primarily on technology skill development. The platform supports direct-to-consumer selling and delivery motions, offering hands-on learning environments that emphasize applied skill development. The technology underlying this platform has also been deployed as an extension of our Skills Management Platform to support enterprise customers.

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.

Subscription and Non-Subscription Revenues

Software as a service (“SaaS”) Subscription Revenue. Represents revenue generated from contracts specifying a minimum fixed fee for services delivered over the life of the contract. The initial term of enterprise contracts is generally one to three years and is usually non-cancellable for the term of the subscription. The fixed fee is commonly paid upfront on an annual basis. These contracts typically consist of subscriptions to our various offerings which provide access to our SaaS platforms, associated content and services, and individualized coaching, over the contract term.

Non-Subscription Revenue. Primarily comprised of instructor-led training offerings in our GK segment, which consist of both in-person and virtual environments. Instructor-led training, including virtual offerings, is first scheduled, then delivered later, with revenue realized on the delivery date. Non-subscription revenues also include professional services in our TDS segment related to implementation of our products and subsequent, ongoing consulting engagements. Our non-subscription services complement our subscription business in creating strong and comprehensive customer relationships.

20

The following is a summary of our net revenues by segment and type for the periods indicated (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

TDS:

SaaS and subscription services:

Enterprise

$

342,800

$

341,427

$

1,373

0.4

%

$

341,427

$

335,964

$

5,463

1.6

%

Consumer

34,668

41,307

(6,639

)

(16.1

)%

41,307

48,058

(6,751

)

(14.0

)%

Professional services

26,277

22,796

3,481

15.3

%

22,796

20,828

1,968

9.4

%

403,745

405,530

(1,785

)

(0.4

)%

405,530

404,850

680

0.2

%

GK:

Virtual, on-demand and classroom

108,929

125,464

(16,535

)

(13.2

)%

125,464

148,387

(22,923

)

(15.4

)%

Total net revenues

$

512,674

$

530,994

$

(18,320

)

(3.5

)%

$

530,994

$

553,237

$

(22,243

)

(4.0

)%

Revenues for the GK segment declined when comparing fiscal 2026 to fiscal 2025 as a result of macroeconomic uncertainty, as well as a continued decline in public sector business that contributed to lower enrollment. We expect these trends to continue to lower our future GK segment revenues for the foreseeable future. For the TDS segment, total revenue decreased when comparing fiscal 2026 to the fiscal 2025, primarily due to lower consumer revenue associated with our Learner Platform.

Revenues for the GK segment declined when comparing fiscal 2025 to fiscal 2024 while TDS revenues remained relatively flat. The decline in revenues in our GK segment was primarily due to weaker market demand, particularly in Europe, as well as a higher mix of reseller business, which is recorded in revenue net of fees.

Operating Expenses

Summary of operating expenses

The following provides select operating expenses (in thousands, except percentages), which are discussed in the associated captions that immediately follow:

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Costs of revenues

$

134,638

$

134,879

$

(241

)

(0.2

)%

$

134,879

$

153,157

$

(18,278

)

(11.9

)%

Content and software development expenses

55,626

60,757

(5,131

)

(8.4

)%

60,757

68,031

(7,274

)

(10.7

)%

Selling and marketing expenses

153,495

162,879

(9,384

)

(5.8

)%

162,879

170,982

(8,103

)

(4.7

)%

General and administrative expenses

80,649

92,364

(11,715

)

(12.7

)%

92,364

95,896

(3,532

)

(3.7

)%

Amortization of intangible assets

127,346

127,216

130

0.1

%

127,216

152,511

(25,295

)

(16.6

)%

Impairment of goodwill and intangible assets

31,716

—

31,716

100.0

%

—

202,233

(202,233

)

(100.0

)%

Acquisition and integration related costs

1,379

4,247

(2,868

)

(67.5

)%

4,247

5,063

(816

)

(16.1

)%

Restructuring

17,318

18,273

(955

)

(5.2

)%

18,273

13,978

4,295

30.7

%

Total operating expenses

$

602,167

$

600,615

$

1,552

0.3

%

$

600,615

$

861,851

$

(261,236

)

(30.3

)%

Costs of revenues

Costs of revenues consists primarily of employee salaries and benefits for hosting operations, professional service and customer support personnel; royalties; hosting and software maintenance services; facilities and utilities costs; consulting services; and instructor fees, course materials, logistics costs and overhead costs associated with virtual, in-classroom, and on-demand training solutions. The following provides details regarding the changes in components of costs of revenues (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Courseware, instructor fees and outside services

$

68,270

$

68,646

$

(376

)

(0.5

)%

$

68,646

$

78,663

$

(10,017

)

(12.7

)%

Compensation and benefits

50,960

51,169

(209

)

(0.4

)%

51,169

55,563

(4,394

)

(7.9

)%

Hosting and software maintenance

12,957

11,637

1,320

11.3

%

11,637

11,403

234

2.1

%

Facilities, utilities and other

2,451

3,427

(976

)

(28.5

)%

3,427

7,528

(4,101

)

(54.5

)%

Total costs of revenues

$

134,638

$

134,879

$

(241

)

(0.2

)%

$

134,879

$

153,157

$

(18,278

)

(11.9

)%

Costs of revenues is variable and generally correlates with revenue volume and the mix of products and services, as different offerings carry different margin profiles. Despite lower overall revenue, however, when comparing fiscal 2026 to fiscal 2025, courseware, instructor fees and outside services, as well as compensation and benefits, did not decline proportionately. This was primarily due to the revenue mix of our GK business, which reflects lower-margin offerings, and to a lesser extent, increases in third-party costs within our TDS business. Hosting and software maintenance increased year-over-year, primarily reflecting continued investments in technology. Facilities and utilities expenses decreased, when comparing these same periods, primarily due to cost savings resulting from the consolidation of our facilities. 

The decreases in courseware, instructor fees and outside services and compensation and benefits, when comparing fiscal 2025 to fiscal 2024, were primarily attributable to the decline in our GK segment revenues as discussed in Subscription and Non-Subscription Revenue above. The decrease in facilities and utilities expenses, when comparing fiscal 2025 to fiscal 2024, was primarily attributable to cost savings from the consolidation of our facilities.

21

Content and software development

Content and software development expenses include costs associated with the development of new products and the enhancement of existing products, consisting primarily of employee salaries and benefits; development-related professional services; facilities costs; depreciation; and software maintenance costs. The following provides details regarding the changes in components of content and software development expenses (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Compensation and benefits

$

40,186

$

46,468

$

(6,282

)

(13.5

)%

$

46,468

$

51,748

$

(5,280

)

(10.2

)%

Consulting and outside services

8,862

10,204

(1,342

)

(13.2

)%

10,204

11,190

(986

)

(8.8

)%

Software maintenance

5,613

3,167

2,446

77.2

%

3,167

2,916

251

8.6

%

Facilities, utilities and other

965

918

47

5.1

%

918

2,177

(1,259

)

(57.8

)%

Total content and software development expenses

$

55,626

$

60,757

$

(5,131

)

(8.4

)%

$

60,757

$

68,031

$

(7,274

)

(10.7

)%

Compensation and benefits and consulting and outside services decreased in fiscal 2026 compared to fiscal 2025, primarily reflecting productivity gains achieved through leveraging our technology investments. These decreases were partially offset by higher software maintenance expenses in fiscal 2026, driven by continued investments in technology.

The decreases in compensation and benefits and consulting and outside services, when comparing fiscal 2025 to fiscal 2024, were primarily attributable to productivity gains through leveraging AI and lower stock-compensation expense due to forfeitures and lower grants of share-based payment awards. The decrease in facilities and utilities expenses, when comparing these same periods, was primarily attributable to cost savings from the consolidation of our facilities.

Selling and marketing

Selling and marketing (“S&M”) expenses consist primarily of employee compensation and benefits for selling, marketing and pre-sales support personnel, commissions, and travel expenses; advertising and promotional expenses; consulting and outside services; facilities costs; depreciation; and software maintenance costs. The following provides details regarding the changes in components of S&M expenses (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Compensation and benefits

$

116,162

$

121,495

$

(5,333

)

(4.4

)%

$

121,495

$

121,749

$

(254

)

(0.2

)%

Advertising and promotions

18,672

21,605

(2,933

)

(13.6

)%

21,605

27,198

(5,593

)

(20.6

)%

Software maintenance

12,325

14,717

(2,392

)

(16.3

)%

14,717

13,137

1,580

12.0

%

Consulting and outside services

4,847

2,954

1,893

64.1

%

2,954

4,389

(1,435

)

(32.7

)%

Facilities, utilities and other

1,489

2,108

(619

)

(29.4

)%

2,108

4,509

(2,401

)

(53.2

)%

Total S&M expenses

$

153,495

$

162,879

$

(9,384

)

(5.8

)%

$

162,879

$

170,982

$

(8,103

)

(4.7

)%

Compensation and benefits decreased in fiscal 2026 compared to fiscal 2025, primarily reflecting the implementation of our July 2024 comprehensive resource reallocation plan (“CRRP”). Advertising and promotions and software maintenance also declined year-over-year, primarily due to proactive reductions in paid media and advertising spend. Facilities, utilities and other expenses decreased compared fiscal 2025, largely as a result of cost savings from the consolidation of our facilities. These declines were partially offset by higher consulting and outside services in fiscal 2026, primarily reflecting our strategic decision to engage targeted marketing expertise to enhance brand awareness and support revenue growth. 

The decreases in advertising and promotions and consulting and outside services, when comparing fiscal 2025 to fiscal 2024, were primarily attributable to proactive reductions in branding initiatives and paid media spend, partially offset by targeted strategic go-to-market reinvestments. The decrease in compensation and benefits, when comparing fiscal 2025 to fiscal 2024, were primarily attributable to the CRRP, partially offset by an S&M executive's forfeiture of a share-based payment award that lowered stock-compensation expense during fiscal 2024. The decrease in facilities, utilities and other expenses, when comparing fiscal 2025 to fiscal 2024, was primarily attributable to cost savings from the consolidation of our facilities. These decreases were partially offset by the increase in software maintenance expenses, which was primarily the result of investments in our go-to-market transformation activities and enablement programs.

General and administrative

General and administrative (“G&A”) expenses consist primarily of employee salaries and benefits for executive, finance, administrative, and legal personnel; audit, legal and consulting fees; insurance; franchise, sales and property taxes; facilities costs; and depreciation. The following provides details regarding the changes in components of G&A expenses (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Compensation and benefits

$

53,101

$

64,455

$

(11,354

)

(17.6

)%

$

64,455

$

63,355

$

1,100

1.7

%

Consulting and outside services

18,995

16,396

2,599

15.9

%

16,396

20,570

(4,174

)

(20.3

)%

Insurance

2,110

2,549

(439

)

(17.2

)%

2,549

3,704

(1,155

)

(31.2

)%

Facilities, utilities and other

1,384

2,708

(1,324

)

(48.9

)%

2,708

3,673

(965

)

(26.3

)%

Software maintenance

4,127

5,428

(1,301

)

(24.0

)%

5,428

4,267

1,161

27.2

%

Franchise, sales, and property tax

932

828

104

12.6

%

828

327

501

153.2

%

Total G&A expenses

$

80,649

$

92,364

$

(11,715

)

(12.7

)%

$

92,364

$

95,896

$

(3,532

)

(3.7

)%

Compensation and benefits decreased, when comparing fiscal 2026 to fiscal 2025, primarily due to lower bonus expense, cost savings resulting from the CRRP, and reduced stock-based compensation expense driven by forfeitures and lower grants. In addition, integration and restructuring activities contributed to the decline in G&A expenses, including cost savings from the consolidation of our facilities and reductions in software maintenance and insurance costs. These decreases were partially offset by a year-over-year increase in consulting and outside services, primarily related to initiatives to improve operational processes, and evaluate technology and organizational efficiencies across the business.

When comparing fiscal 2025 to fiscal 2024, reductions in consulting and outside services, cost savings from the consolidation of our facilities, and lower insurance, contributed to the overall decline in G&A expenses. In addition, compensation and benefits, when comparing these periods increased due to severance costs for our former Chief Executive Officer, whose employment with Skillsoft ended on May 9, 2024, and increases in bonuses, partially offset by cost savings resulting from the CRRP discussed above and lower stock-compensation expense due to forfeitures and lower grants of share-based payment awards. Further, the increases in software maintenance expenses, when comparing fiscal 2025 to fiscal 2024, primarily reflect investments in technology.

22

Amortization of intangible assets

Intangible assets arising from business combinations are developed technology, customer-related intangibles, trade names and other identifiable intangible assets with finite lives. These intangible assets are amortized over the estimated useful lives of such assets. We also capitalize certain internal use software development costs related to our SaaS platforms incurred during the application development stage. The internal use software is amortized on a straight-line basis over its estimated useful life.

Amortization of intangible assets, when comparing fiscal 2026 to fiscal 2025, remained relatively consistent as increases in amortization of capitalized internal use software development costs were offset by decreases attributable to certain intangible assets becoming fully amortized. The decrease in amortization of intangible assets, when comparing fiscal 2025 to fiscal 2024, was primarily due to certain intangible assets becoming fully amortized or written down due to impairment during the fourth quarter of fiscal 2024.

Impairment of goodwill and intangible assets

Intangible asset 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 tests 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 impairment tests 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 reporting units were determined to be the same as our operating segments.

Impairments during the fiscal year ended January 31, 2026

Our impairment assessments require significant judgment, including estimates of future cash flows, discount rates, and market‑based inputs. Since fiscal year‑end, market conditions have evolved, including declines in our stock price and market capitalization. While these developments were not indicative of conditions existing as of January 31, 2026, if such trends persist, they could necessitate an interim impairment assessment in future periods.

In evaluating goodwill impairment, management considers, among other factors, Skillsoft’s market capitalization relative to carrying value. Subsequent to fiscal year‑end, Skillsoft’s market capitalization declined further, reflecting broader market conditions, increased volatility, and company‑specific developments. Management will continue to monitor these indicators as part of its ongoing impairment assessment process.

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. In addition, but to a lesser extent, 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, the estimated undiscounted future cash flows attributable to carrying value of the TDS and GK asset groups were determined to be greater than their carrying values, therefore management concluded that there was no impairment of long-lived assets or amortizable intangibles during the fourth quarter of fiscal 2026.

As of January 1, 2026, we estimated the fair value of our indefinite-lived trademark intangible using the relief-from-royalty method discussed in Intangible asset impairment review requirements and assumption uncertainty above and, as of such date, for the reasons described above, determined that the fair value was lower than the carrying value. As a result, management recorded a $10.9 million non-cash impairment charge for our indefinite-lived trademark intangible for the three months ended January 31, 2026. This impairment charge is included under “impairment of goodwill and intangible assets” on 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 Intangible asset 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.

Management next estimated the fair value of the TDS and GK reporting units using the income approach discussed in Intangible asset impairment review requirements and assumption uncertainty above. As of January 1, 2026, we estimated the fair value of the TDS and GK reporting units, and determined that the fair value was in excess of the carrying value for each reporting unit.

23

During the third quarter of fiscal 2026, we identified triggering events requiring testing for impairment of our GK reporting unit primarily attributable to the impact of industry macroeconomic uncertainty, the industry shift to integrated learning experience, as well as a continued decline in public sector business that contributed to lower enrollment. As a result of the foregoing, we lowered our expectations for the GK reporting unit’s revenue and estimated future cash flows. As of October 1, 2025, the estimated undiscounted future cash flows attributable to carrying value of the GK asset group were determined to be greater than the carrying values, therefore management concluded that there was no impairment of long-lived assets or amortizable intangibles during the third quarter of fiscal 2026. 

Management next estimated the fair value of the GK reporting unit as of October 1, 2025, using the income approach discussed in Intangible asset impairment review requirements and assumption uncertainty above. Management did not use the market approach in the weighting of the fair value of the GK reporting unit given its low profitability. For the reasons described above, the estimated future cash flows of this reporting unit declined, and when applied to the impairment analysis, resulted in a lower fair value of the GK reporting unit. As a result, management recorded a $20.8 million non-cash goodwill impairment for the GK reporting unit for the three months ended October 31, 2025. This impairment charge is included under “impairment of goodwill and intangible assets” in the consolidated statements of operations. After the impairment charge, $8.7 million goodwill associated with the GK reporting unit remains. The key assumptions used in the discounted cash flow analysis included projected revenue growth, EBITDA margin (a non-GAAP financial measure), the EBITDA exit multiple (a non-GAAP financial measure), and the discount rate.

We did not identify any interim triggering events during the third quarter of fiscal 2026 in connection with either the TDS reporting unit or our indefinite-lived trademark intangible.

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, and 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 Intangible asset 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 Intangible asset 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 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 identifiable intangibles, including the indefinite-lived intangible in our TDS reporting unit, which are 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 Intangible asset 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.

Acquisition and integration related costs 

Acquisition and integration related costs consist of professional fees for legal, investment banking and other advisor costs incurred in connection with the business combinations completed in April 2022 and the subsequent integration-related activities. Changes in these costs during fiscal 2026 and fiscal 2025, as compared to the respective prior fiscal years, primarily reflect fluctuations in the level of integration activities incurred during each period.

Restructuring

In connection with the previously announced review of strategic alternatives for the GK segment, with a focus on a potential sale, the implementation of the CRRP, and our workplace flexibility policy, we continued to execute initiatives aimed at reducing costs and aligning our operating expenses with current economic conditions and our operating model. These initiatives were intended to enhance operating efficiency, competitiveness, and overall profitability, and included workforce reductions and facility consolidations. As a result, we recognized restructuring charges of $17.3 million, $18.3 million and $14.0 million, during fiscal 2026, fiscal 2025, and fiscal 2024, respectively. These charges included employee termination costs of $9.2 million, $11.9 million, and $8.7 million, as well as lease terminations and impairment charges of $1.1 million, $1.4 million, and $3.6 million, in each case for fiscal 2026, fiscal 2025, and fiscal 2024, respectively. In addition, restructuring charges for fiscal 2026 included $3.9 million related to contract termination costs.

We are conducting a review of strategic alternatives with respect to our GK business, which may include potential divestitures, reorganizations, or other strategic actions. The evaluation, negotiation, or implementation of any such alternatives will require us to undertake additional restructuring activities, which may include workforce reductions, facility consolidations, the exit or modification of certain contracts, or other actions intended to improve operating efficiency or rationalize our cost structure that may be material. However, there can be no assurance that our strategic review will result in a transaction.

Interest and other, net

Interest and other, net, consists of gains or losses on derivative instruments, interest income, interest expense, and other expenses and income (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Other income (expense), net

$

(3,696

)

$

677

$

(4,373

)

(645.9

)%

$

677

$

(1,986

)

$

2,663

(134.1

)%

Interest income

1,859

3,526

(1,667

)

(47.3

)%

3,526

3,557

(31

)

(0.9

)%

Interest expense

(58,470

)

(63,516

)

5,046

(7.9

)%

(63,516

)

(65,335

)

1,819

(2.8

)%

Other income (expense), net consists primarily of the foreign exchange gains and losses (specifically, resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities), which fluctuate as the U.S. dollar appreciates or depreciates against other currencies. Interest income for fiscal 2026 and fiscal 2025 decreased primarily due to lower money market balances, as a result of the reduction in borrowings under our accounts receivable facility (described below), as well as lower average money market investments yields. The decrease in interest expense, when comparing fiscal 2026 and fiscal 2025, was primarily due to a reduction in borrowings under our accounts receivable facility (described below) and lower average interest rates for our borrowings.

24

Interest income for fiscal 2025, when compared to fiscal 2024, remained relatively flat. The decrease in interest expense, when comparing fiscal 2025 to fiscal 2024, was primarily due to the decision to reduce the borrowings under our accounts receivable facility (described below) during fiscal 2025.

As a result of our interest rate swaps we executed on June 17, 2022 (described below), we have a fixed cash interest rate of 8.94% on $300 million of our outstanding term loans. 

Fair value adjustment of warrants

The gains attributable to warrants are primarily a result of Skillsoft’s underlying common stock performance during fiscal 2024. As of January 31, 2026 and 2025, the fair value of our liability-classified warrants was insignificant, however, previously, they were marked-to-market each balance sheet date, with gains and losses being recorded in current period earnings.

Fair value adjustment of interest rate swaps

We entered into two fixed-rate interest rate swap agreements on June 17, 2022 for a combined notional amount of $300 million and a maturity date of June 5, 2027. The objective of the interest rate swaps is to eliminate fluctuations in cash flows for interest payments on $300 million of variable rate debt attributable to changes in the benchmark one-month Secured Overnight Financing Rate (“SOFR”). The interest rate swaps are not designated for hedge accounting and are carried on the consolidated balance sheets at their fair value. Unrealized gains and losses from changes in fair value of the interest rate swaps, which arise from variations in the forward-looking yield curve, are included in the caption “fair value adjustment of interest rate swaps” in the statements of operations as they occur.

The gains (losses) reflected for the change in value of the interest rate swaps are primarily attributable to increases (decreases) in the expectation for one-month SOFR interest rates through June 5, 2027, during fiscal 2026, fiscal 2025 and fiscal 2024.

Gain on sale of business

On August 15, 2022, we completed the sale of our SumTotal business to a third party. The disposal of SumTotal assets met the criteria to be reported as held for sale and discontinued operations. The April 2023 final working capital adjustments are included in the captions “gain (loss) on sale of business” on the consolidated statements of operations separate from the results of continuing operations and “Sale of SumTotal, net of cash transferred” within investing activities on the consolidated statements of cash flows for fiscal 2024.

Provision for (benefit from) income taxes

The following provides select provision for (benefit from) income taxes information (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Provision for (benefit from) income taxes

$

(13,709

)

$

(5,739

)

$

(7,970

)

138.9

%

$

(5,739

)

$

(16,265

)

$

10,526

(64.7

)%

Effective income tax rate

8.9

%

4.5

%

4.4

%

4.5

%

4.5

%

0.0

%

The effective income tax rate for fiscal 2026 differed from the United States federal statutory rate of 21.0% due primarily to the impact of non-deductible items, impairment of goodwill, foreign rate differential, changes in unremitted earnings, changes in uncertain tax position, and changes in the valuation allowance on our deferred tax assets.

The effective income tax rate for fiscal 2025 differed from the United States federal statutory rate of 21.0% due primarily to the impact of tax return to book provision adjustments, foreign rate differential, global intangible low-taxed income, and changes in the valuation allowance on our deferred tax assets.

The effective income tax rate for fiscal 2024 differed from the United States federal statutory rate of 21.0% due primarily to the impact of non-deductible items, foreign rate differential, changes in uncertain tax positions, and changes in the valuation allowance on our deferred tax assets.

Liquidity and Capital Resources

Liquidity and sources of cash

As of January 31, 2026, we had $100.8 million of unrestricted cash and cash equivalents. Most of our cash and cash equivalents are held at large financial institutions with high rating agency designations, and our exposure to regional banks is not significant. Our investment policy is approved and reviewed annually by the Audit Committee. Our current investment policy’s primary objectives when investing available cash are in order of importance: (1) preservation of capital and protection of principal; (2) maintenance of liquidity that is sufficient to meet cash flow needs; and (3) maximize rate of return. Our cash requirements from period to period vary depending on factors such as the growth of the business, changes in working capital needs and capital expenditures. We have funded operations primarily through the use of cash collected from our customers and the proceeds received from the Term Loan Facility (defined below), supplemented with borrowings under our accounts receivable facility (described below). We expect to operate the business and execute our strategic initiatives principally with funds generated from operations, supplemented by borrowings up to a maximum of $75.0 million under our accounts receivable facility. Based on our current cash flow budgets and forecasts of both short-term and long-term liquidity needs, we anticipate we will have sufficient internal and external sources of liquidity to fund operations and anticipated working capital and other expected cash needs for at least the next twelve months, as well as for the foreseeable future with capital sources currently available. Specifically, we believe cash flow from operating activities, together with cash on hand and availability under our accounts receivable facility, will be sufficient to fund our anticipated working capital needs, planned capital spending, contractual obligations and other cash requirements, including debt repayments and finance costs. While our Term Loan Facility does include restrictions on the ability of our guarantor subsidiaries to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions, which are expected to permit distributions to enable us to make required principal and interest payments on our indebtedness. However, in the event we are not able to receive cash from our subsidiaries, we will be unable to make the required payments. In addition, although we anticipate we will be able to refinance outstanding obligations under our credit agreement prior to or when they mature, there can be no assurance we will be able to do so, or that the terms of any refinancing will be favorable. Further, we may require additional capital in the future to fund capital expenditures, acquisitions (including contingent consideration payments), strategic transactions or other investments. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our objectives, operating performance, economic and capital market conditions and other relevant circumstances. Our operating cash flow performance may also be affected by matters discussed under “Risk Factors” in Part I, Item 1A of this Annual Report. These risks and uncertainties may adversely affect our long-term liquidity.

25

Term Loans

On July 16, 2021, Skillsoft Finance II, Inc. (“Skillsoft Finance II”), a subsidiary of Skillsoft Corp., entered into a Credit Agreement (the “Credit Agreement”), by and among Skillsoft Finance II, as borrower, another subsidiary Skillsoft Finance I, Inc. (“Holdings”), the lenders party thereto and Citibank, N.A., as administrative agent and collateral agent, pursuant to which the lenders provided a term loan facility in the original principal amount of $480 million (the “Term Loan Facility”). Term loans under the Term Loan Facility (“Original Term Loans”) were drawn in full on the closing date thereof, and are scheduled to mature on July 16, 2028 (the “Maturity Date”).

In connection with the closing of our Codecademy acquisition, Skillsoft Finance II entered into Amendment No. 1 to the Credit Agreement, dated as of April 4, 2022 (the “First Amendment”), among Skillsoft Finance II, Holdings, certain subsidiaries of Skillsoft Finance II, as guarantors, Citibank N.A., as administrative agent, and the financial institutions party thereto as Term B-1 Lenders, which amended the Credit Agreement (as amended by the First Amendment, the “Amended Credit Agreement”).

The First Amendment provided additional Term B-1 Loans in the original principal of $160 million (the “Term B-1 Loans”), all of which was drawn in full on the closing date thereof, and are scheduled to mature on the Maturity Date. In addition, the First Amendment, among other things, (a) provided for early opt-in to SOFR subject to a 0.75% floor, for the Original Term Loans (the Original Term Loans together with the Term B-1 Loans, the “Initial Term Loans”) and (b) provided for an applicable margin for the Initial Term Loans of 4.25% with respect to base rate borrowings and 5.25% with respect to SOFR borrowings.

Prior to the maturity thereof, the Initial Term Loans are subject to aggregate quarterly amortization payments of $1.6 million. The proceeds of the Term B-1 Loans were used by Skillsoft to finance, in part, the Codecademy acquisition, and to pay costs, fees, and expenses related thereto.

Interest rates applicable to the Initial Term Loans are described in Note 11“Commitments and Contingencies”. As of January 31, 2026, the outstanding principal balance of $583.4 million of Initial Term Loans bears interest at a rate equal to SOFR plus a credit premium of 0.11% plus a margin of 5.25%, per annum, with a SOFR floor of 0.75%. As a result of our interest rate swaps, we have a fixed cash interest rate of 8.94% on $300 million of our outstanding term loans. 

We are also required to make prepayments of outstanding obligations under the Amended Credit Agreement if certain criteria are met including, but not limited to excess cash flow for the prior fiscal year (as defined in the Amended Credit Agreement), net cash proceeds from asset sales and net cash proceeds from issuances of equity or indebtedness. No prepayments were required during fiscal 2026. Loan parties are subject to various affirmative and negative covenants and reporting obligations under the Amended Credit Agreement, as described in Note 12 “Long-Term Debt”. As of January 31, 2026, we are in compliance with all such covenants.

The Amended Credit Agreement contains customary events of default. If an event of default occurs and is continuing (and is not waived), the administrative agent may declare all amounts outstanding thereunder to be immediately due and payable. In the event of payment or other specified defaults, outstanding obligations accrue interest at the then applicable rate plus 2.00%.

All obligations under the Amended Credit Agreement, and the guarantees of those obligations are secured by substantially all of Skillsoft Finance II’s personal property as well as the assets of each subsidiary guarantor.

Accounts Receivable Facility

We also have access to up to $75.0 million of borrowings under an accounts receivable credit agreement (the “A/R Agreement”) with First Citizens Bank and Trust Company. Pursuant to this agreement, certain of our accounts receivable are pledged as security for loans made by participating lenders. In November 2024, the A/R Agreement was amended to, among other things: (a) extend the maturity date from December 27, 2024 to the earlier of (i) November 26, 2029 or (ii) 90 days prior to the maturity of any corporate debt (including the Initial Term Loans); (b) reduce the fixed component of the interest rate to 2.61% per annum from 3.11% per annum; (c) increase the highest advance rate on certain eligible receivables from 85% to 90%; (d) reduce the minimum outstanding balance requirement from $10 million to $1 million; and (e) allow for ad hoc borrowings and repayments. Based on seasonality of billings and the characteristics of our accounts receivable, some of which are not eligible for advances, we are not always able to access the full $75.0 million available capacity. As of January 31, 2026, $1.0 million was drawn under the A/R Agreement, and approximately $74.0 million was available to be drawn there under. Under this agreement, when borrowing more than the required minimum, Skillsoft receives proceeds equal to the net present value of the accounts receivable balances used to calculate the borrowing base. The interest rate on borrowings outstanding under the accounts receivable facility was 6.31% as of January 31, 2026.

When borrowing more than the minimum, the lenders require us to deposit receipts from pledged receivables to a restricted bank account within two business days of receipt. A reconciliation detailing collections against the prior month’s borrowing base and additional receivables to be pledged is submitted monthly. If additional pledged receivables exceed the prior month’s collections, funds from the restricted bank account are returned to us.

Currently Out of Compliance with the NYSE’s Continued Listing Standards

On March 26, 2026, we received the Notice from the NYSE that we were no longer in compliance with the Market Cap Standard, each as defined as described in further detail (including potential adverse consequences to our stockholders) in Part I, Item 1A. Risk Factors: “We are currently out of compliance with the NYSE minimum market capitalization requirement and are at risk of the NYSE delisting our common stock; such a delisting could reduce the liquidity and market price of our common stock, limit investors’ ability to make transactions in our securities, subject us to additional trading restrictions, and/or negatively impact our ability to raise equity financing.” The Notice has no immediate impact on the listing of our common stock. 

While we are not aware of any single event or development that directly caused the decline in our market capitalization, we believe that our stock price has been affected by a combination of adverse factors, including heightened market volatility tied to recent geopolitical events, corporate and government spending sensitivity in response to macroeconomic conditions, a slowdown in demand for live upskilling, resulting in the recent operating performance of our GK segment, as well as low trading volume in our common stock.

In accordance with NYSE procedures, we have 45 days from receipt of the Notice to submit a plan to the NYSE demonstrating how we intend to regain compliance with the Market Cap Standard within 18 months of our receipt of the Notice (the “Plan”). We intend to submit a Plan within the required timeframe, including strategic steps already in process intended to reduce costs, and reallocate capital to higher-growth, higher margin offerings, including our active pursuit of strategic alternatives for our GK business. However, there can be no assurance that the NYSE will accept the Plan, or if accepted, that it will be successful. If the Plan is not submitted timely or accepted, or if the Plan is accepted but we are unable to meet material aspects of the Plan, any quarterly milestones, cure the deficiency by the end of the applicable cure period, or comply with any other continued listing standard of the NYSE, our common stock would be subject to delisting from the NYSE, which may, among other things, reduce the liquidity and market price for our common stock, and hinder our ability to raise additional capital.

The Notice does not affect our business operations or our reporting obligations with the SEC, and it does not conflict with or cause an event of default under any of Skillsoft’s material debt or other agreements.

26

Share Repurchase Authorization

On July 10, 2024, the Board authorized and approved a share repurchase authorization for up to $10 million of Skillsoft’s outstanding shares of common stock. The share repurchase authorization commenced on July 11, 2024, and will terminate on the fourth anniversary of such date. Under the share repurchase authorization, we may purchase shares of common stock from time to time in the open market, in private negotiated transactions, or by other means. We cannot predict when or if we will repurchase any shares of common stock. The timing and number of shares of common stock that may be purchased will depend on a variety of factors, including the share price of the common stock, general market conditions, alternative uses for capital, our financial performance, and other considerations. This authorization does not obligate us to purchase any minimum number of shares of common stock, and the authorization may be suspended, modified, or discontinued at any time without prior notice. As of January 31, 2026, no common stock had been repurchased under the share repurchase authorization.

Cash Flows

The following summarizes our cash flows for the periods presented (in thousands, except percentages):

Twelve Months Ended

Dollar

Twelve Months Ended

Dollar

January 31,

Increase

Percentage

January 31,

Increase

Percentage

2026

2025

(Decrease)

Change

2025

2024

(Decrease)

Change

Net cash provided by (used in) operating activities

$

25,050

$

29,965

$

(4,915

)

(16.4

)%

$

29,965

$

2,818

$

27,147

963.3

%

Net cash provided by (used in) investing activities

(18,552

)

(18,358

)

(194

)

1.1

%

(18,358

)

(23,040

)

4,682

(20.3

)%

Net cash provided by (used in) financing activities

(8,053

)

(51,511

)

43,458

(84.4

)%

(51,511

)

(10,812

)

(40,699

)

376.4

%

Effect of foreign currency exchange rates on cash and cash equivalents

2,696

(3,282

)

5,978

(182.1

)%

(3,282

)

1

(3,283

)

NCM

Net increase (decrease) in cash and cash equivalents and restricted cash

$

1,141

$

(43,186

)

$

44,327

(102.6

)%

$

(43,186

)

$

(31,033

)

$

(12,153

)

39.2

%

NCM above stands for not considered meaningful.

Cash flows provided by (used in) operating activities

The decrease in operating activity cash flows in fiscal 2026 compared to fiscal 2025, was primarily the result of lower margins in our GK segment and the timing of working capital settlements. The increase in net cash provided by operating activities in fiscal 2025, compared to fiscal 2024, was primarily the result of improved margins and the timing of working capital settlements, slightly offset by cash outflows for restructuring actions under the CRRP. 

Cash flows provided by (used in) investing activities

The increase in cash flows used in investing activities, when comparing fiscal 2026 to fiscal 2025, was due primarily to a $0.2 million increase in purchases of property and equipment, which largely consisted of computer hardware and software. The decrease in cash flows used in investing activities, when comparing fiscal 2025 to fiscal 2024, was primarily attributable to the April 2023 final working capital adjustment of $5.1 million related to the sale of our SumTotal business to a third party.

Cash flows used in investing activities in fiscal 2026, fiscal 2025, and fiscal 2024 included $16.8 million, $16.8 million and $13.7 million of cash payments for internally developed software, respectively.

Cash flows provided by (used in) financing activities

Cash flows used in financing activities consist primarily of borrowings and repayments under our Amended Credit Agreement and A/R Agreement, and payments for share repurchases. The decrease in cash flows used in financing activities, when comparing fiscal 2026 to fiscal 2025, was primarily due to a $44.0 million reduction in payments on our A/R Agreement. The increase in cash flows used in financing activities, when comparing fiscal 2025 to fiscal 2024, was primarily due to a $49.3 million increase in payments on our A/R Agreement, partially offset by $8.0 million for the acquisition of treasury stock during fiscal 2024.

Effect of foreign currency exchange rates on cash and cash equivalents

The effect of exchange rate changes on cash and cash equivalents represents translation adjustments, which vary with fluctuations in foreign currency exchange rates relative to the U.S. dollar.

27

Contractual and Commercial Obligations

The scheduled future principal payments for maturities of our debt and future minimum rental commitments under non-cancellable lease agreements as of January 31, 2026 were as set forth below (in thousands):

Payments due by Fiscal Year

Total

2027

2028-2029

2030-2031

Thereafter

Initial Term Loans

$

583,394

$

6,404

$

576,990

*

$

—

$

—

Operating leases

9,408

2,040

3,566

1,883

1,919

Total

$

592,802

$

8,444

$

580,556

$

1,883

$

1,919

* The maturity date for the Initial Terms Loans is July 16, 2028, which occurs in fiscal 2029.

Contingencies

From time to time, we are a party to or may be threatened with litigation in the ordinary course of our business. We regularly analyze the then current information, including, as applicable, our defense and insurance coverage and, as necessary, provide accruals for probable and estimable liabilities for the eventual disposition of these matters. For information regarding legal proceedings, see Note 11 “Commitments and Contingencies” to our Consolidated Financial Statements.

Critical Accounting Estimates

Our consolidated financial statements and the related notes have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of such financial statements, and the reported amounts of assets, liabilities, revenues and expenses during the applicable reporting period. We regularly reevaluate our estimates and judgments, including those related to the following: business combinations, revenue recognition, impairment of goodwill and intangible assets, the remaining useful lives of capitalized assets, income tax assets and liabilities, and restructuring charges and accruals. We base our estimates and judgments on historical experience and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. The economic environment also impacts certain estimates and discount rates necessary to prepare our consolidated financial statements, including significant estimates and discount rates applicable to the determination of the fair value used in the impairment testing of our assets. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, or results of operations could be impacted.

Significant accounting policies and methods used in the preparation of our consolidated financial statements are described in Note 2 “Summary of Significant Accounting Policies” to our Consolidated Financial Statements. The following is a discussion of accounting estimates which management considers to be “critical”, defined as accounting estimates made in accordance with GAAP that involve a significant level of estimation uncertainty, and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.

Revenue recognition

Skillsoft enters into contracts that provide customers with access to a broad spectrum of learning options including cloud-based learning content, talent management solutions, virtual, on-demand and classroom training, and individualized coaching. We recognize revenue that reflects the consideration that we expect to be entitled to receive in exchange for these services. We apply judgment in determining our customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience, credit, or financial information. We are not required to exercise significant judgment in determining the timing for the satisfaction of performance obligations or the transaction price.

While the majority of our revenue relates to SaaS and subscription services where the entire arrangement fee is recognized on a straight-line basis over the contractual term, we sometimes enter into contractual arrangements that have multiple distinct performance obligations, one or more of which have different periods over which the services or products are delivered. These arrangements may include a combination of subscriptions and non-subscription products such as professional services. We allocate the transaction price of the arrangement based on the relative estimated standalone selling price of each distinct performance obligation. Our cloud-based solutions generally do not provide customers with the right to take possession of the software supporting the platform or to download course content without continuing to incur fees for hosting services and, as a result, are accounted for as service arrangements. Access to the platform and course content represents a series of distinct services as we continually provide access to, and fulfill our obligation to, the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. Accordingly, the fixed consideration related to subscription revenue is generally recognized on a straight-line basis over the contract term, beginning on the date the service is made available to the customer. Our subscription contracts typically vary from one year to three years. Our cloud-based solutions arrangements are generally non-cancellable and non-refundable.

Revenue from classroom training and individual coaching is recognized in the period in which the services are rendered. Revenue from virtual and on-demand training for time-based access to unlimited sessions is recognized on a straight-line basis over the period these services are available to the customers.

We also sell professional services related to our cloud solutions which are typically considered distinct performance obligations and are recognized over time as services are performed. For fixed-price contracts, revenue is recognized over time based on a measure of progress that reasonably reflects our advancement toward satisfying the performance obligation.

Reimbursements received from customers for out-of-pocket expenses are recorded as revenues, with related costs recorded as costs of revenues. We present revenues net of any taxes collected from customers and remitted to government authorities.

As our contractual agreements predominantly call for advanced billing, contract assets are rarely generated.

Intangible assets, including goodwill

We recognize the excess of the purchase price, plus the fair value of any noncontrolling interest in an acquiree, over the fair value of identifiable net assets acquired, which includes the fair value of specifically identifiable intangible assets, as goodwill.

We amortize finite-lived intangible assets, including customer contracts and internally developed software, over their estimated useful life. We review the carrying values of intangible assets subject to amortization at least annually to determine if any adverse conditions exist or a change in circumstances has occurred that indicate impairment or a change in remaining useful life. Conditions that indicate impairment and trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator.

28

In addition, we review the carrying values of our indefinite-lived intangible assets, including goodwill and the Skillsoft trademark, during the fourth quarter of each fiscal year for impairment, or more frequently if certain indicators are present or changes in circumstances suggest that impairment may exist and reassess their classification as indefinite-lived assets. 

Aa discussed above, during the fourth quarter of fiscal 2026, we recorded an impairment charge for our indefinite-lived trademark intangible. After impairment, we continue to have a $65.6 million carrying value for this intangible. The fair value of our indefinite-lived trademark intangible 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. Changes in these key assumptions could materially affect the estimated fair value of the indefinite-lived trademark intangible asset and result in future impairment charges.

If current discount rates rise or if relevant market-based inputs for our impairment assessment worsen, subsequent reviews of goodwill and intangibles could result in impairment. Factors that could result in future impairment include, but are not limited to, the following:

●

Prolonged period of our estimated fair value of our reporting units exceeding our market capitalization;

●

Lower expectations for future profitability of bookings or EBITDA (a non-GAAP measure), which in part could be impacted by legislative, regulatory or tax changes that affect the cost of, or demand for, products and services as well as the loss of key personnel;

●

Deterioration in key assumptions used in our income approach estimates of fair value, such as higher discount rates from higher stock market volatility; and

●

Valuations of significant mergers or acquisitions of companies that provide relevant market-based inputs for our impairment assessment that could support less favorable conclusions regarding the estimated fair value of our reporting units.

As discussed above, during the third quarter of fiscal 2026, we recorded a goodwill impairment charge related to our GK reporting unit. After the impairment, we have $8.7 million of goodwill allocated to this reporting unit. The goodwill assigned to this reporting unit is considered at risk of future impairment due to how the reporting unit’s estimated fair value as of October 1, 2025 was used to determine the $8.7 million carrying value. The determination of the GK reporting unit’s fair value involved significant judgment, including the selection of discount rates, long-term growth rates, and projected future cash flows. A further decline in expected operating performance, an increase in the discount rate, continued or additional adverse macroeconomic conditions, or changes in industry trends could negatively affect fair value and may result in additional impairment charges in future periods. We will continue to monitor these factors and will perform interim impairment tests if events or circumstances indicate that the carrying amount of any reporting unit may no longer be recoverable or in excess of fair value, as applicable.

For additional information on goodwill and intangible assets see Note 4 “Intangible Assets” to our Consolidated Financial Statements.

Income taxes

As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each of the tax jurisdictions in which we operate. This process involves estimating our actual current tax obligations together with assessing temporary differences between the basis of assets and liabilities for financial reporting purposes as compared to tax purposes. We provide for deferred income taxes resulting from such temporary differences using rates expected to be in effect when such differences reverse. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. Determining the amount of valuation allowance requires significant judgment in estimating future taxable income, applicable tax strategies, and the expected timing of reversals of temporary differences.

Recently Issued Accounting Pronouncements

The effect of recently issued accounting pronouncements is set forth in Note 2 “Summary of Significant Accounting Policies” to our Consolidated Financial Statements.

See Note 21 “Related Party Transactions” to our Consolidated Financial Statements for a description of our related party transactions.