Skillsoft Q4 FY2026 Earnings Call - AI Platform Gains Traction but GK Sale, Consumer Drag and Geopolitics Cloud Near-Term Growth

Operator: Thank you for standing by, and welcome to Skillsoft’s fourth quarter fiscal 2026 results conference call. At this time, all participants are in a listen-only mode. After the speakers present, there will be a question and answer session. Please note that today’s call is being recorded, and a replay of the call and webcast will be available shortly after the call concludes for a period of 12 months. I would now like to hand the conference over to your first speaker today, Stephen Poe, Investor Relations. Thank you. Please go ahead.

Stephen Poe, Investor Relations, Skillsoft: Thank you, operator. Good day, and thank you for joining us to discuss our results for the fourth quarter ended January 31st, 2026. Before we jump in, I want to remind you that today’s call will contain forward-looking statements about the company’s business outlook and our expectations that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements concerning financial and business trends, our expected future business and financial performance, financial condition, and market outlook. These forward-looking statements and all statements that are not historical facts reflect management’s current beliefs, expectations, and assumptions, and therefore are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions, forecasts, estimates, or projections in the forward-looking statements made today.

For discussion on the material risks and other important factors that could affect our actual results, we refer you to our most recent Form 10-K and other documents that we file with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements or information which speak as of their respective dates. During the call, unless otherwise noted, all financial metrics we discuss, other than revenue, will be non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. For example, listeners should be cautioned that references to phrases such as Adjusted EBITDA and free cash flow denote non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation or as substitute for GAAP financial measures.

Presentation of the most directly comparable financial measures determined in accordance with GAAP as well as the definitions, uses, and reconciliations of non-GAAP financial measures included in today’s commentary to the most directly comparable GAAP financial measures is included in our earnings press release, which has been furnished to the SEC on Form 8-K and is available at www.sec.gov. It is also available on our website at www.skillsoft.com. Following today’s prepared remarks, Ron Hovsepian, Skillsoft’s Executive Chair and Chief Executive Officer, and John Frederick, Skillsoft’s Chief Financial Officer, will be available for Q&A. With that, it’s my pleasure to turn the call over to Ron.

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Thanks, Nick, and good afternoon. Thank you to everyone for joining us today. Over the past 18 months, we have worked through two important and related efforts at Skillsoft. First, we undertook a strategic transformation to reposition the company for where the market is going. Second, during FY 2026, we made meaningful operational progress against that strategy while navigating a very challenging external environment. Let me start with the strategic transformation. We began with a comprehensive assessment of the market, where the customer demand was heading, and where Skillsoft could differentiate in a durable way. That work confirmed three foundational assets in the business: our content, our platform, and our data. Those assets give us a credible foundation to evolve from a traditional learning company into an AI-native skills platform built for the enterprise needs.

From there, we put in place a clear transformation plan and applied sharper prioritization with greater discipline to capital allocation. Using that same discipline, we reduced gross costs by approximately $45 million and reinvested roughly half of that into areas that we believed would matter most for long-term value creation, primarily go-to-market capabilities and AI-driven product innovation. FY 2026 was about turning that strategy into execution. I want to be clear on the context. We made progress while operating against a backdrop of significant macro and geopolitical uncertainty. Earlier in this year, bookings were affected by executive orders, DOGE-related actions, and broader disruption in parts of the government market. As the year progressed, that uncertainty was compounded by additional global geopolitical instability and a more cautious enterprise spending environment. Despite that, we made substantial operational progress.

We advanced our product roadmap, including the release of an upgraded version of CAISY, our AI simulation offering. We announced our new AI-native platform in September, and we brought it to general availability in February. Since launch, we’ve secured 15 paying customers, and we are also using the platform internally in our own operations, which is helping us refine the experience and accelerate learning from the market while becoming more efficient as a company. At the same time, we continue to simplify and focus on the business. We further streamlined the cost structure, improved efficiency, and maintained prioritization and disciplined capital allocation with the outcome of generating positive free cash flow. Just as important, FY 2026 demonstrated the financial durability of the business as we operated with discipline and continued to fund our transformation in a highly uncertain environment.

That same discipline also led us to initiate a strategic review of Global Knowledge, which remains underway. As we continue to focus capital and management attention on the areas of the portfolio with the strongest growth, margin, and cash flow characteristics, particularly TDS. As we sit here today, I think there are three things that matter most. First, the strategic transformation was necessary with the AI disruption. That transformation is well underway as we reposition the company around AI native and AI-enabled skills platform model. That positioning is increasingly resonating with customers. Second, FY 2026, we represented substantial operational progress. We improved focus, advanced the platform, made the cost base leaner and more directed, strengthened execution discipline, and delivered positive free cash flow, all while continuing to manage through a meaningful market disruption. Third, we’re beginning to see evidence that this work is gaining traction.

Our platform is winning customers. Our AI capabilities are seeing strong engagement, and we believe our TDS enterprise business has reached a revenue inflection point. When we look at the market, many companies are talking about skills, and many of them are talking about AI. What we believe differentiates Skillsoft is our ability to bring together content, platform, data, and AI in a way that is usable, governed, and scalable for the enterprise. Our differentiation comes down to three things. First, our skills intelligence. We have a deep and structured body of enterprise learning data mapped to roles, domains, and job-relevant use cases, which gives us a meaningful foundation for skills-based development. Second, the integration of content, platform, and data. We are not offering a narrow point solution. We are delivering an integrated system that can help customers move from learning activity to workforce capability and measurable outcomes.

Third, our ability to operationalize AI in the enterprise environments. Customers are not looking for AI as a feature by itself. They are looking for trusted partners that can help them apply AI securely, responsibly, and in ways that improve workforce readiness in a measurable way. All of this is delivered through our AI-native Skillsoft Percipio platform, which brings together learning content, skills data, and measurement into a unified system. It could serve as the front end of a learner relationship or as the back end of the skills management process, giving customers flexibility in how they deploy it in their enterprise environments. That is exactly how we are seeing it in the market. One concern we sometimes hear is whether AI could reduce the relevance of categories like ours. What we are seeing suggests the opposite. AI is increasing the urgency of workforce readiness.

It is widening the skills gap faster than many organizations can close it and driving demand for solutions that can translate into AI true role-based execution. This is not just conceptual. It is showing up in customer behavior, in platform usage, and in buying decisions. For example, one of Singapore’s largest telecommunications providers selected Skillsoft through a competitive RFP process to support an AI-led workforce transformation mandate, not simply to extend a content relationship. Across the organization’s entire user base, Skillsoft is helping support role redesign, develop AI capabilities, and embed learning into the flow of work. Early activation includes persona-based learning for an internal AI academy and pilots around AI-augmented job redesign. We saw something similar with a large global healthcare organization, which entered into a multi-year partnership with Skillsoft to help operationalize an AI-first operating model.

They are using Skillsoft to translate AI advancements into role-specific capabilities and move from fragmented learning approaches toward a more centralized and business-aligned skills model. We’re also seeing strong signals in our own engagement data. AI skill benchmark completions increased 994% year-over-year. AI content completions increased 261% year-over-year. AI journey completions increased 222% year-over-year. CAISY learners increased 146% year-over-year. CAISY launches or engagement increased by 341% year-over-year. To us, that matters because it reflects active, scaled behavior tied directly to workforce transformation. It suggests that AI is not displacing the need for skills development, it is increasing it. As enterprises move faster on AI, they’re also becoming more aware of the risks of moving without verified workforce capability. AI without demonstrable skills can create a real business risk, including poor decision-making, compliance exposure, and lower productivity.

That is the one reason buyers are becoming more focused on ROI, measurable outcomes, and trusted platforms that can support enterprise execution at scale. When I step back, I would frame FY 2026 this way. It was a year of significant strategic and operational progress in a highly uncertain environment. We continued transforming the company. We advanced our AI native platform and broader AI capabilities. We sharpened the operating model. We demonstrated financial durability, we improved execution discipline, and we began to see clearer evidence of the traction in the market. There’s still work ahead, but the direction is increasingly clear. We are building a more focused company, a more differentiated AI native platform, in a market where the need for skills-based workforce transformation is growing, and that demand continues to build. We believe Skillsoft is increasingly well-positioned to translate that market shift into durable growth.

With that, let me turn the call over to John to cover our financial results in more detail. John?

John Frederick, Chief Financial Officer, Skillsoft: Thank you, Ron, and good afternoon, everyone. As a reminder, and as noted at the opening of the call, consistent with prior quarters, this section covers non-GAAP measures unless otherwise stated. During mid-FY 2025, we presented our strategic and financial roadmap to the street. For FY 2025 through FY 2026, our stated financial objectives were, first, $45 million of annualized expense reduction in FY 2025. This was achieved. Second, margin expansion in FY 2025 and 2026. This was also achieved. Third, return to top-line growth in FY 2026. This was achieved for TDS Enterprise, but not for Learner or for GK, which informed decisions around the latter two businesses. Finally, fourth, positive free cash flow generation in FY 2026. This was achieved for FY 2025 and for FY 2026.

While macroeconomic disruption and minor operational time delays impacted bookings and revenue during FY 2026, the company delivered on its structural objectives of cost reduction, margin expansion, and cash generation, validating that this transformation strategy presented at Investor Day is indeed on track. Now turning to the results. Revenue for TDS was $102.6 million for the fourth quarter, nearly flat year-over-year, with growth in our enterprise solutions business offsetting a continued drag from our B2C learner product. Global Knowledge revenue of $28 million in the quarter was down approximately $2.9 million or 9.4% year-over-year. The trends we’ve seen earlier in the year for demand and instructor-led training have continued. Total revenue of $130.7 million in the fourth quarter was down $3.1 million or 2.3% year-over-year.

Our TDS LTM dollar retention rate, or DRR, as of the fourth quarter, was 98% compared to 105% in the prior year quarter. Customer retention improved year-over-year, while customer upgrade rates declined more, reflecting a challenging year-over-year comparable period. Going forward, we believe that the release of the new platform should enable us to move back to historical upgrade rates and beyond. Now, I’ll walk you through our expense measures, which taken as a whole, continue to see year-over-year improvements. Cost of revenue was $34.2 million in the fourth quarter or 26% of revenue, up 2.5% year-over-year, reflecting higher labs and certification spending resulting from higher customer utilization. We have changed the way we structure some of these agreements to avoid these overruns in the future.

Content and software development expenses of $12.8 million in the quarter, or 10% of revenue, were down approximately 5% year-over-year. These improvements largely reflected productivity gains from leveraging AI and sharper focus. Selling and marketing expenses of $37.5 million in the fourth quarter, or 29% of revenue, were down approximately 5.6% year-over-year, resulting largely from lower program spending reflecting our drive for capital allocation discipline. General and administrative expenses were $15 million in the fourth quarter, or 11% of revenue, down approximately 13% year-over-year, reflecting lower headcount and vendor spending, continuing our drive for a leaner, more efficient cost structure. Once we complete the GK strategic assessment process, we believe we can streamline the cost structure further. Total operating expenses were at $99.5 million in the fourth quarter, or 76% of revenue, and were down $4.3 million or 4.2% year-over-year.

Adjusted EBITDA of $31.2 million was up approximately 4% compared to $29.9 million last year, with adjusted EBITDA margin as a percentage of revenue for the quarter at 23.9% compared to 22.4% last year. We estimate that TDS contributed approximately $33 million to EBITDA, driving most of the improvement in both EBITDA dollars and EBITDA margin. GAAP net loss was $36.7 million in the fourth quarter, compared to a GAAP net loss of $31.1 million in the prior year period. The increase in GAAP net loss resulted primarily from an intangible impairment charge and higher restructuring expenses, offset somewhat by lower expenses. GAAP net loss per share was $4.19, compared to $3.75 loss per share in the prior year period. Adjusted net income of $11 million in the fourth quarter compared to adjusted net income of $17.5 million in the prior year.

Adjusted net income per share of $1.26 in the fourth quarter compared to adjusted net income per share of $2.11 in the prior year. Now moving to cash flow and the balance sheet highlights. Free cash flow for the quarter was $26.5 million, compared to $13.2 million in the prior year period. As a reminder, last quarter we highlighted delayed collections in the third quarter would be recaptured in the fourth quarter, which in fact happened, driving a portion of the improvement. GAAP cash equivalents, and restricted cash was $104.5 million at quarter end. Total gross debt on a GAAP basis, which includes borrowings under our term loan and accounts receivable facility, was $578 million at the end of Q4, down slightly from approximately $501 million at the end of fiscal 2025, reflecting normal amortization.

Total net debt, which includes borrowings under our term loan and accounts receivable facility, net of cash equivalents, and restricted cash, was approximately $474 million, down from approximately $477 million at the end of FY 2025, reflecting our positive free cash flow for the year, which came in just above the high end of our expectations at $6.5 million. We continue to make progress on our strategic assessment of GK that we announced in our Q3 earnings call. We’re in active discussions with multiple parties having completed a recent bid date. However, the conflict in the Middle East has had meaningful impacts on our process given GK’s direct exposure to the Middle East, fears of global economic issues, and some potential buyers being physically located in the market.

We will keep our stakeholders updated on this, and we are working quickly with speed and certainty as key guardrails in our assessment. That said, there can be no absolute assurance of a successful transaction. Looking to FY 2027 guidance for TDS, we expect revenue for the full FY 2027 of between $388 million-$406 million and Adjusted EBITDA between $108 million-$116 million, or around 28% of revenue. Putting aside GK, we expect free cash flow in the range of $14 million-$22 million for TDS. With that, operator, please open the call up to questions.

Operator: Thank you. With that, we will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Ken Wong with Oppenheimer & Co. Inc. Please proceed with your question.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Fantastic. Thanks for taking my question. Great to see a solid close to the year, guys. Ron, maybe starting with you. When I look at the TDS guidance, it does show a slight decline. Can you talk through some of the business dynamics that you’re seeing, maybe how that progression could look through the year? John, to the extent that you can maybe comment on the levels of conservatism or some of the assumptions that are baked into that guidance so we have a sense of how qualified that number could eventually settle out at.

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Thanks, Ken. Great to hear your voice. The key business dynamics that you’re asking about that are influencing are some historical pieces that I’m looking at my teammate, John, and he’ll walk you through them so you can bridge them as part of it. We’ve got some historical pieces with the normal things you’re seeing. I just remind everybody, when we came into the year, we were driving our strategic transformation and that operational turnaround. We made really good progress against that.

As part of it. Now we’re shifting to the phase here where we’re going to start to focus on the growth. That will show up actually first in bookings before it shows up inside of the revenue number. The revenue had some headwinds in other dimensions that I’m looking to John to cover with you so we can bridge those numbers to you to make it clearer of where we’re going. The market is definitely slowed and focused on it right now. Customers are thinking. That plays right to our core strategy of that learning unified platform, the Skillsoft Percipio platform, unifying all their skills management needs. That’s definitely been the conversation. As we said, we’ve now signed up 15 customers onto that strategy and that journey with us, all paying customers, which is great.

I’ll flip it over to John to fill in the rest of that guidance dimension for you, and then we can come back to it more, Ken.

John Frederick, Chief Financial Officer, Skillsoft: Hey, Ken. How you doing?

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Got it.

John Frederick, Chief Financial Officer, Skillsoft: Thanks for.

Great

Thanks for asking the question. If you break down TDS, we have two components of it. We have a consumer business. We have an enterprise business, or an enterprise solution, if you will. When you think about the relative size of those two components, consumer is about 9% of the total, and enterprise is the rest, so just to contextualize it. When you look at the midpoint of our guidance, we’re down about $7 million year-over-year at the midpoint. Nearly all of that is as a result of our consumer business. The enterprise business has actually been performing reasonably well. It hit the inflection point. We’ve talked about that. We’re pretty happy with that.

Some of the headwinds that we saw earlier in the year, namely some of the churn in some of our government federal clients, put a bit of a bookings headwind going into FY 2027, as Ron was commenting on the fact that you really have to get the growth out of bookings first before you get it in revenue. We had a bit of a headwind from that. We think that we can overcome most, if not all of that, and perhaps grow from there on a revenue basis, in enterprise. We’re planning for a continued decline in the consumer business.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Got it. Okay. That’s fantastic. Appreciate that. I guess maybe just continuing down that thread, like you guys highlighted some macro geopolitical uncertainty. Obviously, you’ve got a new platform out there that probably takes a little time to ramp. Should we assume that you have an elevated level of conservatism in that guide relative to how you guys typically approach it? What’s the right framing of the setup on numbers here?

John Frederick, Chief Financial Officer, Skillsoft: Yeah. I think the range that we put out, I think is pretty reflective of what we’re seeing in the market right now, which is really a couple of components. At the low end of the range, we’re thinking about things like pressure from the Middle East, most notably at the low end of guidance. At the high end of guidance, we’re assuming that we can temper the decline in the consumer business and that we have a well-performing Middle East business. So, just to kind of think about the two ends of the spectrum, that kind of informs where we could end up, and it actually gives you a way to track how we’re doing through the year.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Got it. Okay, fantastic. Ron, you touched earlier on some of the customer engagement on the AI side, and it’s north of 200% on a few of your key KPIs there. Any thoughts on how the timeline might look when you move from activity to workforce transformation, and then hopefully workforce transformation leads to monetization? What’s the path forward on that particular timeline?

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Yeah. It’s a multidimensional timeline. To your first part of the timeline, we’re already collecting from those customers and those numbers I just gave you, right? We’re already getting some of that revenue as part of that journey. Two, the way we structured it was we wanted the customers to really begin to use it, so we were more open about the usage of how they were approaching it, versus trying to hit them with all usage fees. We were driving adoption as part of it at these early customers that we had as part of our journey. As I think about that part of the roadmap, we structured our pricing and packaging to make sure that we got the customers adopting and going. We’re in the early days of that.

Those pieces associated with it after these early parts of what we’re talking about then get into the full migration, where the customer can then sell. I’m jumping all the way to the end of the journey, which for a customer could really range from anywhere from 6 months to 2 years as a large customer who’s going on one of those large migrations. The correlation would be they move from multiple hundreds of thousands of dollars type customers to multiple millions of size customers as we go on our journey. As you know, each leg of the adoption gathers more impact and more holding power for us with the customer.

What I’m more excited about in some of the numbers as we go forward, when we start showing some of those, will be around how they adopt our strategy around our custom content, their content, and building that. That’s still the early days on that piece. Everything else was really driving engagement on the products that we got out last year, and then we’ll continue to report back to you these pieces and put it together in a broader mosaic. The ultimate life cycle that I look forward to packaging up here once we get more data, will be that life cycle journey. Where do I have the customers at this stage? Then going to the next stage, to the next stage, to the next stage.

We think of those stages in four big chunks, and we can walk you through what those are after on that one, Ken, but happy to. I’m focused on the enterprise and larger enterprises. I see those turning into multimillion-dollar contracts per year with our customers in terms of upside.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Under-

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Which I think is where you’re saying, "Hey, Ron, how fast can you get there? And then how much is it worth at the end?

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Understood. Perfect. Appreciate the context there, Ron. I think one piece of the guidance that I thought was particularly attractive, because you’re still projecting for increased EBITDA free cash flow despite a slight downtick in TDS. I guess, as we think about the spend numbers there, do you feel there is sufficient investment to revive growth? I think, John, you mentioned that once you guys potentially clear GK off the deck, there’s maybe room for further improvement. Maybe dive into those two pieces, if you could.

John Frederick, Chief Financial Officer, Skillsoft: Sure, happy to. One of the interesting things that isn’t completely visible in the numbers is we have been fairly successful in reducing costs on a year-over-year basis. We have that growing year-over-year, where you get the rest of the costs that you reduced in the prior year. We have a little bit of a tailwind from that. We’re taking those benefits, and we’re investing in growth. We’re investing in things like marketing programs. We’re investing in the platform. Everything that we’re doing at this point is reorienting our spend towards the areas of the business that we think will grow the fastest. When you think about what’s possible on the other side of a GK, there’s really two big components. One is the trapped costs that are in the business.

We believe that by the end of the fourth quarter, we can get those out of our run rate, assuming we can get to a satisfactory transaction between now and then. As you simplify the business, it gives us the ability to refine the rest of the cost structure over time, because it’s just a simpler business to run.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Got it. Okay. Very helpful. I realize we’re not focused as much on GK anymore with you guys looking to exit that business. While it declined, it does appear that maybe we found some footing at the $28 million revenue run rate level. I guess, is that a fair assumption? Again, just to the extent that you guys can talk on how GK tracked relative to expectations, we’d just love to get a sense of whether or not that business has stabilized.

John Frederick, Chief Financial Officer, Skillsoft: I think, as you know, we’re giving guidance on TDS. With respect to the historicals, I think we would have liked to have seen a little bit more progress in the fourth quarter. One of the challenges for that business, though, is the process itself. That process, along with 20% of our business being in the Middle East, the combination of those two things put some pretty intense pressure on the business. Now, having said that, I think the team did a good job of absorbing those fundamental challenges. Thanks for the observation. For sure, I think they’ll appreciate that. I think that the business has the ability to grow.

I think if we had more time, and this was on the same pace of performance as TDS, we’d have a demonstrable reason to keep the company or keep the business in the company, because we do like that learning modality. I think we’ve also concluded that from a learning modalities perspective, we can partner and get that piece, and including GK being a partner on the other side of what happens. If I drill down into the individual pieces of GK, the EMEIA business is really starting to look like a good performer. We’re very excited about that. In the Middle East, notwithstanding what’s going on in the world, we’re seeing some solid progress there. In North America, that’s the place where we have a bit of work to do to repair the business.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Got it. Okay, perfect. Shifting back to the core TDS side, you touched on the DRR slight downtick sequentially, down year-over-year, not an area where you guys expect to live forever, and there’s a path upwards. Ron, do you feel you guys have the appropriate product set, the appropriate go-to-market that we can see DRR return to that 105 level? Again, maybe not this year, but down the line. For you, John, I guess how should we think about that trajectory? Again, not a specific quantification of what that number could be, but should we assume that the path forward will hopefully be at least a little bit of an upward trajectory?

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Yes. As John pointed out in his prepared remarks, there was a headwind from the prior year comparison that was there. There was some of the headwinds that happened as part of the year that we had pointed out as part of that overall journey. When I look forward, we combine that and I look forward to where we can go. Absolutely, I do see us have the ability to recover to those historical patterns that we were operating in as I look ahead. To me, as we layer more of the bricks down in this big foundation that we poured last year, those pieces will just continue to build our story, and that should directly tie to DRR, from my perspective, with these customers. Especially as we’ve shared with you, we’ve got a good group of customers that are very loyal.

We’ve got a good group of customers that are very engaged. Those 15 customers, paying customers, who have signed up for the new platform journey, in the very early days here is a real good testament to that opportunity to improve that DRR as we go on that journey as the first green shoot, let’s call it, Ken.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Fantastic. All right.

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Yeah.

John Frederick, Chief Financial Officer, Skillsoft: Go into it. Yeah.

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: I’ll just say to John, do you want to add to that?

John Frederick, Chief Financial Officer, Skillsoft: Yeah. Let me come in over the top on that on a couple of things. As you drill into DRR, you look at the fiscal 2025 period, the fourth quarter of fiscal 2025, we had an outstanding quarter from a DRR perspective, and that was on the strength of some very large upgrade deals that we had at the end of that quarter. As we proceeded through the year, we had the challenges from some of our federal customers and just some of our larger customers really screwing down on expenses because of economic uncertainty. That drove much of what we saw in our upgrade performance. Interestingly, the thing that I liked about the fourth quarter of this year was we actually saw some strengthening in our retention rates, our customer retention rates. That part with lower churn was very exciting for us.

The much lower upgrade rates, I think, as we get past. We lapped the federal business comps. As we go into the year, it’ll be a little bit easier for us to get back to those levels, to get back to the 100% and above as we proceed. We really needed two elements. One is for the new product to be in market and showing well. I think we’re seeing that with 15 customers who are paying for the platform. We needed really the marketing to wrap around that so people knew we had a new product and it was demonstrably different in the marketplace. I think the combination of those two things, along with lapping some of the churn that we had in FY 2026, should really help our DRR in the upcoming year.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Got it. Last one from me. Just when you look out at the competition, both old and new, how would you say you guys are stacking up? I guess any concern that, again, some of the prior softness that hopefully we’re going to lap, what’s the confidence that that is not driven by competition, and it’s more a dynamic of macro?

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Yeah. From my perspective, as I look at the market in total, customers are going to make some big shifts these next five years, and some of them are going to come sooner than later. When I look at the competition from that perspective, AI will be that catalyst, and it’ll come in both the agentic workflow, way people consume content, and learning experiences. That will all tie together. At the end of the day, skills management for the companies is going to be the new high order for what customers have to get done. That requires a unified platform system that allows the customer to manage that full life cycle, and at the learning level, right? Not at the system of record down at the HRIS level. They can complement each other, but it’s really how do I take my company on that learning journey?

What I see in the market today is a series of point solutions in the market. I see some people after our announcement last September scrambling to try to fill in some of the cracks around that on their platform stories because their platforms are narrow. They’re point solutions. I’m an LMS. Now I want to be a talent management system. What I’m seeing right now is the normal repackaging of the marketing and the materials around it. In general, I’m actually more comfortable that there’s more point solutions that the customers will want to learn to, over time, migrate into a full skills lifecycle management, which our skills management positioning will be excellent as we progress on that journey, as I look at it.

I remain very optimistic that this piece of it is going to move with great velocity for us, and let’s just get these early wins as part of the overall journey. To me, it’s a logical aggregation opportunity for the customer to then make that migration from point solutions. My life experience has been point solutions to suites to platforms as part of the journey. Again, I’m in the learning space. I’m not taking on anything with HRISs or anything like that. In that learning space, you have to train humans and AI now. You have to manage humans and AI now. You have to bring all those pieces together. We’ve got a skills ontology of 20 years around content and learning. We’ve got the skills ontology of how to do roles assessment. That’s how we’re winning these deals. That’s our data.

That’s why I made the comment around our platform, the data that we have, along with the platform, along with the content, is actually the winning hand, right? Much like the media market, right? Oh, it’s all content. No, it’s all platform. No, it’s actually both. We have streaming, right? Putting all three together, to me, is going to be the key in this market, and that’s what we have.

Ken Wong, Analyst, Oppenheimer & Co. Inc.: Got it. Really appreciate the thoughtful response there. That’s it on my end. Thanks a lot, guys.

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: All right. Thanks, Ken. Thank you, everyone.

Operator: Thank you. With that, there are no further questions at this time. I’d like to turn the call back over to Ron Hovsepian for any closing remarks.

Ron Hovsepian, Executive Chair and Chief Executive Officer, Skillsoft: Thank you. As I look back at the 18 months ago when we started the journey from our overall reporting perspective at Investor Day, we’ve made a ton of progress on the strategic transformation. Still more work to be done. As I look forward, where we’ve positioned ourselves with AI and how we think about AI as part of the customer’s journey, as I just said, the journey for the AI human part of it and the agent part of it is going to play a key role for us and a key role with the customer. We’re as well-positioned as anybody with what we’re doing with our skills intelligence, what we’re doing with our content, what we’re doing with our platform, and ultimately bringing all that together with the data that we have here over many, many years.

As I look at 2027, it’s a year of growth. We’re going to try to prove ourselves growth in the revenue. As we hit the end of the year, we’ll start to really begin to look at what that backlog growth looks like because we’re seasonally loaded to the back end. It’ll show up in that backlog number as we look into the end of the year. With that, I say thank you. Stay tuned. I look forward to reporting more about our growth and where we’re going as we move forward.

Operator: Thank you. With that, ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time. Have a wonderful rest of your day.