Executive Summary

Q2 FY2026 revenue was $128.8M, down 2.6% YoY; TDS held flat YoY while GK fell ~10%. Adjusted EBITDA was $28.3M (22.0% margin), flat YoY, and adjusted EPS was $0.92 versus $0.87 a year ago .
Versus S&P Global consensus, revenue was essentially in line ($128.8M vs $129.0M), EPS was a significant beat ($0.92 vs -$2.10), while EBITDA was below S&P’s EBITDA definition ($23.0M vs $25.0M)* .
Full-year revenue guidance was lowered to $510–$530M (from $530–$545M), while adjusted EBITDA guidance was maintained at $112–$118M and FCF expectations reiterated at $13–$18M, reflecting GK softness (live learning, federal/public sector) but continued cost discipline .
Catalysts: upcoming AI product announcements (AI-native authoring, CAISY enhancements), new AWS Marketplace availability, and early European GK “green shoots” could offset macro/GK headwinds and support the TDS enterprise growth narrative .

What Went Well and What Went Wrong

What Went Well
- Fourth consecutive quarter of revenue growth in the TDS enterprise solution; LTM DRR at 99% with improvements attributed to SME investments .
- Margin execution: adjusted EBITDA margin expanded to 22.0% (vs 21.4% YoY); adjusted EPS improved to $0.92 (vs $0.87 YoY) on cost controls and productivity gains .
- Strategic progress: availability in AWS Marketplace and Salesforce CAISY agent actions expand go-to-market reach; technology learners +50% YoY, AI learners +74%, AI learning hours +158% .
- Quote: “We delivered… a fourth consecutive quarter of revenue growth in our TDS enterprise solution, reinforcing the durability and potential of our core business.” — Ron Hovsepian, CEO .
What Went Wrong
- GK continued to decline (-9.6% YoY), pressured by softer discretionary live learning demand, especially in North America and the Middle East; federal churn/erosion also weighed on DRR by ~4 ppt intra-quarter .
- Revenue outlook cut by ~$20–$15M at the midpoint on GK weakness, despite stability in TDS enterprise and unchanged EBITDA outlook .
- B2C (sub-10% of TDS) was down double-digits YoY, masking growth in TDS enterprise within TDS segment .

Financial Results

Headline metrics (oldest → newest)

Metric	Q4 FY2025	Q1 FY2026	Q2 FY2026
Revenue ($M)	$133.753	$124.201	$128.822
GAAP EPS	$(3.75)	$(4.57)	$(2.78)
Adjusted EPS ($)	$2.11	$0.30	$0.92
Adjusted EBITDA ($M)	$29.931	$22.131	$28.321
Adjusted EBITDA Margin (%)	22.4%	17.8%	22.0%
Free Cash Flow ($M)	$13.221	$26.164	$(22.624)

Vs S&P Global consensus (current quarter)

Metric	Consensus	Actual	Surprise
Revenue ($M)	$129.0*	$128.822	In line to slight miss*
Primary EPS ($)	$(2.10)*	$0.92	Significant beat*
EBITDA ($M)	$25.0*	$23.019*	Miss*

Values marked with * are retrieved from S&P Global.

Segment revenue and contribution (oldest → newest)

Segment	Q4 FY2025 Rev ($M)	Q4 BU CM (%)	Q1 FY2026 Rev ($M)	Q1 BU CM (%)	Q2 FY2026 Rev ($M)	Q2 BU CM (%)
Talent Development Solutions (TDS)	$102.805	70.5%	$99.148	69.1%	$101.185	69.8%
Global Knowledge (GK)	$30.948	38.0%	$25.053	34.3%	$27.637	36.1%

KPIs and balance sheet (current quarter highlights)

KPI / Item	Q2 FY2026
TDS LTM Dollar Retention Rate (DRR)	99%
Tech learners YoY	+50%
AI learners YoY	+74%
AI learning hours YoY	+158%
Cash, cash equivalents & restricted cash	$103.420M
Total gross debt (GAAP)	$579M (term loan + AR facility)
Net debt (approx.)	~$475M

Notes on non-GAAP: Adjusted results exclude items such as amortization of acquired intangibles, restructuring, long-term incentive compensation, transformation and system migration costs, fair value adjustments, and other items as specified in the release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
GAAP Revenue	FY2026	$530–$545M	$510–$530M	Lowered
Adjusted EBITDA	FY2026	$112–$118M	$112–$118M	Maintained
Free Cash Flow	FY2026	Not disclosed in prior 8-K	$13–$18M (reiterated)	Maintained (per CFO)

Drivers: Guidance cut is almost entirely GK-related (live learning/public sector softness), while TDS enterprise remains stable; cost optimization supports unchanged EBITDA and FCF targets .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2025 / Q1 FY2026)	Current Period (Q2 FY2026)	Trend
AI/technology initiatives	Scaling CAISY previews; expanded ecosystem integrations (SAP TIH)	AI-native roadmap incl. authoring, CAISY voice mode & enhanced scoring; 50% tech learners, 74% AI learners, 158% AI hours; Salesforce Agentforce actions	Accelerating AI productization and usage
Macro/GK/live learning	GK pressured; live learning impacted by discretionary spend (Q1)	Continued GK softness in NA and Middle East; federal/public sector weakness; “green shoots” in Europe bookings	Mixed: soft in NA/ME; improving in Europe
TDS enterprise trajectory	Top 10 TDS Q4 deals $22M TCV; multi-quarter TDS growth (Q1)	4th consecutive quarter of TDS enterprise revenue growth; DRR 99%	Stable-to-improving
Cost actions/margins	Ongoing transformation; EBITDA/margin expansion	$45M expense reductions to date; 22.0% adj. EBITDA margin; EPS up YoY	Sustained margin discipline
Go-to-market & channels	Building GTM, SME investments (Q1)	New marketing leader; SMEs boosting DRR; AWS Marketplace channel live	Execution building
B2C/learner product	Noted pressure (Q1)	B2C down double digits YoY, masking TDS enterprise growth	Headwind persists
Regional	Not highlighted	Europe GK bookings improving; NA/ME softer	Divergent by region

Management Commentary

Strategy and execution: “We are accelerating our execution to reimagine learning… introduce a set of AI Innovation based products and roadmap while reshaping our go to market to better execute the strategy.” — Ron Hovsepian, CEO .
Segment dynamics: “Growth in our TDS Enterprise Solutions was masked by declines in our learner product line… Global Knowledge revenue… down ~9.6% YoY.” — John Frederick, CFO .
Cost discipline: “Despite a lower revenue base, we delivered consistent profitability and improved adjusted EBITDA margins… $45 million in expense reductions.” — Ron Hovsepian .
Outlook framing: “We are adjusting… revenue range… However… reiterating our expectations for adjusted EBITDA of $112–$118 million… and free cash flow of $13–$18 million.” — John Frederick .
Demand signals: “We are seeing encouraging proof points… large public sector deals in Europe… bookings progress.” — Ron Hovsepian .

Q&A Highlights

GK softness and macro vs. competition: Management attributes GK pressure to macro/public sector and regional instability (NA/Middle East) rather than competitive losses; noted peers also reported weakness in live learning .
Guidance mechanics: The implied ~$17M back-half revenue reduction reflects seasonality (65% 2H bookings) and derisking GK; TDS expected to remain stable with modest seasonality .
Trough discussion: Management “programmed in” more GK weakness in 2H; balance between macro uncertainty and ongoing transformation may make near-term trajectory choppy .
Profitability levers: Margin resilience driven mostly by prior fixed cost reductions rather than variable comp flex; ongoing efficiency focus continues .

Estimates Context

Q2 FY2026 vs S&P Global consensus:
- Revenue: $128.8M actual vs $129.0M consensus (in line to slight miss)* .
- Primary EPS: $0.92 actual vs -$2.10 consensus; a significant beat likely driven by cost controls and fewer/more normalized non-GAAP adjustments vs expectations* .
- EBITDA: $23.0M (S&P definition) actual vs $25.0M consensus; miss under S&P’s definition, while company-reported adjusted EBITDA was $28.3M (22.0% margin) .
  Values marked with * are retrieved from S&P Global.

Implications: Consensus models likely need lower FY revenue on GK softness while maintaining EBITDA/FCF given unchanged cost plan. EPS estimates may rise near term on better margin execution and non-GAAP addbacks, but mix will hinge on GK recovery trajectory .

Key Takeaways for Investors

Mixed print: slight revenue shortfall vs S&P, but a large EPS beat and maintained EBITDA/FCF guide underscores cost discipline and TDS enterprise stability .
Guidance reset isolates GK: The revenue cut is “almost all” GK; TDS enterprise shows continued growth with 99% DRR, suggesting core subscription durability .
Near-term catalysts: AI-native product announcements, AWS Marketplace, and Salesforce CAISY actions could accelerate adoption and improve attach/expansion rates in TDS .
Watch Europe GK: Early bookings “green shoots” could signal stabilization; NA/Middle East remain softer given public sector/geopolitical backdrop .
Cash/Leverage: ~$103M cash and ~$475M net debt; execution toward $13–$18M FCF target is critical to de-risk balance sheet and sustain investor confidence .
Model considerations: Lower FY revenue, unchanged EBITDA/FCF; consider widening outcome ranges for GK while modestly raising EPS near term due to Opex discipline and adjusted EPS construct .
Trade setup: Stock likely trades on confidence in AI product ramp and evidence GK is bottoming; beats on DRR/TDS expansion or European GK conversion could be upside catalysts .

Sources: Company 8-K press releases and financials (Q4 FY2025, Q1 FY2026, Q2 FY2026) and Q2 FY2026 earnings call; additional press releases noted. Citations inline.

Skillsoft Corp. (SKIL)·Q2 2026 Earnings Summary