Skillsoft Corp. (SKILW)

Skillsoft is a company that makes learning software for businesses. Think of it as Netflix for training. Companies buy access to Skillsoft’s platform, and employees log in to take courses and complete certifications. The platform has thousands of videos, interactive modules, and exams covering everything from cloud computing and cybersecurity to management and soft skills. Skillsoft makes money by charging companies an annual fee for access, and the bigger the company, the more it pays.

How it started

Skillsoft was founded in the late 1990s as companies realised they needed to train employees fast as technology changed. The internet made it possible to deliver training online instead of flying people to classrooms. The company built libraries of courses and sold subscriptions to big companies. For two decades it was a steady business — every large company needed to train workers, and Skillsoft had content covering most topics that mattered.

The challenge: online training platforms are not hard to copy. Competitors popped up. YouTube made some training free. Companies started building their own learning platforms or switching to cheaper vendors. By the 2010s, Skillsoft was profitable but growth was slow. Wall Street investors wanted faster growth, so Skillsoft went public through a merger with a blank-check company (a SPAC) in 2021, bringing fresh capital and pressure to expand.

What Skillsoft actually makes

The core product is a learning-management system — basically a website where employees log in, browse courses, enroll, take quizzes, and earn certificates. The content is mostly video-based. Skillsoft owns a lot of its own courses, but it also resells content from other creators. Some of the biggest categories are cloud-computing certifications (Amazon Web Services, Microsoft Azure, Google Cloud), cybersecurity, IT infrastructure, data science, and business skills like project management and leadership.

Skillsoft also buys competing platforms to add their content and customer bases. In 2021, it acquired Placebase, which helps companies run apprenticeships. Before that it bought SumTotal (a learning-management platform) and Skillsoft expanded through acquisition as much as organic growth.

Why companies buy it

Most companies have thousands or tens of thousands of employees. They need those people to learn new technical skills, stay compliant with regulations (cybersecurity training, anti-harassment), and develop leadership. Sending everyone to in-person classes is expensive and takes them away from work. With Skillsoft, HR sets up an account, employees get access on day one, and they can learn at their own pace. Skillsoft tracks who completed what, which helps HR show that training happened.

The model works best for large companies with stable headcount and money to spend on employee development. Smaller companies might use cheaper alternatives or free resources. During recessions, companies cut training budgets, so Skillsoft’s revenue slows.

The money behind it

When Skillsoft went public via SPAC in 2021, it promised investors it would grow revenue by double digits a year. That didn’t happen at that pace. Growth was there but bumpy — some years organic growth was low single digits, and the company relied on acquisitions to boost numbers. The business is profitable in the sense that it does not burn cash, but margins are not spectacular. A lot of revenue goes to paying for content creators, technology infrastructure, and customer support.

The shares have been volatile because the company has not met growth targets consistently, and because education and training budgets are discretionary spending that swings with the economy.

Competition from all sides

Skillsoft competes with platforms like Udemy for Business (which is cheaper), LinkedIn Learning (which bundles with professional networking), Coursera, and dozens of smaller learning platforms. It also competes with companies’ homegrown solutions — many large tech firms and enterprises build their own learning platforms. None of this is classified as a unique or defensible market. Skillsoft’s main defensibility is customer inertia (switching costs — it takes effort to move thousands of employees to a new platform) and its library of proprietary content. But content can be created by anyone, and switching is not impossible.

How to research Skillsoft

Read the company’s quarterly earnings reports and annual 10-K filing (SEC CIK 0001774675). Pay attention to two numbers: annual recurring revenue (ARR) or subscription revenue, which shows if the business is growing; and net dollar retention, which shows whether existing customers are spending more, the same, or less year-on-year. A net dollar retention above 100% means customers are expanding — a good sign. Below 100% means they are shrinking or leaving — a red flag.

Also watch the churn rate — what percentage of customers cancel each year. Learning platforms often see 10-20% annual churn because companies restructure, merge, or find cheaper alternatives. If Skillsoft’s churn is rising, it is a warning sign. And look at gross margins — the percentage of revenue left after paying for content and delivery. Higher margins mean the business is getting more efficient; declining margins suggest pressure from competition or price cuts.