SKIL - Skillsoft Q2 Earnings: Debt Reduction Hampered By Growth Challenges

2025-09-11 07:24:41 ET

Since its Investor day last July, Skillsoft ( SKIL ) has been progressing steading in trying to reignite revenue growth, while at the same time growing FCF to support deleveraging its balance sheet. Strict cost discipline has helped deliver $45 million in expense reductions, strengthening margins and putting the business on track to deliver meaningful FCF this fiscal year. Revenue growth on the other hand has remained elusive, with Q2 results for FY 2026 showing a modest decline, leading to an overall reduction to full year revenue guidance. This outcome validates the view I shared in my prior writeup , where I maintained a Hold rating:

While the current valuation for SKIL stock remains cheap at 11 times FCF, especially given that the unlevered FCF multiple is just 2.3, the muted topline growth and limited margin expansion ahead likely means that the deleveraging process will be slow, thereby limiting the capital available for shareholder returns.

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