SKIL - Skillsoft stock hits record low on earnings miss slashed guidance

Skillsoft ( NYSE: SKIL ) stock dropped to a record low on Thursday after the educational technology firm reported Q2 earnings miss and slashed its FY23 guidance to reflect lower Global Knowledge revenue and foreign exchange headwinds.

The revised outlook reflects the SumTotal sale , forex impact, lower fundamentals due to weaker sales of Global Knowledge, and macro-economic uncertainty.

SKIL expects FY23 adj. revenue of $545M-$580M vs. prior outlook of $765M-$790M. Bookings are estimated to be $580M-$615M vs. prior outlook of $790M-$825M.

Adj. EBITDA is projected to be $105M-$125M vs. prior outlook of ~$167M.

SKIL reported Q2 EPS of -$0.74 and revenue of $140.6M, up 27% Y/Y. Adj. revenue fell 5% to $148.4M due to Global Knowledge results.

Skillsoft content segment bookings grew 5% at constant currency, while Global Knowledge segment bookings fell 21% at constant currency, partly due to post-COVID recovery a year ago.

DA Davidson cut its price target on SKIL to $3 (potential upside of 11.5% to last close) from $7, citing prolonged Global Knowledge complications.

But the brokerage maintained its Buy rating on upside to subscription revenue through Codecademy cross-selling.

Analyst Robert Simmons noted that Global Knowledge struggles were due to two of SKIL's largest tech partners slashing training subsidies to clients, staffing issues, tough comps, and longer sales cycles.

Simmons revised estimates to reflect the updated guidance. FY24 revenue is expected to be $598M while adj. EBITDA is estimated to be $113M.

Over 1.2M shares changed hands as of 1.40 pm ET vs. average trading volume of 673.8K. Shares of SKIL declined 74.2% YTD.

SKIL is at high risk of performing badly due to declining growth and decelerating momentum, according to SA Quant, which rated the stock Sell .

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