Skillsoft Corp.

Ladies and gentlemen, thank you for standing by and welcome to Skillsoft's third quarter fiscal 2022 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. I would now like to hand the conference over to your first speaker today, Jim Gruskin, Interim Head of Investor Relations. Thank you. Please go ahead.

Good afternoon and welcome to Skillsoft's third quarter fiscal 2022 earnings call. Today we will be discussing the results announced in our press release issued after the market closed. With me are Skillsoft CEO Jeff Tarr and CFO Gary Ferreira. Today's call will contain forward-looking statements about the company's business outlook and expectations, including statements concerning financial and business trends, our expected future business and financial performance and financial condition, and our guidance for fiscal 2022. These forward-looking statements and all statements that are not historical facts reflect management's beliefs and predictions as of today, and therefore are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks described in the safe harbor discussion found in the company's SEC filings. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Now a few comments on the required GAAP presentation of Skillsoft's financial statements following the merger and D-SPAC on June 11th, 2021. GAAP requires accounting periods before and after June 11th to be separated into predecessor and successor periods to reflect the change in ownership and lack of comparability between periods due to different ownership and investment bases. In addition, global knowledge activity is only reflected in the GAAP financial statements after June 11th. References on this call to combined GAAP results reflect a combination of the predecessor period before June 11th that excludes global knowledge with the successor period after June 11th. For all non-GAAP measures in the supplemental materials filed with the SEC today and in today's commentary, the company is providing normalized results as if Skillsoft and global knowledge had been combined for all periods presented, which we believe is useful to investors to show the trends of the go-forward company. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics, is included in our earnings press release, which has been furnished to the SEC and is also available on our website at www.skillsoft.com. With that, I will turn the call over to Jeff.

Thanks, Jim. Good afternoon and thank you all for joining us today. I want to begin by welcoming Gary Ferreira to his first earnings call as our new CFO. Gary and I have worked closely together before and I'm excited he chose to join our leadership team. In his 16 years as a CFO, he's taken two companies public and completed numerous strategic transactions. Since joining Skillsoft three months ago, Gary has rapidly come up to speed on the business and, as expected, has proven to be a tremendous partner to the leadership team and me. While not on our call, I'm equally pleased that during the quarter we were joined by Christy Hummel, our new Chief People Officer. Christy comes from Dell, where she was SVP of HR. She was previously Chief Human Resources Officer at VCE and VP of HR Operations at EMC. The HR leadership role is especially critical in a company focused on helping customers unleash human potential through learning. Christy is a recognized HR thought leader and will materially advance our culture of leadership and learning with benefits for team members and customers alike. Before I discuss our results, I want to thank our entire team for delivering another quarter of bookings and revenue growth that came in ahead of our expectations. I also want to thank our customers and learners who are at the heart of our purpose. Our headline message is clear. Since returning Skillsoft to public markets in June, we've made tremendous progress executing our plan. The foundation of our business is strong and getting stronger. We began by recapitalizing our balance sheet, assembling a world-class management team and board of directors, and completing two acquisitions. We've since extended our industry-leading reach within the enterprise market and strengthened our content offerings and platform capabilities. Our migration to Percipio, our innovative learning experience platform, is on track retention and net new business are up, and bookings and revenue growth are again ahead of our expectations. To reflect this momentum, I'm pleased to report that we are again increasing bookings and adjusted revenue guidance for the full year fiscal 2022. Given our confidence in the size and growth of the market for corporate digital learning and our team's ability to execute, we plan to continue investing in driving top line growth, both organically and through M&A. More on this later. I'll first share a few highlights from the quarter and then briefly discuss our market opportunity and our recent progress. I'll then hand the call over to Gary to review our results in more detail. We grew bookings 7% in the quarter with solid growth in each of our segments. On a year-to-date basis, bookings were up 9%. We added 126 net new logos during the quarter, a metric that is up sequentially for the second straight quarter. And we've increased our penetration of the Fortune 1000 from 70% at the start of the year to approximately 75% today. We also made solid progress on our migration to the Precipio platform. with 86% of annual recurring revenue on Percipio or dual deployment at the end of the third quarter, up from 81% last quarter. The feedback we receive from customers who transition continues to validate our belief that this next-generation immersive AI-driven platform is delivering on the complex learning needs of many of the world's largest and most sophisticated companies. In addition, we hit the ground running with our new alliances strategy. By making it easy for customers to integrate third-party content from an even wider variety of sources, along with Skillsoft content and their own custom content, we are making Precipio even more valuable and integral to our customers' organizations. To that end, we entered into a number of important strategic alliances in the quarter, including Udemy, Get Abstract, and good habits. These partners join a growing list of content providers available through Precipio. Over time, we expect that by allowing customers to integrate more third-party content along with customer-owned content into Precipio, we will drive further improvements in retention and growth. Turning now to the market opportunity. Online learning has become an important C-suite topic. with CEOs and chief people officers intently focused on addressing skills gaps, labor shortages, and the great resignation. According to our annual IT skills and salary report, 76% of IT decision makers face critical skills gaps. This astounding number is up two and a half times since 2016. Importantly, 56% of IT managers plan to address these gaps with training. Our Women in Tech survey revealed a similar need for what we do, with 86% reporting that professional development and training are extremely or very important to them, while only 42% said their employers currently offer this as a benefit. Skillsoft addresses these challenges head-on, positioning the company as a leader in an addressable market that is estimated to be $28 billion, growing at 10% annually. With our large enterprise customer base in Salesforce, we believe Skillsoft is well-positioned to capture this attractive and growing market opportunity. As I discussed last quarter, our blueprint for growth is built on six key pillars. content leadership, platform leadership, go-to-market leadership, operational excellence, disciplined M&A, and our culture of leadership and learning. I'll spend a few minutes today on the recent progress we've made in the first three of these. First, content leadership. Skillsoft is a leading content creator with strong positions across the three largest categories of corporate digital learning. leadership and business skills, tech and dev, and compliance. This differentiates us as a one-stop shop, delivering a complete solution to both the customer and the learner, and giving us an incredible competitive advantage. During the quarter, we made important strides building on our content offerings across all three of these product categories. Specifically, we integrated content from Skillsoft and Global Knowledge, more than doubling our tech and dev collection to 8,000 courses. We added new content in agile management, workforce safety, and diversity, equity, and inclusion. We're also making investments to translate hundreds of additional courses into more languages to better meet the needs of global clients. Turning to our second pillar, platform leadership. One of our most important initiatives is the migration of customers to our industry-leading Percipio platform, with its dramatically higher dollar retention rates. As I mentioned, 86% of our revenue base is now on Percipio or dual deployment, up from 81% at the end of Q2 and 68% a year ago. With that progress, we anticipate continued momentum, delivering higher retention and faster growth into next year. During the quarter, our platform team also successfully integrated live instructor-led training into Percipio, enriching our Aspire learning communities and setting the stage for the realization of additional synergies. In addition, we expanded our relationship with Microsoft with the release of Percipio app for Microsoft Teams, integration with Microsoft Viva, and integration of MS Learn content into Percipio. We believe FedRAMP certification is imminent and continue to expect integration with Workday by Q2 of next year, joining Cornerstone, Saba, SAP SuccessFactors, and other LMS partners. Now to our third pillar, go-to-market leadership. Our chief revenue officer, Eric Stein, continued to advance our Salesforce transformation, evolving our sales organization from one that was optimized to retain customers and migrate them to Percipio to one that is optimized to deliver growth. In October, Angelique Slagle, previously head of SAP SuccessFactors North America, joined us as our new SVP of Americas in Asia Pacific. In September, Jason Chapman, an experienced enterprise sales operations leader and former Bain consultant, joined as global head of go-to-market operations. And shortly after close, David Osborne joined as our new SVP of global tech and dev sales, bringing experience as a former chief revenue officer and general manager of a $500 million revenue training and e-learning business. We are continuing to advance our coverage model, strengthen talent, and enhance other aspects of our go-to-market strategy to further accelerate top-line growth. In addition, I'm pleased that our focus on new customer acquisition has resulted in the addition of more than 350 net new logos since the start of the year. These wins were geographically diversified, with 70 in EMEA and 26 in APAC. underscoring the reach of our global sales force. Wins in this quarter included notable names such as Siemens Digital Industry Software, Lenovo, Zscaler, USAID, and Simrise. With our average sales cycle running approximately six to nine months, we believe this early progress is just the beginning. Given our early top line success, and the size of the market opportunity, we have made a deliberate decision to focus on foundational investments in content, platform, and go-to-market to drive future bookings and revenue growth while maintaining EBITDA margins that lead our peer group. I'll now turn the call over to Gary to share his initial observations and discuss our financial results and updated outlook in greater detail.