Skillsoft's Prudent Expense Control: Means to Margin Resilience

Skillsoft Corp. SKIL registered a 6% year-over-year decline in its top line during the third quarter of 2026. This detriment was primarily caused by a 18% dip in Global Knowledge (GK) revenues. While revenues took a hit, the company managed to protect its margins by leveraging its operational discipline.

SKIL took extensive measures to ensure the decline in revenues could be compensated for with an overhead reduction. The company recorded $101 million in total operating expenses, which declined 4.1% year over year. This reduction was achieved by Skillsoft as it managed to strip down content and software expenses, selling and marketing expenses and general and administrative expenses.

Productivity gains from leveraging AI and a sharper focus led to a 2.4% year-over-year dip in content and software development expenses. SKIL was able to lower selling and marketing expenses by 7.1% year over year on the back of headcount reduction. Finally, lower headcount and vendor spending resulted in a 11.9% year over year dip in general and administrative expenses.

These massive cuts resulted in registering an adjusted EBITDA of $28 million. While the adjusted EBITDA margin dipped to 22% from the year-ago quarter’s 23.3%, we must acknowledge the margin resilience given the double-digit decline in the GK segment’s revenues.

On a segment-basis, we observe the Talent Development Solutions segment to remain profitable while GK took a hit of $3.3 million negative EBITDA. Therefore, it is important to consider that the decision to strip away the lower margin business and finding the alternative to GK will result in the company utilizing its high-margin SaaS platform to stabilize its long-term margin.

SKIL’s Price Performance, Valuation & Estimates

Skillsoft has plummeted 71.3% in a year against the industry’s 10.2% growth. Meanwhile, SKIL’s industry peer Nable NABL has dipped 30.3%, and Agora API lost 8.6%.

1-Year Share Price Performance

From a valuation standpoint, SKIL trades at a 12-month forward price-to-earnings ratio of 1.99X compared with the industry’s 25.21X. It trades cheaper than Nable’s and Agora’s 12.9X and 26.81X, respectively.

P/E - F12M

Skillsoft has a Value Score of A. Nable and VerifyMe carry a Value Score of B and C, respectively.

The Zacks Consensus Estimate for EPS for 2025 is set at $4.17, which has been revised up 19.8% over the past 60 days. The consensus mark for EPS for 2026 is pinned at $4.54, which has been revised down 9.9% over the past 60 days.

SKIL sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research