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's CEO, Jeff Tarr, and CFO, Gary Ferrera. 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 11, 2021. GAAP requires accounting periods before and after June 11 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 basis. In addition, Global Knowledge activity is only reflected in the GAAP financial statements after June 11. References on this call to combined GAAP results reflect a combination of the predecessor period before June 11 that excludes Global Knowledge with the successor period after June 11. 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 Ferrera 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. With 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. While not on our call, I'm equally pleased that during the quarter, we were joined by Kristi Hummel, our new Chief People Officer. Kristi 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. Kristi 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. 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 Percipio 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 received 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 Percipio 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, GetAbstract, and Good Habits. These partners join a growing list of content providers available through Percipio. Over time, we expect that by allowing customers to integrate more third-party content, along with customer own content into Percipio, 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 2.5x 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 and 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 development, 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, work 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 the 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 Stine 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 in North America, joined us as our new SVP of Americas and Asia Pacific. In September, Jason Chapman, an experienced Enterprise Sales Operations Leader and former Bank Consultant, joined as Global Head of Go-To-Market Operations. And shortly after close, David Osborne joined us 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 salesforce. Wins in this quarter included notable names such as Siemens Digital Industry Software, Lenovo, Zscaler, USAID, and Symrise. With our average sales cycle running approximately six to nine months, we believe this early progress is just the beginning. Given our early topline 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 to lead our peer group. I will now turn the call over to Gary to share his initial observations and discuss our financial results and updated outlook in greater detail.

Thanks, Jeff. I appreciate the kind words. It's an absolute pleasure to be working with you again. It feels great to work at a company that is a clear leader in a growing sector with an opportunity to create significant value for shareholders. I have only been on board a couple of months. During that time, I've been impressed with the caliber of the highly motivated team. I look forward to accomplishing great things together. Now let's focus on our consolidated results. Bookings for the quarter were $169 million, up $12 million or 7% compared to the prior year. In the year-to-date, bookings were $453 million, up $37 million or 9% compared to last year. Turning to revenue, GAAP revenue was $171 million in Q3, and for the year-to-date period, combined GAAP revenue was $401 million. Adjusted revenue in Q3 was $179 million, an increase of $10 million or 6% over the prior year, and year-to-date adjusted revenue was $521 million, an increase of $4 million or 1% as compared to last year. This quarter, you will notice that there is a much smaller difference between adjusted revenue and GAAP revenue. This relates to our adoption of a new accounting standard during the quarter, ASU 2021-08 accounting for contract assets and contract liabilities. While non-GAAP revenue adjustments will be significantly smaller due to this change, we will continue to adjust GAAP revenue to gross up Global Knowledge reseller fees which are accounted for on a net basis. Our GAAP net loss was $43 million for the quarter and for the year-to-date period, our combined GAAP net loss was $104 million. Q3 adjusted EBITDA was $49 million, flat to the prior year. Year-to-date, adjusted EBITDA was $130 million, down $4 million or 3% compared to the prior year. Adjusted EBITDA margin for Q3 was 28%, and year-to-date, it was 25%. Our adjusted EBITDA margin benefited from lower expenses during the quarter and year-to-date due to the seasonality of bookings. We anticipate a lower margin in the fiscal fourth quarter as we increase investment in the business to generate future growth. We also have a natural increase in expenses such as commissions in the quarter that accompany the typically higher Q4 bookings. A note regarding the timing of cash flows during the year. As I just mentioned, Q4 is by far our highest billing period. Cash is typically collected in the first few months after billings, such that we expect more cash flow in our fourth and first fiscal quarters. Our current gross debt balance is $480 million, excluding original issue discount and issuance costs. Our cash balance at quarter end was $81 million. While we have no maintenance covenants in our credit agreement, our current gross leverage is 3x and net leverage is 2.5x based on the last 12 months adjusted EBITDA of $160 million. We also have outstanding $11 million of our $75 million accounts receivable facility. Let's now move to the individual segments. Bookings for Skillsoft content for Q3 were $78 million, an increase of $5 million or 6%. Year-to-date bookings were $181 million, an increase of $10 million or 6%. Our Q3 content dollar retention rate is 98%. Importantly, the combined Percipio dual deployment dollar retention rate is 101%. At the end of Q3, 86% of our annual recurring revenue was on Percipio or dual deployment. As we continue to migrate business to Percipio, we expect to see improving renewal rates. Year-to-date bookings from new customers to the content business were $14 million. At the time of the merger announcement, we estimated bookings from new customers to be in the range of $22 million to $30 million for the full year. We continue to believe we are on track to deliver this result. Adjusted revenue for Skillsoft content in Q3 was $87 million, unchanged from Q3 last year, and year-to-date adjusted revenue was $255 million, a decrease of $3 million. This decrease was driven by lower bookings in the prior year. Given the delay between a booking and GAAP revenue recognition for annual subscription contracts, a significant portion of bookings flow into revenue in the following year. We expect the growth in current year bookings to support an improving trajectory of GAAP revenue as we move into fiscal 2023. Bookings for Global Knowledge in Q3 were $62 million, an increase of $6 million or 11%. Year-to-date bookings are $190 million, an increase of $29 million or 18%. The Global Knowledge improvement was driven by a shift to digital and to recovery from COVID headwinds experienced in the prior year. Virtual instructor-led training represented approximately 80% of total bookings in Q3. Adjusted revenue for Global Knowledge for Q3 was $62 million, an increase of $11 million or 21%. Year-to-date adjusted revenue was $177 million, an increase of $15 million or 9%. Now turning to SumTotal, bookings were $29 million an increase of $1 million or 3%. Year-to-date SumTotal bookings were $82 million, a decrease of $2 million. Adjusted revenue was $30 million, a decrease of $1 million from Q3 last year and year-to-date adjusted revenue was $90 million, a decrease of $7 million. SumTotal continues to maintain a strong market position, particularly within the LMS business serving the talent development needs of customers with complex learning and compliance reporting requirements. I will wrap up with some comments on our raise of the fiscal 2022 full-year outlook. We are raising our bookings outlook for the year by $10 million at the top and bottom ends of the range. We have not narrowed the range at the midpoint; almost 40% of our full-year bookings come in the fourth quarter. We now expect bookings of $700 million to $720 million. We are increasing the bottom end of our adjusted revenue outlook for the year by $15 million, and the top end of the range by $10 million. This narrows the range to $15 million, resulting in a full-year adjusted revenue outlook of $685 million to $700 million. Finally, we've narrowed the range for adjusted EBITDA and now expect it to approximate $165 million for the full year as we continue to invest in the business to drive future growth. With that, I'll turn it back over to Jeff.

Thanks, Gary. We are proud to operate what we believe is the largest corporate digital learning business in the world, expected to generate at least $685 million in adjusted revenue in fiscal 2022, for more than 12,000 corporate customers and more than 45 million learners. We are profitable and growing. And with our strong leadership, team, and recent enhancements to content, platform, and go-to-market, we believe we're well positioned to drive continued growth and create substantial value for our shareholders, customers, learners, and other stakeholders. Operator, you can now open the call for Q&A.

Thank you. We will now begin the question-and-answer session. Our first question comes from Raimo Lenschow with Barclays. Please go ahead with your question.

Thank you and congratulations to everyone. It’s great to see another strong comeback quarter. My first question is about Global Knowledge, Jeff. We observed significant growth last quarter and again this quarter, indicating robust business activity. How do you view this in a broader context? Is it mainly due to easier comparisons and a rebound, or do you perceive a more fundamental change, suggesting a shift towards more virtual instructors and an enduring momentum that extends beyond a simple recovery? Additionally, I’d like to ask about the net revenue retention for skills content at 101%, which is a solid figure. What factors should we consider regarding this? Congratulations once again. Thank you.

Thanks, Raimo. So first of all, on Global Knowledge, certainly last quarter, when Global Knowledge was up about 30%, that was in part due to easier COVID comparisons in the prior year, but it is on a growth trajectory. We've now strung together three straight quarters of solid double-digit year-over-year growth. And importantly, we've done that with a vastly improved mix from a predominantly classroom to one that now is predominantly virtual, and as we all know, that virtual business carries a higher margin. Now, it's also a somewhat lumpier business in terms of it's more transactional than the rest of our revenue, and so that's just an aspect of that business. But it's a good business and one that we expect to get better as we tighten the integration with Percipio and with our subscription content business. So more to come on that, and I'm pleased with the progress we've made. On your second question on the improvement in retention rates, I have a few thoughts and then I'll see if Gary has any others. But first of all, the biggest driver in the improvement of retention rates are our continued progress, migrating from Skillport to Percipio. As we do that, we just structurally drive higher dollar retention rates. Now, I'm pleased also that the Percipio plus dual deployment retention rate is improving slightly year-over-year. And we also look at the last 12-month retention rate as an important indicator because there is some lumpiness to the dollar retention rates, but we see them trending up. We see them continuing to trend up. And that is because our sales team and customer success team is continuing to improve. The product continues to improve, both the platform and the content, and overall, we're excited about where we can take that dollar retention rate over time.

Perfect. Thank you.

Our next question comes from Brian Schwartz with Oppenheimer. Please go ahead with your question.

This is Ari Friedman subbing in for Brian Schwartz. I was just wondering how your sales hiring has been going. And if you could give some puts and takes on that.

Sales hiring has progressed positively. We established the new customer acquisition team early in the year, and we are starting to see them deliver results. Some of these results include the net new logos we discussed today. Throughout the business, we are making talent upgrades and filling vacancies in various regions, but we haven't expanded the salesforce beyond the previous increase of thirty. Our focus has been more on training, development, compensation, and the coverage model, and I believe the effects of these changes will be noticeable next year.

Thank you.

Our next question comes from Raj Sharma with B. Riley. Please go ahead with your question.

Hi, this is Katherine Knop on for Raj Sharma. I was just wondering if you guys could give a little bit more color on the bookings increase and your upping of guidance. Are you seeing new customers or existing customers purchasing more? Thanks.

The answer is yes; we're seeing dollar retention rates move up. That dollar retention rate is a net dollar retention rate reflects upgrades. It also reflects downgrades, which is why it's not vastly higher than that. But we're seeing growth in new customers and we're seeing the addition of net new logos. So that combination is driving up the bookings.

Thank you. Our next question comes from the line of Arvind Ramnani with Piper Sandler. Please proceed with your question.

Hi. Thanks for taking my question. I wanted to ask you about the dynamics that you mentioned, that sort of increased levels of turnover at certain firms or kind of across the board. But then also kind of this increased levels of demand is, are employees, employers, and enterprises looking at Skillsoft as now, something so essential to kind of provide to the employees in terms of retention or kind of what's driving that increased demand, and with the backdrop of like, higher levels of turnover?

Yes. So, certainly higher levels of turnover is creating a number of needs within our customers. First and foremost, learning and development is a benefit. The survey work that we've done has shown that when people do leave their employer, more often than not, it's for training and development more so than compensation. And so we're finding that those who purchase our products inside the enterprise now realize that learning and development is mission critical for retention; it is also essential to fill skills gaps. For example, one of our customers, which was in the printing business, got hit incredibly hard by COVID because people weren't using office printers. So what they did is we worked with them to retrain a large number of printing technicians for other technical jobs. That has played a key role, and that business is turned around as they've shifted their mix of their revenue from just office printing to a more broad suite of IT services. We're seeing that everywhere across our business, demands like that. We're excited by what we're seeing because we believe that we can make a real difference; we make a real difference for learners. We make a real difference for the enterprise that's seeking to combat the great resignation to upskill and reskill to train new employees for their jobs. It's ongoing training within the enterprise. So it's an exciting opportunity to be in this particular business.

That's great. I wanted to quickly ask about guidance. You had a Q3 beat of roughly $13 million, and looking at the guidance range, you tightened it by about $5 million and increased the target by $13 million, indicating strong momentum in Q3. Is there a level of conservatism built into Q4, or do you believe this guidance reflects a more realistic outlook without much conservatism?

Hi Arvind, this is Gary. Yes, so obviously, I've been here less than three months. So you know, what I do with guidance is tell you what I know. And so conservatism, I wouldn't say that is built into that. Bookings obviously still 40% left to go in the quarter and in Q4, revenues at tighter range because revenue is a lot more known at this point in time, and we were able to narrow down the adjusted EBITDA because that comes in a couple of million in either direction. But obviously, bookings is the biggest question at this time because it's still 40 more percent.

Our next question comes from the line of Peter Heckmann with DA Davidson. Please proceed with your question.

Good afternoon, gentlemen. Just one quick housekeeping item about how much in ARR did Pluma add in the quarter?

It was immaterial in the quarter as this was our first full quarter with Pluma. We're very pleased. Bookings have exceeded our original expectations and acquisition model. However, we are still in the early stages with what is a small business that we anticipate will become a significant contributor in the future. Additionally, during my conversations with customers at the CEO and CHRO level, Pluma is resonating well as a value proposition; we're observing our pipelines grow, and we believe it will positively impact our company in the long run.

Great. And then just can you give us an update on the competitive dynamics? We all know that there's been a lot of relatively new entrants, or maybe our awareness of those new entrants is higher, given some recent IPOs and some content players, some direct competitors; but how would you talk about that, and the overall demand versus any other changes in let's say pricing or willingness to bundle by competitors, and how you're dealing with that?

Well, we love the competitive environment. What I'll tell you is when I'm speaking to customers and analysts and I'm listening closely to what they have to say, what I'm hearing time and time again is the single biggest change in the competitive environment over the last year is the new Skillsoft. We have a new management team, new sales leadership, a new product; we brought three companies together, we've integrated those offerings, and we are having a huge impact in the marketplace. If you look closely at the publicly available data on the competitive set, what you see is when it comes to the enterprise, the corporate market, our scale is vastly larger than the competition. If you look behind the numbers, such as what's the average revenue per account, it shows that we're not playing in a small way in the corporate market, we're playing in a big way at the corporate center on an enterprise scale. And we intend to continue to do so and grow our business. One final point I'd make is there's a lot of consumer-oriented learning offerings out there. What we've been finding is that those are great partners for us because we can take those offerings and make them available through Percipio to our customers. And that's a real win-win for the numerous players who otherwise would not have access to the enterprise market, and it's a win for our customers who rely on us to curate the best early-stage offerings out there and bring the best breed to them in a fashion that's integrated into our Aspire learning journeys into Percipio in a way that works for learners. I'm excited by what I see in the competitive environment.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to Jeff Tarr for closing remarks.

Thanks, everyone. I really appreciate you joining the call today. We are pleased with the early results of our investments in platform, content, and go-to-market. I'm grateful for the strong execution that our team has been delivering. I believe we're well on our way to achieving our vision of becoming the most highly valued provider of learning solutions, preparing the workforce of today with the skills for tomorrow. Looking forward to speaking with you next quarter and sooner than that, with any callbacks. So thanks very much and have a great day.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.