Skillsoft Corp. · NYSE:SKIL
Skillsoft — Churchill Capital Corp II — SPAC Merger (March 2021)
47 slides from Skillsoft's SPAC merger presentation, Mar 10, 2021
Slide 1: Investor Presentation March 2021
INVESTOR PRESENTATION March 2021
Slide 2: Disclaimer: Important Additional Information and Where to Find It
DISCLAIMER IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT This communication is being made in respect of the proposed merger transaction involving Churchill II and Skillsoft. Churchill II has filed a registration statement on Form S-4 with the SEC, which includes a proxy statement of Churchil
Slide 3: Introduction
Introduction Strategy Finance Q&AINTRODUCTION3
Slide 4: Overview of Churchill Capital: Who We Are
Introduction Strategy Finance Q&AOVERVIEW CHURCHILL CAPITALWHO WE AREA unique model, the first GP team focused purely on public equityCreating value by leveraging the active engagement of high performing FortuneA pioneer in public equity vehicles for scale investmentsTHE CHURCHILL COMPANIES ASSET CH
Slide 5: Creating the New Skillsoft
Introduction Strategy Finance Q&ACREATING THE NEW SKILLSOFTPURCHASE PRICESKILLSOFT $1.3B GLOBAL KNOWLEDGE $233MCOMBINED VALUATION MULTIPLES(1)ADJ. REVENUE 2.2x ADJ. EBITDA 7.6x LEVERED FREE CASH FLOW 5.6xCAPITAL STRUCTUREPIPE 2 $530M NET DEBT OF $115M ADJ. EBITDA 2, 3, 4 0.6xOWNERSHIP 2, 550%32%17%P
Slide 6: Introduction to Prosus Group
Introduction Strategy Finance Q&AINTRODUCTION TO PROSUS GROUPCOMPANY OVERVIEW INVESTMENT PHILOSOPHYA global consumerBuilding leadingListed on EuronextFOCUSED ACTIVE LONG-TERM FOCUSinternet group and one of the largest technology investors in the world. • Early investor in global tech leaders, includ
Slide 7: A Strong Foundation to Build From
Introduction Strategy Finance Q&AA STRONG FOUNDATION TO BUILD FROMPOWERFUL ‘AT SCALE’ FOUNDATION SIGNIFICANT PROGRESS AND IMPROVEMENTS• Industry leading content library • Strong technology platform (Percipio) • Large enterprise customer base • Recurring revenue streamWHAT WE NEEDED TO FIX• Overlever
Slide 8: Illustrative Timeline to Close
Introduction Strategy Finance Q&AILLUSTRATIVE TIMELINE TO CLOSEEVENTSKILLSOFT FYE 1/31/21 RESULTSS-4 EFFECTIVE DATE AND PROXY MAILINGSTOCKHOLDER REDEMPTION DATESTOCKHOLDER APPROVAL AND TRANSACTION CLOSEEXPECTED DATEEARLY APRIL APRIL MAY MAYNote: For illustrative purposes only; timing subject to chan
Slide 9: Strategy
IntroductionStrategyFinance Q&ASTRATEGY9
Slide 10: The New Skillsoft
IntroductionStrategyFinance Q&ATHE NEW SKILLSOFT01 An attractive market opportunity without a clear leader02 Building a global leader from a strong foundation03 A powerful platform for further M&A04 An attractive investment opportunity10
Slide 11: An Attractive Market Opportunity
IntroductionStrategyFinance Q&AAN ATTRACTIVE MARKET OPPORTUNITYLARGE MARKET GROWING MARKET STRONG SECULAR GROWTH DRIVERSTOTAL ADDRESSABLE MARKET GLOBAL PROFESSIONAL ELEARNING1 $28BGlobal Professional eLearning TAM3 forecasted to grow 10% p.a., with market spend growing 13-14% p.a.+10% p.a.• Growing
Slide 12: Major Customer Segments Remain Highly Underpenetrated
Introduction Strategy Finance Q&AMAJOR CUSTOMER SEGMENTS REMAIN HIGHLY UNDERPENETRATEDROBUST HEADROOM AVAILABLE ACROSS CUSTOMER SEGMENTS WITHIN THE U.S.U.S. PROFESSIONAL ELEARNING TOTAL ADDRESSABLE MARKET3, 2021F $ in B Total = $10BTotal Addressable Market represents value of the market in which100%
Slide 13: Fragmented Market Space Without a Clear Leader
IntroductionStrategyFinance Q&AFRAGMENTED MARKET SPACE WITHOUT A CLEAR LEADERNO OTHER CORPORATE DIGITAL LEARNING BUSINESS WITH >$500M OF REVENUENew$500M REVENUESKILLSOFT IS THE LARGEST PLAYER FOCUSED PRIMARILY ON THE ENTERPRISE13
Slide 14: A New and Inspiring Direction That Builds on Our Strengths
Introduction Strategy Finance Q&AA NEW AND INSPIRING DIRECTION THAT BUILDS ON OUR STRENGTHSOUR AMBITION ‘To create a future-fit workforce skilled and ready for the jobs of tomorrow’WHERE WE PLAYWe upskill the global workforce across three core segments… (Leadership & Business Skills, Compliance and
Slide 15: Where We Play: Three Customer Segments
Introduction Strategy Finance Q&AWHERE WE PLAY: UPSKILLING THE GLOBAL WORKFORCE ACROSS THREE CUSTOMER SEGMENTSLEADERSHIP & BUSINESS SKILLSTECHNOLOGY & DEVELOPMENTCOMPLIANCECUSTOMER VALUE PROPOSITIONROLE IN SKILLSOFT’S PORTFOLIOSKILLSOFT POSITIONEnable leaders and organizations to thrive in a digital
Slide 16: How We Win: Content Breadth Will Drive Growth
IntroductionStrategyFinance Q&AHOW WE WIN: CONTENT BREADTH OF OUR OFFERING WILL DRIVE GROWTH22 PERCENTAGE POINT HIGHER DOLLAR RETENTION RATE1 AMONG CUSTOMERS PURCHASING 3 PRODUCTS VS. 1LEADERSHIP & BUSINESS SKILLS• Unique opportunity to create global leader• The breadth of our offering is the #1 rea
Slide 17: How We Win: Go-To-Market Cross-Sell Opportunity
Introduction Strategy Finance Q&AHOW WE WIN: GO-TO-MARKET UNIQUE OPPORTUNITY TO CROSS-SELLRETENTION: 22 percentage point higher dollar retention rate among customers purchasing 3 products1CROSS-SELL: Growing share of customers buying 2-3 productsDollar Retention RateAnnual Recurring Revenue Distribu
Slide 18: How We Win: Content Enables Compelling Learning Journeys
Introduction Strategy Finance Q&AHOW WE WIN: CONTENT OUR CONTENT ENABLES COMPELLING LEARNING JOURNEYSA COMPLETE LEARNING SOLUTION. . . 180K+ Content assets in the library, reflecting significant capital investment$100M+ Invested in content since 2017. . .WITH ORIGINAL AND CURRENT CONTENT 90% Of cons
Slide 19: How We Win: Percipio Platform
Introduction Strategy Finance Q&AHOW WE WIN: PLATFORM PERCIPIO PLATFORM DELIVERS ENGAGING EXPERIENCES4x MORE LEARNING HOURS1~100% PERCIPIO COHORT DOLLAR RETENTION RATETHE PERCIPIO PLATFORM • Learner focused • Skill-based learning paths • AI-enabled • Badges, open source content, microlearning, mobil
Slide 20: How We Win: Unrivaled Enterprise Sales Capability
IntroductionStrategyFinance Q&AHOW WE WIN: GO-TO-MARKET AN UNRIVALED ENTERPRISE SALES CAPABILITY~70% OF FORTUNE 10001~45M LEARNERS WORLDWIDE2160+ COUNTRIES WORLDWIDE3~600 COMBINED SALES TEAM~98% REVENUE FROM BUSINESS CUSTOMERS4Notes: 1 Based on customers who have purchased training from Skillsoft or
Slide 21: A Powerful Platform for Further M&A
IntroductionStrategyFinance Q&AA POWERFUL PLATFORM FOR FURTHER M&AMore than 1,000 tuck-in acquisition targets with less than $100M in revenue and a few with over $100M in revenueCONTENT Complete full portfolio of learner needs in our prioritized content areasPLATFORM Enhance our capabilities to driv
Slide 22: A Unique Opportunity for Shareholder Value Creation
Introduction Strategy Finance Q&AA UNIQUE OPPORTUNITY FOR SHAREHOLDER VALUE CREATIONSTRONG FOUNDATION• Robust core business • Healthy balance sheetATTRACTIVE BUSINESS MODEL • Enterprise subscriptions • High operating leverage • Low capital intensity • Strong free cash flow conversionBUSINESS AT AN I
Slide 23: Recap: What Are We Building?
Introduction Strategy Finance Q&ARECAP: WHAT ARE WE BUILDING?OUR AMBITION ‘To create a future-fit workforce skilled and ready for the jobs of tomorrow’WHERE WE PLAYWe upskill the global workforce across three core segments… (Leadership & Business Skills, Compliance and Technology & Development)…by p
Slide 24: Finance
Introduction StrategyFinanceQ&AFINANCE24
Slide 25: Attractive Financial Profile
Introduction StrategyFinanceQ&AATTRACTIVE FINANCIAL PROFILE#1 NEW SKILLSOFT POSITIONED FOR PROFITABLE GROWTH HIGH LEVEL OF SUBSCRIPTION REVENUE WITH STRONG REVENUE PREDICTABILITY #3 OPERATING LEVERAGE SUPPORTS FUTURE MARGIN EXPANSION HIGH CASH FLOW CONVERSION PROVIDES FINANCIAL FLEXIBILITY AND SUPPO
Slide 26: Positioned for Growth: Percipio Migration
Introduction Strategy Finance Q&APOSITIONED FOR GROWTH: PERCIPIO MIGRATION SUPPORTS IMPROVED REVENUE RETENTION AND MORE NEW BUSINESSPERCIPIO VS. LEGACY PLATFORM SKILLPORT PERFORMANCE COMPARISON ($M except percentages) $328 $310-$315 $315-$325 $340-$360Annual Recurring Revenue (Excl. SumTotal)55%32%1
Slide 27: Positioned for Growth: Global Knowledge Stabilized
Introduction StrategyFinanceQ&APOSITIONED FOR GROWTH: GLOBAL KNOWLEDGE HAS STABILIZED WITH IMPROVED PRODUCT MIXGLOBAL KNOWLEDGE SEQUENTIAL ORDER INTAKE PROGRESSION1 ($M)• COVID-19 negatively impacted classroom revenue by ~$115M3 offset by ~$35M increase from growth in virtual and on- demand offering
Slide 28: Business Tracking Above Prior Estimates
Introduction Strategy Finance Q&ABUSINESS TRACKING ABOVE PRIOR ESTIMATESANNUAL RECURRING REVENUE (SKILLSOFT CONTENT)ORDER INTAKEADJUSTED GROSS REVENUE ADJUSTED EBITDACY2020E1 ($M) ESTIMATE AT ANNOUNCEMENT REVISED ESTIMATE $300-$310 $310-$315 $625-$650 $669 $650-$680 $686-$691 $145-$165 $158-$163Note
Slide 29: New Skillsoft Positioned for Growth
Introduction StrategyFinanceQ&ANEW SKILLSOFT POSITIONED FOR GROWTH($M)ORDER INTAKE$777 $669 $660-$690 $710-$760• Order intake o Percipio migration -> retentionADJ. GROSSCY 2019A ¹ $808CY 2020E ²CY 2021E ³CY 2022E ³$675-$725improvement (stabilizes core) o Sales realignment and 30 new customerREVENUE(
Slide 30: High Subscription Revenue with Strong Predictability
Introduction Strategy Finance Q&AHIGH SUBSCRIPTION REVENUE WITH STRONG PREDICTABILITYSKILLSOFTGLOBAL KNOWLEDGECOMBINED~9%~91%CY2020E¹~95%~5% CY2020E¹~36%~8%~92%CY2022E²~75%~25% CY2022E²~32%• Subscription-based business provides significant visibility and predictabilityo 91%+ revenue subscription bas
Slide 31: High Cash Flow Conversion Provides Financial Flexibility
Introduction StrategyFinanceQ&AHIGH CASH FLOW CONVERSION PROVIDE FINANCIAL FLEXIBILITY AND SUPPORT REINVESTMENTILLUSTRATIVE CY2022E FREE CASH FLOW BRIDGE ($M; Cash Flow items shown as % of Adj. EBITDA)250 $180-$220200~14-18%~15-10%$125-$155• High cash conversion of 70%+ supports growth• Low capital
Slide 32: Attractive Capital Structure and Partner Support
Introduction Strategy Finance Q&AATTRACTIVE CAPITAL STRUCTURE AND PARTNER SUPPORT PROVIDE STRATEGIC FLEXIBILITYILLUSTRATIVE CAPITAL STRUCTURE ASSUMES NO REDEMPTIONS AND COMPLETION OF $400M SECOND STEP INVESTMENT BY PROSUS ($M)CASH2, 3 $535 TOTAL DEBT2 $650 NET DEBT $115COMMITTED INVESTOR BASECHURCHI
Slide 33: Q&A
Introduction Strategy Finance Q&AQ&A33
Slide 34: Appendix
APPENDIX34
Slide 35: Jeff Tarr to Lead the New Skillsoft
JEFF TARR TO LEAD THE NEW SKILLSOFTEXECUTION EXPERIENCE BOARD EXPERIENCE• Former CEO ofMeaningfully Grew DigitalGlobe’s BusinessHistory of Creating Value for ShareholdersDigitalGlobe and Hoover’s • Former President & COO of IHS((DDiiggiittaallGGlloobbee’s’srreevveennuueeoovveerrtteennuurree;;$$iinnm
Slide 36: Value Creation Opportunity for Investors
VALUE CREATION OPPORTUNITY FOR INVESTORSBUSINESS PLAN SUPPORTS SIGNIFICANT ADJ. EBITDA GROWTH (Adj. EBITDA; $ in M)$180-$220$158-$163 $155-$175Adj. Gross RevenueCY2020 CY2021 CY2022 $686-$691 $645-$675 $675-$725ATTRACTIVE ENTRY VALUE ($ in B) Firm Value / CY2022E Adj. Revenue2.2x5.3x6.1x 6.7x148.0xF
Slide 37: CY2021E Outlook Commentary
CY2021E OUTLOOK COMMENTARY 1 22REVENUECOMMENTARY Expect ~46-48% of revenue in 1H; ~52-54% in 2H• Skillsoft o Primarily subscription (~90%1) earned ratably throughout year o Quarterly progression tied to change in ARR • Global Knowledge o Improving revenue as year progresses and COVID impact lessens
Slide 38: Financial Overview
FINANCIAL OVERVIEW ($M)CY22001199AA11LTMLT1M0/3101//3210/2A02A2 CY22002200EE33 CY202210E241E4CY202220E24 4Expect to finish towardSkillsoft Order Intake: Content $347 $341 $334 ⁵ SumTotal 138 126 124 Total Skillsoft Order Intake $485 $467 $458 $435 - Global Knowledge Order Intake: Classroom and All O
Slide 39: Historical Quarterly Financial Performance
HISTORICAL QUARTERLY FINANCIAL PERFORMANCE($M) Skillsoft Order Intake:CCYY210919AA¹ 1CaCleanldeanrdYaeraYre2a0r2200²202 Q1A Q2A Q3A Q4ECYC20Y2200EE²2COMMENTARY • Expect to finish toward the upper end of CY20 rangesContent $347 $39 $59 $74 $164 $334 SumTotal 138 32 24 28 40 124 Total Skillsoft Order
Slide 40: Key Performance Metrics
KEY PERFORMANCE METRICS ($M)Skillsoft Annualized Recurring Revenue (ARR):1 22 CY2019A Calendar Year 2020 CY2020E Q1A Q2A Q3A Q4EPercipio $42 $47 $51 $57 $74 - $75 $74 - $75 Dual Deployment 103 118 154 168 158 - 160 158 - 160 Skillport 181 161 126 105 78 - 80 78 - 80 Total Skillsoft Content ARR $327
Slide 41: Transaction Summary
TRANSACTION SUMMARY ($M) PF EQUITY OWNERSHIP OWNERSHIPILLUSTRATIVE SOURCES AND USESSOURCES $ %Shareholders Churchill SPAC Skillsoft S/H Common Equity PIPE Investors7 Total Shares OutstandingDAY 1 OWNERSHIP1 Shares % 81.92 50.1% 28.5 17.4% 53.0 32.4%163.4 100.0%INC. REVESTED PROMOTE1 Shares % 86.3 51
Slide 42: Summary of Shares Outstanding at Various Prices
SUMMARY OF SHARES OUTSTANDING AT VARIOUS PRICES (SHARES IN M)Share Price Public IPO SharesTotal Shares OutstandingPublic Shares as % of Shares Outstanding (Incl / Excl Public Warrants) (1)COMMENTARY Shares: • Includes 69.0M public IPO shares • Includes 17.25M founder shares$10.00 69.0 163.4 42.2% /
Slide 43: Summary Unaudited Pro Forma Condensed Combined Financial Information
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (S-4) ($M)FYE 12/31/19* Nine Months Ended 9/30/20* Total pro forma combined revenue⁽¹⁾ $646 $489 Reversal of pro forma adjustments: Skillsoft fresh-start reporting 121 (39) Global Know ledge purchase accounting 6 -- Elimination of
Slide 44: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (S-4) ($M)Skillsoft ⁽¹⁾Fresh-start accounting reduced deferred revenue amount on balance sheet CY2019A Nine Months Ended 9/30/20 Global Know ledge(1/31/20)(9/27/19) Combined Skillsoft ⁽¹, ²⁾Global Know ledge ⁽³⁾CombinedNet Revenue $514 $260 $774 $311 $14
Slide 45: Reconciliation of Non-GAAP Financial Measures (Cont'd)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (S-4) ($M) (CONT’D)Restructuring reduced debt by $1.5B+,Skillsoft ⁽¹⁾ (-)saving $100M+ in annual cash interest expenseNine Months Ended 10/31/20Nine Months Ended 10/31/19(+) FYE 1/31/20= LTM (10/31/20)Global Know ledge (FYE 10/2/20) Combined LTMNet Reven
Slide 46: SumTotal: Comprehensive Learning and Talent Management System
SUMTOTAL: A COMPREHENSIVE LEARNING AND TALENT MANAGEMENT SYSTEM INDUSTRY LEADERS CHOOSE SUMTOTAL7 Of the world’s largest drug and biotech companies3 Of the largest U.S. banks3 Of the five largest U.S. life insurance companies3 Of the world’s 10 largest airlinesLEADING PLATFORM • Supports every stage
Slide 47: Disclaimer: Important Additional Information and Where to Find It
DISCLAIMER IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT This communication is being made in respect of the proposed merger transaction involving Churchill II and Skillsoft. Churchill II has filed a registration statement on Form S-4 with the SEC, which includes a proxy statement of Churchil