Skillsoft Corp. · NYSE:SKIL
Skillsoft — Churchill Capital Corp II — SPAC Merger (May 2021)
48 slides from Skillsoft's SPAC merger presentation, May 19, 2021
Slide 1: Investor Presentation May 2021
INVESTOR PRESENTATION May 2021
Slide 2: Disclaimer
2 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 Church
Slide 3: Introduction
Introduction Strategy Finance Q&A INTRODUCTION 3
Slide 4: CY2020A results exceeded estimates; transaction update
Introduction Strategy Finance Q&A • CY2020A results exceeded estimates at announcement o $691M actual Adjusted Gross Revenue compared to $650-680M estimate at announcement; $163M actual Adjusted EBITDA compared to $145-165M estimate at announcement • Reaffirmed combined CY2021 outlook for Adjusted G
Slide 5: Value creation opportunity for investors
Introduction Strategy Finance Q&A VALUE CREATION OPPORTUNITY FOR INVESTORS 5 BUSINESS PLAN SUPPORTS SIGNIFICANT ADJ. EBITDA GROWTH (Adj. EBITDA; $ in M) CY2020A CY2021E CY2022E ATTRACTIVE ENTRY VALUE ($ in B) Adj. Gross Revenue $163 $155-$175 $180-$220 $691 $645-$675 $675-$725 2.2x 6.8x 15.5x 4.7x (
Slide 6: Churchill Capital overview
Introduction Strategy Finance Q&A CHURCHILL CAPITAL II Raised Jun. 2019 $690M CHURCHILL CAPITAL VI Raised Feb. 2021 $552M CHURCHILL CAPITAL V Raised Dec. 2020 $500M CHURCHILL CAPITAL VII Raised Feb. 2021 $1.38B OVERVIEW CHURCHILL CAPITAL 6 A unique model, the first GP team focused purely on public e
Slide 7: Creating the new Skillsoft
Introduction Strategy Finance Q&A CREATING THE NEW SKILLSOFT 7 PURCHASE PRICE COMBINED ACQUISITION MULTIPLES(1) CAPITAL STRUCTURE 50% 32% 17% OWNERSHIP PARTNERS TIMING Notes: 1 Based on acquisition values and FYE 1/31/2023E financials. Transaction multiples exclude sponsor promote and transaction co
Slide 8: Introduction to Prosus Group
Introduction Strategy Finance Q&A 8 A global consumer internet group and one of the largest technology investors in the world. • Early investor in global tech leaders, including Tencent and Delivery Hero Building leading companies in high growth sectors. • EdTech • Food delivery • Online classifieds
Slide 9: Powerful 'at scale' foundation and significant progress
Introduction Strategy Finance Q&A POWERFUL ‘AT SCALE’ FOUNDATION SIGNIFICANT PROGRESS AND IMPROVEMENTS • Industry leading content library • Strong technology platform (Percipio) • Large enterprise customer base • Recurring revenue stream • Strengthening capital structure: o Balance sheet restructure
Slide 10: Jeff Tarr to lead the new Skillsoft
Introduction Strategy Finance Q&A 10 JEFF TARR TO LEAD THE NEW SKILLSOFT History of Creating Value for Shareholders Revenue Over Tenure; $ in millions) $476 $1075 2005A 2010A Meaningfully Grew DigitalGlobe’s Business DigitalGlobe’s revenue over tenure; $ in millions) $340 $900 2011A 2017A EXECUTION
Slide 11: Illustrative timeline to close
Introduction Strategy Finance Q&A 11 ILLUSTRATIVE TIMELINE TO CLOSE EVENT CFIUS APPROVAL OF PROSUS $400M SECOND STEP INVESTMENT 10-K/A AND S-4/A FILINGS EXPECTED S-4/A EFFECTIVE DATE STOCKHOLDER REDEMPTION DATE / VOTE AND TRANSACTION CLOSE EXPECTED DATE1 COMPLETED MAY 3 COMPLETED MAY 13 MAY JUNE Not
Slide 12: Strategy
Introduction Strategy Finance Q&A STRATEGY 12
Slide 13: The new Skillsoft
Introduction Strategy Finance Q&A THE NEW SKILLSOFT 01 An attractive market opportunity without a clear leader 02 Building a global leader from a strong foundation 03 A powerful platform for further M&A 04 An attractive investment opportunity 13
Slide 14: An attractive market opportunity
Introduction Strategy Finance Q&A AN ATTRACTIVE MARKET OPPORTUNITY LARGE MARKET GROWING MARKET STRONG SECULAR GROWTH DRIVERS • Growing skills gap globally • Corporate / C-Suite focus on workforce development / upskilling • Shift from insourced to outsourced training • Shift from classroom to digital
Slide 15: Major customer segments remain highly underpenetrated
Introduction Strategy Finance Q&A MAJOR CUSTOMER SEGMENTS REMAIN HIGHLY UNDERPENETRATED 15 ROBUST HEADROOM AVAILABLE ACROSS CUSTOMER SEGMENTS WITHIN THE U.S. Total Addressable Market represents value of the market in which new Skillsoft participates, including unpenetrated portion that can adopt onl
Slide 16: Fragmented market space without a clear leader
Introduction Strategy Finance Q&A 16 FRAGMENTED MARKET SPACE WITHOUT A CLEAR LEADER SKILLSOFT IS THE LARGEST PLAYER FOCUSED PRIMARILY ON THE ENTERPRISE NO OTHER CORPORATE DIGITAL LEARNING BUSINESS WITH >$500M OF REVENUE New $500M REVENUE
Slide 17: A new and inspiring direction that builds on our strengths
Introduction Strategy Finance Q&A A NEW AND INSPIRING DIRECTION THAT BUILDS ON OUR STRENGTHS 17 WHERE WE PLAY We upskill the global workforce across three core segments… (Leadership & Business Skills, Compliance and Technology & Development) …by providing engaging digital learning & development solu
Slide 18: Where we play: three customer segments
Introduction Strategy Finance Q&A 18 WHERE WE PLAY: UPSKILLING THE GLOBAL WORKFORCE ACROSS THREE CUSTOMER SEGMENTS LEADERSHIP & BUSINESS SKILLS TECHNOLOGY & DEVELOPMENT COMPLIANCE #1 GLOBAL LEADER CUSTOMER VALUE PROPOSITION Enable leaders and organizations to thrive in a digital world Stay ahead of
Slide 19: How we win: content breadth
Introduction Strategy Finance Q&A 19 HOW WE WIN: CONTENT BREADTH OF OUR OFFERING WILL DRIVE GROWTH • Unique opportunity to create global leader • The breadth of our offering is the #1 reason we win with customers • Supports learners with a unified platform, consistent pedagogy and more complete lear
Slide 20: How we win: content cross-sell opportunities
Introduction Strategy Finance Q&A 20 Note: 1 Covers Q4FY2017 through Q4FY2021. HOW WE WIN: CONTENT OUR CONTENT CREATES UNIQUE CROSS-SELL OPPORTUNITIES CROSS-SELL: Growing share of customers buying 2-3 products RETENTION: 22 percentage point higher dollar retention rate among customers purchasing 3 p
Slide 21: How we win: compelling learning journeys
Introduction Strategy Finance Q&A 21 HOW WE WIN: CONTENT OUR CONTENT ENABLES COMPELLING LEARNING JOURNEYS . . .WITH ORIGINAL AND CURRENT CONTENT A PROVEN LEARNING MODEL. . . . . .THAT DELIVERS REALWORLD RESULTS 90% Of consumption based on proprietary Skillsoft content Skillsoft has conducted neurosc
Slide 22: How we win: Percipio platform
Introduction Strategy Finance Q&A HOW WE WIN: PLATFORM PERCIPIO PLATFORM DELIVERS ENGAGING EXPERIENCES 2,400 COMPANIES LIVE ON PLATFORM 4x MORE LEARNING HOURS1 9M BADGES ISSUED ~100% PERCIPIO COHORT DOLLAR RETENTION RATE UP TO 29PT INCREASE IN DOLLAR RETENTION RATE1 THE PERCIPIO PLATFORM • Learner f
Slide 23: How we win: unrivaled enterprise sales capability
Introduction Strategy Finance Q&A ~70% OF FORTUNE 10001 ~45M LEARNERS WORLDWIDE2 160+ COUNTRIES WORLDWIDE3 ~600 COMBINED SALES TEAM ~98% REVENUE FROM BUSINESS CUSTOMERS4 HOW WE WIN: GO-TO-MARKET AN UNRIVALED ENTERPRISE SALES CAPABILITY 23 Notes: 1 Based on customers who have purchased training from
Slide 24: A powerful platform for further M&A
Introduction Strategy Finance Q&A A POWERFUL PLATFORM FOR FURTHER M&A CONTENT Complete full portfolio of learner needs in our prioritized content areas PLATFORM Enhance our capabilities to drive learner engagement GO TO MARKET Extend our reach into new customer segments More than 1,000 tuck-in acqui
Slide 25: A unique opportunity for shareholder value creation
Introduction Strategy Finance Q&A 25 A UNIQUE OPPORTUNITY FOR SHAREHOLDER VALUE CREATION ATTRACTIVE BUSINESS MODEL • Enterprise subscriptions • High operating leverage • Low capital intensity • Strong free cash flow conversion BUSINESS AT AN INFLECTION POINT • New leadership team with clear strategi
Slide 26: Recap: what are we building?
Introduction Strategy Finance Q&A RECAP: WHAT ARE WE BUILDING? WHERE WE PLAY We upskill the global workforce across three core segments… (Leadership & Business Skills, Compliance and Technology & Development) …by providing engaging digital learning & development solutions… …to enterprise clients glo
Slide 27: Finance
Introduction Strategy Finance Q&A FINANCE 27
Slide 28: New Skillsoft positioned for profitable growth
Introduction Strategy Finance Q&A NEW SKILLSOFT POSITIONED FOR PROFITABLE GROWTH HIGH LEVEL OF SUBSCRIPTION REVENUE WITH STRONG REVENUE PREDICTABILITY OPERATING LEVERAGE SUPPORTS FUTURE MARGIN EXPANSION HIGH CASH FLOW CONVERSION PROVIDES FINANCIAL FLEXIBILITY AND SUPPORTS REINVESTMENT IN THE BUSINES
Slide 29: Percipio migration supports improved retention
Introduction Strategy Finance Q&A 29 POSITIONED FOR GROWTH: PERCIPIO MIGRATION SUPPORTS IMPROVED REVENUE RETENTION AND MORE NEW BUSINESS Note: Dual Deployment (DD) reflects customers who are paying for Percipio and Skillport platforms. Percipio reflects customers who are only paying for Percipio pro
Slide 30: Global Knowledge has stabilized with improved product mix
Introduction Strategy Finance Q&A 30 POSITIONED FOR GROWTH: GLOBAL KNOWLEDGE HAS STABILIZED WITH IMPROVED PRODUCT MIX Notes: 1 Information shown reflects FYE January 31st financials (e.g., FYE 1/31/21 shown for CY2020). 2 Order intake (Bookings) represents confirmed orders, subject to cancellation a
Slide 31: CY2020 results above prior estimates
Introduction Strategy Finance Q&A 31 CY2020 RESULTS ABOVE PRIOR ESTIMATES CY20201 ($M) ESTIMATE AT ANNOUNCEMENT ACTUAL ANNUAL RECURRING REVENUE (SKILLSOFT CONTENT) $300-$310 $317 ORDER INTAKE $625-$650 $669 ADJUSTED GROSS REVENUE2 $650-$680 $691 ADJUSTED EBITDA3 $145-$165 $163 Note: 1 CY2020A reflec
Slide 32: New Skillsoft positioned for growth
Introduction Strategy Finance Q&A 32 NEW SKILLSOFT POSITIONED FOR GROWTH ORDER INTAKE (BOOKINGS) • Order intake o Percipio migration -> retention improvement (stabilizes core) o Sales realignment and 30 new customer acquisition sellers: focus on new business o GK stabilization: COVID rebound and mig
Slide 33: High subscription revenue with strong predictability
Introduction Strategy Finance Q&A 33 HIGH SUBSCRIPTION REVENUE WITH STRONG PREDICTABILITY Notes: 1 CY2020A reflects financials for the fiscal year ended 1/31/21 for Skillsoft and the twelve months ended 1/1/21 for Global Knowledge. 2 CY2022E reflects FYE January 31st financials (e.g., FYE 1/31/23E s
Slide 34: High cash flow conversion provides financial flexibility
Introduction Strategy Finance Q&A 34 HIGH CASH FLOW CONVERSION PROVIDE FINANCIAL FLEXIBILITY AND SUPPORT REINVESTMENT ILLUSTRATIVE CY2022E FREE CASH FLOW BRIDGE ($M; Cash Flow items shown as % of Adj. EBITDA) • High cash conversion of 70%+ supports growth • Low capital expenditure requirements (~3%
Slide 35: Attractive capital structure and partner support
Introduction Strategy Finance Q&A ATTRACTIVE CAPITAL STRUCTURE AND PARTNER SUPPORT PROVIDE STRATEGIC FLEXIBILITY Notes: 1 Reflects FYE 1/31/23E Adj. EBITDA midpoint. 2 Pro forma for Churchill transactions with Skillsoft and Global Knowledge; assumes no redemptions. 3 PIPE subject to certain conditio
Slide 36: Q&A
Introduction Strategy Finance Q&A Q&A 36
Slide 37: Appendix
APPENDIX 37
Slide 38: CY2021E outlook commentary
CY2021E OUTLOOK COMMENTARY 38 1 2 2 COMMENTARY REVENUE 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 l
Slide 39: Order intake and adjusted revenue summary
2019A 2020A 2021E 2022E Skillsoft Order Intake (Bookings): Content $347 $334 SumTotal 138 124 Total Skillsoft Order Intake (Bookings) $485 $458 $435 - $450 $465 - $495 Global Knowledge Order Intake (Bookings): Classroom and All Other $175 $62 Virtual and On-Demand 116 148 Total Global Knowledge Orde
Slide 40: Historical quarterly financial performance
HISTORICAL QUARTERLY FINANCIAL PERFORMANCE ($M) 40 COMMENTARY CY19A Calendar Year 2020 CY20A Q1A Q2A Q3A Q4A Skillsoft Order Intake (Bookings): Content $347 $39 $59 $74 $164 $334 SumTotal 138 32 24 28 40 124 Total Skillsoft Order Intake (Bookings) $485 $71 $82 $102 $203 $458 Global Knowledge Order I
Slide 41: Key performance metrics
KEY PERFORMANCE METRICS ($M) 41 1 CY2019A reflects year ended 1/31/20A financials for Skillsoft and year ended 9/27/19A for Global Knowledge. 2 CY2020A reflects year ended 1/31/21A financials for Skillsoft and year ended 1/1/21A for Global Knowledge. CY2019A Calendar Year 2020 CY2020A Q1A Q2A Q3A Q4
Slide 42: Transaction summary
TRANSACTION SUMMARY ($M) 42 PF EQUITY OWNERSHIP OWNERSHIP DAY 1 OWNERSHIP1 INC. REVESTED PROMOTE1 • The sponsor has agreed to unvest and revest 25% of promote at $12.50 • Substantial value will be created for investors before Churchill’s sponsor receives all Founder shares Shareholders Shares % Shar
Slide 43: Summary of shares outstanding at various prices
SUMMARY OF SHARES OUTSTANDING AT VARIOUS PRICES (SHARES IN M) 43 Notes: Shares and warrants net for Treasury Stock Method (“TSM”). Excludes equity issued to management and advisors in connection with the consummation of the contemplated transaction, including equity issued under Churchill's manageme
Slide 44: Summary unaudited pro forma condensed combined financial information
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (S-4) ($M) 44 Source: S-4 * Amounts for the year ended December 31, 2020 combine the historical (1) audited financial statements of Churchill as of and for the year ended December 31, 2020; (2) historical audited consolidated finan
Slide 45: Reconciliation of non-GAAP financial measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (S-4) ($M) 45 Source: S-4 1 Calculation pursuant to credit agreement operative in those periods. CY2020A Skillsoft (1/31/21) Global Knowledge (1/1/21) Combined Net Revenue $383 $190 $572 Impact of fresh-start and purchase accounting 89 -- 89 One-time imp
Slide 46: Key customer wins in 3Q and 4Q CY2020
KEY CUSTOMER WINS IN 3Q AND 4Q CY2020 46 Company Description Competition Period Skillsoft Value Drivers $23B+ revenue manufacturing company Pluralsight Udemy Udacity Coursera Q3 & Q4 • Enterprise Digital Literacy Program solution • Depth of data content in multiple formats • Strong bundling of conte
Slide 47: SumTotal: comprehensive learning and talent management system
SUMTOTAL: A COMPREHENSIVE LEARNING AND TALENT MANAGEMENT SYSTEM 47 LEADING PLATFORM COMPREHENSIVE SOLUTION TOP PRIORITIES • Supports every stage of the employee development lifecycle • Robust, highly configurable systems and best positioned to address large, complex, compliance-oriented use cases •
Slide 48: Disclaimer
DISCLAIMER 48 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 Churc