MARKETS
SkillSoft sees profits soar in Q4
14-03-2008
by Emmet Ryan
E-learning firm SkillSoft posted another great set of quarterly results with revenues up by 34 percent and profits nearly quadrupling.
Coming off the back of a third quarter where profits nearly trebled SkillSoft managed to perform even better in the fourth quarter as it posted profits of USD34.3 million, up from USD8.2 million for the same quarter the previous year. This equated to USD0.31 per diluted share, up from USD0.08 per share last year.
Revenues at the firm also rose impressively to USD77.5 million, up from USD57.7 million for the same period the previous year and ahead of the average analyst estimate of USD75.5 million.
The firm said the increase in revenue was primarily down to higher-than-planned rates of contract retention and renewal, incremental revenues of USD4.6 million related to the amortisation of deferred revenue acquired by SkillSoft in the acquisition of NETg, and incremental revenues from NETg customer contracts which were renewed after acquisition. The purchase of NETg, a former market rival of SkillSoft, has proven in the short-term at least to be a rather clever investment by SkillSoft. In both of the last two quarters SkillSoft's shiny new asset has played a key role in boosting the bottom line.
Needless to say SkillSoft's management is pleased with the overall performance, especially in terms of how the acquisition of NETg affected the results. "We are pleased with the results of our fourth quarter NETg customer renewal efforts as well as the overall customer reception of the acquisition," commented Chuck Moran, president and chief executive of SkillSoft.
So all in all everything is dandy for the e-learning firm and they all lived happily ever after. As usual though the picture is sadly never quite that pretty. SkillSoft's repeated booming performances could see it fall prey to the similar market forces that have rained on Google's parade. As profits increase, the demand for more, more, more means the market eventually sets estimates the company can't meet.
With this possibly in mind SkillSoft's management have elected not to get carried away with the firm's current good fortune and has forecast a drop in profits for the year ahead. Having posted year-end profits of USD60 million is this latest set of results, the e-learning firm said it expects profits of between USD35 million and USD38 million for the year ahead.
The educational software firm was formed in 2002 following the merger of Irish e-learning giant Smartforce and its smaller US rival SkillSoft.
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