Is Skillsoft (NYSE:SKIL) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Skillsoft Corp. (NYSE:SKIL) does carry debt. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Skillsoft's Debt?

As you can see below, Skillsoft had US$578.6m of debt at July 2025, down from US$622.2m a year prior. However, it also had US$100.5m in cash, and so its net debt is US$478.1m.

How Strong Is Skillsoft's Balance Sheet?

We can see from the most recent balance sheet that Skillsoft had liabilities of US$296.9m falling due within a year, and liabilities of US$630.1m due beyond that. On the other hand, it had cash of US$100.5m and US$96.8m worth of receivables due within a year. So it has liabilities totalling US$729.7m more than its cash and near-term receivables, combined.

This deficit casts a shadow over the US$112.1m company, like a colossus towering over mere mortals. So we definitely think shareholders need to watch this one closely. After all, Skillsoft would likely require a major re-capitalisation if it had to pay its creditors today. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Skillsoft can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for Skillsoft

Over 12 months, Skillsoft made a loss at the EBIT level, and saw its revenue drop to US$524m, which is a fall of 2.3%. That's not what we would hope to see.

Caveat Emptor

Importantly, Skillsoft had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping US$44m. Reflecting on this and the significant total liabilities, it's hard to know what to say about the stock because of our intense dis-affinity for it. Like every long-shot we're sure it has a glossy presentation outlining its blue-sky potential. But the reality is that it is low on liquid assets relative to liabilities, and it lost US$117m in the last year. So we're not very excited about owning this stock. Its too risky for us. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 2 warning signs for Skillsoft you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.