Digital learning platform provider Skillsoft agreed to sell its SumTotal business to Cornerstone OnDemand for approximately $200 million in cash.
SumTotal, which focuses on developing learning and HCM software for highly regulated industries, is a neat fit with Cornerstone’s content-heavy strategy for developing its customer base and roadmap..@Skillsoft agreed to sell its @SumTotalSystems business to Cornerstone OnDemand for approximately $200 million in cash. Click To Tweet
In March, Cornerstone acquired the learning experience platform provider EdCast. In announcing that deal, Cornerstone said it hoped to create a “next generation technology blueprint for the future-ready workforce.” Buzzwords aside, the companies promised to develop new approaches to experiential learning, content and skill building even as they create a unified, scalable infrastructure for developing and managing talent. With EdCast, Cornerstone said it hoped to “reimagine the people growth experience” in a way that creates a “next generation technology blueprint for the future-ready workforce.”
Skillsoft CEO Jeffrey Tarr said that by divesting itself of SumTotal, his company will be able to better align and simplify its portfolio in ways that serve its customer base and focus on “the best opportunities for profitable growth.” The move “marks another important step in our long-term strategic efforts to extend our leadership and create a more valuable company,” he said.
According to Skilllsoft, SumTotal reported approximately $123 million in bookings and $120 million in revenue during fiscal 2022. Adjusted EBITDA was approximately $37 million, excluding corporate allocations, and approximately $25 million including corporate allocations. The company expects SumTotal’s results to be essentially flat across those metrics in fiscal year 2023.
In a blog post, industry analyst Josh Bersin said the deal “pretty much ends the innovative phase of the learning management systems market, clearly marking a new era.” Essentially, he said, SumTotal is “the combination of many older technologies.” However, its technology stack is old and the LMS market has moved beyond it. Employers today don’t want their learning solutions to work “as an employee-facing system,” Bersin said. “Companies like EdCast (remember: also owned by Cornerstone), Degreed and Microsoft Viva are taking over.”
Examined from greater heights, Cornerstone is building its future on a foundation of content. While other HCM technology vendors increase the attention they put on solutions that develop content and engagement, Cornerstone stands out for the time, attention and dollars it channels into integrating content into the capabilities of its platform and solutions.
The continued development on Cornerstone’s content business has been driven by an increased demand for online learning that addresses the needs surrounding changing work environments and developing new and different skillsets. Some 36 million minutes of learning content were consumed during 2021, the company said. Half of that was spent on self-directed learning which, to Cornerstone, implies a new interest in personal skill-building on the part of both organizations and people.
This attention to content seems to be paying off. Last year, CEO Phil Saunders told analysts that Cornerstone’s focus on integrating content into its products “led to a surge in business.” That, he said, “further validates our strategy and execution.”