Skillsoft to acquire Codecademy in a US$525 million deal
Skillsoft has announced that it is acquiring coding skills platform Codecademy in a US$525 million deal that will close within the first half of 2022. The deal, which comprises 40% cash and 60% stock, is the company's biggest since Skillsoft's June 2021 business combination and subsequent debut on the New York Stock Exchange.
Codecademy, founded in 2011, offers free basic online courses in high-demand fields including cybersecurity, data science, and AI, as well as more in-depth paid versions. It has 40 million registered users spread across almost every country.
“Codecademy will significantly expand Skillsoft’s capabilities in the high-growth Tech & Dev segment,” said Jeffrey R. Tarr, Chief Executive Officer of Skillsoft. “With the addition of Codecademy’s innovative capabilities, we will create an even more immersive online learning experience. When we combine Skillsoft’s enterprise customer base of more than 12,000 corporate customers and over 46 million learners with Codecademy’s 40 million learners, sophisticated digital marketing capability and influential brand, we expect to unlock significant revenue synergies.”
The revenue benefit will occur almost immediately, according to the announcement: Codecademy is expected to report revenue of about US$42 million and some US$47 million in bookings for the 2021 financial year. In addition, it is expected to deliver gross margins of more than 85% in 2021 and be accretive to Skillsoft’s gross margin immediately upon closing.
Skillsoft plans to integrate its AI capabilities into Codecademy's product offerings in order to "upsell and cross-sell across each company's customer base" for increased customer growth and revenue synergies.
Tarr also noted that strategic acquisitions are an important part of Skillsoft's growth strategy. During the business combination leading to its listing in June, the edtech giant acquired virtual instructor-led training platform Global Knowledge, and shortly after that picked up professional development and coaching platform Pluma.
Codecademy Founder and CEO Zach Sims said that Codecademy’s goals align with Skillsoft’s strengths, and that the acquisition will drive the company's ability to build its curriculum, scale its work with businesses, and grow globally, particularly into fast-growing international markets like India - a target market that Codecademy has been eyeing for some time. In February this year, Codecademy raised US$40 million in Series D funding, of which Sims said at the time that a good amount was earmarked for international growth.
The Codecademy team will join Skillsoft under the terms of the deal.