More big changes are coming to one of Utah’s most high-profile tech companies.
In two months, Pluralsight has announced a new business structure, new ownership and the departure of its new leader, Chris Walters, who succeeded founder Aaron Skonnard as CEO and president in April.
The company’s new owners — a conglomerate of lenders led by Blue Own Capital and referred to online as the “Investor Group” — will “recapitalize” the business, Pluralsight announced last week. In exchange for handing the reins of the company over, the deal settles some of Pluralsight’s debts with lenders, including Blue Owl and Goldman Sachs Asset Management Group.
The new owners have also pledged an additional $200 million in capital “to accelerate customer-centric initiatives that support our business strategy,” Pluralsight said in a statement.
“This is a positive and exciting change for Pluralsight,” the company told The Salt Lake Tribune in a statement. “We believe with this recapitalization now complete, we are in an even stronger position to deliver outstanding experiences for our customers and our employees.”
The announcement also comes on the heels of a proposed $20 million settlement filed last month for allegations that Pluralsight misled investors about the size of its salesforce in 2019. The settlement proposal is scheduled for a hearing in February 2025.
How did we get here?
Pluralsight, the Draper-based online learning platform that offers digital courses to techies-in-training, has been in turbulent waters for several years.
After becoming a “unicorn” (a private startup that surpassed $1 billion in value), the company briefly went public in 2018. Its two years on the stock exchange were defined by loss — roughly $164 million per year, according to public filings — and Vista Equity Partners bought it for $3.8 billion in 2021.
Under Vista Equity, the company implemented several rounds of heavy layoffs, including one that hit roughly 20% of its workforce in 2022.
Then, in May, Vista Equity wrote off Pluralsight’s entire equity value, according to reporting from Axios.
The company announced “operational changes” under new CEO Chris Walters in June, which included a new executive team and an organizational focus on growing its corporate, business-to-consumer and public sector sectors.
But Pluralsight’s new owners decided Walters’ short time at the helm was enough, according to a company spokesperson, who said Walters and investors “mutually agreed” on his departure.
Who’s in charge?
The new executive team Walters introduced in June remains intact. It includes a new chief operating officer, Erin Gajdalo, and new chief product and technology officer Chris McClellen. But Pluralsight’s top seat remains empty.
Pluralsight is looking for Walters’ replacement, the spokesperson said. In the meantime, the company’s new board chair, Jeff Ray, is in charge, alongside Gajdalo and Chief Financial Officer Michael Agresta. In a news release last month, Ray said he was excited about the new owners and the company’s future.
“I look forward to working with the team to accelerate progress on our growth strategy and deliver on our mission to inspire and empower the technology workforce to achieve their goals,” Ray said.
What’s the settlement?
Pluralsight may also soon be on the hook for a $20 million settlement paid to former investors who claim they were misled in 2019. If approved in February, Pluralsight shareholders who bought Class A common stock between January 16 and July 31, 2019, would be eligible for a portion, provided they submit a claim by December 21.
Investors, led by the Indiana Public Retirement System and Public School Teachers’ Pension and Retirement Fund of Chicago, claimed Pluralsight leaders overstated its growth potential in order to “attract investors.” Knowing it wasn’t making any money — and, in fact, was losing millions of dollars — Pluralsight told investors to pay attention to “billings growth,” which accounts for new and renewing subscribers, according to court documents. Its subscription base was growing, it said, because its sales force was growing.
At an investors conference in January 2019, then-Chief Financial Officer James Budge claimed the company’s sales force had grown to “about 250” people.
But when billing slowed and Pluralsight revealed in a July 2019 earnings report that its sales force had only grown to 200 people, investors felt deceived, according to court documents. Pluralsight’s share price dropped nearly 40% after the report was released, and the two investment funds sued.
An initial lawsuit was dismissed in 2021, but some of the claims were revived in 2022, according to the court docket.
Pluralsight has denied the charges but agreed to the proposed settlement to avoid further litigation, according to court documents.
What’s next?
At least one of Pluralsight’s new owners says the group is ready to watch the company grow. Looking again at bookings as a metric of success, Blue Capital Managing Director Erik Bissonnette said things are looking up.
“The most recent quarters’ improved customer retention and new bookings performance highlight that the team is well positioned to execute on the significant and growing, global eLearning market opportunity,” Bissonnette said in a news release. “We are pleased to have reached an agreement that supports Pluralsight’s growth plans.”
Blue Owl did not respond to The Tribune’s request for further comment.
Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.
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