Publicly traded digital learning provider Skillsoft Corp. is acquiring Codecademy, the operator of a popular education platform that helps users learn how to program.

The companies announced the transaction today. The acquisition values Codecademy, officially Ryzac Inc., at about $525 million. Skillsoft will finance the deal with a combination of cash and stock.

Codecademy has raised more than $80 million in funding from prominent investors such as Index Ventures. The company’s online education platform offers courses on 14 different programming languages. Codecademy says more than 40 million people have signed up for its platform since its launch in 2011. 

Codecademy offers basic courses for free and makes money by providing more advanced learning tracks through paid subscriptions. Users who purchase a subscription can learn specific skills such as how to carry out feature engineering, a technique used to optimize artificial intelligence models. Codecademy also offers broader courses aimed at users pursuing careers in areas such as data science.

Codecademy’s platform targets individual learners, as well as organizations seeking to equip employees with new skills. Codecademy says that its customer base includes employees at major tech companies such as IBM Corp., Microsoft Corp. and Google LLC. 

The acquisition of Codecademy will help Skillsoft expand its presence in the information technology market. NYSE-listed Skillsoft provides corporate learning content for major enterprises such as Toyota Motor Corp. and General Electric Co. The company’s content catalog includes courses on topics such as data science, product management, business operations and many others.

Skillsoft expects to close the acquisition in the first half of 2022. The company estimates the deal will be “significantly accretive to revenue and bookings growth.” 

To boost revenue growth, Skillsoft plans to promote the coding courses it will acquire through Codecademy to its customer base of more than 12,000 organizations. In parallel, the company plans to expand Codecademy’s course catalog. There might also be opportunities for Skillsoft to promote its own courses to Codecademy’s users. 

“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,” said Skillsoft Chief Executive Officer Jeffrey Tarr. 

Codecademy is set to close 2021 with negative earnings before interest, taxes, depreciation and amortization of $20 million. However, Skillsoft expects that the acquisition will be accretive to EBITDA on the long term, since Codecademy has a gross margin of more than 85%.

“We have helped tens of millions of people around the world learn new technology skills,” said Codecademy founder and CEO Zach Sims. “Together with Skillsoft, we will have the opportunity to rapidly increase the size of our content library and scale Codecademy across the millions of learners and thousands of companies – including approximately 75% of the Fortune 1000 – that work with Skillsoft worldwide. With additional resources and opportunities to drive growth, we are excited to embark on this important next chapter.”

Image: Codecademy