Cengage Learning II (CNGO) investor relations material

Executive summary

• Fiscal 2026 delivered solid results with adjusted cash revenue of $1.55 billion and adjusted cash EBITDA of $545 million, both up 1% year-over-year, with a 35% adjusted cash EBITDA margin.

• Accelerating momentum in H2, with adjusted cash EBITDA up 21% on 6% adjusted cash revenue growth, driven by higher education and Ed2Go performance.

• Digital product revenue reached approximately $1.2 billion, up 10% year-over-year, with over 16 million digital users and AI solutions launched across all segments.

• Strategic focus on digital transformation, AI-enabled tools, and expanding workforce education offerings, including new partnerships and international expansion.

• Recognized by Fast Company as one of the world's most innovative companies in 2026 for leadership in AI-powered learning.

Financial highlights

• Q4 revenue grew 4% year-over-year, led by higher ed and workforce skills segments, with mid-single-digit growth in HED and Work, which together contributed 82% of group revenue.

• Q4 EBITDA increased 9% with nearly 200 basis points of margin expansion due to operating model efficiencies and cash operating expenses declined mid-single digits.

• Full year net debt at 2.3x adjusted trailing 12-month cash EBITDA, with total liquidity of $561 million, up $109 million year-over-year.

• Levered free cash flow improved by $133 million, reaching $181 million, nearly 4x the prior year, driven by working capital improvements and lower interest payments.

• Net income for FY26 was $84.9 million, a turnaround from a $120.8 million loss in FY25.

Outlook and guidance

• Anticipates continued strong demand for credentialed training and digital courseware in higher ed and work segments, with cyclical improvement expected in K-12 adoption opportunities in FY27-28.

• Ongoing investment in technology, AI, and international expansion, including new offerings in Canada and Spanish language courses.

• Continued focus on digital transition and operating model efficiency to drive further margin expansion.