Thank you for standing by, and welcome to Skillsoft’s Fourth Quarter and Full Fiscal Year 2025 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers present, there will be a question-and-answer session. Please note that today's call is being recorded. I would now like to hand the conference over to your first speaker today, Stephen Poe, Investor Relations. Thank you. Please go ahead.

Thank you, operator. Good day, and thank you for joining us to discuss our results for the fourth quarter and full fiscal year ended January 31, 2025. Before we jump in, I want to remind you that today's call will contain forward-looking statements about the company's business outlook and our expectations, including statements concerning financial and business trends, our expected future business and financial performance, financial condition and market outlook. These forward-looking statements and all statements that are not historical facts reflect management's current beliefs and expectations as of today, and therefore, are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of the material risks and other important factors that could affect our actual results, we refer you to our most recent Form 10-K filing with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates. During the call, unless otherwise noted, all financial metrics we discuss will be non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures included in today's commentary to the most directly comparable GAAP financial measures, as well as how we define these metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at www.skillsoft.com. Following today's prepared remarks, Ron Hovsepian, Skillsoft's Executive Chair and Chief Executive Officer; and Rich Walker, Skillsoft's Chief Financial Officer will be available for Q&A. With that, it's my pleasure to turn the call over to Ron.

Thanks, Stephen. Good afternoon, and thank you for joining us. I'm happy to share that we delivered solid fourth quarter and fiscal year results with revenue exceeding the high end of our guidance range and adjusted EBITDA at the upper end of the range. We continue to remain on track with the transformation plan we've been articulating with our strong execution over the past six months, positioning us well to return to growth in fiscal 2026. We are closely monitoring the macro-economic environment, including the potential impacts of evolving government policies, which may be material. During our fiscal fourth quarter, we delivered a dollar retention rate or DRR of 105%, which drove our last 12 months DRR to 100%, meeting our expectations. In our Global Knowledge business unit, we deliver instructor-led training, which can be physical or virtual, and we have begun moving our go-to-market resources to a more regionally focused model. This approach is moving us in the direction of stabilization of our GK business unit, with a year-over-year decline in revenue improving from 20% in the first half to 11% in the second half of our fiscal '25. In our Talent Development Solutions business unit, TDS, which serves the organization and individual learner, we had strong execution in the quarter, driven by solid bookings and DRR performance. As a reminder, 45% to 50% of our annual bookings occur in the fourth quarter. We expect this annual trend to continue, and it is reflected in our revenue guidance for FY '26. At our Investor Day, our transformation strategy focused on two key objectives: fix the basics and invest to grow. Fix the basics focuses on improved operational execution to drive growth and improving productivity and margin expansion over time. Invest to grow focuses on a reallocation of our resources with the goal of returning to or above market growth rates. In this first phase of our transformation, we are focusing our efforts on our go-to-market motions and product, the areas we believe can create the fastest business momentum. As we enter FY '26, we have targeted to shift up to 20% of our go-to-market and product resources into the enterprise market segment while driving more efficiency in other market segments. We are investing more in acquiring and retaining large enterprise customers while we invest in advanced product capabilities oriented to these customer cohorts. We will cover some examples of this in a moment. The market we serve is large and growing, currently estimated at more than $400 billion. We are targeting some of the fastest-growing subsets of this market, and we believe we are well positioned to lead this market shift by focusing on the talent development lifecycle within the enterprise market segment. Skillsoft offerings are differentiated. We are the only company that owns and offers global skills development across multiple learning modalities at scale. We deliver interactive learning experiences that enable the learner and organizations to leverage disruptive AI technologies that accelerate workforce transformation and empower talent development management. Over time, our unique capabilities combined with the market opportunity we see position us to return Skillsoft to growing at market and eventually, we believe, above market growth rates. Shifting gears. I'd also like to remind you of the financial commitments we made at our Investor Day. First, we said we would drive at least $45 million in annualized expense reduction in fiscal 2025 on a run rate basis, with 40% to 50% of these savings being invested back into the business. I'm happy to report that we delivered on that and we are currently reinvesting in the business, and we will continue to do so in fiscal 2026, with reinvestment happening predominantly in the first half of the year to provide the essential tools to grow in the back half of the year. Secondly, we communicated our intention to return the company to top line growth with continued margin expansion in FY '26 and generating positive free cash flow for FY '26. We remain committed to these targets. As you'll see, when Rich shares our guidance in a few minutes, we're on track to deliver. Now let me share with you more detail on our progress against our transformation commitments as it relates to our product and go-to-market strategy, as well as our enhanced corporate capabilities. As it relates to our product strategy, in the last quarter, we continued to build out our enterprise features and integrations available in the Percipio platform. Our award-winning AI-powered coach, Skillsoft CAISY, recently hit a major milestone with over 1 million launches. Skillsoft has a rich library of ready-made scenarios to support both tech and business markets with popular topics like agile development, business planning, managing stakeholders, performance management and more. We limited our preview program to 100 enterprise organizations, allowing them to participate as design partners providing feedback while testing new functionality that enables our customers to author their own AI simulations with Skillsoft CAISY tool. This feedback was extremely useful and positive, and this functionality will launch later this fiscal year. Percipio now allows customers to create their own certification paths and manage their own certification programs to measure their reskilling where learners can earn company credentials, complete job training, and enhance their internal career mobility. Some of our most popular Percipio enterprise features for end-to-end certifications are now available with Codecademy's new certification hub for individual learners. These high-value offerings include interactive labs and test prep, which are aimed at the reskilling audience. We continue to optimize the experience with our coaching offering and recent user experience enhancements have reduced the time to schedule your first coaching session by 50% from an average of 18 days to nine days. This increases time to value for clients. In terms of integrations that drive an open ecosystem for our customers, Skillsoft released a new integration with SAP Talent Intelligence Hub to help clients manage their skills strategy and apply skills data across their talent development life cycle. Skillsoft Percipio also added Pluralsight and Big Think+ as new content integrations and added Oracle and Docebo as new learning management system integrations, continuing to expand one of the industry's broadest set of enterprise integrations. Moving to our go-to-market strategy. On the commercial sales front, GK's top 10 deals during the quarter represented nearly $6 million in total contract value. These wins were primarily due to the expertise of our trainers, the relationships with key partners like Microsoft and AWS, and the use of Net Promoter Score to monitor learner satisfaction. Within our TDS segment, our top 10 deals represented $22 million in total contract value with many multi-year deals focused on skill building, skill measurement, enterprise integrations, and the ability to support our customers' need for choice. I'd like to share two enterprise examples of talent development management wins that exemplify our strategy in action. One is a current customer and one is a new customer. First, Honda is undergoing a major business transformation in both products and services with a strong focus on new electrified business segments. This significant shift is being referred to as the company's second founding. As part of the transformation, Honda is leveraging Skillsoft’s content, platform, and services to deliver comprehensive digital capability enhancement programs across all of North America. This initiative is a key component of Honda's quest for a digitally enabled workforce, equipping all staff with the essential digital skills to generate new insights, reduce routine work, and create more capacity for work and new service areas. Next, Virgin Media-O2 Ltd. or VMO2, a U.K.-based media and telecommunications company, recently partnered with Skillsoft to create a market-leading learning ecosystem and align their roles and skills taxonomy to enable skill building and skill measurement. This partnership will also ensure learning content is engaging, interactive, and relevant for all roles within the organization. This program has been made available to VMO2's 16,000 employees and focuses on increasing learning adoption and engagement across the company's diverse archetypes, including retail, knowledge workers, field sales, technicians, engineers, call centers, digital pioneers, and future careers. Skillsoft’s innovative technologies are leveraged to address upskilling and reskilling challenges, fostering new opportunities for VMO2 people in maintaining their market-leading position. While we still have more work to do, we've made meaningful progress in the last six months to realign our organization and drive improved financial results. Let me recap some of the key areas where we've made progress, which positions us well for the future. First, we shifted and focused our resources on the higher end of the market. This includes targeted investments in boosting our enterprise learning subject matter expertise and the continued build-out of our digital strategy. Second, we remain focused on driving product innovation. Our transformation is allowing us to reallocate our resources to drive technical advancements, including the acceleration of our AI roadmap. Looking ahead to fiscal 2026, we have three key priorities: transforming our go-to-market approach, pivoting the company to growth, and generating free cash flow for the full year. We look forward to updating you on our progress through the year. With that, let me now hand the call over to Rich to cover our financial results in more detail.

Thanks, Ron. Welcome, everyone, and thanks for joining today. As Ron shared earlier, it was another solid quarter for Skillsoft, as we continue to execute against the transformation priorities we laid out last July at Investor Day. While we are only part of the way through our multi-quarter transformation journey, I am pleased that we once again delivered revenue ahead of our expectations, improved profitability, and drove positive free cash flow performance. Turning now to a detailed review of our financial results. Starting with revenue. Talent Development Solutions or TDS revenue was $102.8 million in the fourth quarter, up 1% year-over-year, and $405.5 million for the full year, essentially flat to FY '24. We saw a slightly negative impact on revenue from FX in the quarter and the full year for the TDS segment. Our efforts to capitalize on the evolving market shift from traditional learning and skills development toward more comprehensive Talent Development Solutions is aligning well with the needs and demands of our customers. Our LTM dollar retention rate or DRR for the full year FY '25 returned to 100% as a result of a strong Q4 DRR of 105%. This is a 200 basis point improvement from the 98% LTM DRR we saw in both the second quarter and the third quarter and validates changes we are making with the product and our customer success motions. While we are pleased with the progress we made in the quarter, DRR remains a company-wide priority focus area for us as we move into FY '26. Global Knowledge revenue of $30.9 million in the fourth quarter was down approximately $4.7 million or 13% year-over-year. Revenue for the full year was $125.4 million, down approximately $23 million or 15% year-over-year. We saw a more pronounced negative impact on revenue from FX in the fourth quarter, in particular, given the higher mix of non-U.S. dollar denominated revenue. As Ron commented earlier, we remain encouraged by our progress in GK, particularly in stemming the revenue declines we saw in the first half of FY '25. The sequential improvement in the second half of the year is a key step for this business unit on its transformation journey, and continuing that progress will be an important component of returning the total company to growth. Total revenue of $133.8 million in the fourth quarter was down approximately $3.8 million or 2.8% year-over-year. For the full year, total revenue of $531 million was down approximately $22.2 million or 4% year-over-year. Walking through expenses. Cost of revenue of $33.3 million in the fourth quarter or 25% of revenue was favorably down 12% year-over-year, and $133.8 million for the year or 25% of revenue, down 12% year-over-year. These decreases were driven primarily by lower variable costs and continued expense discipline on our fixed costs. Content and software development expenses of $13.5 million in the fourth quarter or 10% of revenue were favorably down 12% year-over-year and $55.5 million for the full year or 10% of revenue, down 6% year-over-year. These improvements were part of our planned productivity gains by leveraging AI, which we expect further investment in FY '26. Selling and marketing expenses of $39.8 million in the fourth quarter or 29% of revenue were flat year-over-year. Full year expenses were $158 million or 30% of revenue, down 5% year-over-year, primarily due to more targeted advertising spend, enabling additional strategic go-to-market investment. General and administrative expenses were $17.3 million in the fourth quarter or 13% of revenue, a 4% increase year-over-year and $74.6 million for the year or 14% of revenue, representing a 5% increase year-over-year. While we made continued progress on our resource reallocation plan and reducing expenses such as outside services and facilities, these were offset by targeted investment in technology and our short-term incentive award accrual, which was not achieved in the prior year period. As I shared with you at Investor Day, improving our management systems is a critical focus area for our leadership team. One of these improvements is aligning our pay-for-performance plans across the entire organization, which drove improvements in both top line and bottom line results in the second half of the year and provided funding for our short-term incentive compensation plans. Total operating expenses were $103.8 million in the fourth quarter or 78% of revenue and were favorably down $5.5 million or 5% year-over-year. For the full year, operating expenses were $421.9 million or 79% of revenue and were favorably down $26.3 million or 6% year-over-year. Similar to last quarter, despite a lower revenue base compared to the prior year period, we delivered higher profitability. Adjusted EBITDA of $29.9 million in the fourth quarter or 22% of revenue was up $1.6 million compared to $28.3 million or 21% of revenue one year ago. Full year adjusted EBITDA was $109.1 million or 21% of revenue, up $4 million compared to $105.1 million or 19% of revenue one year ago. Our resource reallocation efforts and continued expense discipline drove further margin improvement in the fourth quarter and full year. We saw a slightly positive impact from FX in the fourth quarter and the full year at the EBITDA line because we are naturally hedged in our foreign markets. GAAP net loss was $31.1 million in the fourth quarter compared to a GAAP net loss of $245.3 million in the prior year. GAAP net loss per share was $3.75 compared to $30.38 per share in the prior year. For the full year, GAAP net loss was $121.9 million compared to $349.3 million in the prior year. GAAP net loss per share was $14.87 compared to $43.38 per share in the prior year. Beginning this quarter, we modified our non-GAAP presentation of adjusted net income. Specifically, we've excluded the non-cash impact of amortization expense related to acquired intangible assets. Please refer to our 8-K filing for the full reconciliation of GAAP to non-GAAP measures. Adjusted net income of $17 million in the fourth quarter was flat compared to the prior year and $35 million for the year compared to an adjusted net income of $34 million in the prior year. Adjusted net income per share of $2.11 in the fourth quarter was consistent with $2.09 in the prior year. For the full year, adjusted net income per share of $4.33 improved from $4.25 in the prior year. Moving to cash flow and balance sheet highlights. As we highlighted last quarter, one of our key focus areas is improving our free cash flow profile and getting the company to generate consistent positive free cash flow. As a reminder, we had a strong Q3 from a cash flow perspective despite Q3 typically being a weaker cash flow quarter seasonally. We followed that up with another strong cash flow quarter in Q4, supported by further improvement in working capital management and collections efficiency. In Q4, we generated $17.7 million in cash flow from operations and invested $4.5 million in capital expenditures and capitalized internally developed software, resulting in free cash flow of $13.2 million compared to $5.4 million in the prior year period, an improvement of $7.8 million. For the full year FY '25, we generated $29.9 million in cash flow from operations and invested $18.3 million in capital expenditures and capitalized internally developed software, resulting in free cash flow of $11.6 million compared to negative $15 million in the prior year period, an improvement of approximately $27 million. We are pleased with this significant progress and how it positions us going into FY '26. As we have been highlighting over the last couple of quarters, the non-recurring costs associated with our transformation of the business have had a material impact on the free cash flow of the company, but were essential to aligning our cost structures integrating systems and operations and creating the capacity to self-fund our growth investment initiatives. Those costs did decrease in Q4 versus Q3, but still had a meaningful impact on both the quarter and the fiscal year as we implemented our resource reallocation plans. Accordingly, adjusting for the cash impact of restructuring charges of $21.5 million for the year, we generated positive adjusted free cash flow of $33 million in FY '25, an improvement of $30 million compared to the prior year period. Our adjusted EBITDA to adjusted free cash flow conversion was 30% for the year. We will continue to aggressively manage this metric. As a result of these actions, we closed the quarter maintaining a healthy balance sheet and a strong cash and liquidity position. Cash, cash equivalents and restricted cash was $103 million. Total gross debt, which includes borrowings on our term loan and accounts receivable facility, was $581 million at the end of the fourth quarter, down from approximately $591 million at the end of Q3. In FY '25, we've lowered our gross debt leverage profile from 6 times to 5.3 times. More specifically, as we saw improved cash flow in the quarter, we lowered borrowings on our accounts receivable facility to the minimum amount of $1 million. Total net debt, which includes borrowings on our term loan and accounts receivable facility, net of cash, cash equivalents and restricted cash was approximately $477 million, down from approximately $489 million at the end of the fiscal third quarter. Turning to our outlook for the full year FY '26. We expect revenue of $530 million to $545 million and adjusted EBITDA of $112 million to $118 million. Our guidance reflects our commitment to returning the company to growth in FY '26 on an annual basis. We will continue to monitor current market conditions and policy changes that may potentially materially impact the business. Given the progress we made on working capital in FY '25, we remain confident in our ability to again drive positive free cash flow in FY '26. We expect free cash flow of $13 million to $18 million for the full year FY '26. Excluding net debt servicing costs, we anticipate unlevered free cash flow of $71 million to $76 million. With that, operator, please open up the call to questions.

Thank you. We will now be conducting a Q&A session. Our first question comes from Ken Wong with Oppenheimer. Please proceed.

Ron, so you guys are my first earnings post the tariff news. So this is probably a little unfair to you guys, but we'd love a sense of what you're either directly or indirectly seeing, hearing from your customer base. Any context in terms of verticals or regionally that you might be able to call out or help us with in terms of if you're seeing any impact on your business?

Sure, happy to address that, Ken. It's fortunate to go first, right? As we evaluate the situation, there are a few key points I'd like to highlight. Firstly, we are a federal contractor, which gives us a firsthand perspective on the developments at hand. We’ve been actively collaborating with the federal government and relevant agencies, and, as Rich mentioned earlier, we haven't experienced any significant material impact so far due to the thorough preparation of our team in aligning with the executive orders issued. Secondly, there's another group of federal contractors that service the U.S. government, and they also need to ensure that they have all the necessary frameworks in place to comply with regulations, which is due by April 21 for everyone involved. Regarding your question about what we're observing across various industries, the feedback is quite diverse. We are identifying two main types of requests: one from customers wanting to maintain their supply of materials that are not linked to U.S. federal contracts, and another set of requests associated with geographical factors. People are generally adopting a more cautious stance, which can be categorized into three groups: those requesting to continue receiving materials, those choosing to comply with regulations even if they do not directly affect them, and those who prefer to adopt a wait-and-see approach as market conditions evolve. The positive aspect is that our platform and support services are exceptionally equipped to manage the complexities associated with these three customer groups. We have a unique capability to tailor our responses for individual customers and ensure compliance, as demonstrated in our dealings with federal agencies and contractors. I’m quite satisfied with our company’s performance in this area thus far. However, it’s important to acknowledge that the situation introduces a level of uncertainty, which makes it challenging to predict future implications. As Rich and I review our business each quarter, this uncertainty will likely influence decision-making processes moving forward. For now, our approach is to operate the business normally while keeping a close eye on developments as the market uncertainty is hopefully resolved. Does that clarify your question?

That helps a lot and way more detail than I was expecting. Really appreciate that, Ron. And Rich, I guess the flip side of the coin, I guess, it sounds like you guys are – Ron says, approaching business as usual. So as I think about the growth in '26, I'm assuming nothing baked in as far as any potential impact or please correct me if I'm wrong, if you guys have at least thought through how that could cause some slippage or elongation or any potential headwinds?

Yeah. You said it accurately, Ken, and I'll repeat it. Our outlook is reflective of the business we're operating right now. I think we acknowledge that there is a fluid environment that as things play through and develop, it may have an impact going forward. But the impact to this point has already been reflected in this outlook. What we don't know is the duration and the depth of this uncertainty that might develop in the future.

Perfectly fair. As we consider the other half of our guidance, the EBITDA guidance shows a nice increase in dollar terms and decent growth, indicating that progress was made throughout the year. However, when we analyze the details, it appears there is no margin improvement or expansion. Can you help clarify some of the factors contributing to the lack of progress in that area?

I take the midpoint of the guidance range for this discussion. When I look at revenue, it is showing positive growth, which we highlighted in our commentary. Specifically, compared to FY '25, where we experienced a 4% decline, we are now focusing on what we refer to as the pivot to growth. Transitioning from a 4% decrease to a 1% increase represents a 5 percentage point shift towards growth. At the midpoint of our EBITDA, which is growing at just over 5% based on the reported amount, we are gaining nice leverage. The growth rate of EBITDA, when compared to the revenue growth rate, is demonstrating favorable earnings leverage. There is a slight improvement in the margin profile, just under 100 basis points. Finally, when we look at free cash flow at the midpoint of our guidance, it is growing almost 34% year-over-year, which indicates good leverage on incremental EBITDA as it converts into free cash flow as well.

Got it. Okay. Perfect. Go ahead.

Yeah. And Ron is reminding me, we made the progress, important progress on our transformation efforts, which we announced in July at Investor Day. We've already begun reinvesting that in the second half of the year. And most of that reinvestment will happen in the first half of next year as well. We're not going to build the company we want or shareholders want through expense actions. It's pivoting to investing for growth, and we're doing that. We're doing that on the timelines we laid out.

Got it. It seems that with the reinvestment occurring in the second half and the first half, I don’t want to put words in your mouth, and I understand we’re not providing guidance on specific quarters. However, it appears that from a profitability standpoint, the exit rate should be more appealing than what we observed in the first half. Would that be an accurate characterization?

I have a few points to consider regarding our guidance. We mentioned that we still achieve 45% to 50% of our annual bookings in the fourth quarter, and that seasonal trend will persist. Much of the investment we're making in the first half is aimed at ensuring strong execution in the second half. Additionally, I want to remind you that the first quarter is typically our smallest in terms of revenue and EBITDA, which aligns with the seasonal pattern. So, we expect acceleration from our early investments in the first half to pay off in the second half, which is our busiest for bookings. The seasonality in Q1 remains consistent, and we won't provide quarterly guidance but will continue to share insights on the existing seasonal patterns, which will carry into FY '26.

Got it. Ron, I wanted to revisit the go-to-market transformation. It seems like you are making progress with the big deal activity. I would appreciate an update on the current state of the sales force ramp. Is the headcount at your desired level? Additionally, regarding the larger deals, can you provide insights into what you're observing with your enterprise skills champions? Is that effort moving forward as planned?

I'll start with your last point first and then expand from there. It was rewarding to see that the 10 significant deals in TDS specifically contributed $22 million to our Total Contract Value, which is a promising sign of larger customers embarking on their talent journey. We're witnessing strong validation from our customers as we discuss our product strategies with them. Additionally, we had 100 customers participating in the preview of our CAISY AI simulator, and we received a lot of valuable feedback and momentum regarding what they want from that product, alongside over 1 million downloads as part of our overall journey. I’m observing a positive reaction to our product strategy and go-to-market approach in marketing and sales. We have tested new value propositions and marketing packages that will begin to roll out in the second quarter, and we are very excited about this. The feedback from the market has been encouraging. On the sales front, we have made several adjustments, not necessarily resulting in significant headcount growth, but rather in how and where we are deploying our personnel, along with the skills training we've provided. There are two specific initiatives underway focused on enhancing our enterprise squad by adding more subject matter experts from the learning industry and effectively integrating our new acquisition, which we believe can yield further growth. For instance, we secured a deal with Disney earlier this year, which exemplifies the kind of major brand wins we're aiming for.

Perfect. And maybe kind of shifting gears a little. You talked about the 100 CAISY test customers there.

Yeah.

What type of engagement are you seeing with that little cohort? In terms of virtual versus or I guess AI-driven versus maybe your more kind of traditional use cases with your customers, like, what kind of balance are you seeing? And then second, as you looked at the engagement of this cohort, what confidence level do you have that this could be a truly monetizable event, whether it's improving cross-sell or upsell? How should we think about how that flows through based on what you're seeing in this current group?

Sure. The first and most important thing we asked them was about their use cases, which caught me a bit off guard. The customers indicated that it was primarily focused on customer-facing revenue, and they are implementing it there first, which aligns with our own experience. We utilized our CAISY AI simulator with our sales team for training, allowing the advertisers to engage and train them on the new selling methods and materials. It's quite fascinating. Another interesting aspect was their discussion on the different features of the platform. This is still an early indicator, but I found it noteworthy that some customers who joined this limited group, which we capped at 100, opted to engage our professional services team either before or during their participation. About a third did so, which I found intriguing as it reflects their level of engagement early on in our journey. I don't want to project too much at this stage since it's still very early, and we're currently working on packaging and pricing. However, this insight provides a glimpse into the customers' perspective on this topic and how they plan to use the tool. We have now concluded the preview period and are moving into the construction and testing phases of this tool version.

And when you say the hiring of the pro-serve group, is that for training? Is it for potential rollout of these capabilities across the organization more broadly? How should we interpret, what are the specific needs the customers before...

At the broadest level, this involves staff augmentation, which can be divided into a couple of expected categories. One aspect is the hands-on technical work you mentioned, while another focuses on the content needed to develop more simulators. Our library is currently around 100 simulations created for our customers, which is fantastic. Additionally, customers are developing their own simulators, which aligns perfectly with our objectives. We're very excited about this development, as they are creating their own tools for the sales team, similar to what we did internally.

Okay. Perfect. Rich...

By the way, the big takeaway there is the big takeaways, they love creating the capabilities and the content as part of it. They love this concept that we're bringing to them, that's what's most exciting. Sorry, Ken.

Makes sense. No problem at all. And Rich, back to the big deal dynamics. You guys gave some pretty good color in terms of contribution from top 10 customers. Any way to provide some context as to how that might have looked year-over-year? Would just love a sense of how dramatic the improvement might have been as far as your kind of your large deal, large customer engagement?

I believe that when we compare year-over-year, we are seeing significant success. Major customers are confirming that our strategy aligns with their direction. Remember, 45% to 50% of our bookings occur in the fourth quarter. We performed well to close the year and secured some large enterprise customers. We reported a total contract value and confirmed that our agreements span over one year, often multiple years. These are substantial relationships with long-standing customers who continue to grow their engagement with us. I appreciate your question, and I will follow up to provide a more comprehensive response regarding our successes by industry or other factors.

Okay. I understand. One thing we noticed is that the Global Knowledge margin contribution declined year-over-year. Can you provide some context on this? How should we view that margin profile moving forward?

The plan involves two main steps: first, we aim to enhance our overall business performance, and second, we focus on improving our profit margins. We often refer to this as a mix issue because our margins differ based on the technology partners we train with and whether we employ internal trainers or third-party contractors. A key initiative discussed by Darren is the training on our own Skillsoft and Global Knowledge intellectual property. We've made significant progress in launching our own courses, which haven't yet influenced our financial profile, but we expect they will as we move into fiscal year 2026. Additionally, the mix of resellers, where we are both selling and delivering courses instead of just acting as resellers, also affects our margins. In the second half of last year, we focused on stabilizing our top line, bookings, and revenue growth. We will keep pushing forward with the various initiatives that Darren and the team are working on. I anticipate that we will show sequential improvement in our margin profile throughout fiscal year 2026, with a more substantial impact as we head into fiscal year 2027.

Understood. And as someone that historically maybe dinged you guys on the DRR number, you guys made pretty drastic improvements there. So we definitely want to call that out. How durable is that or was that maybe just a 4Q dynamic where the team really executed? As we look ahead, is that a number that seems that we can stay within that ballpark?

It's a great question. I'll provide some context before handing it back to Rich. First, as you know, Q4 is our major quarter, which amplifies that signal. Additionally, we typically operate under three-year contracts, although we do have some one-year agreements. This suggests a positive outlook for what we're doing regarding durability. Your inquiry about the durability of the contracts and the process implies that the process should continue to improve. As I mentioned in response to your first question, Ken, we're reallocating some resources from various market segments into the enterprise segment. We have planned for this shift, understanding that there may be some challenges along the way. Currently, as Rich outlined in our overall guidance, any potential impacts are incorporated into the guidance we provided.

We anticipated performing better in the fourth quarter. We had previously mentioned our initiatives aimed at supporting smaller customers, which often experience more volatility, and we were pleased with that relationship. We have internalized our capabilities and refined our approach further. My earlier comments highlighted the positive results of our customer success efforts across all segments, which seem to confirm the progress we are making. Additionally, we discussed improvements to our compliance product, enhancing its durability and relevance for our customers. Overall, the combination of these efforts was successful in the quarter and remains a focus for the entire company. We will continue to push forward. It’s important to note that there are different cohorts within our customer segments, and we are currently performing well over 110%. We need to concentrate on each segment and keep making progress. Our plan and guidance indicate continued, modest progress without any dramatic changes, and we are committed to ongoing efforts.

That's great. Really appreciate the color there. And then last question for me. I realize, again, you guys don't give kind of quarterly specifics and really appreciate all the color around Q4, Q1. As we think about the seasonality of your business, any reason to think that, that has shifted much as we compare this year to last year given the macro uncertainty, the improvement in your go-to-market? Anything that we should be aware of as we kind of try to model going forward in '26 and beyond or specifically '26?

I think the big ones worth repeating. When you look at bookings, 45% to 50% of the TDS bookings happen in the fourth quarter. Revenue is obviously more ratable and recognized relatively ratable across each of the four periods. But Q1 is always our smallest quarter and not surprising coming off a big push to finish the year. Those areas of the business where we recognize revenue as the class is delivered or as a coaching session is delivered, Q1 tends to be our smallest quarter in both revenue and EBITDA; it’s just the way the seasonal pattern works. So all of those things, acceleration, early investment in the first half of the year, expected return on that investment in the second half as we execute in our biggest bookings half of the year, and the Q1 seasonality is always in place. We don't give you quarterly guidance. We try to give you some of these contextualizations and reminders on what seasonality is still in the business, and that's going to continue in FY '26 as well.

Got it. Okay. One last question just based on that response.

Sure.

I'm not holding you to this, but many people are likely wondering if there are any delays or challenges. It's clear that your team has made progress in achieving growth. Will the focus be on protecting EBITDA cash flow, or will you continue to prioritize maintaining that 26% growth rate?

We have focused heavily on reaching a point where we can invest in growth while enhancing our management systems and visibility. We are equipped to make those trade-offs. We do not plan to grow at any cost; rather, our goal is to grow in a profitable and thoughtful manner. At the same time, we will not neglect investments in areas of the business that show significant long-term potential. The work we are doing with our customers is affirming this approach. I feel confident in our balance sheet and liquidity position, which allows us to continue investing in growth opportunities despite any short-term disruptions or uncertainties. We can manage our profit and loss effectively to maintain the right balance, avoiding growth at any cost. We aim to grow intelligently and profitably, and we will strategically allocate investments into the business given our solid balance sheet and liquidity.

Okay. I think that's about as fair as we can approach it. I appreciate you guys taking a stab at that question. That's it on my end.

Great. Operator, I know – thank you, Ken, very much. Operator, I know we’re at the top of the hour. So I’d like to wrap up the call here. And I’ll jump right in with some closing remarks, if that’s okay.

Of course.

In my review of things, as Rich and I looked at it, our fiscal second half performance really was a very good indicator of the progress we've made in our transformation strategy, which allowed us to position ourselves for this growth pivot that Rich just described here in the Q&A, which I think is a very important 5 point swing that you we're talking about inside of the business at the midpoint that Richard pointed out. We are paying attention, as Ken just asked, and we responded around the macro environment uncertainties, but we have to run the business and stay focused on running the business, and we'll adjust as we go along. I will say my confidence continues to grow on the overall strategy that we have in place for ‘26. It will be a very critical year for the company in terms of our transformational journey. Equally as important, the team’s confidence in my view of the team and our ability to execute with this has also increased as we’ve gone along in achieving our goals, and it really ties back to that management system and operational dimensions we have put in place. So I’m feeling stronger about those particular pieces that we put the right approach and priorities in place. So with that, I look forward to focusing on FY ‘26 with the whole team and giving you updates as we go along the way on this journey. And as Rich shared, we’re looking at it on an annual basis when we stay focused on as what we told you last year. We’re going to keep that going this year. But feel very good about what happened in ‘25. Great end with that, and we’re very focused on ‘26 here. Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.