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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 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, where we deliver instructor-led training, which can be physical or virtual, 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 on 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 life cycle 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. And 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 continue 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 rescaling 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 road map. 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. Rich?

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 towards 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 to 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. [Operator Instructions] Our first question comes from the line of Ken Wong with Oppenheimer. Please proceed.

Operator, we're not hearing Ken. I don't know, if he’s on a mute or you still have…

Yes, Ken, your line is unmuted. We are unable to hear you.

Can you guys hear me, okay, now?

Yes.

Sorry about that. No problem. 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?

Yeah. Happy to answer that one, Ken. I guess, it's lucky to be first, right? I think as we look at it, I think there's probably three things that I'd want to call your attention to. First and foremost, we are actually a federal contractor as a company. And as a federal contractor, we understand everything that is going on, first-hand, and we've been working with the federal government and the agencies that are effective. So we've got to go through that experience first-hand. And as Rich said in his comments, we have not seen any real material impact at this point, given how well our team prepared and worked with the agencies and to meet the executive orders that were sent out. So we feel very good about that piece of it. That's first-hand experience with it. We also then have another group right behind that of federal contractors that actually service the U.S. government, and they have to have all of their pieces in place actually like us and certify that internally that we have the right things in place as we service the U.S. government as part of that journey, that actually is due April 21 for everybody. And then, the third part of your question, I think, was -- or my response to your question was, okay, then what are we seeing across the different vertical industries and it really ranges. So the geographies and vertical industries, we're hearing two different sets of requests. Macro request that I would highlight is, we have a group of customers that actually want to continue to receive those materials that are non-U.S. federal government contractors or liaise with the U.S. government in terms of transactions. So request over on that side of the equation that we have to respond to. And that also has a geographic implication as well. So we're seeing it on both pieces, both in some verticals as well as some geographies and some company specific. We're seeing a lot of people take a more cautious view. If I broke them into three buckets, you've got the group that's asking to continue to receive those materials, you got a group that's saying, we're going to comply with those regulations, even though they may not apply to us, and then you've got a group in the middle that's saying, we're just going to kind of wait and see as to how things unfold in the market. So those are kind of the three big buckets. The good news is, our platform and our support services were all extremely well prepared for us to handle the complexity of handling those three groups of customers. We're very uniquely positioned because we can go right down, and at the lowest level, the atomic will take out a particular course for a customer and not allow permissioning or even for it to exist as an option. And those are the things that we did with the federal agencies and we're doing with the federal contractors. So we can manage it in a very unique way. And I will tell you, I'm really pleased with how the company has performed so far in this area. But it’s complex and at the end of the day, no matter how we do in this piece, we have to realize that this whole situation creates uncertainty. That uncertainty, unfortunately, I can't forecast what that means. And my hypothesis, as Rich and I look at the businesses, each quarter this goes along, it's going to begin to impact how people make decisions. So right now, as we put our thoughts together for you, this is how we approached it. Let's run the business as normal, and we'll pay attention to it as close as everybody else as the uncertainty hopefully clears in the market. Does that help?

That helps a lot and way more detail than I was expecting. Really appreciate that, Ron.

Yeah.

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. And then, as we think about the other half of guidance, EBITDA guidance, like, a nice step-up dollar wise, decent growth, you guys clearly made progress through the year. I guess when we map it out, it looks like not -- we're not seeing any margin improvement, no margin expansion. Any -- just help us think through some of the moving pieces there in terms of why not see some progress there?

Yeah. So I take the -- just for this discussion, Ken, I take the midpoint of the guidance range. And when I look at revenue, in particular, that is showing positive growth, which we emphasized in our commentary. Importantly, if you look at that against what we did in FY '25, where we were down 4%, we really focus on what we call this pivot to growth. So going from 4 down to up 1, approaching 500 (ph) percentage points of growth, 5 percentage points of growth pivot. And at the midpoint of our EBITDA, which is growing at 5%, just over 5% again based on the reported amount, we're getting nice leverage. So the EBITDA growth rate when you compare that to the revenue growth rate, so we're getting some nice earnings leverage. There is some modest expansion in the margin profile, just under 100 basis points, and then finally, translating that into free cash flow, again, at the midpoint of our guidance, growing almost 34% year-over-year, good leverage on incremental EBITDA as that's converting 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 time lines we laid out.

Got it. So, it sounds like with that reinvestment happening second half, first half, again, not -- I don't want to put words in your mouth, and I realize we're not guiding to kind of quarters. But it does sound like from a profitability perspective, the exit rate should be more attractive than what we see in the first half. Would that be a fair characterization?

Yeah. I think a couple of things come to mind in the contextualization of guidance. We still do -- we commented in the script, we still do 45% to 50% of the annual bookings in the fourth quarter of the year, that seasonal pattern will continue. And a lot of the investment that we're putting in the business in the first half is to drive really good execution in the second half of the year. The other piece I'd tell you or remind you is the first quarter is always our smallest quarter, Ken, from a quantum of revenue and a quantum of 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 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. Ron, I wanted to circle back to the go-to-market transformation. Clearly, it looks like you're making some progress here with the big deal activity. Would love a sense of kind of where we are as far as any incremental sales force ramp. Is the head count where you want it to be? And then second, again, back to the larger deals. Any color on what you're seeing across your enterprise skills champions? Is that activity -- is that effort progressing as planned?

Yeah. I'll start with your last point first, and then I'll build from there. It was really rewarding to see the 10 big deals in TDS specifically drive $22 million of TCV, that really was a great indicator of those larger customers who are going on that talent journey. We're seeing a great set of validation occur by our customers on that as we share with them some of the product strategies. And we also shared with you, we had 100 customers in the preview of our CAISY AI simulator. Got a lot of great feedback and a lot of momentum of what they want out of that product as we got the feedback on that particular piece of it as well as over 1 million -- over 1 million downloads we sit at today as part of the overall journey. So I'm seeing a good positive reaction to, let's call it, the product strategy, the go-to-market strategy around marketing and sales. We've gone out and tested the new value proposition and marketing packaging that we'll do that will start to kick in, in the second quarter, and we're very excited about that. That's gotten good positive market feedback for us. And then on the sales side of it, what we are doing is working through and have done a number of shifts. I wouldn't say even to see a big growth number in the headcount, but where we've deployed them, how we've deployed in the skills training that we've given our team and the swapping out of skills of skills to get new skills in the company has been part of it. There's two efforts specifically underway around an enterprise squad, enhancement to get more subject matter experts from the learning industry as part of it and then ultimately moving more into our new acquisition, which we referenced as part of our growth. We saw a good return to that number this past year, which again, we can grow that number more in our opinion. That's like an example of we won a Disney, as an example, earlier in the year. Those are the kind of big brand wins we want.

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. I think the first and most important thing were we asked them what's your use cases. And it caught me a little off guard, I'll admit. The customers actually came at us saying it was mostly what you and I would call customer-facing revenue. And they're putting it to work there first, which, by the way, is what we did. We used our AI -- CAISY AI simulator with our own sales team to help train them, where the advertiser would actually interact with them and train them on how to sell the new way and with the new materials. So it's really quite fascinating. The second part that was interesting is, they went through the different features in the platform, etc. What is interesting, and it's not -- it's just early, early indicator, like really early, Ken. But what I found interesting was as the customers came into this -- and by the way, it's a limited time and we limited it to just 100. We had to close it off. But what was fascinating is some of the customers on the way in hired our professional services group. And then some of them, while they were in, hired our professional services group. About a third of them did, which is pretty interesting to me, that was probably the really little juicy nugget in there that I found fascinating, that they were -- even though this early just showed how engaged they were as part of our overall journey early on. Again, I don't want to get into projecting it at this point. It's really way too early, and we're doing a bunch of packaging and pricing work on all of the stuff now we'll have directionally there. But that's probably the best nugget of indication that I can give you of where the customers' minds are on this particular topic and what they like to do with the tool. We've now ended the preview period because we're now in delivery -- construction and delivery in test mode with that version of the tool.

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...

Yeah. At the broadest level is staff augmentation. At the broadest level underneath that, it breaks into a couple of buckets you would normally expect. Some of it is the hands-on piece that you just described around the technical part. But a number of them is around the content of what they want to do to create more simulators as part of it. Now our library is growing very -- yes, it's around 100 right now, simulations that have been produced for our customers, which is fantastic. And the simulators that they're creating their own simulators, which is just what we want. So we're very excited about that, so that's what they're doing. They're literally creating their own for the sales team, just like we did internally.

Okay. Perfect. Rich...

By the way, the big takeaway there is to -- 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?

Yeah. I think with that a thorough kind of compare year-over-year, we're winning big – big customers are validating every day, Ken, that our strategy is aligned with where they're going. And you recall 45% to 50% of our bookings get done in the fourth quarter. We executed well to finish the year and we had some large enterprise customers. We gave you a TCV. We do have a greater than one year. So we do, do multi-years. Those are some pretty chunky relationships, with customers that have been with us a long time and continue to expand their relationship. But we'll follow up with -- I appreciate the question. And I want to give you a more thoughtful response on where we're winning maybe by industry or others.

Okay. Understand. And then one thing we noticed is the Global Knowledge margin contribution -- margin declined year-over-year. Just wanted a little context there. How should we think about that margin profile trending forward as well?

Yeah. Two step, get the business to perform better at the top line, and second step is to improve the margin and profit profile. You would hear us refer to it generally, Ken, as a mix issue. Our margins vary between which tech partner we're training on. Our margins vary when we use inside trainers versus third-party contract trainers. Another significant push you heard Darren talk a lot about, training on our own Skillsoft, Global Knowledge intellectual property. We made good progress in bringing to market our own courses. Those haven't impacted the financial profile yet, but expect they will as we continue in FY '26. And then finally, a mix of resellers, where we're both selling and delivering the course versus simply acting as a reseller kind of have an impact on the margin. So focus for the second half of this -- of last year was in getting the top line stabilized, getting the bookings and revenue progression stabilizing. We will continue to attack the number of initiatives Darren and the team have underway. And I expect that we'll -- over the course of FY '26 improve sequentially the margin profile, but really make an impact as we get through FY '26 into FY '27.

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?

Yeah. It's a great question. I'm going to jump in for a little color, and then I'll hand it back to Rich. So first of all, as you know, Q4 is our big quarter. So to your point, that amplifies that signal even more. So -- and then two, these contracts, we tend to be in the three year contract, is where we tend to operate. We have one year, but most of these are three years. So that, to me, also bodes well for the future of what we're doing in terms of your question around durability and that's how I look at it. So -- and your question is, this durability in the contracts and durability of the process. The process should continue to improve. Now what we are doing is, we are -- as I shared at the beginning of your first question, Ken, we're shifting some of the resources from some of our different market segments up into the enterprise more. So what we're seeing inside of that shift is, we've done some planning knowing that we may have some shifts inside of the -- as we ship the resources there may be some breakage along that journey. And so right now, as Rich gave them in our overall guidance as to where we're going, it's built into that guidance that we shared with you.

Yeah. It was -- we expected to execute better in the fourth quarter, Ken. We had previewed some of our efforts in prior calls that we were on. Where we support and service the smaller customer set where there's typically more volatility, we were just satisfied with that relationship. We brought that in-house and stood up our own capability. We have gotten that cadence, that motion further refined. My comments talked about what we're doing in customer success across every segment is working, and I think it validated some of that progress. The other piece we spoke about in our most recent call was some enhancements to our compliance product to make that more durable, more relevant and resonate better with customers. And I think combination of everything we're doing did develop nicely in the quarter, and it remains a company-wide focus. So I appreciate the call out. We're going to keep banging away. A final comment would be, certainly, there are cohorts within our customer segmentation. We're actually -- we're well over 110%. We need to focus on every cohort, every segment and make continued progress as we go on. And our plan and our guidance reflects some continued progress, some modest continued progress, nothing dramatic, but we'll keep plugging away at it.

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, that pattern, that seasonality existed in FY '25. And I think you can assume it will continue in FY '26. Ron, any thoughts?

Yeah. The only thing I'd add, Ken, would be just, listen, we built in the guidance, our thinking as we were running the business today with the best knowledge that we have of today and decided to execute the way we've been executing. And we can come back if we see that uncertainty grow or start to impact the business, right? We're watching it very closely for the elongation of decision making, in particular, is the thing we're staring at the most right now. And you have a couple of transactions here and there. I can see a little slowing down, but we're all watching it very, very closely like the rest of the world. Candidly, there's nothing new there. But that is something we are paying close attention to, but we built them as we're operating these as best we can with the data that we had, and we will stay the course until we get different information.

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

Sure.

And I got to -- won't obviously hold you guys to this, but I'm sure a lot of folks are trying to figure out if there is some elongation, if there is some headwind. Clearly, you guys have made progress towards returning to growth. Would there be a priority to defend EBITDA cash flow or would the intention be to kind of continue to lean in, move forward on trying to maintain that 26% growth number?

Yeah. We've spent a lot of time ensuring we got to this point where we could make sure we're investing for growth and improving our management systems and our visibility. We have the levers to make those trade-offs. So -- and I'll take either side of the example, Ken. We're not going to grow at all costs. We're going to grow profitably and thoughtfully. Alternatively, we're not going to underinvest in areas of the business that we think show the most promising long-term growth. And the work we're doing with our customers are validating that. I'm very comfortable we've got the balance sheet, the liquidity position to continue to invest for those growth opportunities even in the midst of some near-term disruption or uncertainty. We can manage the P&L to find the right balance as we've done to not grow at all costs. I think we'll grow smart and profitably. And we'll manage where we let the investment into the business given our strong balance sheet and liquidity position.

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.