Cengage Learning Holdings II, Inc.

For fiscal 2026, adjusted cash revenue was $1.55 billion, up 1% year over year, and adjusted cash EBITDA was $545 million, up 1%, with a 35% adjusted cash EBITDA margin. In the second half, adjusted cash revenue increased 6% and adjusted cash EBITDA increased 21%; H2 EBITDA margins rose over 360 basis points year over year. On a GAAP basis, digital revenue was $1.2 billion, up 10%, and represented 81% of total GAAP revenue. For Q4, revenue rose 4% and EBITDA increased 9%, with about 200 basis points of margin expansion. Management did not provide formal next-quarter or full-year numerical guidance, but said fiscal 2027 begins with healthy demand, expected continued growth in Work and Higher Ed, and a multiyear tailwind in K-12 as large state adoption cycles begin.

Michael Hansen framed the year as proof that Cengage’s strategy is working: trusted content plus digital, AI, and outcome-focused products. He emphasized that Higher Education and Work are the company’s long-term secular growth engines, and highlighted strong second-half momentum, growing corporate distribution for ed2go, and measurable learner outcomes such as 9% to 14% average first-year compensation gains after certification. His tone was constructive and confident, with AI presented as an enabler for product innovation, customer outcomes, and enterprise efficiency rather than a standalone theme.

Dean Tilsley focused on the financial rebound and cash generation. He said Q4 revenue grew 4% and EBITDA grew 9% as the new operating model drove mid-single-digit operating expense reductions and nearly 200 basis points of margin expansion. For the full year, levered free cash flow improved by $133 million to $181 million, helped by $55 million from working-capital improvement, roughly $50 million from lower restructuring and nonoperating costs, and $25 million from lower interest after refinancing term loan debt in January 2026. He also noted liquidity of $561 million, up $109 million year over year, and net debt of $1.26 billion, with leverage at 2.3x trailing 12-month adjusted cash EBITDA.

The main analyst question focused on K-12 adoption timing, especially whether California delays and Texas OER competition could change the size or timing of the opportunity. Michael Hansen said K-12 is under 20% of total revenue and K-5 is about 3%, so it is not a major focus, but he confirmed that California district decisions were pushed out after more experimentation and that this should benefit all players next year. He also said Texas OER experimentation has been part of the market for decades and is not a material concern for Cengage’s overall performance.