Cengage Learning II (CNGO) Q1 2026 earnings summary

Executive summary

• Completed resegmentation into four business units: Higher Education, Work, School, and English Language Learning, enhancing focus, execution, and customer engagement.

• Digital sales now comprise 79% of total revenues, with US Higher Ed at 91% digital, reflecting a strategic shift to digital.

• AI-driven product launches, including Student Assistant and Lexile Leveler, support digital strategy and innovation.

• Ed2Go adjusted cash revenues grew 24% year-over-year, marking 11 consecutive quarters of double-digit growth.

• Cost savings initiatives and operational discipline contributed to improved cash flow and reduced leverage, with $60M targeted for FY26 on top of $60M realized in FY25.

Financial highlights

• Q1 adjusted cash revenue was $254M, down 8% year-over-year, but only 2% lower when normalized for non-recurring items.

• Q1 adjusted cash EBITDA was $15M, down $24M year-over-year, mainly due to non-recurring items and partnership timing.

• Trailing 12-month adjusted cash revenues reached $1.52B, up 2% year-over-year; adjusted cash EBITDA margin improved to 34% TTM.

• Q1 cash burn reduced to $109M, a significant improvement from $132M in Q1 FY25 and $166M in Q1 FY24.

• Net loss for Q1 was $24.3M, an improvement from $28.6M loss in the prior year.

Outlook and guidance

• FY26 outlook projects strong revenue and EBITDA growth, supported by digital momentum and cost savings.

• At least $60M in cost savings expected in FY26, in addition to ~$60M realized in FY25.

• School segment anticipates modest full-year growth despite a low adoption year, with stronger years expected in FY27 and FY28.

• ELL segment expects broadly flat revenues and EBITDA for FY26, with a focus on core markets and sustainable growth.

• Entering main sales season with strong pipelines and execution.