Cengage Learning II (CNGO) Q3 2025 earnings summary

Executive summary

• On track for a fourth consecutive year of revenue and EBITDA growth, driven by cost savings, digital expansion, and investments in acquisitions, partnerships, and AI initiatives.

• Leadership transition announced, with Dean Tilsley appointed CFO effective March 1, 2025, succeeding Bob Munro.

• Targeting a fifth year of revenue and EBITDA growth in FY26, with continued margin expansion.

• Net income for the latest quarter was $9.5 million, a turnaround from a $42.0 million loss in the prior year; nine-month net loss was $46.5 million, improved from $55.5 million.

• Adjusted EBITDA for the quarter rose 9.4% to $112.5 million; for the nine months, Adjusted EBITDA increased 6.1% to $341.3 million.

Financial highlights

• FY25 full-year revenue expected at $1.56–$1.57 billion, up 3% underlying; adjusted cash EBITDA expected at $530–$535 million, up 15%, with margins near 34%.

• YTD Adjusted Cash Revenue $1,117M, up 1% excluding a one-time $25M drag from rebasing a ministry contract in ELT.

• YTD Adjusted Cash EBITDA $362M, up 11%, driven by cost savings from the new operating model.

• Trailing 12-month digital net sales up 7% to $1.17 billion, representing 78% of total sales.

• Operating cash flow year-to-date at $255 million, up 15%; levered free cash flow at $23 million.

Outlook and guidance

• FY25 guidance reconfirmed: revenue growth of 3% (adjusted), EBITDA growth of 15%, margin expansion to ~34%, and unlevered free cash flow of $390–$400M.

• Net leverage expected to fall to 2.5x or lower by year-end.

• Fiscal 2026 expected to continue revenue and EBITDA growth with further margin expansion.