Cengage Learning II (CNGO) Q4 2025 earnings summary

Executive summary

• Achieved fourth consecutive year of adjusted cash revenue and EBITDA growth, with FY25 adjusted cash revenue at $1,541M (up 2% excluding one-time contract impact) and adjusted cash EBITDA at $530M (up 15%).

• Digital transition nearly complete in US Higher Ed (91% digital), driving 7% revenue growth; digital products now represent 79% of total sales, with digital net sales up 6% year-over-year.

• Cengage Work segment grew 14%, led by ed2go's 23% increase and 11th straight quarter of double-digit growth.

• Strategic investments included the $30M acquisition and integration of Visible Body, expanding AR/VR and sciences offerings.

• Innovation in generative AI expanded to 1M students, with new student assistant and faculty dashboard tools.

Financial highlights

• FY25 adjusted cash EBITDA reached $530M, up 15% year-over-year, with margin rising to 34%.

• Full-year cash revenues reached $1.54 billion, up 2% underlying, with digital net sales at $1,183M (79% of total), up over 600 bps from FY24.

• Realized $60M in cost savings in FY25, on track for $100M+ by end of FY26; one-time costs totaled $95M.

• Unlevered free cash flow was $328M, up 3% year-over-year; levered free cash flow was $49M, up $3M from FY24.

• Net leverage reduced to 2.6x from 3.0x, with cash balances at $256M and total liquidity around $451M as of March 31, 2025.

Outlook and guidance

• Focus for FY26 is on continued revenue and EBITDA growth, cost discipline, and operational efficiency, with liquidity expected to improve as consulting and restructuring costs decline.

• All planned cost-saving initiatives are in place, targeting over $100M in total savings by end of FY26.

• Continued focus on digital and institutional sales, education for employment, and leveraging AI for growth.