Management attributes the 7% invoice growth in Enterprise North America to the successful execution of a go-to-market transformation implemented last year, shifting focus toward solution-based selling.
The 10% invoice growth in North America (excluding government) was driven by strong new logo acquisition and one of the highest revenue retention levels in recent periods, fueled by existing client expansion.
Performance in the government sector was negatively impacted by disruptions and spending reductions at the federal level, though this was offset by broad-based commercial demand.
Management views AI as a catalyst that increases the ‘premium on human leadership,’ positioning their behavior-change model as a necessary partner for technical transformations.
The Education division’s 16% revenue growth was driven by increased demand for ‘Leader in Me’ materials and services, despite the expiration of COVID-related ESSER funding.
Strategic positioning focuses on being a ‘performance partner’ rather than a software provider, with 62% of revenue now under multiyear contracts to ensure long-term partnership stability.
Fiscal 2026 is characterized as a ‘year of execution,’ with strong invoice growth expected to build a foundation for accelerated reported revenue and EBITDA in fiscal 2027.
Management reaffirmed full-year adjusted EBITDA guidance of $28 million to $33 million, assuming 60% to 65% of that total will be generated in the fourth quarter due to Education seasonality.
The company expects to achieve approximately 1 percentage point of operating leverage improvement annually, targeting a long-term adjusted EBITDA margin of 20%.
Future growth assumptions rely on deep penetration of existing clients, where current solutions reach only 5% to 10% of the addressable employee population.
Guidance for fiscal 2027 will be provided in the fall of 2026 following a summer planning cycle and an update to the five-year strategic plan.
The company incurred $1.5 million in restructuring costs during the quarter, primarily related to severance and efforts to streamline operations for better operating leverage.
A $0.5 million increase in building exit costs was noted, primarily consisting of legal expenses related to footprint optimization.
Management highlighted the expiration of federal ESSER funds as a headwind for the Education business, though they believe private funding partners and state-level deals are mitigating this impact.
Foreign exchange rates provided a $0.7 million favorable impact on consolidated revenue and a $0.2 million benefit to adjusted EBITDA.
finance.yahoo.com
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