Q4 2025 D2L Inc Earnings Call

Yeah.

Operator: Hello everyone and thank you for joining the D2L Inc Q4 earnings call.

Lucy: Hello, everyone and thank you for joining the <unk>, Inc. Q4 earnings call. My name is Lucy and I will be coordinating your call today.

Operator: My name is Lucy and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2 on your telephone.

During the presentation you can register a question by pressing star slipped by one on your telephone keypad.

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Craig Armitage: I will now hand over to your host, Craig Armitage, Investor Relations, to begin. Please go ahead.

Craig Armitage: Now how does the whole host Craig Armitage Investor Relations to begin. Please go ahead.

Craig Armitage: Good morning. Listeners are reminded that portions of today's discussion will include statements that contain forward-looking information. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from a conclusion, forecast, or projection in the forward-looking information. Further, certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information.

Speaker Change: Good morning.

Speaker Change: We are reminded that portions of today's discussion will include statements 16 forward looking information any such statements are subject to risks and uncertainties that could cause actual results to differ materially from a conclusion forecast or projection in the forward looking information.

Speaker Change: Further certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as Rick.

Speaker Change: Collected in the forward looking information Ardennes.

Craig Armitage: Our identification and discussion of such risks Factors and Assumptions, as well as further information concerning poor... please refer to the company's annual. discussion and analysis, and the most recently filed annual information form, in each case as filed under the company's profile on CedarPlus at www.cedarplus.com.

Speaker Change: For identification and discussion of such risks uncertainties and factors and assumptions as well as further information concerning forward looking statements. Please refer to the company's annual management's discussion and analysis and the most recently filed annual information form in each case as filed under the company's profile on SEDAR plus at Ww SEDAR plus dot com.

Craig Armitage: In addition, during this call, revenues will be made to various non-IFRS financial measures including constant currency revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted gross margin, and free cash flow. These non-IFRS financial measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other programs. Please refer to the company's MB&A for the years ended January 31st, 2025. For more information about these and certain other non-IFRS financial measures, including where applicable, or reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS.

Speaker Change: In addition, during this call references will be made to various non <unk> financial measures, including constant currency revenue adjusted EBITDA adjusted EBITDA margin adjusted gross margin and free cash flow. These non <unk> financial measures do not have a standardized meaning prescribed by <unk> for us it may not be comparable to similar measures presented.

Speaker Change: By other public companies. Please refer to the company's MD&A for the year ended January 31.

Speaker Change: 2025, and 2024 for more information about these and certain other non <unk> financial measures, including where applicable reconciliation of historical non <unk> financial measures to the most directly comparable <unk> financial.

Financial measures from our financial statements I'd now like to turn the call over to Mr. John Baker, Chief Executive Officer <unk>. Please go ahead John.

Craig Armitage: Now I'd like to turn the call over to Mr. John Baker, Chief Executive Officer, D2L. Please go ahead, John.

John Baker: Thank you, Craig, and thank you, everyone, for joining us for our Q4 earnings call. We released financial results after the markets closed yesterday, which you can find on the investor relations section of our website at d12.com. Please note that the results we're discussing today are in U.S. dollars.

Speaker Change: Thank you Greg and thank you everyone for joining us for our Q4 earnings call. We released financial results. After the market closed yesterday, which you can find on the Investor Relations section of our website at each while that Tom Please.

Speaker Change: Please note that the results. We're discussing today are in U S dollars.

John Baker: We're joined this morning by Josh Huff, our CFO. And I'm pleased to report it was a strong fourth quarter that underscored our effective execution in fiscal 2025. We balanced top-line growth with meaningfully improved profitability. revenue and adjusted EBITDA exceeding our full year guidance. When you look at the numbers, it's important to understand the impact of FX in the period, particularly in Q4. We've included several constant current geometric to provide a more accurate picture of our ongoing performance. The Q4 highlights include total revenue growth of 12% to $53.3 million. Subscription and support revenue rose 11%. 46.8 Annual recurring revenue was up 9% over last year's Q4 to $205.3 million on a constant currency basis.

Speaker Change: Joining this morning, Hi, Josh our CFO.

Speaker Change: And I'm pleased to report strong fourth quarter that underscore our effective execution in fiscal 2025.

Speaker Change: Top line growth.

Speaker Change: Meaningfully improved profitability with.

Speaker Change: Revenue and adjusted EBITDA exceeding our full year guidance.

Speaker Change: When you look at the numbers it is important to understand the impact of FX in the period, particularly in Q4.

Speaker Change: We did several constant currency metrics to provide a more accurate picture of our ongoing performance.

Speaker Change: The Q4 highlights include total revenue growth of 12% to $53 3 million.

Speaker Change: Scripture that support revenue rose, 11% to $46 8 million annual recurring revenue was up 9% over last year's Q4.

Speaker Change: Q2 hundred $5 3 million on a constant currency basis.

John Baker: An adjusted EBITDA increased $9.4 million, with adjusted EBITDA margin at $17.7 million. compared to 7.3% in last year's Q4.

Speaker Change: And adjusted EBITDA increased $9 4 million with adjusted EBITDA margin of 17, 7%.

Speaker Change: 273% in last year's Q4.

John Baker: In fiscal 2023, we set out a medium term model that concluded in fiscal 2025. We executed well against this and have navigated the major transition in the financial profile of the business. From fiscal 2023 to 2025, we added $37 million to our annual revenue. Adjusted gross margins are up approximately 500 basis points to 69%. Adjusted EBITDA improved by $31 million, and our adjusted EBITDA margin reached 13.7% up from a negative 1.7% in fiscal 2023. Repash flow increased by $27 million. And expressed another way, we dramatically advanced our Rule of 40 performance, reaching 26% in Fiscal 2025 versus 7% in Fiscal 23.

Speaker Change: In fiscal 2023, we set a medium term all that concluded in fiscal 2025.

Speaker Change: Well again.

Speaker Change: Navigator is a major transition and the financial profile of the business.

Speaker Change: Fiscal 'twenty three 'twenty five we added $37 million to our annual revenue.

Speaker Change: Adjusted gross margins were up approximately 500 basis points to 69% adjusted EBITDA improved by 31 million and our adjusted EBITDA margin reached 13, 7% up from a negative one 7% in fiscal 'twenty three.

Speaker Change: Cash flow increased by $27 million.

Speaker Change: And expressed in other way, we dramatically advanced our rule of 40 performance, reaching 26% in fiscal 2025 versus 7% in fiscal 'twenty three.

John Baker: At the same time, we've added 4 million users, bringing us to more than 20 million users on the Brightspace Learning Platform at ERAD. And I want to thank the entire D2L team for their contributions. This performance is a direct reflection of the tremendous focus and discipline work across the company. I also take this opportunity to thank Stephen Laster for his leadership and impact. As you may know, Stephen was a D2L client and a partner and a friend for many years before joining our team. Over the past three years, he's helped us build a strong and deep leadership group, and his work across other key areas of the business have allowed us to move forward on an even stronger foundation.

Speaker Change: At the same time, we've added 4 million users, bringing us to more than 20 million users on the bright spots blending platform at year end and.

Speaker Change: And I want to thank the entire <unk> team for their contributions.

Speaker Change: Performance is a direct reflection of the tremendous focus and disciplined work across the company.

Speaker Change: I will take this opportunity to thank Steve for last year for his leadership and impact as you May know Stephen.

Speaker Change: Each of our client partner and a friend for many years before joining our team.

Speaker Change: Over the past three years. He has helped us build a strong and deep leadership group and it's work across other key areas of the business.

Speaker Change: All of us to move forward on an even stronger foundation wish him well going forward.

John Baker: We wish him well going forward.

John Baker: Our results in Fiscal 2025 were achieved despite challenges posed by the macroeconomic environment. which has affected market activity levels, particularly in U.S. higher education. Through our 25-year history, we've experienced macro challenges many times, and our performance through these periods highlights the relative resiliency of our business. Organizations managing through a period of austerity, where a strong partner, as our modern AI-first platform, can improve learner engagement and retention, while increasing efficiency, a compelling value proposition. We have the team highly focused on building great software, delivering first class services to our customers. and continuing to drive efficient growth.

Speaker Change: Our results in fiscal 2025 were achieved despite challenges posed by the macro economic environment, which.

Speaker Change: Which has affected market activity levels, particularly in U S higher education.

Speaker Change: Through our 25 year history, we've experienced macro challenges many times in our performance through these periods highlights relative resiliency of our business <unk>.

Speaker Change: Our organization is managing through a period of austerity were strong.

Speaker Change: As our modern.

Speaker Change: Hi, <unk> platform can improve learner engagement and retention, while increasing efficiency.

Speaker Change: <unk> value proposition.

Speaker Change: We have the team highly focused on building great software delivering first class services to our customers and continue to drive efficient growth and this work will put us in an even better position when the macro uncertainty clears.

John Baker: This work will put us in an even better position when the macro uncertainty clears.

John Baker: Building on our strong foundations, D12's next chapter will be defined by ushering in our AI-first learning platform strategy, as we've already started with the introduction of D12. We see platform innovation as a key driver of growth over the medium term as our clients look to us to improve the learning experience and outcome.

Speaker Change: Building on our strong foundation <unk> next chapter will be defined by ushering in our AI first learning platform strategy as we've already started with the introduction of <unk>.

Speaker Change: We see platform innovation as a key driver of growth over the medium term as our clients look to us to improve boarding experience.

Speaker Change: Yeah.

John Baker: This chapter for G2L will continue to be a balance of growth and profitability while we drive to be number one in focused education markets globally and establish ourselves as the next-gen learning platform for upskilling in the corporate market. As you will see in the new medium-term outlook, we have high confidence in the growth drivers and our ability to generate higher revenue growth and margin expansion over this period.

Speaker Change: This chapter for each well will continue to be a balance of growth and profitability, while we drive to be number one and focused education markets globally and establish yourselves with the Nextgen learning platform for Upskilling and the corporate market.

Speaker Change: As youll see in the new medium term outlook, we have high confidence in the growth drivers and our ability to generate higher revenue growth and margin expansion over this period.

John Baker: Our confidence is rooted in several factors. 1.

Speaker Change: Confidence is rooted in several factors.

John Baker: By meeting with leaders globally, continue to reinforce the underlying demand for a better learning platform as organizations look for ways to address high priority issues like upskilling and reskilling, combating enrollment pressures, or addressing growing demand. Teaching Education and Professional Upskilling. And they appreciate that most platforms cannot meet their needs. Remember that in higher education, legacy platforms still hold 30% market share in North America and over 70% market share internationally.

Speaker Change: One a leading since leaders globally continue to reinforce the underlying demand for a better learning platform as organizations look for ways to address a high priority issue like Upskilling and reskilling combating enrolment pressures or addressing growing demand for continuing education and professional upscaling.

Speaker Change: And they appreciate that most platforms cannot meet their needs.

Speaker Change: Remember that in higher education legacy platform still hold 30% market share in North America, and over 70% market share internationally.

John Baker: Second, our competitive position is getting stronger, even in a challenging macro market, our team has delivered fastest growth among our higher education learning platform peers. And in North America, we increased our market share last year and solidified our position as the number two LMS vendor by enrollment. And our win rate continues to be strong at north of 50% in this important market.

Speaker Change: Second our competitive position is getting stronger.

Speaker Change: Even in a challenging macro market our team has delivered the fastest growth among our higher education learning platform peers.

Speaker Change: And in North America, we increased our market share last year and solidified our position as the number two LMS vendor by enrollment and our win rate continues to be strong at north of 50% in this important market.

John Baker: Through the great efforts of our team, G12 has also become the number one higher education learning platform in many countries around the world.

Speaker Change: Through the great efforts of our team <unk> has also become the number one higher education learning platform in many countries around the world.

John Baker: In our most recent quarter, our new higher education customers include Roger Williams University in the US, Salta Group in the Netherlands, Desh, Bhagat, University in India. And our win rates are strong and improving across our corporate markets as well.

Speaker Change: Our most recent quarter, our new higher education customers include Roger Williams University in the U S South of the group in the Netherlands.

Speaker Change: S Baguette University in India.

Speaker Change: And our win rates are strong and improving across our corporate markets as well.

John Baker: In Q4, we continue to expand the customer base and employee learning and training organizations, adding Viasa Energy and Shepard & Company, among others. Third, our new products are hitting the market with customers. We're seeing strong pipeline generation from our recently extended portfolio, including our AI offerings and creator partners. Our organic and inorganic product portfolio has allowed us to increase our catch rates and average deals.

Speaker Change: In Q4, we continued to expand the customer base and employee learning and training organizations.

Speaker Change: Energy and separate and company among others.

Speaker Change: Third our new products are hitting the mark with customers we're.

Speaker Change: And we're seeing strong pipeline generation from our recently expanded portfolio, including our AI offerings and traders.

Speaker Change: Our organic and inorganic product portfolio has allowed us to increase our attach rate on the average deal size.

John Baker: Taylor Ploth as an example, has doubled its RRQ following the acquisition of H5P in July of 2024. And the product now has an attached rate of 20% across our customers. And the tax rates on Quartz Merchant is up 55% since we acquired the business in May of 2023. As we've leaned into our existing relationship, we're providing incremental value to customers as they grow with us. Other recent examples of this in Q4 include, in the APAC region, a top-ranked public university serving 40,000 learners, which has been a long-standing customer of ours, renewing their relationship and expanding their suite of tools to include Achievement Plus, Amy Pro, Creator Plus.

Speaker Change: Got it.

Speaker Change: As an example has doubled its <unk> following the acquisition of <unk> in July of 2024.

Speaker Change: The product now has an attach rate of 20%.

Speaker Change: Our customer base.

Speaker Change: And our attach rate courts merchant.

Speaker Change: 55% since we acquired the business in May of 2023.

Speaker Change: As we've leaned into our existing relationships, we're providing incremental value to customers as they grow with us.

Speaker Change: Recent examples of this in Q4 include in the APAC region.

Speaker Change: Operating public universities, serving 40000, Warners, which has been a long standing customer of ours renewing their relationships and expanding the suite of tools to include achievement.

Speaker Change: Pro Tweener plus.

John Baker: partner products that we and another Kenyan. in the U.S. added CreatorPlus with AI generation via H5P on a renewal due to a steady increase in program offerings and enrollment, this institution is expecting to triple the number of learners over the next five years.

Speaker Change: Parker products that we sell.

And another 10 year customer.

Speaker Change: S added creator plus with AI generation.

Speaker Change: Each idea on a renewal due to a steady increase in program offerings and enrollment with institutions I think to triple the number of lenders over the next five years.

John Baker: These are just two of many examples that underscore our success at introducing new products that solve important customer challenges and help grow D2L's addressable market and revenue opportunities. Looking across our customer base, our net revenue retention rate at UM shows early evidence of its cross-sell and up-sell success. Prompting currency, NRR, increased by 60 basis points year over year to 102.7%. including the impact of a small subscription retirement, Compton Currency NRR would have been 104.1%, an increase of 200 basis points over the prior year.

Speaker Change: Is there just too many examples that underscore our success in introducing new products that solve important customer challenges and help grow details addressable market and revenue opportunity.

Speaker Change: Looking across our customer base, our net revenue retention rate at year end shows early evidence of this cross sell and up sell.

Speaker Change: The currency and our increase.

Speaker Change: <unk> increased by 60 basis points year over year to 102, 7%.

Speaker Change: Excluding the impact of a small subscription retirement constant currency <unk> would've been 104, 1% increase of 200 basis points over the prior year.

John Baker: There is a significant opportunity to move NRR higher in the coming years, and we believe investments in AI will be one of the key catalysts. Customers are responding very positively to our approach and solutions around AI. We continue to differentiate with an AI-first, human-centered solution, pragmatically delivered to our clients to have a high impact in the use cases that matter. And to do this right, we need to layer AI on top of the right foundation. Robust learning path. You need to be deeply rooted in learning, with your clear strength to teach well. The market evolves, we believe, so we can further differentiate these areas.

There is a significant opportunity to move higher in the coming years, we believe investments in AI will be one of the key catalyst.

Speaker Change: Customers are responding very positively to our approach and solutions round out and continuing to differentiate with an AI first human centered solution pragmatically delivered to our clients that have a high impact on the use cases that matter.

Speaker Change: And to do this right need to layer AI on top of the right Foundation.

Speaker Change: Robust learning platform and you need to be deeply rooted in learning, which are clear strengths of each well.

Speaker Change: Market evolves, we believe that we can.

Speaker Change: And further differentiate those areas.

John Baker: As we go to market, we're assembling case studies and efficacy data from many users that are seeing significant impact on improving educational outcomes from retention to engagement to time on task.

As we go to market, we're assembling key studies and efficacy data for many users that are seeing significant impact from improving educational outcomes from retention to engagement timeline task.

John Baker: We're receiving industry recognition as well.

Speaker Change: Leading industry recognition as well he told Lumi won three awards in the primary secondary and higher education categories in the teaching and learning awards of excellence.

John Baker: HLW won three awards in the primary, secondary, and higher education categories in the Teaching and Learning Awards of Excellence. Best of 2025.

Speaker Change: 24.

John Baker: Under the direction of our new CTO, Andrew, and our Chief Product Officer, Christian Pantel, we will continue to strengthen our core platform. Spend our portfolio and enhance our speed of development as we work to solve more challenges for clients. Strengthen our growth levers and widen the gap between D2L and the competition.

Speaker Change: Under the direction of our new CTO, Andrew and our Chief product Officer, Christian <unk>, who will continue to strengthen our core platform expand our portfolio and enhance our speed of development as we work to solve more challenges for our clients.

Speaker Change: Vinson growth leavers and widen the gap between <unk> and the competition.

John Baker: We have a robust roadmap, and we look forward to unveiling important product developments at our future users conference in a few months.

Speaker Change: We have a robust roadmap and we look forward to unveiling important product developments and our future users conference in a few months.

John Baker: Lastly, even though we're in tough macro conditions, our confidence in the medium term outlook is supported by a great team, strong financial position with no debts, increasing cash flow, and the flexibility to invest in organic and inorganic growth levers for us as a company.

Josh: Lastly, even though we are in a tough macro conditions our confidence in the medium term outlook is supported by a great team strong financial position with no debt, increasing cash flow and the flexibility to invest in organic and inorganic growth lever for us as a company with that I'll turn the call over to Josh.

Josh Huff: With that, I'll turn the call over to Josh. Thanks, John.

Josh: Thanks, John and good morning, all.

Josh Huff: And good morning. Our full financials were posted last night. So I will focus on the highlights for the fourth quarter and full year. As John mentioned, these results show great performance in balancing solid top line growth with significantly improved profitability and cash Total revenue for Q4 was $53.3 million, a 12% increase over the same period last year, and constant currency revenue increased 14% to $54.3 million. Full year revenue grew 13% to $205.3 million ahead of our guidance range, which was increased during the year. Subscription and support revenue increased 11% in Q4 to $46.8 million. The full year subscription results were also up 11% to $180.6 million.

Josh: Financials were posted last night, so I'll focus on the highlights for the fourth quarter and full year.

Josh: As John mentioned these results show, great performance and balancing solid topline growth with significantly improved profitability and cash flow.

Josh: Total revenue for Q4 was $53 3, million% to 12% increase over the same period last year and constant currency revenue increased 14% to $54 3 million.

Speaker Change: All year revenue grew 13% to $205 3 million ahead of our guidance range, which was increased during the year.

Speaker Change: Subscription and support revenue increased 11% in Q4 to $46 8 million.

Speaker Change: The full year subscription results were also up 11% to $186 million.

Josh Huff: Constant currency annual recurring revenue increased by 9% from $188.1 million to $205.3 Foreign exchange was a headwind on ARR given the sharp strengthening of the U.S. dollar in the final weeks of our fiscal year, removing roughly $4 million from ARR sequentially from Q3 to Q4. Professional services and other revenue increased 20% in Q4 to $6.5 On the margin front, we continue to show meaningful gross profit margin improvement. Adjusted gross margin for Q4 came in at 69.6%, up from 67.7% last year, and we saw a 170 basis point margin improvement for the full year to 69%.

Speaker Change: Constant currency annual recurring revenue increased by 9% from $188 1 million to $205 3 million.

Speaker Change: In exchange was a headwind on <unk> given the sharp strengthening of the U S. Dollar in the final weeks of our fiscal year, removing roughly $4 million from <unk> sequentially from Q3 to Q4.

Speaker Change: Professional services and other revenue increased 20% in Q4 to $6 5 million.

Speaker Change: On the margin front, we continue to show meaningful gross profit margin improvement adjusted gross margin for Q4 came in at 69, 6% up from 67, 7% last year and we saw a 170 basis point margin improvement for the full year to 69%.

Josh Huff: Subscription and support gross profit margin rose to 73.2% in Q4, or 74.3% when adjusted for intangible asset amortization, compared to 73% in the prior year. This improvement continues to reflect ongoing engineered optimizations in our cloud technology delivery, while at the same time as we see increased utilization of the platform from our customers. And normalized gross profit margin for professional services and other was 32.5% for fiscal 2025, up 610 basis points relative to the prior year. We delivered these strong results while managing OPEX well during the year. Operating expenses for the fourth quarter were $32.9 million, up 1% year over year.

Speaker Change: Subscription and support gross profit margin rose to 73, 2% in Q4 or 74, 3% when adjusted for intangible asset amortization compared to 73% in the prior year.

Speaker Change: This improvement continues to reflect ongoing engineered optimizations in our cloud technology delivery, while at the same time as we see increased utilization of the platform from our customers.

Speaker Change: And normalized gross profit margin for professional services and other was 32, 5% for fiscal 2025 up 610 basis points relative to the prior year.

Speaker Change: We delivered these strong results, while managing opex well during the year.

Speaker Change: Operating expenses for the fourth quarter were $32 9 million up 1% year over year.

Josh Huff: As a percentage of revenue, total OPEX was 62% this quarter versus 68% of revenue in last year's Q4. 600 Basis Point Improvement in Operating Scale. R&D with 21% of revenue compared to 26% of revenue in last year's Q4, in large part due to efficiency improvements and lower headcount post the skills wave spinout. Excluding the impact of stock-based compensation and the H5P acquisition, sales and marketing expenses were relatively consistent year over year. And while G&A expenses increased, this was due, in large part, to non-recurring legal and professional fees and transaction-related expenses from the acquisition of H5P and divestiture of SkillsWave.

Speaker Change: As a percentage of revenue total opex was 62% this quarter versus 68% of revenue in last year's Q4.

Speaker Change: A 600 basis point improvement in operating scale.

Speaker Change: R&D was 21% of revenue compared to 26% of revenue in last year's Q4.

Speaker Change: In large part due to efficiency improvements and lower head count post the <unk> spin out.

Speaker Change: Excluding the impact of stock based compensation and the <unk> acquisition sales and marketing expenses were relatively consistent year over year.

Speaker Change: And while G&A expenses increase this was due in large part to nonrecurring legal and professional fees and transaction related expenses from the acquisition of <unk> and divestiture of skills ways.

Josh Huff: Excluding the impact of these costs, GNA decreased 3% year over year. This combination of revenue growth, improved gross profit margin and operating leverage drove a substantial year over year improvement and profitability. We reported Q4 adjusted EBITDA of $9.4 million, or 17.7% margin, an increase from 7.3% in the same period of the prior year. and Foyer Adjusted EBITDA was $28.1 million, above our recently updated guidance and an increase of $20 million from the prior year. and income for the period improved to $25.7 million compared with a loss of $3.5 million.

Speaker Change: <unk> the impact of these costs G&A decreased 3% year over year.

Speaker Change: This combination of revenue growth improved gross profit margin and operating leverage drove a substantial year over year improvement in profitability.

Speaker Change: We reported Q4, adjusted EBITDA of $9 4 million or 17, 7% margin an increase from seven 3% in the same period of the prior year.

Speaker Change: And full year adjusted EBITDA was $28 1 million above our recently updated guidance range and an increase of $20 million from the prior year.

Speaker Change: And income for the period improved to $25 7 million compared with a loss of $3 5 million.

Josh Huff: for Fiscal 2024. Free cash will improve to $-0.6 million in Q4, compared to $-6.1 million in the same period in the prior year, a roughly $5 million increase in the quarter. For the full year, free cash flow was $27 million, an increase of $17 million from fiscal 2024. This added to the company's strong financial position. At year end, we had no debt and $99.2 million in cash, providing us the financial flexibility to invest in growth opportunities as we move forward. In terms of capital allocation, We bought back just over 400,000 shares under the NCIB buyback program in fiscal 2025.

Speaker Change: 2024.

Speaker Change: Free cash flow improved to negative $6 million in Q4 compared to negative $6 1 million in the same period in the prior year roughly.

Speaker Change: Roughly $5 million increase in the quarter.

Speaker Change: For the full year free cash flow was $27 million, an increase of $17 million from fiscal 2024.

Speaker Change: This added to the company's strong financial position at.

Speaker Change: At year end, we had no debt and $99 $2 million in cash providing us the financial flexibility to invest in growth opportunities as we move forward.

Speaker Change: In terms of capital allocation, we bought back just over 400000 shares under the NCI buyback program in fiscal 2025.

Josh Huff: This largely offset any dilution from equity grants. As a result, shares outstanding increased only 1% year over year. We will continue to make use of the MCID within our capital allocation plan.

Speaker Change: This largely offset any dilution from equity grant as a result shares outstanding increased only 1% year over year.

Speaker Change: We will continue to make use of the <unk> within our capital allocation plans.

Josh Huff: Turning to our outlook. With the release of our Q4 results, we presented fiscal 2026 guidance and a new medium-term target model. For Fiscal 2026, we plan to continue making measured investments in growth while scaling the operations towards increasing levels of profitability. Specifically, we are targeting subscription and support revenue in the range of $194 million to $196 million, implying growth of 7% to 9% over Fiscal 2025, and 9% to 10% growth when expressed on a constant currency basis. Total revenue in the range of $219 million to $221 million, implying growth of 7% to 8% over fiscal 2025, and 8% to 9% growth when expressed on a constant currency basis.

Speaker Change: Turning to our outlook with the release of our Q4 results, we presented fiscal 2026 guidance and a new medium term target model.

Speaker Change: For fiscal 2026, we plan to continue making measured investments in growth.

Speaker Change: Scaling the operations towards increasing levels of profitability, specifically, we are targeting subscription and support revenue in the range of $194 million to a $196 million.

Speaker Change: Implying growth of 7% to 9% over fiscal 2025, and 9% to 10% growth when expressed on a constant currency basis.

Speaker Change: Total revenue in the range of $219 million to $221 million.

Speaker Change: <unk> growth of 78% over fiscal 2025, and 8% to 9% growth when expressed on a constant currency basis.

Josh Huff: and adjusted EBITDA in the range of $32 million to $34 million. applying an adjusted EBITDA margin of 15%. These targets reflect the current macroeconomic environment and its impact on foreign exchange rates and our selling environment. are also partly informed by sales activity that occurred during fiscal 2025 and the resulting flow-through impact on revenue recognition in fiscal 2026. Lastly, these targets are based on our current operations and do not include impact of any incremental acquisition in the period, which, if any occurred, would be expected to be additive to our guided revenue and profits in the period.

Speaker Change: And adjusted EBITDA in the range of 32 million to $34 million, implying an adjusted EBITDA margin of 15%.

Speaker Change: These targets reflect the current macroeconomic environment and its impact on foreign exchange rates and our selling environment.

Speaker Change: They are also partly informed by sales activity that occurred during fiscal 2025, and the resulting flow through impact on revenue recognition in fiscal 2026.

Speaker Change: Lastly, these targets are based on our current operations and do not include impact of any incremental acquisition in the period, which if any occurred would be expected to be additive to our guided revenue and profits in the period.

Josh Huff: As John highlighted, we view these macro conditions as transitory and continue to see strong growth drivers over the medium term, which we expect will lead to higher revenue growth, along with further adjusted EBITDA margin expansion. Periods like this bring to light the durability and stability of our business. supported by long term contracts, high customer attention, strong free cash flow, a diversified customer base, and a strong balance.

Speaker Change: As John highlighted we view these macro conditions as transitory and continue to see strong growth drivers over the medium term, which we expect will lead to higher revenue growth along with further adjusted EBITDA margin expansion.

Speaker Change: Periods like this spring to light the durability and stability of our business.

Speaker Change: Courted by long term contracts high customer retention strong free cash flow, a diversified customer base and a strong balance sheet.

Josh Huff: To help investors understand our medium term outlook, we have presented a new target operating model. The call that we introduced an updated medium-term model in Fiscal 2023, bridging to Fiscal 2025, that was aimed at balancing growth and profitability. As you will see in the MDNA, we landed within the target range on three of the four measures. and would have also achieved a free cash flow margin, if not for non-recurring expenses related to several transactions during this period.

Speaker Change: To help investors understand our medium term outlook, we have presented a new target operating model.

Speaker Change: Call that we introduced an updated medium term model in fiscal 2023 bridging the fiscal 2025 that was aimed at balancing growth and profitability.

Speaker Change: As you will see in the MD&A, we landed within the target range on three of the four measures.

Speaker Change: And would have also achieved a free cash flow margin if not for nonrecurring expenses related to several transactions during this period.

Josh Huff: Looking ahead, we presented the year-over-year revenue growth and adjusted EBITDA margins that we expect to achieve over the go-forward medium term by fiscal 2028. We expect to achieve 10 to 15% growth in annual revenue as we continue to grow our customer base and market share, increase net revenue retention, and pursue acquisition. and we expect adjusted EBITDA margin in the range of 18 to 20%, a 300 to 500 basis point improvement relative to fiscal 2025 based on further operating leverage.

Speaker Change: Looking ahead, we presented the year over year revenue growth and adjusted EBITDA margin that we expect to achieve over the go forward medium term by fiscal 2028.

Speaker Change: We expect to achieve 10% to 15% growth in annual revenue as we continue to grow our customer base and market share increased net revenue retention and pursue acquisitions.

Speaker Change: And we expect adjusted EBITDA margin in the range of 18% to 20%.

Speaker Change: At 300 to 500 basis point improvement relative to fiscal 2025 based on further operating leverage.

Josh Huff: To build on John's earlier comments, thanks to the D2L team for their great work over the past several years, we have made tremendous progress balancing growth and profitability.

Speaker Change: To build on John's earlier comment thanks to the <unk> team for their great work over the past several years, we have made tremendous progress balancing growth and profitability.

Josh Huff: We're excited for this next chapter. D2L has long been a market leader in innovation, and we have a compelling vision that will have a big impact on the learning experience. But we also build a stronger and more profitable business.

Speaker Change: We are excited for this next chapter <unk> has long been a market leader in innovation and we have a compelling vision that will have a big impact on the learning experience. While we also build a stronger and more profitable business.

Operator: And with that, I'll turn it back to the operator. Thank you.

Speaker Change: And with that I'll turn it back to the operator.

Speaker Change: Thank you to ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by <unk>.

Operator: To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.

Speaker Change: When preparing to ask your question. Please ensure your devices on music likely.

Doug Taylor: We have our first question from Doug Taylor of Canaccord Genuity.

Doug Taylor: We have our first question from Doug Taylor of kind of <unk>.

Speaker Change: <unk> Genuity Doug Your line is now open. Please go ahead.

Doug Taylor: Doug, your line is now open. Please go ahead. Yes, thank you. Good morning. The challenges that you reference here with the U.S. higher education market, understanding some of this is related to the Department of Education changes that are being contemplated. I just want to dig into that a bit deeper. So, you know, investors have a better picture of what's happening. You see this as mostly about decision making and distraction in your customer base versus how the budget for LMS solutions might actually impact as some of the funding mechanisms move around. Any additional color there I think would be helpful.

Speaker Change: Yes. Thank you good morning.

Speaker Change: The challenges that you reference here with the U S higher education market understanding some of this is related to the.

Speaker Change: The department of education changes that are being contemplated I just wanted to dig into that a bit deeper so investors have a better picture of what's happening you see this.

Speaker Change: It's mostly about decision, making and distraction in your customer base versus how the budget for LMS solutions.

Speaker Change: It actually impacted some of the funding mechanisms move around any additional color there I think would be helpful.

Speaker Change: Yeah.

John Baker: Good morning, Doug. And I think, as per your comment, I do think you've got a good read on the situation. I do think whenever there's a big change in a macro market, like the US higher education system right now is going through, you're going to see a slowdown in the decision making process, or you might see more folks weighing in to sign off on a decision as they go through a period of uncertainty. That said, I don't see the big demand drivers changing in US higher education. I think what we're seeing is the demand being pushed into future quarters.

Doug Taylor: Good morning, Doug and I think that's it.

Speaker Change: Per your comments I do think you've got a good read on the situation.

Doug Taylor: I do think whenever there's a big change in.

Speaker Change: Macro market like the U S higher education system right now is going through.

Speaker Change: You're going to see a slowdown in the decision, making process or you might see more folks willing to sign off on this decision as they go through a period of uncertainty.

Speaker Change: That said I don't see the big demand drivers changing in U S. Higher education I think we're seeing is the demand being pushed into future quarters. All the work that we're doing is paying off in terms of driving a better win rates.

John Baker: All the work that we're doing is paying off in terms of driving a better win rate. We're seeing good differentiation in our product. When I'm talking with presidents and provosts and other folks within our prospective client base, there's an incredible amount of interest in what we're doing with our AI first strategy. All good indicators in terms of the top of the funnel. We're just seeing a short term, we believe, a short term issue with just decision making in the US higher education market.

Speaker Change: We're seeing good differentiation in our product.

Speaker Change: I'm talking with presidents and provosts and other folks within our respective client basis.

Speaker Change: The amount of interest in what we're doing with our AI strategy.

Speaker Change: All good indicators in terms of the top of the funnel.

Speaker Change: We're just seeing a short term we believe the short term.

Speaker Change: Issue with just decision, making in the U S higher education market I would not look at it as a change in the market dynamic long term for the learning platform whatsoever.

Doug Taylor: I would not look at it as a change in the market dynamic long term for the learning platform whatsoever. We've been in a period for, I mean, a couple of years now where I think you've consistently referenced the level of RFP activity being below what you'd consider normal. I mean, are you starting to see that level of activity slow down further? Is that in the short, medium-term pipeline? Is that evident here as well? We're seeing good growth in many regions around the world in terms of RFP volume either being flat or slightly up. U.S. higher education has got a different reason for RFP volume for campus-wide implementations in the last two quarters.

Speaker Change: And we've been in a period for a couple of years now where I think you've consistently referenced the level of RFP activity being below what you would consider normal I mean are you starting to see that.

Sure.

Speaker Change: Activity slowed down further.

Speaker Change: In the short medium term pipeline is that is that evident here as well.

Speaker Change: We're seeing good growth in many regions around the world in terms of RFP volume, either being flat or slightly up.

Speaker Change: U S higher education has got a different reason for RFP volume for campus wide implementation for the last two quarters.

John Baker: Overall trend for total RFPs tends to be slightly up year over year, but for different reasons. For example, there might be campuses looking for a continuing education or workforce upskilling RFP sort of to tip the toe in the water versus doing a campus-wide. We have seen that change in the last few quarters as they focus in their energy on a growth driver as they navigate some of this uncertainty in the market. We believe that those RFPs will eventually turn into campus-wide RFPs. Again, just building a good top of the funnel with building those initial early relationships.

Speaker Change: Overall trends for total Rfps.

Speaker Change: Sends to be slightly up year over year, but for different reasons for example, there might be.

Speaker Change: Campus is looking for and continue it continuing education or workforce Upskilling RFP sort of dip a toe in the water versus doing a campus wide. We have seen that changed in the last few quarters as they focus their energy on a growth driver.

Speaker Change: Now the gate some of this uncertainty in the market we believe.

Speaker Change: Those rfps will eventually turn into campus wide rfps.

Speaker Change: Again, just building a good top of the funnel with with building those initial early relationships and the team is doing a great job.

John Baker: Our team is doing a great job driving win rate again with that part of the market that is coming up for grabs each and every quarter.

Speaker Change: Driving win rate again with that part of the market that is coming up for grabs each and every quarter.

Doug Taylor: Maybe one last question for me, you've referenced some pockets of strength in other areas, I mean, Creator Plus, but also in international markets.

Speaker Change: Maybe one last question for me you referenced some pockets of strengths in other areas I mean creator plus but also in international markets I guess when you got situations.

John Baker: I guess when you get situations, like what you're seeing right now in one of your markets, can you talk about, you know, your philosophy, John, on how you would adjust or reprioritize your resources, hiring or otherwise spend in response to the evolving dynamics here? Yeah, what's interesting with this is it feels like it's like the fog at the beginning of a morning, it will eventually lift. The top of the funnel, the action that we're doing in the US right now is not really pivoting resources out of that market for clarity. You know, the work that we're doing with provost presidents teams around setting up a good process for them to run is still happening.

Speaker Change: Like what Youre seeing right now and one of your markets can you talk about your philosophy, John on how you would adjust or re prioritize your resources hiring or otherwise spend in response to the evolving dynamics here.

Speaker Change: Yes.

Speaker Change: What's interesting with this it feels like it's like the fog at the beginning of a morning. It will eventually lift.

Top of the funnel of the action that we're doing in the U S. Right now is not really pivoting resources out of that market for clarity.

Speaker Change: The work that we're doing with provost president teams around setting up a good process for them to run is still happening theres still good progression with those deals. It's just taking more time or their readiness to kick off an RFP might be pushed out a quarter or two so we're not pulling resources out of that region I want to be very clear on that.

John Baker: There's still good progression with those deals. It's just taking more time, or the readiness to kick off an RFP might be pushed out a quarter or two. So we're not pulling resources out of that region, I want to be very clear on that.

Speaker Change: <unk>.

John Baker: That said, you may tweak, you know, some of the spend on the marketing side, or where you're running an event, or we might do a few more international events during this particular timeframe. And we're definitely leaning into international as the US market goes through this dynamic. And then, Doug, to your point on Crater Plus and Lumi, we're seeing a great momentum in terms of step function improvement quarter over quarter in terms of attach rate with those products. We certainly see a tremendous amount of opportunity for us to turn that into a real driver for change in the market.

Speaker Change: That said you may tweak some of the spend on the marketing side or were you running an event, where we might do a few more international events. During this particular timeframe.

Speaker Change: We're definitely leaning into international as the <unk>.

Speaker Change: U S market.

Speaker Change: I'll go through this dynamic.

Speaker Change: And then Doug to your point on greater plus in Lumi, we're seeing great momentum in terms of.

Speaker Change: The step function improvement quarter over quarter in terms of attach rate with those products.

Speaker Change: We certainly see a tremendous amount of opportunity for us to turn that into a real driver for change in the.

Speaker Change: And the market.

John Baker: And at some point, it's my belief that AI first learning platform will become a catalyst for change, hopefully getting the RFP volume spiking up again like it was pre-COVID. And I think this technology with AI is going to be probably more impactful than cloud or mobile in terms of technology waves that we've seen in the past. We just have not yet seen that play out in the market in terms of requirements in RFP. But we are seeing it at the top of the funnel when we're engaging with provosts and presidents. And they see this as a great product to drive efficiency while improving the student learning experience.

Speaker Change: And at some point.

Speaker Change: It's my belief that AI first learning platform will become a catalyst for change.

Speaker Change: Hopefully getting the RFP volume spiking up again like it was pre COVID-19.

Speaker Change: And I think this technology with AI is going to be.

Speaker Change: Probably more impactful than cloud or mobile in terms of technology waves that we've seen in the past.

Speaker Change: We just have not yet see that play out in the market in terms of.

Speaker Change: Requirements, an RFP, but we are seeing it at the top of the funnel when we're engaging with provost president and they see this as a great product to drive efficiency, while improving the student learning experience and.

Doug Taylor: And that's a great combination in this type of uncertain market as well, too.

Speaker Change: That's a great combination and this type of uncertain market as well too.

Doug Taylor: I appreciate your insights. I'll pass the line. Thank you all.

Speaker Change: I appreciate your insights help echelon.

Doug Taylor: Thanks, Doug.

Gavin Fairweather: Our next question is from Gavin Fairweather of Cormark. Gavin, your line is open, please go ahead.

Speaker Change: Our next question is from Katherine Xu with out of coal mine.

Speaker Change: Your line is open. Please go ahead.

Gavin Fairweather: Oh, hey, good morning. Thanks for taking my questions. Maybe just to start in the higher ed business, you talked about how your competitive positioning is strengthening. Maybe you can update us on what you're seeing in the market and in terms of, you know, win rates, selling prices and how your competitors are acting as they're Yeah, so the market's definitely dynamic, Gavin, as you pointed out. Our win rates are ticking up year over year, so still north of 50%. We see our competitive positioning getting stronger as we lean into our AI strategy, and every month we're putting out new capability for our clients, everything from generating content to interactive to now assessment types.

Katherine Xu: Oh, Hey, good morning, Thanks for taking my questions, maybe just to start in the higher Ed business you talked about how your competitive positioning is strengthening maybe you can update us on what youre seeing in the market in terms of win rates selling prices in how your competitors are acting as their basis revenue.

Katherine Xu: Yes, so the market is definitely dynamic.

Katherine Xu: Pointed out our win rates are ticking up year over year.

Katherine Xu: So it's still north of 50%.

Katherine Xu: <unk>.

Katherine Xu: See our competitive positioning is getting stronger as we lean into our AI strategy and every month, we're putting out new capability for our clients.

Katherine Xu: Everything from generating content interactive to now.

John Baker: We'll be providing feedback on assessments to students based upon an AI response. We're linking learning outcomes to content and assessment automatically using these tools, and there's a long, long list of other innovations coming in the product in the months ahead. That's becoming a real driver for both adoption with our clients, but also opening up doors with new prospective clients.

Katherine Xu: <unk> types.

Katherine Xu: We will be providing feedback on assessments to students based upon Nai response, we're linking learning outcomes to content and assessment automatically using these tools and Theres a long long list of other innovations coming and the product in the months ahead.

Katherine Xu: That's becoming a real driver for both adoption with our clients, but also opening up doors with new perspective clients.

Gavin Fairweather: In our case, what we're doing is we're very much focusing on the things that will become a big driver for change in the market in the long term. very helpful.

Katherine Xu: In our case, what we're doing is we're very much focusing on the things that will become a big driver for change in America in the long term.

Speaker Change: That's very helpful. Maybe you can check in on the corporate side I mean, a lot of work that went into the product over the course of fiscal 'twenty five I'm curious where you think you are on that journey in terms of just continually.

John Baker: Maybe we can check in on on the corporate side. I mean, a lot of work that that went into the product over the course I'm curious where you think you are on that journey in terms of just, you know, continually proving the product to make it. Big Market, both for memberships Yeah, I think, Gavin, if you look at our investments that we're making, we've got a public roadmap in terms of what we're sharing with the broader market. We are making significant investments into our corporate product. We're doing a great job with training organizations. You know, globally, there's a great product market fit there.

Katherine Xu: Improving the product to make it kind of more and more competitive in that big market. Both for memberships and then upscaling within corporates as well.

Katherine Xu: Yes, I think Kevin if you look at our investments that we're making and we've got a public road map in terms of what we're sharing.

Katherine Xu: With the broader market, we are making significant investments into our corporate product.

Katherine Xu: We're doing a great job with training organizations.

Katherine Xu: Globally there is a.

John Baker: And there's really no reason why we can't continue to see good scale in that part of our business as we continue to lean into the go to market motion. For the broader employee learning and other segments, you know, we're investing today to round out key use cases so that we can have no excuse for not being the next gen platform for adoption in the corporate market. We anticipate most of that work will be done this year. There will be obviously ongoing work that continues to put us in a spot where we start to really pull apart and differentiate in the space.

Katherine Xu: Great product market fit there and there's really no reason why we can't continue to see good scale in that part of our business as we continue to lean into the go to market motion.

Katherine Xu: For the broader employee learning and other other segments.

Katherine Xu: We are investing today to round out our key use cases, so that we can have no excuse for not being the next gen platform for adoption in the corporate market.

Katherine Xu: Anticipating most of that work will be done this year there'll be obviously ongoing work that continues to put us in a spot where we start to really pull apart and differentiate in the space.

John Baker: And a great example of that is also H5P, you know, for a long time, companies have relied on SCORM as an interactive standard for building content, but it hasn't changed in 20 years, Gavin. And what we're doing with H5P is ushering in a new standard for building interactive learning, and I think that's going to be a real transformation of the corporate learning experience, building more engagement, making sure folks can retain the knowledge for longer, while yet spending less time on the task because it's a better learning experience itself. You know, that product now has adoption with about 200 million people globally.

Katherine Xu: A great example of that is also <unk> IP for.

Katherine Xu: For a long time companies have relied on storm as an interactive standard for building.

Speaker Change: Content, but it hasnt changed in 20 years Kevin.

Speaker Change: And what we're doing with <unk> is ushering in a new standard for building interactive learning and I think that's going to be a real transformation of the corporate learning experience.

Speaker Change: Building more engagement.

Speaker Change: Making sure folks getting retain the knowledge for longer while yet spending less time on the task because it's a better learning experience itself.

Speaker Change: That product now is adoption with about 200 million people globally.

John Baker: We're going to work very hard to commercialize it in a bigger way in corporate, and that's part of our key roadmap as we look ahead.

Speaker Change: To work very hard to commercialize it in a bigger way in corporate.

Speaker Change: And that's part of our key roadmap as we look ahead.

Gavin Fairweather: Great.

Speaker Change: Great and then lastly for me maybe for Josh just on the EBITDA margins I mean, they certainly surprised and kind of more like the high teens in the back half of your fiscal year.

Josh Huff: And then lastly, for me, maybe for Josh, just on the EBITDA margins, I mean, they certainly surprised, you know, and kind of more like the high teens and in the back half of your fiscal year, and yet you've provided your guidance for about 15% for fiscal 26. Maybe just walk us through the puts and takes in terms of seasonality, FX, spending that you guys are planning on making on growth to help reconcile that epidemic. Yeah, thanks, Gavin. Good question. Certainly pleased with the progress in F25, roughly $20 million increase in EBITDA year over year. And as we look out to F26, you're right, there is seasonality typically in the expense profile.

Speaker Change: And yet you've provided your guidance for about 15% for fiscal 'twenty six maybe just walk us through the puts and takes in terms of seasonality FX incremental spending that you guys are planning on making on growth.

Speaker Change: Help reconcile that EBITDA margin going forward.

Speaker Change: Yes. Thanks, Kevin Good question, certainly pleased with the progress in F 'twenty five.

Speaker Change: Roughly $20 million interest increase in EBITDA year over year and.

Speaker Change: And as we look out to 'twenty six youre right. There is seasonality typically in the expense profile.

Josh Huff: You'll see that in the past, notably in Q2, we have our Fusion User Conference. And then in the first half of the year overall, there's typically sort of the reset of payroll taxes, benefits, and merit increases from a compensation perspective. So you will see typically in Q1 and Q2, a bit of a step down relative to Q3 and Q4. And then back half of the year, that margin profile sort of steps up a little bit. So you can expect to see that as well. And then from an investment perspective, I mean, a lot of the stuff John has hit on, we see a really important opportunity ahead of us, both from an AI and sort of next gen learning platform and education, as well as some significant investments in corporate employee learning.

Speaker Change: You'll see that in the past, notably in Q2, we have our fusion user conference.

Speaker Change: Then in the first half half of the year overall.

Speaker Change: There is typically sort of the reset of payroll taxes benefits and merit increases.

Speaker Change: From a compensation perspective, so you will see.

Speaker Change: Typically in Q1, and Q2, a bit of a step down relative to Q3, and Q4, and then back half of the year that margin profile.

Speaker Change: Sort of steps steps up a little bit. So you can expect to see that as well.

Speaker Change: And then from an investment perspective, I mean, a lot of the stuff John has hit on we see a really important opportunity ahead of us.

Speaker Change: From an AI and sort of next Gen learning platform in education as well as some significant investments in corporate employee learning.

Josh Huff: And so we're balancing growth and profitability as we have the past three years and making sure we're making the right discipline investments, but certainly maintain confidence in those growth drivers as we kind of work through the macro fog in fiscal 26.

Speaker Change: And so we.

Speaker Change: We're balancing growth and profitability as we have the past three years in making sure we're making the right disciplined investments, but certainly mainly.

Speaker Change: We maintain confidence in those those growth drivers.

Speaker Change: As we kind of work through the macro.

Speaker Change: <unk> in fiscal 'twenty six.

Gavin Fairweather: That's it for me. Thanks so much. Thanks Gavin. Thanks.

Speaker Change: That's it for me. Thanks, so much I'll pass the line.

Speaker Change: Thanks, Kevin.

Paul Treiber: Our next question is from Paul Treiber of RBC Capital Markets. Paul, your line is now open. Please go ahead. Yeah, thanks very much and good morning. Just a follow up question just in regards to the EBITDA margins.

Speaker Change: Our next question is from pool treatment of RBC capital markets. Paul. Your line is now open. Please go ahead.

Paul: Yes, thanks, very much and good morning.

Paul: Follow up question just in regards to the EBITDA margins.

Paul Treiber: But just looking out to 2028, when you look at the slope of margin expansion from 26 to 28, why would there be more operating leverage coming off revenue growth? Do you see those investments that you're making in 26 being sustained through 27 and 28? Yeah, thanks, Paul. Good question. Yeah, with the medium term outlook, we're providing, you know, sort of a steady lift in our margin profile, year over year over year. And I would say similar to the response to Gavin, and in direct response to your question, there is an opportunity to invest in growth.

Paul: But just looking out to 2028, when you look at the slope of margin expansion from 26 to 28 why wouldn't it be more operating operating leverage.

Paul: Coming off coming up revenue growth as it is.

Paul: Is it do you see those investments that youre, making in 2006 being sustained through 27 and 28.

Speaker Change: Yes. Thanks, Paul Good question, yes, with the medium term outlook.

Paul: We're providing sort of a steady.

Paul: The lift in our margin profile.

Paul: Year over year over year, and I would say similar to the.

Gavin: The response to Gavin.

Paul: Indirect response to your question.

Gavin: There is an opportunity to invest in growth and we.

Josh Huff: And we, you know, have confidence in the ability to accelerate growth through those investments. And those investments are 12 month investments.

Gavin: I have confidence in the ability to accelerated growth through those investments and those investments are 12 month investments. So there is a need to continue to balance our growth and profitability over the entirety of the medium term, but certainly confident that the business can continue to scale.

Josh Huff: So there's, there's a need to continue to balance our growth and profitability over the entirety of the medium term, but certainly confident that the business can continue to scale and increase our profitability year over year.

Gavin: And increased our profitability year over year.

John Baker: And in regards to cost, you mentioned AI as a product opportunity. Do you anticipate or have you seen to date AI improve productivity in product development? Or are you looking at it from a customer support perspective? Do you see opportunities to improve productivity internally in the company? That's a great question, Paul. We're early days in terms of driving productivity across the different parts of the organization with leveraging AI internally. That said, the groups that have embraced AI have seen incredible improvements. Everything from our learning services team that's embraced AI to help with the generation of course content and experiences for our clients.

Speaker Change: And in regards to cost you mentioned AI as a product opportunity do you.

Gavin: And anticipate or have you seen to date AI improve productivity and in product development or.

Speaker Change: Are you looking at it from a customer support perspective, do you see opportunities.

Gavin: Right.

Gavin: To improve productivity.

Gavin: Internally in the company.

Gavin: That's a great question Paul.

Gavin: Early days in terms of driving productivity across the different parts of the organization with leveraging AI internally.

Gavin: That said the groups that have embraced AI has seen incredible improvements everything from our learning services team that's embraced AI to help with the generation of course content and experiences for our clients.

John Baker: They've been working with a number of clients to pilot this work out in the field, if you will, and it's having a great impact. We're seeing similar results with our customer support and services. And as we continue to deploy AI across R&D and other parts of the organization, that innovation will drive significant efficiencies, which we can then turn into innovations for our clients that drive impact on the learning experience.

Gavin: They've been working with a number of clients.

This work.

Gavin: In the field, if you will and it's having a great impact.

Gavin: We're seeing similar results with our customer support and services.

Gavin: And as we continue to deploy AI across R&D and other parts of the organization that innovation will drive significant efficiencies, which we can then turn into innovations for our clients that drive able to act on the learning experience. So very much excited about the opportunity to leverage these technologies internally here at <unk>.

John Baker: So, very much excited about the opportunity to leverage these technologies internally here at D2L in this next chapter.

Gavin: Chapter.

Paul Treiber: And then just lastly, for me, you know, one of one of your competitors had a fairly high profile security breach, and a lot of news around it. You know, they're more in the K to 12 space, but has that opened the door to discussions with customers, you know, across, you know, higher ed and other end markets, just in terms of migrating from from legacy platforms, to something more modern. And, you know, how does that, you know, counter, you know, or, you know, how does that relate to what's going on in terms of the broader environment in terms of the uncertainty from a macro perspective?

Gavin: And then just lastly for me one on one of your competitors had a fairly high profile.

Gavin: Security breach.

Gavin: And a lot of news around it there more than that the K 12 space, but has that.

Gavin: Open the door to discussions with customers across.

Gavin: Higher Ed and other end markets just in terms of migrating from legacy platforms.

Gavin: To something more modern and.

Gavin: How does that count.

Gavin: Counter.

Gavin: Yeah.

Speaker Change: How does that relate to what's going on in terms of the broader environment in terms of uncertainty from a macro perspective out there.

John Baker: It's client by client. Paul, we are seeing some universities and colleges also have gone through similar experiences, is what you saw with the PowerSchool breach. I think that's what you're referring to. And in those cases, they are looking to modernize their learning platform infrastructure. It won't be overnight. We've spent a lot of time.

Speaker Change: It's client by client.

Paul: Paul we are seeing some.

Paul: Overseas and colleges also have gone through similar experiences as what you saw with the.

Speaker Change: The power school reach I think that's what you're referring to.

Speaker Change: And in those cases, they are looking to modernize their learning paths that are infrastructure it won't be overnight.

John Baker: I've visited the White House. We've made commitments in this particular area. And we are by far the leader in our markets when it comes to investing in both privacy, data security, and the controls that really are required to implement this properly. This is, you know, it definitely is a big investment on our end to make sure that we're doing this right. That's why we've got a number of marquee clients that have embraced our technology because they need these controls in place. And I think as the broader market realizes that security does matter, this will become a growth driver for Brightspace.

Speaker Change: Spent a lot of time I visited the White house.

Speaker Change: Made commitments in this particular area and we are by far the leader in our markets. When it comes to investing in both privacy and data security and the controls.

Speaker Change: Really are required to implement this properly.

Speaker Change: This is it definitely is a big investment on our end to make sure that we're doing this right and that's why we've got a number of marquee clients that have embraced our technology because they need these controls in place.

Speaker Change: And I think as the broader market realizes the security does matter.

Speaker Change: This will become a growth driver for bright space, we are significantly differentiated.

John Baker: We are significantly differentiated both in K-12 and higher ed and even in corporate when it comes to how we handle security, data privacy, and the infrastructure for our clients.

Speaker Change: In K, 12, and higher Ed and even incorporate when it comes to how we handle security data privacy.

Speaker Change: The infrastructure for our clients.

Paul Treiber: Thanks for taking the question.

And thanks for taking the questions.

Speaker Change: Yeah.

Thanos Moschopoulos: Our next question is from Thanos Moschopoulos of BMO Capital Markets. Thanos, your line is now open, please go ahead.

Speaker Change: Our next question is from Scott <unk> of BMO capital markets. Your line is now open. Please go ahead.

Thanos Moschopoulos: Good morning. John, maybe just to clarify a point, the U.S. higher ed market is predominantly a replacement market. So I think that would imply that the budget is already, you know, there and being spent on an existing LMS. So just obviously a lot of budget uncertainty, but. From your perspectives, it's just all this noise causing customers to delay decisions. even though presumably they shouldn't be spending any incremental budget on your solution versus what they're already spending on their existing LMS. Yeah, no, I think it's a matter of prioritization for these clients. They're just dealing with a bunch of uncertainty.

Speaker Change: Hi, good morning.

John: John maybe just to clarify a point.

John: The U S higher Ed market is predominantly replacement market.

John: So I think that would imply that the budget is already there and being spent on an existing LMS. So.

John: Just obviously a lot of budget uncertainty.

John: <unk>.

Speaker Change: From your perspective is it just all this noise, causing customers to delay decisions.

John: Chris.

John: Even though presumably they shouldnt be spending any incremental budgets on your solution versus what they're already spending on their existing illness.

John: Yes, no I think it's a matter of prioritization for these clients are just dealing with a bunch of uncertainty so they've got to work through that.

John Baker: So they've got to work through that, set their budgets and strategies for the institutions as they go through that change. But what's clear in terms of my conversations with presidents and provosts is that our technology has never mattered more. You know, you're seeing it showing up in our services line. Clients are engaging us to accelerate roadmap, because this technology is believed to have a big impact on the student experience, driving better engagement, helping them grow into new markets. This has become a mission critical tool. And I think as AI becomes a powerful driver in this market, you will see them prioritize this in a much bigger way.

John: Their budgets and the strategies for the institutions as they go through that change.

John: But what's clear in terms of my conversations with presidents and Provosts is that our technology has never mattered more.

John: You're seeing it showing up in our services line clients are engaging us to accelerate roadmap. Because this technology is believed to have a big impact on the student experience driving better engagement, helping them grow into new markets. This has become a mission critical tool.

John: And I think as AI becomes a powerful driver in this market you will see.

John: Prioritize this is a much bigger way the early results that we're seeing from the efficacy studies.

John Baker: The early results that we're seeing from the efficacy studies, Thanos has been incredible in terms of improving student outcomes while saving time for faculty. It's a killer combination for any school that's going through austerity, because you get to improve the student experience while saving resources in doing it. It's a great combination.

John: <unk> has been incredible in terms of improving student outcomes, while saving time for faculty, it's a killer combination for any school thats going through austerity, because you get to improve the student experience, while saving resources in doing it.

It's a great combination.

Thanos Moschopoulos: Great.

John: Great and just in terms of international maybe just expand as far as the geographies in which.

John Baker: And just in terms of international, maybe just expand as far as the geographies which you're most optimistic about over the next year, and to what extent you're seeing a macro impact in some of those markets as well. Yeah, we've made some leadership ads in international. We're seeing, again, good growth internationally. Last year, we anticipate continued good growth this year. Remember, most of the market internationally is traditional legacy players that have not evolved very much and are going through their own challenges in terms of restructuring organizations, things like that. And so we're competing incredibly well here.

John: You are most optimistic about her over the next year and to what extent, you're seeing a macro impacts and some of those markets as well.

John: Yeah, we've made some leadership beds in international we're seeing again good growth internationally last year, we anticipate continued good growth this year.

John: Remember most of the market internationally is traditional legacy players that have not evolved very much and theyre going through their own challenges.

John: In terms of restructuring organizations things like that.

John: And so we're competing incredibly well here.

John Baker: You know, we've seen a number of countries put up their best quarter year over year. Good results. I'm very happy with what the international team is doing, and we'll continue to lean into that as a good growth driver for us for the future. And keep in mind, Thanos, many of these markets, you know, they're at the 1% line. They're not, they're nowhere close to full capacity when it comes to putting in place great learning platforms to support their learners across their region. So, you know, this is an exciting opportunity for us to continue to lean into.

John: We've seen a number of countries put up their best quarter year over year.

John: Good results I'm very happy with what the international team is doing and we will continue to lean into that as a good growth driver for us for the future.

John: And keep in mind many of these markets.

John: The 1% line they are not.

John: We're nowhere close to full.

John: Capacity when it comes to putting in place great learning platforms to support their learners across the region. So this is.

John: This is an exciting opportunity for us to continue to lean into.

Thanos Moschopoulos: All right.

Speaker Change: Alright, well thanks, a lot. Thank you.

Thanos Moschopoulos: I'll pass the line. Thank you.

Speaker Change: Thank you. Our next question is from Brian Peterson of Raymond James Brian. Your line is now open. Please go ahead.

Brian Peterson: Our next question is from Brian Peterson of Raymond James. Brian, your line is now open, please go ahead. I think the leaders will look at it, I hope, this year. We have not seen evidence of that, though, for clarity, other than my conversations with presidents and provosts. It has not translated into RFP volume yet, Brian. And we've seen one RFP globally, just to give you a sort of an early indicator.

Brian Peterson: Hey, guys. Thanks for taking the question and congrats on the strong win rates. So John I know you mentioned AI first learning as a catalyst for change in that's even bigger than cloud I'm curious just given your expertise in time in the industry.

Brian Peterson: How do you see that unfolding when would you think that installed base that is largely them cloud today could look at AI is kind of a shift to transition to a new LMS any perspective there.

Brian Peterson: Yeah.

Speaker Change: I think the leaders will look at it I hope this year, we have not seen evidence of that though for clarity other than my conversations with presidents and provosts. It has not translated into RFP volume yet Brian.

Speaker Change: And we've seen one RFP globally, just to give you a sort of early indicator but.

John Baker: But why do I think it? You know, if you look at it from just simply a design perspective, you know, the first wave of our technology made things that were done in the classroom now possible to do online. Then our next wave of innovation was to drive us being the easiest to use learning platform in this cloud model architecture, if you will, that that has driven our win rates way up. And then this next wave, as we roll out AI to support all these different key use cases within the platform and all the key workflows, it has a dramatic impact on the learner experience, and making it far easier for faculty to be able to create content, create assessments, provide the linkages, build a better learning experience.

Speaker Change: Why do I think.

Speaker Change: If you look at it from just simply a design perspective.

Speaker Change: The first wave of our technology made things that were done in the classroom now possible to do online.

Speaker Change: Then our next wave of innovation was to drive us being the easiest to use learning platform.

Speaker Change: In this cloud architecture, if you will that that has driven our win rates way up.

Speaker Change: And then this next wave as we rollout AI to support all these different key used cases within the platform and all the key workflows. It has a dramatic impact on our experience and.

Speaker Change: And making it far easier for faculty to be able to create content create assessments provide the linkage is build a better learning experience.

John Baker: And it feels a little bit like, I know it's going to sound strange, but it feels a little bit like magic in the learning platform as the system itself recommends things for you, and you're hitting approve or making minor tweaks. It has a significant impact in improving the faculty experience, the learner experience, and that's going to become a driver for change for institutions. If one institution rolls this out, which we're seeing now as we start to see our client base tick up in terms of adoption of these types of technologies, their neighbors are not going to want to be left behind.

Speaker Change: And it feels a little bit like I know, it's going to sound strange, but it feels a little bit like magic in the learning platform as the system itself recommends things for you and you and you're hitting approve or or making minor tweaks. It has a significant impact in improving the faculty experience learner experience and that's going to be.

Speaker Change: I'm a driver for our change for institutions.

Speaker Change: One institution rules themselves.

Speaker Change: Which we're seeing now as we start to see your client base tick up in terms of adoption of these types of technologies. Their neighbors are not going to want to be left behind very similar to what you saw with mobile other driver and very similar to what we saw as cloud as a driver we've seen these things in the past we relate to the game in some of these in the past, we're not going to relate to the game and that's why we're going to lead this revolution.

John Baker: Very similar to what you saw with mobile as a driver, and very similar to what we saw with cloud as a driver. We've seen these things in the past. We were late to the game in some of these in the past. We're not going to be late to the game in this one. We're going to lead this revolution.

Speaker Change: <unk>.

Brian Peterson: Appreciate the color.

Speaker Change: I appreciate the color and Josh maybe just one follow up as we're thinking about the medium term targets, how big of a contribution could M&A be there or is that largely inorganic numbers. Thanks guys.

Josh Huff: And Josh, maybe just one follow up. As we're thinking about the medium term targets, how big of a contribution could M&A be there? Or is that largely an organic number?

Josh Huff: Thanks, guys. Yeah, thanks, Brian. Think about M&A in the in sort of the construct of consistent with our approach to date, we see value in adding to the portfolio of products to really, you know, add to that platform strategy that we have and add more value to customers. And so we'll continue to look at doing that over the medium term. I think H5P and connected shopping are two good examples of that. And to the point earlier on the call, we're seeing some really good progress with them so far. Thank you.

Speaker Change: Yes, Thanks, Brian.

Speaker Change: Think about M&A and sort of the construct of consistent with our approach to date, we see value in.

Speaker Change: Adding to the portfolio of products to.

Really add to that platform strategy that we have and add more value to customers and so we will continue to look at.

Speaker Change: Doing that over the medium term I think HVAC and connected shopping or are two good examples of that and to the point earlier on the call. We're seeing some really good progress with them so far.

Speaker Change: Thanks, Josh.

Speaker Change: Thank you.

Suthan Sukumar: Our next question is from Suthan Sukumar of Stiefel. Your line is now open, please go ahead. Good morning, Jen. Well, first question, I want to touch on your international growth. You know, this has been pretty durable over the past several quarters. You mentioned you're leading in given the Edmonds in the US. Can you speak a little bit about how your strategy might be involving in your focus markets here? And how do you see win rates and deal sizes trending? We're definitely seeing good opportunities in international markets. Again, many of these markets are very early stage.

Speaker Change: Next question is from Susana <unk> of Stifel. Your line is now open. Please go ahead.

Speaker Change: Good morning, Jeff.

Susana: First question I wanted to touch on your international growth.

Susana: <unk> been pretty durable over the past several quarters, you've mentioned your lead again, given the headwinds in the U S could you speak a little bit about how your strategy might be evolving and your focus markets you're in.

Susana: And how do you see win rates and deal sizes trending from here.

Susana: Okay.

Susana: We're definitely seeing good.

Susana: Opportunities in international markets again, many of these markets are very early stage.

John Baker: So our approach in terms of tweaking our model that we've had in the past has been to really drive a push on the leadership. So we've made some investments into leadership in LATAM, in the Middle East, India region, and other regions around the world. We are driving to be number one in key markets globally. We're working very hard to make sure that we've got a good motion when it comes to opening up a market, building the capability in that market to get the first few key wins and establish ourselves as a leader, and then pushing it again aggressively to drive quick adoption across the rest of the market, and then trying to create an opportunity for us to be a very clear number one player.

Susana: So.

Susana: Our approach in terms of tweaking our models that we've had in the past has been to really drive.

Susana: On the leadership, so we've made some investments into leadership in Latam.

Speaker Change: The middle East.

Susana: The region.

Susana: And in other regions around the world.

Susana: We are driving to be number one in key markets globally.

Susana: We're working very hard to make sure that we've got a good motion when it comes to opening up a market.

Susana: Building the capability in that market to get the first few key wins in the San Francis self as the leader and then pushing it again aggressively to drive quick adoption across the rest of the market and then and then trying to create an opportunity for us to be very clear number one player youre seeing that in markets like the Netherlands, where we are now.

John Baker: You're seeing that in markets like the Netherlands, where we're now very clearly number one in the market. Singapore, we're number one on the market. Columbia, we've added, for example, another institution just recently to put us in a very clear market leadership position with the top universities in our market, and we'll continue to push down. And there's many other great markets around the world that are opening up as we speak. So you'll see us continue to lean into international. We expect that to continue to be a 15 plus percent growth driver for us.

Susana: Very clearly number one in the market, Singapore, where we're number one on the market Columbia. We've added for example, another institution just recently.

Susana: Put us in a very clear market leadership position with the top universities in that market and we'll continue to push down.

Susana: And there's many other great markets around the world that are opening up as we speak so.

Susana: Youll see us continue to lean into international we expect that is continuing to be a 15 plus percent growth driver for us.

Suthan Sukumar: I'm very excited about the opportunity to serve globally. Thank you.

Susana: I'm very excited about the opportunity to sort of globally.

Susana: Okay. Thank you.

Josh Huff: On NRR, you know, this continues to improve, and it sounds like you still see opportunity for that to expand. Looking ahead, can you speak to the opportunity for, you know, upsell, cross sell of Rumi and Critter Plus and some of the other modules within the US higher ed base, just given all the, you know, the macro noise now? Well, maybe I can split this response with Josh. We definitely believe that we can continue to lean in on NRR. And I know a few of you have asked about pricing. You know, we are seeing pricing take up a little bit in our markets.

Susana: On our.

Susana: And there are.

Susana: This continues to improve and it sounds like you still see opportunity for that to expand.

Susana: Looking ahead could you speak to the to the opportunity for.

Susana: Upsell cross sell of Lumi and create a plus in some of the other modules.

Susana: Within the U S higher Ed basis, given all the.

The macro noise now.

Susana: Well, maybe I can slip this response with Josh.

Susana: We definitely believe that we can continue to lean in on NR and I know a.

Susana: A few of you have asked the pricing, we're seeing pricing tick up a little bit.

Susana: In our markets.

John Baker: That's going to be a driver for NRR as well. But more importantly, we're leaning in with great product that clients are loving. So Creator Plus is a perfect example. We're seeing attach rate step up quarter over quarter. We will lean into that even more this year to drive better attach rates again. Lumi, we're seeing incredible results. I mean, it's very early days within our client base. But we're seeing a big step function from Q3 to Q4. Remember, this has only been a market for two quarters. The next two quarters are going to be really interesting as we lean into Fusion.

Susana: It's going to be a driver for <unk> as well, but more importantly, we're leaning in with great product.

Susana: Clients are loving.

Susana: <unk> creator plus is a perfect example, where we're seeing attach rates step up quarter over quarter.

Susana: We will lean into that even more this year.

Susana: Drive better attach rates again lumi, we're seeing incredible results I mean, it's very early days within our client base.

Susana: But we're seeing a big step function from Q3 to Q4 remember this has only been in market for two quarters.

Susana: The next two quarters are going to be really interesting as we lean into fusion and I think that will be a big driver for our expansion in the future.

Josh Huff: And I think that will be a big driver for NRR expansion in the future. And then we also have clients, as we mentioned on the call, that are early adopters of new technologies like Achievement Plus. Really seeing the value of that, being able to support the accreditation process in their institution. That was a product that we thought would take time to drive adoption within our base. But we're seeing a lot of clients showing interest in that one already. All of these things will continue to drive our NRR in the right direction. And Josh, do you want to add more to that?

Susana: And then we also have clients as we mentioned on the call that are early adopters of new technologies like achieved a plus.

Susana: You're really seeing the value of that being able to support that.

Susana: Accreditation process for their institution.

Susana: Well the product.

Susana: We thought would take time to drive adoption within our base, but we're seeing a lot of class showing interest in that one already.

Susana: All of these things will continue to drive our NRI in the right direction and Josh do you want to add more to that yeah I think.

Josh Huff: Yeah, I think the only thing I'd add is I think you've seen this start to play out. Certainly, we identified about two years ago that there was a real opportunity for us to expand our portfolio and add more value to our customers. And so to John's point, the NRR progress in fiscal 25, moving from 102 to 104 is good. And still, I'd say, reflective of early days. We expect over the medium term to be able to continue to increase that NRR profile for the business.

Susana: Only thing I'd add is I think you've seen this start to play out.

Speaker Change: Certainly we identified.

Speaker Change: About two years ago that there was a real opportunity for us to expand our portfolio and add more value to our customers and so to John's point the NRI our progress in fiscal 'twenty five moving from 102 to 104 is good.

Speaker Change: And still I would say reflective of early days. So we expect over the medium term to be able to continue to increase that NR profile for the business.

Speaker Change: Great.

Speaker Change: Okay. Good color, just helping us a lot.

Suthan Sukumar: for the Color Jets, I'll pass it along. Thank you.

Yes.

Speaker Change: Thank you. Our final question comes from John Michel If National Bank. John Your line is now open. Please go ahead.

John Shao: Our final question comes from John Shao of National Bank.

John Shao: John, your line is now open, please go ahead. Hey, thanks. Good morning. Thanks for taking my question.

John Michel: Hey, Thanks. Good morning, Thanks for taking my question I have a similar question to Brian on your physical 2028 gross target could you maybe give us a breakdown of how much of that growth acceleration tying to a recovery in the macro versus your opex investments and potential M&A.

John Baker: I have a similar question to buy on your physical 2028 growth target. So could you maybe give us a breakdown of how much of that growth acceleration is tied to a recovery in macro versus your OPEC investment and potentially M&A? Well, right now, that growth that we've provided for guidance for the year incorporates the fog that we see today and the macro conditions, broadly speaking, around the world, as well as some of the FX considerations that we've been facing. So feel confident that we can deliver against the numbers that we've provided for guidance. And my hope is that we can turn some of these things that we've talked about on the call into real drivers for accelerating growth in the medium term.

John Michel: Well right now of.

John Michel: That growth that we've provided for guidance for the year incorporates the fog that we see today.

John Michel: And the macro conditions broadly speaking around the world.

John Michel: As well as some of the FX considerations that we've been facing.

John Michel: So feel confident that we can deliver against the numbers that we provided for guidance.

John Michel: And my hope is that we can turn some of these things that we've talked about on the call into real drivers for accelerating growth in the medium term and.

Josh Huff: And, you know, all the early indicators, as I said on the call, you know, conversations with leaders within the higher education system seem to indicate so. We just haven't seen it yet translate. So it's hard for us to guide for that at this stage. But yeah, John, just to add, I think from a medium term growth outlook, the thing with fog is over time, it does subside. And so, as we look out over the medium term, we see an opportunity for our strength from a higher education perspective to continue to shine through. We're making investments to further solidify that.

John Michel: Ill.

John Michel: All the early indicators as I said on the call with conversations with leaders within the higher education systems seem to indicate though we just haven't seen it yet translate to.

John Michel: Hard for Us to guide for that at this stage.

John Michel: But yes, John just to add I think.

John Michel: Our medium term growth outlook.

John Michel: The thing with fog as over time, it does subside and so as we look out over the medium term.

John Michel: We see an opportunity for our strengths from a from a higher education perspective to continue to shine through we're making investments to further solidify that.

Josh Huff: And we've talked about that product portfolio continuing to expand and our upsell capabilities to continue to improve. And likewise, we've talked about the international end markets and the corporate end markets. And so, it's really a combination of all of that, that is incorporated into that medium term 10 to 15%.

John Michel: And we've talked a.

John Michel: About that product portfolio, continuing to expand and our up sell capabilities to continue to improve.

John Michel: <unk>, we've talked about the international end markets and the corporate end markets and so it's really the combination of all of that that incorporated incorporated into that medium term, 10% to 15%.

John Shao: Okay, thanks for the colors.

Speaker Change: Okay. Thanks for the color given your FX exposure would you ever consider hatching euro currency risk on the top line when it comes to Opex structure, just want to make sure. We still have a natural hedge to protect the EBITDA from the Volatilities.

Josh Huff: And given your F exposure, would you ever consider hedging your currency risk on the top line when it comes to off-tech structure? Just want to make sure you still have a natural hedge to protect your EBITDA from the volatility. Yeah, it's a good question, John, we evaluate on an ongoing basis, the right approach. To date, we have not implemented significant hedging, but continue to monitor and evaluate. Okay, thanks. I'll pop the line. Thank you.

Speaker Change: Yes, it's a good question John we evaluate.

Speaker Change: On an ongoing basis.

Speaker Change: <unk> approach.

Speaker Change: To date, we have not implemented significant hedging, but continue to monitor and evaluate.

Speaker Change: Okay. Thanks, I'll pass the line.

Speaker Change: Thank you we have no further questions. So I'll hand back to John Baker CEO for closing remarks.

John Baker: We have no further questions, so I will hand back to John Baker, CEO, for closing remarks. Well, thank you everyone for joining us on the call today. We're really looking forward to updating you following our Q1 results.

Speaker Change: Well. Thank you everyone for joining us on the call today, we're really looking forward to updating you. Following our Q1 results I hope everyone has a good week and.

Operator: I hope everyone has a good week, and thank you again for joining us. This concludes today's call. Thank you for joining. You may now disconnect your line.

Speaker Change: Thank you again for joining us.

Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change: [music].