Transcript: Gloo Holdings Q4 2025 Earnings Conference Call

On Tuesday, Gloo Holdings (NASDAQ:GLOO) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.

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The full earnings call is available at https://edge.media-server.com/mmc/p/ovbao96a/

Summary

Gloo Holdings reported a strong Q4 2025, quadrupling revenue year-over-year and improving their balance sheet post-IPO.

The company is on track to achieve adjusted EBITDA profitability by Q4 2026, driven by organic growth and strategic acquisitions like Enterprise Market Desk and Westfall Group.

Gloo Holdings is focusing on expanding its applied AI capabilities, aiming to modernize technology for the faith and flourishing ecosystem, with strategic growth in customer base and partnerships.

Revenue for Q4 2025 was $33.6 million, a 418% increase year-over-year, with significant contributions from platforms like Glue360 and strategic acquisitions.

The company projects Q1 2026 revenue of $36 million, with a narrowing adjusted EBITDA loss, and full-year 2026 revenue guidance of $190 million without needing further acquisitions.

Management emphasized the strategic importance of AI, with Gloo AI Studio launched to serve developers and enhance customer offerings, alongside a strong M&A pipeline and disciplined financial management.

Full Transcript

OPERATOR

Thank you for standing by and welcome to the Gloo Holdings fiscal fourth quarter 2025 earnings conference call. At this time, all participants are in listen only mode. After the Speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1. Again, we ask that you please limit yourselves to one question and one follow up. As a reminder, today's program is being recorded and now I'd like to introduce your host for today's program, Oliver Roll, Chief Marketing and Communications Officer. Please go ahead sir.

Oliver Roll (Chief Marketing and Communications Officer)

Thank you Operator and thank you to all of you for joining our fiscal fourth quarter and full year 2025 earnings conference call. We'll be discussing Glu's performance for the fourth quarter ended January 31, 2026 as well as our results for the full year 2025. We'll also be providing guidance for our Q1 and full year 2026. Joining me on today's call are CEO and Co Founder Scott Beck and CFO Paul Seaman. Our Executive Board Chair and Head of Technology Pat Gelsinger will also join the Q and A session. Before we begin, please be reminded that this call will contain forward looking statements which are based on Gloo's current expectations, but which are subject to risks and uncertainties relating to future events and or the future financial performance of glu. Actual results could differ materially from those anticipated in these forward looking statements. A discussion of some of the risks that could cause actual results to differ materially from our forward looking statements can be found in today's press release and elsewhere in our filings with the securities and Exchange Commission, including our prospectus dated November 18, 2025 and our annual report on Form 10K that we expect to file later this week. Our SEC filings are also available on Gloo's investor relations website at investors and the SEC's website. In addition, during today's call we will discuss certain non GAAP financial measures, reconciliations of these non GAAP metrics to the most directly comparable GAAP metrics, as well as the definitions of each measure. Their limitations and our rationale for using them are included in today's press release and in our form 10K. And now I'll turn the call over to Scott.

Scott Beck (CEO and Co Founder)

Thank you Oliver and thank you for joining our 2025 fourth quarter and year end earnings call. Q4 was a strong quarter for Gloo that exceeded our guidance and capped a strong year in 2025, our first year as a public company. In Q4 2025, we more than quadrupled our revenue compared to the prior year period. We also exited 2025 with a much stronger balance sheet following our November IPO and the conversion of a significant majority of our debt into equity. We're also making good progress toward adjusted EBITDA profitability as reflected in our Q1 guidance of more than 30% improvement in adjusted EBITDA from Q4. We remain confident in achieving adjusted EBITDA profitability in Q4 2026 and continue to expect to approach adjusted ebitda profitability in Q3. These results and our confidence in the future reflect the unique value that we are delivering against two mission critical needs across the faith and flourishing ecosystem the need to modernize technology and the need to expand reach. Our growth is driven organically as well as through continued expansion from accretive strategic acquisitions that strengthen our platform. Before I go deeper into our strategy, I want to briefly revisit the ecosystem that we serve because that context is important to understanding both our opportunity and our results. GlooE is building the leading technology platform for the faith and flourishing ecosystem. This is one of the oldest and largest sectors in the world, yet one that remains highly fragmented and materially underserved by modern technology. At the center of this ecosystem are two interconnected groups. First are churches and frontline organizations or CFLs, which serve people and communities directly. The second are network capability providers, or NCPs, which equip them with the tools, services, resources and infrastructure that they need to succeed. At the heart of the ecosystem, we also see two mission critical and unmet needs. One is the need to modernize technology, including systems, data, workflows and core operating infrastructures. The other is the need to expand reach, deepen engagement, and increase donor support in more effective and scalable ways. The Gloo platform is built to address those needs through two core areas of focus powering technology and powering Reach. Our solutions that Power Tech help organizations modernize their operations and build the foundation required to adopt new technologies effectively. Our solutions at Power Reach help organizations expand awareness, strengthen engagement, and grow support through differentiated marketing, media and fundraising. Underpinning everything is the company's growing leadership in applied AI. We're leveraging the latest innovations in agent-based AI foundational models and services from top AI companies. We're combining that with the AI advancements across our own platform. As part of this strategy, we're taking over more of our customers work that can now be executed by AI. We take over a customer's technology operations, we modernize them and then we apply agent-based AI to deliver significantly better outcomes at lower cost while also creating higher margins for glue and highly durable revenue streams. This allows AI to be uniquely applied to the real operations, workflows and mission critical activities of churches, ministries and not for profits in ways that protect theological integrity, strengthen relational ministry and advance human flourishing. This approach is supported by forward deployed engineers similar to the models used by Palantir. We understand customer operations and build tailored agentix solutions that create meaningful repeatable value over time. We believe that expands our opportunity well beyond software spend into the much larger labor budgets that sit behind it. We believe GlooE is uniquely positioned to lead applied AI in the faith and flourishing ecosystem by helping customers harness those capabilities in practical, mission aligned ways. I now want to turn to our broader platform strategy and how we continue to strengthen it over time. As the platform expands, it benefits from a powerful flywheel effect. Each new capability solution and network capability provider makes the platform even more valuable to the churches and the frontline organizations that we serve. And as more of these organizations engage, the platform becomes more valuable to the network capability providers and the partners serving them. Strategic acquisitions are a key part of strengthening that flywheel, enhancing our ability to power tech and power reach for our customers. Earlier today we announced our latest example of that flywheel in action. Today we announced the definitive agreement to acquire Enterprise Market Desk, known as emd, a leading workday service partner that provides consulting, implementation and operating services to small and mid sized organizations and not for profits. This is an important addition to our solutions for powering tech. Workday is the leading ERP platform in the faith and Flourishing ecosystem and often the preferred solution for many of the GlooE enterprise customers, creating clear synergies between the two companies. EMD offers a full suite of services including workday deployments, application management services and staff augmentation. This strengthens the Glue360 value proposition and expands our ability to help customers modernize core systems and transform it in more strategic ways through our applied AI. This aligns with our core strategy of taking over and modernizing the work of an organization using forward deployed engineers, then applying agent-based AI, thereby delivering better results at lower cost while at the same time creating higher margins for glue. Workday offers a major set of capabilities that we see many of the organizations in the faith and flourishing ecosystem using more often. Workday implementations are long cycle engagements that will lead to larger digital Transformation mandates that GlooE360 is uniquely able to support. In addition, we successfully completed the acquisition of Westfall Group during the quarter. Westfall is a leading platform for major donor engagement in the faith and flourishing ecosystem. Its addition has expanded our donor development capabilities and strengthen the strategic fit and synergies with Masterworks, which we acquired in 2025. Together, these moves reflect our disciplined approach of adding best in class network capability providers as Gloo capital partners, strengthening the platform and reinforcing the flywheel. Westfall Group has been immediately accretive since close and we anticipate EMD to will be immediately accretive upon close as well. Now let me turn back to the importance of AI to our strategy. Underpinning everything we do is our growing leadership in applied AI. Our applied AI strategy is focused on three areas. First, we're building the core AI capabilities we believe the ecosystem needs, including agents, values aligned AI, unified data infrastructures and trusted chat based interfaces. Second, we're embedding AI across our solutions to improve automation, personalization, data integration and overall customer outcomes. Third, we're helping both our customers and Glue itself, put AI agents to work and evolve toward more agentic operating models so that the ecosystem can focus more time, energy and resources on mission. We believe this strengthens our platform, accelerates innovation across our portfolio and reinforces our leadership in applied AI for the faith and flourishing ecosystem. Let's turn to customer momentum. We're seeing strong customer momentum across our portfolio. We continue to close larger strategic deals with two customers now expanding to almost 10 million of annual revenue. We also closed several agreements valued at more than 1 million, including an exciting expansion in the university segment through our work with Jessup University. This is the first example of us bringing the full breadth of the glue platform to a large university and it's a strong validation of the value that we can provide this very large market segment. We also announced a new strategic technology partnership with InterVarsity Christian Fellowship USA with Glu 360 powering its enterprise technology operations. That will enable InterVarsity to spend less time managing systems and more time engaging students and faculty across more than 700 campuses in the United States. It's a strong example of how by powering their technology we can help organizations modernize operations while while increasing mission impact. Separately, we also expanded our partnership with U version in Brazil establishing a co located engineering presence alongside their regional hub to strengthen the cultural alignment with their team while building engineering capacity in the region. In a moment, Paul will take you through our guidance for Q1 and the year ahead. We remain super confident in our strategy and and our outlook for 2026. Our confidence reflects the strength of the platform that we're building, the flywheels that continue to strengthen as we scale, and the momentum that we're seeing across the business. It also reflects the role AI is increasingly playing as an accelerator across both powering tech and our powering reach solutions. We believe our AI is unlocking enormous possibilities for ministries, churches and network capability providers to grow reach and to expand their impact. Our focus on applied AI and bringing agentic workflows into the faith and flourishing ecosystem in practical mission aligned ways uniquely positions us to capture that opportunity. Taken together, that gives us confidence in our guidance, our path to profitability and the long term value we believe we are delivering to our customers and to our shareholders. Paul, over to you to talk about our numbers in more detail.

Paul Seaman (Chief Financial Officer)

Thank you Scott Our fourth quarter 2025 results were strong with revenue beating our guidance and adjusted EBITDA at the upper end of our guidance range, giving us solid momentum as we ended the year. Revenue for the quarter was $33.6 million, an increase of 418% compared to the same period last year and 3.3% sequential growth compared to Q3, which is good performance given the seasonality characteristics of our industry. Year over year. Results were driven by solid organic growth across our portfolio as well as the acquisitions of several capital partner businesses, most notably Masterworks and Midwestern platform revenue totaled $20.1 million, an increase of $13.8 million from Q4 of last year and 1.6% sequential growth. As a reminder, platform revenue includes advertising, marketplace and subscription offerings. Much of this sequential growth was driven by Gloo360 and igniter, partially offset by some Masterworks advertising revenue that shifted into Q3. As we previously discussed, Platform Solutions revenue was $13.5 million, up 6% sequentially supported by strong performance from Barna and the addition of Westfall Group. Going forward, Westfall's donor events and design business will primarily contribute to Platform Solutions revenue and together with Masterworks will strengthen our solutions for powering reach by supporting customers fundraising throughout the year and around key events. Cost of revenue in the quarter was 76.5%, an improvement from 83.4% in the prior year period. That improvement was driven by growth and higher margin business lines and improved pricing in some areas. We expect improvement to continue throughout the year. Adjusted EBITDA improved $0.7 million sequentially to negative $18.6 million. This improvement reflects incremental gains across nearly all of our glue businesses and capital partners and includes acquisition costs related to the Westfall Group acquisition, which we do not Adjust out Westfall did not contribute to adjusted EBITDA as January is seasonally slower for fundraising activity. There are also two important noncash items to note that significantly reduced net income in the quarter. First, share based compensation was higher than normal due to non recurring IPO related award activity. As noted in our Q3.10Q. Second, the line item loss from the change in fair value of financial instruments reflects derivative calculations affected by our share price. If our price declines in a quarter, we will generally record a loss in this line and if our share price increases in a quarter, we will generally record a gain in Q4. This number pressured net income and therefore EPS. As of January 31, 2026, we had $57.3 million of cash and cash equivalents. I'd like to now turn to our Q1 and full year 2026 outlook. As Scott mentioned, we continue to guide to first quarter revenue of $36 million. For the quarter, we expect adjusted EBITDA loss to narrow to negative $12 million, representing more than $6 million of sequential improvement. As we grow revenue, improve cost of revenue and continue to aggressively manage operating expenses, we remain focused on progressing towards adjusted ebitda profitability in Q4. Our full year 2026 revenue outlook is now $190 million, which includes the addition of EMD. While we continue to see M and A opportunities, we are confident in our ability to achieve this guidance without any additional acquisitions. As we move through 2026, we continue to expect meaningful sequential improvement each quarter and Expect profitability in Q4. 2026 for Q1, we expect a weighted average share count of approximately 80 million shares. Looking ahead, we're excited about scaling the business and applying glue AI internally as we become more efficient and using it externally to help customers better serve their constituents. With that, back to you, Scott.

OPERATOR

Thanks, Paul. With that operator, we're ready to take the first question. Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again and one moment for our first question. And our first question comes from the line of Richard Baldry from Roth Capital. Your question please.

Richard Baldry (Equity Analyst)

Thanks. You probably don't want to name them, but I'm curious if you can maybe just broadly describe the two customers that are nearing 10 million a year in revenue and maybe how replicable that could be across the total addressable market you're looking at. Yeah. Thank you. This is Pat and we See that these customers are now taking more of the different offerings glue. And that's part of what's making these accounts larger,, right, Is that they're Masterworks, Westfall Gold Glue, 360 AI customers. And as we're aggregating more of those capabilities, these account relationships are becoming very large. Obviously these are some of the larger customers in the ecosystem, but we continue to win more customers at the million level. A number of those are maturing to be multimillion customers. And we do see that these are very large customers in the ecosystem. So we do think there's replicable to having more customers get to that level of relationship. Overall. The key point is that these are big accounts and we're establishing big, trusted, deep, enduring relationships with them across increasing breadth of the portfolio of our offerings. And maybe you address it a little bit, but can you talk about the funnel for million dollar plus deals, how that's change now that you're a public entity with sort of greater visibility, how that's changeed as you've rapidly scaled the portfolio and your revenues. Is that pipeline sort of picking up because of the capabilities you have now?

Pat Gelsinger (Executive Board Chair and Head of Technology)

Yeah, I'll say there's probably three aspects to the pipeline to just highlight. The one is it is just getting bigger. The more we're building our sales capacity, we're seeing more accounts that we are engaging with. More salespeople have reference accounts that they can secondly move horizontally. And that's one of the things that's exciting. We do see that we're able to move to other customers in that segment. So we're able to land and expand within an account. We're able to land and expand within the segment. We're also seeing the sales cycle, if anything shorten. And that's probably maybe the most exciting aspect of the growing momentum in sales that the more reference accounts that we have, the more we're able to then replicate that into other segments. Like we saw this quarter, we closed our first major multi offering university and we expect that we'll have many other universities that we'll be able to replicate that kind of sales motion with. With InterVarsity, one of the reference customers, you know, the campus ministry segment is showing replicability as well. So you know, it really is a very positive aspect to the business. As the accounts get bigger, we're able to see the sales funnel increase and the acceleration in those accounts as well.

Richard Baldry (Equity Analyst)

And switching gears, if we look at the AI part of the business, can you talk about how far into it you feel you are in terms of rolling out products and services based upon it, and then maybe second stage, how far you're into adopting internally tools for efficiency purposes operationally.

Scott Beck (CEO and Co Founder)

Thanks. Yeah, and maybe I'll start and ask Scott to add to this one. You know, the first would be is, you know, I see AI overall in the first inning period for the industry writ large. So there's a lot to go. And you know, for most of our accounts, we're even earlier than the first inning. Right. We're just getting started because in many cases we're just starting the 360 engagement. We're about to turn on some of the first agent-based engagement capabilities. So I'll say this is very early and we see tremendous opportunity to build on those offerings for the accounts internally. We're further along and we have more of our internal businesses, our capital partners taking advantage of our AI capabilities today. We're using it across many different aspects of our business today. But again, we see a lot more opportunity which will only improve our speed of operation and the margin of the business. This idea of applied AI is one that we really believe that we can be operating in that space for many, many years to come because the market is large, the customer needs are large, the gap in technology is large, and the benefits of AI, and particularly this idea of magent-based applied AI, that it's not just addressing how to do things better, but it's also literally turning people and manual processes into service offerings in the future. This is something we think is an industry trend and one we're uniquely applying to this segment of the market. Scott? Yeah, thanks, Pat. Yep. Rich. In addition to that, AI is actually driving a lot of demand for glue. 360. It's one of the reasons that we're seeing these bigger deals come in because it's just now gotten to the point with keeping up with technology for ministries where, you know, their primary job is not technology. Their primary job is to go out and do mission, to, you know, translate bibles, to work on campuses, to be able to help people in their communities. And now all of a sudden, that AI has come on the scene, it's just accelerated the reality of not being able to fully keep up. And so us being able to show up and to be able to help them with that is, I think, a big driver for overall demand now as I stick with 360 for a second. In addition, what we've been able to do is pull work out of these different organizations, literally pull the SaaS technologies as well as the people out of the organizations being able to help move to the next level and then applying AI to that to be able to deliver better results to the organizations that we're serving at a lower cost and then being able to keep applying the AI to that, which allows us to be able to improve margins and pass that along to the rest of the system. So there's a lot happening there. And then, you know, we also announced this quarter or just this last month, Glue AI Studios. And you know, Pat, you can just chime in for finishing up here, but you know, really providing developers infrastructures that can be used beyond glue.

Pat Gelsinger (Executive Board Chair and Head of Technology)

Yeah, just to add to that, you know, we just finished Missional AI, a major AI conference for the faith and flourishing industry. And at it we announced Studio AI, now a full set of API services, pay for services. We have a growing set of developers now taking advantage of that because we really see part of our mission is not just what we do in our offerings, but enabling a broad ecosystem to build on the foundational capabilities that Glue AI provides.

Richard Baldry (Equity Analyst)

Last for me, could you just generally discuss the MA environment for curious how it's impacting the face and flourishing world. It's obviously been valuation pretty depressed in the open market as people are fearful about the disruptions of generative AI. If you can walk through a backdrop of that, be helpful. Thanks. Sure, I'll take that. It basically goes back to what I was just talking about. AI from our standpoint is definitely a friend in that entire process. You know, as the SaaSS tools out there, big, you know, system of record tools for us to be able to take on those tools, to be able to integrate with them, to be able to build workflows, AI powered agentic workflows on top of those historical infrastructures. Whether it's a church management system in a church or whether it's, you know, a salesforce or a workday in some of these big enterprise customers. Our ability to basically build the workflows on top of that and then to be able to power that back into the ecosystem, that's just a great thing for us. We don't see ourselves being negatively impacted at all as a result of some of the conversations around SaaS. In fact, we see it as basically being able to further power our business and power our strategy. Thanks. Congrats on a great quarter and a great outlook.

OPERATOR

Thanks, Rich. Thank you. And our next question comes from the line of Yeun Kim from Loop Capital. Your question please.

Yeun Kim (Equity Analyst)

All right, congrats on the coder, Scott, Paul and Pat and also on the EMD acquisition announcement first. Maybe Paul can answer this, but obviously Glue360 is doing very well. Is scaling that business a key driver behind your margin improvement this year or is there other part of your business that's even bigger margin driver than glue 360?

Paul Seaman (Chief Financial Officer)

Glue 360 is definitely key. Each quarter it steps up incrementally both on the growth side and on the margin side. So it's a big contributing factor along with AI rolled into that. So I'd say those are number one and number two together.

Yeun Kim (Equity Analyst)

Okay. And then on the emd, any additional details you want to share with us like the revenue run rate and. And then also the margin profile?

Paul Seaman (Chief Financial Officer)

Yeah, just a few things on EMD to start with. Overall, you know, we just have seen and part of what motivated us to do this acquisition was that Workday was already being well adopted by our ecosystem. In fact, some 40 plus percent and growing of 360 customers are already using Workday. So we saw it as a great fit for our offerings and acceleration of what we're doing with areas like 360 already. So super great fit for that. And we see ourselves having these deep relationships with customers only enhanced. We, you know, Scott mentioned his formal remarks, you know, accretive, you know, from day one. So we do see that as being beneficial to our journey. As we indicated at the beginning of the year we saw a couple of ma. We've now completed both of those. So we're very confident and raised our guidance as a result. Financially we're not giving specific size on the deal itself revenue, but between this and Westfall Gold now being completed, we satisfied that portion of the growth that we had indicated of our inorganic growth for the year. Overall, we see great synergies as well. We're supplying many of the customers that we're already engaging with. So we do see Synergy Sales being a benefit to our ecosystem. And finally, this is a path for improving margins over time as we expand our unique relationship with Workday and the benefits that it brings to the ecosystem. This will only be more accretive over time as we get deeper and deeper on these key assets and that provide value. And finally building our AI capabilities as Scott already indicated before, will only enhance what we can do and use the unique capabilities both of Workday and the broader capabilities of Glue AI.

Yeun Kim (Equity Analyst)

Okay, great. I just want to better understand the cross sell opportunity with emd. Is that primarily selling Workday and related services to your current install base or is it more around converting certain customer segment of EMD to glue 360.

Paul Seaman (Chief Financial Officer)

Yeah, there's actually quite a bit both because, you know, some of the accounts that were in the glue360 pipeline were already being serviced by EMD. And that's part of what got us actually quite excited because some of those accounts that we hadn't yet broken into, you know, are now becoming Glue customers. And we expect that the land and expand opportunity as a result is only accelerated. We also see because of their depth of capabilities that we'll be introducing it into accounts where we already have activities and now we'll have a much richer set of capabilities to accelerate workday deployments into a number of Glue accounts. Already finally, EMD was servicing customers that weren't even in our pipeline today. So we do see some market expansion opportunity. So I'll say it's yes, yes and yes for the synergy opportunities.

Yeun Kim (Equity Analyst)

And then just lastly on Glue AI Studio, I know you already mentioned it, but is that targeted at customers wanting to customize their Glue AI solutions, or is that a precursor to potentially opening up your platform and maybe getting into the partner ecosystem where try to develop is the ecosystem?

Pat Gelsinger (Executive Board Chair and Head of Technology)

Yeah, we unquestionably see this as building an ecosystem of developers that are aligned with faith and flourishing. You know, some of the accounts, they're already doing these type of AI app development and they might be looking at whether they would want to do that on Anthropic or Google or Amazon or Microsoft. Well, we offer all of those models through the Glue AI Studio, but we add guardrails, protections and testing to validate that it meets the values and expectations of these customers. And those are part of what the Glue AI Studio provides. So we're finding increasing resonance for people to say, yeah, I want the best models that are there in the industry, but I also want them to be safe and trusted. And that's the value that Glue360 is adding on top of enabling the best AI capabilities in the industry. So we expect that this ability for us to service big customers like YouVersion and we're partnering with them on many AI builds, but a much broader set of customers as they want to build their own applications, but doing it with a trusted partner like Flu.

Yeun Kim (Equity Analyst)

Okay, great. Thank you so much.

OPERATOR

Thank you. As a reminder, ladies and gentlemen, we do ask that you please limit yourself to one question and one follow up. Our next question question comes from the line of Matthew Harrigan from Benchmark. Your question, please.

Matthew Harrigan (Equity Analyst)

Thank you. I'm curious what the reaction right out of the box is on Glue AI Studios in terms of partners who have Used it. I mean, in February we saw this rapturous reaction to CDance in terms of the implications for the entertainment industry. And I imagine it's kind of an overreach comparison.

Pat Gelsinger (Executive Board Chair and Head of Technology)

But do you think the ease of use is good? I mean, do you think, are people really interested? Are people getting utility out of it right away? You know, super early? And I'm sure in a quarter or two when we've been in market for more than just a couple of weeks, we're going to have much better signal. But the response so far is we're getting mails that people are using other people's platforms and tools, very excited to move their apps over on top of Glue AI Studio. So we definitely have some early positive anecdotal signals that give us a lot of confidence. We're also coming into developer season for Glue. Right. We just had missional AI and we launched Studio just in front of that on purpose. We have a virtual developer event over the summer and then we have our big hackathon in the fall. So we about every two months we have a major developer event over the next four months. So it's going to be an exciting time for us to build that momentum. You know, we're measuring the results on this on a daily weekly basis as we're starting to see token count, rising, API calls, revenue start to materialize. So just the beginning of an exciting new capability for Glue.

Dan

And since we have kind of a two headed monster here between myself and Dan, a question from Dan. When you add these capabilities and clearly you're getting a lot more pull, demand as you get more awareness in the marketplace, when you look at the sales cycle, when you get a big contract in a given vertical, does the next win come pretty quickly in a tighter sales cycle or are people looking to emulate what other guys are doing and they don't want to be left behind in a certain sense in terms of the implementation of the software and the AI capabilities that you offer.

Pat Gelsinger (Executive Board Chair and Head of Technology)

Yeah, we're definitely seeing that. And that's very much what I was trying to indicate earlier, that we're able to see the sales cycle close, particularly for the next account within a segment. Right. And as we saw with InterVarsity this quarter, you know, it was in the same segment where we also had other activities with campus ministries. We do expect that we'll see very similar within the university segment. When we have reference accounts, we're able to move across that segment quite effectively. So it's land expand and expand, expand the segment, you expand the offerings from Glue as we build more of our capabilities for those customers. And overall, say the sales cycle and having led major software and SaaS model, how rapidly we're able to convert accounts is really pretty impressive so far.

Matthew Harrigan (Equity Analyst)

I rather suspect that sales number is going to be light. You won't refrain from more MA activity, but congratulations, lots of momentum.

OPERATOR

Thanks. Thank you. Thank you. And our next question comes from the line of Jason Cryer from Craig Hallam, your question, please.

Jason Cryer (Equity Analyst)

Great. Thank you, guys. I'll echo my congrats on the quarter. Wanted to maybe start on the M and A front. You know, we went into the year expecting a couple of deals and kind of a defined revenue contribution. You've done a couple of deals? It seems like we're in the vicinity of that revenue contribution. Just curious, we're pretty early in fiscal 26 yet. So what are your thoughts on other MA opportunities that might present themselves over the duration of the year?

Scott Beck (CEO and Co Founder)

Yeah, thanks, Jason. We've got a significant pipeline from an investment standpoint. From an acquisition standpoint, however, we've been really focused on, you know, getting the synergies out of the current transactions that we've done. That's been a big focus of us so far this year and it's going to be a really important driver to get into that ebitda profitability by Q4. You know, that being said, we do have a pretty significant pipeline. We will be super disciplined as a result of that. You know, there may be more this year, but we need no more to be able to hit the numbers that we've got for guidance. And we need no more to be able to get to the EBITDA profitability. We've had the good fortune of being able to best in breed for this ecosystem. Been very picky in terms of the transactions that we've entered into. But a great example is the work that we did last year as a result of Masterworks and the great boost that that's been able to give us in terms of massive synergy across the reach. And you know, as Paul was talking about a little bit earlier, in terms of, you know, the organic growth from 360 and the improvement in the margins from 360, we're seeing the same thing in Masterworks, you know, so one is powering tech, the other one is powering Reach. But you know, we can continue to be very disciplined as the year goes forward, even though we do have a good pipeline.

Jason Cryer (Equity Analyst)

Thanks, Scott. I want to build on that. You're seeing more profitability flow earlier in the model than we anticipated. Nice guide. In terms of improvement for Q1, you're moving forward that profitability for FY26. Maybe just talk about the drivers there. Are you finding you don't need as much OPEX as you thought or is it more a product of the revenue outperformance and getting scale there? Just any way to define it would be great.

Scott Beck (CEO and Co Founder)

Thanks. Great question, Jason. It's a combination of both. So first of all, as we talked about or announced in December, we took a look at our cost structure, removed some redundancies there and that flows through first quarter begins to hit, which helped our guide and the incremental EBITDA improvement. And then secondly, the businesses are scaling really nicely across everything we talked about. Reach, Tech, Masterworks360, all the different businesses. So as those take steps each quarter, you start to see it in first quarter and then each incremental one going forward. As we work towards adjusted EBITDA profitability in fourth quarter, yeah, I jump in and add just a lot of operating discipline as well, which we're excited about. We couldn't be more proud of our capital partners, the organizations that we've made investments in and the organizations that we've acquired. I mean, it's just like the leadership have stayed, they're invigorated. We're bringing synergies to the table in terms of on technology and in terms of cross selling and channel. But you know, the capital partners are doing great. It's super exciting to see the synergy that's coming from that, the enthusiasm that

OPERATOR

continues to be there and we're super grateful for them. That's great to hear. Thank you guys. Thank you. And our next question comes from the line of Ryan Myers from Blake Street Capital Markets. Your question please.

Ryan Myers (Equity Analyst)

Hey guys, thanks for taking my questions today.

Paul Seaman (Chief Financial Officer)

I guess the first question, are there any material cost pressures or risks we should be aware of in fiscal year 26? I don't think anything significant that we haven't talked about before that's not normal. Nothing stands out in terms of cost pressures.

Scott Beck (CEO and Co Founder)

Gotcha. And then I know you don't disclose the actual number, but are you seeing more other revenue base becoming recurring or how is that shaping up? Yeah, I mean as you look at, as you look at this, the work that we're doing with glue360, as you look at the work that we're doing with Masterworks, I mean more and more of that is just, you know, locked in recurring revenue. And I just love what we've been doing in terms of this idea of taking over Work. There's been some really good commentary on that as well. Recently there's been an article that some research published by Julian Beck, a partner at Sequoia. And it was really the title of that is Services the New Software. And what he's pointing out there is a little bit of the older model was sell tools in and let people do work on top of those tools. Whereas at this point what you're able to do is actually pull work out. And when you pull that work out, you pull those tools and you pull that work out and then you're able to be able to sell that work back into the organizations. Well, not only is it much bigger because you got the tools revenue and you've got the work revenue, you got that labor revenue on top of it, but it is incredibly sticky. It's very, very durable, which we like to see. He makes a quote that says a company might spend 10k on QuickBooks and 120k on the accountant to close the books. The next legendary company will just close the books. Right. And that, that's really what we're focused on with a lot of what we're doing, not just at 360, but also at Masterworks where we're forward deploying people into those organizations, we're pulling work out of those organizations, being able to deliver them better results, you know, at a lower cost. Being able to then set ourselves up for really good long term relationships, very recurring in their nature and then really freeing them up to be able to focus more of their energy on going out and chasing and scaling their mission, which is what it's all about. At the end of the day, it's about helping those organizations help people flourish, help communities flourish and be able to enable those organizations to thrive. So, and all of that then becomes more recurring by its very nature. Even if some of that you think of as a service, it is a very deeply embedded long term agreement that delivers services or work back into those organizations.

Ryan Myers (Equity Analyst)

Yeah, that sounds awesome. Thanks for answering my questions. Yep, thank you.

OPERATOR

This does conclude the question and answer session of today's program. I'd like to hand the program back to Scott Beck, co founder, CEO for any further remarks.

Scott Beck (CEO and Co Founder)

Yeah, thanks a lot. You know, let me start by saying I couldn't be more excited by where we're at today. You know, we've been on a long journey here. We've spent more than a decade building the foundation for this business, investing in the platform, in the trusted relationships and in the mission that continues to guide our work. And today I believe that glue is better positioned than ever as the leading technology platform for this ecosystem and as the leader in applied AI for this ecosystem. And all of this is pointed toward being able to use technology as a force for good. Our aim has always been that. And you know, it's just we've made tremendous progress toward that. Also super thankful. You know, I just gotta say we're super thankful for the organizations that trust us with that. You know, we do this wholly and perfectly right and we're getting better every day. But, you know, they trust us with it, they journey with us on it, and we're super grateful for that. Also thankful for the team, for our capital partners. I talked about them earlier, as well as the investors. You know, we've got a lot of investors that got us to this point and new investors that are on the journey. But, you know, with all of this, our goal remains really clear. To build a large, profitable, mission driven business that serves those who served. And we're committed to doing that with discipline, transparency and a focus on long term value creation for our shareholders, but also for the customers that we serve. Personally, I thank God for the opportunity to be able to serve this ecosystem, to best ensure that the organizations can thrive and so that they can go into their communities, they can work with the people and help them flourish to become all that they're born to be. Thank you all for taking time today to listen to our call. As always, we remain available to answer questions. Feel free to reach out at any time with that operator. That concludes our time.

OPERATOR

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.