Financial Data and Key Metrics Changes - Total revenue for the third quarter was $129 million, down $8.2 million or 6% year-over-year [13] - Adjusted EBITDA was $28 million, down about 12% compared to $31.9 million last year, with an adjusted EBITDA margin of 21.7% compared to 23.3% last year [15] - GAAP net loss was $41.3 million, compared to a GAAP net loss of $23.6 million in the prior year period, primarily due to a non-cash goodwill impairment loss of $20.8 million related to the GK segment [16] - Free cash flow for the quarter was -$23.6 million, compared to a positive $4.1 million in the prior year period [17] Business Line Data and Key Metrics Changes - Revenue for Talent Development Solutions (TDS) was $100.8 million, down 2.1% year-over-year, with around 70% of the decline coming from the B2C learner product [12] - Global Knowledge (GK) revenue was $28.2 million, down approximately $6 million or 17.6% year-over-year, impacted by a shift in customer purchasing preferences and spending reductions from the U.S. government shutdown [13][14] - TDS dollar retention rate (DRR) improved to 99% from 98% year-over-year, while GK accounted for 73% of the revenue decline despite representing only 22% of total revenue [14][9] Market Data and Key Metrics Changes - The public sector business showed signs of recovery post-government shutdown, with DRR related to federal business around 103-104, indicating stabilization [34] - The company is focusing on large enterprise customers who have shown deeper adoption of advanced features, achieving a 115% dollar retention rate in Q3 [7][36] Company Strategy and Development Direction - The company is transforming its strategy to focus on the talent development market, aiming for revenue inflection and growth while maintaining strong profitability and cash flow [5] - A strategic review of the GK segment is underway, with a shift towards a partnership-driven model rather than continued ownership [9][20] - The company is investing in AI capabilities to enhance its platform, aiming to capture opportunities in the evolving skills management market [6][45] Management's Comments on Operating Environment and Future Outlook - Management highlighted the urgency of improving cash flow and the importance of aligning with customer needs for multimodal learning [23][24] - The company is optimistic about future growth, with plans to roll out new branding and a revamped sales model in FY 2027 [29][55] - Management emphasized the importance of AI in redefining content and platform offerings, positioning the company well for future growth [45][46] Other Important Information - The company expects positive free cash flow of between $0 and $5 million for fiscal 2026, with guidance for TDS revenue for the full fiscal year projected between $400 million and $410 million [21][18] - Total gross debt was $578 million at the end of Q3, down slightly from the previous year, while total net debt increased to approximately $500 million [19][20] Q&A Session Summary Question: Timeline for strategic review of GK segment - Management indicated that it is inappropriate to speculate on the exact timing but emphasized the urgency of improving cash flow [23] Question: Margin profile of core TDS and growth potential - Management noted that TDS has strong profitability and will focus on maintaining profitability while investing for growth [25][27] Question: Stability of public sector business post-shutdown - Management reported positive signs of recovery in the public sector business, with healthy performance expected to continue into Q4 [34] Question: Sales cycles and deal momentum in Q4 - Management stated that sales cycles are within normal boundaries and highlighted the positive performance of larger customers [35][36] Question: Approach to investment cadence moving forward - Management plans to continue driving productivity improvements and will shift focus to growth investments as the TDS model proves successful [50]

Financial Data and Key Metrics Changes - Total revenue for the third quarter was $129 million, down $8.2 million or 6% year over year [15] - Adjusted EBITDA was $28 million, down about 12% compared to $31.9 million last year, with an adjusted EBITDA margin of 21.7% compared to 23.3% last year [17] - GAAP net loss was $41.3 million, compared to a GAAP net loss of $23.6 million in the prior year period, primarily due to a non-cash Goodwill Impairment loss of $20.8 million related to GK [18] - Free Cash Flow for the quarter was negative $23.6 million, compared to a positive $4.1 million in the prior year period [19] Business Line Data and Key Metrics Changes - Revenue for Talent Development Solutions (TDS) was $100.8 million, down 2.1% year over year, with around 70% of the decline coming from the B2C learner product [14] - Global Knowledge (GK) revenue was $28.2 million, down approximately $6 million or 17.6% year over year, impacted by a shift in customer purchasing preferences and spending reductions from the U.S. government shutdown [15][16] - TDS's dollar retention rate (DRR) improved to 99% from 98% year over year, while GK accounted for 73% of the revenue decline despite representing only 22% of total revenue [16][10] Market Data and Key Metrics Changes - The enterprise portion of TDS, which represents around 91% of TDS, was down slightly due to customer churn from earlier in the year [12] - The public sector business showed signs of recovery with a DRR of around 103-104, indicating stabilization after the government shutdown [36] Company Strategy and Development Direction - The company is focusing on the talent development market, aiming to reach revenue inflection and return to growth while maintaining strong profitability and cash flow [5] - A strategic review of the GK segment has been initiated, with a shift towards a partnership-driven model rather than continued ownership [10] - The company is investing in AI-driven skills management solutions, anticipating a market shift towards AI-powered skills solutions [7][11] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of skills visibility as a top investment priority for organizations, with over 70% of CHROs citing it as critical [5] - The company is optimistic about its positioning for growth in FY27, with a focus on product innovation and a leaner cost structure [8][9] - Management acknowledged the challenges faced in the GK segment but expressed confidence in the overall transformation and future growth potential [11][22] Other Important Information - The company expects full fiscal 2026 year revenue for TDS to be between $400-$410 million and adjusted EBITDA of between $112-$116 million [22] - GAAP cash, cash equivalents, and restricted cash were $77.5 million at quarter end, with total gross debt at $578 million [20][21] Q&A Session Summary Question: What is the timeline for the strategic review of GK? - Management indicated that it is inappropriate to speculate on the exact timing but emphasized the urgency to improve cash flow for the company overall [24] Question: How does GK's underperformance affect TDS margins? - Management noted that TDS is currently the flagship for growth and profitability, and they are focused on maintaining profitability while investing in growth [26][29] Question: How is the public sector business shaping up post-government shutdown? - Management reported that the public sector business is stabilizing, with positive signs in the federal business and a healthy DRR [36] Question: What is the approach to investment cadence moving forward? - Management stated that they will continue to drive productivity improvements and shift economic benefits into growth investments as they prove their model [52][53]