Gloo Holdings, Inc. (GLOO) Q4 2025 Earnings Report, Transcript and Summary

Thank you for standing by. Welcome to the Gloo Holdings Fiscal Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

Thank you, operator. And thank you to all of you for joining our fiscal fourth quarter and full year 2025 earnings conference call. We will be discussing Gloo'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 Seamon. Our Executive Board Chair and Head of Technology, Pat Gelsinger, will also join the Q&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 Gloo. 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 10-K that we expect to file later this week. Our SEC filings are also available on Gloo's Investor Relations website at investors.gloo.com 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 10-K. And now, I'll turn the call over to Scott.

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 towards 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 2 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. Gloo 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 2 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 2 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 2 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 that 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 agentic 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 agentic AI to deliver significantly better outcomes at lower costs, while also creating higher margins for Gloo 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 agentic 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 Gloo 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 a definitive agreement to acquire Enterprisemarketdesk, known as EMD, a leading Workday Service Partner that provides consulting, implementation and operating services to small and midsized organizations and not-for-profits. This is an important addition to our solutions for powering tech. Workday is a leading ERP platform in the faith and flourishing ecosystem and often the preferred solution for many of the Gloo enterprise customers, creating clear synergies between the 2 companies. EMD offers a full suite of services, including Workday deployments, application management services and staff augmentation. This strengthens the Gloo 360 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 agentic AI, thereby delivering better results at lower cost while at the same time creating higher margins for Gloo. 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 Gloo 360 is uniquely able to support. In addition, we successfully completed the acquisition of Westfall Group during the quarter. Westfall is the leading platform for major donor engagement in the faith and flourishing ecosystem. Its addition has expanded our donor development capabilities and strengthened 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 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 3 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 Gloo 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 2 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 Gloo 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 Gloo's 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 increasing mission impact. Separately, we also expanded our partnership with YouVersion 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 our outlook for 2026. Our confidence reflects the strength of the platform that we're building, the flywheel to 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 their 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 that we believe we are delivering to our customers and to our shareholders. Paul, over to you to talk about our numbers in more detail.

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 the sequential growth was driven by Gloo 360 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 in 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 Gloo 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 2 important noncash items to note that significantly reduced net income in the quarter. First, share-based competition was higher than normal due to nonrecurring IPO-related award activity as noted in our Q3 10-Q. 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&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 Gloo AI internally as we become more efficient and using it externally to help customers better serve their constituents. With that, back to you, Scott.

Thanks, Paul. With that, operator, we're ready to take the first question.

[Operator Instructions] And our first question comes from the line of Richard Baldry from ROTH Capital.

You probably don't want to name them, but I'm curious if you can maybe just broadly describe the 2 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?

Yes. Thank you. This is Pat. And we see that these customers are now taking more of the different offerings of Gloo. And that's part of what's making these accounts larger, right, is that they're Masterworks, Westfall Gold, Gloo 360, AI customers. So 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. I mean multimillion customers, and we do see that these are very large customers in the ecosystem. So we do think there is 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, trust and deep, enduring relationships with them across the increasing breadth of the portfolio of our offerings.

Then maybe you addressed it a little bit, but can you talk about sort of the funnel for $1 million-plus deals, how that's changing now that you're a public entity with sort of greater visibility, how that's changed as you've rapidly scaled the portfolio and your revenues? Sort of is that pipeline like sort of picking up because of the capabilities you have now?

Yes. I'll say there's probably 3 aspects to the pipeline to just highlight. So one is, it is just getting bigger, right? 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. And like we saw this quarter, we closed our first major multi-offering university, and we expect that we'll have many other universities that will be able to replicate that kind of sales motion, with InterVarsity, one of the reference customers. The campus ministry segment is showing replicability as well. So 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.

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?

Yes. And maybe I'll start and ask Scott to add to this one. The first would be is, I see AI, overall, in the first inning period for the industry writ large. So there's a lot to go. And 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 agentic capabilities. So I'd say this is very early, and we see tremendous opportunity to build on those offerings for the accounts, internally or 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 was 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 agentic applied AI that it's not just addressing how to do things better, but it's also literally turning people and manual processes in the service offerings in the future, this is something we think is an industry trend and what we're uniquely applying to the segment of the market. Scott?

Yes. Thanks, Pat. Yes, Rich, in addition to that, AI is actually driving a lot of demand for Gloo 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 their primary job is not to be a technology company. Their primary job is to go out and do mission, to translate Bibles, to work on campuses to be able to help people and 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 organization, being able to help that move to a whole 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 we also announced this quarter or just this last month, our Gloo AI Studios. And Pat, you can just chime in for finishing up here, but really providing developers infrastructures that can be used beyond Gloo.

Yes. And just to add to that, we just finished Missional AI, a major AI conference for the faith and flourishing industry. And at it, we announced Studio AI (sic) [ AI Studio ], 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 Gloo AI provides.

Maybe last for me. Could you just generally discuss the M&A environment? Sort of curious how it's impacting the faith and flourishing world. It's obviously been valuation is pretty depressed in the open market as people are fearful about the disruptions of generative AI. And sort of if you can walk through a backdrop of that, it would be helpful.

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. As the SaaS tools out there, big 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 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. So 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.

Thanks, Rich.

And our next question comes from the line of Yun Kim from Loop Capital.

All right. Congrats on the quarter, Scott, Paul and Pat, and also on the EMD acquisition announcement. First, maybe, Paul, can answer this, but obviously, Gloo 360 is doing very well. Is scaling that business a key driver behind your margin improvement this year? Or is there other parts of your business that's even bigger margin driver than Gloo 360?

Gloo 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 #1 and #2 together.

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

Yes. Just a few things on EMD to start with. Overall, 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're, as Scott mentioned in his formal remarks, accretive from day 1. 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 M&A. We've now completed both of those. So we're very confident and we raised our guidance as a result financially. We're not giving specific sizes 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. Then we're supplying many of the customers we are 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 that provide value. And finally, building our AI capabilities, as Scott already indicated before, it will only enhance what we can do and use the unique capabilities, both at Workday and the broader capabilities of Gloo AI.

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 installed base or even more around converting certain customer segment of EMD to Gloo 360?

Yes. And it's actually quite a bit both because some of the accounts that were in the Gloo 360 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 were now becoming Gloo customers, and we expect that the land and expand opportunity as a result has 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 that will have a much richer set of capabilities to accelerate Workday deployments into a number of Gloo accounts already. Finally, EMD was servicing customers that weren't even in our pipeline today. So we do see some market expansion opportunity for us. So I'll say, it's yes, yes, and yes, for the synergy opportunities.

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

Yes. We unquestionably see this as building an ecosystem of developers that are aligning with faith and flourishing. Some of the accounts that are 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 Gloo 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 Gloo AI Studio provides. So we're finding increasing resonance for people to say, yes, 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 Gloo 360 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 Gloo.

[Operator Instructions] Our next question comes from the line of Matthew Harrigan from Benchmark.

I'm curious what the reaction right out of the blocks is on Gloo AI Studio in terms of partners who have used it. I mean in February, you saw this rapturous reaction to Seedance in terms of the implications for the entertainment industry, and I imagine that's kind of an overreach comparison. 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?

Super early. And I'm sure in a quarter or 2, when we've been in market for more than just a couple of weeks, we're going to have a much better signal. But the response so far is we're getting mails that people were using other people's platforms and tools, very excited to move their apps over on top of Gloo AI Studio. So we definitely have some early positive anecdotal signals that give us a lot of confidence. We're also coming into a developer season for Gloo, 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 -- every 2 months, we have a major developer event over the next 4 months. So it's going to be an exciting time for us to build that momentum. We're measuring the results of this on a daily, weekly basis as we're starting to see token count rising, API calls, revenues start to materialize. So it's just the beginning of an exciting new capability for Gloo.

And that since we have kind of a 2-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?

Yes. 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, 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 those segments quite effectively. So it's land, expand and expand, expand in the segment, expand the offerings from Gloo as though we build more of our capabilities for those customers. And overall, I'll 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.

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

And our next question comes from the line of Jason Kreyer from Craig-Hallum.

I'll echo my congrats on the quarter. Wanted to maybe start on the M&A front. 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 M&A opportunities that might present themselves over the duration of the year?

Yes. Thanks, Jason. We've got a significant pipeline from an investment standpoint -- from an acquisition standpoint. However, we've been really focused on 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. That being said, we do have a pretty significant pipeline. We will be super disciplined as a result of that. 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 are -- we've had the good fortune of being able to be 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 as Paul was talking about a little bit earlier in terms of the organic growth from 360 and the improvement in the margins from 360, we're seeing the same thing in Masterworks. So one is powering tech. The other one is powering reach. But we can continue to be very disciplined as the year goes forward, even though we do have a good pipeline.

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 FY '26. 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.

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 as it begins to hit, which helped our guide in the incremental EBITDA improvement. And then secondly, the businesses are scaling really nicely across everything we talked about, reach, tech, Masterworks, 360, 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 the fourth quarter.

Yes, I'd 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've -- they're invigorated. We're bringing synergies to the table in terms of on technology and in terms of cross-selling and channel, but the capital partners are doing great. It's super exciting to see the synergy that's coming from that, the enthusiasm that continues to be there, and we're super grateful for them.

And our next question comes from the line of Ryan Meyers from Lake Street Capital Markets.

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.

Got you. And then I know you don't disclose the actual number, but are you seeing more of the revenue base becoming recurring? Or how is that shaping up?

Yes. I mean as you look at the work that we're doing with Gloo 360, as you look at the work that we're doing with Masterworks, I mean, more and more of that is just 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 Julien Bek, 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 organization. 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, right? It's very, very durable, which we like to see. He makes a quote that says, "A company might spend $10,000 on QuickBooks and $120,000 on the accountant to close the books. The next legendary company will just close the books, right?" And that's really what we're focused on with a lot of what we're doing, not just the 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 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.

Thank you. 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 and CEO for any further remarks.

Yes. Thanks a lot. Let me start by saying, I couldn't be more excited by where we're at today. We've been on a long journey here. We spent more than a decade building the foundation for this business, investing in the platform and the trusted relationships in the mission that continues to guide our work. And today, I believe that Gloo 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 it's just we've made tremendous progress toward that. Also super thankful. I just got to say, we're super thankful for the organizations that have -- that trust us with that. We do this wholly and perfectly, right? And we're getting better every day. But 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. We've got a lot of investors that got us to this point and new investors that are on the journey. But 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.

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.