Gloo Holdings (GLOO) Q2 2026 earnings call transcript

Now it's my pleasure to turn the call to the Chief Marketing and Communications Officer, Oliver Rall. Please proceed. Thank you, Operator, and thank you to all of you for joining our fiscal second quarter earnings conference call. We will be discussing Gloo's performance for the second quarter ended July 31st, 2026, as well as providing guidance for our Q3 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&A session. Before we begin, please be reminded that this call will contain forward-looking statements, including statements related to our business, future growth, strategic initiatives, key priorities, and our financial outlook for Q3 and fiscal year 2026. These statements are based on Gloo's current expectations, but are subject to risks and uncertainties relating to future events and or the future financial performance of Gloo. Gloo assumes no obligation to update or revise them, whether as a result of new developments or otherwise. 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 differ materially from our forward-looking statements can be found in today's press release and are disclosed under the caption, We will now turn the caption, risk factors, and elsewhere in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended January 31st, 2026, and in our subsequent quarterly reports on Form 10-Q.

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'll discuss certain non-GAAP financial measures, including adjusted EBITs. We use non-GAAP measures in some of our financial discussions as we believe they provide valuable insights on our operational performance and underlying operating results. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, our GAAP results. 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 will be included in our Form 10-Q to be filed for the quarter ended July 31, 2026.

And now I'll turn the call over to Scott.

Thank you, Oliver, and thank you for joining us today. Q2 was another solid quarter, with revenue increasing 188% year-over-year to $46.6 million. Since becoming a public company, we've been able to improve our financial performance every quarter. We have met or exceeded guidance each time and are raising our full-year revenue guidance once again. Our progress continues to demonstrate that our strategy and our execution is on track. One of the key drivers is our leadership in Applied AI for the faith and flourishing ecosystem. This strengthens every layer of our platform, from trusted AI capabilities like Gloo AI Studio to AI-powered solutions like Gloo 360 to helping customers transform their organizations through agentic workflows. Our approach to applied AI reflects a broader shift in how AI-native companies are creating value.

We are increasingly delivering the work and the outcomes our customers need, rather than simply providing a better tool. As AI models improve, that work becomes faster and more efficient to deliver, creating greater value for our customers and expanding operating margins for Gloo. That makes continued advancement in the frontier models a powerful tailwind to our overall strategy and growth. When the models get better, we get better. We are seeing that in our customer momentum.

Customers are trusting Gloo with more of their technology and growth needs. They're engaging with more solutions across our platform, as well as adopting capabilities that we've added through acquisitions. All of this is translating into strong top-line growth while we continue to operate with cost discipline and make meaningful progress toward adjusted EBITDA profitability. Since becoming a public company, we've improved adjusted EBITDA every quarter and continue to approach breakeven in Q3, and are committed to achieving adjusted EBITDA profitability in Q4. Our full-year guidance more than doubles revenue in 2026 year-over-year while holding operating expenses approximately flat in absolute dollars. To support that growth and profitability trajectory, we completed meaningful cost actions in Q2, building on the actions that we took last year.

We are demonstrating that we can integrate new capabilities, meet significantly greater customer demand, and grow revenue without building a proportionately larger cost base. Behind these results is a large, growing, fragmented, and underserved market. According to Kently Insights, faith-based organizations generated over $265 billion in revenue in 2025. That's up 8.2% from $245 billion in revenue in 2024, roughly double the pace of U. S. GDP growth. At the same time, organizations are under increased pressure to modernize technology, operate more efficiently, strengthen donor development, and scale their missions. Our customer needs align directly with our strategy to power technology and to power reach with applied AI. Powering technology helps organizations modernize their systems, data, and workflows so they can spend more time focusing on their mission.

Power and reach helps organizations strengthen marketing and engagement, expand awareness, and build the donor relationships that fund their missions so that they can increase their impact in the world. Underpinning both is our leadership in applied AI for the faith and flourishing ecosystem. Organizations are choosing us because they want a trusted partner that can deliver better outcomes with the resources they already have. That's exactly where Gloo is positioned to add value. The people and organizations that we serve are amazing. They are changing lives for good and transforming communities in thousands of different ways around the country and around the world. These strategic customer relationships matter. We are closing larger, more strategic relationships that expand both the value that we deliver and the markets that we serve.

We now have more than 30 customers representing over 1 million each in annual contract value. In Q2, we reached another important milestone with our first customer exceeding 10 million in annual contract value. In addition, with the acquisition of Cedarstone, we've added over 250 new mid-market network capability providers or customers who are well positioned for cross-selling. We also expanded further into social services and youth-serving organizations, where our technology engagement donor development capabilities lift the technology burdens and help them scale. There are many people and youth in this country who are really struggling, and these organizations are making an enormous difference in their lives and are better able to serve them in partnership with Gloo. These relationships create significant long-term growth opportunities as customers adopt more of the Gloo platform.

Universities continue to emerge as a strong growth vertical, with over 40 universities in our current client portfolio. Universities face many of the same challenges we see across the broader ecosystem. They have complex technology environments and fragmented data. They have pressure to operate more efficiently, they need to increase enrollment, and they need to strengthen their donor development. Those needs align very well with our platform capabilities. We've added and expanded several university relationships during this quarter, and we have a strong pipeline of additional opportunities ahead. We are not only adding customers, we are also deepening the relationships we already have. In this market, trusted relationships are a non-negotiable. Each capital partner we add to our platform brings its own deep, trusted customer relationships into Gloo.

This creates an increasingly powerful ripple effect within our customers and within the segments. This supports our overall strategy that we call Land, Expand, and Expand. This means once we land with a customer, we not only expand with that specific customer, but we also expand across the segment as well. For example, we already have many of our million-dollar-plus customers adopting solutions from multiple Gloo business units and capital partners. This is an important indicator of the opportunity that lies ahead. AI is another strong tailwind for Gloo. More organizations are turning to us to apply AI in practical ways that advance their mission, grow their revenue, and make their operations more efficient. We're bringing the power of agentic workflows to organizations in areas like donor engagement, help desk automation, project management, and many more.

These are tangible applications of AI that also give customers better insights into their enterprises while reducing repetitive administrative work and allowing them to focus more on their mission-lined outcomes. And importantly, as we increasingly deliver the work itself, we rapidly embrace the AI model improvements to even more efficiently deliver the work. Through our forward-deployed engineering model, we work alongside customers to solve specific operational challenges, and then we turn what works into capabilities that can scale across the ecosystem. On September 8th, the company announced GluCode, a new agentic building capability within the Gloo AI studio that helps developers get more from their tokens by pairing purpose-built agents with the right models for each task. Developers will have the opportunity to use Gloo code at our annual Gloo AI hackathon in October, when we expect hundreds of developers to build new applications for the faith and flourishing ecosystem.

Our acquisition strategy is a core part of building a stronger, more durable company. Since becoming a public company, we've completed five additional acquisitions. Westfall Gold, XRI, EMD or Enterprise Market Desk, our remaining ownership stake in Midwestern Interactive, and Cedarstone. That's with EMD closing in Q2, and Midwestern and Cedarstone, which have closed in Q3. Cedarstone is a good example of the cross-selling opportunities that we discussed earlier, with Masterworks providing a natural channel to bring Cedarstone capabilities to more customers. Each one adds capabilities, expertise, customer relationships, or market access that strengthens the broader Gloo platform.

As we integrate them, we create new growth opportunities and reduce duplication as we integrate their operations. Our acquisition synergies are working. They improve revenue, financials, and expand what we can do for customers while driving synergies across our platform. This is a powerful flywheel that will ultimately drive meaningful profitability for Gloo. So when I look at Q2, I see significant momentum. Our market is massive, growing, and technologically underserved. Our largest relationships are getting bigger and broader. New verticals are opening up. Applied AI is moving into meaningful operational workflows. And the capabilities that we have added across Gloo are increasingly working together as one platform. We still have a lot of work ahead of us, but we believe the direction of the business is clear and strong.

We're building the leading technology platform, including our capital partners and business units, for the faith and flourishing ecosystem, and we're demonstrating that we can grow the platform with increasing operating leverage. We will remain focused on execution through the second half of the year and delivering on our commitment to achieving adjusted EBITDA profitability in Q4.

With that, I'll turn it over to Paul to walk through our financial results in more detail.

Thank you, Scott. Our momentum continued in the second quarter as we exceeded both revenue and adjusted EBITDA guidance, with strong year-over-year growth from both our powering tech and powering REACH businesses. Q2 revenue was $46.6 million, up 188% from the same period last year, and 12% sequentially from Q1. Year-over-year growth was driven by Gloo 360 and Workspace, as well as acquisitions including Masterworks, Westfall, and EMD. As we continue to strengthen our platform with new capabilities we are seeing strong cross momentum across our products and solutions Our leadership in applied AI enables us to deliver essential business outcomes to our customers We are delivering the work rather than just the software tool they have to manage.

In fact, our platform solutions are helping customers reduce the number of software tools they have to license and pay for. This is driving strong revenue growth in platform solutions at $22.9 million in Q2 2026, up 209% from $7.4 million in Q2 of last year. This was driven by Masterworks, Westfall Group, and EMD. Platform revenue totaled $23.6 million in Q2 2026, an increase of 170% from $8.7 million in Q2 of last year. This was driven by Gloo 360, Masterworks, and Workspace. Cost of revenue in the quarter was 64.0% of total revenue, an improvement of 10.8 percentage points from 74.8% in the prior year period.

This significant improvement was driven by increased scale across our businesses, as well as a favorable shift in mix from our acquisitions over the past year. We expect incremental improvement to continue. Adjusted EBITDA improved $3.2 million sequentially to negative $8.3 million. This improvement reflects revenue growth across our businesses, along with cost restructuring actions we completed in the quarter to integrate our acquisitions and streamline our corporate services. Also note that general and administrative expenses in Q2 included an impact from the Cedarstone acquisition, which closed in August. As we previously stated, we do not adjust for these costs in our non-GAAP results. In the quarter, we took a $4.4 million restructuring charge, primarily for severance costs related to the integration of our business lines.

While we will always seek opportunities to improve our cost structure, we believe the business is in a strong position to continue our focus on growth. We are investing in adding salespeople to drive our top line in the coming quarters. In the quarter, we completed a successful follow-on offering, raising $23.7 million of additional capital, net of underwriting fees, commissions, and offering expenses.

As of July 31, 2026, we had $39.3 million of cash and cash equivalents. Last week, we extended the term of our senior secured loan of $13.2 million by one year to April 2028, providing us additional flexibility in 2027. I'd like to now turn to our full year, 2026 and Q3 outlook. We're increasing our full year 2026 revenue outlook by $5 million to $200 million, inclusive of the Cedarstone acquisition. We expect revenue to be $55 million in the third quarter and adjusted EBITDA to narrow to negative $3.5 million, a nearly $5 million improvement over the second quarter. We expect the third quarter to provide a significant step up in our performance as it is the strongest advertising and fundraising season for Masterworks and Westfall Group.

We continue to expect adjusted EBITDA to reach profitability in Q4 2026 as we maintain cost discipline. One other item to note, for Q3, we expect a weighted average share count of approximately 90 million shares.

Hey, Rich. Scott. Yeah, we did make real good progress in the margin for this quarter. As we look forward, we're going to be seeing more leverage as well. in the operating expenses. So you can expect that as we move forward over the next couple of quarters.

Yeah, from visibility standpoint, we do have a very strong pipeline. We've got the ability to have good levels of projections as we're looking out over the next couple quarters, and that is as a result of having strong recurring revenue because we do have a lot of our revenue that is in that recurring and reoccurring category, number one. And then number two, we've got good visibility into the pipeline. So we feel real solid about what we're looking forward to in Q3 and Q4.

Yeah, thanks. And also just finishing up on the last question that you asked, in addition to pipeline, from a revenue standpoint, what we're also seeing is increasing cross-selling across our different capital partners and our different offerings. We'll delve a little bit deeper into that maybe later under some other questions. As far as the M&A pipeline, the pipeline's strong. You know, we've had extremely good past success with the acquisitions that we've done. You've been able to see that in the performance, not only in terms of, you know, them building the base, but also us being able to help them organically grow once they're with us. We're going to be opportunistic in M&A, and as we've always been, we're going to be extremely cash efficient.

Typically, we're 20% to 25% cash, some seller notes of performance, and then maybe 50% stock. So we see that as being continued. As we look into 2027, for sure, you know, we're going to expect that M&A is part of our strategy, as it always has been, and we're excited about what we're seeing.

Thanks.

Like a number of them would have been Masterworks customers for a number of years, and we've been growing those relationships and now cross-selling for more of the portfolio. You know, some have been more recent. You know, 360, as an example, is only a year and a half old as an offering in the marketplace. So those customers are more recent. You know, Westfall Gold would be another example that we've had long customer relationships with them as well as they've been doing business for three decades now. So it really crosses the spectrum of recent to long-term customers. But what you're seeing very systematically is we're able to increase the size of the relationship. And we're doing that by doing more with them in one product area, then being able to cross-sell.

And this quarter, we've formalized our sales compensation programs, so cross-selling across all of our sellers to further incense, and we're seeing good momentum from that cross-selling already. So we do believe there's a lot more to do there. And as Scott said in his formal remarks, we call it land, expand, expand. And we're able to then also move into other customers in similar verticals. And for instance, 40 universities now, and I think it was maybe two quarters, maybe three quarters ago, we talked about our first university win. And now we're having very broad success across that category. So overall, land expand, expand, and seeing that quite consistently now across the portfolio. And now with 30 plus at a million, we're certainly going to be giving periodic updates on the next milestone.

You know, for them, we're looking forward, and several of them are approaching 10 million, so we definitely see that they'll be updates there. So, overall, our sales momentum is strong, and we see that we have many synergies to harvest in the future. I look forward to a continuation of those trends. I'm going to kick it over to Paul, just on the numbers. Great to see the leverage in the model. As we get closer to Q4 pivoting into EBITDA profitability, can you just talk about any aspirations beyond that? Should we be expecting some seasonal dips in profitability, or do you anticipate continuing to drive that positive EBITDA into future quarters? Thanks.

Thanks, Jason. To start out, we expect the third quarter to be the strongest sequential growth in terms of quarter to quarter, and that's driven by Westfall and Masterworks. Seasonally, it's very strong for them in advertising and in fundraising. And then as we think about moving into fourth quarter, that has more moderate growth, given that we have both Christmas and January falling in our fiscal year, which ends January 31st. And that's the seasonality we'd expect to see going forward with the business mix. So that'll carry over into next year. So there will be some up and down quarter to quarter, with third quarter generally being the strongest sequential growth. Also, moving into the – for 2027, as we think about moving beyond adjusted EBITDA, our focus is also getting to pre-cash flow positive in the back half of the year.

So, the combination of momentum and revenue, cost efficiency, being careful with the top and bottom line sets us up for a good 2027.

And just adding a little bit to my earlier comments, clearly, you know, we do see cross-sell as an important aspect of our organic growth and leveraging, and maybe I'll ask Scott when I finish here to talk a little bit about Cedarstone, because part of that acquisition was very much driven, you know, by the cross-sell opportunities that we saw there. We did roll out a formal sales compensation program this quarter, crossing all of the Gloo sellers across all of our businesses. We have a distributed sales force, and now they're being compensated to drive cross-sell, and we're already seeing good momentum from that. So we do see that we're already seeing good introductions and good pipeline creation.

But with the sales incentive now, we're formalizing that, tracking it more aggressively, and seeing good momentum from that. So the bulk of our revenue growth comes from existing customers, but, you know, we're being very focused on continuing to expand the opportunities within those customers and within the verticals, like the university one that we talked about, that we're seeing momentum in. And the acquisitions are clearly giving us additional customers that we're then having the opportunity to cross-sell into.

And maybe, Scott, maybe talk a little bit more about Cedarstone there. Sure, thanks, Pat. As we said before, every capital partner that we add brings capabilities, but they also bring trusted relationships and trusted relationships. You know, Cedarstone specifically, super excited about it. It's a great business with really awesome leaders. It's about 20 years old. They've been big, massive growth opportunity from our standpoint in cross-selling as a result of the core businesses that they're in. You know, first, they do the accounting, right? They actually close the books. And we love this where we actually taking over responsibility to deliver the work Because then as we have improvements in technology improvements in AI improvements in agentics we can deliver that work more effectively give them better results do it with better margins for ourselves And then in addition to the accounting they also doing what we call donor services So they providing donor services and accounting into these organizations And there over 250 new names Okay these are new names that are being served by Cedarstone And I can tell you you know I had the opportunity to personally meet and have conversations with over 20 of Cedarstone's larger customers.

I was amazed at the depth of the relationship, the commitment, the long-term nature of these relationships, and super excited. Almost every one of those is a potential Masterworks customer or Masterworks partner, and likewise, many, many of the Masterworks partners are potential Cedarstone customers. So we're actually seeing that in spades with Cedarstone, and just like to say welcome, Cedarstone, to being part of the Gloo family here.

Yeah, and the answer is yes to the question where we're able to go back into existing customers and be able to have them start to take advantage of studio. We have a defined focus on our capital partners to have them become studio partners as well, and we're using it for our own internal purposes as well. We're measuring every one of the internal users as well as they're building more and more of their applications using Gloo Studio.

As you comment, you know, Gloo Code, exciting new offering, really bringing agentic workflows to the coding process. When you think about quad code, cursor, copilot, codex, each one of those has clearly seen the coding application create significant momentum for the platform. And having just rolled it out yesterday, we're anxious to see the market response, but already we have quite a number of new signups coming on to the platform. And obviously, we find that concurrent with the start of the hacking window for our coming hackathon next month. So clearly, you know, Gloo code being available with the hackathon, we clearly want to drive many of the, I'll call it more retail developers who are, you know, right, individuals coming on to the platform as well.

So Studio covers the full spectrum of our internal, our customers, and the individual user that are aligned. Clearly, part of the Gloo code value proposition is a cost-effective development platform that preserves the customer's coding privacy, a differentiator for us versus many of the broad market offerings. And we do think that will be a very sustainable value proposition for us. And overall, you're going to see us continue to add capabilities to Gloo Studio going forward as we're just going to incrementally keep putting more and more value into the platform. We hope to have many joining for the hackathon as the hacking window is now open, and we're super excited about the partnership with YouVersion, who's come along to be our lead partner for the hackathon.

And that relationship is one that really just continues to gain great value for us, a new version across many of the portfolio offerings. So, look forward to giving you updates next quarter on the adoption of Gloo code, as well as the results of the hackathon.

Yeah, and I wasn't using AI when I was a teenager, but, you know, the opportunity, and this is what we do, and essentially when you think about studio, you know, we're acting like an open router, a guardrails, a coding environment, all rolled into one, and thus we're picking the lowest cost models, often open source models, to give the cost-effective platform, but where appropriate or where the customer would pick a certain model, we reflect that choice or a better model for their use for specific activity. So we are managing as part of the studio offering, I'll say the picking the best model for whatever the particular task would be that the customer, the developer is utilizing.

So in that way, we're able to potentially manage costs on their behalf, still produce margin for us, and deliver superior experiences. And, you know, it's highly automated now, so as new models become available, we're immediately reflecting them into the studio offering, updating pricing for customers as they flow through quite quickly in that regard, And operating as a leading developer platform and studio environment. We're also increasingly then being able to turn work into agents. And for that, Gloo 360, like Helpdesk, is now highly run as an agentic workflow. Our marketing offerings from Midwestern are now agentic workflows, and increasingly we're able to replace work with agents, and as I already said, we're optimizing the cost and operational environments of those agents.

So it's producing great work at increasingly lower costs, which is a key margin driver for us over time. There's been some interesting discussion in The Economist, I think The Telegraph, on some of the sophistication of the LLMs, you know, magisterium, AI, I guess, out of the Vatican, you know, literally, you know, trying to make answers to moral questions more religion-based, you know, versus very reductive and secular. I know that's not a huge priority, and I know it can get kind of Joseph Ratzinger complicated probably if you go into some depth, but they're talking about putting Greek and Latin texts online and everything like that. Is that something you're looking at as well? I mean, you're more evangelically Protestant oriented, but is that kind of an afterthought, or is that something you're really actively engaged in now?

Yeah, maybe a customer example of that, Hello Bible is an example. They were running on open AI, and they've moved over to Gloo now, Gloo Studio, and they are specifically doing a chat service that's evangelical Christian aligned. So, you know, there would be a strike zone to the question that you would have. You know, we're very familiar with Magisteria, and we hope to win their business over time. And really, I'll say any values-oriented user, and we think of them as B2B2C. You know, we don't focus on C as much directly, but we focus on businesses that are focusing on consumers and supporting them. And for instance, the hackathon, quite a few of those applications that will be created as part of the hackathon will become the future Hello Bibles that are doing exactly what you described.

So from our purpose, that very much is strike zone of the kind of developers, applications, and users that we want to be supporting across all of the Gloo customers as well. You know, sometimes those are going to be using for very specific ministry purposes. Sometimes they'll be broadly consumer available, but all of those will be part of the Gloo platform and Gloo studio target audience.

Very good. Thank you. You know, and all of that ties into just the fundamental thought of, you know, one of our core concepts is to shape technology as a force for good. Because that technology is out there, it's being evolved and improved at amazing lightning speed. And how do we keep shaping that so that it can be used for good?

Thank you.

At the same time, as more open source models are becoming available, you're seeing the lowering of that. And it is one of those environments where you've just got to ride the wave. And for us, we're going to keep riding this wave. And every time token prices come down, we're going to benefit. We're going to benefit directly, right, because it's going to be lowering our cost. And in many cases, we'll be reflecting that through our customers as well, which will drive more customers onto the platform, right, and as we scale it. We're definitely seeing that behavior as our token usage continues to rise, and we're monitoring that and running metrics on that quite regularly.

If there's a single day that token usage isn't going up, I'm asking the team what's going on. I mean, we really are building very good effectiveness in managing our studio environment. But, you know, this is something where when you start thinking about these broad agentic workflows, you know, somewhat the sky is the limit. And as I've said separately, we see no end to the demand for tokens going forward. You know, it really is an unlimited capacity. They're way too expensive today. Even as you said, prices have come down. You know, we're still far, far from where we see they need to get to over time. And obviously, as Scott said, tech for good, we're uniquely pursuing many of these use cases that really are so aligned with technology for good, Bible translations, conquering languages, many other places of the world, enabling ministries to take, I call it any dollar that's given to a ministry that isn't going to ministry purposes is a bad dollar.

You know, we see that authentic AI gives us enormous opportunity to give leverage to every one of those customers that are surveying others a more effective voice.

You know, most of them start with one, but almost every customer engagement is presenting the full portfolio. And where is the interest the highest? And that will become the first follow up for it. But in some cases, we've had customers come on to a multi offering relationship from day one. And a couple of the university customers come to mind specifically that way, where we were on day one, bringing them on multiple offerings on the platform. So most end up starting somewhere right and we think that just good management of the relationship but we always presenting the portfolio and finding more and more interest across different offerings So it portends well to the future of accelerating of the cross motion Scott anything you have Yeah, I would say plus one to everything that Pat just said.

And, you know, but as you noted, when we do an acquisition, they already have an installed base. And so, obviously, that installed base already starts with that one. And we're super excited about that because they've got then, you know, long-term, you know, very, very substantive relationships already in place. And then, you know, when we're doing acquisitions, we're also doing a crossover analysis. And we're typically finding, you know, when we do an acquisition that we're going to have 10 or 15 percent crossover analysis, you know, in terms of where we already have multiple value props serving that customer even before the acquisition. So we see it as an opportunity to add in both ways.

It is. It's accelerating in Q3 where we'll have a nice step up sequentially on the revenue side as well as we've got it on the adjusted EBITDA side. And then, like we said, it moderates in the fourth quarter with some of the seasonality.

You know, we've got very strong organic growth. We've, you know, benefited from it all year long, We'll continue to benefit from it. You know, but in addition, you know, you're seeing not only the organic growth, but you're seeing the benefit of being able to do the M&A with new organizations. And then as they come on, they basically help organic growth in two different ways. Number one, we get them into our organic growth motion to be able to help them scale what they're already doing. But the second one is that then that's new offerings for our current customers, which also gives us, you know, a next level of organic growth. So yeah, organic growth continues to be very strong.

It's an important part of what we're doing. And, you know, you'll continue to see that flow through the P&L in terms of, you know, better margin and increased revenue growth.

So, I just, you know, more directly, where is AI having the biggest financial impact for you guys? Is it just helping win customers, increasing customer spend? Is it lowering delivery costs? Or is it just, you know, generally reducing your guys' internal expenses? Just so we kind of encapsulate everything you guys have said. Yeah, we would say probably the biggest impact is accelerating the offerings to customers today.

This would be examples like Masterworks and 360, where it's accelerating. As those efforts turn people into agents, it's lowering costs as sort of the second benefit that we're getting. And then it's increasing the offering value itself as we're able to essentially turn, you know, help desk into an immediate response or being able to fully automate marketing flows for customers. So, you know, finally, it's improving the attractiveness of the product offerings themselves. So I tell you, it's somewhat in that order. But to us, they're actually pretty tied together, right? Because it really is all of them coming together that what AI is enabling for us. So we see it across the board, but driving more customer offerings, right, driven by cost savings and improving the offering itself.

All three of those are largely being done as a result of the AI capabilities that we're increasingly building into the offerings. Over time, you're going to see us just bring more and more of that value to bear. And for it, we meet every week with our leadership team. We're reviewing different AI offerings that are being pursued, driving more accountability toward how we're driving the costs and the benefits of those, getting more disciplined with the sales enablement. You know, for those, we're finding areas like data in particular being an extremely interesting way to get started with customers around AI because most AI projects fail because you don't have good access and good consolidation of data. You know, so that in particular is becoming a great offering for us, you know, starting with customers, with data, right, which is the enablement pathway for almost every AI use case starts with the data.

So it's really across the board of our offerings, and we look forward to updating you more, particularly after the hackathon next month.

Yeah, you know, it clearly is a key element of the offering for us. You know, Midwestern is a great complement because in many cases, people just don't have the talent. And, you know, we have one of the best talent pathways, literally in the industry, much less in the faith and flourishing community. So, you know, having talent is a powerful enabler for us, and we're finding more and more value. So, if anything, that business area is finding more attractiveness to us. We have now added the international component. As we've indicated, Brazil is another area, so we get lower costs, also co-locating with our customers in those locations. And then our 360 offering is entirely based on forward deployed engineering, where we're essentially becoming their CIO and CTO for those organizations, which gives them a skilling level they'd never be able to achieve themselves, which further accelerates their ability to drive their AI transformation.

So I'd say for Midwestern and 360 in particular, those are probably the most powerful areas. But then even areas like Servant, our high-end consulting offering is transformational for customers where literally we're like McKinsey for this ecosystem of being able to guide the transformative process, which today is almost always driven by an AI model of how they can change their business operations in a pretty fundamental way. So those would be some of the examples, but, you know, forward deployed engineering is a key theme across all of those three.

Thank you. Yeah, as we're looking at M&A pipeline, we're evaluating all those different components. We're looking at a number of different things. One, are capabilities.

Are these incremental capabilities that we don't currently have that would be good capabilities to add? Definitely, number one. Number two, we're also looking at the customer base. Where are we at from a customer base standpoint, and is that a customer base that's important to be able to draft in? You'll also find that certain of these organizations have more expertise, let's say, in one of the denominational areas versus another. You know, you may find somebody that's stronger in the Catholic market or stronger in, you know, more of a Southern Baptist market. So we're looking at it really from a number of different perspectives, capabilities, customer base, and then also what are the areas where they've found favor and how do those fit together and create greater synergies and further advance the flywheel that we find with M&A.

Yeah, and maybe if I just add to that, the two examples that we touched on, I think, really clarify your comments nicely, Scott. You know, EMD, right, we saw Workday and many of our customers, so we saw Workday capability, and EMD was a perfect fit for Cedarstone. As we looked at that, we saw a huge synergy potential, particularly with our marketing offerings.

So those two were driven by different reasons, but ones that, again, fit exactly what we said. We're enhancing our platform offerings, and we're driving more synergy in the marketplace.

Thank you, Operator. And thanks, everybody, for joining in today's call. I just want to make a few final comments before we close. First, super pleased with the progress that we're making. Just across the board, the maturity of the organization, the organizations that we're being able to acquire, I'm just super pleased with that progress. And just a reminder, this is such a large, fragmented market. Now, as I said earlier, it remains significantly underserved by technology. You know, our existing customers are growing, and our verticals are continuing to expand. The universities are a great example. You know, now we're up to, you know, 40 that we're serving there. A lot of the expansion is being accelerated by these great capital partners that we've got out there.

We couldn't be more proud of the capital partners in the organizations. We named quite a few today, but there's, you know, 15 more that are just doing a great job. They bring great expertise and trusted relationships. So from a business standpoint, the opportunity in front of us is really significant. But there's another bottom line that matters to us as well, and that's the missional impact that these organizations that we work with are serving and helping every day. These organizations that we serve, they're changing lives every day, and it's really an honor to serve them. I can't say enough about the work that they do. In fact, if you look at it, faith-aligned organizations are estimated to provide about 40% of the vital human services across large U. S. cities.

A few examples of the organizations that we serve. You know, the rescue missions that we serve had served over 10 million meals last year alone. These rescue missions, we serve some of the largest rescue missions in the United States. In addition, those same rescue missions are helping people escape from human trafficking. These are real stories of life change based on the organizations that we serve. The campus ministries that we serve are active on thousands of campuses throughout the United States, and they're reaching hundreds of thousands of students each year, being able to help them. The churches that we're serving are active in their communities as well. You know, it's not well known, but there's over 100,000 churches in the United States that have embedded recovery programs helping people find freedom from addiction, and that's addictions all across the board.

That's why I'm so excited about what's happening here is both of the bottom lines. We have an opportunity to build a powerful, durable economic enterprise that creates great long-term value for our shareholders. And at the same time, we get to strengthen organizations that are transforming lives and making changes in communities every day. And that's ultimately what Gloo's about, is building a strong economic enterprise that helps people flourish and helps these organizations thrive so that they can do more of what they're uniquely called to do.

Thanks for taking time to join us today. May God bless you. May God bless the people that we serve and the organizations that we serve and also the work ahead of us. Thank you for joining us today, and thank you, Operator.