Thank you for standing by and welcome to GLUE fiscal second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call to the Chief Marketing and Communications Officer, Oliver Roll. 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 Glue's performance for the second quarter ended July 31st, 2026, as well as providing guidance for our Q3 and fall 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, 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 Blue's current expectations, but are subject to risks and uncertainties relating to future events and or the future financial performance of Blue. Blue 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 to differ materially from our forward-looking statements can be found in today's press release and are disclosed under 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 31, 2026, and in our subsequent quarterly reports on Form 10-Q. Our SEC filings are also available on Blue's Investor Relations website at investors.blue.com and the SEC's website. In addition, during today's call, we'll discuss certain non-GAAP financial measures, including adjusted EBITDAs. 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 and applied AI for the faith and flourishing ecosystem. This strengthens every layer of our platform, from trusted AI capabilities like Glue AI Studio to AI-powered solutions like Glue 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 Glue. 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 Glue 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 Kentley 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. Powering 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 and 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 Glue 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 Cederstone, 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 Glue 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 glue. 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 Glue business units and capital partners. This is an important indicator of the opportunity that lies ahead. AI is another strong tailwind for Glue. 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-aligned 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 GlueCode, a new agentic building capability within the Glue 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 Glue Code at our annual Glue 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 Glue 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 Glue. 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 Glue 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 Glue 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-sell 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 is 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 Glue360, 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, in Q3 Outlook. We are 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 Westphal 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. With that, I'll turn it back to the operator to take your questions.

Thank you. And as a reminder, if you do have a question, simply press star 1 1 to get in the queue and wait for your name to be announced. To remove yourself, press star 1 1 again. Please limit your questions to one and one follow-up please. One moment while we compile the Q&A roster. First question comes from Richard Baldry with Roth Capital. Please proceed.

Thanks. The improvement on the P&L was pretty marked in the quarter with most of it driven by improving gross margin dollars. I guess I'd expected a bit more of that improvement driven by, you know, cost synergies. So looking forward on the improvements, can you maybe talk about how much more cost synergies you still have ahead and maybe how much of the improvement you expect driven by more step ups in gross margin dollars like we saw in the second quarter? Thanks.

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.

Okay. My follow-up would be, when you look into the second half and you're getting more of a recurring revenue base, how much of the outlook do you think is driven by contracts you know, contracts you're assigned, clients to be deployed out of what you might call a backlog of versus how much of it is a go-get that's still to be captured by your sales teams? Sort of a visibility question. Thanks.

Yeah, from a 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 of 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, you know, what we're looking forward to in Q3 and Q4.

If I can squeeze one extra one in. You know, you said before you don't need to do incremental acquisitions for the forecast that you put out there. How do you still feel about sort of the M&A pipeline activities in there, interest levels in there, and maybe if that's more of a 27 thing, you know, how do you feel about the outlook into 27 for M&A? Thanks.

Yeah, thanks. You know, and also just, you know, finishing up on the last question that you asked, you know, in addition to pipeline, what we're, you know, 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. 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 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 or performance, and then maybe 50% stock. So we see that as being continued. As we look into 2027, for sure, 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.

Great. Thanks. Congrats on a great quarter. Thanks.

Our next question comes from Jason Creyer with Craig Hallam. Please proceed.

Great, thank you guys. So look, you're up to 30 customers now that are producing over a million in revenue. By the way, congrats on the first $10 million customer. You just maybe generally talk about the journey that those customers have been on with Glue, maybe just where those relationships started and how you've been successful continuing to expand wallet share over time.

This is Pat. Some of those customers have been customers of different portions of glue for quite a while. 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. Some have been more recent. 360, as an example, is only a year and a half old as an offering in the marketplace. So those customers are more recent. West Fogel 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 incent 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 a 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 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, 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 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 downs quarter to quarter with third quarter generally being the strongest sequential growth. Also moving into 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. All right. Thanks, Paul. Thanks, guys.

One moment for our next question. It comes from Jung Kim with Loop Capital Markets. Please proceed.

All right. Thank you. Congrats on a strong quarter again. Scott, since you mentioned it, if you can talk about the cross-sell motion, maybe more details. Obviously, you have a lot of products and service offerings, so a lot of different entry points for a customer to your platform, but also, obviously, expand once you land. How much of your business today is driven by existing customers versus new customers? And, you know, I think Pat alluded to it a little bit, but is there a specific sales incentive to drive cloud sales? And how is the sales organization structured to drive that cloud sales versus new customer acquisition? Thanks.

Thank you. And just adding a little bit to my earlier comments, clearly 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 cedar stone because part of that acquisition was very much driven by the cross-sell opportunities that we saw there. We did roll out a formal sales compensation program this quarter, crossing all of the glue sellers across all of our businesses. We have a distributed sales force, and now they're being compensated to drive a cross-sell. and many more. We're 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.

You know, as we said before, every capital partner that we add, you know, brings capabilities, but they also bring trusted relationships and trusted, you know, trusted, yeah, 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. First, they do the accounting, right? They actually close the books. And we love this where we're 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're also doing what we call donor services. So they're providing donor services and accounting into these organizations. And there's over 250 new names. These are new names that are being served by Cedarstone. And I can tell you, 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 glue family here.

Okay, great. My second question, congrats on introducing the Glue code today or yesterday. I lose track of days nowadays. So obviously, that's a sign that you Glue AI studios gaining traction out there, continuing success with your hackathon events and whatnot. So if you can just give us an update on the kind of traction that you are seeing with developer community out there on the Glue platform. Are these development efforts coming from established partners, like, you know, including your capital partners, or are you also seeing momentum with smaller startups and individual developers?

Yeah, and the answer is yes to the question where, you know, we're able to go back into existing customers and be able to have them start to take advantage of studios. 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 and we're measuring every one of the internal users as well as they're building more and more of their applications using Glue Studio. As you comment, you know, Glue Code, exciting new offering, really bringing a Gen Tech workflows to the coding process. When you think about Cloud 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 and many more. I'll call it more retail developers who are individuals coming onto 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 Glue 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 Glue 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 has come along to be our lead partner for the hackathon and that relationship is one that's really just continues to gain great value for us and YouVersion across many of the portfolio offerings. So look forward to giving updates next quarter on the adoption of Glue Code as well as the results of the hackathon. Okay, great. Thank you so much.

Our next question comes from the line of Matthew Harrigan with Benchmark Stonex. Please proceed.

Thank you. I'd like to take credit for this, but there's an executive at IBM, I think, who recently said you don't need your HR chatbot to understand quantum mechanics with respect to optimizing the use of models and constraining token costs. I'm sure you're not using Babel very much, but you said that the real advances in LLMs are really helping Your business, I mean, some of what you do really seems to be kind of industrial AI where you can really identify, you know, the ROI is pretty, you know, discreet. But how do you balance, you know, the cost of using those models with the excitement of really being at the cutting edge that I know, you know, Pat especially can relate to since he was probably a teenager?

Yeah, and I wasn't using AI when I was a teenager, but the opportunity, and this is what we do, and essentially when you think about studio, we're acting like an open router. Garb Rails, 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 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 Glue 360. My help desk 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. 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 and I think The Telegraph on some of the sophistication of the LLMs, Magisterium, AI, I guess out of the Vatican, literally trying to make answers to moral questions more Religion based, you know, versus very reductive and secular. You know, I know that's not a huge, huge priority. And I know it can get, you know, kind of, you know, Joseph Ratzinger complicated, probably if you if you go into some depth. But I mean, they're talking about like putting, you know, Greek and Latin texts on 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 Glue now, Glue Studio, and they are specifically doing a chat service that's evangelical Christian aligned. You know, they would be a strike zone to the question that you would have. You know, we're very familiar with Magisterium. We hope to win their business over time. And really, I'll say any values-oriented user, 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, you know, that very much strikes on the kind of developers, applications and users that we want to be supporting across all of the Glue customers as well. 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 Glue platform and Glue Studio target audience.

Great. Hopefully we'll get to your hackathon this year. Thanks.

Very good. Thank you. You know, and all of that ties into just the fundamental thought of 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. Our next question comes from Dan Kernos with Stonex. Please proceed.

Great, thanks. Before I get my question, Scott, that's obviously a good point, given some of the news we've seen about people fleeing Anthropic for some pretty negative use cases. But, Pat, I do want to double down a little bit on Matt's first question. You kind of alluded to this. I mean, we've seen LLM token prices fall by 68% or so since May. and I think people kind of lose sight of the ramifications of that. You guys benefit in multiple ways from that. So maybe just talk through that as well as how you think about kind of widening your competitive vote through the multi-agent strategy. And do you see people or already seeing people increase platform usage as token prices continue to come down and you keep building out those use cases for the community?

Yeah, it's pretty amazing. We're seeing token prices go up and we've seen them come down. Because more sophisticated reasoning models, you've seen those become more expensive. 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 you know 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 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. We really are building very good effectiveness in managing our studio environment. But this is something where when you start thinking about these broad agentic workflows, somewhat the sky is the limit. And as I've said separately, we see no end to the demand for tokens going forward. It really is an unlimited capacity. They're way too expensive today. Even as you said, prices have come down. 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 We see that agentic AI gives us enormous opportunity to give leverage to every one of those customers that are surveying others in more effective ways.

Got it. No, that makes sense. And then I know you guys spent a lot of time talking about the cross-sell motion and really incremental color there. I'm just curious, are we sort of to this scale yet when you guys have new enterprise conversations that were, and I know you just, when you guys do acquisitions, you pick up customers, but say you're picking up somebody who's tangential or just outside the ecosystem in your pipeline or you're looking at now, are you able to now bring them on with a multi-product sales strategy or are we kind of in the one and then land expand expands type phase?

Most of them start with one, but almost every customer engagement is presenting the full portfolio. and, you know, 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, you know, where we were on day one bringing them on multiple offerings on the platforms. So most end up starting somewhere, right? And we think that's just good management of the relationship. But we're 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-sell motion. Scott, anything you'd add?

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.

Got it. And if I could just tie it all together, because I just don't want this to get lost in the wash. I know, Paul, you mentioned that there is clearly some seasonality in DQ3, but I think if I directionally strip that out and adjust for the acquisitions, you can see both from a revenue and profitability perspective. that the growth is accelerating as is the margin power in Q3. I just don't want that to get lost in the noise.

It is 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.

Okay. Well, thanks, guys. And it's nice to see the continued progress. Appreciate all the color.

Thank you. Our next question comes from Ryan Mayers with Lake Street Capital Markets. Please proceed.

Okay, guys. Thanks for taking my questions. Just sort of as a follow-up to the last one, I mean, can you give us what the organic growth was in the second quarter and then how we should think about that the rest of the year?

You know, we've got very strong organic growth. We've 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 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'll continue to see that flow through The P&L in terms of, you know, better margin and increased revenue growth.

Okay, got it. And then obviously a lot of questions today on AI. 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 help desk into an immediate response or being able to fully automate marketing flows for customers. So finally, it's improving the attractiveness of the product offerings themselves. So I'd say 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. We're driving more accountability toward how we're driving the costs and the benefits of those, getting more disciplined with the sales enablement. for those who are 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. So that in particular is becoming a great offering for us, starting with customers with data, 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. Got it.

Thanks for taking my questions.

Thank you. Our next question comes from Tim Wong with Citizens JMP. Please proceed.

Hey, thanks for taking my questions. I wanted to ask about FDEs. You've completed the acquisition of EMD and are acquiring the remaining stake in Midwestern, both of which expands your forward deployed capacity. I'm curious how you think about deployment and implementation as the bottleneck on AI adoption, and how much would you say you're winning because you have FDEs?

Yeah, it clearly is a key element of the offering for us. Midwestern is a great complement because in many cases people just don't have the talent. And we have one of the best talent pathways literally in the industry. much less in the faith and flourishing community. So 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 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 for deployed engineering, is a key theme across all of those three.

Great. And as a follow-up, as you look at your M&A pipeline, I wonder if there's a piece of the full solution that isn't there yet. You spoke to an opportunistic approach, but curious whether that has to do more with the people and the relationships you can bring on board, or if there are customers who maybe stop at one offering and don't go to two or have two offerings and don't go to three if there are reasons or gaps in your product solution that you think you could fit. 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 area of one of the denominational areas versus another. You may find somebody that's stronger in the Catholic market, or stronger in 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, maybe if I just add to that, the two examples that we touched on, I think really clarify your comments nicely, Scott. You know, EMV We saw Workday in many of our customers, so we sought a Workday capability, and EMD was a perfect fit. For Cederstone, 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 synergies in the marketplace.

Thanks so much.

Thank you, ladies and gentlemen. This will conclude our Q&A session. I will pass it back to the CEO, Scott Beck, for closing remarks.

Thank you, operator. And thanks, everybody, for joining in today's call. Yeah, I just want to make a few final comments before we close. First, super pleased with the progress that we're making. Just, you know, across the board, the maturity of the organization, the organizations that we're being able to acquire, just super pleased with that progress. And just a reminder, this is such a large fragmented market. And 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. Now we're up to 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 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. 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 Glue'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.

Thank you, and this will conclude our conference. You may now disconnect.