Core Insights - The company anticipates strong growth in invoiced sales, particularly in Enterprise North America, which is expected to drive overall growth for fiscal year 2026 [4][10][25] - The growth in invoiced amounts is expected to translate into significant increases in reported revenue, adjusted EBITDA, and free cash flow in fiscal year 2027 [3][10][48] Financial Performance - Total first quarter reported revenue was $64 million, down 7% from the prior year, primarily due to an 8% decline in the Enterprise division and a 2% decrease in the Education division [27][32] - Invoiced amounts in the Enterprise North America segment grew 7% to $34.9 million, with a notable 13% growth when excluding government contracts [11][32] - The company reported a 5% year-over-year increase in consolidated deferred revenue balance to $100.2 million, which will be recognized as revenue in upcoming quarters [28] Growth Drivers - The growth in invoiced amounts is driven by a strong pipeline and significant year-over-year increases in advanced bookings of services [2][12] - New logo subscription invoiced amounts grew 25% year-over-year, indicating strong demand for the company's solutions [12][72] - The company has seen a consistent client retention rate and an increase in the percentage of revenue contracted for multiyear periods to 61% [12][38] Education Division Insights - The Education Division is expected to achieve strong growth in both invoiced and reported sales in fiscal year 2026, despite previous uncertainties regarding school funding [5][44] - Invoiced amounts in the Education Division for the first quarter were $6.6 million, a decline of $5.6 million from the prior year, primarily due to the absence of a large statewide deal that impacted last year's results [41][43] - The company expects a pattern of invoiced amounts and recognized revenue similar to prior years, with significant growth anticipated in the second half of the fiscal year [9][44] International Operations - International invoiced amounts and reported revenue are expected to grow modestly, with first quarter revenue slightly down due to challenges in China [9][39] - Excluding China, revenue from the International segment increased by 4%, indicating resilience in other markets [39] Strategic Initiatives - The company is focused on being the partner of choice for organizations seeking to achieve breakthrough results, emphasizing the importance of human capabilities alongside AI integration [14][15] - Recent investments in go-to-market strategies have begun to yield positive results, with a restructured sales team focused on landing new strategic clients and expanding existing relationships [22][76] - The company has launched new AI-driven solutions to assist clients in adopting AI effectively, enhancing their operational efficiency [16][18]

This is my third time covering Franklin Covey Co. ( FC ). I previously covered the company in 2023 and again last summer, and on both occasions I took a bullish view. The most recentI focus on producing objective, data-driven research, mostly about small- to mid-cap companies, as these tend to be overlooked by many investors. From time to time, though, I also look at large-cap names, just to give a fuller sense of the broader equity markets.Analyst’s Disclosure:I/we have a beneficial long position in the sh ...

Financial Performance - Consolidated revenue for the quarter ended November 30, 2025, was $64.0 million, a decrease of 7.5% from $69.1 million in the same quarter of fiscal 2025[62] - Gross profit for the first quarter of fiscal 2026 was $48.4 million, down from $52.7 million in the prior year, resulting in a gross margin of 75.5% compared to 76.3%[62] - Enterprise Division revenues for the first quarter of fiscal 2026 totaled $47.5 million, a decline of 7.9% from $51.6 million in the first quarter of fiscal 2025[63] - Education Division revenues were $16.1 million, down from $16.5 million in the prior year, primarily due to reduced classroom and training materials sales[63] - Consolidated subscription and subscription services revenues for the first quarter of fiscal 2026 were $52.0 million, compared to $55.8 million in the prior year[63] - Net loss for the first quarter of fiscal 2026 was $(3.3) million, or $(0.27) per share, compared to net income of $1.2 million, or $0.09 per diluted share, in the first quarter of fiscal 2025[66] - Adjusted EBITDA for the first quarter of fiscal 2026 totaled $3.7 million, down from $7.7 million in the prior year[66] Segment Performance - North America segment revenue was $36.3 million, a decrease of 9.7% from $40.1 million in the prior year, impacted by lower invoiced amounts and canceled government contracts[65] - International segment revenue was $11.2 million, a decrease of 2.1% from $11.4 million in the prior year, primarily due to lower revenue from the China office[69] - Education Division revenue for Q1 FY2026 decreased by 2% to $16.1 million compared to $16.5 million in Q1 FY2025, primarily due to lower sales of classroom and training materials[72] - Gross profit for the Education Division declined to $9.9 million, with a gross margin of 61.6%, down from 63.2% in the prior year, attributed to increased fixed costs and lower revenue[73] Expenses and Cash Flow - SG&A expenses increased to $10.8 million, representing 67.4% of sales, due to higher associate expenses and changes in compensation plans[74] - Cash provided by operating activities was $0.1 million, a significant decrease from $14.1 million in the prior year, mainly due to unfavorable changes in working capital[84] - Cash used for investing activities totaled $3.8 million, with $2.0 million allocated to the development of offerings and $1.7 million for property and equipment[86][88] Liquidity and Capital Expenditures - The company had $80 million in available liquidity as of November 30, 2025, consisting of $17.5 million in cash and a $62.5 million undrawn revolving credit facility[80] - The company anticipates capital spending for curriculum development to be between $8 million and $10 million in FY2026[87] Tax and Interest Rates - The effective tax benefit rate for Q1 FY2026 was 9.4%, significantly lower than the 25.6% rate in Q1 FY2025, due to a decrease in non-deductible executive compensation[78] - The effective interest rate on the 2023 Credit Agreement was 5.5% as of November 30, 2025[105] - There were no outstanding borrowings under the 2023 Credit Agreement as of November 30, 2025, indicating no material impact from interest rate changes on interest expense and cash flows[105] - The company has fixed long-term obligations primarily from the purchase of Strive Talent, Inc., which influences overall interest rate sensitivity[105] - The company did not utilize any foreign currency or interest rate derivative instruments during the quarter ended November 30, 2025[106] Future Outlook - Forward-looking statements include expectations about future revenue levels and financial results, particularly for fiscal 2026[101] - Anticipated increases in add-on subscription services revenue and delivered training and coaching days are part of the company's future outlook[101] - The company is focused on hiring sales professionals to support its growth strategy[101] - The company acknowledges risks such as cybersecurity, macroeconomic factors, and competition that may affect future performance[102] - The market price of the company's common stock has been volatile, influenced by quarter-to-quarter variations in revenues and earnings[103] - The company does not undertake any responsibility to update forward-looking statements except as required by law[104]

Core Viewpoint - Firm Capital Mortgage Investment Corporation has declared a special year-end dividend of $0.084 per common share, in addition to the regular December 2025 dividend, totaling $0.162 per common share, payable on January 15, 2026 [1][2]. Dividend Information - The total dividends paid to common shareholders in 2025, including the December and special year-end dividends, amounted to $1.02 per common share, reflecting a slight increase from the previous year [3]. - Monthly cash dividends of $0.078 per common share have been declared, with payment dates set for January 30, February 27, and March 31, 2026 [4]. Company Overview - Firm Capital Mortgage Investment Corporation is an investor in mortgages through Firm Capital Corporation, a non-bank lender providing various financing options, including residential and commercial real estate financing [5]. - The Corporation's investment objective is to preserve shareholders' equity while providing a stable stream of monthly dividends from investments in niche markets underserved by large lending institutions [5].

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Core Insights - The company reported a 7% year-over-year growth in invoiced amounts for Enterprise North America in Q1, with a 13% growth when excluding government business disruptions [1][6] - Management anticipates strong growth in invoiced amounts for fiscal 2026, particularly in Enterprise North America, while reported revenue growth is expected to be more modest due to revenue recognition timing [2][3] - Fiscal 2026 is viewed as a transition year, with expectations for a rebound in invoiced amounts and a return to growth following a challenging fiscal 2025 [3][6] Financial Performance - Q1 revenue was reported at $64.0 million, down 7% year-over-year, with adjusted EBITDA at $3.7 million, a decrease from $7.7 million in the prior year [5][12] - Consolidated deferred revenue increased by 5% to $100.2 million, indicating future revenue recognition potential [5][13] - Free cash flow was negative $3.7 million, compared to positive $11.4 million in the previous year, but management expects improvement in the latter half of the year [15] Strategic Initiatives - The company is focusing on large multi-year client contracts and has reorganized its sales and client success teams to enhance market engagement [4][8] - New AI offerings, including an AI Sales Coach and other solutions aimed at improving leadership and productivity, are being integrated into the company's product suite [9][10] - Management highlighted significant contract wins, including a $6 million deal with a global agriculture company, which is expected to contribute to future revenue [8] Segment Performance - The Enterprise segment accounted for 74% of Q1 revenue, with invoiced amounts growing 4% to $45.5 million, despite a decline in reported revenue [16] - North America segment revenue was $36.3 million, down from the previous year, attributed to lower recognized services and subscription revenue [17] - International revenue was slightly down, primarily due to challenges in China, but showed growth excluding that market [19] Guidance and Capital Allocation - Management reaffirmed full-year fiscal 2026 guidance, maintaining revenue expectations of $265 million to $275 million and adjusted EBITDA of $28 million to $33 million [21] - The company has $80 million in liquidity, including $17.5 million in cash, and has repurchased approximately 582,000 shares for $10.4 million [22]

Financial Data and Key Metrics Changes - Total first quarter reported revenue was $64 million, down 7% from the prior year, driven by an 8% decline in the enterprise division and a 2% decrease in the education division [28][32] - Adjusted EBITDA was $3.7 million compared to $7.7 million in the previous year, reflecting lower reported revenue and higher SG&A expenses [32] - Cash flows from operating activities were $0.1 million compared to $14.1 million in the previous year, primarily due to timing-related changes in working capital [32] Business Line Data and Key Metrics Changes - The enterprise division generated 74% of the company's overall revenue, with invoiced amounts growing 4% to $45.5 million [33] - North America segment invoiced amounts grew 7% to $34.9 million, and excluding government contracts, it grew 13% [33][34] - Education division revenue was $16.1 million, 2% lower than the prior year, primarily due to decreased material sales [39] Market Data and Key Metrics Changes - International segment revenue was $11.2 million, down slightly from $11.4 million in the prior year, primarily due to challenges in China [38] - Excluding China, international segment revenue increased 4%, and licensee revenue increased 8% compared to the first quarter of fiscal 2025 [38] Company Strategy and Development Direction - The company views fiscal 2026 as a year of execution and return to growth, with expectations for strong growth in invoiced amounts and reported revenue in fiscal 2027 [4][46] - Strategic investments in transforming the enterprise North America go-to-market strategy are gaining traction, with a focus on solution selling and bundling content with services [34][46] - The company aims to be the partner of choice for organizations seeking to achieve breakthrough results, emphasizing the importance of human capabilities alongside AI [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong growth in invoiced amounts, particularly in North America, and expects this momentum to continue [5][26] - The company anticipates that the meaningful growth in invoiced amounts will translate into substantial growth in reported revenue, Adjusted EBITDA, and free cash flow in fiscal 2027 [12][46] - Management acknowledged the impact of macroeconomic conditions and government actions on revenue recognition and deferred revenue [28][32] Other Important Information - The company has a strong liquidity position with $80 million at the end of the first quarter and no drawdowns on its credit facility [41] - The company repurchased approximately 582,000 shares in the open market at a cost of $10.4 million during the first quarter [42] Q&A Session Summary Question: Guidance for the full year and adjusted EBITDA timing - Management reaffirmed guidance for the full year, noting that adjusted EBITDA will be more back-end loaded due to the timing of large education contracts [51][52] Question: Update on North American Enterprise sales force - Management confirmed that invoice growth in Q1 was up 7% in North American Enterprise, with a significant increase in new logo subscription invoiced amounts [57][58] Question: Drivers of growth in new logo sales - Management indicated that growth was driven by a combination of higher attach rates of services and an increase in subscription sales [88][92]

Financial Data and Key Metrics Changes - Total first quarter reported revenue was $64 million, down 7% from the prior year, driven by an 8% decline in the Enterprise Division and a 2% decrease in the Education Division [28][31] - Adjusted EBITDA was $3.7 million compared to $7.7 million in the previous year, reflecting lower reported revenue and higher SG&A expenses [32] - Cash flows from operating activities were $0.1 million compared to $14.1 million in the previous year, primarily due to timing-related changes in working capital [32] Business Line Data and Key Metrics Changes - Enterprise Division invoiced amounts grew 4% to $45.5 million, with North America segment invoiced amounts growing 7% to $34.9 million, and 13% excluding government contracts [33][34] - Education Division revenue was $16.1 million, down 2% from the prior year, primarily due to decreased material sales [38] - Subscription revenue in the Education Division increased 12% to $11.8 million compared to $10.5 million in the prior year [40] Market Data and Key Metrics Changes - International segment revenue was $11.2 million, down slightly from $11.4 million in the prior year, primarily due to challenges in China [37] - Excluding China, revenue from the International segment increased 4%, and licensee revenue increased 8% compared with the first quarter of fiscal 2025 [38] Company Strategy and Development Direction - The company views fiscal 2026 as a year of execution and return to growth, with expectations for strong growth in invoiced amounts and reported revenue in fiscal 2027 [4][46] - Strategic investments in transforming the go-to-market strategy are gaining traction, with a focus on solution selling and bundling content with services [34][19] - The company aims to be the partner of choice for organizations seeking to achieve breakthrough results, emphasizing the importance of human capabilities alongside AI [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong growth in invoiced amounts, particularly in North America, and expects this momentum to continue [5][26] - The company anticipates that the meaningful growth in invoiced amounts will translate into substantial growth in reported revenue, Adjusted EBITDA, and free cash flow in fiscal 2027 [12][46] - Management acknowledged the impact of macroeconomic conditions and government actions on revenue recognition and deferred revenue [28][12] Other Important Information - The company has a strong liquidity position with $80 million available, including $17.5 million in cash and no drawdowns on its credit facility [41] - The company repurchased approximately 582,000 shares in the open market at a cost of $10.4 million during the first quarter [42] Q&A Session Questions and Answers Question: Clarification on guidance and Adjusted EBITDA timing - Management confirmed that the Adjusted EBITDA will be more back-end loaded due to the timing of large Education contracts, which are expected to be recognized in Q3 and Q4 [52][53] Question: Update on North American Enterprise sales force performance - Management confirmed that invoice growth in North American Enterprise was up 7%, with a significant increase in new logo subscription invoiced amounts growing 25% year-over-year [57][91] Question: Drivers of growth in new logo subscription invoiced amounts - Management indicated that the growth was driven by a combination of larger deals and a successful go-to-market transformation, with a focus on strategic clients [98][97]

Financial Data and Key Metrics Changes - Total first quarter reported revenue was $64 million, down 7% from the prior year, driven by an 8% decline in the enterprise division and a 2% decrease in the education division [27] - Adjusted EBITDA was $3.7 million compared to $7.7 million in the previous year, reflecting lower reported revenue and higher SG&A expenses [31] - Cash flows from operating activities were $0.1 million compared to $14.1 million in the previous year, primarily due to timing-related changes in working capital [31] Business Line Data and Key Metrics Changes - The enterprise division generated 74% of the company's overall revenue, with invoiced amounts growing 4% to $45.5 million [32] - Invoiced amounts in North America grew 7% to $34.9 million, and excluding government contracts, it grew 13% [32][33] - The education division's revenue was $16.1 million, 2% lower than the prior year, primarily due to decreased material sales [37] Market Data and Key Metrics Changes - International segment revenue was $11.2 million, down slightly from $11.4 million in the prior year, primarily due to business conditions in China [36] - Excluding China, international segment revenue increased 4%, and licensee revenue increased 8% compared to the first quarter of fiscal 2025 [36] Company Strategy and Development Direction - The company views fiscal 2026 as a year of execution and return to growth, with expectations for significant growth in invoiced amounts and reported revenue in fiscal 2027 [4][42] - Strategic investments in transforming the enterprise North America go-to-market strategy are gaining traction, with a focus on solution selling and bundling content with services [33][21] - The company aims to be the partner of choice for organizations seeking to achieve breakthroughs in performance, emphasizing the importance of human capabilities alongside AI [16][18] Management's Comments on Operating Environment and Future Outlook - Management anticipates strong growth in invoiced amounts in fiscal 2026, particularly in Enterprise North America, with a strong pipeline and significant year-over-year increase in advanced bookings [6][12] - The company expects education to achieve strong growth in both invoiced and reported sales in fiscal 2026, despite the seasonality of revenue recognition [11][39] - Management remains optimistic about the company's ability to deliver sustainable growth, supported by strong client retention and expanding demand for leadership development services [44][45] Other Important Information - The company incurred $3.4 million in restructuring expenses during the first quarter, reflecting efforts to streamline operations [30] - The balance of billed deferred subscription revenue in North America increased 8% to $49.1 million, indicating a solid foundation for future growth [36] Q&A Session Questions and Answers Question: Guidance reaffirmation and adjusted EBITDA timing - Management reaffirmed guidance for the full year, noting that adjusted EBITDA will be more back-end loaded due to the timing of large education contracts [46][47] Question: North American Enterprise sales force performance - The invoiced growth in North American Enterprise was up 7% in Q1, with a significant increase in new logo subscription invoiced amounts growing 25% [49][50] Question: Lifecycle of new logos and attachment rates - The company has seen success in transitioning new logos to client partners, maintaining retention rates and expanding revenue through dedicated focus on customer success [65]