Financial Data and Key Metrics Changes - Revenue growth for Q3 2022 was strong, increasing by 13%, and 19% when excluding the impact of COVID-related lockdowns in China and Japan [7][18] - Subscription and subscription services revenue grew 31% in Q3 2022, with All Access Pass revenue reaching $136.2 million, a growth of 32% [8][39] - Adjusted EBITDA increased by 27% to $10.9 million for the quarter, with year-to-date adjusted EBITDA growth of 66% [11][15] Business Line Data and Key Metrics Changes - North America Enterprise operations saw revenue growth of 20% in Q3, with subscription services revenue growing 27% [19][20] - Education business revenue grew 21% in Q3 and 33% year-to-date, with subscription services revenue growing 28% [21][22] - International operations were impacted by COVID, with revenue in China and Japan declining 46% in Q3, but showing signs of recovery [23][24] Market Data and Key Metrics Changes - Deferred revenue increased by 21% to $116.5 million, indicating strong future revenue visibility [9][40] - The percentage of multiyear contracts for All Access Pass increased to 42%, with 58% of total subscription revenue coming from these contracts [9][40] Company Strategy and Development Direction - The company is focused on expanding its presence in large, fragmented markets, including Enterprise learning and Education, which are expected to grow significantly [27][30] - The strength of the subscription model is a key driver for growth, providing predictability and durability in revenue [37][39] - Investments in technology and sales force are ongoing to support growth, with plans to increase client partners from 30 to 40 in fiscal 2023 [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential economic downturns, citing the enduring nature of the problems they help clients solve [76][78] - The company expects to increase revenue growth guidance to the low teens for fiscal 2023 and beyond, driven by strong subscription growth [13][61] - Adjusted EBITDA guidance for fiscal 2022 has been raised to between $40 million and $41.5 million, reflecting strong performance [15][57] Other Important Information - The company returned $20.3 million to shareholders through share repurchases, ending the quarter with $67.1 million in liquidity [12][26] - The company is actively exploring acquisition opportunities to enhance capabilities and expand its service offerings [71][73] Q&A Session Summary Question: Can you elaborate on client partner hirings and the shift from net 30 to net 40? - Management confirmed that the support staff is in place to support the increase to net 40 client partners in fiscal 2023, with ambitions to go beyond that in the following years [64][67] Question: What is the status of All Access Pass implementation in China and Japan? - Significant progress has been made in Japan, with 45% of their business being All Access Pass related, while China is also seeing growth despite recent downturns due to COVID restrictions [68][69] Question: Can you provide an update on the acquisition landscape? - The company is focused on acquiring capabilities and content that complement their existing offerings, with ongoing discussions about potential targets [70][72] Question: How is the company preparing for potential macroeconomic challenges? - Management expressed confidence in their preparedness, highlighting the importance of their subscription model and strong cash flow as key advantages during economic uncertainty [76][80]

Financial Performance - Consolidated sales for Q2 fiscal 2022 increased 18% to $56.6 million, up from $48.2 million in Q2 fiscal 2021[66] - All Access Pass and related sales grew 29% to $32.0 million in Q2 fiscal 2022[66] - International licensee revenues increased 7% year-over-year, reflecting improved economic conditions[67] - Education Division revenues rose 31% due to increased consulting, coaching, and training days[68] - Deferred subscription revenue increased 20% to $70.4 million compared to the previous year[73] - Gross profit for Q2 fiscal 2022 increased 18% to $44.1 million, with a gross margin of 77.9%[74] - Operating income improved 317% to $3.5 million, while net income reached $1.9 million compared to a net loss in the prior year[76] - Cash flows from operating activities increased to $23.2 million for the first two quarters of fiscal 2022[77] Segment Performance - Direct Office segment revenue increased 16% to $41.5 million, driven by strong performance in the U.S. and Canada[79] - International licensee sales for the quarter ended February 28, 2022, increased to $2,588,000, a 6.6% increase from $2,429,000 in the prior year[85] - Gross profit for international licensees rose to $2,304,000, representing a gross margin of 89.0%, up from 86.5% in the previous year[85][86] - Education Division sales for the quarter ended February 28, 2022, grew to $11,066,000, a 30.5% increase from $8,478,000 in the prior year[88] - Direct Offices segment sales for the first two quarters of fiscal 2022 reached $86,621,000, a 19.5% increase from $72,481,000 in the same period last year[95] - International licensee revenues for the first half of fiscal 2022 increased to $5,586,000, a 11.1% increase from $5,026,000 in the prior year[100] - Education Division gross profit for the two quarters ended February 28, 2022, was $14,959,000, with a gross margin of 65.7%, up from 58.4% in the prior year[103] - Adjusted EBITDA for the Education Division improved to $(324,000), a significant improvement from $(858,000) in the prior year[88] - Adjusted EBITDA for the Direct Offices segment increased to $18,686,000, up from $12,827,000 in the prior year, reflecting a strong performance[95] Expenses and Taxation - SG&A expenses for the Direct Offices segment increased to $51,464,000, reflecting higher associate costs and increased commissions due to higher sales[98] - The effective income tax rate for the quarter ended February 28, 2022, was approximately 40%, a significant decrease from 114% in the prior year[93] - SG&A expenses increased due to higher associate costs, including additional commission expenses and increased salaries compared to the prior year[106] - Income tax provision for the two quarters ended February 28, 2022, was $2.5 million on pre-tax income of $8.2 million, resulting in an effective tax rate of 31%[109] Cash Flow and Capital Expenditures - Cash and cash equivalents totaled $61.1 million as of February 28, 2022, with no borrowings on the $15.0 million revolving credit facility[111] - Cash provided by operating activities increased to $23.2 million in the first half of fiscal 2022, compared to $21.9 million in the same period of fiscal 2021[115] - Cash used for investing activities totaled $2.0 million in the first half of fiscal 2022, primarily for purchases of property and equipment[116] - Capital spending for curriculum development is expected to total $5.0 million during fiscal 2022[118] - Net cash used for financing activities totaled $7.4 million, including $3.9 million for principal payments on term loans[119] Interest Rates and Financial Obligations - The effective interest rate on term loans payable and the line of credit facility was 2.4% as of February 28, 2022[134] - A 1% increase in the effective interest rate on term loans would result in an additional $0.1 million of interest expense over the next 12 months[134] - The financing obligation has a fixed interest rate of 7.7%[134] - Interest rate sensitivity is primarily influenced by amounts borrowed on term loans and the revolving line of credit facility[134] - The company has long-term obligations primarily consisting of term loans, a long-term lease agreement, and contingent consideration from acquisitions[134] Market Conditions and Future Outlook - The company anticipates ongoing governmental mandates will adversely impact operations in China and Japan in the upcoming quarters[71] - The market price of the common stock has been volatile and may continue to be affected by factors unrelated to performance[132] - The company has low market capitalization, which may impact stock price due to a lack of analyst coverage and fewer potential investors[132] - Forward-looking statements are based on management's expectations and may differ materially from actual future performance[133] - There have been no material changes from the information previously reported in the Annual Report for the fiscal year ended August 31, 2021[135]

Financial Data and Key Metrics Changes - Subscription and subscription services revenue grew 31% in Q2 and 32% year-to-date, driving overall company revenue growth of 18% in Q2 and 22% year-to-date [6][27] - Deferred revenue, both billed and unbilled, grew 24%, with gross margin reaching 77.9% for the quarter, an increase of 41 basis points year-over-year [7][30] - Adjusted EBITDA for Q2 increased 57% to $8 million and 103% to $18 million year-to-date, with net cash flow from operating activities increasing to $23.2 million [9][38] Business Line Data and Key Metrics Changes - The All Access Pass subscription and subscription services revenue grew 29% to $32 million in Q2 and 28% to $65.2 million year-to-date [26] - The average All Access Pass contract value in the US-Canada business increased from $31,000 in fiscal 2016 to $46,000 [21] - The annual revenue retention rate for All Access Pass has exceeded 90% every quarter since its inception [22] Market Data and Key Metrics Changes - The balance of deferred revenue grew to $70.4 million, a 20% increase compared to the same period last year, with unbilled deferred revenue growing 31% to $49 million [30] - The Education Division's Leader in Me subscription offering is in over 5,000 schools worldwide, achieving greater than 90% revenue retention [41] Company Strategy and Development Direction - The company aims to transition virtually all sales to subscription and subscription services within the next three years, expecting revenue growth to move from high single digits to low double digits and eventually to mid-teens and beyond [43][45] - The strategy includes significant investments in content, technology, and client partner hiring to enhance growth and client engagement [60][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the All Access Pass subscription and subscription services sales, which are expected to drive future revenue recognition from deferred revenue [50] - The company anticipates challenges in China and Japan due to pandemic-related issues but remains optimistic about growth in North America and the Education Division [52][56] Other Important Information - The company has raised its full-year guidance for FY 2022, expecting adjusted EBITDA to be between $38 million and $39 million, reflecting a 38% increase compared to the previous year [48] - The company has a strong liquidity position with $76.1 million in liquidity and no net debt, allowing for continued investments and potential share repurchases [38][95] Q&A Session Summary Question: Update on client partner hiring - Management indicated plans to hire 30 new client partners this year, with a focus on ramping up hiring in Q4 [62][64] Question: Outlook for fiscal years 2023 and 2024 - Management remains confident in achieving adjusted EBITDA targets of $45 million for FY 2023 and $55 million for FY 2024, with updates expected after Q4 results [57][68] Question: Update on Strive rollout - The Strive platform is on track for a full launch at the start of the new fiscal year, following successful pilot testing [73][74] Question: Cash buildup on the balance sheet - Management discussed using excess cash for business growth, acquisitions, and share repurchases, maintaining a focus on strategic investments [93][95] Question: Sustainability of service attach rate to All Access Pass - Management noted that the attach rate is currently in the high-50s and believes there is still room for growth, driven by client needs for higher-level services [84][88]

Greatness Starts Here We transform organizations by building exceptional leaders, teams, and cultures that get results. FranklinCovey* Investor Update Second Quarter Fiscal Year 2022 lanita Anders © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL Forward-Looking Statements/Non-GAAP This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements re based upon management's current expectations and ...

Financial Data and Key Metrics Changes - Total revenue in Q1 2022 grew 27% or $12.9 million to $61.3 million, with a 12-month revenue growth of 26% or $48.9 million to $237.1 million [6][11] - Adjusted EBITDA for Q1 increased to $9.9 million, a rise of $6.2 million or 167% compared to $3.7 million in Q1 FY21 [13] - Gross margin percentage increased 240 basis points to 77.7% from 75.3% in the previous year [12] Business Line Data and Key Metrics Changes - Subscription revenue grew 31% or $6.7 million to $28.4 million in Q1, with a 12-month growth of 22% or $19.1 million to $106.2 million [7] - The Enterprise Division revenue grew 22% or $8.8 million to $48.1 million, driven by strong subscription sales [11] - The Education Division saw a revenue increase of 56% or $4.2 million to $11.7 million in Q1 [21] Market Data and Key Metrics Changes - Revenue in North America for the Enterprise Division grew 22% or $6 million to $33.4 million in Q1 [17] - International direct office revenue grew 24% in Q1 compared to the previous year, despite ongoing pandemic challenges in certain regions [18] - The number of Leader in Me schools increased to 706, up from 560 in the previous year [20] Company Strategy and Development Direction - The company aims to transition its entire business model to be increasingly subscription-based, expecting subscription services to account for approximately 90% of sales in North America over the next three years [30][32] - The focus on expanding the All Access Pass and related subscription services is a key strategic initiative [29] - The company is investing in technology and content to enhance its offerings, including the Strive platform, which aims to improve customer engagement and service delivery [49][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the All Access Pass and related sales, anticipating continued growth in revenue and adjusted EBITDA [53][55] - The company expects to generate adjusted EBITDA between $34 million and $36 million for FY22, reflecting a 25% increase compared to FY21 [53] - Management noted that the pandemic has accelerated certain trends, leading to strong performance in both the Enterprise and Education Divisions [17][50] Other Important Information - The company ended the quarter with $66 million in total liquidity, consisting of $51 million in cash and $15 million in undrawn credit [15] - The balance of deferred subscription revenue grew 19% to $67.8 million, indicating strong future revenue visibility [23] Q&A Session Summary Question: What were the big surprises in Q1 performance? - Management noted that the number of education coaching sessions delivered exceeded expectations, positively impacting margins [61] Question: Why was guidance not updated higher despite strong Q1 results? - Management decided to wait until the end of Q2 to reassess guidance for better visibility into the fourth quarter [64][65] Question: What investments are being made in marketing efforts? - The company plans to add net 30 client partners this year and is undergoing a branding project to enhance market presence [67][69] Question: Update on the Strive platform launch? - The Strive platform is on track, with Phase 2 currently underway, aiming for a full launch later this year [71] Question: What is the growth split between new logos and pass expansion? - New logos contributed significantly to growth, with a 23% increase in new logos in the Enterprise Division [78]

Financial Performance - Consolidated sales for the first quarter of fiscal 2022 increased 27% to $61.3 million compared to $48.3 million in fiscal 2021[57] - All Access Pass and related sales increased 27% to $33.1 million in the first quarter of fiscal 2022[57] - Education Division revenues grew 56% due to increased Leader in Me subscription sales and related services[59] - Gross profit for the first quarter of fiscal 2022 was $47.6 million, with a gross margin improvement to 77.7% from 75.3% in the prior year[64] - Net income for the first quarter of fiscal 2022 was $3.8 million, or $0.27 per diluted share, compared to a net loss of $(0.9) million in the prior year[67] - Adjusted EBITDA for the first quarter increased 167% to $9.9 million compared to $3.7 million in the prior year[67] - Deferred subscription revenue increased 19% to $67.8 million compared to the prior year[63] - Direct Office segment revenue increased 23% to $45.1 million, driven by strong performance in the U.S. and Canada[69] - International licensee revenues increased 15% due to improving economic conditions in many licensee countries[58] Cash Flow and Expenditures - Cash flows from operating activities were strong at $10.2 million for the quarter, with $51.3 million in cash and no borrowings[68] - Cash and cash equivalents as of November 30, 2021, totaled $51.3 million, with no borrowings on the $15 million revolving credit facility[83] - Cash provided by operating activities was $10.2 million, slightly down from $10.9 million in the first quarter of fiscal 2021[86] - Cash used for investing activities was $0.8 million, primarily for property and equipment purchases[87] - The company expects capital expenditures for fiscal 2022 to total approximately $4.8 million, including $5 million for curriculum development[88][89] Education Division Performance - Education Division sales for the quarter ended November 30, 2021, were $11.7 million, a 56% increase from $7.5 million in the same quarter of the previous year[76] - Gross profit for the Education Division increased to $7.86 million, representing a gross margin of 67.2%, up from 53.2% in the prior year[76][78] - SG&A expenses rose to $7.63 million, accounting for 65.2% of sales, compared to 83.6% in the previous year[76][79] - Adjusted EBITDA improved to $235,000, a significant recovery from a loss of $2.29 million in the same quarter last year[76] Tax and Interest Rates - The effective income tax rate for the quarter was 25.5%, with a provision of $1.3 million compared to $0.2 million in the prior year[82] - The effective interest rate on term loans and the line of credit facility was 2.4% as of November 30, 2021[106] - A 1% increase in the effective interest rate on term loans would result in approximately $0.1 million of additional interest expense over the next 12 months[106] - The financing obligation has a fixed interest rate of 7.7%[106] Market and Operational Risks - The market price of the common stock has been volatile, influenced by quarter-to-quarter variations in revenues and earnings[104] - The company faces risks related to competition, consumer acceptance of new products, and potential cybersecurity threats[103] - Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially[105] - The company has long-term obligations primarily consisting of term loans, a long-term lease agreement, and contingent consideration from acquisitions[106] - The company anticipates potential lingering effects from the COVID-19 pandemic on its business operations[101] - The company expects to maintain adequate capital for operations for at least the upcoming 12 months[101] Program Utilization - The Leader in Me program is currently utilized in nearly 3,000 schools across the United States and Canada, indicating strong market penetration[77]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________ Form 10-K __________________ þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED AUGUST 31, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___ TO ___ Franklin Covey Co. (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | |-------------------------- ...

Franklin Covey Co. (NYSE:FC) Q4 2021 Earnings Conference Call November 9, 2021 5:00 PM ET Company Participants Derek Hatch – Corporate Controller Paul Walker – President and Chief Executive Officer Steve Young – Chief Financial Officer and Corporate Secretary Bob Whitman – Chairman and Executive Chair Sean Merrill Covey – President, Education Division Jen Colosimo – President, Enterprise Division Conference Call Participants Andrew Nicholas – William Blair Alex Paris – Barrington Research Marco Rodriguez – ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2021 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file no. 1-11107 FRANKLIN COVEY CO. (Exact name of registrant as specified in its charter) 2200 West Parkway Boulevard 8411 ...

Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $58.7 million, a 58% increase compared to $37.1 million in Q3 2020, and higher than the $56 million in Q3 2019 [10][11] - Gross margin percentage increased by 587 basis points to 78.2% compared to 72.3% in Q3 2020 [10][16] - Adjusted EBITDA rose to $8.6 million, an increase of $12.2 million from a loss of $3.6 million in Q3 2020 [18][42] - Net cash from operating activities increased 65% to $30.9 million compared to $18.7 million in the same period last year [21][45] - The company ended the quarter with $51 million in liquidity, up from $37 million at the start of the pandemic [22][46] Business Line Data and Key Metrics Changes - All Access Pass subscription sales increased 17% to $19.2 million compared to $16.4 million in Q3 2020 [12][25] - Total subscription and subscription services sales grew 43% to $29.7 million compared to $20.8 million in Q3 2020 [13] - Deferred subscription revenue grew 26% to $55.3 million, up from $43.9 million in Q3 2020 [14] - Education division revenue grew 44.8% compared to Q3 2020, with a gross margin improvement from 57.3% to 68.7% [38][39] Market Data and Key Metrics Changes - International sales were down only 13% compared to Q3 2019, showing recovery from pandemic impacts [34] - The number of Leader in Me schools increased to 1,921, up from 1,681 in the same period last year [36] Company Strategy and Development Direction - The company aims for subscription and subscription services to account for the majority of sales within three to four years [58][61] - The focus is on expanding All Access Pass subscriptions in both North America and international markets, with expectations of significant growth in these areas [62][64] - Recent acquisitions, such as Strive, are expected to enhance the company's technology platform and client engagement capabilities [75][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of All Access Pass subscriptions and the overall business model, despite pandemic-related challenges [58][60] - The adjusted EBITDA guidance for FY 2021 has been raised to between $24.5 million and $26.5 million, reflecting strong performance and expectations for Q4 [79][80] - Future projections for adjusted EBITDA are optimistic, with expectations of approximately $30 million in FY 2022 and $40 million in FY 2023 [84] Other Important Information - The company announced key leadership promotions, with Paul Walker becoming the new CEO effective September 1 [92][96] - The executive team is expected to continue driving growth and strategic initiatives, with a focus on enhancing client partner hiring and expanding market reach [98][99] Q&A Session Summary Question: Guidance and Increased Spending - Inquiry about the nature of increased spending initiatives and whether they are one-time or multi-quarter investments [101] Response: - Management indicated that spending includes investments in client partners and marketing initiatives, with some costs being one-time expenditures [103]