Franklin Covey FY Conference Summary Company Overview - **Company Name**: Franklin Covey (NYSE: FC) - **Business Model**: Transitioned from paper planners to a subscription-based model focused on leadership development and organizational performance improvement [1][2][3] Core Business Areas 1. **Leadership Development**: Partnering with organizations to enhance leadership skills at all levels [3][4] 2. **Interpersonal Effectiveness**: Improving team communication, collaboration, and accountability [3] 3. **Culture and Trust**: Enhancing organizational culture and trust levels [3] 4. **Strategy Execution**: Assisting organizations in aligning and executing their strategies [4] Financial Performance - **Revenue**: Reported $267 million in revenue, with $225 million from subscriptions and services [5][6] - **Gross Margin**: Approximately 82-83% overall, with near 100% margin on subscription revenue and about 65% on services [6] - **Adjusted EBITDA**: $29 million, down from $56 million the previous year [19] - **Free Cash Flow**: Generated about $250 million over the last 10 years, with 80-83% used for share buybacks [21] Strategic Changes - **Sales Transformation**: Invested $16 million to restructure the salesforce into dedicated hunters and farmers to improve account management and new client acquisition [17][19] - **Market Challenges**: Faced revenue decline due to external factors like DOGE and internal transitions, leading to a flattening of subscription growth [18][19] - **Future Expectations**: Anticipated growth in invoiced amounts and deferred revenue, expecting a return to higher revenue growth rates in fiscal 2027 [20][27] Subscription Model - **All Access Pass**: Subscription model sold on a per-head basis, with a one-year minimum commitment [4] - **Service Attach Rate**: For every dollar of subscription revenue, approximately $0.50 comes from professional services [5][40] - **Retention Rates**: Education division has an 85% retention rate, while enterprise client retention historically above 90% [50][51] Investment in Content and Technology - **Annual Investment**: Approximately 9-10% of prior year's revenue invested in content and technology development [4][44] - **New Solutions**: Recently launched solutions focused on AI leadership and cultural adaptation to AI [46][48] Market Position and Client Base - **Client Examples**: Notable clients include Marriott, which utilizes Franklin Covey's subscription for improving guest satisfaction [9][10] - **Education Market**: The Leader in Me program is used in about 8,000 schools, focusing on personal leadership skills for students [11][12] Conclusion - **Outlook**: The company is optimistic about future growth driven by recent strategic changes and investments in content and technology, with expectations for improved financial performance in the coming years [20][27]