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]

Greatness Starts Here We transform organizations by building exceptional leaders, teams, and cultures that get results. INVESTOR UPDATE First Quarter Fiscal 2026 This presentation contains forward -looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 . Forward -looking statements are based upon management's current expectations and are subject to various risks and uncertainties including, but not limited to : The ability of the Company to grow revenues; The acceptanc ...

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]

Financial Performance - FY25 Revenue was $267.1 million, within the guidance range of $265M-$275M [14, 16] - FY25 Adjusted EBITDA was $28.8 million, also within the guidance range of $28M-$33M [14, 16] - Q4FY25 Revenue decreased by 15.3% to $71.2 million compared to $84.1 million in Q4FY24 [16, 27] - FY25 Free Cash Flow was $12.1 million, a significant decrease from $48.9 million in FY24 [16] - FY25 Adjusted EBITDA decreased by 48% to $28.8 million compared to $55.3 million in FY24 [16, 27] Segment Performance - Enterprise Division revenue for FY25 was $188.1 million, a 9.6% decrease compared to $208.1 million in FY24 [31, 35] - Education Division revenue for FY25 was $74.6 million, a slight increase of 0.5% compared to $74.2 million in FY24 [31, 37] - Enterprise Division's Q4FY25 revenue decreased by 21.6% to $45.7 million compared to $58.2 million in Q4FY24 [31, 35] - Education Division's Q4FY25 revenue remained relatively flat at $24.4 million compared to $24.4 million in Q4FY24 [31, 37] Deferred Revenue - Q4FY25 Deferred Subscription Revenue Balance was $111.7 million, compared to $107.9 million in Q4FY24 [16]

Financial Performance - Q3 FY25 - Revenue for Q3 FY25 was $67.1 million, within the guided range of $67 million to $71 million[9] - Adjusted EBITDA for Q3 FY25 was $7.3 million, beating the constant currency guidance by $0.3 million[9] - Q3 FY25 Adjusted EBITDA was $7.3 million, a decrease of 47.5% compared to $13.9 million in Q3 FY24[15, 27] - Q3 FY25 revenue was $67.1 million, a decrease of 8.5% compared to $73.4 million in Q3 FY24[15, 27] Financial Performance - YTD Q3 FY25 - Revenue for YTD Q3 FY25 was $195.8 million, a decrease of 3.6% compared to $203.1 million in YTD Q3 FY24[15, 27] - Adjusted EBITDA for YTD Q3 FY25 was $17.0 million, a decrease of 47.3% compared to $32.3 million in YTD Q3 FY24[15, 27] - YTD Q3 FY25 Free Cash Flows were $10.6 million, compared to $30.6 million in Q3 FY24 YTD[15] Guidance Update for FY25 - Updated revenue guidance for FY25 is $265 million to $275 million, a decrease of $10 million from the previous guidance[9] - EBITDA guidance for FY25 is $28 million to $33 million, a decrease of $2 million at the low end from the previous guidance[9] Enterprise Division - North America - Billed Deferred subscription Revenue Balance was $45.0 million, compared to $47.2 million in Q3 FY24[16] - Subscription Revenue was $20.9 million, compared to $22.0 million in Q3 FY24[16] - Revenue was $37.1 million, compared to $40.6 million in Q3 FY24[16] - Unbilled Deferred Revenue Balance was $56.4 million, compared to $64.4 million in Q3 FY24[16] - Subscription & Subscription Services Revenue was $33.7 million, compared to $35.9 million in Q3 FY24[16] Education Division - Invoiced Amounts were $15.0 million, compared to $19.0 million in Q3 FY24[23] - Subscription & Subscription Service Revenue was $17.8 million, compared to $18.2 million in Q3 FY24[23] - Revenue was $18.6 million, compared to $20.2 million in Q3 FY24[23] - Deferred Subscription Revenue Balance was $34.1 million, compared to $28.2 million in Q3 FY24[23] - Subscription revenue increased 13% and Deferred Revenue balance grew 21% in Q3[14]

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $59.6 million, slightly below the $61.3 million achieved in Q2 last year, primarily due to government-related cancellations [44] - Adjusted EBITDA for the quarter was $2.1 million, landing at the top end of expectations despite government disruptions [44] - Revenue guidance for the year has been adjusted to between $275 and $285 million, reflecting a decrease of $7 million or 2.5% lower than last year [21][53] Business Line Data and Key Metrics Changes - The education business saw a revenue growth of 3% in the second quarter and is up 7% year-to-date, with invoiced amounts up 13% [40] - Advanced bookings for new services in the U.S. and Canada, excluding government, increased by 5% year-to-date compared to the same period last year [48] - The percentage of subscription revenue under multiyear contracts was 61%, indicating strong client retention [26][46] Market Data and Key Metrics Changes - Approximately 6% or $17 million of total business is tied to governmental entities, with $5 million in government revenue already canceled or postponed [13] - International revenues are expected to decline by as much as $4 million due to government actions and trade tensions, particularly affecting operations in China [14][15] - The company anticipates a potential $3 million impact on education revenue due to uncertainties surrounding the Department of Education [16][18] Company Strategy and Development Direction - The company is focused on a go-to-market transformation aimed at accelerating revenue growth from single-digit to double-digit growth in the coming years [19] - Investments of $16 million are being made to support this transformation, with a commitment to not cut back on these growth investments despite current challenges [22][82] - The strategic strength of the business model is evident, with a focus on helping organizations address mission-critical challenges [24] Management's Comments on Operating Environment and Future Outlook - The external economic environment is described as turbulent and uncertain, impacting revenue growth but not the overall business model [8][11] - Management remains confident in the actions taken to accelerate future revenue growth and expects significant growth in adjusted EBITDA and cash flow [9][21] - The company is monitoring potential impacts from government actions and is taking steps to reduce costs in affected areas [22][70] Other Important Information - The company has over $100 million in liquidity and has invested approximately $105 million to repurchase shares since 2022 [51] - The guidance for the third quarter is set at revenue between $67 and $71 million, with adjusted EBITDA between $4 million and $6.5 million [53] Q&A Session Summary Question: Impact of government actions on revenue - Management confirmed that the $17 million in government-related revenue is primarily from federal agencies, with expectations that this revenue will not be recovered this year [60][69] Question: Education revenue and funding sources - The company clarified that it does not sell directly to the Department of Education, and funding is expected to continue flowing from state governments despite potential federal cuts [74][76] Question: Guidance and future expectations - Management indicated that the current guidance reflects a one-year step back, with expectations to return to original EBITDA projections in the following year [85][89] Question: New logo sales and project starts - Management reported strong new logo sales and confirmed that project starts have not been delayed despite external uncertainties [108][113] Question: Long-term growth and market strategy - The company sees significant potential for growth in both new client acquisition and expansion within existing accounts, with a focus on maintaining a balance between these two strategies [132][134]