Franklin Covey(US:FC)2022-01-07 01:36Financial 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]