Franklin Covey(US:FC)2021-07-01 11:06Financial 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]