Franklin Covey(US:FC)2021-01-08 03:53Financial Data and Key Metrics Changes - In Q1 2021, revenue was $48.3 million, driven by strong performance in All Access Pass sales, with gross margins increasing by 359 basis points to 75.3% compared to the previous year [5][30][26] - Adjusted EBITDA for the quarter was $3.7 million, exceeding expectations of $2 million to $2.5 million, and net cash provided by operating activities increased by 60% to $10.9 million [5][23][25] - The company ended the quarter with approximately $49 million in liquidity, up from $42 million at the end of the previous fiscal year [5][25] Business Line Data and Key Metrics Changes - All Access Pass subscription sales grew 16% in Q1 to $17 million, with invoiced amounts increasing by 55% [12][27] - The Education Division, accounting for nearly 20% of total sales, saw high retention rates for Leader in Me subscriptions, adding over 300 new schools during the pandemic [9][22] - Add-on services bookings returned to pre-pandemic levels, with actual delivered revenue for these services increasing to $9 million [29][17] Market Data and Key Metrics Changes - International sales improved significantly, with Q1 sales reaching $9.9 million, a 41% increase from the previous quarter [20][19] - Sales in China and Japan showed strong recovery, with sequential sales increasing 70% from the previous quarter [19][20] - The company reported that 87% of clients have shifted to live online delivery of services, reducing susceptibility to future cancellations [18] Company Strategy and Development Direction - The company aims to achieve adjusted EBITDA of $20 million to $22 million in FY 2021, reflecting a 50% increase from the previous year [34][66] - Strategic investments are being made in areas where the company has competitive advantages, particularly in enhancing the All Access Pass offerings [43][48] - The company plans to continue expanding its direct sales force and international licensee network to penetrate local markets more effectively [51][53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the All Access Pass economic engine and its ability to drive future growth [37][38] - The company anticipates continued strong performance in North America and expects international operations to strengthen further [68][70] - Management acknowledged the challenges posed by the pandemic but noted that the business model has proven resilient and valuable to clients [65][66] Other Important Information - The total balance of billed and unbilled deferred revenue increased to $97.4 million, providing significant stability and visibility into future performance [32][33] - The company expects to achieve high single-digit revenue growth annually, targeting approximately $20 million in revenue growth each year [35][73] Q&A Session Summary Question: What were the key drivers of the sequential strength in international sales this quarter? - The main driver was increased stability in China and Japan, where teams have successfully filled the pipelines again as conditions improved [75][77] Question: How does the company expect international sales to perform in the upcoming quarters? - While Q2 is typically the smallest quarter due to holidays, the company expects to see continued sequential improvements year-over-year [77]