Franklin Covey(US:FC)2020-11-08 14:47Financial Data and Key Metrics Changes - Revenue for Q4 2020 was $49.9 million, exceeding expectations, with adjusted EBITDA of $8.9 million compared to an expectation of $4 million, bringing full-year adjusted EBITDA to $14.3 million, surpassing the expected $9.4 million [8][29][70] - Gross margins increased to 77.3%, up 437 basis points from 72.9% in Q4 2019, and SG&A expenses decreased to $28.9 million, down from $34.1 million in the previous year [34][35] Business Line Data and Key Metrics Changes - All Access Pass subscription sales grew 11% in Q4 and 17% for the full fiscal year, with a revenue retention rate exceeding 90% [14][20] - The Education Division, which accounts for approximately 22% of total sales, saw 2,200 existing Leader in Me schools renew their subscriptions, with 320 new schools added during the fiscal year [25][27] Market Data and Key Metrics Changes - North American operations accounted for 70% of total enterprise sales, with All Access Pass and related sales making up approximately 80% of that revenue [9][41] - International operations improved, with sequential sales increasing 70% to $7 million in Q4 compared to $4.1 million in Q3 [24][22] Company Strategy and Development Direction - The company aims for high single-digit revenue growth, targeting adjusted EBITDA of $20 million to $22 million for FY 2021, reflecting a 50% increase from FY 2020 [70][76] - The focus remains on strengthening the All Access Pass subscription model, which has proven resilient during the pandemic, and expanding its market share internationally [44][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and durability of the All Access Pass subscription, noting that it has driven significant revenue growth and improved gross margins [41][43] - The company anticipates continued growth in both North American and international markets, with expectations for strong retention rates in the Education Division despite budget constraints [72][73] Other Important Information - The total balance of billed and unbilled deferred revenue increased to over $100 million, reflecting a growth of 13.7% compared to the previous year [37] - The company ended the fiscal year with approximately $42 million in liquidity, consisting of $27 million in cash and $15 million undrawn under its revolving credit facility [31] Q&A Session Summary Question: Recognition of postponed training engagements - Management indicated that it is challenging to track the exact recognition of postponed engagements but believes that around 70% of those will ultimately be realized over time [79][80] Question: Cost structure and margin sustainability - The majority of cost reductions are expected to be permanent, with some variable costs returning as revenue increases, but overall, a significant portion of the savings will remain [82][83] Question: Transition to online delivery for training - The transition to online delivery has been well-received, with high Net Promoter Scores, and it is anticipated that this model will become a permanent part of the business moving forward [88][90]