Franklin Covey(US:FC)2023-11-02 02:55Financial Data and Key Metrics Changes - Total revenue grew to $280.5 million, which is $55 million or 25% higher than the pre-pandemic revenue high of $225.4 million in fiscal 2019 [32] - Adjusted EBITDA increased significantly to $48.1 million, representing a $27.5 million or 133% growth compared to the pre-pandemic high of $20.6 million in fiscal 2019 [47][131] - Subscription and subscription services sales reached $222.8 million, an increase of almost $100 million or 80% compared to the pre-pandemic high of $124.1 million in fiscal 2019 [33] Business Line Data and Key Metrics Changes - The Education business accounted for about 25% of total company revenue, growing 13% for the year but decreasing 2% from the record level achieved in Q4 FY 2022 [1] - The Enterprise Division's revenue for the full year was $205.7 million, representing growth of $69.8 million or 51% since the conversion to a subscription model in 2017 [54] - Education's revenue increased by $7.9 million or 13% to $69.7 million, representing growth of $25.6 million or 58% since 2017 [87] Market Data and Key Metrics Changes - North America accounted for 73% of total Enterprise Division sales, which grew 6% in FY 2023 on top of 19% pandemic-comp accelerated sales growth in FY 2022 [70] - International operations, accounting for approximately 17% of total Enterprise Division revenue, increased by $1.9 million or 6% in the year, primarily driven by improved results in China [72] - Year-over-year retention of Leader in Me schools remained extremely high at nearly 85% for FY 2023 [73] Company Strategy and Development Direction - The company aims to be the partner of choice for clients by addressing significant challenges while maintaining a strong and profitable business model [35] - Investments are being made in new content and technology to penetrate and expand solutions within more organizations and schools globally [7] - The company plans to focus on organic growth opportunities within current client organizations and explore inorganic growth through potential acquisitions [158][151] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future revenue growth due to several factors, including a strong sales force and high retention rates [5][80] - The company expects adjusted EBITDA to increase by 17% in FY 2024, with guidance set between $54.5 million and $58 million [107] - Management noted that while economic conditions could impact expectations, they remain optimistic about financial future [76] Other Important Information - The balance of billed and unbilled deferred revenue grew by 22% or $33 million to $186.4 million, indicating strong future revenue visibility [6][38] - The company returned $35.6 million to shareholders through share repurchases during the year, with a total of $59.4 million over the last two years [81][92] Q&A Session Summary Question: What was the attach rate in Q4? - The attach rate in Q4 was 60%, which is one of the stronger attach quarters [141] Question: What trends are being noticed in sales conversion relative to previous economic conditions? - New client partners added are currently ramping, and their contributions to growth are expected to be more pronounced in the middle and back half of the year [144] Question: How is the company thinking about capital allocation and potential inorganic growth? - The company sees significant opportunities for organic growth within current clients and is exploring interesting inorganic opportunities as it continues to grow [151][158]