In This Article:
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Revenue: $69.1 million, up 1% from $68.4 million in the previous year's first quarter.
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Adjusted EBITDA: $7.7 million, or $8.1 million in constant currency, compared to $11 million last year.
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Cash Flows from Operating Activities: $14.1 million, down from $17.4 million last year.
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Free Cash Flow: $11.4 million, compared to $13.7 million last year.
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Education Division Revenue: Grew 11% to $16.5 million.
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Enterprise Division Revenue: Down 2%, primarily due to challenges in Asia.
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Deferred Subscription Revenue: Increased 10% to $95.7 million.
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Stock Repurchases: 146,000 shares purchased at a cost of $6 million.
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Total Liquidity: Approximately $116 million, including $53.3 million in cash.
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Guidance for FY25: Revenue expected between $295 million and $305 million in constant currency; Adjusted EBITDA between $40 million and $44 million.
Release Date: January 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Franklin Covey Co (NYSE:FC) reported a 1% increase in Q1 revenue, reaching $69.1 million, driven by an 11% growth in the Education division.
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The company has successfully transitioned its sales structure to focus on expanding existing business and landing new clients, which is expected to accelerate revenue growth.
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Franklin Covey Co (NYSE:FC) has made significant investments in client expansion and new logo acquisition, which are anticipated to drive consistent double-digit revenue growth.
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The Education division saw a 58% increase in contracted Leader in Me schools, highlighting strong demand and successful district-level sales.
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The company has a robust balance sheet with $116 million in total liquidity, supporting ongoing growth initiatives and stock repurchases.
Negative Points
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Q1 adjusted EBITDA decreased to $7.7 million from $11 million in the previous year, primarily due to growth investments.
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Enterprise division revenue in North America was flat, and international operations faced challenges, particularly in Asia.
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The transition to the new sales model has led to some turnover in the sales team, indicating potential disruptions during the adjustment period.
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The company's guidance for Q2 adjusted EBITDA is significantly below analyst expectations, reflecting continued investment expenses.
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There is a reliance on the successful renewal of key contracts, with some timing-related delays impacting Q1 results.
Q & A Highlights
Q: Can you provide more details on the growth investments and their impact on Q1 and Q2 financials? A: Stephen Young, CFO, explained that Franklin Covey spent just under $3 million on growth investments in Q1 and expects to spend over $4 million in Q2. The total planned investment for the year is $16 million, with the remaining amounts to be evenly distributed in Q3 and Q4.