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- **North America Enterprise Momentum**: 7% Q1 growth (13% ex-government) driven by 25% new logo subscriptions and 29% services bookings, positioning FY26 for accelerated FY27 growth.
- **AI-Driven Innovation**: Launch of AI Coach and 'Leading AI Adoption' solutions highlight strategic integration of AI to enhance client execution capabilities.
- **Financial Discipline**: Reaffirmed FY26 guidance with $28M-$33M EBITDA, supported by $3.4M restructuring and 5% deferred revenue growth, despite Q1 EBITDA decline due to macro headwinds.

**【CEO Summary Section】**
- **North America Enterprise Growth**: Q1 invoiced amounts grew 7% YoY, excluding government contracts, driven by a 25% increase in new logo subscription sales. Services booking pace rose 29%, reflecting strategic client partnerships.
- **AI Integration**: Launched AI Coach for 4 Disciplines of Execution and solutions like 'Leading AI Adoption,' embedding AI into core offerings to enhance client outcomes.
- **Client Retention**: 61% of revenue contracted for multiyear periods, with a consistent logo retention rate, underscoring long-term client trust.

**【CFO Financial Commentary】**
- **Reaffirmed Guidance**: Maintained FY26 revenue ($265M-$275M) and adjusted EBITDA ($28M-$33M) targets, with 25%-30% of EBITDA expected in the first half due to delayed education contract launches.
- **Cost Management**: Incurred $3.4M restructuring costs in Q1, supporting EBITDA margin expansion and positioning for FY27 growth.
- **Deferred Revenue**: Consolidated deferred revenue rose 5% YoY to $100.2M, with North America deferred subscription revenue up 8% to $49.1M.

**【Q&A Highlights】**
- **Education Contract Timing**: Large state contracts shifted to Q3/Q4, impacting Q1 invoiced amounts by $3.5M but ensuring cash collection for future periods.
- **AI Strategy Balance**: Combines in-house AI development (e.g., AI Coach) with potential partnerships to enhance solutions without over-reliance on external vendors.
- **Customer Sentiment**: Neutral macro environment with some discretionary spend recovery, but ongoing budgetary pressures in key industries like healthcare (17% of revenue).

Franklin Covey Co.(FC)-20260108-2026 Q1 Earnings call transcript

- **Return to Growth**: Fiscal 2026 marks a return to growth with North America Enterprise invoiced amounts up double digits in Q1 2026, driven by new logo growth and services expansion.
- **AI-Enhanced Solutions**: Integration of AI into leadership development and sales coaching is delivering measurable results, such as improved win rates for clients.
- **Strong Financial Foundation**: Deferred revenue grew 13% in 2025, setting the stage for 2026 reported revenue growth, with adjusted EBITDA expected to improve in the second half of the year.
- **Education Resilience**: Despite macro challenges, Education subscription revenue grew 10% in 2025, with a pipeline of large district opportunities for 2026.

**【CEO Summary Section】**
- Franklin Covey achieved fiscal 2025 revenue of $267.1 million, in line with guidance, despite macroeconomic challenges. The company expects fiscal 2026 to mark a return to growth, with invoiced amounts in North America up double digits year-over-year in the first quarter.
- The go-to-market transformation has yielded early results, including a 53% services attachment rate in North America and strong new logo growth in Q1 2026. The company is embedding AI into its solutions to enhance leadership development and execution, such as real-time coaching for sales professionals.
- The Education Division maintained resilience with 10% subscription revenue growth in 2025, driven by deferred revenue growth of 13%, setting a strong foundation for 2026.

**【CFO Financial Commentary】**
- Fiscal 2025 adjusted EBITDA was $28.8 million, in line with guidance, with free cash flow of $12.1 million. Fiscal 2026 guidance includes revenue of $265-$275 million and adjusted EBITDA of $28-$33 million, reflecting a back-half weighted growth trajectory.
- Deferred revenue increased 3% to $111.7 million, with unbilled deferred revenue up 7% to $48.4 million, indicating strong future growth potential. The company maintained a strong balance sheet with $94 million in liquidity.

**【Q&A Highlights】**
- **Sales Transformation Performance**: North America Enterprise bookings for the first 2 months of 2026 are up double digits year-over-year, with services bookings up 56% in 2025. A large multiyear deal won in Q1 2026 was facilitated by new systems implemented during the transformation.
- **Client Renewals**: Client retention rates remain stable, with 84% school retention in Education. Revenue retention is expected to improve as the go-to-market transformation gains traction.
- **AI Integration**: AI is being used to enhance leadership development (e.g., real-time coaching for sales calls) and execution (e.g., deal objection handling), complementing Franklin Covey's world-class content and services.
- **Government Impact**: The company expects to lap the impact of 2025 government contract disruptions in 2026, with no comparable headwinds anticipated.


Franklin Covey Co. (FC) Q4 2025 Earnings Call Transcript

- **Cost Savings Drive EBITDA Beat**: $4.7M Q3 cost cuts enable $7.3M EBITDA vs. $4-6.5M guidance
- **Go-To-Market Transformation Gains Traction**: 
  - 15% increase in off-cycle expansions
  - $2.3M AI-enabled sales win
- **Education Resilience**: 
  - 13% QoQ subscription growth
  - 7,900+ schools retain despite DOE funding cuts
- **FY26 Growth Catalysts**: 
  - $8M annualized cost savings
  - AI adoption in 43% of client engagements
- **Key Risks**: 
  - 10% revenue range uncertainty
  - 12.7% decline in unbilled deferred revenue

**【CEO Summary Section】**
- Q3 revenue: $67.1 million (down 9% YoY), adjusted EBITDA: $7.3 million (vs. guidance of $4-6.5 million). 
- Completed $4.7 million in cost reductions, annualizing to $8 million in FY26 savings.
- Enterprise North America go-to-market transformation: 
  - 2 dedicated sales teams (new logos/expansion)
  - 15% increase in off-cycle expansions
  - $2.3M new logo win with AI sales coach
- Education division: 
  - Subscription revenue +13% QoQ
  - 7,900+ Leader in Me schools globally
  - Deferred revenue +21% to $34.1M
- FY25 guidance updated to $265-275M revenue, $28-33M EBITDA.

**【CFO Financial Commentary】**
- Gross margin: 76.5% (flat YoY)
- SG&A: $53.5M (+$5.7M YoY due to restructuring)
- Free cash flow: $10.6M YTD (vs. $30.6M last year)
- FY26 expectations: Meaningful EBITDA and free cash flow growth
- Share buybacks: $17M YTD, $27.9M remaining under $50M plan.

**【Q&A Highlights】**
- **Sales Force Effectiveness**: 
  - 50%+ off-cycle expansions in Q3
  - 60% services attach rate in Enterprise
  - AI coach used in 43% of client engagements
- **Education Challenges**: 
  - Timing delays push $1.5M in services to FY26
  - 8,000+ schools retain despite DOE funding uncertainty
- **Deferred Revenue**: 
  - Unbilled deferred: $56.4M (down 12.7% YoY)
  - Billed deferred: $45M (down 4.7% YoY)
- **AI Adoption**: 
  - AI sales coach in 43% of client engagements
  - Custom content generation via AI
- **Revenue Risk**: 
  - 10% revenue range reflects Education timing uncertainty
  - 80%+ client retention despite economic headwinds

Franklin Covey Co. (FC) Q3 2025 Earnings Call Transcript

- **Revenue Impact**: FY25 revenue down 2.5%-5% YoY due to $15M+ government and international disruptions.
- **Growth Momentum**: Q2 new logo revenue up 50%+ vs. plan, with 30% pipeline growth and 61% multi-year contracts.
- **Education Strength**: Education invoiced revenue up 13% YTD, with 7,800+ schools adopting Leader in Me.
- **Cash Management**: $100M+ liquidity and $14.7M YTD buybacks, with positive FY25 free cash flow expected.

**【CEO Opening Remarks】**
- **External Challenges**: Government-related disruptions (e.g., $5M in federal cancellations) and international headwinds (e.g., $4M potential loss in China) are impacting Q2 and FY25 revenue. Education business faces $3M risk from Dept. of Ed uncertainty.
- **North America Enterprise Growth**: Go-to-market transformation yields strong Q2 results: 50%+ new logo revenue vs. plan, 8% expansion beat, and 30% pipeline growth. Multi-year contracts now represent 61% of subscription revenue.
- **Education Resilience**: Q2 education revenue up 3%, with 7,800+ schools adopting Leader in Me. FY25 invoiced education revenue up 13% YTD, positioning for H2 strength.

**【CFO Financial Update】**
- **Q2 Results**: Revenue $59.6M (-3% YoY), Adjusted EBITDA $2.1M (down 94% YoY) due to government losses. Gross margin stable, SG&A includes $4M of $16M growth investments.
- **FY25 Guidance**: Revenue $275-285M (-2.5% to -5% YoY), Adjusted EBITDA $30-33M (down 44% YoY). Q3 revenue $67-71M, EBITDA $4-6.5M.
- **Cash Flow**: $100M+ liquidity, $14.7M share buybacks YTD. Free cash flow expected positive for FY25 despite near-term headwinds.

**【Q&A Highlights】**
- **Government Risk Mitigation**: Shifting focus to state-level education funding and cost-cutting in government ops. No immediate recovery expected for lost federal contracts.
- **AI & Product Development**: Integrating AI into solutions to enhance client outcomes, with R&D investments supporting long-term growth.
- **Share Buybacks**: Committed to disciplined capital allocation, with $105M+ returned to shareholders since 2022.

Franklin Covey (FC)-2 Apr 25-2025 Q2 Earnings call transcript

- **Q1 Revenue Growth**: 1% YoY to $69.1M, with Education up 11% and Enterprise flat.
- **Investment Impact**: $16M FY25 growth spend driving deferred revenue to $95.7M.
- **Go-To-Market Shift**: 88 expansion reps & 44 new logo hunters fully deployed.
- **Education Strength**: 58% YoY school growth, state-level contracts.
- **Q2 Outlook**: EBITDA expected to drop to $1.5-2.5M due to investment cadence.
- **Future Momentum**: 10% client penetration, targeting 20-30% via new solutions.
- **Risks**: Asia-Pacific Enterprise weakness persists.


**【CEO Opening Remarks】**
- Q1 revenue: $69.1M (1% YoY growth), driven by 11% growth in Education and flat Enterprise sales.
- Adjusted EBITDA: $7.7M (vs. $11M YoY), reflecting $16M in growth investments for FY25.
- Project Expand & Land: 88 client expansion reps and 44 new logo hunters now fully operational.
- Education success: 82 schools signed (58% YoY growth), including a state-level contract covering 100+ schools.
- Deferred revenue: $95.7M (10% YoY growth), setting up future revenue recognition.

**【CFO Financial Details】**
- Q1 GAAP revenue: $69.1M; Enterprise North America: $40.1M (flat YoY), Education: $16.5M (11% YoY).
- Cash flow: $14.1M (operating) and $11.4M (free), despite $16M annual investment.
- FY25 guidance: Revenue $295-305M, EBITDA $40-44M.
- Q2 outlook: Revenue $61.5-63M, EBITDA $1.5-2.5M (vs. $7.4M YoY).

**【Q&A Key Takeaways】**
- Growth investments: $3M in Q1, $4M+ in Q2, totaling $16M for FY25.
- Early KPIs: 95% of new logo hunters hired, $350K deal with top U.S. bank.
- TAM expansion: 10% current penetration, targeting 20-30% via new solutions (e.g., Speed of Trust for non-leaders).
- Product momentum: 7 Habits 5.0 saw 15% event attendance growth, 2,000+ live attendees.
- Risk: Asia-Pacific Enterprise revenue down due to macro challenges.


Franklin Covey (FC)-8 Jan 25-2025 Q1 Earnings call transcript

Franklin Covey (FC)-6 Nov 24-2024 Q4 Earnings call transcript

Franklin Covey (FC)-26 Jun 24-2024 Q3 Earnings call transcript

Franklin Covey (FC)-27 Mar 24-2024 Q2 Earnings call transcript

- **Revenue Momentum**: Q1 subscription sales up 4% YoY, with deferred revenue at $169.7 million (12% YoY growth) driving back-half EBITDA guidance of $54.5-$58 million.
- **Subscription Attach Rate Recovery**: Expected to return to 66.5% in Q3/Q4, fueled by new solutions like Speed of Trust 3.0 and Difficult Conversations.
- **Free Cash Flow Surge**: Q1 free cash flow of $13.7 million vs. $0.8 million last year, with FY 2024 growth driven by working capital improvements.
- **International Rebound**: Japan nearing pre-pandemic sales levels, China showing stabilization as both markets transition to subscription models.
- **Education Strength**: Leader in Me deferred revenue up 29% YoY, with 1/3 of ESSER funding remaining to support growth.

**【CEO Summary Section】**
- **Q1 Revenue Growth**: Total revenue of $68.4 million exceeded expectations, with subscription and subscription services sales at $54.8 million, 4% higher than prior year.
- **Deferred Revenue**: Billed and unbilled deferred revenue reached $169.7 million, up 12% year-over-year, providing strong visibility for future growth.
- **Subscription Attach Rate**: Expected to return to historic levels of 66.5% in Q3/Q4, driven by new solutions like 3.0 and 5.0 versions of key programs.
- **Business Model Strengths**: Highlighted by increasing revenue per client, high retention (90%+ in North America), and disciplined reinvestment in sales and content.
- **Back Half Growth**: Guided for adjusted EBITDA of $54.5-$58 million, with Q3/Q4 revenue acceleration due to deferred revenue and subscription growth.

**【CFO Financial Commentary】**
- **Q1 Financials**: Adjusted EBITDA of $11 million, up 22% year-over-year; free cash flow of $13.7 million, a significant improvement from $0.8 million in Q1 2023.
- **Revenue Trends**: Subscription and subscription services revenue grew 6% on a trailing 12-month basis, with 2-year growth of 34%.
- **Guidance**: FY 2024 adjusted EBITDA expected to increase 17% at midpoint to $56 million; Q2 EBITDA projected at $6.2-$7.2 million, lower than prior year due to service attach rate timing.
- **Liquidity**: $96.5 million in total liquidity, supporting share repurchases ($16.3 million in Q1) and growth investments.

**【Q&A Highlights】**
- **Client Demand**: Despite macroeconomic uncertainty, clients maintain budgets and focus on leadership development, culture, and execution.
- **Education Division**: Leader in Me subscriptions grew 9% on a trailing 12-month basis, with deferred revenue up 29% in Q1. ESSER funding utilization is expected to continue, with 1/3 of allocated funds remaining.
- **International Performance**: North America sales stable, while international markets (Japan, China) show improving trends as they transition to subscription models.
- **Free Cash Flow**: Expected to grow significantly in FY 2024, with free cash flow to EBITDA ratio improving but still below pre-pandemic levels due to CapEx and working capital dynamics.
- **Win-Back Strategy**: Proactive efforts to regain non-renewing clients, with some success in Q1 and ongoing pipeline.


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