Franklin Covey Company

Welcome to the Q4 2021 FranklinCovey Earnings Conference Call. My name is Darrell, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star then 1 on your touchtone phone. I will now turn the call over to Derek Hett, Corporate Controller. Derek, you may begin.

Thank you. Good afternoon, ladies and gentlemen. On behalf of FranklinCovey, it's my pleasure to welcome you to our fourth quarter and full fiscal year 2021 conference call. Before we get started, I'd like to remind everybody that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon management's current expectations and are subject to various risks and uncertainties, including but not limited to the ability of the company to stabilize and grow revenues, the acceptance of and renewal rates for our subscription offerings, including the All Access Passive Leader and Me memberships, the duration and recovery from the COVID-19 pandemic, the ability of the company to hire productive sales professionals, general economic conditions, competition in the company's targeted marketplace, market acceptance of new offerings or services and marketing strategies, changes in the company's market share, changes in the size of the overall market for the company's products, Changes in the training and spending policies of the company's clients and other factors identified and discussed in the company's most recent annual report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company's current expectations, and there can be no assurance the company's actual future performance will meet management's expectations. These forward-looking statements are based on management's current expectations, and we undertake no obligation to update or revise these forward-looking statements, reflect events or circumstances after the date of today's presentation, except as required by law. With that out of the way, we'd like to turn the time over to Mr. Paul Walker, our Chief Executive Officer.

Paul? Thanks, Derek, and good afternoon, everyone. We're really excited to be with you today, and thanks so much for joining us. We're pleased to report that our fourth quarter and full year results were strong, in fact, very strong and stronger than expected. As you can see shown in slide three, adjusted EBITDA for fiscal 2021 increased to $28 million, which was up 96% from $14.3 million of adjusted EBITDA in fiscal 2020, and up 36% when compared to fiscal 2019 strong $20.6 million of adjusted EBITDA. This result was well above our original guidance for the 2021 fiscal year of between 20 and 22 million, and also $1.5 million above the high end of our updated guidance range of 24.5 to 26.5 million. These results reflect the strength and power of FranklinCovey's high growth and durable subscription business model, which is shown in slide four, achieves strong growth on every key metric. Specifically, as you can see in slide four, First, total revenue grew 40.7%, or $20 million in the fourth quarter, and grew 13%, or $25.7 million for the full fiscal year 2021. Second, you can see there that total subscription revenue grew 33%, or $7.2 million in the fourth quarter, and 15%, or $13 million for the full fiscal year. Total subscription and subscription service revenue grew 52%, or $17.7 million to $52.1 million in the fourth quarter, and 21% or $27.5 million for the year. And finally, as you can see shown there, the sum of billed and unbilled deferred revenue grew 27% or $27.2 million to $127.4 million for the year. There are five things we'd like to talk about today and have you take away from our discussion, and you can see these summarized in slide five. The first is that our results for the fourth quarter and full year 2021 were strong and even stronger than expected. And as you'll hear in a moment, this strength is reflected in every key P&L category, including revenue growth, growth margins, adjusted EBITDA, and cash flow. The second takeaway we'll talk about today is that this strong performance was driven by the strength of our rapidly growing subscription business model. The third is that also driving our growth is the fundamental importance of challenges we're helping our clients address. The fourth is that we expect subscription and subscription services to account for greater than 90% of the company's sales within three years. And finally, the fifth takeaway is that we expect our almost complete conversion to our subscription and subscription services to also drive significant additional value to our shareholders. To talk about this first takeaway, I'd like to turn time and ask Steve Young to address this, our performance for the fourth quarter and full fiscal year results.