Franklin Covey Company

Q1 2022 Earnings Conference Call

1/6/2022

spk_0: welcome to the que one twenty twenty two franklincovey or in conference call my name is a train and i'll be or operator for today's call at this time all participants are no listen only mode leader will conduct questionnaire professen during the questioning a professor if you have a question please press dar and one on your touchdown phone about turn the color their catch their catch may begin
spk_1: they exude room
spk_2: good afternoon ladies and gentlemen and happy new year on be of franklin kirby it's my pleasure to welcome you to earnings call this afternoon to discuss the first quarter of fiscal twenty twenty two before we begin i'd like to remind everybody that this presentation contains forward looking statements within the meaning of this private securities litigation reform act of nineteen ninety five for looking statements are based upon management current expectations 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 race for our subscription offerings including the all access pass and leader in me memberships the duration recovery from the are nineteen pandemic either bloody the computer hired productive sales professionals general economic conditions competition in the cab companies targeted marketplace market acceptance of new offerings are services and marketing strategies changes in the company's market share changes in the size of the overall market for the company's product pages in the company and the training and spending policies of companies clients and other factors identified in discussing the country's most recent annual report on for ten k another periodic reports filed with the securities and exchange commission many the conditions are beyond our control or influence any one of which may cause future is also differ materially from the company's current expectations and there can be no assurance the company's actual future performance will meet mandarins expectations he's for the his statements are based on management's current expectations we undertake no obligation to update or revise these for looking statements to have like reflect events or circumstances after the date of today's presentation except as required by law without out of the way was like during the time over to mister paul walker r chief executive officer of like derek good afternoon
spk_3: every one i'm joined here also by a steve young i'm bob women were happy to have the opportunity to talk with you today and we just we're grateful he joined us we're very pleased to report that our first quarter results were very strong as you can see shown in flight three total revenue in the first quarter grew twenty seven percent or twelve point nine million to sixty one point three million and for the latest twelve month period revenue grew twenty six percent or forty eight point nine million to two hundred thirty seven point one million adjusted ebitda for the first quarter increased to nine point nine million an increase of six point two million or one hundred sixty seven percent compared to the three point seven million of adjusted a bid on the for barbie one are are online cut out and yourself one a different line let me up will just pick right back up we were living like that what we start back on on flight or and talk about the strong growth on on each t metric you can see they mention there and the first quarter a subscription revenue grew thirty one percent or six point seven million the twenty eight point four million in for the latest twelve months it grew twenty two percent or nineteen point one million two hundred six point two million as you can see told subscription and subscription services revenue and first quarter grew thirty two percent or ten point eight million to forty three point nine million and for latest told months or thirty one percent or thirty nine point four million two hundred sixty eight million
spk_4: and in the first quarter the some of bill the unbuilt or revenue grew twenty four percent or twenty three point seven million to one hundred twenty one point one million
spk_3: so i i yo the first point here as we and we really continue to be really pleased with the strong results for achieving our subscription been that than in the company overall ah today either for keep things that we'd like you to take wait more discussion and i'll summarize the they're so flight five and then we're going to a bit of that on each
spk_4: at the first is that our results in the first order as we just previewed work that strong the strength as reflected in every you know category including revenue growth gross margin improvements adjusted the bit on also in cash flow the second that will talk about the day that the strong performance was driven by the strength of are rapidly growing inscription business model the third that is that we expect that the entire business to become increasingly subscription and subscription services over the coming years and finally will talk about that point number for that we're really excited about the size of the market opportunity before us and we're doing a lot to ensure that we continue to execute on it and scale and now like to asked began to address take away number one with strength of our first quarter and latest twelve months result the
spk_5: thank you paul and nice to have you back nice to be with everyone to today's report this good quarter and just give her a little bit and little bit more in depth look at the highlights that paul mentioned as you can see on slide seven some nike highlights for the quarter include the following
spk_6: or revenue as mentioned in the first quarter good twenty seven percent or twelve point nine million to sixty one point three million and revenue for the latest twelve month period through the first quarter grew twenty six percent or forty eight point nine million to two hundred and thirty seven point one million
spk_5: that of head partially from the fact that last year's first quarter was impacted by the pandemic
spk_6: the strong first quarter revenue growth was broad based across across both the enterprise and education divisions and the enterprise division revenue grew twenty two percent or eight point eight million to forty eight point one million reflecting both the strength of our performance in north america for sales good twenty two percent and in our international direct officers were sales grew twenty seven per sand growth in both of these areas was driven by are strong subscription and subscription services sales which increased twenty seven percent in the first quarter the education division also had a very strong first first quarter with revenue growing fifty six percent or four point two million are gross margin percentage in the quarter increased two hundred and forty basis points to seventy seven point seven million from seventy five point three million and last year's first corner gross margin percentages remain very strong across every operating unit with a significant portion of this first quarter increasing gross margin percentage resulting from the fact that we achieved more normalize margins in education division
spk_5: this resulted from better absorption of certain fixed coaching costs compared to last year when girls were struggling to adapt to the pandemic environment and utilize fewer coaching days during the first and second corners
spk_6: our overall company gross margin percentage for the latest twelve month period increase three hundred and thirty nine basis points to seventy seven point seven percent also operating as dna as a percentage of sales improved two hundred or six hundred and six hundred and twelve basis points in the corridor to sixty one point five percent of sales compared to sixty seven point six percent of sales in last year's first corner and improved four hundred and nine basis points to sixty three point two percent for the latest one month period has shown and slide eight adjusted a bit off for the first quarter increase six point two million or one hundred and sixty seven percent to nine point nine million compared to three point seven million in the first quarter of f y twenty one the stronger is all also represents an increase of almost five million compared to the pre damaged first quarter of f y twenty for the latest twelve month period adjusted ebitda increased twenty one point one million or one hundred and sixty two percent to thirty four point two million finally us as a shown in slide eight
spk_5: our cash flow and liquidity positions are also very strong
spk_6: our cash for robbery activities remained very strong at more than ten million for the quarter as shown him slide nine are free cash flow for que one of f y twenty two as nine point four million versus ten point four and que one of last year
spk_7: both we think good not good strong numbers they strong cash flow metrics reflect an additional benefit of our subscription model specifically that we voice up surprising plaque cash from these invoiced amount even faster than we recognize all of the subscription revenue associated with a shift
spk_6: caption contracts as noted with a strong cashflow we we ended the the quarter with sixty six million of total acquitted he made up of court fifty one million in cash plus fifteen million and credit facility remaining undrawn and available as our place with a result of the first corner and
spk_8: trailing for a quarter so back coupon
spk_3: thank you steve i've just add that this strong performance reflects the continuation acceleration of three key trends that we discuss with the on past quarters as you can see on flight ten these trends are first that enterprise division failed in north america can he be very strong driven by the growth and all access pass the description and subscription services sale in the first quarter as you can see their revenue in north america grew twenty two percent or six million dollars to thirty three point for me alien and for the latest twelve month period enterprise revenue north america grew twenty three percent or twenty three point eight million to one hundred twenty five point six million up from hundred one point eight million last year that can you get to their in the middle column failed than our international operations continued to strengthen while pandemic related challenges continue in japan and in certain light with the location
spk_2: resulting in our total international direct office enlightened see revenue still being somewhat below that those that we achieved in fiscal twenty twenties first quarter were played that overall revenue and our international direct offices and the first quarter grew twenty four percent compared to the first quarter of fiscal twenty twenty one and grew thirty six percent for the latest for me
spk_3: period in addition the strong focus an all access pass in these international operations has resulted in significant increases in our balance at all access pass deferred revenue internationally which is establishing a foundation for strong future international fails go
spk_4: the third performance at third the performance and trend than or education division of strengthen potentially the strengthen his is reflected in one the increasing the number of leader in the school that have contracted to renew their leader and me membership to seven hundred thick school in the first quarter of fiscal twenty twenty two up from five hundred fifty in the first quarter of fiscal twenty twenty one
spk_3: and second that significant eighty score increase in number of new leader and the school have contracted during the first quarter of fiscal twenty twenty two where we added a hundred twenty nine new leader in the school up from forty nine new school in the first quarter of fiscal twenty one it's increase a new and retain schools together with an increase in the number of coaching and training days delivered compared to last year's first quarter draw strong performance in the education division were revenues group forty two four point two million of legal four point two million or fifty six percent in the first quarter
spk_4: up to eleven point seven million compared to seven point five million the first quarter of fiscal twenty twenty one adjusted even die in the education division in the first quarter increased two point five million to two hundred thousand dollars compared to an adjusted you but our lot of two point three million last year's first quarter the second pic ways you can see on flight eleven our that we were like talk about that a strong performance was driven by the continued and accelerating strength of are rapidly growing subscription business model
spk_3: as shown in flight twelve our total subscription and subscription services sales grew thirty two percent in the first quarter to forty three point nine million an increase of ten point eight million compared to thirty three point two million and subscription and subscription services rabbit even first quarter of fiscal twenty twenty one related twelve month for the first quarter subscription and subscription services sales grew thirty one percent or thirty nine point four million to one hundred sixty eight million the some of our build and unbuilt or revenue also dirty dancing the first quarter increasing twenty four percent or twenty three point seven million to one hundred twenty one point one million compared to ninety seven point four million at the end of the first quarter of fiscal twenty twenty one
spk_4: this large and rapidly growing balance of build and unbuilt for revenue provide significant stability of and visibility into our future revenue growth
spk_3: a break out between build the ferdinando the for revenue is also shown on quite well
spk_4: our balance the third subscription revenue grew nineteen percent or ten point eight million the sixty seven point eight million in the first quarter compared to fifty six point nine million last year's first quarter and are unveiled or revenue grew thirty two percent or twelve point nine million the fifty three point four million compared to a balance of forty point by nine and last your first quarter riff reflecting the significant ongoing increase in the percent of our i access path contract and contract value now represented by multiyear contract as an example of that in north america at the end of our first quarter it's got twenty to forty two percent of all acts of path contract representing fifty five percent of total i of path contract value were under multiyear contract
spk_2: i'd important another way cheap song strong subscription and subscription service growth in both the enterprise and education division
spk_4: as shown in flight thirteen in the enterprise division all access pass subscription and subscription services sailed in the first quarter grew twenty seven percent or seven point one million to thirty three point one million
spk_3: compared to twenty six million the first quarter of fiscal twenty one
spk_4: if the latest twelve month period to the first quarter all access pass subscription and subscription services sales grew twenty nine percent or twenty six point seven million to one hundred nineteen point seven million compared to ninety three million for the faint latest twelve month period last year
spk_3: the number of a like the path new law that the north american the first quarter remain strong our annual revenue retention continued to accede ninety percent and as i noted a minute ago the felt more peer contract offer continued strong a showing like fourteen and the education division
spk_4: in the first quarter leader and each subscription and subscription services they'll screw fifty one percent or three point six million to ten point eight million
spk_3: compared to seven point one million first quarter of fiscal twenty one related twelve month period through this your first quarter subscription and subscription service have failed men are pride division grew thirty six percent or twelve point seven million to forty eight point three million up from thirty five point six million for the same latest twelve month period last year
spk_4: feel great about our our subscription business is shown in flight number fifteen third take away that that we'd like to discuss with you this afternoon that we expect our entire business the become increasingly subscription and inscription services in the coming years as shown in five fifteen
spk_3: the latest twelve month period through this your spurs quarter subscription and subscription service of sales grew thirty one percent to one hundred sixty eight million representing seventy point nine million a total latest twelve month fails up two hundred thirty seven point one million
spk_4: given has continued rapid growth we expect our entire been to become increasingly subscription and subscription services over the coming years i for example in north america annoyed at twelve months or this your first quarter all access pass subscription and with script and services accounted for a poor percent of fail
spk_3: and this is expected to increase to approximately ninety percent of they all over the next three years as shown in flight seventeen
spk_4: i'll accept path the description and subscription service sales represented only thirteen percent or thirteen point seven million a total sales the north america in two thousand and sixteen when we first introduced all access pass this dramatic sustain compound a grope than than has resulted an all access pass subscription answered scripts and service sales for the latest twelve months to this your first quarter grind to one hundred four point nine million or america
spk_3: with and you're all access pass subscription and subscription service a failed expected to continue to grow rapidly and would legacy failed the north american out very low level than expected to run off further as mentioned we expect that i like the path the description and subscription service fell to increase approximately ninety percent of total north america enterprise fail in the next over the next three years isis past the description and subscription services cells are also expected to make up the vast majority of our sale in earnest international enterprise operations in the coming years the growth and penetration of all access pass subscription and subscription services is also progress rapidly in our english speaking direct offices
spk_4: as you can see there on that right side of five seventeen from having no subscription failed law on these offices just five years ago all access pass the description and subscription service sales for the latest twelve month period through this year's first quarter now account for eighty three percent of total failed in the uk and seventy two percent in australia both offices are well on their way to wear the same ninety percent penetration we expect to achieve in north america and as you know our largest international direct officer in china and japan and both of them are in relative early stage that conversion to isis path but are making great progress
spk_3: having a the conversion and the us and a that uk australia we're confident that china and japan also converts the vast majority of their revenue and in fact in fiscal twenty one all access pass subscription and subscription services they failed a third of japan's total failed system there just in the early days there for them for would be a great about that progress ah because our of our because of are compelling leader and neat subscription model or more than ninety percent of failed in education division are in fact already subscription and scripts and services a good almost complete conversion to subscription and subscription services occurs we expect virtually the entire company to be able to generate the same kind of strong growth and revenue growth margins revenue retention and customer impact that we've seen in our subscription bit cover the last five years
spk_4: that the final pick a way that that that we like talk about the day number four is showing flight a team is really about that the market and a significant market opportunity that we serve their there are there for reasons that were excited about the market opportunity before us them and that we have the ability to execute in the market that scale first the markets we targets are very large and they're they're growing rapidly as you can see and five nineteen our focus is on three primary market or
spk_3: first the enterprise learning market
spk_2: second of the education market and third this market where business leaders themselves are investing to improve performance know doing out of their operating budget
spk_3: ah the overall global enterprise learning space is that is about a three hundred and eighty one billion dollar market and approximately ninety nine billion of that is spent with external providers
spk_4: the entire markets growing by approximately three percent or eleven billion dollars per year this the second marchese the education market itself also very large
spk_3: seven hundred twenty six billion spent annually destiny us by k twelve schools fifty nine billion about it ban on instructional resources and services that are beyond faculty salaries and benefits and this market is growing at just over two percent or by about fifteen billion dollars per year
spk_4: and then the third market where business leaders themselves during batting to improve performance that makes up trillions of dollars and expenditures and is generally growing and at least the paper gdp fate three percent or that would equate to hundreds of billions of dollars per year i eat it is market is highly fragmented the largest players account for only approximately one to two percent of any of the market and we believe that this plus strong growth in these markets provide lot of hadn't brought in the opportunity for us to significantly increase our market share
spk_3: that the second thing that we're excited about it is
spk_4: where the leader in one of the most important and lucrative position that each of these markets specifically that of helping organizations achieve result the require the collective action of large numbers of leaders an individual as you can see showing by twenty while while lots of things including providing people useful information helping them learn new skills exaggerate the cannot die to an organization for an organization to move aggressively forward to achieving at most important objective that requires collective action at getting everybody moving together and offering their collective bath contrary contributions to our the achievement of the organization highest priority and in that that the the third pointing to make your that this helping organization do that to achieve that kind of five make collective action that so important to them that quite good progress that's where where prank on cabbie it most excited and where we really shine as indicated in fly twenty one we bring truly differentiated strength the helping organizations address challenges the achievement of which requires sustain collective action are differentiated strength include the following first and this represented in the top left that green puzzle pete they're having some of the world's best content for addressing a big organizational opportune
spk_3: and challenges are content with principal based adorable it's recognized that might market leading up with our content with the billions of dollars of solutions overtime and built very strong durable and growing purpose brown
spk_4: our second strategic strength with our ability to offer clients tremendous flexibility in delivering our content and services through all modalities on all devices almost a segment of time and in more than twenty one language as worldwide it's capability had been further enhanced by selected acquisition and we talk on previous call i for example
spk_3: about the strive platform fate of the yard behavior change platform or create a powerful and theme of experience for end users as well as for those who declare solutions within their organizations our third string it is our global reach our global failed delivery network include the direct failed source of or the two hundred seventy one client partners across our direct offices number which weeks back to grow by at least net thirty each year
spk_4: and more than sixty life with the partners operating in more than one hundred fifty countries allowing us to serve love applying for for the largest global footprint than our industry and truly unique ways and forth as you can see in the bottom right are are for strategic strength our world class con a thought leadership position of strategic strength which includes a best selling book of what which we've sold more than fifty million a number we believed work that have any other player in our space or weekly leadership podcast however we could leadership podcast called on leadership and now the world most followed leadership or gap our our team of bestselling thought leaders a thought leader speak of them more bought up your venues including places like the world better form and others and ah we publish articles monthly a huge increasingly can find brighton covey thought leadership in forbes dot com that company inc magazine and doesn't the other industry publication and the strength of the reason why even throughout the consider the constantly changing pandemic environment thousand of organization the school the purchase expanded and renewed they're all access pass the meter me subscriptions and a purchase support services and franklin cover to help them achieve their most important objective the strength drop the behind the fact that as showing fly twenty two and you've seen it before the lifetime value of our customers continues to be both large and growing
spk_3: while we hardly a significant undifferentiated strength of each us for key area i talked about again assigned by twenty three we continue to make significant an ongoing investment me to these areas
spk_4: these include creating new and expanded content and content area
spk_3: expanding our technology platform than our delivery modality capability and the associated flexibility growing are direct sales forces and our international waikiki partner channels and finally creating new content and channel to continue to build our industry leading thought leadership
spk_5: giving a large given large and growing and fragmented market that we serve the strength of our leadership positions in these markets and the considered investment for making we believe that we have a unique opportunity it's men are position as the leader and these targeted market
spk_9: arthur we're we're very excited ah have both about the result and also just about what's happening with a subscription business than our ability to continue to add meaningful resources and pizza to that that are showing up in differential and very helpful to our clients and so about without horse and out of the whether i like the now term
spk_5: some time to feed to discuss our outlook in our guide ah thank you pop
spk_6: arsenal of have like an hour and our guidance our guidance for y twenty two as that we expect to generate a just a david are between thirty four and thirty six million
spk_5: the midpoint of this range would reflect and approach twenty five percent increase in adjusted ebitda compared to the twenty eight million achieved an f y twenty one
spk_6: underpinning this guidance or the expectations that are consistent primarily for had in the past first the recognition during a y twenty two have a large portion of the sixty seven point eight million of differed revenue currently on the balance sheet
spk_5: and the building of a large portion of the fifty three point four million of unveiled the from revenue which has been contracted
spk_6: this provide significant visibility into our revenue for the balance of the year second in addition to the recognition of deferred revenue the fact they're which is expected to have the greatest impact on f y twenty two result is also one in which we have high confidence that is the strength of are all access pass and related sales
spk_5: third we expect that are revenue in japan china and among our like licensees will continue to strengthen
spk_6: the increase in all access pass tales which we expect to achieve in those countries will as you understand result in a portion of the new sales revenue been added to the balance sheet is deferred revenue fourth in that education division we expect expected continue to achieve strong resent retention of both schools and revenue among existing later and me schools and expect to grow the number of new leader in middle school to a level even higher than what then we achieved last year so now cute too
spk_5: and cute to in the second quarter we expect that adjusted the but i will be between five point eight and six point eight million
spk_7: compared to five point one million in the second quarter of an i twenty one
spk_5: obviously we recognize that with are strong first quarter performance or latest twelve month adjusted ebitda of of thirty four point two million would already put us within our for year guidance range even without any further year over year improvement and adjusted a bit after the rest the year
spk_6: our expectation of achieving further year over year growth and just to the were dying cute to would put us even higher in that range
spk_5: recognizing this ah we will consider our guidance range when way report or physical to to quarter performance
spk_6: and and make adjustments at at that time so now with with that guidance as look at our targets for the coming years as shown in slide twenty four building on the thirty four to thirty six million of adjusted ebitda we expect to achieve this year and driven substantially by the expected continued growth of all access pass our target to have a just as a bit i increase by around ten million per year there are after to be around forty five million and f y twenty three and around fifty five million and f y twenty four
spk_3: this represents an expected adjusted a bit are compounded annual growth rate of approximately twenty five percent per year old if over the coming years
spk_9: these targets reflect achieving low double digit revenue growth and approximately forty percent of that growth in revenue will flow through to increases in adjusted ebitda and cashflow even after significant growth investments in marketing or salesforce technology
spk_10: and an expansion in the some new content areas
spk_3: while dramatic changes in the world environment and other factors could impact our expectations we want to share that these are current targets i also want to point out once again at all and not only are these are targets but when you read our proxies dame and you'll see that the executive team ah long term incentive pay awards depend on achieving the strong multiyear growth targets
spk_0: so paul back to you that is steve
spk_11: we saw week we feel great about our and and we look redoing and
spk_0: as mentioned our guide range or that quarter or this year and with that will now adrian beltre like questions thank you will now begin the question if professor
spk_12: he never question please press star and one on your touched on phone
spk_13: if you wish
spk_4: you these press the pound sign or they asked
spk_12: if he used the speaker phone you may need to pick up the handset birth or press the numbers what's mtf a question please post star and why nine you have some phone and efforts quest faster marco rodrigues don't pay capital you're like
spk_3: or the afternoon everyone thank you for are taking my question hi marco against all as women of either talk a little bit more about the performers the or obviously really strong well at guidance what we're sort of a bit the big surprise for you guys yeah great question so
spk_4: asked for falls relate to eat at our growth on the mentioned this in in his comments we were benefited more than maybe a bit more than we thought by the number of education coaching sessions that we are able to deliver in the first quarter and and so those
spk_3: coaches or there's a fixed costs component there and we delivered a number of deaths in that school got back in into session and so that helps on the drip down on margin side which flowed through to the bottom line is that was that was definitely positive but i think generally speaking
spk_2: it's it's what we've been seeing ret revenue retention was great
spk_12: new logo that was great we had a great service quarter in the enterprise division as well exactly what it was record setting ah delivery of services are all access pass client in north america in the enterprise the business i think those are probably the two big things with the amount of coaching were able to deliver schools services in in enterprise i'm in the first quarter our clients are doing great with live online and as we move to to deliver more more that way we're we're thing that services
spk_3: continues to grow that's a those are probably that the two or three points marco caliber very helpful and on or i know you touched on it or steep touched on on the guidance and you guys ramzi cognizant of of the annual even a guidance what you've done he what you expected for que to in a he made some comments which are helpful but i'm i'm just trying to can a guide me little bit deeper it's you can a walk us through that the decision making process their to and not update the guidance higher are there any sort of thing that you are are trying to be a more conservative on anything that is maybe a bit more of an unknown
spk_6: a day at before before the call the and no yeah i think we'd we'd talk
spk_12: oh and you could imagine quite a bit about that that very topic in and up feel great about where the businesses the where it's headed and is and made the decision that will will get to our second quarter and and will come back and and and the take a look at
spk_2: in i'll reconsider guidance and any revision around guyton
spk_14: i've nothing other than that picking when the ones you that pick pick in the second quarter the time he would do that even up you have any other thought you'd want to add to that know paul the on there that is that a as you know marco arab our fourth quarter
spk_2: is a very large quarter for adjusted ebitda of because of all the things that go on and that poured in education otherwise and it gives us an opportunity to big ah closer to that very important quarter or just have a l l a little a little better visibility maybe into that into that corridor after another quarter goes by
spk_4: i understood on and and it's like it's becoming more and here you disgust a little bit here you prepared remarks the the market opportunity that and it's present
spk_15: and and know that you guys and always taking
spk_3: a great deal of investments are making a great deal of investments into your climb partners mom a and been for dolman apres as a modern it may maybe you can discuss any sort of initiative or additional investments that you might be making into your overall marketing efforts whether that's that the additional klein partners are your business development or online events meet the year that we should be looking at for county or twenty thanks yeah that's a that's a great question at the good question mark on the field is are very very large market silk a couple of hot there personal you'll recall route we report it the end of and of fiscal twenty one for back in november that we we are added nineteen new client partners last year we we and we would add twenty were nineteen one one came in after the end of the year it without read about that we're we're going to add net thirty this year i think that the number we're looking at had had a we celebrate that maybe i another what color it beyond thirty this year but it wasn't that long ago that we were adding five or six and then it went to ten or twelve and and ten or twelve moved up to two twenty and now twenty to thirty and i think thirty or moved to forty and thorn as i think that there will be more dollars invested their
spk_12: on in sales people to to more quickly penetrate and take advantage of the the marked team of worth that big to fail side of that
spk_0: on the marketing side up similar story were actually in the middle right now and we've been in the middle of a large branding project
spk_16: new new messaging branding preparing to get our word out there even more aggressively than we haven't we been doing great with and we moved on my of and we talk in the past about significantly more people and that continues to be the case or being exposed to franklincovey into our content to how we can help them quarterback order those numbers climate we put more into marketing i think it's not to regret the do that as well and that
spk_17: that part of the discussion that we're we're we're definitely having right now we see with a great opportunity at about the ten bedroom
spk_3: added mario rpg that's fine thank you
spk_4: and do
spk_18: and and s class and path and jeff march and for roth capital partners the line up and
spk_19: good afternoon way to see that dollars off from the quarter
spk_3: paul on it get an update on the stripe platform lot i believe that was slated for beginning of the year is that that the timing on that and then also on and on i understand what you think the near term and longer term benefit thoughts on that platform okay thanks
spk_4: and chef hope you're happy new year
spk_3: so strives right on track in fact today it earlier today at about two o'clock they've socks off the field faith one was that and distribute the pilot customers that we've been working with all through the fall and brought them on strike platform that given up a chance to notes drive with authority a going concern and with drive with able to run their current content on strike we needed to run franklincovey content and so we we did that throughout the fall had tremendous be back from our clients and saw thought on only high and ps and great for scores that client buying me the buses and those pilot client now are in discussions about them expanding aside their path because of what's drive does for them today we we moved into a to and faith to is where we moved to a larger group of our client partners and we up with that that they to is really about how do we haven't prepared to a in math and so we're now kicking off will be at a couple of my
spk_4: month period here we got to a larger group of customers and potential customers with a larger group of our sales people to do the same thing with to define the pile say and then pay three will be that complete for launch a little bit later this year worst were strive will become that the default platform for all of our clients so we're we're right where we wanted to be as the late
spk_3: our project plan that the strike team is doing great work and that to tear second the second player question to benefit that customers will see and therefore how that might benefit our business
spk_4: that the primary benefit to a customer is is that a stride think of drive i like to equate strive to palatine capello upon bike i withheld hi like my kind of prior to our time by you could you could go via a bicycle put it in your basement you could pull a tv
spk_20: the over in front of you and go on you tube and try to find an exercise instructor that you light than you could you'll get people on your smartphone and have a as a virtual experience with that covered of people if you wanted to do that and you can have metric they'll run a whiteboard on your wall and you could do all of that but with that disconnected not a seamless and not new nearly as powerful experience that a pellet on it today where it's all integrated into one that similar great technology platform that powers the content be cohort experience the metric eccentric
spk_3: dr has that organizing effect for a little it'll take all of our great content and allow us to provide cohort based learning experience and overtime individual experiences where strive will power them through those experiences
spk_4: ah but in a very interactive way and it has all the pieces built into it that are critical to driving behavior change our we we don't want to just be in the with of having people watch content that doesn't necessarily do much more than provides an odd an implied we need to take people and not just individual but entire team and organizations all the
spk_20: wade through two of the point where their behavior change and it can be sustained and first drive in the tech platform that you will that ah that will enable that for our clients
spk_21: obviously the bent the benefits after three lost weight will be i yelled at the at the even more compelling died was not help us on the win rate on new logos ah it it it we believe it a lead to greater expansion as stride take some of the work load off of the learning and development admit
spk_16: straighter or the bit of a chokepoint than time there were they they're responsible for the map and and and strive will help the technology that will help and deploy and in greater quantity the larger scale and then of course it's also a bigger population and then finally we think will sell and were thing that with them or services
spk_3: ah delivery services and coaching services great great to have failed thanks i'm one of the get a sense or hiring and a quarter of a new client partners and i asked the question from the perspective of try and understand that sales and marketing expansive air if there weren't a lot higher than que en when a expecting yeah and groups to be higher than and in order to help us better model out as gnh or the balance appear on a quarterly basis
spk_4: not at that good question so and i mentioned a minute ago we we we hired he new last year he wanted never are large hiring quarter it's that is the time when we kick off the new year where it were deeply mom knows activity so you can expect that be the net thirty add i rip bear
spk_3: early evenly spread across que to que three que por medio waited a little bit more towards two three before
spk_14: okay great and then flat question could could you
spk_3: hearts out
spk_19: no growth between new logos and path expansion my understanding of new love it had been strong and based on accommodating like they continue to be strong lead help us understand can of from a big picture standpoint an amateur the revenue got his comments from up from path expansion and how much is coming from delegates
spk_22: now
spk_3: no get question so i would we are we we come in and and and in education that new schools which is off the new was for them those were up up substantially and in the enterprise division for and in north america all access pass on a look for on a latest twelve month faces the logos are up twenty three percent
spk_23: and that and for that week
spk_0: and that continued and into one though new logos are making up a of
spk_24: significant portion of the girl
spk_25: and then obviously the other the other two pieces of the growth that we'd be come from expansion of existing customers
spk_26: and and that that half the bad is happening as well
spk_25: revenue retention is greater than ninety percent ah and then of course we thought nice services growth in the first quarter as well as amateur the record services growth the really it it really is the growth is coming from a night brad across all three of those those important metric new logo expansion of existing or kathy and services growth
spk_27: with new logo being up twenty three percent on a on a latecomer basis
spk_4: great they keep up
spk_28: except
spk_3: classic out the mouth and a parent and barrington research are lining up and and alexander cannot have any account yep sorry guys i was a new dad thanks for taking my questions are many of which were ask and answer but i have a couple follow up sad i'm given that the don't miss strength of the first quarter on i'm both revenues and adjusted either now
spk_5: and the adjusted ebitda driven in part by coaching and services and that sort of thing and then your guidance for second quarter adjusted ebitda which is a little bit below you know my estimate on the consensus estimate bob
spk_29: i'm wondering
spk_6: either a in a way it's quite likely that we were a little too aggressive on cue tips but did que one morrow from que to it on all in terms of earth thought process go forward
spk_25: yeah zell in in a word know and out of have asked feed the time in years well so are feel of course you know this from falling at the art are paid a visit some my it's not so much helpful to compare to clinch supporters that that is year over year and in our second quarter tend to be it tends to be are smaller adjusted ebitda quarter and the primary reason for that because we deliver fewer services second quarter happened to be easy usually have been a larger subscription quarter or like subscription i or the description quarter or know and a smaller services quarter because we have the holidays where we don't do to our clients don't want service delivery during a an extended period of time during the quarter in sell the quarters a little bit different que one tenth of a lot of services which of course we recognize
spk_3: that revenue at the time we deliver ah and and a nice services or subscription quarter key to tend to be a little bit lower services and a higher subscription quarter were that revenue goes on with for overtime and so i could get it it it isn't that not a borrowing thing it's just the timing of how these quarters command would be my response to that the would you would yeah anything of that how the i had ad policy that that the be a little bit of change in at least in that guidance were anticipating a little bit of change in our as dna i mean will hire a few people here and there are don't know exactly how travel will go now based upon the new pandemic
spk_30: the of it
spk_3: some additional investments and growth here and there are abbott but primarily related so they'll be a little impact of that compared to que one i'm but the but the services is the main is the main point gotcha that saw very helpful so what like you said steve earlier had to another question that the reason for waiting to queue to is just to be a little bit closer to queue for the all important you for yeah yeah i make sense on and then now
spk_20: missy and
spk_14: i guess the last question i'll ask is ah
spk_25: ah what do you see in in terms of inflationary cost pressures and then your ability to pass it on and it is part of that question and ah and is wondering about i he is strategy with regard to price increases and most a a p and leader and me
spk_20: out
spk_31: self we i think where we see
spk_4: inflationary pressures would would be probably a income of our labor costs
spk_25: i know in attracting and a talent and and palin to the organization ah
spk_32: in turn your second question is where we are seeing a bit about your second question we we have had it that he practiced of and price increases
spk_3: i've since the inception of all access pass will continue that this year and had already planned to do something a little bit larger than than we were a last year we didn't do as much at all because we've been there in the middle pandemic we plans you something a bit larger that here
spk_4: the much as a response to an end to our cocks showing up although although there is little bit of that but really because the the value of the all access pass is is taking be taking another huge leap forward with the addition of strife
spk_3: and with them and content that we have added recently and we'll be adding this year so we think there's there's an opportunity that we plan to do that at similarly and education shah and you want to comment on price increase strategy in education dash york yeah hi i'm it's very similar to what we're doing the enterprise we've got our strategy of incremental three to five percent price increases the chair we did last year and under god rather significant increase in services or prices for services the gallery our coaching forces are very good very viable and we're fine in the market could beret so he did that but we just the plan is just an ongoing
spk_25: and in all three to five percent increases of the foreseeable future
spk_33: and out like in like manner to the all access path we keep right we keep on adding really viable and new content pieces and and god he has like news a ride in a theme park some really viable on that we think will get us pricing leverage in the future
spk_0: i'm for example we're adding a new curriculum and we are generally about whole school of social emotional learning that we're going out into compliance curriculum compile which you don't have right now it to be of he gets it's a substantial upgrade which i think will help support price increases next year and for many years to come
spk_3: great that's helpful lot and then i guess don't know the very last an associate it an hour related questions on odyssey labor costs are across the board within the economy voter existing people as well as
spk_2: trying to bring new people into the organization any changes and compensation philosophy with regard to play and partners for example
spk_34: i so that be
spk_2: we are finding and and we will find kept the seattle
spk_34: the up a little bit more to to get some of the client partners or that we want with experience that that that we need and i think we have very competitive compensation plan i think it's a great model for it for our client partners are building a large bank of of a recurring revenue
spk_3: and that very attracted to them that that coupled with the embattled that were making the business right now to make the i could pass
spk_0: so valuable at it we're we're really pleased that the client partners that we're hiring and we just had failed academy with the new crew yesterday ends and to gets a great group very talented people so we're we're confident we can feed it to get great people conley look at a he to do on a computation seismic to make you remain competitive
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