富兰克林科维公司 (FC) 首席执行官鲍勃惠特曼在 2019年 第三季度业绩 - 收益电话会议记录

[机器翻译] 电话会议 · 2019年06月29日 · 36 次阅读

Franklin Covey Co. (NYSE:FC) Q3 2019 Results Earnings Conference Call June 27, 2019 5:00 PM ET

富兰克林科维公司(纽约证券交易所代码:[FC])2019年第3季度业绩会议电话会议2019年6月27日美国东部时间下午5:00

公司参与者

Derek Hatch - Corporate Controller, Central Services, Finance
Bob Whitman - Chairman and CEO
Steve Young - Chief Financial Officer
Paul Walker - President, Enterprise Division
Todd Davis - Executive Vice President, Chief People Officer
Sean Covey - President, FranklinCovey Education

  • Derek Hatch - 中央服务,财务部门的公司财务总监
  • 鲍勃惠特曼 - 董事长兼首席执行官
  • Steve Young - 首席财务官
  • Paul Walker - 企业部总裁
  • 托德戴维斯 - 执行副总裁,首席人事官
  • Sean Covey - FranklinCovey教育总裁

电话会议参与者

Chris Howe - Barrington Research
Trevor Romeo - William Blair
Jeff Martin - ROTH Capital Partners
Marco Rodriguez - Stonegate Capital
Zach Cummins - B. Riley FBR

  • 克里斯豪 - 巴林顿研究
  • 特雷弗罗密欧 - 威廉布莱尔
  • Jeff Martin - ROTH Capital Partners
  • Marco Rodriguez - Stonegate Capital
  • Zach Cummins - B. Riley FBR

会议主持员

Welcome to the Q3 2019 Franklin Covey Earnings Conference Call. My name is Daryl, 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. [Operator Instructions]
Please note that this conference is being recorded. I will now turn the call over to Mr. Derek Hatch. Mr. Hatch, you may begin.

欢迎参加2019年Q3富兰克林科维收益电话会议。 我的名字是Daryl,我将成为今天电话的运营商。 此时,所有参与者都处于只听模式。 稍后,我们将进行问答环节。 [操作说明]

请注意,此会议正在录制中。 我现在将电话转给Derek Hatch先生。 哈奇先生,你可以开始。

Derek Hatch

Thank you, Daryl. On behalf of the management of Franklin Covey, I would like to welcome everyone to our conference call this afternoon.
Before we begin, 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 our revenues and the acceptance of and renewal rates of the All Access Pass, the ability of the company to hire productive sales professionals, general economic conditions, competition in the company’s targeted marketplace, market acceptance of new products or services and marketing strategies, changes in the company’s market share, changes in the size of the overall market for the company’s product -- 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 influence or -- and control, anyone of which may cause future results to differ materially from the company’s current expectations, and there can be no assurance that the company’s 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 to reflect current events or circumstances after the date of today’s presentation, except as required by law.
With that out of the way, I would like to turn the time over to Bob Whitman, our Chairman and Chief Executive Officer. Bob?

谢谢你,达里尔。我谨代表富兰克林科维的管理层,欢迎大家参加今天下午的电话会议。

在我们开始之前,我想提醒大家,本演示文稿包含1995年“私人证券诉讼改革法案”界定的前瞻性陈述。前瞻性陈述基于管理层当前的预期,并受各种风险和不确定因素的影响。包括但不限于公司稳定和增加收入的能力,以及All Access Pass的接受和续订率,公司聘请高效销售专业人员的能力,一般经济条件,公司竞争目标市场,新产品或服务的市场接受度和营销策略,公司市场份额的变化,公司产品整体市场规模的变化 - 产品,公司客户培训和支出政策的变化,以及在公司最新的10-K表及其他报告中发现和讨论的其他因素提交给美国证券交易委员会的提交报告。

其中许多条件超出了我们的影响或 - 并且控制,任何可能导致未来结果与公司当前预期产生重大差异的情况,并且无法保证公司未来的业绩将满足管理层的期望。

这些前瞻性陈述基于管理层当前的预期,我们没有义务更新或修订这些前瞻性陈述,以反映今天陈述之后的当前事件或情况,除非法律要求。

有了这个,我想把时间交给我们的董事长兼首席执行官鲍勃惠特曼。鲍勃?

鲍勃惠特曼

Derek, thank you so much. Good afternoon, everyone. We really appreciate you joining us today. Hope your summers are off to a good start. Those of you who live in places that are having summer most of the countries not.
We are really pleased with our third quarter result, pleased they were strong and better than expected. Building on a robust year-to-date performance, we are on a great trajectory to achieve significant growth in adjusted EBITDA and cash flow in fiscal ‘19 and we believe also to savage the foundation for a very strong fiscal 2020 and in the coming years beyond.
Specifically, as you can see in slide three and we have said that we expect to grow reported adjusted EBITDA in constant currency from $11.9 million in fiscal ‘18 to between $18 million and $22 million in fiscal ‘19, which represents 50% to 80% -- 85% growth and then to grow adjusted EBITDA between $26 million and $31 million in fiscal ‘20 and between $35 million and $40 million in fiscal ‘21.
We have also talked about our -- some of the increased adjusted EBITDA plus the change in deferred gain in the range of $30 million to $34 million this year, the range of $38 million to $42 million next year and $47 million to $52 million the following year.
And importantly, the net cash generated we expect to really which is a very close cousin to cash flow from operating activities to very closely track reported adjusted EBITDA and again be between $18 million and $22 million this year and then $26 million to $31 million next year and $35 million to $40 million in fiscal ‘21.
So we have high expectations and our strong third quarter and year-to-date performance has moved just rapidly up the mountain toward meeting these objectives and has reinforced four key takeaways in the business that I like to just touch on there in slide four.
First takeaway is that the better than expected results in the third quarter were broad based both added to operation, as well as across all -- most of all of the lines in the income statement, showing growth in sales, higher gross margins, lower operating SG&A as a percentage of sales, and much higher adjusted EBITDA, and cash flow. The combination of these factors drove a 45% flow through of increases in revenue, the increases in adjusted EBITDA and then even higher flow through to increases in cash flow.
Second takeaway is that these results continue to be driven by significant growth in our subscription and related sales business, and by strategic and structural strength of our subscription based business model.
We are selling new subscriptions and retain substantially all of the subscription and related revenue we contract. This is creating high lifetime customer value. It is significantly increasing our visibility into future revenue.
It’s also strategically and structurally durable because there we are solving important problems and people are buying, Pass paying upfront, signing multi-year agreements and so that continued strong in the third quarter subscription or related sales grew 27% year-over-year and year-to-date we are up 30%.

德里克,非常感谢你。大家下午好。我们非常感谢您今天加入我们。希望你的夏天有一个良好的开端。那些生活在夏季大多数国家没有的地方的人。

我们对第三季度业绩感到非常满意,他们很高兴并且比预期更好。凭借强劲的年初至今业绩,我们在19财年实现调整后EBITDA和现金流量的显着增长,并且我们相信也将为未来几年强劲的2020财年打下基础超越。

具体来说,正如您在第三张幻灯片中所看到的那样,我们已经表示,我们预计在19财年,报告的调整后EBITDA将从18财年的1190万美元增长到1800万美元到2200万美元,这相当于50%到80% - 在2010财年,经济增长率为85%,然后增长调整后的EBITDA在2600万美元到3100万美元之间,在21财年增长到3500万美元到4000万美元之间。

我们还谈到了我们 - 一些调整后的EBITDA增加加上今年递延收益的变化范围在3000万美元到3400万美元之间,明年范围为3800万美元到4200万美元以及下面的4700万美元到5200万美元年。

而且重要的是,我们预计实际产生的现金净额非常接近于经营活动的现金流量,非常密切跟踪报告的调整后EBITDA,今年再次介于1800万美元至2200万美元之间,明年则为2600万美元至3100万美元在21财年,3500万美元到4000万美元。

所以我们有很高的期望,我们强劲的第三季度和年初至今的表现已经快速上升到实现这些目标,并加强了业务的四个关键要点,我想在第四个幻灯片中触及。

首先要说的是,第三季度的好于预期的结果是广泛的,既增加了运营,也增加了所有 - 收益表中的所有线路,显示销售增长,毛利率提高,运营率降低SG&A占销售额的百分比,以及更高的调整后EBITDA和现金流量。这些因素的结合推动了45%的收入增长,调整后的EBITDA增加,然后更高的流量增加了现金流量。

第二个问题是,这些结果继续受到我们订阅和相关销售业务的显着增长以及基于订阅的业务模式的战略和结构优势的推动。

我们正在销售新订阅并保留我们签订的大部分订阅和相关收入。这创造了高终身客户价值。它显着提高了我们对未来收入的可见度。

它具有战略性和结构性,因为我们正在解决重要问题,人们正在购买,通过预付款,签署多年期协议,以及第三季度订阅或相关销售的持续强劲同比增长27%到目前为止,我们上涨了30%。

Our total number of paying subscribers grew 34% compared to the same period of last year. And in addition our key subscription metrics continue to place in the company of some of the very top subscription businesses.
Third takeaway is, again it may be an emphasis again on the flow-through, our the models our subscription models high recurring revenues, strong and expanding gross margins, relatively fixed central costs and low capital intensive you are driving really compelling economics and flow through. This again is reflected in the high flow through of increases in revenue to increases in adjusted EBITDA and cash flow.
And finally, takeaway four, these rate metrics are creating compelling sales force expansion economics. These combination of factors is making it so our payback period for an investment in a new client partner is only about a year and with the huge headroom we have for sales force growth, we are really taking advantage of that opportunity.
So far this year, we have added 13 net new client partners through the third quarter that added a few since then that brought our total to -- through the end of the third quarter to 227 and we expect that at least seven additional new client partners at the end of the fourth quarter for a net addition of at least 20 net for the year.
So with those takeaways, let’s take a deeper look into our third quarter results. As you can see in the third quarter, our revenue growth was strong and broad based. You can see in slide six, revenue grew 11% in the third quarter. It’s grown 10.5% year-to-date and 10% for the latest 12 months.
Adjusted for changes in foreign exchange rates, revenue actually grew 12.3% in the third quarter and 11% -- 11.7% year-to-date, with strong growth in both the Enterprise and Education divisions.
Our balance of billed and unbilled deferred revenue all related to subscription sales grew 28% in the quarter to $63.7 million. That’s an increase of $14.1 million, compared to last year’s third quarter.
Balance of billed deferred revenue grew 16% to $39.9 million, $40 million compared to last year’s third quarter and our balance of unbilled deferred revenue grew 58%, compared to last year’s third quarter to $23.7 million.
It’s worth noting that in addition to this large and increasing balance of deferred revenue, we also have $11 million in contractual annual minimum royalty payments for international licensee partners, which further adds to our large and growing balance of annually recurring revenue.
Our total contracted revenue grew 5% in the quarter, 6.5% year-to-date and 4.5% for the latest 12 months, after observing more than $2 million of impact from foreign exchange and from the delay of the government contract.
In actuality the contracted revenue in the Enterprise division was substantially higher than this and so it was in the Education division that we were down some but that it really was reflective of some large contracts we signed last year that repeated this year but there were certain terms of the contract don’t allow us to put those on as multi-year agreements even though they are multi-year agreements because they have some rights to modify those won’t appear -- those don’t appear as unbilled deferred now.

我们的付费用户总数与去年同期相比增长了34%。此外,我们的主要订阅指标继续存在于一些顶级订阅业务的公司中。

第三个问题是,再次强调可能再次强调流程,我们的模型我们的订阅模型高经常性收入,强劲和不断扩大的毛利率,相对固定的中央成本和低资本密集度,你正在推动真正引人注目的经济和流通。这再次体现在收入增加对调整后EBITDA和现金流量增加的高流量。

最后,外卖四,这些利率指标正在创造引人注目的销售力量扩张经济学。这些因素的综合作用使我们投资新客户合作伙伴的投资回收期仅为一年左右,而且随着销售人员增长的巨大空间,我们真正利用了这个机会。

今年到目前为止,我们已经在第三季度增加了13个新的净客户合作伙伴,从那时起增加了一些,使我们的总数达到了 - 在第三季度末达到227个,我们预计至少会增加7个新的客户合作伙伴在第四季度末,全年净增加至少20个净额。

因此,有了这些内容,让我们深入研究一下我们的第三季度业绩。正如您在第三季度所看到的那样,我们的收入增长强劲且基础广泛。您可以在第六季度看到,第三季度收入增长了11%。今年迄今为止增长了10.5%,最近12个月增长了10%。

根据汇率调整,第三季度收入实际增长12.3%,年初至今增长11% - 11.7%,企业和教育部门均实现强劲增长。

我们与订阅销售相关的账单和未开单递延收入余额在本季度增长了28%,达到6370万美元。与去年第三季度相比,这增加了1410万美元。

计费递延收入余额增长16%至3990万美元,与去年第三季度相比增加4,000万美元,我们的未开单递延收入余额增长58%,而去年第三季度为2370万美元。

值得注意的是,除了递增收入的巨额且不断增加的余额之外,我们还为国际被许可方合作伙伴提供了1100万美元的合同年度最低特许权使用费,这进一步增加了我们每年经常性收入的巨大且不断增长的平衡。

在观察到外汇影响超过200万美元以及政府合同延迟后,我们的合同总收入在本季度增长了5%,今年迄今为6.5%,最近12个月增长了4.5%。

实际上,企业部门的合同收入大大高于此,因此我们在教育部门的收入有所下降,但它确实反映了我们去年签署的一些大型合同,这些合同今年重复但有一些条款合同中不允许我们将这些协议作为多年协议,即使它们是多年期协议,因为他们有一些权利可以修改那些不会出现的协议 - 现在看来这些协议似乎没有延期。

Our profitability and cash flow metrics also increased significantly. So you can see on slide seven, gross profit grew 13.6% in the quarter, it’s grown 11.2% year-to-date and 11.7% in the latest 12 months.
Gross margin percent improved 163 basis points to 70.8%. This has resulted from accelerated growth in subscription and related sales.
Our operating SG&A as percent of sales was the -- is better it’s down, it improved 269 basis points in the third quarter coming in at 65.3%, compared to 68% in last year’s third quarter and year-to-date were 370 basis points better in terms of operating SG&A relative to sales. The result has been of course significant increase in adjusted EBITDA and cash flow.
Adjusted EBITDA increased $2.5 million in the quarter to $3.1 million from $600,000 in last year’s third quarter. Adjusted for changes in foreign exchange rates, adjusted EBITDA actually increased to $2.8 million in the third quarter to $3.4 million.
Year-to-date through the third quarter, adjusted EBITDA in constant currency increased to $8.1 million, compared to only $0.5 million year-to-date through the third quarter of last year. So it’s again $7.5 million, $7.6 million through the third quarter and for the latest 12 months in constant currency, adjusted EBITDA increased 70.9% to $19.5 million, compared to $11.4 million in adjusted EBITDA for the same period last year.
Finally, net cash flow provided by operating activities, as you can see in slide 37 in the appendix increased to $18.6 million, that’s an increase of $10 million or 116%, compared to $8.6 million through last year’s third quarter.
So, overall, we felt really good about the performance of the company’s broad based nature both as to division, geography, delivery modality, et cetera, also as it relates to lines on the income statement and the cash flow statement.
Just looking at our segment results, I will start with a review of the results for the Enterprise division, just touching on some of the headlines there. As you can see on slide eight, the Enterprise division which is kind of approximately 75% of our total revenue in the third quarter, our revenue growth was broad based with strong growth throughout the U.S. and Canada, and in each of our international direct offices.
Revenue in our Licensee division was down slightly last year, reflecting the impact of foreign exchange and the conversion of the German licensee to a direct office in this last year, also recognizes that they are in the process of learning to sell All Access Pass and doing a good job. But there’s some transition for them even though it doesn’t affect our results because they pay us based on their invoice revenue.
As you can see in slide eight, in the Enterprise division, revenue grew 8.8% in the quarter and has grown 9.8% year-to-date and 11.4% for the latest 12 months. Adjusted for changes in foreign exchange, revenue grew 10.4% in the third quarter and has grown 11.2% year-to-date.
Our balance of billed and unbilled deferred revenue in the Enterprise division grew 34% and the third quarter to $55.3 million. With our balance of billed, deferred revenue increasing 16.2% to $32.3 million and our balance of unbilled deferred revenue increasing 71% to $23 million established in the foundation for strong future growth as we signed these multi-year agreements that don’t actually show up on our balance sheet but are contractual and there are and we will move into build and then into recognized revenue as they mature.

我们的盈利能力和现金流量指标也显着增加。所以你可以在第七张幻灯片上看到,本季度毛利润增长了13.6%,今年迄今为止增长了11.2%,最近12个月增长了11.7%。

毛利率提高163个基点至70.8%。这是由于订阅和相关销售的加速增长。

我们的经营销售额和销售额占销售额的百分比是 - 更好的下降,第三季度提高269个基点,达到65.3%,而去年第三季度为68%,年初至今为370个基点与销售相比,SG&A的运营更好。结果当然是调整后的EBITDA和现金流量显着增加。

调整后的EBITDA在本季度增加了250万美元,从去年第三季度的600,000美元增加到310万美元。经调整后的汇率调整后,调整后的EBITDA实际上在第三季度增加到280万美元,达到340万美元。

年初至第三季度,按固定汇率计算的调整后EBITDA增加至810万美元,而去年同期仅为50万美元,直至去年第三季度。因此,在第三季度再次出现750万美元,760万美元和最近12个月的固定货币,调整后的EBITDA增长70.9%至1,950万美元,而去年同期的调整后EBITDA为1140万美元。

最后,经营活动提供的净现金流量,如附录第37栏所示,增加到1860万美元,比去年第三季度的860万美元增加了1000万美元或116%。

因此,总体而言,我们对公司在分工,地域,交付方式等方面的广泛性质的表现感到非常满意,同时它与损益表和现金流量表中的线路相关。

只要查看我们的细分结果,我将首先回顾一下企业部门的结果,只是触及那里的一些头条新闻。正如您在第8栏中看到的那样,企业部门占第三季度总收入的约75%,我们的收入增长基础广泛,在美国和加拿大以及我们的每个国际直接办事处都有强劲的增长。

去年,我们的被许可方部门的收入略有下降,反映了外汇的影响以及德国被许可人在去年转为直接办公室的情况,也承认他们正在学习销售All Access Pass并且正在进行一份好工作。但即使它不影响我们的结果,也会有一些过渡,因为他们会根据发票收入向我们付款。

正如你在第八部分中看到的那样,在企业部门,本季度收入增长了8.8%,今年迄今为止增长了9.8%,最近12个月增长了11.4%。根据外汇汇率调整,第三季度收入增长10.4%,年初至今增长11.2%。

我们的企业部门的计费和未开单递延收入余额增长了34%,第三季度达到了5530万美元。由于我们签署了这些实际上并未显示的多年期协议,因此我们的结算,递延收入余额增加16.2%至3230万美元,我们的未开单递延收入余额增加71%至2300万美元,这是未来强劲增长的基础。在我们的资产负债表上,但是是合同性的,我们将进行构建,然后在成熟时进入已确认的收入。

The contracted revenue grew 7.1% in the third quarter and 9.5% year-to-date, 6% for the latest 12 months and again this is not in constant currency, which would have made it 100 basis points or so higher and we had 26% growth in contracted AEP and related sales.
Just touching on the Enterprise division’s profitability on the next slide, slide nine. Gross profit increased 10.6% in the third quarter, 10% year-to-date and 13.2% in the latest 12 months.
Gross margin increased 117 basis points during the third quarter to 74.3%. That occurred even with strong growth in sales of All Access Pass add-on all support services, which have a slightly lower margin.
The operating SG&A as a percentage of sales improved 256 basis points coming in at just 61%, compared to 63.5% in last year’s third quarter and that ratio of operating SG&A as sales improved 293 basis points year-to-date.
Finally, adjusted EBITDA in the Enterprise division increased to $5.8 million in the third quarter, representing a growth of 51% compared to last year’s third quarter. This reflects in a flow through of incremental revenues, incremental adjust EBITDA of 56%. In constant currency adjusted EBITDA increased actually to $6.1 million, which was growth of 59%.
Year-to-date through the third quarter adjusted EBITDA in the Enterprise division increased to $14.8 million. That’s 46.3% growth, compared to $10.1 million year-to-date last year and again adjusted for foreign exchange adjusted EBITDA year-to-date increased actually to $15.6 million or growth of 54%.
Finally for the latest 12 months adjusted EBITDA has grown 46% to $23 million at $7.3 million of growth compared to the same period last year and adjusted for foreign exchange it grew 51% to $24 million, which is growth of 51%.
So the momentum in the Enterprise division continues to be very strong and we expect to generate a significant amount of growth in invoice and contract revenue in the fourth quarter. So it establishes a strong foundation for accelerated growth in fiscal 2020 as all of that deferred revenue, primarily deferred revenue goes onto our balance sheet and it is known to be a will for sure be recognized as next year.
Just very quickly touching on the Education division, which represented a 22% of our total revenue in the quarter. Revenue growth was strong, growing 21 point -- 20.1% in the quarter, has grown 13.5% year-to-date.
Revenue growth for the latest 12 months was 5.7%, but you remember that, that was reduced last year by the impact of the expiration of a large multi-year Education Foundation contract in last year’s third quarter, should be the impact of this large contract, latest 12 months revenue growth would have been 16.6% and adjusted for changes in foreign exchange revenue grew 20.4% in the third quarter and 14.2% year-to-date. Our balance deferred revenue in the Education Division grew 13.6% in the third quarter.
Again the profitability in the Education Division was good and strong, strong improvements. Gross profit increased 24.5% in the third quarter, has grown 16% year-to-date and 60.3% for latest 12 months. The latest 12 months figure again reflecting the expiration of the large foundation contracts last year.

合同收入在第三季度增长了7.1%,今年迄今为止增长了9.5%,最近12个月增长了6%,而且这不是固定的货币,这将使其高出100个基点左右,我们有26个合同规定的AEP和相关销售额增长%。

在下一张幻灯片中,只需触及企业部门的盈利能力,请下载第九部分。第三季度毛利润增长10.6%,今年迄今为止增长10%,最近12个月增长13.2%。

第三季度毛利率增长117个基点至74.3%。即使All Access Pass附加所有支持服务的销售额增长强劲,也会出现这种情况,这些服务的利润率略低。

运营的SG&A占销售额的比例提高了256个基点,仅为61%,而去年第三季度为63.5%,而今年迄今销售额与销售额相比增长了293个基点。

最后,企业部门的调整后EBITDA在第三季度增加至580万美元,与去年第三季度相比增长了51%。这反映了增量收入的流量,增量调整EBITDA为56%。按固定汇率计算,EBITDA实际上增加到610万美元,增长率为59%。

年初到第三季度,企业部门的调整后EBITDA增加至1480万美元。与去年同期的1010万美元相比,这一增长率为46.3%,而今年迄今为止的外汇调整后EBITDA再次调整为实际增加至1560万美元或增长54%。

最后,最近12个月的调整后EBITDA增长了46%,达到2300万美元,与去年同期相比增长了730万美元,调整后的外汇收入增长了51%,达到2400万美元,增长了51%。

因此,企业部门的发展势头仍然非常强劲,我们预计第四季度的发票和合同收入将大幅增长。因此,它为2020财年的加速增长奠定了坚实的基础,因为所有的递延收入,主要是递延收入都会转移到我们的资产负债表上,并且众所周知,它将成为明年可以确认的意愿。

刚刚接触教育部门,占该部门总收入的22%。收入增长强劲,增长21点 - 本季度增长20.1%,今年迄今增长13.5%。

最近12个月的收入增长率为5.7%,但您记得去年由于去年第三季度大型多年教育基金会合同到期的影响而减少,这应该是这份大合同的影响最近12个月的收入增长率为16.6%,调整后的外汇收入变化在第三季度增长了20.4%,而今年迄今为止增长了14.2%。我们的教育部门的差额递延收入在第三季度增长了13.6%。

教育部的盈利能力再次强劲,强劲,有了很大的改善。第三季度毛利润增长24.5%,今年迄今为止增长了16%,最近12个月增长了60.3%。最近12个月的数字再次反映了去年大型基金会合同的到期。

Gross margin has improved to 61.7%, which is up 218 basis points over last year’s third quarter. We have done a great job on the operating SG&A as a percentage of sales improving 594 basis points for the quarter coming in at 63.4%, compared to 69.3% in last year’s third quarter and there is improved 500 basis points year-to-date.
And finally, the adjusted EBITDA increased $700,000 to a negative $200,000, compared to negative $900,000 in last year’s third quarter, as you know substantially all the profitability the Education Division occurs in our fiscal fourth quarter. Year-to-date through the third quarter, adjusted EBITDA in Education Division is a negative $1.4 million, is an improvement of $1.5 million compared to last year.
And so I really feel very good about the staging of the Education business being up while they are generating also lots of pipeline and contractual revenue for the fourth quarter. So that will be a long discussion on the results, but that will take you through point one, the other points are faster.
Takeaway two is that the strong results are being driven by the growth in our subscription business. As we mentioned growth in All Access Pass and related sales continue to be very strong in the third quarter and year-to-date.
As you can see in slide 13, All Access Pass and related sales in the third quarter grew 26% to $20.4 million. Year-to-date, All Access Pass and related has increased to 36% and that same metric for the latest 12 months is up 40%.
The balance of deferred revenue in the Enterprise Division grew 34% year-over-year in the third quarter and the number of All Access Pass subscribers reached 406,000 at the end of the third quarter, which is an increase of 104,000 or 34%, compared to our 303,000 paid subscribers one year ago.
Importantly, not only we are growing, but we are also growing in a way that is we think durable and sustainable, and has some metrics that are very comfortable. So those are the best subscription companies.
Shown to slide 14, some of these metrics include annual revenue retention of more than 90%, add-on services rate of more than 45%, which is highly correlated with high customer retention and expansion, a total revenue retention which includes year-over-year same client subscription and services revenue of 100% -- just over 100%, relatively large initial purchase price, which reflects the relatively large size of the population, which All Access Pass is typically purchased and this establishes the foundation for strong unit economics.
Our customer acquisition costs relative to the initial purchase price is less than 1:1, so that plus the fact you can ramp-up sales people and pay for them in a year gives a very strong reason to pursue the expansion of the sales force.
And then the expectation that we will achieve $100 million in annual recurring revenue somewhere between our fourth year and fifth year is four years to five years ahead of when many of the companies have achieved that have done so. And in the mid-term we also have this other contractual recurring revenue of the minimum royalty payments for Licensee business.

毛利率已提升至61.7%,较去年第三季度上升218个基点。我们在运营的SG&A上做得很好,占本季度销售额的594个基点,达到63.4%,而去年第三季度为69.3%,今年迄今为止提高了500个基点。

最后,调整后的EBITDA增加了70万美元至负20万美元,相比之下去年第三季度的负90万美元,因为您对第四季度教育部门的实际利润率大致了解。年初到第三季度,教育部调整后的EBITDA为负140万美元,比去年增加了150万美元。

因此,我对教育业务的升级感到非常满意,同时他们在第四季度也产生了大量的管道和合同收入。因此,这将是对结果的长时间讨论,但这将带您通过第一点,其他点更快。

最重要的两点是,我们的订阅业务增长推动了强劲的业绩。正如我们所提到的,All Access Pass的增长以及相关销售在第三季度和今年迄今仍然非常强劲。

正如您在幻灯片13中看到的那样,第三季度的All Access Pass和相关销售额增长了26%,达到了2040万美元。年初至今,All Access Pass及相关信息已增加至36%,最近12个月的相同指标增长了40%。

第三季度,企业部门的递延收入余额同比增长34%,第三季度All Access Pass用户数达到406,000,增幅为104,000或34%,一年前我们的303,000名付费用户。

重要的是,不仅我们在成长,而且我们也在以一种我们认为持久和可持续的方式发展,并且有一些非常舒适的指标。那些是最好的订阅公司。

如图14所示,这些指标中的一些包括年收入保留率超过90%,附加服务率超过45%,这与高客户保留率和扩展率高度相关,包括年度在内的总收入保留率 - 相同的客户订阅和服务收入100% - 刚刚超过100%,相对较大的初始购买价格,这反映了相对较大的人口规模,通常购买All Access Pass,这为强大的单位经济学奠定了基础。

我们相对于初始购买价格的客户购置成本低于1:1,因此,除了可以增加销售人员并在一年内支付费用这一事实外,这也是推动销售人员扩张的一个非常有力的理由。

然后我们预计,在我们的第四年和第五年之间,我们将在年度经常性收入中实现1亿美元,比许多公司已经实现这一目标要早四年到五年。在中期,我们还有被许可方业务的最低特许权使用费的其他合同经常性收入。

So the combination of these things we think is great that we can grow and that we can grow in a way that is durable and quality and reflects the fact that our customers are really getting enormous value from the All Access Pass and the things they are doing.
So the fact that they are -- when they renew, they are both expanding, oftentimes is extending the term of their contract shows that they are getting real value, in many cases some of these clients might face headwinds in their particular industry or whatever they are choosing to consolidate and give us a higher and higher share of their business, and the value proposition is very compelling.
To increase this client impact, we are committed to consistently adding content and capabilities to the All Access Pass. As you can see on slide 16, we have consistently added content and new capabilities. We had a 1,200 micro learning articles, which were being added to all the time with the acquisition of Jhana and these articles were pushed out to leaders in our client populations weekly. We added broad coaching capabilities with the acquisition of Robert Gregory Group and created four new major courses that are now offered in all modalities live and digital.
In this continuing -- with the continuing theme of expanding into content categories that we think are very powerful. We are really pleased to announce that we have just signed an exclusive agreement with Liz Wiseman, renowned author of the bestselling book multipliers and one of the most sought after speakers and teachers on leadership.
Liz is a researcher and executive advisor who teaches leadership to executives around the world and has been listed on the Thinker’s 50 ranking and named one of the top 10 leadership thinkers in the world.
Wiseman has conducted a significant research in the field of leadership and collective intelligence and Liz writes for The Harvard Business Review, fortunate a variety of other business and leadership journals.
We have entered into an initial term tenure agreement, which can be expanded in multiple times beyond that and we will be developing together a powerful premier leadership development solution based on multipliers to be included in Franklin Covey’s All Access Pass.
We are really excited about this new partnership and we are thrilled to be partners with Liz and with the entire Wiseman group will be sending out a press release providing more information on this new partnership tomorrow morning.
So we continue to build the strategic durability by identifying those big intractable problems that are based in scaled and lasting change in human behavior. We also have structural durability that’s driven by the fact that All Access Pass purchase contract and pay for their subscription at least a full year in advance.
And second, that is shown in slide 17, an increasing percentage of pass holders or any entering into multi-year contracts. For the latest 12-months, 29% of pass holder organization entered into multi-year contracts, up from 15% a year ago.

因此,我们认为这些事情的结合是我们可以成长的伟大之处,我们可以以持久和高质量的方式成长,并反映出我们的客户真正从All Access Pass和他们正在做的事情中获得巨大价值的事实。

事实上,他们是 - 当他们更新时,他们都在扩大,往往延长他们的合同期限表明他们正在获得真正的价值,在许多情况下,这些客户中的一些可能会面临他们特定行业的逆风或任何他们我们选择巩固并为我们提供越来越高的业务份额,而且价值主张非常引人注目。

为了增加客户端的影响,我们致力于不断向All Access Pass添加内容和功能。正如您在幻灯片16中看到的,我们一直在添加内容和新功能。我们收到了1200篇微型学习文章,这些文章随着Jhana的收购而不断增加,这些文章每周被推送给我们客户群中的领导者。我们通过收购罗伯特格雷戈里集团增加了广泛的教练能力,并创建了四个新的主要课程,现在提供各种形式的现场和数字。

在这个持续的过程中 - 继续扩展到我们认为非常强大的内容类别的主题。我们非常高兴地宣布,我们刚刚与Liz Wiseman签订了独家协议,Liz Wiseman是畅销书籍倍增者的着名作家,也是最受关注的演讲者和领导力教师之一。

Liz是一名研究员和执行顾问,教授全球高管的领导能力,并被列入Thinker 50强排行榜,并被评为全球十大领导思想家之一。

Wiseman在领导力和集体智慧领域进行了重要研究,Liz为“哈佛商业评论”撰写文章,为各种其他商业和领导力期刊提供了便利。

我们签订了一份初始任期协议,可以多次扩展,我们将共同开发一个基于乘数的强大的首要领导力发展解决方案,纳入富兰克林科维的全通准证。

我们对这种新的合作伙伴关系感到非常兴奋,我们很高兴与Liz成为合作伙伴,整个Wiseman集团将发送新闻稿,提供有关明天上午这一新合作伙伴关系的更多信息。

因此,我们通过识别那些基于人类行为规模和持久变化的棘手难题来继续建立战略持久性。我们还拥有结构耐久性,这是因为All Access Pass购买合同并至少提前一年支付其订阅费用。

第二,幻灯片17显示,通行证持有人或任何签订多年期合同的比例越来越高。在最近的12个月中,29%的通行证持有者组织签订了多年合同,高于一年前的15%。

As in -- illustrated in slide 18, our goal is to simultaneously achieve the combination of top tier growth in subscription related sales, strong growth there to be in the top tier of these -- of the economic and customer metrics to be reviewed and also top tier rates of growth and adjusted EBITDA in cash flow.
That’s a rare thing to be hitting in all three of them. We believe that we are and we can continue to do so, and for us achieving the intersection of these three factors reinforces this prospect of creating significant increases in value for our shareholders and for our clients.
A bullet point on takeaway three, which is that our the models high recurring revenue, strong gross margins and relatively fixed central costs and low capital intensity is driving compelling economics.
As you can see in the slide 20, the flow-through of incremental revenue to increases in adjusted EBITDA, which is in other words how much the growth and revenue actually gets to the adjusted EBITDA line has been very strong for the third quarter, 45% year-to-date, 44% in the latest 12-months, 35% of the incremental revenue has flow-through the increases in EBITDA and actually the cash flow has grown a bit faster than that.
As we have noted the final takeaway is that, our subscription metrics create compelling sales force growth economics. We have reported several times on the big opportunity we have there. But the fact you can invest in a client, new client partner who over a period of years you can see on 22 -- slide 22, over the first five years you get to a $1.3 million of revenue, generating very high gross margin fully pace for herself or himself in the first year combined with a customer acquisition cost that also is less than 1:1 gives really compelling economics and we are taking advantage of that and as we mentioned we have added 13 net new client partners through the third quarter, we have added a few since then toward our expectation that we will meet at least 20 net new client partners that we said we would at the start of the year by the end of the summer and over the next three years, we expect to add at least 75 net new client partners to our base of 234.
So in conclusion, again, the takeaways, which I know you have already gotten that on slide 23, so the broad based results in the third quarter that were higher than expected that has established the foundation for and already put us in the even -- with that kind of growth we have already grown by the amount we expected to for the year and our guidance that this is being driven by the continued strength of the subscription related sales model that there -- the high flow-through that we have forecasted that we are great for what is happening and we expect to be a very high growth -- to achieve very high rates of growth in both EBITDA and cash flow this year and in coming years, and that we have a great unit expansion opportunity with sales force which would take advantage of our new sales school with our five recruiters and with many other things we are doing to make sure we take advantage of this.

如幻灯片18所示,我们的目标是同时实现订阅相关销售的顶级增长,以及最高层的强劲增长 - 需要审核的经济和客户指标,以及最高增长率和现金流量的调整后EBITDA。

这对他们三个人来说是罕见的。我们相信我们是,而且我们可以继续这样做,而对我们来说,实现这三个因素的交叉,可以强化为股东和客户创造显着价值增长的前景。

外卖三的一个要点是,我们的模型高经常性收入,强劲的毛利率和相对固定的中央成本和低资本密集度正在推动引人注目的经济学。

正如您在幻灯片20中看到的那样,增量收入流入调整后的EBITDA,换句话说,第三季度增长和收入实际上对调整后的EBITDA线的增长幅度非常大,45年初至今,在最近12个月中占44%,增量收入的35%流过EBITDA的增长,实际上现金流增长速度略快于此。

正如我们已经注意到的最终结果是,我们的订阅指标创造了引人注目的销售人员增长经济学。我们已经多次报道过我们在那里的大好机会。但事实上,你可以投资一个客户,新的客户合作伙伴,你可以在22年 - 22年滑雪,在前五年你可以看到你获得130万美元的收入,产生非常高的毛利率对于自己或他自己的第一年加上客户获取成本也小于1:1给出了非常引人注目的经济学,我们正在利用这一点,正如我们所提到的,我们已经在第三季度增加了13个净新客户合作伙伴,从那时起,我们增加了一些我们的期望,我们将至少会见20个净新客户合作伙伴,我们将在今年年初到夏季结束,在未来三年,我们希望增加至少75个净新客户合作伙伴到我们的234个基地。

总而言之,我知道你已经在幻灯片23中得到了这些内容,因此第三季度的广泛结果高于预期,已经奠定了基础并且已经使我们处于平衡状态 - 随着这种增长,我们已经增长了我们预计的年度数量和我们的指导,这是由订阅相关销售模式的持续强势所驱动 - 我们预测的高流通性我们对正在发生的事情非常了解并且我们期望实现非常高的增长 - 今年和未来几年实现EBITDA和现金流的非常高的增长率,并且我们有一个很好的单位扩张机会与销售人员这将利用我们的新销售学校与我们的五名招聘人员以及我们正在做的许多其他事情,以确保我们利用这一点。

We appreciate your support. We really appreciate the efforts of approximately 1,000 associates throughout the world. We are really excited about our opportunities and about the trajectory we are on to achieve significant growth this year and the years ahead and I would just say it’s an exciting and great time to be at Franklin Covey. I think it’s a great and exciting thing to be a client of Franklin Covey. Hopefully it’s also a good time and exciting time to be an owner of Franklin Covey.
So, with that, I will now turn the time over to Steve Young, our CFO to review our outlook and guidance for the balance of the year. Steve?

感谢您的支持。 我们非常感谢全世界大约1,000名员工的努力。 我们对我们的机遇以及我们今年和未来几年取得显着增长的发展轨迹感到非常兴奋,我只想说这是一个令人兴奋和充满乐趣的富裕林科威时光。 我认为成为Franklin Covey的客户是一件非常棒的事情。 希望这也是成为Franklin Covey老板的好时机和激动人心的时刻。

因此,我现在将时间转交给我们的首席财务官史蒂夫杨,以审查我们对今年余额的展望和指导。史蒂夫?

Steve Young

Hey. Thanks. Thank you, Bob. Good afternoon, everyone. Our specific guidance for fiscal ‘19 as you know was that in constant currency adjusted EBITDA would increase from $11.9 million in fiscal 2018 to a range of between $18 and $22 million in FY19, representing a year-over-year growth of between 50% and 85%.
We reaffirm this guidance. We are really pleased that in constant currency adjusted EBITDA, as Bob said, has increased from -- increased $7.6 million year-to-date through the third quarter. We are experiencing very strong momentum in the business, as a result we expect to retain this $7.6 of year-to-date adjusted EBITDA growth and even add a bit to it in the fourth quarter putting our full year adjusted EBITDA essentially right in the middle of our guidance range of $18 million to $22 million, representing year-over-year growth in adjusted EBITDA of approximately 65% to 68%.
Specifically, we expect year-over-year adjusted EBITDA to increase by up to $500,000 in the fourth quarter. And this in spite of the fact that almost all of our growth in invoice revenue in the fourth quarter is expected to be subscription sales whose revenue will be recognized over time, but whose cost for marketing and for hiring new client partners as you know will be expensed in the fourth quarter.
And a second reason that the adoption of the new topic ASC 606 accounting standard will cost us approximately $1.3 million of adjusted EBITDA in the fourth quarter this year, compared to our fourth quarter of last year.
So to conclude we are really excited about our results year-to-date by the expected strength of the fourth quarter and by the significant momentum of the business overall. As a result of this momentum and our strong business model, we not only expect to achieve our guidance for the year, but establish a foundation for very strong results in the future.
So, thank you, Bob.

嘿。谢谢。鲍勃,谢谢你。大家下午好。我们对19财年的具体指导如你所知,在固定货币调整后的EBITDA将从2018财年的1190万美元增加到19财年的1800万美元到2200万美元之间,同比增长50%至50%。 85%。

我们重申这一指导意见。我们真的很高兴,正如鲍勃所说,按照不变货币调整后的EBITDA,从今年到第三季度增加了760万美元。我们正在经历非常强劲的业务增长势头,因此我们预计今年迄今为止的调整后EBITDA增长保持7.6美元,甚至在第四季度增加一点,使我们的全年调整后EBITDA基本上处于中间位置我们的指导范围为1,800万美元至2,200万美元,相当于调整后EBITDA的年增长率约为65%至68%。

具体而言,我们预计第四季度的同比调整后EBITDA将增加至50万美元。尽管我们预计第四季度发票收入的几乎所有增长都将是订阅销售,其收入将随着时间的推移而得到确认,但其营销成本和雇佣新客户合作伙伴的费用如您所知在第四季度支出。

另外一个原因是,与去年第四季度相比,今年第四季度采用新主题ASC 606会计准则将使我们的调整后EBITDA约为130万美元。

因此,总结我们对今年迄今为止第四季度的预期实力以及整体业务的巨大势头感到非常兴奋。由于这种势头和强大的商业模式,我们不仅期望实现今年的指导,而且为未来的强劲成果奠定基础。

鲍勃,谢谢你。

鲍勃惠特曼

Thanks, Steve. At this point let’s open it for questions. I will ask our operator to open the line. Thanks.

谢谢,史蒂夫。 在这一点上,让我们打开它来提问。 我会要求我们的运营商打开这条线。 谢谢。

问答环节

[Operator Instructions] And we do have a question from Alex Paris. Go ahead with your question, Alex.

[操作员说明]我们确实有一个Alex Paris的问题。 继续你的问题,Alex。

Chris Howe

This is Chris Howe sitting in for Alex. Good afternoon, everyone.

这是Chris Howe坐在Alex身边。 大家下午好。

鲍勃惠特曼

Hi, Chris. How are you?

嗨,克里斯。 你好吗?

Chris Howe

I am good. Just sorting through my thoughts and notes here, you have mentioned previously about the multi-year contracts trending to 50% over time and on the last call, I believe you mentioned a seven-year contract. As we think of the length of these contracts, can you characterize or break down the mix that you are seeing as you push forward these efforts to accrue more multi-year contracts overtime?

我很好。 刚刚在这里整理了我的想法和笔记,你之前已经提到过多年期合约趋势达到50%,在最后一次通话中,我相信你提到了一份为期七年的合同。 当我们考虑这些合同的长度时,你是否可以描述或打破你所看到的组合,因为你推动这些努力加速产生更多的多年合同?

鲍勃惠特曼

Sure. Thanks. I will ask Paul Walker to talk through.

当然。 谢谢。 我会请保罗沃克谈谈。

保罗沃克

Hi, Chris. Yeah. So, as we mentioned, we are in the last 12 months multi-year contracts have increased to -- now 29% of our contracts are multi-year. And of course, we are interested in having each of -- one of those be for as many years as possible and you remember accurately the one we talked about last time that was up to seven years.
We are seeing a number of these multi-year contracts are not just for two years now but are increasingly becoming three-year contracts. I am not sure that clients will do -- how many clients will do seven years. We will try for that.
But we are -- we are really pleased with the momentum. We saw in that slide that Bob showed a minute ago it was 1% of our contract two years ago, 15% and now it’s up to 29%, and we continue to work that.
I think what happens is, one, our sales force becomes more comfortable with positioning that right out of the gates. And two, as we are now into our second and third and approaching fourth year renewal cycle to some of these clients, we are now so embedded with them that it makes a lot of sense.
The things we are talking about, the journeys we are on with them just will have a multi-year aspect to them and so it makes sense for the client to save a little bit by going multi-year and just enter into that longer term commitment with us. So we expect that to keep growing.

嗨,克里斯。是啊。所以,正如我们所提到的,我们在过去的12个月里,多年合同已经增加到 - 现在我们合同的29%是多年的。当然,我们有兴趣让每一个 - 其中一个尽可能多年,并且你准确地记得我们上次谈到的那个长达七年的那个。

我们看到这些多年合同中的一些合同不仅仅是两年,而是越来越多地成为三年合同。我不确定客户会做什么 - 有多少客户会做七年。我们会为此而努力。

但我们是 - 我们对这种势头非常满意。我们在那张幻灯片中看到鲍勃在一分钟之前就表明它是两年前合同的1%,15%,现在高达29%,我们继续努力。

我认为会发生的事情是,一方面,我们的销售人员对于将其定位在大门之外变得更加舒适。还有两个,正如我们现在正处于我们的第二个和第三个以及即将到来的第四年更新周期中的一些客户,我们现在已经如此嵌入它们,这很有意义。

我们正在讨论的事情,我们与他们的旅程只会对他们有多年的影响,因此客户通过多年来节省一点时间并进入长期承诺是有道理的和我们。所以我们希望继续增长。

Chris Howe

Okay. That’s great. And then, some more questions here, you mentioned the rep last time that solely targeting multi-year agreements. As you move forward in this transition of the sales force, is that their main focus now or is there still -- are there still other people on the sales force that are not focused on multi-year agreements or are they focused on both, I should say?

好的。 那很棒。 然后,在这里再提出一些问题,你上次提到了代表多年协议的代表。 当你在销售人员的这种转变中向前迈进时,他们的主要关注点是现在还是仍然存在 - 销售人员中还有其他人没有关注多年协议,还是他们专注于两者,我 应该说?

保罗沃克

I will stay with that. This is Paul again. So our sales force is exclusively focused, first of all, it’s important to note, they are exclusively focused on selling All Access Pass in the Enterprise Division. So that all we sell is the All Access Pass and the related services that go along with it.
There are some of our client partners that still have a bit of traditional business that either they are still trying to convert over or those clients will just stay traditional clients of ours, but essentially all of the time and energy and effort is on selling All Access Pass.
Within that context, we attempt to position multi-year every time we can and there are some clients that as this is our first time becoming a client of ours that, that the timing is not right for them to make that kind of commitment. They will try this out for a year and they might come back at their first renewal period and then at that point they might go multi-year with us. But yes, everybody selling All Access Pass and we are trying to position multi-year where we can.

我会坚持下去。这又是保罗。所以我们的销售人员专注,首先,重要的是要注意,他们专注于销售企业部门的All Access Pass。因此,我们销售的所有产品都是All Access Pass以及随之而来的相关服务。

我们的一些客户合作伙伴仍然有一些传统业务,要么他们仍在尝试转换,要么客户只会留下我们的传统客户,但基本上所有的时间,精力和努力都是出售All Access通过。

在这种情况下,我们每次都会尝试多年,并且有一些客户因为这是我们第一次成为我们的客户,他们做出这种承诺的时机不合适。他们会尝试一年,他们可能会在第一次更新期间回来,然后在那时他们可能会和我们一起多年。但是,是的,每个人都在销售All Access Pass,我们正试图在可能的情况下定位多年。

鲍勃惠特曼

Chris, just one of the note, this is Bob -- the nature of the problems, we are helping clients solve when they really get into it as Paul mentioned. They recognize, if they are going to try to transform and get lasting behavioral change in the way that their sales force engages clients, say, a major consulting firm or a major technology firm.
They recognized that both the journey of getting all of the salespeople across that and then maintain that was coaching and ongoing tools, this is going to be a multi-year journey and it’s a journey that’s worth it because they know what the payback is going to be if you are trying to get 190,000 frontline employees to do better -- and do something better or different every day. So it will drive guest satisfaction, that’s an initiative that they are going to be on forever and you always have a new frontline people, you need to keep it going.
And so, the very nature of what we do argues for multi-year contracts is just, as Paul said, in the initial year, they don’t know the extent to which they are going to be engaged in these big journeys. Once they get engaged, it’s a very straightforward things, if we look, you have to match the contract term to what you are trying to get done and you can save a little in the way -- during the way, so.

克里斯,只是其中一个注意事项,这是鲍勃 - 问题的本质,我们正在帮助客户解决他们确实如保罗提到的那样。他们认识到,如果他们试图转变并以其销售人员与客户(例如,一家大型咨询公司或一家大型技术公司)合作的方式进行持久的行为改变。

他们认识到,让所有销售人员参与进来,然后保持这一目标的过程就是教练和持续工具,这将是一个多年的旅程,这是一次值得的旅程,因为他们知道回报的目的是什么。如果你想让190,000名一线员工做得更好 - 并且每天做更好或不同的事情。因此,它将提高客户的满意度,这是他们将永远保持的一项举措,而且你总是有一个新的前线人员,你需要保持这种状态。

因此,我们所做的多年合同辩护的本质正如保罗所说,在第一年,他们不知道他们将在多大程度上参与这些大旅程。一旦他们订婚,这是一个非常简单的事情,如果我们看一下,你必须将合同条款与你想要完成的工作相匹配,你可以节省一点 - 在这期间,所以。

Chris Howe

Thank you for the color. I have many questions here, but one more, if I may.

谢谢你的颜色。 我在这里有很多问题,但如果我可以,还有一个问题。

鲍勃惠特曼

Sure.

当然。

Chris Howe

As you continue to move towards 2021 and you talked about the higher levels of net cash that are going to be generated, with this additional cash and as you see more of this deferred revenue being recognized. How do you anticipate allocating this cash to investments, repurchases and/or acquisitions? And in regard to John and Robert Gregory, are there others that present viable candidates for integration into Franklin Covey?

随着你继续走向2021年,你谈到了将要产生的更高水平的净现金,这个额外的现金,并且你看到更多的这种递延收入得到承认。 您如何预期将这笔现金分配给投资,回购和/或收购? 关于约翰和罗伯特格雷戈里,还有其他人提出融入富兰克林科维的可行候选人吗?

鲍勃惠特曼

Great. Yeah. Priorities for the utilization cash or kind of in this order, first of all, is investing in the recurring needs of the existing business and we are just the ongoing investment in keeping all the content fresh, our portals and everything that go on and that’s the first priority that’s well within our budget to do that, but it’s an ongoing investment that we make every year.
The second is the ability to take steps that would grow the business whether it’s new content, it could be an add-on acquisition, it could be the acceleration right now in the growth of the sales force to take some additional capital and those things will all have such a very high payback when you get 100% return in first year, as we said, hiring a new sales person whatever. That’s our second utilization.
The third is that we have utilized a lot of the excess cash flow beyond those two for years in repurchasing shares. Some have asked why we haven’t been active in repurchasing shares in the last quarters. And really if we haven’t -- if we are not active on repurchasing shares in a quarter, it’s due to one of three things.
Either one, we are making additional investments in the business which last year we did. We made incremental investments in our new ERP system, in our portal, acquisitions and so forth. We made substantial cash acquisition.
So one would be that we just had -- we had unusual requirements in the business. That has not historically been the case. We historically spend about 4% of our revenue in innovation and product development with the All Access Pass. We have moved that up now to 7% a year, but we usually live within that budget. But if we are not buying it could be that we are investing by stocks because we are investing in other parts of the business.
So the second is, there may be the time of year where your cash in our late part of our fiscal year because our fourth quarter is so generally significant in terms of revenue and particularly so in education. We invest a lot of money in working capital to fund all those sales in the fourth quarter and usually, so sometimes it’s just that we don’t have a lot of excess cash if we are not buying.
The third could be honestly that we may be involved in something or having discussions about something, which could be material to the business and significant enough that we are precluded from buying.
But otherwise, any time we think we can earn at least a 20% IRR by investing in our stock, which we have continued to believe is what we can do, we do that and we expect in this coming year that we will have the cash available and the inclination and expectation of doing so. Is that helpful?

非常好。是啊。首先,利用现金或此类订单的优先顺序是投资现有业务的经常性需求,我们只是持续投资保持所有内容新鲜,我们的门户网站以及所有正在发生的事情,这就是在我们的预算范围内做到这一点的首要任务,但这是我们每年都在进行的持续投资。

第二个是能够采取措施增加业务,无论是新内容,它可能是一个附加的收购,它可能是现在加速销售人员的增长,以采取一些额外的资金和那些事情将如我们所说,当你第一年获得100%的回报时,所有人都有如此高的回报,无论如何雇用一个新的销售人员。这是我们的第二次使用。

第三是我们在回购股票时多年来利用了超过这两者的大量现金流量。有些人问我们为什么在过去几个季度没有积极回购股票。事实上,如果我们没有 - 如果我们不积极回购四分之一的股票,那将是由于三件事之一。

无论哪一个,我们都在去年对我们做的业务进行额外投资。我们在新的ERP系统,门户网站,收购等方面进行了增量投资。我们进行了大量现金收购。

所以我们就是这样 - 我们在业务中有不寻常的要求。这在历史上并非如此。我们历史上将4%的收入用于All Access Pass,用于创新和产品开发。我们现在已经把它提高到每年7%,但我们通常都在这个预算范围内。但如果我们不购买它可能是因为我们正在投资于其他业务部门。

因此,第二个问题是,在我们的财政年度末期,您的现金可能存在一年中的时间,因为我们的第四季度在收入方面非常重要,特别是在教育方面。我们在营运资金方面投入了大量资金,以便在第四季度为所有这些销售提供资金,通常情况下,如果我们不购买,有时候我们就没有大量的现金。

第三个可能是老实说,我们可能参与某事或讨论某些事情,这可能对业务有重大影响,并且足以让我们无法购买。

但除此之外,任何时候我们认为通过投资我们的股票可以赚取至少20%的内部收益率,我们一直认为这是我们能做的,我们这样做,我们预计在未来一年我们将获得现金可用以及这样做的倾向和期望。这有用吗?

Chris Howe

Yes. It is. I have more but I will jump back in the queue.

是。 它是。 我有更多,但我会跳回队列。

鲍勃惠特曼

Okay. Thanks.

好的。 谢谢。

Chris Howe

Thank you for taking my questions.

感谢您提出我的问题。

鲍勃惠特曼

We are happy .We will look forward to talking to you if you like to. Those are the questions I should say.

我们很高兴。如果您愿意,我们期待与您交谈。 这些是我应该说的问题。

会议主持员

And our next question comes from Tim McHugh. Tim, you can go ahead with your question.

我们的下一个问题来自Tim McHugh。 蒂姆,你可以继续你的问题。

鲍勃惠特曼

Hi, Tim.

嗨,蒂姆。

特雷弗罗密欧

Good afternoon. It’s actually Trevor Romeo on for Tim.

下午好。 实际上,特雷弗罗密欧对蒂姆来说。

鲍勃惠特曼

Hi, Trevor. How are you?

嗨,特雷弗。 你好吗?

特雷弗罗密欧

Thanks for taking the call. I am doing well. How about yourself?

谢谢接听电话。 我做得不错。 你自己呢?

鲍勃惠特曼

Great. Thanks.

非常好。 谢谢。

特雷弗罗密欧

Yeah. So, first question here, so part of your growth strategy involves growing the client partner headcount. I just want to ask in the current labor market, how difficult is it for you to find qualified people for those roles and then along with that, how is your retention trending among the client partner group?

是啊。 所以,这里的第一个问题是,您的增长战略的一部分涉及增加客户合作伙伴的人数。 我只是想问一下,在目前的劳动力市场中,找到合格人员来完成这些角色有多困难,然后在那个问题上,您的客户合作伙伴群体的保留趋势如何?

鲍勃惠特曼

Great. Let me ask Todd Davis, who heads our People Services and who has these five recruitment professionals working with them every day. Todd, will you respond to that?

非常好。 让我问一下Todd Davis,他是我们人事服务的负责人,每天都有这五位招聘专业人员与他们合作。 托德,你会回应吗?

托德戴维斯

Yeah. Thanks. I am pleased to join you. So it’s a great question. It’s a part of the key strategy. So we have -- as Bob mentioned, we have a very seasoned recruiting staff particularly for our industry. And so while to your point labor market is certainly becoming more challenging, we have found quite frankly with the All Access Pass model more than before while they are not knocking at the door, we are finding much more interest from seasoned sales people client partners as we call them who are interested in our company for two primary reasons.
There are others, but the two primary reasons are the subscription based model where they can actually go in and have the business model so they can actually make a difference, we can make a difference within the client organization and then also I just lost my train of thought -- the two reasons are the model and then the investment that Bob was talking about, just the significant investment and not talking ill of any of our competitors in that, but they are so pleased to be with an organization that is making the financial investment in our offerings and in our solution.
So those are the two that come top of mind as we are talking and interviewing quite frankly every day. This recruiting team is pulling together some phenomenal candidates. So, yes, it has become more difficult and we are finding with the direction the company is headed. We are becoming more attractive for those sales people that are in our industry.

是啊。谢谢。我很高兴加入你们。所以这是一个很好的问题。这是关键战略的一部分。所以我们有 - 正如鲍勃所说,我们有一个非常经验丰富的招聘人员,特别是对我们的行业。因此,虽然在您的观点上劳动力市场肯定变得更具挑战性,但我们比以往更加坦率地发现All Access Pass模型,而他们并没有敲门,我们发现经验丰富的销售人员客户合作伙伴更感兴趣我们称之为对我们公司感兴趣的两个主要原因。

还有其他一些,但两个主要原因是基于订阅的模式,他们实际上可以进入并拥有商业模式,这样他们实际上可以有所作为,我们可以在客户组织内发挥作用,然后我也失去了我的火车思考 - 两个原因是模型,然后是鲍勃所谈论的投资,只是重大的投资,而不是说我们的任何竞争对手都不好,但是他们很高兴与一个组织正在进行对我们产品和解决方案的财务投资。

因此,当我们每天坦率地谈论和采访时,这两个是最重要的。这个招聘团队正在召集一些非凡的候选人。所以,是的,它变得更加困难,我们正在寻找公司的发展方向。我们对行业中的销售人员越来越有吸引力。

鲍勃惠特曼

Paul, on the retention question, do you want to address that?

保罗,关于保留问题,你想解决这个问题吗?

保罗沃克

Yeah. So, we have -- we think we have pretty good retention -- quite good retention actually, especially given where the labor market is right now and there’s a lot of reasons to join the company who have long tenure here. In fact, some people join us. They come to our sales academies. We run this five-week sales academy. Two of the weeks are in-person here in Salt Lake, our headquarters. That’s something we have been doing this year that’s making a tremendous difference.
People come in and they do a tour around our campus and they get to know some of their peers out there, their fellow client partners and one of the common refrains is you have people that have been here a long time. And they say that in a really good way and we feel like that is a really good thing.
And so we are -- we do everything we can to retain them, especially the ones we want to retain. We feel good about where we are there, and as Todd mentioned, we are hiring a lot of great people right now.

是啊。 因此,我们认为 - 我们认为我们有很好的保留 - 实际上保留得非常好,特别是考虑到现在的劳动力市场,并且有很多理由加入这里长期任职的公司。 事实上,有些人加入了我们。 他们来到我们的销售院校。 我们经营这个为期五周的销售学院。 其中两个星期在我们总部盐湖城亲自到场。 这是我们今年一直在做的事情,它正在产生巨大的变化。

人们进来,他们在我们的校园里游览,他们结识了他们的一些同行,他们的客户伙伴以及其中一个常见的禁忌是你有很长一段时间在这里的人。 他们说这是一个非常好的方式,我们觉得这是一件非常好的事情。

所以我们 - 我们尽我们所能保留它们,特别是我们想要保留的那些。 我们在那里感觉很好,正如托德所说,我们现在正在招聘很多伟大的人才。

鲍勃惠特曼

And I think just in terms of specific metrics, we need to hire about 31 client partners to retain 20 over time.

我认为就具体指标而言,我们需要雇用大约31个客户合作伙伴,以便随着时间的推移保留20个。

保罗沃克

Yeah.

是啊。

鲍勃惠特曼

And so -- and that’s -- we feel that’s a very good retention rate in the business that is heavily commissioned sales where they have to go out and win. And that can that certain if you lose, happens over time.

所以 - 那就是 - 我们认为这是一个非常好的业务保留率,这是一个高度委托的销售,他们必须走出去并赢得胜利。 如果你输了就可以确定,随着时间的推移会发生。

保罗沃克

Yeah.

是啊。

鲍勃惠特曼

But we are grateful also that our client partners that we do retain are ramping according to a little bit ahead of the schedule that we have established for them. We keep adding new schools, and tools and marketing efforts and other things to help them succeed.
And I think we have got a great group of people who have been here for many, many, many years, and we are meeting not long ago, where we went through some of our senior sales people and some of our top selling people, all of whom have been here more than 12 years. And so we have a good retention, once you get to the ramp, you tend never to leave. So, thanks.

但我们也很感激我们确实保留的客户合作伙伴正在按照我们为他们制定的计划稍微提前一点。 我们不断增加新的学校,工具和营销工作以及其他帮助他们取得成功的事情。

而且我认为我们有很多人来过很多很多年,而且我们不久前见面了,我们经历了一些高级销售人员和一些畅销人员, 他们已经在这里超过12年。 所以我们有一个良好的保留,一旦你到达坡道,你往往永远不会离开。 那谢谢啦。

特雷弗罗密欧

Okay. Great. That’s very helpful. And then, second question, you had some nice gross margin improvement come through on a year-over-year basis this quarter. I know you hadn’t necessarily seen that in the past couple of quarters, despite pretty strong revenue growth. So could you just kind of talk through the drivers of the gross margin improvement other than revenue growth that helped this quarter?

好的。 大。 这非常有帮助。 然后,第二个问题,本季度你的毛利率有了很大的改善。 尽管收入增长非常强劲,但我知道你在过去的几个季度里未必看到这一点。 那么除了本季度带来的收入增长之外,您能否谈谈毛利率改善的驱动因素?

鲍勃惠特曼

Yeah. I think the first factor is just mix. So as we have more and more subscription revenue as a percentage, we will get that. It was offset in the first couple of quarters this year somewhat by, we had such a significant expansion in our services revenue, addition of services, which we think is important that we are moving that up to now to 47% on top and that it helped down the gross margin expansion a little bit. But given the same mix of services and subscriptions, you will tend to have some just the mix shift change will add to the margins and I think that’s the primary thing.
We also have had annual price increases for the All Access Pass and that -- most of that flows through to the increment and well it doesn’t apply to the entire population because people can avoid it if they sign multi-year agreements or that they can do it by signing up, expanding their population or whatever else, despite -- and we want them to do those things.
We give them those incentives because they are our folks and we want revenue per client to grow. And if we give up a little bit on the revenue per seat to get revenue per client, that’s something that’s in our favor.
But beyond that, I think it’s primarily that there is some price increase for all new sales internally but you doesn’t take advantage of those through a combination of that and the mix shift continues to nudge the gross margin upward offset partially by sort of increases in service sales. And so in any given quarter, you might be flat or whatever we don’t expect to go backwards on this.

是啊。我认为第一个因素就是混合。因此,随着我们以百分比形式获得越来越多的订阅收入,我们将获得这一点。在今年的前几个季度,它有所抵消,我们的服务收入,服务的增加有了如此显着的扩展,我们认为这对于我们现在将其提升到47%并且它的重要性是重要的。帮助降低毛利率扩张一点点。但是考虑到服务和订阅的相同组合,你将倾向于只有一些混合班次变化将增加利润,我认为这是主要的事情。

我们还有全面访问通行证的年度价格上涨 - 大部分都流入增量,并且它不适用于整个人口,因为人们可以避免它,如果他们签署多年协议或他们可以通过注册,扩大人口或其他任何事情来做到这一点,尽管 - 我们希望他们做这些事情。

我们给予他们这些奖励,因为他们是我们的人,我们希望每个客户的收入增长。如果我们放弃每个座位的收入以获得每个客户的收入,这对我们有利。

但除此之外,我认为主要是内部所有新销售都有一些价格上涨,但你并没有利用这些因素,而且混合转移继续推动毛利率上升部分抵消增加在服务销售。因此,在任何一个季度中,您可能会持平或者我们不希望在这方面倒退。

特雷弗罗密欧

Okay. Great. That’s all I have for now. So thank you guys very much for the detail.

好的。 大。 这就是我现在所拥有的一切。 非常感谢你们的细节。

鲍勃惠特曼

Great. Thanks so much. Great questions.

非常好。 非常感谢。 好问题。

会议主持员

And our next question comes from Jeff Martin. Jeff, you can go ahead with your question.

我们的下一个问题来自Jeff Martin。 杰夫,你可以继续你的问题。

杰夫马丁

Thanks. Good afternoon, guys.

谢谢。 大家下午好。

鲍勃惠特曼

Hi, Jeff.

嗨,杰夫。

杰夫马丁

I wanted to touch on the international license partners and also the international offices. Specifically, I wondered how the direct office in China has fared if that’s growing nicely. And then, on the international license side, specifically are they all selling all Access Pass where are they in that process and do you expect some growth acceleration there?

好的。 谢谢你的颜色。 就你在识别机会方面的程度而言,就目前而言。 这是你要说的很远的东西,或者是它 - 你提到了早期的话,我们仍然不知道有什么机会可以解决它们。...

鲍勃惠特曼

Right. Paul, do you respond to that.

对。 保罗,你对此作出回应吗?

保罗沃克

Sure. Hi, Jeff. So I will start with the international direct offices. They had, as Bob mentioned a few minutes ago, really a nice Q3, every office was up in the third quarter, all of the offices are doing well for the year and we expect the opportunity to do well in the fourth quarter.
As you know, in our English speaking offices in the U.K. and Australia, they have been selling All Access Pass now essentially as long as we have here in the U.S. and the majority of their business is now All Access Pass are seeing very similar retention metrics, add-on services metrics, multi-year metrics, et cetera.
China -- China is actually doing very well, so they had a great quarter. They are not yet selling All Access Pass. They will start in the fall. We have been working -- our technology team has been working, doing great job getting a portal stood up inside China.
We do service some clients in China, so we are able to sell global deals and service clients in China, but really to do this in a big way in China we need to have our All Access Pass portal and everything in China to provide good consistent steady access for people there. So China is doing well and All Access Pass is starting to fall.
Japan has just come online in the last few months now with All Access Pass. They have sold some and that business is starting to grow for them and so we expect that they will follow a similar trajectory as we have in our English speaking countries.
And then as you know, earlier this year we assume the license in Germany, Switzerland and Austria, and they are selling All Access Pass as well. They got on board as our licensee partners did a little over a year ago and that business had a nice quarter, also it’s now being led and managed out of the U.K. by a leader there. So we feel really good about international direct and half those offices are selling All Access Pass almost exclusively on the other hand China, Japan are coming online.
The licenses are actually doing pretty well -- as well. They are up there up a little bit for the year. They will be up for the year when it’s all said and done. They were a little bit off, as Bob mentioned in the third quarter, primarily due to foreign exchange and the conversion of Germany becoming a direct office. And they were down -- they are still in the middle of this conversion themselves, so we were about a year late and supporting them with the All Access Pass, and so this is kind of their first full year if you will it.
Actually they are doing quite well. We think it will be a good driver of growth for them. They still just pay us of course royalties on their sales, but theoretically this will -- this should help them drive their business more quickly than they have in the past just like it is for us and that should translate into higher royalties for us.
Just of note we have one of our partners last year about this time full 1,000 person pass and they just got the renewal on it late last week. And so that’s kind of that’s an exciting thing to see and the same play happening in our direct operations translating and happening just the exact same way in our licensee operations and we will continue to get better and better, better out as well.

当然。嗨,杰夫。所以我将从国际直属办公室开始。正如鲍勃在几分钟前提到的那样,他们真的是一个不错的第三季度,每个办公室都在第三季度上升,所有办公室今年表现都很好,我们期望在第四季度有机会做好。

如您所知,在我们在英国和澳大利亚的英语办公室,他们现在一直在销售All Access Pass,基本上只要我们在美国这里,他们的大部分业务现在都是All Access Pass看到非常相似的保留指标,附加服务指标,多年度指标等等。

中国 - 中国实际上做得很好,所以他们有一个很棒的季度。他们还没有出售All Access Pass。他们将在秋季开始。我们一直在努力 - 我们的技术团队一直在努力,在中国境内站起来做得很好。

我们为中国的一些客户提供服务,因此我们能够在中国销售全球交易和服务客户​​,但在中国真的要做到这一点,我们需要拥有我们的All Access Pass门户网站以及中国的一切,以提供良好的一致性那里的人们可以稳定地进入所以中国表现不错,All Access Pass开始下降。

在过去的几个月里,日本刚刚通过All Access Pass上线。他们已经销售了一些,并且他们的业务开始增长,因此我们希望他们将遵循我们在英语国家的类似轨迹。

然后如您所知,今年早些时候我们将在德国,瑞士和奥地利获得许可,并且他们也在销售All Access Pass。他们在我们的许可证合作伙伴做了一年多一点的时候就加入了这个行业,而且这个行业有一个不错的季度,现在它也是由英国领导人带领和管理的。所以我们对国际直航感觉真的很好,另一半办公室几乎完全出售All Access Pass,中国,日本正在上线。

许可证实际上也做得很好。这一年他们在那里上升了一点点。当这一切都说完了,他们将会成为一年。正如鲍勃在第三季度提到的那样,他们有点偏离,这主要是由于外汇和德国成为直接办公室的转变。而且他们失败了 - 他们仍然处于这种转换的中间,所以我们迟到了大约一年,用All Access Pass支持他们,所以如果你愿意的话,这是他们的第一个全年。

实际上他们做得很好。我们认为这将成为他们增长的良好推动力。他们仍然只是向我们支付他们销售的特许权使用费,但理论上这将是 - 这应该有助于他们比过去更快地推动他们的业务,就像对我们来说一样,这应该转化为我们更高的版税。

值得注意的是,我们去年有一个合作伙伴关于这次完整的1000人通行证,他们刚刚在上周晚些时候进行了续约。所以这是一个令人兴奋的事情,我们的直接操作中发生的同样的事情正在我们的被许可人操作中完全相同的方式进行翻译和发生,我们将继续变得越来越好,也越来越好。

杰夫马丁

Okay. That’s helpful. Thanks. I wanted to ask as it pertains to the client partner additions, what’s the balance of mix in terms of ads in North America versus international markets?

好的。 这很有帮助。 谢谢。 我想问一下,因为它与客户合作伙伴的增加有关,北美和国际市场的广告组合的平衡是什么?

鲍勃惠特曼

It’s about 60/40, 60 U.S., 40 outside of the U.S. I think that’s an opportunity where we will should and will get more aggressive in our International offices. We have got China now and that now that having been part of in Germany as well we have got some big economies there that are now that we have got them in and they are part of our direct operations China now for few years has been in Germany just recently and we get those businesses running exactly how we run them in the other parts of the world where we are direct.
There’s an opportunity to add a lot of headcount there and I think we will, but for this upcoming year the mix is about 60/40 and what we expect a higher and probably will be 50/50 for quite a while. We have got a lot of headroom everywhere.

大约60 / 40,60美国,40美国以外的美国我认为这是一个机会,我们应该并且将在我们的国际办事处更积极。 我们现在已经有了中国,现在已经成为德国的一部分,我们在那里有一些大经济体,现在我们已经进入了它们,它们是我们直接运营的一部分中国现在几年来一直在德国 就在最近,我们让这些企业完全按照我们在世界其他地方运行它们的方式运行。

有机会在那里增加很多人数,我认为我们会这样做,但是对于即将到来的一年,这个组合大约是60/40,我们期望更高,并且很可能会持续50/50。 我们到处都有很多空间。

保罗沃克

And we think also, Jeff, at this point, and one of the real -- one of the strongest assets we have as a company, most important parts of the company is the leadership group we have and particularly those who had these 16 offices or areas of the world in our direct offices.
We had our quarterly leadership meeting two weeks ago and this is a group of seasoned people who on average been with us 16 years, who manage their $10 million to $15 million responsibility in the world and this is an impressive great group.
When you look at the four metrics for which they are responsible, every one of them is living within the minimum acceptable level, others have specialties where they are on the high end. But this is a group of people we noticed to run or obtain and we will be able to add these new client partners are being added to those teams now. We have also put some other wrote new roles, which are kind of player coaches that are carrying a quota but also helping to do this.
So I think we are better positioned now than we have ever been to be able to feel really confident about adding a lot of new client partners in the coming years, because each of them can take one or two a year and that that allows you to grow quite rapidly. So that’s a big -- that’s a real importance.

我们现在也认为,Jeff,以及我们作为公司所拥有的最强大的资产之一,公司最重要的部分是我们拥有的领导团队,特别是拥有这16个办事处或我们直接办公室的世界各地。

两周前我们举行了季度领导会议,这是一群经验丰富的人,他们平均与我们在一起16年,管理着他们在世界上1000万至1500万美元的责任,这是一个令人印象深刻的伟大团体。

当您查看他们负责的四个指标时,每个指标都处于最低可接受水平,其他指标则处于高端的专业水平。但这是我们注意到运行或获取的一组人,我们现在可以添加这些新的客户合作伙伴。我们还提出了一些其他新的角色,这些角色是带有配额的球员教练,但也有助于做到这一点。

因此,我认为我们现在比以往任何时候都更有能力对未来几年增加许多新客户合作伙伴感到非常自信,因为他们每年可能需要一到两年,这样才能让您成长得很快。所以这很重要 - 这才是真正的重要性。

杰夫马丁

Okay. Great. And then my last question is around new content and how quickly that becomes a revenue growth driver and it makes a lot of sense as you are bundling everything into one pass that additional content is going to have a lot more value more quickly than under the old model. I was just curious, as you bring on new content, what kind of ramp do you expect to see out of that versus what you have historically had under the old model?

好的。 大。 然后我的最后一个问题是关于新内容以及它成为收入增长驱动器的速度有多快,因为您将所有内容捆绑到一个通道中,其他内容将比旧版更快地获得更多价值,这很有意义 模型。 我只是好奇,当你带来新的内容时,你期望看到什么样的坡道与你在旧模式下的历史相比?

鲍勃惠特曼

Yeah. Under the old model, of course, we were able to look specifically to a piece of content and know exactly the revenue it generated, because we sold them separately as you know. Now when it enters as part of the All Access Pass, it’s really the value proposition that is the total ecosystem that we have.
And so, the primary ways in which we see impact, one, high -- I mean, we may have already had high retention, we already do have high retention. So it’s hard to say that went up a lot. But where it comes is, there are new jobs to be done, new impact journey this allows us to have, it allow us to go deeper into an organization.
And so, if we pick the right content areas, we pick the right problems that we see -- we have seen, for example, Jhana, the usage of Jhana is across the system, about two-thirds of our All Access Pass holders utilize it and when they it, they utilize it frequently, mostly they -- it’s really pervasive and so we can see that usage.
Our coaching business has gone up a lot and we had something new like this content from partnership with Liz Wiseman. We expect to be reflected, one, our retention rates will stay high and maybe expand. We will be able to continue to do price increases that will allow us to do things.
Third, people will sign more multi-year agreements because that’s one of the things behind them moving toward 50% is there will be an impact journeys that we know they want to be on and we have the content solutions to do it.
So, a combination of those factors, we do it within a specific budget, but we don’t look specifically to the economics of that other than that’s part of our 7% spend to add new content. But we are very precise about doing so on jobs that we know need to be done thinking will affect the whole ecosystem. Is that helpful?

是啊。当然,在旧模式下,我们能够专门查看一段内容,并确切知道它产生的收入,因为我们已按照您的知识单独销售它们。现在当它作为All Access Pass的一部分进入时,它实际上是我们拥有的整个生态系统的价值主张。

因此,我们看到影响的主要方式,一个,高 - 我的意思是,我们可能已经有很高的保留率,我们已经确实有很高的保留率。所以很难说这很多。但到了它的位置,还有新的工作要做,新的影响之旅让我们拥有,它让我们能够更深入地进入一个组织。

因此,如果我们选择正确的内容区域,我们会选择正确的问题 - 我们已经看到,例如,Jhana,Jhana的使用在整个系统中,大约三分之二的All Access Pass持有者利用它和它们何时,它们经常使用它,主要是它们 - 它真的很普遍,所以我们可以看到它的用法。

我们的教练业务增长了很多,我们从与Liz Wiseman合作的内容中得到了一些新内容。我们期望得到体现,一,我们的保留率将保持高位并可能扩大。我们将能够继续提高价格,使我们能够做到。

第三,人们将签署更多的多年协议,因为这是他们落后50%的事情之一,我们知道他们希望有一个影响之旅,我们有内容解决方案来做到这一点。

因此,这些因素的组合,我们是在特定预算范围内完成的,但我们并不专门考虑其他经济因素,而不是我们增加新内容的7%花费的一部分。但是我们非常准确地说我们知道需要做的工作会影响整个生态系统。这有用吗?

杰夫马丁

That’s helpful. I appreciate it. Thanks guys.

这很有帮助。 我很感激。 多谢你们。

鲍勃惠特曼

Thanks, Jeff.

谢谢,杰夫。

会议主持员

And our next question comes from Marco Rodriguez. Marco, you can go ahead with your question.

我们的下一个问题来自Marco Rodriguez。 马可,你可以继续你的问题。

鲍勃惠特曼

Hi, Marco.

嗨,马可。

Marco Rodriguez

Good afternoon, guys. Hey. Thanks for taking my questions.

大家下午好。 嘿。 谢谢你回答我的问题。

鲍勃惠特曼

Thank you.

谢谢。

Marco Rodriguez

Most of my questions have been asked and answered, so I just have a couple real quick, I guess, housekeeping items. In terms of your guidance, specifically on the CapEx and Cat D [ph] spend for fiscal ‘19. Looks like those numbers kind of come down here since the last guidance. Can you just talk a little bit about that?

我的大多数问题都被提出并得到了回答,所以我只想说几个真正快速的家务用品。 就您的指导而言,特别是在19财年的CapEx和Cat D [ph]支出方面。 看起来自上次指导以来这些数字有点落实。 你能谈谈这个吗?

Steve Young

Yeah. A lot of our spend on CapEx and Cat D is down in this quarter and year-to-date, just representing one capitalized projects have been completed and when certain CapEx projects have been completed. So that is in the fundamental change and the amount that we, Marco, that we plan to spend in those areas.
We are -- we have just had less spending year-to-date than we thought we would have, which means that we will make up a little bit of that in the fourth quarter perhaps and going in to next year. That’s one reason this year is down.
And then, the second reason, as Bob mentioned is, in the past we are doing a large ERP project and doing the initial development of our portal both of which were capitalized. So we had higher spending in the past on those items. We have an amount that we plan to spend each year going forward and it just so happens that the timing of projects makes our year-to-date this year a little bit lower than would be a standard run rate.

是啊。 我们在CapEx和Cat D上的大部分支出在本季度和今年迄今为止都有所下降,仅代表一个资本化项目已经完成,并且某些CapEx项目已经完成。 这就是我们计划在这些领域花费的基本变化和数量。

我们 - 我们今年的支出比我们想象的要少,这意味着我们可能会在第四季度弥补一点,并且可能会进入明年。 这是今年失败的原因之一。

然后,正如Bob提到的那样,第二个原因是,我们过去正在做一个大型的ERP项目,并且我们的门户网站的初始开发都是大写的。 所以我们过去在这些项目上花费更多。 我们计划在未来每年花费一笔金额,事实上,项目的时间安排使我们今年的年初至今比标准运行率略低。

Marco Rodriguez

Okay. I think I understand what you are saying there, but I was mostly referring to the fact that the guidance range for the full fiscal year seemed to have come down versus the prior guidance in Q2 and in the beginning of the year. So that’s just timing?

好的。 我想我明白你在说什么,但我主要指的是整个财政年度的指导范围似乎与第二季度和年初的先前指导相比有所下降。 那只是时间吗?

Steve Young

Yes. Yes. Our view of what we are going to spend on CapEx and Cat D is unchanged from what we have talked about. But as you know, when we have these large capitalized development project, et cetera, the point at which those are capitalized is when we are spending, obviously, those monies on the capitalization and that there are swings in that development. But the swings don’t -- in this case don’t represent a fundamental change in how much we plan to spend in capitalized development or capitalized spending on the portal.

是。 是。 我们对将在CapEx和Cat D上花费的观点与我们所讨论的内容保持一致。 但是正如你所知,当我们拥有这些大型资本化开发项目时,等等,那些资本化的时刻就是我们在资本化上花费的那些资金以及这种发展中的波动。 但是波动并没有 - 在这种情况下,并不代表我们计划在资本化发展中花费多少或在门户网上资本化支出的根本变化。

Marco Rodriguez

Got it. And then, in terms of the balance sheet, just the cash that you guys have on there right now just taken a look at what you have reported here year-to-date for cash flow from ops and what you had spent here for CapEx and Cat D, cash is pretty flat from the beginning of the year. So I am assuming even paying down per your credit agreements. Has anything else been accelerated to pay that down or are there other expenditures that are happening on the cash flow from financing that is kind of kept things level there?

得到它了。 然后,就资产负债表而言,你现在所拥有的现金只是看看你今年迄今为止报道的来自运营商的现金流以及你在这里为CapEx和 Cat D,从今年年初开始现金非常持平。 因此,我假设甚至根据您的信用协议付款。 还有什么其他方法可以加速支付这笔费用,还是还有其他支出来自融资的现金流,这种支出在那里保持水平?

鲍勃惠特曼

No. Not necessarily. A fair amount of our cash on our balance sheet is tied up in some foreign operations that we can repatriate or otherwise we would have paid the line of credit down even farther than we have and stuff we are always looking to repatriate cash as quickly as we can to put it to use to reduce interest expense and to use things -- used for things and investing activities refinancing activities, so that we don’t have to borrow against our line.
But a lot of our cash and reason why the cash is really kind of flat even though we have paid down our line significantly since the beginning of the year and made our term loan payments is just simply because we can’t repatriate fast enough with local laws and their local means to pay annual income tax payments and things like that.

不,不一定。 在我们的资产负债表上有相当数量的现金被捆绑在我们可以遣返的一些海外业务中,否则我们就会比我们更远地支付信贷额度以及我们总是希望尽快汇回现金的东西。 可以用它来减少利息费用和使用东西 - 用于事物和投资活动的再融资活动,这样我们就不必借用我们的线路了。

但是,我们的很多现金和理由为什么现金实际上是平的,即使我们自年初以来已经大幅降低了我们的生产线并使我们的定期贷款支付只是因为我们无法快速回国 法律及其当地支付年度所得税的方式以及类似的事情。

Marco Rodriguez

Got it. And then, last quick question, just maybe, Bob, if you can talk a little bit about an M&A landscape any sort of things you might be looking at in terms of specialized content or things that you think that might be somewhat interesting going forward?

得到它了。 然后,最后一个简单的问题,也许,鲍勃,如果你可以谈谈一个并购领域你可能会在专业内容或你认为可能会有点有趣的事情方面看到的任何事情?

鲍勃惠特曼

Yeah. Thanks, Marco. For us, we always had a lot of what we have put in the business development initiatives. For us, fewer of them are acquisitions of companies and they are parts of the acquisition of content or capabilities in some cases as you know with John and Robert Gregory we did the more -- most of what we are looking at is either expanding some kind of a capability that won’t be a big branded thing, it will just add a new capability like micro learning with Jhana or assessments or things like that.
And so many of the things we are looking at are things that will increase the usage of All Access Pass or expand the ways in which people can get value from the All Access Pass. And so number of those will probably be just license agreements where it won’t turn out to be a real M&A activity, it will be in the form of license. Occasionally we will do something big in the content area like with Liz Wiseman. That’s not a major effort on our product. But we have a couple of those kinds of things that we are working on with.
More of the things are capabilities, things that allow usage to increase usage, but we do have a Boyd Roberts who’s here in the room and he heads our business development effort and he’s got a lot on his plate and things we are looking at. But we again think most of these will fall within our normal 7% spend, 7% of revenue spend each year and that’s how that really we are organized to do that responsive.

是啊。谢谢,马可。对我们而言,我们总是拥有很多业务发展计划。对我们来说,更少的是公司的收购,在某些情况下,他们是获取内容或能力的一部分,正如你所知道的约翰和罗伯特格雷戈里我们做得更多 - 我们所关注的大多数是扩展某种一个不会成为大品牌的能力,它只会增加一个新的能力,如微笑学习与Jhana或评估或类似的东西。

我们正在研究的许多事情都会增加All Access Pass的使用范围,或者扩展人们从All Access Pass获得价值的方式。因此,许多协议可能只是许可协议,它不会成为真正的并购活动,它将以许可证的形式出现。偶尔我们会在内容领域做一些大事,比如Liz Wiseman。这不是我们产品的主要努力。但是我们正在处理几种这样的事情。

更多的东西是功能,允许使用增加使用的东西,但我们确实有一个Boyd Roberts谁在房间里,他负责我们的业务开发工作,他有很多他的板块和我们正在看的东西。但我们再次认为,其中大部分将属于我们正常的7%支出,每年7%的收入支出,而这正是我们组织起来做出响应的方式。

Marco Rodriguez

Got it. Yeah. Understood. Thanks a lot guys. I appreciate your time.

得到它了。是啊。了解。 非常感谢你们。 我很感激你的时间。

鲍勃惠特曼

Thank you, Marco.

谢谢你,马可。

会议主持员

And our next question comes from Zach Cummins. Zach, you can go ahead with your question.

我们的下一个问题来自Zach Cummins。 扎克,你可以继续提问。

扎克康明斯

Great. Thanks. Good afternoon.

非常好。 谢谢。 下午好。

鲍勃惠特曼

Hi, Zach.

嗨,扎克。

扎克康明斯

Hi. So in terms of the education segment, can you talk about what really drove the strength here in Q3 and then what are really the expectations for growth in that segment as we move into kind of FY20 and beyond?

你好。 那么就教育领域而言,你能否谈谈在第三季度真正推动这一优势的是什么呢?那么当我们进入20世纪20年代及以后的时期时,该领域的增长预期是什么呢?

鲍勃惠特曼

Yeah. I will turn this one over to Sean Covey and let him respond.

是啊。 我会把这个转到肖恩科维,并让他回应。

肖恩科维

Yeah. Sure. Hi. How are you doing, Zach? Yeah. So third quarter, we had a really strong third quarter, some of that was we had a lot of new contract we signed with schools. This year we are confident we feel good about our fourth quarter, because we feel like we are going to bring in about 50 to 100 new schools over last year. So that shows up -- some of that show up in the third quarter, these are new school that we got signed in the third.
Our retention also is stronger than last year. We think -- our retention has always been pretty high in the about 86% to 90% range and we feel like this year will be at least that good if not 1 percentage point to 2 percentage points better that showed up in the third quarter as well.
So it was -- we also did a lot of material sales, okay. So when Leader in Me school sign on, we have additional materials they can buy and we did a really good job of that in the third quarter. These are like leadership guides for students and they were extremely high margin as well and that helped the gross margin in the third quarter.
So that came in stronger than expected and we put a real focus on that and we find out at least we have updated these over the last year and we are finding that schools like these a lot. So a combination of those things helped in the third.
And then, again, the fourth, we feel pretty good about it, because we have got a stronger pipeline so far. The invoice revenue and final stage pipeline revenue for the fourth quarter were up over last year by about $1.5 million already. Again, new schools 50 to 100, so far we are about 46 over last year, the same point and then and then the retention.
We also have a lot of this year we feel good as well, because we have a lot of late opportunities that we didn’t have last year. We still have some big deals out there that could close or not close or go into next year, which will either help this year or next year.
Yeah. So, for the fourth, we feel good about it. Long-term we feel really good about our prospects, because for a few reasons. One is, the district opportunity selling, that’s one of our big areas of focus next year is to sell more to districts and less direct to schools.
In the past it’s been more of the, more of the opposite. But we are getting good with districts and we are only in eight -- 815 districts of the 15,000 districts in the U.S., 15,000 districts. So we feel like that’s a big opportunity.
The international opportunity continues to do really well. We just opened up in China. I was there last month. We have nine partners. We have licensed pretty much the whole country. We have 30 Leader in Me schools. We think we could get to a couple of hundred next year. That’s going to help us a lot. So the international opportunity is really strong.
Higher education opportunity continues to grow that helped the gross margins as well, so it becomes a higher percentage of our total sales is higher margin. We feel the growth opportunity there is really good.

是啊。当然。你好。你好吗,扎克?是啊。所以第三季度我们的第三季度非常强劲,其中一些是我们与学校签订了很多新合同。今年我们有信心在第四季度感觉良好,因为我们觉得我们将在去年带来约50到100所新学校。所以这显示 - 其中一些出现在第三季度,这些是我们在第三季度签署的新学校。

我们的保留率也比去年强。我们认为 - 我们的保留率一直相当高,在86%到90%的范围内,我们觉得今年至少会有好的,如果不是1个百分点,比第三季度出现的2个百分点更好好。

所以它是 - 我们也做了很多材料销售,好吧。因此,当我的Leader in Me学校签约时,我们可以购买其他材料,我们在第三季度做得非常好。这些就像是学生的领导指南,他们的利润率也非常高,这有助于第三季度的毛利率。

因此强于预期,我们真正关注这一点,我们发现至少我们在去年更新了这些,我们发现这些学校很多。所以这些事情的组合在第三个方面有所帮助。

然后,再次,第四,我们感觉非常好,因为到目前为止我们有一个更强大的管道。第四季度的发票收入和最后阶段管道收入比去年增加了约150万美元。再次,新学校50到100,到目前为止我们比去年大约46,同时然后保留。

今年我们也有很多,我们也感觉很好,因为我们有很多我们去年没有的机会。我们仍然有一些可以关闭或不关闭或进入明年的大宗交易,这将有助于今年或明年。

是啊。所以,对于第四个,我们感觉很好。长期来看,我们的前景非常好,因为有几个原因。一个是,区域机会销售,这是我们明年关注的重点之一是向地区销售更多,而不是直接向学校销售。

在过去,它更多的是相反的,更多的相反。但是我们的地区越来越好,我们只在美国15,000个地区的8-8个地区,15,000个地区。所以我们觉得这是一个很大的机会。

国际机会继续做得很好。我们刚刚在中国开业。我上个月在那里。我们有九个合作伙伴。我们几乎获得了整个国家的许可。我们有30个Leader in Me学校。我们认为明年可以达到几百个。这对我们很有帮助。所以国际机会非常强大。

高等教育机会继续增长,这也有助于毛利率,因此它占我们总销售额的比例越高,利润率越高。我们觉得那里的增长机会非常好。

And I think, finally, just the thing that’s, I guess, most compelling about our -- the future opportunity in education is just the impact we find we are making. We have got great research showing the efficacy of Leader in Me and how it’s increasing attendance and decreasing behavior problems and helping test scores in different areas. And that’s the key area -- that’s the word of mouth and that spreads really well, helps increase our penetration of districts and so forth. So kind of a long answer to your question but that’s how we are feeling right now.

我认为,最后,我认为,对我们来说最引人注目的是 - 未来的教育机会只是我们所发现的影响。 我们有很好的研究表明Leader在我身上的功效,以及它如何提高出勤率和减少行为问题,并帮助测试不同领域的成绩。 这是关键领域 - 这是口口相传,传播得非常好,有助于提高我们对地区的渗透率等等。 对你的问题有一个很长的答案,但这就是我们现在的感受。

扎克康明斯

No. I really appreciate all the color. Thank you for that.

不,我非常欣赏所有的颜色。 谢谢你。

肖恩科维

Yeah.

是啊。

扎克康明斯

And just one more question for me. Bob, I guess, in terms of attachment rates for add-on services with your All Access Pass offering. Do you anticipate that this is something that can be sustainable as customers start to go in the year two, three, or four of their contracts? Are these add-on services something that are going to be recurring in nature and something that these clients will consider buying on an annual basis?

还有一个问题要问我。 我想,就你的All Access Pass产品附加服务的附件费而言,鲍勃。 您是否预计随着客户在合同的第二年,第三年或第四年开始进入市场,这是可持续的? 这些附加服务是否会在本质上反复出现,而这些客户会考虑每年购买一些东西?

鲍勃惠特曼

Yeah. I think that’s been one of the most important factors I didn’t probably emphasize enough is. One of the most encouraging things is that our same client retention rate of revenue, including their past and their services were retaining just over 100% of that.
And so, I think, what’s happen is, people actually the services increase as we -- as people get down the road on this, because they recognize they are entrusting us with -- and they are content with more challenging and important problems, one for they really do need to get their behavior change and so I don’t know, Paul, if you want to add anything to that?

是啊。 我认为这是我不太重视的最重要的因素之一。 最令人鼓舞的事情之一是,我们相同的客户保留收入率,包括过去和他们的服务,仅保留了100%以上。

因此,我认为,实际情况是,人们实际上服务的增长与我们一样 - 因为人们认识到他们正在委托我们 - 而且他们满足于更具挑战性和重要性的问题, 因为他们确实需要让他们的行为改变,所以我不知道,保罗,如果你想添加任何东西呢?

保罗沃克

But the services we believe are very durable. I don’t know -- we don’t know how high up is, but at least at the current levels we think on a rolling 12 month basis we should be able to maintain what we are doing and that as clients get into their third years and fourth years and fifth years, it’s -- because they are working on things that are important.
And so to an earlier question about the M&A pipeline, I think that Marco asked, some of the things we are doing is not M&A, but it’s adding new services and designing new services to exactly meet the needs of people, so when they go through and train a bunch of managers that are coaching build in to the process. So I think right now it has been very durable and expanding. And to the extent we are good at selling and servicing clients, we think it will continue to be strong and expanded, so.

但我们认为服务非常耐用。 我不知道 - 我们不知道有多高,但至少在目前的水平我们认为在12个月的基础上,我们应该能够保持我们正在做的事情,并且当客户进入他们的第三 年,第四年和第五年,这是因为他们正在研究重要的事情。

对于之前有关M&A管道的问题,我认为Marco问道,我们正在做的一些事情不是并购,而是在增加新服务和设计新服务以完全满足人们的需求,所以当他们经历 并培训一批正在进行教练的经理人。 所以我认为现在它已经非常持久和扩展。 而且,就我们擅长销售和服务客户而言,我们认为它将继续保持强劲和扩展,因此。

扎克康明斯

Great. That’s really helpful. Well, thanks again for that and best of luck as you head into Q4.

非常好。 这真的很有帮助。 那么,再次感谢你,并且当你进入第四季时祝你好运。

鲍勃惠特曼

Thanks very much, Zach.

非常感谢,扎克。

鲍勃惠特曼

Other questions?

其他问题?

会议主持员

And we have no more questions at this time.

而且我们现在没有其他问题了。

鲍勃惠特曼

Okay. Great. Well, we will just conclude and thank each of you for joining today. Again, as I mentioned, it is very exciting time to be part of Franklin Covey. It’s time when really to see the impact that we are having in clients and see the recognition of that by revenue retention, new sales, et cetera. It’s really encouraging. And we look forward to talking with many of you in the coming days and weeks. If you have additional questions, happy to respond and we look forward to a strong fourth quarter and to getting a chance to have this formal discussion in November. Thank you so much.

好的。 大。 那么,我们将结束并感谢你们今天的加入。 再次,正如我所提到的,成为富兰克林科维的一部分是非常激动人心的时刻。 是时候真正看到我们对客户的影响,并通过收入保留,新销售等等来看待这一点。 这真的很鼓舞人心。 我们期待在未来几天和几周内与你们许多人交谈。 如果您有其他问题,我们乐意回应,我们期待第四季度的强劲表现,并有机会在11月份进行正式讨论。 非常感谢。

会议主持员

And thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.

女士们,先生们,谢谢你们。 今天的会议结束了。 感谢您的参与。 您现在可以断开连接。

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