Q3 2021 Franklin Covey Co Earnings Call
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Once again, thank you for holding your conference call will be beginning shortly thank you for your patience.
[music].
Welcome to the Q3 'twenty 'twenty, 1 Franklin Covey earnings Conference call. My name is Adrian and I'll be your operator for today's call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press Star then 1 on you touched on zone.
Please note. This conference is being recorded and now I turn the call or a Derek hatch corporate controller Derek Hatch you may begin.
Thank you Adrian.
Good afternoon, ladies and gentlemen on behalf of Franklin Covey, I would like to welcome you to our conference call to discuss the third quarter of fiscal 2021 financial results and hope everyone is having a great summer.
Before we begin this presentation, we'd like to remind everyone that this presentation contains forward looking forward looking statements within the meaning of the private Securities Litigation Reform Act of $19.95.
Forward looking statements are based upon management's current expectations and are subject to various risks and uncertainties, including but not limited to the ability of the company to stabilize and grow revenues the acceptance of and renewal rates for our subscription offerings, including the all access pass and leader in me memberships the duration on recovery from the the duration and recovery from the district.
The COVID-19 pandemic.
The ability of the company to hire productive sales professionals general economic conditions competition on the Companys targeted marketplace market acceptance of new offerings or services and marketing strategies changes in the companys market share changes on the size of the overall market growth the company's products.
Changes in the training and spending policies of the Companys clients and other factors identified and discussed in the company's most recent annual report on form 10-K.
Other periodic reports filed with the Securities and Exchange Commission. Many of these conditions are beyond our control or influence any 1 of which may cause future results to differ materially from the company's current expectations and there can be no assurance the company's actual future performance will meet management's expectations. These forward looking statements are based on management's current expectations.
And we undertake no obligation to update or revise these forward looking statements to reflect events or circumstances. After the date of todays presentation, except as required by law.
With that out of the way, we'd like to turn the time over to Mr. Bob Whitman, Our chairman and Chief Executive Officer Bob.
Thank you very much Derek.
Good afternoon, everyone. We're happy to have the opportunity to talk with you today really appreciate you joining us.
We're pleased to report as you saw on the press release that our third quarter results were strong and even stronger than expected.
We believe this again reflects the strength power quality and durability of our customer value proposition and the high growth durable subscription business model that we have created.
Just some highlights as shown on slide 3.
Revenue was up 58% in the quarter and it was also greater than fiscal 19 strong third quarter.
Gross margin percentage was up 587 basis points, our operating SG&A as a percentage of sales improved to 63, 6%.
Adjusted EBITDA increased $12.2 million in the quarter to $8.6 million.
Our net cash from operating activities increased 65% to $30.9 million.
And we ended the quarter was $51 million on liquidity, even after making a major investing and the acquisition of strides.
So very little more detail on each of these key highlights.
Revenue in the third quarter was $58.7 million, which obviously you represented a big increase compared to the $37.1 billion of revenue.
Last year's third quarter, which of course was impacted by the Covid pandemic.
Importantly, though the $58.7 million on revenue was not only significantly higher than in last year's third quarter. It was also higher than the $56 million on revenue achieved in the strong third quarter of fiscal 19, pre pandemic, which itself represented the big increase compared to the $50.5 million revenue achieved in the third quarter of fiscal 2008.
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This strong growth was driven primarily by the strength and growth of all access pass.
And also of our subscription business and education.
The excess path, we see in slide 4.
In the third quarter, all access pass subscription sales increased 17% to $19.2 million.
Growth from $2.8 million compared to the third quarter of fiscal 2020.
Importantly distribution unit growth was 40% compared to the $13.8 million on all access pass sales achieved in the strong third quarter.
<unk> 2019.
When you take the subscription plus subscription services sales grew 43% to $29.7 million in the third quarter compared to $20.8 million in the third quarter of fiscal 2020.
But also grew 39% compared to the 21.4 million of all access pass subscription and subscription services sales in the third quarter of fiscal 2019.
Our total balance of deferred subscription revenue grew 26% in the third quarter to $55.3 million net increase of $11.4 million compared to a balance of $43.9 million at the end of last year's third quarter. The.
This represented a very strong growth from 39% compared to our deferred revenue balance of $39.9 million in the third quarter of fiscal 19.
And finally, our balance of Unbilled deferred revenue grew 23% to.
To $41.3 million in this year's third quarter and grew 74% compared to $23.7 million dollar balance of Unbilled deferred revenue in the third quarter of fiscal 19.
And this reflects of course, the significant ongoing increase in the percentage of our all access pass contracts, which are now multi year, we've talked in the past of having roughly a third of our contracts.
Multi year, it's now more than 40%.
And the 40% of contracts represent 52% of all of our all access pass subscription revenue is now in multiyear contracts in North America, and that's really encouraging and exciting that people are seeing that value and that we're already have deferred revenue not just for 2022.
Full year, but already significant amounts for 2023.
Our revenue growth was strong as we talked about and as shown on slide 5.
The growth of our profitability and cash flow related to this revenue growth was even more significant.
Gross margin percentage for the company increased 587 basis points to 78, 2% in the third quarter compared with 72, 3% in last year's third quarter, 78% in the third quarter in fiscal 19, and 69, 2% in the third quarter of fiscal 18.
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Gross margins in the Enterprise Division itself actually grew to 81, 5% in the third quarter.
Operating SG&A as a percentage of sales as I mentioned declined to 63, 6%, representing a significant improvement compared to the third quarter of fiscal 2020 was off to a level lower than the 65, 3% achieved in fiscal 2019.
Third quarter, and the 68% achieved in the third quarter of fiscal 18.
Note that adjusted EBITDA increased $8.6 million in the third quarter, that's an increase of $12.2 million compared to adjusted EBITDA loss of $3.6 million last year.
But it also represents a significant increase compared to the $3.1 million and adjusted EBITDA.
<unk> in the third quarter of fiscal 19, and compared to the 600000 of adjusted EBITDA achieved in fiscal 18.
Looking at year to date, adjusted EBITDA increased 17% to $17.4 million, which is a big increase.
To the $5.4 million and year to date adjusted EBITDA through last year's third quarter.
And it's also big compared to the $7.2 million in year to date adjusted EBITDA achieved in.
On a very strong first 3 quarters of fiscal 19, and the half a million dollars a year to date adjusted EBITDA achieved in fiscal 2018.
Importantly, adjusted EBITDA for the latest 12 months through the end of this year's third quarter totaled $26.3 million.
Olivia, which not only substantially exceed the $18.8 million achieved for the same latest 12 month period last year, but also the $18.6 million.
Latest 12 months adjusted EBITDA achieved for the same period in fiscal 19.
Youll note that this $26.3 million.
It is 12 months adjusted EBIT goes also well ahead of our existing full year guidance of $20 million to $22 million of adjusted EBITDA for fiscal 'twenty 'twenty, 1 as a whole.
So more on more on that in a moment.
Our cash flow was also strong with net cash generated from the third quarter, increasing to $11 million. That's an increase of $23.2 million compared to negative $12..2 of net cash generated during the same year to date periods last year.
Also well ahead of the negative $4.8 net cash generated from the same year to day periods, Cisco <unk> and the 7.2 for the same period in 2018, and then finally, our net cash provided by operating activities increased.
65% to $30.9 million through the third quarter.
Net compared to $18.7 million for the same period last year.
<unk> 6 <unk> 19 from the same period $6.8.6 million in 18. So we ended the quarter with strong liquidity of approximately $51 million, even after investing $10.6 million per acquisition its drive, which Paul will talk about later on this call.
This liquidity level is up from the $37 million on liquidity, we had at the start of the pandemic at a year ago.
Even after the investment strength so.
Rates will be in a strong balance sheet position.
We'll discuss these results in more detail in just a moment, but wanted to give you. The same context, we've provided in the in the past 3 quarters.
So you can see what's behind the make sure you're understanding each of the components behind this performance.
As you can see inside 6.
The 4 trends are as follows first as we've talked about all access pass sales and continue to achieve strong growth.
Second all access pass subscription services sales have continued to grow and are now significantly higher than even their pre pandemic levels a year ago.
Third our international operations have continued to strength.
Enforce the performance and trends in our education business have also strengthened substantially both in terms of retention revenue number of new leader in these schools and outlook.
Now just a little more detail on each of these key trends.
First.
As expected all access pass and subscription sales, which now account for 82% of enterprise sales noise.
Strong.
As you can see in chart 1 on slide 7.
Total company all access pass subscription sales grew 17% in the third quarter to $19.2 million year to date growth was 15% and latest 12 months growth from 14%.
The $19.2 million on all access pass subscription sales in the third quarter compares to $16.4 an all access pass subscription sales in the third quarter of 2000.
$13.8 million in third quarter of 19 and $11.1 in the third quarter of 18.
In addition.
As shown on chart 2 on slide 7.
All access pass deferred revenue balance from an even more rapid 25, 9% in the third quarter to $44.2 million, which represents an increase of 36, 8% compared to last year's balance.
The end of it.
The $32.3 balance of deferred revenue at the end of the third quarter of even fiscal 19.
And thats been broad based across all the key elements to number of all access pass new logos increased 93%.
This third quarter of this year compared to last year annual revenue retention continued to exceed 90% as shown on chart 3 on.
On same slide.
And the sale of multiyear contracts as ulcers.
Strong with our balance of Unbilled deferred revenue, increasing 25% to $40.5 million compared to $32.4 million in the third quarter of 'twenty.
The up 74% compared to the 23 million balance of Unbilled deferred revenue we had at the end of the third quarter interest go by <unk> as you can see in chart for the.
The second trend relates to these subscription services.
Sales of all access pass subscription services increased to $10.5 million in the third quarter, making it our highest subscription services quarter ever.
This compared to all access pass subscription service and sales of $4.4 million in the third quarter of fiscal 'twenty $706 million in third quarter of 19 on $5 million in <unk>.
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Which is shown in also in slide 8.
Also shown for the first time, our all access pass subscription and subscription services sales.
There's 100 million for the latest 12 month period net.
Big.
When mark.
Moving to chart 9 talking about subscription services shows the strong booking trends for all access pass subscription services, almost all of which have now been being delivered live online.
As you can see on chart 3 on that slide 9 speaking at beginning of the pandemic in March of last year bookings of services delivered live on site at client locations were necessarily cancelled in.
And the year over year dollar volume of our services declined with delivered engagements down $6.9 million in North America in the third quarter.
However, with our quick to delivering services live online in the fourth quarter of fiscal 2020, new bookings to increase to a level nearly equal to net achieved in the fourth quarter of fiscal 19.
Just 3 months into the pandemic of these strong bookings and churn drove an increase from the dollar volume of services actually delivered.
As a result, instead of being off $6.9 million in the third quarter. The dollar volume of services delivered in the fourth quarter was off on the $1.1 million.
The same positive trend continued in the first quarter accelerated in the second quarter and continued through the third quarter were sales of subscription services exceeded by 16%.
This level ever achieved in any quarter.
As shown on chart 2 again the vast majority of our subscription services are now delivered to clients live on line.
Meaning that our momentum can continue regardless of when and whether certain organizations returned to their offices.
Third as shown on slide 10 performance in our international operations.
To strengthen throughout the third quarter.
Previously reported.
At the start of the pandemic, we had to reschedule substantially all live on site training engagements in our international offices as well.
Since these countries are just starting to sell all access pass and therefore did not have a strong base of durable subscription revenue to cushion than sales in these countries declined significantly compared to the third quarter of fiscal 19.
However, as shown in last year's fourth quarter, while still operating well below the level achieved in the prior year's fourth quarter sequential.
Sequential sales and sales as a percent of the prior year in these countries improved significantly.
Year over year sales improved further in the first and second quarters, we expect <unk> sales to continue to strength in the third quarter and we're pleased that they did.
Third quarter International sales were ahead of our expectations in just 13% lower than in the third quarter of 19, and a portion of that 13% down is reflected in the fact that we're starting to add more subscription sales in those offices as well.
Rich youre going onto the balance sheet, rather than on to the income statement.
While there continue to be pandemic related challenges in Japan, and as certain licensee operations. We're pleased with strong rebound overall on their international operations.
Importantly in addition to the significant recovery in reported sales shown on slide 10.
National operations.
Seeing significant increases as I mentioned on all access pass deferred revenue so.
So finally on these trends we have also seen a real strengthening in the performance and overall market trends.
On our education business in the third quarter.
As shown in slide 11, the strengthening of educations performance includes the number of leader in me schools, which have renewed or ready to renew their leader in the membership increased to 19 <unk> hundred 21 during the third quarter compared to 16.81 at the same time last year.
A new leader in me schools from contracts that ended in the third quarter. We are in the process of contracting is 90.
Later than that achieved by the end of last year's third quarter were 305 schools versus $2.15.
In addition to the strong booking performance education reported performance also increased significantly in the third quarter Education's third quarter revenue grew 44, 8% over last year's third quarter also grew 7.3.
Percent competitive.
<unk> third quarter.
This reflects among other things addition of some new large multi district contracts.
Were started during the third quarter, all of which are expected to bring on additional revenue over the coming quarters and years bolstering.
<unk> the substantial increase in number of coaching days.
<unk> profit in Education Division also improved 1100.40 basis points in the quarter.
From a gross.
Margin of 57, 3% to 68, 7%.
And finally adjusted EBITDA for the Education Division increased by $2.7 million over last year's third quarter and was also up $1.3 million compared to even fiscal 19 third quarter.
Education, our international licensee network also showed substantial improvement from revenue and adjusted EBITDA during the quarter. So conclusion on education.
There are also trends in the overall education market, which we expect will help with education business. During the remainder of this fiscal year and into the next fiscal year, including the increasing confidence.
And the educational community that most schools will be open and largely back to normal in the fall of this year.
And the 3 big Covid stimulus bills passed by Congress dedicated nearly $200 towards stabilizing budgets in K 12 schools.
So with that.
Overview in detail I'd like to now ask Steve young to dive a bit deeper into the performance from the third quarter. We go through the financials Steve.
Thank you Bob and good afternoon, everyone, it's nice to be with you.
So I'll just jump right in as shown on slide 12, and as Bob talked about our performance for the third quarter was stronger than expected and showed positive momentum on almost every front.
As you know on adjusted EBITDA for the third quarter was $8.6 million.
An increase of $12.2 million compared to last year's third quarter of negative $3.6 million.
And the amount substantially exceeding our expectation of adjusted EBITDA between 4 and $4.5 million.
Importantly, this $8.6 million in adjusted EBITDA is also significantly higher than the $3.1 million of adjusted EBITDA achieved in our strong third quarter of FY 19.
As also shown both year to date and last 12 months adjusted EBITDA substantially exceeded that achieve in both FY 'twenty and FY 19.
On our last 12 months' adjusted EBITDA of 26 point.
$3 million as Bob said is substantially exceeds our full year guidance of 20% to $22 million for FY 'twenty 1.
Our cash flow and liquidity position also increased significantly as you can see on slide 13, our net cash generated year to date through the third quarter was $11 million.
This was $23.2 million higher than the negative $12.2 million of net cash generated in last year's third quarter.
And was also higher than the negative $4.8 million on net cash generated in 2019.
And this negative $7.2 million generated in FY 18.
This increase in net cash generated reflects strong growth in adjusted EBITDA.
And that our balance of billed and Unbilled deferred revenue increased by almost $17.1 million or 25% to $96.6 million in the third quarter.
Okay.
Also as shown on slide 14 cash.
Cash flows from operating activities year to date for the 3 quarters ended may 31.
2021 increased $12.1 million.
Or 65% to $30.9 million.
<unk> to $18.6 million last year or $18.7 last year to 18.6 through the third quarter of 19 and.
8.6 through the third quarter of 18.
The strong cash flow reflects an additional benefit of our subscription model specifically.
Specifically that we invoice upfront and collect the cash from Invoiced amounts even faster than we recognize all the revenue.
When this strong cash flow, we ended the quarter with $51 million in total liquidity.
Compared to 36.
Yeah.
Which is comprised of cash of 36 million and.
$15 million of our revolving credit facility still undrawn and available even after as Bob also said paying the $10.6 million during this quarter related to the acquisition of stripes.
This was this overall good performance was driven by first.
Strong revenue growth.
As shown on slide 15, our third quarter revenue was $58.7 million was not only higher than the $37.1 million on last year's third quarter, but also higher than the $56 million of revenue achieved in the third quarter of FY 19.
This strong revenue growth was driven in part by very strong performance in our North American operations driven by the continued outstanding performance of the all access pass.
Additionally, as shown on chart 1 of slide 16.
Company wide all access pass subscription sales grew 7% in the third quarter, 15% year to date and 14% even during the last 12 months pandemic period.
And in addition to the all access pass subscription revenue recognized in the quarter chart..2 shows that we also achieved a very strong increase in our balance of all access pass deferred revenue, which grew 26% or $9.1 million.
$44.2 million in the third quarter.
Our balance of all access pass deferred revenue not only grew substantially compared to last year's third quarter, but consistent with many other measures was also.
37% or $11.8 million higher than that achieved in the third quarter of FY 19 pre pandemic.
This all access pass deferred revenue will be recognized in future periods and helped to accelerate our growth.
This significant growth on all access pass deferred revenue.
Resulted from 1 strong all access pass sales to new logos.
2 our continued quarterly in last 12 months revenue retention rate of greater than 90%.
Shown on chart 3.
And a large number of all access pass expansions.
And as shown on chart 4 a significant volume of multi year on.
All access passes.
Sales of all access pass subscription sales shown on slide 16 were also strong in the third quarter growing 136% compared to last year's third quarter and.
And up 37% compared to the third quarter.
FY 19.
Then second as shown on slide 17 are strong on all access pass.
Sales drove significant growth in our gross margin percentage again in the third quarter.
As shown on a gross margin percentage increased 587 basis points in the third quarter to 78, 2%.
Up from 72, 3% in the third quarter of FY, 'twenty and up from 70.8.
8% in the third quarter of FY 19.
As al.
As also shown year to date, our gross margin percentage increased 514 basis points and has increased 489 basis points for the last 12 months.
In the Enterprise Division drew.
Driven by the significant growth in the all access pass on related sales.
Gross margin percentage increased to 81, 5% compared to 78, 1% in last years third quarter, an increase of 340 basis points.
And an increase of 713 basis points from the 74, 3% and gross margin percentage achieved in the third quarter of FY 19.
Third as shown on slide 17.
Our operating SG&A in the third quarter was all was the only 63.
6% of revenue this is a level significantly lower than the 82, 1 percentage of revenue in the prior year and also lower than the $65.3.
3% of revenue in the third quarter of FY 19.
Finally, the combination of these factors resulted in net SG&A growing $8.6 million in the third quarter, an increase like we set a $12.2.
$2 million.
This is a level significantly higher than the expectation of adjusted EBITDA of $4 to $5 million for the quarter.
The strong third quarter also resulted in adjusted EBITDA for the first 9 months of FY 'twenty, 1 of $17.4 million and for the last 12 months $26.3 million.
As you noticed in all of these were not only compared to FY 'twenty, but FY 19, because that 2019 was such a good pre pandemic here.
Just wanted to show that we're not only just rebounding from.
From the pandemic, but also growing compared to pre pandemic numbers.
Importantly.
As noted on our balance sheet are billed and unbilled deferred revenue.
Which will add to and be recognized in future quarters.
Increased to $96.6 million.
Reflecting growth of $19.3 million or 25 per cent compared to our balance.
$77.3 million at the end of last year's third quarter.
This large balance of billed and Unbilled deferred revenue will help us provide significant stability of and visibility into our future performance.
This strong combination of factors continue to drive our <unk>.
Expectations that we will achieve high rates of growth in adjusted EBITDA and cash flow.
In FY 'twenty, 1 FY 'twenty 2 on ongoing basis thereafter so.
We're very pleased with.
The result of.
Third quarter net.
It's broad based in almost every area doing.
A little bit better or better than we expected so Bob turn it back over to you.
Thanks, Steve.
Just a couple of points. So im looking forward as we've discussed substantially all of our growth has been is being driven by growth.
The all access pass subscription subscription services sales.
And the strong growth has continued throughout the pandemic as we've shown we expect all access pass to continue to drive the future. So driven we expect really that substantially all of the company's sales will be subscription in subscription services within 3 to 4 years as we mentioned last quarter I thought we'd give you a little background into 3 bullet points as to why.
We think that'll be the case.
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But the growth we expect all access pass subscription subscription sales.
To continue to increase in Enterprise Division in North America.
On those sales already account for 82% as shown on slide 18, all access pass subscription and subscription services sales represented only 13% or $13.7 million.
Total sales in North America in 2016, when we first introduced the all access pass.
The dramatic sustained compounded growth since then Israel in all access pass on subscription service sales increasing to $103.2 million from the latest 12 months through this year's third quarter.
From reports that have been sent to us by others, achieving $100 million on subscription.
Service revenue in only 5 years.
Places us among a relatively elite group of SaaS companies actually with the median time for those to actually make it to $100 million being around 9 years.
As shown on slide 19.
All access pass subscription service sales now accounts for 82.
As a percentage of sales in North America.
With the continued expectation of double digit.
Growth.
Pass revenue and with legacy sales now at very low levels and expected to remain flat or even decline a bit further.
We expect all access pass on.
And subscription services to increase to more than 90% of total North America enterprise sales over the next few years. So that's the first big engine.
The second major driver to having the business become almost totally subscription in subscription services. The expected conversion of the majority of our international operations.
All access pass from subscription in the coming years.
In addition to the 82% in North America.
Which we're already there we've also progressed rapidly in our English speaking direct offices.
As you can see on slide 19 from having no subscription sales low on these offices just 5 years ago, all access pass subscription in subscription service sales.
For the latest 12 months now accounts for 72 percentage of total sales in the U K and 72% in Australia.
Both these up through well on their way towards the same 90% penetration, we expect to achieve in North America.
As you know our largest international direct subsidiary in China, and Japan, both of which are in the early stages of conversion to all access pass.
But importantly, Japan. This year, we'll have a third of its sales.
All access pass subscription subscription services.
And China has now begun selling new contracts.
<unk> entered some new large all access pass contracts that will start to be recognized.
We expect again international will get to that same level and finally that education Division.
Of.
Which represents 22% of total sales reported subscription sales already account for 65% of sales for the latest 12 months.
We expect both K 12, and higher Ed to continue to advance towards 90% and subscription.
Subscriptions subscription services in the coming years, so with the combination of all these we expect the vast majority of the business to reflect the same high growth high margin high retention properties.
Our subscription operations and become each year's notes that truly encouraging now I'd just like to turn the time to Paul Walker.
Sean.
3 factors that we expect will continue to drive this growth kind of puts underlying it Paul.
Thanks, Bob and Hello, everyone. Good afternoon all.
I'll briefly describe these 3 factors and then go into just a bit of depth on each of the first half.
After that we expect will continue to drive the significant growth on our subscription sales.
Sales and profitability is that the.
<unk> already significant lifetime customer value of our all access pass holding organizations will continue to increase.
The second factor is that as we continue to aggressively grow our sales force and our licensee network the volume of new high lifetime value all access pass logos will accelerate.
Third the recent acquisitions of strive and then Jonna, which youll recall that we acquired in mid 2017 that together they are accelerating our ability to address larger and larger populations inside new and existing all access pass clients further helping to accelerate the growth of the path inside those organizations and so just briefly discuss.
In describing the screen a bit more detail.
First of all access pass and subscription services revenue will continue to climb.
And that will drive increasing lifetime customer value as shown on slide 20.
In our North American operations, all access pass has FERC relatively large and continually increasing average pack size now at $43000, which is up from 37000, just a year ago.
Second on annual retention rate of greater than 90%, which has been true all the way through the pandemic.
And third a subscription services attach rate of 48% up from 17% a few years ago.
The combination of revenue from the all access pass subscription itself and from attached subscriptions services totaled approximately $61000 per pass holding customer in the third quarter, which was up 13% from $54 just a year ago.
The blended gross margin on all of this.
Continues to be greater than 85% and the strong economics are driving a very significant lifetime customer value and Additionally, as Bob mentioned and Steve alluded to earlier in North America more than 40% of passes representing 52% of subscription revenue are now under multiyear contracts and Stephan.
Back from that just think about that for a minute from where we were a number of years ago.
What amount of revenue under contracts set to come in.
Is this a significant thing for us and for our client partners as well.
The second point, the second factor as we've discussed in the past and as shown on slide 21, we have a lot of headroom for continued client partner growth.
We expect that the continued addition of at least 30 net new client partners each year, well drive significant subscription in subscription services growth since almost all of these new people have to sell it all access pass or in the case of education leader and <unk> subscriptions.
Additionally, we expect significant growth to come from the approximately 120 existing client partners that we've hired over the past few years, who are still on the ramp process.
As youll recall, each new client partner that we hire is expected to generate annual revenues in their first year of 200000 in their second year of 500000 than 800000 going to $1.1 million and then $1.3 million over their first 5 years with us and we defined $1.3 million as being fully ramped and then we have <unk>.
We expect that revenues will continue to grow thereafter.
Today, we have approximately 120 client partners and our North American Enterprise and education divisions.
Who depending on their year of higher over the past 4 years, Paul somewhere along this ramp curve.
And the natural ramp of these client partners, even net of attrition.
Attrition that we might expect to see would result in tens of millions of additional dollars of revenue growth in the coming years.
And so the combination of ramping those we have in hiring the net 30, a year, we believe will generate significant subscription revenue growth for us and then the third point that all that I'll touch on briefly is the recent acquisition of strive coupled with Gianna is accelerating our ability to address larger and larger populations during.
The third quarter, we were pleased to complete the acquisition of strive, which will add meaningfully to our technology platform.
Our strategic capabilities and overall impact a key benefit resulting from strive is that it will increase our ability to address ever larger client populations.
Unique combination of stripes platform, coupled with Franklin Covey best in class content and subscription services will.
We will accelerate our ability to help clients predictably achieve employee behavior change at scale.
Stripes intuitive social learning platform will enable seamless integration and deployment of Franklin Covey is best in class content or services technology and metrics to provide a highly engaging and impactful learning experience with maximum impact.
When combined with Jonna, a push based just in time digital coach for leaders on individual contributors the all.
<unk> Paas platform is taking a significant leap forward and its ability to support large scale impact journey rollout for entire organizations, while simultaneously, allowing individual learners to focused on their own scale development.
And so for these 3 reasons and others. So we feel very positive about the future of our ability to continue to grow our subscription and subscription services business.
With that I'll turn it back to you Bob.
And Paul Thanks, so much on alternate to steves talked about our guidance and outlook.
Okay. Thank you again.
So as you know in past quarters, we have confirmed.
Our guidance that we expected.
To generate adjusted EBITDA of between 20% and $22 million this year.
Based on our strong performance in the third quarter and year to date on our expectations of a strong fourth quarter.
To now be in a position to adjust that guidance upward.
Our new guidance is that we expect adjusted EBITDA for FY 'twenty, 1 to be between $24, 5 and $26.5 million.
The middle of this range would reflect adjusted EBITDA growth of more than 75% compared to the $14.4 million of adjusted EBITDA achieved.
And last year FY 'twenty.
With our last 12 months' adjusted EBITDA through the third quarter.
Already at $26.3 million.
If our fourth quarter result is at least the same as last year's strong fourth quarter. Our results for the fourth quarter would already be at or near the top end of that range.
And we do expect to achieve strong growth in revenue in the fourth quarter.
However, we're also making some significant growth investments.
And we'll incur other costs in the fourth quarter that will partially offset the adjusted EBITDA growth, we could otherwise expect from our expected growth in revenue.
These growth investments include the hiring of a significant number of new client partners to position ourselves for strong growth in.
In FY 'twenty, 2 and beyond.
To some new strategic marketing investments that we expect will broaden our reach.
3 cost associated with the acquisition of strife.
4 and and some other growth investments. We also expect that there will be some extra.
Say coming out of the pandemic costs, including some increased travel.
And profit based compensation, which will impact <unk>.
Costs in the fourth quarter day.
These additional investments notwithstanding we still expect the fourth quarter to be a very strong quarter.
As far as our outlook for FY 'twenty, 2 'twenty 3 and beyond.
In past quarters, we've said that we expected adjusted EBITDA in FY 'twenty, 2 to increase to approximately $30 million and adjusted EBITDA in FY 'twenty 3 to increase further to approximately $40 million.
Based on the strong performance in FY 'twenty, 1 to date and expected through the fourth quarter. We now expect the trajectory of our results in FY 'twenty, 2 and 'twenty 3.
I'll also be somewhat higher than our previous outlook.
We expect it to increase and provide more detail on our outlook for future years, when we report year end results.
November.
So Bob that's that's guidance and outlook.
Great Thanks, China share.
Yes.
Great we feel great about our momentum I'm pleased to be in a position to increase our guidance and really excited about the business just before we turn to Q&A I'd like to thank our.
Absolutely tremendous associates around the world for their continued and unwavering commitment to our mission to our clients index linked and all they do.
They're amazing I'd also like to recognize and thank our great leaders are top leadership roles are all filled by extremely talented experienced and committed individuals who have the combination of a long tenure and yet because of the relatively young age. Many years of strong service still ahead of us.
They lead and a weighted engages their teams and predictably grows or operations that our overall business strategically culturally and financially.
I am thrilled that given the strong results trends and strategic position of Franklin Covey business. We are now prepared to make some key promotions on the executive team that will help to further accelerate our progress really excited about each of these our executive team has functioned as a true partnership for many years our goal has been to.
Have each leader continue to increase his or her responsibilities, while still keeping all members of our executive team kind of on the playing field.
Contributing and both old and new ways, even as the rules change.
That will continue to be the case with the following.
<unk> leadership promotions that will take place effective September 1.
First over the past couple of years, Paul Walker has overseen substantially all of our day to day operations.
Folks the majority of my efforts working closely with Paul Steve and the executive team on our key strategic initiatives, our innovation strategy agenda and on capital transactions.
I am excited personally to now move over 1 share at the table.
In addition to serving as chairman of the board become executive Chairman The company effective September 1.
As executive Chairman I will continue to work in these same strategic areas on which I focused over the past few years as chairman I will spend even more time working to ensure that the tremendous capabilities of our remarkable board are fully utilized.
I'm thrilled to announce the Paul Walker will become our new CEO effective September 1.
The board the executive team and I, all have tremendous confidence and trust from Paul.
Is fully prepared for this expanded role Paul of the completely trusted partner, who has tremendous capabilities instincts and drive engages everyone to come to the best decisions. He also execute with excellence.
The idea that Paul because we become their next year has been something the board and I begin discussing there'll be 10 years ago.
With that potential in mind, Paul was first given responsibility for running our central region than per simultaneously overseeing the central region and our operations in the UK and Ireland.
Then from you all North American operations for the Enterprise Division, then serving as president of the entire Enterprise Division, which it's been such a strong growth engine and most recently as the company's Chief operating officer, where he has done an absolutely incredible job, including all the way through the pandemic.
Over the past 6 years, Paul and I have worked hand in hand every day and most evenings.
Together with the other members of the Exec team launched grew all access pass from what was just an idea to it now generating more than $100 million on subscriptions subscription service revenue on the way Youre, having all access pass on the Enterprise Division.
Our leaders and the membership and the Education Division represents substantially all of the company's revenues on operations in the next few years. During this time, Paul led the execution of our strategy to increase client partner.
Partner hiring served on all our strategic committees and assumed essentially all other key operational responsibilities.
Since September 1.2020, and his role as Chief operating Officer, Paul has effectively been running the business day to day, we're making this transition to CEO was largely a recognition.
<unk> already been doing and the transition will be seamless.
Some additional great news of the Steve Young will remain CFO for at least the next several years continuing to provide that tremendous inconsistent knowledge leadership and influence we all count on gender.
Jennifer Colosimo President of the Enterprise Division will now assume full responsibility for overseeing the entire enterprise division, including not only the U S. Canada operations, which have achieved tremendous growth under her leadership, but all of the enterprise division's international operations.
We're really excited about gender expanded leadership role and have full confidence in her ability she's an amazing person an amazing leader.
Sean Covey will also continue to lead in service because of the Education Division, which she has done and continues to do so effectively and really our top 30. Other leaders will continue at least the top 30 day all of it is up 30 will continue on their rules.
In conclusion, I would just say I've had the privilege of being associated with the company in 1 rule or another since I joined the board of the Covey leadership centered 93.
Became chairman of the board of Franklin Covey and 99 following the merger and then it was asked.
<unk> chairman of the board and as CEO, which had done from the past 21 years.
And my ongoing role as chairman of the board and as a large shareholder and I don't intend to sell any shares my new role as executive Chairman I will remain involved in our most important strategic decisions key financial matters, and the acquisitions and other cash capital transactions.
Mainly I'll do everything I can help Paul on to help Franklin Covey continue to win in any other way that we can think of and I'm excited to remain.
Close partners with Paul on the executive team for many years to come.
These changes along with the strong momentum of the business make it really an exciting time for Franklin Covey.
We feel great about our strategy, our business model, our financial position and our leadership bench strength I loved This company I Love My Loveland, our people our shareholders our clients our mission.
Forward to continuing interest involvement.
Depreciate or more than 1000 associates and partners around the world and appreciate each of you and your ongoing commitment from trucking so that long thing.
We're excited about this has changed on that open the time for question and answers.
Thanks.
Thank you we will begin the question and answer session.
I have a question. Please press Star then 1 on your Touchtone phone.
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Again, if you have a question. Please press Star then 1 on your Touchtone phone and our first question comes from Andrew Nicholas from William Blair. Your line is open.
Hi, Thank you good afternoon, and Craig congratulations to each of you John Bob and Paul on the new roles.
I guess interest dart.
No problem I guess to start.
Terms of the guidance and the guidance change.
You touched on on the increased spending in the fourth quarter. So I was hoping you could spend a little bit more time on exactly what what those investments are.
I know, Steve you listed them, but if we could get maybe a few examples of what those spending initiatives look like and then Relatedly is there any way to quantify that spend and should we view that as kind of a onetime set of initiatives or are these kind of a multi quarter spend.
You're kind of leaning into growth with.
Thanks, Andrew I'll try to give you a little more context, and then invite Paul on <unk>.
Steve.
Add on I think there's some in both categories. The general ones that we always do are the continued investment in client partners, it's a little bit more backend loaded this year, because we didn't hire as many in the first half and therefore, we are adding more in this back half. So we have more of those folks coming on in the fourth quarter than we might normally have.
We are also kind of a 1 time expenditure in.
In some marketing initiatives, we've been working with some firms needs aren't big dollar amounts but incrementally.
The combination of the marketing, which as you know maybe a half a million dollars of extra and.
Involved with really increasing our footprint around the world.
<unk> leadership and some things that we'll be announcing later this year. These are really kind of the day.
Outsourced work we've been doing.
Client partners incrementally youre, adding maybe a half a million dollars or so in the fourth quarter I think.
On the ones that are just more 1 time or the latter in last year's fourth quarter.
We.
Had reserved a bunch for.
Compensation and profit sharing and so forth.
The most of our compensation is tied to results and because the overall results for the year, we're going to be lower because of the pandemic. We reverse some of those things in the fourth quarter. This year the offices will be true and so that's more meaningful couple of million dollars.
Swing between those 2.
And I think those are the primary the primary things. We also have some true.
Travel coming back.
Not a lot, but there is some coming back because offices open and clients expect you to be there and see them and so those expense will come back a little more than they were in last year's fourth quarter and that will be somewhat ongoing but basically the thought is that.
It's possible that the fourth quarter it could be higher than the end of our top of our range, but we do have some expenses relating to those areas.
We're talking about on the fourth quarter.
Is that helpful at all.
Yes, very much so thank you.
Maybe from my follow up switching gears a little bit.
I know you touched on it in your prepared remarks, but I.
I was hoping we could spend a little bit more time on strive.
More specifically you mentioned the ability to target large groups.
Quest that out a little bit further and then maybe bigger picture question. If you could just kind of go through the top 1 or 2 things that drive brings Franklin covey that maybe you're most excited about.
Sure Paul would you like to take that.
Sure.
Hi, Andrew.
So I would just at the beginning here in addition to.
Some of the.
The increases the costs that will pick up in the fourth quarter that Bob mentioned, there are some cost related to the integration of strive as well and getting prepared to come out.
And our next fiscal year.
With driving the big way.
To answer your question, specifically, so we're very excited about strive strive.
As a platform upon which we can we think more more effectively.
Distribute administer provide access to our solutions to clients and so if you think in the past we've had a great platform with all access pass it on and on.
On that platform, we pull in from disparate pieces, we pull in our ability to tap people experience content, our assessment capability, we pull jonna into that and there is theres a constellation of resources and services that we provide clients on that platform will strive they've been out there the last few years as a startup.
Focused primarily on in the leadership space.
They were a content company first day, we're a platform company first and they created a platform that's <unk>.
Even better than what we've had.
Just inside the all access pass portal, where users administrators can deploy content to larger populations.
The focus their focus was on driving behavior change through technology. Our focus is on driving behavior change through their great content and solutions. We havent. So we marry these 2 things together and our clients now if you said what are the 1 or 2 things it's really the user experience.
And the outcomes that organizations will achieve as our content now runs on this strike platform it'll be easier it will be.
Even more digestible will be able to provide metrics in real time engagement will be even higher.
When organizations are trying to deploy something to thousands and also when individuals themselves are going and working on their own skill development and so think of it as you know.
<unk> kind of like what peloton did combining the bike the instructor.
Life life sessions.
Net tricks the social aspect of that all into 1 seamless system.
Drive is going to help us bring all of that together in our in our in our use case, which is around learning and driver driving behavior change at scale.
Perfect perfect well, thanks, very much and again congrats on the new role.
Thank you.
Thanks, Andrew.
And our next question comes from Jeff Martin from Roth Capital Partners. Your line is open.
Thanks, Good afternoon, guys and Paul Congratulations, Jeff well well deserved.
And Bob that was very nice.
A nice way to.
Introduce that to them so compliments to you on on all that.
I'll, let you put together there.
Thanks.
Scott Partners. Your line is open.
I wanted to jump in here.
Third quarter was.
Impressive quarter to start out.
Were there any particular areas that were stronger than what you had thought.
Maybe new logos may be.
Higher average customer spend.
What we think that that.
Surprises on the upside in the quarter on what what does that implicate for the future.
Paul do you want to.
Take that risk today I'll share a couple on.
I'll say I'll share 1 or 2 and then Jen please jump in and education to Sean.
So Jeff I think a couple of things that were.
Pleasantly surprising we had high expectations already but even came in higher.
1 what was new logos that could that metric continues to climb for us every quarter.
Recall during the pandemic, we were we reported net actually new logos that was an area where I wasn't quite sure what was going to happen in the darkest days of the pandemic of new logos really hung in there quite well and we are seeing an acceleration there.
And the other as we mentioned we had a fantastic subscription service this quarter.
And.
The more we get into this the more I think.
As we come out of the pandemic and certainly some of our clients will want to go back and have us come on site again in person I think the fact that the world has shifted and we can do both we can do live online and live in person I think is going to continue to lead to greater demand for services overall.
And so on so I think there is some of that driving the increase in services business and then.
The third leg of that tool as we re tenant client expansion and retention with what's great also on the quarter. So the combination of those things really help on the revenue side.
And of course that that business as we talked about it is it's a high margin business. So we're continually as more and more of the business converts to all access pass with the high margin that flow through to the bottom line that is driving both revenue.
And EBITDA those would be at least 3.
3.
<unk> anything you would add to that on enterprise and then maybe Sean on if there were 2 bad share.
Sure I think from an enterprise Division, Jeff 1 of that Paul mentioned expansion as clients stay with us and they expand.
That makes sense and it came definitely to play in this quarter in that typically a client will hire us to do a particular large scale behavior change and as they.
Complete that start to see some results they have the opportunity to work with our implementation specialists, which is very unique in the industry in the way that we provide them to our clients. They work with our implementation specialists to uncover either additional populations.
To go after the same jobs to be done or a day work.
The other opportunity that they could utilize what was in their path and so we are seeing significant expansion and we did as Paul mentioned have an increase in new logo in it.
I think our team our Franklin Covey team all individual contributors are firing on all cylinders as Paul mentioned, we have a significant opportunity with those that are in ramp and we are seeing.
Newer client partners find success quicker our sales enablement so.
I would also attribute a lot to our people, but also our value proposition of all within the all access pass on how that leads to expansion.
Great that's very helpful.
Yes, Hi, Jeff This is Sean.
Sean.
Yeah, Hi should I, let me just share a little bit about what's going on in Ed.
That would be great.
Yes, so just to follow up with what Paul on Gen share that.
Similar on education.
Retention is stronger than we supposed and not only the number of schools that are that we're retaining but also the <unk>.
Dollars per retain school the average amount is increasing.
I think a lot of this is because of the market is back to normal I think people are making decisions again.
They are.
There's a lot of pent up demand of people kind of waiting on the sidelines and see how things are going to turn out but because.
Everyone feels like things are going to be largely back to normal come fall decisions are being made so we have got a lot of.
New schools coming on a lot higher than last year new districts.
If you recall.
A few sessions ago, we talked about.
Leader in me 4 point out on how it's more district friendly.
The results of that now on where we're bringing on some really sizable districts many of them all over the country.
That maybe a few years ago, we weren't prepared to do and those are those are coming in starting in the third quarter. So that's helping us quite a bit as well so between.
Retention, new schools, and new districts that were getting to.
That's what's caused the increase from the third quarter.
And it's just.
It's something that will be applied to the education Division and not just enterprise just curious.
Yes.
So.
Ultimately I think it's going to start more on the enterprise side that will start I think all the innovation there will be able to be fully utilized at some point in education as well.
Okay, and Jeff I'll, just say 1 on 1 of the great things with stripe is also the great people.
We're adding to our team.
We're grateful for that and there are some very very strong technology.
<unk> added people and great people all the way true so.
Great I look forward to seeing a demo on that soon.
Then my on.
Other question.
Enters around kind of your high level growth outlook I think in the past you've articulated pretty clearly that.
You yourself as kind of an 8% per.
<unk> growth business at least for the foreseeable future with subscription sales and add on sales.
On the high teens to low 20% growth range and as we get to.
Critical mass and it seems like that growth rate is somewhat conservative you add a technology platform strive.
As the larger population.
What's your outlook on what's your view on growth acceleration from that 8% level going forward.
I think you've identified the factors that would argue true for higher growth rate in the future I think the cash.
Combination in the past we knew that the growth of our subscription was being offset partially by the way the decline in the legacy business now that that is largely flattened out even the same growth we've been already achieving.
Would would mean that with less drag you'd be you'd be a bit higher. So I think we're thinking going forward that we can move into that low.
Let me call. It 10 anyway that we can grow 10% or so we still have some conversion on our international operations.
Create some.
Add more on deferred revenue, but I think it's natural that that with the growth rate of our subscription. The things you mentioned it will tend to edge up.
A bit going forward.
Great. Thanks, Thanks for the time and congratulate you on a really strong quarter. Thanks.
So that's true.
And your next question comes from Marco Rodriguez with Stonegate capital. Your line is open.
Good afternoon, everybody. Thanks, Hi, Mark from quick question.
Hey.
Once again, congratulations to everybody with all the promotions and the movements.
Well very well deserved.
I had a couple of quick follow ups here.
Just coming back on the strive acquisition.
On the integration aspects, maybe if you can talk a little bit about that as far as the complexity levels and when you expect to have that fully integrated.
Paul would you want me to talk about that Bob sure that'd be great.
Hi, Marco so.
Bob mentioned this team the team that came with stripe. They came with a day, where the adventures of it. This is an amazing team.
In fact, it would be fun to do a demo and have you have a chance to meet some of the key people on that team.
So strive strive for us will power kind of 3 use cases that you want to think of them. This way..1 1 is when when a client has a job to be done developing first level leaders and they want to take them through our 6 critical practices content.
We will do that now on the strive platform, which will will do all the things I talked about a minute ago on I was explaining to Andrew how strive strive will benefit the client.
So the first thing we're doing right now is we're making all of our content strive of bolt on.
If you will so we didnt getting it ready so that at the assessments all tie together and everything is on that platform. We expect that work to largely be done and be ready to go in January.
The second use case for them. So that's 1 Franklin covey, when our people are delivering services and we're guiding.
We're guiding the client through that they've hired us to not only for our content, but they want our expertise in delivering the training and doing the coaching.
The second use case that will follow that first use cases is equipping our client facilitators.
To implement our content like they can today, but benefiting from this drive platform as well. So it's another reason why you would want to have the all access pass it because even if you're not purchasing subscription services from us.
You'll get the benefit of ethanol access pass holder from the technology Thats their insights drive which will be inside of our portal and then the third use case, which will come along kind of alongside those is disability for even when you're when you're not on a company sponsored journey.
When I haven't been asked by Bob to go through with a cohort of people. Our leadership development experience I may have a skill that I feel like I need to address or that my assessment has told me I need to work on public speaking or platform skills, we have content on the path around.
More effectively presenting and I can go in and the on the strike platform I can work on those skills myself and rather than just <unk>.
Watching a video or page turning some online content strive experience will be it'll be back to the peloton example, much more engaging and much more focused and has the pieces in there to make sure that even if im going through by myself.
By behaviors more likely to change there is more accountability built in their social aspects built in and so over the coming months and quarters.
We will strive needs to be able to do that across all of our content and so thats. The primary programming and engineering that goes behind that as getting Franklin covey content into the strive platform I would say, it's not a it's not a.
Difficult dive it won't happen overnight it'll it'll happen over the next number of months and Youll start we will start to be able to really come out to our clients.
In January ish, we're doing some pilot testing with clients in fact right now.
We were ready to go around it since we acquired them and we're off on our way on the pilots.
Got it understood.
And then just kind of confirming here, obviously you brought out the integration cost that will be there for strive on.
I'm just trying to understand if those costs will be stripped out of your adjusted EBITDA.
And then obviously year on year guidance or is it inclusive.
They are included.
Marco.
Got it okay.
And then last quick question from me, just kind of a higher level. It sounds like obviously confidence levels are are rising.
Performance is very good here, maybe if you can talk a little bit about looking out in the next 12 months. What do you think are the <unk>.
Greater opportunities for you to achieve and accelerate growth and then at the same time what is the greatest risks that you see out there that you might need to manage.
Okay.
I can start and then.
So.
Join in but.
The bigger opportunity we've seen.
People have been apart they are now coming back together, whether thats office or whatever or they are in their new way of working.
There is a lot to most organizations have to do to get there is a lot to do and particularly in building their teams and building their leaders et cetera has been more difficult for them.
During this period of time.
So I think big opportunity is as organizations take on big new opportunities of their own for our execution practices that we're trying to build leaders and really get all of their teams together they tend to look for things that we.
We play where there's collective behavioral changes needed among leaders building trust in a new environment, new work environment unconscious bias overcoming that in all these different ways of working I think is 1 big opportunity as a category is lots of dimensions right. That's a big thing.
Also trying to make or break an operational breakthrough.
In a new world, we've always done well coming out of the.
True to a disruption in execution and other things that people say gosh, I really want to pick something narrow.
A big big opportunity so on the opportunity side I'd say those.
Jim or Paul.
What else would you add to that.
Bob I'll speak to that I think Bob really spoke to where we have the biggest opportunity with clients as they think about place.
Placed on the location and as well as the space that behavior change and the things that they need for their people. The other 1 that's been mentioned and Steve mentioned and we talked about that is I think we have a great opportunity in terms of our thought leadership.
And our market and our positioning further strengthened by our work and the integration of stride, but many many opportunities for as especially as we look for new logos to soften the beaches and have a.
New and distinctive message around who we are on what we do and how we can help you with those operational breakthroughs isn't moving a metric or obtaining collective behavior changed. So I'm excited both about what client opportunity is but also what we have to go after that from a marketing standpoint.
And I think on the challenge side, unless Paul where youre going to add anything or Sean.
2 the opportunity side.
No no go ahead.
I'll just add volume.
Opportunity side, sorry on the opportunity. Thank you Shannon. Thank you Sean Yes sure.
Yes, I think I think the opportunity of education is huge right now because.
Social emotional learning SCL is more popular than ever because of all the mental wellness issues that have come up during COVID-19.
It'll help for students and teachers becomes a big issue, we addressed that so well and leader in me.
Combined with the stimulus money of the 200 billion on top of the 50, the federal government normally stands.
$200 billion will be in the marketplace for 2 to 2 and a half years.
So, it's a great opportunity and runway for.
On new clients to join us.
So we think theres, a real bright future for education because of these trends.
Yes.
Great and then Mark on your question was that helpful. On the on the 1 side on the opportunity side, yes.
Yes that was great.
Great I think on the challenge right now.
You can worry about a lot of things, but we the thing we are spending most of our time worried about is how do we.
As an organization take advantage of that opportunity on a funny way because.
Because everybody every organization in the World has those challenges that we just talked about we've got great distribution, great content et cetera, but how can we scale. It both in terms of delivering bigger and bigger populations, we've talked about that what's driving some of it but also how do we get the word out and.
And how do we make sure that every person who is in that position.
Thank gosh, if I need it.
Behavioral changes scale or I need to accomplish simply requires collective action, how do we make it more automatic.
For them not just our salespeople to call on them and then let them know, but how do we actually help people understand that actually we got this capability at a bigger scale and that's part of what we're investing in this fourth quarter.
Some new margin, but I think it's really getting out there and and taking advantage of what is really huge opportunities.
And again, we've got the scale on that.
The capabilities, but I think we need to we're trying to figure out how to scale more quickly.
Understood I appreciate the time guys Thats all I have thanks.
Thanks, so much margin.
And that concludes our question and answer session I'll turn the call back over to Bob Whitman for final remarks.
Alright, well again, we thank each of you for your great support guidance.
On the advisory hopes to continue to receive that.
And really hope you all have a great force and we'll look forward to.
We're doing a good job here in the fourth quarter and ending up with a good year. So thanks, so much everyone.
Thank you ladies and gentlemen, this concludes today's conference call.
For participating and you may now disconnect.
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