Q2 2024 Franklin Covey Co Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the second quarter 2024 Franklin Covey earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Good day and thank you for standing by welcome to the second quarter 2020 for Franklin Covey Earnings Conference call.

At this time all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

To ask a question during the session you'll need to press star one on your telephone.

Then here an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Derek Hatch. Please go ahead. Thank you. Hello, everyone. On behalf of Franklin Covey, it's my pleasure to welcome you to our conference call to discuss our second quarter fiscal 2024 financial results. We hope that you're enjoying good weather wherever you are in the world this spring or fall, if you're in the Southern Hemisphere.

Your question. Please press star one again.

Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your speaker for today Derek Hatch. Please go ahead.

Derek Hatch: Thank you.

Derek Hatch: Hello, everyone on behalf of Franklin Covey, It's my pleasure to welcome you to our conference call to discuss our second quarter fiscal 2024 financial results. We hope that you're enjoying good weather wherever you are in the world. This spring or fall here in the southern Hemisphere before we begin this presentation, we'd like to remind everybody that the presentation contains.

Derek Hatch: Before we begin this presentation, we'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 grow revenues, the acceptance of, and renewal rates of our subscription offerings, including the All Access Pass and Leader in Me memberships. The ability of the company to hire productive sales and other client-facing professionals, general economic conditions, competition in the company's targeted marketplace, market acceptance of new offerings or services and marketing strategies, changes in the company's market share, changes in the size of the overall market for the company's products, changes in the training and spending policies of the company's clients, and other factors identified and discussed in the company's most recent annual report on Form 10-K and other periodic Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company's current expectations. And there can be no assurance that the company's actual future performance will meet management's expectations.

Derek Hatch: <unk> 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 grow revenues the acceptance of and renewal rates of our subscription offerings, including the all access pass a leader in me memberships.

Derek Hatch: The ability of the company to hire productive sales that are client facing professionals general economic conditions competition in the companys targeted marketplace market acceptance of new offerings or services and marketing strategies changes in the companys market share changes in the size of the overall market for the Companys products changes in the training and spending policies of the companys clients and other.

Derek Hatch: Factors identified and discussed in the company's most recent annual report on Form 10-K, and other periodic reports that are filed with the Securities Exchange Commission. Many of these conditions are beyond our control or influence any one of which may cause future results to differ materially from the companys current expectations.

Derek Hatch: It can be no assurance the company's actual future performance will meet management's expectations. These forward 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.

Derek Hatch: These four 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 today's presentation, except as required. With that out of the way, we'd like to turn the time over to Mr. Paul Walker, our President and Chief Executive Officer.

Derek Hatch: That out of the way, we'd like to turn the time over to Mr. Paul Walker, Our President and Chief Executive Officer, Paul Thank you Eric Hello.

Paul S. Walker: Thank you, Derek. Hello everyone. Thanks so much for joining us today. We're glad to have the opportunity to talk with you. Joining me today are Steve Young, our CFO, Jennifer Colosimo, the President of our Enterprise Division, Sean Covey, the President of our Enterprise Division, and other members of our management team. Our results for the second quarter came in right in line with our expectations, with revenue of $61.3 million and adjusted EBITDA of $7.4 million, which was slightly stronger than expected. And our free cash flow was stronger than expected, $24.7 million in the first two quarters of this fiscal year.

Paul S. Walker: Hello, everyone. Thanks, so much for joining us today, we're glad to have the opportunity to talk with you.

Paul S. Walker: Joining me today are Steve young our CFO, Jennifer call a female the president of our Enterprise Division, Sean Covey, the President of our Enterprise Division and other members of our executive team.

Paul S. Walker: Our results for the second quarter came in right in line with our expectations with revenue of $61 3 million and adjusted EBITDA of $7 $4 million, which was slightly stronger than expected.

Paul S. Walker: And free our free cash flow was stronger than expected $24 7 million in the first two quarters of this fiscal year.

Paul S. Walker: In addressing our performance for the quarter and year to date, I thought I'd start out by organizing my comments into three categories. First, the areas that have been a challenge and with which we're not particularly pleased. Second, the areas that are going well and with which we're encouraged. And then third, three areas of focus that we're really excited about and that we believe are going to accelerate our growth. But first, let's talk about the areas that have been a challenge and with which we're not particularly pleased.

In addressing our performance for the quarter and year to date I thought I'd start out by organizing my comments into three categories.

Paul S. Walker: First the areas that we have been a challenge in which we're not particularly pleased with.

Paul S. Walker: The second the areas that are going well and that we're encouraged by.

Paul S. Walker: And then third three areas of focus that we're really excited about and that we believe are going to accelerate our growth.

Paul S. Walker: First let's talk about the areas that have been a challenge in which we're not particularly pleased.

Paul S. Walker: I'm not pleased that our services sales didn't rebound as rapidly as we thought and, as a consequence, reported revenue for both the third and fourth quarters and for the year is going to come in lighter than we expected when we reported our Q1 results. As a result, rather than achieve low double-digit revenue growth in the back half of this year, as we'd expect... We now expect reported revenue to grow approximately 1% in Q3 and 6% in Q4. I'm also not pleased that since last fall, there's been an environment in which companies' decision-making has been delayed longer than normal. During the late summer and early fall, as interest rates spiked, many organizations either eliminated costs or pushed off decision-making.

Paul S. Walker: I'm not pleased that our services sales didn't rebound as rapidly as we thought and that as a consequence reported revenue for both the third and fourth quarters and for the year are going to come in lighter than we expected when we reported our Q1 results.

Paul S. Walker: As a result, rather than achieving low double digit revenue growth in the back half of this year as we had expected. We now expect reported revenue to grow approximately 1% in Q3 and 6% in Q4.

Paul S. Walker: I'm also not pleased that since last fall there has been an environment in which companies decision, making has been extended longer than normal during the late summer and early fall as interest rates spiked many organizations either eliminated costs or pushed off decision making.

Paul S. Walker: This impacted 2024 budgets and created a more difficult selling environment for us in the first half of fiscal 24. And finally, I'm not happy that even though we do expect adjusted EBITDA to increase significantly this year to $54.5 million in constant currency, that result will only be within the low end of our guidance range of between $54.5 million and $58 million.

This impacted 2020 for budgets and created a more difficult selling environment for us in the first half of fiscal 'twenty four.

And finally, I'm not happy that even though we do expect adjusted EBITDA to increase significantly this year to $54 $5 million in constant currency.

Paul S. Walker: That result will be only within the low end of our guidance range of between $54 5 million and $58 million.

Paul S. Walker: Second, I would like to share a few things that are going well and which we are excited about and encouraged by. The first of these is, as I said a moment ago, we're now expecting reported revenue to grow approximately 1% in Q3 and 6% in Q4, which is an acceleration from the first half of the year. And I just want to point out this 1% and 6% reported revenue is largely revenue that's converting from prior period sales activity and is also muted somewhat by lower than anticipated services sales. And those services are recognized in the period that they're sold and delivered.

Paul S. Walker: Second I would like to share a few things that are going well and which we are excited about and encouraged by.

Paul S. Walker: The first of these is as I said, a moment ago. We're now expecting reported revenue to grow approximately 1% in Q3 and 6% in Q4, which is accelerating from the first half of the year.

Paul S. Walker: And I just want to point out this 1% and 6% reported revenue was largely revenue that's converting from prior period sales activities and is also muted somewhat by lower than anticipated services sales.

Paul S. Walker: And those services are recognized in the period that they are sold and delivered.

Paul S. Walker: In our subscription model, the majority of what we will actually sell between now and the end of the year will not be recognized this year but will be deferred and added to our growing deferred build and unbuild subscription balances to come into revenue and be recognized next year. The volume of subscription sales we're selling today and that we expect to sell in Q3 and Q4 is actually growing at a rate faster than the 1% and 6% reported growth that we're expecting this year. This will put, as I mentioned, more deferred, bill-on-bill revenue on the balance sheet to come into revenue next year, and that's happening at the same time we're beginning to see our services sales, our booking pace, and our services sales accelerate. The second thing that I'm pleased about, despite the economic environment and revenue being lower than expected, we expect that both the company's overall revenue and the revenue in both the enterprise and education divisions will still reach all-time highs in the third and fourth quarters, on top of all-time high comparisons from the previous year.

Paul S. Walker: And our subscription model the majority of what we will actually sell between now and the end of the year will not be recognized this year, but would be deferred and add to our growing deferred billed and unbilled subscription balances to come into revenue and be recognized next year.

Paul S. Walker: The volume of subscription sales, we're selling today and that we expect to sell in Q3, and Q4 is actually growing at a rate faster than the 1% and 6% reported growth that we're expecting in this year.

Paul S. Walker: This will put as I mentioned more deferred billed and unbilled revenue on the balance sheet to come into revenue next year and that's happening at the same time, we're beginning to see our services sales, our booking pace and our services sales accelerate.

Paul S. Walker: The second thing that I am pleased by pleased about is that despite the economic environment and revenue being lower than expected, we expect that both the company's overall revenue and the revenue in both the enterprise and education divisions will still reach all time highs in the third and fourth quarters on top of all time high comparisons from the previous year.

Paul S. Walker: And I'm pleased that revenue in the overall business has grown significantly over the past four years to more than $280 million. Third, I'm pleased that due to the strength of our business model, with its high recurring revenue, and strong gross margin. SG&A that declines as a percentage of revenue and low capital intensity; we expect both adjusted EBITDA and cash flow to come in strong for the year.

Paul S. Walker: And I am pleased that revenue and the overall business has grown significantly over the past four years to more than $280 million.

Paul S. Walker: Third I'm pleased that in addition to generating record levels of revenue due to the strength of our business model with its high recurring revenue strong gross margins SG&A that declines as a percentage of revenue and low capital intensity, we expect both adjusted EBITDA and cash flow to come in strong for the year.

Paul S. Walker: We expect adjusted EBITDA for the year to increase to approximately $54.5 million in constant currency, up from $48.1 million last year. We also expect to generate a very significant amount of free cash flow for the year. As I mentioned, year-to-date through this year's second quarter, free cash flow has been $24.7 million compared to $3.3 million through the second quarter of last year. As you recall, free cash flow in the first half of last year was reduced somewhat as a result of changes in working capital.

Paul S. Walker: We expect adjusted EBITDA for the year to increase to approximately $54 5 million in constant currency up from $48 $1 million last year.

Paul S. Walker: We also expect to generate a very significant amount of free cash flow for the year.

Paul S. Walker: As I mentioned year to date through this year's second quarter free cash flow has been $24 7 million compared to $3 3 million through the second quarter of last year as.

Paul S. Walker: As Youll recall free cash flow in the first half of last year was reduced somewhat as a result of changes in working capital.

Paul S. Walker: And what I'm really pleased with is the resilience we have been seeing in.

Paul S. Walker: In the enterprise and education businesses.

Paul S. Walker: And with the positive direction of some of the recent trends, we're seeing across key parts of the business.

Paul S. Walker: I thought I would just share for first a few of the points of resilience. We are seeing in enterprise and education, and then a comment or two about some of the trends in leading indicators.

Paul S. Walker: And what I'm really pleased with is the resilience we've been seeing in the enterprise and education businesses, and with the positive direction of some of the recent trends we're seeing across key parts of the business. I thought I would just share first a few of the points of resilience we're seeing in enterprise and education and then a comment or two about some of the trends in leading indicators. In the Enterprise Division, each of our six key indicators remained strong and resilient in the second quarter and year to date. First, we had very strong logo retention. In fact, the second quarter was one of the best quarters we've ever had in terms of logo retention.

Paul S. Walker: In the enterprise division each of our six key indicators remain strong and resilient in the second quarter and year to date.

Paul S. Walker: First we had very strong logo retention in fact, the second quarter was one of the best quarters, we've ever had in terms of logo retention.

Paul S. Walker: Second our revenue retention for the quarter and year to date was also very strong continuing to be higher than 90% and with the pattern of client renewals being consistent with historical patterns.

Third as shown on slide four our subscription revenue also grew to an all time high for the second quarter year to date and latest 12 month periods, reaching $26 $3 million in the quarter that was up 9% $53 $1 million year to date up 11% and $104 5 million for the later.

Paul S. Walker: 12 month period, which is up 9%.

Paul S. Walker: Second, our revenue retention for the quarter and year to date was also very strong, continuing to be higher than 90% and with the pattern of client renewals being consistent with historical patterns. Third, as shown on slide four, our subscription revenue also grew to an all-time high for the second quarter, year-to-date, and latest 12-month periods, reaching $26.3 million in the quarter. That was up 9%, $53.1 million year-to-date, up 11%, and $104.5 million for the latest 12-month period, which is up 9%. The fourth point about enterprise is that the percentage of total all access pass contract value for multi-year periods increased to a historic high 62% compared to 57% at the end of Q2 last year. And in addition, the percent of total all access pass contracts, which are for multi-year periods, increased to a historic high of 56% from 50% at the end of Q2 last year.

Paul S. Walker: The fourth point about enterprise as a percentage of total all access pass contract value for multi year periods increased to a historic high 62% compared to 57% at the end of Q2 last year.

Paul S. Walker: And in addition, the percent of total all access pass contracts, which are up for which are for multi year periods increased to a historic high of 56% up from 50% at the end of Q2 last year.

Paul S. Walker: The fifth point is that our deferred revenue billed and Unbilled reached an all time second quarter high balance of $128 7 million versus $124 8 million at the end of last year's second quarter, and finally to round out enterprise, our total subscription and subscription services revenue increased to record levels for the second quarter.

Paul S. Walker: Year to date and latest 12 month periods with $37 $5 million of subscription in subscription services revenue in the second quarter.

Paul S. Walker: $79 $1 million year to date and $162 1 million for the latest 12 months.

Paul S. Walker: While this combination of subscription and subscription services sales achieved a historic high watermark its growth rate was muted somewhat by the fact that while clients have continued to purchase renew and expand their all access pass subscriptions and purchase a substantial number of subscription services as noted they had been.

Paul S. Walker: The fifth point is that our deferred revenue, build and unbuild, reached an all-time high balance of 128.7 million versus 124.8 million at the end of last year's second quarter. And finally, to round out the enterprise, our total subscription and subscription services revenue increased to record levels for the second quarter, year to date, and latest 12 month periods, with $37.5 million of subscription and subscription services revenue in the second quarter. $79.1 million year-to-date and $162.1 million for the last 12 months.

Paul S. Walker: Purchasing a somewhat smaller amount of those services. This is a pattern we've seen and spoken about over the last couple of quarters.

Paul S. Walker: In the Education Division.

As shown on slide five education subscription revenue grew also to an all time high for the second quarter year to date and latest 12 months periods, reaching $9 5 million in the quarter that was up 7% $19 $3 million year to date, that's up 7% and $40 9 million for the latest 12 months.

Paul S. Walker: While this combination of subscriptions and subscription services sales achieved a historic high watermark, its growth rate was muted somewhat by the fact that while clients have continued to purchase, renew, and expand their All Access Pass subscriptions and purchase a substantial number of subscription services, as noted, they have been purchasing a somewhat smaller number of those services. This is a pattern we've seen and spoken about over the last couple of quarters in the Education Division. As shown on slide 5, education subscription revenue also grew to an all-time high for the second quarter, year-to-date, and latest 12-month periods, reaching $9.5 million in the quarter. That was up 7%, $19.3 million year-to-date. That's up 7%, and $40.9 million for the latest 12 months, up 10%, second only to education. Amounts invoiced also grew to an all-time high for the second quarter and for the year-to-date and latest 12-month periods, reaching $9.8 million in the quarter, representing 23% growth. $18.1 million year to date.

Paul S. Walker: Up 10%.

Paul S. Walker: Second in education.

Paul S. Walker: Invoiced also grew to an all time high for the second quarter and for the year to date and latest 12 months periods, reaching $9 $8 million in the quarter, representing 23% growth.

Paul S. Walker: $18 $1 million year to date, it's up 14% and $79 7 million for the latest 12 months our growth of 13%.

Paul S. Walker: And third and finally for education, while it is still early in our contracting year. The number of new schools. We've contracted is significantly higher than it was at the same point last year, a year in which we added a record number of schools. In addition, the number and percent of schools retained is also up significantly year over year.

Paul S. Walker: I am also particularly encouraged by the progress we're making on many of the important leading indicators that point toward accelerating growth and thought you might find a few of these interesting and helpful Spa.

Paul S. Walker: Specifically I'll talk about the areas of new client acquisition, and then of course services bookings.

Paul S. Walker: First related to new client acquisitions, we closely track the leading indicators related to new client revenue growth.

Paul S. Walker: Two important metrics in North America are the number of people participating in our marketing events, where thousands of prospective clients join us throughout the year to learn more about Franklin Covey solutions and second the volume of new client acquisitions that actually enter into our pipelines.

Paul S. Walker: That's up 14% and $79.7 million for the latest 12 months, or growth of 13%. Third and finally, for education, while it is still early in our contracting year, the number of new schools we've contracted is significantly higher than it was at this same point last year, a year in which we added a record number of schools. In addition, the number and percent of schools retained are also up significantly year over year.

Paul S. Walker: As it relates to the number of people participating in our marketing events, we're very pleased with the year over year growth, we're experiencing in that participation rate in.

Paul S. Walker: And particularly over the past 120 days, where you're experiencing a meaningful increase in attendance on a year over year basis and this strengthening is due in part to high interest in our new speed of trust and navigating difficult conversation solutions as well as general interest in our overall solutions to help organizations improved leadership culture.

Paul S. Walker: I'm also particularly encouraged by the progress we're making on many of the important leading indicators that point toward accelerating growth and thought you might find a few of these interesting and helpful. Specifically, I'll talk about the areas of new client acquisition and then, of course, services booking. First, related to new client acquisitions, we closely track the leading indicators related to new client revenue growth. Two important metrics in North America are the number of people participating in our marketing events, where thousands of prospective clients join us throughout the year to learn more about Franklin Covey's solution. And second, the volume of new client acquisitions that actually enter our pipeline. As it relates to the number of people participating in our marketing events, we're very pleased with the year over year growth we're experiencing in that participation rate, especially over the past 120 days.

Paul S. Walker: And execution.

Paul S. Walker: We would expect this increase in participation rates to lead to an increase in new client opportunities entering our pipeline and it is.

Paul S. Walker: As it relates to increases in the volume of new client opportunities that are entering our pipeline over the same last 120 day periods. Our pipeline of new client acquisition opportunities has also increased steadily on a year over year basis.

Paul S. Walker: While we of course don't close every opportunity that enters our pipeline. This acceleration in new client pipeline is a positive leading indicator of future new client growth of course that we can then add services to and expand and retain.

Paul S. Walker: The second area I would just talk about as it relates to these leading indicators as we closely as you would imagine watch our subscription services booking pace.

Paul S. Walker: We're experiencing a meaningful increase in attendance on a year-over-year basis, and this increase is due in part to high interest in our new Speed of Trust and Navigating Difficult Conversations solutions, as well as general interest in our overall solutions to help organizations improve leadership, culture, and execution. We would expect this increase in participation rates to lead to an increase in new client opportunities entering our pipeline, and it is. As it relates to increases in the volume of new client opportunities that are entering our pipeline, over the same last 120-day period, our pipeline of new client acquisition opportunities has also increased steadily on a year-over-year basis. While we, of course, don't close every opportunity that enters our pipeline, this acceleration in the new client pipeline is a positive leading indicator of future new client growth, of course, that we can then add services to and expand and

Paul S. Walker: Booking pace is important is because before we can deliver services, we first need to book them and get them scheduled with the client.

Paul S. Walker: Just maybe a note about services.

Paul S. Walker: When a person buys a subscription whether that's all access pass or leader in me included in that purchase is access to either an implementation strategist and our enterprise division or a leader in me coach in the Education Division.

Paul S. Walker: And they are there to help the client drive maximum impact of their subscription.

Paul S. Walker: In addition to those services, which are included in the subscription clients can also purchase access to Franklin Covey delivery consultants to train and coach their employees on an AD needs as needed basis to help deepen the impact when we when we referred to subscription services.

Paul S. Walker: Those services were talking about.

Paul S. Walker: Prior to the pandemic the attachment rate of services to all access pass subscriptions had steadily increased reaching 55% to 55% 55 cents of every dollar. It was every dollar of subscription was represented by subscription services.

Paul S. Walker: The second area I would just talk about as it relates to these leading indicators is we closely, as you would imagine, watch our subscription services booking pace. The reason booking pace is important is because before we can deliver services, we first need to book them and get them scheduled with the client. Just maybe a note about service. When a person buys a subscription, whether that's All Access Pass or Leader in Me, included in that purchase is access to either an implementation strategist in our enterprise division or a Leader in Me coach in education. And they're there to help the client drive the maximum impact of their subscription. In addition to those services which are included in the subscription, clients can also purchase access to Franklin Covey delivery consultants to train and coach their employees on an as-needed basis to help deepen the impact. When we refer to subscription services, it's those services we're talking about.

Paul S. Walker: We reached that level in 2019.

Paul S. Walker: During and in the post pandemic work from home environment clients took advantage of our tremendous live online services delivery capability to engage their remote workers and this pushed our services sales above their normal attach rates all the way to 60%.

Paul S. Walker: That specific pandemic and post pandemic use case has moderated somewhat.

Paul S. Walker: And our return to the pre pandemic high services attach rate is actually a primary contributor to our reduced services sales this year.

Paul S. Walker: We expect the service attach rate to be high we expect it to end the year at 55%, which is about what it was pre pandemic.

Paul S. Walker: Prior to the pandemic, the attachment rate of services to All Access Pass subscriptions had steadily increased, reaching 55%. So 55 cents of every dollar of subscription revenue was represented by subscription services. We reached that level in 2019.

Paul S. Walker: However, despite the environment and despite this tougher comp we've been encouraged from a leading indicator standpoint that in our U S and Canada enterprise business our services bookings.

Paul S. Walker: Again, a leading indicator of future services revenue, which has been down to prior year 60 days ago and then the last 60 days is now ahead of prior year.

Paul S. Walker: During and in the post-pandemic work-from-home environment, clients took advantage of our tremendous live online services delivery capability to engage their remote workers, and this pushed our services sales above their normal attach rates all the way to 60%. That specific pandemic and post-pandemic use case has moderated somewhat. And our return to the pre-pandemic high services attach rate is actually a primary contributor to our reduced services sales this year. We expect the service attach rate to be high; we expect it to end the year at 55%, which is about what it was pre-pandemic. However, despite the environment and despite this tougher comp, we've been encouraged from a leading indicator standpoint that in our U.S. and Canada enterprise business, our services bookings, again, a leading indicator of future services revenue, which has been down to the prior year 60 days ago, and in the last 60 days, is now ahead of the prior year.

Paul S. Walker: While the purchases of services over the past couple of quarters have been down slightly compared to last year's elevated levels. We expect increases in the purchases of services to be a strong contributor to our revenue growth in the second half of this year and into next year.

First we expect to achieve strong services revenue growth in the education division, particularly in the fourth quarter, when new schools and districts typically typically complete a meaningful portion of their onboarding training and coaching prior to the start of the new school year.

Paul S. Walker: And second as Ive shared we also expect to see a rebound in all access passes clients purchase of subscription services in the Enterprise Division.

Paul S. Walker: I'm encouraged by these trends and thought you might find those insights into the business interesting and hopefully helpful.

Paul S. Walker: So so far I've shared with you what I'm not pleased with and also areas that we're encouraged by and I would now like to transition to my third point before I turn time to Steve which is to talk about some areas in which I am excited and which we believe will accelerate our growth.

Paul S. Walker: While the purchases of services over the past couple of quarters have been down slightly compared to last year's elevated levels, we expect increases in the purchases of services to be a strong contributor to our revenue growth in the second half of this year and into next year. First, we expect to achieve strong services revenue growth in the education division, particularly in the fourth quarter, when new schools and districts typically complete a meaningful portion of their onboarding training and coaching prior to the start of the new school year. And second, as I've shared, we also expect to see a rebound in all access pass clients' purchase of subscription services in the enterprise division. I'm encouraged by these trends and thought you might find those insights into the business interesting and, hopefully, helpful. So, so far, I've shared with you what I'm not pleased with and also areas that we are encouraged by.

Stephen D. Young: I'd like to briefly share three big executable opportunities for accelerated or accelerating our growth that are right in front of us and.

Stephen D. Young: And we're executing on these key initiatives, which we expect both individually and collectively will make major contributions to not only continuing this growth but to meaningfully accelerating it.

Stephen D. Young: As shown on slide six the first of these opportunities is what I'm going to refer to as project penetration.

Stephen D. Young: Since the launch of all access pass eight years ago. The company has become quite good at retaining all access pass clients expanding.

Stephen D. Young: Expanding all access passes penetration levels within these clients.

Stephen D. Young: And providing clients with best in class services to help them achieve their most important jobs to be done.

Stephen D. Young: As a result, the average revenue per all access pass holder has increased from approximately $54000 in fiscal 18 to more than $83000 at the end of fiscal 'twenty three.

Stephen D. Young: Yes.

Stephen D. Young: As significant as this growth has been approximately three years ago.

Stephen D. Young: In an effort to see how high up might be in terms of client impact and therefore and client expansion and penetration.

Paul S. Walker: And I'd now like to transition to my third point before I turn time to Steve, which is to talk about some areas in which I'm excited and which we believe will accelerate our growth. I'd like to briefly share three big executable opportunities for accelerating our growth that are right in front of us. And we're executing on these key initiatives, which we expect both individually and collectively will make major contributions to not only continuing this growth but meaningfully accelerating it. As shown on slide six, the first of these opportunities is what I'm going to refer to as project penetration. Since the launch of All Access Paths eight years ago, the company has become quite good at retaining All Access Paths clients, expanding all access pass penetration levels within these clients, and providing clients with best-in-class services to help them achieve their most important jobs to be done. As a result, the average revenue per all-access passholder has increased from approximately $54,000 in fiscal 18 to more than $83,000 at the end of fiscal 23.

Stephen D. Young: We organized an increased number of client facing resources around a subset of our client partners in North America to create client impact pods.

Stephen D. Young: These pods included providing client partners involved in this test with access to one or more implementation strategists. The services of client success specialists and the ability to access Franklin Covey deep bench of delivery consultants to help in the implementation of client solutions.

Stephen D. Young: Under the direction of the client partner this impact pods sole focus has been to help clients achieve such great results that we would earn the right to expand our solutions even further throughout the client organization.

And.

Stephen D. Young: And create clients for life.

Stephen D. Young: This group of client partners, who directed the activities of these impact pods were set up to have the same number of potential accounts assigned to them as did the traditional client partner group of similarly, Similarly experienced client partners. They also had essentially the same number of all access pass holding clients as did the traditional group.

Stephen D. Young: And so therefore, what have the results been.

Stephen D. Young: While both the impact pod group and the traditional client partner group achieved very strong results by comparison the results of the impact Pas group have been truly extraordinarily extraordinary along several key dimensions I will outline.

Paul S. Walker: As significant as this growth has been, approximately three years ago, in an effort to see how high we might be in terms of client impact and, therefore, client expansion and penetration, we organized an increased number of client-facing resources around a subset of our client partners in North America to create client impact pods. These pods included providing client partners involved in this test with access to one or more implementation strategies, the services of client success specialists, and the ability to access Franklin Covey's deep bench of delivery consultants to help in the implementation of client solutions. Under the direction of the client partner, this Impact Pod's sole focus was to help clients achieve such great results that we would earn the right to expand our solutions even further throughout the client organization and Create Clients for Life. This group of client partners who directed the activities of these impact pods was set up to have the same number of potential accounts assigned to them as did the traditional client partner group of similarly experienced client partners. They also had essentially the same number of all-access pass-holding clients as did the traditional group.

Stephen D. Young: Four of them here.

Stephen D. Young: First as shown on slide seven.

Stephen D. Young: The size of the average all access pass subscription contract.

Stephen D. Young: The client partners and the impact pods average all access pass size grew to $80000, whereas the traditional client partner groups average all access pass size grew to $45000.

Second is the subscription services attach rate.

Stephen D. Young: The impact pod and the traditional client partner groups achieved significant growth in their services attach rate. However, the impact pods subscription services attach rate.

Stephen D. Young: Now represents more than 67% of the amount of their all access pass subscription itself compared to our services attach rate of 50% for the traditional client partner group.

Stephen D. Young: Third the combination the combined subscription and subscription services revenue per all access pass holder. So the sum of those first two metrics.

Stephen D. Young: Where the impact pod now achieved an average of $132000 per all access pass client compared to an average of 60 $63000 per all access pass client for the traditional group.

Stephen D. Young: And fourth the logo retention rate, while the all access pass logo retention rate is very high overall the impact pods annual logo retention averages are more than 500 basis points higher than the traditional client partner group.

Paul S. Walker: And so, therefore, what are the results? While both the Impact Pod group and the Traditional Client Partner group achieved very strong results, by comparison, the results of the Impact Pod group have been truly extraordinary along several key dimensions. I'll outline four of them here. The first is shown in slide seven.

Stephen D. Young: As a result of these combined the combined impacts of this focus our top performing client partners, who used to average approximately $1 $5 million in annual revenue now average between two and a half and $3 million with several generating more than $3 million each year.

Paul S. Walker: The size of the average All Access Pass subscription contract, where the client partners in the Impact Pod's average All Access Pass size grew to $80,000, whereas the traditional client partner group's average All Access Pass size grew to $45,000. Second, the subscription services attach rate. Both the Impact Pod and the Traditional Client Partner Groups achieved significant growth in their services attach rates. However, the Impact Pod subscription services attach rate now represents more than 67% of the amount of their All Access Pass subscription itself, compared to a services attach rate of 50% for the Traditional Client Partner Group. Third, the combined subscription and subscription services revenue per all-access passholder, so the sum of those first two metrics. Where the Impact Pod now achieves an average of $132,000 per All Access Pass client compared to an average of $63,000 per All Access Pass client for the traditional, And fourth, the logo retention rate.

Stephen D. Young: This compares to average revenue for all client partners of approximately $900000 importantly, as significant as the penetration and increases in revenue event for the client impact pod group each still has tremendous opportunities for growth.

Stephen D. Young: We're still only penetrated 10% to 15% of the way into these clients total populations and potential.

Stephen D. Young: Project penetrations potential impact on accelerating revenue growth is quite significant.

Stephen D. Young: For example, if its full implementation resulted in the average client partner generating even an extra $300000 per client partner or 20% of the increase achieved by the impact pod group.

Stephen D. Young: This would ultimately add nearly $40 million of income in incremental revenue compared to the normal client partner ramp.

Stephen D. Young: And then as much as the impact part is simply a resource pool, which can be accessed by a number of client partners and since we already hired and trained a significant number of client facing team members to populate additional pods. So we'd be in a position to expand the rollout of project penetration in the coming quarters.

Paul S. Walker: While the All Access Path logo retention rate is very high overall, the Impact Pod's annual logo retention averages are more than 500 basis points higher than the traditional client partner. As a result of the combined impacts of this focus, our top performing client partners, which used to average approximately $1.5 million in annual revenue, now average between $2.5 and $3 million, with several generating more than $3 million each year. This compares to average revenue for all client partners of approximately $900,000.

As noted several earnings calls over the past.

Stephen D. Young: Year over the past year, the incremental flow through of this increased revenue to adjusted EBITDA and cash flow is expected to be high.

Stephen D. Young: So we're excited about project penetration.

Stephen D. Young: The second of these targeted growth acceleration opportunities as shown in slide eight is what I'll refer to as project speed to ramp.

Stephen D. Young: New client partners, primarily focus on winning new clients or new logos, and then retaining and expanding our business with them.

Paul S. Walker: Importantly, as significant as the penetration and increases in revenue have been for the Client Impact Pod Group, each still has tremendous opportunities for growth. We're still only penetrated 10 to 15 percent of the way into these clients' total populations and potential. Project Penetration's potential impact on accelerating revenue growth is quite significant. For example, if its full implementation resulted in the average client partner generating even an extra $300,000 per client partner, or 20% of the increase achieved by the impact pod group, this would ultimately add nearly $40 million of incremental revenue compared to the normal client partner ramp. And inasmuch as the impact pod is simply a resource pool that can be accessed by a number of client partners, and since we've already hired and trained a significant number of client-facing team members to populate additional pods, so we'd be in a position to expand the rollout of project penetration in the coming quarters, as noted on several earnings calls over the past year. The incremental flow through of this increased revenue to adjust the So we're excited about Project Penetration.

Stephen D. Young: Focus of projects speed to ramp is in the name its focus is to significantly increase the number of new client logos, which ramping client partners add each year.

Stephen D. Young: This will accelerate the ramp trajectory and increased the number of clients with whom we can then continue to penetrate and continue to grow over many years.

Stephen D. Young: For context in addition to increasing our penetration of existing subscription clients. Another of our key strengths over many years had been our ability to hire train and ramp up new client partners.

Stephen D. Young: We've generally counted on these client partners to prospect and generate their own business from a list of accounts provided to them and we've established a strong infrastructure to support them in doing this including include.

Stephen D. Young: Including things like the REIT to recruit new client partners. We have built a strong team that uses all of the latest recruiting tools has a strong social media presence and a rigorous interviewing process to ensure that new recruits meet our established profile of a successful client partner.

Stephen D. Young: Once recruited these client partners are assigned a list of named accounts and are responsible for penetrating that list and winning new clients.

Stephen D. Young: Our efforts to support these new client partners as they ramp up include having them go through an extended live and live online sales school.

Stephen D. Young: Providing sales mentorship with lots of sales presentation AIDS.

Stephen D. Young: Holding many hundreds of live and live online thought leadership events to which they can invite potential and prospective clients.

Stephen D. Young: And assigning them to a managing director, who works with them weekly going on sales calls with them and have them go on calls with more experienced client partners and there's many other things to support them in their development.

Paul S. Walker: The second of these targeted growth acceleration opportunities, as shown in slide 8, is what I'll refer to as Project Speed to Ramp. New client partners primarily focus on winning new clients or new logos and then retaining and expanding our business with them. The focus of Project Speed to Ramp is in the name. Its focus is to significantly increase the number of new client logos which ramping client partners add each year. This will accelerate the RAMP trajectory and increase the number of clients with whom we can then continue to penetrate and continue to grow over many years. For context, in addition to increasing our penetration of existing subscription clients, another of our key strengths over many years has been our ability to hire, train, and ramp up new client partners.

Stephen D. Young: This process process, which we continue continue to regularly refine has been quite effective.

Stephen D. Young: As a result, our number of client partners has grown significantly and their ramp up has driven significant sales growth across the world.

Stephen D. Young: Over the years, while primarily relying on client partners to generate their own new business from a list of qualified accounts provided to them. We've also tested and worked to establish various ways to further accelerate the speed at which they ramp up while at the same time continuing to increase the revenue growth rate for already ramped client partners.

Stephen D. Young: The focus of what we're calling project speed the ramp is to further accelerate client partners speed to ramp by focusing on both sides of the math of acquiring new clients.

Paul S. Walker: We've generally counted on these client partners to prospect and generate their own business from a list of accounts provided to them, and we've established a strong infrastructure to support them in doing this, including things like recruiting new client partners. We've built a strong team that uses all the latest recruiting tools, has a strong social media presence, and a rigorous interviewing process to ensure that new recruits meet our established profile of a successful client partner. Once recruited, these client partners are assigned a list of named accounts and are responsible for penetrating that list and winning new clients.

Stephen D. Young: The first side. This is a significantly increased the percentage of our client partners time that is spent making sales presentations versus the time spent prospecting.

Stephen D. Young: This will involve implementing a significantly expanded lead generation effort, which we've been testing, including both inside and outside lead generation activities.

Stephen D. Young: And second at the same time, increasing the percentage of sales presentations that are successful in acquiring a new client. This will involve having a much higher percent of the ramping client partners sales presentations be done in partnership with somebody who is more experienced sales coach or a partner.

Paul S. Walker: Our efforts to support these new client partners as they ramp up include having them go through an extended live and live online sales school, providing sales mentorship with lots of sales presentation aids, and holding many hundreds of live and live online thought leadership events to which they can invite potential and prospective clients. And assigning them to a managing director who works with them weekly, goes on sales calls with them, and who has them go on calls with more experienced client partners and does many other things to support them in their development. This process, which we continue to regularly refine, has been quite effective.

Stephen D. Young: We've tested these two efforts in a variety of circumstances and are really excited about the results and the potential.

Stephen D. Young: Projects speed the ramp has to both accelerate ramp time for new client partners and increased their total revenue once ramped.

Stephen D. Young: As we add more than 100 net new client partners in the coming years. This powerful combination of faster ramp and higher trajectory could add tens of millions of dollars of incremental profitable growth.

Stephen D. Young: Importantly, because of the investments are being made and relatively modest incremental investments required to implement projects penetration and speed to ramp and the high gross margins generated on incremental sales, we can make the required incremental investments to accelerate revenue growth and still maintain our position as a high EBITDA hi.

Paul S. Walker: As a result, our number of client partners has grown significantly, and their ramp-up has driven significant sales growth across the world. Over the years, while primarily relying on client partners to generate their own new business from a list of qualified accounts provided to them, we've also tested and worked to establish various ways to further accelerate the speed at which they ramp up, while at the same time continuing to increase the revenue growth rate for already ramped client partners. The focus of what we're calling Project Speed to Ramp is to further accelerate client partners' speed to ramp by focusing on both sides of the math of acquiring new clients.

Stephen D. Young: Cash flow growth company.

Stephen D. Young: As part of the implementation of project penetration in projects speed to ramp.

Stephen D. Young: We've recently completed an evaluation of the size and deployment configuration of our approximately 290 client partners and our more than 150 additional client facing field teams of business developers implementation strategists and leader in me coaches.

Stephen D. Young: Through this evaluation, we determined two things.

Stephen D. Young: First that we should place a few additional resources in roles to focus on business development and account penetration.

Stephen D. Young: And second that we had approximately 8% of our client partners or <unk> 24 in total who didn't fit within our planned future field deployment structure.

Paul S. Walker: The first step is to significantly increase the percentage of a client partner's time that is spent making sales presentations versus the time spent prospecting. This will involve implementing a significantly expanded lead generation effort, which we've been testing, including both inside and outside lead generation activities. And second, at the same time, increasing the percentage of sales presentations that are successful in acquiring a new client. This will involve having a much higher percent of the ramping client partner's sales presentations be done in partnership with somebody who's more experienced, a sales coach, or a partner. We've tested these two efforts in a variety of circumstances and are really excited about the results and the potential.

Stephen D. Young: As a result, we made the difficult decision to separate from these client partners.

Stephen D. Young: This is temporarily reducing our number of client partners from approximately 290 to approximately 265.

Stephen D. Young: This refinement of our client partner force is similar in nature and scope to the refinement. We made in 2016, when we move to a subscription model and the cost is reflected in the restructuring charge on the income statement.

Stephen D. Young: We expect to begin aggressively hiring new client partners in fiscal 'twenty, five and beyond as well as continue adding to our important client facing field roles as we fully implement project penetration in projects speed to ramp.

Stephen D. Young: The third growth accelerator idea or project that we're working on that I'd like to talk about here is what we're calling project impact and as you can see on slide nine.

Paul S. Walker: Project Speed to Ramp has to both accelerate ramp time for new client partners and increase their total revenue once ramped. As we add more than 100 net new client partners in the coming years, this powerful combination of faster ramp and higher trajectory could add tens of millions of dollars of incremental profitable growth. Importantly, because of the investments already being made and the relatively modest incremental investments required to implement projects penetration and speed to ramp and the high growth margins generated on incremental sales, we can make the required incremental investments to accelerate revenue growth and still maintain our position as a high EBITDA, high cash flow growth company. As part of the implementation of Project Penetration and Project Speed to Ramp, we recently completed an evaluation of the size and deployment configuration of our approximately 290 client Through this evaluation, we determined two things.

Stephen D. Young: The substance of this third key growth opportunity as our ongoing investment in developing high impact solutions to drive collective action at scale.

Stephen D. Young: As you know we partner with organizations to address their most important people related challenges that are developing leaders at all levels building, winning cultures and creating a system of execution to achieve breakthrough results.

Stephen D. Young: We achieved these goals with our clients by flexibly delivering world class solutions that seamlessly generate behavior change at scale.

Stephen D. Young: The solutions, we implement do not simply create individual performance improvements are pockets of excellence.

Stephen D. Young: We work systematically to transform performance across an organization.

Stephen D. Young: To that end I'd like to provide a few product updates and the results of those products.

Stephen D. Young: Those product updates in order to help our partner organizations achieve breakthrough results, we develop principle centric industry, leading solutions and technologies that allow for seamless flexible scalable impactful deployments over the past two years, we've significantly expanded the scope of our efforts and as shown on slide 10 in the last six months alone.

Stephen D. Young: One.

Stephen D. Young: We completed and launched leading and working at the speed of trust this substantial update and refinement to our interest industry, leading winning culture solution. Both modernize the solution. So it's increasingly relevant and applicable for contemporary work cultures and by launching a scalable working at the speed of trust companion solution extended the impact.

Paul S. Walker: First, that we should place a few additional resources in roles to focus on business development and account penetration. And second, that we had approximately 8% of our client partners, or 24 in total, who didn't fit within our planned future field deployment structure. As a result, we made the difficult decision to separate from these client partners.

Individual contributor audiences.

Stephen D. Young: Three months post launch leading at the speed of Trust is earned a net promoter score of a remarkable 78, representing a 34% increase compared to our previous world renowned solution, making it among our highest performing solutions to date and importantly through our investments in technology, including the impact platform working.

Paul S. Walker: This is temporarily reducing our number of client partners from approximately 290 to approximately 265. This refinement of our client-partner force is similar in nature and scope to the refinement we made in 2016 when we moved to a subscription model, and the cost is reflected in the restructuring charge on the income. We expect to begin aggressively hiring new client partners in fiscal 25 and beyond, as well as continue adding to our important client-facing field roles as we fully implement project penetration and project speed. The third growth accelerator idea or project that we're working on that I'd like to talk about here is what we're calling project impact. And as you can see on slide nine,

Stephen D. Young: At the speed of trust has been assigned on demand of more than 10 times as many learners as the previous solution.

Stephen D. Young: The second product related update is that we launched an important and hard hitting new communications offering entitled navigating difficult conversations.

Stephen D. Young: We did we launched this in February it's an extremely engaging solution that helps individuals and teams adopt the paradigms and gain the skills necessary to have the kinds of high impact conversations that can move relationships and teams forward and it does so in an action packed two hour session that meets the time demands of modern workers, while maintaining Franklin Covey is pinched printed.

Stephen D. Young: <unk> centric inside out World class quality differentiation. This solution has garnered more client interest and any new solution launched in the last three years and within one month of launch has already been adopted by clients twice as much as any other skill specific solution we've launched.

Paul S. Walker: The substance of this third key growth opportunity is our ongoing investment in developing high-impact solutions to drive collective action at scale. As you know, we partner with organizations to address their most important people-related challenges, such as developing leaders at all levels, building winning cultures, and creating a system of execution to achieve breakthrough results. We achieve these goals with our clients by flexibly delivering world-class solutions that seamlessly generate behavior change at scale. The solutions we implement do not simply create individual performance improvements or pockets of expertise.

Stephen D. Young: Third we launched a top level solution solutions, selling offering entitled helping clients succeed strikingly different selling this leverages the intellectual property, we've had in our traditional helping clients succeed sales offerings. We launched this in January the solution was designed leveraging the latest science of <unk>.

Stephen D. Young: Turning research.

Stephen D. Young: And with the impact platform in mind utilizing unique blend of asynchronous and synchronous experiences that will drive improved measurable selling outcomes for business to business sales early client reactions are overwhelmingly positive.

Paul S. Walker: We work systematically to transform performance across an organization. To that end, I'd like to provide a few product updates and the results of those products. In order to help our partner organizations achieve breakthrough results, we develop principle-centric, industry-leading solutions and technologies that allow for seamless, flexible, scalable, impactful deployment. Over the past two years, we've significantly expanded the scope of our efforts, and as shown on slide 10, in the last six months alone, we completed and launched Leading and Working at the Speed of Trust. This substantial update and refinement to our industry-leading, winning culture solution both modernized the solution so it's increasingly relevant and applicable to contemporary work cultures and, by launching a scalable Working at the Speed of Trust companion solution, extended the impact to individual contributor audiences.

Stephen D. Young: Our impact platform has now become an industry, leading technology solution the impact platform, our proprietary learning platform. Our clients can easily launch manage and measure compelling behavior change experiences has evolved into an industry leading technology solution.

Stephen D. Young: In the past six months, we've launched the impact platform in over 20 languages built a robust diagnostic experience to measure behavior change overtime built built one of a kind functionality for clients to launch their own client facilitated courses and integrated with popular <unk> and <unk>.

Stephen D. Young: Over 80% of our clients are now upgraded to the impact platform and clients, who have upgraded assigned four times as much content to their employee populations and participants now complete 10 times as much content as those on the legacy all access pass portal.

Stephen D. Young: We expect to upgrade 100% of our clients by January 2025.

Stephen D. Young: Just a couple of notes about upcoming product developments and updated seven habits solution will be launching in the fall of 'twenty four.

Paul S. Walker: Three months post-launch, Leading at the Speed of Trust has earned a net promoter score of 78, representing a 34% increase compared to our previous world-renowned solution, making it among our highest-performing solutions to date. And importantly, through our investments in technology, including the Impact Platform, Leading at the Speed of Trust has been assigned on demand to more than 10 times as many learners as the previous solution. The second product-related update is that we launched an important and hard-hitting new communications offering entitled Navigating Difficult Conversations.

Stephen D. Young: Seven habits, our flagship solution for individual effectiveness is undergoing its most substantial revamp in a decade. The solution is being re imagined to engage modern workers globally. We've completed the most extensive development and beta testing we've done for any solution to date and we're receiving rave reviews in the early pilots in beta testing and we're eager to unveil the solution. This.

Stephen D. Young: Paul.

Stephen D. Young: And finally, our clients are expressing delight, if the increasing access engagement and enjoyment and the impact of the learner experience. We've been working on this spring summer and fall, we're excited to unveil substantial improvements to our industry, leading impact platform will launch our first ever native mobile apps learner and for.

Stephen D. Young: <unk> certificates to incentivize completion and awareness.

Paul S. Walker: We launched this in February. It's an extremely engaging solution that helps individuals and teams adopt the paradigms and gain the skills necessary to have the kinds of high-impact conversations that can move relationships and teams forward. And it does so in an action-packed two-hour session that meets the time demands of modern workers while maintaining Franklin Covey's principle-centric inside-out, world-class quality differentiation.

Stephen D. Young: Powerful AI coach and enhancements to the admin experience that will make it easier even easier to launch manage and measure behavior change at scale.

Stephen D. Young: Stepping back I'm very pleased about these three key projects project penetrate project speed the ramp and project impact.

Stephen D. Young: And we have high expectations that they will drive increased growth in the coming quarters and years and would now like to turn sometime to Steve to talk about some of our results in the quarter more specifically.

Paul S. Walker: This solution has garnered more client interest than any new solution launched in the last three years, and within one month of launch, it's already been adopted by clients twice as much as any other skill-specific solution we've launched. Third, we launched a top-level solution selling offering entitled Helping Clients Succeed: Strikingly Different Selling. This leverages the intellectual property we've had in our traditional Helping Clients Succeed sales offerings. We launched this in January. The solution was designed leveraging the latest science of learning research.

Stephen D. Young: Thank you very much Paul good afternoon, everyone. It's a pleasure to be with you today.

I'd like to briefly provide more detail on the factors underlying our performance focusing on the overall company result for the quarter and then on the results in three key areas of our company specifically, our enterprise business in North America.

Stephen D. Young: Our enterprise business internationally.

Stephen D. Young: Our education business.

Stephen D. Young: Since I'm focusing just on these three areas I'd like to point out to everyone. As you probably already know that.

Paul S. Walker: And with the Impact Platform in mind, utilizing a unique blend of asynchronous and synchronous experiences that will drive improved, measurable selling outcomes for business-to-business sales, early client reactions are overwhelmingly positive. Our Impact Platform has now become an industry-leading technology solution. The Impact Platform, our proprietary learning platform where clients can easily launch, manage, and measure compelling behavior change experiences, has evolved into an industry-leading technology solution.

Stephen D. Young: In our slide deck Appendix. We include the current balance sheets income statements and other financial information will allow you to see our complete results for the quarter and year to date.

Stephen D. Young: So for the company.

Stephen D. Young: As shown on slide 11 second quarter sales were $61 3 million, which as we expected was roughly even with the record $61 8 million, we achieved in the second quarter of last year.

Paul S. Walker: In the past six months, we've launched the Impact Platform in over 20 languages, built a robust diagnostic experience to measure behavior change over time, built one-of-a-kind functionality for clients to launch their own client-facilitated courses, and integrated with popular LMSs and LXPs. Over 80% of our clients are now upgraded to the Impact platform, and clients who have upgraded assign four times as much content to their employee populations, and participants now complete 10 times as much content as those on the legacy All Access Pass portal. We expect to upgrade 100% of our clients by January 2025. Just a couple of notes about upcoming product developments. An updated 7-Habit solution will be launched in the fall of 24.

Year to date sales were $130 million compared to $131 million in the prior year and for the <unk>.

Stephen D. Young: And for the latest 12 months sales were $279 million compared to $276 million in the prior year.

Stephen D. Young: These results are essentially even with the record levels achieved last year.

Stephen D. Young: With year to date sales down about 1% in the latest 12 months sales up about 1%.

Stephen D. Young: <unk> quarter, adjusted EBIDTA was seven $4 million this year compared to $8 2 million last year.

Stephen D. Young: Year to date, adjusted EBITDA was $18 4 million compared to $19 7 million in the prior year.

Stephen D. Young: In the latest 12 months adjusted EBITDA.

Stephen D. Young: It was about $47 million compared to about $44 million in the prior year.

Stephen D. Young: Now as shown on slide 12 results sooner enterprise business in North America continued to be strong in the second quarter kind of latest 12 months.

Paul S. Walker: Seven Habits, our flagship solution for individual effectiveness, is undergoing its most substantial revamp in a decade. The solution is being reimagined to engage modern workers globally. We've completed the most extensive development and beta testing we've done for any solution to date, and we're receiving rave reviews in the early pilots and beta testing, and we're eager to unveil the solution this fall. And finally, our clients are expressing delight at the increasing access, engagement, and enjoyment and the impact of the learner experience we've been working on. This spring, summer, and fall, we're excited to unveil substantial improvements to our industry-leading impact platform. We'll launch our first-ever native mobile apps, learner and facilitator certificates to incentivize completion and awareness, a powerful AI coach, and an enhancement to the admin experience that will make it even easier to launch, manage, and measure behavior change at scale.

Stephen D. Young: Sales in North America, which accounts for about 73% of total Enterprise Division sales was $34 1 million in the second quarter $72 5 million year to date and $150 million in the latest 12 months.

Stephen D. Young: Revenue achieved in those periods you can see is essentially even with prior years, which were themselves up 8% in the quarter, 12% year to date and 15% for the latest 12 months.

Stephen D. Young: Even compared to last year, but last year was up compared to the prior year.

Stephen D. Young: Subscription sales in North America were $22 million.

Stephen D. Young: Growing 5% in the quarter were $44 5 million year to date, which is up 6% and $87 8 million latest 12 months, which is also up 6%.

Stephen D. Young: The combination of subscription and subscription services sales in North America.

Paul S. Walker: Stepping back, I'm very pleased about these three key projects, Project Penetrate, Project Speed to Ramp, and Project Impact. And we have high expectations that they'll drive increased growth in the coming quarters and years. And we'd now like to turn some time to Steve to talk about some of our results in the quarter more specifically. Thank you very much, Paul. Good afternoon, everyone.

Stephen D. Young: <unk> was $31 5 million in the second quarter, representing 4% growth on top of the 7% achieved in last year's second quarter.

Stephen D. Young: These sales were $66 3 million year to date, which is up 2% or.

Stephen D. Young: 3100, $36 4 million and latest 12 months, which is up 4%.

Stephen D. Young: Our balance of deferred subscription revenue billed and Unbilled in North America continued to be strong growing to $117 million in the quarter, which is up 3% on top of the 22% growth achieved in last year's second quarter, establishing as Paul talked about the strong foundation for <unk>.

Stephen D. Young: It's a pleasure to be with you today. I'd like to briefly provide more detail on the factors underlying our performance, focusing on the overall company result for the quarter and then on the results in three key areas of our company, specifically our enterprise business in North America, our enterprise business internationally, and our education business. Since I'm focusing just on these three areas, I'd like to point out to everyone, as you probably already know, that in our slide deck appendix, we include the current balance sheets, income statements, and other financial information that will allow you to see our complete results for the quarter and year-to-date. So, for the company.

Stephen D. Young: <unk> growth.

Stephen D. Young: The percent of North America's all access passes for multiyear periods increased to 56% from 50% last year.

Stephen D. Young: And the percentage of invoice sales represented by multiyear contracts increased.

Stephen D. Young: As shown on slide 11, second quarter sales were $61.3 million, which, as we expected, was roughly even with the record $61.8 million we achieved in the second quarter of last year. Year-to-date sales were 130 million compared to 131 million in the prior year. And for the latest 12 months, sales were 279 million compared to 276 million in the prior year. These results are essentially even with the record levels achieved last year, with year-to-date sales down about 1% and the latest 12 month sales up about 1%. Second quarter adjusted EBITDA was $7.4 million this year compared to $8.2 million last year, and year-to-date adjusted EBITDA was $18.4 million compared to $19.7 million in the prior year. And the latest 12-months adjusted EVA dial was about $47 million, compared to about $44 million in the prior year.

Stephen D. Young: <unk> increased to 62% from 57% last year.

Stephen D. Young: Now as shown on slide 13 revenue from our international operations, which accounts for approximately 17% of our total enterprise Division revenue was $7 2 million in the second quarter, which is even with last year and was $16 million year to date, which is down about.

Stephen D. Young: 4% and $34 5 million in the latest 12 months, which is up about 5%.

Stephen D. Young: As also shown on slide 13, our international licensee partner sales were $2 7 million in the second quarter, a decrease of 6%.

Stephen D. Young: Were $6 1 million year to date, which is even with last year and $11 6 million in the latest 12 months, which is up 3%.

So if you kind of cut through all of these numbers you can see that in the enterprise Division our subscription business is generally up.

Stephen D. Young: Now, as shown on slide 12, results in our enterprise business in North America continue to be strong in the second quarter and the latest 12 months. Sales in North America, which accounts for about 73% of total enterprise division sales, were $34.1 million in the second quarter, $72.5 million year to date, and $150 million in the latest 12 months. Revenue achieved in this period, as you can see, is essentially even with prior years, which were themselves up 8% in the quarter, 12% year to date, and 15% for the latest 12 months. So even compared to last year, which was up, it seems to compare to the prior year. Subscription sales in North America were 22 million, growing 5% in a quarter, were 44.5 million year-to-date, which is up 6%, and 87.8 million last 12 months, which is also up 6%.

Stephen D. Young: While our other revenue is generally down making the overall result resolve essentially essentially flat.

Stephen D. Young: The fact that it's our subscription business the top line Paul talk about <unk>.

Stephen D. Young: <unk> as we look forward to future quarters and years.

Stephen D. Young: Finally, as shown on slide 14.

Stephen D. Young: Sales in our education business, which generally counts for about 25% of total company sales.

Stephen D. Young: Grew to $14 6 million in the second quarter up 3% on top of the 28% growth achieved in the second quarter of FY2023.

Stephen D. Young: Year to date sales grew to $29 3 million up 3% and sales for the latest 12 month period were $75 million.

Stephen D. Young: <unk>, 4% on top of the 22.

Stephen D. Young: Percent growth in the previous year.

Stephen D. Young: The combination of subscription and subscription services sales in North America. It earned $31.5 million in the second quarter, representing 4% growth on top of the 7% achieved in last year's second quarter. These sales were 66.3 million year to date, which is up 2%. And there were 136.4 million in the latest 12 months, which is up 4%. Our balance of deferred subscription revenue billed and unbilled in North America continued to be strong, growing to $117 million in the quarter, which is up 3%, on top of the 22% growth achieved in last year's second quarter, establishing, as Paul talked about, a strong foundation for next year's growth. The percent of North America's all-access passes for multi-year periods increased to 56% from 50% last year, and the percentage of invoice sales represented by multi-year contracts increased to 62% from 57% last year.

Stephen D. Young: Education subscription and subscription services sales grew to $12 9 million in the second quarter.

Up 4% on top of the 30% growth in last year's second quarter.

Year to date sales grew to $26 1 million up 2% on top of the 27% and year to date growth achieved in last year's second quarter.

Stephen D. Young: And the latest 12 months education sales were $65 2 million.

Stephen D. Young: Which is up 4% on top of the 23% growth achieved in the same latest 12 month period last year.

Stephen D. Young: Education's balance of deferred subscription revenue billed and Unbilled increased by 10 million to $30 million versus last year's balance.

Stephen D. Young: As Youll recall, not many years ago. The education business was small and had a traditional services and materials business model we.

Stephen D. Young: Now, as shown in slide 13, revenue from our international operations, which accounts for approximately 17% of our total enterprise division revenue, was $7.2 million in the second quarter, which is even with last year, and $16 million year-to-date, which is down about 4%, and $34.5 million in the latest 12 months, which is up about 5%. As also shown on slide 13, our international licensee partner sales were $2.7 million in the second quarter, a decrease of 6%.

Stephen D. Young: We are pleased that since the launch of the leader in me subscription in the Education Division.

Revenue has grown substantially from just over $3 million in the first year to more than 70.

Stephen D. Young: In the latest 12 months.

Stephen D. Young: And educations business model is transform to closely mirror that of enterprise with approximately 90% of education revenue now represented by subscription subscription services revenue.

Stephen D. Young: There were 6.1 million year to date, which is even with last year and 11.6 million in the latest 12 months, which is up 3%. So if you kind of cut through all of these numbers, you can see that in the enterprise division, our subscription business is generally up. While our other revenue is generally down, making the overall result essentially flat, the fact that it's our subscription business that's up, like Paul talked about, encourages us as we look forward to future quarters and years. Finally, as shown on slide 14, Sales in our education business, which generally accounts for about 25% of total company sales, grew to $14.6 million in the second quarter, up 3%, on top of the 28% growth achieved in the second quarter of FY23.

Stephen D. Young: We also expect that after years of accelerated investment the education division's adjusted EBITDA margins will also expand this year and beyond.

Stephen D. Young: Our cash now now cash flows and the balance sheet.

Stephen D. Young: As shown on slide 15, our year to date cash flows from operating activities was $30 million this year versus $11 million last year.

Stephen D. Young: Our free cash flow for the first two quarters increased to $24 7 million.

Stephen D. Young: Paired with $3 3 million.

Stephen D. Young: For the prior year.

Stephen D. Young: <unk> that changes in the elements of working capital were very favorable in the first and second quarters of this year compared with last year, particularly reflecting changes in accounts receivable accounts payable and accrued liabilities and deferred revenue.

Stephen D. Young: Year-to-date sales grew to $29.3 million, up 3%, and sales for the latest 12-month period were $70.5 million, up 4% on top of the 22% growth in the previous year. Education subscription and subscription services sales grew to 12.9 million in the second quarter, up 4% on top of the 30% growth in last year's second quarter. Year to date sales grew to 26.1 million, up 2% on top of the 27% in year to date growth achieved last year's second quarter. And the latest 12-month education sales were $65.2 million, which is up 4% on top of the 23% growth achieved in the same latest 12-month period last As you recall, not many years ago, the education business was small and had a traditional services and materials business model.

In Q1, and Q2, we invested $18 4 million to purchase 461000 shares and over the past four quarters, we've invested for more than $49 million.

Stephen D. Young: To purchase shares.

Stephen D. Young: We ended the quarter with over $103 million in total liquidity, including $49 million in cash and $62.5 million available under the revolving credit facility, even after investing in the $8 4 million.

Stephen D. Young: <unk> and stock.

Stephen D. Young: $18 4 million.

Stephen D. Young: To repurchase stock.

Stephen D. Young: Compared to Q2 of FY2023 the sum of billed and Unbilled deferred subscription revenue increased 9% to $158 5 million, giving us <unk>.

Stephen D. Young: Our substantial and increased visibility into future sales results.

Stephen D. Young: We are pleased that since the launch of the Leader in Me subscription in the Education Division, revenue has grown substantially from just over $3 million in the first year to more than $70 million in the latest 12 months. And Education's business model has transformed to closely mirror that of the enterprise, with approximately 90% of its revenue now represented by subscription services revenue. We also expect that after years of accelerated investment, the education division's adjusted EBITDA margins will also expand this year and beyond. Now, Cash Flow and the Balance Sheet. As shown on slide 15, our year-to-date cash flows from operating activities were $30 million this year versus $11 million last year. Our free cash flow for the first two quarters increased to $24.7 million, compared with 3.3 million for the prior year, reflecting that changes in the elements of working capital were very favorable in the first and second quarters of this year, compared with last year, particularly reflecting changes in accounts receivable, accounts payable, and accru In Q1 and Q2, we invested $18.4 million to purchase 461,000 shares. And over the past four quarters, we've invested more than $49 million to purchase shares. We ended the quarter with over $103 million in total liquidity, including $40.9 million in cash and $62.5 million available under the revolving credit facility, even after investing the $8.4 million investment in stock.

Stephen D. Young: The deferred subscription revenue increased 13% to $86 million.

While the Unbilled deferred revenue increased 4% to $73 million.

Stephen D. Young: We continue to report a very strong balance sheet.

Stephen D. Young: Yeah.

None: Now guidance.

And our first quarter earnings call, we communicated that we expected revenue in the back half of this fiscal year to be higher.

None: Then in the first half.

None: And that we expected to finish the year with adjusted EBITDA at the bottom of our range of between $54 $558 million in constant currency.

None: While we expect our back half revenue growth to exceed that which we achieved in the first six months, we expect the absolute amount of that growth to be lower than the low double digit growth that we had expected for the back half.

None: This is in large part due to the fact, though.

None: Expected rebound in services is occurring.

None: It began.

None: Later.

None: Than we had anticipated.

None: As a result, we now expect total sales for the year to be lower than previously expected with growth of approximately 1% in the third quarter, increasing to approximately 6% in the fourth quarter.

None: Despite this lower revenue, we still expect adjusted EBITDA to come in at the bottom end of our previously announced guidance range of 54, 5% to $58 million in constant currency.

None: This result reflects.

Stephen D. Young: 18.4 million to repurchase stocks. Compared to Q2 of FY23, the sum of billed and unbilled deferred subscription revenue increased 9% to $158.5 million, giving us substantially increased visibility into future sales results. The deferred subscription revenue increased 13% to $86 million, while the unbilled deferred revenue increased 4% to $73 million. We continue to report a very strong balance sheet. Now guided

None: One <unk>.

None: Expected high flow through of incremental revenue to adjusted EBITDA.

Driven primarily by our high gross margin and declining SG&A as a percentage of sales.

None: Two the restructuring event.

None: Paul talked about.

None: And three the fact that a significant portion of our compensation throughout the company is tied to growth in sales and overall financial performance.

None: For Q3, we expect net sales to grow approximately 1% to approximately $72 million.

None: And adjusted EBITDA to be between 12 and $13 million.

Stephen D. Young: In our first quarter earnings call, we communicated that we expected revenue in the back half of this fiscal year to be higher than in the first half and that we expected to finish the year with adjusted EBITDA at the bottom of a range of between 54.5 and 58 million in constant currency. While we expect our back half revenue growth to exceed that which we achieved in the first six months, we expect the absolute amount of that growth to be lower than the low double digit growth that we had expected for the back half. This is in large part due to the fact that though our expected rebound in services is occurring, it began a bit later than we had anticipated. As a result, we now expect total sales for the year to be lower than previously expected, with growth of approximately 1% in the third quarter, increasing to approximately 6% in the fourth quarter. Despite this lower revenue, we still expect it to come at the bottom end of our previously announced guidance range of $54.5 to $58 million in constant currency.

None: Reflecting a midpoint increase of approximately 600000 over the prior year.

None: Our back half projections are consistent with our current expectation that add on sales will continue to strengthen as we've talked about and that our education.

None: Division will have a very strong Q3 and Q4, so I would now like to turn time back Paul.

Paul S. Walker: Steve Thanks, so much for that thanks for going through the quarter end.

Paul S. Walker: Why don't we now invite Lisa to open the call up to questions as she does that I will just say we feel.

Lisa: Very good about the building momentum we are seeing in the business.

Lisa: Looking forward to a good back half and a good fiscal 'twenty five so Lisa.

Lisa: Some questions.

Lisa: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone please.

None: Please wait for your name to be announced before you proceed with your question.

Stephen D. Young: This result reflects the expected high flow through of incremental revenue to adjusted EBITDA, driven primarily by our high gross margin and declining SG&A as a percentage of sales, to the restructuring event that Paul talked about. And three, the fact that a significant portion of our compensation throughout the company is tied to growth in sales and overall financial performance. For Q3, we expect net sales to grow approximately 1%, as I said, to approximately 72 million and adjusted EBITDA to be between $12 and $13 million, reflecting a midpoint increase of approximately 600,000 over the prior year. Our back half projections are consistent with our current expectation that add-on sales will continue to strengthen, as we've talked about, and that our educational division will have a very strong Q3 and Q4. So I'd now like to turn time back to Paul.

None: One moment, while we compile the Q&A roster.

None: Our first question will be coming from.

David Joseph Storms: Dave Stoehr.

Dave Stoehr: Arms are still.

David Joseph Storms: Your line is open.

David Joseph Storms: Good evening and I appreciate you taking my question.

David Joseph Storms: You bet Hi Tech.

David Joseph Storms: How has it gone just wanted to kind of start.

Hi Tech: Around the slower than expected rebound.

None: It sounds like that's just a timing issue.

None: Can we kind of expect that to hopefully restart back in the early parts of 2025 or is there anything that you would expect to bring that back into play for the second half of this year.

None: Are you, referring specifically to the services rebound.

None: Yes, yes, yes, okay, great yes.

None: So yes.

None: The rebound.

None: Leading indicators in the services booking pace suggests that the rebound has begun.

Paul S. Walker: Steve, thanks so much for that. Thanks for going through the quarter. And why don't we now invite Lisa to open the call to questions as she does that?

None: And it is slower a quarter or so slower than we thought it was going to be so we're starting we're beginning to see the rebound we expect that rebound will.

Operator: I'll just say we feel very good about the building momentum we're seeing in the business and are looking forward to a good back half and a good fiscal 25. So, Lisa, we have some questions. Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. Please wait for your name to be announced before you proceed with your question.

None: Accelerate through the back half of the year and we will certainly be so we'll see that's part of what's driving growth in the back half of this year overall versus being flattish in the first half of the year and then we expect that to continue and as I mentioned.

None: That looks like it's having reached a.

None: A high level high watermark of 60% or at least the high watermark for now 60% service attach rate.

Operator: One moment while we compile the Q&A roster. Our first question will be coming from Dave Storms of Stone Gate. Your line is open. Good evening. Appreciate you taking my question. You bet. How's it going?

None: It's progressing back to what was already a high rate of about 55% and we expect that it will.

None: It'll it'll stay there and we'll try to improve that over time.

Understood very helpful. Thank you and then just.

David Joseph Storms: Just wanted to kind of start around the slower than expected rebound. It sounds like that's just a timing issue. Can we kind of expect that to hopefully restart back in the early parts of 2025, or is there anything that you would expect to maybe bring that back into play for the second half of the season? Yeah, are you referring specifically to the services rebound? Yes. Yeah, okay, great. Yeah, we're us, so yes, it is the rebound. The leading indicators and the service's booking pace suggest that the rebound has begun. And it is slower, a quarter or so slower than we thought it was going to be. But we're beginning to see the rebound. We expect that the rebound will.

None: It sounds like you had a really strong quarter for logo retention.

None: Any thoughts around that going forward it sounds like there.

None: There might be less belt tightening going on among clients is that expected to kind of be the trend going forward.

None: Yeah. Great question. So we were pleased with the logo retention in the quarter as I mentioned it was one of our one of our best quarters. We've we've had.

None: In logo retention and I think it's I think it's due to it there's a couple of things driving that one is and as I mentioned in a few minutes ago.

None: I don't know that I understood. The degree as we were in the fall this year.

None: Executing the degree to which clients were.

None: Pausing thinking about their budgets, maybe creating new budgets pulling back a little bit on their budgets at the same time that interest rates were spiking and we're kind of moving out of zero interest rate World and I think that has had a had created some headwinds for us in the first part of this year I think know clients have their budgets. They know what those budgets look like they're there.

Paul S. Walker: Accelerate through the back half of the year and will certainly be you know So we'll see pot that's part of what's driving growth in the back half of this year overall versus being Flattish in the first half of the year and then we expect that to continue and as I mentioned what that looks like is having reached a High level high water mark of 60% at least a high water mark for now 60% service attach rate It's it's regressing back to what what was already a high rate of about 55% and we expect that it'll It'll it'll stay there and we'll try to improve that over, It sounds like you had a really strong quarter for logo retention. Any thoughts around that going forward? It sounds like there might be less bell tightening going on among clients. Is that expected to be the trend going forward? Yeah, great question.

Things are.

None: There's still some uncertainty out there, but more certain I think now in the economy.

None: We will shift from a headwind to.

None: Not a tailwind at least.

None: Less wind.

None: And then I think the second thing, though that's driving that logo retention rate is that we've learned a lot over eight years that we've been.

None: Subscription company, we converted to subscription.

None: Eight years ago, we never been a subscription business before it didn't even have a post sale motion and so over time, we've created and we've talked the last year or so about these field facing teams of implementation strategists that come alongside client partners and we continue to refine those processes as we mature and understand what does it look like to support our clients post sale.

Paul S. Walker: So we were pleased with the logo retention in the quarter. As I mentioned, it was one of our best quarters we've had in logo retention. And I think it's due to it. There are a couple things driving that.

None: I think we're also getting better execution.

None: <unk>.

None: Our processes are getting better and we're getting better execution on those processes as well and as I mentioned this project's penetration the real goal of project penetration is actually to increase the retention of clients both logo and revenue and we're starting to see the fruits of that as well, which is why we're excited to begin to extend that.

Paul S. Walker: One is, and as I mentioned a few minutes ago, I don't know that I understood the degree to which clients were pausing, thinking about their budgets, maybe creating new budgets, pulling back a little bit on their budgets, at the same time that interest rates were spiking, and we're kind of moving out of the zero interest rate world. And I think that has created some headwinds for us in the first part of this year. I think now that clients have their budgets. They know what those budgets look like. There's still some uncertainty out there, but it's more certain, I think, now in the economy. It's not a tailwind, at least not in the east.

None: More broadly in the company.

None: That's very helpful. Thank you for taking my questions.

None: Thanks, Dave.

None: Thank you one moment to the next question.

None: And our next question will be coming from Jeff Martin of Roth Your.

Jeffrey Michael Martin: Your line is open.

Jeffrey Michael Martin: Thanks.

Jeffrey Michael Martin: Can you hear me, Okay I'm in the car.

Jeffrey Michael Martin: But I Couldnt hear.

Jeffrey Michael Martin: Europe.

None: Okay great.

None: So Paul could you touch on the client partner changes.

Paul S. Walker: Yeah and in Q1 at about 300 client partners.

Paul S. Walker: The goal is to add 40 net new this year.

Paul S. Walker: You know, less wind. And then I think the second thing, though, that's driving that logo retention rate is that we've learned a lot over the eight years that we've been a subscription company. We converted to subscription, you know, eight years ago; we'd never been a subscription business before, didn't even have a post-sale process. And so over time, we've created, and we talked about the last year or so about these field-facing teams of implementation strategists that come alongside client partners, and we continue to refine those processes as we mature and understand what it looks like to support our clients post-sale. I think we're also getting better execution, you know; our processes are getting better, and we're getting better execution on those processes as well.

Paul S. Walker: And it looks like we took a step back down to $2 65, maybe touch on what.

Paul S. Walker: What the plan is for this year and did I hear correctly, you are taking a pause in hiring.

Paul S. Walker: Partnering with till next year.

None: Yes, you heard that correctly, so so what's underlying that is.

None: Sure.

None: So as we've.

Been working on as I mentioned project penetration projects be de ramp part of that as we've built this more than 400 person 400.

None: 30 years, or so person field facing organization.

None: We're focused right now on understanding exactly how to configure those groups.

None: And we feel like we have a really good configuration map here.

None: <unk>, we've gone to market without a lot of segmentation.

None: We havent segmented historically around client size or around vertical and as we around verticals as we look into the future. We see an opportunity to increase the level of segmentation of that field force and so while we are we want to put the right amount of resources into business development to help generate more opportunities for our salespeople also have that sales.

Paul S. Walker: And as I mentioned, this project penetration, the real goal of project penetration is actually to increase the retention of clients, both logos, and revenue. And we're starting to see the fruits of that as well, which is why we're excited to begin to extend that more broadly in the coming years with their help. Thank you for taking my question. Thanks Dave.

David Joseph Storms: Thank you. One moment for the next question, and our next question will be coming from Jeff Martin of Roth. Your line is open. Thanks. Paul, can you hear me? Okay, I'm in the car. I thought you called me, but I couldn't hear.

None: Force configured against the biggest opportunities on the map and I think there is a natural segmentation that occurs around large enterprise organizations versus mid market and then the team that supports post sale of implementation strategists were getting more strategic and more refined in how we want to deploy.

Jeffrey Michael Martin: Hi Paul. Europe. Okay, great. So Paul, could you touch on the client partner changes? I mean, you ended Q1 at about 300 client partners. The goal is to add 40 net new partners this year. But it looks like we took a step back down to 265.

And so in that in that set of discussions and strategic planning we recognized there were about 24.

None: While there were 24 that didn't fit within the structure, we're going to build toward and so we're pausing just briefly here to then come out and accelerate with more hiring into an even more strategic.

Paul S. Walker: Maybe touch on, you know, what the plan is for this year. And did I hear correctly that you're taking a pause on hiring and partners until next year? Yeah, you heard that correctly.

None: <unk> approach, both pre sales sales and post sales, but also in how we divide up the market.

Paul S. Walker: So, what's underlying that is, as we've been working on, as I mentioned, Project Penetration, Project Speed to Ramp, part of that, as we've built this more than 400 person, 400 and 30 or so person field facing organization. We're focused right now on understanding exactly how to configure those groups.

None: I'm actually quite encouraged about this I think this is the next big step for us as a sales organization and I think it will unlock a tremendous amount of growth because we see so much potential in the existing accounts. We already have and then of course, there is a significant amount of white space out in the market that we're not even touching today and so.

Paul S. Walker: And, and we feel like we have a really good configuration map, you know, historically, we've kind of gone to market without a lot of segmentation. We haven't segmented historically around client size or around vertical, and as we, around verticals, as we look into the future, we see an opportunity to increase the level of segmentation of that field force. And so while we're, we want to put the right amount of resources into business development to help generate more opportunities for our salespeople, and also have that sales force configured against the biggest opportunities on the map. And I think there's a natural segmentation that occurs around large enterprise organizations versus the mid market. And then the team that supports post sales implementation strategists. We're getting more strategic and more refined in how we want to deploy.

None: This sir.

None: Segmentation in these two projects penetration project penetration and project speeds ramp are really about getting at that in a much bigger way than we even have in the past.

None: So it will be back on the highway bill it back on the hiring in fiscal 'twenty five Jeff.

None: And I'm sure will add it will add a few I'm sure in the back half of this year as we have.

None: Yes.

None: As we move forward, but the bulk of the hiring will be in fiscal 'twenty five.

None: Yes, that's a natural segue into my other question has the executable opportunities that you went into it.

None: Quite a bit of detail on.

None: Where are you in terms of implementation of those when do you expect to see.

None: Traction in those efforts and when should we expect a material reacceleration of revenue growth.

Paul S. Walker: And, and so in that, in that set of discussions about strategic planning, we recognize there were about 24. Well, there were 24 that didn't didn't fit within the structure we're going to build toward. And so we're pausing just briefly here to then accelerate with more hiring into an even more strategic segmented approach, both pre sales, sales, and post sales, but also in how we divide up the market. I'm actually quite encouraged about this.

None: Yeah.

None: Yeah.

None: Great question, a couple a couple of thoughts one we're we're in the middle of implementing that wide scale now and that'll be the effort over the back half of this year. So we'll be in.

None: Fully configured.

None: September one as we start the new year.

None: Or at least moving people into that configuration between now and then.

None: Second as far as the acceleration of revenue growth. We're already pleased I mean, the reason we have the confidence to step into those projects as we've been executing against those and kind of a test way.

Paul S. Walker: I think this is the next big step for us as a sales organization, and I think it'll unlock a tremendous amount of growth because we see so much potential in the existing accounts we already have. And then, of course, there's a significant amount of white space out in the market that we're not even touching today. And so this segmentation, these two projects, Project Penetration and Project Speed to Ramp, are really about getting at that in a much bigger way than we even have in the past. So we'll be back on the hiring in fiscal 25, Jeff. And we'll, I'm sure we'll add, we'll add a few, I'm sure, in the back half of this year, as we have, you know, as this, as this, as we move forward, but the bulk of the hiring will be in fiscal 25. Yeah, that's a natural segue into my other question here, which is the executable opportunities that you went into quite a bit of detail on, you know, where are you in terms of implementation of those?

None: Over the past couple of quarters and we're encouraged by the results. We're already seeing the results show up that gives us the confidence that as step across and really do this at a bigger scale as far as its ability to accelerate revenue growth as I mentioned there is two things that are happening that are accelerating revenue growth, even if we even if we didn't make the step across and fully execute.

None: Project penetration and project speed to ramp.

None: We're seeing natural acceleration in revenue growth as I mentioned because of our subscription business is growing.

None: Faster right now than the overall company is growing and that's going to pull with it increases in reported growth as we go into next year that fact, plus what I think is going to be impact.

None: As we go into next fiscal year and throughout next fiscal year of these two key growth initiatives I think we'll all point towards more accelerated growth in the coming.

Paul S. Walker: When do you expect to see, you know, traction in those efforts? And when should we expect a material, you know, reacceleration of revenue growth? A great question.

None: Quarters year at quarters and years.

None: Great. Thanks for taking my questions.

None: Thanks, Jeff.

None: Thank you one moment for the next question.

Paul S. Walker: A couple of thoughts. One, we're in the middle of implementing that wide scale now, and that'll be the effort over the back half of this year.

None: Okay.

None: Our next question will be coming from EMEA Procol.

EMEA Procol: <unk> capital your line is open.

EMEA Procol: Hey, guys congratulations for executing so well in tough environment.

Paul S. Walker: So we'll be in, you know, fully configured, uh, you know, September one, as we start the new, or at least moving people into that configuration between now and then. Second, as far as the acceleration of revenue growth is concerned, we're already pleased. I mean, the reason we have the confidence to step into those projects is we've been executing against those in kind of a trial way over the past couple of quarters, and we're encouraged by the results. So we're already seeing the results show up.

EMEA Procol: I'd like to start with a comment so I followed you guys for almost a decade I've been a continuous shareholder for eight years now.

EMEA Procol: It gets pushed back I always got from other investors at OFC, a cyclical there'll be killed in a recession. So when I look at consulting companies professional services company today, many of them are actually being double digit organic declines over the past few quarters. So the fact that your subscription invoices are growing in this type of environment, you're throwing off prodigious free cash flow.

Jeffrey Michael Martin: That gives us the confidence to step across and really do this at a bigger scale. As far as its ability to accelerate revenue growth, as I mentioned, there are two things that are happening that are accelerating revenue growth. Even if we didn't make the step across and fully execute project penetration and project speed to ramp. We're seeing natural acceleration in revenue growth, as I mentioned, because our subscription business is growing faster right now than the overall company is growing, and that's going to pull with it increases in reported growth as we go into next year. That fact plus what I think is going to be the impact of as we go into next fiscal year and throughout next fiscal year of these two key growth initiatives will all point towards more accelerated growth in the coming quarters, year, quarters, and years. Great, thanks for taking my question. Thanks, Jeff.

EMEA Procol: That really demonstrates the power of your business model and suggest that your stock should be trading at a much higher multiple and I think if the market is too shortsighted to see it.

You guys should take advantage of it and consider going et cetera. So that's my comment I don't know if you have any observations there before I get to my question.

EMEA Procol: Okay.

None: Thanks for your comment.

None: Of course.

None: I would I want to grow faster and we will but.

None: But I will say as we mentioned we're pleased with the fact that we are we are growing in a tougher environment and so I want to thank all the people on our teams around the world for the great work, they're doing and and our ambition is to do even more.

Great. So my question is sort of related you talked a couple of quarters ago about the potential for M&A and it seems like in this environment you might have competitors that are over reliant on a single type of content single modality that don't have your subscription model that might be facing a tough time, but have great customers, where content set that might be out of it.

Paul S. Walker: Thank you. One moment for the next question. Our next question will be coming from Samir Patel of ASCO Latin Capital. Your line is open.

Samir Patel: Hey guys, congratulations on executing so well in a tough environment. I'd like to start with a comment. So I've followed you guys for almost a decade, and I've been a continuous shareholder for eight years now. The biggest pushback I always get from other investors is, oh, FT is cyclical, they'll be killed in a recession.

None: Yours.

None: Do you think you're any closer to being able to close on one or two of those types of opportunities.

None: Yes, it's a great question Sameer. So maybe just let me let me we were spending a fair bit of time thinking about how to utilize our excess cash and what role M&A might play in in our utilization of that cash.

Paul S. Walker: So when I look at consulting companies and professional services companies today, many of them are actually seeing double-digit organic declines over the past few quarters. So the fact that your subscription invoices are growing in this type of environment means that you're throwing off prodigious free cash flow. I think that really demonstrates the power of your business model and suggests that your stock should be trading at a much higher multiple. And I think if the market is too short-sighted to see it, you guys should take advantage of it and consider doing a tender. So that's my comment.

None: I'll tell you what.

Sameer: So the short answer to your question is I think that there will that it's likely that M&A will play out.

Sameer: Bigger role in the future than it has in the past.

Sameer: I think we have some opportunities there.

We've been a little bit careful over the past year or year, and a half or so because.

Sameer: Many of the many of the companies in our space.

Samir Patel: I don't know if you have any observations there before I get to my question. Thanks for your comment. I would; I want to grow fast.

Sameer: Fared far worse than we did in the pandemic.

Sameer: And coming out of the pandemic for a couple of years, they're starting to put up pretty significant growth numbers on a percentage basis, but that growth was just getting them back to their pre pandemic high if not above.

Paul S. Walker: And we will. But I will say, as we mentioned, we are pleased with the fact that we are growing in a tougher environment, and so I want to thank all the people on our teams around the world for the great work they're doing, and our ambition is to do even more. Okay. So my question is sort of related.

Sameer: At the same time, we were also hit a little bit in the first couple of quarters, but our business did quite well during the pandemic and then has grown substantially since our over our pre pandemic highs and.

Samir Patel: You talked a couple quarters ago about the potential for M&A, and it seems like in this environment, you might have competitors that are over-reliant on a single type of content, single modality, that don't have your subscription model, that might be facing a tough time, that have, you know, great customers or a content set that might be out of reach for its viewers. Do you think you're any closer to being able to close on one or two of those types of opportunities? Yeah, it's a great question, Samir.

Sameer: And recognizing that companies you might want to look at acquiring out there are they they'd like to sell based on the growth rate they've achieved getting back to where they were we wouldn't want to.

Sameer: Wouldn't want to probably pay based on that and so we've been just kind of watching and waiting and we're starting to see what you alluded to in your opening comment there that those growth rates are.

Sameer: Coming back down to where.

Sameer: Where we thought they might and so theres I.

Sameer: I think there are opportunities as we talk as a team here and we're we're investigating those I'm looking at those as you would imagine.

None: Okay and then on the other uses of cash I mean, any reason it slowed down in the quarter I mean kind of the outlook for it.

Paul S. Walker: So, maybe just let me step back. We were spending a fair bit of time thinking about how to utilize our excess cash and and what role M&A might play in our utilization of that cash. I'll tell you what the what the short answer to your question is. I think that there will be, that it's likely that M&A will play a bigger role in the future than it has in the past, and I think we have some opportunities there. We've been a little bit careful over the past year or year and a half or so because many of the people, many of the companies in our space, fared far worse than we did in the pandemic. And coming out of the pandemic for a couple of years, they started to put up pretty significant growth numbers on a percentage basis. But that growth was just getting them back to their pre-pandemic highs, not above.

None: Sorry about that use of cash I mean, not repurchases and the outlook for that I mean, your stock's down double digits. After hours you have $40 million cash you implied youre going to have record free cash flow. This year, which suggests another $20 million free cash flow generation in the back half.

None: Plus the revolver I mean, that's that's a lot of liquidity.

None: So any thoughts on on further share repurchases and like I said, maybe considering a tender or something more aggressive to retire a much larger percentage of the market cap.

Thanks, Steve you want to take that yes, Tamara nice to be talking with you. So yes, we see the situation. The same as you do look at this at the same as you do as you know.

Stephen D. Young: We generally don't commit to what we're going to do.

Paul S. Walker: At the same time, we were also hit a little bit in the first couple of quarters, but our business did quite well during the pandemic and then has grown substantially over our pre-pandemic high. And recognizing that, you know, companies you might want to look at acquiring out there are, they'd like to sell based on the growth rate they've achieved getting back to where they were. We wouldn't want to; we wouldn't want to probably pay based on that.

None: But we do see it the same as usual.

Okay. Thanks, guys appreciate it.

Thanks Samir.

None: Thank you one moment for the next question.

None: Our next question will be coming from the hall succeed.

Nordson is seasonally up Northland capital your line is open.

Nordson: Yes. Thank you.

Nordson: Hi, Nate.

Nordson: Hey.

Nordson: Steve.

Northland Capital: What at this point in time, where currency rates are is your expectation on currency headwind on both topline and EBITDA at this point.

Paul S. Walker: And so we've been just kind of watching and waiting. And we're starting to see what you alluded to in your opening comment there that those growth rates are, you know, kind of coming back down to where we thought they might. So there's, I think there are opportunities as we talk as a team here, and we're investigating those and looking at those, as you would imagine. Okay. And then on the other uses of cash, I mean, any reason it slowed down in the quarter?

Northland Capital: For the full year.

Northland Capital: The FX impact so we've had an impact of about 200000 on revenue and about 200000 on adjusted EBITDA.

Stephen D. Young: So far this year.

Stephen D. Young: And what is your expectation as far as how much where currency rates right now.

Stephen D. Young: How much would that impact for the next two quarters here now.

None: Based upon the current rates, we would have about 200.

Samir Patel: I mean, kind of the outlook for, I'm sorry, when I say uses of cash, I mean, on repurchases and the outlook for that. I mean, your stock's down double digits after hours. You have $40 million in cash.

None: Adjusted EBITDA.

None: About 200000, adjusted EBITDA in Q3, and 200000 again in Q4 at the current rates compared to last year.

Paul S. Walker: You implied you're going to have record free cash flow this year, which suggests another $20 million free cash flow generation in the back half, plus the revolver. I mean, that's a lot of liquidity. So any thoughts on further share repurchases? And like I said, maybe considering a tender or something more aggressive to retire a much larger percentage of the market cap. Yeah, Samir, nice to be talking with you.

None: Great Okay. Thanks.

None: Paul.

None: What's the time to deliver the value on the three projects that you have discussed.

None: The time to deliver value.

Paul S. Walker: I think there is actual because we're already so take you through each of the three starting with the third one I talked about project impact where we've been in the middle and are in the middle of that we've had we have had we have a multiyear road map our product and technology teams have been doing a fantastic job.

Samir Patel: So yeah, we see the situation the same as you do, look at it the same way you do. As you know, we generally don't commit to what we're going to do, but we do see it the same way you do. Okay, thanks guys. I appreciate it. Thanks, Samir.

Paul S. Walker: Delivering against that so we're right in the middle and that'll that'll be something we continue to do and we're seeing we're seeing the impact of that everyday.

Paul S. Walker: The other two projects project penetration projects speed to ramp again as I mentioned, we've already been testing those are ready to move to more wide scale, we'll do that over the coming couple of quarters and I think we will see the impact.

Operator: Thank you. One moment for the next question. Our next question will be coming from Nehal Chokshi of Northland Capital. Your line is open. Yes, thank you. Hey, Steve.

Nehal Sushil Chokshi: What at this point in time, where currency rates are, is your expectation of currency headwinds on both the top line and EBITDA for the full year? The FX impact. So we've had an impact of just about 200,000 on revenue and about 200,000 on adjusted EBITDA so far this year. And what is your expectation as far as how much, uh, where currency rates are right now, how much would that impact the next two quarters here now? Based upon the current rates, we'd have about 200.

And later this year and into next year.

Paul S. Walker: On both of those projects.

Paul S. Walker: As far as getting them completed and kind of stood up in the configuration changes and all that that will happen in the coming couple of quarters.

Paul S. Walker: Okay, and I think you did give some penetration numbers of both the.

Paul S. Walker: Impact pod penetration rate as well as the penetration of improved selling structure here.

Paul S. Walker: Yes.

Paul S. Walker: Okay.

Paul S. Walker: Back in.

Paul S. Walker: Okay.

Paul S. Walker: So the penetration rates for the impact of pod.

Stephen D. Young: [inaudible] about 200,000 adjusted EBITDA in Q3 and 200,000 again in Q4 at the current rates compared to last year. Great. OK, thanks, Paul. What's the timetable to deliver value on the three projects that you have discussed?

Paul S. Walker: First of all their services attach rate you didn't ask about that but the service attach rate is 67% versus 50% for the others. Their average revenue per clients of $132000 versus 63000 and logo retention is about 500 basis points higher.

Nehal Sushil Chokshi: time to deliver value. I think there's actually a time to deliver value because we're already so take each of the three, starting with the third one I talked about project impact where we've been in the middle and are in the middle of that we have had, we have had, we have a multi-year roadmap. Our product and technology teams have been doing a fantastic job delivering against that. So we're right in the middle.

Paul S. Walker: And as it relates to penetration the average subscription side is $80000 versus 45000 for everybody else. So there theyre penetrating their clients further.

Paul S. Walker: Because what we're seeing right now.

Im sorry, I meant like what percent of your subscription revenue.

Paul S. Walker: And that'll, that'll be something we continue to do. And we're seeing the impact of that every day. The other two projects, Project Penetration and Project Speed to Ramp, again, as I mentioned, we've already been testing those, we're ready to move to a wider scale, we'll do that over the coming couple of quarters, and I think we will see the impact later this year and into next year on both of those projects. As far as getting them completed and kind of stood up and the configuration changes and all that, that'll happen in the coming couple of quarters.

Paul S. Walker: Is being addressed with the impact pod versus a standard pause that's what I meant.

Paul S. Walker: Oh what percent of the overall revenue.

Paul S. Walker: I would.

None: Hang on.

None: About 20%.

None: Of the overall subscription subscription services revenue as represented by the.

The impact that tested the impact parts.

None: Great.

None: And then as far as the improved selling structure for ramping client partners what percent of client partners already have this.

Improved selling structure.

Paul S. Walker: Okay, and I think he did give some penetration numbers of both the impact pod penetration rate, as well as the penetration of the improved selling structure here. Yeah. Go back and...

None: That's the other kind of end of the continuum and I'd say its about the same or different set of client partners, but I'd say it's.

Maybe in that group is maybe a Seattle proper.

Nehal Sushil Chokshi: So the penetration rates for the impact pod. First of all, their service attach rate, you didn't ask about that, but the service attach rate is 67% versus 50% for the others. Their average revenue per client is $132,000 versus $63,000.

None: Probably 10% or so today 10, or 15% are benefiting from that which will rollout to the rest.

None: In the coming quarter or two.

None: Okay.

None: And I'm, sorry, functionally was a difference between impact pod and traditional part I get that you get all of these different results great results, but functionally what is the difference between impact pod penetration pod.

Paul S. Walker: And logo retention is about 500 basis points higher. And as it relates to penetration, the average subscription size is $80,000 versus $45,000 for everybody else. So they're penetrating their clients further, which is what we're seeing right now. I'm sorry, I meant like what percent of your subscription revenue is being addressed with the impact pod versus the standard pod. That's what I'm doing.

None: Yes.

None: So the difference is the.

None: The amount of support provided to that client partner.

None: The infrastructure around them to help them better.

Nehal Sushil Chokshi: Oh, what percent of overall revenue? Hang on, about 20% of the overall Subscription Services revenue as represented by the test with the impact pods. Great. And then, as far as the improved selling structure for ramping client partners is concerned, what percent of client partners already have this, you know, improved selling structure? Yeah, that's the other kind of end of the continuum.

None: Engaged those clients post sale to uncover and lead to expanded subscription and services sales so more intensity of implementation strategist support and more intensity of consultant support.

None: Per client partner.

None: Okay great.

None: And can you share the consumption characteristics of the new and refreshed pipeline at this point in time.

Paul S. Walker: I'd say it's about the same different set of client partners, but I'd say, Maybe in that group is maybe a sea of, Probably 10% or so today, 10% or 15% are benefiting from that, which we'll roll out to the rest in the coming quarter or two. Okay, and I'm sorry, functionally, what is the difference between an impact pod and a traditional pod? I get that you get all these different results, great results, but functionally, what is the difference between an impact pod and a traditional pod?

None: Explain that the consumption characteristics of the new and refreshed pipeline.

None: I'm, sorry pipeline new.

None: Let me rephrase that it stayed in correctly, what are the consumption characteristics for new and refreshed content pipeline.

None: And by consumption characteristics do you mean by modality.

I mean like number of hours that are being consumed the new content.

Paul S. Walker: Yeah. So the difference is, uh, the amount of support provided to that client partner, and the infrastructure around them to help them better engage those clients post-sale to uncover and lead to expanded subscription and services sales. So it's more intensity of implementation strategist support and more intensity of consultant support per client partner. Okay, great. And can you share the consumption characteristics of the new and refreshed pipeline at this point in time? Explain that. I'm sorry, product pipeline? Let me rephrase that. I stated it incorrectly. What are the consumption characteristics for new and refreshed content? And by consumption characteristics, do you mean by modality? I mean the number of hours that are being consumed by the new content relative to the last time when they were refreshed.

None: Relative to the last time when they were refreshed okay. Okay. I got you, yes, so as I mentioned, sorry, sorry for not.

None: I understand the question fully as I mentioned, so just take a couple of examples so.

None: We launched <unk>.

None: Our new leading at the speed of trust and work in a brand New companion module, we've never had before which is working at the speed of trust is meant to scale to individual contributors.

None: <unk>.

None: That's now on our impact platform as well and in the first three months we.

None: We've had 10 times more usage of the on demand modules on our impact platform.

None: Then we had in total from the previous version.

None: So significant increase in consumption around that that that new solution.

None: And we're just in the early early days of navigating difficult conversations with the client interest has been very very high and so we expect to see significant increased consumption of that solution as well and then overall, what we hoped would happen unexpected what happened when we acquired strive.

Paul S. Walker: Okay, okay, I got you. Yeah. So as I mentioned, sorry, sorry for not understanding the question fully. As I mentioned, just take a couple of examples.

Paul S. Walker: So we launched our new leadership at the speed of trust and work and a brand new companion module we've never had before, which is working at the speed of trust. It's managed to scale to individual contributors, and that's now on our impact platform as well. And in the first three months,

None: And we eventually got all of our content on to strive and we've created the ability for strive to integrate into clients.

<unk> and LMS is in there their technology infrastructure, we're seeing significant increases in usage across the board of our content by clients, which which we believe is that as part of us driving higher logo retention. Although also by the way back to Dave Storm. Dave's earlier question is that there are solutions are becoming more sticky because of <unk>.

Paul S. Walker: We've had ten times more usage of the on-demand modules on our impact platform than we had in total from the previous version, so a significant increase in consumption around that new solution. And we're just in the early, early days of navigating difficult conversations, but client interest has been very, very high. And so we expect to see significant increased consumption of that solution as well. And then overall, what we hoped would happen and expected would happen when we acquired Strive. And we eventually got all of our content onto Strive, and we created the ability for Strive to integrate into clients' LXPs and LMSs and their technology infrastructure. We're seeing significant increases in usage across the board of our content by clients, which we believe is... That's part of what's driving higher logo retention.

None: Realizations, becoming much higher.

None: By clients across the organization.

None: Okay.

None: Thank you very much.

None: Thanks Neil.

Neil: Thank you and that does conclude the Q&A session for today I would now like to turn the call back over to Paul for closing remarks. Please go ahead.

Paul S. Walker: Lisa Thanks, so much for turning it back over thanks, everyone for joining us today really appreciate your questions and thanks as always for your interest in.

None: We appreciate you and hope you have a great rest of your day and week.

None: Thank you all for joining today's conference call. This does conclude today's meeting you can have a great evening.

Paul S. Walker: Also, by the way, back to Dave's earlier question, our solutions are becoming more sticky because utilization is becoming much higher by clients across the organization. Okay, great. Thank you very much. Thanks, Nehal.

None: Please disconnect.

None: Yes.

None: Okay.

None: Yes.

None: Okay.

None: Yes.

None: Okay.

None: [music].

Nehal Sushil Chokshi: Thank you, and that does conclude the Q&A session for today. I would now like to turn the call back over to you for closing remarks. Please go ahead.

None: Okay.

None: [music].

Operator: Lisa, thanks so much for turning back over. Thanks, everyone, for joining us today. Really appreciate your questions. And thanks, as always, for your interest. And we appreciate you and hope you have a great rest of your day and week. Thank you all for joining today's conference call. This does conclude today's meeting. You can have a great evening. Please disconnect.

None: Yes.

None: Yes.

None: [music].

None: Yes.

None: [music].