Q3 2024 Franklin Covey Co Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Q3 2024 Franklin Covey Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, Derek Hatch, Corporate Controller.

Speaker Change: Good day, and thank you for standing by. Welcome to the Q3 2024 Franklin Covey Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, Derek Hatch, Corporate Controller.

Derek Hatch: Hello, everyone, and thanks so much for joining us. We're glad to have the opportunity to talk with you today. Participating on our call this afternoon are Paul Walker, our Chief Executive Officer, Steve Young, our Chief Financial Officer, Jennifer Colosimo, President of our Enterprise Division, and Sean Covey, President of our Education Division. Before we get started, I would like to remind everybody that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Hello everyone and thanks so much for joining us. We're glad to have the opportunity to talk with you today. Participating on our call this afternoon are Paul Walker, our Chief Executive Officer, Steve Young, our Chief Financial Officer, Jennifer Colosimo, President of our Enterprise Division, and Sean Covey, President of our Education Division.

Derek Hatch: 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 revenue, 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 reports filed with the Securities and Exchange Commission. Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company's current expectations, and there can be no assurance the company's actual future performance will meet management's expectations.

Speaker Change: Before we get started, I would like to remind everybody that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Forward-looking statements are based upon management's current expectations and are subject to various risks and uncertainties including but not limited to

Speaker Change: The ability of the company to grow revenue.

Speaker Change: 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, and the ability

Speaker Change: 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

Speaker Change: Changes in the training and spending policies of the company's clients, and other factors identified and discussed in the company's most recent annual report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission.

Speaker Change: Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company's current expectations. And there can be no assurance the company's actual future performance will meet management's expectations.

Derek Hatch: These forward-looking statements are based on management's current expectations, and we undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of today's presentation, except as required by law. With that out of the way, we'd like to turn the time over to Mr. Paul Walker, our Chief Executive Officer. Thank you, Derek. Welcome, everyone.

Speaker Change: These forward-looking statements are based on management's current expectations, and we undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of today's presentation, except as required by law.

Speaker Change: With that out of the way, we'd like to turn the time over to Mr. Paul Walker, our Chief Executive Officer. Thank you, Derek. Welcome, everyone. It's great to be with you today.

Paul S. Walker: We're pleased with our results for the third quarter, where revenue, adjusted EBITDA, and free cash flow were all stronger than expected. And, importantly, several of our key leading growth indicators strengthened. Specifically, I'd like to point out, as shown in slide four. Revenue came in at $73.4 million versus the $72.2 million we'd expected. Adjusted EBITDA came in at $13.9 million, versus the expected range of between 12 and 13 million. And free cash flow was $30.6 million in the third quarter versus $15.6 million in the third quarter of last year.

Paul S. Walker: We're pleased with our results for the third quarter, where revenue, adjusted EBITDA, and free cash flow were all stronger than expected, and where importantly, several of our key leading growth indicators strengthened.

Paul S. Walker: Specifically, I'd like to point out, as shown in slide 4, revenue came in at $73.4 million versus the $72.2 million we'd expected.

Paul S. Walker: Adjusted EBITDA came in at $13.9 million versus the expected range of between $12 and $13 million.

Paul S. Walker: and Free Cash Flow was $30.6 million through the third quarter versus $15.6 million through the third quarter of last year.

Paul S. Walker: This strength was broad-based across both the Enterprise and Education Divisions. Additionally, the Foundation for Accelerated Future Growth is being established by our 9% increase in our balance of billed and unbilled deferred revenue, which increased to $153.2 million and which will be recognized in the coming quarters, as well as by our increased services booking rate, which will flow through to revenue in the coming quarters. In addressing our performance for the quarter and our outlook for the future, I'd like to address four key drivers that continue to accelerate the growth and value of Franklin Covey's business.

Paul S. Walker: This strength was broad-based across both the enterprise and education divisions.

Paul S. Walker: Additionally, the Foundation for Accelerated Future Growth is being established by our 9% increase in our balance of billed and unbilled deferred revenue, which increased to $153.2 million and which will be recognized in the coming quarters.

Paul S. Walker: as well as by our increased services booking rate, which will flow through to revenue in the coming quarters.

Paul S. Walker: In addressing our performance for the quarter and our outlook for the future, I'd like to address four key drivers that continue to accelerate the growth and value of Franklin Covey's business.

Paul S. Walker: Each of these drivers was particularly evident in the third quarter's performance. As you can see on slide five, the first driver of growth and value is the mission critical nature of the opportunities and challenges we help organizations and schools address, and the strength of our solutions in addressing them, both of which are reflected in the continued resiliency in our business. A recent June 11th Bloomberg article reported that, quote, businesses are holding off on capital expenditures and reducing costs.

Paul S. Walker: Each of these drivers were particularly evident in the third quarter's performance.

Paul S. Walker: As you can see shown on slide 5, the first driver of growth and value is the mission-critical nature of the opportunities and challenges we help organizations and schools address and the strength of our solutions in addressing them.

Paul S. Walker: Both of which are reflected in the continued resiliency in our business.

Paul S. Walker: A recent June 11th Bloomberg article reported that quote businesses are holding off on capital expenditures and reducing costs close quote

Paul S. Walker: Despite an uncertain and challenging environment, Franklin Covey's business continues to be strong and highly resilient. In the Enterprise Division in North America, as we'll describe in more detail in a moment, we achieved our highest ever All Access Pass logo retention percentage for a third quarter, our highest ever absolute revenue retention, and one of our highest revenue retention percentages for any third quarter. And in the education division, the number of new and retained schools is pacing well ahead of last year through the third quarter.

Paul S. Walker: Despite an uncertain and challenging environment, Franklin Covey's business continues to be strong and highly resilient.

Paul S. Walker: In the Enterprise Division in North America, as we'll describe in more detail in a moment, we achieved our highest ever All Access Pass logo retention percentage for a third quarter.

Paul S. Walker: our highest ever absolute revenue retention.

Paul S. Walker: and one of our highest revenue retention percentages for any third quarter.

Paul S. Walker: And in the education division, the number of new and retained schools is pacing well ahead of last year through the third quarter.

Paul S. Walker: This continued strength and resilience reflects two things. First, the importance of the opportunities and challenges we're helping organizations and schools address. And second, the broadly recognized strength and efficacy of our solutions in addressing these. I'd like to just say a couple of additional points about each of these, first as to the importance of what we're doing to help our clients. The types of challenges and opportunities we help organizations achieve are not just nice to have; they're truly mission critical.

Paul S. Walker: This continued strength and resiliency reflects two things. First, the importance of the opportunities and challenges we're helping organizations and schools address. And second, the broadly recognized strength and efficacy of our solutions in addressing them.

Paul S. Walker: I'd like to just say a couple of additional points about each of these.

Paul S. Walker: first as to the importance of what we're doing to help our clients.

Paul S. Walker: The types of challenges and opportunities we help organizations achieve are not just nice to have. They're truly mission critical.

Paul S. Walker: For organizations, achieving extraordinary strategic or business outcomes almost always requires building winning cultures, achieving extraordinary execution, earning the highest levels of customer loyalty, and building leaders who can unleash the collective power of their people. Underpinning each of these outcomes is the need for the most impactful behaviors and actions of people at scale throughout an organization. Achieving such large-scale collective action is not just nice to have; it's mission-critical.

Paul S. Walker: For organizations, achieving extraordinary strategic or business outcomes almost always requires building winning cultures, achieving extraordinary execution,

Paul S. Walker: earning the highest levels of customer loyalty and building leaders who can unleash the collective power of their people.

Paul S. Walker: Underpinning each of these outcomes is the need for the most impactful behaviors and actions of people at scale throughout an organization.

Paul S. Walker: Achieving such large-scale collective action is not just nice to have, it's mission-critical. Second, as to the tremendous strength and efficacy of Franklin Covey's solutions in helping organizations successfully address these opportunities and challenges.

Paul S. Walker: Second, as to the tremendous strength and efficacy of Franklin Covey's solutions in helping organizations successfully address these opportunities and challenges, Franklin Covey's solutions combine best-in-class content with high-leverage tools, coaching, and measurement, all of which is available across any delivery modality. The power of our solutions helps Franklin Covey earn the right to be Partners for Life with our clients. The second driver I'd like to talk briefly about is the strength of our leading indicators of future growth, which were also strong in the third quarter.

Paul S. Walker: Franklin Covey's solutions combine best-in-class content with high leverage tools and coaching and measurement, all of which is available across any delivery modality.

Michael Sean Merrill Covey: The power of our solutions helps Franklin Covey earn the right to be partners for life with our clients.

Michael Sean Merrill Covey: The second driver I'd like to talk briefly about is the strength of our leading indicators of future growth which were also strong in the third quarter.

Paul S. Walker: Three key leading indicators of our future growth include growth in the amount of our deferred revenue, which directly reflects growth in our contracted and invoiced revenue that will be recognized over the next 12 months. Growth in the amount of unbilled deferred revenue, which represents increases in the dollar volume of multiyear contracts, which establishes a strong foundation for growth even beyond 12 months, and growth in the amount of services booked in the quarter for future delivery.

Michael Sean Merrill Covey: Three key leading indicators of our future growth include growth in the amount of our deferred revenue, which directly reflects a growth in our contracted and invoiced revenue that will be recognized over the next 12 months.

Michael Sean Merrill Covey: Growth in the amount of unbilled deferred revenue, which represents increases in the dollar volume of multi-year contracts, which establishes a strong foundation for growth even beyond 12 months.

Paul S. Walker: Each of these key lead indicators of future growth was strong in the third quarter. As you can see in slide six, our balance of deferred revenue increased 15% to $83.8 million in the quarter, reflecting growth in revenue amounts contracted and invoiced in the quarter. Our balance of unbilled deferred revenue increased 2% to $69.4 million during the third quarter, reflecting an increase in the dollar volume of multi-year contracts, which typically flow into revenue over the ensuing 18 to 30 months.

Michael Sean Merrill Covey: and growth in the amount of services booked in the quarter for future delivery.

Michael Sean Merrill Covey: Each of these key lead indicators of future growth was strong in the third quarter.

Michael Sean Merrill Covey: As you can see shown in slide 6, our balance of deferred revenue increased 15% to 83.8 million in the quarter, reflecting growth in revenue amounts contracted and invoiced in the quarter.

Michael Sean Merrill Covey: Our balance of unbilled deferred revenue increased 2% to $69.4 million during the third quarter, reflecting an increase in the dollar volume of multi-year contracts which typically flows into revenue over the ensuing 18 to 30 months.

Paul S. Walker: Additionally, I would also add that, as we expected, in the third quarter, our services booking pace accelerated meaningfully, and the accelerated pace has continued through the month of June. The third driver of growth and value is the strength of our business model. Our business model is designed to achieve high levels of recurring revenue with strong gross margins, and operating SG&A as a percent of revenue that declines with scale. And with very little working capital required, since the invoiced revenue is billed and collected before the revenue is recognized. The combination of these factors results in a high flow-through of increases in revenue to increases in both adjusted EBITDA and free cash flow, for example, for the latest 12 month period ended in May of fiscal 2020.

Michael Sean Merrill Covey: Additionally, I would also add that, as we expected, in the third quarter, our services booking pace accelerated meaningfully, and the accelerated pace has continued through the month of June .

Michael Sean Merrill Covey: The third driver of growth and value is the strength of our business model.

Michael Sean Merrill Covey: Our business model is designed to achieve high levels of recurring revenue, with strong gross margins,

Michael Sean Merrill Covey: with operating SG&A as a percent of revenue that declines with scale.

Michael Sean Merrill Covey: and with very little working capital required since the invoiced revenue is billed and collected before the revenue is recognized.

Michael Sean Merrill Covey: The combination of these factors results in a high flow-through of increases in revenue to increases in both adjusted EBITDA and free cash flow. For example,

Paul S. Walker: Revenue at the time was $214.6 million, and adjusted EBITDA was $18.8 million. This compares with revenue and adjusted EBITDA through the latest 12 months through this year's third quarter, where revenue had grown during that period to $281 million and adjusted EBITDA to $48.8 million. With revenue growth of 31% during that period, adjusted EBITDA grew an even more rapid 160%. This pattern of strong flow-through continued in this year's third quarter, where revenue grew $1.9 million, or 3%, and adjusted EBITDA grew $2 million, or 17%.

Michael Sean Merrill Covey: For the latest 12-month period ended May of fiscal 2020.

Michael Sean Merrill Covey: Revenue at the time was $214.6 million and adjusted EBITDA was $18.8 million.

Michael Sean Merrill Covey: This compares with revenue and adjusted EBITDA through the latest 12 months through this year's third quarter, where revenue had grown during that period to $281 million and adjusted EBITDA to $48.8 million.

Michael Sean Merrill Covey: With revenue growth of 31% during that period, adjusted EBITDA grew an even more rapid 160%.

Michael Sean Merrill Covey: This pattern of strong flow-through continued in this year's third quarter, where revenue grew $1.9 million, or 3%, and adjusted EBITDA grew $2 million, or 17%.

Paul S. Walker: The final of these four drivers I'd like to talk about today is that we've been able to invest our free cash flow and excess cash in the business at high rates of return, with the balance being returned to shareholders in the form of a significant stock repurchase. In fiscal 2024, our return on net tangible assets from investments in the business continued to be remarkably high. As shown on slide 7, year to date, we've returned $25.8 million to shareholders through purchasing 649,000 shares, including returning $7.4 million through purchases of 188,000 shares in the third quarter.

Michael Sean Merrill Covey: The final of these four drivers I'd like to talk about today is that we've been able to invest our free cash flow and excess cash in the business at high rates of return, with the balance being returned to shareholders in the form of significant stock repurchases.

Michael Sean Merrill Covey: In fiscal 2024, our return on net tangible assets from investments in the business continued to be remarkably high.

Michael Sean Merrill Covey: As shown on slide 7, year-to-date, we've returned $25.8 million to shareholders through purchasing 649,000 shares, including returning $7.4 million through purchases of 188,000 shares in the third quarter.

Paul S. Walker: And we've invested $61.4 million to repurchase shares over the last two years. Our board also approved a new $50 million stock repurchase authorization to put ourselves in a position to continue to opportunistically return capital to shareholders through continued stock repurchase. Additionally, we continue to make significant progress in each of the three growth projects I described in detail last quarter, Project Penetrate, Project Speed to Ramp, and Project Impact.

Michael Sean Merrill Covey: And we've invested $61.4 million to repurchase shares over the last two years.

Michael Sean Merrill Covey: Our board also approved a new 50 million dollar stock repurchase authorization to put ourselves in a position to continue to opportunistically return capital to shareholders through continued stock repurchases.

Michael Sean Merrill Covey: Additionally, we continued to make significant progress in each of the three growth projects I described in detail last quarter, Project Penetrate, Project Speed to Ramp, and Project Impact.

Paul S. Walker: And we're encouraged by what we see in terms of these projects driving future accelerated growth. I'm pleased with the progress we're making. I'm pleased about our outlook for growth and what we're doing to become even more important to our clients. I'd like to now turn time to Steve to share details about our specific Q3 results and discuss guidance. After Steve concludes, we'll open the line and look forward to answering your questions.

Michael Sean Merrill Covey: And we're encouraged with what we see in terms of these projects driving future accelerated growth.

Michael Sean Merrill Covey: I'm pleased with the progress we're making. I'm pleased about our outlook for growth and what we're doing to become even more important to our clients.

Speaker Change: I'd like to now turn time to Steve to share details about our specific Q3 results and discuss guidance.

Speaker Change: After Steve concludes, we'll open the line and look forward to answering your questions. Steve.

Stephen D. Young: I would like to briefly provide a little more detail on the factors underlying our performance, focusing on the overall company result and then on the results in three key areas of our company, specifically our enterprise division in North America, the enterprise business internationally, and our education business. As shown on slide 8, third-quarter revenue was $73.4 million, 3% higher than the $71.4 million generated in last year's third quarter. Year to date revenue was $203.1 million, or slightly higher than $202.6 million in the prior year.

Stephen D. Young: Thank you Paul. I would like to briefly provide a little more detail on the factors underlying our performance.

Stephen D. Young: And for the latest 12 months, revenue was $281.1 million, compared to $281.4 million in the prior year. Third quarter adjusted EBITDA was $13.9 million compared to $11.9 million achieved last year. Year to date adjusted EBITDA was $32.3 million compared to $31.6 million last year. And for the latest 12 months, adjusted EBITDA was $48.8 million compared to $44.9 million last year.

Stephen D. Young: focusing on the overall company result and then on the results in three key areas of our company, specifically our enterprise division in North America, the enterprise business internationally, and our education business.

Stephen D. Young: As shown on slide 8, third quarter revenue was $73.4 million, 3% higher than the $71.4 million generated in last year's third quarter.

Stephen D. Young: Year-to-date revenue was $203.1 million, or slightly higher than the $202.6 million in the prior year.

Stephen D. Young: And for the latest 12 months, revenue was $281.1 million compared to the $281.4 million in the prior year.

Stephen D. Young: Third quarter adjusted EBITDA was $13.9 million compared to $11.9 million achieved last year.

Stephen D. Young: Year-to-date adjusted EBITDA was $32.3 million compared to $31.6 million last year.

Stephen D. Young: And for the latest 12 months, adjusted EBITDA was $48.8 million compared to $44.9 million last year.

Stephen D. Young: As shown on slide nine, results in our enterprise business in North America continued to be strong in the third quarter. Revenue in North America, which accounts for about 73% of total enterprise division revenue, was $39.1 million in the third quarter, which is flat with the $39.1 million recorded in the prior year. Year-to-date revenue and the latest 12-month revenues were also essentially flat versus last year, after FY23 recorded large increases over the same period in FY22.

Stephen D. Young: As shown on slide 9, results in our enterprise business in North America continue to be strong in the third quarter.

Stephen D. Young: Revenue in North America, which accounts for about 73% of total Enterprise Division revenue, was $39 million in the third quarter, which is flat with the $39.1 million recorded in the prior year.

Stephen D. Young: Year-to-date revenue and the latest 12 months revenues were also essentially flat versus last year, after FY23 recorded large increases over the same period in FY22.

Stephen D. Young: Subscription revenue in North America was $22 million, reflecting growth of 3% in the quarter, was 66.5 million year to date, which is up 5%, and 88.5 million in the latest 12 months, which is also up 5%. The combination of subscriptions and subscription services revenue in North America was $35.9 million in the third quarter, representing 3% growth. This revenue was $102.2 million year-to-date, which is up 2%, and was $137.3 million in the last 12 months, which is up 3%.

Stephen D. Young: Subscription revenue in North America was $22 million, reflecting growth of 3% in the quarter.

Stephen D. Young: was $66.5 million year-to-date, which is up 5%.

Stephen D. Young: and 88.5 million in the latest 12 months, which is also up 5%.

Stephen D. Young: The combination of subscription and subscription services revenue in North America was $35.9 million in the third quarter, representing 3% growth.

Stephen D. Young: This revenue was $102.2 million year-to-date, which is up 2%, and was $137.3 million latest 12 months, which is up 3%.

Stephen D. Young: Our balance in deferred revenue built and unbilled in North America continued to be strong, growing to $111.6 million in the quarter, which is up 3% on top of the 19% growth achieved in last year's third quarter, establishing, as Paul talked about, a strong foundation for next year's growth. And the percent of North America's all-access passes contracted for multi-year periods increased to 55% from 50% in the third quarter last year.

Stephen D. Young: Our balance in deferred revenue, billed and unbilled, in North America continued to be strong.

Stephen D. Young: Growing to $111.6 million in the quarter, which is up 3% on top of the 19% growth achieved in last year's third quarter, establishing, as Paul talked about, a strong foundation for next year's growth.

Stephen D. Young: And the percent of North America's all-access passes contracted for multi-year periods increased to 55% from 50% in the third quarter last year.

Stephen D. Young: And the percentage of invoiced revenue represented by multi-year contracts increased to 60% from 57% in the third quarter last year. As shown on slide 10, revenue from our international direct operations, which accounts for approximately 17% of total enterprise division revenue, was $8.5 million in the third quarter, which was down 7%. This decrease is more than 100% attributable to the geopolitical issues related to China, as every other international direct operation grew revenues over the prior year.

Stephen D. Young: And the percentage of invoiced revenue represented by multi-year contracts increased to 60% from 57% in the third quarter last year.

Stephen D. Young: As shown on slide 10, revenue from our international direct operations, which accounts for approximately 17% of total enterprise division revenue, was $8.5 million in the third quarter, which was down 7%.

Stephen D. Young: This decrease is more than 100% attributable to the geopolitical issues related to China.

Stephen D. Young: as every other international direct operation grew revenues over the prior year.

Stephen D. Young: Year-to-date revenue from these offices was $24.4 million, which is down 5%, and the latest 12-months revenue was $33.9 million, down 2%, as also shown on slide 10. Our international licensee partner revenue was $2.7 million in the third quarter, a decrease of 5%, with year-to-date revenue of $8.8 million, down 2%, and the latest 12-months revenue of $11.4 million, which is flat to the prior year Revenue in our education business, which accounts for approximately 25% of total company revenue, grew to $20.1 million in the third quarter, on top of 18% growth achieved last year.

Stephen D. Young: Year-to-date revenue from these offices was $24.4 million, which is down 5%, and the latest 12-months revenue was $33.9 million, down 2%.

Stephen D. Young: has also shown on slide 10.

Stephen D. Young: Our international licensee partner revenue was $2.7 million in the third quarter, a decrease of 5%.

Stephen D. Young: with year-to-date revenue of $8.8 million, down 2%, and the latest 12-months revenue of $11.4 million, which is flat to the prior year.

Stephen D. Young: Finally, as shown on slide 11.

Stephen D. Young: Revenue in our education business, which accounts for approximately 25% of total company revenue, grew to $20.1 million in the third quarter, on top of 18% growth achieved last year.

Stephen D. Young: Year-to-date revenue grew to $49.4 million, up 8%, and revenue for the latest 12-month period was $73.5 million, up 5%, on top of the 21% growth in the previous year. Education amounts invoiced grew to $18.9 million in the third quarter, up 16% from the third quarter a year ago; year-to-date amounts achieved were 37 million, up 16%. And for the latest 12 months, it grew 13%, to 82.3 million.

Speaker Change: Year-to-date revenue grew to $49.4 million, up 8 percent, and revenue for the latest 12-month period was $73.5 million, up 5 percent, on top of the 21 percent

Speaker Change: growth in the previous year.

Speaker Change: Education amounts invoiced grew to $18.9 million in the third quarter, up 16% from the third quarter a year ago.

Speaker Change: Year-to-date amounts achieved were $37 million, up 16%, and for the latest 12 months grew 13% to $82.3 million.

Stephen D. Young: Education Subscription and Subscription Services revenue grew to $18.2 million in the third quarter, up 13%, on top of 19% growth in last year's third quarter. Year-to-date revenue grew to $44.3 million, up 6% on top of the 24% year-to-date growth achieved through last year's third quarter and for the latest 12 months. Education revenue was $67.3 million, which is up 3%, on top of the 21% growth achieved in the same last 12 months last year. Education's balance of deferred subscription revenue, billed and unbilled, increased to 28.9 million, or growth of 42% in the third quarter. Now a little bit about cash flows and balance sheets.

Speaker Change: Education subscription and subscription services revenue grew to $18.2 million in the third quarter, up 13 percent.

Speaker Change: on top of 19% growth in last year's third quarter.

Speaker Change: Year-to-date revenue grew to $44.3 million, up 6% on top of the 24% in year-to-date growth achieved through last year's third quarter, and for the latest 12 months.

Speaker Change: Education revenue was $67.3 million, which is up 3%, on top of the 21% growth achieved in the same latest 12 months last year.

Speaker Change: Education's balance of deferred subscription revenue, billed and unbilled, increased to $28.9 million, or a growth of 42% in the third quarter.

Stephen D. Young: As shown on slide 12, cash flows from operating activities for the nine months ended May 31st, 2024 were $38.4 million, an increase of 12.5 million, or 48 percent, compared to $25.9 million for the prior year. Our free cash flow for the first three quarters increased $15 million, or 96%, to $30.6 million compared to $15.6 million for the prior year, reflecting that changes in the elements of working capital were very favorable through Q3 of this year compared with the prior year, particularly reflecting changes in accounts receivable, accounts payable, accrued liabilities, and deferred revenue.

Speaker Change: Now a little bit about cash flows and balance sheet.

Speaker Change: As shown on slide 12, cash flows from operating activities for the nine months ended May 31st, 2024 was $38.4 million.

Speaker Change: An increase of $12.5 million, or 48%.

Speaker Change: compared to $25.9 million for the prior year.

Speaker Change: Our free cash flow for the first three quarters increased $15 million, or 96%, to $30.6 million compared to the $15.6 million for the prior year, reflecting that changes in the elements of working capital were very favorable through Q3 of this year.

Speaker Change: compared with the prior year, particularly reflecting changes in accounts receivable, accounts payable, accrued liabilities, and deferred revenue.

Stephen D. Young: For the third quarter, free cash flow was $5.8 million compared to $12.3 million in the prior year, reflecting changes in working capital this quarter. As Paul mentioned, in the first three quarters of FY24, we invested $25.8 million to purchase 649,000 shares, and over the past four quarters, we invested $31.7 million to purchase 774,000 shares. We ended the quarter with nearly $100 million of total liquidity, including $36.3 million in cash and $62.5 million available under the revolving credit facility, even after investing $25.8 million in stock repurchases as of today.

Speaker Change: For the third quarter, free cash flow was $5.8 million compared to $12.3 million in the prior year, reflecting also changes in working capital this quarter.

Speaker Change: As Paul mentioned, in the first three quarters of FY24, we invested $25.8 million to purchase 649,000 shares. And over the past four quarters, we invested $31.7 million to purchase 774,000 shares.

Speaker Change: We ended the quarter with nearly $100 million of total liquidity, including $36.3 million in cash and $62.5 million available under the revolving credit facility, even after investing the $25.8 million in stock repurchases year-to-date.

Stephen D. Young: Compared to Q3 of FY23, the sum of billed and unbilled deferred subscription revenue increased to $153.2 million, giving us increased visibility into future revenue results. Deferred subscription revenue increased 15% to $83.8 million, while unbilled deferred revenue increased 2% to $69.4 million. Adjusted EBITDA for the third quarter, as we said, was $13.9 million, representing 17% growth over the prior year. Now, a little bit about guidance.

Speaker Change: Compared to Q3 of FY23, the sum of billed and unbilled deferred subscription revenue increased to $153.2 million, giving us increased visibility into future revenue results.

Speaker Change: The deferred subscription revenue increased 15% to $83.8 million, while the unbilled deferred revenue increased 2% to $69.4 million.

Speaker Change: Adjusted EBITDA for the third quarter, as we said, was 13.9 million representing 17% growth over the prior year.

Stephen D. Young: In our second quarter earnings call, we communicated that we expected full-year revenue to be approximately $284 million in constant currency, after absorbing what we expected at the time to be 700,000 of unfavorable FX for the year, with Q3 revenue expected to be approximately $72 million and fourth quarter revenue expected to be approximately $83 million. We still expect full-year revenue to be approximately $284 million in constant currency for the year, with Q3 revenue of $73.4 million would make Q4 revenue approximately $80.5 million, primarily reflecting a modest shift forward from the fourth quarter to the third quarter in the education division related to the earlier than anticipated launch of a large statewide contract.

Speaker Change: Now a little bit about guidance. In our second quarter earnings call, we communicated that we expected full-year revenue to be approximately $284 million in constant currency.

Speaker Change: after absorbing what we expected at the time to be 700,000 of unfavorable FX for the year.

Speaker Change: With Q3 revenue expected to be approximately $72 million and fourth quarter revenue to be approximately $83 million.

Speaker Change: We still expect full-year revenue to be approximately $284 million in constant currency for the year.

Speaker Change: With Q3 revenue of $73.4 million, would make Q4 revenue approximately $80.5 million.

Speaker Change: Primarily reflecting a modest shift forward from fourth quarter to third quarter in the education division related to the earlier than anticipated launch of a large statewide contract.

Stephen D. Young: In our second quarter earnings call, we also communicated that we expected full-year adjusted EBITDA to be within our original range of between $54.5 and $58 million in constant currency and to be at the low end of that range, excluding approximately 500,000 of negative effects. This result would represent approximately 13 percent year-over-year growth, and today we are reaffirming that guidance. We feel good about the building revenue momentum and lead indicators we see and expect a continuation of these trends into FY25 and beyond. So, Paul, back to you. Thanks, Steve.

Speaker Change: In our second quarter earnings call, we also communicated that we expected full-year adjusted EBITDA to be within our original range of between $54.5 and $58 million in constant currency and to be at the low end of that range.

Speaker Change: excluding approximately 500,000 of negative effects impact.

Speaker Change: This result would represent approximately 13% year-over-year growth, and today we are reaffirming that guidance.

Speaker Change: We feel good about the building revenue momentum and lead indicators we see and expect a continuation of these trends into FY25 and beyond.

Paul S. Walker: Thanks for taking us through that. I feel incredibly good about the renewed growth momentum in the business and the progress we're making on a number of important strategic and operational fronts and just want to express my gratitude to each of you and also to each of our associates around the world here for the great work they're doing. And with that, we'd now like to ask the operator to open the line for your questions. Thank you.

Speaker Change: So Paul, back to you.

Paul S. Walker: Thanks, Steve, for taking us through that.

Paul S. Walker: I feel incredibly good about the renewing growth momentum in the business and the progress we're making on a number of

Paul S. Walker: important strategic and operational fronts and just want to express my gratitude to each of you and also to each of our associates around the world here for the great work they're doing. And with that we'd now like to ask the operator to open the line for your questions.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for questions. Our first question comes from Alex Paris with Barrington Research. He may proceed.

Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. One moment for questions.

Speaker Change: Our first question comes from Alex Paris with Barrington Research. He may proceed.

Alexander Peter Paris: Hey guys, congratulations on the better than expected third quarter results.

Paul S. Walker: Thanks, Alex. I hope you're doing well.

Alexander Peter Paris: Hey guys, congratulations on the better than expected third quarter results.

Alexander Peter Paris: Yep, thank you. So I have got a couple of questions. The first one relates to the education division, and then I have a couple of cats and dogs to follow up on. So education division, this is the season, this is the big time of the year for education, and I feel good about your prepared comment. New and retained schools are pacing well, but you have a pretty tough comp. I think the fourth quarter last year, or the full year last year, was a record 791 new schools. Also on strong retention. How do you feel about that hurdle for fiscal 2024?

Speaker Change: Thanks, Alex. Hope you're doing well.

Speaker Change: Yep, thank you.

Alexander Peter Paris: So I got a couple of questions. The first one relates to the education division and then I have a couple of cats and dogs to follow up on. So education division, this is the season, this is the big time of the year for education and I'm

Speaker Change: I feel good about your prepared comment, new and retained schools pacing well.

Speaker Change: But you've got a pretty tough comp. I think the fourth quarter last year, or the full year last year, was a record 791 new schools. Also on strong retention. How do you feel about that hurdle for fiscal 2024?

Paul S. Walker: Yeah, I'll go ahead, Paul. Go ahead. I'll just say, Alex, thanks for the question, and I was going to say, let's hear from the man who has to start in the Super Bowl here in the fourth quarter, Sean Covey.

Speaker Change: Yeah, I'll...

Michael Sean Merrill Covey: [inaudible] Okay, how are you doing, Alex? Great. How are you, Sean?

Michael Sean Merrill Covey: Good. Good. Thanks.

Speaker Change: Okay, how you doing Alex?

Alexander Peter Paris: Great, how are you Sean? Good, good thanks. Yeah, so we feel good about it, we have

Alexander Peter Paris: We're ahead so far on new schools, substantially. Last year we had a record 791. We believe we're going to beat that again this year, and we had good retention. We've always had good retention, and we feel like it's solid and ahead of last year.

Michael Sean Merrill Covey: Yeah, so we feel good about it. We're ahead so far on new schools. Last year, we had a record 791.

Michael Sean Merrill Covey: We believe we're going to beat that again this year, and we have good retention. We've always had good retention, and we feel like it's solid and ahead of last year at this point. We also have probably the best pipeline I've ever seen since I've been here. So we've got a lot of big opportunities coming in. Most of the decisions are made. Schools have been looking for and talking with us all year. Most of the decisions are made in July and August because a lot of the budget for K-12 districts is renewed in July.

Alexander Peter Paris: We also have, you know, probably the best pipeline I've ever seen since I've been here, so we've got a lot of

Alexander Peter Paris: A lot of big opportunities coming in. Most of the decisions are made, you know, schools are.

Alexander Peter Paris: looking and talking with us all year. Most of the decisions are made in July and August because a lot of the budgets for K-12 districts renew in July .

Michael Sean Merrill Covey: So a lot of decisions have been made, but we feel really good about it. We have, you know, our focus has been on selling to districts, and that's going better than ever. You know, they're bigger, they're stickier, you get more schools all at once. We think we'll add about 170 new district partnerships this year, on top of the 200 to 230 or so we had last year. And then over half of our new schools coming on are coming from districts.

Alexander Peter Paris: So a lot of the decisions are made. But we feel really good about it. We have, you know, our focus has been on selling to districts. That's going better than ever. You know, they're bigger. They're stickier. You get more schools all at once.

Alexander Peter Paris: We think we'll add about 170 new district partnerships this year on top of the...

Michael Sean Merrill Covey: So all the signs are really good. You don't know until it happens, in terms of all the leading indicators, pipeline, new schools to date, retention to date. Also, the funding environment is really positive for us right now because of community support, foundation support, and grants that we're winning. So that's been really good. So everything is leaning into our favor to have a really solid and positive growth fourth quarter.

Alexander Peter Paris: 200 to 230 or so we had last year, and then over half of our new schools coming on are coming from districts. So all the signs are really good. You know, you don't know until it happens, but

Alexander Peter Paris: Great. Well, good luck with that.

Alexander Peter Paris: in terms of all the leading indicators, pipeline, new schools to date, retention to date.

Alexander Peter Paris: Also, you know, the funding environment is really positive for us right now because of

Alexander Peter Paris: community support, foundation support, grants that we're winning. So that's that's been really good. So a lot of so everything is leaning into our favor to have a really solid and positive growth fourth quarter.

Alexander Peter Paris: I was going to follow up too on the ESSER funds. You know, I think we all know that the ESSER funds are ending in September, although business contracted prior to September can be spent through January, as I understand it. What impact do you think that will have on your business? I know you've got the big foundation, you know, that's gonna kind of offset some of that. Maybe just some perspective on ESSER funds. What impact does that have on fiscal 23, fiscal 24, and what are your thoughts about going forward?

Speaker Change: Great, well good luck on that. I was going to follow up too on the ESSER funds, you know, I think we all know that the ESSER funds are ending in September , although business contracted prior to

Speaker Change: September can be spent through January as I understand it. What impact do you think that will have on your business? I know you got the big foundation you know that's going to kind of offset some of that. Yeah. Maybe just some perspective on ESSER funds.

Speaker Change: What impact does that have on Fiscal 23, Fiscal 24, and what's your thoughts about going forward?

Michael Sean Merrill Covey: Yeah, so in general, we think ESSER is going to have, you know, it's gonna have some impact, how much we're not quite sure, but all things considered, we feel good about going right through it. Maybe the most encouraging thing is that we've already been facing ESSER all year because a lot of these schools use their ESSER funds, and districts early on, they don't have ESSER funds anymore because they've used them all, and they're renewing, you know, and staying with us, and so it's kind of like we're halfway through it. Even though officially it ends at the end of our fiscal year and up through So I'm not ignoring it, it won't have some impact, but I don't, you know, we're expecting to grow right through it.

Speaker Change: Yeah, so in general, we think ESSER is going to have, you know, it's going to have some impact. How much, we're not quite sure, but all things considered, we feel good about growing right through it. Maybe the most encouraging thing is that we've already been facing ESSER all year because a lot of these schools use their ESSER funds in districts early on. They're coming up for renewal.

Speaker Change: They don't have us or funds anymore because they've used them all and they're renewing, you know and staying with us And so it's kind of like we're halfway through it already

Speaker Change: Even though officially it ends at the end of our fiscal year and up through, like you said, through the calendar year, it's kind of like we're halfway through it and we're growing right through it right now.

Speaker Change: So, I'm not ignoring, it won't have some impact, but I don't, you know, we're expecting to grow right through it, and primarily because

Michael Sean Merrill Covey: And primarily because we have so much other funding. Title I grants, we use them all the time. And we've got this big foundation, which is multi-millions of dollars and hundreds of schools that will be funded through the foundation. We have a lot of other community initiatives, and that's really helpful.

Speaker Change: We have so much other funding. Title I grants, we use them all the time. And we've got this big foundation which is multi-millions of dollars and hundreds of schools that will be funded through the foundation. We have a lot of other community initiatives.

Michael Sean Merrill Covey: And that big foundation, you said, multimillion dollars, obviously. They're going to fund 100 schools in total over time, or 100 schools this year? Well, I said hundreds of schools.

Speaker Change: And that's really helpful. And that big foundation, you said multi-million dollars. Obviously, they're going to fund 100 schools in total over time, or 100 schools in this year? I said hundreds of schools. Hundreds, okay. They're supporting, yeah. And they don't give...

Michael Sean Merrill Covey: They're supporting, yeah. And they don't give, they give so much per student, you know. And so it's like an accelerator, which is kind of good because we want the, you know, if we go to a district, we say, hey, we've got a funding partner that can help you get going. It accelerates, people come on faster, and they come on bigger, knowing they've got support, but they have to have some skin in the game too.

Speaker Change: They give so much per student, you know, and so it's like an accelerator.

Speaker Change: which is kind of good because we want the you know if we go to a district we say hey we've got a funding partner that can help you get going.

Speaker Change: It accelerates, people come on faster and they come on bigger, knowing they've got support. But they have to have some skin in the game too, so the foundation doesn't cover everything. It usually covers about a third of their costs.

Michael Sean Merrill Covey: So the foundation doesn't cover everything, it usually covers about a third of their costs, and uh, but it helps tremendously. It makes them feel like hey, there's somebody out here that believes in this and is going to support me, help me get started, get off the ground. So that's been, that's been a really positive thing. And we've we've had about, you know, we've had since We've had probably about 30 to 40% of our schools have been supported by some kind of community, business, Chamber of Commerce, or foundation initiative.

Speaker Change: But it helps tremendously. It makes them feel like, hey, there's somebody out here that believes in this and is going to support me, help me get started, get off the ground.

Speaker Change: So that's been a really positive thing, and we've had about, you know, we've had, since the beginning, we've had probably about 30 to 40 percent of our schools have been supported by some kind of community, business, chamber of commerce, foundation initiative.

Michael Sean Merrill Covey: So our solution is really powerful. And because of that, it attracts like-minded entities that are, you know, wanting to support character development in kids. So that's been a steady thing, and we think it'll help us tremendously get through a COVID bump or the Esser, you know, from the

Speaker Change: So it's our solution is really powerful and because of that it attracts

Speaker Change: like-minded entities that are, you know, wanting to support character development in kids.

Speaker Change: So that's been a steady thing and we think it'll help us tremendously get through a COVID bump.

Alexander Peter Paris: Great, thanks, that's really helpful. Yeah, can I help you? Yeah, okay. Absolutely.

Speaker Change: or the Essar, you know, from the COVID impact, for sure.

Speaker Change: Great, thanks that's real helpful. Yeah absolutely. A quick one on restructuring costs you talked about it on the third quarter you'd say you said there would be

Alexander Peter Paris: A quick one on restructuring costs, you talked about it in the third quarter. You said there would be. I think we're at 3 million year to date. Are we done with restructuring, or will there be a further charge in the fourth quarter? It looks like the number of CPs came down as you had sort of forecast, actually a little less than you forecast. You said maybe 24 more would come out. It looked like 20 came out, if I had that right.

Speaker Change: I think we're at three million year to date. Are we done with restructuring or will there be a further charge in the fourth quarter? It looks like.

Speaker Change: The number of CPs came down as you had sort of forecast, actually a little less than you forecast. You said maybe 24 more would come out. It looked like 20 came out, if I have that right.

Stephen D. Young: So Alex, the impact that we reported in Q2 and Q3 was from the same initiative, and we don't anticipate any additional restructuring charges in Q4.

Alexander Peter Paris: So Alex, the impact that we reported in Q2 and Q3 were from the same initiative and we don't anticipate any additional restructuring charges in Q4.

Alexander Peter Paris: Okay. And then last question. This is also for you, Steve. Help me and your investors understand this. This has been sort of a nagging point for me.

Alexander Peter Paris: I should probably understand it, so that's why I'm asking. Deferred revenue was up 15%. Unbilled deferred was up 1% or so. In total, it was up 8.7% to $153.2 million. But when I scroll down to the balance sheet, deferred subscription revenue is down 16%, from 95% to 80%. Obviously, that's not the whole number, and it perhaps applies just to subscriptions. It doesn't include services or training days. But how do you explain that?

Speaker Change: Deferred revenue was up 15%. Unbilled deferred was up 1% or so. In total it was up 8.7% to 153.2 million. But when I scroll down to the balance sheet

Speaker Change: Deferred subscription revenue is down 16% from 95 to 80. Obviously, that's not the whole number, and it perhaps applies just to subscription. It doesn't include services or training days, but how do you explain that?

Stephen D. Young: The balance sheet is Q3.

Speaker Change: The balance sheet is Q3 versus

Stephen D. Young: [inaudible] versus year-end versus the prior

Speaker Change: versus year end versus the prior year.

Stephen D. Young: Do you understand me, Alex? So we're talking about different- Oh, yes. It's not year over year, it's just year to date. Yeah. We're comparing different periods in one calculation versus the other.

Alexander Peter Paris: Does that make sense Alex? So we're talking about... Oh yes, it's not year-over-year, it's just year-to-date, yeah.

Speaker Change: Yeah, we're comparing different periods in one calculation versus the other calculation.

Stephen D. Young: So if I looked at... Yeah, if I looked at Q3, 23... If I looked at Q323 versus Q324, yeah, then the numbers would tie out.

Speaker Change: Thank you. Thank you.

Speaker Change: So if I looked at...

Speaker Change: Yeah, if I look at Q3, 23...

Speaker Change: If I look at Q323 versus Q324, yeah, then the number should tie out. That makes sense.

Stephen D. Young: That makes sense. OK. And time. Very helpful. I'll take a look at it and make sure I understand it, and if I have any further questions, I'll ask them on a follow-up. But thank you very much and again, congratulations on the quarter. Thanks for asking that, Alex, because those are the kind of things that are

Speaker Change: Okay, good.

Speaker Change: helpful I'll take a look at it make sure I understand and if I have any further questions I'll do it on a follow-up but thank you very much and again congrats on the quarter

Paul S. Walker: Thanks for asking that, Alex, because those are the kind of things that are confusing, so it's good to clarify things when they're in people's minds.

Alexander Peter Paris: Thanks for asking that Alex because those are the kind of things that are that are confusing so it's good to clarify those when they're in people's minds.

Alexander Peter Paris: Thanks, Alex.

Operator: Our next question comes from Nehal Chokshi with Northland Capital Markets.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Nehal Chokshi with Northland Capital Markets. You may proceed.

Nehal Sushil Chokshi: Thank you. Hey.

Nehal Sushil Chokshi: And I hope you

Nehal Sushil Chokshi: So, you know, you list a

Nehal Sushil Chokshi: So, you know, you list an unbilled deferred revenue year growth of 2% and deferred revenue growth of 15%. I presume that the deferred revenue growth is a much better indicator of your short-term billings than the unbilled because that's probably more representative of a flattening and adoption multi-year agreement. Is that correct? Yeah. Yes, the unbilled deferred.

Nehal Sushil Chokshi: Unbilled deferred revenue year growth of 2%, deferred revenue growth of 15%. I presume that the deferred revenue growth is a much better indicator of your short-term billings.

Speaker Change: , and the unbilled because that's more representative of flattening and adoption of multiyear agreements. Is that correct?

Stephen D. Young: Sorry Nehal, nice to talk with you. Yes, the unbilled deferred comes from multi-year agreements and, by its very nature, is more lumpy quarter to quarter and period to period than the deferred. And the deferred is normally billed one year at a time, and many of those are one-year contracts or the annual billing of a multi-year contract, so yes, I think the way you described it is exactly right.

Speaker Change: Sorry, Nehal, nice to talk with you. Yes, the unbilled deferred

Speaker Change: It comes from the multi-year agreement.

Speaker Change: And by its very nature is more lumpy quarter to quarter and period to period than the deferred. And the deferred is normally billed one year at a time.

Speaker Change: And many of those are one-year contracts or the annual billing of a multi-year contract. So yes, I think the way you described it is exactly right.

Nehal Sushil Chokshi: Okay, great. And that metric undoubtedly represents an acceleration from the prior three quarters, and that is the primary reason why you guys feel very good about the signal of accelerating growth in subscription revenue. Is that correct?

Speaker Change: Okay, great. And that metric undoubtedly represents an acceleration from the prior three quarters, and that is the primary reason why you guys feel very good about the

Stephen D. Young: Yes, so just as you said the portion of the unbilled deferred revenue, we know that when that's going to be billed, and as soon as we invoice, we know the pattern that that's going to come in as recorded revenue.

Speaker Change: signal of accelerating growth on subscription revenue. Is that correct?

Speaker Change: yes so so just as you said the portion of the unbilled deferred we know that when that's going to be billed and and as soon as we invoice we know the pattern that that's going to come in to recorded revenue

Nehal Sushil Chokshi: Okay, great. And what are your thoughts on pre-cash flow for fiscal fourth quarter, especially given what was? I think that

Nehal Sushil Chokshi: especially given what was, I think, a pretty solid free cash flow number for fiscal 3Q.

Speaker Change: Okay, great. And what are your thoughts on the pre-cash flow for fiscal fourth quarter, especially given what was, I think, a pretty solid pre-cash flow number for fiscal 3Q?

Stephen D. Young: Well, we don't actually have guidance for cash flow in the fourth quarter. We do expect to end the year with a very good cash flow number, a good percentage of adjusted EBITDA. We just haven't given guidance on exactly what that is, but we expect to have a good free cash flow.

Speaker Change: Well, we don't actually have a...

Speaker Change: Guidance for the cash flow in the fourth quarter, but we do expect to end up the year with a very good cash flow number, a good percentage of adjusted EBITDA. We just haven't given guidance on exactly what that is, but we expect to have a good free cash flow year.

Nehal Sushil Chokshi: So I'm here today. Um, you're trying to get above 100% a bit of conversion of free cash flow.

Speaker Change: So I'm here to date.

Speaker Change: You're trying to get above 100% EBITDA conversion of free cash flow. That should not continue into fiscal 4Q basically.

Stephen D. Young: That should not continue into fiscal 4Q, basically.

Stephen D. Young: Yeah, I think that 100% stretch over time is a higher percentage than what we would expect just in normal circumstances. We've normally been looking at, well, as you notice, Nehal, from looking quarter to quarter, that percentage is sometimes down around 40% and sometimes up like 150% of adjusted EBITDA. So it's very volatile as a comparison to adjusted EBITDA, but we look overall for it to be like 70%, 75% of adjusted EBITDA.

Speaker Change: Yeah, I think that that

Speaker Change: a hundred percent

Speaker Change: Stretch over time is a higher percentage than what we would expect just in normal circumstances. We've normally been looking at like, well,

Speaker Change: As you notice, Nehal, from looking quarter to quarter,

Speaker Change: you know.

Speaker Change: sometimes down around 40% and sometimes up.

Speaker Change: like 150% of adjusted EBITDA, so it's very volatile as a comparison to adjusted EBITDA.

Speaker Change: But we look overall for it to be like 70-75% of adjusted EBITDA. With this year being an abnormally high year so far,

Stephen D. Young: With this year being an abnormally high year so far for several reasons, working capital has gone in our favor for the three quarters. And we've also had some fairly good prepayments on contracts. So yeah, the 100% is all real. It's just a number that, overall, we'll probably look year to year be more like 70 to 75% of adjusted EBITDA as a balance of free cash flow. Thank you very much.

Speaker Change: for several reasons. Working capital's gone in our favor for the three quarters, and we've also had some fairly good prepayments on contracts.

Speaker Change: So yeah, we're

Speaker Change: The 100% is, it's all real, it's just a number that, again, will probably, overall, looking year to year, be more like 70 to 75% of adjusted EBITDA as a balance of free cash flow.

Speaker Change: Okay, thank you very much.

Operator: Our next question comes from Dave Storms with Stonegate. You may proceed.

Speaker Change: Thanks Nehal. Thank you.

David Joseph Storms: Good afternoon. Thank you for taking the questions.

Speaker Change: Our next question comes from Dave Storms with Stonegate. He may proceed.

Paul S. Walker: Dave, it's good to hear from you.

Speaker Change: Good afternoon. Thank you for taking the questions.

David Joseph Storms: Great, great to hear from you too. Thanks for taking my questions. I just want to start, there's a lot of talk about lead-in indicators, and I'm hoping we could focus that on the sales cycle and how closing times are trending. Maybe if you could give us a sense of how closing times are trending between renewals and then also any new logos and maybe a sense of what that looks like.

Speaker Change: Dave, good to hear from you.

David Joseph Storms: Great, great to hear from you too. Thanks for taking my questions.

David Joseph Storms: Just want to start, there's a lot of talk about lead-in indicators, and I'm hoping we could focus that in on the sales cycle and how closing times are trending. Maybe if you give us a sense of how closing times are trending between renewals and then also any new logos, and maybe a sense of what that looks like.

Paul S. Walker: Yeah, great, great question. So, you know, I would say that, generally speaking, there are two very different processes, right, what it takes to get a new opportunity through the prospecting funnel into our deal progression cycle and to get that closed. And there's a cycle for that that can take anywhere from, sometimes it's as fast as, a month. And sometimes, you know, that'll be on average, that takes a number of months for somebody to go from first interest to closing that first time contract with us.

Speaker Change: Yeah, great question.

Speaker Change: You know, I would say that, generally speaking,

Speaker Change: There are two very different motions, right? What it takes to get a new opportunity.

Speaker Change: through the prospecting funnel into our deal progression cycle and to get that closed. And there's a cadence for that that can take anywhere from, you know, sometimes it's as fast as...

Paul S. Walker: On the renewal side, fortunately, these are clients who have been using our solutions successfully. We can see that renewal in the pipeline, that renewal in the pipeline the moment they sign the contract. And we know we're expecting that that's going to convert one year later from that contract. And so, what I think the real answer to your question that would be most helpful is that, generally speaking, we're not seeing any more elongation right now in either of those than we've seen in the last few quarters.

Speaker Change: a month. And sometimes, you know, that'll be on average, that takes a number of months, usually for somebody to go from first interest to closing that first time contract with us. On the renewal side, fortunately,

Speaker Change: These are clients who have been using successfully our solutions.

Speaker Change: We can see that renewal in the pipeline. That renewal's in the pipeline the moment they sign the contract, and we know we're expecting that that's going to convert.

Speaker Change: One year later from that contract and so what I think that the real answer to your question that I think would be most helpful is that generally speaking

Speaker Change: We're not seeing any more elongation right now in either of those.

Paul S. Walker: In fact, I would say, if anything, it's maybe getting a little bit better out there, just the environment, certainly not materially worse in any way, and maybe a little bit better for us as we come to the end of the year here. And I think that's probably more of the question you're getting at.

Speaker Change: then we've seen the last few quarters. In fact, I would say if anything, it's maybe getting a little bit better out there, just the environment, certainly not materially worse in any way, maybe a little bit better for us as we come to the end of the year here. And I think that's probably more of the question you're getting at.

David Joseph Storms: So that's very helpful. Thank you. And then just looking at the North American market for enterprise vision, you know, nice growth year over year, any sense of kind of what's driving that outside of, you know, some of the stuff you've laid out at the top, you know, the drivers of growth and value? Is there any feeling of whether that's pent-up demand kind of coming to fruition or anything else that may be a lead in that charge?

Speaker Change: Understood. That's very helpful. Thank you.

Speaker Change: and then just looking at the North American market.

Speaker Change: for the Enterprise Division, you know, nice growth year over year.

Speaker Change: Any sense of kind of what's driving that outside of, you know, some of the stuff you've laid out at the top, you know, the drivers of growth and value. Is there any...

Speaker Change: feeling of if that's pent-up demand kind of come into fruition or anything else that may be a lead in that charge?

Paul S. Walker: Yeah, again, a good question. I'd point to two things. We've talked about these in the last few calls as well. So, and I made a reference to this in my comments earlier.

Speaker Change: Yeah, again, good question. I'd point to two things. We've talked about these the last few calls as well. So, and I made a reference to this in my in my comments earlier. One, in the third quarter we had we had

Paul S. Walker: One, in the third quarter, we had quite strong retention. And so one of the indicators of the durability of the business, the subscription business, is the retention both of logos, of the actual clients themselves, but also of subscription revenue. And the third quarter was very strong. It was among our highest water quarterly earnings for a third quarter going back over quite a number of years. And so we were encouraged by that.

Speaker Change: quite, quite strong retention.

Speaker Change: And so one of the indicators of the durability of the business, the subscription business, is the retention of both of logos of the actual clients themselves, but also the subscription revenue. And the third quarter was very strong. It was among our, you know, high water quarters for a third quarter.

Paul S. Walker: That's a pattern we've seen strengthening. It was strong in Q3, it was also strong in Q2, and it was strong in Q1. So coming out of last year's Q2, Q3 time period where those retention percentages weren't quite as strong as we'd historically been accustomed to, it's been strengthening quarter by quarter up to this most recent third quarter, where it was the strongest it had been in quite some time. So that's one kind of leading indicator that we saw.

Speaker Change: going back over quite a number of years.

Speaker Change: And so, we were encouraged by that. That's a pattern we've seen strengthening. It was strong in Q3. It was also...

Speaker Change: Strong in Q2, strong in Q1, so coming out of last year Q2, Q3 time period where those retention percentages weren't quite as strong as we'd historically been accustomed to, it's been a

Speaker Change: strengthening quarter by quarter up to this most recent third quarter where it was the strongest had been in quite some time. So that was that's one kind of leading indicator that we saw. The other would be our services. So we talked last quarter quite a bit about the services attach rate in the booking of services.

Paul S. Walker: The other would be our services. So we talked last quarter quite a bit about the services attach rate in the booking of services. We mentioned that we expected those services, both the delivered services and the booking of new services that will be delivered in the future, to both strengthen, and they did meaningfully in the third quarter. And, in fact, they are continuing to strengthen through the month of June. So those two things combined contributed to improving results and accelerating growth in the third quarter.

David Joseph Storms: That's very helpful. Thank you.

Speaker Change: We mentioned that we expected those services, both the

Speaker Change: the delivered services and the booking of new services that will be delivered in the future to both strengthen, and they did meaningfully in the third quarter. And in fact, they are continuing to strengthen in through the month of June . So those two things combined contributed to improving results and accelerating growth in the third quarter.

David Joseph Storms: And then just one more, if I could, think about the international markets. I know, Steve, you mentioned that any weakness there was entirely due to, you know, the Chinese market. I know the Chinese market has kind of given you fits and starts over the last several quarters. Any outlook there on, maybe, fingers in the wind, what we should expect going forward?

Speaker Change: That's very helpful. Thank you. And then just one more, if I could, thinking about the international markets. I know, Steve, you mentioned that any weakness there was entirely due to, you know, the Chinese market.

Speaker Change: I know...

Speaker Change: The Chinese market is kind of giving it fits and starts over the last several quarters. Any outlook there on maybe a finger in the wind what we should expect going forward?

Paul S. Walker: As far as what's going forward, we're hoping for a little bit better growth in China, and I think our team's doing great work, and we just, there are some headwinds we face in China. In fact, Jen, do you want to just give a quick comment on China? I know that's something you spend a lot of time on.

Speaker Change: As far as what's, you know, going forward, we're hoping for a little bit better growth there in China, and I think our team's doing great work, and we're just, there's some headwinds we face in China. In fact, Jen, do you want to just give a quick comment on China? I know that's something you spend a lot of time on.

Jennifer C. Colosimo: Yes, of course. Hi Dave.

Jennifer C. Colosimo: We are hoping, frankly, as a training and education organization in that space, there will just be geopolitical challenges for our Chinese citizen teams. They are all Chinese citizens. They're working really hard and doing well. But in our particular space, who they are seeing, or, frankly, us even being an American company, is currently a challenge. And then, of course, China has its own economic challenges taking place. So I wouldn't venture a guess, Dave, as to whether or not that improves.

Jen: Yes, of course. Hi, Dave.

Jen: We are hoping, frankly, as a training and education organization in that space, there are just geopolitical challenges for our Chinese citizen teams.

Jen: They are all Chinese citizens. They're working really hard and doing well, but in our particular space

Jen: who they are seeing, or frankly us even being an American company, is currently a challenge. And then, of course, China has their own economic challenges taking place. So I wouldn't venture a guess, Dave, as to whether or not that improves.

Operator: I understood that's a great color.

Jennifer C. Colosimo: Understandable. That's great, Collar. I appreciate you taking my questions and wish you all the best of luck in the next quarter.

David Storms: I appreciate you taking my questions, and we'll show all the best to look in this photo.

David Joseph Storms: Understood. That's great, Collar. I appreciate you taking my questions and wish you all the best. Good luck in the next quarter.

David Storms: Thanks, Dave. Thank you.

Operator: Our next question comes from Jeff Martin with Roth Capital Partners. Please proceed.

Operator: Part next question comes from Jeff Martin with Roth Capital Partners; you may proceed.

David Joseph Storms: Thanks, Dave.

Speaker Change: Thank you. Our next question comes from Jeff Martin with Roth Capital Partners. You may proceed.

Jeffrey Michael Martin: Hi Jeff. Good afternoon, guys. How are you?

Jeffrey Martin: Hi, Jeff. Let's see that afternoon, guys. How are you? Great.

Paul S. Walker: Great. Um, you know, I was curious if you could give us an update on new content and content refresh this year. I know you've had a lot of activity going on. If you're seeing some revenue uplift associated with that. Yeah, great.

Jeffrey Michael Martin: Good afternoon guys, how are you?

Alexander Paris: You know, I was curious if you could give us an update on new content and content refresh this year. I know you had a lot of activity going on if you're seeing some revenue uplift associated with that. Yeah, great. So this is this is a big year for us. We earlier this year launched the we've with that the new companion offering around working at the speed of trust, which is the our step away from just addressing trust for leaders, but also extending that content down to individual contributors, associates, and companies. That's that's going well. We're pleased with what we're seeing there, particularly the broader adoption of trust now that we have this working at the speed of trust companion offering.

Jeffrey Michael Martin: Great.

Jeffrey Michael Martin: I was curious if you could give us an update on new content and content refresh this year. I know you had a lot of activity going on. I'm seeing some revenue uplift associated with that.

Paul S. Walker: So this is a big year for us. We launched two substantial offerings earlier this year. The Speed of Trust, and with that, the new companion offering around working at the speed of trust, which is our step away from just addressing trust for leaders but also extending that content down to individual contributor associates and companies. That's going well.

Speaker Change: Yeah, great.

Speaker Change: So this is this is big year for us. We, earlier this year, launched the, we've launched two substantial offerings earlier this year. The Speed of Trust.

Speaker Change: refresh.

Speaker Change: And with that, the new companion offering around working at the speed of trust, which is our step away from just addressing trust for leaders, but also extending that content.

Paul S. Walker: We're pleased with what we're seeing there, particularly the broader adoption of trust now that we have this working at the speed of trust companion offering. We launched a few months ago, Navigating Difficult Conversations, a module on just what it sounds like, how to navigate and have difficult conversations.

Speaker Change: down to individual contributor associates and companies.

Speaker Change: That's going well, we're pleased with what we're seeing there, particularly the broader adoption of trust now that we have this working at the speed of trust companion offering.

Alexander Paris: We launched a few months ago, navigating difficult conversations. It's a module on just what it sounds like. How to navigate and have difficult conversations. That's also gaining traction. We're pleased with what we're seeing now. That's the first in a category for us. The first of a few things we intend to do to strengthen and round out a more full some communication category of offerings. That's at the top of the next top of the list of things our clients would like to see from us. And then, of course, we're right in the middle right now, getting ready to launch this fall.

Speaker Change: We launched a few months ago, Navigating Difficult Conversations. It's a module on just what it sounds like, how to navigate and have difficult conversations.

Paul S. Walker: That's also gaining traction, and we're pleased with what we're seeing there. That's a first in a category for us, the first of a few things we intend to do to strengthen and round out a more fulsome communication category of offerings. That's at the next top of the list of things our clients would like to see from us. And then, of course, we're right in the middle right now of getting ready to launch the 7 Habits this fall.

Speaker Change: That's also gaining traction. We're pleased with what we're seeing now. That's a first in a category for us.

Speaker Change: The first of a few things we intend to do to strengthen and round out a more fulsome communication category of offerings. That's at the next top of the list of things our clients would like to see from us.

Alexander Paris: The seven habits. This will be the 5.0 edition of The Seven Habits. That's a it's been, gosh, nine issues or so. Since we we refreshing updated seven habits last time that always drives a big cycle for us, and we're very excited about that coming this fall. And then in addition to that there's been a lot on the technology side that Impact platform continues to get more and more powerful and more and more valuable to our clients, including AI capability that's now quite infused in that and it's AI coaching capability as well that's built into the platform to help support learners as they're participating in impact journeys and also post impact journey as a performance enhancing support coach, if you will.

Paul S. Walker: This will be the 5.0 edition of the 7 Habits. It's been, gosh, nine-ish years or so since we refreshed and updated 7 Habits the last time. That always drives a big cycle for us, and we're very excited about that coming this fall. And then, in addition to that, there's been a lot on the technology side. The impact platform continues to get more and more powerful and more and more valuable to our clients, including AI capability that's now quite infused into that, and it's AI coaching capability as well that's built into the platform to help support learners as they're participating in impact journeys and also post-impact journey as a performance-enhancing support coach, if you will.

Speaker Change: And then, of course, we're right in the middle right now of getting ready to launch this fall.

Speaker Change: The 7 Habits, this will be the 5.0.

Speaker Change: addition of the seven habits that's a it's been gosh nine ish years or so since we since we refresh and updated seven habits last time that always drives a big cycle for us and we're we're very excited about that coming this fall

Speaker Change: And then in addition to that, there's been a lot on the technology side, the impact platform continues.

Speaker Change: to get more and more powerful and more and more valuable to our clients.

Speaker Change: including AI capability that's now.

Speaker Change: quite infused into that. And it's AI coaching capability as well that's built into the platform to help support learners as they're participating in impact journeys and also post-impact journey as a performance-enhancing support coach, if you will.

Operator: It all is it's year and again.

Paul S. Walker: Professor Paul Young, Paul Walker, Nehal Chokshi, Alexander Paris, Samir Patel, Derek Hatch, Franklin Covey Co

Speaker Change: It all fits here and

Jeffrey Michael Martin: Jeff, I think I lost you there for a minute. Will you start that question over? Yes.

Jeffrey Michael Martin: Jeff, I think I lost you there for a minute. Will you start that question over? Yeah, sorry it's a little windy where I am. Was just curious if you're seeing any uplist in the backup of fiscal 24 and results of those launches or read launches and have to expect that to have more prominent impact next year. Yeah, so the short answer to the first part is, yeah, I think that's part of what's helping drive an increase in services and certainly what's helping drive an increase in the overall net revenue retention as clients are expanding to take advantage of these solutions. And then, to your second part, your question.

Jeffrey Michael Martin: Yeah, sorry, it's a little windy where I am. I was just curious if you're seeing any uplifts in the back half of fiscal 24 as a result of those, you know, launches or relaunches and a few. I expect that to have a more prominent impact next year.

Speaker Change: Jeff, I think I lost you there for a minute. Will you start that question over? Yeah, sorry, it's a little windy where I am. I was just curious if you're seeing any uplifts in the back half of fiscal 24 as a result of those.

Speaker Change: You know launches or relaunches and if you expect that to have more prominent impact next year

Paul S. Walker: So the short answer to the first part is yes, I think that's part of what's helping drive an increase in services and certainly what's helping drive an increase in overall net revenue retention as clients are expanding to take advantage of these solutions. And then to the second part of your question.

Speaker Change: Yeah.

Speaker Change: So the short answer to the first part is yes. I think that's part of what's helping drive an increase in services and certainly what's helping drive an increase in the overall net revenue retention as clients are expanding to take advantage of these solutions. And then to your second part of your question,

Paul S. Walker: Yeah, I think the real, even more growth will happen next fiscal year. When we launch a new product, you can imagine it's another product inside this already powerful All Access Pass subscription offering. Many clients are in the middle of an impact journey, and the new product needs to work its way either into that impact journey, or usually, what will happen is it works its way into the next impact journey that their participants are going on with us.

Alexander Paris: Yeah, I think the real even more growth is, it will happen next fiscal year and we launch a new product. You can imagine, it's another product inside this already powerful Alex has passed the description offering. Many clients are in the middle of an impact journey and the new product needs to work its way either into that impact journey or usually will happen is it works its way into the next impact journey that their participants are going to go on with us. So there's typically a bit of a lag, it can, you know, take six to really up to 12 months before we start to see the full impact of a new product launch as clients become aware of the new solution. Our client partners have a chance on our implementation strategy, just have a chance to go in and then plan and plot out what the usage will look like for that then to really, really start to show up in kind of the lagging results around revenue and retention, things like that. So early indicators positive and I think the real action for a couple of these solutions we've launched this year will be felt in fiscal 25. Yep, yep, okay, and then you refer, you refer pretty consistently throughout the year about the challenging economic environment, just choices. You're noticing any sentiment shifts among clients and your conversations on either a new logo basis or renewal basis in terms of their propensity to either spend more on these programs or whether they're still kind of in cautious mode. So I would say that the sentiment, if anything, is neutral to a little, maybe a little bit more positive, it's not, it's not worse sentiment. It's how I would characterize that, you know, I think people have their budgets now where we understand what they are, they understand what they are and our client partners and sell super doing a great job out there working with clients and hopeful that that continues and if anything that the sentiment, you know, maybe even increases a little bit more, but who knows, but right now I'd say, neutral to maybe even a little bit better. Okay, and then you may, I apologize if this is a done the question, but since for client partners in investment in these sales, you know, gross from client partners in fiscal 25 and beyond. Yeah, great, great question.

Speaker Change: Yeah, I think the real...

Speaker Change: even more growth will happen next fiscal year when we launch a new product.

Speaker Change: Another product inside this already powerful All Access Pass subscription offering. Many clients are in the middle of an impact journey.

Speaker Change: And the new product needs to work its way either into that impact journey or

Speaker Change: Usually what will happen is it works its way into the next impact journey that their participants are going to go on with us. And so, there's typically a bit of a lag.

Paul S. Walker: And so there's typically a bit of a lag. It can take six to, really, up to 12 months before we start to see the full impact of a new product launch. As clients become aware of the new solution, our client partners have a chance, and our implementation strategists have a chance to go in and then plan and plot out what the usage will look like for that then to really start to show up in kind of the lagging results around revenue and retention, things like that. So the early indication is positive, and I think the real action for a couple of these solutions we've launched this year will be felt in fiscal 25.

Speaker Change: It can take six to really up to 12 months before we start to see the full impact of a new product launch.

Speaker Change: Clients become aware of the new solution, our client partners have a chance, and our implementation strategists have a chance to go in and then plan and plot out what the usage will look like.

Speaker Change: for that then to really really start to show up in kind of the lagging results around revenue and retention things like that. So early indicators positive and I think the real action for a couple of these solutions we've launched this year will be felt in fiscal 25.

Jeffrey Michael Martin: Yep, yep. Okay. And then you referred pretty consistently throughout the year about the challenging economic environment. Just curious. Are you noticing any sentiment shift among clients in your conversations on either a new logo basis or renewal basis in terms of their propensity to either, you know, spend more on these programs, or whether they're still kind of in cautious?

Speaker Change: Yep. Yep. Okay. And then you refer, you referred pretty consistently throughout the year about the challenging economic environment. Just curious if

Speaker Change: You're noticing any, you know, sentiment shift among clients in your conversations on either, you know, a new logo basis or renewal basis in terms of their propensity to either, you know, spend more on these programs or whether they're still kind of in cautious mode.

Paul S. Walker: I would say that the sentiment, if anything, is neutral to maybe a little bit more positive. It's not, it's not, we're sensitive. It's how I would characterize that. I think people have their budgets now, where we understand what they are, they understand what they are, and our client partners and sales people are doing a great job out there working with clients. I'm hopeful that that continues, and if anything, the sentiment maybe even increases a little bit more, but who knows. But right now, I'd say it's neutral to maybe even slightly better.

Speaker Change: So I would say that the sentiment, if anything, is neutral to a little, maybe a little bit more positive. It's not, it's not worse sentiment.

Speaker Change: is how I would characterize that.

Speaker Change: People have their budgets now where we understand what they are, they understand what they are, and our client partners and sales people are doing a great job out there working with clients, and hopeful that that continues, and if anything, the sentiment, you know, maybe even increases a little bit more, but who knows. But right now, I'd say it's neutral to maybe even a little bit better.

Jeffrey Michael Martin: Okay, and then you may, I apologize if this is a redundant question, but for client partners and investment in new sales growth from client partners in fiscal 25 and beyond. Yeah, great, great question. So we

Speaker Change: Okay, and then you may, I apologize if this is a redundant question, but

Speaker Change: for client partners and investment in new sales and growth from client partners in fiscal 25 and beyond.

Paul S. Walker: Yeah, great, great question. So we, and Alex picked up on this a little bit too. We actually added back four net new client partners in the quarter. So we've gone down by 24 at the end of last quarter and then and then went back up by four. So I think we're at 269 at the end of Q3. Last quarter, I laid out in quite a bit of detail, three important growth accelerating projects and project impact, which are around content and making sure we continue to feel the best set of solutions to kind of drive our 10 year product roadmap and vision.

Alexander Paris: So we, and Alex, picked up on this a little bit too.

Alexander Paris: We, we actually added back for net new client partners in the quarter, so we've gone down by 24 the end of last quarter and then, and then went back up by four, so I think we're at 269 at the end of 23. Last quarter I laid out in quite a bit of detail, three important growth accelerating projects: project impact, which is around content and making sure we continue to feel the best set of solutions to kind of drive our 10 year product road map and vision. And then projects speed to ramp and project penetrate, which are about getting at this large, very large addressable, but not yet fully addressed by us market that's out there. And so a lot of work to being done with our in our sales org right now on how do we accelerate and enhance our go to market motion and and so more client partner hiring in fiscal 25 certainly, then going backward in fiscal 24, and and we're right now in the middle of modeling that out, and we'll be able to give a good update as we kick off the new year exactly what that looks like. I would just say, you know, as we, we here we are today with a field, a field facing force of around 450 people between our client partners, our implementation strategist and our coaches, it's it's the largest we've ever had. And and we look at the addressable opportunity out there and we, you know, we, we look at companies like Gardner, we, we of course love to be Gardner in a lot of ways work, but we look at comes like that and say, wait a minute, that we're selling to a very similar audiences senior leaders inside companies of all sizes.

Speaker Change: Yeah, great, great question. So we, and Alex picked up on this a little bit too, we actually added back four net new client partners in the quarter. So we've gone down by 24 at the end of last quarter, and then it went back up by four. So I think we're at 269 at the end of Q3.

Paul S. Walker: And then projects, speed to ramp, and project penetrate, which are about getting at this large, very large, addressable, but not yet fully addressed by us market that's out there. And so a lot of work's being done with our sales org right now on how do we accelerate and enhance our go-to-market motion. And, and so more client partner hiring in fiscal 25, certainly, then going backward in fiscal 24.

Speaker Change: Last quarter I laid out in quite a bit of detail three important growth accelerating projects.

Speaker Change: Project IMPACT, which is around

Speaker Change: content and making sure we continue to field the best set of solutions to kind of drive our 10-year product roadmap and vision.

Speaker Change: and then projects.

Speaker Change: Speed to Ramp and Project Penetrate, which are about getting at this very large

Speaker Change: addressable but not yet fully addressed by us market that's out there and so a lot of works being done with our in our sales org right now on how do we accelerate and enhance our go-to-market motion.

Speaker Change: And so, more client-partner hiring in Fiscal 25, certainly, than going backward in Fiscal 24.

Paul S. Walker: And, and we're right now in the middle of modeling that out; we'll be able to give a good update as we kick off the new year exactly what that looks like. I would just say, you know, as a field force of around 450 people between our client partners, our implementation strategists, and our coaches, that's, it's, it's the largest we've ever had. And we look at the addressable opportunity out there.

Speaker Change: And we're right now in the middle of modeling that out. We'll be able to give a good update as we kick off the new year, exactly what that looks like. I would just say, you know, as a...

Speaker Change: Here we are today with a field-facing force of around 450 people between our client partners, our implementation strategists, and our coaches. It's the largest we've ever had.

Paul S. Walker: And we, you know, we look at companies like Gartner, we, of course, love to be Gartner in a lot of ways, but we look at companies like that and say, wait a minute, that we're selling to very, very similar audiences, senior leaders inside companies of all sizes, we have a powerful subscription offering, we add services to that, and the solutions we're selling are really important. And, and, and our client organizations need access to these solutions; partners have 5500 people in their sales organization.

Speaker Change: We look at the addressable opportunity out there and we, you know, we look at companies like Gartner. We, of course, love to be Gartner in a lot of ways. But we look at companies like that and say, wait a minute, we're selling to very similar audiences, senior leaders inside companies of all sizes.

Alexander Paris: We have a powerful subscription offering; we had services to that, and the solutions we are selling are really important, and our client organizations need access to these solutions. Gardner's got 5,500 people in their sales organization, and so there's a, I'm, I'm quite excited about the headroom to grow this, and the work is being done right now to get in and really map that out.

Speaker Change: We have a powerful subscription offering, we add services to that, and the solutions we're selling are really important, and our client organizations need access to these solutions.

Paul S. Walker: And so there's there's a lot of room to grow this and the work that's being done right now to get in and really map that out in an even more aggressive way than we have in the past, and look forward to talking more about that as we get ready to kick off fiscal 25.

Speaker Change: Gartner's got 5,500 people in their sales organization and so there's a there's a I'm quite excited about

Speaker Change: The headroom to grow this and the work that's being done right now to get in and really map that out In an even more aggressive way than we have in the past and look forward to talking You know more about that as we get ready to kick off fiscal 25

Alexander Paris: And, and and even more aggressive way than we have in the past, and and look forward to talking, you know, more about that as we get ready to kick off fiscal 25.

Speaker Change: Very helpful. Thank you.

Paul Walker: I would now like to turn the call back over to Paul Walker for any minor works. Wonderful. Well, thanks, Josh, and thanks everybody for joining today. It was great to be with you.

Paul S. Walker: I would now like to turn the call back over to Paul Walker for any closing remarks.

Speaker Change: Thank you.

Speaker Change: I would now like to turn the call back over to Paul Walker for any closing remarks.

Paul S. Walker: Wonderful. Well, thanks, Josh. And thanks, everybody, for joining us today. It was great to be with you. We appreciate all that you do to follow the company and understand the company and for your great questions, and hope you have a wonderful rest of your day and the rest of your week.

Paul Walker: We appreciate all that you do to follow the company and understand the company and for your great questions, and hope you have a wonderful rest of your day and rest of your week. Thank you.

Paul S. Walker: Wonderful, well thanks Josh and thanks everybody for joining today. It was great to be with you. We appreciate all that you do to follow the company and understand the company and for your great questions and hope you have a wonderful rest of your day and rest of your week.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Operator: This concludes the conference. Thank you for your participation.

Operator: You may now disconnect.

Speaker Change: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.