Franklin Covey (FC) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 revenue reached $287.2 million, up 2.4% year-over-year, with Q4 revenue at $84.1 million, an 8% increase.

• Adjusted EBITDA for FY24 was $55.3 million, up 15% from $48.1 million in FY23; Q4 Adjusted EBITDA was $22.9 million, up 39%.

• Net income for FY24 was $23.4 million, up 32% year-over-year; Q4 net income rose 76% to $12.0 million.

• Free cash flow for FY24 was $48.9 million, more than doubling from $22.2 million in FY23; operating cash flow was $60.3 million, up 69%.

• The company completed its transition to a subscription model and is investing for accelerated double-digit growth.

Financial highlights

• Gross profit for FY24 was $221.1 million, with gross margin improving to 77.0%.

• Operating SG&A was $165.8 million, flat year-over-year, with SG&A as a percentage of revenue improving by 125 bps.

• Net income for FY24 was $23.4 million, up from $17.8 million in FY23.

• Deferred subscription revenue at year-end rose 9% to $107.9 million.

• Company repurchased 776,234 shares for $30.7 million during fiscal 2024.

Outlook and guidance

• FY25 revenue is expected to be $295–$305 million, with Adjusted EBITDA of $40–$44 million due to $16 million in growth investments.

• Revenue growth is projected to accelerate to 10% in FY26, 12% in FY27, and 14% in FY28.

• Adjusted EBITDA is expected to rise to $48 million in FY26, $60 million in FY27, and $75 million in FY28.

• Q1 FY25 guidance: revenue just over $70 million, Adjusted EBITDA $7.5–$8.5 million.

• FY25 growth investments are planned in client expansion, sales, marketing, scalability, and technology, totaling up to $18 million.