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Feb 29, 2020
FranklinCovey Q2 2020 Earnings Report
Reported strong results with revenue growth and improved profitability.
Key Takeaways
Franklin Covey reported a strong second quarter of fiscal 2020, with a 7% increase in net sales to $53.7 million and a 321% increase in Adjusted EBITDA to $4.1 million. The company saw growth in both the Enterprise and Education Divisions, driven by increased sales of subscription services and All Access Pass offerings. However, the company withdrew its full-year guidance due to the uncertainty and fluidity of the ongoing business and educational institution disruptions resulting from the COVID-19 pandemic.
Net sales increased 7% to $53.7 million, with growth in both the Enterprise and Education Divisions.
All Access Pass and Pass-Related sales increased 28% over the prior year.
Gross profit increased 9% to $38.7 million compared to $35.4 million in fiscal 2019.
Adjusted EBITDA improved 321% to $4.1 million compared to $1.0 million in the second quarter of fiscal 2019.
Revenue by Segment
Forward Guidance
Due to the uncertainty and fluidity of the ongoing business and educational institution disruptions resulting from the COVID-19 pandemic, investors should no longer rely on the Company’s previously released guidance and assumptions for fiscal 2020.
Positive Outlook
- Company remains confident that once the global economy begins to return to normalcy, the same factors that have driven its growth trajectory this year-to-date, and in recent years, will help the Company to begin to resume accelerated growth.
- Operationally Strong – with continued broad-based momentum from the second quarter and for fiscal 2020, especially in our subscription business
- Strategically Strong – our subscription model provides clients with the ability to access our best-in-class content and solutions across a wide variety of delivery modalities, including digital, live on-line, and in weekly micro-learning bursts.
- Investments in technology are allowing the company to work with clients who have the need to convert previously-booked onsite services to live-on-line or digital to accommodate employees working remotely
- Financially Strong – the company entered this period with significant cash balances and a strong balance sheet
Challenges Ahead
- Meaningful COVID-19 impact experienced to date
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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