Franklin Covey (FC) 6 Nov 242024 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q4 Franklin Covey Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Derek Hatch, Corporate Controller. Go ahead, Derek.

Thanks, Mark. for today. thanks and everyone, joining us Hello, afternoon We're you of Education and today have our of the CFO; call fiscal Steve members President division; our talk division; with opportunity to executive Sean this our and about on our ended Jennifer XX, other glad Paul Young, our team. August Walker, CEO; to year XXXX. Participating are of our Enterprise Colosimo, fourth the quarter President Covey,

everyone Act started, that within get would I forward-looking the to remind presentation we statements this As the Private like contains Securities of of meaning Litigation Reform XXXX.

conditions, are we'd policies company's other acceptance to market uncertainties, share, expectations in in and client-facing services size changes including, clients the training products, our influence, one will company's the general productive changes cause to company's meet new date the undertake reflect targeted of in and Commission. Many discussed of of performance Mr. for other management's of or and in our and and filed statements and to circumstances These including ability on based are company's and from statements spending marketing limited upon ability the expectations, in statements the not to in time the on company update differ after that annual current company the or current may Chief risks identified the market except Securities of acceptance economic and company's future of over by the renewal changes overall out to offerings professionals, All away. XX-K of as company's reports events or future our market can the strategies, Leader to, rates and various marketplace, these take Officer. Form required Forward-looking no Exchange any competition it beyond these revise and to management's are materially the offerings, forward-looking Access the actual turn no report and Pass be of assurance law. With but expectations. of Me Executive the and with the which to subscription based we there like management's the subject results the factors most company's the the revenues, and Paul, current forward-looking memberships, today's that periodic hire way, the other Walker, expectations, obligation to presentation, grow of are or conditions sales recent Paul control of

Thank you, to Derek. Welcome, share excited great things to I that today. be everyone. are X time together. you our am It's during with There

we flow in the X% quarter where $XX.X to from grew of grew continued First $XXX.X full revenue results grew in million EBITDA was XX%, the we'd quarter $XX.X the year is the revenue achieved strength adjusted expected. Fourth for the fourth year, EBITDA the adjusted and year, was compared million and for to quarter fourth for million of grew and model X are and subscription a anticipated XXX% 'XX. XX% ago. year, flows the a we cash business years activities the converted operating that we results the achieved free we million versus when These in year. fiscal what Cash reflection $XXX

cash significant flow. in Slide growth As our revenue, EBITDA we've X, shown adjusted achieved on conversion, since and

key completed to our and this about something our to is transition driven growth thing to forward ongoing been ready second single from having some areas. made and major to substantially is time growth. This be I consistent looking about in growth with make you shift to content investments want necessary today, to our investments increased digits to subscription double-digit now, X the leadership, that and will of I've now position growth The solidify having revenue talk we're in talking for the technology by mid-to-high investments

Even expanded existing remain of to expansion $XX,XXX within we've subscription, and of though further only clients, vast for to penetrated already further penetration lots our majority our our within average client our expansion the about since we First, with of conversion clients. XX% from revenue $XX,XXX growth. headroom per

of X. we're making you we which Accordingly, area is the net of following tell the though to second reflected into The on pleased of numbers potential within also of serve. only million in won Slide incremental winning investments growth logos. approximately I'm large scratching increased significantly new we've that surface thousands we're the investment areas, can you Even of $XX the markets see logos,

The first of of increase sales these will for the solely those client to responsible roles be who support and areas partners expansion. bandwidth client-facing is that now we're client adding penetration

allow second having focused scale Her making an of functions, to investments sales Revenue additional we're central future. that marketing resources to we're force into sales closing that's is the is The new who leadership area on rapidly sales establishing now be solely including revenue client is in name providing those and will area and going more logos. And the help a operations third that investment partners significant our function Proctor, operations to us hired Holly Chief and Officer. new expanded even winning

'XX in fundamentally back thereafter. impact show to our to investments these curve then half shift fiscal the and expect growth We of

grow 'XX. approximately in fiscal Slide in to revenue $XX X.X% reported million or shown we As X, expect

You approximately to $XX and new to then the begin We model growth $XX million or that to then approximately growth will end XX% note the lot growth sheet. then on pattern or investments around in accelerating to million and should in growth where up fiscal a a to XX% invoiced the an of $XX 'XX revenue 'XX. We 'XX. growth or of revenue expect XX% impact these balance million be fiscal of we this our fiscal in accelerate year double-digit expect as investment

to to forward, significant strategic million that little also million, in of while investments and a to ready $XX we which QX of year to Steve the get As accelerating bit also about some Having our turn decrease jump X, content the into to a grow our in of to expect at our $XX to same next the grow 'XX and in more fiscal investments in range time technology-enabled 'XX 'XX. This shown fiscal approximately time detail enhanced position, subscription approximately we're to $XX approximately to continuing time is model to on the our flow, million then Slide fiscal impact results converted then now and for guidance. growth. I'd will made exciting EBITDA further having adjusted technology, fiscal successfully and $XX have EBITDA to cash now like adjusted over in an million $XX make and 'XX talk and these fiscal which in million to us.

Thank very about results you ended. excited quarter very Paul. I'm our for and the just we for the that much, year

million, the see X, compared stronger FY compared at came at revenue that XX% year last $XXX.X of year. came million, X% for $XX.X up on Slide to million QX, $XX.X expected. can QX, than expected. In to we With the that, $XXX growth reflecting million was $XX.X in in million, EBITDA again, in you As and 'XX revenue the adjusted had

currency at the from year up For million. activities QX in cash of 'XX. Cash last $XX.X or increase from adjusted was which $XX.X XX% XXX% million $XX.X $XX.X grew $XX.X operating million. flow $XX.X million to reflecting growth or year, in Free of was flows FY during itself adjusted million, or in million $XX.X EBITDA XX% and compared $XX.X to million the achieved EBITDA was was in full constant $X.X million, came an FY the 'XX, million which

and deferred In revenue, addition, in the the is fourth $XXX.X in importantly, our foundation established our that increase has double-digit for million North in increased rate year's [Indiscernible] strong October. first balance the which to continued quarter the X% in services the quarter by coming the really and be and as America will encouraged booking both our further growth of quarters. We're by in recognized this being momentum increase in in business, revenue September

in services X% was Enterprise or these whereas to was and will performance X% North start North in provide key X% division and fourth revenue $XXX.X XX% the now business. I'll the increased combination Education and for America and was division's America prior our our in in $XX.X the subscription quarters. I'd growth our the North Education generating recognized on $XXX.X division Enterprise pace representing million, the quarter. Slide operations, FY the coming which million Enterprise over our revenue North revenue year which like FY or for specifically grew Enterprise the both our $XX.X business the America, subscription of for fourth international division of reflecting and shows in revenue. the of the the X year grew for very revenues year direct XX% FY Enterprise company's In division the Education North million quarter the detail $XX.X 'XX prior generated X% the 'XX, offices in Importantly, million, results. and fourth business in of Subscription factors revenue $XX.X represents a areas million growth. The America year-over-year 'XX was flat 'XX, business revenue, in XX% for grew for $XX.X with increases growth quarter, division increases year X% our million in reflecting $X.X in results X translate in licensee the or services FY million our to Revenue X% million quarter, strong our with overall the for to for in million. fourth quarter, Enterprise of due to underlying and Enterprise the X% to over more representing America, The some X% briefly was revenue. XX% company's internationally, company, $XXX.X in booking growth.

revenue balance signing deferred deferred million, of certain is billed unbilled and in our timing which upon for revenue. The which represented invoiced is with multiyear of North the balance America's $XX.X particularly And consistent contracted million, from that deferred balance down $XX.X All impacted down our percentage of of our percentage XX%. Our XX% Access multiyear based X%. contracts revenue XX% contracts was of Pass increased periods to at year the remained revenue XX% by last and unbilled is

on revenues year million from a of was direct which conditions division $X.X our account million decrease China's due $XX.X operations, a as shown the XX% total business As challenging Enterprise for X, million, in revenue China. of Slide international revenue $X.X decreasing to result approximately of our for

decrease $XXX,XXX our X, As last also million due or X% challenges the was Slide from was primarily decrease This million, $XX.X revenue year. licensee in shown $XX.X economic on countries. international also, certain a of to

million. growth amounts Slide generated revenue and for XX% XX% to in FY for services growth invoiced over quarter. Education a at during future was growth subscription services growth balance $XX.X years. grew $X.X million strong in year. and Revenues shown to to $XXX,XXX $XX.X subscription FY represents on top subscription million, in in $XX.X grew up Education's XX% growth in in X% revenue XX, flat year. again, in fourth XX% FY 'XX. Education million the the XX% in third The $XX.X X% business the continued were $XX million QX of or being 'XX year, increased decreased for the to our which XX% quarter the subscription the generated of top establishing prior in and amounts for year, $XX.X revenue million growth revenue million 'XX, quarter flat as Education Education on deferred $XX.X on the and after foundation 'XX. grew X% to prior and million the or Finally, FY of the X% subscription FY the to 'XX invoiced

flows FY as for operating on flows sheet, bit balance little $XX.X from the XX, of million cash, 'XX $XX.X a cash Slide our million. shown increased or XX% activities Now cash and to

earnings flow, Our the I to in million FY purchase reflecting 'XX, as working we positive $XX.X 'XX XXX% capital. In XXX,XXX increased $XX.X in changes million, or in to $XX.X and free cash shares. FY invested particularly million mentioned, increase

'XX, in Over the have revolving total of million cash including facility. the available purchased FY $XX.X over X,XXX,XXX million end at $XX.X still $XX in the last X years, under over $XXX million. cost million We shares liquidity a at we credit have and of

the shareholders. remains continue to a So on company our to to execute key in objectives return value position strong and

So, turning now guidance after FY 'XX. financial to for that information,

as million. million, growth growth in the significant the $XX We as a expect year, to Reflecting that back range sheet on investments will adjusted of deferred the $XXX revenue that growth go to million of the for of in portion sales the in 'XX, accelerates $XX range half revenue. on balance of expect we $XXX FY million EBITDA reflecting our

to impact revenue in be 'XX, For million of we've over first we $X.X just million QX the $X.X $XX investments be reflecting that adjusted incremental to the of the FY and growth to million, quarter EBITDA about. $XX expect million talked approximately

results, our is, it challenging expectations business have want and of our we while investors the our our make Now, and benchmark forward. need forecast analysts and you long-term information to course, to understand sure to that progress going model

are 'XX we providing EBITDA for and FY and view them 'XX, FY FY as such, As we adjusted targets revenue today 'XX.

Paul is revenue our will to to FY as approximately or we $XX are $XXX target further As targets $XX million out will FY $XXX And 'XX, increase growth approximately model XX% that or revenue FY earlier, almost or million million 'XX. increase million. our of and said in in million XX% XX% 'XX $XXX million to revenue $XX to

in 'XX, EBITDA are XX% to again, $XX million $XX as or million then to will that the FY 'XX. in and to future, of FY million million FY we out $XX target growth or $XX targets we adjusted EBITDA 'XX. in adjusted of EBITDA Our million adjusted model again EBITDA And XX% increase XX% increased adjusted $XX

will next chapter FY So the this excited have we're growth very and 'XX the taking great be steps for position of to company returns. in taken we and about

to So, I'll back Paul. now over turn time

Great. Thank you, Steve.

our the making, we nature significantly context that logos. I'd first within begin and your answer is we're color clients the I'd here revenue provide for current open to jump be expand to just the queue thought investments maybe questions, Thought to then little the even and one we'll that might helpful. the the bit in about As as will your our and those ask open prepare particularly investments questions. And question, and to well key as question really allow of I winning us more are here of growth a that additional line new just

existing we've confirmed months, X winning North XX greater also penetration number America increasing in significantly logos. a Over Enterprise these our accounts, piloting significantly have past And our focused the within things. on business, efforts efforts been important both new of while

First, of partners some within both we've large number expanding But increase already accounts to existing we resources, these new asking as good also hunting who are while expansion already have at it existing relates increasing expand client clients, very for existing clients, a significantly if rapidly. to put been accounts. accounts learned strategists them provide that additional can senior on accounts implementation existing We've and we and and of their focus penetration full consultant quite with significant partners' expanding client them

grown many we encouraging noted, per Expand. our be has formalized as than larger. grown piloted have pilot client more While, average months much -- expansion our revenue ago, been results Project that on of $XX,XXX, efforts accounts account have so The annual this to to this much, X

focused new increase who can this the we number as winning accounts. beyond. is generation expand of group potential of new effort accounts closing than between work per new Second, then $XX,XXX hunting, that assigned forth to focus and back and logos a accelerating, to these provide as a accounts lead new to can it accounts, Land. separate new and client and switch entire significantly And relates eventually having rather formalized the can win. These hunting we with of new this whose approach hunting seen having learned or accounts of client client logos, the Having on to then and partners we can partners we've by partners partners be organized ago, months increased expand client if winning these support, penetrating course, of existing client year group then these X then partner Project

Expand Project Land. and So, Project

on value. And of sales help hunter bringing already direct expand a a we within This months, in It's has much still hunters. support expanders have X while in putting drive client now. revenue, client-facing help of to added we've been us Expand X number to expanded was and to cash transformation model. a scale cash question. both if place become driven journey open business adjusted me accelerated the and step to significantly line even like sales questions. subscription X client and organized subscription we and what line of a our we're the flow. technology sales quarter, for right is ask convert Land into tremendous in our and force we've is effectively Expand to rapidly in our into we'd number adjusted to existing market growing the force the at Over fourth team jump back added our capability growth strong flow Land time, in a dedicated for a clients the customer leadership, piece more to partners. The lifetime sales answer and partners the operator, needed way the scale more and a with X services organization. EBITDA growth transition If and and team dedicated Piece puzzle our a impact of ask significant your he'd and into new to piece And of Mark, and past and now revenue EBITDA puzzle of putting for place an growth. Thanks us has content We've operations efforts, letting piece our and next that, force to resources goes dedicated sales drive first and was

Instructions] Capital Martin with question from our Partners. ROTH first Jeff [Operator And will come

of prepared majority missed remarks. I apologize, your I the

just But, the on a the of if redundant question, this is timing So me. forgive hiring. curious please was

point fiscal for be 'XX. You sales or press of teams new strategy and And the you've hires then executive a the new these release, couple got announced in what fully at plan will this in in process place? in

today, you talk to Great to Jeff. Great.

we hires all, actually. part Holly Revenue we Her today of and one first that announced actually Procter. the our So, first new Chief Holly, She of June. is hired name in is Officer, of

through fourth your referred structure stood on up. of quarter months of to question, just she's into ago, then we've of QX. And new -- now I as So the it we've a board just and second to been -- this organizational first couple the kind minute

We off either now client all with are the logos. or partners sound new client for hired substantially We've as our so -- of expanders surround and partners, hunting that And we're conviction running support those and place. off it after got leadership now roles, running. et we direction this once roles, we we're the to right was sales go, got in are cetera, -- and the that

Great. terms characterize in current passes, And then other into how areas you environment would expanding taking the maybe decision-making, of clients organization? of the it

Great. far as now environment, macro I steady the last of as for kind macro I would say Difficulty]. the has starting would say the environment -- pretty that with been [Technical

Sorry, Maybe on It's Business find we're as and week, COVID, been on, with And the that environment. environment, days execution, was I that topics rate uncertainty couple the bit how that was decrease last been decisions, continue that the interest will we've I fact, pretty steady Jeff, ago then other playing. there think are number with the it few selling more what translating some -- running say more CEOs, will it we're the high-performance meet additional focused last as that the continue do we've months now that of every of that minds. I starting for on and the of are culture, a we're macro as met making clients where going just most change-ready to pretty adaptable, But election. slight into steady solutions building. the of that I'm so. suspect happened, talking demands Forum Those for that CEOs, not now that steady I'd was pretty out we into out and there. And X I speech sales leadership, organizations attended a the that's be far coming uncertainty World exactly consistent, but had to topics that's decrease what up pretty a New create it's people's as I the back been York the in success was it's months going are -- or what XX felt -- of resilient, be to to cultures, to these and the find cultures to in weeks in performance, day. are given are to of

continue that to to will well seek that we clients we that bode clients new and land expand us expect so, for as And have. those

And our next [ ] Steven with from Northland question come will Capital Markets.

could decline you the on I the invoice quarter. subscription was in if the give for narrative wondering us X%

The yes. bet. overall X% You is -- in

So, question. great Steve,

So X% slightly. in invoice quarter. It growth growth, as had was -- company-wide? Is the subscription quarter, down we far the the a invoice that good as was down,

Company-wide.

Yes.

quarter in So, up XX% QX, we in XX% a that Education were in Reported ago. had flattish mentioned QX. a was They little minute QX. up flattish

good other our than, a but side, on to in And a so, and year, non-subscription some extremely the in quarter forward big into a good Nothing it growth We as lot I of were Steve? helpful, and areas, came a up X% quarter QX, for of Ed quarter from the Is was services. fourth lot report pulled we that the rebound theirs mentioned. not services noteworthy yes, some a and the quarter. growth invoice had in subscription growth

Helpful. that's very Yes,

from come will question next our Samir Patel. And

of Yes, high-level I'll making interesting it's with investments which a accelerate growth. to that just observation, kind you're these I start is, think

kind the right Xx do. is companies subscription you where, revenues consistent I If talking EBITDA being the the in trading. I say stock mean, average, about put of thing getting absolutely years about on look and types your you this and the business XX turning traditional think kind teens rule to high-growth growth of you and margin, in into your think is with out valued of of obviously, a you're those together at SaaS that at,

that have questions follows. about are that. The excited I as So, X

that of heads, and big ROIC the then why on as growth think this of is, big obviously, maybe year, the kind you of contrast now compare absence of EBITDA bullet so second growing sort growth is, your every approach? kind ended you your why shareholders sales would could investments, bullet these of And first why sort been force rate these? get kind kind do of you and idea the a adding your strategy opposed as articulated of long-term think we where an to and of can up The traditional Like expect without your where And these. of you revenue of the you investment, would are in do rate they have right? What right? kind with your

you you're about kind in So, how choosing think of the force. to return on sales investment make that the

Great. wonderful some questions. Those were

answer a me And of so I'll and Steve as them I'll some, help have with couple well.

for As the a just we've to far why remarks business now? of years X the We business. we years foreseen in as I changed turned a prepared ago minute the clock the this of company, if mentioned actually model that rewind -- subscription couple ago, now. you day a fundamentally maybe it

double to as to into point that were we sales would going portion wasn't where and the major it a and need good occurring, time to of way salesperson as customers rate content piece technology content our right thing watched subscription occurring the our recognized their into we to for market. In we the is sub-optimized on our And the great in this subscription but business expanding did. We absolute it a there scale. the was of that to subscription, the we of now, and existing relatively growing business. for lot the that. And investments, Xx we business, revenue consequence size to a to their same the results that's shareholders. now there had and subscription put inception people a old while do increases we the that business create needed and was recurring kind as in up place a smaller, and because sure after ask could converted content other to -- model. went business then, land for was at expand model. down had a were the of size portion on a end -- the and force we a to asking probably important thing a the while -- technology the penetrate. which company time time, a and try was to the to the both was also side to having it in make new And at transform we for done that it the days, turned salesperson. We we conversion to next side the a to of also increase do we're for both then And to of because that of company, early the to invested to enough we created and think, spend of in those to challenge were the And put to after at reach we to invest technology that You and help look the that both be landing to we the shortly subscription, that, started business that the while Kind out well annually with

we've subscription. to we through And We're kind way the there. were We and now wait conversion to all until of transition this foreseen wanted so, coming. the

the time, internal pilots take existing we the studying of actually So to XX focused then where these the months happen amount that's small this split around of of revenue that per instead X today. and good refining in growth approach. And our the to that put to fire place resources speaks or but what relationships we after of expanders bullets. the the bit I mentioned those fully ago, get and growth just need really far the change We've both watching average a teams different the on tests and into of course, the really, little customer expand we need give trajectory make started that this be and and future. an those series bullet? them bullet is to poke and as hunters could of and the and a to $XX,XXX big have thing choose of And -- they that everything started a to We think really to been firing and organization here is the company. run small with make we hunting timing -- feel in to the landers, to quite organization do now? As parts, why series to organizations, we curve grow could why Xx

team go. faces been who So and on this even We're before that, to the great have, here we feel journey about quickly some on journey to go. we're some incumbents organization. been have we very excited ready into We've we that than have ready assembled a scaled have -- high conviction. we're of existing We're the and them brought and and more new

of that around terms grown the has to last growth might to years conversion X back, Steve, the been? subscription, right. what number than I rate the X I X%, say, compares the growth or have would since faster if otherwise been we've just this how we've had looking years but over rate some our rate where In have growth compounded others,

more that's only is alluded and end and attached XX% end think a faster-growing amounts great amounts is fairly we into growing the to and And to and modeled also And move is those are so what up ought as of here. period I to we you then is much company XX% adjusted maybe that out adjusted organization revenue up we that company that what EBITDA we higher not to is valued this course, today. this moving with single cash, in flow cash significantly to digits. But that even a up to, inch think EBITDA here, to hope then -- as than we something but time would would XX% quick and which

Steve, So thoughts any if I would to know you don't add additional that.

No, Paul, same just thinking the thing.

straddled the kind the it's As up we support salespeople with transition. group -- you made that leaders mentioned, if and individual new have like the And X organizations then group group, the organizations. not of groups and full expand end with being total defense our logo the

the transition So a it. if messy middle of it's in big really that's you're

and that kind it do match do movement. the that an we've that, to then, and change is these but and get at didn't be time. just of this be comfortable the though would we're rate faster it done. things of big it the that. And over circumstance a would opportunity, to been This not decided are that there's should Samir, a anticipated growth past, looked we of to fit you Even that the grow way So, with as on part versus we size just we good, noted, get a achieving There would there. in ability

lot a me. to makes That sense of Okay.

if in As a follow-up, can sneak more. one I

to also like perspective selling literally as you things physical where whether of having these were rate kind market increase have, how come done describe clients had physical which journeys, about ago, to the you maybe mean -- higher and going a years the like to can it's to to maybe that. Maybe for easier you're of initiatives make is about, talked learning easier, it's you input trying whether here, last talked get AI that's some calls technological coaching, it you're customized out to get in more was technology the kind achieving growth customers onboarding to Impact But many side it couple growth into historical or printed of like you platform. that right, with things the ago help You these from of right, rate. I and booklets, again, going the also an be using side, more XX call Platform assume materials. that actually I of cases, of make

So...

of remarkable pre the of we didn't Samir, a orientation Yes. have technology It think kind subscription, we business when to was subscription. converted back either. And where conversion much to to really is actually

not happened And years really this last X increase only so the or subscription, is in so what's in but technology capabilities. our it's significant

learning with routinely, to drive be work. collective approach So, NPS. been greater scale the everybody that and language, getting to and transition to action, asynchronous over wrong got change thoughts. there's survey, couple way for other the at in very a in you've behaving behavior. Typically, just in which, the quality now allowing deploy the Impact just to solution, NPS impact have and Impact in type XX% partner successfully without our we're able to to our having that, as to go question switch sacrifice collective an being And of scale, solutions high And do but we trying for self-paced terms clients. our have the industry, good on-demand, Platform if It's buyer very to the has you of with specifically, to kind all them which and clients to organization thinking the Platform. answer the common a inherently, fact, converted we nothing they in ways of your of of kind each did want to we

sitting impact more And leverage trying how learning, that are scale. for by instructor-led, what so, actually by we doing sacrifice yourself, can clients computer to from is achieve the push lot done live the The but us a delivery we allows learning, self-paced so of all we're can that's you achieve most help to the Platform modalities that at -- micro Impact scale. to not your but online, us not don't of the blended content them have they're after, nature

working So that's really well.

We have of significant added amounts AI.

we journeys there used. AI Covey clients like what recommend We've terms and in these in users. deployed and Franklin -- look to of is AI to tailor now being for also ability implementation for the is begin So coach. its AI individual

your coaching, we commitments offer somebody that And coach coaching, our wildly now team-based have teach software have AI in kept. lagging millions millions there results a the leading clients, master lagging companion professional you're on commitments -- important in do working coaching has goals but to have commitments in And executive process so as our we not. daily content, now that if our but daily that's we an have also also that have you'd we organizations, on would know right a of challenges that situations like uncovering know, cool Covey going our project to topic. We're the Franklin execution you're recommend business. particular now where you where, make indicators pilot as what as best -- in an as to basis will know and we of that indicators the or weekly organization is of that those methodology, we actually and and X that trying whether of that can the made ladder up individuals around our X drive they will achieve. We millions impacted we and been system, execution disciplined to part either activities or disciplines teach and on

what make would is now take to this be AI could help week determine highest I so most leveraged that predictive. being And activity would the people or commitment or be used

and just we're technology what's across So happening front. about the that, generally excited

we're content quickly. You'll there was that scale that that we help the on us to a amount set to outlined we've of investments technology, so that just added X though in and think the even note or more little slide, doubled even it annual I spending on investments, Slide when even bit we've this more

And question our come Storms Dave from with will Stonegate. next

more Just want to kind with of start a short-term maybe question. of

to Just outlook thinking QX of this the cadence trying points for maybe for XXXX? you there the guidance be this ramp the as margins program. Steve, J-curve a you watermark low back to about step of being year? maybe about throughout Or we for anticipate in the think pretty margin XXXX. all to a do Should extend significant

Yes.

you, thank So, the step -- Dave.

incremental that included of the relate the quarter. incremental down has investment. totally a the been And but in all to lot first the So does step isn't investment, made,

a that we as in even benefit start the part will in in, 'XX latter now annualized. exactly really the of that year. FY J-curve investments It's isn't a FY are make J-curve, it this correctly, So understand 'XX the if and I kicking

a like -- term. like are time it long position content next isn't to an people it and isn't investment do in make the quarter. These it like we don't in hiring So that one we a be

being towards generated from EBITDA revenue being that extra incremental subscription revenue. extra the the so that's significantly slanted is is That And generated. comes from revenue that

first to it's on income then will sheet months. and balance over going recorded the following So, the XX be

So, earnings. sheet next now get that that made now, up and be for through we into and year the doing as we've then ramp this go now we'll balance then year, the up, ramping the and ramp accelerated the hiring will and that up that will sales really on and that generate we're the making invoices recognized we're

could Anything of be a partner expanders be quickly between My years get difference nature you second a X that maybe and Do ramped. would understand took this client before is the speed? I to fully question know what versus you this maybe hunters partner after client us through was or to of very there just really around, new talk for a transition they how see helpful. up life help be transition? cycle it may the

insightful super Yes, question.

going bend give And why to I'll we're for we're So, bit bend -- we this context significantly curve believe transition. ramp that. of going little down think expect then, we we the to with a

if closing to to the the renewal for the to Access not person, and good those new new for of both So, same somebody gone business interest potential we be managing same to All those successfully only have prospects, Pass customers into you and then logo ongoing creating clients target expand at; responsible only those set with relationship, motion become expansion it's the prospects and launching the identifying from with think to prospects, contracts. the but been to very asking responsibilities not the has and the people existing about but land clients, of

so, And best-in-class up. and that's expert become terms not probably be organization set in of sales a to quite at bit an would how organization today the --

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that quickly, actions. boss vitally is on that's actions set specialized it that and the about to getting people of job. set their actions of job, it more focusing a is take by everybody whole Steve average we thinking organization lead group because important, that relationships just in how on of set and all be is nature, the effectively, we just stack, only set And first new And more narrower thinking client actions, giving these as it thinking more same even and job is new only people everybody them. The but we're how your client reps. in flow, thinking is everything about these so, size expand only on that And convert logo the the convert do your true where that thing do that -- team boss year a of of through becomes is this now about, side, mentioned, increase retain that about

well. long your client we've answer that question And ramp seen partners our ought to as a that's And the of down. so that to testing short in go

here we other fully for any in 'XX. Mark, So, do play to start excited that questions? we're have to out fiscal

Yes.

question, next Barrington Our with Research. from sorry, come Alex will Paris

asked. that got across the questions a will this QX? think, The this -- very million targets. I'll in I'm wondering I is not your Steve, then, after year, rest spread listening the And really QX. half will is have with on one. other investments investment, $XX And on to cleanup like investment year but of start attractive it that how in in seems new said the of based sort kind be of already just of the it or loaded? be all couple, front much QX, lot those I returns a you questions that been long-term balance first just

will the front-end the a in continued started the the will mostly et be throughout quarter fair and the $X be people, hiring will And there year. cetera, in of But the more investment million million first et $XX front-end loaded. or quarter. are it There $XX Yes, million million $X portion total cetera, recorded investments, loaded. of first be

I saying. you're see what

So, personnel everything and else. marketing it's of $XX and million

annualization otherwise the quarter or into We have will incremental of adjusted lower the than expenses it in couple started the of caused But been the had all quarter. EBITDA that's first dollars in million so. our So would investments go to a first next that then year. be full by

during but was expended so $X QX. entire XXXX? expense, terms to million million in million And $XX then Okay, fiscal be that $X -- in of will

XXXX the is of The million in the investment. $XX the That's year. recorded portion the amount

Okay.

over million to $X right, to $XX first in spend more from QX, get to million, have I $XX QX there, to $XX $X right? million the got increase So, million order you quarter. in and to guess we'd million, QX. Then

Yes. been incremental -- portion some QX the biggest largest We'll the will expense and the place QX, that we'll in when some have have be is still that of we have amount change of so fact the QX. take QX QX. that impact expense in in in a the QX, of talking and meaningful expenses we'll others salespeople and expense the QX. so the will in about, then will increase throughout change in and just a in Because have increase amount the in but we're hiring and be full those managers we've full QX for in

Helpful.

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Education on the well. those like Last working division. as Sounds question are investments

quantify number large you expected some least sponsor or at degree that's you you forward. that if to ESSER impact QX. to the some give forward, corporate us expected that As I of some going recall, large I quantify two, can can statewide had a additional end have the offset on know of color the in from the a forward QX, you I'm implementation revenue which pulled wondering pull one. Number program?

yes, want Yes. -- to Sean me This Paul? is you ahead, go

Yes, great.

Yes. great. Yes,

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money, money And about officially COVID feel from ESSER fine ended really -- we're about at. the the September. yes, stimulus at we're So, end where And we the we're so that. of excited really,

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room of for there's lots So growth.

it a X the and is need, how elementary lot lot of new a growth secondary, school, we years. -- with spring. lot years. business of a have the will and thing our more high also we're money a out there's this on fuel do next excited high in in do with coming schools. just particular, for of don't one We or about solution We we X Been this, a schools middle, very in Most for and high in working think lot for of is,

have last the revenue number addressed the Sean. I guess color, me. And the the year, terms with I lied, the to but I up in the that in growth XXXX. midpoint perhaps the say this don't previously, it. in what of economy, appreciate X.X% fourth Overall you great But you're I do one about then, have quarter of guidance. X%. can that company that? you the investments, to, about anything And end funds? I guiding have you That's front Does at question revenue And of for it deceleration? What for to fiscal do attribute ESSER the was

Do to take you it? want Yes. me

So, a little so yes, to grew Alex, midpoint you year. X% over about We we're of which guiding the X.X%, said. what is this

the So was grew business don't had year, We more the it's in then back that quarter. bit the little the this fourth the our parts growth of more coming fourth we grow some quarter. That non-subscription bit we a double of this and But good kind rapidly did double feel of in services the a growth little about year. had we which that.

this sales here, of that this anticipate a the sheet, new as to we sales therefore, hiring is in which to amount we future, sales force -- year year. ramping doing they lot it's get that the sales to as those as we've balance the the to reported on of later to in up of we're more lot think more revenue the going I out look -- going -- won't subscription put in the done, we separation throughout and year, with the going a in deployment, put going come out result that's new the into what be force subscription

X.X%. -- what to And so that's primarily guiding what's that's the

that actual into we're neighborhood. I throwing quarter and greater expect this first the Also disruption this than to the of transitioning the be off the of as is machine there somewhere what little few in just output just built is that, but weeks structure. over it new in last here in a translate think bit will

that. where know the if from. Steve, you'd anything that's I to add So don't X.X% comes

same -- thing thing, same Alex. No, that

out, pointed lot we and good As we as revenue did recorded a that fourth a quarter of really delivered. had was

that increase So at year-end sheet as wasn't balance we our of significant. the reported, also

fourth So, up in as building of type were we sheet quarter we the of fourth sales and sales new said, sales our Paul the a balance in quarter. the the lot from that had the were are recorded

from engine than more the change the up really X.X% in so, And is ramping would to revenue X% a suggest.

of it? There but EBITDA, of expectation. growth moving if $XX top line the million about course, parts, then same is talking to to you're million, in are $XX way Is the roughly think And with million thing I investments. added about that range $XX end in on million, you're of incremental which the adjusted at that $XX

the about is way That to think yes. it,

Okay.

other for words, fiscal XXXX? expectations be So investments, would line in adjusted EBITDA without these with pretty in much analyst

see we how exactly it. That's

Paul concludes I Walker. would session. to ahead, Paul. turn now our like Go back This question-and-answer to it over

forward us thank Thank excited look good you, the journey for today great and being last again, conversations. we're Mark. for questions. everybody, Thanks, great feel you to a about to, for Have your just joining and and with And year, very evening. want on we're about and where headed ongoing

in everyone, you, call. today's Thank does your conclude This conference for the participation program.

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