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| And finally, we achieved even stronger growth in subscription and subscription services revenue |
| I think that’s a good opportunity to increase value for shareholders also |
| We -- while we are doing great, we had a record number of new logos and new schools last year |
| The order of priority for us would be to first invest that back in the business in the form of organic growth and we think that there is a tremendous opportunity to continue to drive organic growth in our business |
| Another reason why is because we are getting really good client outcomes and word of mouth spreads fast |
| And so I -- we feel like the opportunity for new schools being brought on over the next several years is really good |
| As it relates to the new client partners we have added, we feel great about the people that we have added |
| And so, in the environment that we are in, we are really pleased to have our best year ever in acquiring new logos |
| Fiscal 2023 was our best year for new logo adds, both in the Enterprise Division, All-Access Pass new clients and in the Education Division new Leader in Me schools that we have had since we converted to a subscription business |
| So the attach rate in Q4 was quite good |
| This significant growth in deferred revenue further elevates the trajectory, predictability and visibility into future revenue growth |
| As Steve mentioned, and I will reiterate, we continue to feel incredibly good about the results from fiscal 2023 and also good about -- and have a high level of confidence about the durability in our growth expectations of our All Access Pass and Leader in Me subscription business in the months, quarters and years to come |
| This creates a very strong foundation upon which to build and add new growth |
| The second is to be able to accomplish that first priority, while also having a strong and profitable business model |
| We feel particularly good about this growth and the strength of our growth engine going forward and are grateful to our clients for trusting us to be their partner through both good and challenging times |
| We are really pleased to have achieved strong progress on each of these fundamental priorities in the fourth quarter and throughout fiscal 2023 as a whole |
| While many economic and other factors could impact these expectations, we are very excited about our financial future |
| This full year guidance is particularly strong, considering that we expect first quarter sales and adjusted EBITDA to, perhaps, be slightly less than last year |
| Our adjusted EBITDA target for FY 2025 of $66 million represents an additional increase of 17% over FY 2024 and again considering constant currency also represents a bit better growth trajectory that we have been talking about for some time |
| These include outcomes such as consistently winning new logos or clients; having subscription and subscription services revenue continue to increase, as a percent of total company revenue; retaining substantially all of our subscription revenue; increasing our average subscription contract size; increasing the percent of logos under multiyear contracts; continuing to have clients purchased a considerable number of services to help them achieve their performance breakthroughs; and achieving a high and growing lifetime customer value |
| As you can see in slide eight, we are pleased to have achieved strong results in each of these key outcomes and I’d like to share a few points of detail related to a few of these |
| Franklin Covey’s financial strategy is to consistently grow revenue, and at the same time, experience a high flow-through of that increased revenue to adjusted EBITDA and cash |
| Sales of All Access Passes to new logos in the Enterprise Division grew 9% to the highest amount in any year, since that conversion to All Access Pass eight years ago |
| So we are pleased with the performance in our divisions |
| And year-over-year retention of Leader in Me schools remains extremely high at nearly 85% for FY 2023 |
| As shown on slide 24, Education subscription and subscription services sales growth was strong, increasing 13% for the year, but decreasing 3% for the fourth quarter |
| We are pleased with these results, particularly considering the adverse impact of FX and a challenging geopolitical environment |
| We are pleased with the growth rates we have achieved in the Enterprise business in North America |
| We are pleased with the 26% growth we have achieved in the Enterprise business in North America over the past two years |
| As shown on slide 22, results in our Enterprise business in North America continued to be strong |
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| Largely as a result of this and also reflecting the approximately $1 million of FX impact in the last two quarters in the Enterprise Division, our total company revenue of $280.5 million, though a record high, came in 1.2%, or $3.5 million lower than the $284 million we had expected, when we updated our forecast in our second quarter report |
| This reflects primarily that our service revenues, while still our second highest dollar amount ever, will be lower than last year’s record first quarter |
| For the fourth quarter of FY 2023, sales decreased 2%, after growing 17% in last year’s record fourth quarter |
| We could not be more pleased with the quality and expected impact these new and re-imagined solutions will have on our clients and we are just getting started |
| As you recall, mid last year we noted that this year’s cash flows would be lower than the past couple of years, primarily reflecting a decrease in accrued liabilities and accounts payable and an increase in accounts receivable from increased sales |
| As a result, the services and materials that would normally have been delivered in the fourth quarter relating to these new schools were not able to be fully delivered in the fourth quarter |
| The only factor not meeting expectations was it because of the extremely high number of new schools added in the year, a portion of these new schools signed up a month or so later than normal |
| But we don’t think -- we still think we will grow the following year and those are the primary reasons why I think it’s going well |
| First to be our client’s partner of choice for addressing the challenges that really matter to them, our content and technology are and must continue to be world-class in delivering collective behavior change and measurable outcomes |
| Finally, the results in our Education business, which accounts for about 25% of the total company grew 13% for the year, but decreased 2% from the record level achieved in the fourth quarter of FY 2022, which as we mentioned earlier, both that we had a record number of schools, and that not all the revenue from those schools that we normally get made it into the fourth quarter |
| While others are competing with vast libraries have increasingly undifferentiated content, we are doubling down on the development of solutions and technologies to truly drive collective action, behavior change and breakthrough results |
| Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company’s current expectations and there can be no assurance that the company’s actual future performance will meet management’s expectations |
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