Q2 2024 Earnings Summary
Reported on Mar 27, 2024 (After Market Close)
Pre-Earnings Price$38.30Last close (Mar 27, 2024)
Post-Earnings Price$35.66Open (Mar 28, 2024)
Price Change
$-2.64(-6.89%)
- Franklin Covey is demonstrating resilience in a tough economic environment, with subscription invoices growing while other consulting companies are seeing declines, showcasing the strength of its business model.
- The company has over $40 million in cash and expects record free cash flow this year, providing opportunities for shareholder-friendly actions such as share repurchases or tender offers.
- Leading indicators suggest that the rebound in services has begun and is expected to accelerate in the back half of the year, driving growth after a flat first half.
- The company experienced a slower-than-expected rebound in services revenue, with the CEO noting that the rebound is "a quarter or so slower than we thought it was going to be," potentially indicating challenges in regaining growth momentum.
- Clients have been tightening budgets and pausing decision-making due to rising interest rates and economic uncertainty, creating headwinds that affected the company's performance in the first part of the year and which may continue to impact future results.
- The services attach rate is decreasing from a previous high of 60% down to approximately 55%, suggesting a possible reduction in clients' demand for additional services attached to their subscriptions, which could affect future revenue growth.
Research analysts covering FRANKLIN COVEY.