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c770e915407a57f96815a52824cfc95de39e5fd5b9057ce1b0b8511e37bda894

bf507dd4407d92962d3c0c1ece0d852fd41dedb93d6a64c3367223bf5a4835b7

9762a0cb8aad17e4c0b88c16db062ab06fb75ee2e8d4b5c30785f7f5dffdca19

Cash and cash equivalents (USD, thousands)

Accounts receivable, less allowance for credit losses (USD, thousands)

Inventories (USD, thousands)

Prepaid expenses and other current assets (USD, thousands)

Total current assets (USD, thousands)

Property and equipment, net (USD, thousands)

Intangible assets, net (USD, thousands)

Goodwill (USD, thousands)

Deferred income tax assets (USD, thousands)

Other long‐term assets (USD, thousands)

Total assets (USD, thousands)

Current portion of notes payable (USD, thousands)

Current portion of financing obligation (USD, thousands)

Accounts payable (USD, thousands)

Deferred subscription revenue (USD, thousands)

Customer deposits (USD, thousands)

Accrued liabilities (USD, thousands)

Total current liabilities (USD, thousands)

Notes payable, less current portion (USD, thousands)

Financing obligation, less current portion (USD, thousands)

Other liabilities (USD, thousands)

Deferred income tax liabilities (USD, thousands)

Total liabilities (USD, thousands)

Common stock (USD, thousands)

Additional paid‐in capital (USD, thousands)

Retained earnings (USD, thousands)

Accumulated other comprehensive loss (USD, thousands)

Treasury stock at cost (USD, thousands)

Total shareholders’ equity (USD, thousands)

f5efabf266a0379128ae53fcfffc5225ad4d63b16c63807599d67cfa9115fa00

The jump in **total assets** in Q4 2024 was primarily driven by a significant **increase in Cash and Cash Equivalents** (rising by **$10,433 thousand** from FY 2023 to FY 2024), a growth in **Accounts Receivable** (an increase of **$4,067 thousand**), and an uptick in **Other Long-Term Assets** (up by **$5,223 thousand**). These increases were partly offset by depreciation in **Property and Equipment** and **Intangible Assets**, but the net effect was an overall rise in total assets for the period.  **[0000886206-24-000058_fc-20241106xex99_1.htm:7]** **[0000886206-24-000060_fc-20240831x10k.htm:67]** **[FC_3406220_4]** 

Why did Total assets jump in Q4 2024?

The **total liabilities spiked in Q4 2024** primarily because key liability components increased significantly. **Deferred subscription revenue** jumped from **$95,386 thousand to $101,218 thousand**, marking a rise of **$5,832 thousand** due to higher subscription sales yet to be recognized. In addition, **customer deposits** increased by **$4,835 thousand** (from **$12,137 thousand to $16,972 thousand**), and **accrued liabilities** grew by **$4,202 thousand** (from **$28,252 thousand to $32,454 thousand**). **Other liabilities** also rose by **$3,115 thousand** (from **$7,617 thousand to $10,732 thousand**). Although there were reductions in **notes payable** and **financing obligations**, these decreases did not offset the substantial increases in the other areas, leading to the overall spike to **$178,404 thousand** in Q4 2024.  **[0000886206-24-000058_fc-20241106xex99_1.htm:7]** **[0000886206-24-000060_fc-20240831x10k.htm:67]** 

Why did Total liabilities spike in Q4 2024?

The **current portion of notes payable** dropped dramatically in Q4 2024 because the company fully repaid the term loan payable under the **2023 Credit Agreement** in June 2024, which significantly reduced its obligations. The remaining balance pertains solely to the **Strive acquisition note payable**, requiring annual payments of **$0.8 million** for five years, reflecting a strategic shift in the company’s financial obligations.  **[0000886206-24-000060_fc-20240831x10k.htm:83]** **[0000886206-24-000058_fc-20241106xex99_1.htm:7]** **[0000886206-24-000060_fc-20240831x10k.htm:67]** 

Why did the current portion of notes payable drop dramatically in Q4 2024?

The **cash and cash equivalents** increased in Q1 2025 by **$4,631 thousand** because the company generated **$14,145 thousand** in cash from operating activities, which more than offset the cash outflows from investing activities (**$(2,754) thousand**) and financing activities (**$(6,579) thousand**), along with a minor negative impact from foreign currency changes (**$(181) thousand**).  **[0000886206-25-000004_fc-20241130x10q.htm:1]** **[0000886206-25-000002_fc-20250108xex99_1.htm:7]** 

Why did cash and cash equivalents increase in Q1 2025?

aae2bec032955b84c5be7d71c52a34386094cd892463b3fd6599227342e805ad

The documents indicate that **Income from Operations was $1.4 million in Q2 2024**, which is down from **$2.8 million in Q2 2023**.  **[0000886206-24-000024_fc-20240327xex99_1.htm:5]** **[0000886206-24-000028_fc-20240229x10q.htm:17]**  However, the documents do not provide specific reasons for this decline. They do note that **net income** and **Adjusted EBITDA** also fell during the same period—with net income dropping from **$1.7 million** to **$0.9 million** and Adjusted EBITDA declining from **$8.2 million** to **$7.4 million**—suggesting that overall financial performance was affected by changes in factors such as revenue and expenses, though the exact causes are not detailed.  **[0000886206-24-000024_fc-20240327xex99_1.htm:5]** **[0000886206-24-000028_fc-20240229x10q.htm:17]** 

Why was Income from Operations so low in Q2 2024?

Franklin Covey’s Q2 2024 drop in net income was driven primarily by **lower operating income** and changes in its **income tax provision**. **Operating income** fell from **$2.8 million in Q2 2023** to **$1.4 million in Q2 2024** due to a slower-than-expected rebound in services sales and longer decision-making cycles by clients, which greatly affected overall performance.  **[0000886206-24-000024_fc-20240327xex99_1.htm:5]** **[0000886206-24-000028_fc-20240229x10q.htm:17]**  Additionally, while the **income tax provision** declined from **$1.0 million** to **$0.5 million**, the **effective tax rate** in Q2 2024 actually increased from **37.5%** to **38.2%** due to non-deductible executive compensation and additional taxes on foreign earnings, further impacting net income.  **[0000886206-24-000024_fc-20240327xex99_1.htm:5]** **[0000886206-24-000028_fc-20240229x10q.htm:17]** 

What factors contributed to the drop in Net Income in Q2 2024?

The strong revenue performance in Q4 2024 was driven by several key factors. **Franklin Covey experienced robust growth in its Enterprise division**, which accounts for **73% of overall revenue** and grew by **8%** in the quarter – notably with North America Enterprise revenue increasing by **17%**.  **[FC_3406220_3]**  **Subscription and services revenues also rose**, with North America subscription revenue growing **3%** and the combination of subscription and subscription services revenue increasing **4%**.  **[FC_3406220_3]**  Additionally, there was strong momentum in deferred revenue, which increased by **9%**, indicating healthy future bookings.  **[FC_3406220_3]**  A **rebound in services revenue** further contributed to the overall growth, while the Education division remained stable at **$24.1 million** due to multiyear deals and grants.  **[FC_3406220_15]** **[FC_3406220_16]** 

What drove the strong revenue performance in Q4 2024?

The significant decline in net income in Q1 2025 is primarily attributed to **substantial growth investments** of **$16 million** impacting short-term profitability, **restructuring costs** of **$2.0 million** related to severance expenses for about 35 associates, a drop in **adjusted EBITDA** (from **$11 million** to **$7.7 million**), and revenue growth constraints in key segments such as the Enterprise Division due to challenging market conditions.  **[FC_3412222_6]** **[0000886206-25-000004_fc-20241130x10q.htm:7]** **[FC_3412222_5]** 

Why did Net Income decline significantly in Q1 2025?

0c9d717c78d570d61be10eee77857bc1bac35e717027272e2a60f1c3609f6d0b

Net income (USD, thousands)

Depreciation and amortization (USD, thousands)

Amortization of capitalized curriculum costs (USD, thousands)

Stock-based compensation (USD, thousands)

Deferred income taxes (USD, thousands)

Amortization of right-of-use operating lease assets (USD, thousands)

Decrease / (Increase) in accounts receivable, net (USD, thousands)

Decrease / (Increase) in inventories (USD, thousands)

Decrease / (Increase) in prepaid expenses and other assets (USD, thousands)

Increase / (Decrease) in accounts payable and accrued liabilities (USD, thousands)

Decrease / (Increase) in deferred revenue and customer deposits (USD, thousands)

Increase / (Decrease) in income taxes payable (USD, thousands)

Decrease in other long-term liabilities (USD, thousands)

Net cash provided by operating activities (USD, thousands)

Purchases of property and equipment (USD, thousands)

Curriculum development costs / Capitalized curriculum development costs (USD, thousands)

Reacquisition of license rights / Acquisition of content rights (USD, thousands)

Net cash used for investing activities (USD, thousands)

Principal payments on notes payable (USD, thousands)

Principal payments on financing obligation (USD, thousands)

Purchases of common stock for treasury (USD, thousands)

Proceeds from sales of common stock held in treasury (USD, thousands)

Net cash used for financing activities (USD, thousands)

Effect of foreign currency exchange rates on cash and cash equivalents (USD, thousands)

Net increase / (decrease) in cash and cash equivalents (USD, thousands)

Cash paid for income taxes (USD, thousands)

Cash paid for interest (USD, thousands)

Acquisition of property and equipment and capitalized curriculum, financed by accounts payable (USD, thousands)

Consideration for reacquired license rights from liabilities of seller / Acquisition of content rights financed by accounts payable (USD, thousands)

Acquisition of right-of-use operating lease assets for operating lease liabilities (USD, thousands)

Payment of contingent consideration liabilities (USD, thousands)

Proceeds from term notes payable financing (USD, thousands)

Impairment of asset (USD, thousands)

Change in fair value of contingent consideration liabilities (USD, thousands)

Cash paid for new secured credit agreement (USD, thousands)

Impaired asset (USD, thousands)

Cash and cash equivalents at the beginning of the period (USD, thousands)

Cash and cash equivalents at the end of the period (USD, thousands)

9d6ca5ff0012c040c079a8dbaf03d65345da2995f7e3977843d437426090acac

Revenue (USD, thousands)

Cost of Revenue (USD, thousands)

Gross Profit (USD, thousands)

Selling, General, and Administrative Expenses (USD, thousands)

Restructuring Costs (USD, thousands)

Impaired Asset (USD, thousands)

Depreciation (USD, thousands)

Amortization (USD, thousands)

Income from Operations (USD, thousands)

Interest Income (USD, thousands)

Interest Expense (USD, thousands)

Income Before Income Taxes (USD, thousands)

Income Tax Provision (USD, thousands)

Net Income (USD, thousands)

769c1488aa3b8435dafc111b73a978d8cd7e0b936c1bfa67fbe3b6a96b86950b

Americas

- United States/Canada

Asia Pacific

- China

Europe/Middle East/Africa

International Licensees

Other

Total Revenue

6ec7af0a7b5fb6011d23e64f3481f4c04e189da2e963d00916c7141355c0ab24

Franklin Covey Co (FC)

Financials