Franklin Covey reports Q2 EPS 12c, consensus 13c

Reports Q2 revenue $61.8M, consensus $62.4M. CEO Paul Walker commented, "Despite the current challenging economic environment, we are pleased with the demonstrated durability of our business model and our second quarter results, which featured continued revenue growth, a strong gross margin, and growth in Adjusted EBITDA over the prior year. Our consolidated sales for the second quarter increased 9% over the prior year, our gross margin remained strong at 76.4%, and our Adjusted EBITDA increased to $8.2 million. Our liquidity remained strong with $55.1 million of cash and with our full revolving credit facility undrawn. We achieved these results despite the challenging economic conditions, a slower-than-expected rebound of post-COVID operations in China and Japan, and the impact of $1.0 million of unfavorable foreign exchange on our second quarter sales. Four key elements of our strategy and business model were designed to establish durability across various economic cycles. First, the challenges and opportunities that we help our clients address are mission critical, especially in tough economic environments. These must-win challenges and opportunities require the collective action of large numbers of people, and our offerings are designed to address these challenges. Second, the effectiveness of our solutions in helping clients successfully address these challenges builds strong relationships. Our offerings include best-in-class content, powerful technology which enables us to deliver our content with impact and at scale, and metrics that our clients can use to evaluate the impact of our solutions in moving behavior. As our clients find success in addressing their challenges, we build strategic relationships that can allow us to become ‘partners for life.’ Third, the diversity of our client bases, geographic footprint, and international business model provide a strong foundation for future growth. We are not overly reliant on any one client or market segment and we serve clients in virtually all markets around the world. And lastly, is the strength of our subscription business model. We believe the subscription model provides a high lifetime customer value and recurring revenue stream that provides enduring growth potential. These factors were key to our strong second quarter and early fiscal 2023 performance, and will continue to be important to our growth in future periods."