On this page of StockholderLetter.com we present the latest annual shareholder letter from FRANKLIN COVEY CO — ticker symbol FC. Reading current and past FC letters to shareholders can bring important insights into the investment thesis.

 •  12/20/2024 Letter Continued (Full PDF)
 •  12/19/2023 FC Stockholder Letter
 •  More "Business Services & Equipment" Category Stockholder Letters
 •  FC Benford's Law Stock Score = 100

FC Shareholder/Stockholder Letter Transcript:

The 7 Habits E   ect
Unlock Potential. Unleash Performance.
Annual Report 2024

Mission Statement
We enable greatness in people and
organizations everywhere.
Vision
Our vision is to profoundly impact the way
billions of people throughout the world live,
work, and achieve their own great purposes.
To Be the Workplace of Choice
for Achievers With Heart, We Value:
The Whole Person
Lasting Client Impact
We embrace the uniqueness and diversity
of each individual and cultivate a culture
of belonging.
We care deeply about our clients and helping
them achieve their own great purposes.
The Principles We Teach
The Pursuit of Growth
We believe in universal principles of
effectiveness and strive to model what
we teach.
We are committed to meaningful growth   
as individuals and as an organization.
About the Cover
For over 40 years, organizations worldwide have experienced the transformative impact of The 7
Habits of Highly Effective People   on personal effectiveness, leadership, culture, and organizational
performance   what we call the    7 Habits Effect.    This year, we are proud to introduce the latest
evolution of this timeless training program to our enterprise and education clients globally.

TABLE OF CONTENTS
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
Management   s Discussion and Analysis . . . . . . . . . . . . . . . . .
104
Report of Independent Registered Public Accounting Firm . .
121
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . .
124
Notes to Consolidated Financial Statements . . . . . . . . . . . . .
128
Corporate Information . . . . . . . . . . . . . . . . . . . . .
Inside Back Cover

2
Letter to Shareholders
Franklin Covey 2024 Annual Report
Paul S. Walker
Chief Executive Officer
Stephen D. Young
Chief Financial Officer
Dear Fellow Shareholders,
We are pleased to share our fiscal 2024 results, which were strong and reflect the importance and durability of the
opportunities and challenges we help our clients address. This past year has been another strong period for
Franklin Covey, marked by significant financial achievements, strategic progress, and a continued commitment to
being the partner of choice for our clients. Below are highlights of our journey and vision for the future.
Highlights of Our Journey
Franklin Covey delivered a strong financial performance for fiscal year 2024, including:

Revenue reached $287.2 million, compared to $280.5 million in fiscal 2023.

Adjusted EBITDA grew 15% to $55.3 million compared to $48.1 million in fiscal 2023.

Cash Flows from Operating Activities grew 69%, reaching $60.3 million compared to $35.7 million in fiscal
2023.

Free Cash Flow was also very strong, increasing 121% to $48.9 million, up from $22.2 million in the prior
year.

Over the past three years we have returned a significant amount of capital to shareholders, investing more
than $90 million to purchase over 2,247,000 of our shares.

Our liquidity remains strong. After investing to grow the business and purchase shares, we ended the year
with more than $110 million in available liquidity.
This strong financial performance reflects key strategic, financial, and operational aspects of Franklin Covey   s
business, including:

Strategically: We continue to focus our entire company around helping clients successfully address their
mission critical opportunities and challenges that require the collective action of their people. Our goal is to
become so effective in doing this that our clients choose to be our partners for life, as many of them already
are. Today, more leaders and organizations in our Enterprise Division and more students and schools in our
Education Division are being impacted by Franklin Covey solutions than at any point in our history.

Financially: Having successfully transitioned the business to a subscription model, the strength of our
technology-enabled content and services subscription business continues to accelerate revenue growth while
also generating even higher rates of growth in Adjusted EBITDA and Free Cash Flow. Since the beginning of
Franklin Covey   s conversion to a subscription-based model in 2016, our revenue has grown by $77.3 million
from $209.9 million to $287.2 million and Adjusted EBITDA has grown by $23.4 million, from $31.9 million
to $55.3 million.

Operationally: We are committed to increasing client impact and to becoming even more operationally
efficient. Today our client Net Promoter Score in our Enterprise North America business is an extremely
high 67. We retain more than 90% of our revenue, and the vast majority of our clients and schools, from year
to year.

Franklin Covey 2024 Annual Report
Letter to Shareholders
Vision for the Future
Nine years ago, as we contemplated how a transition to subscription would benefit our clients and shareholders, we
recognized that a full transition to this business model would require additional investments in content, new
investments in technology, and eventually changing the way in which we deploy our sales organization to drive even
higher rates of growth. Having successfully completed our transition to a subscription model and having doubled our
annual rate of investment in content and technology, we are now making the final set of growth investments to
transform the way our sales force goes to market. In fiscal 2025 we will invest an incremental $16 million in support of
this transformation.
Franklin Covey expects these growth investments to drive a significant change in our annual revenue growth from
historic single-digit growth to consistent double-digit growth. Following the initial investment period, we expect to
achieve accelerated growth in Adjusted EBITDA and Cashflows. We target revenue growth of 10% or $30 million in
fiscal 2026, increasing to 12% or $40 million in fiscal 2027, and increasing further to 14% or approximately $50 million
in fiscal 2028. After the initial investment period, which will decrease Adjusted EBITDA in fiscal 2025 to between
$40 million and $44 million, we are targeting Adjusted EBITDA to increase to $48 million in fiscal 2026, increasing to
$60 million in fiscal 2027, and then increasing further to approximately $75 million in fiscal 2028.
The strategic growth investments in fiscal 2025 that will produce accelerating growth in revenue, Adjusted EBITDA
and Cash Flows encompass the following three areas:
1.
Client Penetration and Expansion: Franklin Covey is adding client-facing sales and support roles to
increase our penetration within existing clients. Even after significantly increasing our average revenue per
client in our Enterprise North America business from approximately $10,000 prior to our conversion to
subscription, to $85,000 today. We remain less than 10% penetrated within most of our clients, offering
substantial room for further growth.
2.
New Client Acquisition: We are providing additional marketing and closing resources to help a dedicated
new logo sales force win new clients. Despite having secured thousands of new clients over the years, we
believe we have only scratched the surface of the potential within the large markets we serve.
3.
Sales Leadership and Operations: We are investing in central sales leadership and establishing an
expanded revenue operations function. These efforts will enable us to further increase our revenue per
salesperson and efficiently scale our sales force more rapidly in the future.
Franklin Covey is extremely optimistic about the road ahead and expects the next phase of growth and innovation to
be significant for our shareholders and clients. While we have achieved remarkable success in the past, we are excited
about the opportunities that lie ahead.
On behalf of everyone at Franklin Covey, we express gratitude for your continued support and dedication.
Paul S. Walker
Chief Executive Officer
Stephen D. Young
Chief Financial Officer
3



 12/20/2024 Letter Continued (Full PDF)