Franklin Covey Co reported solid execution in Q4 FY2024, underscoring the durability of its subscription-based business model. Q4 revenue of $84.1 million rose 8% year over year, driving FY2024 revenue to $287.2 million (reported). Adjusted EBITDA in Q4 was $22.9 million, with FY2024 adjusted EBITDA of $55.3 million, up 15% year over year in constant currency. The company highlighted a successful transition to a subscription-centric growth engine nine years after the move, evidenced by expanding customer lifetime value, higher contract visibility, and a rising proportion of multi-year subscriptions. Cash flow remained robust, with operating cash flow of $60.3 million for FY2024 and free cash flow of $48.9 million, underpinning a strong liquidity position (cash at end of period $48.7 million; total liquidity >$111 million including revolver availability).
Management signaled an explicit program to accelerate revenue growth by investing roughly $16 million in FY2025 to expand penetration within existing accounts and to win a materially larger number of new logos. Holly Proctor was introduced as Chief Revenue Officer to drive a two-pronged sales organization (Expand vs Land) with increased marketing, lead generation, and sales operations. The anticipated outcome is a mid-single-digit to double-digit acceleration in revenue growth, evolving toward 10%+ growth in FY2026, 12% in FY2027, and 14% in FY2028, with EBITDA expanding meaningfully as the investments annualize. The near-term EBITDA is expected to dip to $40–$44 million in FY2025, reflecting the investment cycle, before a multi-year ramp higher to roughly $75 million by FY2028. The company expects FY2025 revenue to be about $295–$305 million (midpoint ~4.5% growth) with a progressive shift toward subscription-driven revenue that is partially deferred on the balance sheet.
Overall, FC presents a compelling risk-adjusted growth thesis: a scalable content/technology platform (Impact Platform with AI capabilities), strong gross margins, and meaningful free cash flow generation, coupled with a disciplined capital plan and a constructive path to higher long-term growth. Investors should monitor the execution cadence of the Expand/Land sales construct, the pace of subscription bookings and deferred revenue buildup, and the realization of the projected EBITDA/J-curve in FY2026–FY2028.