FRANKLIN COVEY CO

Previous wording

Management’s discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in forward-looking statements are set forth below under the heading “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.”

Current wording

Management’s discussion and analysis of financial condition and results of operations (Management’s Discussion and Analysis) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in forward-looking statements are set forth below under the heading “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.”

Previous wording

This Management’s Discussion and Analysis includes the concept of Adjusted EBITDA which is a non-GAAP financial measure. We define Adjusted EBITDA as net income excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other items, including infrequently occurring items such as restructuring and impaired asset costs. We reference this non-GAAP measure in our decision making because it provides supplemental information that facilitates consistent internal comparisons to the operating performance of prior periods and we believe it provides investors with greater transparency to evaluate operational activities and financial results. For a reconciliation of our segment Adjusted EBITDA to net income, a related GAAP measure, refer to Note 9, Segment Information, to our condensed consolidated financial statements.

Current wording

This Management’s Discussion and Analysis includes the concepts of Adjusted EBITDA and constant currency, which are non-GAAP financial measures. We define Adjusted EBITDA as net income excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other items such as restructuring costs. Constant currency is a non-GAAP financial measure that removes the impact of fluctuations in foreign currency exchange rates and is calculated by translating the current period’s financial results at the same average exchange rates in effect during the prior year and then comparing this amount to the prior year. We reference these non-GAAP measures in our decision making because they provide supplemental information that facilitates consistent internal comparisons to the operating performance of prior periods and we believe it provides investors with greater transparency to evaluate operational activities and financial results. For a reconciliation of our reporting segment Adjusted EBITDA to net income, a related GAAP measure, refer to Note 7, Segment Information, to our unaudited condensed consolidated financial statements.

Previous wording

Franklin Covey Co. is a global company focused on individual and organizational performance improvement. Our mission is to “enable greatness in people and organizations everywhere,” and our worldwide resources are organized to help individuals and organizations achieve sustained superior performance at scale through changes in human behavior. We believe that our content and services create the connection between capabilities and results. Our business is currently structured around two divisions, the Enterprise Division and the Education Division. The Enterprise Division consists of our Direct Office and International Licensee segments and is focused on selling our offerings to corporations, governments, not-for-profits, and other related organizations. Our offerings delivered through the Enterprise Division are designed to help organizations and individuals achieve their own great results. Our Education Division is centered around the principles found in The Leader in Me and is dedicated to helping educational institutions build cultures that will produce great results, including increased student performance, improved school culture, and increased parental and teacher involvement.

Current wording

Franklin Covey Co. is a global company focused on individual and organizational performance improvement. Our mission is to “enable greatness in people and organizations everywhere,” and our worldwide resources are organized to help individuals and organizations achieve sustained superior performance at scale through changes in human behavior. We believe that our content and services create the connection between capabilities and results. Our business is currently structured around two divisions, the Enterprise Division and the Education Division. The Enterprise Division consists of our North America, International Direct Office, and International Licensee segments and is focused on selling our offerings to corporations, governments, not-for-profits, and other related organizations. Our offerings delivered through the Enterprise Division are designed to help organizations and individuals achieve their own great results. Our Education Division is centered around the principles found in The Leader in Me and is dedicated to helping educational institutions build cultures that will produce great results, including increased student performance, improved school culture, and increased parental and teacher involvement.

Previous wording

Our consolidated revenue for the quarter ended May 31, 2024, increased to $73.4 million compared with $71.4 million in the prior year. Third quarter fiscal 2024 revenue performance included the following:

Current wording

Our consolidated revenue for the quarter ended November 30, 2024, increased 1% to $69.1 million compared with $68.4 million in the prior year. This result reflects strong growth in our Education Division, where revenue grew 11%, and flat sales in the Enterprise Division, which was essentially in line with our expectations when we began the transition of our sales force to a more focused go-to-market model in North America. First quarter fiscal 2025 revenue performance included the following:

Previous wording

o Education Division revenues grew 18% to $20.1 million in the third quarter of fiscal 2024 primarily due to increased classroom materials revenue, due in part to a new initiative with a state that began in the third quarter, and increased membership subscription revenues. Delivery of training and coaching days remained strong during the third quarter of fiscal 2024, as the Education Division delivered nearly 100 more training and coaching days than the prior year.

Current wording

o Education Division revenues in the first quarter increased 11% to $16.5 million compared with $14.9 million in the first quarter of the prior year. The increase was primarily due to a new state-wide initiative that began in the first quarter of fiscal 2025, and increased membership subscription revenues. Delivery of training and coaching days remained strong to begin fiscal 2025, as the Education Division delivered approximately 100 more training and coaching days than the first quarter of the prior year.

Previous wording

o Consolidated deferred subscription revenue at May 31, 2024 increased 15% to $83.8 million compared with $72.7 million at May 31, 2023. At May 31, 2024, 55% of our AAP contracts are for at least two years, compared with 50% at May 31, 2023, and the percentage of contracted amounts represented by multi-year contracts increased to 60% from 57% at May 31, 2023.

Current wording

o Consolidated deferred subscription revenue as of November 30, 2024, increased 10% to $95.7 million compared with $87.2 million at November 30, 2023. At November 30, 2024, 55% of our AAP contracts are for at least two years, compared with 54% at November 30, 2023, and the percentage of contracted amounts represented by multi-year contracts was equal with the first quarter of the prior year at 60%.

Previous wording

The following is a summary of other consolidated financial highlights from our third quarter of fiscal 2024:

Current wording

The following is a summary of other consolidated financial highlights from the quarter ended November 30, 2024:

Previous wording

Cost of Revenue/Gross Profit – For the quarter ended May 31, 2024, our cost of revenue was consistent with the prior year at $17.2 million. Gross profit for the quarter ended May 31, 2024, was $56.2 million compared with $54.2 million in the third quarter of fiscal 2023. Our gross margin for the third quarter of fiscal 2024 remained strong and increased to 76.6% of revenue compared with 75.9% in the prior year. The improvement was primarily due to a change in the mix of services provided and products sold compared with the prior year.

Current wording

Cost of Revenue/Gross Profit – For the first quarter of fiscal 2025, our cost of revenue was $16.4 million compared with $16.1 million in the prior year. Gross profit for the quarter ended November 30, 2024, was $52.7 million compared with $52.3 million in the same quarter of fiscal 2024. The increase in gross profit was primarily due to increased revenue as described above. Our gross margin for the first quarter of fiscal 2025 remained strong and was 76.3% of revenue compared with 76.4% in fiscal 2024.

Previous wording

Our income tax provision for the first three quarters of fiscal 2024 was $3.6 million on pre-tax income of $15.1 million, for an effective tax rate of 24.0%, compared with an effective rate of 28.9% for the three quarters ended May 31, 2023, when we recorded income tax expense of $4.5 million on pre-tax income of $15.4 million. Our effective tax rate for the first three quarters of fiscal 2024 was lower than the effective rate in fiscal 2023 primarily due to a $3.2 million tax benefit for stock-based compensation deductions in the first quarter of fiscal 2024 that exceeded the corresponding expense for book purposes, which was partially offset by $2.2 million of tax expense for the non-deductible portion of stock-based compensation paid to executives. These stock-based compensation factors produced a net benefit of $1.0 million, or 6.6%, in the first three quarters of fiscal 2024.

Current wording

Income Taxes –Our income tax expense for the quarter ended November 30, 2024, was $0.4 million on pre-tax income of $1.6 million, for an effective tax rate of 25.6%, compared with an effective rate of 8.1% in the first quarter of fiscal 2024 when we recorded income tax expense of $0.4 million on pre-tax income of $5.3 million. Our effective tax rate for the first quarter of fiscal 2025 was higher than the effective rate for the first quarter of fiscal 2024 primarily due to a significantly reduced tax benefit related to stock-based compensation in the first quarter of fiscal 2025 compared with the first quarter of fiscal 2024.

Previous wording

Operating Income, Net Income, and Adjusted EBITDA– Our income from operations for the quarter ended May 31, 2024, increased 27%, or $1.8 million, to $8.3 million compared with $6.6 million in the prior year, which reflected the above noted factors. Net income for the third quarter of fiscal 2024 increased 25% to $5.7 million, or $0.43 per diluted share, compared with $4.6 million, or $0.32 per diluted share, in the prior year. Our Adjusted EBITDA for the quarter ended May 31, 2024, increased 17%, or $2.0 million, to $13.9 million, compared with $11.9 million in the third quarter of fiscal 2023. For the three quarters ended May 31, 2024, our Adjusted EBITDA increased to $32.3 million, compared with $31.6 million in the prior year.

Current wording

Operating Income, Net Income, and Adjusted EBITDA– Primarily as a result of increased operating expenses discussed above, our income from operations for the quarter ended November 30, 2024, was $1.5 million compared with $5.3 million in the prior year. Net income for the first quarter of fiscal 2025 was $1.2 million, or $0.09 per diluted share, compared with $4.9 million, or $0.36 per diluted share, in the first quarter of fiscal 2024. Our Adjusted EBITDA for the quarter ended November 30, 2024, was in line with expectations and totaled $7.7 million compared with $11.0 million in the first quarter of fiscal 2024. In constant currency, our Adjusted EBITDA for the first quarter of fiscal 2025 was $8.1 million.

Previous wording

Liquidity and Financial Position –Even after the purchase of $25.8 million of common stock during the first three quarters of 2024, our liquidity and financial position remained strong. At May 31, 2024, we had nearly $100 million of available liquidity which consisted of $36.6 million of cash and our undrawn $62.5 million line of credit.

Current wording

Liquidity and Financial Position –Our liquidity and financial position remained strong throughout the first quarter of fiscal 2025. At November 30, 2024, we had over $115 million of available liquidity which consisted of $53.3 million of cash and our undrawn $62.5 million line of credit.

Previous wording

Further details regarding our results for the quarter and three quarters ended May 31, 2024, are provided throughout the following management’s discussion and analysis.

Current wording

Further details regarding our results for the quarter ended November 30, 2024, are provided throughout the following Management’s Discussion and Analysis.

Previous wording

The Direct Office segment includes our personnel that serve clients in the United States and Canada; our directly owned international offices that serve clients in Japan, China, the United Kingdom, Ireland, Australia, New Zealand, Germany, Switzerland, and Austria; and other groups such as our government services and books and audio department.

Current wording

Our directly owned international offices serve clients in Australia, Austria, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom. The following comparative information is for our International Direct Office segment in the periods indicated (in thousands):

Previous wording

Revenue. International licensee revenue is primarily comprised of royalties on sales of our content by the licensees. In the third quarter of fiscal 2024, our international licensees’ revenue decreased by 5%, which was primarily due to a 4% decrease in royalty revenues and a small decrease in our share of AAP revenue during the quarter. Licensee royalty revenue declined primarily due to economic challenges in certain of the countries in which our licensees operate and staffing issues at some of the licensee operations. While we remain optimistic that our licensees’ sales and our corresponding royalty revenues will grow during fiscal 2024, difficult macroeconomic conditions, such as slowing economic growth and regional conflicts may negatively impact our licensees’ operations and our royalty revenues in future periods. Foreign exchange rates had a $0.1 million adverse impact on international licensee revenues and operating results for the quarter ended May 31, 2024.

Current wording

Revenue. International licensee revenue is primarily comprised of royalties on sales of our content by the licensees. In the first quarter of fiscal 2025, our international licensees’ revenue decreased by 7%, or $0.2 million, which was primarily due to decreased services revenue and a $0.1 million decrease in our share of AAP revenue. Licensee royalty revenues were essentially flat compared with the prior year. While we remain optimistic that our licensees’ sales and our corresponding royalty revenues will grow in future periods, continued difficult macroeconomic conditions, such as slowing economic growth and regional conflicts, and operating challenges may negatively impact our licensees’ operations and reduce growth compared with our expectations. Foreign exchange rates had an immaterial impact on international licensee revenues and operating results during the first quarter of fiscal 2025.

Previous wording

Gross Profit. Gross profit decreased due to licensee revenue performance as previously described. International licensee gross margin was generally consistent with the prior year at 90.2% compared with 89.9% in fiscal 2023.

Current wording

Gross Profit. Gross profit decreased due to licensee revenue performance as previously described. International licensee gross margin was generally consistent with the first quarter of the prior year at 89.4% compared with 90.0% in fiscal 2024.

Previous wording

Our Education Division is comprised of our domestic and international Education practice operations (focused on sales to educational institutions) andincludes our widely acclaimed Leader in Me program. The following comparative information is for our Education Division in the periods indicated (in thousands):

Current wording

Our Education Division is comprised of our domestic and international Education practice operations (focused on sales to educational institutions) andincludes our widely acclaimed The Leader in Me program. The following comparative information is for our Education Division in the periods indicated (in thousands):

Previous wording

Revenue. Education Division revenue for the quarter ended May 31, 2024, increased 18%, or $3.0 million, compared with the prior year. This growth was primarily due to increased sales of classroom and training materials, due in part to a new initiative with a state that began in the third quarter, and increased membership subscription revenues. We invoiced $4.9 million related to this new state-wide initiative in the third quarter, which included $1.4 million of classroom and training materials. Training materials are recognized in revenue upon shipment of the product. Education subscription and subscription services revenues in the third quarter of fiscal 2024 increased 13% compared with the prior year. In addition, the delivery of training and coaching days remained strong, and during the third quarter of fiscal 2024 the Education Division delivered nearly 100 more training and coaching days than the prior year, which are recognized as revenue when they are delivered. We continue to be pleased with the strength and momentum of our Education Division, which added a record 791 new Leader in Me schools during fiscal 2023. We believe this positive momentum generated in fiscal 2023 and in the first three quarters of fiscal 2024 will continue through the remainder of fiscal 2024. At May 31, 2024, we had over 3,800 schools using the Leader in Meprogram in the United States and Canada.

Current wording

Revenue. Education Division revenue for the quarter ended November 30, 2024, increased 11%, or $1.6 million, compared with the first quarter of the prior year. First quarter revenue growth was primarily due to increased sales of classroom and training materials, due in part to a new initiative with a state that began in the first quarter of 2025, increased coaching and consulting revenue, and increased membership subscription revenues resulting from new schools which started The Leader in Me during fiscal 2024. Training and materials revenue increased $0.7 million over the prior year, which included $0.4 million of classroom and training materials from the new state-wide initiative. The delivery of training and coaching days remained strong during the first quarter of fiscal 2025 as the Education Division delivered approximately 100 more training and coaching days than in the prior year. Training and coaching days are recognized as revenue when they are delivered. Education subscription and subscription services revenues in the first quarter of fiscal 2025 increased 12% compared with the prior year. We continue to be pleased with the strength and momentum of our Education Division, which added 728 new The Leader in Me schools during fiscal 2024. We believe the momentum generated in fiscal 2024 and in the first quarter of fiscal 2025 will continue through the remainder of fiscal 2025. At November 30, 2024, nearly 3,800 schools were using The Leader in Meprogram in the United States and Canada.

Previous wording

Gross Profit. Education Division gross profit increased primarily due to sales growth as previously described. Education segment gross margin remained strong during fiscal 2024 and increased to 63.1% compared with 62.5% in fiscal 2023. The increase was primarily attributable to a change in the mix of services delivered and products sold during the fiscal year.

Current wording

Gross Profit. Education Division gross profit increased primarily due to revenue growth as previously described. Education segment gross margin remained strong and was consistent with the prior year at 63.2% of sales compared with 63.6% in the prior year.

Previous wording

SG&A Expenses. Education SG&A expenses increased primarily due to increased commissions on higher revenue, new personnel, and changes to compensation plans.

Current wording

SG&A Expenses. Education SG&A expenses increased primarily due to increased commissions on higher revenue, new personnel, and allocation of increased shared services costs compared with the prior year.

Previous wording

Depreciation –Depreciation expense for the three quarters ended May 31, 2024, was $3.0 million, compared with $3.1 million in the corresponding period of fiscal 2023, and decreased primarily due to the full depreciation of certain assets.

Current wording

Depreciation –Depreciation expense for the quarter ended November 30, 2024, was $1.0 million, compared with $1.1 million in the first quarter of fiscal 2024. The decrease was primarily due to the full depreciation of certain capital assets. We currently expect depreciation expense to total approximately $3.5 million in fiscal 2025.

Previous wording

Amortiza tion –Amortization expense during the quarter ended May 31, 2024, was consistent with the third quarter of fiscal 2023 at $1.1 million. We currently expect definite-lived intangible asset amortization expense will total $4.3 million during fiscal 2024.

Current wording

Amortiza tion –Amortization expense for the first quarter of fiscal 2025 was equal to the first quarter of the prior year at $1.1 million. We currently expect definite-lived intangible asset amortization expense will total $4.4 million during fiscal 2025.

Previous wording

Interest Expense – Our interest expense decreased $0.3 million compared with the first three quarters of fiscal 2023 primarily due to decreased term loan and financing obligation liabilities as payments have been made in the normal course of business.

Current wording

Interest Expense – Our interest expense decreased $0.2 million compared with the first quarter of fiscal 2024 due to decreased term loan and financing obligation liabilities as payments have been made in the normal course of business.

Previous wording

On May 31, 2024, our cash and cash equivalents totaled $36.6 million, with no borrowings on our $62.5 million revolving credit facility. Our cash balance on May 31, 2024, included $12.7 million which was held at our foreign subsidiaries. We routinely repatriate cash from our foreign subsidiaries and consider cash generated from foreign activities a key component of our overall liquidity position. Our primary sources of liquidity are cash flows from the sale of services in the normal course of business and available proceeds from our revolving line of credit facility. Our primary uses of liquidity include payments for operating activities, purchases of common stock, debt payments, capital expenditures (including curriculum development), and working capital expansion.

Current wording

At November 30, 2024 we had over $115 million of available liquidity, which consisted of $53.3 million in cash combined with our undrawn $62.5 million revolving credit facility. Of our $53.3 million of cash at November 30, 2024, $13.1 million was held outside the U.S. by our foreign subsidiaries. We routinely repatriate cash from our foreign subsidiaries and consider cash generated from foreign activities a key component of our overall liquidity position. Our primary sources of liquidity are cash flows from the sale of services and products in the normal course of business and available proceeds from our credit facility. Our primary uses of liquidity include payments for operating activities, purchases of our common stock, working capital expansion, capital expenditures (including curriculum development), and debt and leasing payments.

Previous wording

In fiscal 2023, we entered into a new credit agreement (the 2023 Credit Agreement) with KeyBank National Association (KeyBank) leading a group of financial institutions (collectively, the Lenders), which replaced our previous credit agreement. The 2023 Credit Agreement provides up to $70.0 million in total credit, of which $7.5 million was used to replace the outstanding term loan balance from the previous credit agreement. The remaining $62.5 million is available as a revolving line of credit or for future term loans. Principal payments on our current term loan consist of quarterly payments totaling $1.25 million that are due and payable on the last business day of each March, June, September, and

Current wording

In fiscal 2023, we entered into a new credit agreement (the 2023 Credit Agreement) with KeyBank National Association (KeyBank) leading a group of financial institutions (collectively, the Lenders), which replaced our previous credit agreement. The 2023 Credit Agreement provides up to $70.0 million in total credit, of which $7.5 million was used to replace the outstanding term loan balance from the previous credit agreement. The remaining $62.5 million is available as a revolving line of credit or for future term loans. The 2023 Credit Agreement matures on March 27, 2028, and interest on any draws upon the line of credit is due and payable on the last day of each month. For term loan borrowings, interest is due and payable when the term loan principal payments are due and payable. The interest rate for borrowings on the 2023 Credit Agreement is based on the Secured Overnight Financing Rate (SOFR) and is a tiered structure that varies according to the Leverage Ratio as defined in the 2023 Credit Agreement.

Previous wording

The following discussion is a description of the primary factors affecting our cash flows and their effects upon our liquidity and capital resources during the three quarters ended May 31, 2024.

Current wording

The following discussion is a description of the primary factors affecting our cash flows and their effects upon our liquidity and capital resources during the quarter ended November 30, 2024.

Previous wording

Our primary source of cash from operating activities was the sale of services to our customers in the normal course of business. Our primary uses of cash for operating activities were payments for SG&A expenses, payments for direct costs necessary to conduct training programs, to fund working capital changes, and payments to suppliers for materials used in training manuals sold. Our cash provided by operating activities during the first three quarters of fiscal 2024 increased $12.4 million to $38.4 million compared with $25.9 million in the first three quarters of the prior year. The difference was primarily attributable to favorable changes in working capital during the first three quarters of fiscal 2024 and featured strong collections of accounts receivable, less cash used to pay seasonally high year-end accounts payable and accrued liabilities, and a smaller change in deferred revenue compared with the prior year. Through May 31, 2024, our collection of accounts receivable remained strong and provided the necessary cash to support our operations, pay our obligations, and make critical investments. We currently anticipate that our cash flows from operating activities will remain strong during the remainder of fiscal 2024.

Current wording

Our primary source of cash from operating activities was the sale of services to our customers in the normal course of business. Our primary uses of cash for operating activities were payments for SG&A expenses, payments for direct costs necessary to conduct training programs, to fund working capital changes, and payments to suppliers for materials used in training manuals sold. Our cash provided by operating activities during the first quarter of fiscal 2025 remained strong and was $14.1 million compared with $17.4 million for the quarter ended November 30, 2023. The difference was primarily attributable to lower operating income in the first quarter of fiscal 2025 as previously discussed. Through

Previous wording

During the three quarters ended May 31, 2024, our cash used for investing activities totaled $7.8 million. Our primary uses of cash for investing activities consisted of additional investments in the development of our offerings and purchases of property and equipment in the normal course of business.

Current wording

During the quarter ended November 30, 2024, our cash used for investing activities totaled $2.8 million. Our primary uses of cash for investing activities consisted of additional investments in the development of our offerings and purchases of property and equipment in the normal course of business.

Previous wording

Through May 31, 2024, we spent $5.2 million on the development of our various offerings and related content. We are expecting to launch new and significantly refurbished offerings in fiscal 2024 and in future years, and we believe continued investment in our offerings and content is key to future growth and the development of our subscription offerings. We currently expect that our capital spending for curriculum development will total $7.1 million in fiscal 2024.

Current wording

In the first quarter of fiscal 2025, we spent $1.4 million on the development of our various offerings and related content. During the quarter ended November 30, 2024, we launched a significantly refurbished The 7 Habits of Highly Effective People offering and expect to release additional/refurbished content in fiscal 2025 and in future years. We believe continued investment in our offerings and content is key to future growth and the development of our business. We currently expect that our capital spending for curriculum development will total $9.3 million in fiscal 2025.

Previous wording

Our purchases of property and equipment in the first three quarters of fiscal 2024 consisted primarily of computer software and hardware, and leasehold improvements on our corporate campus. We currently anticipate that our purchases of property and equipment will total $4.0 million in fiscal 2024. However, our purchases of property and equipment in fiscal 2024 and 2025 are highly dependent upon leasehold improvements that may be necessary on our corporate campus as we approach the end of the master lease in June 2025. While we do not have an asset retirement obligation as we exit the campus lease, we are required to maintain infrastructure and repair or replace any broken or inoperable equipment. Therefore, our capital expenditures for property and equipment may differ from this estimate.

Current wording

Our purchases of property and equipment during the first quarter of fiscal 2025 totaled $1.0 million and consisted primarily of computer software and hardware. We currently anticipate that our purchases of property and equipment will total $5.3 million in fiscal 2025.

Previous wording

Through May 31, 2024, our net cash used for financing activities totaled $32.0 million. Our primary use of financing cash was $25.8 million used to purchase shares of our common stock, including $10.3 million used for shares withheld for income taxes on stock-based compensation awards which were distributed during the first quarter (refer to Note 3, Purchases of Common Stock for Treasury, to our condensed consolidated financial statements). We also used $7.2 million of cash for principal payments on our notes payable and financing obligation during the first three quarters of fiscal 2024. Partially offsetting these uses of cash were $1.1 million of proceeds from our Employee Stock Purchase Plan participants to purchase shares of stock during fiscal 2024.

Current wording

For the quarter ended November 30, 2024, our net cash used for financing activities totaled $6.6 million. Our primary uses of financing cash were $6.0 million used to purchase shares of our common stock, which consisted entirely of shares withheld for income taxes on stock-based compensation awards distributed during the first quarter, and $1.0 million used for principal payments on our financing obligation relating to our corporate headquarters lease. Partially offsetting these uses of cash for financing activities were $0.3 million of proceeds received from our Employee Stock Purchase Plan participants to purchase shares of common stock during the first quarter of fiscal 2025.

Previous wording

On April 18, 2024, our Board of Directors approved a new plan to purchase up to $50.0 million of our outstanding common stock. The previously existing common stock purchase plan was canceled, and the new common share purchase plan does not have an expiration date. As of May 31, 2024, we had not purchased any shares under this new plan and had the full $50.0 million available on the current purchase authorization.

Current wording

On April 18, 2024, our board of directors approved a plan to purchase up to $50.0 million of our outstanding common stock. The previously existing common stock purchase plan was canceled, and the new common share purchase plan does not have an expiration date.

Previous wording

Our uses of financing cash during fiscal 2024 are expected to include required payments on our term loan and financing obligation, and may include purchases of our common stock. However, the timing and amount of common stock purchases is dependent on a number of factors, including available resources, and we are not obligated to make purchases of our common stock during any future period.

Current wording

Our uses of financing cash during fiscal 2025 are expected to include required payments on our financing obligation, and may include purchases of our common stock. However, the timing and amount of common stock purchases is dependent on a number of factors, including available resources, and we are not obligated to make purchases of our common stock during any future period.

Previous wording

We expect to meet the obligations on our notes payable, service our existing financing obligation, pay for projected capital expenditures, and meet other obligations during the remainder of fiscal 2024 and in fiscal 2025 from current cash balances and future cash flows from operating activities. Going forward, we will continue to incur costs necessary for the day-to-day operation of the business and may use additional credit and other financing alternatives, if necessary, for these expenditures. During fiscal 2023, we entered into the 2023 Credit Agreement which we expect to renew and amend on a regular basis to maintain the long-term borrowing capacity of this credit facility. Additional potential sources of liquidity available to us include factoring receivables, issuance of additional equity, or issuance of debt to public or private sources. If necessary, we will evaluate all of these options and select one or more of them depending on overall capital needs and the associated cost of capital.

Current wording

We expect to meet the obligations on our notes payable, service our existing financing obligation, pay for projected capital expenditures, and meet other obligations in fiscal 2025 and beyond from current cash balances and future cash flows from operating activities. Going forward, we will continue to incur costs necessary for the day-to-day operation of the business and may use additional credit and other financing alternatives, if necessary, for these expenditures. During fiscal 2023 we entered into the 2023 Credit Agreement which we expect to renew and amend on a regular basis to maintain the long-term borrowing capacity of this credit facility. Additional potential sources of liquidity available to us include factoring receivables, issuance of additional equity, or issuance of debt to public or private sources. If necessary, we will evaluate all of these options and select one or more of them depending on overall capital needs and the associated cost of capital.

Previous wording

We believe that our existing cash and cash equivalents, cash generated by operating activities, and the availability of external funds as described above, will be sufficient for us to maintain our operations for at least the upcoming 12 months. However, our ability to maintain adequate capital for our operations in the future is dependent upon a number of factors, including sales trends, macroeconomic activity, our ability to contain costs, levels of capital expenditures, collection of accounts receivable, and other factors. Some of the factors that influence our operations are not within our control, such as general economic conditions and the introduction of new offerings or technology by our competitors. We will continue to monitor our liquidity position and may pursue additional financing alternatives, as described above, to maintain sufficient resources for future growth and capital requirements. However, there can be no assurance such financing alternatives will be available to us on acceptable terms, or at all.

Current wording

However, our ability to maintain adequate capital for our operations in the future is dependent upon a number of factors, including sales trends, macroeconomic activity, our ability to contain costs, levels of capital expenditures, collection of accounts receivable, and other factors. Some of the factors that influence our operations are not within our control, such as general economic conditions and the introduction of new offerings or technology by our competitors. We will continue to monitor our liquidity position and may pursue additional financing alternatives, as described above, to maintain sufficient resources for future growth and capital requirements. However, there can be no assurance such financing alternatives will be available to us on acceptable terms, or at all.

Previous wording

2024, there have been no material changes to our expected uses of cash and contractual obligations from those discussed in our Annual Report. However, current economic conditions and other forecasts may change and could alter our expected material uses of cash in future periods. For further information on our material uses of cash and contractual obligations, refer to the information included in our Annual Report.

Current wording

These material cash requirements are discussed in more detail in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended August 31, 2024, which was filed with the SEC on November 12, 2024 (our Annual Report). During the quarter ended November 30, 2024, there have been no material changes to our expected uses of cash and contractual obligations from those discussed in our Annual Report. However, current economic conditions and other forecasts may change and could alter our expected material uses of cash in future periods. For further information on our material uses of cash and contractual obligations, refer to the information included in our Annual Report.

Previous wording

Our consolidated financial statements were prepared in accordance with GAAP. For information on our critical accounting policies, see “Critical Accounting Estimates” in the Management’s Discussion and Analysis included in Item 7 of the Annual Report on Form 10-K for the fiscal year ended August 31, 2023. Please refer to those disclosures for further information regarding our uses of estimates and critical accounting policies. There have been no significant changes to our previously disclosed estimates or critical accounting policies.

Current wording

Our consolidated financial statements were prepared in accordance with GAAP. For information on our critical accounting policies, see “Critical Accounting Estimates” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report. Please refer to those disclosures for further information regarding our uses of estimates and critical accounting policies. There have been no significant changes to our previously disclosed estimates or critical accounting policies.

Previous wording

Refer to Note 1 to our condensed consolidated financial statements for a description of new accounting pronouncements that may impact us.

Current wording

Refer to Note 1 to our unaudited condensed consolidated financial statements for a description of new accounting pronouncements that may impact us.

Previous wording

Certain statements made by the Company in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended (the Exchange Act). Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “project,” or words or phrases of similar meaning. In our reports and filings we may make forward-looking statements regarding, among other things, our expectations about future revenue levels and financial results, our financial performance during fiscal 2024, future training and consulting revenue, expected increases in add-on subscription services revenue and delivered training and coaching days, anticipated renewals of subscription offerings, our ability to hire sales professionals, the amount and timing of capital expenditures, anticipated expenses, including SG&A expenses, depreciation, and amortization, future gross margins, the release of new services or products, the adequacy of existing capital resources, our ability to renew or extend our line of credit facility, the amount of cash expected to be paid for income taxes, our ability to maintain adequate capital for our operations for at least the upcoming 12 months, the seasonality of future revenues, future compliance with the terms and conditions of our line of credit, the ability to borrow on our line of credit, expected collection of accounts receivable, estimated capital expenditures, and cash flow estimates used to determine the fair value of long-lived assets. These, and other forward-looking statements, are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are disclosed from time to time in reports filed by us with the SEC, including reports on Forms 8-K, 10-Q, and 10-K. Such risks and uncertainties include, but are not limited to, the matters discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2023, entitled “Risk Factors.” In addition, such risks and uncertainties may include unanticipated developments in any one or more of the following areas: cybersecurity risks; inflation and other macroeconomic risks; unanticipated costs or capital expenditures; delays or unanticipated outcomes relating to our strategic plans; dependence on existing products or services; the rate and consumer acceptance of new product introductions, including the All Access Pass; competition; the impact of foreign exchange rates; the number and nature of customers and their product orders, including changes in the timing or mix of product or training orders; pricing of our products and services and those of competitors; adverse publicity; and other factors which may adversely affe…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements made by the Company in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended (the Exchange Act). Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “project,” or words or phrases of similar meaning. In our reports and filings we may make forward-looking statements regarding, among other things, our expectations about future revenue levels and financial results, our financial performance during fiscal 2025, future training and consulting revenue, expected increases in add-on subscription services revenue and delivered training and coaching days, anticipated renewals of subscription offerings, our ability to hire sales professionals, the amount and timing of capital expenditures, anticipated expenses, including SG&A expenses, depreciation, and amortization, future gross margins, the release of new services or products, the adequacy of existing capital resources, our ability to renew or extend our line of credit facility, the amount of cash expected to be paid for income taxes, our ability to maintain adequate capital for our operations for at least the upcoming 12 months, the seasonality of future revenues, future compliance with the terms and conditions of our line of credit, the ability to borrow on our line of credit, expected collection of accounts receivable, estimated capital expenditures, and cash flow estimates used to determine the fair value of long-lived assets. These, and other forward-looking statements, are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are disclosed from time to time in reports filed by us with the SEC, including reports on Forms 8-K, 10-Q, and 10-K. Such risks and uncertainties include, but are not limited to, the matters discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2024, entitled “Risk Factors.” In addition, such risks and uncertainties may include unanticipated developments in any one or more of the following areas: cybersecurity risks; inflation and other macroeconomic risks; litigation; unanticipated costs or capital expenditures; delays or unanticipated outcomes relating to our strategic plans; dependence on existing products or services; the rate and consumer acceptance of new product introductions, including the All Access Pass; competition; the impact of foreign exchange rates; the number and nature of customers and their product orders, including changes in the timing or mix of product or training orders; pricing of our products and services and those of competitors; adverse publicity; and other factors which may ad…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Forward-looking statements are based on management’s expectations as of the date made, and we do not undertake any responsibility to update any of these statements in the future except as required by law. Actual future performance and results will differ and may differ materially from that contained in or suggested by forward-looking statements as a result of the factors set forth in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in our filings with the SEC.

Current wording

Forward-looking statements are based on management’s expectations as of the date made, and we do not undertake any responsibility to update any of these statements in the future except as required by law. Actual future performance and results will differ and may differ materially from that contained in or suggested by forward-looking statements as a result of the factors set forth in this Management’s Discussion and Analysis and elsewhere in our filings with the SEC.