Welcome to the Q3 2017 Franklin Covey Earnings Conference Call. My name is Adrianne and I will be your operator for today’s call. [Operator Instructions] Please note this conference is being recorded. I will now turn the call over to Derek Hatch, Corporate Controller. Derek Hatch, you may begin.

Thanks, Adrianne. Good afternoon, ladies and gentlemen. On behalf of Franklin Covey, I would like to welcome you to our third quarter of fiscal 2017 earnings call and discussion this afternoon. Before we begin, I would just like to remind everyone that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon management’s current expectations and are subject to various risks and uncertainties, including but not limited to the ability of the company to stabilize and grow revenues, the acceptance of and renewal rates for the All Access Pass, the ability of the company to hire productive sales professionals, general economic conditions, competition in the company’s targeted marketplace, market acceptance of new products or services and marketing strategies, changes in the company’s market share, changes in the size of the overall market for the company’s products, changes in the training and spending policies of the company’s clients and other factors identified and discussed in the company’s most recent annual report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. Many of these conditions are beyond our control or influence, any of which may cause future results to differ materially from the company’s current expectations. And there can be no assurance the company’s actual future performance will meet management’s expectations. These forward-looking statements are based on management’s current expectations and we undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of today’s presentation, except as required by law. With that out of the way, we’d like to turn the time over to Mr. Bob Whitman, our Chairman and Chief Executive Officer. Bob?

Thanks, Derek. Hello to everyone. We appreciate you joining us today. We are happy to have the chance to talk with you. For the third quarter, we are pleased that the sum of revenue plus the change in deferred revenue for the third quarter was $2.3 million higher than last year’s third quarter and for adjusted EBITDA, the same was true that the sum of adjusted EBITDA plus our change in deferred revenue that we always talk about was $1 million higher. So, we thought it was a good solid quarter. We are particularly pleased by All Access Pass’ continued momentum and by the momentum of the education division and the momentum that’s in the rest of the business going into the fourth quarter. We believe we are well-positioned to accelerate growth in the fourth quarter. We expect very strong fourth quarter and also position for some transitions in fiscal 2018. Inflection points we’ll talk about in future years. Today, I would like to briefly address five questions, which we have been asked in recent investor conferences and visits. So, I will actually address the first three and Paul and Sean Covey will address the fourth and Steve the fifth. But the first is how our sales of All Access Pass going? We’ll give you an update on that. Second, how was the lifetime value of our customers playing out the factors which drive that? Third, how is the transition to the All Access Pass subscription business model progressing? Fourth, how are we organizing people? So tell me how you can organize through and take advantage of the big opportunities in both – with All Access Pass and with education and then again some update on how we have been utilizing our excess cash to hopefully increase – further increase…

Thanks Bob. Hello everybody, good afternoon. As Bob mentioned in March, we reorganized a significant portion of the organization to match and better drive our All Access Pass go to market strategy. And if you look at Slide 11, this is a simple diagram to explain what this structure looks like. Within our field organization now, nearly all of our employees fall on a team, a market team. And today we have about 14 – we have 14 of those around the world in those countries that where we have historically had our direct offices, so the supplies to the U.S., Canada, the UK, Japan, Australia and China. Each of these teams are similar in size, both in terms of revenue and the number of employees or staff on each of these teams. They are also similarly resourced and that’s important because these teams now become really the primary operating unit of the company and it’s through these teams that we sell, we support, we deliver and ultimately renew our pass holder relationships. So you see there and it turns you might be familiar with our client partners. Each team there in the center is led by Managing Director. We have got our inside sales teams, our client service coordinators, those implementation specialists that we talked on. We talked about on prior calls that are so important in helping us maintain and renew these pass holder relationships. We have got our regional practice leaders that help us preserve our ability to have to go deep with clients on specific topical areas to find some of our solutions. So each team is similarly structured. And as Bob mentioned we have integrated into each of these teams, what we are historically are the sales and marketing delivery efforts from our sales performance…

Thanks, Paul. And Sean?

Hi. You are hearing me okay. Great. Yes. Hi everyone. Yes. So similar to how Paul has organized with brokerage side we have done the same kind of thing with education. As Bob said seeing opportunity in education, 144,000 K-12 schools in U.S. and Canada alone, about 3 million across the world. So we have organized ourselves into market teams as well. We did this many years ago. We just keep refining it. With each market team of about it’s usually four, five, six members. We will take on about 1,500 schools in the area and work with those schools. We will to try to get them onboard and then to keep them strong. And we call these market teams pods. We have 30 of them in total and the pods consists of a client partner that leads the sales efforts, customer service person, one or more coaches, some of these pods are pretty big, might have 200 schools will have four coaches each. Each coach serves about 40 to 50 schools. And their job is to help these schools achieve outcomes that the school desires. And then we have got a person in each pod that is focused just on getting the school to renew, keeping them happy and serving them so that we have a higher renewal rate. So with 30 pods, Bob mentioned that gives us about 45,000 schools that we are kind of looking after even though we haven’t penetrated. We have only penetrated [ph] 2,500 to 4500, but so on average each pod is working with about 100 schools and has approached about another hundred, so there is still a lot of room to grow here. The pod structure works really well, because it’s a team based approach, so a lot of synergy among the…

Thanks Sean very much. For us this is important thing, doing this structure allows each of these pods to take in all the responsibilities of go to market, servicing the customers after, renewals, etcetera so that you at least have the structure where you are not just building a big central team it really it builds around the people we have to deliver on this. Final question then five, how we expect to utilize excess cash and credit line capacity, Steve, if you will just address that will be great. Steve Young?

Okay. So my opportunity to take on what we have done and expect to do with cash, then after that I will mention a few financial facts and then talk about guidance. So first of all what we expect to do with cash. As we discussed last quarter, while our transition to subscription accounting suppresses reported revenue, EBITDA and earnings, it does not suppress cash. So our cash flow is expected to remain strong and predictable. As you know historically, after making the investments we need to grow the business, we have used a significant amount of our excess cash to repurchase shares. Over the past seven quarters, we have repurchased $45 million of shares and over the past ten quarters $59 million of share. So, fairly significant amounts we think for a company our size. And as we said, last quarter it’s easy for us to decide to continue to repurchase shares for several reasons. First, at approximately our current market cap, the after-tax cash yield is around 7%. A second reason since we have grown in the past and we expect to grow in the future, the internal rate of return we can think we can get by repurchasing shares is good and exceeds our cost of capital. And third, we believe the very little value is still being attributed to our potentially largest growth engine, that being the direct offices. So, the value of the company we think is only – is not enough more than the value that we think of the education practice and the licensee practice. So, we expect in the future to continue to use our excess cash to repurchase shares. Now, in the third quarter, however, we didn’t repurchase shares. And the reason for that is our knowledge of three pending acquisitions…

Thanks, Steve. I guess, we should open up for questions. Thanks.

Thank you. [Operator Instructions] And our first question comes from Tim McHugh from William Blair. Please go ahead.

Hi, Tim.

Yes, hi, guys. First, maybe Steve the last comment you made about the deferred revenue growth I guess for the year essentially is a little less than you thought at the start of the year. Is that because of All Access sales have been less than you would have said at the start of the year or is there a bigger drag from the traditional business, essentially more cannibalization that you would have assumed at the start of the year. What’s the difference?

Well, first of all, the amount of increase in deferred revenue that we talked at the beginning of the year was really quite significant. As Bob talked about, it could be as much as $25 million at the end of the year or for the year. So, the shortfall impacting deferred revenue is primarily the subscription type sales that while still as Bob talked about significant increases over last year and growing very, very rapidly are a bit less than…?

One of the – probably the key driver of that maybe a little disruption for future and reorganization, but that wasn’t it. The main driver is in last year’s third and fourth quarters we signed up new All Access Passes. In order to some people say, Oh Gosh, I am not sure I can use it right now and so we gave many, a lot of different people we gave them a pass. It was not just a 12 month pass, we gave them a 14 month pass and so when we look at the anniversary, originally when we kind of forecasted the number. There was kind of assumption that people would just assume that since they bought the pass in the third and fourth quarter they would renew and even though their pass turn went into the following quarters, so if they bought in the third quarter, it might not be renewable till July and if they bought in the fourth quarter for some people it is not renewable till September or October. I think at least in our guidance, my guidance, we assume that just 1% or more of the amounts would actually contract in the quarter. That makes up substantially all of it. Really is just that it pushed some from the third quarter over and in the fourth quarter pushed some into the first. And so we were making some efforts and giving people some offers to get it back into the year and that’s what Steve says. I think there is some efforts as possible, we actually will recover it. The other – and so that’s it for deferred revenue, the only other real impact there was the sales performance practice. Again with the inclusion of its content in the All Access Pass we assumed incorrectly that they can just continue to sell where they had to existing customer, but we really disrupted them in third and fourth quarter, but that’s more on the other side of the income statement. That’s as reported, but that’s the deferrals almost all just as sliding. We haven’t been doing that same thing going forward. By the way I mean now a days we are not doing that we are selling 12 month passes, its rear and we do something else.

Okay. You touched on the sales effectiveness program, I guess that strategic markets business, now that it’s increasingly rolled into the All Access Pass, I guess what’s the rest if that revenue continues to erode on a standalone basis?

We think – what we have done is the roll those sales people into these pods that you see, so each of these salespeople still have the accounts they had before. And now they have the entire resources, before they didn’t have the marketing resources, because they were too small. They didn’t have the pass holder services resources with the sales. So I think the early returns and it is early because two months later is that people are thrilled about this idea that now they are part of the real team pain that had – they have more accounts to handle some of these are most sort of most capable salespeople in the company. But they have had a limited number of accounts to manage. They don’t have a full territory. They have got all the marketing support. So I think the product line itself, we don’t think we will – and we have had some declines this year because we have cannibalized it. We think actually starting from this that the content we have had 7 or 8 people selling that content. Now we have 300 potentially including our licensees that can do it, all of our existing salespeople plus those. So I think the category will grow. It will probably grow at an accelerated rate related to other things. Now the individual salespeople will continue to do well with some of our best and they will get a lot more support in doing it, but not have the cost of trade separate pods around it. So I think it streamlines costs, but we think that for both customer loyalty and the sales performance which should not grow in really in the last couple of years that this is now going to unleash a lot of new sales there.

But just to understand right the roughly called $20 million or so little over of annual revenue in that strategic market that’s going to shift towards an All Access Pass sale, good going forward, I mean you have to do that trade off or those salespeople have sell All Access Passes now and increasingly less like they are selling those on a standalone basis, is that the right way?

Yes. Probably that’s true. They won’t sell on a standalone basis. What will happen is as it is happening now is it’s somebody when they buy the pass they are buying it often times for a specific purpose. So they will still be talking to sales forces who are saying Gosh, I have got all these development needs. And – but rather than buying that content separately just for the sales performance, we will say them, listen you can get all the content that you need for your sales performance solution plus you get everything else from the pass to help elsewhere in the company and it just provides more comprehensive solution. But people can still buy I mean many people are still buying a solution to a specific problem. We want them to do that. It’s just they are delivering through the All Access Pass.

And Steve, do you have the free cash flow or operating cash flow?

I will get Derek to get the exact number of from our Q that’s going to come out as like $11.7 million year-to-date.

$11.7 million is that operating cash or…?

That’s the net cash provided by operations.

So $11.7 million and you have CapEx?

Yes. CapEx for the quarter – for three quarters is $5 million, curriculum development $4 million and then as we said in the press release we did that about $3.5 million for the Robert Gregory acquisition.

Okay, thanks.

And the next question comes from Marco Rodriguez.

Well, we have to thank you. I just interrupted you.

Our next question comes from Marco Rodriguez with Stonegate Capital. Please go ahead.

Good afternoon guys. Thanks for taking my question. Hi, I wanted to follow-up a little bit on the sales team organization now, I am so just trying to pass through the changes you guys have implemented now and how you used to approach market and if I am not mistaking in prior calls here when you have been transitioning – you been transitioning to the All Access Pass, you have talked about there still being I guess clients or end customers are going to want individual type practice sales and so I am trying to understand this whole move, are we getting away from doing any individual sales and how is that going to kind of work?

Hey Marco, this is Paul. I probably didn’t explain that very clearly, I apologize. So we are actually very much not trying to move away from the individual solution base sale. We want to deliver both individual solutions via the All Access Pass. We still are very interested in doing large scale transformation engagements, large execution engagements, large trust engagements. The benefit to us and we think to our customers if we do that is in the past some of those practice areas got a little bit lumpy where it fell into an organization with a really big initiative, but there was nothing there on the backside that we had to go find and explain. We think the benefit and in still engaging with that client initially what they have for example around the sales transformation solution is that they can get all of the content and tools they need from within the pass. And because they are pass holder we can then work with them to find additional journeys, additional areas of the organization where we can have impact, start to align those up and now that client become much less lumpy with us and they are a client that would renew since they with us year after year after year. So we are trying to get the best of both worlds which is still had to leverage our great expertise in 7 or 8 key areas but to deliver those clients in a way that allows us to go broad once we are in that organization to increase lifetime value of that organization.

Okay. And did you cut heads from the sales force to switch to this?

No.

And really what we would see is for the salesperson, individual salesperson other than that some of them report to a different managing director today it didn’t affect them. So with the exception of the salespeople coming over from the sales performance practice, we would now have more accounts and can sell the full range of our solutions. It really didn’t effect the individual salesperson or his or her job, but what it did is provide them the support structure within their pod or have new protocol for central resources to try to help them close the sale or to have a pass holder services discussion or sales assistant or whatever it is just provided the resources under our MDs, so really all the change happens just at the supervisory level and support level. The job of the client partners stays the same as it was before, their go to market approach is the same as it was before the exception of the sales performance practice it is now part of those eight salespeople are now part of these geographic MD regions.

Got it, okay. And I apologize if this is in the press release I didn’t get a chance to go through the entire thing, but the restructuring charge you had for the sales force realignment, so what is that for then if you didn’t cut heads?

Yes. We didn’t cut salespeople. So it affected three things. One of our more than 130 or 140 salespeople in the U.S., only about 15 were working out of the offices that we had, because we have offices in Atlanta, in Chicago and in Orange County, California, but the salespeople really were out in their territories working and really the only thing that was in the central offices were some administrative functions. So, we consolidated those functions and eliminated offices. And that was one thing. We had duplicate marketing functions in both of the – in offices as well as centrally that’s now been reorganized. We – Paul, you can address some of the other things, but those are the two of the biggest ones. There were some individuals in staff positions which we tried to put into different positions in the company, but there were some staffing reductions of around 14 people or something that in the end either because they couldn’t move or whatever there wasn’t a job for them and they were given severance, as we organized into these geographic areas instead of multiple regions around the world and organizing that way and with around this pod structure, we are able to streamline and get some efficiencies. So from an overall supervisory level, there was a little bit of a reduction there as well.

Got it. Okay. And what are the client partners’ total amount at the end of the quarter?

211.

Got it. Okay. And last quick question, the acquisitions that you have announced here, I am assuming they are not significant enough to change your guidance where they are not really doing much to guidance one way or the other?

Yes, that’s right. As you know during the implementation of an acquisition, you have some additional costs for the first quarter or so. And also the financial impact from the acquisitions would be if our sales, for example, increase because of that content, not because of the acquired EBITDA.

Got it. Thanks a lot. I appreciate it.

Thanks, Marco.

And our next question comes from Kevin Liu from B. Riley & Company. Please go ahead.

Hi, good afternoon. First question just in terms of the All Access Pass sales, I think I heard mentioned of some potential multi-year arrangements coming down the pike. So, just curious if you are planning on extending bigger discounts or what other value-adds you have to convince clients that’s entering to multiyear arrangements?

Yes. Basically, the answer is yes, but I mean, right now, we have had introductory pricing going since the inception of All Access Pass. And that will add about 10% in price of the pass anyway. So, the first thing they get by renewing and doing a multiyear is they get to lock in for the period of time the introductory pass. And then on top of that, there is another 10% cost price break if they will add the extra years. So…

Understood. And then just also with respect to All Access Pass, can you talk a little bit about what sort of impact if any it’s had on your licensee sales today? And at which point, you would expect more of the licensee activity to also shift towards All Access Pass predominantly?

Yes. Sean, do you want to speak?

Yes, sure. Yes. So, we haven’t done that much yet. We have done lot of preparation to get it up and going, but we are – we are working on the portal that’s got 50 new languages. And as soon as that is completed, we will launch it hard across the whole globe. We have sold 25 passes primarily in the Nordic region and in the Netherlands area, little bit in Germany, mainly to English-speaking multinational companies. We think that I think this is going to be extraordinarily a good thing for our partners. I think they are generally more so sophisticated in their sales ability. And I think this is a more complex sell and I think it will match up well with how they sell. They are excited. We are prepared. We are just waiting for the portals. We have the language where we can get going.

You had a question?

I am sorry, Bob.

No, go ahead, Sean, sorry.

As you have said, we have sold about $0.5 million of All Access Pass so far this year.

The thing I was going to say Kevin is that you probably know this, but we don’t have the same accounting issues with the international licensee sales of All Access Pass, because they pay us on invoiced amounts. And so for them, the business model – our business model, which is already just a license fee we get from them will continue as it is, but we think the All Access Pass will love them like us to have bigger initial sales, higher renewals and bigger add-on sales, all of which will benefit their businesses and therefore benefit ours, because they will pay us a royalty as its invoice, but we don’t have the same deferred revenue thing coming up for our licensee partners.

Great. That’s helpful. And then just the last question here, the $5 million in annualized cost savings from all the reorganization, does all of that start to come through here in the fourth quarter or is there anything else that kind of needs to be done that will preclude you from showing all those savings?

We will get about one quarter’s worth of that. We get about $860,000 or something of benefit in the fourth quarter from those, because they have all been implemented at this point. And so, yes, and they will expect to pickup on the same operations that cost saving in next year. Obviously, we will make other investments in new people. So, the net cost savings for the year will be $4 million and $4 million that we are running this year over and it will be $4 million versus what would have been, but of course, we will still have new salespeople and things out of it. But this cost saving is a real, they have been implemented and they are flowing through already in the fourth quarter.

Alright. Thanks for taking the questions.

Thanks, Kevin.

And our next question comes from Samir Patel from Askeladden Capital Management. Please go ahead.

Hey, guys. How is it going?

Hi, good Samir. How are you?

Pretty good. So, I want to drill down on a couple of things. So, I guess the first one is it sounds like, I mean, just apples-to-apples before even any growth in revenue, you are going to have $4 million increase in adjusted EBITDA next year just from the calendarization of the cost savings, right?

Effectively, yes. I mean, that’s the idea if we ran the same revenue again this year as we did last year you would get the costs are down.

So, following up the other thing you mentioned, but I don’t think you really highlighted enough, you said that because of the way you have streamlined the sales organization that your flow-through on incremental revenue to incremental adjusted EBITDA is actually going to exceed your historical range? Can you dimensionalize that any? Can you put a number on that, because I think historically you have guided to 25% to 30% incremental EBITDA margins? What would you expect now?

Yes. I mean, I would say that with a combination of those 3 out of 30% to 35%. I mean, that would increase by – if we ever say 25% to 30%, let’s say we were thinking 28%, this thing would have 300 to 400 basis points change over time as we continue to increase margins, reduce the costs and have lower marketing costs on the renewal revenue.

Got it. Okay. And then putting that all together, I mean, you have talked I think qualitatively about how excited you are about 2018, but if you were to just put a number on it, right, you are starting with 38, your current year 34 plus formulating cost savings, obviously, you are getting a big boost from the deferred revenues. I mean, is it reasonable to think that it’s going to be somewhere in the low 40s at a minimum for adjusted EBITDA next year? And of course, I am referring to invoiced amounts and not those stupid GAAP accountings?

Thanks for the editorial comment about the GAAP accounting. We agree.

Hey, the SEC probably doesn’t lie.

Yes. So, we are not prepared obviously to talk about guidance for next year, but no, I don’t have any argument with your thought process.

Sure. Thanks, guys.

Thanks, Samir.

And our next question comes from Patrick Retzer from Retzer Capital. Please go ahead.

Good afternoon, gentlemen. So, I wanted to talk about your guidance for adjusted EBITDA plus the change in deferred that you had laid out last quarter and the previous quarter. Last quarter, you beat your guidance for the second quarter of the fiscal year. And it sounds like you are confident you will meet your guidance for Q4? Having said that, you fell short a bit here in Q3 and I wanted to clarify it sounds like that’s because to a slight degree from the disruption due to the reorganization and then more largely because last year in Q3 and Q4 you were granting 14-month passes for All Access Pass to get people onboard. So, this year some of those are getting pushed out a quarter.

I believe all of that is accurate.

Yes, that’s accurate. And the other one would be their sales performance practice here as we mentioned, because maybe the disruption in hours and also change was $1 million of EBITDA less than we thought – we would have thought in the third quarter and will also be in the fourth quarter. So we are saying in the fourth quarter we will meet our original guidance, even though as sales performance practice will be less and even though there is some of the revenues that will get renewed, some of their passes will get renewed in Q1 that were for Q4 sales, but the question is as Steve said we think this fourth quarter will shape up very strong. We will be strong enough. We have got some big deals out there, but we are working which we were to hit them could actually make up some of that ground from the third quarter and we would expect that we will make up some of this ground from the third quarter. But it would take winning a couple of the bigger ones to actually make up for the third quarter and that’s the reason why on a reported basis we expect to be on guidance or if missed, missing by hopefully a couple hundred thousand or some thing like that. On the gross basis around the reported plus deferred that number we are just trying to see how much in the third quarter we can make up in the fourth.

Okay. And then Steve had talked about the three acquisitions, the third one, he couldn’t name, but it sounds like it’s imminent, should we be expecting that to be done and announced in July or early August?

We would expect it to be early July.

Okay.

We are very close to signing a definitive agreement, in fact we keep looking around the room to see if we’ve signed yet and then we expect after we sign definitive agreement to close within two weeks.

Okay. And then at what point are you able to start buying stocks?

Well, this will be announced or announceable and so as soon as our acquire period last for 72 hours after we report our numbers, so here in just a little while…

Yes. We are announcing it today for that reason, so we can be back in the market in 72 hours...

Okay. Thanks, guys.

Thanks.

And your next question comes from Samir Patel from Askeladden Capital Markets. Please go ahead.

Hi. I just want the follow-up on two things, the first you talked about the introductory pricing on All Access Pass, can you just explain to me how that’s going to flow through over the next few years in terms of when those clients come up for renewal or they are going to pay for 10% price increase or is it going to be kind of on people who sign after that offer expires or just how does that work?

This is Paul, I will take that. So what we are – we are going to announce the introductory – the phase out of the introductory price increase, so any new clients who sign after that period will pay the new pricing which will be roughly 10% higher. For those clients that got on early with us and have been some of our great active clients will go to them this upcoming fiscal year and invite them to renew on time. And if they do, they won’t be subject to the price increase as a way of keeping them, that’s the hope to sign them for multiple years at that point. And those that don’t renew on-time for that reason would be subject to then the price increase, that’s how we will balance taking care of those who came on early and then the rest of the market which will start selling 10% higher price.

Okay, great. And then the follow-up to that is on your – it sounds like again you got 90% plus net revenue renewal, is that counting up-sell and price increases or is that just literally the percentage of prior year revenue that’s being retained?

It includes its past expansion, so often times expanded populations it does include. But it doesn’t include any of the add-on services or price increase that’s just expansion. It’s either the renewal of the existing or the renew plus expansion which is about two-thirds of those who have renewed, who renew do so, it might be a small additional population that some additional population on two-thirds.

Sure. And I don’t know if this is just a metrics difference in the way that you presented or its actual underlying difference in the business, but you guys talk about copying the Gartner [ph] model a lot, right and Gartner I think typically tends to achieve over 100% dollar retention, although they may measure that differently, do you think that’s a stretch goal for the out years here or do you think it’s going to settle out somewhere in the low to mid-90s in terms of net revenue retention?

I mean we think it will probably settle out in the low-90s. Actually what we have been saying it’s above 90 and it is above 90. But I would say if we look at along there might be quite a bit above 90 right. So we think 90 would be a great thing long-term. Our sales process is different, corporate executive order Gartner who have won now, they just have to just convince Steve to buy the research report every year. And as long as they keep in touch with Steve then it’s fine. We have both the bigger opportunity and because we have past expansions we have got lots of teams we can sell through inside an organization and that’s the upside. On the downside if you somebody leaves who is the head of learning and development and you have to start over, you have some of that. So I think over long-term if we said that their past renewal revenue would be in the low-90s, but there was service add-ons and so forth, the actual retain revenue per client would be 100% or more that would be the way to think about it even though we are getting we are doing more like Gartner revenue retention right now.

Great, okay. And then since you won’t give me 2018 guidance, I am going to be ambitious and ask for 2028 guidance, by which I mean can you put all these numbers together until long-term growth algorithm like you know obviously there is a lot of flux in the financials right now, but kind of when you look out over the next 4 years, 5 years, 6 years, 7 years, 10 years what kind of topline growth rate do you believe is achievable?

For us, I mean what we ought to be able to say is it ought to be double digit. But I think what we are saying is we are pretty sure it can be 6% to 7% every year. And if we can do that on the base of $225 million revenue and flow through something like a third that, that would be a good target given the investments and so forth that we are going to need to make to do this. But at least we think we are now organized so that we can scale the next level so – but that will my...

Sure, it’s a double digit is the target and 6% to 7% is what you’ll want to commit to?

I think that’s we should expect that with a couple of points coming from price increase on average and the rest coming from more – this is kind of organic mostly organic growth.

Good word mostly organic.

Yes. I mean pick up $1.50 from somebody from small acquisitions we’ll pick up small amounts, but most importantly you will pick up capabilities and great people and an expanded offer.

And I am sorry, did you guys say how significant the imminent acquisition is, like the kind of comparable in size to Robert Gregory Partners is it like [indiscernible] or is it something bigger?

Yes. I would think of it like the Robert Gregory.

Okay, cool. Thanks.

Thanks.

This concludes the question-and-answer session. I will now turn the call back over to Bob Whitman for final remarks.

Thanks. We just want to thank everyone for being on today. Thanks for your great questions. If any of you have follow-up questions obviously we are delighted to talk to you. We appreciate your support and are excited to be in this fourth quarter which is very active. So thanks very much. We are excited about it. Thanks very much.

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for participating. And you may now disconnect.