Welcome to the Q4 2019 Franklin Covey Earnings Conference Call. My name is Adrienne and I will be your operator for today’s call. At this time, all participants are in al listen-only mode. Later, we’ll conduct the question-and-answer session. [Operator Instructions] Please note this conference is being recorded. I’ll now turn the call over to Corporate Controller, Derek Hatch. Derek Hatch, you may begin.

Thank you, Adrienne. Good afternoon, everyone. On behalf of Franklin Covey I would like to welcome you to our investor call for the fourth quarter and fiscal year ended August 31, 2019. Before we begin, we’d 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 they 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 one 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 so much, Derek. Good afternoon, everyone. We really appreciate you joining today. We’re really pleased to report that our Q4 and full fiscal year 2019 results were strong – really, very strong and even better than expected. We have strong momentum in our business and we fully expect to build on that momentum going forward. The results for the fourth quarter and for the year are really what we expected when we made the business model change several years ago – high-single-digit revenue growth in constant currency; high gross margins; high revenue retention; SG&A that was reduced for high flow-through; and really accelerated growth in adjusted EBITDA and cash flow. As you know, our goal and expectation is to consistently achieve these very high rates of growth in adjusted EBITDA and cash flow, and to do it for years to come. Consistent with this objective, we had very high expectations for growth and adjusted EBITDA and cash flow in fiscal 2019, specifically as you can see in Slide 3. We expected that in fiscal 2019 in constant currency our reported adjusted EBITDA would increase from $11.9 million in fiscal 2018 to between $18 million and $22 million in 2019. We also expect that our adjusted EBITDA plus the change in our deferred revenue balance would increase to between $30 million and $34 million in constant currency and that our net cash generated would increase between $18 million and $22 million. We’re pleased that the strength of our results in fiscal 2019 allowed us to meet or exceed each of these expectations. Again, as you can see in Slide 3, in constant currency which was the basis for our guidance, our adjusted EBITDA increased from $11.9 million in fiscal 2018 to $21.6 million in fiscal 2019, a growth of $9.7…

Okay. Thank you, Bob. Good afternoon, everyone. So, guidance. As Bob discussed, we expect net sales to grow at a rate of high single digits in fiscal 2020 and expect that a significant portion of this increase in revenue will flow through to increases in adjusted EBITDA. Our fiscal 2020 guidance therefore in common currency is that adjusted EBITDA will increase from $20.6 million in FY 2019 to a range of between $27 million and $32 million in fiscal 2020. Anywhere in that range we think represents really strong growth in adjusted EBITDA, with growth rates from between 30% and 55%. So we’re pleased that we continue to have high flow-through and growing rapidly. Now to our first quarter. Despite the significant investments in our 31 new client partners and other investments, we still expect adjusted EBITDA to grow in Q1 by up to $1 million compared to last year, to approximately $4.2 million in the quarter. So that’s our guidance. Now, let me also touch on a couple of other matters before I turn it back to Bob. A little bit about liquidity. We also have significant liquidity and tend to use it to create additional shareholder value. So four points related to liquidity. First, we generated significant cash flow in fiscal 2019. As already discussed our net cash generated as we define it, increased to $22.2 million in FY 2019 and our cash flows from operating activities increased 81% or $13.6 million from $16.9 million last year to $30.5 million this year, even after making substantial growth investments in new content, increased portal functionality and adding a significant number of new client partners. So second point, we expect to generate significant additional cash flows in the future in the coming year. As discussed, our target is for net…

Thank you, Steve. With that, we’ll open it to questions. Thank you very much, everyone.

Thank you. [Operator Instructions] Our first question comes from Jeff Martin from Roth Capital. Your line is open.

Thanks. Good afternoon, guys. How are you?

How are you?

I’m doing well. Thanks a lot. Wanted to just touch on your content development and your investment in content, what – you bought some items in the past year or so, and some of those have become pretty sticky. I was wondering if you could give us an update on the uptake on some of those, and if those are helping drive new sales, and then what your plan is for additional either content investment or content creation in 2020.

You bet. Historically, we’ve invested about 4% in new content development every year. With the introduction of All Access Pass and Leader in Me, we increased that budget for a couple years to 7% or 8% and think it’ll kind of settle in at around 5% or 6% a year. So we have ongoing investments that are really substantial and these include some things as mundane as customer functionality and user access and the way that the portals work, etc., but very necessary to on the other end, acquisition or licensing or development of new content. In the last year and a half, we’ve had three really important additions to our content, to your point. One is new content that’s associated with the acquisition of Jhana called, Everyone Deserves a Great Manager, or Six Critical Practices for Leading a Team. We have a new best-selling book that supports that solution but it’s focused on one of our key jobs to be done, which is helping develop unit-level leaders. And so that’s been a really good hit. The second is this Unconscious Bias offering, which is noted, it has been out about six months. But really the number of – we had landed some that are really quite large populations inside an All Access Pass holder, as I mentioned, where they’re going to all 10,000 of their employees in addition to having a pass for 1,000. So that’s a great thing. The joint acquisition itself has made the content very sticky, because they get the Jhana weekly. We’ve added, in the education division we’ve added Leader in Me. We’ve gone to Leader in Me 4.0 and the whole new versioning of this that comes out every year. But this has been a massive effort and significant investment as well as our new district model which allows us to make it more scalable as we see this big opportunity. These districts love what’s happening in the one or two schools, want to take it to their district. Had to re-architect that. And then we acquired rights to all of Liz Wiseman’s content on multipliers. And so those are some of the important pieces of content. The last one is you know, in development now with Liz, and we’ll be coming out later this year. But I think that’s – if that’s – hopefully that’s responsive, that we’re making investments across a wide range of things. We also have refreshing of existing content, but is that helpful, Jeff?

Definitely, I appreciate that. And then I got on the call a little bit late, but I was wondering if you could – I’m referring to Slide 28, the contracts signed slide. I was wondering if you could just kind of put into perspective the change in deferred revenue and change in billed deferred revenue. In the fourth quarter there were some things that – because you would think that would grow quite a bit in the fourth quarter. I think last year’s fourth quarter you had a pretty significant period for All Access Pass, so maybe give some perspective on that?

Yes. I think on the contracts signed page, one of the things that gets reflected in this too, is unbilled deferred revenue. And so in prior years, the fourth quarter, we did all of our multi-year, essentially all of our multi-year sales in the fourth quarter. And so that was really helpful on the unbilled deferred edition. We have good unbilled deferred edition this year but we – now this is just a way of selling. I don’t know, Paul, if you want to add to that. This is what we do day-in, day-out, and these sales are now more evenly spread throughout the year. And so rather than making a big effort to get everybody to sign up for multi-year in the fourth quarter, we just said, let’s settle into a process. And so it’ll hit this first fourth quarter a little bit because that’s historically we had a bunch of – a big press at the end. We decided not to have any big presses at the end anymore and just to run it similarly throughout the whole year. So I think that’s the primary factor, Jeff. Otherwise it was pretty steady with what we normally would do.

Okay. And then was wondering how your recent class of new salespeople last year have progressed. Are you seeing them hit their marks? Are they hitting them earlier than what you hypothesize with your model? I know it’s…

Let me ask Paul and Sean to respond to that…

Your experience with that. Yes, thanks.

I’ll respond for enterprise, this is Paul. We’re really pleased with not only this last year, but the last couple of years. One of the things that we hoped would happen when we – Bob mentioned earlier a number of things we hoped would happen as we moved to this subscription model with all-access pass. One of those would be that we would see a faster ramp of client partners because they would start each year with all of that subscription revenue from the prior year in place, or substantially all of it in place. And that is proving to be the case for all of our client partners. But it has a particular impact on those that are new as they’re trying to hit these ramp rates that we talk about. And so we saw that again in fiscal 2019. It was a great year for the new client partners. Just another point on that, one of the other things we’ve done, I think we talked about this a call or two ago. We’ve really reworked our onboarding process for our client partners, as well. And so where we used to put quite a bit into them, now it’s – we’re spending 5X the amount of time with them to make sure that they have everything they need to really hit the ground running and to be successful. And that’s paying off for us also, so we’re – we’re pleased with what we saw in Fiscal 2019 from the new client partners for sure.

I’ll just add – this is Sean. So we’ve been pleased also with the client partners and their growth, their ramp rates in education. And what we’ve done historically, we haven’t had that much sales management. We’ve been putting that in place the last couple of years. And so we have several regional managers, district managers now, that are helping to oversee and ramp client partners, which has been a very positive thing. So we’ve got, since in the last two months we’ve hired eight new client partners in education over the last year, net new. And we’re continuing to hire, because we’re getting good returns and we feel like our onboarding process is getting better all the time. And so we’re very gung-ho about the future.

And Jeff, overall between the – thanks, Paul and Sean. Overall if you look at the ramp, the expected ramp, which you know the 200, 500, it’s on slide 22. The 200, 500, 800, million, 1 million, 3, the cohorts that we’ve hired since 2015 – so 2016 on, when All Access Pass has been in place and Leader in Me, we were about 20% ahead for each cohort. And it kind of seems to be about the same for each cohort. And what’s happening is of course, they’re retaining substantially all the revenue they generate the first year rather than losing a bunch of it. And that puts them on a higher trajectory. We’re keeping the goals the same. So we’re at about 20% ahead of those numbers.

That’s great to hear. Thanks, guys.

Thanks, Jeff.

Your next question comes from Marco Rodriguez with Stonegate Capital Markets. Your line is open.

Good afternoon, guys. Hey. Thanks for taking my questions.

Thank you.

I’m sorry if I missed this on the call, but I was wondering if you could talk a little bit more about the gross margin in the quarter that you guys saw, kind of flattish revenue growth year-over-year and the gross margins went down a few basis points here year-over-year as well. So I’m presuming that obviously you have higher revenue, higher margin revenue in the mix versus last year. I’m just kind of trying to figure out some of the drivers there.

What we talked about is that because – for the year as a whole we maintained the gross margin percentage, that really right-on 70.7% both years. And what we mentioned earlier was that this was despite the fact that we increased our services revenue some, the add-on services grew quite a bit during the year even though they’re a little over margin. You kept the overall margins the same, so that’s reflected that more subscription sales, higher margins, increase by – impacted for the company overall by some services. But they retained that. In the fourth quarter we had a little less in terms of percentage overall as a company, but it’s primarily related – almost all of it’s related to the education division where we made some additional investments in the portal as well as launched a new service that’s a derivative of Jhana. But it’s called – it’s the Leader in Me – it’s Leader in Me Weekly that goes out to faculty and administrators every week. And so those two investments, we won’t be increasing – those were kind of not one-time but they won’t increase like this again. And that affected the margin a little bit in the education division. And then most of this high-margin subscription revenue that we saw in the fourth quarter, none of it showed up in this quarter. It’s all on the balance sheet. So that’s really all that happened is the combination of some more services that kept it flattish, the decline in education which we won’t – we don’t expect to see it decline again, but you know, to swallow these investments that increased quite a bit this year, and the fact that this high margin revenue that we signed in the fourth quarter, all of it’s on the balance sheet, not – didn’t flow through the income statement yet.

Very helpful. Then in terms of the education division, you spent some time in the past talking about the under-penetration and the market opportunity that you guys have available to you with that line or that service. Can you maybe just talk a little bit more about what sort of initiatives or drivers you might be looking at within the next couple years, that might try to increase that overall market penetration for the education division?

Sure. Well, the biggest opportunity we feel and the lowest-hanging fruit is in the district penetration. And this has kind of taken us some time to see the opportunity, because we had to kind of get penetrated first of all, inside of some of these districts. And increasingly what’s happened is we start with a school or two instead of a district. They like it, and they want to take it further and expand it across the district. And as we shared, there are about 15,000 districts in North America, in the U.S. and Canada. And we’re in about 850 of them. And so this year and the next year, the next foreseeable future, we’ve adjusted our offering to make it more district-friendly so it’s easier to expand. We give districts many opportunities or ways of implementing, so if they decide to do Leader in Me inside of a district, we say, okay, we can do it with you, we can certify you to do it, you can self-implement. Made it very easy and affordable and flexible for them. So that’s been the big focus just in the last few months, and we’re right now selling Leader in Me 4.0 with this new district focus. So that’s probably the first opportunity is penetration in districts. On average we’re only in about two schools per district and most districts have between 10 and 20. They vary by size. Some are 5 and some are 250, right. And so that’s the number one focus is to get big into the districts. Yeah. This year, this past year, we’ve started this district focus. We grew our new schools well from 447 to 522 new schools. So that’s about 20% growth year-over-year. And we’re happy with that, and feel like it’s only going to accelerate in the upcoming years with additional focus on districts. Internationally, we’ve brought on about 700 new schools, and so we’re really happy with what’s happening internationally as well. So I think it’s a combination of penetration’s going to be district-focused, and also the new 4.0 model is, one part of it is the district focus and one part of it is a more flexible, up-front, Leader in Me. Because our biggest complaint has been, you’re too expensive the first year. So we’ve made a new offering that’s less expensive the first year. It’s still about the same amount over time, but it spreads it out over time. It’s easier to get in. Just in the last two months with this new offering we’ve heard several customers come to us and districts come to us and say, hey, I think you’ve solved the cost issue. This is a lot more affordable and flexible, and we’re really happy with what we’re seeing. And so we’re seeing big opportunities in districts. So that’s the plan.

And then lastly I was just wondering if maybe you could talk a little bit more about the client partner ramp, if you could just perhaps talk about the cadence, or expected cadence, of hires as you kind of progress through the year. And then maybe if you can address your ability to find additional client partners.

So client partners, as we mentioned, we added 31 net new client partners last year which we feel great about. They’re ramping well, very excited about them. We’ll add at least 20 additional client partners this year. Again, we tend to try to hire them in cohorts or in classes quarterly. The last two weeks of every quarter for us is new client partners, the kickoff of their five-week orientation, we call it sales academy. And so actually starting here soon, we have another batch of client partners coming in. So we try to space them throughout the year, as equally as we can. And we feel – we do. As we mentioned a minute ago we feel great about that, and their ramp and their development. As far as sourcing client partners, we have a recruiting team here at our headquarters in Salt Lake. We have five people who are full-time recruiters. And their job is to find client partners and we’re increasingly, we think, between both divisions. Sean, I think you’d say this too, zeroing in on who we think the right profile is, the right candidate, and increasingly getting more and more confident. We love all of our client partners, and those we’ve hired recently in the last couple of years are coming. And they’re very, very strong with great backgrounds and hitting the ground running very quickly.

And you know this, Marco, but just adding – if you add 20 net new salespeople a year for five years, by the fifth year, in the fifth year the first classes is doing $26 million of additional revenue. You’re adding almost $100 million of additional revenue and only the first two classes are close to ramp. So this is an important thing in getting it right. We’ve invested heavily, as Paul said, in the sales school, in the whole process. Now it used to be a few days, now it’s months. And this is – we’ve invested heavily behind this for a decade. Now we feel like we’re in a position where we can really add this – at least $20 million net but $25 million to $30 million like we did this last year. And that really makes a big difference to the growth rates a couple years out.

Thanks a lot, guys. Appreciate your time.

Thank you so much, Marco.

And our next question comes from Samir Patel from Askeladden Capital. Your line is open.

So, Paul, actually I want to ask you a question, which is a couple years ago Bob talked about this campfire metaphor, you know, how there’s these wonderful campfires of top performance in client organizations, really Franklin Covey can help those client organizations move brighter and tighter, right. So that more people are sitting around those campfires. With regards to your new role, could you maybe talk about some of those best practices or campfires that you see, and how you plan to replicate those across the organization? Thanks.

Good question. Inside our company. Good question. So you can imagine, working for Bob all these years, that that is not just a metaphor that we talk about as it relates to our clients. It’s a metaphor that is alive and well inside Franklin Covey as well. But it really is, I think it’s the story for us as a company. We made a big transition a number of years ago. Sean started it before enterprise with his move to Leader in Me, and that being a subscription business. Then enterprise did this four years ago and we now have, we think, the right strategy. We think we have the right pieces in place. We have the right content acquisition development strategy, the right funding behind that. All of those pieces, kind of those strokes of the pen if you will, the things that you can decide to do. We have those all in place and now it really is an execution play for us. And the better we can execute, the righter, tighter so to speak that we can get, moving our little campfires to become bonfires and our bonfires to become something bigger than bonfires, is really what we talk about every day around here. And we’re starting to see examples of that. The UK for example, the great – a great example of this, where it had been a nice business for a long time but now it’s really growing and thriving and doing well, culturally with the All Access Pass hitting all of these key metrics that we talk about. And so I would say for us, specifically to answer your question, what are some of those for us, it would be righter and tighter, staying on higher and ramp of client partners. That’s one big – that’s a major piece of our strategy that if we get that right and we continue to do that, it almost takes care of everything else for us. The growth will be there and we’ll continue to accelerate. Second one for us is then as we hire those client partners and we sell to new clients, it’s continuing what we’re doing today which is maintaining and retaining those relationships with our clients. So we have a process for what we do with clients once they become an All Access Pass holder, and the better we get at that – and we have pockets of excellence, and we have other places where we need to move more towards excellence. But that’s an example of that. And we know when we do that process right, not only do we retain that customer, that customer grows. They add more seats. They add services. All the things that we want. So hiring and ramp, it would be retaining those clients. The great things we do around the content side. And so I would say those probably would be the three, three big ones. They’re all things we know how to do.

And so if I’m understanding this correctly…

Thank you. Go ahead.

Go ahead. Finish.

As we say, they’re all things we know how to do. That’s the whole point of it, right? We know how to get the fire started and we just need to get it going, you know, more places, more frequently.

So is it, would you say it’s kind of like the sales school in that it’s just kind of institutionalizing best practices that you already know how to do? It’s nothing revolutionary, or finding okay, how are we – cohort of clients, a cohort of clients, or how is this cohort or client partner selling better than this other cohort, and just standardizing that across the organization?

That’s exactly what it is. In fact, you’re kind of giving Bob’s speech here. But that’s the thing for most organizations. They have pockets of excellence. They institutionally, somewhere in the organization, they know where – they know how to do this. They have pockets of excellence where it’s happening. It just doesn’t become uniform and widespread. And that’s really what Shawn and I are focused on every day, is how do we – how do we make those great things more uniform and widespread.

There’s a scoreboard, Samir, on each of the 20 managing directors. They have these four outcomes and every month there’s a metric to see how right and tight they are in each of the key four metrics. And so we’re nudging it a little at a time and trying to nudge it faster.

Perfect, thanks.

Our next question comes from Zach Cummins from B. Riley. Your line is open.

Hi. Good afternoon, everyone. Thanks for taking my questions. Bob, I was just going to ask you, just with the flat revenue growth here in Q4, a lot of that having to do with subscription revenue going straight onto the balance sheet, should we expect this revenue growth to smooth out over time from quarter to quarter? Or is it going to be kind of this fluctuation from quarter to quarter, just –

I think what you’re saying is exactly it. It would – this year we were glad that in the first three quarters, you know, I mean, 90% of the growth in EBITDA for the year occurred pretty much in the first three quarters. And that didn’t used to be the case. And so I think that trend will continue. The bigger our growth – I mean, the more subscription revenue we put on the books in the fourth quarter, the less we’ll recognize in that quarter. But it helps every other quarter. So we – our forecasts would show that we’ll keep nudging the percentage of the total EBITDA for a year that occurs in each quarter. It’ll get increasing – there’ll be increasing amounts every year in the first, second and third quarter, and a decreasing amount as a percentage in the fourth. So I think it’s exactly what will happen, and is happening.

Got it. And then in terms of the SG&A line especially with all the client partners that you brought on, I was surprised to see it was down sequential on a year-over-year basis. Can you talk about the drivers of kind of the lower SG&A here that we saw in Q4?

You bet. Steve?

So the simple answer is that a good portion of our SG&A is either fixed, or semi-fixed. So as we’re going through the transition to the All Access Pass and transitioning the business, we added costs. The implementation specialist department, as an example. We added those costs and a good portion of those adds then become a fixed amount that we can essentially grow revenue for a year, maybe two years, maybe three years in some areas, without having a proportional increase in the cost. So what’s going on is a couple of things. We are – well, three things. We are investing in new client partners. We’re adding money there. We’re adding money in innovations. We’re adding money in implementation specialists. A good portion of our costs are fixed like I talked about. And then in other areas, we’re finding that as we’ve gone through the transition, now that we’re on the other side we can actually find efficiencies and effectiveness to reduce some costs. So we have cost increasing, costs that are fixed, and costs that are decreasing. And so overall we expect a good portion of our accelerated flow-through to EBITDA to come from a repeat of this same scenario that we have revenue growth. Our gross margin stays good and our SG&A becomes a smaller and smaller percentage of revenue.

And then just one final question around potential uses of cash. It sounds like with all the cash that’s being generated and expected to be generated here in the coming years, that potentially using that to buy back some of your own stock. Have you still explored a potential M&A at this point, or what’s really the approach there?

Pretty much the same as we’ve talked about. As we said here, we will always first run the business, because adding salespeople and investing in the business will provide the best return to shareholders. And then if we could – this is my view. If we could find acquisitions that fit into what we’re doing and are incremental to the business, and add an acceleration to the growth or fill in holes in the content or anything like that, that we could see beneficial, then I believe we would use cash to do acquisitions. And I think that that would be very valuable to the company. And then to the extent that we have excess – well, as an example, Jhana and Robert Gregory were both great small acquisitions done over the past couple of years. So we’ll continue to do that. And then we still expect to have incremental cash, and we’ve shown a willingness to return that cash to shareholders through buying back stock.

There are a lot of – you won’t see us making, like, transformative acquisitions or anything like that, big, big bets. But we think that in our space right now, there are lots and lots – there’s lots going on, and things like Jhana and Robert Gregory and such, that really can add tremendous capabilities. We are on people’s radar, with Boyd Roberts, who’s on our executive team, is in charge of all our business development. And between content acquisitions, license deals for content, small acquisitions otherwise, and we’ve also boosted our investment and content as we mentioned from 4% to 6%. Those are kind of the uses. We’ve been able to generate kind of a net tangible assets, very high rates of return of what we invest in the business, the cash flow relative to the net tangible asset. So that’d be a good thing if we can do it. We have – like I say, we have our feelers out all the time. But even with that, we suspect that we’ll have quite a lot of excess cash being generated beyond what we can conceive, and we’re likely to do, and that will be applied to continuing to do. As you know, we’ve reduced the total shareholder base by more than 10 million shares over a long period of time. It’s continued. And we like the idea of having our existing shareholders own more and more of the business that we think is on a really great trajectory of high EBITDA and cash flow growth.

Great. Thanks for taking my questions, and best of luck as we end FY2020.

Thank you.

Our next question comes from Samir Patel from Askeladden Capital. Your line is open.

You talked about the one-year payback period on new client partner, and obviously the 90% revenue retention and the high incremental margin. Have you guys put that together into an LTV-to-CAC type of metric? It seems like it’d be best-in-class, but you haven’t actually disclosed it.

We have. We said it’s less than 1-to-1 but I think – but your point is exactly right. I think it’s really the unit economics, are really so compelling that that’s why we built this whole infrastructure. It’s taken years to build but the sales school is the easier part even though that’s not easy. But I mean, building the infrastructure of all these managing directors who can mentor and ramp up these people. But yeah, it’s exactly it. And so that ratio of lifetime customer value to the customer acquisition cost. For us, the combination of the fact that as you say, first our initial sale price is a pretty substantial amount because of the size of the population, and our costs of acquisition are well less than 1-to-1. So we think that’s a compelling metric.

Thanks.

Thanks.

Our next question comes from Andrew Nicholas from William Blair. Your line is open.

Hi. Good afternoon.

There you go. How are you?

Great. So a lot of my questions have been asked, but I appreciate you squeezing me in. Just one, I was hoping you could maybe talk a little bit about performance in the quarter across the different geographies. Are there any regions that are growing particularly well right now? Where do you think you have the most opportunity going forward? And then maybe any color on client engagement in the UK and Europe given some of the uncertainty in those regions.

Thanks. Paul, you might want to go.

So we’re pleased, and Bob mentioned earlier, all year and even in the fourth quarter, quite broad-based result – success and results from all of our different operations. And so that’s one point. Very broad-based. Everybody had a really strong year, good growth. Areas where we expect to see great growth in the future, one would be China. We think there’s a lot of headroom there for us. The reason that we converted that from a license to a direct operation a few years ago. We did the same thing earlier this fiscal year, really in December, with our Germany, Switzerland and Austria operations. So that was formerly a license operation of ours, is now direct, being managed and run out of the UK for us. So we see that as potential – a good potential growth opportunity also. So we now kind of have the major economies in the world that are direct, and then this great licensee network that helps us cover everywhere else in the world. Specifically the UK and in Europe, we actually – we had a great year in the UK despite Brexit and all the questions there on what’s going to happen. That business is growing really well. One of the things, I think, that benefits us is in a place like the UK, and this is probably true of anywhere we operate, while we’re growing nicely we’re still very underpenetrated in most of the markets in which we serve. And so the headroom for us to grow is there even if there’s choppiness going on as well. We’re just not that big. And so that allows us to continue to chug along and to grow. We saw that this year in the UK and we think that’ll happen in Germany, Switzerland and Austria as well now that it’s being run the way we run all of our direct operations.

And this concludes the question-and-answer session. I’ll turn the call back over to Bob Whitman for final remarks.

Great. Well, we just want to thank each of you for being on the call with us today. More importantly, we thank you for your support and guidance and coaching and so forth over the years. We feel like we have a tremendous team of premium people throughout the company. We have kind of a – we have a scoreboard, where we say, do we have the right person on the right seat on the bus and all the key – the critical positions. And the answer, today, is we are green on every major position in the company that is one of those critical positions. Occasionally we’ll have one or two yellows and work with them, but that’s a big thing. Second, we’re at a time where the $40 billion that’s spent in outsourced content and services and so forth for performance improvement is primarily a fragmented business, and we – with our value proposition and All Access Pass we’re in an increasing position to win more and more of that, and a greater and greater share of that. And we’ve got many clients who have decided to take their 30 suppliers and narrow it down to us alone, or us and one other supplier. And so we think it’s a great opportunity. We’re grateful to have the chance to have you as our partners in this and feel great about where we are, about the prospects for 2020 and beyond. So thanks very much for joining us today.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating and you may now disconnect.