Franklin Covey Co. (NYSE: FC) reported net income of $3.1 million, or $0.27 per diluted share, for the third quarter of fiscal 2026, compared with a net loss of $1.4 million, or $0.11 per share, in the same period a year earlier. The company also lowered its full-year revenue guidance in results announced July 1.
Consolidated revenue for the quarter, which ended May 31, 2026, rose 1% to $67.8 million from $67.1 million in the prior-year period.
Adjusted EBITDA increased 14% to $8.3 million from $7.3 million a year earlier. The company defines Adjusted EBITDA as a non-GAAP measure that excludes interest, income taxes, amortization, depreciation, stock-based compensation, and certain other items.
#Franklin Covey Lowers Fiscal 2026 Revenue Guidance to $260 Million to $267 Million
The company now expects fiscal 2026 revenue of $260 million to $267 million in constant currency, down from its prior range of $265 million to $275 million.
Adjusted EBITDA guidance was set at $28 million to $31 million, within the prior range of $28 million to $33 million. The company said the narrower range reflects cost reduction measures implemented throughout the year.
Franklin Covey attributed the revenue revision to a timing shift in previously invoiced services delivery on a large Enterprise North America contract, gubernatorial budget reductions that affected a large new school contract with an existing state-wide Education client, and the impact of ongoing geopolitical tensions on its international business. The company said it expects the Education contract funding to return next year.
#Enterprise North America Invoiced Amounts Grow 4% in the Third Quarter
Enterprise Division revenue increased to $48.1 million from $47.3 million in the prior year, reflecting a $1 million increase in North America segment revenue partially offset by a $0.2 million decrease in the International segment.
Invoiced amounts in Enterprise North America grew 4% year-over-year to $36.7 million. Chief Executive Officer Paul Walker said the quarter marks the company's third consecutive quarter of invoiced growth in the segment.
"While we experienced an unexpected headwind in our Education business due to a last-minute state budget reduction that removed funding for a large state contract, the underlying strength of our business across both Enterprise North America and Education remains solid," Paul Walker, President and Chief Executive Officer, Franklin Covey, said in the earnings release.
Education Division revenue rose to $19 million from $18.6 million. The company attributed the increase to higher subscription revenue, primarily from the delivery of more training and coaching days, partially offset by decreased materials revenue during the quarter.
Subscription and contractually committed services invoiced for the quarter totaled $37 million, growth of 17% compared with $31.7 million a year earlier.
#Deferred Revenue Rises 7% While Cash From Operations Declines
Consolidated deferred revenue stood at $96 million at May 31, 2026, up 7% from $89.3 million a year earlier.
Cash provided by operating activities for the quarter was $1.1 million, compared with $6.3 million in the prior year, and free cash flow was negative $1 million versus positive $2.8 million.
Cash and cash equivalents totaled $12 million at quarter end, compared with $33.7 million at May 31, 2025. The company said total liquidity remains over $74 million, including its fully available $62.5 million credit facility.
Franklin Covey provides leadership and organizational performance training to corporate, educational, and government clients across 160 countries, according to the company. Subscription and subscription services revenue of $57.5 million accounted for the majority of the quarter's total, compared with $57.7 million in the prior-year period.
The company's forward-looking statements are subject to risks including general macroeconomic conditions, renewals of subscription contracts, market acceptance of new products, and impacts from geopolitical trade tensions, according to its filings with the Securities and Exchange Commission.
Franklin Covey said it believes it is positioned to deliver net revenue, Adjusted EBITDA, and free cash flow growth in fiscal 2027 and beyond, though subscription renewals, state education funding, and geopolitical conditions remain key risks to that outlook.