Franklin Covey Reports Revenue Decline and Net Loss in Q2 Fiscal 2025

Franklin Covey Co. reported a decline in financial performance for the second quarter of fiscal 2025, with revenue totaling $59.6 million, down from $61.3 million in the same quarter of the previous year. The company experienced a net loss of $1.1 million, or $(0.08) per share, compared to a net income of $0.9 million, or $0.06 per diluted share, in the prior year. For the first half of fiscal 2025, total revenue was $128.7 million, slightly lower than $129.7 million reported for the same period in fiscal 2024. The decrease in revenue was attributed to adverse macroeconomic conditions, including canceled government contracts and geopolitical tensions affecting international operations.

In terms of operational metrics, Franklin Covey's Enterprise Division, which includes North America and International Direct Offices, saw revenues decrease to $43.6 million from $45.6 million year-over-year. The North America segment alone reported $34.5 million in revenue, down from $35.6 million, primarily due to the impact of canceled government contracts. Conversely, the Education Division reported a 3% increase in revenue to $15.1 million, driven by growth in training and coaching services. The company noted that approximately 3,800 schools are currently using its "The Leader in Me" program, reflecting strong adoption rates in the education sector.

The company’s balance sheet showed a decrease in total current assets to $121.0 million as of February 28, 2025, down from $160.3 million at the end of the previous fiscal year. Current liabilities also decreased to $134.1 million from $162.5 million, resulting in total liabilities of $148.8 million compared to $178.4 million previously. Shareholders' equity fell to $72.5 million from $83.1 million, reflecting the impact of the net loss and stock repurchase activities. Franklin Covey's cash and cash equivalents stood at $40.4 million, down from $48.7 million at the end of the previous fiscal year.

Strategically, Franklin Covey has been restructuring its North America sales force to enhance sales growth, which has begun to show positive results in client expansion activities. The company also launched a refurbished version of "The 7 Habits of Highly Effective People" offering, which is expected to contribute to future revenue growth. Additionally, the company has a new stock repurchase plan approved for up to $50 million, which is intended to enhance shareholder value over time.

Looking ahead, Franklin Covey remains cautiously optimistic about its future performance, particularly in the Education Division, which has shown resilience despite broader economic challenges. The company anticipates that improvements in macroeconomic conditions and the successful execution of its sales strategies will support revenue growth in the upcoming quarters. However, management acknowledged that external factors, including government spending and international market conditions, could continue to pose risks to achieving its financial objectives.