Franklin Covey Co. reported a consolidated revenue of $67.1 million for the third quarter ended May 31, 2025, a decrease from $73.4 million in the same quarter of the previous fiscal year. The decline in revenue was attributed to macroeconomic uncertainties, including reduced U.S. federal government spending and geopolitical tensions, which adversely affected client spending and new contract acquisitions. The company's net loss for the quarter was $1.4 million, or $(0.11) per share, compared to a net income of $5.7 million, or $0.43 per share, in the prior year.
The company's performance in its Enterprise Division, which includes North America, International Direct Offices, and International Licensees, saw revenues drop to $47.3 million from $51.9 million year-over-year. This decline was primarily driven by a $3.5 million decrease in North America segment revenues and a $1.0 million decrease in International Direct Office revenues. The Education Division also experienced a revenue decline, reporting $18.6 million compared to $20.2 million in the previous year, largely due to reduced classroom materials sales. However, the division saw a 21% increase in deferred subscription revenue, indicating strong ongoing demand for its services.
Operationally, Franklin Covey has been restructuring its sales force and implementing a new go-to-market strategy aimed at enhancing client relationships and driving growth. The company incurred $4.7 million in restructuring costs during the quarter, primarily for severance and related personnel expenses. As of May 31, 2025, the company had $95 million in available liquidity, including $33.7 million in cash and a fully undrawn $62.5 million line of credit, which positions it well for future investments and operational needs.
Looking ahead, Franklin Covey remains optimistic about its long-term growth potential despite current challenges. The company noted that 58% of its All Access Pass contracts are for at least two years, up from 55% a year earlier, suggesting a solid foundation for future revenue stability. The management emphasized the importance of its digital delivery modalities and ongoing investments in content development to adapt to changing market conditions and client needs. The company is committed to monitoring its liquidity and may pursue additional financing options to support its growth initiatives.
About FRANKLIN COVEY CO
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