Franklin Covey Reports Modest Revenue Increase and Return to Profitability for Third Quarter

Franklin Covey Co. reported its financial results for the quarter and three quarters ended May 31, 2026, revealing a modest increase in revenue and a return to profitability. The company generated $67.8 million in revenue for the third quarter, a 1% increase from $67.1 million in the same period last year. For the first three quarters of fiscal 2026, total revenue was $191.5 million, down from $195.8 million in the prior year. The net income for the quarter was $3.1 million, or $0.27 per diluted share, compared to a net loss of $1.4 million, or $(0.11) per share, in the same quarter last year. However, the year-to-date net loss stood at $2.2 million, compared to a loss of $1.3 million for the same period in fiscal 2025.

The company experienced significant changes in its financial performance compared to the previous fiscal period. Gross profit for the third quarter decreased to $50.1 million from $51.3 million, primarily due to increased costs associated with delivering training and coaching services. The gross margin also declined to 73.9% from 76.5% year-over-year. Operating expenses decreased by $7.6 million, driven by lower restructuring costs and a reduction in selling, general, and administrative expenses. The company reported restructuring costs of $0.7 million in the third quarter, down from $4.7 million in the prior year.

Strategically, Franklin Covey has focused on enhancing its go-to-market strategy, particularly in its North America segment, which saw a revenue increase of 3% to $38.0 million in the third quarter. The Education Division also reported a 2% revenue increase to $19.0 million, driven by an 11% rise in subscription revenue. The company added 624 new schools to its Leader in Me program, bringing the total to over 8,000 schools globally. Despite these gains, the company faced challenges due to budget cuts in education spending in certain states, which impacted classroom and training materials sales.

Operationally, Franklin Covey's deferred revenue increased by $6.7 million, or 7%, to $96.0 million as of May 31, 2026. The company reported a total of 59% of its North America All Access Pass contracts were for at least two years, indicating a stable customer base. The company’s cash and cash equivalents decreased to $12.0 million from $31.7 million at the end of the previous fiscal year, largely due to stock repurchases totaling $28.1 million during the first three quarters of fiscal 2026.

Looking ahead, Franklin Covey remains optimistic about its growth trajectory, particularly in the North America segment, as it continues to execute its new sales strategy. The company anticipates that the investments made in its go-to-market strategy will yield positive results in the coming fiscal periods. However, it acknowledges that ongoing macroeconomic challenges and geopolitical tensions may impact its performance. The company expects to maintain adequate liquidity, with over $74 million available, including a $62.5 million line of credit, to support its operations and strategic initiatives.