EX-99.1 2 fc-ex99_1.htm EX-99.1 EX-99.1

 

 

 

Exhibit 99.1

 

img208941192_0.jpg

 

Press Release

 

 

 

13907 S. Minuteman Drive, Suite 500

Draper, UT 84020

 

 

www.franklincovey.com

 

 

 

 

 

FRANKLIN COVEY REPORTS SECOND QUARTER FISCAL 2026

FINANCIAL RESULTS

 

Consolidated Second Quarter Revenue of $59.6 Million

 

Invoiced Amounts in Enterprise North America Increases 7%

 

Deferred Revenue Increases 7% to $101.5 Million

 

Net Loss for the Second Quarter of $2.0 Million

 

Adjusted EBITDA Increases 99% to $4.1 Million

 

Liquidity Remains Strong at Over $76 Million, with $13.7 Million of Cash

and the Company’s $62.5 Million Credit Facility Fully Available

 

Purchased $17.0 million of Common Stock During the

Second Quarter Fiscal 2026

 

Company Affirms Annual Guidance for Fiscal 2026

 

Salt Lake City, Utah – Franklin Covey Co. (NYSE: FC), a global leadership and organizational performance partner, gives strategy the human edge. We help clients achieve breakthrough results and transform how they execute strategy at scale. Today, the Company announced its financial results for the second quarter of fiscal 2026, which ended on February 28, 2026.

 

Second Quarter Fiscal 2026 Financial Overview

 

The Company’s consolidated revenue for Q2 FY2026 was $59.6 million, which was flat to Q2 FY2025. Consolidated invoiced amounts for Q2 FY2026 grew 5% over the prior year. The Company’s financial results for Q2 FY2026 include the following:

 

o
Enterprise Division revenue for Q2 FY2026 totaled $41.6 million compared with $43.6 million in the prior year.
▪
Enterprise Division revenue reflected a $2.0 million decline in North America segment revenue partially offset by a $0.1 million increase in International segment revenue. The North America segment was adversely affected by lower subscription revenue recognized as a result of lower invoiced amounts and deferred revenue last fiscal year.
▪
Enterprise North America invoiced amounts grew 7% for the second quarter in a row.
▪
Deferred revenue for the Enterprise Division increased 15% year-over-year.
o
Education Division revenue in Q2 FY2026 increased $2.4 million, or 16%, to $17.5 million compared with $15.1 million in the prior year.
▪
The increase was driven by higher training, coaching, materials, and membership subscription revenue during the quarter.
o
Consolidated subscription and subscription services revenue for Q2 FY2026 was $50.9 million compared with $49.5 million in Q2 FY2025. Subscription and contractually committed services

 

 

invoiced for Q2 FY2026 totaled $39.3 million, growth of 16%, compared with $33.9 million in Q2 FY2025.
o
The Company realized a net loss for Q2 FY2026 of $(2.0) million, or $(0.17) per share, compared with a net loss of $(1.1) million, or $(0.08) per share, in Q2 FY2025.
o
Adjusted EBITDA for Q2 FY2026 increased 99% to $4.1 million compared with $2.1 million in the prior year.
o
Consolidated deferred revenue at February 28, 2026 increased 7% to $101.5 million compared with $94.4 million at February 28, 2025.
▪
At February 28, 2026, 59% of the Company’s AAP contracts in North America were for at least two years, compared with 55% at February 28, 2025, and the percentage of contracted amounts represented by multi-year contracts was 62% compared with 61% on February 28, 2025.
▪
Unbilled deferred revenue totaled $64.9 million at February 28, 2026, compared with $64.5 million at February 28, 2025.
o
Cash provided by operating activities for the first two quarters of FY2026 was $16.4 million reflecting the strength of Q2 FY2026 operating cash flows of $16.3 million compared with $(1.4) million of cash used in the prior year.
▪
Free cash flow for Q2 FY2026 was $13.2 million compared with $(3.6) million in Q2 FY2025.
▪
Cash and cash equivalents totaled $13.7 million compared with $40.4 million as of February 28, 2025.
o
During Q2 FY2026, the Company purchased approximately 947,000 shares of its common stock for $17.0 million. Approximately 922,000 shares were purchased in the open market under 10b5-1 trading plans and approximately 25,000 shares were withheld to cover statutory income taxes on stock-based compensation awards that vested and were issued during the second quarter.

 

Paul Walker, President and Chief Executive Officer commented, “Our second quarter results reflect the importance of what we do and the traction of our go-to-market transformation. We delivered our second consecutive quarter of 7% invoiced growth in Enterprise North America as strong execution on our go‑to‑market strategy continues to gain traction. We believe we are at an inflection point where the return on investment from our transformation is becoming evident.

 

This momentum comes as AI is reshaping how work gets done, and we are seeing increased demand for FranklinCovey's expertise in helping organizations strengthen the human side of execution—leadership, trust, change management, sales performance, collaboration, and disciplined execution. FranklinCovey is uniquely positioned as a long-term performance partner, helping organizations navigate AI‑driven opportunities and complexities to deliver sustained performance.”

 

Jessi Betjemann, Chief Financial Officer said, “In the second quarter, we translated operational momentum into improved profitability and strong cash generation. Adjusted EBITDA increased to $4.1 million, operating cash flow was $16.3 million, and free cash flow improved to $13.2 million. We also returned $17.0 million to shareholders through the repurchase of approximately 947,000 shares, while maintaining $76 million of liquidity. We are reaffirming our FY2026 guidance of total revenue of $265 to $275 million and Adjusted EBITDA of $28 to $33 million, in constant currency.”

 

Fiscal 2026 Guidance

 

The Company expects to return to growth in both revenue and Adjusted EBITDA in FY2026 as the benefits of its go-to-market transformation and cost reduction actions begin to increase revenue, lower costs, and flow through improved results.

 

Based on current expectations, the Company affirms the following guidance, in constant currency:

 

o
Total revenue in the range of $265 million to $275 million.
o
Adjusted EBITDA in the range of $28 million to $33 million.

 

 

 

This guidance reflects the positive momentum the Company is seeing and expecting in both the Enterprise and Education divisions, balanced with a disciplined view of the risks and opportunities ahead as it continues to execute in an uncertain macro environment. The Company anticipates strong invoiced growth in FY2026 which the Company believes will translate into meaningful reported growth in revenue and Adjusted EBITDA in FY2027.

 

Earnings Conference Call

 

On Wednesday, April 1, 2026, at 5:00 p.m. Eastern (3:00 p.m. Mountain Time) Franklin Covey will host a conference call to review its second quarter fiscal 2026 financial results. Interested persons may access a live audio webcast at https://edge.media-server.com/mmc/p/qux2545x or may participate via telephone by registering at https://register-conf.media-server.com/register/BI2c1e170bc74e4643ad0d7d53976bef49. Once registered, participants will have the option of 1) dialing into the call from their phone (via a personalized PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone. For either option, registration will be required to access the call. A replay of the conference call webcast will be archived on the Company’s website for at least 30 days.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including those statements related to the Company’s future results and profitability and other goals relating to the growth and operations of the Company. Forward-looking statements are based upon management’s current expectations and are subject to various risks and uncertainties including, but not limited to: general macroeconomic conditions; renewals of subscription contracts; the impact of strategic projects and initiatives on future financial results; growth in and client demand for add-on services; market acceptance of new products or services, including new AAP portal upgrades and content launches; impacts from geopolitical trade tensions and the general business environment; 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 the Company’s 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 that the Company’s actual future performance will meet management’s expectations. These forward-looking statements are based on management’s current expectations, and the Company undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances subsequent to this press release.

 

Non-GAAP Financial Information

 

This earnings release includes the concepts of Adjusted EBITDA and Free Cash Flow which are non-GAAP measures. The Company defines Adjusted EBITDA as net income or loss excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other infrequently occurring items such as restructuring and building exit costs. Free Cash Flow is defined as GAAP calculated cash flows from operating activities less capitalized expenditures for purchases of property and equipment, curriculum development, and content or license rights. The Company references these non-GAAP financial measures in its decision-making because they provide supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods, and the Company believes they provide investors with greater transparency to evaluate operational activities and financial results. Refer to the attached tables for the reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to consolidated net income (loss), a related GAAP financial measure, and for the calculation of Free Cash Flow.

 

The Company is unable to provide a reconciliation of the above forward-looking estimate of non-GAAP Adjusted EBITDA to GAAP measures because certain information needed to make a reasonable forward-looking estimate is difficult to obtain and dependent on future events which may be uncertain, or out of the Company’s control, including the amount of AAP contracts invoiced, the number of AAP contracts that are renewed, necessary costs to deliver the Company’s offerings, such as unanticipated curriculum development costs, and other potential variables. Accordingly, a reconciliation is not available without unreasonable effort.

 

 

 

About Franklin Covey Co.

 

Franklin Covey Co. (NYSE: FC), a global leadership and organizational performance partner, gives strategy the human edge. We help clients achieve breakthrough results and transform how they execute strategy at scale.

 

Our Enterprise and Education Divisions develop high-performing leaders at all levels of the organization and align people around purpose and priorities. Through proven, principle-centered frameworks and practices, we build high-trust leaders, teams, and cultures and help organizations translate strategy into consistent execution.

 

Our approach enables lasting, repeatable results by helping clients identify, align, and execute their most important priorities. This approach has been tested and refined through more than 40 years of work with tens of thousands of leaders and organizations – from Fortune 100 and 500 companies to small and mid-sized businesses, as well as educational institutions and government entities.

 

We provide professional services in over 160 countries and territories through directly owned operations and licensee partners, serving both enterprise and education clients. Our solutions are delivered through the FranklinCovey All Access Pass® and Leader in Me® subscriptions which combine world-class content and tools with the trusted expertise of consultants, coaches, and facilitators and are available in multiple modalities and in more than 20 languages.

 

Learn more at www.franklincovey.com and explore exclusive content across our social media channels: LinkedIn, Facebook, X, Instagram, and YouTube.

 

 

Investor Contact:

 

Media Contact:

Franklin Covey

 

Franklin Covey

Boyd Roberts

 

Debra Lund

801-817-5127

 

801-817-6440

investor.relations@franklincovey.com

 

Debra.Lund@franklincovey.com

 

 

 

 

 

 

 

 

 

 

 

 

FRANKLIN COVEY CO.

 

Condensed Consolidated Statements of Operations

 

(in thousands, except per-share amounts, and unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

Two Quarters Ended

 

 

February 28,

 

 

February 28,

 

 

February 28,

 

 

February 28,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

59,647

 

 

$

59,612

 

 

$

123,692

 

 

$

128,698

 

Cost of revenue

 

14,374

 

 

 

13,866

 

 

 

30,045

 

 

 

30,241

 

Gross profit

 

45,273

 

 

 

45,746

 

 

 

93,647

 

 

 

98,457

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

43,497

 

 

 

45,087

 

 

 

89,618

 

 

 

92,291

 

Restructuring costs

 

1,510

 

 

 

-

 

 

 

4,954

 

 

 

1,984

 

Building exit costs

 

455

 

 

 

-

 

 

 

1,129

 

 

 

-

 

Depreciation

 

1,140

 

 

 

1,016

 

 

 

2,239

 

 

 

1,967

 

Amortization

 

670

 

 

 

1,098

 

 

 

1,357

 

 

 

2,196

 

Income (loss) from operations

 

(1,999

)

 

 

(1,455

)

 

 

(5,650

)

 

 

19

 

Interest income (expense), net

 

(63

)

 

 

107

 

 

 

(43

)

 

 

220

 

Income (loss) before income taxes

 

(2,062

)

 

 

(1,348

)

 

 

(5,693

)

 

 

239

 

Income tax benefit (provision)

 

80

 

 

 

272

 

 

 

422

 

 

 

(134

)

Net income (loss)

$

(1,982

)

 

$

(1,076

)

 

$

(5,271

)

 

$

105

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

$

(0.17

)

 

$

(0.08

)

 

$

(0.45

)

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

   Basic

 

11,422

 

 

 

13,102

 

 

 

11,816

 

 

 

13,097

 

   Diluted

 

11,422

 

 

 

13,102

 

 

 

11,816

 

 

 

13,236

 

 

 

 

 

 

 

 

 

 

 

 

 

Other data:

 

 

 

 

 

 

 

 

 

 

 

   Adjusted EBITDA(1)

$

4,102

 

 

$

2,060

 

 

$

7,784

 

 

$

9,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock-based compensation, and certain other items) is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results. For a reconciliation of this non-GAAP measure to a comparable GAAP measure, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA as shown below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRANKLIN COVEY CO.

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

(in thousands and unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

Two Quarters Ended

 

 

 

February 28,

 

 

February 28,

 

 

February 28,

 

 

February 28,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Reconciliation of net income (loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

     Net income (loss)

 

$

(1,982

)

 

$

(1,076

)

 

$

(5,271

)

 

$

105

 

     Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

          Interest expense (income), net

 

 

63

 

 

 

(107

)

 

 

43

 

 

 

(220

)

          Income tax provision (benefit)

 

 

(80

)

 

 

(272

)

 

 

(422

)

 

 

134

 

          Amortization

 

 

670

 

 

 

1,098

 

 

 

1,357

 

 

 

2,196

 

          Depreciation

 

 

1,140

 

 

 

1,016

 

 

 

2,239

 

 

 

1,967

 

          Stock-based compensation

 

 

2,664

 

 

 

1,346

 

 

 

4,093

 

 

 

3,513

 

          Restructuring costs

 

 

1,510

 

 

 

-

 

 

 

4,954

 

 

 

1,984

 

          Building exit costs

 

 

455

 

 

 

55

 

 

 

1,129

 

 

 

55

 

          Gain on license liability restructuring

 

 

(338

)

 

 

-

 

 

 

(338

)

 

 

-

 

            Adjusted EBITDA

 

$

4,102

 

 

$

2,060

 

 

$

7,784

 

 

$

9,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

            Adjusted EBITDA margin

 

 

6.9

%

 

 

3.5

%

 

 

6.3

%

 

 

7.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRANKLIN COVEY CO.

 

Additional Financial Information

 

(in thousands and unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

Two Quarters Ended

 

 

 

February 28,

 

 

February 28,

 

 

February 28,

 

 

February 28,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Revenue by Division/Segment:

 

 

 

 

 

 

 

 

 

 

 

 

     Enterprise Division:

 

 

 

 

 

 

 

 

 

 

 

 

          North America

 

$

32,484

 

 

$

34,520

 

 

$

68,739

 

 

$

74,657

 

          International

 

 

9,154

 

 

 

9,031

 

 

 

20,359

 

 

 

20,473

 

 

 

 

41,638

 

 

 

43,551

 

 

 

89,098

 

 

 

95,130

 

     Education Division

 

 

17,500

 

 

 

15,065

 

 

 

33,593

 

 

 

31,529

 

     Corporate and other

 

 

509

 

 

 

996

 

 

 

1,001

 

 

 

2,039

 

     Consolidated

 

$

59,647

 

 

$

59,612

 

 

$

123,692

 

 

$

128,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit by Division/Segment:

 

 

 

 

 

 

 

 

 

 

 

 

     Enterprise Division:

 

 

 

 

 

 

 

 

 

 

 

 

          North America

 

$

27,155

 

 

$

28,974

 

 

$

56,710

 

 

$

61,795

 

          International

 

 

7,073

 

 

 

7,059

 

 

 

15,746

 

 

 

16,036

 

 

 

 

34,228

 

 

 

36,033

 

 

 

72,456

 

 

 

77,831

 

     Education Division

 

 

10,777

 

 

 

9,331

 

 

 

20,683

 

 

 

19,741

 

     Corporate and other

 

 

268

 

 

 

382

 

 

 

508

 

 

 

885

 

     Consolidated

 

$

45,273

 

 

$

45,746

 

 

$

93,647

 

 

$

98,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA by Division/Segment:

 

 

 

 

 

 

 

 

 

 

 

 

     Enterprise Division:

 

 

 

 

 

 

 

 

 

 

 

 

          North America

 

$

5,921

 

 

$

4,843

 

 

$

11,190

 

 

$

13,587

 

          International

 

 

1,025

 

 

 

483

 

 

 

3,460

 

 

 

1,903

 

 

 

 

6,946

 

 

 

5,326

 

 

 

14,650

 

 

 

15,490

 

     Education Division

 

 

416

 

 

 

(313

)

 

 

(519

)

 

 

(47

)

     Corporate and other

 

 

(3,260

)

 

 

(2,953

)

 

 

(6,347

)

 

 

(5,709

)

     Consolidated

 

$

4,102

 

 

$

2,060

 

 

$

7,784

 

 

$

9,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRANKLIN COVEY CO.

 

Condensed Consolidated Balance Sheets

 

(in thousands and unaudited)

 

 

 

 

 

 

 

 

February 28,

 

 

August 31,

 

 

2026

 

 

2025

 

Assets

 

 

Current assets:

 

 

 

 

 

     Cash and cash equivalents

$

13,717

 

 

$

31,698

 

     Accounts receivable, less allowance for

 

 

 

 

 

        credit losses of $2,721 and $2,929

 

50,191

 

 

 

68,415

 

     Inventories

 

5,336

 

 

 

5,165

 

     Prepaid expenses and other current assets

 

26,188

 

 

 

24,199

 

          Total current assets

 

95,432

 

 

 

129,477

 

 

 

 

 

 

 

Property and equipment, net

 

13,177

 

 

 

14,324

 

Intangible assets, net

 

32,449

 

 

 

34,551

 

Goodwill

 

31,220

 

 

 

31,220

 

Deferred income tax assets

 

239

 

 

 

231

 

Other long-term assets

 

33,972

 

 

 

33,109

 

 

$

206,489

 

 

$

242,912

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

     Current portion of notes payable

$

835

 

 

$

823

 

     Accounts payable

 

6,611

 

 

 

8,780

 

     Deferred revenue

 

97,936

 

 

 

106,534

 

     Customer deposits

 

25,021

 

 

 

16,327

 

     Accrued liabilities

 

21,840

 

 

 

24,828

 

        Total current liabilities

 

152,243

 

 

 

157,292

 

 

 

 

 

 

 

Other liabilities

 

11,695

 

 

 

14,718

 

Deferred income tax liabilities

 

4,501

 

 

 

3,991

 

       Total liabilities

 

168,439

 

 

 

176,001

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

     Common stock

 

1,353

 

 

 

1,353

 

     Additional paid-in capital

 

229,610

 

 

 

230,251

 

     Retained earnings

 

121,001

 

 

 

126,272

 

     Accumulated other comprehensive loss

 

(1,162

)

 

 

(1,032

)

     Treasury stock at cost, 15,866 and 14,565 shares

 

(312,752

)

 

 

(289,933

)

        Total shareholders' equity

 

38,050

 

 

 

66,911

 

 

$

206,489

 

 

$

242,912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRANKLIN COVEY CO.

 

Condensed Consolidated Free Cash Flow

 

(in thousands and unaudited)

 

 

 

 

 

 

 

 

 

 

Two Quarters Ended

 

 

 

February 28,

 

 

 

February 28,

 

 

 

2026

 

 

 

2025

 

 

 

(unaudited)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income (loss)

$

 

(5,271

)

 

$

 

105

 

Adjustments to reconcile net income (loss) to net cash

 

 

 

 

 

 

 

provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,596

 

 

 

 

4,163

 

Amortization of capitalized curriculum costs

 

 

2,515

 

 

 

 

2,171

 

Stock-based compensation

 

 

4,093

 

 

 

 

3,513

 

Deferred income taxes

 

 

510

 

 

 

 

(145

)

Amortization of right-of-use operating lease assets

 

 

450

 

 

 

 

287

 

Gain on license obligation restructuring

 

 

(338

)

 

 

 

-

 

Changes in working capital

 

 

10,796

 

 

 

 

2,682

 

Net cash provided by operating activities

 

 

16,351

 

 

 

 

12,776

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,763

)

 

 

 

(2,271

)

Curriculum development costs

 

 

(4,085

)

 

 

 

(2,380

)

Reacquisition of license rights

 

 

-

 

 

 

 

(324

)

Net cash used for investing activities

 

 

(6,848

)

 

 

 

(4,975

)

 

 

 

 

 

 

 

 

Free Cash Flow

$

 

9,503

 

 

$

 

7,801