Franklin Covey Co. reported first‑quarter fiscal 2026 results that included consolidated revenue of $64.0 million, a 7% year‑over‑year decline from $69.1 million, a net loss of $3.3 million, and Adjusted EBITDA of $3.7 million. Deferred subscription revenue rose 5% to $100.2 million, cash and cash equivalents stood at $17.5 million, and the company did not draw on its $62.5 million credit facility. During the quarter, Franklin Covey repurchased $11.1 million of common stock, underscoring its commitment to shareholder returns.
The revenue miss was driven by macroeconomic uncertainty, geopolitical trade tensions, and the cancellation of U.S. federal government contracts that reduced demand in the Enterprise division. Despite these headwinds, invoiced amounts in Enterprise North America grew 7%—a 13% increase excluding government business—indicating that the company’s underlying demand remains robust and that revenue recognition lag will likely improve in subsequent quarters.
The earnings miss was amplified by a $3.4 million restructuring charge and margin compression from 11.1% to 5.7%. The net loss per share of $(0.27) fell short of the consensus estimate of $0.04, reflecting the combined impact of lower revenue, higher operating expenses, and the one‑time restructuring cost. Adjusted EBITDA, while positive, was below analyst expectations of $0.07 per share, underscoring the pressure on profitability.
Franklin Covey reaffirmed its fiscal 2026 guidance, projecting revenue of $265 million to $275 million and Adjusted EBITDA of $28 million to $33 million. The guidance signals management’s confidence that the completed go‑to‑market transformation, cost‑reduction initiatives, and AI‑driven product launches will generate stronger results in the second half of the fiscal year and into fiscal 2027.
CEO Paul Walker said the company is in a “year of execution” and that invoiced growth in Enterprise North America will translate into revenue gains. CFO Jessi Betjemann highlighted the transition point the company is experiencing, noting that the revenue outlook reflects a lag between invoiced growth and recognized revenue due to lower deferred revenue in fiscal 2025. Both executives emphasized the importance of AI integration and the healthcare vertical, which now accounts for 17% of revenue, as key growth drivers.
Analysts noted the earnings miss and revenue shortfall, which led to a sharp decline in market sentiment. However, management’s reaffirmation of guidance and focus on cost discipline and AI initiatives may temper investor concerns over the short term, while the underlying demand signals suggest a potential rebound in later quarters.
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