Franklin Covey (FC) investor relations material

Executive summary

• Q2 FY2026 revenue was $59.6 million, flat year-over-year, with 5% growth in invoiced amounts and nearly doubled Adjusted EBITDA to $4.1 million.

• Deferred revenue increased 7.5% year-over-year to $101.5 million, with 62% of revenue under multi-year contracts.

• Education Division revenue grew 16% to $17.5 million, driven by strong demand for Leader in Me services and higher training, coaching, and subscription revenue.

• Net loss widened to $2 million, impacted by restructuring, higher share-based compensation, and building exit costs.

• Company remains confident in achieving full-year revenue and Adjusted EBITDA guidance, with momentum expected to continue.

Financial highlights

• Q2 reported revenue was $59.6 million, flat year-over-year, with Enterprise revenue down 4% to $41.6 million and Education up 16% to $17.5 million.

• Adjusted EBITDA rose 99% to $4.1 million, with margin up to 6.9% from 3.5% year-over-year.

• Free cash flow for Q2 was $13.2 million, up from negative $3.6 million last year; YTD free cash flow improved to $9.5 million from $7.8 million.

• Gross margin was 75.9%, down from 76.7% due to higher amortization and mix shift.

• Net loss for Q2 was $2 million, compared to $1.1 million last year.

Outlook and guidance

• FY2026 revenue guidance reaffirmed at $265–$275 million and Adjusted EBITDA at $28–$33 million (constant currency).

• Revenue and EBITDA expected to be seasonally higher in Q4, with 50–55% of back-half revenue and 60–65% of EBITDA in Q4.

• Anticipates accelerated growth in reported revenue, EBITDA, and cash flow in fiscal 2027.

• Long-term Adjusted EBITDA margin target remains at 20%, with plans for ~100bps improvement per year.

• Effective tax rate for FY26 estimated at 37%; capital expenditures expected at $5M–$7M.