Franklin Covey (FC) Q3 2026 earnings summary

Executive summary

• Q3 FY2026 revenue increased 1% year-over-year to $67.8 million, with Enterprise North America invoiced amounts up 4% and Education Division subscription revenue up 11%, despite macroeconomic headwinds and state budget cuts.

• Net income improved to $3.1 million from a $1.4 million loss in Q3 FY2025, and Adjusted EBITDA rose 14% to $8.3 million, reflecting operational efficiency and cost reductions.

• Deferred revenue increased 7% year-over-year to $96.0 million, supporting future growth.

• Liquidity remains strong at over $74 million, including $12.0 million in cash and a fully available $62.5 million credit facility.

Financial highlights

• Gross margin for Q3 FY2026 was 73.9%, down from 76.5% last year due to higher delivery and product costs.

• Operating, selling, general and administrative expenses fell to $41.8 million, representing 61.6% of revenue.

• Free cash flow for Q3 FY2026 was negative $1.0 million, compared to positive $2.8 million last year, mainly due to working capital changes and higher deferred revenue.

• Year-to-date cash flow from operations was $17.5 million.

Outlook and guidance

• Fiscal 2026 revenue guidance revised to $260–$267 million, reflecting timing shifts, state budget reductions, and international geopolitical challenges.

• Adjusted EBITDA guidance maintained at $28–$31 million, citing effective cost controls.

• Management expects meaningful growth in net revenue, Adjusted EBITDA, and free cash flow in fiscal 2027 and beyond.