Franklin Covey (FC) Q3 2026 earnings summary

Executive summary

• Q3 FY26 revenue was $67.8 million, up 1% year-over-year, with Enterprise and Education divisions both growing; YTD revenue was $191.5 million, down 2.2% from prior year.

• Adjusted EBITDA for Q3 was $8.3 million, up 14% year-over-year; net income improved to $3.1 million from a net loss of $1.4 million.

• Deferred revenue at quarter-end was $96 million, up 7% year-over-year, with Enterprise North America deferred revenue up 18%.

• The company maintains strong liquidity with over $74 million, including $12 million in cash and a $62.5 million undrawn credit facility.

• Positioned for accelerated growth in fiscal 2027, supported by strong deferred revenue, contracted services, and strategic transformation.

Financial highlights

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

• Free cash flow for Q3 was negative $1 million, compared to positive $2.8 million last year; YTD free cash flow was $8.5 million, down from $10.6 million.

• Operating SG&A for Q3 was $41.8 million, 61.6% of revenue, a 398 bps improvement year-over-year.

• LTM revenue declined 6.1% to $262.7 million; LTM Adjusted EBITDA margin decreased 369 bps to 10.6%.

• Consolidated subscription and subscription services revenue was $57.5 million, nearly flat year-over-year.

Outlook and guidance

• Fiscal 2026 revenue guidance revised to $260–$267 million due to timing shifts, state budget cuts, and international headwinds.

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

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