Franklin Covey (FC) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 revenue was $64.0 million, down from $69.1 million in Q1 FY2025, reflecting macroeconomic headwinds, lower deferred revenue, and canceled U.S. government contracts.

• Net loss for Q1 FY2026 was $3.3 million, or $(0.27) per share, compared to net income of $1.2 million, or $0.09 per share, in the prior year.

• Adjusted EBITDA was $3.7 million, down from $7.7 million in the prior year, with free cash flow negative $3.7 million versus $11.4 million last year.

• Strong growth in Enterprise North America invoiced amounts, up 7% (13% excluding government), signals positive momentum from new go-to-market strategy.

• Deferred subscription revenue increased 5% year-over-year to $100.2 million, and liquidity remains strong at $80 million, including $17.5 million in cash and no drawdowns on a $62.5 million credit facility.

Financial highlights

• Gross profit margin for Q1 FY2026 was 75.5%, down from 76.3% in Q1 FY2025, with gross profit at $48.4 million.

• Operating SG&A was $44.7 million, flat year-over-year, but as a percentage of revenue increased to 69.8% from 65.2%.

• Adjusted EBITDA margin dropped to 5.7% from 11.1% year-over-year.

• Cash provided by operating activities was $0.1 million, down from $14.1 million in the prior year.

• Free cash flow for Q1 FY2026 was negative $3.7 million, compared to $11.4 million in Q1 FY2025.

Outlook and guidance

• Full-year FY2026 revenue guidance reaffirmed at $265–$275 million, with Adjusted EBITDA expected between $28–$33 million.

• Growth in invoiced amounts in FY2026 is expected to drive accelerated reported revenue, Adjusted EBITDA, and free cash flow in FY2027.

• Approximately 45–50% of revenue and 25–30% of Adjusted EBITDA will be recognized in the first half, reflecting seasonality and timing of Education contracts.

• Margin expansion anticipated in the second half as cost savings and operating leverage build.

• Management expects improved cash flows and revenue growth in future quarters as transformation investments in North America gain traction.