Franklin Covey (FC) Q4 2025 earnings summary

Executive summary

• Fiscal 2025 was a year of transition, with revenue at $267.1M, down 7% year-over-year, and Adjusted EBITDA at $28.8M, both in line with guidance despite macroeconomic and geopolitical headwinds and organizational transformation.

• Net income for FY2025 was $3.1M, down from $23.4M in FY2024, with Q4 net income at $4.4M.

• The company is entering fiscal 2026 with strong momentum, especially in enterprise North America, and expects a return to growth, supported by transformation initiatives and cost actions.

• Strategic investments in go-to-market transformation are yielding results, with new client wins, higher services attachment, and strong client retention.

• Deferred subscription revenue at year-end rose 3% to $111.7M; liquidity remained strong with $31.7M in cash and no credit facility drawdowns.

Financial highlights

• Fiscal 2025 total reported revenue was $267.1M, down 7% year-over-year, with Q4 revenue at $71.2M, a 15.3% decrease from Q4FY24.

• Adjusted EBITDA for FY2025 was $28.8M, a 48% decline from FY24, with Q4 Adjusted EBITDA at $11.7M.

• Free cash flow for FY2025 was $12.1M, down from $48.9M in FY2024.

• Gross margin for FY2025 was 76.2%, down from 77% in the prior year.

• Net income for FY2025 was $3.1M, down from $23.4M in FY2024.

Outlook and guidance

• Fiscal 2026 revenue is projected at $265M–$275M, with Adjusted EBITDA expected between $28M–$33M.

• Revenue and EBITDA are expected to be back-end weighted, with 45–50% of revenue and 30–35% of EBITDA in the first half due to seasonality, especially in Education.

• Margin expansion is anticipated in the second half of FY26 as cost savings and operating leverage build.

• Strong invoiced growth in FY2026 is expected to drive meaningful reported revenue and EBITDA growth in FY2027.

• Management anticipates benefits from go-to-market transformation and cost reduction actions to drive improved results.