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Franklin Covey Reports Second Quarter Fiscal 2025 Financial Results

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Franklin Covey (NYSE: FC) reported Q2 fiscal 2025 financial results with consolidated revenue of $59.6 million, down from $61.3 million in Q2 2024. The Education Division showed 3% growth to $15.1 million, while the Enterprise Division revenue decreased to $43.6 million.

Key highlights include:

  • Deferred subscription revenue increased 10% to $94.4 million
  • Strong liquidity position with $40.4 million cash and no credit facility drawdowns
  • Reported net loss of $(1.1) million, or $(0.08) per share
  • Adjusted EBITDA of $2.1 million, down from $7.4 million year-over-year

The company revised its fiscal 2025 guidance, now expecting revenue between $275-285 million and Adjusted EBITDA between $30-33 million, citing impacts from government actions and current business environment challenges.

Franklin Covey (NYSE: FC) ha riportato i risultati finanziari del secondo trimestre dell'anno fiscale 2025, con ricavi consolidati di 59,6 milioni di dollari, in calo rispetto ai 61,3 milioni di dollari del secondo trimestre 2024. La Divisione Educazione ha mostrato una crescita del 3%, raggiungendo i 15,1 milioni di dollari, mentre i ricavi della Divisione Imprese sono diminuiti a 43,6 milioni di dollari.

I punti salienti includono:

  • I ricavi da abbonamento differiti sono aumentati del 10%, raggiungendo 94,4 milioni di dollari
  • Posizione di liquidità solida con 40,4 milioni di dollari in contante e nessun utilizzo di linee di credito
  • Perdita netta riportata di $(1,1) milioni, ovvero $(0,08) per azione
  • EBITDA rettificato di 2,1 milioni di dollari, in calo rispetto ai 7,4 milioni di dollari dell'anno precedente

La società ha rivisto le sue previsioni per l'anno fiscale 2025, ora prevedendo ricavi tra 275-285 milioni di dollari e EBITDA rettificato tra 30-33 milioni di dollari, citando impatti delle azioni governative e le sfide dell'attuale ambiente commerciale.

Franklin Covey (NYSE: FC) reportó los resultados financieros del segundo trimestre del año fiscal 2025, con ingresos consolidados de 59,6 millones de dólares, en comparación con 61,3 millones de dólares en el segundo trimestre de 2024. La División de Educación mostró un crecimiento del 3% alcanzando los 15,1 millones de dólares, mientras que los ingresos de la División Empresarial disminuyeron a 43,6 millones de dólares.

Los aspectos más destacados incluyen:

  • Los ingresos diferidos por suscripción aumentaron un 10% a 94,4 millones de dólares
  • Sólida posición de liquidez con 40,4 millones de dólares en efectivo y sin retiradas de líneas de crédito
  • Pérdida neta reportada de $(1,1) millones, o $(0,08) por acción
  • EBITDA ajustado de 2,1 millones de dólares, en comparación con 7,4 millones de dólares del año anterior

La empresa revisó su guía para el año fiscal 2025, ahora esperando ingresos entre 275-285 millones de dólares y EBITDA ajustado entre 30-33 millones de dólares, citando impactos de acciones gubernamentales y los desafíos del actual entorno empresarial.

프랭클린 코비 (NYSE: FC)는 2025 회계연도 2분기 재무 결과를 발표했으며, 통합 수익은 5,960만 달러로, 2024년 2분기의 6,130만 달러에서 감소했습니다. 교육 부문은 3% 성장하여 1,510만 달러에 도달했지만, 기업 부문의 수익은 4,360만 달러로 감소했습니다.

주요 하이라이트는 다음과 같습니다:

  • 연기된 구독 수익이 10% 증가하여 9,440만 달러에 달했습니다.
  • 현금 4,040만 달러와 신용 시설 인출 없음으로 강력한 유동성 위치를 유지하고 있습니다.
  • 보고된 순손실은 $(110만)이며, 주당 $(0.08)입니다.
  • 조정된 EBITDA는 210만 달러로, 전년 대비 740만 달러에서 감소했습니다.

회사는 2025 회계연도 가이드를 수정했으며, 이제 수익을 2억 7,500만 달러에서 2억 8,500만 달러 사이, 조정된 EBITDA를 3천만 달러에서 3천 3백만 달러 사이로 예상하고 있으며, 정부의 조치와 현재 비즈니스 환경의 도전 과제를 언급했습니다.

Franklin Covey (NYSE: FC) a publié les résultats financiers du deuxième trimestre de l'exercice 2025, avec des revenus consolidés de 59,6 millions de dollars, en baisse par rapport à 61,3 millions de dollars au deuxième trimestre 2024. La Division Éducation a enregistré une croissance de 3%, atteignant 15,1 millions de dollars, tandis que les revenus de la Division Entreprises ont diminué à 43,6 millions de dollars.

Les points clés comprennent:

  • Les revenus d'abonnement différés ont augmenté de 10% pour atteindre 94,4 millions de dollars
  • Position de liquidité solide avec 40,4 millions de dollars en espèces et aucune utilisation de lignes de crédit
  • Perte nette rapportée de $(1,1) million, soit $(0,08) par action
  • EBITDA ajusté de 2,1 millions de dollars, en baisse par rapport à 7,4 millions de dollars d'une année sur l'autre

L'entreprise a révisé ses prévisions pour l'exercice 2025, s'attendant désormais à des revenus compris entre 275-285 millions de dollars et un EBITDA ajusté entre 30-33 millions de dollars, citant les impacts des actions gouvernementales et les défis de l'environnement commercial actuel.

Franklin Covey (NYSE: FC) hat die finanziellen Ergebnisse für das zweite Quartal des Geschäftsjahres 2025 veröffentlicht, mit konsolidierten Einnahmen von 59,6 Millionen Dollar, ein Rückgang von 61,3 Millionen Dollar im zweiten Quartal 2024. Die Bildungsabteilung verzeichnete ein Wachstum von 3% auf 15,1 Millionen Dollar, während die Einnahmen der Unternehmensabteilung auf 43,6 Millionen Dollar sanken.

Wichtige Highlights sind:

  • Die aufgeschobenen Abonnement-Einnahmen stiegen um 10% auf 94,4 Millionen Dollar
  • Starke Liquiditätsposition mit 40,4 Millionen Dollar Bargeld und keinen Inanspruchnahmen von Kreditlinien
  • Gemeldeter Nettoverlust von $(1,1) Millionen, oder $(0,08) pro Aktie
  • Bereinigtes EBITDA von 2,1 Millionen Dollar, ein Rückgang von 7,4 Millionen Dollar im Jahresvergleich

Das Unternehmen hat seine Prognose für das Geschäftsjahr 2025 überarbeitet und erwartet nun Einnahmen zwischen 275-285 Millionen Dollar und bereinigtem EBITDA zwischen 30-33 Millionen Dollar, wobei es auf die Auswirkungen staatlicher Maßnahmen und die Herausforderungen des aktuellen Geschäftsumfelds hinweist.

Positive
  • Education Division revenue grew 3% to $15.1M
  • Deferred subscription revenue increased 10% to $94.4M
  • Strong liquidity position with $40.4M cash and unused $62.5M credit facility
  • Highest quarter in over a year for new logo acquisition
  • Strong gross margin at 76.5% of sales
Negative
  • Q2 revenue declined to $59.6M from $61.3M year-over-year
  • Net loss of $(1.1M) compared to $0.9M profit in prior year
  • Adjusted EBITDA decreased to $2.1M from $7.4M year-over-year
  • Downward revision of FY2025 guidance
  • Enterprise Division revenue decreased by $2M to $43.6M

Insights

Franklin Covey's Q2 FY2025 results reveal concerning performance metrics with a revenue decline to $59.6 million from $61.3 million year-over-year and a shift to an operating loss of $1.5 million from $1.4 million in operating income last year. Most troubling is the substantial 71% drop in Adjusted EBITDA to $2.1 million from $7.4 million.

The revised downward guidance is particularly significant—projecting FY2025 revenue between $275-$285 million (below last year's $287.2 million) and Adjusted EBITDA of $30-$33 million (down from original $40 million guidance and well below last year's $55.3 million). This represents a potential 45% year-over-year EBITDA decline at the midpoint.

However, several positive indicators exist: Education Division revenue grew 3%, deferred subscription revenue increased 10% to $94.4 million, and liquidity remains strong with $40.4 million cash and no credit facility draws. Management's confidence is evident through $8.7 million in share repurchases during Q2.

The company's restructured North America sales force is showing early promise with increased new client acquisition, but these gains are currently overshadowed by higher SG&A expenses from this transformation and macroeconomic headwinds affecting government contracts and international operations. The $16 million investment in growth initiatives represents a calculated short-term sacrifice for potential long-term acceleration.

Franklin Covey's Q2 results highlight the tension between long-term strategic investments and short-term financial performance. The company is executing a classic strategic pivot by restructuring its North American sales organization—trading immediate profitability for future growth potential.

Early indicators suggest this transformation is gaining traction: highest quarterly new logo acquisition in over a year and better-than-expected client expansion. However, this comes at a cost reflected in the $4.3 million increase in SG&A expenses, primarily from new sales personnel and supporting infrastructure.

The bifurcated performance between divisions is telling. The Education Division's 3% growth demonstrates resilience and product-market fit, while Enterprise Division's revenue challenges ($43.6 million vs $45.6 million last year) highlight vulnerability to government contract cancellations and macroeconomic uncertainty.

The subscription-based model provides some stability amid turbulence—with 55% of North American AAP contracts spanning at least two years and subscription revenues forming the backbone of the business at $49.5 million for the quarter. The 10% growth in deferred subscription revenue indicates future revenue stability.

Management's characterization of this as a "one-year step back" before resuming growth trajectory merits scrutiny. The $16 million investment in growth initiatives represents approximately 5.6% of annual revenue—a significant bet on future returns that requires accelerated growth to justify. Investors should closely monitor whether the promised acceleration to double-digit growth materializes in FY2026 as suggested.

Consolidated Revenue for the Second Quarter Totals $59.6 Million, or $60.1 Million in Constant Currency, compared with $61.3 Million in Fiscal 2024

Education Division Second Quarter Revenue Increases 3% to $15.1 Million compared with $14.7 Million in the Prior Year

Deferred Subscription Revenue at February 28, 2025 increases 10% to $94.4 Million compared with $86.1 Million at February 29, 2024

Liquidity Remains Strong at over $100 Million, with $40.4 Million of Cash and No Drawdowns on the Company’s $62.5 Million Credit Facility Even After $8.7 Million of Common Stock Purchases in the Second Quarter

Company Provides Revised Guidance for Fiscal 2025

SALT LAKE CITY--(BUSINESS WIRE)-- Franklin Covey Co. (NYSE: FC), a leader in organizational performance improvement that creates, and on a subscription basis, distributes world-class content, training, processes, and tools that organizations and individuals use to achieve systemic changes in human behavior to transform their results, today announced financial results for the second quarter of fiscal 2025, which ended on February 28, 2025.

Second Quarter Fiscal 2025 Financial Results

The Company’s consolidated revenue for the quarter ended February 28, 2025 was $59.6 million compared with $61.3 million in the second quarter of fiscal 2024. In constant currency, second quarter fiscal 2025 revenues were $60.1 million. The Company’s financial results for the second quarter of fiscal 2025 included the following:

  • Enterprise Division revenues for the second quarter of fiscal 2025 totaled $43.6 million compared with $45.6 million in the prior year. Enterprise Division revenues decreased primarily due to a $1.1 million decrease in International Direct Office revenues and a $1.0 million decrease in North America segment revenues, which were impacted by canceled government contracts and macroeconomic and business environment uncertainties. These challenging economic and business conditions were partially offset by new logo sales and strong client expansion activity in the second quarter from the Company’s newly restructured North America sales force. Enterprise Division subscription plus subscription services revenue was $36.1 million in the second quarter of fiscal 2025 compared with $37.5 million in fiscal 2024.
  • Education Division revenues in the second quarter of fiscal 2025 increased 3% to $15.1 million compared with $14.7 million in the prior year. Second quarter growth was primarily due to increased training and coaching revenue, membership subscription revenues, and classroom materials sales. Delivery of training and coaching days remained strong in the second quarter, as the Education Division delivered approximately 70 more training and coaching days than in the second quarter of fiscal 2024.
  • Consolidated subscription and subscription services revenues for the second quarter were $49.5 million compared with $50.3 million in the second quarter of fiscal 2024. For the quarter ending February 28, 2025, subscription revenue invoiced was $33.9 million compared with $34.6 million in fiscal 2024.
  • The Company’s operating expenses for the second quarter of fiscal 2025 increased $1.8 million compared with the prior year, which was primarily due to a $4.3 million increase in selling, general, and administrative (SG&A) expenses, which were partially offset by a $1.7 million decrease in restructuring costs, and a $0.9 million decrease in impaired asset charges. The increase in SG&A expenses was primarily due to increased associate costs related to new personnel, including new sales and sales support personnel hired in connection with the restructuring of the North America sales force, compensation increases, and employee benefit costs.
  • The Company’s consolidated operating results for the quarter ended February 28, 2025 were a loss of $(1.5) million compared with $1.4 million of operating income in the second quarter of fiscal 2024, and reflected the factors noted above. The Company realized a net loss for the second quarter of fiscal 2025 of $(1.1) million, or $(0.08) per share, compared with net income of $0.9 million, or $0.06 per diluted share, in the second quarter of the prior year.
  • Adjusted EBITDA for the second quarter of fiscal 2025 was in-line with Company expectations at $2.1 million compared with $7.4 million in the prior year. In constant currency, Adjusted EBITDA was $2.6 million in the second quarter of fiscal 2025.
  • Consolidated deferred subscription revenue at February 28, 2025, increased 10% to $94.4 million compared with $86.1 million at February 29, 2024. At February 28, 2025, 55% of the Company’s AAP contracts in North America are for at least two years, compared with 56% at February 29, 2024, and the percentage of contracted amounts represented by multi-year contracts was 61% compared with 62% at February 29, 2024. Unbilled deferred revenue totaled $64.5 million at February 28, 2025, compared with $72.7 million at February 29, 2024.
  • The Company purchased 250,772 shares of its common stock on the open market for $8.7 million during the second quarter of fiscal 2025. For full fiscal 2025, the Company has purchased 396,540 shares of its common stock for a total of $14.7 million.

Paul Walker, President and Chief Executive Officer, commented, “The current economic and business environment is turbulent and uncertain. While our clients are not immune to the challenges in the broader economic and political landscape, we are pleased that first, the nature and importance of the opportunities and challenges we help organizations address are critical in both good and challenging business environments, and that our business model is strong; second, that we are already seeing significant traction from the implementation of our new go-to-market and sales force strategy in North America; and third, that our Education business continues to be strong. Overall, we feel encouraged about our second quarter results, particularly considering canceled or postponed government contracts, lower revenue through our international operations, and the general macroeconomic environment.”

Walker continued, “We are now just 90 days into our new go-to-market and sales force strategy in North America. We believe the opportunity is significant, and we are already seeing positive results from the new strategy. The second quarter of fiscal 2025 was our highest quarter in over a year for new logo acquisition, and we expect another strong quarter ahead. In addition, we had a standout quarter in terms of client expansion, which exceeded our expectations. Underpinning this early success are two important factors. First, that our sales and go-to-market structure is in place and fully aligned. Every planned role is filled, and we believe that we have added top-tier talent in critical roles to augment the tremendous talent we already had in place. Second, the important investments into content, technology, and delivery capability we have been making over the past several years are enabling us to serve more clients more effectively than ever before. Through this lens, we continue to be confident and excited about executing our strategy to deliver accelerated revenue and Adjusted EBITDA growth.”

Fiscal 2025 Year-to-Date Financial Results

Consolidated revenue for the first two quarters of fiscal 2025 was $128.7 million compared with $129.7 million in the first two quarters of the prior year. Enterprise Division sales for the first half of fiscal 2025 were $95.1 million, compared with $98.0 million in the first two quarters of fiscal 2024. Enterprise Division subscription and subscription services sales were $77.1 million compared with $79.1 million in fiscal 2024. North American office revenues were impacted by canceled or postponed government contracts and related economic uncertainty. For the two quarters ended February 28, 2025, sales through the Company’s International Direct offices and International Licensees decreased $1.7 million primarily due to ongoing macroeconomic issues and geopolitical business tensions. Education Division sales grew 7% to $31.5 million compared with $29.6 million in the first two quarters of fiscal 2024. Education Division sales grew primarily due to increased consulting, coaching, and training days delivered during the year, recognition of previously deferred revenue from new Leader in Me subscriptions, and increased materials sales. Consolidated gross profit for the first two quarters of fiscal 2025 was $98.5 million compared with $99.1 million in the first two quarters of fiscal 2024. Gross margin for the two quarters ended February 28, 2025 remained strong and increased to 76.5% of sales compared with 76.4% in the first half of fiscal 2024.

Operating expenses for the two quarters ended February 28, 2025 increased $6.1 million compared with the first two quarters of fiscal 2024 due to a $7.3 million increase in SG&A expenses which were primarily for increased associate costs related to new personnel, including new sales and sales support personnel hired in connection with the restructuring of the North America sales force, compensation increases, and employee benefit costs. As a result of these factors, net income through February 28, 2025 was $0.1 million, or $0.01 per diluted share, compared with $5.7 million, or $0.42 per diluted share, in the prior year. Adjusted EBITDA for the first two quarters of fiscal 2025 was $9.7 million, or $10.7 million in constant currency, compared with $18.4 million in the first two quarters of fiscal 2024.

Fiscal 2025 Guidance

The objectives of the Company’s new go-to-market transformation remain unchanged. Despite the on-the-margin interruptions in revenue from government and international operations, as described above: (a) The engines in the Company’s Enterprise Division in North America and in Education are strong and durable; (b) the new go-to-market transformation is tracking a bit ahead of expectation; and (c) the go-to-market transformation is expected to drive significant acceleration of the Company’s overall revenue growth, moving the trajectory from single-digit to double-digit revenue growth in the coming years, with a significant flow-through of this incremental revenue to increases in Adjusted EBITDA and Cash Flow.

However, due to the impacts of Government actions and the current business environment on certain areas of the business, the Company is adjusting its guidance for fiscal 2025.

Last year the Company achieved revenue of $287.2 million and generated $55.3 million of Adjusted EBITDA. The Company’s low-end of its original fiscal 2025 guidance anticipated revenue growth of approximately $8 million, generating Adjusted EBITDA of $40 million, which reflected a reduction from the prior year for the $16 million of incremental growth investments being made in fiscal 2025.

Due to the impact of Government actions and the current business environment, the Company now expects fiscal 2025 revenue to be between $275 million to $285 million. The mid-point of this range is $7 million, or 2.5%, lower than the prior year and $15 million, or 5%, lower than the low end of the Company’s original guidance, in constant currency. Based on these revised projected revenues, the Company now expects Adjusted EBITDA to be between $30 million and $33 million, in constant currency, primarily reflecting the expected loss in gross profit from the decline in revenue related to Government actions.

While the $16 million of incremental growth investments were projected to have a direct impact on fiscal 2025’s Adjusted EBITDA, the Company expected that these investments would establish a strong foundation for accelerated future growth, and the Company remains confident in these expectations. The Company is pleased with the traction and early results it is seeing from these investments and remains fully committed to executing the new go-to-market strategy.

The Company did not anticipate the full impact of Government actions and other business environment challenges, but it is committed to taking quick actions to reduce the cost structure in government, international, and other areas of the business. The Company expects these actions will partially offset some of the government-related challenges and result in an even higher percentage of incremental revenue flowing through to Adjusted EBITDA next year. Therefore, the Company expects this will be a one-year step back, and that in fiscal 2026 the Company’s Adjusted EBITDA will approach fiscal 2025 expectations and then continue its climb from there. The Company expects to provide specific fiscal 2026 revenue and Adjusted EBITDA guidance in November.

Earnings Conference Call

On Wednesday, April 2, 2025, at 5:00 p.m. Eastern (3:00 p.m. Mountain) Franklin Covey will host a conference call to review its second quarter fiscal 2025 financial results. Interested persons may access a live audio webcast at https://edge.media-server.com/mmc/p/zq4jny5e or may participate via telephone by registering at https://register-conf.media-server.com/register/BIa528563697bf49788ba39527c0d81092. Once registered, participants will have the option of 1) dialing into the call from their phone (via a personalized PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone. For either option, registration will be required to access the call. A replay of the conference call webcast will be archived on the Company’s website for at least 30 days.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including those statements related to the Company’s future results and profitability and other goals relating to the growth and operations of the Company. Forward-looking statements are based upon management’s current expectations and are subject to various risks and uncertainties including, but not limited to: general macroeconomic conditions; renewals of subscription contracts; the impact of strategic projects and initiatives on future financial results; growth in and client demand for add-on services; market acceptance of new products or services, including new AAP portal upgrades and content launches; impacts from geopolitical trade tensions and the general business environment; and other factors identified and discussed in the Company’s most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. Many of these conditions are beyond the Company’s control or influence, any one of which may cause future results to differ materially from the Company’s current expectations, and there can be no assurance that the Company’s actual future performance will meet management’s expectations. These forward-looking statements are based on management’s current expectations and the Company undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances subsequent to this press release.

Non-GAAP Financial Information

This earnings release includes the concepts of Adjusted EBITDA, Free Cash Flow, and “constant currency” which are non-GAAP measures. The Company defines Adjusted EBITDA as net income or loss excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other infrequently occurring items such as restructuring costs. Free Cash Flow is defined as GAAP calculated cash flows from operating activities less capitalized expenditures for purchases of property and equipment, curriculum development, and content or license rights. Constant currency is a non-GAAP financial measure that removes the impact of fluctuations in foreign currency exchange rates and is calculated by translating the current period’s financial results at the same average exchange rates in effect during the prior year and then comparing this amount to the prior year. The Company references these non-GAAP financial measures in its decision-making because they provide supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and the Company believes they provide investors with greater transparency to evaluate operational activities and financial results. Refer to the attached tables for the reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to consolidated net income, a related GAAP financial measure, and for the calculation of Free Cash Flow.

The Company is unable to provide a reconciliation of the above forward-looking estimate of non-GAAP Adjusted EBITDA to GAAP measures because certain information needed to make a reasonable forward-looking estimate is difficult to obtain and dependent on future events which may be uncertain, or out of the Company’s control, including the amount of AAP contracts invoiced, the number of AAP contracts that are renewed, necessary costs to deliver the Company’s offerings, such as unanticipated curriculum development costs, and other potential variables. Accordingly, a reconciliation is not available without unreasonable effort.

About Franklin Covey Co.

Franklin Covey Co. (NYSE: FC) is a global leadership company with directly owned and licensee partner offices providing professional services in 150 countries and territories around the world. The Company transforms organizations by partnering with its clients to build leaders, teams, and cultures that achieve breakthrough results through collective action, which leads to a more engaging work experience for their people. Available through the Franklin Covey All Access Pass, the Company’s best-in-class content and solutions, experts, technology, and metrics seamlessly integrate to ensure lasting behavioral change at scale. Solutions are available in multiple delivery modalities in more than 20 languages.

This approach to leadership and organizational change has been tested and refined by working with tens of thousands of teams and organizations over the past 30 years. Clients have included organizations in the Fortune 100, Fortune 500, and thousands of small- and mid-sized businesses, numerous governmental entities, and educational institutions. To learn more, visit www.franklincovey.com, and enjoy exclusive content from Franklin Covey’s social media channels at: LinkedIn, Facebook, Twitter, Instagram, and YouTube.

FRANKLIN COVEY CO.
Condensed Consolidated Income Statements
(in thousands, except per-share amounts, and unaudited)
 
 
Quarter Ended Two Quarters Ended

 

February 28,

February 29,

 

February 28,

February 29,

 

 

2025

 

 

 

2024

 

 

2025

 

 

 

2024

 

 
Revenue

$

59,612

 

$

61,336

 

$

128,698

 

$

129,736

 

Cost of revenue

 

13,866

 

 

14,485

 

 

30,241

 

 

30,607

 

Gross profit

 

45,746

 

 

46,851

 

 

98,457

 

 

99,129

 

 
Selling, general, and administrative

 

45,087

 

 

40,771

 

 

92,291

 

 

84,976

 

Restructuring costs

 

-

 

 

1,726

 

 

1,984

 

 

2,307

 

Impaired asset

 

-

 

 

928

 

 

-

 

 

928

 

Depreciation

 

1,016

 

 

913

 

 

1,967

 

 

2,005

 

Amortization

 

1,098

 

 

1,071

 

 

2,196

 

 

2,142

 

Income (loss) from operations

 

(1,455

)

 

1,442

 

 

19

 

 

6,771

 

Interest income (expense), net

 

107

 

 

(27

)

 

220

 

 

(80

)

Income (loss) before income taxes

 

(1,348

)

 

1,415

 

 

239

 

 

6,691

 

Income tax benefit (provision)

 

272

 

 

(541

)

 

(134

)

 

(966

)

Net income (loss)

$

(1,076

)

$

874

 

$

105

 

$

5,725

 

 
Net income (loss) per common share:
Basic

$

(0.08

)

$

0.07

 

$

0.01

 

$

0.43

 

Diluted

 

(0.08

)

 

0.06

 

 

0.01

 

 

0.42

 

 
Weighted average common shares:
Basic

 

13,102

 

 

13,263

 

 

13,097

 

 

13,253

 

Diluted

 

13,102

 

 

13,484

 

 

13,236

 

 

13,560

 

 
Other data:
Adjusted EBITDA(1)

$

2,060

 

$

7,448

 

$

9,734

 

$

18,418

 

(1)

The term Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock-based compensation, and certain other items) is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results. For a reconciliation of this non-GAAP measure to a GAAP measure, refer to the Reconciliation of Net Income (Loss) to Adjusted EBITDA as shown below.
 
FRANKLIN COVEY CO.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in thousands and unaudited)
 

Quarter Ended

 

Two Quarters Ended

February 28,

 

February 29,

 

February 28,

 

February 29,

 

2025

 

 

 

2024

 

 

 

2025

 

 

 

2024

 

Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss)

$

(1,076

)

$

874

 

$

105

 

$

5,725

 

Adjustments:
Interest expense (income), net

 

(107

)

 

27

 

 

(220

)

 

80

 

Income tax provision (benefit)

 

(272

)

 

541

 

 

134

 

 

966

 

Amortization

 

1,098

 

 

1,071

 

 

2,196

 

 

2,142

 

Depreciation

 

1,016

 

 

913

 

 

1,967

 

 

2,005

 

Stock-based compensation

 

1,346

 

 

1,368

 

 

3,513

 

 

4,265

 

Restructuring costs

 

-

 

 

1,726

 

 

1,984

 

 

2,307

 

Headquarters moving costs

 

55

 

 

-

 

 

55

 

 

-

 

Impaired asset

 

-

 

 

928

 

 

-

 

 

928

 

Adjusted EBITDA

$

2,060

 

$

7,448

 

$

9,734

 

$

18,418

 

 
Adjusted EBITDA margin

 

3.5

%

 

12.1

%

 

7.6

%

 

14.2

%

 
FRANKLIN COVEY CO.
Additional Financial Information
(in thousands and unaudited)
 

Quarter Ended

 

Two Quarters Ended

February 28,

 

February 29,

 

February 28,

 

February 29,

 

2025

 

 

 

2024

 

 

 

2025

 

 

 

2024

 

Revenue by Division/Segment:
Enterprise Division:
North America

$

34,520

 

$

35,554

 

$

74,657

 

$

75,847

 

International direct offices

 

6,201

 

 

7,263

 

 

14,440

 

 

15,993

 

International licensees

 

2,830

 

 

2,781

 

 

6,033

 

 

6,204

 

 

43,551

 

 

45,598

 

 

95,130

 

 

98,044

 

Education Division

 

15,065

 

 

14,689

 

 

31,529

 

 

29,580

 

Corporate and other

 

996

 

 

1,049

 

 

2,039

 

 

2,112

 

Consolidated

$

59,612

 

$

61,336

 

$

128,698

 

$

129,736

 

 
Gross Profit by Division/Segment:
Enterprise Division:
North America

$

28,974

 

$

29,911

 

$

61,795

 

$

62,675

 

International direct offices

 

4,560

 

 

5,502

 

 

10,673

 

 

12,115

 

International licensees

 

2,499

 

 

2,397

 

 

5,363

 

 

5,478

 

 

36,033

 

 

37,810

 

 

77,831

 

 

80,268

 

Education Division

 

9,331

 

 

8,675

 

 

19,741

 

 

18,150

 

Corporate and other

 

382

 

 

366

 

 

885

 

 

711

 

Consolidated

$

45,746

 

$

46,851

 

$

98,457

 

$

99,129

 

 
Adjusted EBITDA by Division/Segment:
Enterprise Division:
North America

$

4,843

 

$

9,158

 

$

13,587

 

$

19,599

 

International direct offices

 

(973

)

 

(107

)

 

(1,197

)

 

1,051

 

International licensees

 

1,456

 

 

1,358

 

 

3,100

 

 

3,274

 

 

5,326

 

 

10,409

 

 

15,490

 

 

23,924

 

Education Division

 

(313

)

 

(474

)

 

(47

)

 

(364

)

Corporate and other

 

(2,953

)

 

(2,487

)

 

(5,709

)

 

(5,142

)

Consolidated

$

2,060

 

$

7,448

 

$

9,734

 

$

18,418

 

 
FRANKLIN COVEY CO.
Condensed Consolidated Balance Sheets
(in thousands and unaudited)
 

February 28,

 

August 31,

 

2025

 

 

 

2024

 

Assets
Current assets:
Cash and cash equivalents

$

40,393

 

$

48,663

 

Accounts receivable, less allowance for
credit losses of $2,512 and $3,015

 

53,287

 

 

86,002

 

Inventories

 

4,094

 

 

4,002

 

Prepaid expenses and other current assets

 

23,270

 

 

21,586

 

Total current assets

 

121,044

 

 

160,253

 

 
Property and equipment, net

 

9,554

 

 

8,736

 

Intangible assets, net

 

36,067

 

 

37,766

 

Goodwill

 

31,220

 

 

31,220

 

Deferred income tax assets

 

821

 

 

870

 

Other long-term assets

 

22,634

 

 

22,694

 

$

221,340

 

$

261,539

 

 
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of notes payable

$

835

 

$

835

 

Current portion of financing obligation

 

1,201

 

 

3,112

 

Accounts payable

 

6,796

 

 

7,862

 

Deferred subscription revenue

 

88,435

 

 

101,218

 

Customer deposits

 

19,960

 

 

16,972

 

Accrued liabilities

 

16,849

 

 

32,454

 

Total current liabilities

 

134,076

 

 

162,453

 

 
Notes payable, less current portion

 

804

 

 

775

 

Financing obligation, less current portion

 

1,312

 

 

1,312

 

Other liabilities

 

9,639

 

 

10,732

 

Deferred income tax liabilities

 

2,983

 

 

3,132

 

Total liabilities

 

148,814

 

 

178,404

 

 
Shareholders' equity:
Common stock

 

1,353

 

 

1,353

 

Additional paid-in capital

 

228,143

 

 

231,813

 

Retained earnings

 

123,309

 

 

123,204

 

Accumulated other comprehensive loss

 

(1,012

)

 

(768

)

Treasury stock at cost, 14,075 and 14,084 shares

 

(279,267

)

 

(272,467

)

Total shareholders' equity

 

72,526

 

 

83,135

 

$

221,340

 

$

261,539

 

 
FRANKLIN COVEY CO.
Condensed Consolidated Free Cash Flow
(in thousands and unaudited)
 
Two Quarters Ended

February 28,

 

 

February 29,

2025

 

 

 

2024

 

(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $

105

 

$

5,725

 

Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization

4,163

 

4,146

 

Amortization of capitalized curriculum costs

2,171

 

1,501

 

Stock-based compensation

3,513

 

4,265

 

Impaired asset

-

 

928

 

Deferred income taxes

(145

)

(978

)

Amortization of right-of-use operating lease assets

287

 

403

 

Changes in working capital

2,682

 

14,222

 

Net cash provided by operating activities

12,776

 

30,212

 

 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment

(2,271

)

(1,716

)

Curriculum development costs

(2,380

)

(3,770

)

Reacquisition of license rights

(324

)

-

 

Net cash used for investing activities

(4,975

)

(5,486

)

 
Free Cash Flow $

7,801

 

$

24,726

 

 

 

Investor Contact:

Franklin Covey

Boyd Roberts

801-817-5127

investor.relations@franklincovey.com

Media Contact:

Franklin Covey

Debra Lund

801-817-6440

Debra.Lund@franklincovey.com

Source: Franklin Covey Co.

FAQ

What caused Franklin Covey (FC) to revise its fiscal 2025 guidance downward?

FC revised guidance due to government actions and business environment challenges, now expecting revenue of $275-285M (down 2.5% YoY) and Adjusted EBITDA of $30-33M.

How much stock did FC repurchase in Q2 2025?

FC purchased 250,772 shares for $8.7 million in Q2 2025, bringing the fiscal year total to 396,540 shares for $14.7 million.

What was FC's Education Division performance in Q2 2025?

Education Division revenue grew 3% to $15.1M, driven by increased training, coaching revenue, membership subscriptions, and classroom materials sales.

How much deferred subscription revenue did FC report for Q2 2025?

FC reported deferred subscription revenue of $94.4M as of February 28, 2025, a 10% increase from $86.1M in the previous year.
Franklin Covey Co

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