Franklin Covey Co (FC) Stock Analysis and Metrics

Franklin Covey

NYSE: FC

$20.03 ▼ -0.65 (-3.14%)

At close: Aug 13, 2026 · 1:40 PM UTC

Financial Ratios

Market Cap224.24 Mn

P/E102.58

P/S0.85

Div. Yield0.00

Revenue Growth (1y) (Qtr)1.02

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About

Franklin Covey is a global company focused on organizational performance improvement. Its mission is to enable greatness in people and organizations everywhere. The company provides leadership development, productivity training, and consulting services to individuals and organizations worldwide. It operates through a global structure that includes approximately 1,120 associates worldwide and wholly owned subsidiaries in Austria, Australia, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom. In locations where it does not have a directly owned office, Franklin Covey works with independent licensee partners who deliver its content and services in about 150 other countries and territories.

The company generates revenue primarily through subscription based access to proprietary content, implementation tools, assessments, and expert consulting and advisory services. Its flagship offerings include the All Access Pass which is sold mainly through the Enterprise Division, and the Leader in Me membership which is offered through the Education Division. The All Access Pass provides clients with scalable access to a library of content such as The 7 Habits of Highly Effective People, The Four Disciplines of Execution, The Speed of Trust, and Multipliers, along with implementation tools, assessments, and the AI Coach to deepen learning and application. The Leader in Me membership offers educational institutions access to the Leader in Me online service which includes digital curriculum, leadership lessons, illustrated leadership stories, and various other resources to support program implementation. For the fiscal year ended August 31, 2025, consolidated net revenue totaled $267.1 million.

The company operates through the following segments: Enterprise Division and Education Division.

• Enterprise Division: This segment focuses on selling solutions to corporations, governments, non profit organizations, and other related entities. It provides the All Access Pass subscription which includes access to proprietary content, implementation tools, assessments, expert consulting, and advisory services, as well as the AI Coach to support learning and application.

• Education Division: This segment serves educational institutions by offering the Leader in Me membership which provides access to digital curriculum, leadership lessons, illustrated leadership stories, and various other resources. It also supplies experienced coaches and consultants, many of whom are former educators, to assist schools with the implementation of the Leader in Me program.

Franklin Covey operates in the People and Organizational Performance industry where it competes with a range of providers. Competitors for the Enterprise Division include McKinsey & Company, Deloitte, Accenture, Korn Ferry, Heidrick & Struggles, Development Dimensions International, LHH, Blanchard, BetterUp, CoachHub, Ezra, RAIN Group, Sandler, Challenger, Workboard, Amplify, Cornerstone, Udemy Business, and LinkedIn Learning. Competitors for the Education Division include 7 Mindsets, Capturing Kids Hearts, Second Step, Responsive Classroom, and CharacterStrong. The company believes its competitive advantages stem from the quality and depth of its content, the breadth and flexibility of its delivery options including the All Access Pass and Leader in Me membership, its global reach and delivery capability, and the measurable impact its offerings are designed to achieve.

The company serves a broad base of organizational, governmental, educational, and individual clients in the United States and internationally through directly owned operations and a global licensee partner network. During the periods presented in this report, no single customer accounted for more than 10% of consolidated revenue.

Investment Thesis

▲ Bull case

Franklin Covey's core enterprise transformation is delivering inflection point results with North America Enterprise invoiced amounts growing 13% year-over-year excluding the government business, driven by a 25% surge in new logo subscription wins and a 29% increase in services booking pace. This momentum is underpinned by a strategic shift toward larger, transformational deals with higher attachment of predefined services, as evidenced by the $5.6 million contractually committed services booked in Q1 primarily related to a three-year deal with a global agriculture client. Management emphasized that these deals yield guaranteed revenue streams with recognition potentially extending through fiscal 2027, creating a diversified and sticky backlog that will convert to reported revenue as delivery milestones are met. The deferred subscription revenue balance in North America rose 8% to $49.1 million, and the% of revenue under multiyear contracts increased to 61%, indicating a structural improvement in revenue quality and predictability that will support sustained growth in fiscal 2027 and beyond.
The company's go-to-market reorganization is yielding tangible commercial benefits, with Holly Procter highlighting larger deal sizes, strategic executive-level engagements, and improved solution selling as direct outcomes of the transformation. The new logo hunting team's 25% increase in invoiced amounts, combined with a strong services attach rate of 55% on an apples-to-apples basis, reflects success in landing higher-value clients and expanding relationships through dedicated client success teams. This structural shift enables Franklin Covey to target complex, multi-faceted organizational challenges—such as AI adoption, merger integration, and culture transformation—where its combined content, coaching, and delivery capabilities create unique value. The launch of AI-specific solutions like Leading AI Adoption and Working with AI addresses a critical human-side barrier to AI utilization, positioning the company to capture growing demand for leadership development in the era of technological disruption.
Education division fundamentals remain strong despite a 2% revenue decline in Q1, with subscription revenue growing 12% to $11.8 million and the division delivering over 100 more training and coaching days year-over-year. Management expects Education to accelerate materially in the second half of fiscal 2026 due to deferred launches of significant state contracts and normal seasonality, with the large statewide deal from last year's Q1 now expected to drive implementation in Q3 and Q4. The division's billed deferred subscription revenue increased 2% to $45.1 million, establishing a resilient foundation for future growth. Combined with Enterprise North America's momentum, this sets the stage for the company to achieve its full-year guidance of $265-$275 million in revenue and $28-$33 million in adjusted EBITDA, with 45%-50% of revenue and 25%-30% of adjusted EBITDA expected in the first half—implying strong back-half acceleration.
Capital allocation reflects management's confidence in intrinsic value, with $10.4 million spent on share repurchases in Q1 (582,000 shares) and a new 10b5-1 plan launched to repurchase up to $20 million worth of shares, of which $3.7 million has already been utilized. Liquidity remains robust at $80 million, including $17.5 million in cash and a fully undrawn $62.5 million credit facility, providing flexibility to weather near-term volatility while continuing to return capital. The company's statement that it has spent over 130% of its free cash flow on buybacks over the last 12 quarters underscores a disciplined, long-term focus on shareholder value creation, supported by strong client retention and expanding demand for leadership development services across enterprise and education.

Franklin Covey's core enterprise transformation is delivering inflection point results with North America Enterprise invoiced amounts growing 13% year-over-year excluding the government business, driven by a 25% surge in new logo subscription wins and a 29% increase in services booking pace. This momentum is underpinned by a strategic shift toward larger, transformational deals with higher attachment of predefined services, as evidenced by the $5.6 million contractually committed services booked in Q1 primarily related to a three-year deal with a global agriculture client. Management emphasized that these deals yield guaranteed revenue streams with recognition potentially extending through fiscal 2027, creating a diversified and sticky backlog that will convert to reported revenue as delivery milestones are met. The deferred subscription revenue balance in North America rose 8% to $49.1 million, and the% of revenue under multiyear contracts increased to 61%, indicating a structural improvement in revenue quality and predictability that will support sustained growth in fiscal 2027 and beyond.
The company's go-to-market reorganization is yielding tangible commercial benefits, with Holly Procter highlighting larger deal sizes, strategic executive-level engagements, and improved solution selling as direct outcomes of the transformation. The new logo hunting team's 25% increase in invoiced amounts, combined with a strong services attach rate of 55% on an apples-to-apples basis, reflects success in landing higher-value clients and expanding relationships through dedicated client success teams. This structural shift enables Franklin Covey to target complex, multi-faceted organizational challenges—such as AI adoption, merger integration, and culture transformation—where its combined content, coaching, and delivery capabilities create unique value. The launch of AI-specific solutions like Leading AI Adoption and Working with AI addresses a critical human-side barrier to AI utilization, positioning the company to capture growing demand for leadership development in the era of technological disruption.
Education division fundamentals remain strong despite a 2% revenue decline in Q1, with subscription revenue growing 12% to $11.8 million and the division delivering over 100 more training and coaching days year-over-year. Management expects Education to accelerate materially in the second half of fiscal 2026 due to deferred launches of significant state contracts and normal seasonality, with the large statewide deal from last year's Q1 now expected to drive implementation in Q3 and Q4. The division's billed deferred subscription revenue increased 2% to $45.1 million, establishing a resilient foundation for future growth. Combined with Enterprise North America's momentum, this sets the stage for the company to achieve its full-year guidance of $265-$275 million in revenue and $28-$33 million in adjusted EBITDA, with 45%-50% of revenue and 25%-30% of adjusted EBITDA expected in the first half—implying strong back-half acceleration.
Capital allocation reflects management's confidence in intrinsic value, with $10.4 million spent on share repurchases in Q1 (582,000 shares) and a new 10b5-1 plan launched to repurchase up to $20 million worth of shares, of which $3.7 million has already been utilized. Liquidity remains robust at $80 million, including $17.5 million in cash and a fully undrawn $62.5 million credit facility, providing flexibility to weather near-term volatility while continuing to return capital. The company's statement that it has spent over 130% of its free cash flow on buybacks over the last 12 quarters underscores a disciplined, long-term focus on shareholder value creation, supported by strong client retention and expanding demand for leadership development services across enterprise and education.

▼ Bear case

Franklin Covey's reported revenue decline of 7% in Q1, driven by an 8% drop in Enterprise and 2% decrease in Education, reveals underlying weakness masked by invoiced growth metrics. The decline in Education was tied to a $5.6 million reduction in invoiced amounts from the timing of a large statewide contract, with management acknowledging that the prior year's Q1 included a one-time spike from a significant multiyear state deal that began implementation immediately. While they expect the launch to occur in Q3 and Q4 this year, this creates a meaningful base effect risk: if the deferred implementation does not materialize as anticipated, Education could face a pronounced year-over-year decline in the second half, undermining the expected acceleration and potentially pulling full-year results below guidance. The division's adjusted EBITDA loss of $0.9 million in Q1, versus a $0.3 million gain last year, highlights margin pressure from lower revenue and higher SG&A, suggesting the business may not be as resilient as claimed during seasonal troughs.
Gross margin contraction to 75.5% from 76.3% year-over-year, attributed to increased product amortization and lower Education Division margins, signals persistent cost pressures that management has not adequately addressed. Although they cite cost reduction efforts, the $3.4 million restructuring expense incurred in Q1—consisting primarily of severance and related costs—was not factored into the original fiscal 2026 guidance per Jessica Betjemann's confirmation that it was a subsequent addition. This unplanned expense, combined with a $0.7 million increase in headquarters moving costs and higher capitalized development costs, contributed to adjusted EBITDA falling to $3.7 million from $7.7 million and free cash flow turning negative at $3.7 million versus $11.4 million prior year. The company's expectation that margin expansion will come from cost takeout in the back half lacks specificity, with no dollar amounts or verticals provided, raising doubts about the timing and magnitude of savings.
Operating cash flow collapsed to $0.1 million from $14.1 million year-over-year, driven by $10.1 million in timing-related working capital changes, including less cash collected from a lower beginning receivables balance and a $4.5 million decrease in net income. This sharp deterioration in cash conversion, coupled with negative free cash flow, suggests that the growth in invoiced amounts and deferred revenue may not be translating into usable liquidity as quickly as management implies. While they cite a $100.2 million consolidated deferred revenue balance (up 5% year-over-year) as a foundation for future growth, the conversion lag means that a significant portion of this year's invoiced growth will not be recognized as reported revenue until fiscal 2027, leaving fiscal 2026 results dependent on a fragile education rebound and uncertain cost savings. The reaffirmed guidance of $265-$275 million in revenue and $28-$33 million in adjusted EBITDA appears optimistic given that only 25%-30% of adjusted EBITDA is expected in the first half, implying a steep second-half ramp that may not materialize if education delivery delays persist or enterprise execution falters.
International segment weakness, with revenue decreasing slightly to $11.2 million due to softened business in China from geopolitical and trade tensions, exposes a vulnerability that management downplays by highlighting 4% ex-China direct revenue growth and 8% licensee revenue growth. However, the decision to eliminate the break-out for international licensees in segment reporting—consolidating them under International managed jointly with Direct Operations—reduces transparency and may obscure ongoing challenges in key markets. While licensee revenue grew 8%, the lack of disclosure on direct operations performance makes it difficult to assess whether the underlying business is truly improving or if growth is being flattered by licensee-specific dynamics. This lack of granularity, combined with the acknowledgment that China remains a soft spot despite stability, suggests that international results could remain a drag on consolidated performance if trade tensions worsen or if licensee partners face their own headwinds, particularly given the company's reliance on a diversified global footprint for long-term growth.

Franklin Covey's reported revenue decline of 7% in Q1, driven by an 8% drop in Enterprise and 2% decrease in Education, reveals underlying weakness masked by invoiced growth metrics. The decline in Education was tied to a $5.6 million reduction in invoiced amounts from the timing of a large statewide contract, with management acknowledging that the prior year's Q1 included a one-time spike from a significant multiyear state deal that began implementation immediately. While they expect the launch to occur in Q3 and Q4 this year, this creates a meaningful base effect risk: if the deferred implementation does not materialize as anticipated, Education could face a pronounced year-over-year decline in the second half, undermining the expected acceleration and potentially pulling full-year results below guidance. The division's adjusted EBITDA loss of $0.9 million in Q1, versus a $0.3 million gain last year, highlights margin pressure from lower revenue and higher SG&A, suggesting the business may not be as resilient as claimed during seasonal troughs.
Gross margin contraction to 75.5% from 76.3% year-over-year, attributed to increased product amortization and lower Education Division margins, signals persistent cost pressures that management has not adequately addressed. Although they cite cost reduction efforts, the $3.4 million restructuring expense incurred in Q1—consisting primarily of severance and related costs—was not factored into the original fiscal 2026 guidance per Jessica Betjemann's confirmation that it was a subsequent addition. This unplanned expense, combined with a $0.7 million increase in headquarters moving costs and higher capitalized development costs, contributed to adjusted EBITDA falling to $3.7 million from $7.7 million and free cash flow turning negative at $3.7 million versus $11.4 million prior year. The company's expectation that margin expansion will come from cost takeout in the back half lacks specificity, with no dollar amounts or verticals provided, raising doubts about the timing and magnitude of savings.
Operating cash flow collapsed to $0.1 million from $14.1 million year-over-year, driven by $10.1 million in timing-related working capital changes, including less cash collected from a lower beginning receivables balance and a $4.5 million decrease in net income. This sharp deterioration in cash conversion, coupled with negative free cash flow, suggests that the growth in invoiced amounts and deferred revenue may not be translating into usable liquidity as quickly as management implies. While they cite a $100.2 million consolidated deferred revenue balance (up 5% year-over-year) as a foundation for future growth, the conversion lag means that a significant portion of this year's invoiced growth will not be recognized as reported revenue until fiscal 2027, leaving fiscal 2026 results dependent on a fragile education rebound and uncertain cost savings. The reaffirmed guidance of $265-$275 million in revenue and $28-$33 million in adjusted EBITDA appears optimistic given that only 25%-30% of adjusted EBITDA is expected in the first half, implying a steep second-half ramp that may not materialize if education delivery delays persist or enterprise execution falters.
International segment weakness, with revenue decreasing slightly to $11.2 million due to softened business in China from geopolitical and trade tensions, exposes a vulnerability that management downplays by highlighting 4% ex-China direct revenue growth and 8% licensee revenue growth. However, the decision to eliminate the break-out for international licensees in segment reporting—consolidating them under International managed jointly with Direct Operations—reduces transparency and may obscure ongoing challenges in key markets. While licensee revenue grew 8%, the lack of disclosure on direct operations performance makes it difficult to assess whether the underlying business is truly improving or if growth is being flattered by licensee-specific dynamics. This lack of granularity, combined with the acknowledgment that China remains a soft spot despite stability, suggests that international results could remain a drag on consolidated performance if trade tensions worsen or if licensee partners face their own headwinds, particularly given the company's reliance on a diversified global footprint for long-term growth.

Business Segments Breakdown of Revenue (2025)

Peer Comparison

Companies in the Education & Training Services

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	EDU	New Oriental Education & Technology Group Inc.	84.71 Bn	-31.87	14.96	0.00 Bn
2	COE	51Talk Online Education Group	7.32 Bn	-430.34	67.42	0.00 Bn
3	LAUR	Laureate Education, Inc.	5.21 Bn	-21,621.49	2.85	0.22 Bn
4	GHC	Graham Holdings Co	4.98 Bn	9.06	0.98	0.90 Bn
5	CVSA	Covista Inc.	4.66 Bn	-219.52	2.38	0.66 Bn
6	LOPE	Grand Canyon Education, Inc.	3.78 Bn	16.85	3.31	-
7	LRN	Stride, Inc.	3.50 Bn	10.35	1.39	0.84 Bn
8	MH	McGraw Hill, Inc.	2.38 Bn	67.42	1.13	2.57 Bn

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About

Investment Thesis

Business Segments Breakdown of Revenue (2025)

Business Segments Breakdown of Revenue (2025)

Peer Comparison

Research Tools

Datasets

Plans

Developers

About

Investment Thesis

Business Segments Breakdown of Revenue (2025)

Business Segments Breakdown of Revenue (2025)

Peer Comparison

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