Franklin Covey (NYSE:FC) management said fiscal 2026 is expected to mark a return to execution and growth after what the company described as a transition year in fiscal 2025. On its first quarter fiscal 2026 earnings call, executives pointed to a rebound in “invoiced amounts”—a key internal sales metric that often precedes reported revenue because much of the company’s subscription and services revenue is recognized over time.
Management highlights inflection in Enterprise North America invoiced growth
CEO Paul Walker said the company expects “strong growth in invoiced amounts” in fiscal 2026, led by Enterprise North America, while reported revenue growth is expected to be more modest because of the timing of revenue recognition. Walker said this dynamic should position the company for “accelerated growth” in invoiced amounts, reported revenue, adjusted EBITDA, and cash flow in fiscal 2027.
Company leadership also cited several indicators supporting the Enterprise North America momentum:
- New logo subscription invoiced amounts increased 25% year over year.
- Deferred subscription balance in North America rose 8% to $49.1 million.
- Services booking pace increased 29% in the quarter.
- Multi-year contracting remained elevated, with contracted amounts represented by multi-year contracts at 61%.
During Q&A, management contrasted the first quarter’s growth against fiscal 2025 trends in Enterprise North America invoiced amounts, noting that last year’s quarterly comparisons included declines of 8% in Q1, growth of 2% in Q2, and declines of 11% and 26% in Q3 and Q4, respectively.
Large wins, AI-focused offerings, and go-to-market changes
Walker said Enterprise North America is now benefiting from the company’s go-to-market transformation that reorganized sales and client success teams around two goals: landing new strategic clients and expanding relationships with existing clients. He said the structure has been in place for four quarters and is “beginning to kick in.”
The company highlighted large deal wins tied to clients seeking “breakthrough” performance results. Walker cited a three-year, $6 million contract with a global agriculture company in which Franklin Covey became the sole leadership performance partner, including a mix of services and subscription revenue. He also referenced a multi-year, multi-million-dollar engagement with an industrial packaging company that will use All Access Pass solutions along with coaching and delivery.
Franklin Covey also discussed expanding AI-related capabilities. Walker said the company is incorporating AI into products, including an “AI Sales Coach” referenced previously and a new “AI Coach” for the Four Disciplines of Execution solution planned to launch this year. In the quarter, the company launched two new solutions—“Leading AI Adoption” and “Working with AI”—aimed at helping leaders and individuals develop mindsets and skills to use AI effectively.
In Q&A, management said it expects to combine internal development and potential partnerships or licensing for AI tools, with the goal of embedding AI across solutions within its Impact Platform.
First quarter results: revenue down, invoiced amounts return to growth
CFO Jessie Soderstrom reported first quarter revenue of $64.0 million, down 7% from the prior year. She said the decline was driven by an 8% drop in enterprise revenue and a 2% decrease in education revenue, reflecting lower deferred revenue available to recognize following weaker invoiced amounts in fiscal 2025.
Subscription revenue recognized in the quarter was $37.0 million, flat year over year. However, Soderstrom said total subscription and committed services invoiced amounts rose 5% to $26.0 million, led by Enterprise North America. Consolidated deferred revenue increased 5% year over year to $100.2 million, which management said will be recognized in future quarters.
Gross margin was 75.5% versus 76.3% a year earlier, primarily due to increased product amortization and slightly lower education margins. Selling, general, and administrative expenses were $44.7 million compared with $45.0 million last year. The company recorded $3.4 million in restructuring expense, largely severance-related, as it continued refining operations and reducing costs.
Adjusted EBITDA was $3.7 million, down from $7.7 million a year earlier. Operating cash flow was $0.1 million compared with $14.1 million in the prior-year quarter, with Soderstrom attributing the decrease largely to timing-related working capital changes and lower net income. Free cash flow was negative $3.7 million versus positive $11.4 million a year ago. Management said it expects free cash flow to improve and become “increasingly positive” in the back half of the year as adjusted EBITDA grows and working capital declines.
Segment detail: Enterprise improves in North America; education timing shifts; China remains a headwind
Enterprise represented 74% of first quarter revenue and education accounted for 25%, according to Soderstrom. Enterprise division invoiced amounts grew 4% to $45.5 million, while enterprise reported revenue declined to $47.5 million from $51.6 million.
Within enterprise, North America segment revenue was $36.3 million, down $3.9 million year over year, which Soderstrom said reflected lower services and subscription revenue recognized due to lower invoiced amounts and deferred revenue generated last year. North America segment adjusted EBITDA declined to $5.3 million from $8.7 million.
Soderstrom also highlighted a change tied to “solution selling” and contract structure. She said approximately $5.6 million of first quarter invoiced amounts reflected “contractually committed predefined services,” primarily associated with the agriculture company deal. Because revenue is recognized upon delivery, she said some of those committed services could be recognized as reported revenue in fiscal 2027 depending on delivery timing.
International enterprise revenue was $11.2 million, slightly down from $11.4 million, primarily due to China. Excluding China, international revenue increased 4%, and licensee revenue increased 8%. International direct operations adjusted EBITDA rose to $2.4 million from $1.4 million, driven by cost reductions and lower bad debt expense.
Education revenue was $16.1 million, down 2% year over year, which management attributed to lower material sales and the absence of a symposium event held in the prior-year quarter. Education invoiced amounts declined to $6.6 million from the prior year due largely to a large statewide deal that created a spike in last year’s first quarter. Walker said the timing of school launches under that contract is expected to occur in Q3 and Q4 this year, and Soderstrom said education subscription revenue increased 12% to $11.8 million. Education adjusted EBITDA was a loss of $0.9 million compared with a $0.3 million gain in the prior-year quarter.
Guidance reaffirmed; share repurchases continue
Management reaffirmed full-year fiscal 2026 guidance, maintaining revenue guidance of $265 million to $275 million and adjusted EBITDA guidance of $28 million to $33 million. Soderstrom said the revenue outlook reflects a lag between invoiced growth and reported revenue recognition after lower deferred revenue generated in fiscal 2025. She added that the company now expects 25% to 30% of full-year adjusted EBITDA to be generated in the first half (down from 30% to 35% previously), citing the timing shift of large education contracts further into the back half of the year.
On capital allocation, Soderstrom said liquidity totaled $80 million at quarter end, including $17.5 million of cash and no borrowings on a $62.5 million credit facility. The company repurchased about 582,000 shares for $10.4 million in the quarter. Management said a 10b5-1 plan initiated November 17, 2025, authorizes up to $20 million of repurchases, and the company expects that plan to be completed by the end of January.
About Franklin Covey (NYSE:FC)
Franklin Covey Co (NYSE:FC) is a global consulting and training firm specializing in performance improvement solutions for individuals and organizations. The company offers a range of services, including leadership development, productivity tools, execution frameworks and assessments designed to foster personal effectiveness and drive business results. Its flagship offerings integrate training workshops, digital resources and coaching to support clients in areas such as strategic planning, team productivity and change management.
The origins of Franklin Covey trace back to the merger in 1997 of Franklin Quest Co, founded in 1983 by Hyrum W.
