Q2 2026 Franklin Covey Co Earnings Call Transcript
Key Points
- Franklin Covey Co (FC) reported a year-over-year growth in revenue and adjusted EBITDA, exceeding expectations and consensus estimates.
- Invoiced amounts grew by 5% overall, with a notable 7% growth in Enterprise North America and 10% growth when excluding the Government business.
- The company achieved strong sales to new clients and maintained high client retention, resulting in one of the highest revenue retention levels in recent periods.
- Deferred subscription revenue increased by 16% year over year, with 62% of revenue under multi-year contracts, indicating strong client confidence.
- The Education division reported a 16% increase in revenue, driven by strong demand for Leader in Me services and materials, positioning it well for a strong second half of the year.
- The Enterprise Division reported a 4% decline in revenue, despite the overall growth in invoiced amounts.
- Gross margin decreased to 75.9% from 76.7% in the prior year due to increased amortization of capitalized curriculum expenses and a shift in the mix of services delivered.
- The company incurred $1.5 million in restructuring expenses, contributing to a net loss of $2 million for the quarter.
- There was a 4% decrease in the Education division's balance of billed deferred revenue, attributed to the strong delivery of Leader in Me subscriptions.
- The macroeconomic environment remains neutral, with ongoing uncertainties such as tariffs, government shutdowns, and geopolitical tensions impacting the business landscape.
Good day and thank you for standing by. Welcome to the second-quarter 2026 Franklin Covey earnings conference call.
(Operator Instructions) Please be advised that today's call is being recorded.
I would now like to hand it over to our first speaker, Boyd Roberts, Head of Investor Relations. Please go ahead.
Good afternoon, everyone. Thank you for joining us today on Franklin Covey's second-quarter 2026 earnings call. We appreciate having the opportunity to connect with you.
Before we begin, please remember that today's remarks contain forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, statements that may predict, forecast, indicate, or imply future results, performance, or achievements; and may contain words, such as believe, anticipate, expect, estimate, project, or words or phrases of similar meaning.
These statements reflect management's current
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