Q3 2026 Franklin Covey Co Earnings Call Transcript
Key Points
- Franklin Covey Co (FC) reported its third consecutive quarter finishing in line with expectations, showcasing the company's strategic strength and resiliency.
- The Enterprise division in North America saw invoiced amounts up 6% year to date and 4% in the third quarter, indicating strong client retention and expansion.
- Deferred revenue increased by 18% compared to the previous year, establishing a strong foundation for future growth.
- The Education division reported an 11% increase in subscription revenue in the third quarter, with a strong school retention rate.
- Franklin Covey Co (FC) is well-positioned for growth in fiscal '27, with deferred revenue up 7% year over year and significant services already contracted for future delivery.
- Revenue guidance was revised due to a timing shift of $2 million in previously invoiced services and a $2 million impact from geopolitical tensions affecting international operations.
- The Education division faced a $2 million revenue impact due to gubernatorial budget reductions affecting a statewide education client.
- Gross margin decreased to 73.9% from 76.5% in the prior year, primarily due to increased delivery costs and a shift in the mix of services.
- The International segment faced challenges, particularly in China, due to ongoing trade tensions and macroeconomic uncertainty.
- Free cash flow for the third quarter was negative $1 million, compared to a positive $2.8 million in the previous year, due to unfavorable changes in working capital.
Thank you for standing by. Welcome to the Franklin Covey third-quarter 2026 earnings conference call. (Operator Instructions) As a reminder, today's program is being recorded.
And now I'd like to introduce your host for today's program, Boyd Roberts, Head of Investor Relations. Please go ahead, sir.
Thank you, and good afternoon, everyone. Thank you for joining us today on Franklin Covey's third-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 judgment and analysis and are subject to a variety of
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