Overview

Franklin Covey Co. (NYSE:FC) announced its third‑quarter 2026 results, which missed analyst expectations and prompted a reduction in its full‑year revenue guidance, causing the stock to decline 24% in after‑hours trading.

Financial Performance

  • Adjusted earnings per share for the quarter ended 31 May 2026 were $0.27, versus the consensus estimate of $0.29.
  • Revenue for the quarter increased 1% year‑on‑year to $67.8 million, falling short of the $68.59 million forecast.
  • Net income turned positive at $3.1 million, or $0.27 per diluted share, compared with a net loss of $1.4 million, or $0.11 per share, in the same quarter last year.
  • Adjusted EBITDA rose 14% to $8.3 million.
  • Consolidated deferred revenue grew 7% to $96.0 million.
  • Liquidity remained above $74 million.

Guidance Update

  • Fiscal 2026 revenue guidance was revised to a range of $260 million to $267 million, down from the prior $265 million to $275 million range. The midpoint of $263.5 million is below the analyst consensus of $267.76 million.
  • Adjusted EBITDA guidance was kept within a narrower $28 million to $31 million band, compared with the earlier $28 million to $33 million range.

Segment Performance

  • Enterprise Division revenue increased to $48.1 million from $47.3 million a year earlier.
  • Education Division revenue rose to $19.0 million from $18.6 million a year earlier.
  • Enterprise North America invoiced amounts grew 4% year‑on‑year to $36.7 million, representing 4% growth in invoiced amounts for the quarter and 6% growth year‑to‑date.

Drivers of Guidance Reduction

  • The company cited a timing shift in services delivery for a large Enterprise North America contract.
  • A state education contract was impacted by gubernatorial budget cuts that removed funding for a large state contract.
  • International market challenges were attributed to geopolitical tensions.

Management Commentary

Paul Walker, President and Chief Executive Officer, said the company is “pleased with the continued strong momentum particularly in Enterprise North America,” noting 4% growth in invoiced amounts for the quarter and 6% year‑to‑date. He acknowledged an unexpected headwind in the Education business due to a last‑minute state budget reduction but emphasized that the underlying strength across both Enterprise North America and Education remains solid.

Market Reaction

Following the announcement, Franklin Covey shares fell 24% in trading.