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1. Company Snapshot

1.a. Company Description

Franklin Covey Co. provides training and consulting services in the areas of execution, sales performance, productivity, customer loyalty, and educational improvement for organizations and individuals worldwide.The company operates through three segments: Direct Offices, International Licensees, and Education Practice.It also provides a suite of individual-effectiveness and leadership-development training and products.


The company was incorporated in 1983 and is headquartered in Salt Lake City, Utah.

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1.b. Last Insights on FC

Franklin Covey's recent performance was negatively impacted by its Q4 earnings miss, with quarterly earnings of $0.34 per share, falling short of the Zacks Consensus Estimate of $0.43 per share. This compares to earnings of $0.89 per share a year ago. Despite launching new products, such as "Writing for Results" and "Disrupt Everything: Innovate for Impact", the company's earnings decline appears to be a significant concern. Additionally, the company's valuation and earnings were compared to The Hackett Group, potentially affecting investor sentiment.

1.c. Company Highlights

2. Franklin Covey's Fiscal '25 Results: A Foundation for Growth

Franklin Covey reported total revenue of $267.1 million for fiscal '25, a 7% decline from the prior year, with the Enterprise Division being the main contributor to this decline, down 10% to $188.1 million. The Education Division, however, saw a 1% increase in revenue to $74.6 million, driven by a 10% growth in subscription revenue. The company's gross margin was 76.2%, down from 77% in the prior year, primarily due to increased product amortization costs. The actual EPS for the year came in at $0.34, slightly below estimates of $0.43.

Publication Date: Nov -21

📋 Highlights
  • Fiscal 2025 Revenue Performance:: Total revenue declined 7% YoY to $267.1M, driven by a 10% drop in Enterprise Division ($188.1M) offset by 1% growth in Education ($74.6M).
  • Education Division Growth:: Subscription revenue rose 10% YoY to $45.9M, with Education contributing 4% total revenue growth ($6.9M) despite macroeconomic headwinds.
  • Deferred Revenue Increase:: Consolidated deferred revenue grew 3% to $111.7M, signaling stronger future revenue visibility and supporting fiscal 2026 growth expectations.
  • Enterprise Recovery Momentum:: North America Enterprise invoiced growth accelerated in Q1 FY26, with new client wins up and services bookings rising double-digits YoY.
  • 2026 Guidance:: Revenue projected at $265–275M vs. $267.1M FY25, with adjusted EBITDA expected to rebound to $28–33M (vs. $23.7M FY25) due to sales transformation and AI integration.

Segment Performance

The Enterprise Division, which accounts for 70% of the company's revenue, faced challenges, including canceled U.S. federal government contracts, resulting in a 10% decrease in revenue. The North America segment revenue was $147.6 million, a 10% decrease from the prior year. In contrast, the Education Division saw a 1% increase in revenue, with subscription revenue growing 10% to $45.9 million. The company's adjusted EBITDA for fiscal '25 was impacted by lower revenue and increased SG&A expenses.

Outlook and Guidance

Franklin Covey expects fiscal '26 to be a year of focused execution, with adjusted EBITDA and free cash flow returning to growth. The company anticipates revenue in the range of $265 million to $275 million and adjusted EBITDA between $28 million to $33 million. The sales transformation is gaining traction, with strong invoiced growth in Enterprise North America, and the company is confident in its ability to drive long-term value creation.

Valuation and Metrics

With a P/E Ratio of 58.34 and an EV/EBITDA of 9.2, the market seems to be pricing in a certain level of growth. The company's ROE is 4.3%, and ROIC is 3.34%, indicating room for improvement in returns. The Free Cash Flow Yield is 10.48%, which is relatively attractive. Analysts estimate next year's revenue growth at 0.2%, which may be conservative given the company's expectations. The implementation of AI across its solutions is expected to drive growth and improve client outcomes, potentially leading to increased revenue.

AI Implementation and Future Prospects

The company is leveraging AI to enhance its solutions, such as in its sales performance tool, Helping Clients Succeed, which provides real-time feedback on sales calls. This is expected to drive growth and improve client outcomes. With a strong pipeline of opportunities and a focus on execution, Franklin Covey is optimistic about fiscal '26, expecting invoice growth to translate into increased revenue growth.

3. NewsRoom

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Franklin Covey Co. (FC) Q4 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Franklin Covey (FC) Lags Q4 Earnings Estimates

Nov -06

Source: zacks.com

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Analyzing The Hackett Group (NASDAQ:HCKT) & Franklin Covey (NYSE:FC)

Nov -03

Source: defenseworld.net

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Global FranklinCovey Impact Conference to Feature Mel Robbins, Author of The Let Them Theory, James Patterson and Patrick Leddin, Co-Authors of Disrupt Everything and Win, Stephen M. R. Covey, Author of Trust & Inspire, and an Expert AI Panel

Oct -28

Source: businesswire.com

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Franklin Covey to Report Fourth Quarter and Year-End Fiscal 2025 Results

Oct -22

Source: businesswire.com

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Firm Capital Mortgage Investment Corporation Completes $25 Million Bought Deal Financing

Oct -14

Source: globenewswire.com

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FranklinCovey Launches Disrupt Everything: Innovate for Impact, Based on The New York Times Bestselling Book by James Patterson and Patrick Leddin, Disrupt Everything and Win

Oct -09

Source: businesswire.com

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FranklinCovey Launches Writing for Results: A Practical Framework for Effective Writing

Oct -08

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.60%)

6. Segments

Direct Offices

Expected Growth: 4.5%

Franklin Covey Co.'s Direct Offices segment growth of 4.5% is driven by increasing demand for leadership development and productivity training, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation and online learning platforms has enhanced customer engagement, leading to higher sales and revenue growth.

Education

Expected Growth: 4.8%

Franklin Covey Co.'s 4.8% growth in Education is driven by increasing demand for online learning platforms, strategic partnerships with educational institutions, and expansion of its leadership development programs. Additionally, the company's focus on digital transformation, mobile optimization, and personalized learning experiences contributes to its growth.

International Licensees

Expected Growth: 5.2%

Franklin Covey Co.'s 5.2% growth in International Licensees is driven by increasing demand for leadership development and productivity solutions, expansion into new markets, strategic partnerships, and effective sales and marketing strategies. Additionally, the company's digital transformation and online platform enhancements have improved accessibility and user experience, contributing to the growth.

Corporate and Eliminations

Expected Growth: 4.2%

Franklin Covey Co.'s Corporate and Eliminations segment growth of 4.2% is driven by increased demand for leadership development and productivity solutions, strategic acquisitions, and effective cost management. Additionally, the company's focus on digital transformation and expansion into new markets have contributed to this growth.

7. Detailed Products

The 7 Habits

A framework for personal and professional effectiveness, based on the bestselling book by Stephen Covey

The 4 Disciplines of Execution

A methodology for achieving important goals, based on the book by Chris McChesney, Sean Covey, and Jim Huling

The Leader in Me

A leadership development program for students, based on the book by Sean Covey

The 5 Choices

A time management and productivity system, based on the book by Kory Kogon, Adam Merrill, and Leena Rinne

FranklinCovey Consulting Services

Customized consulting services to help organizations improve their performance and achieve their goals

All Access Pass

A subscription-based online learning platform, offering access to FranklinCovey's content and tools

8. Franklin Covey Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Franklin Covey Co. has a moderate threat of substitutes due to the presence of alternative products and services in the market.

Bargaining Power Of Customers

Franklin Covey Co. has a low bargaining power of customers due to the lack of concentration of buyers in the market.

Bargaining Power Of Suppliers

Franklin Covey Co. has a moderate bargaining power of suppliers due to the presence of multiple suppliers in the market.

Threat Of New Entrants

Franklin Covey Co. has a high threat of new entrants due to the low barriers to entry in the market.

Intensity Of Rivalry

Franklin Covey Co. has a high intensity of rivalry due to the presence of many competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 16.31%
Debt Cost 4.67%
Equity Weight 83.69%
Equity Cost 9.91%
WACC 9.05%
Leverage 19.49%

11. Quality Control: Franklin Covey Co. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Barrett Business Services

A-Score: 6.0/10

Value: 5.9

Growth: 5.6

Quality: 6.0

Yield: 2.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

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Huron Consulting Group

A-Score: 5.7/10

Value: 3.9

Growth: 7.7

Quality: 7.4

Yield: 0.0

Momentum: 9.5

Volatility: 6.0

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CRAI

A-Score: 5.0/10

Value: 3.0

Growth: 6.8

Quality: 5.4

Yield: 2.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

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Resources Connection

A-Score: 4.5/10

Value: 8.5

Growth: 0.9

Quality: 3.8

Yield: 9.0

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

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Franklin Covey

A-Score: 4.1/10

Value: 6.3

Growth: 6.9

Quality: 6.9

Yield: 0.0

Momentum: 0.0

Volatility: 4.7

1-Year Total Return ->

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Forrester Research

A-Score: 3.3/10

Value: 8.9

Growth: 1.8

Quality: 4.2

Yield: 0.0

Momentum: 1.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

16.19$

Current Price

16.19$

Potential

-0.00%

Expected Cash-Flows