Fourth quarter and full fiscal 2026
Filed Nov 4, 2026Consolidated Fourth Quarter Revenue of $70.0 Million and Fiscal 2026 Revenue of $261.5 Million within Updated Guidance Range; Fourth Quarter Adjusted EBITDA Increases 9% to $12.8 Million and Fiscal 2026 Adjusted EBITDA of $28.9 Million within Original Full-Year Guidance Range
Fourth-quarter and fiscal 2026 revenue declined versus the prior year, while net income increased and fourth-quarter Adjusted EBITDA grew 9%. Enterprise North America invoiced amounts and deferred revenue increased, supporting fiscal 2027 guidance for revenue and Adjusted EBITDA growth, but operating cash flow, free cash flow, cash balances, and full-year Enterprise revenue declined.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q4 FY2026 consolidated revenueGAAP | $69.96M | – | – |
| FY2026 consolidated revenueGAAP | $261.5M | – | -2.1% |
| Q4 FY2026 cost of revenueGAAP | 17.67M | – | – |
| FY2026 cost of revenueGAAP | 65.42M | – | – |
| Q4 FY2026 gross profitGAAP | $52.29M | – | – |
| FY2026 gross profitGAAP | $196.0M | – | – |
| Q4 FY2026 selling, general, and administrativeGAAP | 40.49M | – | – |
| FY2026 selling, general, and administrativeGAAP | 173.4M | – | – |
| Q4 FY2026 restructuring costsGAAP | 1.08M | – | – |
| FY2026 restructuring costsGAAP | 6.74M | – | – |
| Q4 FY2026 building exit costsGAAP | 88K | – | – |
| FY2026 building exit costsGAAP | 1.36M | – | – |
| Q4 FY2026 loss on assets held for saleGAAP | 218K | – | – |
| FY2026 loss on assets held for saleGAAP | 218K | – | – |
| Q4 FY2026 income from operationsGAAP | 8.62M | – | – |
| FY2026 income from operationsGAAP | 7.16M | – | – |
| Q4 FY2026 net incomeGAAP | $7.11M | – | – |
| FY2026 net incomeGAAP | $4.92M | – | – |
| Q4 FY2026 diluted net income per common shareGAAP | $ 0.62 | – | – |
| FY2026 diluted net income per common shareGAAP | 0.42 | – | – |
| Q4 FY2026 Adjusted EBITDAnon-GAAP | $12.77M | – | 9% |
| FY2026 Adjusted EBITDAnon-GAAP | $28.88M | – | 0.4% |
| Q4 FY2026 Adjusted EBITDA marginnon-GAAP | 18.3 % | – | – |
| FY2026 Adjusted EBITDA marginnon-GAAP | 11.0 % | – | – |
| Q4 FY2026 cash provided by operating activitiesGAAP | $4.1M | – | – |
| FY2026 net cash provided by operating activitiesGAAP | 21.59M | – | – |
| Q4 FY2026 free cash flownon-GAAP | $700K | – | – |
| FY2026 free cash flownon-GAAP | $9.20M | – | – |
| Consolidated deferred revenue at August 31, 2026other | $116.1M | – | 4% |
| Enterprise Division deferred revenue at August 31, 2026other | $64.9M | – | 14% |
| Enterprise North America deferred revenue at August 31, 2026other | $59.2M | – | 17% |
| Q4 FY2026 Enterprise North America invoiced amountsother | $37M | – | – |
| FY2026 Enterprise North America invoiced amountsother | $151.4M | – | 4% |
| Q4 FY2026 subscription and contractually committed services invoicedother | $62.8M | – | – |
| FY2026 subscription and contractually committed services invoicedother | $165.1M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Q4 FY2026 Enterprise DivisionRevenue reflected a $0.1 million decrease in North America segment revenue and a $0.1 million decrease in International segment revenue. | $45.5M | – | – |
| Q4 FY2026 Enterprise Division: North AmericaPrior-year revenue was $ 35,898 (in thousands). | $35.83M | – | – |
| Q4 FY2026 Enterprise Division: InternationalPrior-year revenue was $ 9,770 (in thousands). | $9.67M | – | – |
| Q4 FY2026 Education DivisionPrior-year revenue was $24.4 million. | $23.6M | – | – |
| FY2026 Enterprise DivisionRevenue performance was impacted by a $5.0 million decrease in North America segment revenue and a $0.4 million decrease in International segment revenue. | $182.7M | – | – |
| FY2026 Enterprise Division: North AmericaPrior-year revenue was $ 147,609 (in thousands). | $142.6M | – | – |
| FY2026 Enterprise Division: InternationalPrior-year revenue was $ 40,455 (in thousands). | $40.08M | – | – |
| FY2026 Education DivisionPrior-year revenue was $74.6 million. | $76.2M | – | – |
| FY2026 Corporate and otherPrior-year revenue was $ 4,385 (in thousands). | $2.61M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
FY2027, in constant currency outlook
- Revenue$263 million to $273 million
- NoteAdjusted EBITDA of $29 million to $34 million.
- NoteFY2027 revenue midpoint: $268.0 million.
- NoteFY2027 revenue YoY growth: 0.6% to 4.4%.
- NoteFY2027 revenue, comparable basis: $263.0 million to $273.0 million.
- NoteFY2027 revenue YoY growth, comparable basis: 1.4% to 5.2%.
- NoteFY2027 Adjusted EBITDA midpoint: $31.5 million.
- NoteFY2027 Adjusted EBITDA YoY growth: 0.4% to 17.7%.
- NoteFY2027 Adjusted EBITDA margin: 11.0% to 12.5%.
- NoteFY2027 reported revenue is expected to be approximately $2.0 million lower than it otherwise would have been because China revenue will shift from direct-office revenue to licensee royalties after closing.
Capital returns
- The Company purchased approximately 1,573,000 shares of its common stock for a total of $28.1 million during FY2026.
- Approximately 1,504,000 shares were purchased in the open market under 10b5-1 trading plans.
- Approximately 69,000 shares were withheld to cover statutory income taxes on stock-based compensation awards that vested during the year.
What drove it
- Fiscal 2026 Enterprise North America invoiced amounts increased 4% to $151.4 million and deferred revenue increased 17% to $59.2 million.
- The Company said fiscal 2026 investments in its Enterprise North America go-to-market model gained traction.
- The Company cited growing client commitments, increased Enterprise North America invoiced amounts, and services bookings generated during FY2026 as support for fiscal 2027 growth.
- The Company said school retention was at its highest level since 2022 and Leader in Me was serving more than 8,000 schools worldwide.
- Fourth-quarter Adjusted EBITDA increased 9% despite lower revenue, which the CFO attributed to operating discipline.
Concerns
- FY2026 consolidated revenue declined to $261.5 million from $267.1 million, and Enterprise Division revenue declined to $182.7 million from $188.1 million.
- Q4 FY2026 cash provided by operating activities was $4.1 million versus $9.9 million, and FY2026 net cash provided by operating activities was 21,587 (in thousands) versus 28,977 (in thousands).
- FY2026 free cash flow was $ 9,204 (in thousands) compared with $ 12,089 (in thousands).
- Cash and cash equivalents declined to $13.3 million from $31.7 million.
- The China transition is expected to reduce FY2027 reported revenue by approximately $2.0 million versus what it otherwise would have been.
What to watch
- Conversion of Enterprise North America deferred revenue of $59.2 million and growing client commitments into reported revenue during FY2027.
- Progress toward FY2027 revenue guidance of $263 million to $273 million and Adjusted EBITDA guidance of $29 million to $34 million.
- Closing of the China direct-operations transition to a locally owned licensee partner, expected by the end of the second quarter of fiscal 2027.
- Enterprise North America invoiced amounts, subscription and contractually committed services invoiced, and Education school retention.
- Operating cash flow and free cash flow following their FY2026 declines.
Balance sheet and cash flow
- Cash and cash equivalents totaled $13.3 million compared with $31.7 million as of August 31, 2025.
- The Company’s $62.5 Million Credit Facility was fully available.
- Accounts receivable, less allowance for credit losses, were 67,771 (in thousands) at August 31, 2026, compared with 68,415 (in thousands) at August 31, 2025.
- Deferred revenue was 112,625 (in thousands) at August 31, 2026, compared with 106,534 (in thousands) at August 31, 2025.
- Current portion of notes payable was $ - at August 31, 2026, compared with $ 823 (in thousands) at August 31, 2025.
- FY2026 purchases of property and equipment were (5,375) (in thousands), compared with (8,253) (in thousands).
- FY2026 curriculum development costs were (7,008) (in thousands), compared with (7,561) (in thousands).
Analysis
Franklin Covey completed fiscal 2026 with Q4 revenue of $70.0 million compared with $71.2 million in Q4 FY2025 and fiscal-year revenue of $261.5 million compared with $267.1 million. The full-year decline was centered in Enterprise Division revenue, which fell to $182.7 million from $188.1 million. Education Division revenue increased to $76.2 million from $74.6 million. Enterprise North America invoiced amounts increased 4% to $151.4 million despite lower reported Enterprise revenue, indicating that the company is emphasizing contracted activity and future revenue conversion.
The deferred-revenue data underpin management's fiscal 2027 outlook. Consolidated deferred revenue rose 4% to $116.1 million, Enterprise Division deferred revenue rose 14% to $64.9 million, and Enterprise North America deferred revenue rose 17% to $59.2 million. Subscription and contractually committed services invoiced increased to $165.1 million from $151.7 million for the year. Management cited growing client commitments, Enterprise North America invoiced amounts, and FY2026 services bookings as expected support for fiscal 2027 revenue and profitability.
Profitability improved on several measures despite the revenue decline. Q4 net income increased to $7.1 million from $4.4 million, while Q4 Adjusted EBITDA increased 9% to $12.8 million from $11.7 million and Adjusted EBITDA margin increased to 18.3% from 16.4%. Full-year net income increased to $4.9 million from $3.1 million, and Adjusted EBITDA was $28.9 million compared with $28.8 million. Full-year operating income rose to 7,164 (in thousands) from 5,704 (in thousands), while fiscal-year Adjusted EBITDA margin was 11.0% compared with 10.8%.
Cash generation and liquidity require attention. FY2026 net cash provided by operating activities declined to 21,587 (in thousands) from 28,977 (in thousands), and free cash flow declined to $9.2 million from $12.1 million. Cash and cash equivalents ended the year at $13.3 million compared with $31.7 million, while the company reported more than $75 million of liquidity because its $62.5 million credit facility was fully available. The company also purchased approximately 1,573,000 shares for $28.1 million during FY2026.
For FY2027, the company guided to constant-currency revenue of $263 million to $273 million and Adjusted EBITDA of $29 million to $34 million. The revenue outlook incorporates an approximately $2.0 million reduction from the planned transition of China direct operations to a locally owned licensee partner, expected to close by the end of the second quarter of fiscal 2027. The company stated that the transaction is not expected to have a material impact on Adjusted EBITDA. The key execution question is whether the larger contracted and deferred-revenue base converts into sufficient reported revenue to deliver the guided expansion in Adjusted EBITDA.
Management, verbatim
In fiscal 2026, the investments we made to build a stronger, faster-growing company gained traction and delivered measurable results. In Enterprise North America, our largest business and the primary focus of these investments, invoiced amounts grew 4% to $151.4 million, and deferred revenue grew 17% to $59.2 million. These increases reflect growing client commitments and give us greater visibility into revenue we expect to recognize in fiscal 2027.
Paul Walker, President and Chief Executive Officer
Our go-to-market model is working, and we are seeing increasingly clear evidence of its potential. Compared with fiscal 2024, the year before we launched the new model, invoiced amounts per new-client sales professional have more than doubled, and existing clients are expanding their work with us. Our Education business remains strong, with school retention at its highest level since 2022 and Leader in Me now serving more than 8,000 schools worldwide. With larger client commitments and a more productive sales engine, we believe we are well positioned to deliver renewed revenue growth and improved profitability in fiscal 2027 and beyond.
Paul Walker, President and Chief Executive Officer
We delivered fourth-quarter and fiscal 2026 revenue within our updated guidance range and full-year Adjusted EBITDA within both our original and narrowed guidance ranges, while strengthening our cost structure and continuing to invest in growth. We grew fourth-quarter Adjusted EBITDA 9% despite lower revenue, reflecting the operating discipline we have built into our business. As a larger base of contracted commitments translates into reported revenue, we expect to benefit from operating leverage, with fiscal 2027 Adjusted EBITDA growing faster than revenue.
Jessi Betjemann, Chief Financial Officer
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported operating metrics were not provided.
- GAAP gross margin was not reported.
- Non-GAAP earnings per share was not reported.
- A fiscal 2027 gross-margin, operating-expense, or tax-rate guidance figure was not provided.
- A reconciliation of forward-looking Adjusted EBITDA guidance to GAAP measures was not available.
- No previous outlook section was provided for formal comparison with prior guidance.
- Total debt was not reported as a standalone balance-sheet figure.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.