Franklin Covey 2026 Q1 Earnings Sharp Net Loss of $0.27 as Revenue Declines 7.3%

Franklin Covey reported a sharp net loss of $0.27 per share in Q1 2026, marking a 400% negative change from the prior year’s profit. Revenue fell 7.3% to $64.05 million, missing expectations, while the company reaffirmed its full-year guidance.

Revenue

Franklin Covey’s Q1 revenue totaled $64.05 million, a 7.3% decline from $69.09 million in Q1 2025. The Services and Products segment contributed $22.15 million, while Subscriptions led with $37.02 million. Royalties added $4.68 million, and Leases and Other generated $195,000. The Enterprise North America invoiced amounts grew 7%, excluding government contracts.

Earnings/Net Income

The company swung to a loss of $0.27 per share in Q1 2026 from a profit of $0.09 per share a year ago. Net income turned negative at $3.29 million, a 378.5% deterioration from the prior year’s $1.18 million. The EPS decline reflects significant operational challenges.

Post-Earnings Price Action Review

The strategy of buying FC when revenue beats and holding for 30 days underperformed dramatically, returning -36.87% versus the benchmark’s 80.61%. Despite a maximum drawdown of 0.00% indicating no losses during the backtest period, the strategy’s Sharpe ratio of -0.24 and volatility of 37.46% underscored its failure to deliver risk-adjusted returns.

CEO Commentary

CEO Paul Walker highlighted strong 7% growth in Enterprise North America invoiced amounts, driven by new logo subscriptions and AI integration. He emphasized strategic investments in AI-driven solutions and expressed confidence in long-term revenue and EBITDA acceleration.

Guidance

Franklin Covey reaffirmed FY2026 revenue guidance of $265–$275 million and adjusted EBITDA of $28–$33 million. The company expects 45–50% of revenue and 25–30% of EBITDA to be recognized in the first half, with education contracts shifting EBITDA to the back half.

Additional News

1. Restructuring Costs: Franklin Covey incurred $3.4 million in restructuring expenses in Q1, impacting margins.

2. Stock Buybacks: The company repurchased 582,000 shares at $10.4 million and initiated a $20 million stock repurchase plan.

3. AI Solutions Launch: Two AI-driven solutions, Leading AI Adoption and Working with AI, were introduced to address human-side challenges in AI integration.