Franklin Covey Shares Face Headwinds Amid Subdued Forecast

Franklin Covey US3534691098

Franklin Covey's latest financial report for fiscal 2025 has painted a complex picture for the organizational consulting firm's equity. Despite a recent short-term recovery in its share price, a sharp decline in profitability and a cautious forward-looking statement are clouding the longer-term investment thesis.

Looking ahead to the current fiscal year 2026, company leadership anticipates a return to growth for both revenue and EBITDA. The official guidance projects revenue in a range of $265 million to $275 million, with adjusted EBITDA forecast between $28 million and $33 million. This outlook suggests the firm will essentially maintain the performance level of the prior, weaker year. Executives state their focus is on executing a sales transformation and implementing cost-reduction initiatives to accelerate growth in subsequent years. A liquidity position exceeding $90 million provides the company with flexibility to pursue these strategic goals.

Fiscal 2025 Performance: Revenue and Profit Pressures

The company released its annual figures on November 5, 2025. Consolidated revenue for the fiscal year declined by 7% to $267.1 million. A significant drop was noted in the Enterprise Division, which posted $188.1 million in sales. Management attributed this weakness to macroeconomic uncertainty, geopolitical trade tensions, and canceled U.S. government contracts.

The impact on profitability was even more pronounced. Adjusted EBITDA nearly halved, falling to $28.8 million. Net income experienced a dramatic contraction, plummeting from $23.4 million to just $3.1 million. A modest positive was a 3% increase in deferred subscription revenue, which reached $111.7 million, potentially indicating some future revenue stability.

Analyst Sentiment and Share Repurchase Activity

Market experts have delivered a mixed response to the results. On December 6, the average 12-month price target for the stock was lowered to $27.88. However, this figure still implies a substantial upside potential of over 75% from the price at that time. Individual analyst estimates present a wide range, from $22.22 to $39.90.

In parallel, the company is actively pursuing a share buyback strategy. Following a $50 million program authorized in August, Franklin Covey initiated a new $20 million repurchase plan on November 17. The intention is to acquire additional shares of its own stock by the end of January 2026.