Franklin Covey Co. (FC) Q3 Shock: Restructuring Drives Loss, But Adjusted EBITDA Crushes Estimates

Another quarter, another 'strategic restructuring'—Wall Street's favorite euphemism for 'we messed up.'

Franklin Covey Co. (FC) just dropped its Q3 numbers, and the ink is still bleeding red. The corporate training giant posted a loss, blaming it on—you guessed it—restructuring costs. Because nothing says 'efficiency' like paying consultants to fire people.

But wait! The suits in the C-suite are spinning this one hard. Adjusted EBITDA (that magical metric where 'one-time' charges never seem to end) actually topped expectations. Cue the confetti cannons—or at least a muted golf clap from analysts.

The real question? Whether FC's '7 Habits' can teach its own executives how to stop habitually missing targets. The stock's reaction? Let's just say the chart needs its own motivational seminar.

TLDR

• Q3 FY25 revenue was $67.1M, down from $73.4M YoY, but within guidance
• Net loss of $1.4M driven by $4.7M in restructuring costs
• Adjusted EBITDA was $7.3M, above guidance
• Deferred subscription revenue rose 7% YoY to $89.3M
• FY25 revenue forecast revised to $265M–$275M, EBITDA to $28M–$33M

Franklin Covey Co. (NYSE: FC) reported its third quarter fiscal 2025 results for the period ending May 31, 2025. The company’s stock closed at $24.17 but fell to $22.35 (-7.53%) in after-hours trading following a quarterly net loss caused by restructuring costs, despite beating adjusted EBITDA expectations.

Franklin Covey Co. (FC)

Revenue Meets Forecast Despite Macro Pressures

Franklin Covey posted Q3 revenue of $67.1 million, a decline from $73.4 million in the same quarter last year. The decrease was attributed to macroeconomic uncertainty, geopolitical trade tensions, and canceled U.S. federal government contracts. The Enterprise Division brought in $47.3 million, down from $51.9 million, while the Education Division posted $18.6 million, compared to $20.2 million last year.

Franklin Covey, $FC, Q3-25. Results:
🔴 -6.5% Post-Market

📊 EPS: -$0.11 🔴
💰 Revenue: $67.1M 🔴
📈 Net Loss: $1.4M
🔎 Adjusted EBITDA exceeded guidance despite restructuring costs; strong client retention and multi-year subscription growth highlight resilience. pic.twitter.com/XISM0FxOnM

— EarningsTime (@Earnings_Time) July 2, 2025

Lower materials revenue in the Education segment affected results, as Q3 FY2024 had benefited from a new state-wide initiative. Still, the company noted increases in coaching, training, and membership subscription revenue partially offset the shortfall.

Restructuring Costs Lead to Net Loss

Franklin Covey reported a net loss of $1.4 million, or $(0.11) per share, versus a net income of $5.7 million, or $0.43 per diluted share, in Q3 FY2024. The loss included $4.7 million in restructuring charges related to its go-to-market transformation strategy and a $1.6 million year-over-year increase in selling, general, and administrative expenses.

Despite these costs, adjusted EBITDA stood at $7.3 million, outperforming the company’s guidance but still below the $13.9 million recorded in the prior year. Management cited improved client acquisition, high client retention, and strong expansion activity across its customer base as key positives.

Recurring Revenue Strength and Liquidity

Deferred subscription revenue reached $89.3 million at quarter-end, reflecting a 7% year-over-year increase. At the same time, the proportion of North American AAP contracts with multi-year terms ROSE to 58%, and 62% of contracted amounts were part of multi-year deals, both metrics showing progress in revenue durability.

Liquidity remains robust, with $33.7 million in cash and no borrowings on the $62.5 million credit facility. Free cash FLOW for the first three quarters of fiscal 2025 was $10.6 million, compared to $30.6 million in the prior year. The company also repurchased 372,000 shares for $8.3 million during the quarter, bringing its year-to-date buybacks to 769,000 shares worth $23 million.