# Franklin Covey Co. (NYSE: FC) Reports Third Quarter Fiscal 2025 Financial Results
## Summary:
– **Consolidated Revenue** for Q3 FY2025 was $67.1 million, showing a slight decline compared to $73.4 million in Q3 FY2024.
– **Adjusted EBITDA** reached $7.3 million, surpassing company guidance but down from $13.9 million in the prior year.
– **Net Loss** for Q3 FY2025 was $(1.4) million, compared to net income of $5.7 million in Q3 FY2024.
– **Deferred Subscription Revenue** was $89.3 million, up 7% year-over-year.
– The **Enterprise Division** revenue declined to $47.3 million in Q3 FY2025, impacted by macroeconomic uncertainties and canceled contracts.
– North America segment revenue decreased by $3.5 million, and International Direct Office revenue dropped by $1.0 million.
– The **Education Division** revenue decreased to $18.6 million in Q3 FY2025, mainly due to lower materials revenue compared to a significant initiative in the previous year.
– **Consolidated Subscription and Subscription Services Revenue** decreased to $57.7 million from $60.8 million in Q3 FY2024.
– **Adjusted EBITDA Margin** decreased to 10.9% in Q3 FY2025 from 19.0% in the prior year.
– **Cash and Cash Equivalents** stood at $33.7 million compared to $40.4 million as of February 28, 2025.
– **Cash Provided by Operating Activities** for the first three quarters of fiscal 2025 was $19.0 million, down from $38.4 million in the prior year.
– **Free Cash Flow** for the same period was $10.6 million, a notable decrease from $30.6 million in the previous year.
– The company made significant **stock repurchases**, acquiring approximately 372,000 shares for $8.3 million in Q3 FY2025.
## Highlights in Percentages:
– **Adjusted EBITDA** saw a decrease to $7.3 million in Q3 FY2025, down from $13.9 million in the previous year.
– **Net Loss** of $(1.4) million in Q3 FY2025 compared to net income of $5.7 million in Q3 FY2024.
– **Deferred Subscription Revenue** increased by 7%, totaling $89.3 million compared to $83.8 million in the previous year.
– **Adjusted EBITDA Margin** decreased to 10.9% in Q3 FY2025, down from 19.0% in the prior year.
– **Cash Provided by Operating Activities** decreased to $19.0 million in Q3 FY2025, a decline from $38.4 million in the previous year.
– **Free Cash Flow** dropped to $10.6 million in the first three quarters of fiscal 2025, down from $30.6 million in the previous year.
### Income Statement
The amounts below are in thousands
| Quarter Ended May 31, 2025 | Quarter Ended May 31, 2024 | Three Quarters Ended May 31, 2025 | Three Quarters Ended May 31, 2024 | |
|---|---|---|---|---|
| Revenue | $67,121 | $73,373 | $195,819 | $203,109 |
| Cost of revenue | $15,799 | $17,167 | $46,040 | $47,773 |
| Gross profit | $51,322 | $56,206 | $149,779 | $155,336 |
| Selling, general, and admin | $46,676 | $45,110 | $138,966 | $130,088 |
| Restructuring costs | $4,739 | $701 | $6,723 | $3,008 |
| Impaired asset | $0 | $0 | $0 | $928 |
| Depreciation | $1,012 | $990 | $2,979 | $2,994 |
| Amortization | $1,098 | $1,062 | $3,294 | $3,204 |
| Income (loss) from operations | -$2,203 | $8,343 | -$2,183 | $15,114 |
| Interest income (expense) | $76 | $21 | $295 | -$59 |
| Income (loss) before income taxes | -$2,127 | $8,364 | -$1,888 | $15,055 |
| Income tax benefit (provision) | $718 | -$2,643 | $584 | -$3,609 |
| Net income (loss) | -$1,409 | $5,721 | -$1,304 | $11,446 |
| Net income (loss) per common share: | ||||
| Basic | -$0.11 | $0.43 | -$0.10 | $0.87 |
| Diluted | -$0.11 | $0.43 | -$0.10 | $0.85 |
| Weighted average common shares: | ||||
| Basic | 12,891 | 13,160 | 13,028 | 13,222 |
| Diluted | 12,891 | 13,378 | 13,028 | 13,499 |
### Balance Sheet
The amounts below are in thousands
| May 31, 2025 | August 31, 2024 | |
|---|---|---|
| Current assets | ||
| Cash and cash equivalents | $33,707 | $48,663 |
| Accounts receivable | $49,843 | $86,002 |
| Inventories | $4,062 | $4,002 |
| Prepaid expenses and other current | $23,391 | $21,586 |
| assets | ||
| Total current assets | $111,003 | $160,253 |
| Property and equipment, net | $9,867 | $8,736 |
| Intangible assets, net | $35,648 | $37,766 |
| Goodwill | $31,220 | $31,220 |
| Deferred income tax assets | $854 | $870 |
| Other long-term assets | $29,692 | $22,694 |
| Total assets | $218,284 | $261,539 |
| Current liabilities | ||
| Current portion of notes payable | $816 | $835 |
| Current portion of financing | $221 | $3,112 |
| obligation | ||
| Accounts payable | $6,234 | $7,862 |
| Deferred subscription revenue | $83,488 | $101,218 |
| Customer deposits | $20,054 | $16,972 |
| Accrued liabilities | $21,494 | $32,454 |
| Total current liabilities | $132,307 | $162,453 |
| Notes payable, less current | $0 | $775 |
| portion | ||
| Financing obligation, less current | $1,312 | $1,312 |
| portion | ||
| Other liabilities | $15,939 | $10,732 |
| Deferred income tax liabilities | $3,147 | $3,132 |
| Total liabilities | $152,705 | $178,404 |
| Shareholders’ equity | ||
| Common stock | $1,353 | $1,353 |
| Additional paid-in capital | $230,375 | $231,813 |
| Retained earnings | $121,900 | $123,204 |
| Accumulated other comprehensive | $-863 | $-768 |
| loss | ||
| Treasury stock at cost, 14,427 and | -$287,186 | -$272,467 |
| 14,084 shares | ||
| Total shareholders’ equity | $65,579 | $83,135 |
| Total liabilities and equity | $218,284 | $261,539 |
