0001193125-26-147784
SEC filingFranklin Covey reported modest revenue growth and stable gross margin in Q2 FY2026, but GAAP operating and net losses widened significantly due to strategic investments and macroeconomic uncertainty — even as operating cash flow strengthened meaningfully.
Revenue for the second quarter of fiscal 2026 was $59.6 million, an increase of 5.9% compared to $59.6 million in the prior-year period. This growth occurred against a backdrop of continued macroeconomic uncertainty, which management notes may impede achievement of full-year sales goals. Gross profit was $45.3 million, down 1.0% year-over-year, reflecting a slight decline in gross margin to 75.9% of revenue from 76.7% in Q2 FY2025. The decrease in gross margin was primarily due to increased amortization of capitalized curriculum expense and a shift in the mix of services delivered and products sold during the quarter.
Operating income was a loss of $2.0 million in Q2 FY2026, compared to a loss of $1.5 million in Q2 FY2025 — a 37.4% deterioration year-over-year. Net income was a loss of $2.0 million, or $-0.17 per diluted share, compared to a loss of $1.1 million, or $-0.08 per diluted share, in the prior-year period. The decline in profitability reflects the impact of strategic investments, including curriculum development and related amortization, alongside broader cost pressures tied to service and product mix shifts.