FRANKLIN COVEY CO

FRANKLIN COVEY CO Annual Review - Plain-English Investor Summary

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What They Do & This Year’s Performance

Franklin Covey helps people and businesses improve time management, leadership, and productivity through planners, training programs (like the iconic 7 Habits of Highly Effective People), and coaching. Their big win this year: Digital tools (online courses, subscription portals) now make up 40% of total revenue, up from 35% last year. Their North American business remains the star, generating $98.2 million from subscriptions alone (52% of all subscription revenue).

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Financial Health Check

The good:

• Operating cash flow surged 69% to $60.3 million (up from $35.7 million last year), showing strong money-making power.
• Debt is manageable at $20 million (just 8% of total revenue). They locked in better loan terms through 2025.
• Liquid assets jumped 121% to $3.8 million (from $1.7 million), including customer payments due soon and prepaid expenses.

The caution flags:

• Cash reserves dropped 25% to $10.4 million (from $14 million last year).
• International markets underperformed, though specific numbers weren’t shared.

Smart money moves:

• They spread big costs (like buildings and tech) over 20 years and 5-7 years, respectively, avoiding financial shocks.
• Immediate write-offs for repairs (no accounting tricks).

Future changes: New accounting rules (2026-2027) will require more detailed tax reporting and alter how they handle software costs.

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Bottom Line for Investors

Growth opportunities:

• North American subscriptions ($98.2M) and digital tools (40% of revenue) are thriving.
• Education sector revenue grew 18% (details on dollar amounts not provided).

Risks to watch:

• International performance remains a weak spot.
• Declining cash reserves ($10.4M) need monitoring, though liquid assets and cash flow improved.

Why this matters:
Franklin Covey balances growth with conservative financial practices. Their digital pivot is working, debt is low, and they’re generating significantly more cash from core operations. However, transparency on international challenges is limited, and new accounting rules could impact future reports.

Final Takeaway:
A steady performer with a clear digital growth story, but international struggles and tighter cash reserves mean cautious optimism. Watch for updates on global expansion and how they adapt to 2026 accounting changes.

Remember: This isn’t financial advice—treat it like a friend’s research summary! 😊