Many readers are familiar with American business coach Stephen Covey and his landmark 1989 book The 7 Habits of Highly Effective People. A global bestseller translated into dozens of languages, it has sold over 40 million copies to date. The book’s success became the springboard for a consulting business that formalized Covey’s approach into professional training programs. Although Covey passed away in 2012, his principles on personal and organizational effectiveness remain influential. Franklin Covey, the publicly traded company that evolved from his original business, showed how the book works in real life.

Franklin Covey’s stock has fallen sharply in 2025, shedding nearly 47% year to date as investors have reacted to disappointing results in both the first and second quarters. The management has attributed the weakness to a business reorganization and broader macroeconomic uncertainty. Despite these headwinds, analyst Aldiyar Anuarbekov believes the recent pullback could present an attractive entry point.

What differentiates Franklin Covey

Franklin Covey was formed nearly 30 years ago through the merger of Covey Leadership Center, where Covey promoted his book, and Franklin Quest, which specialized in time management and planning products. At the time of the merger in 1997, Franklin Quest was already publicly traded on the New York Stock Exchange.

Today, Franklin Covey is a global provider of business support services. Its largest shareholder is Royce Investment Partners, a family of mutual funds that focuses on small-cap investing, with a 7.4% stake. BlackRock follows closely with a roughly 7.0% stake, while other major investors include Vanguard and AllianceBernstein.

The company operates in the corporate training and consulting industry. It competes within the broader research and consulting services sector, where market share is heavily concentrated among industry giants such as Accenture, Gartner, and the consulting arms of the “Big Four” accounting firms—Deloitte, PwC, EY, and KPMG. 

Nevertheless, Franklin Covey has successfully carved out a distinct niche by focusing on leadership development, productivity, and corporate culture. What sets the company apart from its peers is that its flagship training and education programs are based on its own content, like The 7 Habits of Highly Effective People, The Speed of Trust by Covey’s son, Multipliers and Impact Players by Liz Wiseman, and The 4 Disciplines of Execution by Sean Covey and other Franklin Covey representatives. 

Of these, The 7 Habits of Highly Effective People remains Franklin Covey’s most valuable intellectual asset. The book was named the most influential business book of the 20th century and has become synonymous with effective leadership.

Subscriptions

What makes Franklin Covey stand out is not only its proprietary content, but also its business model. In 2016, the company launched All Access Pass, an annual subscription that gives enterprise customers access to its entire portfolio of training materials, courses, and digital tools. Subscriptions now generate the bulk of revenue: They grew 4% in fiscal 2024 to $164.8 million – nearly 80% of the revenue generated by its core Enterprise Division. As a result, deferred revenue (payments received for services yet to be delivered) rose 7% in the fiscal-2025 third quarter to $89 million.

Another strategic advantage is Franklin Covey’s global footprint and its digital learning infrastructure. The company operates through a network of offices and licensed partners in 160 countries and regions, delivering programs in several dozen languages. Its Impact Platform, available by subscription, serves as a digital hub where clients can access content and track progress. This technology layer enhances the value of the subscription. By combining strong proprietary content, user-friendly digital tools, and advisor support, Franklin Covey has created an ecosystem that differentiates it further from peers.

Franklin Covey also offers Leader in Me, an educational program that adapts the 7 Habits principles for schoolchildren. It has become a commercially successful, subscription-based product for schools, with approximately 84% of participating schools renewing their subscriptions in 2024.

Transformation

Franklin Covey continues to invest actively in updating its content. In November 2024, the company released a refreshed version of its flagship course, The 7 Habits of Highly Effective People – the first major update in many years. Repackaging the iconic program for the modern workplace is intended to generate renewed interest among corporate clients, particularly younger leaders.

This year, Franklin Covey began restructuring its North American sales model, allocating $16 million toward hiring, IT infrastructure, training, and process redesign. Company executives have described this as a “transformation.”

As part of it, the company introduced its own AI Coach in March to help users apply Franklin Covey principles, give personalized guidance, and simulate scenarios, such as managing conflict or handling conversations with difficult colleagues. The tool enhances the value of the company’s digital platform by making learning more interactive and applied.

At the same time, the company’s internal transformation has weighed on its near-term financial performance. In the second quarter of fiscal 2025, Franklin Covey posted a net loss of $1.1 million; the loss widened to $1.4 million in the third quarter. Revenue for the third quarter declined 8.5% year over year to $67.1 million. Operating income turned negative, despite adjusted EBITDA of $7.3 million, which exceeded the upper end of the company’s guidance range. However, excluding $4.7 million in restructuring charges and a $1.6 million increase in administrative costs compared to the prior year, the underlying performance was significantly stronger.

External factors also added pressure, including the cancellation of U.S. federal contracts, ongoing geopolitical uncertainty, and softness in international markets. As a result, Franklin Covey revised its full-year outlook for fiscal 2025, guiding for revenue in the range of $265 million to $275 million, down from $287.2 million in fiscal 2024 and $280.5 million in 2023.

In fiscal 2024, revenue rose 2.4%, while net income jumped 32.0%. Diluted EPS soared 37%, from $1.27 to $1.74, and free cash flow more than doubled to $48.9 million, the highest in Franklin Covey’s history.

Stock performance

Since the start of the year, Franklin Covey is down 47% at $19.70 per share. By comparison, the S&P 500 broad market index is up 8.8% year to date. This underperformance is sizable: In terms of year-to-date share price dynamics, it is among the 2% worst performers on the NYSE. Franklin Covey's market capitalization is now only about $249 million, which puts it in the small-cap segment. Among the main risks for Franklin Covey stock are high volatility – typical of small caps generally – cyclical demand, and high competition.

But this drawdown opens up opportunities. In early July, CFRA Research reiterated its "buy" recommendation on Franklin Covey. Barrington Research also confirmed its "outperform" rating and target price of $35 per share. This implies about 78% upside versus current quotes. Both research outlets noted Franklin Covey's solid business model with subscription revenue and stable cash flows, while Barrington Research separately expressed confidence in the transformation and voiced expectations of margin recovery in 2026.

Earlier this summer, Franklin Covey shares were included in the Russell 2000 Value index and the broad-market Russell 3000 Value index during the annual reconstitution.

The AI translation of this story was reviewed by a human editor.

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