KinderCare Learning Companies (KLC) Q1 2025 earnings summary

Executive summary

• Revenue grew 2.1% year-over-year to $668.2 million in Q1 2025, with strong performance in early childhood education and Champions sites, and expansion into Idaho and new employer partnerships.

• Net income reached $21.2 million, reversing a prior year loss, driven by improved operating leverage and lower interest and SG&A expenses.

• Adjusted EBITDA rose 12.2% year-over-year to $86.4 million, and adjusted net income was $27 million, or $0.23 per diluted share.

• Demand for high-quality childcare continues to outpace supply, supporting a durable market position despite a modest 50 basis point year-over-year decline in same-center occupancy.

• Management reaffirmed 2025 guidance for revenue, adjusted EBITDA, and adjusted EPS.

Financial highlights

• Q1 FY25 revenue was $668.2 million, up 2.1% year-over-year, driven by tuition growth and increased centers/sites.

• Same-center revenue increased 1.4% to $606 million; same-center occupancy was 69.1%, down from 69.6%.

• Adjusted EBITDA reached $86.4 million, up from $71.4 million year-over-year; adjusted EBITDA margin was 12.5%.

• Adjusted net income was $27 million, up from $10.3 million last year; adjusted EPS was $0.23, up from $0.11.

• Net debt to adjusted EBITDA ended at 2.6x, with liquidity of $338.7 million including $131.3 million in cash.

Outlook and guidance

• 2025 guidance reaffirmed: $2.75–$2.85 billion in revenue, $310–$325 million in adjusted EBITDA, and $0.75–$0.85 in adjusted EPS.

• Guidance assumes flat occupancy for the year, with long-term expectations of 1–2% annual occupancy growth.

• B2B/Champions and acquisitions each expected to contribute 1–2% to growth; pricing at low end of 3–5% range.

• No material COVID-19 stimulus funding expected going forward; cost structure reflects this change.

• Ongoing investment in technology and service diversification to drive long-term growth.