Scholastic (SCHL) Q1 2025 earnings summary

Executive summary

• Fiscal Q1 2025 revenue increased 4% year-over-year to $237.2 million, driven by the 9 Story Media Group acquisition and growth in core businesses, including Children's Book Publishing and Distribution and higher foreign rights sales.

• Operating loss improved, with adjusted EBITDA loss narrowing and net loss decreasing to $62.5 million from $74.2 million year-over-year.

• Over $10 million returned to shareholders via dividends and share repurchases in Q1.

• Affirmed full-year guidance, targeting modest top- and bottom-line growth, with continued investments in growth initiatives and capital returns to shareholders.

• Strategic focus on long-term growth, capital allocation, and leveraging new media and content opportunities, including the integration of 9 Story and new book releases.

Financial highlights

• Q1 revenue rose 4% year-over-year to $237.2 million; operating loss improved to $85.6 million from $92.8 million, with adjusted EBITDA loss narrowing to $60.5 million from $70.6 million.

• Net loss improved to $62.5 million from $74.2 million; loss per diluted share was $2.21 versus $2.35.

• Excluding one-time items, operating loss was $85.6 million and EPS loss was $2.13.

• Free cash use increased to $68.7 million from $57.8 million year-over-year, reflecting higher capital and production spend.

• Net debt at quarter-end was $152.1 million, compared to net cash of $107.7 million at fiscal 2024 year-end, reflecting the 9 Story acquisition.

Outlook and guidance

• Fiscal 2025 guidance affirmed: revenue growth of 4%-6%, adjusted EBITDA of $140-$150 million, and free cash flow of $20-$30 million.

• Expect lower Q2 results due to timing of publishing releases and headwinds in Education Solutions, with stronger profitability anticipated in the second half.

• Fiscal 2025 revenues expected to benefit from new book releases in the second half, including major titles in the Dog Man and Hunger Games series.

• Continued focus on expanding book fairs, developing new literacy programs, and integrating 9 Story to grow media properties.