Scholastic (SCHL) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue declined 3% year-over-year to $544.6 million, mainly due to timing of publishing releases and lower Education Solutions sales, partially offset by the 9 Story Media Group acquisition, which contributed to Entertainment segment growth.

• Operating income fell to $74.7 million, down from $101.3 million, with adjusted EBITDA at $108.7 million, reflecting lower sales and one-time charges.

• Net income for the quarter was $48.8 million, with diluted EPS at $1.71, or $1.82 excluding one-time items.

• Fiscal 2025 guidance was reaffirmed, with expectations for modest growth driven by new releases and strong Book Fairs and Book Clubs participation.

• The revolving credit facility was upsized to $400 million to support growth initiatives and the 9 Story Media Group acquisition.

Financial highlights

• Q2 revenues were $544.6 million, down 3% year-over-year; operating income was $74.7 million, and adjusted EBITDA was $108.7 million, down 12%.

• Net income was $48.8 million, with diluted EPS at $1.71, or $1.82 adjusted; free cash flow was $42.4 million, down from $88.6 million.

• Net debt at quarter end was $120.8 million, compared to net cash of $107.7 million at FY24 end.

• Gross margin for Q2 was 58%; operating margin was 13.7%.

• Accounts receivable were $293.0 million, inventories $282.0 million, and accounts payable $157.2 million as of Nov 30, 2024.

Outlook and guidance

• Fiscal 2025 guidance reaffirmed: revenue growth of 4% to 6% and adjusted EBITDA of $140–150 million.

• Free cash flow outlook remains $20–30 million, reflecting growth investments and working capital needs.

• Anticipates revenue and adjusted EBITDA growth in Q3, with strong Q4 performance from major book releases.

• Book Fairs participation expected to remain strong, with fair count on track for 90,000 in fiscal 2025.

• Continued investment in growth opportunities and share repurchases planned.