SCHL Q4 Deep Dive: Cost Controls, Real Estate Sale Drive Profit Beat Amid Mixed Sales
Educational publishing and media company Scholastic (NASDAQ:SCHL) fell short of the markets revenue expectations in Q4 CY2025 as sales only rose 1.2% year on year to $551.1 million. Its non-GAAP profit of $2.57 per share was 24.2% above analysts’ consensus estimates.
Is now the time to buy SCHL? Find out in our full research report (it’s free for active Edge members).
Scholastic (SCHL) Q4 CY2025 Highlights:
- Revenue: $551.1 million vs analyst estimates of $556.7 million (1.2% year-on-year growth, 1% miss)
- Adjusted EPS: $2.57 vs analyst estimates of $2.07 (24.2% beat)
- Adjusted EBITDA: $122.5 million vs analyst estimates of $109.8 million (22.2% margin, 11.6% beat)
- EBITDA guidance for the full year is $151 million at the midpoint, below analyst estimates of $159.9 million
- Operating Margin: 15%, in line with the same quarter last year
- Market Capitalization: $723.2 million
StockStory’s Take
Scholastic’s fourth quarter saw revenue growth that fell short of Wall Street expectations, but strong margin discipline led to a sizable beat on non-GAAP earnings per share. Management attributed the profit outperformance to effective cost controls, particularly in overhead and shared services, and ongoing strength in school book fairs and global franchises like Dog Man and Harry Potter. CEO Peter Warwick highlighted the company’s progress in unifying its children’s book group and leveraging proprietary school-based channels, stating, “Growth across key performance metrics, fair counts, revenue per fair, and e-wallet usage underscore the unique strength and relevance of this beloved event-focused channel.”
Looking ahead, Scholastic’s guidance is shaped by continued focus on operational efficiency and the recent $400 million real estate sale, which is being redeployed through share repurchases and debt reduction. Management expressed cautious optimism about the education segment recovering in the spring season, driven by anticipated federal funding disbursements and new product launches like the Knowledge Library. CFO Haji Glover stated, “We expect revenue growth in school reading events and entertainment divisions, partly offset by modestly lower year-over-year revenues in trade and international versus a strong prior year comparison.”
Key Insights from Management’s Remarks
Management credited cost reductions and operational streamlining, along with strong performance in children’s publishing and global franchises, as key drivers of the quarter’s results despite challenges in the education segment.
- Cost efficiencies realized: Significant reductions in shared services and overhead, including real estate footprint and process improvements, contributed to margin expansion and profitability.
- Book fairs momentum: School book fairs delivered robust results, with higher fair counts, increased revenue per fair, and lower cancellations, reflecting strong engagement from students and educators.
- Trade publishing strength: New releases in major franchises—especially Dog Man and Harry Potter—drove sales, with Dog Man’s latest title debuting at number one across children’s and adult categories in the U.S.
- Education segment pressures: Persistent funding delays and slower school district decision-making weighed on supplemental curriculum sales, though cost savings offset some of the revenue decline.
- Real estate sale unlocks capital: Completion of two sale-leaseback transactions generated over $400 million in proceeds, boosting liquidity and funding an expanded $150 million share repurchase authorization.
Drivers of Future Performance
Management sees growth opportunities in digital content, new product launches, and improved school funding, but expects headwinds from tough year-over-year comparisons in trade and international segments.
- Shareholder returns prioritized: The company is directing proceeds from recent real estate sales toward expanded share repurchases and debt reduction, aiming for moderate leverage and capital return.
- Education recovery uncertain: Management is cautiously optimistic about education segment growth in the spring, contingent on federal funding releases and improved school purchasing cycles, but notes that industry-wide volatility remains.
- New product and franchise launches: Expanding digital channels (such as Scholastic TV and YouTube), new titles in established franchises, and partnerships like the CrunchLabs collaboration are expected to drive engagement and incremental revenue.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) whether education segment growth materializes as anticipated federal funds are disbursed and new products launch, (2) the pace and impact of share repurchases and debt reduction enabled by the real estate sale, and (3) continued momentum in key franchises and digital initiatives such as Scholastic TV and YouTube engagement. Execution across these areas will be critical for sustaining profitability and growth.
Scholastic currently trades at $28.59, down from $29.02 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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