Fiscal 2027 first quarter
Filed Sep 24, 2026Scholastic Reports Fiscal 2027 First Quarter Results; Company Affirms Fiscal 2027 Guidance
Revenue declined 4%, adjusted operating loss and adjusted EBITDA loss widened on a reported basis, and free cash use increased, while Entertainment and International improved on a comparable basis and the Company affirmed its fiscal 2027 outlook.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenuesGAAP | $216.8 million | – | (4) % |
| Cost of goods soldGAAP | $118.1 million | – | – |
| Selling, general and administrative expenseGAAP | $178.3 million | – | – |
| Depreciation and amortizationGAAP | $12.6 million | – | – |
| Asset impairments and write downsGAAP | — | – | – |
| Total operating costs and expensesGAAP | $309.0 million | – | – |
| Operating income (loss)GAAP | $(92.2) million | – | — % |
| Interest income (expense), netGAAP | $(1.6) million | – | – |
| Other components of net periodic benefit (cost)GAAP | $0.1 million | – | – |
| Earnings (loss) before income taxesGAAP | $(93.7) million | – | 3 % |
| Provision (benefit) for income taxesGAAP | $(22.5) million | – | – |
| Net income (loss)GAAP | $(71.2) million | – | – |
| Basic earnings (loss) per share of Class A and Common StockGAAP | $(3.77) | – | – |
| Diluted earnings (loss) per share of Class A and Common StockGAAP | $(3.77) | – | (33) % |
| Basic weighted average shares outstandingGAAP | 18,862 | – | – |
| Diluted weighted average shares outstandingGAAP | 19,589 | – | – |
| Adjusted operating income (loss)non-GAAP | $(88.7) million | – | (8) % |
| Adjusted net income (loss)non-GAAP | $(68.6) million | – | – |
| Adjusted earnings (loss) before income taxesnon-GAAP | $(90.2) million | – | – |
| Adjusted diluted earnings (loss) per sharenon-GAAP | $(3.63) | – | (44) % |
| Adjusted EBITDAnon-GAAP | $(63.6) million | – | (14) % |
| Pro forma adjusted operating income (loss)non-GAAP | $(88.7) million | – | (2) % |
| Pro forma adjusted EBITDAnon-GAAP | $(63.6) million | – | 1 % |
| Net cash used in operating activitiesGAAP | $(94.6) million | – | (16) % |
| Property, plant and equipment additionsGAAP | $(14.1) million | – | – |
| Prepublication expendituresGAAP | $(4.0) million | – | – |
| Net borrowings (repayments) of film related obligationsGAAP | $1.9 million | – | NM |
| Free cash flow (use)non-GAAP | $(110.8) million | – | (11) % |
| Net cash (debt)non-GAAP | $(86.8) million | – | 64 % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Children’s Book Publishing and DistributionConsolidated Trade revenues decreased $3.0 million to $70.5 million, primarily reflecting higher international co-edition sales in the prior year period that did not recur in the quarter. Book Fairs revenues were $33.2 million, down $0.9 million from $34.1 million in the prior year period. | $105.8 million | – | (3) % |
| EducationRevenue declined during the segment’s seasonally smallest quarter, reflecting continued pressure on school and district funding and spending on supplemental curriculum materials. | $30.4 million | – | (24) % |
| EntertainmentRevenue increased primarily reflecting higher production revenues. | $20.1 million | – | 48 % |
| InternationalExcluding favorable foreign currency exchange of $1.2 million, revenues were approximately in line with the prior-year period. | $60.5 million | – | 2 % |
| OverheadThe elimination of rental income, recorded in Overhead, followed the sale-leaseback transactions in December 2025. | — | – | (100) % |
Fiscal 2027 outlook
- Revenuerevenue growth of approximately 2% to 4%
- NoteAdjusted EBITDA of approximately $135 million to $145 million
- NoteFree Cash Flow of approximately $35 million to $40 million
Capital returns
- The Company returned approximately $29.6 million to shareholders through share repurchases and dividends.
- Repurchase of 630,850 shares of common stock for $25.8 million.
- $3.8 million of dividends.
- At August 31, 2026, $157.4 million remained authorized for future repurchases under the Company’s stock repurchase program.
What drove it
- Revenues decreased 4% to $216.8 million, primarily reflecting lower revenues in Education and Children’s Book Publishing and Distribution and the elimination of rental income in Overhead, partly offset by higher Entertainment revenues.
- Entertainment production activity and pipeline continued to grow strongly, and Entertainment revenue increased primarily on higher production revenues.
- International adjusted operating loss improved primarily reflecting cost management and operational efficiencies.
- On a comparable basis, Adjusted EBITDA improved $0.6 million as improved results in Entertainment and International more than offset higher Overhead costs.
- Book Fair bookings were ahead of prior year entering the second quarter, according to management.
Concerns
- Education revenue decreased $9.7 million to $30.4 million amid continued pressure on school and district funding and spending on supplemental curriculum materials.
- Children’s Book Publishing and Distribution revenue decreased $3.6 million to $105.8 million, including lower Consolidated Trade revenue due to international co-edition sales in the prior-year period that did not recur.
- Adjusted operating loss increased $6.8 million to $88.7 million on a reported basis.
- Free cash use increased to $110.8 million from $100.2 million, reflecting increased net cash used by operating activities and higher capital expenditures.
- Adjusted overhead costs increased $5.0 million to $23.3 million, primarily reflecting higher costs related to corporate initiatives and the timing of employee-related expenses.
What to watch
- Back-to-school and fall execution in the seasonally important Children’s Books business.
- Book Fair bookings, which management said were ahead of prior year entering the second quarter.
- Education demand amid school and district funding and spending pressure.
- Entertainment production revenues and the production pipeline.
- Whether fiscal 2027 revenue growth of approximately 2% to 4%, Adjusted EBITDA of approximately $135 million to $145 million, and Free Cash Flow of approximately $35 million to $40 million are achieved.
Balance sheet and cash flow
- Cash and cash equivalents were $106.8 million at August 31, 2026, compared to $94.3 million at August 31, 2025.
- Accounts receivable, net were $186.6 million, compared to $187.0 million.
- Inventories, net were $315.3 million, compared to $322.2 million.
- Accounts payable were $150.2 million, compared to $175.8 million.
- Deferred revenue was $171.6 million, compared to $181.0 million.
- Accrued royalties were $68.0 million, compared to $86.6 million.
- Film related obligations were $19.3 million, compared to $14.7 million.
- Lines of credit and long-term debt were $184.8 million, compared to $331.2 million.
- Total stockholders’ equity was $656.5 million, compared to $878.0 million.
- Net debt was $86.8 million compared to net debt of $242.8 million in the prior year period, primarily reflecting net proceeds from the Company’s sale-leaseback transactions completed in December 2025, partly offset by capital returns to shareholders.
- Net cash used in operating activities was $94.6 million, compared to $81.8 million in the prior year period, primarily reflecting higher working capital requirements, as well as higher rent expense and loss of rental income related to the sale-leaseback transactions.
Analysis
Fiscal 2027 first-quarter revenue declined 4% to $216.8 million from $225.6 million. The decline was concentrated in Education, where revenue fell $9.7 million to $30.4 million amid school and district funding pressure, and Children’s Book Publishing and Distribution, where revenue decreased $3.6 million to $105.8 million. The Company also cited the elimination of rental income in Overhead after the December 2025 sale-leaseback transactions. Entertainment partly offset those declines, with revenue rising $6.5 million to $20.1 million on higher production revenues.
Reported operating loss was unchanged at $92.2 million, but adjusted operating loss widened to $88.7 million from $81.9 million as one-time charges were lower year over year. Adjusted EBITDA was a loss of $63.6 million versus a loss of $55.7 million. On the Company’s comparable basis, which applies the sale-leaseback impact to the prior-year period, adjusted operating loss increased $2.0 million while adjusted EBITDA improved $0.6 million. Comparable EBITDA gains in Entertainment and International were more than offset at the operating-income level by Education, Children’s Books and higher Overhead costs.
The segment mix showed sharply divergent trends. Entertainment adjusted operating loss improved $2.4 million to $1.6 million, while International adjusted operating loss improved $1.4 million to $2.7 million, supported by cost management and operational efficiencies. Education adjusted operating loss was $23.3 million versus $21.2 million, and Children’s Book Publishing and Distribution adjusted operating loss was $37.8 million versus $34.3 million. Within Children’s Books, Book Fairs revenue was $33.2 million versus $34.1 million, while Book Clubs revenue increased to $2.1 million from $1.8 million.
Liquidity and cash flow remain important given seasonal use of cash. Net cash used in operating activities was $94.6 million, compared with $81.8 million, and free cash use was $110.8 million, compared with $100.2 million. Net debt improved to $86.8 million from $242.8 million, primarily reflecting sale-leaseback proceeds, while the Company returned approximately $29.6 million to shareholders through repurchases and dividends. Cash and cash equivalents were $106.8 million and lines of credit and long-term debt were $184.8 million at August 31, 2026.
Management affirmed fiscal 2027 guidance for revenue growth of approximately 2% to 4%, Adjusted EBITDA of approximately $135 million to $145 million, and Free Cash Flow of approximately $35 million to $40 million. The guide depends on stronger performance through the back-to-school and fall periods, including Book Fair bookings that management said were ahead of prior year, continued Entertainment production growth, and progress in Education despite ongoing funding pressure.
Management, verbatim
Scholastic continued to advance its fiscal 2027 priorities during the seasonally small first quarter, with strong early indicators across our businesses reinforcing our confidence entering the important back-to-school and fall season.
Peter Warwick, President and Chief Executive Officer
In Education, though increased pressure on school and district budgets impacted sales, we continued to make progress aligning the cost structure and advancing the business’s transformation to support improved performance and long-term growth.
Peter Warwick, President and Chief Executive Officer
We remain confident in the growth trajectory we outlined at year-end and are affirming our full-year guidance as we continue to execute against that plan and create long-term value for shareholders.
Peter Warwick, President and Chief Executive Officer
Not in the filing
stated, not guessed- Gross margin, including GAAP and non-GAAP gross margin
- Prior-quarter comparisons for reported metrics
- Forward guidance for gross margin
- Forward guidance for operating expenses
- Forward guidance for tax rate
- Previous-release outlook needed to compare actual results with prior guidance
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.