Executive Summary

Q2 FY2025 revenue was $602.1M (-1.4% YoY) with gross comparable store sales +$24.4M (+3.8%); net income from continuing operations doubled to $49.7M and diluted EPS was $1.87, with operating margin improving to 9.4% from 5.8% in Q2 FY2024 .
BNC First Day program revenues grew ~18% YoY to $235M, driven by continued adoption of First Day Complete (183 campus stores, ~925k enrolled students in fall 2024) .
Adjusted EBITDA increased to $65.96M from $51.08M (+29%), primarily on $13M lower SG&A from cost savings and productivity initiatives and store closures; year-to-date net loss reflects a prior non-cash $55.2M extinguishment of debt charge .
Management reiterated budget goals for material improvement in FY2025 GAAP results and Adjusted EBITDA vs last year, noted $40M ATM proceeds to cut annual interest by ~$4M and medium-term goal to reduce annual interest to ~$10M or less; expects meaningful operating free cash flow to further de-lever .

What Went Well and What Went Wrong

What Went Well

Strong seasonal execution: Operating margin rose to 9.4% with net income from continuing operations up ~$25M YoY to $49.7M during the pivotal fall back-to-school quarter .
First Day momentum: BNC First Day revenues +$36.2M (~18%) YoY to $235M; First Day Complete adoption reached 183 campus stores and ~925k students in fall 2024 .
Cost actions accretive: Adjusted EBITDA up ~$14.9M to $66.0M, aided by $13.0M lower selling and administrative expenses due to cost-saving/productivity initiatives and underperforming store closures; go-forward savings now estimated >$20M .
- “Strong adoption of our First Day affordable access programs… and a disciplined focus on operational efficiency are reflected in our outstanding results” — CEO Jonathan Shar .

What Went Wrong

Store footprint downsizing: Net decrease of 109 physical and virtual locations weighed on top-line, partially offset by comparable store gains .
Top-line contraction: Total revenue declined by $8.3M (-1.4%) YoY despite comparable store sales growth, reflecting portfolio rationalization .
Free cash flow weaker YoY in quarter: Q2 free cash flow was $41.5M vs $61.1M last year; year-to-date operating cash flow and FCF remain negative given working capital dynamics and earlier non-cash debt extinguishment effects .

Financial Results

Metric	Q2 FY2024	Q1 FY2025	Q2 FY2025	Q3 FY2025
Revenue ($USD Millions)	$610.4	$263.4	$602.1	$466.3
Net Income - Continuing Ops ($USD Millions)	$24.9	$(99.5)	$49.7	$7.1
Diluted EPS - Continuing Ops ($USD)	$9.36	$(7.36)	$1.87	$0.23
Gross Profit Margin %	22.3%	17.9%	22.9%	20.7%
Operating Income (EBIT) Margin %	5.8%	(34.9)%	9.4%	4.9%

Segment/Revenue Composition

Metric	Q2 FY2024	Q2 FY2025	Q3 FY2025
Product Sales & Other ($USD Millions)	$569.7	$559.7	$423.2
Rental Income ($USD Millions)	$40.7	$42.4	$43.2
Product Sales & Other (% of Sales)	93.3%	93.0%	90.7%
Rental Income (% of Sales)	6.7%	7.0%	9.3%

Non-GAAP and KPIs

Metric	Q2 FY2024	Q1 FY2025	Q2 FY2025	Q3 FY2025
Adjusted EBITDA ($USD Millions)	$51.08	$(20.68)	$65.96	$27.38
BNC First Day Revenues ($USD Millions)	N/A	N/A	$235.0	$222.0
Gross Comparable Store Sales ($ change / %)	N/A	N/A	+$24.4 / +3.8%	+$30.1 / +6.6%
First Day Complete Stores (count)	N/A	N/A	183 (Fall ’24)	191 (Spring ’25)
First Day Complete Enrollment (students)	N/A	N/A	~925,000 (Fall ’24)	~957,000 (Spring ’25)
Net Store Count Change (locations)	N/A	N/A	-109	N/A

Estimate Comparison

Metric	Q2 FY2025 Actual	Q2 FY2025 Consensus	Surprise
Revenue ($USD Millions)	$602.1	N/A*	N/A
Diluted EPS - Continuing Ops ($USD)	$1.87	N/A*	N/A

*Consensus values unavailable due to S&P Global daily request limit. Values would be retrieved from S&P Global when accessible.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
FY2025 GAAP Operating Results	FY2025	Not provided; targeted improvement vs FY2024	Material improvement targeted vs FY2024	Maintained qualitative target
FY2025 Adjusted EBITDA	FY2025	Not provided; targeted improvement vs FY2024	Material improvement targeted vs FY2024	Maintained qualitative target
Operating Free Cash Flow	FY2025	Expect meaningful operating FCF; de-lever focus	Expect meaningful operating FCF; used to de-lever	Maintained
Annual Interest Expense	Medium-term	N/A	Medium-term target “~$10M or less” post ATM	New explicit target
Interest Expense Reduction from ATM	Annual	N/A	~$4M reduction per year from $40M ATM proceeds	New
Capital Expenditures	FY2025	~$20M planned capex	Reiterated capital investments focus; components disclosed	Maintained

Earnings Call Themes & Trends

Note: A Q2 FY2025 earnings call transcript was not available in the document catalog; themes below reflect management commentary in earnings releases.

Topic	Previous Mentions (Q1 FY2025)	Current Period (Q2 FY2025)	Trend
First Day adoption & outcomes	First Day revenues +32% YoY; momentum entering fall rush	First Day revenues +18% YoY to $235M; 183 stores; ~925k students; strong adoption	Strengthening adoption, scaling
Cost savings / SG&A discipline	>$10M go-forward savings identified; SG&A down $10.5M	SG&A reduced $13.0M; over $20M go-forward savings estimated	Savings increased
Balance sheet / financing	Milestone equity/refinancing; strengthened foundation	$40M ATM completed; aims to lower interest ~$4M annually, to ~$10M medium-term	Deleveraging/interest cuts
Store portfolio optimization	Closures of underperforming stores to improve profitability	Net decrease of 109 locations; comps +$24.4M offset impact	Rationalization continues
Technology investments	Preparations for fall rush; retail execution	Continued strategic tech investments; serving higher ed marketplace	Ongoing investment
Working capital / FCF	Expect meaningful operating FCF in FY2025	Expect meaningful operating FCF; Q3 notes near-term FCF limited due to liability reduction; optimistic next FY	Transition period, improving

Management Commentary

“Our second-quarter performance during the pivotal fall back-to-school season underscores the exciting progress we’re making in our business transformation… we are confident in our improving momentum and the opportunities ahead.” — Jonathan Shar, CEO .
“We are pleased to see our earnings power continue to grow, reflecting expense discipline, revenue growth, and balance sheet improvements that meaningfully lower interest costs.” — Jonathan Shar, CEO (Q3) .
“The proceeds of this capital raise will reduce go-forward annual interest expense by nearly $4 million per year… management is seeking to reduce annual interest expenses to around $10 million or less.” — Company statement on $40M ATM .

Q&A Highlights

A Q2 FY2025 earnings call transcript was not available in the catalog; therefore, Q&A highlights and any guidance clarifications from the call could not be assessed [ListDocuments earnings-call-transcript: none].

Estimates Context

S&P Global consensus estimates for Q2 FY2025 revenue and EPS were not available due to exceeding the daily request limit; as a result, comparisons vs consensus could not be performed. When accessible, comparisons should anchor to S&P Global’s consensus to evaluate beat/miss. Values would be retrieved from S&P Global.

Key Takeaways for Investors

Q2 demonstrated seasonal earnings power: operating margin expanded to 9.4% with net income doubling, indicating tangible benefits from cost actions and store optimization .
First Day franchise continues to scale and anchor demand, with $235M Q2 revenues and broadening campus adoption; this supports recurring, programmatic revenue and improved student outcomes .
Structural deleveraging and capital actions (ATM) reduce interest expense (~$4M annually) and target ~$10M medium-term, enhancing equity value optionality and risk profile .
Comparable store sales growth (+3.8% in Q2, +6.6% in Q3) offsets footprint reductions, suggesting core retail execution remains strong even amid rationalization .
Non-GAAP leverage improving: Adjusted EBITDA growth (+29% YoY in Q2) reflects sustainable SG&A discipline; monitor persistence into spring term and next fiscal year .
Near-term FCF likely constrained by payables reduction per Q3 outlook, but management expects operating FCF improvement thereafter; watch working capital trends and inventory turns .
Absence of published formal numeric guidance elevates importance of tracking First Day adoption, SG&A trajectory, and interest expense run-rate; future beats/misses will hinge on execution during spring rush and contract renewals .

References:
Q2 FY2025 8-K and exhibits ; Q2 FY2025 press release ; Q2 preliminary press release ; Q1 FY2025 8-K and exhibits ; Q3 FY2025 8-K and exhibits ; First Day Complete expansion press release ; N.C. A&T partnership ; Syracuse partnership .

Barnes & Noble Education, Inc. (BNED)·Q2 2025 Earnings Summary