Executive Summary

Q3 FY25 was mixed: modest revenue growth but seasonal losses narrowed; GAAP EPS was ($0.13) and adjusted EPS was ($0.05), with Adjusted EBITDA improving to $6.0M amid cost controls and stronger School Reading Events; management narrowed FY25 Adjusted EBITDA to ~ $140M and now calls for only “modest” revenue growth, down from 4–6% prior .
Versus S&P Global consensus, revenue missed ($335.4M vs $347.7M*), but adjusted EPS significantly beat (($0.05) vs ($0.78)); EBITDA (S&P definition) modestly missed (actual ($2.7)M vs ($1.6)M) as mix and one-time items played a role [Functions.GetEstimates Q3 2025].
Education Solutions remained a drag (revenue down 16% YoY), prompting a strategic review; Book Fairs and Clubs executed well, while Entertainment benefited from 9 Story distribution/monetization despite industry production delays .
Capital allocation remained shareholder-friendly: $30.0M of buybacks in Q3, authorization lifted by $53.4M to $100M, and a $0.20 dividend declared for Q4 FY25; net debt rose to $189.4M primarily from the 9 Story acquisition and shareholder returns .

What Went Well and What Went Wrong

What Went Well
- School Reading Events (Book Fairs/Clubs) delivered: Fairs revenue rose 8% to $110.7M with fair count on track for 90,000; Clubs up 14% to $15.2M as new strategies improved engagement. “We were encouraged by increased participation in our new Share the Fair program last quarter” .
- Trade resilience around franchises: Dog Man: Big Jim Begins drove strong frontlist performance; “it has remained at the top of bestseller lists… selling almost 2.5 million copies globally” and set up backlist pull-through; Hunger Games fifth title released in March should support Q4 .
- Cost discipline and overhead reduction: Adjusted EBITDA rose to $6.0M (from ($7.2)M), helped by $9.4M lower adjusted overhead costs; management executed one-time and ongoing cost actions to benefit FY25 and FY26 .
What Went Wrong
- Education Solutions headwinds: Revenue fell 16% YoY to $57.2M; segment operating loss widened to ($6.9)M as supplemental curriculum purchasing slowed and operating leverage turned negative .
- Outlook trimmed: FY25 revenue growth now “modest” (from 4–6%) and Adjusted EBITDA narrowed to ~ $140M (from $140–$150M) amid “intensifying spending pressure” on families and schools .
- Entertainment profitability pressured by amortization and delays: segment operating loss ($3.9)M includes $2.3M intangible amortization; on a pro forma basis, 9 Story revenues down due to delayed greenlights industrywide .

Financial Results

Consolidated summary vs prior quarters and S&P Global estimates

Metric	Q1 FY25	Q2 FY25	Q3 FY25	Q3 FY25 Consensus	Notes
Revenue ($M)	$237.2	$544.6	$335.4	$347.7*	Miss vs revenue consensus*
Diluted EPS (GAAP)	($2.21)	$1.71	($0.13)	n/a	Seasonally loss-making Q3
Diluted EPS ex one-time items	($2.13)	$1.82	($0.05)	($0.78)*	Beat vs EPS consensus*
Operating Income (Loss) ($M)	($88.5)	$74.7	($23.9)	n/a	Improved YoY in Q3
Adjusted EBITDA ($M, company)	($60.5)	$108.7	$6.0	n/a	Company’s non-GAAP
EBITDA ($M, S&P definition)	n/a	n/a	($2.7)*	($1.6)*	Miss vs EBITDA consensus*

Values with asterisk (*) retrieved from S&P Global.

Segment breakdown – Q3 FY25 vs Q3 FY24

Segment	Q3 FY24 Revenue ($M)	Q3 FY25 Revenue ($M)	YoY $	YoY %	Q3 FY24 Op Inc (Loss) ($M)	Q3 FY25 Op Inc (Loss) ($M)
CBPD – Book Clubs	$13.3	$15.2	$1.9	14%
CBPD – Book Fairs	$102.7	$110.7	$8.0	8%
CBPD – School Reading Events	$116.0	$125.9	$9.9	9%
CBPD – Consolidated Trade	$77.1	$77.4	$0.3	0%
CBPD – Total	$193.1	$203.3	$10.2	5%	$2.3	$7.6
Education Solutions	$68.5	$57.2	($11.3)	(16%)	($0.8)	($6.9)
Entertainment	$0.5	$12.8	$12.3	NM	($3.1)	($3.9)
International	$59.1	$59.3	$0.2	0%	($5.9)	($2.1)
Overhead (revenue/expense)	$2.5 / ($27.4)	$2.8 / ($18.6)			($27.4)	($18.6)
Consolidated Operating Income (Loss)					($34.9)	($23.9)

Selected KPIs and balance sheet/cash flow

KPI	Q3 FY25	Prior/Context
Book Fairs fair count	On track for 90,000 fairs FY25	Similar trajectory reiterated in Q2
YouTube views (Scholastic channels)	~10M in Feb, up ~40x YoY	Monetization/brand reach expansion
Free cash flow (use)	($30.7)M	($7.1)M in Q3 FY24
Net debt	$189.4M	Net cash $78.9M in Q3 FY24
Share repurchases	1,450,274 shares for $30.0M in Q3	Authorization increased by $53.4M to $100M
Dividend	$0.20 declared for Q4 FY25	Regular quarterly dividend cadence

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA (company)	FY2025	$140–$150M	~ $140M	Narrowed to low end / effectively lowered
Revenue growth (YoY)	FY2025	4%–6%	“Modest” growth	Lowered
Free Cash Flow	FY2025	$20–$30M	$20–$30M (unchanged)	Maintained
Share repurchase authorization	Ongoing	—	Increased by $53.4M to $100M	Expanded
Dividend	Q4 FY2025	—	$0.20 per share declared	Ongoing return of capital

Earnings Call Themes & Trends

Topic	Q1 FY25 (prior)	Q2 FY25 (prior)	Q3 FY25 (current)	Trend
Consumer spending/retail softness	Cautious; retail market slightly down; planned modest per-fair growth	Timing-driven softness; still optimistic on second-half titles	“Intensifying spending pressure” on families/schools, expect to continue into Q4	Worsening macro pressure
Education Solutions demand	Supplemental spending pressured; investing for FY26	Ongoing headwinds; reaffirmed FY26 product pipeline	Revenue down 16%; strategic review initiated	Steady headwinds; strategy pivot
Tariffs/supply chain	Supplier diversification; limited near-term tariff exposure	Minimal FY25/FH1’26 exposure; mitigations in place	Minimal impact through H1 FY26; mid-single-digit $mm cost headwind in FY26 manageable via sourcing/pricing	Manageable; mitigation plan
Entertainment production cycle	Early wins; YouTube channels launched	Industry greenlights delayed; integration ongoing	9 Story accelerated YouTube/IP monetization; production still delayed but expected to improve	Gradual recovery; DTC ramp
Capital allocation	Buybacks/dividends; upsizing revolver planned	Revolver upsized to $400M; guidance reaffirmed	Buyback authorization to $100M; >$35M returned in Q3	Increased return of capital

Management Commentary

“We forecast full-year Adjusted EBITDA at the low end of our fiscal 2025 guidance and more modest revenue growth year-over-year.”
“Dog Man: Big Jim Begins… has been the top-selling book… since its release in early December… [and]… we published… Sunrise on the Reaping… already topping some bestseller lists based on pre-orders.”
“We have also begun a strategic review of [Education Solutions]… as we explore options to optimize it for long-term success.”
“Across Scholastic channels… content had nearly 10 million views on YouTube last month, up almost 40x from a year ago.”

Q&A Highlights

Backlist dynamics: Successful frontlist (Dog Man, Hunger Games) expected to drive backlist sales; “successful frontlist publishing… can really help to drive backlist sales.”
Education funding cadence: Schools/districts are more cautious; core curriculum purchases taking precedence; supplemental seen as cyclical and expected to return post-core adoption .
Federal policy/funding: Federal funding generally stable/mandated; shift toward state/local decision-making and parent choice may create opportunities in charter/parochial/ESA contexts .
Strategy for Education Solutions: Strategic review is internally led, focused on resource allocation to areas with the “right to win” .
Real estate: Management declined to provide asset fair values; provided details for investors to assess via rental income and cap rates .
Tariffs: Minimal exposure through H1 FY26; FY26 cost headwind in mid-single-digit millions is expected to be mitigated via sourcing/spec changes/modest price increases .

Estimates Context

Q3 FY25 vs S&P Global consensus:

Metric	Actual	Consensus	Surprise
Revenue ($M)	$335.4	$347.7*	Below*
Primary EPS (adj)	($0.05)	($0.78)*	Beat*
EBITDA ($M, S&P definition)	($2.7)M*	($1.6)M*	Below*

Note: Company-reported Adjusted EBITDA was $6.0M (non-GAAP) ; S&P Global’s “EBITDA” may reflect a different (standardized) definition.
Values with asterisk (*) retrieved from S&P Global.

Where estimates may adjust: Street likely lifts near-term EPS trajectory on cost execution, but trims revenue for Q4/FY25 given “modest” growth outlook and persistent Education Solutions headwinds .

Key Takeaways for Investors

Earnings quality improving despite a soft macro: adjusted EPS beat vs S&P on disciplined costs and School Reading Events execution; but topline remains pressured and below consensus* [Functions.GetEstimates Q3 2025].
Guidance reset lowers bar: FY25 now ~ $140M Adjusted EBITDA with “modest” revenue growth, de-risking near-term expectations into Q4 .
Structural actions underway: Education Solutions strategic review plus cost measures signal further portfolio/prioritization moves into FY26 .
Franchise flywheel intact: Dog Man and Hunger Games drive frontlist and backlist; YouTube IP monetization is scaling and complementing Trade sales .
Entertainment cyclicality manageable: 9 Story integration monetizes library in ad-supported channels while industry greenlights gradually recover .
Capital returns accelerating: $30M Q3 buybacks, authorization to $100M, and a $0.20 dividend provide downside support while macro normalizes .
Watch items: Q4 demand elasticity under spending pressure, pace of Education Solutions recovery/FY26 launches, tariff pass-through ability, and any real estate monetization updates .