Scholastic Corporation

What they do

Scholastic publishes and distributes children's print, digital and audio books through proprietary school channels (Book Fairs, Book Clubs) and the trade channel, and provides print and digital instructional materials for pre-K to grade 12. It operates in four reportable segments: Children's Book Publishing and Distribution, Education, Entertainment and International. The company, founded in 1920, sells into approximately 145 international locations through its export business.

Revenue drivers

• Children's Book Publishing and Distribution — The largest segment at $964.2 million, or 61.0% of fiscal 2026 revenues; it includes the Book Fairs, Book Clubs and Trade Publishing divisions.
• International — Generated $277.2 million in fiscal 2026, comprising operations in Canada, the UK, Ireland, Australia, New Zealand and Asia.
• Education — Produced $267.6 million in fiscal 2026, down from $309.8 million in fiscal 2025 and $351.2 million in fiscal 2024.
• Entertainment — Reported $65.7 million in fiscal 2026 and includes 9 Story Media Group (acquired June 20, 2024) and Scholastic Entertainment Inc.

Recent performance

Fiscal 2026 revenue was $1,581.9 million, down 3% from $1,625.5 million, and operating income was $15.2 million versus $15.8 million. Net income was $56.7 million and diluted EPS was $2.34, recovering from a net loss of $1.9 million in fiscal 2025. Adjusted EBITDA of $151.5 million rose 4%, or 15% on a comparable basis, and adjusted operating income excluding one-time items increased to $47.1 million from $35.8 million. Operating cash flow fell to $50.9 million from $124.2 million. Fourth-quarter revenue by fiscal period was $476.1 million in the quarter ended May 31, 2026.

Strategy

Management describes fiscal 2026 as progress in a multi-year transformation of governance, organization, strategy and balance sheet. The company completed sale-leaseback transactions in the third quarter of fiscal 2026, returned over $285 million to shareholders through share repurchases, a modified Dutch auction tender offer and dividends, and established a long-term leverage framework. It is repositioning Education around a more focused strategy, improved execution and a lower cost structure. It continues to invest in areas including Book Fairs, Trade Publishing franchises and Entertainment IP across platforms.

Risks

• Education funding volatility — The Education segment declined to $267.6 million in fiscal 2026 from $351.2 million in fiscal 2024, and management cites continued funding volatility and a challenging supplemental curriculum market.
• Dependence on creative talent — The 10-K states that the trade publishing and entertainment portions of the business are highly dependent on maintaining relationships with authors, illustrators, animators and other creative talent and on developing new relationships.
• Changes in purchasing patterns — The 10-K states the business is significantly affected by changes in customer purchasing patterns or trends and the underlying strength of the trade, educational and entertainment markets for children.
• Educational funding and procurement risk — The 10-K notes the educational publishing business may be adversely affected by budgetary restraints, new federal or state policies, or changes in procurement processes to which the company may be unable to adapt.

Outlook

For fiscal 2027, the company expects revenue growth of approximately 2% to 4% and Adjusted EBITDA of approximately $135 million to $145 million. The Adjusted EBITDA range represents growth versus fiscal 2026 on a comparable basis, reflecting the full-year impact of the sale-leaseback transactions in both periods. Management also expects Free Cash Flow of approximately $35 million to $40 million. The outlook assumes growth in Children's Books, Entertainment and International, improved performance in Education, disciplined cost management and targeted investment.