Scholastic Corporation, a global leader in children's publishing, education, and media, has been inspiring young minds for over a century. Founded in 1920, the company's rich history is marked by a steadfast commitment to promoting literacy, cultivating a love for reading, and providing innovative educational solutions to students and educators worldwide.
At the core of Scholastic's success is its vast network of distribution channels, including school-based book clubs and book fairs, trade publishing, and educational solutions. Through these diverse platforms, the company has established itself as a trusted partner for parents, teachers, and schools, delivering high-quality content and fostering a lifelong passion for learning.
Company History and Evolution
Scholastic's journey began with a single classroom magazine in 1920, and over the past century, it has grown into a diversified business serving students, teachers, and families globally. A significant milestone in the company's history was the launch of its iconic school book club program in 1948, which revolutionized access to affordable books for children through their schools. This program has since become a cornerstone of Scholastic's operations and continues to play a vital role in promoting literacy.
The 1960s marked another pivotal moment for Scholastic as it entered the trade publishing market, expanding its reach beyond schools and into the broader consumer market. This strategic move allowed the company to develop and publish original children's books, leading to the creation of beloved franchises such as Goosebumps and Captain Underpants. The trade publishing division has since become a significant revenue driver for the company.
As the digital age dawned in the 2000s, Scholastic faced new challenges with the rise of digital media disrupting traditional publishing. However, the company demonstrated its adaptability by investing in e-books, educational technology, and its entertainment division. This diversification strategy enabled Scholastic to broaden its offerings beyond physical books and maintain its leadership position in the evolving market landscape.
Throughout its history, Scholastic has successfully navigated industry shifts, macro-economic conditions, and various obstacles while remaining true to its core mission of encouraging literacy and learning in children worldwide. Today, the company's global presence spans over 100 countries, showcasing its ability to adapt and thrive in diverse markets.
Financials and Liquidity
Scholastic's financial performance has been a testament to its resilience and adaptability. In the fiscal year ended May 31, 2024, the company reported revenues of $1.59 billion and a net income of $12.1 million. The company generated operating cash flow of $154.6 million and free cash flow of $96.2 million during this period.
In the most recent quarter (Q2 2025), Scholastic reported revenue of $544.6 million, down 3% year-over-year, and net income of $48.8 million, compared to $76.9 million in the prior year quarter. The revenue decrease was primarily driven by timing-related declines in the Children's Book Publishing and Distribution segment, specifically the trade publishing and book fairs channels. The Education Solutions segment also saw lower revenues due to the continued decline in spending on supplemental curriculum products.
Scholastic maintains a strong liquidity position with a debt-to-equity ratio of 0.18 as of May 31, 2024. The company held $113.7 million in cash and cash equivalents at the end of fiscal 2024. On November 26, 2024, Scholastic amended its US credit agreement, increasing the borrowing limit from $300 million to $400 million and extending the maturity to November 26, 2029. As of November 30, 2024, the company had $250 million in outstanding borrowings under this facility. The current ratio stood at 1.26 and the quick ratio at 0.77 as of May 31, 2024, indicating a healthy short-term liquidity position.
Business Segments and Strategy
Scholastic's operations are divided into four reportable segments: Children's Book Publishing and Distribution, Education Solutions, Entertainment, and International. This diversification not only provides stability but also allows Scholastic to capitalize on emerging trends and new opportunities.
In the Children's Book Publishing and Distribution segment, Scholastic has maintained its position as a market leader, leveraging its iconic book series, such as Harry Potter, Hunger Games, and Dog Man, to engage readers across multiple platforms. In Q2 2025, this segment reported revenues of $367.0 million, down from $392.4 million in the prior year period. The decline was primarily driven by lower trade channel revenues and decreased revenues from the book fairs channel. Despite these challenges, the book clubs channel saw a slight improvement in revenues due to higher revenue per sponsor.
The Education Solutions segment, which provides supplemental and core curriculum materials to schools and libraries, reported revenues of $71.2 million in Q2 2025, down from $81.0 million in the prior year period. The decline was primarily driven by continued market conditions where school districts have been focusing on adopting and implementing new core programs, leading to decreased spending on supplemental materials. Scholastic has responded by developing new research-based programs, such as Explore ELA and the Scholastic Knowledge Library, that align with the growing emphasis on the science of reading and meeting the evolving needs of students and teachers.
Scholastic's newly formed Entertainment segment, which includes the operations of its Scholastic Entertainment and 9Story Media Group divisions, reported revenues of $16.8 million in Q2 2025, a significant increase from $0.4 million in the prior year period. This growth was driven by the addition of 9Story Media Group, with a majority of the revenues coming from production revenue related to episodic deliveries, production services provided to third parties, and revenues from royalties and distribution.
Internationally, Scholastic maintains a strong presence, with operations in major markets, including Canada, the United Kingdom, Australia, and New Zealand, as well as a growing footprint in Asia. In Q2 2025, the International segment reported revenues of $86.7 million, relatively flat compared to the prior year period. The company saw declines in Australia and New Zealand, offset by modest growth in the UK and Canada.
Future Outlook and Strategic Priorities
Looking ahead, Scholastic remains focused on executing its strategic priorities, which include developing direct-to-consumer offerings, expanding partnerships with public and private funders to increase book access, and creating new, valuable global franchises that leverage the company's unique editorial, distribution, and entertainment capabilities.
For fiscal 2025, Scholastic has reaffirmed its guidance, expecting revenue growth of 4% to 6% and adjusted EBITDA of $140 million to $150 million. The company anticipates revenue and adjusted EBITDA growth in the third quarter, largely driven by positive timing-related factors in their trade and school reading events divisions. Scholastic also expects solid performance in the fourth quarter, driven by their trade division with the release of the fifth Hunger Games book and modest growth in school reading events. The outlook for full-year free cash flow remains between $20 million and $30 million, reflecting planned capital expenditures and larger than usual working capital investments.
Despite facing some near-term challenges, Scholastic's long-term outlook remains promising. The company's strong brand recognition, diversified business model, and commitment to innovation position it well to navigate the evolving educational and media landscapes. As Scholastic continues to inspire young minds and foster a love for reading and learning, it remains a compelling investment opportunity for those seeking exposure to the dynamic children's publishing and education sectors.