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May 31, 2022
Scholastic Q4 2022 Earnings Report
Scholastic's Q4 2022 earnings were released, highlighted by a 28% increase in revenue and a significant rise in operating income, driven by strong book fair performance and education solutions sales.
Key Takeaways
Scholastic reported strong Q4 and full-year results for fiscal 2022, driven by the rebound of in-person book fairs and increased demand for educational products. Revenue increased by 28% compared to the previous year, and operating income saw a substantial gain.
Revenue increased by 28% year-over-year, reaching $514.4 million.
Operating income increased by $55.8 million to $65.5 million.
Children’s Book Publishing and Distribution revenues increased by 42% due to high revenue-per-fair levels and trade revenue growth.
Education Solutions revenue increased by 26% driven by demand for educational materials and government-funded programs.
Scholastic
Scholastic
Scholastic Revenue by Segment
Scholastic Revenue by Geographic Location
Revenue by Segment
Children's Book Publishing & Dist. Revenue
CapyFin.comRevenue by Geographic Location
International Revenue
CapyFin.com Forward Guidance
Scholastic anticipates strong demand for independent reading resources in fiscal 2023 and expects revenue to increase by 8%-10%. The company aims to improve cross-selling and data-driven selling opportunities, while also managing overhead costs and exploring cost-saving opportunities.
Positive Outlook
- Overall demand for independent reading resources at home and in school to remain strong.
- Strategically increase fair count, anticipating 85% pre-pandemic levels, while maintaining strong revenue per fair.
- Mitigated labor and system issues in the book clubs channel which will lead to higher operating incomes.
- Increased demand of its educational products supported by continued government-related funding programs.
- Sales of Scholastic Magazines+TM have reached near pre-pandemic levels with distribution of over 125M units of digital and physical product to children throughout the U.S.
Challenges Ahead
- Prudently increase spending to improve cross-selling initiatives and data-driven selling opportunities which will benefit future periods but will impact next fiscal year, decreasing operating income.
- Overhead costs are expected to increase next year due to higher salary related costs as a result of continuing inflationary pressures
- An increase in spending on transformative and digital services as the Company invests in future growth opportunities.
- Business in Australia and New Zealand was adversely affected by the later timing of COVID-related shutdowns when compared to the other markets.
- Revenues in Asia decreased as the Company exited its direct sales business, which is no longer a strategic fit for the Company’s future growth strategy, and China continued to be impacted by restrictive government regulations on after-school tutoring programs as well as pandemic-related shutdowns.