Scholastic Q4 2022 Earnings Report
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
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income