Scholastic’s second quarter results were received negatively by the market, as revenue missed Wall Street expectations and declined compared to last year. Management pointed to a challenging comparison in trade publishing and continued volatility in education funding as key factors. CEO Peter Warwick noted that the strong prior-year performance of The Hunger Games release created an unusually high bar, while education segment revenue fell short of internal hopes due to weaker-than-expected school spending. Despite these headwinds, Book Fairs grew and entertainment revenues improved, helping to partially offset the softness.
Is now the time to buy SCHL? Find out in our full research report (it’s free for active Edge members).
Scholastic (SCHL) Q2 CY2026 Highlights:
- Revenue: $476.1 million vs analyst estimates of $517.1 million (6.3% year-on-year decline, 7.9% miss)
- Adjusted EPS: $2.19 vs analyst estimates of $2.16 (1.4% beat)
- Adjusted EBITDA: $84.7 million vs analyst estimates of $81.82 million (17.8% margin, 3.5% beat)
- EBITDA guidance for the upcoming financial year 2027 is $140 million at the midpoint, below analyst estimates of $160.5 million
- Operating Margin: 14.4%, up from 11% in the same quarter last year
- Market Capitalization: $773.9 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Scholastic’s Q2 Earnings Call
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Brendan McCarthy (Sidoti): Asked about the drivers behind the revenue miss, particularly in education. CEO Peter Warwick attributed the shortfall to a tough comparison in trade publishing and a lack of anticipated spending by school districts.
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Brendan McCarthy (Sidoti): Inquired about Book Fairs growth and future fair count expectations. Warwick explained that most of the growth came from increased fair counts and additional outreach to new school types, with expectations for continued expansion next year.
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Brendan McCarthy (Sidoti): Probed on efforts to stabilize the education segment. Warwick described improved product offerings, expense management, and a new Chief Revenue Officer as key changes, but acknowledged that near-term growth depends on funding stability.
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Andrew Crum (B. Riley Securities): Asked about the company’s plans to capitalize on the Harry Potter franchise. Warwick detailed coordinated publishing and retail activation efforts, aiming to drive increased foot traffic and reach a new generation of readers.
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Andrew Crum (B. Riley Securities): Sought clarity on the expected timeline for education segment improvement. Warwick confirmed that stabilization and growth are expected to materialize in the second half, assuming funding conditions do not deteriorate further.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) momentum in Book Fairs participation and revenue per fair, (2) the impact of major media tie-ins on publishing and franchise sales, and (3) signs of stabilization in the education segment as new product initiatives and go-to-market strategies roll out. Execution on cost controls and capital allocation will also be important as management aims to deliver on margin and cash flow targets.
Scholastic currently trades at $41.05, down from $46.44 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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