Scholastic falls 12% after hours as school budget cuts drive a 24% drop in its education sales

Scholastic shares fell about 12% in after-hours trading on Thursday, to around $30.70 from a $34.83 close, according to Nasdaq.com, after the children's publisher reported results for its fiscal first quarter ended Aug. 31. Investing.com flagged the drop. The company did not change its full-year outlook, according to its results release filed with the SEC.

Revenue fell 4% to $216.8 million. The loss per share widened to $3.77 from $2.83, and the adjusted loss per share to $3.63 from $2.52. The release does not comment on the share price, so here is what changed in the numbers.

The loss is smaller news than it looks

The June-to-August quarter is Scholastic's smallest by far because schools are closed and its book fairs barely run. It routinely reports a loss here: the operating loss was $92.2 million in both this quarter and last year's.

Much of the wider per-share loss comes from the sale-leaseback transactions it completed in December 2025. Scholastic sold property it used and leased it back, so it now pays rent and no longer books rental income. The company restates last year as if that deal had already happened. On that basis, adjusted EBITDA was a loss of $63.6 million, slightly better than last year's $64.2 million. The deal also cut net debt to $86.8 million from $242.8 million a year earlier.

The number that matters: Education

Education revenue fell $9.7 million to $30.4 million, a 24% drop, by our math. The company put it down to "continued pressure on school and district funding and spending on supplemental curriculum materials." The segment's operating loss grew to $23.3 million from $21.2 million.

That is the line with read-across. Classroom magazines, supplemental reading programs and similar extras are among the first things districts cut when budgets tighten. Scholastic said cost cuts in the segment partly offset the revenue drop, but it did not forecast a recovery in school spending.

What was better

• Entertainment: revenue rose $6.5 million to $20.1 million on higher production work.
• International: revenue rose $1.1 million to $60.5 million, all of it currency.
• Book fairs: revenue slipped to $33.2 million from $34.1 million in a quarter when fairs barely operate, but Chief Executive Peter Warwick said fall bookings are ahead of last year.

Head-office costs went the other way. Adjusted overhead rose $5.0 million to $23.3 million, which the company tied to corporate initiatives and the timing of employee costs.

The forecast it kept

Scholastic affirmed fiscal 2027 revenue growth of about 2% to 4%, adjusted EBITDA of about $135 million to $145 million and free cash flow of about $35 million to $40 million. It used $110.8 million of free cash in the quarter, which is normal for the season, and returned $29.6 million to shareholders, including $25.8 million of buybacks. It has $157.4 million left under its buyback authorization.

What to watch: book fair revenue in the September-to-November quarter, which is when the forecast gets tested, and whether the Education decline spreads into the fall buying season.

Sources: Scholastic results release (SEC Form 8-K, Exhibit 99.1); Investing.com; Nasdaq.com. After-hours prices as of about 4:53 p.m. ET. This is market information, not investment advice.