Scholastic Corporation (NASDAQ: SCHL) reported Q3 FY2026 adjusted EPS of -$0.15, beating the consensus estimate of -$0.37 by 59%, while revenue of $329.1 million slightly missed analyst expectations. The company’s $400M+ sale-leaseback unlocked a landmark balance sheet transformation, sending SCHL shares up roughly 9.4% in after-hours trading on March 19, 2026.
About Scholastic Corporation
Scholastic Corporation (NASDAQ: SCHL) is the world’s largest publisher and distributor of children’s books, operating through school-based book clubs, book fairs, classroom libraries, retail, and online channels with a global reach into more than 135 countries. Founded in 1920 by Maurice R. Robinson and headquartered in New York, NY, the company has spent over 100 years connecting children to stories and educational content through its proprietary school-based channels and iconic publishing franchises.
As of the quarter, Scholastic carries a market capitalization of approximately $871 million, with a dividend yield of approximately 2.4% ($0.20 per share per quarter) and roughly 4,770 employees. The company operates across four business segments: Children’s Book Publishing and Distribution (its largest), Education Solutions, Entertainment, and International. Its publishing portfolio includes marquee franchises such as Dog Man, The Hunger Games, Wings of Fire, Clifford the Big Red Dog, and Captain Underpants. In fiscal Q2 2026, Scholastic completed landmark sale-leaseback transactions involving its New York City headquarters and its Jefferson City, Missouri distribution center, generating over $400 million in net proceeds.
Top Financial Highlights
- Total Revenue of $329.1 million, down 2% from $335.4 million in Q3 FY2025
- Adjusted EPS of -$0.15, significantly improved versus the -$0.37 consensus estimate and -$0.05 in the prior year quarter
- GAAP Diluted EPS of $2.55 (including $119.8M pretax gain from sale-leaseback), compared to a GAAP loss of -$0.13 a year ago
- Net Income of $62.5 million on a GAAP basis, versus a net loss of $3.6 million in the prior year period
- Adjusted EBITDA of approximately $0.0 million, compared to $6.0 million in Q3 FY2025, primarily reflecting $6.7 million partial-year impact from sale-leaseback transactions
- Operating Loss of $26.9 million, widening from $23.9 million a year ago
- Free Cash Flow surged to $407.0 million, compared to free cash outflow of $30.7 million in Q3 FY2025, driven by $452.4 million in net proceeds from the sale-leaseback
- Net Cash Position of $90.6 million, reversing from net debt of $189.4 million in Q3 FY2025, after repaying the revolving credit facility in full
- Cash on Hand of $104.6 million as of February 28, 2026
- Children’s Book Publishing Revenue of $197.6 million, down 3% YoY; segment operating income improved to $8.9 million from $7.6 million
- Book Fairs Revenue of $113.3 million, up 2% driven by higher revenue per fair and greater eWallet adoption
- Education Solutions Revenue of $56.1 million, down 2% amid continued school funding headwinds
- Entertainment Revenue of $16.0 million, up 25% from $12.8 million, driven by increased episodic deliveries and production services
- Full-Year FY2026 Guidance Reaffirmed: Adjusted EBITDA of $146M to $156M; free cash flow forecast to exceed $430 million
- New $300M Share Repurchase Authorization including a $200 million modified Dutch auction tender offer at $36 to $40 per share, anticipated to launch March 23, 2026
- Incremental Tariff Expense of approximately $10 million anticipated in cost of product for fiscal year 2026
Beat or Miss?
| Metric | Reported | Estimated | Difference / Analysis |
| Total Revenue | $329.1M | $331.0M–$337.7M | Slight miss of ~0.6%–2.5%; lowest estimate was Zacks consensus at $331.04M |
| Adjusted EPS | ($0.15) | -$0.37 (Zacks) / -$0.60 (StreetInsider) | Beat by $0.22–$0.45, a 59%–75% positive surprise |
| GAAP Diluted EPS | $2.55 | N/A (boosted by one-time sale-leaseback gain) | Strong GAAP beat driven by $119.8M pretax gain |
| Entertainment Revenue | $16.0M | $13.05M | Beat by $2.95M (+22.6%) |
| Education Revenue | $56.1M | $53.29M | Beat by $2.81M (+5.3%) |
| International Revenue | $58.7M | $59.0M | Slight miss |
| Children’s Book Revenue | $197.6M | $204.7M | Missed by $7.1M, reflecting publishing calendar timing |
| Free Cash Flow | $407.0M | N/A | Dramatically exceeded prior-year use of $30.7M |
| Adjusted EBITDA | ~$0.0M | N/A | Below prior year $6.0M due to $6.7M sale-leaseback impact |
What Leadership Is Saying?
CEO Peter Warwick on strategy and shareholder value: “Last quarter Scholastic made significant progress in its ongoing plan to enhance shareholder value, including optimizing our balance sheet with over $400 million in net proceeds from two sale-leaseback transactions and advancing our strategy to drive long-term growth and margin expansion.
After returning over $147 million to shareholders through open-market share repurchases since December, our Board has additionally authorized a $200 million modified Dutch auction tender offer anticipated to be launched in the coming days. This is a core part of a new $300 million share repurchase authorization that underscores our confidence in Scholastic’s long-term opportunity.”
CFO Haji Glover on financial discipline and Q4 outlook: “We definitely are seeing some favorability from our cost mitigation actions that we have been taking throughout the year. So that is why we feel very confident in the fourth quarter. And plus, as you know from watching us over the years, the fourth quarter is our second biggest performing quarter. It is just a little bit more profitable because of all the cost actions that we have made throughout the year. That is really why we are very confident about the fourth quarter from a profitability standpoint.”
Historical Performance
| Category | Q3 FY2026 | Q3 FY2025 | Change (%) |
|---|---|---|---|
| Total Revenue | $329.1M | $335.4M | -1.9% |
| Net Income (GAAP) | $62.5M | -$3.6M | NM (turnaround) |
| Adjusted Net Loss | -$3.5M | -$1.3M | -169% |
| GAAP Diluted EPS | $2.55 | -$0.13 | NM |
| Adjusted EPS | -$0.15 | -$0.05 | -200% |
| Operating Loss | -$26.9M | -$23.9M | -13% |
| Adjusted EBITDA | $0.0M | $6.0M | -100% |
| Free Cash Flow | $407.0M | -$30.7M | NM |
| Net Cash (Debt) | $90.6M net cash | -$189.4M net debt | +148% improvement |
| Book Fairs Revenue | $113.3M | $110.7M | +2% |
| Trade Revenue | $69.7M | $77.4M | -10% |
| Education Revenue | $56.1M | $57.2M | -2% |
| Entertainment Revenue | $16.0M | $12.8M | +25% |
| International Revenue | $58.7M | $59.3M | -1% |
Competitor Historical Performance
The table below compares Scholastic against its closest publicly traded publishing and education peers. Scholastic reports on a fiscal year ending May 31, while Wiley reports on a fiscal year ending April 30, and Pearson reports on a calendar year. The nearest comparable reporting periods are used.
| Category | Scholastic Q3 FY2026 (ended Feb 2026) | Scholastic Q3 FY2025 (ended Feb 2025) | Change (%) | Wiley Q3 FY2026 (ended Jan 2026) | Wiley Q3 FY2025 (ended Jan 2025) | Change (%) |
| Revenue | $329.1M | $335.4M | -1.9% | $410.0M | $404.0M (approx.) | +1.5% |
| Net Income | $62.5M (GAAP) | -$3.6M | NM | $29.7M | -$23.0M | NM |
| Adjusted EPS | ($0.15) | ($0.05) | NM | $0.97 | ~$0.82 | +19% |
| Operating Income | -$26.9M | -$23.9M | -13% | $62.8M | $51.9M (approx.) | +21% |
| Adjusted EBITDA | $0.0M | $6.0M | -100% | $105.4M | $94.0M (approx.) | +12% |
Pearson, the largest publicly traded pure educational publisher, reported full-year 2025 sales of £3,577 million (approximately $4.5 billion), up 4% on an underlying basis, with adjusted operating profit of £614 million, up 6% year over year. Pearson carries a market capitalization of approximately $10.3 billion and guides to mid-single-digit underlying sales growth for 2026. Scholastic operates at a much smaller scale (approximately $871M market cap vs. Pearson’s $10.3B) and focuses exclusively on children’s publishing and education, where macro headwinds from school budget constraints weigh more heavily.
How the Market Reacted?
Scholastic shares climbed sharply in after-hours trading following the March 19, 2026 earnings release, rising approximately 9.4% to $37.46 from a regular session close of $34.24, with the after-hours range spanning $33.15 to $37.99. The strong post-earnings gain reflected the significant EPS beat, the announcement of the $300 million share repurchase authorization including the $200 million Dutch auction tender offer at $36 to $40 per share, and the reaffirmation of full-year guidance.
In regular trading that day, the stock was noted up approximately 2.55% heading into the close, and within the next session the stock opened at $37.76, up $3.52 from its prior close for a gain of roughly 8.85%, reflecting a broader positive investor response to the capital return strategy. Zacks assigned SCHL a Rank 1 (Strong Buy) rating following the report, and year-to-date prior to the earnings release, the stock had already gained approximately 12.7% versus the S&P 500’s decline of 3.2%.
