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Scholastic (SCHL) is trading sharply lower today after reporting its Q1 (Aug) results last night. The company missed expectations on its top and bottom line, though it does have limited analyst coverage. Q1 is a seasonally quiet period for the company.

• Management noted that while schools are still spending, uncertainty around future funding is leading districts to prioritize only essential "must-have" purchases.
• Revenue fell 5% yr/yr to $225.6 mln, driven by a 28% decline in Education Solutions to $40.1 mln, reflecting softer demand for supplemental curriculum and timing of state program revenues.
• Entertainment Solutions also declined 18% to $13.6 mln, but Children's Book Publishing & Distribution and International provided offsets, each up 4% to $109.4 mln and $59.4 mln, respectively.
• FY26 guidance was reaffirmed for 2-4% revenue growth and $160-170 mln in adjusted EBITDA. Management expects results to skew more heavily toward the spring selling season, making the back half of the year increasingly important.

Briefing.com Analyst Insight

The weak Education Solutions results underscore broader caution in school budgets, a trend that could weigh on peers exposed to K-12 supplemental materials and curriculum, including Wiley John & Sons (WLY) and Pearson (PSO). While Scholastic's reaffirmed guidance points to confidence in its core publishing and international segments, the uneven funding environment suggests a tough backdrop for education-focused providers heading into the year.