Nido Education Posts 4% Revenue Rise and $4.3 Million Adjusted EBITDA in HY26

Revenue Growth Masks Profit Pressure

Nido Education Limited (ASX:NDO) posted a 4% rise in group revenue to $85.8 million for the six months ending June 30, 2026, buoyed by expansion and sustained demand for early childhood education. However, the headline growth concealed a significant slide in profitability, with adjusted EBITDA falling 35% to $4.3 million and adjusted net profit after tax halving to $2.1 million.

The company delivered 434,000 days of learning at a service margin of 13%, with an average daily fee of $183 and a stable wage-to-revenue ratio of 57%. Despite a challenging sector backdrop marked by lower occupancy starting points, Nido reported enrolment offers running approximately 17% ahead of the prior year, signalling resilient demand.

Operational Investments and Cost Pressures

Support office costs, net of establishment and management fees, crept up 3% to $6.4 million as Nido continued investing in leadership, governance, and systems to underpin its growing network. Depreciation and net finance costs also rose sharply, with finance expenses tripling to $0.9 million, reflecting higher borrowings.

In response to rising costs and to improve returns, Nido implemented fee increases in August 2026 within government guidelines and initiated a cost base review, aiming for phased productivity gains throughout the year. The group also extended and increased its NAB banking facility limit by $10 million to $65 million, providing an $18 million acquisition headroom and strengthening its capital flexibility.

Growth Through Incubation and Acquisitions

Nido’s disciplined growth strategy continued with the opening of four new services and acquisition of four additional centres during the half. The company’s incubator model, which nurtures and manages greenfield services before acquisition, remains central to its pipeline, with over 100 services expected over the next five years.

Acquisitions outside the incubation pipeline are also under active review, though timing and impact on FY26 results remain uncertain. The company’s acquisition activity contributed to a 7% increase in the average number of services to 63 owned centres as of June 2026.

Guidance Withdrawal Reflects Sector Headwinds

Reflecting softer-than-expected trading conditions in the first seven months of FY26, Nido formally withdrew its previously communicated target of 20% EBITDA growth for the full year. The company cited unfavourable days of learning and labour cost trends that undermine the assumptions behind that goal.

Nonetheless, management emphasised its focus on converting enquiries into occupancy, leveraging system improvements for productivity, and sustaining earnings growth through quality and disciplined expansion. The Board reaffirmed its commitment to long-term value creation and indicated intentions to resume dividend payments over time, though no dividend was declared for the half-year period.

Navigating a Complex Early Childhood Landscape

The early childhood education sector continues to face headwinds from demographic shifts, cost-of-living pressures, and uneven supply-demand dynamics across regions. Nido’s strategy prioritises quality education, child safety, educator stability, and family experience to differentiate itself amid these challenges.

With enrolment enquiries holding firm and a growing acquisition pipeline, Nido aims to capitalize on opportunities as market conditions evolve. However, the withdrawal of EBITDA guidance and ongoing cost pressures underscore the uncertainties ahead.