Nido Education (NDO) H2 2024 earnings summary

Executive summary

• FY24 revenue reached AUD 167 million (up 74% year-over-year), with EBITDA of AUD 22 million and NPAT of AUD 19.5 million, reversing a prior year loss.

• Declared a partially franked dividend of AUD 0.058 per share, yielding 5.8% on issue price and 7.4% on recent share price.

• New CEO brings over 20 years of transformation and strategy experience, emphasizing quality, educator support, and a unique growth model.

• Incubation model continues to de-risk growth, with 13 services in incubation and a pipeline of 100+ sites.

• Service EBITDA rose to AUD 32.4 million from AUD 10.2 million in FY23, with margin improving to 20%.

Financial highlights

• Service-based EBITDA was AUD 32 million, averaging AUD 611,000 per service.

• Cash from operations was strong at AUD 25 million, with a cash conversion rate of 110%.

• Net leverage ratio at 0.16x, with AUD 48 million acquisition facility available.

• Finance costs were kept low at AUD 500,000 due to refinancing and debt repayments.

• FY24 tax expense was AUD 1 million after utilizing available tax losses.

Outlook and guidance

• Significant upside potential for 2025, supported by government policy changes and sector tailwinds.

• Expecting to deliver 13 new services in 2025 and escalate to 20 per year in 2026.

• Confident in reaching the target of 150 company-owned centers by 2029.

• January 2025 Service EBITDA up 40% year-on-year (30% organic, 10% acquisitions), but February enrolments subdued due to economic caution.

• Changes to the child care subsidy activity test expected to boost demand from 2026.