Nido Education Posts $11M Profit, Declares 5.5% Dividend Amid Growth Push
Nido Education delivers $11 million profit and declares 5.5% dividend yield
Nido Education has reported $11 million in adjusted net profit after tax (ANPAT) for the year ended 31 December 2025, underpinned by 4% revenue growth to $173 million despite challenging trading conditions. The Board has determined a final fully franked dividend of 2.2 cents per share, delivering a 5.5% yield on the current share price. The full-year dividend totals 3.7 cents per share. The company generated adjusted EBITDA of $17 million (pre-AASB 16 and before stamp duty from acquisitions), in line with guidance. The Board has stated its intention to continue paying dividends going forward, supported by a strong balance sheet and 94% cash conversion.
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Understanding childcare sector economics
Childcare operators generate revenue through daily fees charged to parents and government subsidies, which together determine total service revenue. Occupancy rates (how many children attend as a percentage of licensed places) directly drive volume. The sector measures this volume using “days of learning” (the total number of child-days delivered across all services). Nido delivered 938,000 days of learning in FY25. A critical profitability metric is wage costs as a percentage of revenue, given childcare is a labour-intensive sector. Nido improved this ratio to 55% (from 57% in the prior year), indicating operational efficiency gains despite inflationary pressure on wages. Average daily fee growth is another key driver. Nido’s average daily fee increased to $174 (from $164 previously), reflecting sustained investment in the service offering and pricing discipline in a competitive market.
FY25 strategic investments strengthen foundations
The company framed FY25 as a year of deliberate investment to build long-term capability rather than maximise short-term margins. Management deployed capital across six key areas:
- Safeguarding, quality and compliance
- Curriculum, menus and resources for children
- Educator training and employee value proposition
- Brand evolution and marketing capability
- Service design, maintenance and cleaning
- Leadership, governance and operational structure
These investments delivered measurable outcomes. Educator retention improved to over 80%, and the company delivered over 60,000 training courses. Nido’s quality rating remained above the sector average, while year-on-year compliance improvements were maintained. The result was a 24% decline in adjusted EBITDA to $17 million, reflecting the deliberate trade-off between near-term profitability and platform strengthening.
Service-level performance remained resilient
Services generated $30.2 million in EBITDA at an average of $534,000 EBITDA per service. The wage-to-revenue ratio improvement to 55% demonstrates operational discipline at service level, even as support office costs increased to support growth infrastructure. In January 2026, the company implemented a fee increase of approximately 4%.
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Service revenue | $166.4m | $159.9m | +4% |
| Average daily fee | $174 | $164 | +6% |
| Wage to revenue ratio | 55% | 57% | -2pp |
| Days of learning | 938k | 956k | -2% |
Incubator pipeline delivers de-risked growth runway
Nido operates a distinctive greenfield incubation model designed to mitigate acquisition risk. A third-party incubator initially owns each service, funds the development and trade-up losses, while Nido manages operations from site selection through to opening. Once acquisition performance hurdles are met (typically around 80% occupancy), Nido has a 12-month option to acquire the service at 4.5x EBIT. The company opened seven services in FY25 and acquired three from the incubation pipeline. Two additional services opened in January 2026.
The pipeline provides visibility over future growth:
- 18 services currently open and trading up
- 19+ services expected to open progressively over the next 16 months
- 32 sites with DA approval awaiting completion
- 49 sites passed initial assessment and progressing through due diligence
The company expects to acquire four services from incubation in the first half of FY26 for approximately $9 million. All services are purpose-built to Nido’s design specifications, with 30+ year leases (including renewal options) and education and safeguarding designed into the physical environment. This model provides a visible, de-risked acquisition pipeline of over 100 services at various stages of maturity.
Balance sheet supports dividend and acquisition strategy
Nido’s capital position underpins both the dividend payment and ongoing acquisition capacity. Net debt stands at $21.7 million, representing a low net leverage ratio of 1.1x (net debt divided by covenant EBITDA). The interest cover ratio sits at 15.7x, indicating substantial headroom. The company has $27 million in acquisition facility availability, comprising $19 million drawn for acquisitions since IPO and $8.5 million representing the remaining portion of debt drawn at IPO. Management confirmed the dividend payment does not constrain the company’s ability to invest in growth or pursue acquisitions. The loan facilities are expected to be extended by a further three years, with terms to be reviewed by 30 June 2026.
CEO Adam Lai
“In FY26 we are focused on delivering a greater impact for the community through more days of learning which is targeted to deliver growth in our AEBITDA in the order of 20% on the FY25 result.”
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FY26 outlook signals recovery momentum
January 2026 delivered an EBITDA result ahead of FY25, suggesting the strategic investments are beginning to translate into improved operational performance. Management reported positive lead indicators as the company works through the February re-enrolment period:
- Enquiries are slightly above last year
- Enrolment offers to parents are up 20% year-to-date
- Conversion rates are improving and tracking above prior year
These early signs of improvement reflect the operational pivot implemented early in 2025 through structural changes and investment in capability and personnel. The outlook is partially supported by government subsidy changes with the introduction of the 3 Day Guarantee, which aims to improve access and affordability. Management acknowledged challenging trading conditions will persist in the short term but expects medium-term improvement as birth rates recover. The company is targeting EBITDA growth of approximately 20% in FY26, supported by increased days of learning delivered across the expanded service network.
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