Nido posts solid 2024 financial performance despite challenging operating environment 

ASX listed early childhood education and care (ECEC) provider Nido Education has posted its 2024 full year results in which substantial improvements in revenue and profits were reported despite a challenging operating environment. 

The Group reported revenues of $166.8 million, up 74 per cent from the prior year, and earnings before interest, tax, depreciation and amortisation (EBITDA) of $22.0 million, up from a loss of $15.4 million recorded in 2023. 

The Group now operates 53 centres across Australia with an EBITDA per centre of $611,000, supported by fees (net of discounts) of $164 per day and average occupancy of 78 per cent. Despite the positive return the company was candid about the challenges faced towards the beginning of the year. 

“In 2024, families across Australia faced significant cost of living pressures, which impacted their child care arrangements,” the results announcement noted. 

“Many parents opted to reduce their children’s enrolment days in child care, while others chose to work from home on days their children were not enrolled.”

As a result, the company went on to add, in house expectations for the increase in seasonal occupancy growth from April to November, on which many workforce and operational decisions are made, were found to be too optimistic as demand patterns compared to previous years were more subdued. 

The direct consequences of more muted occupancy growth in the first half of the year drove it to quickly move to unwind increases in the company’s labour pool that it had accumulated earlier in the year in anticipation of seasonality patterns kicking in. 

Wages as a percentage of revenue in H1 2024 totalled 59 per cent, 4 per cent higher than the second half of the year, and impacted by an estimated $1.2 million of spend on wages allocated to those team members that were recruited prematurely earlier in the year who were subsequently not required. 

“To address the overstaffing situation, Nido’s operations team managed wages to better align labour costs with actual occupancy levels and then held wages relatively flat as occupancy increased. This strategic decision was critical for maintaining financial stability during a period of reduced demand,” the company said. 

Incubation pipeline remains healthy as does company balance sheet

A central aspect of Nido’s growth model is the ability to secure new services from its incubator partner at a predetermined occupancy level of 80 per cent and six month EBIT per licence place of $5,500.  

The incubator currently holds thirteen open centres that are in various stages of ramp up ranging from occupancy levels of 15 per cent for the most recently opened centre and 74 per cent for the highest performing more seasoned centre. 

Outside of the operating centres the incubator has a pipeline of 55 other centres in various stages between approval and construction. Thirty centres are awaiting development approval, ten centres are approved, five centres are approaching construction and ten are currently under construction. 

Notably, Nido confirmed that it “continues to review between 100+ sites per month and have 50+ sites being considered for approval by the Incubator Board,” highlighting the scale of the growth operation at hand. 

From a balance sheet perspective Nido had cash of $3.5 million and outstanding debt of $7.0 million drawn from a total facility of $48.0 million, bringing their leverage ratio to just 0.16 times. 

Operating cash flow for 2024 was $28.5 million, with cash used in investing activities, mostly acquisitions pegged at $24.3 million. 

In light of the year’s performance the company elected to pay a maiden dividend of 5.8c per share. 

Looking ahead to 2025 Nido noted that “Despite a strong start to the year, February enrolments have been subdued. This trend suggests that families are exercising caution in their decision-making, likely due to ongoing economic pressures, even though enquiries remain robust,” mirroring sentiment expressed by other listed providers in their recent results. 

To read Nido’s 2024 results please click here.