Nido Education Reports $12.8M Service EBITDA, Declares 1.5c Fully Franked Dividend
Nido Education Limited reported an 8% rise in Service EBITDA to $12.8 million for the first half of 2025, maintaining steady operational performance despite sector-wide occupancy challenges. The company declared a fully franked interim dividend of 1.5 cents per share, underscoring confidence in its growth strategy.
- Service EBITDA increased 8% to $12.8 million
- Net profit after tax declined 17% to $4.6 million
- Interim fully franked dividend of 1.5 cents per share declared
- Investments made in curriculum, compliance, and corporate support
- Pipeline of over 100 Services supports growth outlook
Financial Performance Amid Sector Pressures
Nido Education Limited (ASX – NDO) has released its half year results for the period ending June 30, 2025, reporting an 8% increase in Service EBITDA to $12.8 million. This growth was achieved despite a 17% decline in net profit after tax to $4.6 million and a $0.9 million drop in EBITDA pre-AASB16, reflecting the challenging operating environment.
The company attributed these pressures to subdued occupancy rates across the early childhood education sector, driven by cost-of-living constraints, flat population growth, and increased supply in some regions. Notably, Nido chose not to raise average fees in January 2025 to ease the burden on families, which impacted EBITDA by an estimated $3 million.
Strategic Investments and Operational Resilience
In response to these headwinds, Nido has strategically invested in evolving its service offering, including enhancements to its curriculum, menu, facilities, and risk and compliance frameworks. The company also bolstered its corporate and service support capabilities by expanding executive leadership, marketing, and people management functions.
These investments have positioned Nido to maintain an EBITDA per Service run rate of $229,000 and a stable margin of 16%, while realizing productivity and efficiency gains that improved the wage-to-revenue ratio. The company’s disciplined capital management is evident in its strong balance sheet, with a net leverage ratio of 0.5x and a cash conversion rate of approximately 97%.
Growth Pipeline and Incubation Model
Nido’s unique incubation model continues to underpin its growth strategy by acquiring and managing purpose-built early childhood education Services with reduced integration risk. The company currently manages a pipeline of over 100 Services at various stages of development, with 16 already open and 19 more expected to open within the next 15 months.
Since its IPO in October 2023, Nido has increased its owned and incubated portfolio by 20%, opening five new Services in 2025 and acquiring five others. This approach supports consistent expansion while maintaining quality and operational control.
Regulatory Environment and Market Outlook
Looking ahead, Nido anticipates an improving sector outlook driven by upcoming government reforms. From January 2026, the Australian Government will replace the existing childcare subsidy activity test with a guaranteed three days per week of subsidised early education, expected to increase demand by 8% among families.
The company welcomes these reforms alongside ongoing government initiatives to enhance child safety and workforce stability, including wage increases and funding support. Nido’s investments in compliance and safety protocols align with these sector-wide priorities.
Overall, Nido Education’s half year results reflect resilience and adaptability in a challenging market, supported by strategic investments and a robust growth pipeline.
Bottom Line?
Nido’s disciplined investments and strong balance sheet set the stage for growth as government reforms promise to boost sector demand.
Questions in the middle?
- How will occupancy rates respond to the new childcare subsidy reforms in 2026?
- What impact will increased support office costs have on long-term profitability?
- How effectively can Nido integrate and scale its growing portfolio of incubated Services?
