Exchange: NASDAQ | Sector: Communication Services | Industry: Publishing
Q3 2025
Published: Jan 13, 2025
Earnings Highlights
Revenue of $11.05M down 34.8% year-over-year
EPS of $-0.10 decreased by 141.7% from previous year
Gross margin of 62.5%
Net income of -835.70K
""We're in a much stronger financial position, and we can run our business how we need to." - Craig White, CEO." - Craig White
Educational Development Corporation (EDUC) Q3 2025 Financial Performance Review
Executive Summary
The third quarter of fiscal year 2025 (Q3 2025) resulted in significant challenges for Educational Development Corporation (EDUC), showcasing a 34.78% decline in revenue year-over-year, amounting to $11.1 million compared to $16.9 million in Q3 2024. This decline was accompanied by a net loss of $835,700, marking a stark contrast to a net income of $2 million in the prior year. Management highlighted ongoing operational improvements but faced headwinds due to excessive inventory and adverse pricing strategies implemented to support sales. While management remains cautious, the outlook is improved by potential cash flow from the anticipated sale of their headquarters, positioning the company for strategic restructuring moving forward.
Key Performance Indicators
Revenue
11.05M
QoQ: 69.79% | YoY:-34.78%
Gross Profit
6.90M
62.47% margin
QoQ: 89.32% | YoY:-38.04%
Operating Income
-1.20M
QoQ: 51.97% | YoY:-118.56%
Net Income
-835.70K
QoQ: 53.66% | YoY:-142.38%
EPS
-0.10
QoQ: 54.55% | YoY:-141.67%
Revenue Trend
Margin Analysis
Key Insights
**Q3 2025 Revenue**: $11.1 million, down 34.78% YoY (was $16.9 million in Q3 2024)
**Gross Profit**: $6.9 million, with a gross margin of 62.47%, a YoY reduction from 65.7% due to increased discount strategies.
**Net Income**: –$835,700 representing a net profit margin of –7.56% (down from a 11.83% profit margin in Q3 2024).
**Total Assets**: $83.6 million
Financial Highlights
Revenue Analysis
- Q3 2025 Revenue: $11.1 million, down 34.78% YoY (was $16.9 million in Q3 2024)
- Quarter-over-Quarter Growth: 69.79% increase from Q2 2025 ($6.5 million)
Profitability Ratios
- Gross Profit: $6.9 million, with a gross margin of 62.47%, a YoY reduction from 65.7% due to increased discount strategies.
- Net Income: –$835,700 representing a net profit margin of –7.56% (down from a 11.83% profit margin in Q3 2024).
Balance Sheet Strength
- Total Assets: $83.6 million
- Total Liabilities: $41.8 million, highlighted by $32.7 million in total debt.
- Total Stockholders' Equity: $41.8 million, indicating a stable equity position despite operational losses.
Cash Flow Health
- Net Cash from Operating Activities: $4.4 million, supported by effective working capital management despite the overall income loss.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
11.05M
-34.78%
69.79%
Gross Profit
6.90M
-38.04%
89.32%
Operating Income
-1.20M
-118.56%
51.97%
Net Income
-835.70K
-142.38%
53.66%
EPS
-0.10
-141.67%
54.55%
Key Financial Ratios
currentRatio
3.64
grossProfitMargin
62.5%
operatingProfitMargin
-10.8%
netProfitMargin
-7.56%
returnOnAssets
-1%
returnOnEquity
-2%
debtEquityRatio
0.78
operatingCashFlowPerShare
$0.54
freeCashFlowPerShare
$0.52
priceToBookRatio
0.36
priceEarningsRatio
-4.53
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategic Focus
- Craig White, CEO: "Our increased discounting has solely been to bolster sales and turn excess inventory into cash to be used to pay down our bank debt."
- Dan O'Keefe, CFO: "Net revenues were $11.1 million compared to $16.9 million. Net loss for the quarter totaled $800,000 compared to a net income of $2 million last year."
Market Position Strategy
- Heather Cobb, Chief Sales and Marketing Officer: "The shipping subscription launch has met with overwhelming positive feedback from both brand partners and customers, affirming its value as a relationship-building and revenue-driving tool."
"We're in a much stronger financial position, and we can run our business how we need to." - Craig White, CEO.
— Craig White
"The heart of the mission and foundation of why we do what we do continues." - Heather Cobb, CMO.
— Heather Cobb
Forward Guidance
Educational Development Corporation anticipates stabilization post-sale of its headquarters site, a key move projected to enhance cash flow and reduce debt burdens. Management’s commentary reflects optimism regarding the recovery of brand partners and interest in new strategic initiatives, suggesting a gradual return to historical revenue levels contingent on operational adjustments and market acceptance. Notably, management highlighted moving away from deep discount-driven sales, which should improve overall profitability once inventory levels normalize.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
EDUC Focus
62.47%
-10.80%
-2.00%
-4.53%
WLYB
74.20%
12.80%
-3.35%
-24.40%
SCHL
53.90%
-7.13%
-0.38%
-42.26%
PSORF
51.00%
17.50%
2.42%
15.93%
NYT
48.20%
12.00%
3.46%
35.68%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investors should view the upcoming sale of the Hilti Complex as a potential catalyst for a turnaround in EDUC’s financial health, reducing debt and providing liquidity for reinvestment in core operational areas. However, the company's reliance on discounting and its struggle to regain revenue momentum necessitate cautious monitoring. Continued focus on enhancing product offerings and operational efficiencies is crucial, alongside strategic efforts to attract new brand partners and rejuvenate sales volumes.
Key Investment Factors
Growth Potential
Educational Development Corporation’s diversification into digital subscriptions and enhanced customer engagement tactics show growth potential, particularly if the inventory reduction successfully results in improved margins.
Profitability Risk
High debt levels and weak revenue performance over the past fiscal year pose risks. Moreover, reliance on discounting strategies may lead to vulnerabilities in brand reputation.
Financial Position
A robust balance sheet highlighted by significant total assets aligns with a strategic plan to reduce liabilities, particularly through the expected proceeds from the building sale.
SWOT Analysis
Strengths
Established market presence in educational publishing.
Strong brand loyalty within its sales partner network.
Diverse range of educational products catering to different learning needs.
Weaknesses
Stagnant revenue growth and increasing operational losses.
High operational leverage with substantial debt obligations.
Opportunities
Expansion in digital markets through subscription services.
Emerging trends towards educational toys and resources.
Threats
Intense competition within the publishing sector and evolving consumer preferences.