Bright Horizons delivered a strong second quarter, with results exceeding Wall Street’s expectations and a significant positive market reaction. Management pointed to robust growth in the back-up care segment and steady enrollment gains in full-service centers as key drivers. CEO Stephen Kramer noted that the company benefited from “continued enrollment growth, tuition increases and new center openings,” while the back-up care business saw strong demand, particularly for summer programs and new client wins such as McKesson. CFO Elizabeth Boland highlighted improved operating leverage and margin expansion, supported by disciplined cost management and operational improvements in underperforming centers.
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Bright Horizons (BFAM) Q2 CY2025 Highlights:
- Revenue: $731.6 million vs analyst estimates of $723.8 million (9.2% year-on-year growth, 1.1% beat)
- Adjusted EPS: $1.07 vs analyst estimates of $1.01 (5.8% beat)
- Adjusted EBITDA: $115.6 million vs analyst estimates of $112.7 million (15.8% margin, 2.6% beat)
- The company slightly lifted its revenue guidance for the full year to $2.91 billion at the midpoint from $2.89 billion
- Management raised its full-year Adjusted EPS guidance to $4.20 at the midpoint, a 3.7% increase
- Operating Margin: 11.8%, up from 10.3% in the same quarter last year
- Organic Revenue rose 8.4% year on year vs analyst estimates of 7.4% growth (93.4 basis point beat)
- Market Capitalization: $6.71 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Bright Horizons’s Q2 Earnings Call
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Princy Mariyam Thomas (Barclays) asked about segment-level margin expectations for the year. CFO Elizabeth Boland explained that back-up care margins should remain in the 25–30% range, with full-service margins expanding by roughly 125 basis points.
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Andrew Charles Steinerman (JPMorgan) questioned enrollment growth expectations. Boland clarified that full-service enrollment growth should remain near 2% for the rest of the year, driven by targeted outreach and strong infant/toddler demand.
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George Tong (Goldman Sachs) inquired about sales cycle trends and occupancy improvement. CEO Stephen Kramer described investments in personalized technology and white-glove support to convert more inquiries into enrollments, while Boland noted that average occupancy is expected to step up modestly by year-end.
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Toni Michele Kaplan (Morgan Stanley) pressed about the impact of center closures on margin expansion. Boland replied that closures had only a minor effect, with most margin gains coming from enrollment growth and cost discipline.
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Jeffrey Marc Silber (BMO Capital Markets) asked about center openings and closures by geography. Boland reported five opens and eight closures, mostly in the U.S., and confirmed the U.K. business is on track for breakeven this year.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) whether Bright Horizons sustains double-digit growth in back-up care through further client wins and expanded service types, (2) progress in raising occupancy levels in underperforming full-service centers, and (3) the U.K. segment’s path to breakeven and further margin improvement. Updates on leveraging regulatory changes, such as the expanded 45F tax credit, will also be closely monitored.
Bright Horizons currently trades at $118.06, up from $113.28 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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