Bright Horizons' second quarter performance was driven by robust growth in its Back-up Care segment and steady, though more modest, gains in full service child care. CEO Stephen Kramer pointed to 19% revenue growth in Back-up Care, highlighting deeper client penetration and increased usage as significant contributors. Tuition increases and selective center openings also supported full service, even as the company faced ongoing enrollment headwinds in Australia and continued to optimize its center portfolio through closures. Management described the operating environment as stable, while acknowledging persistent challenges in specific geographies.
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Bright Horizons (BFAM) Q2 CY2026 Highlights:
- Revenue: $779.2 million vs analyst estimates of $774.2 million (6.5% year-on-year growth, 0.6% beat)
- Adjusted EPS: $1.28 vs analyst estimates of $1.20 (6.6% beat)
- Adjusted EBITDA: $130.6 million vs analyst estimates of $126.2 million (16.8% margin, 3.4% beat)
- The company reconfirmed its revenue guidance for the full year of $3.1 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $5.10 at the midpoint, a 2% increase
- Operating Margin: 10.2%, down from 11.8% in the same quarter last year
- Market Capitalization: $3.97 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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
- Andrew Steinerman (JPMorgan) asked about the impact of summer camp usage on Back-up Care growth and fall enrollment expectations. CEO Stephen Kramer explained summer camps account for 25-30% of Back-up Care usage, while CFO Elizabeth Boland described modest ex-Australia enrollment growth.
- Ronan Kennedy (Barclays) sought clarity on whether new Back-up Care clients are ramping faster and on margin sustainability. Kramer noted new client ramp is consistent with historical trends, and Boland affirmed 28%-30% Back-up Care margins as sustainable.
- Jeff Meuler (Baird) pressed for detail on the status and future of underperforming centers, especially in Australia. Boland described ongoing reviews with potential closures, and Kramer outlined steps to align staffing and consider broader strategic options.
- George Tong (Goldman Sachs) inquired about margin expansion potential as occupancy recovers and the sustainability of Back-up Care growth. Boland stated a path back to 10% EBIT margin in full service, with Kramer highlighting continued user growth as a driver in Back-up Care.
- Toni Kaplan (Morgan Stanley) questioned changes in the center opening strategy and FX impacts. Kramer reiterated a client-centric approach to new centers, while Boland explained that FX contributed a 100 basis point tailwind in Q2, expected to taper in the second half.
Catalysts in Upcoming Quarters
Over the coming quarters, our analysts are focused on (1) the pace at which Bright Horizons can drive further penetration and utilization in Back-up Care, (2) the success of efforts to stabilize and grow occupancy in full service centers—particularly in the middle and bottom-performing cohorts, and (3) the company’s ability to address persistent challenges in Australia through operational adjustments or potential closures. Execution on digital engagement initiatives and measured capital allocation will also be key signposts.
Bright Horizons currently trades at $75.55, down from $77.95 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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