BRIGHT HORIZONS FAMILY SOLUTIONS INC. Q3 FY2024 earnings call

• Extended sympathies to those affected by Hurricanes Helene and Milton. • Third quarter results: Total revenue up 11% to $719M, adjusted EBITDA up 20% to $121M, adjusted EPS up 26% to $1.11 per share. • Full Service segment: Revenue up 9% to $487M, added 6 centers, U.K. operations narrowed losses. • Back-up Care: Revenue up 18%, strong use and client expansion. • Education Advisory: Revenue up 4%, but muted participant growth in EdAssist. • Success of Omni Horizon Summit, first in-person client event since pandemic.

Full Service: Revenue increased 9% to $487 million. Added 6 centers in Q3. Enrollment in centers open over one year had low single-digit growth. U.K. operations narrowed losses but still need work to return to pre-pandemic levels. Back-up Care: Revenue increased 18% to $202 million, outpacing expectations with stronger use and client base expansion (e.g., Progressive Corporation, Brookfield Property). Education Advisory: Revenue grew 4% to $31 million, added new clients but participant growth in EdAssist remains muted.

• Refined full-year 2024 revenue to ~$2.675B (11% growth) and adjusted EPS to $3.37-$3.42. • Q4 revenue expected $665M-$675M, adjusted EPS $0.88-$0.93. • Full-year outlook by segment: Full-service 10%-11% growth, Back-up Care 14%-15% growth, EdAdvisory flat.

• Operational challenges in certain centers, particularly those in the bottom occupancy cohort. • Uncertainty around recovery of occupancy rates to pre-COVID levels, especially for lower-performing centers. • Impact of market conditions on enrollment and pricing, including wage inflation and competitive pressures.

Q: Andrew Steinerman asks about organic constant currency revenue growth and M&A.

A: Elizabeth Boland responds that full service organic constant currency revenue growth was 8%, FX was ~100bps, and M&A was ~50bps.

Q: Manav Patnaik asks about enrollment breakdown and 2025 outlook.

A: Elizabeth Boland states enrollment was low single digits both domestically and internationally, and for 2025, expects low single-digit enrollment growth and price increases tapering to ~4% with 100bps gap to wage increases.

Q: George Tong asks about occupancy rates and recovery.

A: Elizabeth Boland explains current low 60s utilization, expecting to stay in low 60s for rest of year, with mid-cohort centers making progress towards pre-COVID levels but bottom cohort challenging.

Q: Jeff Meuler asks about back-up care growth drivers and hurricane impact.

A: Stephen Kramer responds back-up care growth is more utilization by existing clients, and hurricanes had limited financial and enrollment impact.

Q: Toni Kaplan asks about back-up care growth drivers and M&A.

A: Elizabeth Boland says back-up care growth is from existing clients using more, and M&A relationships with providers continue but valuations still mismatched.

Q: Jeff Silber asks about EdAssist and election impact.

A: Stephen Kramer discusses EdAssist challenges and investments to revitalize, and says federal government has limited involvement in child care.

Q: Josh Chan asks about back-up care metrics and full service enrollment.

A: Elizabeth Boland says back-up care is tracked by overall use, and full service enrollment is mid-single digits with cautious outlook for rest of year and 2025.

Q: Faiza Alwy asks about margins and pricing.

A: Elizabeth Boland says backup margins similar to 2023, full service margins improving, and pricing strategy balances price and service growth with tapering inflation.

Q: Harold Antor asks about U.K. operations.

A: Stephen Kramer and Elizabeth Boland discuss U.K. progress, center closures, and inflation trends.