Child care and education company Bright Horizons (NYSE: BFAM) announced better-than-expected revenue in Q3 CY2025, with sales up 11.6% year on year to $802.8 million. Its non-GAAP profit of $1.57 per share was 18.9% above analysts’ consensus estimates.
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Bright Horizons (BFAM) Q3 CY2025 Highlights:
- Revenue: $802.8 million vs analyst estimates of $780.2 million (11.6% year-on-year growth, 2.9% beat)
- Adjusted EPS: $1.57 vs analyst estimates of $1.32 (18.9% beat)
- Adjusted EBITDA: $156.1 million vs analyst estimates of $138 million (19.4% margin, 13.1% beat)
- Management raised its full-year Adjusted EPS guidance to $4.51 at the midpoint, a 7.3% increase
- Operating Margin: 15.1%, up from 12.4% in the same quarter last year
- Free Cash Flow was -$42.45 million compared to -$32.18 million in the same quarter last year
- Market Capitalization: $5.27 billion
Company Overview
Founded in 1986, Bright Horizons (NYSE: BFAM) is a global provider of child care, early education, and workforce support solutions.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Bright Horizons grew its sales at a 11.6% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Bright Horizons’s annualized revenue growth of 11% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
This quarter, Bright Horizons reported year-on-year revenue growth of 11.6%, and its $802.8 million of revenue exceeded Wall Street’s estimates by 2.9%.
Looking ahead, sell-side analysts expect revenue to grow 6.4% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.
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Operating Margin
Bright Horizons’s operating margin has been trending up over the last 12 months and averaged 9.9% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports mediocre profitability for a consumer discretionary business.
In Q3, Bright Horizons generated an operating margin profit margin of 15.1%, up 2.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Bright Horizons’s EPS grew at a solid 14.7% compounded annual growth rate over the last five years, higher than its 11.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
In Q3, Bright Horizons reported adjusted EPS of $1.57, up from $1.11 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Bright Horizons’s full-year EPS of $4.39 to grow 7.3%.
Key Takeaways from Bright Horizons’s Q3 Results
It was good to see Bright Horizons beat analysts’ EPS expectations this quarter. We were also glad its full-year EPS guidance exceeded Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 9.2% to $100.90 immediately following the results.
Indeed, Bright Horizons had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
