BRIGHT HORIZONS FAMILY SOLUTIONS INC. Q4 FY2024 earnings call

• Full Service: Added 7 centers in Q4, including client centers for Ragon Institute and St. Jude's Hospital and second India center for Morgan Stanley. Full-year opened 26 centers, 17 for client employers. Enrollment in centers open over one year had low single-digit growth in Q4. Top cohort centers had >80% occupancy in Q4. Underperforming centers in urban business districts showed early signs of enrollment uptick due to return-to-office policy changes. - Backup Care: Q4 revenue up 15%, full-year over $600M. Strong traditional network use, added new clients like Harris Health and Lonza. - Education Advisory: Grew to $32M in Q4, added new clients like Atlantic Health Systems and United Natural Foods. - Expressed sympathies for LA fire victims and noted team support for affected communities.

Full Service Child Care: Q4 revenue increased 8% to $485 million. Added 7 centers in Q4, including client centers for Ragon Institute and St. Jude's Hospital. Full-year opened 26 centers. Enrollment in centers open over one year had low single-digit growth in Q4. Top cohort centers (nearly 40% of portfolio) had >80% occupancy in Q4. Backup Care: Q4 revenue grew 15% to $157 million. Full-year revenue increased 16% to $610 million. Operating income of $170 million from Backup Care exceeded the contribution of the entire Full Service segment prior to COVID. Education Advisory: Q4 revenue was $32.5 million, operating margin 29%, slightly higher than prior year.

• 2025 revenue expected $2.85B-$2.9B (6%-8% growth, 7%-9% constant currency). - Full Service: Reported revenue growth 4.5%-6.5%, constant currency 6%-8% due to enrollment gains and tuition increases, offset by net center closings. - Backup Care: Reported revenue growth 11%-13% due to continued expansion of use. - Ed Advisory: Low to mid-single digits growth. - 2025 adjusted EPS expected $3.95-$4.15. - Q1 2025 revenue expected $660M-$670M (6%-8% growth), adjusted EPS $0.63-$0.68.

• Enrollment challenges in underperforming centers, particularly in urban business districts like D.C., NYC, Seattle where return to office impact is mixed. - Foreign exchange headwind on revenue growth. - Dependence on employer return-to-office policies for enrollment in certain underperforming centers.

Q: Manav Patnaik asked about quantifying the 6%-8% growth in Full Service, specifically pricing, enrollment, and net closure.

A: Elizabeth Boland said price increase 4%-5%, enrollment 2.5%-3.5%, net closure effect ~0.5% (offset by openings).

Q: George Tong asked about occupancy trend in 2025.

A: Elizabeth Boland said expectation is mid 60s, with growth weighted to back end due to enrollment.

Q: Andrew Steinerman asked about center closings and their revenue drag.

A: Elizabeth Boland explained net unit revenue factor, closings higher than 0.5%, net effect from openings and closings.

Q: Jeffrey Meuler asked about underperforming centers and Backup Care client budget discussions.

A: Stephen Kramer talked about intensifying efforts for underperforming centers and positive renewal discussions for Backup Care regarding broadening user base.

Q: Joshua Chan asked about return to office impact and UK breakeven.

A: Stephen Kramer said return to office is a tailwind for some centers, and UK expects to breakeven in 2025 due to enrollment growth, staffing improvements, and government free hours expansion.

Q: Toni Kaplan asked about enrollment trends and Backup Care In-Home Care financials.

A: Elizabeth Boland discussed enrollment challenges in different cohorts and In-Home Care is an important part of service delivery, more expensive but optionality-driven.

Q: Jeffrey Silber asked about share repurchase and labor supply/wage inflation.

A: Elizabeth Boland said share repurchase due to cash visibility and good debt pricing, and Stephen Kramer noted comfortable with wage estimates.

Q: Faiza Alwy asked about below 40% utilization cohort and full service margin expansion.

A: Elizabeth Boland said target to reduce below 40% cohort to 5%-16% by end of 2025, and full service margin expansion from enrollment and pricing benefits in different cohorts.