Gross margins have contracted sharply from 27.5% in 2024Q2 to 13.5% in 2026Q1, reflecting significant difficulty in managing fixed-cost labor ratios.
| Sales/Revenue | 2.74B | 2.73B | 2.66B | 2.51B | 2.17B | 1.81B | 1.37B | 1.88B |
| Revenue Growth % | 3.95% | 2.64% | 6.09% | 15.9% | 19.8% | 32.29% | -27.14% | - |
| Cost of Goods Sold | 2.29B | 2.25B | 2.03B | 1.82B | 1.72B | 1.44B | 1.2B | 1.47B |
| COGS % of Revenue | - | 82.39% | 76.32% | 72.68% | 79.49% | 79.63% | 87.89% | 78.4% |
| Gross Profit | 449.67M | 481.23M | 630.52M | 685.86M | 444.2M | 368.3M | 165.49M | 405.23M |
| Gross Margin % | 16.43% | 17.61% | 23.68% | 27.32% | 20.51% | 20.37% | 12.11% | 21.6% |
| Gross Profit Growth % | - | -23.68% | -8.07% | 54.4% | 20.61% | 122.55% | -59.16% | - |
| Operating Expenses | 296.63M | 297.23M | 551.2M | 410.57M | 54.73M | 155.9M | 235.97M | 340.86M |
| OpEx % of Revenue | - | 10.87% | 20.7% | 16.36% | 2.53% | 8.62% | 17.27% | 18.17% |
| Selling, General & Admin | 296.63M | 297.23M | 423.06M | 287.97M | 267.29M | 227.08M | 170.31M | 218.7M |
| SG&A % of Revenue | - | 10.87% | 15.89% | 11.47% | 12.34% | 12.56% | 12.46% | 11.66% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 0 | 0 | 128.14M | 122.61M | -212.56M | -71.19M | 65.66M | 122.16M |
| Operating Income | 153.03M | 183.99M | 79.32M | 275.29M | 389.47M | 212.4M | -70.48M | 64.37M |
| Operating Margin % | 5.59% | 6.73% | 2.98% | 10.97% | 17.98% | 11.75% | -5.16% | 3.43% |
| Operating Income Growth % | - | 131.97% | -71.19% | -29.32% | 83.37% | 401.36% | -209.49% | - |
| EBITDA | 278.1M | 307.96M | 196.92M | 384.33M | 477.98M | 294.71M | 15.7M | 161.93M |
| EBITDA Margin % | 10.16% | 11.27% | 7.39% | 15.31% | 22.07% | 16.3% | 1.15% | 8.63% |
| EBITDA Growth % | 501.34% | 56.39% | -48.76% | -19.59% | 62.18% | 1776.67% | -90.3% | - |
| D&A (Non-Cash Add-back) | 125.07M | 123.97M | 117.61M | 109.05M | 88.51M | 82.31M | 86.18M | 97.56M |
| EBIT | 153.03M | 183.99M | 92.31M | 282.82M | 88.41M | 58.9M | -92.73M | 87.28M |
| Net Interest Income | -77.47M | -79.15M | -163.17M | -146.75M | -98.5M | -96.56M | -99.35M | -102.63M |
| Interest Income | 5.01M | 4.83M | 7.37M | 6.14M | 2.97M | 14K | 0 | 0 |
| Interest Expense | 82.48M | 83.97M | 170.54M | 152.89M | 101.47M | 96.58M | 99.35M | 102.63M |
| Other Income/Expense | -565.74M | -277.34M | -157.55M | -145.36M | -101.72M | -95.93M | -98.31M | -85.42M |
| Pretax Income | -412.7M | -93.34M | -78.23M | 129.93M | 287.75M | 116.47M | -168.79M | -21.05M |
| Pretax Margin % | -15.08% | -3.42% | -2.94% | 5.18% | 13.29% | 6.44% | -12.35% | -1.12% |
| Income Tax | 11.16M | 19.54M | 14.61M | 27.37M | 68.58M | 28.06M | -39.3M | 8.09M |
| Effective Tax Rate % | -2.71% | -20.93% | -18.67% | 21.06% | 23.83% | 24.09% | 23.28% | -38.42% |
| Net Income | -423.87M | -112.88M | -92.84M | 102.56M | 219.17M | 88.41M | -129.5M | -29.14M |
| Net Margin % | -15.48% | -4.13% | -3.49% | 4.09% | 10.12% | 4.89% | -9.48% | -1.55% |
| Net Income Growth % | -82.66% | -21.59% | -190.52% | -53.21% | 147.9% | 168.27% | -344.38% | - |
| Net Income (Continuing) | -423.87M | -112.88M | -92.84M | 102.56M | 219.17M | 88.41M | -129.5M | -29.14M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -3.58 | -0.95 | -0.96 | 0.90 | 1.92 | 0.77 | -1.13 | -0.25 |
| EPS Growth % | -75.53% | 1.45% | -206.67% | -53.13% | 149.35% | 168.14% | -343.49% | - |
| EPS (Basic) | - | -0.95 | -0.96 | 0.90 | 1.92 | 0.77 | -1.13 | -0.25 |
| Diluted Shares Outstanding | 118.5M | 118.33M | 96.31M | 114.37M | 114.37M | 114.37M | 114.37M | 114.37M |
| Basic Shares Outstanding | 118.5M | 118.33M | 96.31M | 114.37M | 114.37M | 114.37M | 114.37M | 114.37M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - |
Labor-driven margin compression
According to the provided quarterly income statements, KLC's revenue growth has decelerated significantly, moving from a 7.4% year-over-year increase in 2023Q4 to a marginal 0.6% growth rate by 2026Q1, suggesting that the company's ability to drive top-line expansion through pricing or volume is currently constrained.
The inconsistent revenue trajectory indicates that the company may be struggling to maintain enrollment momentum in a competitive labor market. Investors should monitor whether this deceleration reflects a saturation of the community-based center model or an inability to pass through tuition increases to price-sensitive households.
As reported in the financial data, KLC's gross margin has experienced a notable contraction, falling from a peak of 27.5% in 2024Q2 to just 13.5% in 2026Q1, which highlights the difficulty of managing high fixed-cost labor ratios in an inflationary environment for childcare services.
The sharp decline in gross profitability suggests that direct costs, particularly teacher wages and facility expenses, are outpacing the company's revenue generation capabilities. This margin compression appears to be a structural challenge rather than a temporary anomaly, warranting further investigation into the company's long-term pricing power.
Based on the income statement history, KLC's operating income has shown extreme volatility, swinging from a positive $80.6M in 2024Q2 to a negative $89.3M in 2024Q4, indicating that the company lacks the operating leverage necessary to protect profitability during periods of revenue fluctuation or elevated overhead.
The inability to maintain consistent operating margins suggests that corporate SG&A and fixed facility costs are not scaling efficiently with the center footprint. This lack of operational discipline may indicate that the current business model is overly sensitive to minor changes in occupancy levels.
As evidenced by the reported figures, KLC's net income has been highly erratic, including a massive $121.8M stock-based compensation charge in 2024Q4 that contributed to a $133.6M net loss, complicating the assessment of the company's underlying ability to generate sustainable GAAP earnings for shareholders.
The significant swings in net income, exacerbated by non-operating items and stock-based compensation, suggest that investors should focus on core operational metrics rather than headline EPS. The recurring net losses in recent quarters raise questions about the company's path to consistent profitability.
A critical review of the income statement, as shown in the provided data, reveals that KLC's net margin has frequently dipped into negative territory, with a -43.1% net margin in 2026Q1, which may lead skeptics to question the long-term viability of the current cost structure.
Short-sellers might focus on the persistent inability to convert revenue into bottom-line profit, suggesting that the company's reliance on high-touch, labor-intensive services creates a permanent ceiling on margins. The risk of further margin compression remains high if labor costs continue to rise without corresponding tuition hikes.
Quick answers to the most common questions about buying KLC stock.
For fiscal year 2025, KinderCare Learning Companies, Inc. (KLC) reported total revenue of $2.73B. This represents a 45.7% increase compared to $1.88B in 2019.
KinderCare Learning Companies, Inc. (KLC) reported a net loss of $112.9M for the fiscal year ending 2025.
KinderCare Learning Companies, Inc. (KLC) reported an operating income of $184.0M, resulting in an operating profit margin of 6.7%. This margin reflects the operational efficiency of the business before interest and taxes.
KinderCare Learning Companies, Inc. (KLC) generated $481.2M in gross profit for the year, representing a gross profit margin of 17.6%. This demonstrates the company's core pricing power and production efficiency.