• Challenging operating environment in the child care sector
• Nido has made investments to strengthen operational capabilities
• Supply of new child care services has diluted demand in some areas
• Nido expects operating environment to remain challenging in 2026

Nido Education Limited (ASX: NDO) has announced three important updates: 1) a perspective on the current trading conditions in the child care sector, 2) Nido's current performance, and 3) capital management as part of its annual report announcement. The company notes a challenging operating environment in the Australian early childhood education and care market, with industry demand conditions softening over 2024-2025. This appears to be driven by a combination of demographic, affordability, work pattern, and local supply factors. Nido has made significant investments over the past 12 months to strengthen its operational capabilities, prioritizing safeguarding, quality of educational offering, employee engagement, and disciplined operational performance. The company has also seen new child care services open in some oversupplied areas, diluting demand and leading to lower-than-expected occupancy across local catchments. Looking ahead to 2026, Nido expects the operating environment to remain challenging as it continues to prioritize child safety, quality, and compliance. However, policy settings remain supportive of utilization and workforce participation, and Nido will execute targeted initiatives to drive enrolments and deliver more days of learning. The company also plans to provide an update on capital management, including a potential dividend and continuation of its share buyback program, as part of its annual report announcement.

Nido expects the operating environment to remain challenging in 2026 as it continues to prioritize child safety, quality, and compliance. The company has recorded year-on-year growth in enquiries and enrolment offers issued to families, and January 2026 delivered an acceptable profit outcome, with group-level earnings ahead of the corresponding period last year. However, investors should note that a single month is not necessarily indicative of full-year performance.

While Nido commenced 2026 with lower starting occupancy compared to the prior year, the company has recorded year-on-year growth in enquiries and enrolment offers issued to families. Nido expects the operating environment to remain challenging in 2026 as it continues to prioritize child safety, quality, and compliance. However, policy settings remain supportive of utilization and workforce participation, and Nido will execute targeted initiatives to drive enrolments and deliver more days of learning across its service network.