Bright Horizons Family Solutions Inc.

Greetings and welcome to the Bright Horizons Family Solutions first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Michael Flanagan, Group Vice President, Strategic Finance. Please go ahead.

Thank you, Stacey, and welcome to Bright Horizons' first quarter earnings call. Before we begin, please note that today's call is being webcast, and a recording will be available under the investor relations section of our website, investors.brighthorizons.com. As a reminder to participants, any forthcoming statements made on this call, including those regarding future business, financial performance, and outlook, are subject to the State Barber Statement included in our earnings release. Forward-looking statements inherently involve risk and uncertainties that may cause actual operating and financial results to differ materially and should be considered in conjunction with the cautionary statements that are disclosed in detail in our earnings release, our 2025 Form 10-K, and other SEC filings. Any forward-looking statement speaks only as to the data which is made, and we undertake no obligation to update any forward-looking statements. Today, we'll also refer to non-GAAP financial measures, which are detailed and reconciled to their GAAP counterparts in our earnings release. which is available on the IR section of our website at investors.brighthorizons.com. Along with today's earnings release, we have posted an updated investor presentation to our website, which we will reference during tonight's call. And here joining me on the call is our Chief Executive Officer, Stephen Kramer, and our Chief Financial Officer, Elizabeth Bolin. Stephen will start by reviewing our results and provide an update on the business. And Elizabeth will follow with a more detailed review of the numbers before we open up to your questions. With that, let me turn the call over to Stephen.

Thanks, Mike, and good evening, everyone. 2026 is off to a positive start. Revenue grew 7% in the first quarter, in line with our expectations, and earnings came in slightly ahead, reflecting continued execution across our business segments. In Q1, we delivered double-digit revenue growth and backup, expanded operating margins in full service, and made progress on transforming our education advisory business. Taken together, these results reflect the diversity and strength of our model and the enduring demand from working families and learners for the services that we provide, along with the employers who support them. Before I get into the segment results for the quarter, I want to take a different approach tonight and start by addressing the thoughtful questions we have received from analysts and investors in recent quarters. Specifically, I want to take a few minutes to highlight how our strategy post-COVID is focused on delivering long-term growth and earnings performance while increasing our impact on those we serve. Bright Horizons' unique business model centers around partnering with employers to deliver high-quality solutions that support client employees across critical life and career stages while delivering a compelling ROI for our employer clients. Over time, we have expanded our education and care offerings, and more recently, have sharpened our focus on the integration of our full suite of services for the benefit of our clients and their employees. To that end, we have taken steps to unify our go-to-market strategy, executed by a singular sales force and integrated account management team, and underpinned by new resources and tools. In parallel, we are developing a fully connected continuum of service, delivered through both our owned assets and trusted partners. To make that work at scale, we are strengthening our foundational capabilities, specifically a common client-employee credit model across our offerings, an integrated CRM and consumer data platform, and ultimately a more consistent and seamless customer experience. As Mike mentioned, alongside tonight's earnings release, we've included an updated investor deck that outlines our client-centric business model, our competitive advantages, and illustrates the scope of the growth opportunity. As one example, I'll use BackupCare, our largest segment by earnings contribution. Using slides 12 through 15 in our new investor presentation, I will walk through the growth framework, penetration within existing clients, expansion of our care and education ecosystem, and winning new logos. Starting with penetration on slide 12, user penetration is less than 5% across our client base, which highlights a significant opportunity ahead. The latent demand is substantial. More than four in five working US adults have at least one care need that our backup care offering addresses. Over the last several years, we have thoughtfully listened to clients and broadened our capabilities to include an even wider range of care types, increasing relevance across employee populations. This in turn enables our employer partners to meet their strategic objectives of fewer vendors, delivering broader and deeper value, directly aligned with our approach. We also break down penetration by industry and illustrate the dispersion within each sector on slide 13. The takeaway is clear. Penetration is low across all industries, and even within the same sector, there is wide variation, demonstrating that the opportunity is less about maturity and more about how the benefit is deployed within each client. To highlight one example, healthcare, the median client penetration is below 2%, which increases to more than 7% at the 95th percentile and exceeds 10% among our most highly utilized healthcare clients. Next, on slide 14, we illustrate that a key driver of growing utilization is the breadth of our care network. We have built an ecosystem that spans traditional childcare centers, in-home care providers, school-age programs, academic tutoring, pet care, and elder care through a mix of owned assets and a vetted network of partners. Expanding that network helps us to meet more employee needs, which support adoption and retention among both new and existing users. Finally, turning to slide 15, new logos are another meaningful growth channel and backup. We estimate that 90-plus percent of the SMB market remains unvended today, and roughly half of the Fortune 500 does not have a backup care solution in place. What positions us exceptionally well to capitalize on this opportunity is our ability to deliver high-quality care across care types, geographies, and employee needs with flexibility, scale, and trust that are difficult to replicate. We believe this advantage becomes even more important as employer adoption continues to grow. I highlighted backup care as the example because it reflects the broader playbook across Bright Horizons. Drive deeper client and user adoption, expand the range of needs we can serve, and deliver a more connected experience for families. By way of a real-time example, we put this strategy into action this past week at our On the Horizon Summit. We hosted more than 100 clients, including HR and benefits leaders from Bank of America, Comcast, and Cone Health, to name a few. The discussion encompassed the future of employer-sponsored education and care and modern ways to deliver a unified experience for employees and their families. We received tremendous feedback from clients about the event and the innovations that we introduced. We look forward to sharing more over time, and at this point, I would like to turn back to our first quarter segment results. In backup care, revenue increased 12.5% to 145 million in the quarter, and adjusted operating margins were 18%, both in line with our expectations. Growth was driven by continued expansion in unique users with solid use across all care types. And looking ahead to the summer months and peak utilization, For school-age programs, we are encouraged by continued user growth and the visibility of use through early reservations for the second and third quarters. Turning to full service, revenue grew 6% to $541 million in line with our expectations. Growth was driven by a combination of tuition increases and a tailwind from foreign exchange, partially offset by center closures as we continue to rationalize the portfolio. We opened two centers in the first quarter, one in the Netherlands and our third location for Toyota here in the United States. Occupancy averaged in the mid 60% range in Q1, improving sequentially from the fourth quarter and the prior year. Enrollment growth in centers opened for the last year was modestly positive in the first quarter. This included approximately 100 basis points of headwind from our Australia operations, where we experienced an elevated enrollment decline in this group of 78 centers. In contrast to our other geographies, our Australia portfolio's occupancy has drifted lower in the years following the pandemic. And this quarter, the enrollment contraction was much more significant than prior year's school year transition cycle. With the broader Australian ECE industry also experiencing meaningful weakness in 2026, we expect a more challenged enrollment picture and overall performance profile as we look to the rest of the year. More broadly, we remain encouraged by the sequential improvement in occupancy across our network of centers, the continued recovery across our middle and lower cohorts, and the improved operating margin we drove this quarter, despite a headwind from Australia. Our focus remains on expanding our enrollment with improved consumer experience and quality value, achieving improved operating leverage and operating efficiency, and rationalizing the center portfolio where appropriate. As previewed on our call in February, we closed 24 centers this quarter as we continue to position our portfolio to serve employees of our client partners and working parents where they live and work. Our education advisory business delivered revenue of $27 million in the quarter and increased 2% over the prior year. Notable new client launches in the quarter included NXP Semiconductors, Visa, and Huntington Bank, and we continue to be focused on driving participant growth and use across our college coach and ed-assist services. So to close, our Q1 results demonstrate solid demand and execution across the business. We remain encouraged by the progress we are making in our core operations while maintaining financial and operational discipline. As such, we are reaffirming our 2026 full-year revenue guidance range of $3.075 billion to $3.125 billion and our adjusted EPS guidance range of $4.90 to $5.10 per share. With that, I'll turn the call over to Elizabeth. who'll dive into the quarterly numbers and share more details around our outlook.