Americas Business & Information Services Child care online searches remain healthy though RTO is plateauing

Equity Research 17 September 2026 | 9:01PM PDT

AMERICAS BUSINESS & INFORMATION SERVICES

Child care online searches remain healthy though RTO is plateauing; favor BFAM over KLC

Our analysis of alternative data linked to child care demand, including Google search George K. Tong, CFA | activity and Kastle office card swipe data, indicates healthy underlying demand with Goldman Sachs & Co. LLC

a more favorable read-through for Buy-rated BFAM than Neutral-rated KLC. Google Alex Lakritz | searches for “child care near me” and “day care near me” have remained above Goldman Sachs & Co. LLC pre-COVID averages through September MTD, with the index averaging 57 in 3Q Sami Nasir, CFA | QTD vs a pre-COVID average of 48, 72 in 2Q vs 41 and 68 in 1Q vs 36. That said, Goldman Sachs & Co. LLC Kastle data indicates office attendance has plateaued following several years of recovery, with attendance at 53% of pre-COVID levels in the second week of September compared with averages of 55% in 2Q and 54% in 1Q. We believe healthy search activity remains supportive of child care demand, though slower RTO gains limit the incremental tailwind for employer-sponsored and workplace-adjacent centers. These trends reinforce our positive view on BFAM, where occupancy recovery and robust back-up care growth can support strong double-digit annual EPS growth over the medium term. KLC should also benefit from healthy demand trends, but its ability to convert inquiries into enrollments remains constrained by company-specific execution challenges, and RTO provides a less relevant demand signal given its ~80% community-based center mix.

Alternative data shows more consistently positive relationships with BFAM revenue growth than KLC revenue growth. We analyzed Google search volumes for “child care near me” and “day care near me” to assess changes in parental interest, using Google Trends data indexed from 0 to 100 based on peak search interest over the relevant period. We view nearby child care search activity as a useful leading indicator of enrollment demand since it captures parents actively evaluating care options. Since 2Q 2020, child care search activity has shown a strong positive 0.64 correlation with BFAM’s full service center-based care revenue growth, compared with a weak positive 0.15 correlation with KLC’s ECE revenue growth since 1Q 2022. We also analyzed Kastle card swipe data, which measures office attendance across ~2,600 buildings in ten major US metro areas relative to pre-COVID levels in early February 2020. Kastle data has shown a moderately positive 0.22 correlation with BFAM’s full service center-based care revenue growth since 2Q 2020, consistent with onsite work supporting demand for employer-sponsored or workplace-adjacent child care, though RTO is not the sole driver of utilization. In contrast, Kastle data has shown a negative 0.78 correlation with KLC’s ECE revenue growth since 1Q 2022, suggesting RTO has provided a less useful demand signal for KLC given its ~80%

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Goldman Sachs Americas Business & Information Services

community-based center mix, different parent-use cases and greater exposure to company-specific enrollment and execution factors.

Online child care search volumes remain above pre-COVID levels. Google search volumes for “child care near me” and “day care near me” have remained meaningfully above pre-COVID levels on a seasonally adjusted basis, which we view as a positive leading indicator of child care demand and center occupancy. The Google index registered 55 in September MTD, above its long-term average of 49.6 since 2016, as illustrated in Exhibit 1. The data shows a steady pre-COVID uptrend, a…