Nov 5, 2026, 7:14 AM ETConsumer Defensive

McGraw Hill, Inc. — Fiscal Second Quarter 2027 Earnings Summary

MHMCGRAW HILL INC

Financial Performance

Total revenue for the quarter ended September 30, 2026, was $632.2 million, a 5.5% decline year-over-year (YoY), while year-to-date revenue declined 1.9% YoY.
Re-occurring revenue was $414.1 million, a 2.0% YoY decline, representing 65.5% of total revenue; year-to-date re-occurring revenue grew 3.7% YoY.
Digital revenue increased 2.6% YoY to $361.4 million for the quarter, with year-to-date growth of 5.6%.
Remaining performance obligation (RPO) stood at $1,790.5 million as of September 30, 2026, up from $1,671.4 million as of March 31, 2026.
GAAP gross profit was $500.5 million, maintaining a 79.2% gross profit margin, consistent with the prior year.
GAAP net income was $86.4 million for the quarter, down from $105.3 million in the prior-year period; year-to-date GAAP net income was $144.2 million, up from $105.8 million.
Adjusted EBITDA was $250.6 million for the quarter, representing a 39.6% margin, compared to $286.4 million (42.8% margin) in the prior year; year-to-date Adjusted EBITDA was $457.7 million (38.7% margin) versus $477.8 million (39.7% margin).
Gross debt reduction totaled approximately $700 million since the initial public offering, including a $50 million term loan paydown in the quarter; net leverage is tracking toward a 2.0–2.5x target.
Net debt was $2,342.8 million as of September 30, 2026, with a Net Leverage Ratio of 3.2x.

The Company reaffirmed its fiscal year 2027 guidance: Revenue between $2,115 million and $2,175 million; Re-occurring Revenue between $1,587 million and $1,627 million; and Adjusted EBITDA between $750 million and $790 million.
Management expressed confidence in delivering accelerating growth in fiscal year 2028, citing strengthening indicators and robust re-occurring revenue growth.
Leading indicators for the K-12 segment are strengthening in open territory markets ahead of the multi-year ELA super-cycle beginning in fiscal year 2028.

Higher Education: Revenue was $213.5 million, up 0.2% YoY; year-to-date growth was 4.5%. Re-occurring revenue grew 5.5% YoY to $170.6 million, with year-to-date growth of 9.8%. The segment gained approximately 5 points of market share over the past four fiscal years. Evergreen adoption drove a 35% reduction in sales touchpoints and 20% higher competitive win rates.
K-12: Revenue was $324.6 million, down 9.6% YoY, as lower capture rates in select math markets offset strength in Science and ELA; year-to-date revenue was down 4.9%. Re-occurring revenue was nearly $200.0 million, down 7.8% YoY, with year-to-date growth relatively flat. Emerge, Summit, and Soar exceeded early capture rate expectations.
Global Professional: Delivered 5.5% re-occurring revenue growth YoY, driven by 7% growth in the medical portfolio.
International: Revenue increased 1.6% YoY, with delayed Middle East shipments being fulfilled.
AI and Technology: Active AI users grew double-digits across nine AI learning tools; over 80 million AI Reader learning interactions occurred across 3.4 million students since inception. The company integrated proprietary content into Microsoft Copilot and Anthropic's Claude for Teachers via Model Context Protocol.
Acquisitions: Expanded K-12 AI capabilities through the acquisitions of TeachFX and Teachally.

The Company serves over 100 million active curriculum licenses across the global education ecosystem.
McGraw Hill is positioning itself as an early-mover in agentic AI, connecting proprietary content to leading AI platforms to expand its addressable market.
The company has established a deep position of trust and scale in the global education market, with over 30 offices and solutions available in more than 80 languages.

The press release notes that actual results may differ materially from forward-looking statements due to risks and uncertainties, including those described in the Company's Form 10-K and 10-Q filings.
Specific challenges include anticipated lower capture rates in select math markets within the K-12 segment.
Forward-looking estimates of Adjusted EBITDA for fiscal year 2027 are provided without a reconciliation to net income due to the difficulty in predicting certain information.

CEO Philip Moyer highlighted continued higher education market share gains and the company's early-mover advantage in agentic AI.
CFO Bob Sallmann emphasized digital revenue growth, a strong margin profile, and commitment to debt reduction, stating confidence in the long-term strategy.
Management expressed confidence in the execution focus and margin expansion for fiscal year 2028.

Credit rating upgrades were received from S&P Global Ratings and Moody's Ratings during the quarter.
Leadership changes include the appointment of Robin Lucas as President of Higher Education and Jana Thompson as President of K-12; Michael Ryan is retiring after 26 years of service.
The company proactively extended near-dated maturities subsequent to the quarter end.
The Evergreen content delivery model was expanded in Higher Education with direct updates to over 800 titles.
The company doubled the number of ongoing institutional agentic AI pilots, including an integration with the University of California, San Francisco School of Medicine.