McGraw Hill Reaffirms Fiscal 2027 Outlook After a Profitable Start
GAAP net income was $57.9 million in the fiscal first quarter ended June 30, 2026, versus $0.5 million a year earlier, as the company kept its full-year revenue range of $2.115 billion to $2.175 billion.
McGraw Hill, Inc. (MH), a global provider of education solutions for preK-12, higher education and professional learning, reported GAAP net income of $57.9 million for the fiscal first quarter ended June 30, 2026, compared with $0.5 million a year earlier, and reaffirmed its fiscal 2027 outlook.
Total revenue was $549.9 million, up 2.6% from a year earlier. That year-over-year rate slowed from 4.2% in the fiscal third quarter, when revenue was $434.2 million. The quarter exceeded internal expectations, and the company was entering the peak selling season with momentum.
Recurring revenue was $425.6 million, up 9.8% year-over-year and 77% of the total. Digital revenue was $353.5 million, up 8.8%. GAAP gross profit was $439.2 million, a 79.9% margin, up 290 basis points from the year-ago period. Adjusted EBITDA was $207.0 million, a 37.7% margin, up 192 basis points. Diluted earnings were $0.30 a share.
Higher Education was the growth engine. Segment revenue was $199.8 million, up 9.6% year-over-year, after 24.0% growth in the prior quarter. The increase was attributed to market share gains, price realization and higher enrollment, and the company had gained about five points of share from traditional competitors over the past four fiscal years, per MPI. Recurring revenue in the segment was $182.1 million, up 14.1%.
K-12 revenue was $274.4 million, up 1.3% year-over-year, tied to multi-year contracts and capture rates in ELA and Science. Recurring revenue in K-12 was $196.6 million, up 7.1%. Chief Financial Officer Bob Sallmann said leading indicators were strengthening, including a new K-12 ELA program delivering win rates above target and early stages of a multi-year curriculum adoption cycle. In July, California ELA programs were recommended for approval by state reviewers; in August, Florida approved the company’s Math program ahead of an adoption cycle beginning in fiscal 2028.
Global Professional delivered 6.3% recurring revenue growth, fueled by wins for the medical solutions portfolio, including AI-driven Clinical Reasoning, across Osteopathic Medicine, Physician Assistant and Nurse Practitioner programs. International revenue was $45.2 million, with delayed Middle East K-12 shipments fulfilled and Latin America momentum offsetting Canadian enrollment headwinds.
Remaining performance obligation was $1,522.2 million as of June 30, 2026, down from $1,696.8 million as of December 31, 2025. Cash and cash equivalents were $193.6 million. The company continued to progress toward a 2.0-2.5x net leverage target; in July 2026, Moody’s upgraded its credit ratings.
President and Chief Executive Officer Philip Moyer said AI was a contributor to revenue growth, margin expansion, price realization and market share gains, and that the company’s agentic strategy continued to progress. The company served more than 7.5 million active users across eight live AI learning tools, with three additional launches planned this fiscal year. AI Reader generated 63 million learning interactions across about 2.6 million students since inception through July 2026, accelerating from about 47 million interactions and about 2.2 million students in fiscal 2026.
Fiscal 2027 guidance was reaffirmed at revenue of $2.115 billion to $2.175 billion, recurring revenue of $1.587 billion to $1.627 billion, and Adjusted EBITDA of $750 million to $790 million. Sallmann said the company believed it was well positioned to deliver accelerating revenue growth and continued margin expansion in fiscal 2027 and beyond.