McGraw Hill Reaffirms Fiscal 2027 Outlook After K-12 Sales Dip

The Tip Desk · November 11, 2026 · 3 min read

Second-quarter revenue was $632.2 million as the education company posted $86.4 million of GAAP net income and held its full-year ranges.

McGraw Hill, Inc. (MH), a global provider of education solutions, reported fiscal second-quarter 2027 revenue of $632.2 million, a 5.5% year-over-year decline that the company said was favorable to expectations. The drop reversed a 2.6% year-over-year increase in the fiscal first quarter. The company said market-share gains and strong capture rates across most markets partly offset anticipated lower capture rates in select math markets.

GAAP net income was $86.4 million, compared with $105.3 million a year earlier. Diluted earnings were $0.45 a share. Adjusted EBITDA was $250.6 million, or a 39.6% margin. GAAP gross profit was $500.5 million, a 79.2% margin the company described as consistent with the prior year.

Re-occurring revenue was $414.1 million, down 2.0% year-over-year and equal to 65.5% of total revenue, after a 9.8% year-over-year increase and a 77% share of sales in the prior quarter. Digital revenue was $361.4 million, up 2.6% year-over-year. Remaining performance obligation stood at $1,790.5 million as of September 30, 2026, up from $1,522.2 million as of June 30, 2026.

Higher Education revenue totaled $213.5 million, up 0.2% year-over-year. Re-occurring revenue in the segment was $170.6 million, up 5.5% year-over-year. The company said it gained about five points of market share over the past four fiscal years from competitors, according to MPI, and that Evergreen adoption was driving a 35% reduction in sales touchpoints and 20% higher competitive win rates.

K-12 revenue was $324.6 million, down 9.6% year-over-year, as capture-rate strength in Science and ELA was offset by lower anticipated capture rates in select Math markets. K-12 re-occurring revenue was nearly $200.0 million, down 7.8% year-over-year. The company said Emerge, Summit and Soar continued to exceed early capture-rate expectations and that California Math pilots were four times the number versus the prior year.

Global Professional delivered 5.5% re-occurring revenue growth year-over-year, driven by 7% medical portfolio growth. International revenue increased 1.6% year-over-year, with delayed Middle East shipments being fulfilled.

The company said it became one of the first major education companies to integrate proprietary content into Microsoft Copilot and Anthropic’s Claude for Teachers via Model Context Protocol, and that AI Reader reached over 80 million learning interactions across approximately 3.4 million students since inception through October 2026. It acquired TeachFX and Teachally to expand K-12 AI capabilities. Robin Lucas was appointed President of Higher Education and Jana Thompson President of K-12.

McGraw Hill paid down a $50 million term loan in the quarter, bringing total gross debt reduction to approximately $700 million since its initial public offering, with net leverage tracking toward a 2.0–2.5x target. Credit ratings were upgraded by S&P Global Ratings and Moody’s Ratings in the quarter.

The company re-affirmed fiscal year 2027 guidance of revenue of $2,115 million to $2,175 million, re-occurring revenue of $1,587 million to $1,627 million, and Adjusted EBITDA of $750 million to $790 million. Chief Financial Officer Bob Sallmann said first-half performance, including re-occurring revenue growth, combined with strengthening indicators of the ability to deliver accelerating growth in fiscal year 2028.