McGraw Hill Q1 Earnings Call Highlights

McGraw Hill exceeded Q1 expectations: Revenue rose 2.6% to $550 million, recurring revenue increased nearly 10% to $426 million, and adjusted EBITDA margin expanded to 37.7%. Digital revenue reached 64% of the mix. Fiscal 2027 guidance was reaffirmed despite shipment timing issues and international delays. Higher Education led segment growth with a 10% revenue increase, while management highlighted strong K-12 literacy adoption momentum tied to science-of-reading mandates. AI and new assessment products remain growth priorities: The company plans additional AI launches and will integrate Stanford’s ROAR dyslexia screener into its analytics platform. McGraw Hill also reduced gross debt by $646 million in fiscal 2026 and continues to prioritize debt reduction, strategic acquisitions and selective share repurchases.

McGraw Hill NYSE: MH reported stronger-than-expected first-quarter fiscal 2027 results, with revenue growth, recurring-revenue gains and margin expansion, while reaffirming its full-year outlook ahead of its key back-to-school selling period. Revenue rose 2.6% year over year to $550 million for the quarter ended June 30, 2026. Recurring revenue increased nearly 10% to $426 million and represented 77% of total revenue, while digital revenue grew nearly 9% and accounted for 64% of the revenue mix. Adjusted EBITDA totaled $207 million, producing a 37.7% margin, up 192 basis points from the prior year. Net income was $58 million.

Chief Executive Officer Philip Moyer said the company entered its most important selling season following a stronger-than-expected quarter. He cited more than 100 million active curriculum licenses, more than 7.5 million users of McGraw Hill’s artificial intelligence tools and billions of learning interactions across its platforms.

Chief Financial Officer Bob Sallmann said first-quarter outperformance was primarily driven by K-12 execution and the timing of deliveries, with some educational materials delivered in June rather than July. He cautioned that revenue and EBITDA can move between the fiscal first and second quarters because of academic seasonality and K-12 shipment timing, making first-half results a more meaningful measure.

Higher Education: Revenue increased 10% year over year to $200 million, while recurring revenue grew 14%. Trailing 12-month market share remained above 30% through June, up 140 basis points year over year, according to MPI. Inclusive Access represented 57% of segment revenue.

K-12: Revenue increased 1.3% to $274 million, and recurring revenue rose 7%. The company said capture rates outside California and Texas were at the high end of its target range.

Global Professional: Revenue was $35 million, with recurring revenue increasing more than 6%. Medical education represents 80% of the segment, according to Sallmann.

International: Revenue was $45 million. Middle East conflict delayed certain K-12 shipments, though the company said these orders are now being fulfilled and that the disruption is expected to affect timing rather than full-year results.

McGraw Hill reaffirmed fiscal 2027 guidance across all metrics. The company’s outlook continues to assume 1% higher-education enrollment growth, though management said it would reassess that assumption after gaining more visibility into fall enrollment trends as students arrive on campuses. Sallmann said the company expects to provide a more informed outlook when it reports fiscal second-quarter results in November.