McGraw Hill NYSE: MH reported fiscal 2026 results above its prior expectations and issued fiscal 2027 guidance calling for modest revenue growth, higher recurring revenue and continued margin expansion, as executives emphasized growth in higher education, artificial intelligence-enabled products and an approaching K-12 literacy curriculum cycle.
On the company’s earnings call for the fiscal fourth quarter and year ended March 31, 2026, Chair Simon Allen said the year “demonstrated the strength of our business, our strategy, and the enduring importance of education,” adding that the company made “significant strides in AI-powered innovation.” Allen also expressed confidence in President and Chief Executive Officer Philip Moyer, who has been in the role for about 120 days.
Moyer said McGraw Hill exceeded its IPO expectations for revenue and adjusted EBITDA in fiscal 2026, while recurring revenue grew 6% and represented more than 73% of total revenue. He said the company’s focus for shareholders is to “maintain our profit profile, reduce our debt, and accelerate our growth in fiscal year 2027 and beyond.”
Fiscal 2026 Results Top Guidance
Executive Vice President and Chief Financial Officer Bob Sallmann said fiscal 2026 revenue was $2.1 billion, above the high end of the company’s guided range and $2 million above the prior year. Recurring revenue reached $1.5 billion, up nearly 6% year over year, while adjusted EBITDA rose 2% to $744 million. Adjusted EBITDA margin expanded nearly 80 basis points to 35.4%.
For the fourth quarter, revenue was $464 million, down 2% year over year, reflecting a smaller K-12 market opportunity partly offset by continued strength in higher education. Recurring revenue was $373 million, and digital revenue reached $393 million, representing 81% and 85% of total revenue, respectively. Fourth-quarter adjusted EBITDA was $131 million, with margins up nearly 40 basis points from the prior year.
Sallmann said McGraw Hill reduced gross debt by $646 million during the fiscal year, including IPO proceeds, and ended the year with $254 million in cash and $704 million in total liquidity. The company’s revolving credit facilities remained undrawn. He said the company lowered annualized cash interest expense by nearly $45 million and remains focused on a net leverage target of 2 to 2.5 times.
Higher Education Gains Offset K-12 Market Decline
Higher education was the strongest segment. Sallmann said fiscal year higher education revenue grew 12% to $879 million, with recurring revenue up 10% to $734 million. He attributed growth largely to share gains, enrollment, pricing and lower sales returns. The company’s higher education market share is approaching 31%, according to MPI, and the fourth quarter marked its 40th consecutive quarter of share gains, Moyer said.
Sallmann said McGraw Hill’s Evergreen delivery model, which provides continuously updated content, now represents 68% of higher education revenue. Inclusive access represented 56% of revenue in fiscal 2026. Net dollar retention in higher education reached 114% for the year.
K-12 revenue declined 9% year over year to $884 million, reflecting what Sallmann described as an anticipated smaller market opportunity and a difficult prior-year comparison. K-12 recurring revenue grew 3% to $620 million. Fourth-quarter K-12 revenue fell 10% to $126 million.
Executives said the California math adoption cycle has been slower than expected, with some districts taking longer to make decisions. Sallmann said 80% of the California math market remains undecided, while the company has recalibrated the phasing of the market opportunity as some business shifts into fiscal 2028. In Texas, he said the company’s math program has been well received, but state-sponsored curriculum has seen early success because of upfront incentives, while contracts have been shorter.
Moyer said the math market is fragmented, with disagreement among districts, teachers and states over pedagogy. By contrast, he said literacy represents a large opportunity because 42 states are mandating the science of reading approach. McGraw Hill has invested more than $100 million in its new English Language Arts programs, Emerge!, Summit! and Soar!, which Moyer described as the company’s largest curriculum investment to date.
AI Strategy Centers on Education-Specific Data and Tools
AI was a central theme of the call. Moyer said McGraw Hill has launched eight AI learning tools serving more than 7.5 million users, with three additional launches planned this fiscal year. He said the company has more than 100 million active licenses across students and educators and captured 25.6 billion learning interactions, supported by more than 190 terabytes of learning data.
Moyer said investors often ask whether AI will disrupt the business, but customers do not ask the question in the same way. “Students, teachers, parents, and institutions don’t want to park a child in front of a generic LLM and hope for a good outcome,” he said. He argued that McGraw Hill’s advantage comes from proprietary content, pedagogical sequencing, personalized delivery, learning data and its ability to integrate tools into classroom workflows.
The company is also piloting what Moyer called an agentic AI tool intended to make McGraw Hill’s “precision education experience” accessible as a trusted AI agent. In response to analyst questions, he said the company is testing business models and expects to provide more information over the next six months. He described potential use cases in higher education, healthcare and professional education, including “just-in-time education” for medical professionals.
Moyer also highlighted AI Reader, Sharpen and ALEKS as examples of tools tied to measurable outcomes. He said AI Reader generated 57 million learning interactions across 2.4 million students, while students using Sharpen at Rowan College in New Jersey achieved final exam scores 47% higher than peers who did not use the tool.
Fiscal 2027 Outlook Includes Growth and Buyback
For fiscal 2027, McGraw Hill expects revenue of $2.115 billion to $2.175 billion. Sallmann said that is consistent with the dollar expectations established at the time of the IPO. The company expects recurring revenue of $1.587 billion to $1.627 billion and adjusted EBITDA of $750 million to $790 million. At the midpoint, adjusted EBITDA margin is expected to be 35.9%, up 50 basis points year over year.
Unlevered free cash flow is expected to be approximately $400 million, up roughly 20% year over year. Sallmann said capital expenditures and product development are expected to remain around 10% of revenue. He also said the board authorized a $50 million share repurchase plan, reflecting confidence in the company’s growth, profitability and cash generation.
Sallmann said fiscal 2027 assumptions include continued share gains in higher education, a measured view of enrollment, improving K-12 trends as the market expands, continued focus on medical solutions in Global Professional and a better position in international markets. McGraw Hill also expects GAAP net income in fiscal 2027 to increase significantly compared with fiscal 2026.
Executives said McGraw Hill plans to provide a broader update on long-term strategy and capital allocation at an investor day later this calendar year.
About McGraw Hill NYSE: MH
McGraw Hill NYSE: MH is a global learning science company specializing in educational content, digital learning platforms, and assessment solutions. The company offers textbooks and course materials for K-12 and higher education, along with professional development resources for corporate and workforce training. Its digital solutions—including adaptive learning platforms and analytics-driven tools—support personalized instruction, progress tracking, and interactive engagement in both classroom and remote environments.
Founded in 1888 in New York City, McGraw Hill has evolved from a technical periodical publisher into one of the world's leading providers of educational content and technology.
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