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McGraw Hill (MH) investor relations material

McGraw Hill Q1 2026 earnings summary

Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.
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Q1 2026 earnings summary14 Aug, 2025

Executive summary

  • Revenue for Q1 FY26 grew 2.4% year-over-year to $535.7M, with net income of $0.5M, and adjusted EBITDA up 7.2% to $191.4M, margin expanding to 35.7%.

  • Digital and recurring revenue growth, AI-powered solutions, and innovation drove operational efficiencies and market expansion.

  • Completed IPO in July 2025, raising $385.7M in net proceeds, used to reduce gross debt by $386M and strengthen the balance sheet.

  • Company continues to gain market share in higher education (nearly 29% LTM), with strong performance in K-12 and digital segments.

  • Business model is resilient, with predictable academic cycles, multiyear contracts, and diversified revenue streams.

Financial highlights

  • Gross profit for Q1 FY26 rose to $412.3M, with gross margin improving to 77% (up 90 bps year-over-year).

  • Recurring revenue was $387.6M (72% of total), up 7.1% year-over-year; digital revenue was $325M, up 7.2%.

  • Adjusted EBITDA margin expanded to 36% (up 150 bps year-over-year).

  • Cash and cash equivalents at quarter-end were $247.3M, with total liquidity of $697M; net leverage reduced to 3.6x post-IPO.

  • Operating cash flow was negative $96.7M, reflecting seasonality and working capital changes.

Outlook and guidance

  • FY26 revenue guidance: $1.99B–$2.05B; recurring revenue: $1.48B–$1.52B; adjusted EBITDA: $663M–$703M.

  • Medium- to long-term targets: 5%+ annual revenue growth, 75%+ recurring/digital revenue mix, gross margin above 82%.

  • Capex to remain at 8%–9% of revenue; tax liability expected to fall to $30M–$50M due to policy changes.

  • Unlevered free cash flow for FY26 expected at lower end of 50%–100% conversion range; medium-term leverage target of 2–2.5x net debt/EBITDA.

  • Growth investments planned to leverage scale ahead of larger market opportunities in FY27 and beyond.

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