McGraw Hill (MH) Q1 2027 earnings summary

Executive summary

• Q1 FY27 revenue rose 2.6% year-over-year to $550 million, with recurring revenue up 9.8% to $426 million, now 77% of total revenue.

• Adjusted EBITDA reached $207 million (37.7% margin), up 192 basis points year-over-year, and net income was $58 million.

• Digital revenue increased 8.8% year-over-year to $354 million, reflecting strong adoption of technology-based solutions.

• Strong performance was driven by disciplined execution, digital engagement, and AI-enabled product innovation across all segments.

• Company reaffirmed FY27 guidance, citing strong leading indicators and confidence in multi-year growth trajectory.

Financial highlights

• Gross profit margin expanded to 79.9%, up 290 basis points year-over-year, with gross profit at $439.2 million.

• Remaining performance obligation stood at $1.52 billion, indicating strong future revenue visibility.

• Gross debt was $2.63 billion, with net debt at $2.44 billion as of June 30, 2026.

• Ended Q1 with $194 million in cash and $644 million in total liquidity; revolving credit facility undrawn.

• Interest expense decreased 22.1% to $45.8 million, reflecting lower debt levels and reduced rates.

Outlook and guidance

• FY27 guidance reaffirmed: revenue $2,115M–$2,175M, recurring revenue $1,587M–$1,627M, Adjusted EBITDA $750M–$790M.

• Multi-year trajectory targets mid-single-digit plus revenue growth and continued margin expansion.

• Guidance assumes 1% higher education enrollment growth; will update after Q2 as visibility improves.

• Management expects accelerating revenue growth and continued margin expansion for the remainder of the year.