McGraw Hill (MH) Q4 2026 earnings summary

Executive summary

• Fiscal 2026 revenue reached $2.1 billion, up 0.1% year-over-year, exceeding IPO expectations and guidance, driven by AI innovation, market share gains, and strong recurring revenue growth, with digital and recurring revenue now over 73% of total.

• Adjusted EBITDA for FY26 was $744 million, margin 35.4%, up nearly 80 basis points year-over-year; gross profit margin improved to 80.9%.

• Net income for FY26 was $35 million, a turnaround from a net loss of $85.8 million in the prior year.

• Major investments in AI-powered learning tools and literacy curriculum, with eight AI tools launched serving 7.5 million users.

• K-12 and higher education segments showed resilience, with higher ed market share near 31% and record net dollar retention of 114%.

Financial highlights

• FY26 revenue was $2.1 billion, above guidance and $2 million higher year-over-year; recurring revenue was $1.541 billion, up 5.8%; digital revenue was $1.434 billion, up 5.5%.

• Adjusted EBITDA reached $744 million, margin 35.4%; gross profit margin was 80.9%.

• Gross debt reduced by $646 million, net leverage down to 3.2x, and annualized cash interest expense lowered by $45 million.

• Unlevered free cash flow was $335 million; cash from operations $331 million; CapEx and product development just over $200 million.

• Q4 FY26 revenue was $464 million, down 2% year-over-year, with digital revenue representing 85% of total.

Outlook and guidance

• FY27 revenue guidance is $2.115–$2.175 billion, with recurring revenue of $1.587–$1.627 billion and adjusted EBITDA of $750–$790 million.

• Unlevered free cash flow projected at $400 million, up 20% year-over-year; CapEx and product development to remain ~10% of revenue.

• Board authorized a $50 million share repurchase plan.

• K-12 capture rates expected at the low end of 25–30% range; higher ed to continue share gains with measured enrollment assumptions.

• Medium- to long-term targets: revenue growth 5%+, recurring and digital revenue 75%+ of total, gross margin 82%+, adjusted EBITDA margin 37%+, net debt/EBITDA 2.0x–2.5x.