McGraw Hill reported fiscal second-quarter 2027 revenue of $632.2 million, down 5.5% from a year earlier but above the company’s expectations. Growth in digital sales and market-share gains helped offset weaker capture rates in some math markets. The education publisher also highlighted its push to connect its learning content with generative AI tools, including Microsoft Copilot and Anthropic’s Claude for Teachers.
The quarter’s results were mixed: digital revenue grew, while total revenue and net income declined year over year. For the first half of the fiscal year, however, recurring and digital revenue were higher than a year earlier, and the company continued to pay down debt.
Key details
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Revenue and market performance: Second-quarter revenue was $632.2 million, down 5.5% year over year. McGraw Hill said market-share gains and strong customer capture rates in most markets partly offset lower capture rates in select math markets. Revenue for the first half was down 1.9% year over year.
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Recurring and digital revenue: Recurring revenue was $414.1 million, down 2.0% for the quarter and equal to 65.5% of total revenue. For the first half, recurring revenue grew 3.7%. Digital revenue rose 2.6% to $361.4 million in the quarter and was up 5.6% for the first half. The company cited customer retention, adoption of its learning platforms and use of AI features embedded in its products, including AI Reader in Connect.
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Profitability: Gross profit was $500.5 million, with a gross margin of 79.2%, unchanged from the prior-year period. Net income was $86.4 million, compared with $105.3 million a year earlier. For the first half, net income was $144.2 million, up from $105.8 million.
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Adjusted earnings measure: Adjusted EBITDA was $250.6 million, equal to a 39.6% margin. McGraw Hill said the result supported its confidence in achieving margin expansion in fiscal 2027.
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Future contracted revenue: Remaining performance obligations were $1.79 billion, a measure of contracted revenue not yet recognized.
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Debt reduction: The company repaid $50 million of term-loan debt during the quarter. It said gross debt has fallen by approximately $700 million since its initial public offering.
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AI strategy: McGraw Hill said it is making its proprietary education content available through Microsoft Copilot, Claude for Teachers and academic institutions. Chief Executive Philip Moyer said the strategy is intended to connect trusted content with AI tools and expand the company’s addressable market. The company also said it serves more than 100 million active curriculum licenses globally.
What the results show
Digital growth and first-half recurring-revenue gains indicate continued progress in subscription and online offerings, even as quarterly revenue declined. The $1.79 billion in remaining performance obligations provides visibility into contracted future revenue, while ongoing debt repayment reduces gross debt. The company also expressed confidence in fiscal-year margin expansion, though it did not provide a specific target in the material provided.