McGraw Hill, Inc. (NYSE:MH) shares gained 3.9% after the education solutions provider delivered first-quarter earnings and revenue above Wall Street forecasts. Growth in recurring and digital revenue, alongside stronger profitability, provided momentum as the company approaches the most important selling period of its fiscal year.
McGraw Hill beats first-quarter forecasts
McGraw Hill reported adjusted earnings of $0.59 per share for the fiscal first quarter ended June 30, 2026, exceeding the analyst consensus of $0.48 by $0.11.
Revenue increased 2.6% year over year to $549.9 million, comfortably ahead of Wall Street expectations of $532 million.
The performance was supported by solid execution across the company’s Higher Education and K-12 businesses, with recurring revenue continuing to represent a substantial proportion of overall sales.
“McGraw Hill’s strong start to fiscal year 2027 reflects the strength of our strategy and the trust that millions of educators and institutions place in us to deliver successful learning outcomes,” said Philip Moyer, President and Chief Executive Officer. “This quarter, we exceeded our expectations while building positive momentum as we prepare for the most important quarter of our fiscal year.”
Recurring revenue climbs nearly 10%
Recurring revenue increased 9.8% from the same quarter last year to $425.6 million.
That represented approximately 77% of McGraw Hill’s total quarterly revenue, highlighting the increasing importance of predictable, recurring income to the company’s business model.
Digital revenue also delivered solid growth, increasing 8.8% year over year to $353.5 million.
The expansion of digital and recurring sales provides McGraw Hill with greater revenue visibility while reducing its reliance on traditional one-time educational product purchases.
Adjusted EBITDA margin expands
Profitability improved significantly during the quarter.
Adjusted EBITDA reached $207.0 million, equivalent to a margin of 37.7%.
The adjusted EBITDA margin expanded by 192 basis points compared with the prior-year period, indicating that McGraw Hill was able to translate modest overall revenue growth into stronger operating profitability.
GAAP net income showed an even more substantial improvement, rising to $57.9 million from just $0.5 million in the comparable quarter last year.
The increase provides another indication of the stronger earnings performance achieved during the opening quarter of fiscal 2027.
Fiscal 2027 revenue guidance reaffirmed
Following the better-than-expected quarter, McGraw Hill maintained its existing outlook for fiscal 2027.
The company continues to forecast annual revenue of between $2.115 billion and $2.175 billion.
At $2.145 billion, the midpoint of the range sits marginally below the analyst consensus estimate of $2.15 billion.
McGraw Hill also expects recurring revenue of between $1.587 billion and $1.627 billion for the year.
Adjusted EBITDA is projected to reach between $750 million and $790 million.
Peak selling season comes into focus
Management’s comments highlighted the importance of the upcoming quarter, which represents the company’s most significant selling period of the fiscal year.
Momentum across Higher Education and K-12, together with the continued expansion of digital and recurring revenue, gives McGraw Hill a stronger foundation heading into that period.
The first-quarter results also suggest that improving revenue quality is supporting greater profitability, with recurring sales approaching four-fifths of total revenue and adjusted EBITDA margins expanding.
Investors respond positively to Q1 beat
The 3.9% rise in McGraw Hill shares reflects a stronger-than-expected start to fiscal 2027, with both earnings and revenue surpassing Wall Street forecasts.
While the midpoint of full-year revenue guidance remains slightly below consensus, growth in recurring revenue, an 8.8% increase in digital sales and the sharp improvement in GAAP net income provided encouraging signals.
Attention will now turn to McGraw Hill’s peak selling quarter and whether the company can build on its first-quarter momentum while remaining on track to deliver its fiscal 2027 revenue and adjusted EBITDA targets.