10-Q · February 11, 2026
McGraw Hill reported quarterly revenue of $434,162,000, up $17,669,000 from $416,493,000 a year earlier, with gross profit of $370,318,000 and operating income of $30,392,000. The company posted a net loss of…
Earnings analysis · 10-Q
MH earnings analysis
Filed August 13, 2026 · Our reading of the company's report
The latest report
McGraw Hill delivered modest year-over-year revenue growth of 2.6% to $549.9 million, with stronger recurring revenue and Higher Education performance supporting gross and operating margin expansion. GAAP profitability…
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McGraw Hill delivered modest year-over-year revenue growth of 2.6% to $549.9 million, with stronger recurring revenue and Higher Education performance supporting gross and operating margin expansion. GAAP profitability improved substantially, and lower debt outstanding reduced net interest expense, although diluted EPS of $0.30 remains below the provided $0.48 consensus estimate. Cash conversion was weak at $0.6 million of operating cash flow, while cash declined to $193.6 million and International and portions of K-12 showed execution headwinds. The filing contained no material changes to previously disclosed risk factors and no new numeric guidance.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.3
What stood out
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Revenue Growth Accelerated Sequentially
Revenue increased to $549.9 million from $535.7 million, up $14.2 million or 2.6% year over year, and rose from $463.7 million in the immediately prior quarter.
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Gross Profit and Margin Improved YoY
Gross profit increased 6.5% to $439.2 million from $412.3 million. Gross margin was approximately 79.9%, up from 77.0% year over year, although below 83.9% in the prior quarter.
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Operating Leverage Rebounded
Operating income increased 18.8% to $114.3 million from $96.2 million. Operating margin was approximately 20.8%, versus 18.0% year over year and negative 1.4% in the prior quarter.
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GAAP Profitability Improved Sharply
Net income rose to $57.9 million from $0.5 million, while diluted EPS increased to $0.30 from $0.00. The effective tax rate declined to 15.5% from 98.7%, and net interest expense fell 22.1% to $45.8 million.
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Recurring and Digital Mix Expanded
Recurring revenue increased to $425.6 million, representing approximately 77% of total revenue versus 72% a year earlier. Higher Education recurring revenue increased $22.6 million, supported by digital adoption, Inclusive Access, pricing and enrollment growth.
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Adjusted EBITDA Margin Expanded
Adjusted EBITDA increased to $207.0 million from $191.4 million, and adjusted EBITDA margin expanded to 37.7% from 35.7%. K-12 adjusted EBITDA rose 18.8% to $114.5 million and Higher Education rose 11.9% to $87.0 million.
What to watch
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High Leverage and Lower Cash
Cash and cash equivalents declined to $193.6 million from $253.5 million at March 31, 2026, while total debt was approximately $2.574 billion, including $828.5 million of 2022 Secured Notes and $599.0 million of 2022 Unsecured Notes.
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Seasonal Liquidity Pressure
Operating cash flow was only $0.6 million compared with $(96.7) million in the prior-year quarter. Management stated that operating cash flow is seasonally lower in the first half of the fiscal year and that certain months may operate at a net cash deficit.
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International Revenue Headwinds
International revenue declined 12.1% to $45.2 million, driven by lower Canadian higher-education enrollments, timing of Spain K-12 sales and Middle East shipment delays that shifted revenue recognition into the second quarter of fiscal 2027.
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K-12 Market Share Execution Risk
K-12 transactional revenue declined approximately $9.5 million because of lower-than-target market-share capture in California and Texas, partially offset by Florida and open-territory performance.
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Higher Investment Intensity
Capital expenditures increased to $23.9 million from $16.3 million, while product development expenditures rose to $34.4 million from $22.8 million. These investments reduced near-term cash conversion despite continued platform and content spending.
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No Formal Risk Update; Rate Exposure Remains
The filing states that there have been no material changes to the risk factors disclosed in the Annual Report. Separately, a 100-basis-point increase in Term SOFR would increase annual interest expense by $5.5 million on the applicable debt balances.
Management's outlook
The 10-Q does not provide explicit numeric revenue or EPS guidance. The prior August 13, 2026 earnings release, rather than this filing, reaffirmed fiscal 2027 revenue guidance of $2.115 billion to $2.175 billion.
Earlier filings 3
10-Q · November 12, 2025
McGraw Hill reported revenue of $669,187 (in thousands) and diluted EPS of $0.57 for the three months ended September 30, 2025. Revenue and EPS declined versus the prior-year quarter while the company materially…
10-Q · August 14, 2025
McGraw Hill reported quarterly revenue of $535,710 (dollars in thousands) and GAAP net income of $502 (dollars in thousands), producing basic and diluted EPS of $0.00 for the three months ended June 30, 2025. Operating…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.