McGraw Hill reports strong Q1 results driven by AI and digital growth

McGraw Hill reported stronger-than-expected first-quarter fiscal 2027 results, characterized by revenue growth and margin expansion. For the quarter ending June 30, 2026, revenue rose 2.6% year-over-year to approximately $550 million. Adjusted EBITDA reached $207 million, representing a 37.7% margin.

Digital and recurring revenue streams showed significant strength. Recurring revenue increased nearly 10% to $426 million, accounting for 77% of total revenue, while digital revenue grew nearly 9%. CEO Philip Moyer attributed this momentum to the integration of artificial intelligence, noting that AI serves as a tailwind for revenue growth and market share gains. The company reported over 7.5 million active users of its AI learning tools.

In the Higher Education segment, revenue increased 10% to $200 million, while the K-12 segment saw revenue rise 1.3% to $274 million. Following these results, several analysts have updated their outlooks on the company. Wall Street Zen upgraded the stock from 'hold' to 'buy', and BMO Capital Markets increased its price objective to $17.00.