Q3 2026 McGraw Hill Inc Earnings Call Transcript
Key Points
- Revenue for the third quarter increased by 4.2% year over year, driven by strong performance in the higher education segment.
- Reoccurring revenue grew 14.8% over the prior year, representing 82% of total revenue, showcasing a robust digital mix.
- Digital revenue expanded by 11%, representing 84% of total revenue, indicating strong digital adoption.
- Adjusted EBITA increased by 7.7% versus the prior year, yielding a margin of 31.3%, reflecting strong operational efficiency.
- McGraw Hill Inc (MH) has been recognized as the top education company for effectively utilizing AI, according to a study by Morning Consult.
- K-12 revenue declined by 14.6%, in line with expectations due to a smaller market size this year.
- International revenue declined by 1.8% year over year, indicating persistent headwinds in higher education markets abroad.
- The company faces a difficult comparison in the fourth quarter, which may impact growth rates.
- There is a significant number of learning tools (up to 1,000) in school districts, which could complicate integration and adoption of McGraw Hill Inc (MH)'s solutions.
- Despite strong performance, the company is still working towards reducing its net leverage, which stood at 2.9 times as of December 30th.
Hello and welcome to the McGraw Hill fiscal third-quarter 2026 earnings conference call for the quarter ended December 31, 2025. All participants are in a listen-only mode. As a reminder, today's call is being recorded and a written transcript will be made available in the events and presentation section of the company's investor relations website. A webcast replay of today's call will also be made available on the company's investor relations website. (Operator Instructions)
I would now like to turn the call over to your host, Danielle Kloeblen, Treasurer and Senior Vice President, Investor Relations. Please go ahead, Danielle.
Good evening and welcome to McGraw Hill's fiscal 3rd quarter 2026 earnings call. Joining me today are Simon Allen, chair of the Board of Directors, Philip Moyer, President and Chief Executive Officer, and Bob Salmon, executive Vice President and Chief Financial Officer. As announced on January 6, 2026, Simon retired as President and CEO
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