McGraw Hill Inc (NYSE: MH) delivered a robust fiscal first quarter 2027 performance, reporting net income of $57.9 million compared to just $0.5 million in the same period last year. The education solutions provider posted total revenue of $549.9 million, reflecting a 2.6% year-over-year increase driven by strong execution across its Higher Education and K-12 segments.

The company’s shift toward sustainable revenue streams continued to accelerate. Re-occurring revenue climbed 9.8% to $425.6 million, now constituting 77% of total revenue. Digital revenue also expanded by 8.8% to $353.5 million, underscoring the growing adoption of its technology-based learning tools. This structural shift contributed to improved profitability, with GAAP gross profit margin expanding by 290 basis points to 79.9%.

Segment Performance

Higher Education emerged as the primary growth engine, with revenue surging 9.6% to $199.8 million. This segment benefited from market share gains, price realization, and increased enrollment. Re-occurring revenue within Higher Education rose 14.1% to $182.1 million, anchored by the company’s Evergreen delivery model which secures renewal bases while freeing sales capacity for new acquisitions.

In contrast, the K-12 segment saw modest top-line growth. Revenue increased 1.3% to $274.4 million, supported by the durability of multi-year contracts and capture rates in English Language Arts (ELA) and Science. However, K-12 re-occurring revenue grew at a healthier clip of 7.1% to $196.6 million. The segment is positioned for future gains with early capture rates for new programs like Emerge, Summit, and Soar, alongside favorable policy environments such as Science of Reading regulations in 44 states.

What the Numbers Show

The divergence between GAAP net income and Adjusted EBITDA highlights the impact of non-cash charges on the bottom line. While GAAP net income jumped to $57.9 million, Adjusted EBITDA was $207.0 million, representing a margin of 37.7% (up 192 basis points). The reconciliation reveals that amortization of intangible assets ($53.5 million) and interest expense ($45.8 million) remain significant deductions from operating cash generation. Furthermore, the GAAP net income margin expanded dramatically from 0.1% to 10.5%, suggesting that the prior year’s near-zero profitability was heavily suppressed by specific non-recurring or high-cost items that have since normalized or been offset by operational efficiency.

Strategic Highlights and Guidance

Management attributed much of the momentum to artificial intelligence. McGraw Hill served more than 7.5 million active users across eight live AI learning tools, with AI Reader generating 63 million learning interactions since inception. CEO Philip Moyer noted that AI is driving revenue growth, margin expansion, and market share gains, positioning the company for meaningful total addressable market (TAM) expansion.

Looking ahead, McGraw Hill reaffirmed its fiscal year 2027 guidance:

• Revenue: $2,115 million to $2,175 million
• Re-occurring Revenue: $1,587 million to $1,627 million
• Adjusted EBITDA: $750 million to $790 million

The reaffirmed sales outlook of $2.115 billion to $2.175 billion aligns with the $2.149 billion analyst estimate. The company remains focused on debt reduction, progressing toward its 2.0-2.5x net leverage target. In July 2026, Moody’s Ratings upgraded McGraw Hill’s credit ratings, validating its financial trajectory.

McGraw Hill Inc (NYSE: MH) has identified excessive screen time as the most significant barrier to student success globally, according to its 2026 Global Education Insights Report. The findings, based on a survey conducted by Morning Consult on behalf of McGraw Hill, highlight growing educator anxiety regarding technology’s impact on learning outcomes and student well-being. With 42% of educators reporting a decline in students' ability to focus over the past five years, the data underscores a critical challenge for schools navigating the digital age.

The report surveyed more than 1,300 K-12 and higher education educators across 19 countries. Philip Moyer, President and CEO of McGraw Hill, stated that the future of education depends on using technology responsibly to support teaching rather than diminish human connection. He emphasized that social media and screen time impacts are clear, necessitating tools that strengthen teacher-student relationships and critical thinking.

Key Findings on Student Well-being and Focus

Educators are increasingly concerned about the intersection of technology and mental health. The survey indicates that 68% of educators worldwide are concerned about their students' mental well-being, with K-12 educators showing higher concern at 86%. Managing student behavior and mental health remains the top challenge for educators for the second consecutive year, cited by 42% of respondents. Additionally, 42% of educators believe social media has a mostly negative impact on educational outcomes, the highest negative rating among all technologies tested.

Despite these concerns, educators favor balance over bans regarding device usage. Forty-five percent support policies allowing cell phone access during non-instructional periods such as lunch. The view that digital tools with embedded AI are a net positive for education stands at 62%, contrasting sharply with the perception of social media.

Conditional Trust in Artificial Intelligence

As AI usage grows, trust remains conditional among educators. Sixty percent of educators globally believe their students use AI for schoolwork, an increase from 2025. While nearly four in five educators say AI tools have saved them time, they distinguish sharply between general chatbots and platform-integrated AI. Educators are 81% more likely to completely trust information from AI embedded in education platforms than from general GenAI chatbots. Trust in general chatbots has declined by 33% compared to last year.

Seventy-two percent of educators do not expect in-person instructional time to decline over the next decade, even as nearly nine in 10 expect AI use in education to increase. Nearly three-quarters assert that social-emotional support and teacher-student relationships cannot be replaced by AI. Educators are most comfortable with students using AI to create study guides from text (83%) and for translation (81%).

Critical Thinking Identified as Top Skill Gap

Almost all educators (95%) identify critical thinking and problem-solving as essential for career success, yet 52% view it as one of the biggest gaps in current education. The report highlights several impactful educational experiences needed to prepare students for the future:

• Real-world learning experiences (95%)
• Career exploration and vocational guidance (93%)
• Communication and collaboration (91%)
• Financial literacy (91%)
• Emotional intelligence/resilience (87%)
• Digital literacy (87%)
• AI literacy (84%)

Overall optimism remains high, with 86% of educators confident their students will receive the education needed for successful careers. The data suggests that relevant career-connected curriculum, increased mental health support services, and smaller class sizes have the most potential to help students overcome obstacles to success.