Key insights
- McGraw Hill reported strong Q4 FY2026 earnings, significantly beating adjusted EPS expectations due to a sharp improvement in profitability. While revenue growth was modest, the company highlighted substantial increases in recurring and digital revenue, driven by AI adoption. With over 7.5 million users of AI-enabled tools and plans for new AI pilots, McGraw Hill is positioning itself as an AI education stock. Debt reduction and a new share repurchase plan further bolster its financial profile, suggesting potential positive sentiment for the education technology sector.
$MH Q4 FY2026:
Revenue: $463.7M vs. $441.2M expected Adjusted EPS: $0.31 vs. $0.15 expected EPS surprise: +106.7% Adjusted EBITDA: $130.6M Adjusted EBITDA margin: 28.2%
The top line was not exciting.
Q4 revenue fell 2% year-over-year, and full-year revenue rose just 0.1% to $2.10B.
But the profit story improved sharply.
Full-year recurring revenue increased 5.8% to $1.54B, now making up more than 73% of total revenue.
Digital revenue rose 5.5% to $1.43B.
Adjusted EBITDA increased to $744.3M, with margin improving to 35.4%.
Net income improved to $35.3M, compared with a loss of $85.8M last year.
McGraw Hill now has:
More than 100M active student and educator curriculum licenses More than 7.5M users of AI-enabled learning tools More than 25B learning interactions across its platforms
Management is also preparing to pilot a new Agentic AI tool tied to its precision education model.
Capital allocation helped too.
The company reduced gross debt by $645.6M in fiscal 2026 and approved a new $50M share repurchase plan.
It was a profitability, recurring revenue, digital learning, AI adoption, debt reduction, and buyback story.