McGraw Hill Q2 revenue falls 5.5% as K-12 declines

Overview

• US education solutions provider's fiscal Q2 revenue fell 5.5% yr/yr, but topped company expectations

• Adjusted EBITDA margin fell to 39.6% from 42.8%

• Digital revenue rose 2.6% yr/yr, supported by AI tool adoption and platform growth

Outlook

• McGraw Hill reaffirms FY 2027 revenue guidance of $2.115 bln to $2.175 bln

• Company maintains FY 2027 re-occurring revenue outlook of $1.587 bln to $1.627 bln

• McGraw Hill expects FY 2027 adjusted EBITDA between $750 mln and $790 mln

Result Drivers

• DIGITAL REVENUE GROWTH - Co said digital revenue rose 2.6% yr/yr, driven by strong retention, learning platform adoption and increased AI tool usage

• HIGHER EDUCATION MARKET SHARE - Co said Higher Education segment revenue grew 0.2% yr/yr, citing continued market share gains and value-based pricing momentum

• K-12 MATH WEAKNESS - Co said K-12 segment revenue fell 9.6% yr/yr, as strength in Science and ELA was offset by lower anticipated capture rates in select Math markets

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 12 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the consumer publishing peer group is "buy"

• Wall Street's median 12-month price target for McGraw Hill, Inc. is $17.00, about 33.2% above its November 4 closing price of $12.76

• The stock recently traded at 6 times the next 12-month earnings vs. a P/E of 6 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)