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

By Reuters News


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

Metric

Beat/Miss

Actual

Consensus Estimate

Q2 Revenue

$632.21 mln

Q2 EPS

$0.45

Q2 Adjusted Net Income

$144.56 mln

Q2 Net Income

$86.38 mln

Q2 Adjusted EBITDA

$250.62 mln

Q2 Adjusted EBITDA Margin

39.60%


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


Reuters Recommended Reads

  • Nov 4 - HMH Holding Q3 revenue falls on lower volume across product

  • Nov 5 - Strategic Education Q3 revenue rises 1.6%, slightly misses estimates

  • Nov 4 - Charles River Laboratories Q3 revenue beats estimates, lifts 2026 outlook


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(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.)

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