McGraw Hill, Inc. Reports Strong Fiscal First Quarter 2027 Results Exceeding Expectations
Enters Peak Selling Season with Momentum Amid Growing Revenue, Re-Occurring Revenue and Digital Revenue While Expanding Margins and Net Income
COLUMBUS, Ohio—(BUSINESS WIRE)— August 13, 2026—McGraw Hill, Inc. (NYSE: MH) (“McGraw Hill” or the “Company”), a leading global provider of education solutions for preK-12, higher education and professional learning, today announced financial results for the fiscal first quarter 2027 ended June 30, 2026.
Key Fiscal First Quarter 2027 Financial Highlights
•Total revenue of $549.9 million, an increase of 2.6% year-over-year, driven by strong execution in Higher Education and K-12 segments.
•Re-occurring revenue of $425.6 million, an increase of 9.8% year-over-year, representing 77% of total revenue.
•Digital revenue of $353.5 million, an increase of 8.8% year-over-year, underscoring the strength of the Company’s technology-based solutions, which are deeply embedded in the learning experience.
•Remaining performance obligation (RPO) of $1,522.2 million as of June 30, 2026, demonstrating predictability and visibility into future revenue growth.
•GAAP gross profit of $439.2 million, representing a GAAP gross profit margin of 79.9%, an increase of 290 basis points versus prior year.
•GAAP net income of $57.9 million, compared to $0.5 million in the prior-year period.
•Adjusted EBITDA(1) of $207.0 million, representing an Adjusted EBITDA margin(1) of 37.7%, an increase of 192 basis points versus prior year.
•Continued commitment to gross debt reduction, progressing toward the Company’s 2.0-2.5x net leverage target. In July 2026, Moody’s Ratings upgraded the Company’s credit ratings.
“McGraw Hill's strong start to fiscal year 2027 reflects the strength of our strategy and the trust that millions of educators and institutions place in us to deliver successful learning outcomes,” said Philip Moyer, President, Chief Executive Officer of the Company and a member of the Company’s Board of Directors. “This quarter, we exceeded our expectations while building positive momentum as we prepare for the most important quarter of our fiscal year.”
Mr. Moyer added “AI was a contributor to the momentum we're seeing across revenue growth, margin expansion, price realization, and market share gains. AI represents a genuine tailwind for our business, and our agentic strategy continues to progress, representing an opportunity for meaningful TAM expansion ahead. By harnessing this technology, it will augment our current solutions and reinforce our ability to deliver precision education, the right content at the right moment, to our more than 100 million active curriculum licenses.”
“Fiscal first quarter 2027 represents a solid start to our fiscal year, with revenue, re-occurring revenue, and Adjusted EBITDA all coming in above our expectations,” said Bob Sallmann, McGraw Hill’s Executive Vice President, Chief Financial Officer. “Re-occurring revenue and Adjusted EBITDA margins continue to grow, reflecting the durability of our model and cost discipline. Our margins are best-in-class among education peers, underscoring the strength and differentiation of our business. As we enter our peak selling season, our leading indicators, including our new K-12 ELA program delivering win rates above target, early stages of a multi-year K-12 curriculum adoption cycle, and continued Higher Education market share gains, are strengthening considerably. We believe that we are well positioned to deliver accelerating revenue growth and continued margin expansion in fiscal year 2027 and beyond.”
Fiscal First Quarter 2027 Strategic Highlights
•Served more than 7.5 million active users across eight live AI learning tools, with three additional launches planned for this fiscal year.
•Generated 63 million AI Reader learning interactions across approximately 2.6 million students since inception through July 2026, accelerating from approximately 47 million interactions and approximately 2.2 million students in fiscal year 2026.
•Expanded the Company’s Evergreen delivery model in Higher Education, driving share gains and improving the customer experience and retention.
•Advanced the Company’s agentic AI strategy at scale, with pilot opportunities progressing, including industries outside of education.
•Broadened the Company’s literacy portfolio with ROAR®, the Rapid Online Assessment of Reading, the only research-backed dyslexia screener for K–12, subsequent to the fiscal first quarter. Exclusive integration will bring assessment developed at the Stanford Graduate School of Education, Reading and Dyslexia Research Program to more K–12 classrooms.
Fiscal First Quarter 2027 Financial Highlights
| | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| ($ in thousands) | | 2026 | | 2025 |
| Revenue | | $ | 549,903 | | | $ | 535,710 | |
| Cost of sales (excluding depreciation and amortization) | | $ | 110,704 | | | $ | 123,384 | |
| Operating and administrative expenses | | $ | 255,069 | | | $ | 241,549 | |
| Net income (loss) | | $ | 57,860 | | | $ | 502 | |
Adjusted EBITDA (1) | | $ | 207,046 | | | $ | 191,416 | |
| Net income (loss) margin | | 10.5 | % | | 0.1 | % |
Adjusted EBITDA Margin (1) | | 37.7 | % | | 35.7 | % |
Adjusted net income (loss) (1) | | $ | 112,753 | | | $ | 292 | |
Fiscal First Quarter 2027 Segment Highlights
Higher Education
•Revenue totaled $199.8 million, an increase of 9.6% year-over-year, supported by market share gains, price realization and increases in enrollment.
•Re-occurring revenue totaled $182.1 million, an increase of 14.1% year-over-year.
•Continued Higher Education market share gains, including ~5 points of market share gained over the past four fiscal years from traditional competitors, according to MPI.
•Growth driven by continued Inclusive Access momentum and deeper campus penetration; Evergreen delivery model anchors renewal base and frees sales capacity to focus primarily on taking market share.
K-12
•Revenue totaled $274.4 million, up 1.3% year-over-year driven by the durability of multi-year contracts and capture rates in ELA and Science.
•Re-occurring revenue totaled $196.6 million, an increase of 7.1% year-over-year.
•Robust early capture rates for Emerge, Summit and Soar; 44 states now have a Science of Reading policy or regulation in place, covering 86% of U.S. K-5 public school enrollment.
•In July, the Company’s California ELA programs were recommended for approval by state reviewers, ahead of the state's approved vendor list to be released later in calendar year 2026.
•In August, Florida approved the Company’s Math program ahead of the state’s upcoming adoption beginning in fiscal year 2028.
Global Professional and International
•Global Professional delivered 6.3% re-occurring revenue growth year-over-year, fueled by wins for the medical solutions portfolio, including AI-driven Clinical Reasoning, across Osteopathic Medicine, Physician Assistant, and Nurse Practitioner programs worldwide.
•International revenue was $45.2 million, with delayed Middle East K-12 shipments being fulfilled, and strong momentum in Latin America, offsetting Canadian enrollment headwinds, positioning the segment for growth in fiscal year 2027.
Fiscal Year 2027 Guidance
We are re-affirming our fiscal year 2027 guidance, which is included below. This fiscal year 2027 guidance is forward-looking and is based on the Company’s current expectations. Actual results may differ materially from what is indicated below.
| | | | | | | | | | | | | | |
| | Fiscal Year 2027 Guidance |
| ($ in millions) | | Low | | High |
| Revenue | | $ | 2,115 | | | $ | 2,175 | |
| Re-occurring Revenue | | 1,587 | | | 1,627 | |
Adjusted EBITDA (1) | | 750 | | | 790 | |
Earnings Conference Call and Webcast
Today, August 13, 2026, at 8:30 a.m. ET, McGraw Hill will host a conference call via webcast to review fiscal first quarter 2027 results and provide a business update. The webcast will be hosted by Philip Moyer, President and Chief Executive Officer, and Bob Sallmann, Executive Vice President and Chief Financial Officer, and will conclude with a question-and-answer session.
To access the live webcast or to view a replay, visit the Company's investor relations website at https://investors.mheducation.com/
The live question and answer portion of the call can be accessed by registering online at the Event Registration Page: https://events.q4inc.com/analyst/296224850?pwd=wJNVPA4x at which time registrants will receive dial-in information as well as a conference ID. Registration can be completed in advance of the conference call.
About McGraw Hill
McGraw Hill (NYSE: MH) is a leading global provider of education solutions for preK-12, higher education and professional learning, supporting the evolving needs of millions of educators and students around the world. We provide trusted, high-quality content and personalized learning experiences that use data, technology and learning science to help students progress towards their goals. Through our commitment to fostering a culture of innovation and belonging, we are dedicated to improving outcomes and access to education for all. We have over 30 offices across North America, Asia, Australia, Europe, the Middle East and South America, and make our learning solutions available in more than 80 languages. The Company’s fiscal year is the 52-week period ended March 31. Visit us at mheducation.com or find us on Facebook, Instagram, LinkedIn or X.
Safe Harbor Statement
This press release includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology, including terms such as “believes,” “estimates,” “anticipates,” “expects,” “projects,” “intends,” “plans,” “may,” “will,” “should” or “seeks,” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and include, but are not limited to, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which it operates. By their nature, forward-looking statements involve risks and uncertainties, as they relate to events and depend on circumstances that may or may not occur in the future. The Company’s expectations, beliefs and projections are expressed in good faith, and the Company believes there is a reasonable basis for them; however, the Company cautions readers that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity, and the developments in the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the
forward-looking statements contained in this press release, including those described under the headings “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, and in other filings made with the U.S. Securities and Exchange Commission. In addition, even if our results of operations, financial condition and liquidity, and the developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statements the Company makes in this press release speak only as of the date of such statement. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
(1) Non-GAAP Financial Measures
In addition to presenting financial results that have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), we have included in this release the following non-GAAP financial measures—EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income (loss), Adjusted basic and diluted earnings (loss) per share, Adjusted operating and administrative expenses, Adjusted selling and marketing expenses, Adjusted general and administrative expenses, Adjusted research and development expenses and Net Leverage Ratio. All such financial measures are not required by or presented in accordance with GAAP. We believe that these non-GAAP financial measures are useful in evaluating our business and the underlying trends that affect our performance. The Company has included non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. We include these non-GAAP financial measures in this release because management uses them to assess our performance. We believe that they reflect the underlying trends and indicators of our business and allow management to focus on the most meaningful indicators of our continuous operational performance. Although we believe these measures are useful for investors for the same reasons, readers of the financial statements herein should note that these measures are not a substitute for GAAP financial measures or disclosures. Each of these measures is not a recognized term under GAAP and does not purport to be an alternative to net income (loss), or any other measure derived in accordance with GAAP as a measure of operating performance, or to cash flows from operations as a measure of liquidity. Such measures are presented for supplemental information purposes only, have limitations as analytical tools and should not be considered in isolation or as substitute measures for our results as reported under GAAP. Management uses non-GAAP financial measures to supplement GAAP results to provide a more complete understanding of the factors and trends affecting our business, rather than evaluating GAAP results alone. Because not all companies use identical calculations, our measures may not be comparable to other similarly titled measures of other companies, and our use of these measures varies from others in our industry. Such measures are not intended to be a measure of cash available for management’s discretionary use, as they may not capture actual cash obligations associated with interest payments, other debt service requirements and taxes.
Because of these limitations, we rely primarily on our GAAP results and use these non-GAAP measures only supplementally. See “Reconciliations of Non-GAAP Financial Measures” in the “Supplemental Information” section below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” in our Quarterly Report on Form 10-Q filed on August 13, 2026, for reconciliations of non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP.
(2) Learning interactions measures the volume of user-driven educational activities across McGraw Hill platforms, including answering questions, completing assignments, and engaging with learning content. This data captures activity across K-12 platforms (Open Learning, ConnectED, ALEKS), Higher Education (Smartbook, Connect), and Enterprise IDM. For the fiscal year ended March 31, 2026, coverage expanded to include A3K Literacy, Actively Learn, and additional Connect data.
Forward-Looking Non-GAAP Financial Measures
This press release contains forward-looking estimates of Adjusted EBITDA for fiscal year 2027. We provide this non-GAAP measure to investors on a prospective basis for the same reasons (as set forth above) that we provide it to investors on a historical basis. We are unable to provide a reconciliation of our forward-looking estimate of fiscal year 2027 net income (loss) to a forward-looking estimate of fiscal year 2027 Adjusted EBITDA because certain information needed to make a reasonable forward-looking estimate of net income (loss) for fiscal year 2027 is unreasonably difficult to predict and estimate and is often dependent on future events that may be uncertain or outside of our control. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on our future financial results. Our forward-looking estimates of both GAAP and non-GAAP measures of our financial performance may differ materially from our actual results and should not be relied upon as statements of fact.
| | | | | | | | | | | |
| Investor Contacts: | | Media Contacts: |
| Danielle Kloeblen | | Cathy McManus |
| Danielle.kloeblen@mheducation.com | | Cathy.mcmanus@mheducation.com |
| | | |
| | | |
| Zack Ajzenman | | Tyler Reed |
| Zack.ajzenman@mheducation.com | | Tyler.reed@mheducation.com |
| | | |
| | | |
| Lizzie Kenter | | |
| Lizzie.kenter@mheducation.com | | |
MCGRAW HILL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for share and per share data)
| | | | | | | | | | | |
| Three Months Ended June 30, |
| 2026 | | 2025 |
| Revenue | $ | 549,903 | | | $ | 535,710 | |
| Cost of sales (excluding depreciation and amortization) | 110,704 | | | 123,384 | |
| Gross profit | 439,199 | | | 412,326 | |
| Operating expenses | | | |
Operating and administrative expenses(1) | 255,069 | | | 241,549 | |
| Depreciation | 16,348 | | | 17,187 | |
| Amortization of intangibles | 53,500 | | | 57,365 | |
| Total operating expenses | 324,917 | | | 316,101 | |
| Operating income (loss) | 114,282 | | | 96,225 | |
| Interest expense (income), net | 45,770 | | | 58,774 | |
| Income (loss) from operations before taxes | 68,512 | | | 37,451 | |
| Income tax provision (benefit) | 10,652 | | | 36,949 | |
| Net income (loss) | $ | 57,860 | | | $ | 502 | |
| | | |
| Basic earnings (loss) per share | $ | 0.30 | | | $ | 0.00 | |
| Diluted earnings (loss) per share | $ | 0.30 | | | $ | 0.00 | |
_________________(1) See “Supplemental Information—Reconciliations of Non-GAAP Financial Measures; Non-GAAP operating and administrative expenses” for a breakdown of our GAAP operating and administrative expenses and a reconciliation to the corresponding Non-GAAP financial measure.
MCGRAW HILL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for share data)
| | | | | | | | | | | |
| June 30, 2026 | | March 31, 2026 |
| (Unaudited) | | |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 193,637 | | $ | 253,519 |
| Accounts receivable, net of allowance for credit losses of $12,638 and $14,517 as of June 30, 2026 and March 31, 2026, respectively | 377,884 | | 362,483 |
| Inventories, net | 183,213 | | 195,022 |
| Prepaid and other current assets | 133,328 | | 162,625 |
| Total current assets | 888,062 | | | 973,649 |
| Product development costs, net | 306,676 | | 285,970 |
| Property, plant and equipment, net | 92,505 | | 90,421 |
| Goodwill | 2,522,595 | | 2,522,595 |
| Other intangible assets, net | 1,173,912 | | 1,227,253 |
| Deferred income taxes | 8,546 | | 8,572 |
| Operating lease right-of-use assets | 43,225 | | 44,836 |
| Other non-current assets | 343,131 | | 332,225 |
| Total assets | $ | 5,378,652 | | $ | 5,485,521 |
| Liabilities and stockholders' equity (deficit) | | | |
| Current liabilities | | | |
| Accounts payable | $ | 118,740 | | $ | 126,701 |
| Accrued royalties | 100,656 | | 81,436 |
| Accrued compensation | 33,569 | | 108,434 |
| Deferred revenue | 732,926 | | 835,357 |
| Current portion of long-term debt | 13,170 | | 13,170 |
| Operating lease liabilities | 7,592 | | 8,365 |
| Other current liabilities | 138,553 | | 93,086 |
| Total current liabilities | 1,145,206 | | 1,266,549 |
| Long-term debt | 2,561,270 | | 2,560,698 |
| Deferred income taxes | 15,443 | | 15,214 |
| Long-term deferred revenue | 789,230 | | 836,001 |
| Operating lease liabilities | 55,898 | | 57,301 |
| Other non-current liabilities | 23,215 | | 23,540 |
| Total liabilities | 4,590,262 | | 4,759,303 |
| Commitments and contingencies | | | |
| Stockholders' equity (deficit) | | | |
| Common Stock, par value $0.01 per share; 2,000,000,000 shares authorized, 191,276,168 and 191,146,027 shares issued and outstanding as of June 30, 2026 and March 31, 2026, respectively | 1,911 | | 1,911 |
| Additional paid-in capital | 1,978,413 | | 1,972,702 |
| Accumulated deficit | (1,188,020) | | (1,245,880) |
| Accumulated other comprehensive income (loss) | (3,914) | | (2,515) |
| Total stockholders' equity (deficit) | 788,390 | | 726,218 |
| Total liabilities and stockholders' equity (deficit) | $ | 5,378,652 | | $ | 5,485,521 |
MCGRAW HILL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| | | | | | | | | | | |
| Three Months Ended June 30, |
| 2026 | | 2025 |
| Operating activities | | | |
| Net income (loss) | $ | 57,860 | | | $ | 502 | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | | | |
| Depreciation (including amortization of technology costs) | 16,348 | | | 17,187 | |
| Amortization of intangibles | 53,500 | | | 57,365 | |
| Amortization of product development costs | 13,628 | | | 13,302 | |
| Amortization of deferred royalties | 38,039 | | | 34,669 | |
| Amortization of deferred commission costs | 7,655 | | | 7,435 | |
| Stock-based compensation | 3,884 | | | — | |
| Credit losses on accounts receivable | (1,251) | | | (2,286) | |
| Inventory obsolescence | 3,958 | | | 3,486 | |
| Deferred income taxes | 255 | | | 864 | |
| Amortization of debt discount | 3,166 | | | 3,352 | |
| Amortization of deferred financing costs | 1,222 | | | 1,253 | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | (18,041) | | | (105,289) | |
| Inventories | 7,864 | | | 10,544 | |
| Prepaid and other current assets | (16,360) | | | (28,185) | |
| Accounts payable and accrued expenses | (63,566) | | | (91,569) | |
| Deferred revenue | (149,389) | | | (27,553) | |
| Other current liabilities | 42,342 | | | 12,233 | |
| Other changes in operating assets and liabilities, net | (513) | | | (3,962) | |
| Cash provided by (used for) operating activities | 601 | | | (96,652) | |
| Investing activities | | | |
| Product development expenditures | (34,360) | | | (22,788) | |
| Capital expenditures | (23,929) | | | (16,283) | |
| Cash provided by (used for) investing activities | (58,289) | | | (39,071) | |
| Financing activities | | | |
| Payment of A&E Term Loan Facility | (3,293) | | | (3,292) | |
| Payment of finance lease obligations | (1,684) | | | (1,718) | |
| Deferred Initial Public Offering costs | — | | | (2,374) | |
| Exercise of stock options | 1,827 | | | — | |
| Cash provided by (used for) financing activities | (3,150) | | | (7,384) | |
| Effect of exchange rate changes on cash | 956 | | | 608 | |
| Net change in cash and cash equivalents | (59,882) | | | (142,499) | |
| Cash and cash equivalents, at the beginning of the period | 253,519 | | | 389,830 | |
| Cash and cash equivalents, at the end of the period | $ | 193,637 | | | $ | 247,331 | |
| Supplemental disclosures | | | |
| Cash paid for interest expense | $ | 9,464 | | | $ | 22,408 | |
| Cash paid/(refunded) for income taxes, net | (3,511) | | | 56,813 | |
Supplemental Information
Reconciliations of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
“EBITDA” is defined as net income (loss) from continuing operations plus interest expense (income), net, income tax provision (benefit), depreciation and amortization.
“Adjusted EBITDA” is defined as net income (loss) from continuing operations plus interest expense (income), net, income tax provision (benefit), depreciation and amortization, restructuring and cost savings implementation charges, the effects of the application of purchase accounting, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), impairment charges, transaction and integration costs, stock-based compensation, (gain) loss on extinguishment of debt and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
Further, although not included in the calculation of Adjusted EBITDA below, we may at times add estimated cost savings and operating synergies related to operational changes ranging from acquisitions or dispositions to restructurings, and exclude one-time transition expenditures.
“Adjusted EBITDA Margin” is calculated by dividing Adjusted EBITDA by total revenue.
The following table presents a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial measure for the periods presented.
| | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| ($ in thousands) | | 2026 | | 2025 |
| Net income (loss) | | $ | 57,860 | | | $ | 502 | |
| Interest expense (income), net | | 45,770 | | | 58,774 | |
| Income tax provision (benefit) | | 10,652 | | | 36,949 | |
| Depreciation, amortization and product development amortization | | 83,476 | | | 87,854 | |
EBITDA | | $ | 197,758 | | | $ | 184,079 | |
Restructuring and cost savings implementation charges (a) | | 3,746 | | | 3,106 | |
Advisory fees (b) | | — | | | 2,500 | |
Transaction and integration costs (c) | | — | | | 100 | |
Stock-based compensation (d) | | 3,884 | | | — | |
Other (e) | | 1,658 | | | 1,631 | |
Adjusted EBITDA (f) | | $ | 207,046 | | | $ | 191,416 | |
| | | | |
| Total Revenue | | $ | 549,903 | | | $ | 535,710 | |
| Net income (loss) margin | | 10.5 | % | | 0.1 | % |
| Adjusted EBITDA Margin | | 37.7 | % | | 35.7 | % |
__________________
(a) Represents severance and other expenses associated with headcount reductions and other cost savings initiated as part of our formal restructuring initiatives.
(b) For the three months ended June 30, 2025, represents the pro rata portion of the annual $10.0 million of advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering).
(c) This primarily represents transaction and integration costs associated with acquisitions.
(d) Represents stock-based compensation expense related to awards granted to our employees, directors and consultants under the Company's long-term incentive plans.
(e) For the three months ended June 30, 2026 and 2025, this amount represents (i) foreign currency exchange transaction impact of $(0.7) million and $(1.9) million, respectively, (ii) non-recurring expenses related to strategic initiatives, including marketing, consulting, and non-operational costs associated with the market introduction of a new product launch of $2.6 million and $0.8 million, respectively, (iii) reimbursements of expenses paid to Platinum Advisors incurred in connection with its services under the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering) of nil and $0.1 million, respectively, (iv) non-recurring transaction-related costs associated with our initial public offering that were expensed as incurred of nil and $1.9 million, respectively, and (v) the impact of additional insignificant earnings or charges resulting from matters that we do not consider indicative of our ongoing operations of $(0.3) million and $0.7 million, respectively, that are primarily related to individually insignificant miscellaneous items, including asset dispositions, third-party consulting and advisory fees associated with system and process rationalization initiatives, as well as certain additional payments related to incremental insurance premiums and policies as a result of the Platinum acquisition that did not renew after the consummation of our initial public offering.
(f) The purchase accounting, impairment charges and (gain) loss on extinguishment of debt adjustments included in the definition of Adjusted EBITDA are not presented in the table above, as there were no such charges recognized during the three months ended June 30, 2026 and 2025.
Adjusted net income (loss) and Adjusted basic and diluted earnings (loss) per share
“Adjusted net income (loss)” is defined as net income (loss) from continuing operations adjusted to exclude amortization of intangible assets, restructuring and cost savings implementation charges, the effects of the application of purchase accounting, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), impairment charges, transaction and integration costs, stock-based compensation, (gain) loss on extinguishment of debt and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations and the related tax impact of those adjustments.
“Adjusted basic and diluted earnings (loss) per share” is calculated by dividing Adjusted net income (loss) by the basic and diluted weighted average shares outstanding.
The following table presents a reconciliation of Adjusted net income (loss) and Adjusted basic and diluted earnings (loss) per share to the most directly comparable GAAP financial measure for the periods presented.
| | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| ($ in thousands) | | 2026 | | 2025 |
| Net income (loss) | | $ | 57,860 | | | $ | 502 | |
Amortization of intangible assets (1) | | 53,341 | | | 57,168 | |
Restructuring and cost savings implementation charges (2) | | 3,746 | | | 3,106 | |
Advisory fees (2) | | — | | | 2,500 | |
Transaction and integration costs (2) | | — | | | 100 | |
Stock-based compensation (2) | | 3,884 | | | — | |
Other (2) | | 1,658 | | | 1,631 | |
Tax impact of adjustments(3) | | (7,736) | | | (64,715) | |
| Adjusted net income (loss) | | $ | 112,753 | | | $ | 292 | |
| | | | |
| Basic earnings (loss) per share | | $ | 0.30 | | | $ | 0.00 | |
| Diluted earnings (loss) per share | | $ | 0.30 | | | $ | 0.00 | |
| Adjusted basic earnings (loss) per share | | $ | 0.59 | | | $ | 0.00 | |
| Adjusted diluted earnings (loss) per share | | $ | 0.59 | | | $ | 0.00 | |
| Basic weighted-average shares outstanding | | 191,247,605 | | | 166,611,519 | |
| Diluted weighted-average shares outstanding | | 191,308,015 | | | 166,611,519 | |
_____________
(1) Represents amortization of definite-lived acquired intangible assets.
(2) Represents the same adjustments used in calculating EBITDA and Adjusted EBITDA.
(3) Represents the tax impact of the adjustments, which are pre-tax, based upon the estimated annual effective income tax rate.
Non-GAAP operating and administrative expenses
“Adjusted operating and administrative expenses” is defined as GAAP operating and administrative expenses adjusted to exclude restructuring and cost savings implementation charges, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), transaction and integration costs, stock-based compensation, amortization of product development costs and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
“Adjusted selling and marketing expenses” is defined as GAAP selling and marketing expenses adjusted to exclude stock-based compensation and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
“Adjusted general and administrative expenses” is defined as GAAP general and administrative expenses adjusted to exclude restructuring and cost savings implementation charges, advisory fees paid to Platinum Advisors pursuant to the Advisory Agreement (which was terminated on July 25, 2025 in connection with the consummation of our initial public offering), transaction and integration costs, stock-based compensation and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
“Adjusted research and development expenses” is defined as GAAP research and development expenses adjusted to exclude stock-based compensation and the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations.
The following table presents a reconciliation of these non-GAAP operating and administrative expenses to the most directly comparable GAAP financial measure for the periods presented.
| | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| ($ in thousands) | | 2026 | | 2025 |
| Operating and administrative expenses | | $ | 255,069 | | | $ | 241,549 | |
| Restructuring and cost savings implementation charges | | (3,746) | | | (3,106) | |
| Advisory fees | | — | | | (2,500) | |
| Transaction and integration costs | | — | | | (100) | |
| Amortization of product development costs | | (13,628) | | | (13,302) | |
| Stock-based compensation | | (3,884) | | | — | |
| Other | | (1,658) | | | (1,631) | |
Adjusted operating and administrative expenses (1) | | $ | 232,153 | | | $ | 220,910 | |
| | | | |
| Selling and marketing | | $ | 94,784 | | | $ | 87,397 | |
| Stock-based compensation | | (225) | | | — | |
| Other | | (1,886) | | | (417) | |
Adjusted selling and marketing expenses (1) | | $ | 92,673 | | | $ | 86,980 | |
| | | | |
| General and administrative | | $ | 86,812 | | | $ | 75,392 | |
| Restructuring and cost savings implementation charges | | (3,746) | | | (3,106) | |
| Advisory fees | | — | | | (2,500) | |
| Transaction and integration costs | | — | | | (100) | |
| Stock-based compensation | | (3,069) | | | — | |
| Other | | 786 | | | (906) | |
Adjusted general and administrative expenses (1) | | $ | 80,783 | | | $ | 68,780 | |
| | | | |
| Research and development | | $ | 59,845 | | | $ | 65,458 | |
| Stock-based compensation | | (590) | | | — | |
| Other | | (558) | | | (308) | |
Adjusted research and development expenses (1) | | $ | 58,697 | | | $ | 65,150 | |
_____________
(1) We calculate each of these measures by using the same adjustments used in calculating EBITDA and Adjusted EBITDA to the extent such items are included in the corresponding GAAP operating and administrative expense category.
Net Leverage Ratio
“Net Leverage Ratio” is calculated by dividing net debt as of the most recent balance sheet date by the Last Twelve Months (“LTM”) Adjusted EBITDA. Net debt is defined as Gross Debt, net of cash and cash equivalents. Gross Debt is defined as the total amount of principal borrowings outstanding.
LTM is defined as the twelve-month period ended on the last day of the most recently completed fiscal quarter and is calculated by adding the results for the three months ended June 30, 2026, to the results of the fiscal year ended March 31, 2026, and subtracting the three months ended June 30, 2025.
| | | | | | | | |
| | As of June 30, |
| ($ in thousands) | | 2026 |
| A&E Term Loan Facility due 2031 | | $ | 551,547 | |
| 2022 Secured Notes due 2028 | | 828,466 | |
| 2024 Secured Notes due 2031 | | 650,000 | |
| First Lien Indebtedness | | $ | 2,030,013 | |
| 2022 Unsecured Notes due 2029 | | 599,034 | |
Gross Debt | | $ | 2,629,047 | |
Cash and cash equivalents | | (193,637) | |
Net Debt | | $ | 2,435,410 | |
| | |
LTM Adjusted EBITDA (1) | | $ | 759,894 | |
| | |
Net Leverage Ratio (2) | | 3.2x |
__________
(1) LTM Adjusted EBITDA is calculated by adding Adjusted EBITDA for the three months ended June 30, 2026 of $207,046, to Adjusted EBITDA for the fiscal year ended March 31, 2026 of $744,264, and subtracting Adjusted EBITDA for the three months ended June 30, 2025 of $191,416.
(2) In addition to the Net Leverage Ratio, the Company is subject to a Consolidated First Lien Net Leverage Ratio springing covenant, pursuant to its credit agreement. The Consolidated First Lien Net Leverage Ratio is calculated by dividing Consolidated First Lien Secured Debt by LTM Consolidated Adjusted EBITDA, as such terms are defined in our credit agreements. As of June 30, 2026, the Consolidated First Lien Net Leverage Ratio was 2.9x. The Consolidated First Lien Secured Debt was $1,852,252 as of June 30, 2026, and is defined as First Lien Indebtedness of $2,030,013 plus capital lease obligations of $15,876, net of cash and cash equivalents of $193,637. LTM Consolidated Adjusted EBITDA is calculated by adding Consolidated Adjusted EBITDA for the three months ended June 30, 2026 of $77,354, to Consolidated Adjusted EBITDA for the fiscal year ended March 31, 2026 of $751,803, and subtracting Consolidated Adjusted EBITDA for the three months ended June 30, 2025 of $179,622. Consolidated Adjusted EBITDA differs from Adjusted EBITDA presented elsewhere herein and is defined in our credit agreements.
Key Operating Metrics
Re-occurring Revenue and Transactional Revenue
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| | 2026 | | 2025 |
| ($ in thousands) | | Re-occurring
Revenue | | Transactional
Revenue | | Total | | Re-occurring
Revenue | | Transactional
Revenue | | Total |
| K-12 | | $ | 196,595 | | | $ | 77,809 | | | $ | 274,404 | | | $ | 183,641 | | | $ | 87,290 | | | $ | 270,931 | |
| Higher Education | | 182,102 | | | 17,734 | | | 199,836 | | | 159,552 | | | 22,827 | | | 182,379 | |
| Global Professional | | 25,140 | | | 9,675 | | | 34,815 | | | 23,657 | | | 11,502 | | | 35,159 | |
| International | | 21,727 | | | 23,503 | | | 45,230 | | | 20,764 | | | 30,700 | | | 51,464 | |
| Other | | — | | | (4,382) | | | (4,382) | | | — | | | (4,223) | | | (4,223) | |
| Total Revenue | | $ | 425,564 | | | $ | 124,339 | | | $ | 549,903 | | | $ | 387,614 | | | $ | 148,096 | | | $ | 535,710 | |
Remaining Performance Obligation (RPO)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2026 | | March 31, 2026 |
| ($ in thousands) | | Current | | Non-current | | Total | | Current | | Non-current | | Total |
| RPO by Segment: | | | | | | | | | | | | |
| K-12 | | $ | 477,491 | | | $ | 733,155 | | | $ | 1,210,646 | | | $ | 477,183 | | | $ | 772,190 | | | $ | 1,249,373 | |
| Higher Education | | 169,906 | | | 47,029 | | | 216,935 | | | 268,649 | | | 53,350 | | | 321,999 | |
| Global Professional | | 62,058 | | | 6,619 | | | 68,677 | | | 58,186 | | | 7,791 | | | 65,977 | |
| International | | 20,465 | | | 2,427 | | | 22,892 | | | 30,394 | | | 2,670 | | | 33,064 | |
| Other | | 3,006 | | | — | | | 3,006 | | | 945 | | | — | | | 945 | |
Total RPO | | $ | 732,926 | | | $ | 789,230 | | | $ | 1,522,156 | | | $ | 835,357 | | | $ | 836,001 | | | $ | 1,671,358 | |
Net Dollar Retention
Net dollar retention “NDR” is calculated by dividing (a) the digital subscription amounts invoiced to existing customers during the year, inclusive of changes in enrollment, price changes and attrition by (b) the digital subscription amounts invoiced to such customers for the comparable prior year.
Digital and Print Revenue
Disaggregation of Revenue - Print and Digital
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| | 2026 | | 2025 |
| ($ in thousands) | | Digital | | Print (1) | | Total | | Digital | | Print (1) | | Total |
| Revenue by Segment: | | | | | | | | | | | | |
| K-12 | | $ | 113,919 | | | $ | 160,485 | | | $ | 274,404 | | | $ | 108,597 | | | $ | 162,334 | | | $ | 270,931 | |
| Higher Education | | 190,146 | | | 9,690 | | | 199,836 | | | 168,826 | | | 13,553 | | | 182,379 | |
| Global Professional | | 26,713 | | | 8,102 | | | 34,815 | | | 25,272 | | | 9,887 | | | 35,159 | |
| International | | 22,755 | | | 22,475 | | | 45,230 | | | 22,353 | | | 29,111 | | | 51,464 | |
| Other (2) | | — | | | (4,382) | | | (4,382) | | | — | | | (4,223) | | | (4,223) | |
| Total Revenue | | $ | 353,533 | | | $ | 196,370 | | | $ | 549,903 | | | $ | 325,048 | | | $ | 210,662 | | | $ | 535,710 | |
___________________
| | | | | |
| (1) | Print revenue contains print and multi-year print products. |
| (2) | Includes in-transit product sales and intersegment revenue adjustments that are not included within segment revenues reviewed by the Company's Chief Operating Decision Maker. |
