McGraw Hill Q2 Earnings: Digital Subscriptions and AI Integration Drive Growth

Educational publisher McGraw Hill saw its shares rise 5.07% following its fiscal second-quarter 2027 earnings call on Nov. 5, 2026, where management announced total first-half revenue reaching $1.2 billion. For everyday investors, the key takeaway is that recurring revenue streams now account for 71% of total sales, supported by strong customer retention and subscription-based curriculum licenses that provide steady financial visibility.

During the briefing, executives highlighted the integration of the company's curriculum with third-party software via the Model Context Protocol. This standard connects educational content directly to artificial intelligence models while requiring paid subscriptions for user access, allowing the publisher to monetize its materials safely across digital platforms.

The higher education division recorded its 41st consecutive quarter of market share expansion, growing sales despite a roughly 1% decline in overall college enrollments. Automatic digital distribution formats like Inclusive Access now generate 58% of revenue for this segment. Meanwhile, the K-12 sector is benefiting from Science of Reading laws passed across 44 states, with early adoption win rates for English Language Arts programs beating internal targets.

Gross margins remained steady near 79% as the firm combined print and digital learning offerings with recent debt paydowns to strengthen its balance sheet. Management continues to monitor contract win rates and pricing discipline to sustain momentum toward fiscal 2028.