McGraw Hill, Inc. Reports Strong Fiscal First Quarter 2027 Results Exceeding Expectations

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 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 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. 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) 3.2 x (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. Source: McGraw Hill