McGraw Hill Recurring Revenue Climbs 10% to 77% of Q1 Revenue
Aug 14, 2026McGraw Hill’s recurring revenue grew much faster than total revenue in its first fiscal quarter, with Higher Education showing how digital delivery and a stronger renewal base are changing the business.
The global education company reported $549.9 million in revenue for its fiscal first quarter of 2027, up 2.6% from a year ago.
Its recurring revenue grew much faster. It increased 9.8% to $425.6 million and represented 77% of Q1 revenue, up from 72% a year earlier.
Digital revenue also rose 8.8% to $353.5 million.
One important clarification for subscription operators: McGraw Hill calls this metric “re-occurring revenue,” and it is broader than subscription revenue. The company includes digital subscriptions as well as multi-year print products in the metric.
Even with that caveat, the direction is clear. More of McGraw Hill’s revenue is coming from ongoing customer relationships rather than one-time purchases.
Higher Education shows that shift especially well.
Higher Education Recurring Revenue Grew 14%
McGraw Hill’s Higher Education business reported $199.8 million in revenue, up 9.6% from a year earlier.
Recurring revenue grew faster, rising 14.1% to $182.1 million.
That means about 91% of Higher Education revenue was recurring during the quarter, up from 87% a year ago.
McGraw Hill said the growth came from market share gains, pricing, enrollment growth and continued expansion of Inclusive Access.
Inclusive Access gives students digital course materials through their institution at the start of a course, usually at a discounted price.
For McGraw Hill, that creates a very different relationship from selling a textbook once and hoping to win the next adoption.
The company says it has gained about five percentage points of Higher Education market share from traditional competitors over the past four fiscal years.
Evergreen Is Changing the Renewal Model
McGraw Hill’s Evergreen delivery model is another important part of the Higher Education story.
The traditional textbook model revolves around new editions. A publisher releases an updated book, and instructors decide whether to adopt it again.
Evergreen works differently.
McGraw Hill updates digital course materials inside courses instructors are already using.
That keeps the product current without forcing the customer through another full adoption cycle.
McGraw Hill says Evergreen “anchors” its renewal base and frees its sales team to focus primarily on gaining market share.
That may be the most useful line in the earnings report for subscription operators.
A stronger renewal base changes where the company can spend its sales effort.
If less time goes into winning existing business all over again, more time can go toward new growth.
McGraw Hill also said Evergreen is improving retention and the customer experience.
Margins Improved Alongside the Revenue Shift
Profitability improved during the quarter too.
Gross profit increased to $439.2 million from $412.3 million a year ago. Gross margin rose from 77.0% to 79.9%.
Adjusted EBITDA increased 8.2% to $207 million, while adjusted EBITDA margin rose from 35.7% to 37.7%.
Net income increased to $57.9 million from $0.5 million a year earlier.
McGraw Hill did not say the improvement came only from its growing recurring revenue mix. The company also pointed to operating performance and cost discipline.
Still, the numbers are worth reading together.
Total revenue grew 2.6%. Recurring revenue grew nearly 10%. Margins improved at the same time.
AI Is Becoming Part of the Growth Story
McGraw Hill is also connecting AI to its recent performance.
CEO Philip Moyer said AI contributed to revenue growth, margin expansion, pricing and market share gains during the quarter.
The company reported more than 7.5 million active users across eight AI learning tools and plans three more launches during the fiscal year.
McGraw Hill is also testing what it calls an “agentic” AI strategy, including possible uses outside education.
For now, the clearer business-model story is the continued shift toward digital and recurring revenue.
Insider Take
The most interesting McGraw Hill number may not be 77%.
It is what the company says its stronger renewal base lets the business do.
McGraw Hill says Evergreen anchors renewals and gives its Higher Education sales organization more room to focus on taking market share.
That is where the recurring-revenue story becomes operational.
When more existing revenue comes back through a repeatable model, the company does not have to spend as much energy rebuilding the same revenue before it can grow.
Higher Education shows how far McGraw Hill has moved in that direction. About 91% of the segment’s quarterly revenue was recurring, while total segment revenue grew 9.6%.
There is one important caveat. McGraw Hill’s company-defined “re-occurring revenue” metric includes multi-year print products, so it should not be read as pure subscription revenue.
The broader shift is still clear. McGraw Hill is moving away from the economics of repeatedly selling editions and toward ongoing customer relationships that can renew and grow over time.
Related Member Resource
For a practical way to look beyond top-line growth, this member resource includes a downloadable Growth Quality Decision Scorecard to assess the evidence behind revenue quality, retention, monetization, margins, and other growth decisions.
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