Shares of McGraw Hill (MH 0.73%) rallied on Thursday after the learning solutions provider reported solid progress on its digital initiatives.
By the close of trading, McGraw Hill's stock price was up more than 15%.
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The shift to digital
McGraw Hill's revenue rose 4.2% year over year to $434.2 million in its fiscal 2026 third quarter, which ended on Dec. 31. The gains were fueled by a 11% jump in digital revenue to $363.7 million.
The education company has expanded beyond physical textbooks and now offers an array of digital learning tools. McGraw Hill is integrating artificial intelligence (AI) into its offerings, helping save teachers time and improve student outcomes.
"We are a digital-first business with some of the world's most trusted global curricula," CEO Philip Moyer said. "We have over a century of learning insights, and proprietary data and analytics."
NYSE: MH
Key Data Points
McGraw Hill's shift to a primarily digital learning platform is boosting its profit margins. The company's gross margin improved by nearly a percentage point to 85.3%.
In turn, McGraw Hill's earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 8% to $135.9 million. This increased profitability enabled it to pay down $200 million in debt, strengthening its balance sheet.
Raised guidance
Encouraging business trends prompted McGraw Hill to lift its full-year outlook. Management now expects adjusted EBITDA of $729 million to $739 million, up from a prior forecast of $702 million to $722 million.
"Over the past 2 years, we have been rolling out AI solutions at scale and delivering real improvements in education outcomes," Moyer said. "My focus is to build on this foundation, accelerate new and engaging learning tools, broaden the customers we serve, and drive sustainable and profitable growth."
