Good morning and welcome to the McGraw Hill fiscal second quarter 2026 earnings conference call for the quarter ended September 30th, 2025. All participants are in a listen-only mode. As a reminder, today's call is being recorded. Any written transcript will be made available in the events and presentations section of the company's investor relations website. A webcast replay of today's call will also be made available on the company's investor relations website. Following the prepared remarks, we will open the call for questions. I would now like to turn the call over to your host, Danielle Kloeblen, Treasurer and Senior Vice President, Investor Relations. Please go ahead, Danielle. Good morning, everyone. Welcome to McGraw Hill's fiscal second quarter 2026 results. Joining me today are Simon Allen, Chairman, President, and Chief Executive Officer, and Bob Sallmann, Executive Vice President and Chief Financial Officer. During this call, we will be making forward-looking statements about the company. These statements are based on our current expectations and the current economic environment. Forward-looking statements, estimates, and projections are inherently subject to significant economic, competitive, regulatory, and other uncertainties and contingencies, many of which are beyond the control of management. These forward-looking statements are also subject to the cautionary statement that is included in our earnings release and the investor presentation. These are further detailed in our 10-Q and other filings with the SEC. Important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in our earnings release issued today, as well as in our SEC filings. We will also refer to certain non-GAAP measures today. We believe that these measures provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. In the earnings press release and the appendix of the investor presentation, as well as supplemental files on the investor relations website, you can find a definition of these non-GAAP measures and reconciliations to the most directly comparable GAAP measures. For those who listen to the recording of this call, we remind you that the remarks made herein are as of today, November 12, 2025, and have not been subsequently updated. With that, I'll turn the call over to our Chairman, President, and Chief Executive Officer, Simon Allen. Thank you, Danielle, and good morning, everyone. McGraw Hill continues to shape education through innovation and AI-driven technology that personalizes learning experiences at scale, driving deeper engagement and better outcomes. Fiscal second quarter results exceeded expectations, showcasing strength, resilience, and the scale of our diverse portfolio, which served the learning life cycle during the pivotal back-to-school season. This strength was underscored by fiscal Q2 revenue, which reached $669 million, our second-best performance for this quarter in a decade, despite a 2.8% year-over-year decline due to the anticipated smaller K-12 market. Recurring revenue grew 6.5% year-over-year to $422 million, or 63% of total revenue, underscoring the strength of our subscription-based model. Digital revenue increased 7.6% year-over-year to $352 million, representing 53% of total revenue. In particular, our higher education business delivered exceptional results. Revenue expanded 14% year-over-year, while digital revenue grew 18.4% due to continued market share gains, inclusive access growth, enrollment favorability, and realizing value-based pricing. Our trailing 12-month market share rose 160 basis points to 30%, according to MPI data. The Evergreen content delivery model, now available across more than 700 leading titles, continues to resonate, reflected in a record-high NPS score during the full semester. The K-12 selling season met our expectations with continued solid performance despite the smaller market opportunity. Recurring revenue grew 3% year-over-year, with share gains in core science, ELA, and math. Early momentum is building for ALEKS Adventure, our supplemental math offering for K-3 students, positioning us for growth beyond the core ahead of the major California math opportunity in fiscal year 2027. We're already seeing positive early indicators for California math, with two large deals booked in fiscal year 2026. Our team also continued to deliver compelling profitability. Adjusted EBITDA reached $286 million in Q2, yielding a margin of 43%, up 60 basis points year-over-year. This reflects strong operating leverage and an expanding digital mix amid reinvestment that is enabling an exceptional pace of innovation. Our strategy, combined with our execution and forward visibility, gives us confidence to raise fiscal year 2026 guidance across the board, which Bob will detail shortly. At McGraw Hill, we focus on solutions that demonstrate proven efficacy. By integrating high-quality proprietary content with actionable student data and thoughtful pedagogy, we deliver meaningful learner outcomes. Having leveraged machine learning for over two decades, our AI philosophy centers on saving educators' time, strengthening student-teacher relationships, and personalizing learning. Our multi-layered moat is built upon three elements. Firstly, our intellectual property. With 137 years of trusted content developed alongside our authors and more than 50 Nobel laureates, our pedagogical-driven approach is held to the highest standards. Secondly, our proprietary data. We possess a deep understanding of the learning journey, fueled by billions of student interactions across millions of digital users annually. Our solutions deliver structured learning progression through real-time insights and feedback built on evidence rather than prediction alone. Thirdly, our domain expertise. We have decades of experience helping educators and institutions integrate digital tools into curricula. Our workforce, including former educators and technology experts, ensures solutions are grounded in pedagogy and structured learning methods that reflect classroom realities. Along with strong relationships, a trusted brand, and a robust distribution network, this moat forms the foundation that allows us to deploy AI effectively across learning environments. While large language models serve as valuable information tools, education demands a structured learning progression supported by continuous student interaction and data to ensure true comprehension over memorization. Educators see us as a trusted partner, reflected in a recent survey we commissioned through Morning Consult, with K-12 teachers and administrators ranking McGraw Hill as the education company using AI most effectively in its products. Helping teachers harness the power of AI to address specific student needs differentiates McGraw Hill from emerging AI-first entrants. Consider the student who is falling behind in math. Our AI-powered supplemental solution, ALEKS, which spans K-12 through higher education, uses machine learning to pinpoint knowledge gaps and deliver targeted content. It helps improve pass rates by 20%, according to a recent Clemson University case study. ALEKS Adventure is our recent addition for K-3 math, which is gaining traction. We are also optimistic about the global launch of ALEKS Calculus, unlocking $100 million in TAM. Now, consider the fifth-grade teacher struggling with administrative tasks and lesson plans. McGraw Hill Plus simplifies workloads and provides real-time insights into student proficiency, enabling targeted instruction. Available in math in 10 states, with two more states coming online next fiscal year, we experienced a 67% increase in the number of districts that accessed McGraw Hill Plus this school year alone, along with rising utilization rates. ALEKS and McGraw Hill Plus are primed to expand in the multi-billion dollar supplemental and intervention market, where we hold only 5% share today. We remain very enthusiastic about GenAI and continue embedding it into our solutions to enhance learning experiences and to support educators. AI Reader is a prime example of how we scaled a proven tool across our portfolio. Launched last spring, AI Reader encourages higher education students to actively engage with content until concepts are fully understood. One million students are engaging with the tool, and 11 million learning interactions were generated in Q2 alone and accelerating. During Back- to- School 2025, we expanded AI Reader, embedding the tool in 600-plus Connect titles, as well as within our first-day forward solutions for medical students. Additionally, we recently introduced four exciting new AI-powered solutions to enhance our portfolio. Firstly, Sharpen Advantage transforms our popular college student study app into an AI-powered enterprise solution focused on academic success through real-time faculty dashboards to track progress, address learning gaps, and create personalized learning study experiences. Underpinned by our content, Sharpen Advantage offers a responsible alternative to generic chatbots institutions can trust, unlocking significant growth opportunities beyond our core. Secondly, Clinical Reasoning leverages our evidence-based content and introduces virtual patient interactions to prepare medical students for real-world clinical care, positioning us for incremental digital growth. Thirdly, Writing Assistant provides real-time personalized feedback to students, fostering skill development through self-checking and self-correction. We've recorded over 130,000 interactions across 877 unique school districts nationwide in October alone. Fourthly and finally, Teacher Assistant gives K-12 teachers instant planning support, reducing prep time. It's currently available for California math, with a nationwide rollout to follow. We believe our writing and teaching assistant capabilities will enhance market share and retention, particularly in the larger upcoming K-12 market opportunity. In closing, we believe that our momentum is undeniable. Our market share is growing, user engagement is accelerating, and our recurring revenue mix is expanding. Our business remains resilient, with no significant impact from tariffs or proposed federal education policy changes. As you know, the vast majority of funding comes at the state and local levels, with an immaterial portion of K-12 budgets tied to course materials. Now, I'll turn the call over to Bob to discuss our financial performance. Thank you, Simon. Good morning, everyone. Our fiscal second quarter results demonstrate the strength, scale, and diversity of our business. We are delivering on our financial priorities, which are disciplined execution, reinvestment to fuel growth, and continued gross debt reduction. Now, let's take a closer look at our fiscal Q2 financial performance. Total revenue reached $669 million, down 2.8% year-over-year due to the anticipated smaller K-12 market opportunity, which was largely offset by the strength in higher education. First-half revenue declined just 0.5% to $1.2 billion. Reoccurring revenue increased 6.5% year-over-year to $422 million, representing 63% of our total revenue in the quarter, primarily driven by digital revenue growth of 7.6% to $352 million. Higher-margin digital contracts continue to enhance revenue quality and predictability. Our remaining performance obligation, or RPO, surpassed $1.9 billion at the end of the quarter, which provides valuable forward visibility. Gross profit margin increased nearly 150 basis points year-over-year to 79.2%, supported by efficient operations, favorable digital revenue mix, and outperformance in higher education. Adjusted EBITDA was $286 million, with a 43% margin, up 60 basis points year-over-year, driven by gross margin strength and disciplined expense management amid continued growth reinvestment. AI implementation is enhancing internal efficiency and customer experience, reducing K-12 order processing times by 27% and automating 25% of service chats. While our AI-powered content creation tool Scribe delivered strong ROI, recouping its initial investment in a year, with use cases expanding, which should unlock incremental margin expansion over time. Now, let's dive into our business segments. In Q2, higher education revenue grew 14% year-over-year to $213 million in the quarter. On a year-to-date basis, revenue was $395 million, also up 14% year-over-year. Reoccurring revenue grew 13.8% to $162 million, while digital revenue expanded 18.4% to $186 million. This exceptional performance was led by market share gains of 160 basis points, reaching 30% on a trailing 12-month basis. Inclusive access sales grew a notable 37% year-over-year. It represents over 50% of our higher education sales and has been adopted by nearly 2,000 campuses. The majority of inclusive access growth continues to come from existing customers adding new courses, demonstrating the effectiveness of cross-sell within accounts and significant expansion opportunities within the 82% of institutions served. This is supplemented by the annual onboarding of approximately 100 new universities into the program, which becomes more impactful to growth in the coming years. These new inclusive access relationships typically take at least two years to fully scale. In other words, based on recent performance, we expect the activations for accounts landed in fiscal year 2026 to increase by 15-20 times by fiscal year 2028. This is key to supporting visibility into our future growth runway. When combined with innovations such as Evergreen, we unlock more avenues to support retention and drive takeaway opportunities to enable incremental market share gains. This performance reflects our successful execution of investment initiatives in recent years. In addition, we captured benefits from healthy enrollment trends and value-based pricing realization. I am incredibly proud of the team's outstanding performance, with their innovation and dedication yielding differentiated results. In K-12, revenue was $359 million in the quarter, down 11.2% year-over-year due to the anticipated smaller market opportunity and lapping of exceptional capture rates in the prior year. First-half revenue was $630 million, down 7.3% versus prior year. Reoccurring revenue increased 2.8% to $216 million, with RPO of $1.4 billion, supported by multi-year procurement cycles and upfront payments, which provide strong forward visibility and the foundation for our return to growth in K-12 in fiscal year 2027. We continue to outperform the market and retain our leadership position in Florida science. Our national science program is driving shared gains in other states, along with investments that have bolstered our go-to-market coverage, which reinforces our optimism moving forward. While the supplemental and intervention market is also smaller, our integration with the core and early success with ALEKS Adventure is encouraging. Pilots generated strong momentum in South Carolina's math adoption, showcasing share gains in the K-5 market. It's worth reiterating, we anticipated the smaller market in fiscal year 2026 due to the predictable school purchasing cycles. Proposed federal education policy changes have had no material impact on our business, as 90% of district revenue is funded by state and local budgets. We believe we are well positioned for fiscal year 2027 opportunities in California math and Florida ELA, among others. Our nationwide Emerge pilot is progressing well ahead of the large California ELA opportunity in fiscal year 2028. Global professional revenue was $40 million in the quarter, relatively flat year-over-year, while recurring revenue grew 5.4% to $25 million. Strength in medical and engineering offset the exit of non-strategic print, with ongoing innovation such as the launch of Clinical Reasoning expected to drive incremental digital growth over time. Finally, international revenue decreased 8.8% year-over-year to $50 million in Q2, a relative improvement from the double-digit year-over-year decline in Q1. The decline in recurring revenue also narrowed sequentially year-over-year to 4.8%. Digital growth in select K-12 markets has partially offset softness in Canada and timing in Spain. Moving on to our balance sheet and cash flow, we ended Q2 with $463 million in cash and $913 million of liquidity, with our revolving credit facility unjurred. Net leverage was 3.3 times as of September 30th. We generated $265 million in cash flow from operating activities in the quarter. Working capital was largely impacted by the K-12 market opportunity and prior year expense timing. In October, we prepaid $150 million in term loan principal following September's repricing that reduced our interest rate spread by 50 basis points. Year-to-date, we've prepaid $542 million in term loan debt, resulting in over $40 million in annualized cash interest savings. Our disciplined capital allocation strategy prioritizes reinvestment and debt reduction. We remain committed to a net leverage target of 2-2.5 times and to strategic tuck-in M&A. We will pursue incremental debt reduction over the remainder of the fiscal year, leveraging cash flow from the business, which has been bolstered by cash tax savings from new tax legislation, and will remain opportunistic on the capital structure. Looking ahead, based on our strong first-half performance, RPO visibility, sustained share gains, and favorable enrollment trends, we are raising our full-year guidance. We now anticipate total revenue for fiscal year 2026 in the range of $2.031 billion-$2.061 billion, recurring revenue ranging from $1.504 billion-$1.524 billion, and adjusted EBITDA between $702 million-$722 million. Unlevered free cash flow is expected to slightly exceed the low end of the 50%-100% adjusted EBITDA conversion range, while CapEx and product development as a percentage of revenue remains unchanged. Our Q2 tax provision was positively impacted by recent changes to federal tax policy and is expected to lower our fiscal year 2026 tax liability below the previous $30 million-$50 million range, both on a cash and GAAP basis. Finally, a few modeling items. We expect revenue seasonality trends in the back half of fiscal year 2026 to be relatively consistent with our historical average. Stock-based compensation expense is expected to be $1 million-$2 million in both the third and fourth quarters. Total interest savings are expected to be approximately $5 million in the second half of the fiscal year, and we expect approximately $6 million of debt extinguishment in Q3. For the fiscal year 2026, we expect our GAAP effective tax rate to be approximately 15%-20%, and our marginal non-GAAP cash income tax rate for the incremental changes to book income to be around 18%. We are proud of our performance and confident in our strategy. Higher education's outperformance is notable, and we are well positioned for K-12 growth in fiscal year 2027 and beyond. Operator, let's open the call up for questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We ask that you please limit yourself to one question and one follow-up. Your first question today comes from the line of Ryan McDonald from Needham. Your line is open. Hi, thanks for taking my questions and congrats on a great quarter. Simon, I wanted to start with higher ed, clearly an excellent performance within that segment of the business. Can you just kind of break down a little bit further for us sort of the mix of benefit from sort of enrollments? I think the data is showing about 2.4% enrollment growth for the current fall semester versus sort of execution and share gains. And then on the inclusive access component of that impressive growth there, can you just give us a sense of sort of the durability and runway for growth within inclusive access still? Thanks. Yeah, thank you, Ryan. It's good to hear from you, and thanks for a great question. Yes, we are incredibly pleased about our higher ed performance this quarter. I think 14% growth comes primarily in a big-time way, actually, from taking market share. We've taken it from all our competitors. You mentioned enrollment. I think enrollment is predicted right now. It's very early, but maybe 2%-2.5%. We've grown massively more than that, and we're taking share from everybody. It's all around our execution. You've heard me say this so many times on these calls, but it really is true. The quality of our execution is why we win out. The product delivery, the fact that we understand what our customers need to see, how we can utilize AI and what we deliver, and prove in a very efficacious way why we've done well. Our go-to-market teams are truly the best in the industry, in my view. I think the performance justifies that comment when you look at, again, retention rates that are growing substantially through what we have done with our market share gains, all of the competitors that we are taking share from across every discipline on the college campus. We are seeing record NPS scores through this back-to-school period. I think best of all for us to now get to 30% market share. If you remember, if you go back a decade, we were at barely 21- 21.5, Ryan. I mean, it was way lower. We have grown now to 30%, 160 basis point growth year on year. We are very proud of that. The last thing I'd say is that when we look at innovations like AI Reader, this is the product, if you remember, we launched a couple of quarters ago, and it's really proven a tremendous retention tool for us. We're seeing over, it's actually, I think we quoted 11 million interactions at the end of Q2. I can tell you through October, it's about 20 million now in terms of Reader interactions. We're just growing that month by month as students see the value and professors see the value of what that can give students to really help them in their class and help them succeed. The last thing I'll say is, you mentioned inclusive access. Again, we've been telling our investors about that for the longest time. It's open to everybody. We recognize the value of it first. We continually grow every quarter our business through IA. It's a wonderful business model. The land and expand that Bob talked about earlier is really true. This is where we're seeing the huge benefit of that. I think when I look at the new solutions that we're creating with products like ALEKS Calculus, that's going to give us another $100 million in untapped TAM. What we've done with Sharpen and Sharpen Advantage as we look at building an institutional AI-driven product, we really are understanding what faculty want to see, how we can help them utilize AI for benefit and for absolute gain in student performance and outcomes. Bob, let me pass on to you a bit because I know you love the inclusive access modeling when you look at the land and expand. Maybe you can help with the final part of Ryan's question. Sure thing. Thanks, Simon. Ryan, you know I also, before I jump into that, I do want to highlight the National Student Clearinghouse data you quoted as preliminary. We've seen changes from that, from our initial print to subsequent prints. I just want to caution you that that 2.4% you quoted is preliminary. Within that, you should also note that the two-year and community colleges has higher growth rates. We over-index there relative to the general market. We're seeing enrollment slightly higher than that 2.4%, but it's worth noting that it is preliminary. Jumping into the inclusive access model, we highlighted this. Just the sustainability of that. We have added 100 new logos, new institutions annually. Clearly, there's a lot of runway for us to continue to land, but more impactful is that expansion. As we land those institutions, we see 15-20 times growth over the first couple of years. You will get continuation of growth. When we think about sustainability, lots of runway there. We are very excited about it, and we are looking forward to continuing to talk through that. Awesome. I really appreciate that. Maybe just to follow up in terms of K-12, kind of great to hear some of the commentary around California math and in Florida as well. Can you just remind us what you are seeing with California math and Florida ELA right now in terms of performance and then how that or what sort of level of confidence that gives you as we go into, I think they call it year one, but are the second sort of tranche of that funding in fiscal 2027? Thanks. Yeah, good question. Ryan, I apologize for the longest answer you've ever heard to higher ed, but thank you for bringing us into K-12, where we are equally excited about our potential. You know and everyone knows that this year is a smaller year in K-12. What is really encouraging about fiscal year 2027 as we look ahead? We are obviously not going to give any guidance just yet. We will wait till the end of our fiscal year to do that. What is really encouraging is the well-known fact of an additional $300 million TAM in that market. It is roughly 10% more in 2027 than 2026. As you say, that is driven by California math. It is also driven by Florida ELA and Texas math. There are a bunch of different opportunities coming out for fiscal year 2027. Where we are encouraged is that we have already had good successes in California at the very earliest stages. It is all about the suitability of our product. We have to make sure that as we create our material, we understand completely the state standards required. We make sure our pedagogical delivery of our products just fits at the right learning age range that is there. Of course, we are supplementing all of our core material with McGraw Hill Plus and, of course, ALEKS that you know very well. We are very, very bullish indeed about next year. Bob, do you have anything to add specifically on California or Texas for Ryan? Yeah, I think the one thing that we are excited about is being able to supplement and supplemental intervention and having bundled solutions as we enter into that market. Again, as we think about that portion of our business, which represents about 15% of the K-12 revenue, we really see a nice opportunity to bundle those offerings as we walk into those opportunities next year. Thanks for all the color. Congrats again. Thank you, Ryan. Thanks for the questions. Your next question comes from the line of Henry Hayden from Rothschild. Your line is open. Morning, everyone. Thanks for taking the time today. We've seen kind of lots of concern across the sector around AI disintermediation, and we were hoping just to get some incremental color on how you would describe the competitive moats around the business, or in other words, what uniquely differentiates McGraw Hill's capabilities from GenAI native new entrants. Thanks. Henry, thank you for the question, and it's lovely to hear a familiar accent. It's a good question because when you think of the issue around AI, I think there's been an enormous amount that's been underappreciated or just not yet recognized about McGraw Hill and our abilities to really make a difference and see AI as a massive real tailwind for our business. We're only in, of course, this is our second quarter earnings call, so it's new to everybody. My hope is over the coming quarters, people recognize the real value and strength that AI gives to our business. The tailwind that we're seeing, we're seeing it across the entire part of our entire structure. When you think about what we're doing in higher education, we've talked a great deal about our products around AI Reader. We've talked a lot about what we've done with Sharpen Advantage when you think about the institutional opportunity. We've talked about the ability for clinical reasoning in our medical business, and that is a significant upside for when you think about potential students learning and what they need to understand when they're going through their medical programs. Then there's ALEKS, and you've known for years that we've worked with ALEKS for now, well, really over two decades. When you think about the ability for machine learning now to focus on generative AI delivery for our adventure for K-5, as well now at the other end for ALEKS Calculus, all of these factors give us substantial confidence. We're seeing that in our customer reactions. We're seeing it in our financial performance, as you've heard. We're seeing it from our customers saying to us, "We are using Sharpen, and it is helping our students." We are seeing a massive increase in student learning and spending time on your great platform with AI Reader. Medical students are benefiting from Clinical Reasoning. These are functional, efficacious products that we deliver. Because of our moats, Henry, we have the strength of our 137 years, the trusted position that we have in the education community, and really the reliability that we provide our customers with that level of trust. They want to work with us, and they want to understand how we can enhance the materials the way they teach through AI integration. Again, a long answer, but it's important to me and to all of us that I think the world at large understands just how beneficial this is for McGraw Hill because we can absolutely improve learning outcomes the way we've integrated AI. Yeah, thank you for that. It's very helpful. Just as a follow-up to that, we've heard from some of your peers around kind of the increased cost to store and leverage data, which has been made, quote, "AI-ready." How would you think about the margin outlook as data becomes a more substantial part of your offering? Good question. We're beginning to measure compute costs right now. In fact, we've done that for a while. Bob, I'll pass that one over to you if you've got some additional. I know we don't exactly give too much detail, but we do have an answer, I think, for Henry. Yeah. Henry, as we think about AI, we ultimately see this as margin expansion over time. When we've talked about the use of Scribe, which reduces our cost in certain use cases by 60% and time to market by 50%, we're able to reduce our overall cost to build product. As we think about that cost to serve AI, we're able to offset that by driving cost reductions in our product and platform development. We ultimately see this as margin expansion over time. That's very clear. Thank you both. Thank you. Your. Your next question comes from a line of Steven Sheldon from William Blair. Your line is open. Hey, thanks. Nice results here. Maybe wanted to dig in a little bit more on the K-12 side. I guess can you just provide some more color on underlying trends there and specifically how newer product traction is progressing relative to expectations as we think about ALEKS Adventure, MH Plus, other things? Just as we think about the benefit of some of these newer products, I know some are incremental revenue opportunities, but how much could they help you as you pursue some of these larger core contracts? How much could these new product capabilities and bundling help with positioning to win those large contracts? Yeah, it's a good question. I'll kick off, and then Bob, I'll pass to you as well to add any information that I've forgotten. What I would say, Steven, is that the—and you mentioned a couple of them—the products that are making the big difference, ALEKS Adventure will give us new growth going forward. It's already beginning. It's been out about a year, give or take. McGraw Hill Plus, we've extended. It's been in 10 states. We've extended it, and we're about to get into two more. Each one of those shows substantial increase in teacher intervention and teacher activity. The reason is that it's giving such a great level of data and detail on the student performance that teachers find very helpful. A key part of your question is, what does this do to the core? Because you know that we're a very, very successful player in core. The market opportunity is much bigger next year. It isn't just that for us. The supplemental intervention space, where it's really 15% of our business, but we have less, around 5% market share. That's where the real opportunity for growth comes. It's really building on the core successes that we've enjoyed, building on with ALEKS, with our math core adoptions, building on the ELA adoptions with Actively Learn and Achieve 3000. These are the tools, and then all of them integrating McGraw Hill Plus. These are the tools that give us great confidence for growth going forward to enable the market share growth to continue. Bob, you may have something else to say to that as well. Yeah, let me add a little bit more color. We have talked about in our prior quarter winning in eight of nine markets. We have demonstrated that, and what we are suggesting is that you will see that over the next several years. What that means is while we are winning, we provide forward visibility in the next several years. These are multi-year contracts. One of the things I will highlight is if you exclude the three large states, particularly Florida and Texas, where we had strong performance last year, if we exclude that and we look at the remainder of the districts that we operate in, we are expanding share. We grew 200 basis points. We are winning at a greater rate. We are winning across the market. A couple of other things that excite us, we have talked about being in 10 states for McGraw Hill Plus. Let me double-click on that and provide you some more insights. As we talked about being in 10 states growing into 12, what does that really mean for our K-12 business? Again, McGraw Hill Plus is going to allow us to be very sticky over time. As we look at it, 25% of our teachers using our core math products Reveal now have access to McGraw Hill Plus. That's nearly a 50% increase year over year. We've seen 4X increase in the unique users in McGraw Hill Plus year over year, and now we're serving over 10% of districts that have access to McGraw Hill Plus. The importance of that is really driving that stickiness and retention over time. Ultimately, the other big innovation we're driving is our new ELA product Emerge that will be coming into market, again, addressing California ELA in 2028. Again, really well positioned. The business performed and met our expectations in the period. We're really excited about how it positions us for a return to growth. Very helpful and good to hear. Just as a follow-up, as we think about incremental spending plans, I guess just given what you've seen so far this year, have your priorities changed at all where you're pushing the pedal more in certain areas of the business than others, especially as we think about product development and sales capacity across different segments? I guess just at a high level, where are you pushing the investment pedal more? Yeah. So first, at a high level, we're not going to be changing sort of the level of investment. We've highlighted that it's been 8%-9% of our revenue. We'll continue to be at that level. Now, of course, we reevaluate and redeploy where we're putting our dollars. And given some of the efficiencies that we are driving in product development, it's allowing us to accelerate the pace of investment in other areas, such as some of the AI tools that we've recently released. Simon mentioned the four new products we brought to market. Again, the pace in which we're releasing things is allowing us to bring new products to market. But most critically, I just want to remind you that we do believe that all of this innovation will still allow us to continue to expand our margin. Great. Thank you. Your next question comes from a line of Steve Koenig from Macquarie Group. Your line is open. Hi, thanks. I'll offer my congratulations as well on a really good quarter. First question would be, in thinking about your outlook for the second half, maybe preface this question by asking, how did you all do kind of relative to your internal expectations in the quarter? In terms of raising that full-year guide, how much of that is related to the Q2 performance and how much of it's related to your outlook for the back half and any changes in your method or assumptions on your guidance? Thanks for that. Sure. I'll take this one, Simon. With respect to our guide in the quarter, first, noting that Q2 is the most significant quarter for our business. It provides us visibility into both enrollments, share gains, and otherwise. Most importantly, in our K-12 business, it provides us the RPO that gives us that clear visibility to the rest of the year. When we put together our guide, I'll walk you through some of the BUs, how we're thinking about it. It's also important to note that we've narrowed the guide from prior quarter to current, meaning the revenue guide we had from high to low, $60 million range, we've now narrowed that to $30 million. On the reoccurring and EBITDA, we were at $40 million in the prior guide. We've taken that down and narrowed our guidance to $20 million. That is driven by the fact that we have moved through that seasonally important Q2 and now have greater visibility. With respect to the portions of the business that met expectations, I would say that K-12 was certainly in line with our expectations. We noted that we were having share gains. Our products are well positioned. We anticipated some of those share gains that we delivered. The overall market size being smaller is coming in line with expectations. Where we performed slightly better, and I will highlight that would be in higher education. Obviously, the share gains, we are very pleased with the continued share gains and the magnitude of those share gains. Enrollment was slightly higher. We talked about it on Ryan's first question about what the clearinghouse is providing. We see it slightly above that, which is providing us a little bit of a tailwind. When I walk through for the full year, I think it's important to recognize that we have seasonality in our business. First half being seasonally important, second half is smaller. That will then translate into a lower EBITDA margin on the lower revenue base. I also think it's important to recognize that that seasonality from first half to second half will also present itself more like fiscal year 2024 than fiscal year 2025. It's important that I highlight that for your modeling considerations, thinking about Q3 and Q4 phasing, as 2025 had that outsized performance in K-12. Really anchor yourself back to 2024. I think then as we think about that overall guide, we are very pleased with how we've positioned the business and it's built on the success that we've had and forward visibility. Terrific. Thanks for that, Bob. If I may get in one follow-up, maybe building on the earlier question about internal investment, maybe expanding that to ask for your color more generally on your thinking on capital allocation here moving forward. Yeah. Sure. The first place that we always invest in is our organic investments. Those will always provide us with the greatest ROI. We remain very committed to deleverage and our target of two to two and a half times. That is demonstrated by our commitment to this by the $150 million we paid down in October. Based on cash flow and where we see the business, there will remain opportunity for us to further deleverage in the remainder of the year. We also balance that with talking M&A. The funnel today is very full. We're looking at smaller opportunities that we consider make versus buy, expanding the addressable market. We look at these opportunities, and so we think that there's a chance for us to continue to explore that. Nothing transformational at this point is in the funnel. Got it. Very good. Thanks very much. Very helpful. You bet. Your next question comes from a line of George Tong from Goldman Sachs. Your line is open. Hi, thanks. Good morning. You highlighted a strong capture rate performance in K-12 so far this adoption cycle. Can you share what capture rates are so far this year and how they compare to last year at the same time? Yeah. George, we're not going to provide visibility exactly on what those capture rates are. As you recall, that's coming off of our internal Salesforce data. I will highlight when we look at that market, it's 200 basis points higher than prior year, which is in line with our expectations. Got it. That's helpful. You talked about strong visibility into the K-12 TAM years in advance. Based on what you see today, how much do you see the K-12 TAM growing in 2027? Yeah. So we've highlighted that the overall market is $300 million that we see as growing. Again, we're really well positioned as we think about the largest opportunity being at California Math. We're excited about the opportunity for us. Simon, I'm not sure if there's anything else you want to add on that. No, just exactly. We have mentioned this earlier on, George, that the extent of the market growth next year is very encouraging for us. You have seen it in prior years where the TAM is at a much higher level. We have done very well. Of course, we would expect to have the same level of growth and performance in the out years. FY 2026, as we have communicated very clearly, has always been a low year. You look at 2027, 2028, and as you look forward, you can see the opportunity then. We are excited about that looking ahead. Got it. Thank you. Your next question comes from a line of Marvin Fong from BTIG. Your line is open. Good morning. Thanks for taking my questions and congratulations as well on a great quarter. For the first question, I'd just like to follow up again on that enrollment data that we all are looking at. I would like to attack it from the subject matter standpoint since that seemed to be the other major change. You just talked about your over-index, under-index, and subject matter that was like health and business or C strength, computer science a bit lower for understandable reasons. Anything in the subject matter trends that are beneficial to you? Yeah. It's a great insightful question. We certainly see that we have those disciplines that we see the highest growth rates. That is very favorable to us, business and other curriculum and science-related subject matter. It does play out favorably to us. Again, I think that bodes well for how we're seeing our enrollment slightly higher than that 2.4% as advertised as a headline for undergraduate growth. Simon, I know you had an explanation. Yeah. Let me add a little bit to that because it's a good question, Marvin. One of the big benefits, and I've been operating in, as you know, the higher ed sector for now, it'll be 40 years in August. The reason that we do so well is that we cover everywhere. You look at the business economics disciplines, you look at the sciences, you look at math, you look at the humanities, social sciences, all of these areas, we're seeing growth across everything. When you look at the tools that we create, AI Reader covers every single discipline, every title, every subject. You think about what we've done with Sharpen. We focus on every single subject again. That's why it's the breadth and the scale that we have that give us so many advantages, particularly compared to some of the smaller startup-type companies. That breadth of coverage is really it means that we're seeing very strong double-digit growth across all of those subject areas. Some are higher than others, but when we look ahead, it's the scale and the breadth of product that we have that gives us such a strong advantage. Fantastic. A follow-up question, if I may. On international, we do not talk about it as much, but the trends are improved. You called out Spain as well as Canada for moving parts there. Could you just kind of discuss what you are seeing there and how we should be thinking about trends both in the back half and maybe even next year? Yeah. And it's a good one. I mean, when you look at, as Bob indicated earlier, the decline, we expected the decline this year. I think in areas like Spain, where we've got a good K-12 business, it has a similar cycle, coincidentally this year, to the U.S. That's clearly a low year for us in Spain. That's timing purely. Things will change next year. When I look at what's happening in Canada, we benefited from the enrollment surge in Canada over the last few years. Now, of course, enrollments in Canada have significantly reduced. What I look at there more than anything is our market share growth. It's if the overall market is in decline, but how are we doing? This is what makes me very happy because Canada, our share, we've grown over 3.5% this year. We're looking at about a 27%-27.5% market share position in Canada. It was barely 15% in 2019 before COVID. You're seeing really good growth in share again where the opportunity is for excellent product and great go-to-market. We succeed, and we've done that very well in Canada. We've also seen upside in Latin America. We continue to do well there with our school and higher ed business. Also, the GCC market in the Middle East is very, very strong for us. It's a good position that we're in. We're looking forward to continuing growth as we go forward. I think it's important that we focus on those markets where we know growth can occur. That's great. Thank you, Simon. Thanks, Bob. Thank you. Your next question comes from a line of Toni Kaplan from Morgan Stanley. Your line is open. Thank you so much. I wanted to ask another question on higher ed, really strong performance this quarter there. You talked about the share gains getting to 30%. Obviously, this is off the back of Evergreen being launched, and I imagine that that is helping contribute to that stronger retention and perhaps salespeople being able to focus more on new business. I was wondering if the success you're seeing is related to that platform shift or if there are other, is there anything content-wise or otherwise that is contributing to that as well? Just wanted to understand the sustainability, essentially, of the higher ed share gains. Thanks. That's a very insightful question, Tony. Thank you. I would say it's across the board is the reason that we're doing very, very well in higher ed. Yes, Evergreen, and that's unique to us, as you know, that we launched about a year ago. Now it's over 600 titles. We're seeing tremendous retention with that. Faculty are just appreciating the ability to be kept completely up to date as they're thinking about their courses. It's also new products that we launch. It's products that we're looking at with ALEKS Calculus, which is a tremendous additional TAM opportunity for us in higher education. What we've done with Sharpen at the consumer level, but then particularly now Sharpen Advantage at the institutional level gives us a great deal of excitement. There are new content. Of course, we always look at our authors in higher education, and we commission new content and new material. That is something we are very, very proud of. We have various new courses and titles that we launch and we release through our Connect platform. It is very, very significant. I think the sustainability for us is proven by the last number of years of our growth in higher ed up now, as you say, to that 30% market share. We feel extremely bullish about our potential in higher ed. We appreciate the question, actually. It is a very good way to pose it. Great. I wanted to ask about pricing. Typically, I think you're getting more of your growth through share gains, maybe some from enrollment, etc. Price has been less of a factor. I think last quarter you mentioned you were taking price increases at a higher rate than originally planned. I was hoping you could talk about if that's still the case and if you're seeing pushback from customers to that or with your new content and platforms, maybe they're not pushing back because of the value add that you're providing. I wanted to understand the pricing dynamics going forward. Thanks. Sure thing. Thanks, Tony. Yeah. From a pricing dynamic, as we've mentioned before, we apply a value-based pricing model. You highlighted some of the value adds that we've been putting in place. We have not been seeing any pushback around our pricing. The price realization has been inflationary levels, which is now in line with what we planned for in the quarter. We are realizing the price that we planned. Thank you. Thanks, Toni. Your next question comes from a line of Jeff Meuler from Baird. Your line is open. Yeah. Thank you. How are you viewing the mix of K-12 opportunities in 2027 by state and subject? I guess for you, do they play to your strengths to an increasing degree at all? Bob, I'll let you run into the detail there. I mean, state by state, as you know, Jeff, we've got substantial opportunities. We look at FY 2027. I don't think we want to get within California. We've talked about that. We've talked about Texas and Florida ELA. Bob, I don't know if you want to get into any more detail. It may be a bit early as we think about that. I know you want to give guidance there as we get to the end of this fiscal year, but you may have comments to make. No. I think in our prepared remarks, we highlighted the fact that we're preparing for the larger opportunities in ELA in 2028 and then in 2027 being math. We are well positioned to play to our strengths as we think about the market opportunities in the next several years. Again, from a subject mix, strengths reside in ELA and math and our new emerged products. We are well positioned, and I think that will benefit us over the next several years, that overall mix in the K-12 market. Got it. Lots of good AI anecdotes and how it's positively impacting your business and you continue to take share. On the emerging AI-first entrants that you mentioned, Simon, where are you predominantly seeing them? Is it more on the supplemental or intervention side, or are they starting to come into the RFP process for core curriculum or not? Thank you. Good one. I would say it's coming more at the RFP, yes, but I think increasingly as we talk to teachers and we talk to school districts that they understand the added value that we can provide through our supplemental interventional tools. Some of them, though, are now requiring that they want that continuity. If they're using Reveal Math, let's look at a math tool that captures those students that may be underperforming. Of course, we have ALEKS. When we look at our ELA business with Emerge that we just launched, and as we think about 2027, 2028, and beyond, that's when teachers are saying, "Listen, we need writing tools and writing instruction tools to aid in our ability to assess students." We provide what we've just launched with Writing Assistant. I think it's now becoming an opportunity for us to really extend our potential with that growth by providing complete solutions, not just in the core, but also in supplemental. Thank you. Thanks. Your next question comes from Elena Faisal Alwi from Deutsche Bank. Your line is open. Yes. Hi. Thank you. A follow-up on the higher education segment. There are some concerns around future enrollment trends as we look ahead over the next, call it, three years because of what is being called a demographic cliff. You alluded to just the fact that you have seen higher enrollment relative to what we might be hearing from the industry. Hoping you could expand a bit more around that, just taking a step back around where you have higher exposure and how you are thinking about just outside of market share gains, how you are thinking about enrollment as we look ahead and how that might impact your business, whether you think there is opportunity for greater pricing in the future, or just any color there would be helpful. That's a good question, Faisal. I know we're running low on time, but I'll start, Bob, and if there's any more you want to add. I would say, Faisal, that there is always pricing opportunity, of course. The enrollment issue is, and I think the demographic cliff is somewhat overstated as it relates to our business because the average age of our student customer is in the mid to late 20s. When you look at the amount of business we have at the community college level, those students are often, very often, in their 30s and 40s. I would say we're less concerned about enrollment issues in that way. The key element for us is there's TAM expansion in the products that we are now offering and the solutions that we provide. We see growth that way. We do not see enrollment decline being a big issue for us because of the expansion and the market share opportunities that we have seen. Our ability to really serve customers, particularly with AI, is what they genuinely need, and they need our help. We are seeing very strong growth that will continue going forward. We need to keep innovating with new products and new solutions to enhance the TAM that we operate within. Bottom line is we'll continue to grow regardless of enrollment. I think that's an important takeaway. Understood. Thank you. Just to follow up on the K-12 segment, you alluded to market share gains in that segment. Just to put a finer point on that, are you really referencing market share gains in supplemental and intervention, or are you seeing market share gains in the core relative to more established players? My comment on the 200 basis points was largely around the core. Keep in mind that that represents 85% of our business. We are seeing gains in supplemental intervention, particularly as you think how we connect to the core. I just want to reiterate how well that positions us as we move into California math into next year. Great. Thank you. Thanks for your questions. Your next question comes from a line of Jeff Silber from BMO Capital Markets. Your line is open. Thanks so much. I know it's late. I'll just ask one. I know we're not talking about fiscal 2027 yet, but generally, what are you hearing about state budgets going into next year? Thanks. Jeff, it's a good question. We're happy to run over. It's lovely to have so many questions. We're hearing good things about state budgets. We're not concerned about decline. As you know, when you look at the budgeting process in K-12, it's very much a local and state-run activity. When you think about the overall percentage of any education budget that's given over to courseware and course materials, it's probably less than 1%. It's a tiny fraction of the overall number. We're not seeing any concern around budgeting for next year and the years forward. That's one of the reasons, one of the many, that gives us so much confidence. Okay. Great. Thanks so much. Thank you. Your next question comes from a line of Josh Chan from UBS. Your line is open. Hi. Good morning, Simon and Bob. I'll keep it to one as well due to the time. I guess, could you talk about the runway that you see in inclusive access in higher ed and then kind of how that and share gains may both contribute to your kind of ongoing growth kind of beyond this year? Yeah. Yeah. Sure. It's a great question. Bob, you go right ahead. You love inclusive access. It's become your flagship. I do. I know we all do. Go-go. Yeah. Again, just that runway is significant for us in terms of inclusive access. Obviously, we're very impressed with the growth that we experienced in the quarter. More importantly, is that dynamic where we're adding 100 institutions per year, we're at 2,000. You can see long runway to continue to add over the years more and more institutions. That several-year path where we continue to grow. It is sustainable. It's going to continue to grow. Long runway there, and we're excited about inclusive access. Great. Congrats on the quarter. Thank you. Thank you, Josh. Your next question comes from a line of David Karnovsky from JPMorgan. Your line is open. Thank you. Maybe just one on K-12. I think there has been some investor concern recently about federal funding and what impact that might have to the procurement process for core or supplemental. Maybe just can you speak to what you saw in the recent selling season or what you are hearing from districts on this? Thanks. Yeah. The one thing I'll highlight is that we're not seeing any widespread delays or any changes in purchasing patterns. It's been consistent with our expectations. I just want to highlight that we walked into the year with our expectation of share gain and overall market size, and it's played out as we've seen. There are always pockets where districts are being cautious and controlled in their spend. That's no change, but we're not seeing anything widespread that would indicate that federal funding is an issue at the district level. Thanks. That concludes our question and answer session. I will now turn the call back over to Simon Allen for some final closing remarks. Thank you, Rob. Thank you, everyone, for dialing in and bearing with us and for allowing us to go over the hour. We do appreciate the questions. It makes our lives much more enjoyable. I hope you get a sense from myself and from Bob and Danielle, whom you will speak to regularly, just how enthusiastic we are about our performance and how optimistic we are. It is a pleasure to beat and raise, and it is a lovely feeling to look at our performance and our market share growth across the businesses. We really do feel very, very good about upcoming conversations with you. Thank you for your attention always, and thank you for your interest in McGraw Hill. We deeply appreciate your commitment to us, and we look forward to serving you and particularly our customers going forward. Thank you for dialing in, and we look forward to talking to you again in a few months. Bye-bye. This concludes today's conference call. Thank you for your participation. You may now disconnect.