Elena Faisal Alwi

Elena Faisal Alwi followed up on the higher education segment, expressing concerns about future enrollment trends due to the 'demographic cliff' and asking about McGraw Hill's exposure, how it views enrollment ahead, and potential for greater pricing. She also asked for clarification on K-12 market share gains, specifically if they were in supplemental/intervention or core relative to established players.

Answer

Simon Allen, Chairman, President, and CEO, stated that the 'demographic cliff' is somewhat overstated for McGraw Hill's business, given the average age of its student customers (mid-to-late 20s) and significant presence in community colleges (students often in 30s-40s). He emphasized that TAM expansion through new products and solutions, along with market share opportunities, mitigates enrollment decline concerns, and there is always pricing opportunity. Bob Sallmann, EVP and CFO, affirmed that McGraw Hill will continue to grow regardless of enrollment. Regarding K-12 market share, Bob Sallmann clarified that the 200 basis point gain mentioned was largely around the core curriculum, which represents 85% of the business, while also seeing gains in supplemental intervention, particularly when connected to the core.

Elena Faisal Alwi followed up on the K-12 segment, seeking clarification on whether market share gains are primarily in supplemental and intervention products or in the core curriculum relative to established players.

Answer

Bob Sallmann, EVP and CFO, clarified that the 200 basis points market share gain mentioned was largely in the core K-12 business, which represents 85% of their revenue. He added that gains are also seen in supplemental and intervention, particularly as these products connect to the core offerings.