Wiley Reports First Quarter 2025 Results

Wiley (NYSE:WLY), a trusted leader in research and learning, today reported results for the first quarter ended July 31, 2024.

HIGHLIGHTS

• Strong year-over-year financial performance driven by solid growth in Research Publishing, AI-related demand for Learning content, and continued execution of the Value Creation Plan
• Third and final divestiture closed and remainder of $130 million cost savings program actioned
• Second GenAI content rights project executed with large tech company

FIRST QUARTER PERFORMANCE

• GAAP Results (including Held for Sale or Sold businesses): Revenue of $404 million (-10%), Operating Income of $29 million (+$45 million), and EPS loss of ($0.03) (+$1.64).
• Adjusted Results at Constant Currency (excluding Held for Sale or Sold businesses, restructuring costs and other adjusted items): Revenue of $390 million (+6%), Adjusted EBITDA of $73 million (+22%), and Adjusted EPS of $0.47 (+74%).

MANAGEMENT COMMENTARY

"The Wiley leadership team and I are pleased with how we started the year, as measured by both our performance indicators and financial results," said Matthew Kissner, Wiley President and CEO. "Research delivered solid growth driven by robust demand to publish in our journals and execution of our publishing and go-to-market strategies. Learning delivered strong growth as it sees continued demand for its authoritative content in training GenAI models and core growth in Academic. Finally, we closed our third and final divestiture and actioned the remainder of our $130 million cost savings program, positioning us for further performance and profit improvement."

Research

• Revenue of $265 million was up 3% as reported and at constant currency, mainly due to growth in open access and institutional licensing models in Research Publishing.
• Adjusted EBITDA of $78 million was up 1% as reported and at constant currency due to revenue performance largely offset by the timing of employee benefit costs related to higher incentive compensation and investments in technology. Adjusted EBITDA margin for the quarter was 29.3% compared to 29.8% in the prior year period.

Learning

• Revenue of $124 million was up 14% as reported and at constant currency driven by a $16 million Q1 contribution from an executed $21 million content rights project for training GenAI models and continued growth in Academic courseware, offsetting moderate declines in Professional. Excluding the GenAI project, Q1 Learning revenue declined 1%.
• Adjusted EBITDA of $34 million was up 60% as reported and at constant currency mainly due to the GenAI content rights project. Adjusted EBITDA margin for the quarter was 27.2% compared to 19.4% in the prior year period.

Corporate Expense Category

• Adjusted Corporate Expenses of $39 million on an Adjusted EBITDA basis was 2% higher at reported and at constant currency, primarily due to higher tech expenses.

Businesses Held for Sale or Sold (HFS)

Our Held for Sale or Sold segment reflects the performance of those businesses for the periods owned. Wiley University Services was completed on January 1, 2024. The sale of Wiley Edge, with the exception of its India operation, was completed on May 31, 2024. The sale of Wiley Edge's India operation was completed on August 31, 2024. The sale of CrossKnowledge was also completed on August 31, 2024.

EPS

• GAAP EPS loss was ($0.03) compared to ($1.67) in the prior year period. The quarterly loss was primarily due to a non-cash income tax adjustment as a consequence of the US valuation allowance related to our divested businesses (see accompanying EPS reconciliation table for more information), as well as restructuring charges and foregone net income from Businesses Sold or Held for Sale. The year over year variance is primarily due to favorability compared to prior year impairments, restructuring charges, and losses on the sale of businesses, partially offset by the current quarter tax adjustment.
• Adjusted EPS of $0.47 was up 74% at constant currency due to higher Adjusted Operating Income and accrued interest income from divestitures.

Balance Sheet, Cash Flow, and Capital Allocation

• Net Debt-to-EBITDA Ratio (Trailing Twelve Months) at quarter end was 2.0 compared to 1.9 in the year-ago period.
• Net Cash Used in Operating Activities was $89 million compared to $82 million in the prior year period with higher annual incentive compensation payments for prior year performance offsetting higher cash earnings. Note, Wiley's regular use of cash in the first half of the fiscal year is driven by the timing of cash collections for annual journal subscriptions, which are concentrated in Q3 and Q4.
• Free Cash Flow less Product Development Spending was a use of $107 million compared to a use of $106 million in the prior year, with higher annual incentive compensation payments for prior year performance offsetting higher cash earnings and lower capex. Capex of $18 million was below prior year by $6 million due to timing. Note, Wiley does not provide an adjusted Free Cash Flow metric; results include held for sale or sold businesses.
• Returns to Shareholders: Wiley allocated $32 million toward dividends and share repurchases, up from $29 million in the prior year, with $13 million used to acquire 295 thousand shares at an average cost per share of $42.34. In June 2024, Wiley raised its dividend for the 31st consecutive year.

FISCAL YEAR 2025 GROWTH OUTLOOK

Wiley is reaffirming its Fiscal 2025 growth outlook. Wiley's revenue outlook is driven by favorable demand trends and strong performance indicators. Wiley's earnings outlook is driven by expected revenue growth and cost savings, while reflecting reinvestments to scale and optimize Research, modernize infrastructure and expand GenAI content licensing and capabilities. Wiley's cash flow outlook is driven by lower restructuring payments and favorable working capital partially offset by higher capex and a year-over-year swing in incentive compensation payments. The Company expects capex of $130 million compared to $93 million in Fiscal 2024 driven by the acceleration of its Research Publishing platform work and infrastructure modernization.

The Company remains on track with its Fiscal 2026 targets.

EARNINGS CONFERENCE CALL

Scheduled for today, September 5 at 10:00 am (ET). Access webcast at Investor Relations at investors.wiley.com, or directly at https://events.q4inc.com/attendee/543994488. U.S. callers, please dial (888) 210-3346 and enter the participant code 2521217#. International callers, please dial (646) 960-0253 and enter the participant code 2521217#.

ABOUT WILEY

Wiley (NYSE:WLY) is one of the world's largest publishers and a trusted leader in research and learning. Our industry-leading content, services, platforms, and knowledge networks are tailored to meet the evolving needs of our customers and partners, including researchers, students, instructors, professionals, institutions, and corporations. We enable knowledge-seekers to transform today's biggest obstacles into tomorrow's brightest opportunities. For more than two centuries, Wiley has been delivering on its timeless mission to unlock human potential. Visit us at Wiley.com. Follow us on Facebook, Twitter, LinkedIn and Instagram.

NON-GAAP FINANCIAL MEASURES

Wiley provides non-GAAP financial measures and performance results such as "Adjusted EPS," "Adjusted Operating Income," "Adjusted EBITDA," "Adjusted Income before Taxes," "Adjusted Income Tax Provision," "Adjusted Effective Income Tax Rate," "Free Cash Flow less Product Development Spending," "organic revenue," "Adjusted Revenue," and results on a Constant Currency basis to assess underlying business performance and trends. Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of divestitures and acquisitions provide a useful comparable basis to analyze operating results and earnings. See the reconciliations of non-GAAP financial measures and explanations of the uses of non-GAAP measures in the supplementary information. We have not provided our 2025 outlook for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend on various factors, and could be material to our consolidated results computed in accordance with U.S. GAAP.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company and are subject to change based on many important factors. Such factors include, but are not limited to: (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities; (x) the ability to realize operating savings over time and in fiscal year 2025 in connection with our multiyear Global Restructuring Program and planned and completed dispositions; (xi) the possibility that the divestitures will not be pursued, failure to obtain necessary regulatory approvals or required financing or to satisfy any of the other conditions to planned dispositions; (xii) cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business; (xiii) as a result of acquisitions, we have and may record a significant amount of goodwill and other identifiable intangible assets and we may never realize the full carrying value of these assets; (xiv) our ability to leverage artificial intelligence technologies in our products and services, including generative artificial intelligence, large language models, machine learning, and other artificial intelligence tools; and (xv) other factors detailed from time to time in our filings with the SEC. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

CATEGORY: EARNINGS RELEASES

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