John Wiley & Sons(WLYB) - 2026 Q1 - Quarterly Results

Executive Summary Management Commentary Wiley's CEO highlighted strong research demand driven by AI and R&D, emphasizing AI leadership, operational excellence, and confidence in the Fiscal 2026 outlook - Strong demand trends in research, driven by new growth pathways in AI and corporate R&D[4] - Wiley is a recognized leader in AI licensing and innovation, executing projects for multi-national corporations and strategically partnering with top AI innovators[4] - Confidence in Fiscal 2026 outlook, supported by leading indicators, recurring revenue models, open access programs, and anticipated cost savings[4] Q1 2026 Financial Highlights Q1 2026 saw mixed GAAP results with improved operating income and EPS, while adjusted revenue grew 1% and Research revenue showed strong AI-driven growth Q1 2026 GAAP Performance vs. Prior Year | Metric | Q1 2026 (USD Million) | Q1 2025 (USD Million) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :--------- | | Revenue | 397 | 404 | -1.7% | | Operating Income | 31 | 29 | +7% | | Diluted EPS | 0.22 | -0.03 | N/A | Q1 2026 Adjusted Results (Constant Currency) vs. Prior Year | Metric | Q1 2026 (USD Million) | Q1 2025 (USD Million) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :--------- | | Adjusted Revenue | 397 | 393 | +1% | | Adjusted Operating Income | 34 | 35 | -2% | | Adjusted EBITDA | 70 | 72 | -3% | | Adjusted EPS | 0.49 | 0.48 | +2% | - Research revenue grew 5% at constant currency, primarily driven by AI licensing projects and open access growth, offsetting journal renewal timing[8] - Executed a landmark AI licensing project with a large tech company and announced a strategic partnership with Anthropic to accelerate AI integration in scholarly research[8] - Increased dividend for the 32nd consecutive year and approved a $250 million share repurchase authorization, a 25% increase over the 2020 authorization[8] Detailed Financial Performance Segment Performance Overview Q1 2026 saw strong Research growth from AI and open access, a decline in Learning due to lower AI licensing, and increased corporate expenses from strategic initiatives Research Segment The Research segment experienced 5% constant currency revenue growth, driven by significant AI licensing and open access contributions Q1 2026 Research Segment Performance | Metric | Q1 2026 (USD Million) | Q1 2025 (USD Million) | Reported Change (%) | Constant Currency Change (%) | | :---------------------- | :-------------------- | :-------------------- | :------------------ | :--------------------------- | | Total Revenue, net | 281.7 | 265.3 | +6% | +5% | | AI Licensing Revenue | 16 | 1 | N/A | N/A | | Adjusted EBITDA | 80 | 78 | +2% | +2% | | Adjusted EBITDA Margin | 28.3% | 29.3% | -1.0 pp | | - Research revenue growth was primarily driven by a significant increase in AI licensing revenue (from $1 million to $16 million) and open access growth[9] - Article submissions and output grew by 25% and 13% respectively, indicating strong demand to publish across all key geographies[9] Learning Segment The Learning segment's revenue declined 8% at constant currency, primarily due to lower AI licensing and softness in the Professional sub-segment Q1 2026 Learning Segment Performance | Metric | Q1 2026 (USD Million) | Q1 2025 (USD Million) | Reported Change (%) | Constant Currency Change (%) | | :---------------------- | :-------------------- | :-------------------- | :------------------ | :--------------------------- | | Total Revenue, net | 115.1 | 124.3 | -7% | -8% | | AI Licensing Revenue | 13 | 16 | -18.75% | N/A | | Adjusted EBITDA | 31 | 34 | -7% | -7% | | Adjusted EBITDA Margin | 27.4% | 27.2% | +0.2 pp | | - Learning revenue decline was largely due to lower AI licensing revenue compared to the prior year ($13 million vs. $16 million) and market-related softness in the Professional sub-segment[9] Corporate Expenses Corporate expenses increased 4% at constant currency due to strategic consulting and modernization, with anticipated declines starting in Q2 Q1 2026 Corporate Expenses (Adjusted EBITDA Basis) | Metric | Q1 2026 (USD Million) | Q1 2025 (USD Million) | Reported Change (%) | Constant Currency Change (%) | | :---------------------- | :-------------------- | :-------------------- | :------------------ | :--------------------------- | | Non-GAAP Adjusted Corporate Expenses | (43.9) | (42.4) | -4% | -3% | | Non-GAAP Adjusted EBITDA | (40.7) | (39.0) | -4% | -4% | - Corporate Expenses rose 4% on an Adjusted EBITDA basis at constant currency, primarily driven by costs related to strategic consulting projects (now complete), enterprise modernization, and other one-time items[10] - Wiley anticipates Corporate Expenses to decline starting in Q2 as cost savings ramp up[10] EPS, Balance Sheet, Cash Flow & Capital Allocation Q1 2026 showed improved GAAP and Adjusted EPS, a healthy Net Debt-to-EBITDA ratio, seasonal operating cash flow use, and strategic capital allocation including debt reduction Q1 2026 EPS Performance | Metric | Q1 2026 | Q1 2025 | | :---------- | :------ | :------ | | GAAP EPS | $0.22 | ($0.03) | | Adjusted EPS| $0.49 | $0.48 | - Net Debt-to-EBITDA Ratio (Trailing Twelve Months) improved to 1.9 at quarter end, down from 2.0 in the prior year period[16] Q1 2026 Cash Flow & Capital Allocation | Metric | Q1 2026 (USD Million) | Q1 2025 (USD Million) | | :------------------------------------ | :-------------------- | :-------------------- | | Net Cash Used in Operating Activities | (85) | (89) | | Free Cash Flow less Product Development Spending | (100) | (107) | | Capex | 15 | 18 | | Returns to Shareholders | 32 | 31 | | Share Repurchases | 14 | 12.5 | | Divestiture Proceeds (University Services) | 120 | N/A | - Wiley acquired approximately 332,000 shares at an average cost of $42.22/share and raised its dividend for the 32nd consecutive year[16] - Received approximately $120 million in cash proceeds from the University Services divestiture, which was fully utilized to reduce debt[16] Fiscal 2026 Outlook Wiley reaffirmed its Fiscal 2026 outlook, projecting low to mid-single-digit adjusted revenue growth, improved adjusted EBITDA margin, and increased adjusted EPS and free cash flow - Wiley is reaffirming its full-year Fiscal 2026 outlook based on leading demand and output indicators, successful calendar year 2025 journal renewals, and anticipated cost savings[12] Fiscal 2026 Outlook | Metric | Fiscal 2024 Results | Fiscal 2025 Results | Fiscal 2026 Outlook | | :----------------- | :------------------ | :------------------ | :------------------------ | | Adj. Revenue | $1,617M | $1,660M | Low to mid-single digit growth | | Adj. EBITDA Margin | 22.8% | 24% | 25.5% to 26.5% | | Adj. EPS | $2.78 | $3.64 | $3.90 to $4.35 | | Free Cash Flow | $114M | $126M | Approximately $200M | Company Information About Wiley Wiley is a global provider of content, insights, and knowledge services, dedicated to advancing science and learning for over 200 years - Wiley is a leading global provider of authoritative content, data-driven insights, and knowledge services for the advancement of science and learning[15] - For over 200 years, Wiley has empowered researchers, learners, and institutions to drive progress and solve pressing global challenges[15] Earnings Conference Call The Q1 2026 earnings conference call was scheduled for September 4, 2025, with webcast and dial-in details provided for participants - Earnings conference call scheduled for September 4, 2025, at 10:00 am (ET)[14] - Webcast accessible via Investor Relations at investors.wiley.com or directly at http://events.q4inc.com/attendee/819546756[14](index=14&type=chunk) - Dial-in numbers: U.S. callers (888) 210-3346, participant code 2521217; International callers (646) 960-0253, participant code 2521217[14] Non-GAAP Financial Measures and Reconciliations Reconciliation of US GAAP to Non-GAAP EPS This section reconciles US GAAP Earnings Per Share to Non-GAAP Adjusted EPS, detailing various adjustments including restructuring, amortization, and divestiture impacts Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS | Adjustment | Q1 2026 (USD) | Q1 2025 (USD) | | :---------------------------------------------------------------------- | :------------ | :------------ | | US GAAP Earnings (Loss) Per Share - Diluted | 0.22 | (0.03) | | Restructuring and related charges | 0.05 | 0.06 | | Foreign exchange gains on intercompany transactions | — | (0.05) | | Amortization of acquired intangible assets | 0.20 | 0.20 | | Net loss (gain) on sale of businesses, assets, and impairment charges | 0.02 | (0.09) | | Held for Sale or Sold segment Adjusted Net Loss | — | 0.04 | | Income tax adjustments | — | 0.33 | | EPS impact of using weighted-average dilutive shares | — | 0.01 | | Non-GAAP Adjusted Earnings Per Share - Diluted | 0.49 | 0.47 | Reconciliation of US GAAP to Non-GAAP Income Before Taxes and Tax Provision This section reconciles US GAAP Income Before Taxes and Tax Provision to their Non-GAAP adjusted counterparts, detailing pretax and tax impacts of various adjustments Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes | Pretax Impact of Adjustments | Q1 2026 (USD Thousands) | Q1 2025 (USD Thousands) | | :---------------------------------------------------------------------- | :---------------------- | :---------------------- | | US GAAP Income Before Taxes | 17,707 | 23,003 | | Restructuring and related charges | 3,038 | 3,870 | | Foreign exchange gains on intercompany transactions | (440) | (2,591) | | Amortization of acquired intangible assets | 13,210 | 12,969 | | Net loss (gain) on sale of businesses, assets, and impairment charges | 1,116 | (5,801) | | Held for Sale or Sold segment Adjusted Loss Before Taxes | — | 2,519 | | Non-GAAP Adjusted Income Before Taxes | 34,631 | 33,969 | Reconciliation of US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision | Income Tax Impact of Adjustments | Q1 2026 (USD Thousands) | Q1 2025 (USD Thousands) | | :---------------------------------------------------------------------- | :---------------------- | :---------------------- | | US GAAP Income Tax Provision | 6,007 | 24,439 | | Restructuring and related charges | 519 | 749 | | Foreign exchange gains on intercompany transactions | (750) | (390) | | Amortization of acquired intangible assets | 2,068 | 1,809 | | Net loss (gain) on sale of businesses, assets, and impairment charges | 54 | (925) | | Held for Sale or Sold segment Adjusted Tax Benefit | — | 372 | | Impact of valuation allowance on the US GAAP effective tax rate | 166 | (18,030) | | Non-GAAP Adjusted Income Tax Provision | 8,064 | 8,024 | | US GAAP Effective Tax Rate | 33.9% | 106.2% | | Non-GAAP Adjusted Effective Tax Rate | 23.3% | 23.6% | Reconciliation of US GAAP to Non-GAAP EBITDA This section reconciles US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA, detailing adjustments for interest, taxes, depreciation, and non-operating items Reconciliation of US GAAP Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA | Metric | Q1 2026 (USD Thousands) | Q1 2025 (USD Thousands) | | :---------------------------------------------------------------------- | :---------------------- | :---------------------- | | Net Income (Loss) | 11,700 | (1,436) | | Interest expense | 11,042 | 12,787 | | Provision for income taxes | 6,007 | 24,439 | | Depreciation and amortization | 36,446 | 37,253 | | Non-GAAP EBITDA | 65,195 | 73,043 | | Restructuring and related charges | 3,038 | 3,870 | | Net foreign exchange transaction losses (gains) | 971 | (234) | | Net loss (gain) on sale of businesses, assets, and impairment charges | 1,116 | (5,801) | | Other expense (income), net | 127 | (782) | | Held for Sale or Sold segment Adjusted EBITDA | — | 2,519 | | Non-GAAP Adjusted EBITDA | 70,447 | 72,615 | | Adjusted EBITDA Margin | 17.8% | 18.6% | Consolidated Financial Statements Condensed Consolidated Statements of Net Income (Loss) Q1 2026 Condensed Consolidated Statements show decreased net revenue but increased operating income and a return to net income, driven by lower interest and tax provisions Condensed Consolidated Statements of Net Income (Loss) | Metric | Q1 2026 (USD Thousands) | Q1 2025 (USD Thousands) | | :------------------------------------ | :---------------------- | :---------------------- | | Revenue, net | 396,800 | 403,809 | | Total costs and expenses | 365,837 | 374,836 | | Operating income | 30,963 | 28,973 | | Interest expense | (11,042) | (12,787) | | Income before taxes | 17,707 | 23,003 | | Provision for income taxes | 6,007 | 24,439 | | Net income (loss) | 11,700 | (1,436) | | Diluted Earnings (loss) per share | 0.22 | (0.03) | - Operating income increased by 7% (from $28.973 million to $30.963 million) despite a slight decrease in revenue, indicating improved operational efficiency[20] - The effective tax rate significantly decreased from 106.2% in Q1 2025 to 33.9% in Q1 2026, contributing to the return to net income[20] Condensed Consolidated Statements of Financial Position The Condensed Consolidated Statements of Financial Position show decreased total assets and liabilities as of July 31, 2025, reflecting reductions in current assets and debt Condensed Consolidated Statements of Financial Position (USD Thousands) | Metric | July 31, 2025 | April 30, 2025 | | :------------------------------------ | :------------ | :------------- | | Total current assets | 420,295 | 439,884 | | Total assets | 2,524,332 | 2,691,466 | | Total current liabilities | 648,843 | 820,856 | | Long-term debt | 818,272 | 789,435 | | Total liabilities | 1,791,273 | 1,939,260 | | Shareholders' equity | 733,059 | 752,206 | - Total assets decreased by approximately $167 million, driven by reductions in current assets (e.g., accounts receivable, prepaid expenses) and other non-current assets[40] - Total liabilities decreased by approximately $148 million, primarily due to a significant reduction in contract liabilities and accrued employment costs, partially offset by an increase in long-term debt[40] Condensed Consolidated Statements of Cash Flows Q1 2026 Condensed Consolidated Statements of Cash Flows show seasonal operating cash use, significant cash generation from investing activities, and a net decrease in cash Condensed Consolidated Statements of Cash Flows (USD Thousands) | Activity | Q1 2026 | Q1 2025 | | :-------------------------------------------- | :------ | :------ | | Net cash used in operating activities | (85,005)| (88,712)| | Net cash provided by (used in) investing activities | 98,856 | (23,807)| | Net cash (used in) provided by financing activities | (16,924)| 101,589 | | Change in cash, cash equivalents and restricted cash | (4,032) | (10,132)| | Cash, cash equivalents and restricted cash - ending | 81,900 | 89,411 | - Net cash provided by investing activities significantly improved from a use of $23.8 million in Q1 2025 to a provision of $98.9 million in Q1 2026, largely due to $115.2 million in cash proceeds from the sale of businesses and assets[42] - Net cash used in financing activities was $16.9 million in Q1 2026, a notable shift from a provision of $101.6 million in Q1 2025, reflecting lower net debt borrowings and increased share repurchases[42] Calculation of Non-GAAP Free Cash Flow Q1 2026 Non-GAAP Free Cash Flow less Product Development Spending showed a reduced cash outflow, reflecting improved operating cash flow and lower capital expenditures Calculation of Non-GAAP Free Cash Flow less Product Development Spending (USD Thousands) | Metric | Q1 2026 | Q1 2025 | | :---------------------------------------- | :------ | :------ | | Net cash used in operating activities | (85,005)| (88,712)| | Less: Additions to technology, property, and equipment | (12,005)| (14,502)| | Less: Product development spending | (2,890) | (3,351) | | Free cash flow less product development spending | (99,900)| (106,565)| - Free cash flow less product development spending improved from a use of $106.6 million in Q1 2025 to a use of $99.9 million in Q1 2026[43] Supplementary Information and Notes Notes to Financial Statements These notes provide context for the condensed consolidated statements, detailing the preliminary nature of information and the financial impact of the University Services divestiture - The supplementary information is preliminary and subject to change prior to the filing of the Quarterly Report on Form 10-Q[21][26] Net (Loss) Gain on Sale of Businesses, Assets, and Impairment Charges (USD Thousands) | Item | Q1 2026 | Q1 2025 | | :---------------------------------------------------------------------- | :------ | :------ | | University Services | (934) | 1,489 | | CrossKnowledge | — | 4,360 | | Wiley Edge | — | (168) | | Tuition Manager | — | 120 | | Other disposition activity | (182) | — | | Net (loss) gain on sale of businesses, assets, and impairment charges | (1,116)| 5,801| - Wiley completed the sale of University Services on January 1, 2024, and received $119.5 million in total cash consideration in June 2025 for the Seller Note, fiscal year 2026 earnout, and TVG Investment, recognizing an additional pretax loss of $0.9 million in Q1 2026[22] Notes to Non-GAAP Reconciliations These notes clarify non-GAAP performance measures, detailing preliminary data, foreign exchange impacts, amortization components, and pretax/tax impacts of asset sales - The supplementary information for non-GAAP reconciliations is preliminary and subject to change prior to the filing of the Quarterly Report on Form 10-Q[26][34] - Amortization of acquired intangible assets includes developed technology, customer relationships, tradenames, and acquired product development assets[29] Net Pretax Loss (Gain) on Sale of Businesses, Assets, and Impairment Charges (USD Thousands) | Item | Q1 2026 | Q1 2025 | | :---------------------------------------------------------------------- | :------ | :------ | | University Services | 934 | (1,489) | | CrossKnowledge | — | (4,360) | | Wiley Edge | — | 168 | | Tuition Manager | — | (120) | | Other disposition activity | 182 | — | | Net pretax loss (gain) on sale of businesses, assets, and impairment charges | 1,116| (5,801)| Income Tax Benefit (Provision) on Sale of Businesses, Assets, and Impairment Charges (USD Thousands) | Item | Q1 2026 | Q1 2025 | | :---------------------------------------------------------------------- | :------ | :------ | | University Services | — | — | | CrossKnowledge | — | — | | Wiley Edge | — | (895) | | Tuition Manager | — | (30) | | Other disposition activity | 54 | — | | Benefit (provision) on sale of businesses, assets, and impairment charges | 54 | (925)| Notes to Segment Results These notes clarify that segment results are preliminary and that Adjusted Revenue, Operating Income, and EBITDA exclude the Held for Sale segment - The supplementary information for segment results is preliminary and subject to change prior to the filing of the Quarterly Report on Form 10-Q[38] - Adjusted Revenue, Adjusted Operating Income, and Adjusted EBITDA exclude the impact of the Held for Sale or Sold segment's revenue, adjusted operating income or loss, and adjusted EBITDA results[38] Notes to Cash Flow Statements These notes confirm the preliminary nature of cash flow information and refer to the Non-GAAP Performance Measures for Free Cash Flow calculation details - The supplementary information for cash flow statements is preliminary and subject to change prior to the filing of the Quarterly Report on Form 10-Q[44] - Refer to the 'Explanation of Usage of Non-GAAP Performance Measures' for additional details on the calculation of Free Cash Flow less Product Development Spending[44] Explanation of Non-GAAP Performance Measures Wiley uses non-GAAP measures like Adjusted EPS, Revenue, and EBITDA as supplemental indicators for performance, internal reporting, and compensation, acknowledging they are not GAAP standardized - Management uses non-GAAP measures (e.g., Adjusted EPS, Adjusted Revenue, Adjusted EBITDA) as supplemental indicators for operating performance, financial position, internal reporting, forecasting, and incentive compensation[45][52] - These non-GAAP measures provide useful information to investors and analysts for operational trends and comparisons by excluding restructuring charges, certain other items, and the impact of divestitures and acquisitions[17][46] - The performance metric used by the chief operating decision maker to evaluate reportable segments is Adjusted Operating Income, with Adjusted EBITDA also presented for additional insights[47] - Non-GAAP measures do not have standardized meanings under US GAAP, may not be comparable to other companies, and should not be viewed as substitutes for US GAAP financial results[50] Legal and Contact Information Forward-Looking Statements This section cautions against reliance on forward-looking statements, listing various factors that could materially impact future results, including technological and economic risks - Reliance should not be placed on forward-looking statements, as actual results may differ materially due to inherent uncertainties and contingencies[18] - Factors that could impact results include investment in new technologies, journal subscriber renewal rates, financial stability of agents and retailers, economic and political conditions, intellectual property protection, successful integration of acquisitions, operating savings from restructuring, cyber risk, and the ability to leverage AI technologies[18] Contact Information Investor relations contact information is provided for inquiries regarding the earnings release - For investor relations inquiries, contact Brian Campbell at brian.campbell@wiley.com or 201.748.6874[19]