John Wiley & Sons(WLYB) - 2026 Q3 - Quarterly Report

Financial Performance - Consolidated Revenue for the three months ended January 31, 2026 was $410.0 million, a 1% increase compared to the prior year [152]. - Operating Income for the same period was $62.8 million, reflecting a 21% increase year-over-year [165]. - Adjusted Operating Income increased to $69.8 million, up 22% compared to the prior year [159]. - Adjusted EBITDA for the three months ended January 31, 2026 was $105.4 million, a 12% increase from the previous year [159]. - US GAAP Income Before Taxes for the three months ended January 31, 2026 was $44.4 million, up from $18.7 million in the prior year, reflecting a significant increase [174]. - Non-GAAP Adjusted Income Before Taxes for the three months ended January 31, 2026 was $68.4 million, compared to $58.5 million in the prior year, indicating a year-over-year growth of 17% [174]. - Diluted earnings per share for the three months ended January 31, 2026 was $0.56, compared to a loss per share of $(0.43) in the prior year, marking a substantial turnaround [179]. - Consolidated Revenue for the nine months ended January 31, 2026, was $1,228.6 million, a decrease of 1% compared to the prior year [195]. - Adjusted Operating Income increased by 13% to $183.0 million, while Adjusted EBITDA rose by 6% to $290.9 million compared to the prior year [195]. - Diluted earnings per share increased to $1.62, up from $0.29 in the prior year, driven by a lower provision for income taxes [218]. - US GAAP Earnings Per Share for the nine months ended January 31, 2026, was $1.62, compared to $0.29 for the same period in 2025, while Non-GAAP Adjusted EPS increased to $2.56 from $2.28, reflecting a 12% increase [219]. Revenue Breakdown - AI license revenue decreased to $7.3 million from $9 million in the prior year, indicating fluctuations in revenue due to timing and content nature [153]. - Research revenue for the three months ended January 31, 2026 increased by $6.6 million, or 2%, compared to the prior year, with Research Publishing revenue growing by 3% [183]. - AI license revenue for the three months ended January 31, 2026 was $6.2 million, down from $9 million in the prior year, reflecting a decline in this segment [184]. - AI license revenue for the nine months ended January 31, 2026 was $42.3 million, compared to $30 million in the prior year, indicating a significant increase in this revenue stream [193]. - Total Research Revenue for the nine months ended January 31, 2026, was $834.3 million, a 5% increase from $794.7 million in 2025, with Research Solutions revenue growing 11% [221]. - Research AI license revenue surged to $26.8 million for the nine months ended January 31, 2026, compared to approximately $10 million in the prior year, indicating a significant growth in AI-related offerings [223]. - Learning revenue decreased by $1.2 million, or 1%, for the three months ended January 31, 2026, with Academic revenue increasing by 1% but Professional revenue decreasing by 4% [187]. - Learning revenue decreased by $28.6 million, or 7%, to $394.3 million for the nine months ended January 31, 2026, primarily due to declines in print and digital sales [226]. Expenses and Cost Management - Cost of Sales increased by $3.6 million, or 3%, to $107.8 million, primarily due to higher royalty costs [155]. - Operating and Administrative Expenses decreased by $10.9 million, or 5%, to $219.1 million, driven by restructuring and cost-saving initiatives [156]. - Adjusted unallocated corporate expenses decreased by 21% to $33.8 million for the three months ended January 31, 2026, primarily due to restructuring and expense management [191]. - Operating and administrative expenses decreased by 5% to $684.5 million, attributed to restructuring and cost-saving initiatives [198]. - Cost of sales remained consistent at $321.4 million, with a 1% decrease on a constant currency basis compared to the prior year [196]. Cash Flow and Debt - Free cash flow less product development spending for the nine months ended January 31, 2026, was $55.5 million, a significant improvement from a negative $1.2 million in the prior year [240]. - Net cash provided by operating activities for the nine months ended January 31, 2026, was $103.3 million, compared to $52.3 million in the prior year, reflecting improved operational efficiency [238]. - The company had approximately $807.5 million of debt outstanding as of January 31, 2026, with $485.2 million of unused borrowing capacity under its credit facilities [236]. - Net cash provided by investing activities was $45.6 million for the nine months ended January 31, 2026, compared to a net cash used of $69.7 million in the prior year, largely due to $115.3 million received from selling University Services assets [247]. - Net cash used in financing activities was $140.0 million for the nine months ended January 31, 2026, compared to net cash provided of $24.1 million in the prior year, driven by lower net borrowings of $113.2 million [248]. Restructuring and Charges - The Global Restructuring Program is expected to yield annualized cost savings of approximately $125 million, with $110 million realized in fiscal year 2026 [161]. - Restructuring and related charges for the nine months ended January 31, 2026, were $16.1 million, compared to $13.1 million in the prior year [200]. Foreign Exchange and Other Income - Interest expense decreased to $11.5 million from $14.0 million in the prior year, attributed to a lower effective interest rate [169]. - Net foreign exchange transaction losses were $(5.2) million for the three months ended January 31, 2026, compared to $(4.2) million in the prior year [170]. - Net foreign exchange transaction losses were $(5.2) million for the nine months ended January 31, 2026, compared to $(7.3) million in the prior year [211]. - Other expense, net was $(1.5) million for the three months ended January 31, 2026, compared to other income of $1.0 million in the prior year, primarily due to foregone interest income from the sale of the University Services Seller Note [174]. Shareholder Returns - The quarterly dividend increased to $1.42 per share annualized from $1.41 per share in the prior year, with a share repurchase program of $250 million approved, of which $237.3 million remained authorized as of January 31, 2026 [249]. - The company repurchased 1,973 thousand shares of Class A and 6 thousand shares of Class B stock for a total of $70.1 million during the nine months ended January 31, 2026, at an average price of $35.42 [251]. Working Capital and Customer Concentration - The company reported a negative working capital of $281.2 million as of January 31, 2026, down from $381.0 million as of April 30, 2025, primarily due to seasonality and unearned contract liabilities [245]. - The top 10 book customers accounted for approximately 11% of total consolidated revenue and 36% of accounts receivable, net, as of January 31, 2026, with no single customer exceeding 6% of total revenue [266]. - Subscription agents accounted for approximately 18% of total revenue for the year ended April 30, 2025, with no single agent exceeding 10% of total revenue, indicating minimal credit risk exposure [265].