Business Overview
John Wiley & Sons, Inc., established in 1807, has a rich history as one of the world’s largest publishers and a trusted leader in research and learning. The company has weathered numerous changes in the publishing industry, adapting its business model to capitalize on evolving trends and technological advancements.
Financial Overview
For the first quarter of fiscal year 2025, Wiley reported revenue of $403.8 million and a net loss of $1.4 million. The company’s operating cash flow was negative $88.7 million, while free cash flow was negative $105.2 million. Wiley’s balance sheet showed cash and cash equivalents of $82.6 million, including $6.8 million classified as held-for-sale. The company has approximately $388.1 million available under its Amended and Restated Credit Agreement.
Segmental Performance
Wiley operates in three main segments: Research, Learning, and Held for Sale or Sold.
The Research segment, which includes the company’s leading journal portfolio and content platforms, generated revenue of $265.3 million in the first quarter of fiscal 2025, a 3% increase from the prior-year period on a constant currency basis. This growth was driven by increased revenue in the Research Publishing business, particularly in institutional licensing and open access models, where open access article output grew approximately 14% compared to the prior year. The segment’s Adjusted Operating Income was $55.2 million, up 3% year-over-year on a constant currency basis, with an Adjusted EBITDA margin of 29.3%.
The Learning segment, which encompasses academic and professional publishing, reported revenue of $124.3 million, up 14% year-over-year on a constant currency basis. This growth was primarily driven by a $17 million content rights project for AI training, as well as continued growth in Academic courseware, partially offset by a decrease in print book sales. Excluding the impact of the AI project, Learning revenue decreased 1% year-over-year on a constant currency basis. The segment’s Adjusted Operating Income was $22.5 million, with an Adjusted EBITDA margin of 27.2%.
The Held for Sale or Sold segment, which includes businesses that Wiley has committed to divest, reported revenue of $14.2 million, an 83% decrease from the prior-year period on a constant currency basis. This decline was due to the sale of the University Services business on January 1, 2024, and the sale of the Wiley Edge business on May 31, 2024. The segment’s Adjusted Operating Income was $2.5 million, with an Adjusted EBITDA margin of 17.8%.
Transformation and Optimization
In recent years, Wiley has undertaken a comprehensive transformation to streamline its operations and focus on its core strengths. The company has executed a $130 million cost savings program, with $120 million in savings expected to be realized by the end of fiscal 2025. Wiley has also divested non-core businesses, including the sale of University Services in January 2024 and Wiley Edge in May 2024, to reinvest in its key Research and Learning segments. The company completed the sale of CrossKnowledge on August 31, 2024.
AI Opportunities
Wiley has identified significant opportunities in the burgeoning artificial intelligence (AI) market. The company has executed two content rights projects with large tech companies, totaling $21 million, to license its high-quality, curated content for AI model training. This represents an incremental revenue stream that complements Wiley’s core publishing activities.
Research Segment Resilience
The Research segment has demonstrated resilience, with the company capitalizing on the continued growth in global R&D spending, which is expected to reach an estimated $2.53 trillion in 2024, up around 8% since 2022. Wiley’s leading journal portfolio and industry-leading content platforms have enabled the company to grow research article submissions by 18% in the first quarter of fiscal 2025, while article output increased by a solid 6%.
Learning Segment Transformation
The Learning segment has undergone a transformation, with a focus on digital products and services. The segment’s revenue rose 14% in the first quarter, driven by the AI content rights project and continued growth in academic digital courseware, where Wiley has seen consistent double-digit increases. The company’s strategic investments in modernizing its systems and platforms are expected to drive further improvement in the Learning segment’s profitability.
Capital Allocation and Shareholder Returns
Wiley remains committed to rewarding shareholders through a combination of dividends and share repurchases. In the first quarter of fiscal 2025, the company increased its quarterly dividend by 0.4% to $0.3525 per share, marking the 31st consecutive year of dividend increases. Additionally, Wiley repurchased 295,000 shares at an average cost of $42.34 per share during the quarter.
Risks and Challenges
While Wiley has navigated the industry’s evolution successfully, the company faces ongoing challenges, including the continued shift from print to digital, pricing pressures, and competition from other publishing and educational technology providers. The company’s ability to effectively execute its transformation strategy and capitalize on emerging opportunities, such as AI, will be crucial to its long-term success.
Financials
Wiley’s financial performance reflects its ongoing transformation and the challenges faced in the publishing industry. For the first quarter of fiscal year 2025, the company reported revenue of $403.8 million, representing a significant market presence. However, the net loss of $1.4 million indicates the ongoing costs associated with its restructuring efforts and investments in future growth initiatives.
The revenue increase in the first quarter was largely driven by the $17 million content rights project for AI training, primarily in the Learning segment. Excluding this project, adjusted revenue increased 2% year-over-year.
Liquidity
The company’s liquidity position remains solid, with $82.6 million in cash and cash equivalents, including $6.8 million classified as held-for-sale. Wiley has approximately $388.1 million available under its Amended and Restated Credit Agreement. The company’s current ratio of 0.5703 and quick ratio of 0.5328 suggest a moderate level of short-term liquidity, which the company will need to manage carefully as it continues to invest in its core segments and new opportunities.
Guidance
For fiscal year 2025, Wiley has provided the following guidance: – Revenue of $1.65 billion to $1.69 billion, representing 2% to 4% growth. – Adjusted EBITDA of $385 million to $410 million, representing 4% to 11% growth, with a target adjusted EBITDA margin of 23% to 24%. – Adjusted EPS of $3.25 to $3.60, representing 17% to 29% growth. – Free cash flow of approximately $125 million.
The guidance reflects expectations of low-to-mid single-digit growth in the Research segment and low single-digit growth in the Learning segment. It also factors in the impact of the two AI content licensing projects executed in fiscal 2024 and fiscal 2025.
Conclusion
Wiley’s rich history, diversified business model, and strategic initiatives position the company well to navigate the changing publishing landscape. The company’s focus on its core Research and Learning segments, combined with its cost optimization efforts and pursuit of AI-related opportunities, suggest a future of continued evolution and value creation for shareholders. The recent divestiture of non-core businesses and the strong performance in digital and open access publishing demonstrate Wiley’s commitment to adapting to market trends and focusing on high-growth areas. As the company continues to execute its transformation strategy and capitalize on emerging opportunities in AI and digital learning, it remains well-positioned to maintain its leadership in the evolving research and education markets.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.