Executive Summary / Key Takeaways

• Strategic Transformation Underway: John Wiley & Sons, Inc. (WLY) is undergoing a significant multi-year transformation, shedding non-core assets and aggressively optimizing its cost structure to drive sustainable, profitable growth in its core Research and Learning segments.
• AI Leadership and Expanding Opportunity: Wiley is a recognized leader in the evolving AI landscape, leveraging its authoritative content for large language model (LLM) training and developing vertical-specific AI applications, with Q1 FY26 AI licensing revenue reaching $29 million and a growing pipeline of recurring inference opportunities.
• Robust Core Business Fundamentals: The Research segment continues to demonstrate strong underlying health with accelerating Open Access growth (21% article output growth in Q1 FY26), solid journal renewal rates for calendar year '25, and a robust publishing pipeline, underpinning resilient recurring revenue models.
• Significant Margin Expansion: Driven by a global restructuring program targeting $105 million in annualized cost savings and ongoing operational discipline, Wiley is projecting substantial Adjusted EBITDA margin expansion to 25.5%-26.5% in FY26, up from 24% in FY25.
• Disciplined Capital Allocation: The company maintains a strong balance sheet (net debt to EBITDA 1.9x) and is committed to shareholder returns, marked by its 32nd consecutive dividend increase and a new $250 million share repurchase authorization, while strategically investing in high-return growth initiatives.

A Legacy Forged in Knowledge, Reimagined for the AI Era

John Wiley & Sons, Inc. stands as a testament to enduring adaptability, a company that began as a Lower Manhattan print shop in 1807 and has evolved over 218 years into a global leader in authoritative content, data-driven insights, and knowledge services. This journey has seen Wiley transform into a predominantly digital enterprise, with over 80% of its adjusted revenue in fiscal year 2025 derived from digital products and services, showcasing its remarkable resilience through economic cycles. Under the leadership of President and CEO Matthew Kissner since October 2023, Wiley embarked on a multi-year strategic reorientation, simplifying its business, optimizing its cost structure, and aggressively pursuing growth in its core Research and Learning segments.

The global knowledge economy, Wiley's operational arena, is characterized by consistent demand, directly correlated with ever-increasing global R&D investment, which grew 8% in 2024 with similar projections for 2025. This environment fuels a continuous demand to publish, vital for researchers' career advancement and the assessment of scientific outcomes. Wiley operates within this ecosystem as a "wide moat business" possessing "must-have content and brands," a position it leverages to deliver resilient compounding growth.

In this landscape, Wiley competes with global information and education giants such as RELX Group (RELX), Pearson (PSO), and McGraw-Hill (MHFI), as well as business intelligence firms like Informa (INF). While RELX excels in broad data analytics and Pearson in adaptive learning technologies, Wiley differentiates itself through its deep content expertise, long-standing partnerships with learned societies (some spanning over 50 years), and a reputation for high-quality, peer-reviewed content. This specialized focus allows Wiley to maintain strong customer loyalty in academic and professional markets, even as it works to accelerate its digital innovation to match the pace of its more diversified rivals.

Technological Edge: Powering Research and Learning with AI

Wiley's strategic response to market dynamics is deeply rooted in its technological differentiation and innovation, particularly in the burgeoning field of Artificial Intelligence. The company is not merely participating in the AI revolution; it is actively shaping how its industry approaches knowledge licensing and partnership.

At the core of this strategy is the Wiley Nexus, a unified platform designed for the AI economy. This proprietary technology connects academic content to AI applications and streamlines licensing processes. Its tangible benefits include the ability to aggregate scholarly content for AI training and develop cutting-edge research tools using advanced vector database technology. This was demonstrated in Q1 FY26 with a landmark $20 million AI licensing project that, for the first time, included $16 million of content from publishing partners, showcasing Wiley's pioneering approach to publisher collaboration. This additive strategy expands Wiley's addressable market and leverages its specialized AI and legal expertise.

Beyond licensing, Wiley is embedding AI across its publishing workflows and product portfolio. The Research Publishing Platform (Research Exchange) is a prime example, with 1,000 journals already transitioned and 350,000 unique users served. This platform integrates major publishing workflows using AI and machine learning to streamline article submissions, enhance quality and integrity screening, and improve peer review. A key quantifiable benefit is a 70% reduction in published papers citing problematic sources, achieved through AI-powered screening tools that conduct 25 comprehensive checks in under ten minutes. Furthermore, the platform has shown a 30% improvement in automated transfer referral conversion, efficiently matching articles to journals and enhancing the author experience.

Wiley's R&D initiatives extend to its Learning segment, where four new AI tools have been introduced for STEM digital courseware products, focusing on tutoring, authoring, assessment, and student behavior insights. In professional publishing, an AI-powered book author portal is being developed to improve launch efficiency and design. These technological advancements contribute directly to Wiley's competitive moat by improving operational efficiency, ensuring content integrity, and creating new, high-value offerings that attract both authors and institutional customers. The "so what" for investors is clear: these innovations drive higher publishing volume at lower costs, enhance the author and learner experience, and position Wiley as a trusted partner in the responsible development and application of AI.

Financial Performance: A Story of Strategic Reorientation and Margin Expansion

Wiley's recent financial performance reflects its strategic reorientation. In the first quarter of fiscal year 2026 (ended July 31, 2025), the company reported Adjusted Revenue growth of 1% on a constant currency basis (excluding divested assets) to $396.8 million. This was primarily driven by mid-single-digit growth in the Research segment, fueled by AI licensing and open access momentum. Adjusted EBITDA, however, saw a 3% decline on a constant currency basis, reaching $70.4 million, and Adjusted EPS rose 2% to $0.49. This quarterly performance, while showing some "noise" due to its seasonal nature, was in line with management's expectations. The slight margin compression in Q1 FY26 was attributed to a strategic mix shift, as the landmark $20 million AI project included $16 million of partner content (Wiley Nexus), which generated strong incremental revenue at a 45% EBITDA margin, compared to approximately 75% for deals involving solely Wiley's own content.

Fiscal year 2025 demonstrated significant progress, with revenue growth and margin improvement across both Research and Learning segments. The company achieved a notable 300 basis point improvement in its adjusted operating margin and a 120 basis point improvement in its adjusted EBITDA margin. Research saw a 19% increase in submissions and 8% output growth, contributing to margin expansion. The Learning segment also delivered revenue and margin growth, with AI licensing generating $29 million in revenue (up from $23 million in the prior year) from academic and professional backlisted content. Corporate expenses were down 4% for the full fiscal year 2025, reflecting initial benefits from cost optimization efforts.

Wiley's liquidity remains robust, with $81.9 million in cash and cash equivalents as of July 31, 2025, and approximately $469.4 million in unused borrowing capacity under its credit facilities. The net debt to EBITDA ratio improved to 1.9x at the end of July 2025, down from 2.0x in the prior year. This financial strength is bolstered by the $119.5 million cash proceeds received in June 2025 from the University Services divestiture, which was used to reduce debt, expected to result in approximately $6 million in annual cash interest savings.

The company's commitment to shareholder returns is evident in its 32nd consecutive annual dividend increase, raising it to $1.42 per share annualized. The Board also approved an additional $250 million share repurchase program in Q1 FY26, a 25% increase over the previous authorization, with $14 million in shares repurchased during the quarter. This balanced capital allocation strategy aims to support shareholder value while funding strategic growth initiatives and maintaining a healthy balance sheet.

Segment Performance: Dual Engines of Growth

Research Segment: Fueling Scientific Advancement

The Research segment is a cornerstone of Wiley's business, delivering peer-reviewed scientific, technical, and medical journals and solutions. In Q1 FY26, Research revenue grew 6% (5% constant currency) to $281.7 million. This growth was primarily driven by a significant increase in AI license revenue, which reached $16 million (up from $1 million in the prior year) due to the Nexus AI project, and robust double-digit growth in gold Open Access. The flagship journal, Advanced Science, saw revenue growth of nearly 50% year-over-year, and July marked a record month for Open Access submissions.

Wiley's publishing pipeline remains robust and globally diversified, with 45% of article output from APAC, 30% from EMEA, 20% from North America, and 5% from other regions. Submissions were up 25% and output 13% in Q1 FY26, with double-digit growth across key geographies including China, India, the US, UK, and Japan. The calendar year '25 journal renewal season was strong, providing good visibility into recurring revenues. While the segment's Adjusted EBITDA margin slightly decreased to 28.3% in Q1 FY26 (from 29.3%) due to the mix of AI licensing deals, management expects margins to improve on a full-year basis as these impacts normalize. Wiley's enduring success in partnering with societies, with a remarkable retention rate, further highlights its competitive strength in this segment.

Learning Segment: Evolving Education and Professional Development

The Learning segment provides scientific, professional, and education content, digital courseware, and assessment services. In Q1 FY26, Learning revenue declined 7% (8% constant currency) to $115.1 million. This decrease was primarily attributed to lower AI licensing revenue ($13 million in Q1 FY26 compared to $16 million in the prior year) and market-related softness in professional publishing, particularly due to consumer spending headwinds and retail channel performance. Academic revenue also saw a decline, mainly from lower licensing revenue.

Despite these headwinds, the segment demonstrated operational discipline, achieving a 20 basis point expansion in Adjusted EBITDA margin to 27.4%. New title signings in the professional portfolio showed robust growth of 27%, with title output up 9%, signaling future revenue contributions. The launch of the Work Smart tool in assessments, combining personality models with training, underscores ongoing product innovation. While the academic market remains steady after two consecutive years of enrollment growth, the company is closely monitoring full college enrollments and consumer spending trends.

Strategic Outlook and Risk Assessment

Wiley's management has reaffirmed its full-year fiscal 2026 outlook, projecting revenue growth in the low to mid-single digits. This confidence is underpinned by strong journal renewals, accelerating Open Access growth, expanding AI partnerships, and disciplined cost management. The Adjusted EBITDA margin is expected to be between 25.5% and 26.5%, a significant increase from 24% in FY25, driven by anticipated business performance and the ramp-up of executed cost savings in Q2. Adjusted EPS is guided to $3.90 to $4.35, up from $3.64 in FY25, and Free Cash Flow is targeted at approximately $200 million, an improvement from $126 million in FY25. Capital expenditures are expected to be comparable to FY25's $77 million.

A key strategic focus for Wiley is the corporate R&D market. This segment currently represents only 10% of Wiley's revenue base but accounts for 80% of total US R&D spend. Wiley aims for material expansion in this area by integrating its content and data more deeply into corporate research processes through AI model enablement and science analytics. Partnerships with Anthropic, Amazon Web Services, Perplexity, and leading pharmaceutical companies for drug discovery and pattern recognition highlight this ambition. These early-stage "AI subscription inference models" generated $1 million in recurring revenue in FY25, and while the market is nascent, it represents a significant long-term opportunity.

However, the investment thesis is not without risks. The AI market, while promising, is "rapidly evolving" and "not as predictable" as traditional segments. The softness in professional publishing "may be an indicator of a broader economic slowdown hitting consumers," a trend Wiley is closely monitoring. Furthermore, potential "US government actions on research funding" and "geopolitical risk" introduce uncertainty, though Wiley's global diversification (US federal funding supports only a single-digit percentage of its article output) and multi-year agreements provide a degree of insulation. The ongoing class-action lawsuit against Anthropic, in which Wiley's content is implicated, also presents an unquantifiable risk, though management views the broader settlement in principle as a "pivotal win for the protection of intellectual property."

Conclusion

Wiley is in the midst of a profound transformation, leveraging its deep heritage in authoritative content and its pioneering approach to AI to redefine its role in the global knowledge economy. The core investment thesis rests on its ability to convert a legacy of trust and quality into sustainable, digitally-driven growth, amplified by strategic cost optimization and a disciplined capital allocation framework. The company's technological leadership, particularly with the Wiley Nexus and Research Exchange platforms, provides a distinct competitive edge, enhancing efficiency, ensuring integrity, and unlocking new revenue streams in the burgeoning AI market.

While short-term fluctuations and external market uncertainties warrant careful observation, Wiley's reaffirmed fiscal 2026 guidance, underpinned by strong fundamentals in research, accelerating AI partnerships, and significant margin expansion, paints a compelling picture. The strategic pivot towards the vast corporate R&D market, powered by its unique content and data, positions Wiley for long-term value creation. Investors should recognize Wiley as a resilient enterprise, strategically reoriented and technologically advanced, poised to capitalize on the evolving demands of science and learning in an increasingly AI-centric world.