John Wiley & Sons, Inc. (WLY) Earnings

Management highlights

### Strategic Framework & Core Growth Flywheel - Wiley operates two mutually reinforcing growth engines: (1) Research publishing, a durable foundation with mid-single-digit growth that generates trusted proprietary content and data, and (2) AI and data analytics, an emerging high-margin growth engine that leverages research content to deliver value to corporate R&D and AI model developers. AI-powered tools accelerate research output and publishing growth, creating a self-reinforcing flywheel effect. - Wiley's competitive advantages in the AI economy include: a large curated portfolio of authoritative scientific/medical content, leading positions in high-demand AI-relevant disciplines, a centuries-long reputation for trust and quality that differentiates it from unvetted scraped internet content, an open ecosystem partnership model that avoids betting on a single AI technology, and a capital-light Capitalite model that reduces capital requirements and creates network effects. ### Research Segment Key Achievements - Delivered 4% full-year revenue growth in fiscal 2026, accelerating from 3% growth in fiscal 2025, with a trajectory toward sustained mid-single-digit growth. Submissions grew 25% and output grew 11%, outpacing the industry average output growth of 6-8%, indicating ongoing market share gains. - The advanced journal portfolio, a top-tier global collection, reached $70 million in annual revenue growing at double digits. Secured high-profile new society partnerships including the American Society of Mechanical Engineers (ASME), and renewed the 30-year partnership with the American Cancer Society, confirming Wiley's position as a partner of choice. - Launched the Research Exchange platform, securing its first external client (Liverpool University Press), creating a new recurring revenue stream from smaller publishers looking to modernize their workflows. - Completed the transformational acquisition of Emerald Publishing after the quarter closed, the largest Wiley acquisition since 2007, for ~$450 million (7x synergized adjusted EBITDA). Emerald adds ~500 journals, thousands of book titles and case studies, and 500,000 backfile assets, with 92% recurring revenue, 99.6% customer retention, and mid-single-digit organic growth. The acquisition deepens Wiley's scale and content advantage in high-demand AI domains including economics, business, and finance, and creates clear cross-selling and geographic expansion opportunities (only 15% of Emerald revenue comes from North America, where 40% of global social science research spend is located). Emerald is expected to be modestly accretive to adjusted EPS in year one, free cash flow accretive in year two, with $30 million in full run-rate cost synergies by year three. ### AI and Data Analytics Segment Key Achievements - Total AI revenue grew from $23 million in fiscal 2024 to $49 million in fiscal 2026, with recurring AI revenue scaling rapidly from ~$1 million in fiscal 2025 to $8 million in fiscal 2026. As of the end of fiscal 2026, Wiley counts 19 corporate AI subscription customers (including 7 of the top 10 global pharma companies) and 4 LLM developer training customers. The Nexus AI content licensing service has 41 publisher partners representing ~100,000 book titles, and generated $19 million in licensing revenue in fiscal 2026. - Key high-growth AI use cases include Clinical Outcome Assessments (COAs), where revenue grew 68% to $11 million in fiscal 2026, up from $6.5 million in fiscal 2025, supported by a strategic partnership with IQVIA. Secured multiple marquee AI ecosystem partnerships in fiscal 2026 including with AWS, Anthropic, OpenEvidence, and Microsoft, integrating Wiley content into leading AI clinical and life sciences tools. ### Operational & Financial Highlights - Delivered record full-year margins in fiscal 2026: adjusted EBITDA margin of 26.2% (up 220 bps year-over-year) and adjusted operating margin of 17.7% (up 260 bps year-over-year), both all-time highs. Over two years, adjusted EBITDA margin expanded 340 bps and adjusted operating margin expanded 560 bps, driven by structural cost reduction. - Full-year adjusted EPS grew 15% year-over-year, free cash flow grew 55% to $195 million, and free cash flow conversion reached 44%. Returned $174 million to shareholders (up from $137 million in fiscal 2025), including a record $100 million in share repurchases, and raised the dividend for the 32nd consecutive year. Net leverage fell to 1.4x at year end, and pro forma leverage after the Emerald acquisition is ~2.1x, well within Wiley's 1.5-2.5x target range. - Ongoing operational excellence initiatives: A multi-year tech transformation partnership with Retusa (Vertuza) is delivering structural cost savings, shifting 50-60% of tech budget to new product development from legacy system maintenance, and enabling AI-native innovation. Corporate expenses fell 15% full-year and 22% in Q4, with AI also driving internal productivity gains across legal, marketing, and content operations.

Guidance

- Full fiscal 2027 organic revenue is expected to grow low to mid-single digits, with the research segment expected to deliver mid-single-digit growth. This excludes ~$78 million of anticipated revenue contribution from the Emerald acquisition, which is included in all other guidance metrics. - Adjusted EBITDA margin is guided to 26.5% to 27.5%, up from 26.2% in fiscal 2026, representing 30 to 130 basis points of continued margin expansion. No material impact from Emerald integration costs is expected in fiscal 2027, with synergy ramping primarily in 2028 and 2029. - Adjusted EPS is guided to $4.60 to $5.05, up from $4.19 in fiscal 2026, including ~$0.10 of contribution from Emerald. - Full-year free cash flow is guided to $205 million, up from $195 million in fiscal 2026. The guidance includes $15 million of year-one free cash flow dilution from Emerald (from integration and restructuring costs) and $15 million of higher CapEx for new AI product development. Emerald is expected to become free cash flow accretive in fiscal 2028. - Total AI revenue for fiscal 2027 is expected to exceed $50 million, with recurring AI revenue expected to grow 2x to 3x from the $8 million level achieved in fiscal 2026, as the business shifts from mostly non-recurring training revenue to higher-margin recurring subscriptions. - The learning segment is expected to see materially improved performance in fiscal 2027, with digital growth in academic and new front-list momentum in professional publishing, after several years of declining revenue. - Q1 fiscal 2027 will face an unfavorable ~$25 million year-over-year comparison from large prior-year AI projects, but will include ~$14 million of revenue from Emerald, and full-year results are the most relevant measure of performance.

Segment performance

1. Research Segment: Q4 2026: Research publishing revenue grew 5% year-over-year (constant currency); research solutions revenue declined 4% year-over-year (constant currency). Full year fiscal 2026: Total research segment revenue grew 4% year-over-year, with publishing up 3% and solutions up 6%. Full-year adjusted EBITDA for the research segment grew 8% year-over-year, reaching an adjusted EBITDA margin of 33.2%, up 110 basis points year-over-year. This segment contributes the majority of Wiley's recurring high-margin revenue, and accounted for ~80% of full-year adjusted operating profit in fiscal 2026. 2. Learning Segment: Q4 2026: Academic revenue declined 5% year-over-year (constant currency); professional revenue declined 10% year-over-year (constant currency). Adjusted EBITDA for the learning segment declined 1% year-over-year, but adjusted EBITDA margin increased 310 basis points to 46.1% due to aggressive cost cutting. Full year fiscal 2026: Academic revenue declined 5% year-over-year, professional revenue declined 10% year-over-year, pressured by macro consumer and corporate spending headwinds and unfavorable year-over-year comparisons for prior-year AI licensing deals.

Risks & headwinds

- The learning segment faces ongoing macro headwinds, including soft consumer and corporate spending, and persistent pressure from Amazon's retail inventory adjustment practices that will create year-over-year headwinds until Q3 2027. - Pending intellectual property copyright court decisions related to AI training data are expected in the coming months, though management believes these decisions will ultimately validate the value of Wiley's proprietary content. - Integration of the Emerald acquisition carries near-term restructuring and one-time cash costs, with full synergies not expected until three years post-close. - AI revenue includes a large share of non-recurring training revenue that creates some quarterly volatility, and the emerging AI market is still developing, creating some uncertainty around long-term growth trajectories.

Analyst Q&A

• Q: What is Wiley's 2027 AI revenue outlook across content monetization, third-party partnerships, and recurring revenue, and is there upside to the >$50 million baseline? /

  A: Management confirmed full-year 2027 AI revenue will exceed $50 million, with recurring revenue expected to grow 2-3x from fiscal 2026's $8 million, as the business shifts from non-recurring training revenue to recurring subscriptions. The three core growth vectors (database solutions, applied research intelligence, audience monetization) all have large addressable markets, with some areas ramping in 2027 and others still in investment mode; more detail will be shared at the 2027 Investor Day. There is upside to the baseline from emerging discrete opportunities, but management maintains transparency around current momentum while the market continues to develop.

• Q: What is Emerald's growth and revenue profile, and how does its economics/business/finance content fit into Wiley's AI strategy? /

  A: Emerald has ~$85 million in annual revenue, 92% recurring revenue, 99.6% customer retention, 37-38% EBITDA margins, and a sustained mid-single-digit organic growth profile, aligned with Wiley's core research business. Strategically, Emerald immediately gives Wiley a leading or second-leading position in economics, finance, and business, which is highly valuable for AI monetization, as AI models need authoritative content in these areas for corporate and financial use cases. It also creates clear geographic revenue synergies, as Emerald only generates 15% of revenue from North America, where Wiley has a strong existing market footprint.

• Q: What is the outlook for the learning segment broken down by courseware, academic/professional publishing, and assessments, and is EBITDA growth expected for the segment in 2027? /

  A: Management does not guide to specific segment-level targets, but noted ongoing near-term headwinds from Amazon's inventory practices, which will create year-over-year pressure until Q3 2027, plus continued soft consumer and corporate spending. The segment is expected to materially improve in 2027, driven by stronger front-list productivity, stabilizing Amazon inventory practices, new product launches in assessments, and growth in digital courseware via inclusive access models. Overall, the company expects full-year revenue improvement and margin expansion across the portfolio in 2027.

• Q: What is the outlook for share repurchases after the Emerald acquisition, and what is the current approach to capital allocation? /

  A: Management maintains a balanced capital allocation framework that prioritizes high-return organic investment first, and remains committed to returning excess cash to shareholders. Pro forma leverage of 2.1x after the Emerald acquisition is well within the 1.5-2.5x target range, so the company has capacity to continue repurchasing shares. Management believes Wiley stock is undervalued at current levels, and will remain opportunistic with share buybacks throughout fiscal 2027, while prioritizing dividend growth per the long-standing policy.