JOHN WILEY & SONS, INC. Q4 FY2025 earnings call

• Multiyear journey to become a stronger and more profitable Wiley, focusing on cost structure and core business growth.
• Achieved revenue growth and margin improvement in both segments, with margin expansion a multi-year strategic focus.
• Drove growth in recurring revenue models, strong Open Access growth, and secured landmark multi-year agreements in emerging markets.
• Capitalized on AI opportunities with $40 million in AI licensing revenue, partnering with major companies and working on various use cases.
• Implemented technology transformation efforts to reduce costs, improve delivery, and innovate, with a new research publishing platform in development.

Research Segment

• Fourth quarter and full year revenue increased 3% due to growth in recurring revenue models, open access programs, and new AI licensing revenue. Ancillary and print products had some softness. Adjusted EBITDA for Research increased 4% for the quarter and 5% for the year, with full-year margin improving by 30 basis points to 32.1%.

Learning Segment

• Q4 revenue declined 5% due to prior year AI agreement and retail channel softness in Professional Publishing. For the year, revenue rose 2% driven by AI licensing and academic growth. Adjusted EBITDA for Learning declined 6% in Q4 but rose 9% for the year. Margin expansion initiatives delivered 250 basis points improvement in fiscal 2025, resulting in an adjusted EBITDA margin of 37.4%.

• Fiscal 2026 revenue expected in low to mid-single digits, excluding the adverse impact of $40 million AI licensing revenue in fiscal 2025.
• Adjusted EBITDA margin outlook raised to 25.5% to 26.5%.
• Adjusted EPS expected to be in the range of $3.9 to $4.35.
• Free cash flow target of $200 million, with CapEx expected to be comparable to current year's $77 million.

• Uncertainty from policy swings, tariffs, and an uncertain economic climate which could impact revenue and margins.
• Potential challenges in navigating the rapidly evolving AI market and maintaining consistent growth.

Q: Talk about the outlook for organic growth ex AI and factors affecting upside/downside in mid-single-digit revenue growth.

A: Drivers like strong submissions and acceptances continuing, favorable calendar '25 renewals, growth in inclusive access and courseware in learning, and good visibility into calendar '26 renewals. Uncertainty in the AI market and external environment pose risks to upside/downside.

Q: Comment on the contribution of recurring revenue from AI partnerships, currently around $1 million, and future potential.

A: It's an early stage figure, a nascent emerging market with pilots and interest in utility-based licensing models. Partnerships with tech and AI native companies are developing, with potential for high-margin, recurring revenue as the market evolves.

Q: Discuss whether submission and output growth rates will converge over time and visibility into revenue.

A: Submission growth supports subscription revenue value, with a lag between submissions and publications. Visibility into calendar '25 revenue is strong due to good renewals, and outlook for calendar '26 renewals is optimistic with sales teams prepared.

Q: Talk about planning and budgeting in an uncertain environment and how it impacts the outlook.

A: Approach with balanced mix of discipline and flexibility, considering global diversification, digital and recurring business models, cost alignment, and margin expansion. Modeling R&D budget scenarios, supporting customers, and monitoring corporate R&D spending trajectories to prepare for uncertainty.

Q: Discuss the cash return to shareholders plan going forward, including buybacks and dividends.

A: Will maintain a mixed approach, returning cash to shareholders as a key component of free cash flow use while maintaining ability to invest in the business. Measured approach to buybacks and dividends, with $60 million spent on buybacks, and continuing to evaluate opportunities based on market conditions.