John Wiley & Sons, Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights:

• AI Leadership: Achieved a $20 million AI licensing project including content from publishing partners, announced a strategic partnership with Anthropic, and delivered $29 million in AI licensing revenue in Q1. The Wiley Nexus platform connects academic content to AI applications.
• Publishing and Renewals: Drove above-market growth in research submissions (up 25%) and output (up 13%). Strong general renewal season for calendar year '25 driven by volume and pricing growth. Open access flagship journal Advanced Science saw revenue grow nearly 50% year-over-year.
• Platform Transformation: Scaled migration of the research publishing platform, the research exchange, with 1,000 journals transitioned and 350,000 unique users served. AI-powered workflows improved author experience and scientific integrity screening.
• Capital Returns: Increased share repurchases to $14 million, board approved a $250 million repurchase authorization (25% increase), and implemented a 10b5-1 plan. Also, 32nd consecutive dividend increase with a current yield of around 3.5%.

Segment Performance:

• Research: Delivered solid 5% growth. Research publishing declined 1% (lapped a $5 million journal renewal benefit from the prior year but offset by double-digit gold open access growth). Research solutions grew 44% driven by the Nexus AI project. Publishing pipeline is robust and globally diversified with 45% from APAC, 30% from EMEA, 20% from North America, and 5% from the rest of the world. July was a record month for open access submissions.
• Learning: Declined 8% due to lower AI and market-related softness in professional publishing. Delivered robust growth in new title signings (27%) and title output (9%) across the professional portfolio. AI learning revenue in Q1 was $13 million, including $9 million carryover from Q4 and a $4 million expansion from a repeat LLM customer.

Guidance:

• Revenue growth in low to mid-single digits.
• Adjusted EBITDA margin of 25.5% to 26.5%, up from 24% the prior year.
• Adjusted EPS of $3.90 to $4.35.
• Free cash flow of approximately $200 million.
• CapEx expected to be comparable to prior year's total of $77 million.
• AI licensing demand remains robust, with confidence in subscription inference opportunities growing.

Risks:

• Industry class action settlement involving pirated content and a key AI developer, which is a pivotal win for intellectual property protection.
• Softness in professional publishing due to consumer spending and retail channel headwinds.

Q: Could you provide more color on the Anthropic agreement, including revenue model and impact on investment plans?

A: Jay Flynn stated the partnership with Anthropic focuses on integrating Wiley's content into Claude for academic use, underpinning institutional library subscriptions and as a potential upsell vector. Matthew Kissner mentioned the market is rapidly evolving and Wiley aims to build connections with various AI tools.

Q: How much of the $16 million Nexus revenue is Wiley's content versus outside content?

A: Craig Albright responded that the $16 million is Nexus or partner-driven content within a total $20 million deal, which blends Wiley content and Nexus content, viewed as additive to Wiley's existing content-driven deals.

Q: Where are journal subscriptions for calendar 2025 renewals at this stage?

A: Jay Flynn noted it's early days, renewal season is coincident with back to school, outlook is fine, and no concerns seen yet for calendar '26.

Q: About the $4 million one-time corporate cost, is it nonrecurring?

A: Craig Albright said it was a short-term one-time lift from strategic consulting projects, now completed, and won't impact going forward.

Q: Impact of Nexus-related revenue on fiscal 2026 margin outlook?

A: Craig Albright stated it's relatively de minimis in impact on margins, with focus on core business margin expansion remaining on track.

Q: Capital allocation priorities, especially share buybacks?

A: Craig Albright said Wiley has a disciplined approach to capital allocation, supporting dividends, share buybacks, paying down debt, and investing in high-value organic growth opportunities.