WLY

Strategic Positioning and AI Integration:

• Wiley is transitioning from a legacy publisher to an AI and data analytics company, leveraging its proprietary content as a foundation for high-stakes scientific AI models.
• The company serves as the sole scientific publisher in the U.S. Department of Energy's Genesis mission and a founding data partner for CUSP AI's Global Materials Foundry.
• AI revenue reached $14 million in Q1, with another $14 million contracted for Q2 and Q3. The mix is shifting toward model training (75%) and recurring revenue (25%).
• Management emphasizes that trust and accurate content are critical differentiators, positioning Wiley to close the 'trust gap' in AI through human oversight and peer-reviewed integrity.

Emerald Acquisition Integration:

• The acquisition of Emerald Publishing is proceeding ahead of schedule with no surprises. The cultural and strategic fit is described as strong.
• Financially, Emerald added $13 million to top-line revenue and $5 million to adjusted EBITDA in its first partial quarter.
• Cost synergies are expected to reach a run rate of $30 million by Year 3, with bulk realized in Year 2. Revenue synergies are anticipated through cross-selling and geographic expansion.

Operational Efficiency and Technology:

• Corporate expenses on an adjusted EBITDA basis decreased by 19% ($8 million), driven by technology restructuring, consolidation of facilities, and retirement of tech debt.
• The Research Exchange platform now hosts 1,600 journals, improving publishing efficiency.
• New Spectral Analysis APIs launched for laboratory markets, replacing manual analysis with real-time spectral intelligence.
• Clinical Outcome Assessments grew more than threefold in Q1, reaching $11 million annually, highlighting the value of structured IP beyond standard publishing.

Publishing Fundamentals:

• Submissions increased by 31% while output grew 8%, indicating robust global demand and a focus on quality.
• Customer retention for journal renewals remained above 99%.
• Open Access growth continues at double digits, with record gold open access output achieved in July.
• Audience monetization is transitioning from traditional advertising to an AI-enabled analytics platform, showing early promise in healthcare verticals.

• Full-year Organic Revenue Growth: Reaffirmed low-to-mid single-digit growth. Research is expected to deliver mid-single-digit organic growth.
• Full-year Adjusted EBITDA Margin: Reaffirmed range of 26.5% to 27.5%, an improvement from 26.2% in fiscal 2026.
• Full-year Adjusted EPS: Reaffirmed guidance of $4.60 to $5.05, including approximately $0.10 accretion from Emerald.
• Full-year Free Cash Flow: Reaffirmed guidance of $205 million, up from $195 million in the prior year. Note: Emerald is dilutive by $15 million in Year 1 but turns accretive in fiscal 2028.
• Capital Expenditures: Expected to increase to approximately $80 million in fiscal 2027, up from $65 million, reflecting a shift toward product development and growth initiatives.

Research: Revenue was $293 million, up 4% year-over-year. This segment contributed approximately 76% of total company revenue ($386 million). Adjusted EBITDA was $87 million, up 9%, with margins expanding to 29.6%. Growth was driven by a 12% increase in research publishing (including $13 million from Emerald) and strong clinical outcome assessments, partially offset by a 30% decline in Research Solutions due to prior-year AI licensing comparisons.

Learning: Revenue was $93 million, down 20% year-over-year. This segment contributed approximately 24% of total company revenue. Adjusted EBITDA was $14 million, with margins contracting to 15.1% from 27.4% in the prior year period. The decline was driven by soft market conditions in professional segments and seasonal weakness in academic, exacerbated by a difficult prior-year comparison involving AI licensing.

• Seasonality and Comparison Base Effects: Q1 is the seasonally smallest period; significant headwinds were caused by a $29 million AI licensing revenue recognition in the prior year quarter, creating a difficult comparative base.
• Learning Segment Volatility: Continued softness in professional learning, particularly in retail trade publishing and corporate assessments, driven by inventory normalization and consumer demand shifts.
• Integration Risks: While currently ahead of schedule, the integration of Emerald carries inherent execution risks regarding cost synergy capture and revenue synergy realization over the next three years.
• Market Conditions: Soft market conditions in professional learning and potential broader economic pressures affecting corporate R&D spending and academic budgets.

Q: How does Wiley’s organic research growth (excluding AI/Emerald) compare to peers, and what drives confidence in mid-single-digit full-year guidance? / A: Management stated they are growing in line with market leaders, citing strong KPIs like record submissions (+31%) and retention (>99%). Confidence stems from structural advantages in scale and brand, robust renewal seasons, and double-digit Open Access growth. They expect momentum to build throughout the year as back-loaded renewals and new journal launches impact later quarters.

Q: What is the revenue cadence for AI licensing, and how should investors view the lumpiness of these deals? / A: AI revenue is characterized as lumpy but growing. Q1 saw $14M realized, with another $14M contracted for Q2/Q3. Last year’s Q2 had ~$6M. Management notes that while licensing deals are irregular, there is a parallel push toward continuous recurring revenue streams (like subscription knowledge feeds and clinical tools) which provide stability. They remain on track for >$50M total AI revenue in FY27.

Q: Can you provide details on the IQVIA partnership and the financial trajectory of Clinical Outcome Assessments (COA)? / A: The IQVIA partnership is strategic, combining Wiley’s peer-reviewed COA instruments with IQVIA’s clinical trial distribution. COAs are described as a 'hidden gem,' having grown from negligible levels to $11M last year and tripling in Q1. It is viewed as a foundational part of the AI/data analytics engine, offering essential infrastructure for pharma R&D rather than just content licensing.

Q: What is the status of the Amazon inventory reduction impact on the Learning segment, and when will it normalize? / A: The impact stemmed from a significant inventory drawdown by Amazon in late August of the prior year, affecting trade publishing sales. Management expects this to be the toughest year-over-year comparison in Q1. Trends are normalizing as inventories stabilize, with improvements expected in assessments and continued growth in digital/inclusive access products driving long-term recovery.