WLY — John Wiley & Sons, Inc.

WLY Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total revenue growth was mixed, with a notable 5% increase in research revenue, while the learning segment experienced an 11% decline.
• Adjusted operating margin improved by 250 basis points to 18.8%.
• Adjusted EBITDA grew by 8%.
• Free cash flow was a use of $108 million, reflecting seasonal trends, but improved by 17% year-over-year.
• Share repurchases increased by 69% to $21 million in the quarter.

2. Strategic Updates and Business Highlights:

• The research publishing segment showed strong momentum with 7% growth driven by record submissions and a 28% increase in author-funded open access.
• AI initiatives are progressing well, with $6 million in AI licensing revenue this quarter, contributing to a total of $35 million year-to-date.
• Strategic partnerships with major AI players like AWS and Anthropic are being leveraged to enhance product offerings.
• The company is focusing on operational excellence, reducing corporate costs, and improving margins through technology transformation and AI-driven productivity.

3. Forward Guidance and Outlook:

• Revenue growth is now expected in the low single digits, down from a previous range of low to mid-single digits, primarily due to challenges in the learning segment.
• Adjusted EBITDA margin guidance is set at 25.5% to 26.5%, up from 24% last year.
• Adjusted EPS is projected to be between $3.90 to $4.35, an increase from $3.64 last year.
• Free cash flow is anticipated to be around $200 million for the year.
• Q3 is expected to be lighter due to timing of AI project revenue, with growth weighted towards Q4.

4. Bad News, Challenges, or Points of Concern:

• The learning segment is facing significant headwinds, with declines attributed to changes in inventory management from Amazon, soft consumer spending, and enrollment challenges in key disciplines like computer science.
• Professional learning revenue declined 16%, and academic learning was down 8%.
• The company acknowledges that while some challenges are cyclical, there are concerns about structural changes in consumer behavior and enrollment trends.
• The overall outlook for learning remains negative for the year, with revenue expected to be down.

5. Notable Q&A Insights:

• Management expressed cautious optimism about the research segment's growth potential, citing strong article submission metrics as a positive indicator.
• The AI licensing revenue is expected to continue but remains difficult to project due to its lumpy nature.
• There is a recognition of the challenges in the learning segment, with management indicating that the majority of the decline is cyclical rather than structural.
• The pace of share buybacks may increase, but management emphasized a disciplined approach to capital allocation, balancing buybacks with debt reduction and growth investments.