WLY — John Wiley & Sons, Inc.

Summary of John Wiley & Sons, Inc. Q3 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Up 1% year-over-year on a reported basis; flat at constant currency.
• Adjusted Operating Income: Increased by 22%.
• Adjusted EBITDA: Up 12%, with margins improving by 250 basis points.
• Adjusted EPS: Grew by 19%, driven by operational performance and a lower share count.
• Operating Cash Flow: Nearly doubled to $103 million.
• Share Repurchases: Increased to $70 million year-to-date, with a target of $100 million for the full year.
• Free Cash Flow: Expected to reach approximately $200 million.

2. Strategic Updates and Business Highlights

• Research Publishing: Revenue grew 4% (excluding AI revenue), with global output up 11%. The company has migrated over 80% of journals to its Research Exchange platform, enhancing AI readiness.
• AI and Data Services: Achieved $7 million in AI revenue for the quarter, with year-to-date revenue reaching $42 million, surpassing last year's total. New partnerships with IQVIA and Open Evidence were announced, enhancing the company's AI capabilities.
• Cost Management: Corporate expenses on an adjusted EBITDA basis decreased by 21%, contributing to margin expansion.
• Learning Segment: Experienced a 2% revenue decline, with Professional down 5% due to macroeconomic pressures, although Academic grew by 1%.

3. Forward Guidance and Outlook

• Fiscal 2026 Guidance: Adjusted EBITDA margin expected to be at the high end of 25.5% to 26.5%. Adjusted EPS guidance raised to the high end of $3.90 to $4.35.
• AI Revenue: Anticipated to reach $45 million to $50 million for the fiscal year, with expectations for continued growth in fiscal 2027.
• Research Growth: Expected to remain strong, driven by robust publishing output and renewal growth.

4. Bad News, Challenges, or Points of Concern

• Learning Segment Struggles: The Learning division faced headwinds from macroeconomic conditions, particularly affecting Professional revenue.
• Market Conditions: Soft market conditions in learning and the impact of prior-year AI revenue comparisons created challenges for growth.
• Corporate Spending Cuts: Lower corporate spending on recruiting and database revenue negatively impacted Research Solutions.

5. Notable Q&A Insights

• AI Revenue Growth: Management expressed optimism about the transition from nonrecurring to recurring AI revenue models, with expectations for significant growth in fiscal 2027.
• Partnership with Virtusa: Discussed as a strategic move to enhance operational efficiency and support tech transformation, expected to contribute to margin expansion.
• Global Research Growth: Strong momentum noted across various regions, including North America, Europe, and emerging markets like India and the Middle East.
• Portfolio Management: Management remains open to evaluating the Professional segment for strategic fit and profitability, indicating no "sacred cows" in their portfolio.

Overall, John Wiley & Sons, Inc. reported solid financial performance in Q3 2026, with significant growth in AI revenue and strategic partnerships, despite facing challenges in the Learning segment. The company remains optimistic about future growth driven by research and AI initiatives.