Summary of Wiley's Q1 2027 Earnings Call

1Key Financial Results and Metrics:

Total Revenue:: $386 million, reflecting a 4% year-over-year increase.

Research Publishing Revenue:: Up 12% to $293 million, driven by strong demand and contributions from Emerald Publishing ($13 million).

Learning Revenue:: Down 20% to $93 million, impacted by prior year AI licensing comparisons and soft market conditions.

AI Revenue:: $14 million for the quarter, with an additional $14 million contracted for Q2 and Q3.

Adjusted EBITDA:: $87 million, up 9% with a margin increase of 130 basis points to 29.6%.

Adjusted EPS:: Down 10% to $4.19, affected by higher interest expenses and restructuring costs; GAAP EPS reported as a loss of $0.23.

Free Cash Flow:: Use of $70 million, improved from $100 million a year ago.

2Strategic Updates and Business Highlights:

Emerald Integration:: On track and ahead of schedule, contributing positively to revenue and operational synergies.

AI and Data Analytics Growth:: Continued expansion with a focus on model training and subscription knowledge feeds. AI revenue is expected to exceed $50 million for the fiscal year.

Research Publishing:: Strong demand with submissions up 31% and retention rates above 99%. New journal launches and a robust pipeline are expected to sustain growth.

Clinical Outcome Assessments:: Revenue grew significantly, indicating strong market demand and potential for future growth.

Partnerships:: Collaborations with organizations such as IQVIA and involvement in significant initiatives like the US Department of Energy's Genesis Mission highlight Wiley's strategic positioning in AI and research.

3Forward Guidance and Outlook:

Full-Year Expectations:: Reaffirmed organic revenue growth of low to mid-single digits, with research expected to grow at mid-single digits.

Adjusted EBITDA Margin:: Projected between 26.5% and 27.5%, an increase from the previous year.

Adjusted EPS Guidance:: Expected to be between $4.60 and $5.05, including contributions from Emerald.

Free Cash Flow Target:: Expected to reach $205 million for the full year.

4Bad News, Challenges, or Points of Concern:

Learning Segment Decline:: Revenue down 20%, particularly in academic and professional segments, attributed to soft market conditions and prior year comparisons.

AI Revenue Variability:: The business model remains lumpy, with fluctuations in revenue from AI licensing agreements.

Increased Costs:: Higher net interest expenses and restructuring charges impacted profitability metrics.

Market Pressures:: Ongoing challenges in the learning market, particularly in retail and professional segments, could affect future performance.

5Notable Q&A Insights:

Market Comparison:: Wiley's organic growth in research aligns with industry leaders, reinforcing confidence in mid-single digit growth outlook.

Emerald Acquisition Feedback:: Positive early indicators from the integration, with no surprises and a strong cultural fit noted.

AI Revenue Expectations:: Q2 AI revenue is expected to mirror prior year results, with ongoing variability anticipated.

Learning Business Dynamics:: The impact of Amazon's inventory reductions is acknowledged, with expectations for normalization as the year progresses.

Partnership Developments:: Strategic partnerships are seen as key to expanding revenue streams, particularly in clinical outcome assessments and AI applications. Overall, Wiley's Q1 2027 results reflect a mixed performance with strong growth in research publishing and AI, while facing challenges in the learning segment. The company remains optimistic about its strategic initiatives and long-term growth potential.