WLYB — John Wiley & Sons, Inc.

Summary of WLYB Q3 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Up 1% year-over-year, flat at constant currency.
• Adjusted Operating Income: Increased by 22%.
• Adjusted EBITDA: Grew by 12%, with a margin improvement of 250 basis points.
• Adjusted EPS: Up 19%, driven by operating performance and 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 be approximately $200 million.

2. Strategic Updates and Business Highlights

• Research Publishing: Revenue up 4% (excluding AI revenue), with a 26% increase in article submissions. Migration of over 80% of journals to the Research Exchange platform is ongoing.
• AI and Data Services: Year-to-date AI revenue reached $42 million, with expectations to exceed $45 million to $50 million for the year. New partnerships with IQVIA and Open Evidence were announced, enhancing their AI capabilities.
• Cost Management: Corporate expenses down 21% year-over-year, contributing to margin expansion.
• Technology Transformation: A partnership with Virtusa aims to enhance operational efficiency and support AI-first initiatives.

3. Forward Guidance and Outlook

• Fiscal 2026 Guidance: Adjusted EBITDA margin expected at the high end of 25.5% to 26.5%. Adjusted EPS guidance raised to $3.90 to $4.35.
• Revenue Growth: Anticipated to be in the low single digits, with Research expected to grow at the top end of the market range.
• Fiscal 2027 Outlook: Continued growth in Research and AI revenue is expected, with ongoing improvements in Learning.

4. Bad News, Challenges, or Points of Concern

• Learning Segment: Revenue declined by 2%, with Professional facing corporate and consumer spending headwinds. The segment is not expected to grow significantly in the near term.
• Market Conditions: Soft market conditions in the Learning segment and potential impacts from macroeconomic factors remain a concern.
• Competitive Pressures: The company faces challenges from evolving AI technologies and the need to adapt quickly to maintain its competitive edge.

5. Notable Q&A Insights

• AI Revenue Growth: Management highlighted a shift from nonrecurring to recurring revenue models in AI, with expectations for significant growth in the coming years.
• Partnership with Virtusa: Expected to drive productivity and margin expansion, contributing to long-term financial goals.
• Global Research Growth: Strong performance noted across various regions, including North America, Europe, China, and India, indicating a diversified growth strategy.
• Learning Business Focus: Management is evaluating the Professional segment for strategic fit, indicating potential changes in focus or investment.

Overall, WLYB reported solid financial performance in Q3 2026, with significant growth in Research and AI segments, while facing challenges in the Learning business. The company remains optimistic about its strategic initiatives and future growth potential, particularly in AI and global research markets.