WLYB — John Wiley & Sons, Inc.

Summary of Wiley's Q4 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Revenue: Flat year-over-year, up 1% including currency impact.
• Adjusted EBITDA Margin: Increased by 220 basis points to 26.2%, an all-time high.
• Adjusted Operating Margin: Rose by 260 basis points to 17.7%.
• Adjusted EPS: Grew by 15%.
• Free Cash Flow: Increased by 55% to $195 million.
• Shareholder Returns: $174 million returned, including record share repurchases of $100 million.
• Net Debt Ratio: Improved to 1.4x; pro forma leverage post-Emerald acquisition at 2.1x.

2. Strategic Updates and Business Highlights

• Growth Engines: Wiley is focusing on two main growth engines: Research (mid-single-digit growth) and AI/Data Analytics (significant growth potential).
• Emerald Acquisition: Acquired for approximately $450 million, expected to enhance research and AI capabilities, with anticipated cost synergies of $30 million and revenue growth opportunities.
• AI Revenue Growth: Increased from $40 million to $49 million, with a rapidly expanding recurring revenue base.
• Partnerships: Strategic partnerships established with IQVIA, Open Evidence, and Virtusa, enhancing product innovation and operational efficiency.
• Research Publishing: Strong performance with 11% output growth and 4% revenue growth, driven by increased submissions and a growing journal portfolio.

3. Forward Guidance and Outlook

• Fiscal 2027 Outlook:
  • Organic revenue growth expected to be low to mid-single digits.
  • Adjusted EBITDA margin projected between 26.5% to 27.5%.
  • Adjusted EPS forecasted at $4.60 to $5.05, including a $0.10 contribution from Emerald.
  • Free cash flow anticipated to reach $205 million.
• Emerald Contribution: Expected to be modestly accretive to adjusted EPS in year one and free cash flow positive by year two.

4. Bad News, Challenges, or Points of Concern

• Learning Segment Decline: Revenue from learning down 5% due to prior year comparisons and softer print revenue, with professional publishing down 10%.
• Delayed Cash Collections: Some large renewals pushed into Q1, impacting cash flow but not revenue.
• Market Headwinds: Challenges in consumer and corporate spending affecting professional publishing and assessments.
• Competitive Pressures: Ongoing need to adapt to market conditions, particularly in the learning segment.

5. Notable Q&A Insights

• AI Revenue Outlook: Management expects AI revenue to exceed $50 million in fiscal 2027, with a shift towards more recurring revenue models.
• Emerald's Economic Fit: Emerald's high recurring revenue and strong customer retention align well with Wiley's strategy, enhancing their position in finance and economics.
• Learning Segment Recovery: Management anticipates stabilization in academic and professional publishing, with digital growth expected to improve in fiscal 2027.
• Capital Allocation Strategy: Wiley remains committed to returning cash to shareholders while balancing organic investments and maintaining a strong capital structure post-acquisition.

This earnings call highlights Wiley's strong financial performance, strategic growth initiatives, and a positive outlook for the upcoming fiscal year, despite facing challenges in the learning segment and market conditions.