John Wiley & Sons (WLY) 7 Mar 242024 Q3 Earnings call transcript

Good morning, and welcome to Wiley's Q3 Fiscal 2024 Earnings Call.

As a reminder, this conference is being recorded. At this time, I'd like to introduce the Vice President of Investor Relations, Brian Campbell. Please go ahead.

Thank you, and welcome, everyone. General Matt Executive Interim and to Vice Executive President are Christina and James your today that will Vice Tassell, Research. Note include views Van President and today questions me reflect Kissner, and as President Wiley's CEO; Flynn, our management's With comments of of responses and Manager and statements. CFO; forward-looking those differ may results statements. materially from Actual them does company not The reflect circumstances. events or obligation update undertake subsequent to to any

to we will to by evaluate on non-GAAP they variances on currency. trends. call, not provide measures and and, measures metrics be supplement are refer and other similar and not as we as used therefore, to the of impact should assets operating while year-over-year exclude performance companies, measures held-for-sale viewed will underlying a noted, These have Also, profitability standardized basis under the U.S. and may do measures a comparable by to meanings non-GAAP be prescribed nor otherwise alternatives GAAP. Unless GAAP

information filings this in Investor SEC. web be will page the our on Relations available with included and transcript of at presentation copy investors.wiley.com. A Additional is our

turn to over Kissner. the now call Matt I'll

this am sound and you, everyone. Thank a if a muted, so I hello, of bit cold you'll Brian, understand morning, I fighting why.

full We'll open questions, will well. saying recap about also and evolving overall performance our our us progress progress, Let will be investor as through for we additional review provide marked VCP I'll outlook. talk and AI view third how then this and recent by seeing quarter me opportunity. performance enter joining start color of some Christina up event. improvement to we're year. Jay as the the on home transition stretch our our we it segment walk I'll date, year

Wiley's marks year. XXXth XXXX

and and new economy and America's areas science, of technology the companies, and finance. application knowledge of enduring economics creation in knowledge and in business its one curation the engineering is most Wiley enabling of critical As

are relevant as ever. as We

turn Let's to progress our to date.

assets moved now sale and decisively divestitures have noncore We've for organization, of Wiley them. divest and our closed the of rightsize We X of X future to success. improve one on the announced

Our goal, where assets opportunities. cash these advantage, have growth of clear of focus ourselves noncore and to [ profitable operating to generative leverage ] on our is we course, free core competitive and

We've made savings, originally it program than with our action savings more million date. moved good very will higher in We've progress on which XX% resulting to. cost of to aggressively -- on talk Christina $XXX it planned,

expectations quarter Research outperform to are revenue with indicators full in growth in be year we favorable. now returning and signs guidance. Learning positive emerging to high expect continues range to of mid- Publishing this to and the leading Overall,

given outlook. year revenue expectations in-year savings, our full Finally, we earnings raising and are accelerated

momentum. remains, we're much continued and while In with work summary, our pleased progress

$X.XX, on primarily Let me held-for-sale $X.XX our EPS the to business by the loss and sale GAAP due divestitures. our given of GAAP performance in down a now to sale a impacted of and University GAAP material declined quarter. for impairments a turn decline our for X%, conditions. related share revenue by our market noncash Services loss to assets was

it it's certainly any look and these we Let to and impairments all don't related write-downs long We us. assets, divestitures. of these acknowledge a obvious been the behind of anticipate me material stretch that to forward write-downs putting further

largely X% sold we'll our commentary, adjusted revenue noted. held-for-sale otherwise be in expectations. excluding in or unless assets of and performance was our QX to growth with line Note, results. our On adjusted our outlook,

our and ] multiyear offset remaining of drag contribution Research, double-digit was by from positive open access This saw Publishing In models. a the by we to return Hindawi. driven institutional growth partially year-over-year gold for growth year-on-year [

revenue for Publishing Research Hindawi, Excluding quarter X%. the up was

improvement the about good core. our So we in feel

we reminder, for integrating our into Hindawi's are Access Open world-class its and program. journal infrastructure quality a own As our using portfolio

overall of talking be performance going program we'll forward. the about So the

and continue digital in we content to Learning, to In see outperformance licensing. with growth our -- digital courseware, Academic attributed

courseware digital zyBooks continue to Access tuition adds STEM model gains. and fees. into access strong inclusive content the cost course show Inclusive and sales Our students' of

As in U.S. the enrollment since undergraduate first the grew semester the a time reminder, full for pandemic.

market favorable become Ed more Higher year. So have conditions this

year. and X% with for million, savings to lower and lower tax in EBITDA Adjusted a higher the the was quarter compensation XX% offsetting operating income. due materially to as down adjusted expense restructuring to expected, geographic performance prior $XX mix revenue Adjusted accrual EPS incentive primarily rose related

those it, our share has a plans update on far The and so been feedback on positive, we may January For now held we're delivering have our targets. near- to medium-term to investor focused and and virtual on executing commitments. that missed XX financial

Let our me briefly summarize key takeaways.

different Wiley a Today's before. is very than company

We're maintaining strongest profitable article in we We moats margins. new most Learning are focused businesses attract and while have our partnerships the taking market share, for. to and actions doing authors brands quality that opportunities, and impact famous specific -- our on drive is and Research strengthen our strongest and this submissions and where and Wiley

to to machine opportunities for large language us, training publishing slide. embed and our engines. and will be AI productivity attractive which next and improve speed, the are we I'll see technology very We the about a volume. on learning models quality content deploying real talk and more Internally, opportunity into

on And our finally, operating publishing we are heavily efficiency. and improving focused

peer ones experience make publishing from flagship submission review enhance offerings to are up easier We will This new and already authors. it for disparate the multiple us we to stand our one platforms have. research for content moving and

Moreover, reduction gains cost we're to savings cost article. And and we driving in a per lead across and platform of times this material organization. efficiency turnaround course, to article the next-generation expect

and it Let's turn how opportunity up. the to AI shaping see we

these the of productivity We to Today, in to four are advancement growth the in areas. technologies will the come. a we of be confident and that years contributor think opportunity

content large is for our in are critical models learning and progress. that language to economic science, strength areas Wiley's and applications. innovation structured in content its is and technological The high-quality similar licensing first in

report fine-tuning models. these rights I'm for book tech we and our recorded The $XX academic content pleased update, the As is project with and our closed, for discussed to to that be on specific use access content quarter a content investor executed professional we million after training onetime transaction previously training to models. published QX in company. a large foundational includes in LLM

development opportunities that served to AI are structured is similar convinced Wiley content and players best other We working future by LLMs the the that content uncover high-quality remain delivers. of with

tools working accomplish with in we team an automation our international reduce journal the R&D are award-winning professors, product built and value this, includes speed building through unit improve chain. process that of content Ph.D. actively we and The advisory and Today, and AI innovation. second and quality team an costs have AI focused area researchers and leaders. on are publishing is To AI we AI thought editing deploying to actively

off. These efforts are paying

For and internal to the example, pilot engine published in right help article get we journals. launched recently an faster AI-powered authors of our matching

have lessons also our valuable promoting Hindawi learned We about experience. research from integrity

our accurate is for detection Such Our data fraud data efficient bad robust, and papers. and actors retracted about models. AI proving training indispensable teams are leveraging

we're where subtle fraudulent we're mill indicators notably, detection even Most of on to the aiming activity. paper focused identify most

is a solutions industry-wide issue for this stated and As before, and top priority an customers. us our

into bringing deploying tools market to systems. clients' incorporated both by across lead and the journal can portfolio taking these our be where they existing our we're So

using we're business Thirdly, drive AI innovation. model to

a datasets mentioned This airport chemical from help our data applications proprietary Jay the As directly of to determine Wiley analysis lab generation. and critical sample. ranging Day, a and to publishes of loaded structure drug during Investor number of that on spectrometry library food to mass discovery security are biofuel instruments has

not application product recent to safety, chemical among but where to using closer utility other things, distribution most content to toxicity. many is one bring AI only compounds, example compounds, predict, to unknown customer. we're Our release Wiley's the models AI and This innovate, and and known products transform of uses just analyze their

Finally, market content This customer and customer like sales further editorial, in management improved to efficiency, marketing, lead colleague response. faster productivity and areas we're to AI to time and deploying service. will improve

summary, we're confident position new and excited economy. In this our in evolving in digital

Christina and that, to turn discuss outlook. over our it With to I'll progress, performance

We're a I the to couldn't and demanding challenges. prouder pivotal the and so of colleagues have Matt, very risen closing everyone. been made changes we've end our year, on I be about the you, but what good far. of global how responded and in the has hello, feel Thank to progress

over So creation to our plan. value

team Over reorganized X past under Jay one Research businesses we functional Learning and consolidated and areas. into the go-to-market the months,

evident are We submissions capabilities and technical reorg growth marketing year-to-date. our and with more the how has in attracting improved example, our XX% submissions authors simplified our as focus, pleased, for

Wiley of to sale the Matt Capital As partnerships Services the Inspire closed on to noted, and academic announced sale of we've ]. [ University Edge

[ be immaterial. QX. although close transaction to divestiture to Edge the the progressing, expect across is ] in We remaining expected transaction knowledge is The

We're moving optimize. aggressively to goals focus on our and

As rate exceeded may than savings multiyear by $XX recall, now actioned up We've quarter. is discussed expected The be actions the the remainder you $XXX $XXX in our goal. or [ million more ] in-year from target actioned last 'XX. This is million means to savings expect planned, largely $XX fiscal 'XX. realize run we now XX% and $XX to million of we've fiscal million million,

functions, coming simplify and more The costs. and multiyear Corporate include: our given we as savings three legacy with plan reduce structure, retire hosting our optimization to consolidated reduced savings areas from savings footprint; labor estate platforms arbitrage streamlined real and and savings our org of our costs key eliminating portfolio; focused technology systems

solutions multiyear expect demand, journal of new authors, global growth Publishing drive half discussed These offerings -- win drive modernizing be reinvested research margin our -- As Research we marketing editorial the meet and in and to through expand January, include the to half flow output initiatives. and and expanding optimization savings to capabilities our in to attract platform. and to brands to and partners our profitable

excluding see models, returned to turn year-over-year X% institutional published include subscriptions quarter, both on leading growth performance. indicators. Publishing agreements. was Open continue revenue we to Publishing and Research read-only the our up Research to and note, this in good which Research strength Access transformational key read momentum and Of and our Gold our Hindawi, of Let's

to author and XX% up into article year-to-date time were convert published our improve These point marketing underlying Submissions long to numbers activities. submission progress through editorial lead continues in submitted the refer as to a we commissioning a efforts, transfer and one. good outlook work

in manage course, these factors power for subscriptions, models, Open depends Gold other quality. in on journal we as such geography, models all our of update, revenue, therefore, to Conversion journals including and and, of investor Access. individual agreements as article overall submissions business rates business as our acceptance mentioned well transformational As these

marking them Integrating As portfolio. -- of us access into have our which journal Matt announced agreements high additional an the in agreements customers. XXX factors, including several Hindawi of Also, as to multiyear noted, institutions existing Hindawi in journals, of types These or we're customer with and the open OA gives XXX institutional and quality. leading impact XX% recently our we folding California as are well corporate University world, of as our governor and System traditional the foundational base global U.S. -- subscriptions around large read U.K. universities, publish the

our we in XX% makes growth excluding saw Gold Publishing XX% segment. model, author paid about quarter, Research in up over This our the fastest-growing OA, our Research revenue. It's area OA Hindawi. of Gold

quarter from in advertising business, projects Solutions the This Research society and offset declined growth managed this softness to in our services to Turning consulting in due both partners. sector. corporate Revenue continued notably business market decline revenue for continued care X% Publishing health our and Solutions.

Research declined marketing quarter driven costs X%, -- editorial higher by and this mainly EBITDA Hindawi. Adjusted in in

in QX XX.X% from adjusted margin XX.X%, prior was the down EBITDA period. Our

expected in So overall in we performance indicators. and leading recoveries revenue in year-over-year seeing both our our Research, are

Learning. turn Let's to now

Our by Academic content up line quarter, continues digital to the X% courseware, and in licensing. perform growing double-digit well, digital driven

since for time categories. technology grew softness As the X% in publishing Professional declined in endemic. noted, driven enrollment fall business and quarter, Matt U.S. by the first

we continue For outperformance see the to year, in Learning.

advancing AI beginning the of evolution our top to the for of our authoritative of engines, that, AI. content we're monetize models learning in training showcasing content discussed, and value as On Matt

from EBITDA quarter primary up with year-to-date and revenue this remains Adjusted and positive XX% savings as growth Learning drivers. restructuring a the story,

period. Our was prior EBITDA QX from the adjusted XX%, margin up in XX%

materially touch expenses. We me restructuring $X a incentive year increase our corporate let unfavorable lower This notably period. saw million prior to savings. in over accrual the due the prior Now year offset comps, on

due held-for-sale As to to noted, our corporate transition continued assets. costs related moderately we year carrying up expenses be expect this to the

cost As we of improve assets and out our optimize and beyond. transition cost see these next further year structure, our ratios we'll

restructuring was months balance and sheet. cash the use compared a by prior and is plan. driven to the million the $XX to for flow tracking variance million of flow renewal the use our payments year. CapEx journal closing year. $X subscription Free in negative The to on our million higher cash prior creation a of related Now of X value timing $XX million $XX was of below

[ expect the flow ] on remain track approximately of journal remaining free restructure close full We $XXX renewals year. to QX the for to in cash million deliver and

$XX $X period. prior repurchases cost $XX.XX. to XXX,XXX year. in with being an allocated repurchased we Year-to-date, XXX,XXX compares year higher acquire to shares share million share prior dividends at than This was repurchases, and $XX million of average million used shares per share towards the

above dividend current X%. yields remained Our

capital we're plan investing down to and Net X.X prior debt to X.X January debt-to-EBITDA in year to dividend. have end in reduced continue of in to manage period, other ratio scale 'XX period. year the was the we and interest repurchasing prior at the supporting expense including debt compared over compared healthy Through $XX 'XX, going fiscal while our net research, balancing a period. opportunistically Note, priorities, million shares by the

cash we expect although cash material, fully upfront proceeds interest. over are from time with the the notes collect the not Our divestitures from to

We turn Learning end by high the This outlook see the throughout in driven our our to to augmented the expected QX. of is with revenue in outperformance range. year, upward deal remaining. rights trending full Let's year quarter X content Learning by mid- adjusted

the $XXX million range to $XXX original to up We be a to million. our million are $XXX adjusted $XXX from raising million, EBITDA guidance in of

improved outperformance reflects of full value additional creation from year $XX plan the savings our and including Our the million cost content QX Learning, outlook a in-year in deal.

than of and margin from of We're To EBITDA the now more our adjusted to an XX% refresh, recover expect projecting XX.X% XX% to margin to a year projected continue fiscal 'XX full we previously XX%. of XX% also increase $X.XX divestiture. fiscal to we raising to operating due $X.XX our University exit up from higher-than-expected as a 'XX. Services range adjusted $X.XX, interest accrued guidance EPS and from our $X.XX adjusted We're to income to a to EBITDA income

We expect the payments this Wiley low summer unusually restructuring lower to be cash million earnings, year. payments. of $XXX flow transition higher for and This combination is approximately given in cash free interest higher

fiscal in laid As cash again targeting in significant flow January, out and 'XX. we're free in improvement fiscal 'XX

structure. on tackling while we, organization, summary, are as very pleased I'm how In with an executing levels multiple our cost

we way confident fiscal As our in and into trajectory. we're 'XX our flow make through cash on to 'XX, deliver margin ability our revenue, our expansion and our

with back And Matt. it that, I'll to pass

Christina. you, Thank

recap stronger, presents so Wiley to difficult we're on. a a me personal had and set Let company. observations our refocusing some rich profitable core a us but period, more opportunities on far. terrific build company coming out makes a of is of very I've Yes,

R&D-driven built strong, research with fundamentally long-term societies corporations. academic are businesses Our on relationships and institutions,

a a position journal built platforms We library and strong driven of have and on franchises. by and in around draw wide enduring our the to moat content a unique Research, our right brands win learning built in

spend Global as is are in demand the knowledge markets ever the for serve. increasing healthy. is we new R&D verticals Our

by It's we're Very special Nobel means Wiley prestigious authors the importantly, and most Prize-winning the to name customers. the something and societies why major our companies. in pharmaceutical universities world, trusted

have an team. We terrific absolutely

better and Wiley are to by now global to reinvigorated identify incremental and growth a working. Our ways our simpler, confident more are opportunities empowered colleagues move of

operation, from have and tech a recently Sri have and Lanka, IT center. India, I where development a world-class we returned we publishing where

European by focus be As to reenergized I with our culture increased visit my and find our offices, November our momentum. to

This we what a world. good not is for finally, slogan. do is And the

mission individual. scientific everyday progress contributing progress globe. This and the well across actively economic as the colleagues Wiley to as major the of energizes are We

summarize Let sense progress me a focused already. just We're we're in We're I'm the and thoughtful and relentlessly the and in with continued improvement prioritization and takeaways. confidence our There's Learning. outperformance of and underlying in sense pleased urgency momentum increasing signs of quickly key on early place. remain fanatical tackling. about being an seeing Research the blocking seeing of execution. We

That transition a said, year. we're still in

raised, our core to earnings all this still us. complexities forward we've and made have and front good of We guidance putting see rebounding drivers work its important look in behind us. and overall progress Although we year

I'll as On in laid low which we with in 'XX to quickly we mid-single-digit targets, in in our to low out core single-digit continue January. conclude Publishing anticipate fiscal financial our fiscal revenue, 'XX. growth growth drivers increasing rebound, to revenue

to expansion focus and to to expand to 'XX Our ongoing efficiency allocation, capital margin to fiscal in are on we're XX% and to XX% 'XX. fiscal XX% in expected beyond continue gains margins going then 'XX. with to disciplined And XX% fiscal our

flow step in targeting to with levels balance million fiscal off. $XXX approximately approximately to we 'XX, We're cash million then 'XX $XXX modernization. as up necessary and improved as Free fiscal investment research in infrastructure expected and is normalized returns payments to restructuring in earnings in cash taper CapEx more

Beyond fiscal to 'XX, we or flow so the conversion anticipate continue going XX% to in 'XX. focus cash increasing from free our on we're fiscal

open for Before us thank for it up I all joining I of want questions, you today. to

I winning As more want Nothing us being to our Wiley a thoughtful collaboration. thank their drive unites colleagues always, for and team. than on continuous

to comments floor now questions. open I'll and the any

your CJS with of Securities. Dan the [Operator Moore comes from Instructions] And line question

the margins? It's fiscal quarter. profitability or of 'XX [ regarding Pete for And the to First Hindawi. EBITDA XX% to start your congratulations a of XX% today. Dan goal the on recovery embedded made level Lukas just ], progress is in What question with in wanted

respond. Christina it's Pete, ask Matt. I'm to going to

to again. you to Sure. speak Pete, nice

in improvement into some And want as is slower don't and detail, 'XX before, but on Jay, you -- if the... expected to than a future bit some Hindawi are know recovery we've we I expecting go our So we said beyond.

Flynn. Jay It's Happy.

progress on Hindawi. in 'XX anticipating we're So 'XX, clearly

rates there mirror the on top before, growth generally our there see Open speaking, Gold in And the reflect in portfolio. we we've margins expect line the what As margins said Access of we rest will to the operations. journal our

haven't out specifically. we broken that So

As Research than a total reminder, this less revenue. it's not X% of is -- a

out breaking So at we're not that that level.

maybe cash touched $XXX at in And the $XXX enough of one significant targeting, Day then with on Can jump the it more you 'XX from kind of maybe us attention, to Perfect. to goals to you're get us that achieving view end, walk and key are bit from the the detail what those 'XX. but free to million Investor a your improvement just a didn't million biggest risks in through part recent and expected assumptions your you give around goals? little flow

Sure.

yes, than flow. we as cash So by recovery obviously are our as that our that cost-out 'XX us year and some to seeing The has been approximately of fiscal lower-than-expected well in returning the million expected. flow primary higher impact had like our full and things taking drivers restructuring free in revenue effect. We've programs needs payments $XXX are cash improvement of for interest

things so And those will level out.

next remarks. thing $XXX about year, our spike that's The in going we're a is to over million from in going to cash years as million, and see X well to prepared CapEx the items as fiscal 'XX, the in next other mentioned impact flow items, optimization $XXX about that's in for my revenue we're talking growth of I programs of terms as some

to thing note will fiscal to normal The as down that, year there we continue come 'XX back is other that out. in

$XXX going rate cash sort of of flow be trajectory will that forward. a run million, can our steady-state a of see You sort

And then talked you about leverage. helpful. Very

predicted think think by you now said fall to 'XX. it's about X.Xx. I about X.Xx And down to I to

flow, than discussed, sheet rather do the -- and levels? balance about to as expectations valuation your buybacks the think current delever your continuing are on how Given you at what those free cash your stock

the we're review stock buyback It's Look, right program. that and we our we're at always a something in Board looking year now. transition annually, with

in So a allocation we're at all looking of total portfolio. our capital as

so we look And yes, every at it year.

at it. to continue look We

versus continue keep that share year, this As I to we're and prior we'll remarks, million mentioned ahead $X going in in our prepared mind year forward. in repurchases

for last the the from me. make just one caught right then I to prepared I just remarks. it sure want And

you savings, million 'XX. $XX see in cost the to the bulk million, $XXX that date, of the XX% of achieved terms but In then

So not that lot expecting beyond, and 'XX in is a correct?

go the that. the within Beyond just million million to $XXX or is million? -- $XXX $XXX the clarify ahead, sorry, So

that No, Yes. was mentioned. you the savings it million overall just your $XXX number using was cost

Right.

of remaining savings So million $XXX the rate million. by of be end 'XX. will the -- that our is run most most $XX of And

the savings, fiscal 'XX So will and your in year optimization three it's left that's savings. the actioned -- and XX% and business in the answer technology basically Did corporate be that that's the question? buckets,

Yes. Very helpful.

the no back closing time. remarks. now to Mr. further I at this There will questions call Kissner turn for are

and results. last you, very of renewed about you year. forward the next We looking Thank the we're with where We've bit feeling our June of back about interest. everyone. a little appreciate we're Thanks we quarter at in Obviously, full update and the our much. got to and our good year talk wind confidence,

This concludes today's call.

You may now disconnect.