10-K: John Wiley & Sons Reports Fiscal Year 2024 Results Amidst Strategic Divestitures

John Wiley & Sons reports a 7% decrease in revenue for fiscal year 2024, alongside strategic divestitures and restructuring efforts.

Summary

• John Wiley & Sons reported a 7% decrease in revenue to $1.873 billion for fiscal year 2024 compared to the previous year.
• The company experienced a diluted loss per share of $(3.65), a significant decrease compared to the prior year's earnings of $0.31 per share.
• Adjusted revenue, excluding the Held for Sale or Sold segment, decreased by 1% on a constant currency basis to $1.617 billion.
• Adjusted EBITDA decreased by 3% to $368.6 million, and Adjusted EPS decreased by 19% to $2.78, both on a constant currency basis.
• The company completed the sale of University Services on January 1, 2024, and the sale of Wiley Edge (excluding its India operations) on May 31, 2024.
• The sale of CrossKnowledge is expected to be completed by the second quarter of fiscal year 2025.
• Wiley's restructuring program is expected to yield annualized cost savings of approximately $65 million, with approximately $36 million realized this fiscal year.
• The company recorded a goodwill impairment of $108.4 million in fiscal year 2024, primarily related to the University Services, CrossKnowledge, and Wiley Edge businesses.
• Approximately 83% of the company's revenue for fiscal year 2024 was generated by digital products and services, excluding the Held for Sale or Sold segment.
• Recurring revenue accounted for 48% of the company's revenue, excluding the Held for Sale or Sold segment.

Sentiment

Score: 4

Explanation: The document presents a mixed picture with strategic moves like divestitures and restructuring, but the financial results show a decline in revenue and earnings, leading to a negative sentiment.

Positives

• The Learning segment saw a 5% increase in revenue, driven by digital content and courseware.
• The company is actively transitioning to digital products and services, with 83% of revenue from digital sources.
• Wiley is implementing a restructuring program expected to yield $65 million in annualized cost savings.
• The company is focusing on high-growth areas in Research and Learning.
• Wiley has a strong position in research publishing, maintaining a top 3 position in terms of citations received.

Negatives

• Total revenue decreased by 7% compared to the previous year.
• The company reported a diluted loss per share of $(3.65).
• Adjusted EPS decreased by 19% on a constant currency basis.
• The Research segment experienced a 3% decrease in revenue, impacted by the Hindawi publishing disruption.
• The Held for Sale or Sold segment saw a 35% decrease in revenue due to divestitures and lower enrollments.
• The company recorded a significant goodwill impairment of $108.4 million.

Risks

• The company may not realize the expected benefits of its growth strategies.
• Divestitures could adversely affect the business and financial results.
• Technological developments in artificial intelligence could disrupt the markets.
• The company may not be able to protect its intellectual property.
• Demand for digital and lower-cost books could impact sales volumes and pricing.
• A reduction in enrollment at colleges and universities could adversely affect demand.
• The company may not be able to retain key talent.
• Information technology risks and cyberattacks could disrupt operations.
• The company may not realize cost savings from restructuring efforts.
• Operating in certain global markets poses risks due to political instability and economic volatility.
• Fluctuations in foreign currency exchange rates and interest rates could impact results.
• The company may not be able to mitigate the impact of inflation and cost increases.
• Goodwill and intangible assets may be impaired.
• Changes in laws and regulations, including those related to open access, could impact results.
• Changes in global and local tax laws could have a material impact.
• A disruption or loss of data sources could limit the collection and use of information.
• Failure to maintain proper internal controls could impair the ability to produce accurate financial statements.
• Global economic, market, public health and geopolitical conditions could negatively impact results.
• The trading price of the shares of common stock may fluctuate materially.
• Adverse publicity could negatively impact the company's reputation.

Future Outlook

The company expects to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025 and anticipates ongoing severance related charges and facility-related costs associated with certain properties to result in additional restructuring charges in future periods.

Management Comments

• Wiley's business strategies are tightly aligned with healthy solid growth trends, including ever-increasing global research and development (R&D) spend leading to consistent growth in scientific research output, the transition to open research, and the increasing application of new knowledge into solutions to solve real world problems.
• Learning strategies include selectively scaling high-value digital content, courseware, and assessments where the Company sees opportunity.
• We continue to implement strategies to efficiently and effectively manage print revenue declines while driving growth in our digital lines of business.

Industry Context

The announcement reflects the broader industry trend of transitioning from print to digital content and the increasing importance of open access in research publishing. The company's strategic divestitures and restructuring efforts are aimed at focusing on core businesses and adapting to changing market conditions.

Comparison to Industry Standards

• Wiley's performance in the 2022 release of Clarivate Analytics Journal Citation Reports (JCR) remains strong, maintaining its top 3 position in terms of citations received and sits in 4th place for journals indexed and articles published.
• Wiley has 7% of titles, 8% of articles, and 11% of citations. A total of 1,562 Wiley journals were included in the reports.
• Wiley journals ranked #1 in 34 categories across 28 of its titles and achieved 384 top-10 category rankings.
• The company's transition to digital products and services aligns with industry trends, but the revenue decline indicates challenges in this transition.
• The restructuring program is similar to actions taken by other publishers to reduce costs and improve efficiency.

Management Changes

Legal Proceedings

• The company is involved in routine litigation in the ordinary course of business.
• The company settled a litigation matter related to consideration for a previous acquisition for $3.7 million during the three months ended January 31, 2023.

Stakeholder Impact

• Shareholders may be concerned about the decrease in revenue and earnings.
• Employees may be affected by the restructuring program and potential job losses.
• Customers may experience changes in product offerings and services due to divestitures.
• Suppliers may be impacted by changes in the company's business strategy.
• Creditors may be concerned about the company's financial performance and debt levels.

Next Steps

• The company will continue to implement its restructuring program.
• The company will focus on scaling high-value digital content, courseware, and assessments.
• The company will continue to manage print revenue declines while driving growth in digital lines of business.
• The company will finalize the sale of Wiley Edge's India operation later in calendar year 2024.
• The company expects to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025.

Key Dates

Keywords

Research Publishing, Learning, Digital Content, Open Access, Restructuring, Divestitures, Goodwill Impairment, Adjusted EBITDA, Adjusted EPS, Cybersecurity, Financial Results, Higher Education, Intellectual Property, Artificial Intelligence