10-K: John Wiley & Sons Reports Strong Adjusted Growth in Fiscal Year 2025 Driven by Digital and AI Licensing, Completes Divestiture Program

John Wiley & Sons, a global leader in research and learning, announced a 3% increase in Adjusted Revenue and a 31% rise in Adjusted EPS for fiscal year 2025 on a constant currency basis, while completing its non-core business divestiture program.

Summary

• For fiscal year 2025, GAAP Revenue decreased by 10% to $1,677.6 million compared to the prior year, primarily due to foregone revenue from divested businesses.
• Adjusted Revenue, excluding the Held for Sale or Sold segment, increased by 3% to $1,660.2 million on a constant currency basis.
• GAAP Operating Income significantly increased to $221.4 million in FY2025, up $169.1 million from the prior year, largely due to lower costs of sales, the absence of a $108.4 million goodwill impairment from the prior year, and reduced operating and administrative expenses.
• Adjusted Operating Income increased by 29% on a constant currency basis, reaching $250.5 million.
• Adjusted EBITDA grew by 8% to $397.7 million on a constant currency basis.
• Diluted Earnings per Share (EPS) improved to $1.53 in FY2025 from a loss of $(3.65) per share in the prior year.
• Adjusted EPS increased by 31% to $3.64 on a constant currency basis.
• Net Cash Provided by Operating Activities was $202.6 million, a slight decrease of $5.0 million from the prior year.
• Free Cash Flow Less Product Development Spending increased by $11.6 million to $125.9 million.
• Digital products and services accounted for 83% of Adjusted Revenue in FY2025, with 48% of Adjusted Revenue being recurring.
• The Research segment's revenue increased by 3% to $1,075.5 million (constant currency), driven by author-funded open access, institutional models, and AI licensing revenue.
• Research AI licensing revenue was approximately $11 million in FY2025.
• The Learning segment's revenue increased by 2% to $584.8 million (constant currency), primarily due to licensing revenue, including AI revenue, and growth in Academic from student enrollment and digital content.
• Learning AI licensing revenue was $29 million in FY2025, up from $23 million in the prior year.
• The company completed the divestiture of its non-core businesses (University Services, Wiley Edge, CrossKnowledge) in FY2025.
• The Global Restructuring Program was extended in Q4 FY2025 to optimize cost structure, with anticipated annualized cost savings of approximately $100 million, of which $80 million was realized in FY2025.
• The company repurchased $60.0 million of Class A and B Common Stock in FY2025, with $57.4 million remaining under the current program.
• The company maintained a quarterly dividend of $1.41 per share annualized in FY2025.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, emphasizing strong adjusted financial performance, successful strategic divestitures, and significant cost savings. While GAAP revenue declined due to portfolio changes, the underlying adjusted metrics show healthy growth and improved profitability. The focus on digital and AI licensing is a forward-looking positive. Risks are comprehensively disclosed but do not overshadow the positive operational and strategic shifts.

Positives

• Strong growth in Adjusted Revenue (+3% constant currency) and Adjusted EPS (+31% constant currency) indicates improved underlying business performance.
• Significant increase in GAAP Operating Income and a swing from net loss to net income, largely due to the absence of prior year's goodwill impairment and lower operating costs.
• Increased AI licensing revenue in both Research ($11 million) and Learning ($29 million) segments highlights successful monetization of content in emerging technology areas.
• Research segment revenue growth driven by author-funded open access and institutional models, indicating strong demand for peer-reviewed content.
• Learning segment growth supported by licensing revenue, digital content, and courseware, aligning with strategic focus on high-value digital offerings.
• Completion of the divestiture program for non-core businesses (University Services, Wiley Edge, CrossKnowledge) allows for greater focus on core Research and Learning segments.
• Anticipated annualized cost savings of $100 million from the Global Restructuring Program, with $80 million already realized in FY225, demonstrating effective cost management.
• Healthy Free Cash Flow Less Product Development Spending of $125.9 million, providing liquidity for debt repayment, dividends, and share repurchases.
• High percentage of Adjusted Revenue from digital products and services (83%) and recurring revenue (48%) indicates a robust and stable business model.
• Maintained top 3 position in Clarivate Analytics Journal Citation Reports (JCR) for citations received, with 1,728 Wiley journals included and 265 top-10 category rankings, affirming strong academic standing.

Negatives

• GAAP Revenue decreased by 10% year-over-year due to the impact of divested businesses, masking underlying growth in core segments.
• Net cash provided by operating activities slightly decreased by $5.0 million compared to the prior year.
• Unfavorable changes in other assets and liabilities in operating cash flow primarily due to higher employee-related costs (incentive compensation) and increased cloud computing arrangement costs.
• Increase in interest expense to $52.5 million from $49.0 million due to a higher weighted average effective interest rate on borrowings.
• Foreign exchange transaction losses increased to $(8.1) million from $(3.0) million in the prior year.
• A net loss on sale and impairments of assets of $12.6 million was recognized in FY2025 related to the University Services divestiture process, including a reduction of the Wiley Edge Earnout fair value to zero.
• The company increased its US valuation allowance on deferred tax assets by $26.0 million in FY2025, indicating uncertainty about realizing certain tax benefits due to US losses.

Risks

• Inability to protect intellectual property, including valuable trademarks and copyrighted content, from unauthorized use, especially with advancements in AI technologies.
• Failure to realize expected benefits from growth strategies, such as expanding publishing output, journal portfolios, and licensing/platform offerings.
• Technological developments in artificial intelligence (AI) could disrupt markets, increase competition, lead to cannibalization of existing products, and introduce legal/regulatory risks.
• Potential for AI Technologies to be deficient, inaccurate, or biased, which could adversely affect the company's reputation.
• Negative impact on workplace culture and ability to attract/retain employees if generative AI tools are perceived as displacing workers.
• Misuse or misappropriation of company data by employees or third parties, leading to reputational harm, legal investigations, and/or actions.
• Potential reductions in US federal funding for libraries and changes to US higher education policy could adversely affect demand for products and services.
• Financial arrangements associated with completed divestitures (Sellers Notes, earnout provisions) present ongoing risks if buyers experience operational or financial difficulties.
• A reduction in enrollment at colleges and universities could adversely affect demand for higher education products.
• Inability to retain key talent and other colleagues due to inadequate skills development or uncompetitive compensation/benefits.
• Competitive pressures in the publishing business, including attracting and retaining authors and professional societies.
• Increased customer expectations for lower-priced digital products and the impact of used/rental textbook markets on sales volumes and pricing.
• Failure to innovate in response to rapidly evolving technological and market developments, impacting competitive position.
• Susceptibility to information technology system failures, disruptions, or data security breaches (cyberattacks), leading to service interruptions, data loss, liability, or reputational damage.
• Risks associated with the multiyear enterprise modernization program, including not realizing projected business benefits or experiencing disruptions/delays in ERP system implementation.
• Operational risks from continuous improvement efforts, including delays in workforce reductions, decreased employee morale, and failure to meet operational targets.
• Ineffective performance by outsourced third-party service providers could lead to business disruption or processing inefficiencies.
• Challenges and uncertainties in global markets due to political instability, economic volatility, and other factors, potentially disrupting operations (e.g., in Russia, China).
• Trade concentration and credit risk related to journal subscription agents and concentration of customers in national, regional, and online book resellers.
• Lack of integrity in published research (e.g., manipulation, misconduct) could adversely impact open access publishing and article output.
• Volatility in financial markets and global economic downturns could impact access to credit markets and future financing needs.
• Fluctuations in foreign currency exchange rates and interest rates could materially impact financial condition and results.
• Inability to mitigate the impact of inflation and cost increases on selling prices or costs.
• Risk of asset impairment (goodwill and intangible assets) if business objectives and financial projections are not achieved.
• Changes in pension costs and related funding requirements due to factors like actual return on plan assets, discount rates, and global pension regulations.
• Changes in laws, tariffs, and regulations, including those related to open access, could adversely impact financial results.
• Increases in income tax rates, changes in tax laws, or unfavorable resolutions of tax matters could have a material adverse impact on financial results.
• Disruption or loss of data sources could limit collection and use of information, impacting communication with customers.
• Failure to maintain proper and effective internal controls could impair the ability to produce accurate financial statements on a timely basis.
• Global economic, public health, and geopolitical conditions (e.g., US-China trade tensions, Ukraine conflict) could negatively impact financial positions and results.

Future Outlook

Wiley anticipates annualized cost savings of approximately $100 million from its Global Restructuring Program, with a focus on optimizing technology and corporate expenses. The company expects to continue leveraging AI technologies in its products and services. While the company believes it has adequate liquidity for the foreseeable future, it acknowledges uncertainties related to global economic conditions, technological changes, and regulatory developments, particularly concerning AI and open access policies.

Management Comments

• "Wiley is one of the worlds largest publishers and a global leader in research and learning."
• "The Company's content, services, platforms, and knowledge networks are tailored to meet the evolving needs of its customers and partners, including researchers, students, instructors, professionals, institutions, and corporations."
• "Wiley is a predominantly digital company with 83% of its Adjusted Revenue for fiscal year 2025 generated by digital products and services."
• "For fiscal year 2025, 48% of Adjusted Revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty."
• "Wileys business strategies are tightly aligned with consistent long-term growth trends, including ever-increasing global research and development (R&D) investment, leading to growth in scientific research output and the number of institutions and researchers worldwide."
• "Learning strategies include selectively scaling high-value digital content, courseware, and assessments to meet targeted opportunities in education and professional development."
• "Our culture differentiates us as an organization, and our core values define how we work together. We ask colleagues to embody our three values—Learning Champion, Needle Mover, and Courageous Teammate—and assess their performance against these in addition to what they achieve against their goals."
• "At Wiley, environmental sustainability is an integral part of our operations and corporate strategy. We continue to build on our progress to further reduce greenhouse gas emissions, strengthen partnerships that advance environmental action, and promote responsible stewardship throughout our value chain."
• "Our climate strategy prioritizes achieving net-zero emissions by 2040. We have established science-based targets, validated by the Science Based Targets initiative (SBTi), to drive emissions reductions across Scopes 1, 2, and 3."
• "We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing, and financing needs in the next twelve months."
• "In the opinion of management, the ultimate resolution of all pending litigation will not have a material effect upon our consolidated financial position or results of operations."
• "Based on the information we have as of the date of this Annual Report on Form 10-K, we do not believe that any cybersecurity incident experienced by the Company has materially affected or is reasonably likely to materially affect Wiley, including our business strategy, results of operations, or financial condition."

Industry Context

Wiley operates in the dynamic research and learning industries, characterized by increasing global R&D investment and a shift towards digital content and open access models. The company's focus on expanding its journal portfolio, driving value in subscription models, and developing new open access and AI-driven content aligns with these trends. The growth in AI licensing revenue positions Wiley to capitalize on the increasing demand for high-quality, authoritative content for training AI models, a significant emerging trend. The divestiture of non-core education businesses reflects a broader industry trend of companies streamlining portfolios to focus on high-growth, high-margin areas, particularly digital and specialized content.

Comparison to Industry Standards

• Wiley maintains its top 3 position in terms of citations received in the 2024 Clarivate Analytics Journal Citation Reports (JCR), holding 8% of titles, 8% of articles, and 10% of citations. This indicates strong competitive standing in the peer-reviewed research publishing sector, comparable to other leading academic publishers.
• The company's Adjusted EBITDA margins for Research (32.1%) and Learning (37.4%) segments suggest healthy profitability within their respective markets, which can be benchmarked against industry peers in scientific publishing and educational technology.
• The growth in author-funded open access (approximately 16% article output growth) demonstrates Wiley's successful adaptation to evolving publishing models, aligning with global mandates and researcher preferences for open science, a trend seen across major scientific publishers like Springer Nature and Elsevier.
• The shift to inclusive access in the Academic segment reflects a broader trend in higher education to provide digital course content more affordably, a strategy adopted by major educational publishers like Cengage and Pearson.
• The company's investment in AI licensing revenue, reaching $40 million in FY2025, positions it as an early mover in monetizing its vast content library for AI model training, a nascent but rapidly growing market that could differentiate it from traditional publishers.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in routine litigation in the ordinary course of its business.
• Management believes the ultimate resolution of all pending litigation as of April 30, 2025, will not have a material effect upon the consolidated financial condition or results of operations.

Stakeholder Impact

• **Shareholders**: Positive impact from increased Adjusted EPS and continued dividend payments. Share repurchase program provides additional shareholder value. Divestitures and restructuring aim to improve long-term profitability and focus, potentially leading to sustained share price performance. However, the increase in valuation allowance on deferred tax assets could signal future tax impacts.
• **Employees**: Impacted by the Global Restructuring Program, which includes workforce reductions and changes in real estate occupancy. The company emphasizes competitive compensation, benefits, and a flexible Global Work Model, along with investment in development and inclusion initiatives, aiming to attract and retain talent.
• **Customers (Researchers, Students, Institutions, Corporations)**: Benefit from expanded publishing programs, journal portfolios, and high-value digital content, courseware, and assessment services. AI licensing opportunities provide new avenues for content utilization. The focus on digital transformation aims to meet evolving customer needs.
• **Suppliers/Partners**: Continued engagement with independent printers, binderies, and third-party service providers. Long-term publishing alliances with professional societies remain crucial, providing mutual benefits and expertise.
• **Creditors**: The company maintains compliance with debt covenants (consolidated leverage ratio and interest coverage ratio) and has significant unused borrowing capacity, indicating a stable financial position for debt servicing.

Next Steps

• Continue to optimize cost structure with particular emphasis on aligning technology costs and other corporate expenses under the Global Restructuring Program.
• Monitor and manage financial arrangements associated with divestitures, including Sellers Notes and earnout provisions.
• Continue to invest in technology and other innovations to adapt and add value to products and services, particularly in response to rapidly evolving AI technologies.
• Publicly update any forward-looking statements to reflect subsequent events or circumstances.
• Hold annual meeting of stockholders on September 25, 2025.
• Continue to make quarterly cash dividends to shareholders.

Key Dates

Recommendation

Keywords

Publishing, Research, Learning, Academic, Professional Development, Digital Content, Open Access, Journals, Books, Courseware, Assessments, Artificial Intelligence, AI Licensing, SEC Filing, 10-K, Financial Results, Corporate Governance, Risk Management, Divestitures, Restructuring, Intellectual Property