10-Q: Wiley Reports Strong Profitability Amid Restructuring

John Wiley & Sons, Inc. reported increased operating income and diluted EPS for the quarter and six months ended October 31, 2025, driven by cost savings and divestiture proceeds, despite a slight revenue decline.

Summary

• Consolidated revenue for the three months ended October 31, 2025, decreased by 1% to $421.8 million, and for the six months, it decreased by 1% to $818.6 million.
• Operating income for the three months increased by 14% to $73.0 million, and for the six months, it increased by 12% to $104.0 million.
• Diluted earnings per share (EPS) for the three months rose by 14% to $0.84, and for the six months, it surged by 48% to $1.05.
• Adjusted EBITDA (constant currency, excluding Held for Sale or Sold segment) increased by 8% to $115.1 million for the three months and by 4% to $185.5 million for the six months.
• The Research segment's revenue grew by 6% (5% constant currency) for the three months and 6% (5% constant currency) for the six months, driven by open access and AI licensing.
• The Learning segment's revenue decreased by 11% (constant currency) for the three months and 10% (constant currency) for the six months, impacted by market softness and lower print sales.
• AI license revenue totaled $6.0 million for the three months and $34.9 million for the six months, with Research AI license revenue at $4.8 million and $20.7 million, respectively.
• The Global Restructuring Program incurred charges of $6.1 million for the three months and $9.1 million for the six months, aiming for $115 million in annualized cost savings, with $110 million expected in fiscal year 2026.
• Net cash used in operating activities improved to $(76.5) million for the six months, compared to $(94.0) million in the prior year.
• Net cash provided by investing activities significantly increased to $72.4 million for the six months, primarily due to $119.5 million cash received from the sale of University Services assets.
• An additional $250 million share repurchase program was approved in July 2025, with $22.4 million remaining under a previous $200 million program.
• The company repurchased $35.1 million in shares during the six months ended October 31, 2025.
• The effective income tax rate for the six months ended October 31, 2025, was 25.3%, down from 45.8% in the prior year, partly due to a deferred tax benefit from German tax rate reductions.

Sentiment

Score: 7

Explanation: The company shows strong execution on its restructuring and divestiture strategy, leading to improved profitability and cash flow metrics despite a slight revenue decline. The Research segment is a growth driver, leveraging AI and open access. The Learning segment's weakness is a concern, but overall financial health appears to be improving, supported by cost controls and strategic portfolio adjustments. The Anthropic settlement offers potential future upside.

Positives

• Operating income increased by 14% for the three months and 12% for the six months ended October 31, 2025.
• Diluted EPS increased by 14% for the three months and 48% for the six months ended October 31, 2025.
• Adjusted EBITDA (constant currency, ex-Held for Sale) grew by 8% for the three months and 4% for the six months.
• The Research segment demonstrated strong revenue growth of 6% (5% constant currency) for both the three and six months, driven by open access and AI licensing.
• AI license revenue significantly increased to $34.9 million for the six months ended October 31, 2025, up from $21 million in the prior year.
• Open access article output grew by approximately 25% for the three months and 23% for the six months.
• Interest expense decreased due to a lower weighted average effective interest rate and reduced total debt outstanding.
• Net cash used in operating activities improved by $17.5 million for the six months, indicating better operational cash management.
• Net cash provided by investing activities saw a substantial increase to $72.4 million, primarily from $119.5 million in cash proceeds from the sale of University Services assets.
• A new $250 million share repurchase program was approved, signaling confidence in future cash flow and commitment to shareholder returns.
• The effective income tax rate decreased for the six months, partly due to a deferred tax benefit from tax rate reductions in Germany.
• The company expects to realize significant annualized cost savings of $115 million from its Global Restructuring Program, with $110 million in fiscal year 2026.

Negatives

• Consolidated revenue decreased by 1% for both the three and six months ended October 31, 2025.
• The Learning segment experienced an 11% (constant currency) revenue decline for the three months and a 10% (constant currency) decline for the six months, attributed to market-related softness, an inventory drop-off at an online retailer, and a slowdown in consumer and corporate spending.
• Learning AI license revenue decreased to $1.2 million for the three months and $14.3 million for the six months, compared to $4 million and $20 million respectively in the prior year.
• A loss of $2.3 million was recognized in the three months ended October 31, 2025, related to the CrossKnowledge divestiture, due to reducing the earnout fair value to zero and an uncollectible receivable.
• A pretax loss of $0.9 million was recognized in the six months ended October 31, 2025, related to the sale of remaining University Services assets.
• Other expense, net, increased for both periods, primarily due to foregone interest income from the sale of the University Services Seller Note and higher pension expense.

Risks

• The level of investment by Wiley in new technologies and products.
• Subscriber renewal rates for journals.
• The financial stability and liquidity of journal subscription agents.
• The consolidation of book wholesalers and retail accounts.
• The market position and financial stability of key retailers.
• The seasonal nature of the educational business and the impact of the used book market.
• Worldwide economic and political conditions.
• Ability to protect copyrights and other intellectual property worldwide.
• Ability to successfully integrate acquired operations and realize expected opportunities.
• Ability to realize operating savings over time and in fiscal year 2026 in connection with the multiyear Global Restructuring Program and completed dispositions.
• Cyber risk and the failure to maintain the integrity of operational or security systems or infrastructure, or those of third parties.
• Risk of not realizing the full carrying value of goodwill and other identifiable intangible assets recorded as a result of acquisitions.
• Ability to leverage artificial intelligence technologies in products and services, including generative AI, large language models, and machine learning.
• Uncertainty regarding the ultimate resolution and financial impact of the Anthropic class-action lawsuit, despite a settlement fund being established.

Future Outlook

The company anticipates realizing annualized cost savings of approximately $115 million from its Global Restructuring Program, with approximately $110 million of that to be realized in fiscal year 2026. Management is continuing to evaluate the full year impact of the 'One Big Beautiful Bill Act' (OBBBA) but does not anticipate a material effect on consolidated financial statements for the year ended April 30, 2026. The company's business strategies are aligned with long-term growth trends in global R&D investment and scientific research output, focusing on expanding publishing programs, driving value in subscription and open access models, and selectively scaling high-value digital content in Learning.

Management Comments

• Wiley is a global leader in authoritative content and research intelligence for the advancement of scientific discovery, innovation, 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 over 83% of its Adjusted Revenue for the year ended April 30, 2025, generated by digital products and services.
• For the year ended April 30, 2025, 48% of Adjusted Revenue is recurring, which includes revenue that is contractually obligated or set to recur with a high degree of certainty.
• Wiley's 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.
• Research strategies include expanding our publishing program and journal portfolio to meet the global demand for peer-reviewed research, driving additional value in our subscription-based models for universities and corporations, volume-based models for open access, content licensing opportunities for applications in science and innovation, and content platform and service offerings for corporations and societies.
• Learning strategies include selectively scaling high-value digital content, courseware, and assessments to meet targeted opportunities in education and professional development.

Industry Context

The company operates within a dynamic industry characterized by increasing global research and development (R&D) investment and a growing demand for scientific research output. The shift towards digital products and services is a key trend, with the company generating over 83% of its Adjusted Revenue from digital offerings. The rise of artificial intelligence (AI) is impacting content licensing, creating new revenue streams in the Research segment. However, the Learning segment faces challenges from market-related softness, including inventory fluctuations at online retailers and a general slowdown in consumer and corporate spending, indicating a mixed environment across its diverse business lines.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• Anthropic Class-Action Lawsuit: Certain authors filed a class-action lawsuit against Anthropic in August 2024, alleging use of copyrighted content to train AI models. A settlement was reached in August 2025 for $1.5 billion to be paid into a settlement fund. The company is aware its content is included and will submit claims, with its portion of the settlement yet to be determined.

Stakeholder Impact

• Shareholders: Benefiting from increased diluted EPS, a new share repurchase program, and consistent dividend payments. The Anthropic settlement could provide additional financial upside.
• Employees: Affected by the Global Restructuring Program, which includes severance for eliminated positions, but also aims to enhance the company's position and drive profitability.
• Customers: The company continues to tailor its content, services, platforms, and knowledge networks to meet evolving needs, particularly in scientific discovery, innovation, and learning.
• Authors/Publishers: The Research segment's growth in author-funded open access and AI licensing indicates new opportunities. Authors whose content was used by Anthropic may receive payments from the settlement fund.
• Creditors: Improved operating cash flow and reduced total debt outstanding enhance the company's ability to meet its financial obligations.

Next Steps

• Continue to evaluate the full year impact of the 'One Big Beautiful Bill Act' (OBBBA) on consolidated financial statements for the year ended April 30, 2026.
• Submit claims for copyrighted content with the settlement administrator in the Anthropic class-action lawsuit.
• Realize approximately $110 million in cost savings in fiscal year 2026 from actions taken under the Global Restructuring Program.

Key Dates

Recommendation

While the company demonstrates improved profitability, strong cost control, and significant cash generation from divestitures, the overall revenue decline and softness in the Learning segment present ongoing challenges. The Research segment's growth, particularly in AI licensing and open access, is a positive, but the company is still in a transitional phase with its restructuring program. The potential upside from the Anthropic settlement is not yet quantified. A 'hold' recommendation reflects the balanced view of positive operational improvements and strategic execution against persistent revenue headwinds in certain segments, suggesting a wait-and-see approach for further clarity on sustained top-line growth.

Keywords

SEC filing, 10-Q, Quarterly Report, Financial Results, John Wiley & Sons, WLY, WLYB, Research Publishing, Learning Solutions, Artificial Intelligence, AI Licensing, Open Access, Restructuring Program, Divestitures, Share Repurchase, EPS, EBITDA, Operating Income, Cash Flow, Debt Management, Corporate Governance, Education Technology, Scholarly Publishing, Digital Content