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01/11 03:22
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a positive sentiment with strong financial performance, including a 39% increase in adjusted EPS and a 280 basis point rise in operating margin. The company has a solid dividend yield and has increased shareholder returns. While there are some competitive pressures and restructuring costs, the overall outlook is optimistic with AI revenue growth and improved cost structure. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
Revenue Revenue was up 1%, driven by Research growth of 5%, offsetting an expected 6% decline in Learning. This year-over-year swing stemmed from a $6 million licensing renewal in the prior year and softness this quarter in academic books.
Adjusted EPS Adjusted EPS increased 39% due to higher adjusted operating income and a lower adjusted effective tax rate.
Operating Margin Operating margin rose 280 basis points to 14.2%.
Adjusted EBITDA Adjusted EBITDA grew 4%, reflecting revenue growth, partially offset by investments in growth and productivity initiatives. Adjusted EBITDA margin for the quarter was 23.2%, up from 22.7%.
Adjusted Operating Income Adjusted operating income up 38%.
Free Cash Flow Free cash flow is expected to meet guidance of approximately $125 million, an improvement from $114 million in the prior year.
Adjusted EBITDA for Research Adjusted EBITDA for Research increased 12% for the quarter and 5% year-to-date, reflecting revenue growth and cost savings, partially offset by investments in growth and productivity.
Adjusted EBITDA for Learning Adjusted EBITDA for the Learning segment decreased 5% this quarter, reflecting revenue performance.
Net Debt-to-EBITDA Ratio Net debt-to-EBITDA ratio was 2.0 at the end of January, compared to 1.9 in the prior year period.
Dividend Yield Current dividend yield is over 3.5%.
AI Licensing Revenue: Year-to-date, we’ve generated $30 million in licensing revenue relating to trading models and executed an early but important agreement for vertical-specific models.
Advanced Journals: The expansion of our advanced journal franchise has been a great success story, encompassing over 20 high-impact journal titles across disciplines.
Open Access Publishing: Gold Open Access has seen double-digit growth, contributing to overall Research revenue.
India Market Expansion: Executed a multiyear agreement expanding access to over 6,000 Indian institutions, supporting 18 million researchers and students.
Brazil Market Expansion: Secured a new multiyear transformational agreement that expands access to over 430 Research academic institutions, reaching upwards of 6 million researchers.
Margin Improvement: Operating margin rose 280 basis points to 14.2% and adjusted EBITDA margin improved to 23.2%.
Cost Structure Optimization: We are transforming how we publish and work to drive greater operating efficiency.
Focus on AI Development: Wiley is positioning itself as a key player in AI development, with a focus on corporate R&D value chain.
Board Appointment: Dr. Karen Madden has joined the Wiley Board of Directors, bringing expertise in technology and R&D strategy.
Economic Uncertainty: The company acknowledges economic uncertainty, including consumer confidence, inflation, tariffs, policy swings, and geopolitical unrest, which could impact business activities.
Regulatory Issues: There is a potential impact of U.S. Government actions on Research funding, although the company does not anticipate near-term effects on Research Publishing programs.
Supply Chain Challenges: The company has not explicitly mentioned supply chain challenges, but the overall economic environment may pose indirect risks.
Competitive Pressures: Wiley faces competitive pressures in the publishing industry, particularly in the context of AI development and the need for high-quality, authoritative content.
Market Volatility: The company operates in a market that is geographically diversified, but it remains sensitive to global economic conditions and funding sources.
Restructuring Costs: The company anticipates restructuring charges related to optimizing its cost structure, which may impact short-term financial performance.
AI Development Risks: While Wiley is positioned as an early beneficiary in AI, the evolving market presents uncertainties regarding the long-term impact and demand for AI-related services.
Margin Target for Fiscal 2026: Wiley is raising its fiscal 2026 margin target to above 25% from the original 24% to 25% range.
AI Licensing Revenue: Year-to-date, Wiley has generated $30 million in licensing revenue related to AI model training.
Expansion in Emerging Markets: Wiley executed multiyear agreements in India and Brazil, expanding access to thousands of institutions and millions of researchers.
Research Segment Growth: Research segment revenue is expected to grow by low-to-mid single digits, driven by favorable journal renewals and demand to publish indicators.
Corporate R&D Focus: Wiley is increasingly focused on integrating content and data into corporate research processes, particularly in AI model enablement.
Fiscal 2025 Revenue Guidance: Wiley expects full-year revenue to land near the midpoint of $1.65 billion to $1.69 billion, representing approximately 3% growth.
Adjusted EBITDA Guidance: Adjusted EBITDA is expected to be near the midpoint between $385 million to $410 million, translating to high single-digit growth.
Adjusted EPS Guidance: Adjusted EPS is expected to be at the high end of the $3.25 to $3.60 range, delivering strong double-digit growth over last year.
Free Cash Flow Guidance: Free cash flow is expected to meet guidance of approximately $125 million, an improvement from $114 million in the prior year.
Fiscal 2026 Free Cash Flow Target: Wiley reaffirms its free cash flow target of $200 million for fiscal 2026.
Dividends and Share Repurchases: Year-to-date, Wiley returned cash to shareholders with dividends and share repurchases totaling $93 million, up from $87 million in the prior year. Approximately $35 million was used to acquire 784,000 shares. The current dividend yield is over 3.5%.
The earnings call presents a positive sentiment with strong financial performance, including a 39% increase in adjusted EPS and a 280 basis point rise in operating margin. The company has a solid dividend yield and has increased shareholder returns. While there are some competitive pressures and restructuring costs, the overall outlook is optimistic with AI revenue growth and improved cost structure. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
The earnings call reveals strong financial performance with positive revenue growth and increased share repurchases, indicating confidence in the company's prospects. The Q&A session highlights promising AI content licensing deals and robust article submission growth, particularly in emerging markets. While there are some concerns about long-term sustainability and lack of specific guidance, the overall sentiment is positive, supported by raised guidance and strategic focus on cost savings and AI opportunities. Given the company's mid-cap status, a positive stock price reaction of 2% to 8% is expected.
The earnings call presents mixed signals. Basic financial performance shows a decline in GAAP revenue and EPS, but adjusted metrics indicate some growth, leading to a neutral rating. Product development and business updates are positive with growth in digital and open access revenues. Market strategy is unclear with management's vague responses. Expenses and financial health show increased CapEx and a decline in free cash flow, though debt metrics improved. Shareholder return plans are positive with increased dividends and buybacks. Overall, the mixed results and uncertain guidance suggest a neutral stock price movement.
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