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01/11 03:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
GAAP Revenue $XXX million, down 6% year-over-year due to the sale of the University Services business and a decline in held-for-sale assets.
GAAP EPS GAAP loss of $2.08 per share, down $0.79 year-over-year, primarily due to material non-cash impairments and loss on sale related to divestitures.
Adjusted Revenue Growth 1% growth year-over-year, in line with expectations, with Research Publishing returning to growth driven by double-digit gold open access growth.
Adjusted EBITDA $92 million, up 1% year-over-year, driven by revenue performance and restructuring savings offsetting lower incentive compensation accrual.
Adjusted EPS Down 27% year-over-year, primarily due to higher tax expense related to geographic mix and lower adjusted operating income.
Free Cash Flow Use of $45 million for the nine months, compared to a use of $22 million in the prior year, driven by timing of journal subscription renewals and higher restructuring payments.
CapEx $70 million, tracking $5 million below prior year.
Net Debt-to-EBITDA Ratio 1.9 at the end of January, down from 2.1 in the prior year period.
Dividends and Share Repurchases $87 million allocated year-to-date, with share repurchases being $5 million higher than prior year.
Adjusted EBITDA Margin 21% to 22% projected for the full year, up from previously projected 19% to 20%.
Adjusted Revenue Guidance Expected to trend upward in the mid to high end of the range, driven by learning outperformance.
Adjusted EBITDA Guidance Raised to a range of $335 million to $355 million, up from $305 million to $330 million.
Adjusted EPS Guidance Raised to a range of $2.45 to $2.65, up from $2.05 to $2.40.
AI Content Licensing: Executed a $23 million content rights project with a large tech company for access to previously published academic and professional book content for training LLM models.
AI Editing Tools: Building and deploying AI editing tools to improve speed and quality of journal content and reduce unit costs through process automation.
AI-Powered Article Matching Engine: Launched an internal pilot of an AI-powered article matching engine to help authors get published faster.
AI-Driven Product Release: Released a product using AI to analyze known and unknown chemical compounds for safety, utility, and toxicity.
Research Publishing Growth: Research Publishing returned to year-over-year growth, with a 2% increase excluding Hindawi, driven by gold open access and institutional models.
Learning Performance: Academic learning revenue up 5%, driven by digital courseware and licensing, with US undergraduate enrollment growing for the first time since the pandemic.
Open Access Agreements: Announced institutional open access agreements with several consortia, including the University of California system and JISC in the U.K.
Cost Savings Program: Progress on $130 million cost savings program, with 60% actioned to date, resulting in $45 million in-year savings.
Divestitures: Closed on the sale of University Services and announced the sale of Wiley Edge, focusing on optimizing the core business.
Streamlined Operations: Reorganized businesses into a single Research and Learning team, improving technical capabilities and author submissions.
Focus on Core Business: Refocusing on core profitable businesses in Research and Learning, divesting non-core assets to enhance competitive advantage.
AI Integration: Integrating AI technologies to improve productivity, publishing speed, and quality, while also enhancing operational efficiencies.
Future Financial Outlook: Raising full year earnings outlook and adjusted EBITDA guidance to $335 million to $355 million, reflecting improved performance.
Divestitures and Impairments: The company has experienced a long stretch of write-downs and impairments related to divestitures, which have negatively impacted GAAP EPS, resulting in a loss of $2.08 per share due to material non-cash impairments.
Market Conditions: GAAP revenue was down 6% due to the sale of the University Services business and a decline in held-for-sale assets, indicating challenges in adapting to changing market conditions.
Corporate Expenses: Corporate expenses are expected to increase moderately due to ongoing carrying costs related to held-for-sale assets, which may affect overall profitability.
Supply Chain and Economic Factors: The company faces challenges in the healthcare sector, with a 1% decline in revenue attributed to market softness in advertising and project business, indicating potential economic pressures.
Regulatory Issues: The integration of Hindawi's quality journal portfolio poses challenges in maintaining research integrity and addressing industry-wide issues such as paper mill detection and fraudulent activity.
Cash Flow: Free cash flow for the nine months was a use of $45 million, compared to a use of $22 million in the prior year, indicating cash flow challenges during this transition year.
Cost Savings Program: While the company is making progress on a $130 million cost savings program, the need for aggressive actions indicates underlying operational challenges.
Cost Savings Program: Wiley has made significant progress on its $130 million cost savings program, with 60% of actions completed to date, resulting in higher in-year savings than originally planned.
Divestitures: Wiley has announced the sale of two of its three non-core assets, with one sale already closed, to focus on its profitable core business.
AI Opportunities: Wiley is actively pursuing AI opportunities, including licensing content for large language models and deploying AI tools to improve publishing efficiency.
Research and Learning Focus: Wiley is concentrating on its strongest and most profitable businesses in Research and Learning, aiming to drive market share and attract new authors.
Full Year Revenue Outlook: Wiley expects full year revenue to be in the mid- to high range of guidance, driven by learning outperformance and a content rights deal.
Adjusted EBITDA Guidance: Wiley is raising its adjusted EBITDA guidance to a range of $335 million to $355 million, up from $305 million to $330 million.
Adjusted EPS Guidance: Wiley is raising its adjusted EPS guidance to a range of $2.45 to $2.65, up from $2.05 to $2.40.
Free Cash Flow Projection: Wiley expects free cash flow to be approximately $100 million for the full year.
Future Revenue Growth: Wiley anticipates low single-digit revenue growth in fiscal 2025, increasing to low to mid-single-digit growth in fiscal 2026.
Margin Expansion Targets: Wiley expects EBITDA margins to expand to 23% to 24% in fiscal 2025 and 24% to 25% in fiscal 2026.
Future Free Cash Flow Targets: Wiley targets approximately $125 million in free cash flow for fiscal 2025 and approximately $200 million for fiscal 2026.
Dividends Allocated: $87 million allocated towards dividends and share repurchases.
Dividend Yield: Current dividend yield remains above 4%.
Share Repurchases: $29 million used to acquire 872,000 shares at an average cost per share of $33.24.
Comparison to Prior Year: Share repurchases were $5 million higher than the prior year, with 540,000 shares repurchased in the prior year period.
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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