JOHN WILEY & SONS, INC. Q3 FY2025 earnings call

• Global R&D spend continues to be a primary driver, with 8% growth in 2024 and similar projections for 2025. - Demand to publish is increasing, with Unitiate research article submissions up 18% and publishing output up 8%. - Recurring revenue models are strong with solid pricing power, supported by subscription read - only and transformational read and publish agreements. - Quality and scale are key advantages; Wiley excels in both. - Executed expanded AI licensing agreements, including an expanded agreement with an existing technology customer this quarter. - Secured multiyear agreements in India (expanding access to over 6,000 Indian institutions) and Brazil (expanding access to over 430 research and academic institutions). - Partnerships with societies are multidimensional, e.g., the IEEE partnership where Wiley manages advertising sales and programs for IEEE. - Margin expansion is a multiyear strategic focus, with 280 basis points of operating margin improvement and 50 basis points of adjusted EBITDA margin improvement over the prior year.

Revenue was up 1% driven by research growth of 5% offsetting a 6% decline in learning. In the research segment, third - quarter and year - to - date revenue increased 5% and 3% respectively. Adjusted EBITDA for research increased 12% for the quarter and 5% year - to - date. The Q3 margin improved by 180 basis points to 32.7% while the year - to - date margin improved by 30 basis points to 31.1%. For the learning segment, Q3 revenue decreased 6% while year - to - date revenue rose 4%. Adjusted EBITDA for the Learning segment decreased 5% this quarter, but margin expansion initiatives delivered 30 basis points of improvement resulting in an adjusted EBITDA margin of 35.4% for Q3, and year - to - date margin for learning improved by over 400 basis points to 35.3%.

• Raising the fiscal 2026 margin target. - Full - year revenue expected to land near the midpoint of the $1.65 billion to $1.69 billion range. - Adjusted EBITDA is expected near the midpoint of the $385 million to $410 million range. - Free cash flow target reaffirmed at $200 million. - EBITDA margin and EPS are trending towards the high end of the guidance.

Economic uncertainty such as consumer confidence, inflation, tariffs, policy swings, and geopolitical unrest may impact the business.

Q: What's driving the upward revision of the 2026 margin target?

A: Primarily rationalizing the cost structure, especially in corporate shared services. We are focused on rightsizing the corporate shared services and will see the benefit next year, expecting over a hundred basis point improvement from the actions we're taking.

Q: Describe revenue exposure to US institutions and US medical libraries?

A: The US accounts for around 20% of our article output. Direct federal funding is only responsible for a single - digit percentage of our total article output.

Q: Examples of deploying AI internally to improve cost efficiency?

A: Workflow automation, document review, research integrity, and automation of content workflows are areas where we are spending time. We have a Magic Lab internally working on such AI - related cost - efficiency initiatives.

Q: Can AI and tools drive productivity gains to improve margins?

A: AI innovation is being embraced with a focus on integrity, balancing technology process with ethical stewardship, author engagement. We feel optimistic that AI can contribute to margin improvement as we balance technology with these aspects.

Q: Do you think research can accelerate towards 4 - 5% growth in the short to medium term?

A: Research revenue is back - ended this year. When we finish the year, our research growth rates will be more in line with industry levels.