Wiley's Q3 2024 Results Unveiled

HOBOKEN, N.J.--(BUSINESS WIRE)-- Wiley (NYSE: WLY and WLYB), one of the world's largest publishers and a global leader in research and learning, today reported results for the third quarter ended January 31, 2024.

• GAAP Results: Revenue of $461 million (-6%), Operating loss of $46 million (+$21 million), and EPS loss of $2.08 (-$0.79). GAAP revenue decrease due to completed divestiture and declines in other held for sale businesses. GAAP results impacted by charges related to held for sale or sold assets, including goodwill and held for sale impairments of $82 million and $26 million, respectively, as well as a loss on a completed divestiture of $26 million. The Company also recorded restructuring charges of $15 million.
• Adjusted Results at Constant Currency (excluding Held for Sale or Sold segment results): Adjusted Revenue of $403 million (+1%), Adjusted EBITDA of $92 million (+1%), and Adjusted EPS of $0.59 (-27%).
• Full Year Outlook:
  • Adjusted Revenue trending toward mid-to-high end of $1,580 to $1,630 million range
  • Adjusted EBITDA raised to $335 to $355 million
  • Adjusted EPS raised to $2.45 to $2.65

MANAGEMENT COMMENTARY

"As we finish out the year, we're increasingly confident in our underlying momentum and recovery in Research and continued outperformance in Learning," said Matthew Kissner, Interim President and CEO. "We've moved decisively on our improvement and optimization plans and expect a strong fourth quarter as Research continues to recover, Learning continues to outperform, and in-year cost savings accelerate. Our disciplined execution and positive momentum are allowing us to raise our earnings guidance this year and set us up well for material performance and profit improvement in Fiscal 2025 and 2026."

FINANCIAL PERFORMANCE

See accompanying financial tables for the third quarter and year-to-date 2024. For GAAP purposes, Wiley's reporting structure consists of three segments: (1) Research, (2) Learning, and (3) Held for Sale or Sold.

Research

• Revenue of $256 million was up 1% as reported, or consistent with prior year at constant currency, due to modest growth in Research Publishing (+0.4% or +2% ex-Hindawi) driven by open access, offsetting a modest decline in Research Solutions.
• Adjusted EBITDA of $79 million was down 1% as reported and 2% at constant currency driven by higher editorial and marketing costs and the Hindawi profit impact, offsetting revenue performance. Adjusted EBITDA margin for the quarter was 30.9%.

Learning

• Revenue of $146 million was up 2% as reported and at constant currency due to 5% growth in Academic (driven by digital courseware, digital content, and licensing) offsetting a 3% decline in Professional.
• Adjusted EBITDA of $51 million was up 16% as reported or 15% at constant currency due to revenue growth and restructuring savings. Adjusted EBITDA margin for the quarter was 35.1%.

Businesses Held for Sale or Sold (HFS)

• Revenue of $58 million was down 38% on a reported basis or 39% at constant currency primarily due to the sale of University Services and declines in Wiley Edge. Adjusted EBITDA of $4 million was down 45% in the prior year due to revenue performance in held for sale assets and the completion of the sale of University Services.
• During the quarter, Wiley announced the sale of Wiley Edge and the close of University Services. For details related to the Edge announcement, please see 8K - Wiley Edge. For details related to the University Services close, please see 8K - University Services.

Corporate Expense Category

• Adjusted Corporate Expenses of $39 million on an Adjusted EBITDA basis was up 13% over prior year at constant currency, driven by a lower incentive compensation accrual in the prior year.

EPS

• GAAP EPS loss of $2.08 compared to a loss of $1.29 in the prior year period. The Company recorded impairment charges related to held for sale or sold assets, including goodwill impairment of $82 million and loss on the sale of a business and related impairment totaling $52 million. Also impacting GAAP EPS was a restructuring charge of $15 million.
• Adjusted EPS excluding businesses held for sale or sold of $0.59 was down 27% due to lower Adjusted Operating Income, higher tax expense, and higher interest expense.

Balance Sheet, Cash Flow, and Capital Allocation

• Net Debt-to-EBITDA Ratio (Trailing Twelve Months) at quarter end was 1.9 compared to 2.1 in the year-ago period.
• Net Cash Provided by Operating Activities (Year-to-Date) was $24 million compared to $54 million in the prior year period due to timing delays in closing journal subscription renewals, higher restructuring payments, and higher interest payments.
• Free Cash Flow less Product Development Spending (Year-to-Date) was a use of $45 million compared to a use of $22 million in the prior year period due to lower cash provided by operating activities, partially offset by lower Capex. Capex of $70 million was below prior year by $5 million. For the year, the Company expects Free Cash Flow of approximately $100 million. Note, Wiley does not provide an adjusted Free Cash Flow metric; results include held for sale or sold businesses.
• Returns to Shareholders (Year-to-Date): Wiley allocated $87 million toward dividends and share repurchases, moderately higher than prior year, with $29 million used to acquire 872,000 shares at an average cost per share of $33.24. This compares to 540,000 shares repurchased in the prior year period.

FISCAL YEAR 2024 OUTLOOK

Given leading indicators, outperformance in Learning augmented by an anticipated Q4 content rights deal for training AI models, and accelerated in-year cost savings, Wiley sees revenue trending toward the mid-to-high end of the range and is raising its Adjusted EBITDA and Adjusted EPS guidance.

*"Adjusted Revenue," "Adjusted EBITDA," and "Adjusted EPS" exclude businesses held for sale, including Wiley Edge (formerly Talent Development) and CrossKnowledge, as well as those sold: University, Services, Test Prep and Advancement Courses.

EARNINGS CONFERENCE CALL

Scheduled for today, March 7 at 10:00 am (ET). Access webcast at Investor Relations at investors.wiley.com, or directly at https://events.q4inc.com/attendee/269336383. U.S. callers, please dial (888) 210-3346 and enter the participant code 2521217#. International callers, please dial (646) 960-0253 and enter the participant code 2521217#.

ABOUT WILEY

Wiley (NYSE: WLY) is one of the world's largest publishers and a global leader in research and learning. Dedicated to the creation and application of knowledge, Wiley serves the world's researchers, learners, innovators, and leaders, helping them achieve their goals and solve the world's most important challenges. For more than two centuries, Wiley has been delivering on its timeless mission to unlock human potential. Visit us at Wiley.com.