Exchange: NYSE | Sector: Communication Services | Industry: Publishing
Q1 2026
Published: Sep 5, 2025
Earnings Highlights
Revenue of $396.80M down 15.3% year-over-year
EPS of $0.22 decreased by 52.2% from previous year
Gross margin of 69.1%
Net income of 11.70M
"“One of the things that's really important to us is to make sure that high-quality content gets included in the research tools and learning tools that are being used by students. And so we're focusing on an announcement in a couple of weeks that will talk about Claude institutional access and the ways that we're integrating our content with Anthropic's toolset into the student and researcher workflow, primarily in the academic market.”" - Jay Flynn
John Wiley & Sons, Inc. (WLY) QQ1 2026 Earnings Analysis: AI-Driven Transformation, Recurring Core Strength, and Open Access Momentum in Publishing & Learning
Executive Summary
John Wiley & Sons, Inc. delivered a structurally mixed QQ1 2026 showing momentum in AI licensing and open access (OA) underpinned by a large recurring revenue base, while facing seasonality headwinds and a temporary mix shift that pressured EBITDA margins. Management reaffirmed full-year guidance as AI adoption accelerates and the company continues to execute on its three-pronged strategy: strengthen research leadership, expand AI-enabled offerings (notably through the Wiley Nexus platform), and improve operating discipline with cost savings ramping in from Q2 onward. The quarter featured a landmark $20 million AI licensing project, of which $16 million was Nexus/partner content, and management emphasized the additive nature of Nexus relative to Wiley’s own content. The company also highlighted strong OA momentum (July opened with record OA submissions) and a robust renewal pipeline, which supports its expectation of low-to-mid single-digit revenue growth and mid-20s EBITDA margins for the full year.
Key Performance Indicators
Revenue
396.80M
QoQ: -1.93% | YoY:-15.30%
Gross Profit
274.33M
69.14% margin
QoQ: -8.68% | YoY:-17.33%
Operating Income
34.00M
QoQ: -34.40% | YoY:-57.39%
Net Income
11.70M
QoQ: 150.97% | YoY:-53.69%
EPS
0.22
QoQ: 151.16% | YoY:-52.17%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $396.8 million in Q1 2026 (GAAP); YoY decline of 15.3% and QoQ decline of 1.93% per reported metrics, reflecting seasonality and prior-year renewal timing. Management notes adjustments and lapping effects that reconcile with the 1% increase in adjusted revenue on the call.
Gross margin: 69.1% ($274.3 million gross profit on $396.8 million revenue).
EBITDA and margins: EBITDA $65.2 million; EBITDA margin 16.4%; Operating income $34.0 million; operating margin 8.6%; Net income $11.7 million; net margin 2.95%; basic EPS $0.22.
AI and Nexus: AI licensing revenue of $29.0 million in the quarter, up from $17.0 million prior year; Nexus-driven content contributed $16.0 million within that Nexus deal; total AI revenue composition: Wiley content and Nexus content blending to expand addressable market.
Research vs. Learning mix: Research revenue up 5% driven by AI demand; Research publishing down ~1% (due to lapped $5 million renewal benefit); Research Solutions up ~44% (Nexus-driven). Learning revenue down ~8% due to softer AI-related demand and consumer/retail headwinds.
Financial Highlights
- Revenue: $396.8 million in Q1 2026 (GAAP); YoY decline of 15.3% and QoQ decline of 1.93% per reported metrics, reflecting seasonality and prior-year renewal timing. Management notes adjustments and lapping effects that reconcile with the 1% increase in adjusted revenue on the call.
- Gross margin: 69.1% ($274.3 million gross profit on $396.8 million revenue).
- EBITDA and margins: EBITDA $65.2 million; EBITDA margin 16.4%; Operating income $34.0 million; operating margin 8.6%; Net income $11.7 million; net margin 2.95%; basic EPS $0.22.
- AI and Nexus: AI licensing revenue of $29.0 million in the quarter, up from $17.0 million prior year; Nexus-driven content contributed $16.0 million within that Nexus deal; total AI revenue composition: Wiley content and Nexus content blending to expand addressable market.
- Research vs. Learning mix: Research revenue up 5% driven by AI demand; Research publishing down ~1% (due to lapped $5 million renewal benefit); Research Solutions up ~44% (Nexus-driven). Learning revenue down ~8% due to softer AI-related demand and consumer/retail headwinds.
- Open Access: OA submissions in July were at a record level; Advanced Science revenue up roughly 50% YoY; OA backstop supports recurring revenue strength.
- Cash flow and balance sheet: Operating cash flow negative (-$85.0 million) in Q1; free cash flow use of about -$97.0 million; cash balance $81.9 million; net debt to EBITDA 1.9x; liquidity of $551 million (cash on hand $82 million; undrawn capacity $469 million); divestiture proceeds of ~$120 million used to reduce debt; annual dividend raised for the 32nd consecutive year; share repurchases of $14.0 million in the quarter; new $250 million repurchase authorization (+25%).
- Guidance and forward look: Revenue growth expected in the low-to-mid single digits; adjusted EBITDA margin target 25.5%–26.5%; adjusted EPS $3.90–$4.35; free cash flow around $200 million; CapEx around $77 million; AI revenue is variable but underlying demand remains robust.
- Strategic posture: Wiley continues to view AI as a transformative, long-duration opportunity, not just a one-off licensing play; emphasis on content integrity and “Wiley’s seal of approval” for AI-enabled workflows. Management remains confident in Q2 and the remainder of the year given renewal momentum, OA demand, AI partnerships, and ongoing cost management.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
396.80M
-15.30%
-1.93%
Gross Profit
274.33M
-17.33%
-8.68%
Operating Income
34.00M
-57.39%
-34.40%
Net Income
11.70M
-53.69%
150.97%
EPS
0.22
-52.17%
151.16%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Themes from the earnings call and management remarks:
- AI leadership and Nexus: Wiley is actively building a multi-pronged AI strategy, including training, Nexus licensing, and AI subscription inference. Matthew Kissner stated that AI is a transformative opportunity and that the company is moving decisively to capture it, with Nexus serving as a unified platform that aggregates content for AI training and supports AI tooling. (Quote: “AI is a transformative opportunity, and we’re moving decisively to capitalize.”)
- Anthropic/Claude integration: Jay Flynn highlighted a pilot to integrate Wiley’s institutional content into Claude and Claude Institutional Access, focusing on academic workflows and content sovereignty. This is presented as a first integration with a major AI tool provider, intended to underpin the value of institutional subscriptions and potential upsell opportunities.
- Margins and mix: Craig Albright explained the margin dynamics of the $20 million AI project, noting 45% EBITDA margins for Nexus content versus ~75% for Wiley-owned content, reinforcing that Nexus is additive rather than a substitute. He also pointed to timing benefits from prior-year renewals and a reallocation of corporate expenses as temporary offsets to near-term margins.
- Renewals and backlog: Management emphasized a favorable renewal backdrop with a six-month-plus publishing backlog and strong OA growth, including a record July for OA submissions and Advanced Science up ~50% YoY.
- Capital allocation: Consistent use of capital return (dividends increased for 32nd straight year; new $250M buyback authorization; 14M of repurchases in the quarter), balanced with balance sheet discipline and debt reduction following the university services divestiture (~$120M cash proceeds to reduce debt).
- Operational progress: The Research Exchange migration milestone (1,000 journals migrated; 350k users) underscores a push toward AI-enabled workflows, improved editorial efficiency, and a stronger data backbone for AI-infused products.
- Market conditions: The management commentary acknowledged headwinds in professional publishing and consumer spending in the retail channel, with an expectation of continued above-market growth in publishing output and title signings, while watching macro consumer trends. Quote: “There was some softness in professional publishing… we have good confidence in Q2 and the rest of the year driven by publishing volume, journal renewals, open access growth, expanding AI relationships, and cost management.”
“One of the things that's really important to us is to make sure that high-quality content gets included in the research tools and learning tools that are being used by students. And so we're focusing on an announcement in a couple of weeks that will talk about Claude institutional access and the ways that we're integrating our content with Anthropic's toolset into the student and researcher workflow, primarily in the academic market.”
— Jay Flynn
“The operating theory is that we believe in the future our content is going to be accessed by various AI tools perhaps as frequently as it's accessed by individuals. And so our goal here is to build those connections into those various tools as the market evolves. This is still early days in the formation of this market.”
— Matthew Kissner
Forward Guidance
Management reaffirmed full-year guidance despite Q1 headwinds, highlighting a path to margin expansion and cash flow recovery as cost savings ramp in from Q2. Key takeaways for the outlook:
- Revenue growth: Low-to-mid single-digit growth for calendar year 2026, supported by continued OA momentum and strong renewal activity.
- Profitability: Adjusted EBITDA margin target raised to 25.5%–26.5% for 2026, implying meaningful margin expansion from the Q1 run-rate (~16.4% wholesale EBITDA margin) as cost-savings and favorable mix normalize.
- Earnings: Adjusted EPS guidance of $3.90–$4.35 for 2026, reflecting ongoing operating discipline and higher returns from AI partnerships.
- Free cash flow and capex: Free cash flow guidance of approximately $200 million, with capex around $77 million, signaling a relatively modest cash outlay for growth investments and a continued emphasis on shareholder returns.
- AI trajectory: AI revenue in Q1 totaled $29 million (including $16 million Nexus content in the quarter). The company expects subscription-inference and broader AI spend to grow over time; management noted that the AI opportunity is still forming but possesses significant upside given the scale of content, the corporate R&D spend landscape, and the Nexus platform.
- Key catalysts and monitors: Sustained renewal momentum into the November–April renewal season for calendar 2026; OA demand and publishing backlog; progress on AI integrations with Anthropic/AWS/Perplexity; cost-savings ramp in Q2; net debt to EBITDA trajectory toward comfort with long-term capital structure.
Overall, investors should monitor: (1) quarterly AI licensing cadence and margins by program (training vs Nexus vs inference), (2) renewal trends and OA growth, (3) progress of the Research Exchange platform adoption, (4) quarterly progression of cost savings and corporate spend, and (5) debt reduction trajectory and liquidity under changing macro conditions.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
WLY Focus
69.14%
N/A
N/A
N/A
PSORF
0.00%
0.00%
0.00%
0.00%
SCHL
45.90%
-37.30%
-6.53%
-3.61%
PSO
0.00%
0.00%
0.00%
0.00%
NYT
47.40%
9.22%
2.63%
40.99%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base-case: Wiley sustains low-to-mid single-digit revenue growth with mid-20s EBITDA margin as cost savings ramp and AI mix normalization drive margin expansion. The company remains well positioned to monetize AI through Nexus, training deals, and inference subscriptions, supported by a backlog in publishing and strong OA momentum. In addition, a disciplined capital allocation framework (dividends + buybacks) and debt reduction through divestiture proceeds reinforce financial flexibility. Bull-case: Accelerated AI adoption and stronger-than-expected renewal momentum, higher contribution from Nexus-based content and inference subscriptions, and further cost optimization leading to EBITDA margins closer to management’s 26%+ target, with FCF above $200 million. Bear-case: Continued macro weakness or slower-than-expected AI monetization, delaying margin expansion and pressuring cash flow and the balance sheet, potentially prompting a more cautious stance on buybacks and capex. Investors should monitor AI licensing cadence, Nexus contribution versus Wiley-owned content margins, renewal trends, OA uptake, and the trajectory of debt leverage as catalysts for the stock’s multiple re-rating.
Key Investment Factors
Growth Potential
AI-enabled publishing and learning monetization could re-shape Wiley’s revenue mix, with Nexus-driven licensing, inference subscriptions, and corporate R&D collaborations expanding addressable markets beyond traditional journals. Management highlighted potential upside from 80% of US R&D spend concentrated in corporations but only 10% of Wiley’s revenue today, signaling substantial expansion runway as AI workflows proliferate and content is more deeply embedded in enterprise tools.
Profitability Risk
Near-term margin normalization risk as AI-related deals carry different royalty structures (e.g., Nexus margins lower than Wiley-owned content). Macro headwinds in consumer channels and professional publishing could dampen near-term demand. Execution risk around large-scale platform migrations and integration with external AI tools (Anthropic, AWS, Perplexity) could introduce operational challenges. IP and regulatory risks tied to AI and data usage remain ongoing industry concerns.
Financial Position
Solid liquidity with $551 million available (cash on hand $82 million and $469 million undrawn debt facilities); debt burden measured at net debt/EBITDA 1.9x; ongoing dividend growth (32nd consecutive year) and a fresh $250 million buyback authorization demonstrate a disciplined capital-allocation stance. The university services divestiture provided one-time cash proceeds (~$120 million) used to deleverage, supporting a leaner balance sheet profile and improved financial flexibility.
SWOT Analysis
Strengths
Strong recurring revenue base (roughly two-thirds of revenue) and a diversified, globally dispersed portfolio across Research Publishing, Platforms, and Education Services
Leading AI initiative via Wiley Nexus, licensing programs, and AI-inference models with multi-faceted partnerships (AWS, Anthropic, Perplexity)
Robust OA growth and a record month for OA submissions; Advanced Science revenue up ~50% YoY
Large, high-quality catalog of journals; industry-leading citations and editorial impact (top category ranks, >10% of citations in the index)
Strong capital allocation discipline (dividends for 32 consecutive years, buybacks, debt reduction)
Strategic platform migration (Research Exchange) delivering efficiency gains and improved research integrity
Weaknesses
Q1 GAAP results show YoY revenue decline (-15%) and negative near-term cash flow (operating cash flow and free cash flow negative in the quarter) due to seasonality and renewal timing
Margins under AI mix pressure (Nexus contributed 45% EBITDA margin vs Wiley content historically around higher margins)
Softness in professional publishing and retail channels creates near-term revenue headwinds in that segment
Significant debt load (net debt/EBITDA 1.9x) and reliance on back-end renewal dynamics; shorter-term negative cash flow could pressure equity multiples
High dependence on timely renewals and OA growth to sustain recurring revenue growth and backlog; macroeconomic sensitivity in consumer spending impacting professional publishing
Opportunities
Expanding AI monetization through Nexus, training deals, and enterprise inference subscriptions; increasing share of corporate R&D spend via enterprise solutions
Open access expansion and strong renewal cycle to underpin recurring revenue and reduce cyclicality
Global expansion of OA and geographies (APAC leadership in outputs) to broaden revenue base
Further integration with leading AI developers to embed Wiley content deeper into end-user workflows
Leveraging ongoing cost reductions to deliver margin expansion and enhanced cash flow
Threats
Macro softness impacting consumer and retail channels (professional publishing)
Competition from other publishers and AI data/content providers; potential pricing pressure on journals and OA models
Regulatory/policy risk around data usage, AI model safety, and copyright in AI-enabled workflows
Execution risk associated with large-scale technology migrations and integration with external AI platforms
Industry IP/piracy concerns and potential litigation or settlements affecting AI licensing dynamics