Exchange: NYSE | Sector: Communication Services | Industry: Publishing
Q2 2025
Published: Dec 6, 2024
Earnings Highlights
Revenue of $426.60M down 13.4% year-over-year
EPS of $0.74 increased by 314.3% from previous year
Gross margin of 74.9%
Net income of 40.46M
"We’re pleased with our continued progress. Our revenue and profit performance are in-line with our expectations, our investments are starting to pay off, and we remain confident in our full-year trajectory." - Matthew Kissner
John Wiley & Sons Inc. (WLY) Q2 2025 Results Analysis — AI-Enabled Growth, Margin Expansion, and Strategic Repositioning in Publishing
Executive Summary
Wiley delivered a resilient Q2 2025 despite a challenging year-over-year backdrop driven by divestitures and legacy revenue swings. Reported revenue of $426.6 million declined 13.4% YoY but rose 5.6% QoQ, while Adjusted EBITDA expanded 14% to $106.0 million and achieved a quarterly margin of 24.9%, up from 22.7% in the prior-year period. The margin uplift reflects ongoing efficiencies and selective reinvestment in growth initiatives, with Learning leading the top-line growth (+7% reported; +5% ex AI) and Research contributing modestly (+1%). Management underscored AI investments and a disciplined, multi-year margin expansion program, signaling a shift toward sustainable profitability as AI-enabled workflows, content tooling, and licensing opportunities scale.
Key catalysts highlighted on the call include: (i) AI productivity, publishing innovation, and licensing applications—supported by a material licensing pipeline (to date, $44 million in licensing revenue realized year-to-date) and a growing internal AI tooling and data catalog; (ii) a strong growth trajectory in Learning, driven by zyBooks, inclusive access, and front-list title expansion, with signings at the strongest pace in years; and (iii) India’s One Nation, One Subscription program, which could broaden institutional access across 6,000+ Indian research institutions and bolster long-dated demand. Wiley also reiterated its full-year guidance, targeting revenue of $1.65–$1.69 billion, Adjusted EBITDA of $385–$410 million, and Adjusted EPS of $3.25–$3.60, accompanied by an expected free cash flow of roughly $125 million.
While near-term free cash flow was negative in the first half (free cash flow of about -$23.6 million and operating cash flow of -$5.28 million, reflecting working capital timing), Wiley sees improving cash generation in H2 as journal renewals re-accelerate and cost-savings initiatives compound. The company maintains a disciplined capital allocation stance, balancing debt reduction with growth investments and shareholder returns. Overall, the setup combines near-term volatility with a clear long-term path to margin expansion and sustainable cash generation as AI-enabled products and recurring revenue models mature.
Net income: $40.46 million; net margin 9.48% (0.0948); YoY +308.06%; QoQ +2917.41%.
EPS (GAAP): $0.75; Diluted EPS: $0.74; weighted average shares 54.19 million (basic) / 54.85 million (diluted).
Financial Highlights
Financial highlights (Q2 2025, USD, unaudited):
- Revenue: $426.6 million; YoY decline -13.44%; QoQ growth +5.64% (per incomeMetrics).
- Gross profit: $319.6 million; gross margin 74.92% (0.7492); YoY gross profit change -5.22%; QoQ +13.47%.
- Operating income: $64.1 million; operating margin 15.03% (0.1503); YoY +38.68%; QoQ +121.35%.
- Net income: $40.46 million; net margin 9.48% (0.0948); YoY +308.06%; QoQ +2917.41%.
- EPS (GAAP): $0.75; Diluted EPS: $0.74; weighted average shares 54.19 million (basic) / 54.85 million (diluted).
- Adjusted EBITDA: $106.0 million; Adjusted EBITDA margin 24.93% (0.2493); YoY +17% (as reported on call).
- Balance sheet strength: Total assets $2.609B; total debt $1.067B; net debt $0.992B; cash & equivalents $75.5M; total stockholders’ equity $755.3M. Current ratio 0.66; quick ratio 0.61.
- Free cash flow (H1 2025): -$23.58 million; operating cash flow -$5.28 million; capital expenditures $18.30 million; dividends paid $38.21 million; share repurchases $12.92 million; net cash used in investing activities $20.68 million; net cash provided by financing activities $11.49 million; cash end of period $75.6 million.
- Outlook implied in the call: Full-year revenue guidance of $1.65–$1.69 billion; Adjusted EBITDA guidance of $385–$410 million; Adjusted EPS guidance of $3.25–$3.60; Free cash flow guidance of approximately $125 million.
- Leverage and liquidity signals: Net debt to EBITDA was 2.2x at end-October 2024 (vs 2.0x prior year); substantial cash returned to shareholders year-to-date (dividends and share repurchases).
- Note on mix and cadence: Revenue growth was led by Learning (+7% reported; +5% excluding AI), with Research up 1%. Legacy print and licensing revenue generated a large year-on-year swing, underscoring the ongoing shift toward recurring institutional models and AI-enabled monetization.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
426.60M
-13.44%
5.64%
Gross Profit
319.60M
-5.22%
13.47%
Operating Income
64.13M
38.68%
121.35%
Net Income
40.46M
308.06%
2 917.41%
EPS
0.75
314.29%
2 940.91%
Key Financial Ratios
currentRatio
0.66
grossProfitMargin
74.9%
operatingProfitMargin
15%
netProfitMargin
9.48%
returnOnAssets
1.55%
returnOnEquity
5.36%
debtEquityRatio
1.41
operatingCashFlowPerShare
$-0.1
freeCashFlowPerShare
$-0.44
dividendPayoutRatio
94.4%
priceToBookRatio
3.54
priceEarningsRatio
16.51
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights and quotes by theme:
- Strategy and AI positioning: Matt Kissner emphasized disciplined AI development and a multi-pillar AI strategy: Productivity, Publishing Innovation, and Licensing and Application. Quote: “We’re moving decisively but methodically, structuring and expanding our available content and data catalogs, formalizing business development teams and pipelines, and developing publishing and author tools.” Significance: Highlights Wiley’s measured approach to AI investments, mitigating execution risk while pursuing early monetization via licensing and productivity enhancements.
- Margin and reinvestment discipline: Kissner noted that “adjusted EBITDA and adjusted EPS were up 17% and 47%, and our adjusted EBITDA margin was up 220 basis points” in the half-year; the company is reinvesting around half of cost savings and AI deal proceeds into growth. Significance: Indicates a deliberate path to margin expansion funded by efficiency gains and AI-driven revenue opportunities.
- Learning momentum and content strategy: Jay Flynn highlighted 18% submissions growth in top journals and 7% output growth within Learning, driven by zyBooks, inclusive access, and accelerated front-list titles. Significance: Demonstrates how targeted content investments translate into higher submissions and potential longer-term revenue durability, even if not always one-for-one with immediate revenue conversion.
- India growth potential and renewals: The India program (One Nation, One Subscription) was described as potentially transformative, expanding access to 6,000+ institutions and positioning Wiley for commensurate growth in subscription revenue; leadership cited India’s 40% growth in article submissions. Significance: Signals a large, multi-year revenue opportunity in a high-growth geography.
- Financial positioning and cadence: Chris Caridi outlined an uneven H2 with Q3 being lighter and Q4 elevated, reaffirming full-year guidance and noting ongoing cost-savings realization and reinvestment. Significance: Provides investors with visibility on cadence risk and the rationale for near-term volatility within a structurally improving margin trajectory.
We’re pleased with our continued progress. Our revenue and profit performance are in-line with our expectations, our investments are starting to pay off, and we remain confident in our full-year trajectory.
— Matthew Kissner
The team’s done a great job over the last 18 months to adjust our cost structure and continue to drive top line performance at the same time. We are seeing continued growth in our zyBooks platform in computer science, data science, AI, that is a core driver of performance learning.
— Jay Flynn
Forward Guidance
Investment Outlook and Outlook Assumptions: Wiley maintains a multi-year growth and margin-expansion thesis underpinned by its AI-enabled strategy and a refocused cost structure. The company guided for FY2025 revenue of $1.65–$1.69 billion, adjusted EBITDA of $385–$410 million (target margin 23–24%), and adjusted EPS of $3.25–$3.60. Free cash flow is expected to be around $125 million, aided by $60 million of cost savings realized this year and $45 million of reinvestments (half of the $60 million savings plus AI proceeds). The company anticipates an uneven H2, with Q3 weaker due to seasonality in Learning and investments, offset by stronger Q4 results driven by publishing momentum and renewals.
Assessing achievability: The guidance appears plausible given mid-year progress: Learning delivered +7% revenue growth (ex AI +5%), and AI initiatives are progressing with a robust pipeline (e.g., targeted pharma agreements, GenAI tutor pilots, and licensing opportunities totaling $44 million in licensing to date). The AI opportunity is framed in three pillars (Productivity, Publishing Innovation, Licensing and Application), with tangible near-term benefits from productivity gains and refer/transfer improvements within Research Publishing. The Indian one-nation program introduces a meaningful long-term growth path, albeit with execution risk and timing uncertainty. Margin expansion is framed as a multi-year objective, with planned lift from 23–24% in FY2025 to 24–25% in FY2026 and beyond, supported by cost-savings, efficiency gains, and scale benefits from higher-value recurring revenue.
Key factors investors should monitor: (1) Execution of AI-enabled publishing tools and licensing deals, (2) the pace and profitability of the India One Nation One Subscription rollout and any incremental impact on subscription revenue and content licensing, (3) the sustained conversion of front-list and high-quality journal growth into repeatable recurring revenue, (4) the trajectory of Research and Solutions segments as AI and platform modernization mature, (5) cadence of cash flow generation in H2 and the company’s ability to de-leverage while funding strategic investments.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
WLY Focus
74.92%
15.00%
5.36%
16.51%
PSORF
50.10%
12.50%
4.14%
10.36%
SCHL
58.00%
13.70%
4.95%
3.81%
PSO
50.10%
12.50%
4.14%
10.74%
NYT
45.10%
13.30%
3.63%
32.29%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Wiley presents a constructive long-term investment thesis anchored in AI-enabled monetization, a rebalanced cost structure, and sustained demand for high-quality scholarly content. The firm’s full-year guidance remains credible given mid-year momentum in Learning and the early-stage AI pipeline, complemented by India growth potential and ongoing platform modernization. Risks center on execution timing, dispersion of benefits from AI programs, and library budget dynamics. If Wiley can translate Learning growth into durable recurring revenue, integrate AI capabilities at profitable margins, and execute on India and licensing opportunities, the stock could exhibit multiple expansion as the margin targets move toward 24–25% by fiscal 2026 and free cash flow improves toward the $125 million target. Key monitoring items include AI licensing milestones, renewal rates and shelf-life of transformational agreements, quantum of cost-savings realization, and progress in India’s policy implementation and associated revenue uplift.
Key Investment Factors
Growth Potential
AI-enabled content licensing and productivity tools create multiple revenue streams (licensing revenue, AI-driven data offerings, and enhanced publishing efficiency that can lift article transfer and submission volumes). Learning remains a core momentum engine with high-potential for expanding journal brands and platform migration to Wiley’s Research Publishing platform, aided by a renewed focus on editorial capacity and go-to-market optimization. India’s One Nation One Subscription represents a potentially large, multi-year growth driver for subscription revenues and institutional relationships.
Profitability Risk
Near-term bets on AI adoptions carry execution risk due to accuracy concerns and integration costs. Legacy revenue volatility (print/licensing) introduced sizable YoY fluctuations in Q2 while divestitures have reduced diversification benefits. Balance sheet metrics show net debt to EBITDA around 2.2x; liquidity is constrained by a current ratio of 0.66, indicating sensitivity to working capital cycles. Regulatory, geopolitical, and currency headwinds could influence renewals and cross-border licensing economics. AI-related partnerships and licensing will require sustained investment and time to scale into meaningful profitability.
Financial Position
Solid brand and cash-flow potential underpin Wiley’s financial position. Total assets of $2.61B and stockholders’ equity of $755.3M support cash generation capacity, while net debt of $0.992B and a 2.2x net debt/EBITDA multiple suggest moderate leverage relative to peers. Management highlighted dividend stability (31st consecutive year of dividend increase, with $64M in dividends and $25M in share repurchases year-to-date) and a disciplined approach to capital allocation that prioritizes debt reduction alongside growth investments.
SWOT Analysis
Strengths
Strong AI positioning with a three-pillar framework (Productivity, Publishing Innovation, Licensing and Application) and a growing licensing pipeline.
High-margin Learning business with accelerator effects from zyBooks and front-list titles.
Recurring revenue backbone through institutional models and transformational agreements.
Resilient legacy brand with long-standing market position in scholarly publishing and knowledge services.
Weaknesses
Significant YoY revenue sensitivity from legacy print and licensing and from divested assets.
Near-term cash flow volatility due to working capital timing and seasonality in journal renewals.
Current liquidity metrics (C ratio 0.66) indicate tighter working-capital cushions relative to peers.
Opportunities
One Nation, One Subscription in India expanding coverage to over 6,000 institutions and potentially lifting subscription revenues.
Expanded AI licensing and data products for LLM developers and enterprise customers.
Expansion of top journal brands, including new AI-focused journals, and platform modernization to improve cost per article and author experience.
Threats
AI tool accuracy and deployment risks requiring ongoing investment and validation.
Macro and political shifts affecting library budgets, renewals, and academic research spending.
Competition from other large publishers and potential changes in open-access dynamics.
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