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
"No transcript data provided in the input." - N/A
John Wiley & Sons, Inc. (WLYB) Q2 2025 Results Analysis — Margin Resilience in a Revenue-Soft Environment with Leverage Considerations
Executive Summary
John Wiley & Sons, Inc. delivered a solid margin performance in Q2 2025 amid a meaningful top-line decline. Reported revenue of $426.6 million declined 13.4% year over year, yet gross margin expanded to 74.9% from 68.4% in the prior-year period, aided by a favorable product mix and ongoing cost discipline. Operating income reached $64.1 million with a 15.0% EBITDA margin, driving a strong year-over-year earnings acceleration: net income of $40.5 million and basic/diluted EPS of $0.75/$0.74, up from a negative year-ago result as certain non-operating items swung to a positive earnings outcome.
Despite earnings strength, Wiley faces liquidity and leverage headwinds. Free cash flow was negative at $23.6 million and net operating cash flow was negative by $5.28 million, driven by a substantial working capital outflow of roughly $107 million and related cash outflows. The balance sheet shows total debt of $1.067 billion and net debt of about $992 million, with a current ratio of 0.66 and a quick ratio of 0.61, underscoring near-term liquidity pressure even as the company preserves a strong balance sheet total assets of $2.609 billion and stockholders’ equity of $755 million. Management commentary to the extent disclosed typically emphasizes progression toward higher-margin revenues in Education Services and digital offerings, though formal forward guidance is not included in the provided data. Investors should monitor working capital dynamics, capital allocation, and the trajectory of the Education Services segment as potential sources of earnings expansion.
Revenue and Profitability:
- Revenue: $426.6 million; YoY change: -13.44%; QoQ change: +5.64%.
- Gross Profit: $319.6 million; YoY change: -5.22%; QoQ change: +13.47%; Gross Margin: 74.92% (0.7492).
- Operating Income: $64.1 million; YoY change: +38.68%; QoQ change: +121.35%; Operating Margin: 15.03%.
- Net Income: $40.46 million; YoY change: +308.06%; QoQ change: +2917.41%; Net Margin: 9.48%.
- Earnings per Share (EPS): Basic $0.75; Diluted $0.74; YoY EPS change: +314.29%; QoQ EPS change: +2940.91%.
- EBITDA: $64.13 million; EBITDA Margin: ~15.0%;
- Other profitability metrics show a favorable margin mix versus the prior-year period, contributing to a substantial earnings uplift despite revenue pressure.
Cash Flow and Capital Allocation:
- Net cash provided by operating activities: -$5.28 million; Free cash flow: -$23.58 million.
- Net change in cash: -$13.83 million; Cash at end of period: $75.59 million; Cash at beginning of period: $89.41 million.
- Capital expenditures: -$18.30 million; Acquisitions, net: -$7.36 thousand; Dividends paid: -$38.21 million; Share repurchases: -$12.92 million.
- Working capital dynamics dominated cash flow: change in working capital: -$107.08 million; other working capital: -$107.08 million.
Balance Sheet and Leverage:
- Total assets: $2.609 billion; Total liabilities: $1.854 billion; Total stockholders’ equity: $755.3 million.
- Total debt: $1.067 billion; Net debt: $0.992 billion; Long-term debt: $1.039 billion.
- Liquidity metrics: Current ratio 0.66; Quick ratio 0.61; Cash ratio 0.14.
- Coverage and profitability indicators: Interest coverage ≈ 4.43x; Debt-to-capitalization ≈ 58.6%; Price-to-book ≈ 3.52x; EV/EBITDA ≈ 56.92x (relative to reported metrics).
Market Position and Benchmark Context:
- Wiley operates in a niche with high gross margins historically but with cyclicality tied to academic library budgets and demand for scholarly content. The Q2 2025 results show margin resilience amid revenue softness, supported by a favorable mix and disciplined cost management. Relative to publishing peers with consumer and educational publishing exposures, Wiley’s leverage profile remains a focal point for investors given the balance-sheet intensity and negative near-term free cash flow.
Overall, the quarter portrays a company delivering earnings upside from margin discipline in a challenged top-line environment, while maintaining a strong brand and long-standing publishing platform. The next chapters will depend on topline stabilization, progression in Education Services and digital platforms, and improvement in working capital to unlock cash flow and reduce leverage pressure.
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
3.52
priceEarningsRatio
16.43
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings call transcript data were not provided in the input. Consequently, key management quotes and themes from the QQ2 2025 call could not be extracted. In the absence of the transcript, the following themes are inferred from the results release and historical Wiley commentary: (1) Emphasis on higher-margin digital and education services opportunities; (2) Focus on operating efficiency and cost discipline to protect margin in a declining revenue environment; (3) Ongoing attention to capital allocation, with a balance between preserving liquidity and returning capital to shareholders. Investors should consult the official transcript for verbatim management commentary and nuance on forward guidance and strategic priorities.
No transcript data provided in the input.
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No transcript data provided in the input.
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Forward Guidance
The data provided does not include formal forward-looking guidance. If management communicates a path forward in typical Wiley fashion, key focus areas likely include: (i) revenue stabilization or growth in Education Services and digital courseware; (ii) continued investment in platforms and content monetization (e.g., Literatum, OPM capabilities); (iii) cost discipline to sustain or expand EBITDA margins; and (iv) working-capital optimization to improve free cash flow generation. Investors should monitor quarterly cadence for signs of revenue recovery, refresh in product mix toward higher-margin offerings, and any communicated targets for FCF, debt reduction, or capex intensity. In the absence of explicit guidance, constructing a framework around target operating margins, normalized working capital, and deleveraging pace is prudent.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
WLYB Focus
74.92%
15.00%
5.36%
16.43%
WLY
74.90%
15.00%
5.36%
16.51%
PSO
50.10%
12.50%
4.14%
10.74%
SCHL
58.00%
13.70%
4.95%
3.81%
PSORF
50.10%
12.50%
4.14%
10.36%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given Q2 2025 results, Wiley exhibits margin resilience in the face of revenue headwinds, supported by a durable gross margin and meaningful operating income. The key driver of long-term value creation will be the acceleration of higher-margin Education Services and digital platforms, which could improve operating leverage and free cash flow once working capital normalization occurs. The current leverage level and negative near-term free cash flow introduce downside risk if revenue declines persist or if the company cannot achieve working-capital improvements. Valuation remains elevated relative to peers (P/B around 3.5x; EV/EBITDA multiple in the mid-to-upper 50s), suggesting investors are pricing in Wiley’s brand strength and long-term growth potential in education and scholarly publishing. A cautious stance is warranted until there is clearer evidence of revenue stabilization and working-capital improvement; potential upside hinges on debt reduction, cash flow normalization, and continued progress in higher-margin digital and education-services initiatives.
Key Investment Factors
Growth Potential
Significant opportunity from Education Services and digital learning growth; potential uplift from online program management (OPM), digital courseware, and professional learning services; platform monetization (Literatum) and libraries’ shift to digital subscriptions supported by pricing discipline and bundled offerings.
Profitability Risk
Revenue cyclicality tied to academic library budgets; elevated leverage with modest near-term free cash flow; paid content and open access dynamics; potential pricing pressure or subscription renewal risk; dependence on US educational and research markets; macroeconomic sensitivity affecting higher education spending.
Financial Position
Healthy gross margin profile (~75%) supports EBITDA resilience; negative free cash flow and modest operating cash flow reflect working-capital headwinds and capex cadence; still substantial debt load and limited liquidity headroom given current ratio. Monitoring debt maturity schedule and potential refinancings is important.
SWOT Analysis
Strengths
Diversified portfolio across Research Publishing, Academic/Professional Learning, and Education Services
High historical gross margin (~75%) supporting EBITDA resilience
Strong brand with a long-standing market presence (founded 1807)
Cash on hand supports selective investment and capex flexibility
Weaknesses
Revenue decline year over year in QQ2 2025 (YoY -13.4%)
Negative near-term free cash flow and negative operating cash flow
Liquidity pressure with current ratio of 0.66 and quick ratio of 0.61
High leverage and sizable long-term debt burden
Opportunities
Growth in Education Services and online program management (OPM) offerings
Expansion of digital platforms (Literatum) and digital content monetization
Cross-segment synergies to improve margin and recurring revenue mix
Threats
Cyclicality of academic library budgets and library spending constraints
Competition from open access and alternative publishing models
Interest rate sensitivity and refinancing risk given elevated debt
Regulatory shifts affecting scholarly publishing and licensing