Exchange: NYSE | Sector: Communication Services | Industry: Publishing
Q4 2024
Published: Jun 26, 2024
Earnings Highlights
Revenue of $468.46M down 11% year-over-year
EPS of $0.46 decreased by 62.6% from previous year
Gross margin of 70.8%
Net income of 25.27M
"GenAI demand is accelerating. We've already executed two content rights projects for large tech companies." - Matt Kissner
John Wiley & Sons Inc (WLY) Q4 2024 Results Analysis: AI-Driven Transformation, Margin Expansion, and Strategic Positioning in Publishing
Executive Summary
Wiley delivered a solid Q4 FY2024 in a transitional year, underscoring the company’s progress on execution, cost discipline, and AI-enabled monetization while continuing to reshape its portfolio. Adjusted revenue rose 4% year over year to $441 million in the quarter, driven by Learning and the GenAI content rights program, even as Research experienced timing-related softness from Hindawi integration and a COVID-era research lag. The quarterly adjusted EBITDA margin reached 28.3% (25.6% excluding the AI deal), reflecting continued savings from the value-creation plan and ongoing efficiency initiatives. For the full year, adjusted revenue declined modestly to $1.617 billion and adjusted EBITDA fell 3% to $369 million, with an adjusted EBITDA margin of 22.8%. Free cash flow amounted to $114 million, pressured by restructuring and higher interest as Wiley completes its transformation.
Key Performance Indicators
Revenue
468.46M
QoQ: 1.68% | YoY:-10.96%
Gross Profit
331.85M
70.84% margin
QoQ: 9.33% | YoY:-5.72%
Operating Income
79.79M
QoQ: 59.10% | YoY:-3.25%
Net Income
25.27M
QoQ: 122.19% | YoY:-63.03%
EPS
0.46
QoQ: 122.12% | YoY:-62.60%
Revenue Trend
Margin Analysis
Key Insights
Quarter (Q4 FY2024): Adjusted revenue up 4% to $441.0 million; Adjusted EBITDA $125.0 million; Adjusted EBITDA margin 28.3% (25.6% ex AI deal); GAAP quarter margins higher due to one-off divestiture and restructuring effects; Net income $25.3 million; EPS $0.46.
Full year FY2024: Revenue $1.617 billion (adjusted); Adjusted EBITDA $369 million; Adjusted EBITDA margin 22.8%; Free cash flow $114 million; Net debt to EBITDA 1.7x; Cash at end of period $83.4 million.
Segment signals: Learning outperformed in Q4 with significant margin expansion (adjusted EBITDA margin 43.5% for the quarter); Research faced a 3% revenue decline (timing and Hindawi integration effects); Gold Open Access expected to grow ~20% in coming years; Institutional models remain steady; Education Services and strategic signings poised to contribute in FY25.
Capital allocation and pivot: Two GenAI licensing deals executed in FY24 ($23 million recognized in Learning; $21 million in FY25), with opportunities for recurring licensing; divestitures completed (University Services and Wiley Edge) for ~ $175 million total consideration; $60 million of run-rate savings realized in-year from a $130 million plan; share repurchases increased in H2 FY24; dividend maintained for 30th consecutive year.
Financial Highlights
- Quarter (Q4 FY2024): Adjusted revenue up 4% to $441.0 million; Adjusted EBITDA $125.0 million; Adjusted EBITDA margin 28.3% (25.6% ex AI deal); GAAP quarter margins higher due to one-off divestiture and restructuring effects; Net income $25.3 million; EPS $0.46.
- Full year FY2024: Revenue $1.617 billion (adjusted); Adjusted EBITDA $369 million; Adjusted EBITDA margin 22.8%; Free cash flow $114 million; Net debt to EBITDA 1.7x; Cash at end of period $83.4 million.
- Segment signals: Learning outperformed in Q4 with significant margin expansion (adjusted EBITDA margin 43.5% for the quarter); Research faced a 3% revenue decline (timing and Hindawi integration effects); Gold Open Access expected to grow ~20% in coming years; Institutional models remain steady; Education Services and strategic signings poised to contribute in FY25.
- Capital allocation and pivot: Two GenAI licensing deals executed in FY24 ($23 million recognized in Learning; $21 million in FY25), with opportunities for recurring licensing; divestitures completed (University Services and Wiley Edge) for ~ $175 million total consideration; $60 million of run-rate savings realized in-year from a $130 million plan; share repurchases increased in H2 FY24; dividend maintained for 30th consecutive year.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
468.46M
-10.96%
1.68%
Gross Profit
331.85M
-5.72%
9.33%
Operating Income
79.79M
-3.25%
59.10%
Net Income
25.27M
-63.03%
122.19%
EPS
0.46
-62.60%
122.12%
Key Financial Ratios
currentRatio
0.52
grossProfitMargin
70.8%
operatingProfitMargin
17%
netProfitMargin
5.39%
returnOnAssets
0.93%
returnOnEquity
3.42%
debtEquityRatio
1.21
operatingCashFlowPerShare
$3.36
freeCashFlowPerShare
$2.84
dividendPayoutRatio
75.6%
priceToBookRatio
2.77
priceEarningsRatio
20.29
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key themes from management discussions on the earnings call:
- Strategy and transformation: “Today Wiley is leaner, more competitive and more efficient.” Wiley continues to execute the value-creation plan, with two divestitures closed and a faster realization of savings (60m of the 90m annualized savings realized in-year from a $130m program). The company expects roughly half of the savings to flow to margin and half to reinvestment in growth initiatives.
- GenAI opportunity and execution: “GenAI demand is accelerating. We’ve already executed two content rights projects for large tech companies.” Management outlined a two-stage approach: (1) licensing select content for GenAI model training today, and (2) evolving recurring licensing and content-enabled applications with customers across pharma, finance, and other sectors.
- Operational risk mitigation and governance: Eight AI tools are already in production to detect papermill activity, verify authors, and detect GenAI content; partnerships with IEEE and Sage to pilot tools across systems; the team emphasizes a two-way street between protecting rights and capitalizing on opportunities, with ongoing platform development to enhance publication speed and integrity.
- Outlook and guidance: Management reinforced FY25 targets (revenue $1.65–$1.69B; adjusted EBITDA $385–$410M; adjusted EPS $3.25–$3.60; free cash flow ~$125M) and long-term targets (FY26 revenue low- to mid-single digit growth; EBITDA margin 24–25%; FCF $200M). They highlighted first-half recognition of the $21M GenAI deal and continued investment in GenAI, Research Publishing platform, and infrastructure modernization.
GenAI demand is accelerating. We've already executed two content rights projects for large tech companies.
— Matt Kissner
Today Wiley is leaner, more competitive and more efficient.
— Matt Kissner
Forward Guidance
Investment outlook is cautiously constructive, anchored by a stabilizing path for FY25 and a longer runway for AI-enabled monetization. Wiley projects 2%–4% top-line growth for FY25, supported by low- to mid-single-digit growth in Research and Learning, with adjusted EBITDA margins of 23%–24% and adjusted EPS of $3.25–$3.60. Free cash flow is expected to be about $125 million, reflecting higher CapEx (about $130 million) and timing of incentive payments. In FY26, Wiley targets revenue growth of 0%–5% (low- to mid-single-digit) with EBITDA margins expanding to 24%–25% and FCF toward $200 million as restructuring tapers and CapEx normalizes.
Key factors investors should monitor:
- GenAI content licensing pipeline quality and duration; proportion of licenses transitioning to recurring revenue and higher-margin models; potential normalization of deal economics if and when content usage rights broaden.
- Progress on the Research Publishing platform migration and its impact on article transfer times, cost per article, and ability to further combat research integrity issues via AI.
- Momentum in Learning (digital content, STEM courseware, inclusive-access adoption) and the sustainability of Gold OA growth (roughly 20% long-run growth expectation).
- Divestiture program progress, reinvestment pace and impact on margins; working capital and tax effects as operating structure continues to evolve.
- Macro headwinds in higher education budgets, currency movements, and library procurement cycles that could influence quarterly revenue timing and mix.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
WLY Focus
70.84%
17.00%
3.42%
20.29%
PSORF
51.00%
15.70%
4.83%
7.66%
SCHL
56.30%
13.90%
3.53%
7.20%
PSO
51.00%
15.70%
4.83%
8.68%
NYT
49.30%
18.30%
6.23%
18.35%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Wiley presents a cautiously constructive investment thesis anchored in a transformational year that delivered meaningful cost savings, portfolio refinement, and an early-stage AI monetization path. The company maintains FY25 guidance for modest top-line growth (2%–4%) with margin expansion (23%–24% EBITDA margin) and FCF of about $125M, and it explicitly earmarks GenAI-related deals as a continuing growth engine rather than a one-off. The two FY24 GenAI licensing deals demonstrate early traction, and the pipeline for licensing, application-based models, and platform-enabled productivity tools could unlock higher-margin, recurring revenue over time. Importantly, Wiley’s divestiture-driven simplification (two assets sold, one in process) reduces non-core exposure and should support a more cash-generative core going forward.
Key upside if execution is favorable includes faster than expected GM platform deployment, stronger than anticipated OA and institutional model growth, and a broader adoption of content-enabled AI products across healthcare, chemistry, and finance sectors. The primary downside concerns relate to the pace and durability of GenAI licensing revenues, potential delays in Research momentum amid ongoing market normalization after Hindawi integration, and macro volatility impacting library budgets. Relative to larger peers in publishing (e.g., RELX/Elsevier) Wiley remains smaller but is making targeted strides toward margin expansion and higher-quality revenue through AI-enabled workflow improvements and a sharper focus on core, cash-generative assets. Given the balance of risks and the potential for meaningful free-cash-flow acceleration by FY26, the stock warrants a selective exposure stance with a focus on execution milestones, AI deals progress, and the evolution of the Research Publishing platform and OA growth trajectory.
Key Investment Factors
Growth Potential
GenAI licensing and ongoing content-enabled applications offer a path to recurring, higher-margin revenue; continued expansion of Gold Open Access, institutional subscription/open-access models, and platform-enabled cost efficiencies support mid-single-digit revenue growth with margin expansion into the mid-20s% over the next 2 years; scale gains from the Research Publishing platform and increased journal portfolio extend Wiley’s competitive moat.
Profitability Risk
Execution risk around GenAI monetization (rights scope, licensing terms, and durability of revenue streams); reliance on slower recoveries in Research after Hindawi disruption and COVID lag; potential currency headwinds and continued restructuring costs; potential competitive pressures from larger incumbents with deeper balance sheets; reliance on library budgets which can be cyclical.
Financial Position
Leverage remains moderate with net debt to EBITDA at 1.7x; cash balance of $83.4M; long-term debt $861.5M; total debt $897.4M; dividends and buybacks conducted with a focus on leveraging capital returns while maintaining flexibility to reinvest in growth and platform modernization; projected free cash flow of ~$125M in FY25 and ~$200M in FY26 as restructuring tapers and CapEx normalizes.
Significant cost savings realization (> $60M in-year vs $30M plan) and restructuring execution.
Strategic divestitures completed (University Services and Wiley Edge) to sharpen focus on core, cash-generative assets; CrossKnowledge in process.
GenAI licensing and content rights deals (two deals totaling $23M in Q4; $21M in FY25) with potential for recurring licensing.
Strong balance sheet progression with disciplined capital allocation (dividends and buybacks) and improving free cash flow.
Research momentum improving with return to growth in submissions (15% YoY trailing 12-month); platform migration underway to boost efficiency and integrity checks.
Leading journal brands and deep content assets across STEM and business disciplines.
Weaknesses
Near-term GAAP volatility due to divestitures and restructuring charges; Hindawi disruption and COVID-related lag affected full-year Research revenue.
Higher dependency on library budgets and institutional collections which can be cyclical; timing risk in recognizing revenue from research licensing deals.
Relatively modest near-term cash balance and ongoing CapEx needs may pressure free cash flow in FY25.
Industry concentration risk given a few large players with scale (peer dynamics not fully captured in FY24 numbers).
Opportunities
GenAI monetization via content licensing and applications (recurring revenue potential).
Gold Open Access and institutional models provide durable, recurring revenue growth.
Research Publishing platform migration to unlock faster turnaround, lower cost per article, and enhanced AI-driven integrity checks.
Expansion into adjacent verticals and enhanced go-to-market to attract authors and societies.
Geographic expansion (US, Europe, China, India) supported by recovered manuscript submissions and institutional deals.
Threats
Regulatory shifts in OA policies or grant funding that alter funding for research libraries.
Adoption risk if AI licensing deals dilute rights or fail to scale, impacting margins.
Macro headwinds in education budgets and academic spending.
Increasing competition from larger publishers with deeper balance sheets and more diversified platforms.
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