Good morning, and welcome to John Wiley & Sons Fourth Quarter and Fiscal 2025 Earnings Call. As a reminder, this conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, If you would like to withdraw your question, press 1 again. Thank you. At this time, I'd like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

Thank you all for joining us. On the call with me are Matt Kissner, Wiley's President and CEO, Christopher Caridi, Interim CFO, and Jay Flynn, Executive Vice President General Manager of Research and Learning. Note that our comments and responses reflect management's views as of today and will include forward-looking statements. Actual results may differ materially from those statements. The company does not undertake any obligation to update them to reflect subsequent events. Also, Wiley provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends. These measures do not have standardized meanings prescribed by U.S. GAAP, and therefore may not be comparable to similar measures used by other companies. Nor should they be viewed as alternatives to measures under GAAP. Unless otherwise noted, we will refer to non-GAAP metrics on the call, and variances on a year-over-year basis and will exclude divested assets and the impact of currency. Additional information is included in our filings with the SEC. A copy of this presentation and transcript will be available on our Investor Relations website at investors.wiley.com. I'll now turn the call over to Matt Kissner. Thank you, Brian. Good morning, everyone. Welcome to our fourth quarter and full year earnings review.

Eighteen months ago, we set out on a multiyear journey to become a stronger and more profitable Wiley. To move decisively on our cost structure and unlock growth in our core businesses. Today, I'm pleased to report another year of meaningful progress. We've met or exceeded our financial commitments, drove growth in our core while delivering material margin expansion and capitalized on emerging market opportunities in the corporate sector through AI licensing, data analytics, and knowledge services. It's really quite a story. One of America's great legacy companies now standing at the forefront of scientific advancement and responsible AI development. Wiley began in 1807 as a print shop in Lower Manhattan. Today, we're a global company supporting the development of the European Space Agency's AI model for Earth observation. We're partnering with the American Cancer Society to disseminate cancer breakthroughs, multinational pharma companies to revolutionize drug discovery, and the world's largest tech companies to help train AI models and interfaces. All to say, we have commenced another exciting chapter in our 218-year history. What makes Wiley compelling over the long term? Market demand has remained consistent over time as it correlates with ever-increasing global R&D spend. At the same time, publishing remains essential for career enablement and acclaim. Wiley is recognized as a wide moat business with a leading market position and must-have content and brands. We deliver resilient compounding growth in global markets that have remained stable through economic downturns. Around half of our revenue is recurring and over 80% is from digital products and services. We are an AI beneficiary with content that is well suited for both training and inference. This gives us an expanding avenue into the massive corporate market. And finally, our financial characteristics remain strong with healthy margins and cash generation, low leverage, and…

Thank you, Matt, and good morning, everyone. I want to commend all my Wiley colleagues for our performance profitability improvements over the past eighteen months. As Matt noted, we still have work to do, but the team has made important material strides. As always, we are passionate about meeting our commitments and earning your trust as shareholders. Margin expansion has been a focal point for us. We took certain actions across the company in Q4, which led to a restructuring charge of $12 million. Our current efficiency programs are focused on our corporate line. Notably technology, We continue to make good headway there and are ramping up our efforts in fiscal 2026 even as we deliver improvements to our enterprise systems, and roll out our new research publishing platform. We are targeting a substantial reduction in our technology costs over time by streamlining the tech organization, with a focus on our location footprint and partnerships with external providers rationalizing our application landscape, and capitalizing on emerging AI-driven software development tools. We are confident that our technology transformation program will lead to improved delivery and innovation at lower cost. We are also focused on other corporate services, including operations, finance, human resources, and legal. We continue to evaluate the efficiency of our corporate processes and look for ways to drive further improvements. Our corporate expenses were down 10% in Q4 and four percent in fiscal year 2025 although as expected the unallocated portion rose modestly this year mainly due to enterprise modernization. We expect corporate expenses to come down in fiscal 2026. While we're rationalizing certain areas of spend, we continue to invest in our journal portfolio expansion, research publishing platform, and AI opportunities. We're also evaluating product profitability across our portfolio and we'll take action as necessary. Our multi-stage research…

Thank you, Chris. Let me recap our key takeaways before opening the floor to questions. Wiley has consistently served as a safe haven delivering resilient compounding growth across economic cycles. This is due to our must-have content and data recurring business models, good geographic diversity, and strong financials. In addition, we are well ahead in tackling our cost structure and continuously improving our fundamentals. We are now a clear beneficiary in AI development across multiple sectors, AI licensing and partnership is another avenue for us into the ever-expanding corporate opportunity. Execution and discipline are now core strengths of ours as is evident in our continuously expanding margins and cash flow. We remain balanced on capital allocation as we invest in high-return initiatives in research and return cash to shareholders through dividends and repurchases. And based on what we know today the momentum we're seeing in our leading indicators, we feel confident in our stated fiscal 2026 growth outlook for revenue, margins, and cash flow. I want to thank all of you for joining us today. We will continue to work hard to reward your trust and confidence. Thank you to our wonderful colleagues for their drive and determination to generate lasting value for our customers, partners, and shareholders. As I said a year ago, nothing unites us more than being on a winning team. And that is what we are and what we will continue to be. I'll open the floor to questions.

Our first question comes from the line of Daniel Moore with CJS Securities. Your line is open.

Thank you. Good morning, Matt. Good morning, Chris. Congrats on the strong progress in 2026 revenue guidance low to mid-single-digit growth including the tough AI comp $40 million licensing. Yeah. I guess it sounds like you expect some additional AI revenue including the $9 million but a little bit lower. You know, just talk about the outlook for sort of organic growth ex AI. And, you know, the likely I guess, the what would cause you to get a little bit closer to the higher end of the range, mid-single-digit, what would be the impact of the factors that might cause you to come in toward the lower end, you know, any risks relative risks upside downside would be super helpful.

Thanks, Dan.

First of all, a quick comment. AI is still a very rapid evolving market. So it's certainly not as predictable as we'd like to see. So that's why we you know, we don't really bake it into our numbers. But let me ask Chris to talk about our thinking around organic growth. Yes, thanks.

The drivers that we saw this year, we largely see continuing next year. Revenues have been strong throughout fiscal '25. And the submissions and acceptances that were yielding are continuing in the fashion that we saw in '25. So we expect 2026 to benefit from that as well. Additionally, as we've mentioned, our TA and subs revenue, we have some line of sight relative to the calendar '25 renewals, which were good. We expect to realize that as well. On the learning side, we have seen in fiscal 2025 strong growth in our inclusive access as well as courseware. And we see that continuing into fiscal 2026 as well. Jay, do you want to quickly comment on the visibility you have into '25 revenue, particularly in research? I mean, sorry, '26 revenue, not '25. Calendar year '25. Of course.

There you go. So yeah, Dan. We as you know, we have a calendar year model that splits over two fiscal. So I have really good visibility into CY '25. We had a great renewal year this year. For calendar '25. And you know, as Matt indicated in our prepared remarks, you know, our submissions were up. 19%. In the year. So that gives us a sense of what the journal article pipeline looks like. And it gives us, a great deal of confidence in the sort of May to December period of our current fiscal year, fiscal year '26. You know, the outlook for calendar '26 renewals is something that we're very dialed into, and we're our sales team, I just met with them this past week, in Texas, met with the institutional sales teams and leaders, and you know, they're raring to go for calendar '26 as well. So we have decent visibility and are feeling, optimistic to guide to the numbers that Chris and Matt have already shared.

Very helpful. And the recurring revenue mentioned, you know, several partnerships that are developing, mostly sort of beta testing at this point. Just confirming, I think you said it was around a million this year. Any sense what that contribution might look like either 26,000,000 or beyond or beyond at this stage?

Yeah. Let me comment and then Jay can give you a little more color. It's a kind of a really nascent emerging market. Where corporations are fine-tuning their proprietary AI models with our data, and they want the most current, most accurate data. So we're really running a series of pilots but getting a lot of interest as to how rapidly that's going to develop. Again, you know, it's very, very early days. But we are I do think kind of that's the future of where the puck is going with AI, at least relative to our business. Jay, do you want to maybe fill in some color on that?

Yes, absolutely. First, let's just lead with the headline that the million dollars isn't the ceiling. It's the start of a shift. Towards AI monetization models that look a lot more like traditional SaaS or subscription. They're high margin. They're recurring. They're deeply embedded as Matt said, into the R&D workflow. So, it's an early stage figure. Based on these new utility-based licensing models. The key features there, Dan, has to do with access to APIs. And the need for, as Matt said, corporate or sorry. R&D intensive corporates to get access to the most current high-quality content to help them achieve their business. So we, we announced a number of partnerships this year both with tech companies and AI native companies like AWS,

Perplexity.

And we've gone to our existing corporate customers and essentially upsold them on AI-friendly packages that will play in their new, AI research environment. So feeling really good about what we've learned. I just want to reemphasize math point. You know, when we started doing these deals, we gave ourselves a goal of not only trying to maximize the value of our backlist, but also trying to learn where the where, as Matt put it, the puck was going in AI, and I couldn't be proud of the work the team's done. It's we've learned a lot, and I think it's going to be an exciting twenty-six.

Super helpful. We've touched on this before, but our article submissions, you know, continue to be exceptionally strong, up 19%, while output is up eight. I know this is not a direct formula between the two or relation but maybe just talk about whether or not those growth rates would expect to converge at all over time from your perspective?

Sure. So

as we've talked about before, a lot of the growth in submissions continues to prop up the value of the subscription revenue. And so, when we look at submission growth, you look at it by geography and you map that to the various business models that are in place in each geography. The open access landscape, the what Wiley used to refer to as the p times q landscape represents about half our output, and the other half is still published under a traditional subscription license. And so know, what happens over time is that, both revenue and conversion from submissions to acceptances will smooth, but we'd like to keep driving submission volume because that's the thing that is going to continue to provide an ongoing stream of value both to our subscribers, of course, to our authors who publish with us, but also for those stakeholders who want to see us continuing to publish every paper in their country open access. So there's always been a six to eight months lag time between submissions and publications. And there's never a great correlation between submissions and out in any given calendar year, but we love to see those trends all continuing to climb. And you know, hats off to the marketing team and the publishing teams who you know, drove those submission results this year as well as drove the article output results.

Super helpful. You alluded to this. You know, clearly, this is an extraordinary time, and it's kind of the general macro and, you know, funding environment. Just talk about what planning and budgeting. Obviously, you know, calendar '25, in really great shape. Just talk about what planning and budgeting looks like right now your visibility and confidence in being able to kind of forecast compared to maybe prior periods of disruption, whether it be, you know, GFC or any others that you can think of that might be a corollary?

Yes. Let me comment Dan, and then ask Jay again to add some color. Obviously, we're the external environment carefully in The U.S, of course, but we one is our internal indicators still are very strong. And the other is Jay and I had a focus group with a number of leading sales folks at the meeting he talked about last week. We had our global sales force together, and we just wanted to get their read on the market. The US sales folks. And what we're hearing back is there's a lot of confusion and uncertainty. But nothing yet that would cause us undue concern. That being said, we're obviously watching it very, very carefully. And Jay is organizing you know, a number of actions to be prepared and maybe even take advantage of some volatility in the environment. So Jay, maybe you want to add a little color?

Sure. Absolutely. I mean, look. Given the uncertain environment, what we see in terms of science funding in The U.S, but also, you know, just to the general state of affairs these days. It makes sense for us to approach 26 I think, with a balanced mix of discipline and flexibility. And so, you know, our guidance reflects that. A measured view of the macro environment, headwinds from geopolitical risk, we've baked that in policy volatility, global funding trends. It's all baked in in education and in research. And, you know, that said, our business is globally diversified. Half of revenue comes from outside The United States. So much of the portfolio is digital and recurring with multiyear contracts. It gives us a really strong base to plan from. And so, we've made a lot of progress on the cost alignment, the margin expansion, simplification of the platform, the operations. That gives us more levers to pull if the environment. And I think we're preparing for that. And as Matt and Chris have already indicated, the discipline around margin expansion remains constant, remains a robust strategy no matter what in the face of any kind of uncertainty on the revenue side. So we're actively modeling this stuff. We're looking at R&D budget scenarios. As Matt talked about, we're planning with the sales teams to try to go where our customers are, support them if they're in need of support. We're looking at corporate R&D spending trajectories too as a way of, providing new avenues for growth. AI is obviously a new avenue for growth. And, clearly, on the learning side, monitoring things like enrollment. So across the board, I think we're going into this eyes wide open prepared, and I think you know, you'll get updates from us regularly throughout the year on how we're viewing things.

Alright. Super helpful. Last for me. Obviously, congrats on the $120 million collection from university service divestment. You know, a big deal that shouldn't go unnoticed. Pro forma leverage down to about a turn and a half, at least based on the 2026 outlook. And another $200 million of free cash coming this year. You've been more aggressive returning cash to shareholders. Is that the game plan going forward? Would you delve further from here? Or more likely to be more aggressive with buybacks, especially where the stock is trading today? Thanks for all the color.

Thanks, Dan.

We as you noted, we returned pretty much our entire free cash flow this year to shareholders between dividends and share buybacks. That's not a formula that we would see going forward. We will return to what we would view as a more mixed approach where we still maintain the ability to invest in the business. And take advantage of opportunities as we see them. But having said that, returning to shareholders is a key component of what we look to do with our free cash flow, and we will continue to have a measured approach. $60 million, I would not say, is a benchmark that we would necessarily look to meet. It's opportunistic. But we would do it again if we saw prices in the ranges that they were previously.

Alright. I'll circle back any follow-ups. Thank you again.

Thank you, Dan.

I will turn the call back over to Mr. Kissner for closing remarks.

Well, thanks, everyone, for joining us. We look forward to sharing more on our next earnings call, which will be in September. Have a great summer.

Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.