Good morning and welcome to Wiley's Second Quarter and Fiscal 2026 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. At this time, I'd like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

Good morning, everyone. On the call with me today are Matthew Kissner, President and CEO, Craig Albright, Executive Vice President and CFO, and Jay Flynn, Executive Vice President and General Manager of Research and Learning. Note that our comments and responses reflect management 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, John Wiley & Sons, Inc. provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends. These measures do not have standardized meanings prescribed by US 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. We will refer to non-GAAP metrics on the call, and variances are 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 at investors.wiley.com. I'll now turn the call over to Matthew Kissner. Thank you, Brian. Hello, everyone, and welcome to our Q2 earnings update.

Before I get into results, which were highlighted by strength and momentum in research and AI, but also declines in learning, let me briefly touch on our agenda. I'll start by outlining what's happening in learning and how we're addressing it. Next, I want to address the questions we've gotten from prospective investors about the unique durability and resilience of the research business and the positive role AI is playing. As you will see, we believe AI is an accelerator for our research core. Building on this, investors naturally want to learn more about our AI growth strategy. So we're going to spend a little time this morning addressing those topics in more detail. I'll also talk about how we're executing on our full-year commitments and walk through our overall growth drivers. Craig will review our performance, operational excellence, and margin expansion initiatives as well as our outlook for the year. Now on to our purpose, which is to unleash the power of science. It means transforming trusted scientific knowledge into practical tools and intelligence that solve real problems. We're moving with urgency to integrate scientific research into new technologies to revolutionize R&D across corporate, academic, and government markets. It's a paradigm shift and we're at the center of it. Never has the trust and accuracy of information mattered more. Our customers range from Nobel laureates to early career researchers, from Fortune 500 innovation teams to government research bodies, all relying on us to ensure scientific excellence and turn scientific knowledge into competitive advantage. Let's turn to the quarter. We saw a mixed revenue picture, with strong growth in research and good momentum in AI, offset by market challenges in our learning segment. I'll dive into learning in more detail on the next slide. Research publishing delivered strong 7% growth…

Thank you, Matthew, and hello, everyone. My focus is straightforward. Continue to drive discipline across the organization, challenge complexity, and shift our portfolio toward high-margin, high-ROIC business models. We're making real progress on multiple fronts, but we have more work ahead. Turning to our second-quarter results. It was a strong quarter for our research business and a challenging quarter for learning. At the same time, we continued to deliver material margin expansion. Adjusted EBITDA grew 8%, and adjusted operating margin expanded 250 basis points to 18.8%. This reflects disciplined cost management, technology transformation, and AI-driven productivity gains. Themes, I'll expand on in a moment. As well as the benefits of our product profitability actions to shift toward higher-margin businesses. Let me walk through segment performance starting with research. Research delivered 5% growth and a 220 basis point improvement in EBITDA margin to 33.5%. Demonstrating our continued operating performance and cost improvements. Research publishing was particularly strong this quarter, driven by record submissions, solid growth in our recurring revenue models, and 28% growth in author-funded open access. AI revenue in research publishing totaled $5 million of our $6 million licensing project this quarter, reflecting continued demand for AI LLM training. Calendar year 2026 subscription renewals are underway, and while it's still early, renewals are tracking steadily worldwide, including early commitments from large institutional customers, such as the regional consortium in Australia and New Zealand. We'll have a fuller picture in March when the majority of our renewals are complete. Research solutions declined 6% due to lower corporate spending on advertising and recruiting. We expect improvement in the second half driven by strong pipelines in spectral data products for OEMs, and managed advertising and knowledge hub solutions for pharma and healthcare customers. Through the half, research revenue and adjusted EBITDA were up…

Thank you, Craig. Let me briefly review our key takeaways before I open the floor to your questions. We're delivering strong growth and momentum in research, supported by robust demand and the disciplined execution of our strategy. Our leadership position in AI continues apace, with another LLM training agreement in Q2 and increasing momentum for our subscription knowledge feeds in corporate R&D. Our strategic partnerships with AI innovators are starting to yield early results, and we're making good headway with our innovative publishing and aggregation platforms. We're focused on our fundamentals and delivering strong earnings growth, material margin expansion, and cash flow improvement, for reinvestment and return to shareholders. As I said before, continuous improvement is a way of life for us now. Through the half, we returned $73 million of cash to shareholders in dividends and share repurchases. Our balance sheet continues to be a foundational strength as we further reduce our leverage. And finally, we're confident in our long-term direction, driven by our unique right to win in research and transformative opportunities in AI. I want to thank you all for joining us today for your interest and for your investment. And special thanks to our Global Wiley colleagues for all they do to make us a very special company with a very special past and a very meaningful and promising future. I want to wish all of you a happy and healthy holiday season and a momentous New Year. I'll now open the floor to questions.

At this time, I would like you to press star then the number one on your telephone keypad. Your first question comes from Daniel Moore with CJS Securities.

Thank you. Matthew, Craig, Jay, good morning. Thanks for the questions. Start with the research side. Research revenue grew, you know, 5% ex-currency, driven by OA and mixed model, which is great to see. Does that feel like the right place to be? Just wondering if there could be some incremental upside to that type of growth. Not necessarily next quarter, but over the next, you know, near to midterm. Just given the strong and continuing high double-digit growth that we've seen in article submission over the past few quarters.

Brian, I do believe that your line may be muted. Ladies and gentlemen, please hold and the conference will resume momentarily. Thank you for your patience.

It's unmuted. Can you hear us at all?

Yes. You can go ahead.

Alright. Great. Thank you. Sorry, Dan. We had a little technical glitch here. Let me begin and then ask Jay to comment. You know, the market typically grows. You know? Fixing. You can hear us now? Can you hear us now, Dan?

Yes. Okay. Good. Sorry.

You know, we think we're gonna be growing at the top of the market growth, if not I think there's a potential to outperform given our strong article roles. I mean, that's a very powerful leading indicator here. So let me ask Jay to maybe add a little color to that.

Yeah. Hey, Dan. You know, last quarter, we characterized, and I think others in the space characterized it, overall market growth sort of trending between 3-4%. We thought we'd be at the high end of that. And as you saw, 5% in the quarter, 7% for research publishing in the quarter. You know, underpinned by really strong metrics as you talked about. We're cautiously optimistic, but we're just getting into the renewal season now. As you know, we're beginning dialogue and beginning the conversations executing renewals for calendar '26. Obviously, feel good about the performance in Q2 for research and in particular, in research publishing. And, you know, we'll leave it at that for now. But I feel like, you know, at the top end of the market, is a comfortable place for us. And we'll watch how it develops as the renewal season comes in.

Very helpful. I appreciate the color on AI, not only the license revenue but, you know, the other opportunities. Just maybe a little bit more color around $6 million in revenue that you booked during the quarter. It sounds like it was with an existing LLM customer. Talk about the pipeline of opportunities. Are you seeing customers like that sort of come back for additional sites to the Apple? And I think you said full year, you know, up modestly versus the $40 million, which would imply, you know, something about $5 million in licensing for the back half of the year. Just want to make sure that's correct.

Yes. Good morning, Dan. Craig Albright here. So I think you got the read right. You know, the $6 million deal, we feel really good about. It was majority Wiley content. It was a repeat customer. And, you know, it was a good signal that there continues to be some length in the LLM training model that we've talked about in the past. We have also talked about the fact that this is a bit lumpy. You know, that it's hard to predict exactly when the deals come in. We want to make sure they're the right kind and the right, you know, guardrails kind of put around them, and that's what we continue to do. We guided to moderately up year over year. We have a continuing pipeline that we're working, and I think the way you phrased it is about right. Let me turn it over to Jay and see if he doesn't add anything else.

Yeah. Thank you. Thank you, Craig. Dan, you've called it right based on what we reported and what we're guiding to. But I think for me, you know, I want to make one additional point, which is that, you know, our commitment both to investors, but also to ourselves is to generate meaningful deep relationships which drive recurring revenue and to continue to come back and learn from these partnerships to drive our own product innovation pipeline. So it's no coincidence that, you know, we're doing training deals, but we're also partnering with AI native companies. It's no coincidence that once we've established those partnerships, we've developed a strategy that relies on openness, that relies on meeting users where they are using the tools that they want, and then using both of those things to go into corporate R&D and to help corporate customers achieve their aims more quickly, cheaper, and with an increasing degree of confidence. So we feel good about all three of those opportunities and as we get through the rest of the year, you know, hope to talk more about all three of them as it relates to fiscal '27. But, you know, we'll keep it at that for now and want to reaffirm your read on where we're guiding to now.

Understood. Helpful. Switching gears to learning, obviously, it remains challenged. Maybe your best guess for how much of the decline is due to sort of end market demand versus inventory management at large retailers, Amazon specific, in the channel. And I think you said, you know, that headwind should moderate in the back half. But, you know, the absolute any additional color there would be helpful.

Yeah. Let me spend a few minutes and then turn it over to Craig and certainly Jay. You know, I spent a week at the Frankfurt Book Fair in October, talked to other publishers, and everybody is seeing the impact of this in, let's call it, change in inventory strategy just because of the importance of Amazon in this business. Our early indications are that that ordering pattern is starting to normalize. And we don't see any change in end-user behavior. In other words, are people reading books? You know? So there's no reason to believe that there's kind of been an abrupt structural change at this point in time. But we are learning and keeping our eyes on this. So, Craig, Jay, anything you want to add to this?

Yeah. No. I think, Matthew, you covered it well. You know, we don't give guidance specifically on segments, you know, Jay highlighted earlier here, you know, that there are some headwinds here in learning. We expect those to normalize, as Matthew said. Still likely to be down for the year. But I think we view it more as cyclical than structural in terms of what we're seeing in terms of the trade business. There are parts of it in terms of enrollments in higher ed where we've got our closer eyes on to see if there's some other shifts going on there that we have to kind of continue to stay focused on more structural. But at this point, I think the majority is leaning towards cyclical. We've seen these kinds of cycles in the past. And we happen to be at the kind of bottom of one of those cycles. But all the indicators are that there should be some normalization and recovery here.

Helpful. Well, kudos for maintaining the guidance given those, you know, those headwinds that certainly a little bit stronger than, you know, what we thought a couple of quarters ago. Maybe just one or two more. You stepped up the pace of buybacks during the quarter. Free cash flow guide implies something well north of $300 million in free cash flow coming in the back half of the year. Given that and the health of the balance sheet, do you anticipate ramping that pace further as we get, you know, how are you sort of weighing the, you know, accelerated buybacks versus delevering as we look at the back half of the year? Thanks again for all the color.

Great question, Dan. Thank you. As we've said in the past, we have a very disciplined approach to capital allocation. And the opportunity we have certainly with the cash flow guide that we're giving is, yes, that we could continue to use some of that towards share buybacks. We want to maintain between, you know, our growth opportunities internally. We want to make sure that we continue to manage the leverage ratio at the right levels. But we do see opportunities. And I would say in that front, we continue to be opportunistic. You know? We're now in the market every trading day of the year. With our 10b5-1 plans. When the prices are attractive, you know, we have shown already that we are more aggressive in terms of share repurchases. I think we'll continue to look opportunistically going forward as well. But we feel good about the pace we're on with our return to shareholders, and we're going to continue to maintain that discipline.

Alright. Now I'll circle back on the same follow-up. Thank you.

There are no further questions at this time. I'll now turn the call back over to Mr. Kissner for any closing remarks.

Yes. I want to thank you all for joining us. Once again, I want to wish you and your loved ones a healthy and happy holiday season. We thank you for partnering with us on this journey, and we look forward to updating you on our progress at our March call. Have a great holiday.

This concludes today's conference call. Thank you for participating. You may now disconnect.