Good morning and welcome to Wiley’s Q2 Fiscal 2023 Earnings Call. As a reminder this conference is being recorded. At this time, I would like to introduce Wiley’s Vice President of Investor Relations, Brian Campbell. Please go ahead.

Thank you, and hello everyone. With me are Brian Napack, Wiley’s President and CEO; and Christina Van Tassell, Executive Vice President and CFO. A few reminders to start. The call is being recorded and may include forward-looking statements. You shouldn’t rely on these statements as actual results may differ materially and are subject to factors discussed in our SEC filings. The company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances. 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 are on a year-over-year basis and will exclude the impact of currency. After the call, a copy of the presentation and a transcript and a playback of the webcast will be available on our Investor Relations web page at investors.wiley.com. I’ll now turn the call over to Brian Napack.

Good morning everyone. Thanks for joining us. As I often do I will start by pointing to Wiley’s mission which is to unlock human potential and do so by powering scientific research and career connected education. This is far more than just a statement, it is our purpose, our culture, and our differentiator. Through many cycles and periods of disruption, the Wiley brand has helped us to win and retain customers, authors, and partners. And together with them we have promoted science, growth, and social progress for more than 200 years. The Wiley team accomplished a lot in the second quarter. This is both despite and in response to a challenging economic environment. We have seen a confluence of headwinds, these include decade high inflation, low consumer confidence, a tight job market, rising interest rates, FX volatility, and ongoing geopolitical disruption. These pressures have caused a pullback in consumer spending that is effective about consumer facing and enrollment dependent businesses. And this has impacted our revenue performance for the quarter and our growth expectations for the year. Christina will speak to that later in the call. Despite all this, our core growth engines of research publishing, research solutions, and corporate talent development remains strong and they are performing well. Research has a solid growth trajectory, consistent margins, and a recession tolerant profile. It continues to be supported by ever increasing R&D spending worldwide that drives up publishing volume and the demand for Wiley's research content and solutions. Since 2000, global R&D has more than tripled to $2.4 trillion. This spending growth has persisted through multiple recessions. Corporate talent development is now a major growth driver for Wiley, driven by the success of our unique education services that help corporations to fill their big talent gaps rapidly and reliably. That said,…

Thank you, Brian, and hello, everyone. Although we're navigating through a challenging economic environment, our core research remains strong with healthy profit margins in a recession tolerant industry. We remain bullish on our opportunities there to expand and scale our publishing and solutions offerings. In our academic line, we're tackling our cost structure to align with current market realities, which are both cyclical and secular in nature. Talent development continues to grow nicely as we extend into new industry verticals and new regions. We're investing there to grow our client base while driving towards meaningful profit contributions in the future. In research, as Brian noted, we continue to drive strong momentum as we invest to publish more high-quality research and do it more efficiently. We've also set our sights on scaling solutions offerings such as content platforms, OA publishing, and other revenue-generating services to help support the industry transition to open research. The team spent considerable time out in the market in Q2 and the feedback from both current and potential customers is that they're focused on the changing economic and policy landscape and they need help in the OA transition. The recent OSTP guidance only confirms our solution strategy here, and we believe we are well situated to seize that opportunity. Research revenue for the quarter was up 3% or 2% organically. Research publishing revenue rose 2%, driven by continued growth in Open Access with OA article output of 34% over prior year. Research Solutions revenue was up 11%, driven by recent acquisitions and modest organic growth from platform services and career centers. As Brian noted, we continue to make terrific progress in adding new solutions partners, including 18 logos this quarter as well as upselling existing ones. To give you a sense of the upsell opportunity, only around…

Thanks, Christina. Before I sum up, let me say a few more words about our segment realignment. The changes we are making in Q3 focus on our education group. The research segment will remain unchanged. Research Publishing and Research Solutions are already focused customer-centric lines of business that complement one another and that together are a strong market leader, delivering new pathways for profitable growth. In Education, Wiley targets two primary customer groups, universities and corporate customers. Organizing our segments around these groups will naturally result in a simpler, more customer-centric and more efficient Wiley. Our new academic segment will consist of two lines: Academic Publishing and University Services. Academic Publishing will incorporate both Education Publishing and Professional Publishing. Together, the Academic segment team will focus on delivering outcomes for learners in university and other institutional settings, leveraging Wiley's full suite of content platforms and services. This alignment will enable both revenue and cost synergies over time. Our new talent segment will include Wiley's Talent Development and Corporate Training Products and Services. The new talent team will be fully focused on meeting the critical talent needs of employers by delivering all of Wiley's training, sourcing, and upskilling solutions. This customer-centric alignment will allow us to achieve more revenue and cost synergies as we optimize both our offerings and our go-to-market efforts for the corporate customer. We will begin reporting on these new segments in Q3. So, let me quickly summarize the key takeaways for the quarter. Despite the difficult economic environment, we continue to execute well on our commitments. Our results have been weighed down by consumer spending and enrollment challenges in education. But our core growth areas of Research Publishing, Research Solutions, and Corporate Talent Development remains strong. We are actively tackling our cost structure to adapt to cyclical…

[Operator Instructions]. Your first question comes from the line of Dan Moore with CJS Securities. Your line is open.

Hi, good morning. It's Pete Lukas for Dan. Just starting with what's causing the clients to slow spending on professional learning. Is it the general macro concerns that you mentioned or are there other factors out there and if so, what visibility do you have in terms of how long that may last? And on the flip side, what do you see as the main drivers for the strong corporate training that you've seen?

Yes, great question. Great to have you on the phone, Pete. So in professional learning, we are seeing some softness but not related to a slowdown, particularly in corporate spending. What we're seeing is slowdown in consumer channels. And that slowdown in consumer channels is largely of cyclical nature. The underlying demand for our professional learning products remains quite strong. In fact, we're seeing excellent growth out of our corporate training in -- for team leadership and certainly our Corporate Talent development, which we'll talk about later. What's driving demand in professional learning and some of the softness is effectively an industry restocking that's happening at our key retailers, key online retailers where they have adjusted their inventory policies and practices and in the near term have rightsized basically their inventory according to what they believe demand is. And so therefore, that is what we would call a cyclical or a temporary thing and that should come back. There is, however, and it's important to note an underlying headwind that is economic that is driving our -- that is driving softness in consumer demand. And that consumer demand relates to professional buying a book. It relates to a person spending money on their own personal development. It's -- but we're not seeing the demand yet from the -- any demand softness at this point due to the economic pullback in professional development funded by corporations. And that's leading to a very solid performance in our corporate training business, where businesses, which are growing very, very nicely and in talent development, specifically, as you can see, we're seeing a tremendous investment that companies are making in the acquisition, the development, and the retention of their talent. Notably, one of the things that we've seen in this cycle different than prior cycles is a reallocation of funds in corporations towards digital education and talent development in the most key areas that companies need to succeed. Companies are still obliged to pursue their strategic plans and they're investing to do so. What we're seeing is less demand across the industry or sector for in-person training, but we are primarily in digital training at this point in time. And so we're seeing pretty good performance there, as you can tell from our numbers.

Very helpful, thank you. And in terms of the faster-than-expected decline in print materials, would you say that's mainly due to enrollment or has usage taken another leg down?

Yes. So no, by all accounts, usage and attachment of curriculum materials professionally published are the same as they've always been. What's happening now is different than in prior periods where we had concern about the evolution of this segment in the long run. What we're seeing is very similar to the answer that I just gave you on professional learning, which is that during this period, we've seen significant economic changes, and that has caused two primary factors, the largest being this inventory adjustment that we see at our retail channels, that accounts for the bulk of it. And the second is this idea of consumer spending. Just because I call it consumer doesn't mean it doesn't affect students. Students are looking for ways to save money like everybody else. And so we have seen -- certainly, we've seen enrollment softness. We see that across a number of our businesses that does affect the underlying demand for the units of our products, both in our publishing lines and also in our services line. But really, what we're seeing right now is primarily a factor of these two cyclical factors that I keep talking about, with regard to inventory and underlying consumer demand. But not shift in the underlying nature of the sectors that we're in, or their long-term outlook.

Great, thanks. And then just jump into research. Prior to Open Access becoming a larger percentage of your research revenue, you would provide updates on what percentage of your following year's journal subscriptions were under contract. Is that still a relevant metric for you and if so, how is it trending related to years past?

Yes. No, we're not providing that guidance now. And it is -- I will say that we continue to see very, very strong demand, most importantly, for our transformation of OA agreements. These are the agreements by which we help the market transition from the traditional models to the more mixed and open models that we're going to see in the future. We're at a point in the year, which is where we haven't seen much of that activity just because this is the way that annual timing and patterns work out. We will see -- we have a very strong pipeline of transformational agreements and our more traditional subscription agreements will continue to chug along as normal, and we expect that to pick up seasonally as we move through the balance of the fiscal year. So yes, things are trending as we would expect them to from a pipeline perspective and from a transition perspective. And that, of course, supports our long-term Open Access strategy, our long-term aggressive forward-leaning strategy towards embracing the new models in the marketplace. That's a little less relevant these days to talk about traditional subscription deals.

Great, thanks. And last one for me, just on a more big picture. Can you give an update on capital allocation priorities, outside of internal investments, is M&A still the priority or is it more focused on debt reduction and perhaps opportunistic share repurchases?

Yes, I'll start the question -- answering the question, Pete, and then I'll hand it over to Christina. So our capital allocation is driven by our belief in the long-term opportunities that we have as a company. And we divide it obviously into multiple categories. We've been very consistent about that. The first category is the investment in the future of this business, both through organic investments, which you've seen and through inorganic investments such as M&A. And I will say our M&A strategy here is consistent. We are being cautious, of course, we're being patient, and we're being focused. So our strategy drives our capital allocation and our capital allocation is thus tightly aligned to our investment priorities in our growth areas. Those being research publishing, research solutions, and corporate talent development. And everything flows from that. So Christina, perhaps you can say a few more words.

Sure, thanks. Hi Pete, we are continuing to remain balanced on capital allocation to Brian's point. And just a note there that historically, our steady cash flow has allowed us to be very balanced and has rewarded us in difficult times, and this is no exception. So we're continuing to look at this. We are still keeping margin towards our priorities. You specifically mentioned debt, that is moving up our priority list given the market environment and our interest expense outlook, and we will look at that as we go forward. But I'm not uncomfortable with our leverage right now, which is at a good place. And finally, on dividends and share repurchases, you also mentioned, this is a reminder there, we allocate about half of our free cash flow to dividends and share repurchases, and that's in line with last year. And so we have a long streak of raising our dividend annually. We're paying a nice yield and share repurchases have also been steady. And we'll continue to look at that, but we're going to continue and stay the course there. Thanks for the question.

Great, thank you for the time. I will jump back in the queue.

There are no further questions at this time. I will now turn the call over to Mr. Napack.

Alright. Well, I want to thank everyone for joining us today. I want to wish everyone a very, very happy, healthy holidays and a prosperous New Year, and we will look forward to seeing you and sharing our Q2 results in March. Thanks very much.

Ladies and gentlemen, thanks for participating. This concludes today's conference call. You may now disconnect.