Good morning, and welcome to Wiley's First Quarter Fiscal 2024 Earnings Call. As a reminder, this conference is being recorded. At this time, I'd like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

Thank you, and welcome, everyone. With me today are Brian Napack, President and CEO, and Christina Van Tassell, Executive Vice President and CFO. Note that our comments and responses to your questions 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 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 US GAAP and therefore, may not be comparable to similar measures used by other companies, nor should they be viewed also 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 held-for-sale 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 web page at investors.wiley.com. I'll now turn the call over to Brian Napack.

Good morning, everyone. Thanks for joining. Last quarter, we announced some important actions that we're taking at Wiley to unlock value for our shareholders. These include divesting non-core assets to focus Wiley on its greatest strengths and its biggest opportunities so that we can deliver superior financial performance. Today's Wiley is a knowledge company, a global leader in the creation and distribution of new knowledge to solve real-world problems. Speaking more practically, we're one of the world's leading publishers of top quality research, academic and professional content. Complementing our role as a publisher, we're also a leading provider of digital solutions that power the knowledge ecosystem and that specifically help people to access new knowledge and use it to achieve their goals. Research is Wiley's largest and most profitable business, and it's at the core of our knowledge company strategy. The market for new research content grows consistently and Wiley has one of the world's leading research journal portfolios in the industry's most widely-used research content delivery platform. The company is fundamentally strong, maintaining a healthy balance sheet and delivering consistent cash generation. Today, over 80% of Wiley's revenue is digital and 50% of it is recurring. Our current dividend yield is 4%, and we have now delivered 30 consecutive years of dividend increases. There aren't too many companies that can say that. For over two centuries, Wiley has delivered new high-impact knowledge to the world, and this legacy matters. The Wiley brand and our reputation help us to win and retain customers in all of our businesses. All this is to say that we are in a good position to transition to the future to win in the market and to drive increasing shareholder value. Q1 played out largely as expected. We saw year-on-year revenue and profit declines that…

Thank you, Brian, and hello, everyone. As discussed, we've now realigned the company to focus on our core strengths to improve performance while we drive greater operating and capital efficiency. Our leadership team is collaborating to extract the benefits of our new strategy and sharply focused organization. Specifically, Jay Flynn and I are working together to identify and invest in growth opportunities in Research and Learning while streamlining our Publishing businesses where appropriate. Matt Leavy and I are tightly connected on driving towards a leaner organization with lighter infrastructure, simplified processes and improved analytics and insight. The execution of these programs is our top priority. Let me start with our performance in Research. Research Publishing revenue declined 8% this quarter, mainly due to our year-over-year impact of last year's in Hindawi pause. Absent Hindawi, Research Publishing revenue was up modestly. As Brian noted, we feel good about our volume trends this quarter in our Open Access momentum, with Gold OA revenue up 36% and Gold OA output up to 20% ex Hindawi. We're also pleased with our growth in China, which is the fastest-growing large market in research today. Several of our new China journals received their first impact factors, and we're proud to say that the scores were at the top of their fields. We saw strong rankings in smart manufacturing and sustainable materials as Wiley continues to build on its global leadership in material science and other areas critical to knowledge economy. Research Solutions revenue declined 2% this quarter due to lower corporate spend on advertising and recruiting. Lower corporate revenue offset growth in our Publishing Services business, which includes services to help society partners and other publishers manage their peer review process and Open Access transactions. The underlying momentum of this business remains strong. During the quarter,…

Thanks, Christina. To summarize before I open it up for questions. Q1 performance was largely what we expected, and we are encouraged by the continuing underlying strength and increasing momentum in Research following the unusual dynamics of the past year. We are actively simplifying the company structure to reflect our more focused strategy and drive efficiency. Going forward, we will have one market-facing team, enabling greater coordination of product and go-to-market efforts. This group will be supported by one global operations group, enabling efficiency and driving operational excellence across the company. We're now in mid-process in our efforts to divest several of our non-core assets. Processes are going well with good buyer engagement, although market is challenging. Fiscal '24 remains characterized as a transition year for Wiley as we work through these substantial actions and as our core drivers rebound. We expect to deliver performance gains and margin acceleration in fiscal '25 and '26. As a reminder, we're hosting an Investor Day on Thursday, October 12, at our corporate headquarters in Hoboken, New Jersey. At that event, we'll share our go-forward vision for Wiley, provide detail on our Research and Learning businesses, outline our critical operational improvement initiatives and we'll introduce fiscal '26 financial targets. After the presentations, which will run from 9 to 12 noon Eastern, we will hold a networking lunch for all attendees. As always, I want to thank our global colleagues for their tireless work and perseverance, their dedication to each other and to this very special company. I'll now open the floor to comments and questions.

[Operator Instructions] And your first question comes from the line of Daniel Moore from CJS Securities. Your line is open.

Good morning, Brian. Good morning, Christina. Sorry, I just had to jump off mute there. Let me start with Research. I appreciate the commentary. Just kind of remind us where we are? What is Gold OA generally as a percentage of Research revenue now? And maybe just what can you say now that we're a little bit further removed from the pause in publishing you experienced in the back half of last year? Was it simply tough comps versus the pandemic-driven spike or are there other factors and just your confidence in that improvement as we look to H2?

Yeah, Dan, first of all, thanks for joining the questions as always. You're starting in the right place. It's really important when we look at Wiley to understand that we've just refocused our strategy and our company around the Research business and the core of that is Research Publishing business. And the core of the future and future growth and profitability will come from OA. So we're starting in the right place. So Gold OA now is around 10%, with OA overall 10% of our research revenues. And overall OA is around a third of our Publishing revenues and I guess, high 20s of our overall Research revenue, 27%, 28% of our overall Research revenues. So that's where we stand. Those areas are growing very nicely, very rapidly. And I think we saw a growth of 36% or something excluding Hindawi of Gold OA and overall OA is growing very nicely as well. So what we're seeing, up and down and changes. It was a very unusual period for us. A return to the normal road patterns, which is what we expected to see and what we are seeing across the business. So the -- we're doing very well in the high-growth markets like China and India. We're doing very well across the major Western markets, US, UK, Germany. And so wherever they were during the COVID period, they're now returning to where -- to normalcy, and that means growth. So in every area, as I said earlier in the comments -- in the prepared comments, in every region, in all of our major subject areas, we're seeing a return to volume growth and revenue growth. Obviously, there's many dynamics that go on in this market. But it's exactly what we wanted to see. It's exactly what we expected to see, and it's what we've been talking about for a while. So that should give you a foundation.

Very helpful. Staying with Research, but just to switch, shifting to Hindawi. Just to clarify, I think you said it was an $18 million impact, is that year-over-year impact? Or was it a loss of $18 million in this quarter?

It was a loss. Hi, Dan, it's Christina. It was a loss this quarter.

Got it. That's helpful. And just I need you to…

And to provide a little context, it's important to remember that while we were experiencing significant growth coming out of Hindawi, Hindawi represents low single-digits, 2%, 3% of our Research revenue. So we just need to put that in context. We certainly lament the loss of that revenue. And now we're starting to see the metrics come back to where we want them to see and to be and we'll see that coming back. But I just always want to put that in context of our overall Research business, we're talking about low single-digits number.

Of course. And I know you gave the numbers, Christina, but just remind us, what's sort of embedded for Hindawi in terms of EBITDA loss for the full year '24 guide, so we think about that jumping off point for '25.

Sure. So as I talked about on the call, revenue for the full year is expected to decline about $55 million, and $23 million to $20 million this year and it will be a modest EBITDA loss for the full year. And we'll see the first -- this quarter and next quarter, have some tough comps and recover in the back half of the year.

Decline from $55 million, not decline by $55 million.

From $55 million to $20 million. Yeah.

Yeah. Perfect.

What we're expecting to see Dan, because I know it's the next question is where we're going to go with it. And so, Hindawi over the -- we're executing our revitalization plan, and it's coming along nicely. We expect to see most of the bad comparison to be through in the first half. And then as we go through '25 and into 26, we'll see ourselves get back to and above where we were before. So we're not going to get it all back right away because you know we're coming conservatively to do it the right way, and it takes a little while due to the lags in the business, but we expect it to be -- to return to its contribution to Wiley's growth through '25 and be above where it was in '26 -- be above where it was in '23. I just want to be clear about my words.

Right, right, in terms of the progression. Okay. And then shifting to Learning, I think overall, you said 55% was digital. Just starting with Academic, which took obviously another leg down this quarter, what's the mix there, print versus digital? And just talk about -- I understand the 18% is driven by timing, but it continues over time to kind of work its way down [indiscernible] about the secular opportunity there over the next three to five years?

You bet. Part of it is timing. It's not all timing, right? We're seeing print continue its decline. What happened in the quarter was a combination of a very small quarter at a very unusual time of the year for those businesses and is not representative of the full year. But nonetheless, beyond timing, which is its own issue, we continue to expect to see a slow decline. Print now represents about 40% of that business, with digital being close to 50%. And digital continues to grow for us, as you know. So that transition continues to go on. We expect it to continue to go on. It's not -- this quarter is not reflective of that progression, but we do expect to continue the migration from one to another with the digital revenue basically offsetting the print decline.

And that digital revenue that is saved for quarters like this one and the timing. What are you experiencing in terms of growth? And do you expect that to inflect higher or just kind of remain steady?

We expect it to remain steady. We have pockets of very strong growth where we are -- where we have fantastic products like zyBooks. I think zyBooks is up mid-30s. If I'm not -- I should say, to be imprecise, it is up mid-30s. In the balance of it, it's growing in proportion to the adoption of those products in the marketplace, which is more of a low single-digit kind of pace now. We hope to continue that and more than offset the print declines. So we're not going to see -- I want to say something generally about that business because I think it's very important from an expectation setting perspective. We don't expect the Academic segment to be a driver of growth for Wiley in the future. It will do okay. It will keep pace with inflation with digital offsetting print. But what it really represents for us is a very solid business with good profitability characteristics and good cash generation characteristics that contributes to the overall empire. As we see -- as we move toward a one Wiley notion, we'll start to see some real benefits from expense savings as we combine things like content platforms and sales forces and other things like that, I shouldn't say combined, aligned is a better word than combined. But what we're looking for is one strong operating infrastructure supporting the whole business, and we should expect to see some revenue synergies as well out of that as, for example, a research author who was a PhD at a university publishes with us their books, which they always do and need to do. So we expect to see some of that as well. Again, I'm trying to provide the overall context for the role of academic and our expectations going forward so that we know where our growth is going to come from, where our profitability is going to come from.

Absolutely. And if you wouldn't mind, kind of the same outlook for Professional?

Yeah. Professional is a combination of our Professional Publishing, which is mostly books, in both print and digital format, and our assessments business, or what we call internally our team development business. And as a group, we expect that to again contribute a modest growth a little bit more than you would expect out of the Academic segment and very good profitability. It's a similar story. We have certain areas such as our team development business, where we have real strength and brand and competitive advantage and great profitability characteristics. That tends to be a smaller -- or that is a smaller part of the business, call it, one-third of the Professional business. The book business continues to grow as the book business grows. And we, again, like that business, but we don't expect outsized growth out of our book publishing. Our book publishing is professional book publishing. It has consistent demand. We do very well in it. We are probably the world's leader in professional book publishing. I'd say probably one of our competitors recently backed off, it's a commitment to the area. So now we're definitely a leader in that area. And so we -- but again, we expect it just to be a modest growth business, but with very good profit characteristics. Is that enough on that, Dan? I'm happy to go into more detail.

Yep. No, that helps. One or two more, and I'll let you off the hook here. But anything you might say just in terms of preview of what -- not numbers, but what general kind of strategy you might hope to convey at the upcoming Investor Day in October?

Yeah, it's a great question, and I really am looking forward to seeing lots of people at our Investor Day. I would say it's -- I would say what I've said before, I wouldn't expect from Wiley a big reveal of some unfamiliar or orthogonal strategy giving a brand-new growth area to us. We believe deeply in the businesses we're in, starting with our Research Publishing business, building on it with our Knowledge Solutions business and supported by our consistent Learning businesses, particularly the Publishing businesses. And we believe that there is significant opportunity due to the endemic characteristics and in the case of the Research business, endemic growth characteristics of those businesses and we believe that there are additional adjacencies that we've spoken about for the most part, Dan, areas like partner solutions, areas like the way that we can expand our Publishing portfolio by building our brands and so forth. We believe that those areas provide more than enough growth at very attractive financial characteristics, meaning profitability and cash flow characteristics to provide a significant opportunity for us and most importantly, to generate value for our shareholders. But there is an internal part of our strategy that's critical as well, which I would summarize as just saying operational excellence that can result from focus and simplicity. And I know these are themes we've talked about before. We're well on our way. We just came through a reorganization of a company that opens up a lot of those opportunities, and we are going to execute it. We've just appointed a new head of operations, as we talked about in our remarks, who's dedicated to driving that operational excellence. So the internal part of Wiley's strategy is just as important as our external part of the strategy because that's what allows us to improve our operating leverage, which is what we all want to see.

Perfect. Last one for me, maybe, Christina, I appreciate the commentary on Hindawi. So just looking at the overall for Q2, kind of fair to assume that revenue and more importantly, EBITDA may be down a little bit year-over-year relative to the adjusted numbers that you filed in the 8-K last week – with an -- more improvement in the back half. Is that the right way to think about it? The cadence?

That's right. That's right. So we'll see another -- next quarter we'll see another year-on-year down, and that will stabilize in the back half of the year. [Technical Difficulty].

Thank you.

Thanks very much, Dan.

Thank you.

And there are no further questions at this time. I will now turn the call back over to Mr. Napack for some final closing comments.

All right. Well, thank you very much for joining today. We look forward to seeing you at our Investor Day, and if you're not lucky enough to attend that, we look forward to reporting on next results on Q2 at that moment. So thank you again for joining, and have a great day.

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