Good morning, and welcome to Wiley's Q1 Fiscal 2025 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 hello, everyone. I am with Matt Kissner, Wiley's President and CEO; Christina Van Tassell, Executive Vice President and CFO; and Jay Flynn, Executive Vice President and General Manager of Research & 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 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 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 webpage at investors.wiley.com. I'll now turn the call over to Matt Kissner.

Thank you Brian, and thank you everyone for joining us today. At the end of last fiscal year, I said that we were seeing strong momentum in our businesses and value creation activities, and that our culture had been reinvigorated by a much simpler and more efficient Wiley. I said then that we look forward with renewed confidence and optimism. I'm pleased to report that all of this is playing out in our solid performance indicators, colleague engagement scores, and in our financial results. As I said in June, we have more work to do to realize our full potential, and that work will continue. But the leadership team and I are pleased with our momentum and progress as we enter the new fiscal year. Our Wiley colleagues around the world have done a terrific job getting our businesses on a successful track. I can't thank them enough for their hard work and dedication and their unwavering commitment to serving our customers with excellence. In July, I was privileged to be named Wiley's CEO after serving in an interim capacity since October. I see no change in my approach. We will continue to be relentless in our execution as we publish more high value content to meet global demand, move decisively on AI growth opportunities, and drive operational improvements and rigor across the organization. I am grateful to our colleagues and stakeholders for their positive reception and support, and I want to thank the Wiley board of directors for their confidence and continued partnership. I'll start today with a quick reminder about our two businesses, review how we did against our objectives, and discuss our Q1 performance, notably the strong recovery and growth we're seeing in research. I'll also say a few words about how we're thinking about the IP…

Thank you, Matt. I'm pleased to start by saying that we've largely executed on our multi-year value creation plan ahead of schedule. At this point, we've closed all divestitures in action, the $130 million run rate savings program, enabling us to reinvest while driving continued margin improvement. Just last week, we closed on our final divestiture cross knowledge. As we discussed previously, this is an immaterial transaction but frees up capital and with our previous divestitures allows us to focus on our core. This quarter, we actioned the remaining $40 million of the $130 million savings plan. The executed savings were largely in our corporate functions. Stepping back, we finished fiscal 2024 with $90 million actioned and $60 million realized in year. We've now actioned the full $130 million and anticipate realizing $120 million of that by the end of fiscal 2025 for an incremental in year savings benefit of $60 million. As noted, around half of that total run rate savings is being reinvested. Let's talk about where we're investing. We're focused on driving incremental growth in research, where we have clear competitive advantage and demand. This includes scaling our journal portfolio and article transfer capabilities, optimizing go to market to attract and retain authors, and extending our flagship journal brands into additional verticals. Second, we're investing in AI growth and productivity initiatives, including optimizing our content for large language model deployment, incorporating AI into our publishing platforms and workflows, and investing in productivity tools for our colleagues. Third, we're modernizing our systems to improve speed and productivity. We've talked about two specific areas, our research publishing platform and back office modernization. Let's turn to our research performance. Q1 revenue was up 3% due to strong demand and execution and research publishing. Research publishing delivered 4% top line growth…

Thank you, Christina. Let me summarize the key takeaways. We're off to a good start, but we're not declaring victory. We have a lot more work to do to achieve our full potential. Still, I'm encouraged by demand trends and other performance indicators, our alignment and execution as an organization, and the material increase in colleague engagement. We've turned the corner on research, a business that has grown consistently over a very long period and remains an ever expanding opportunity. Our accelerating performance is not only market driven, but a collective outcome of many months of hard work and transformation by the team. We're publishing better, we're marketing better, we're investing in the right areas, and it's paying off. Separately we're moving decisively, but judiciously in responding to AI opportunities. We're reinvesting where we have a unique right to win, which will benefit us in the years ahead. We're off and running. We've largely executed our value creation plan ahead of schedule. Importantly, our culture today is far more energized, motivated and engaged. We can see that in our recent survey results. We're making decisions faster and moving with purpose. We're focused on less but doing more. We're empowering colleagues to make decisions and unlock pockets of growth. We continue to focus on rewarding you, our shareholders. I hope you can see our steadfast commitment to value creation and where we're focused, how we're executing and how we're allocating capital. And finally, we're confident in our fiscal 2025 outlook for revenue growth and margin expansion, and remain well on track to meet our fiscal 2026 targets. Again, what a difference he makes. I'll finish by thanking our Wiley colleagues for putting us in the position we're in. As I said before, nothing unites us more than being on a winning team. I'll now open the floor to any comments and questions.

Thank you. [Operator Instructions] We'll take our first question from Daniel Moore at CJS Securities.

Thank you. Good morning, Matt. Good morning, Christina. Thanks for taking questions.

Hi, Dan.

Start with, obviously, the momentum you were experiencing in terms of article submission. Maybe talk about that throughout the quarter in terms of cadence and so far into fiscal Q2 and how we should think about the potential organic growth and research revenue that may translate to over the next several quarters.

Yes. Let me begin, and then I'll ask Jay to comment more specifically. But, this is a business with long lead times. As we've talked about in the past, there's a publication cycle that can, it can take six to nine months for an article to actually be published, and depending upon the type of article revenue recognized. So what's really encouraging is the, were the signals we started to see in the fourth quarter and have continued into the first quarter of a very healthy pipeline. I'll let Jay comment a little more specifically on what it looks like for the rest of the year.

Sure, of course. Hey Dan, thanks for your question. So a couple of things to just reiterate, as we like to do when we talk about article submissions. The first is remembering that not all article submissions convert into published articles. There's a lot of variability in the mix. Right. We have higher acceptance rates from certain institutions, from certain authors, from certain geographies. So the mix of submissions determines long term article output. But as we've seen in our reported metrics this quarter and last quarter as well, we're seeing continued improvement, both top of the funnel and in terms of that translating into article volume output, we expect that to continue. We're pleased with the development of our submissions pipeline, as usual, but not all that volume will turn into published articles. And as we talked about both in our investor day and in our last call, not all those articles convert one to one into incremental revenue growth. A lot of that volume supports our underlying subscription business. A lot of that volume supports our transitional agreement. So, we're not going to say anything more about that, except to say that we're feeling good about the quarter and feeling good about the long term trajectory of both submissions and published articles. That's reflected in our guidance and that it's nice to see the research publishing business returning to 4% growth year-over-year.

Yes, let me add, we're cautiously optimistic, let me say that about that, because it's such an important leading indicator. And I was in China, as I commented earlier last month, wanted to see what was going on the ground and just, there's some real strength there to see our people working aggressively on the ground to build this business. So we're, as they said, we have cautious optimism about this.

Very helpful. And then shifting gears to AI, are you in discussions currently regarding any further similar licensing agreements to the first two? And can you just update us a little bit more secondarily on your progress in potentially monetizing AI tools to drive more recurring revenue, the second chance that you described?

Yes, sure. And again, I'll begin and then ask Jay to get more specific, but we are seeing a lot of interest, as you might expect, in a market that's also rapidly changing. When we did our first AI deal late in fiscal year 2024, the market was even a little different then than it is now, but we are seeing a lot of interest because of the quality of our content. It's accurate, it's curated, it's indexed, it's perfect for training these models. At the same time, we're being very selective about the partnerships we want to pursue because we want to only pursue partnerships that meet our standards and are compatible with our strategic objectives. And Jay now has a team dedicated to this. And the benefit is one we're learning a lot and there will be future opportunities here as we work with these developing, AI model builders. Jay, do you want to get a little more specific for Dan?

Happy to. I think first thing to say about this is, the quality of our content, the quality of our, of our output is very attractive to AI model builders. As Matt said, it's also attractive to research intensive corporations and the application development companies that are looking to supply tools to end markets. And so we're in discussions with a variety of potential partners. We're very selective about who we work with and we want to make sure that we adhere to our licensing principles. As we discussed in the presentation, in our prepared remarks, it's really important that Wiley continues to advocate for the rights of its authors with our society partners and, and our other stakeholders. The thing that I'm personally focused on and that the team that we've stood up over the last year has been focused on is really thinking about ways that Wiley can add recurring value and ongoing value to the research process, in particular in areas like drug discovery, life science, healthcare, chemistry, material science, those areas where Wiley is very strong and where there's a need for the latest information to be amplified by the power of these tools. And those opportunities present themselves to us and we're evaluating them. So we'll have more to say as they develop when we have additional news to report. Of course, we will do that.

Helpful. Jay, Sorry, I was just jumping off mute there, switching gears. The disconnect at least, versus our estimates for this quarter in terms of maybe the share price this morning was on the expense side, I guess. First, how was the quarter relative to your internal expectations from a profitability and expense perspective? And then second, you've got obviously 60 million of incremental savings that you're marked for fiscal 2025, half of that reinvested. And yet overall, OpEx, not really seeing the benefit, at least in this quarter. Were there any unusual incentive comp or investment spend in fiscal Q1, and if not, maybe, why aren't we seeing, more of the benefit of that, those reduction initiatives, cost reduction initiatives on a net basis?

Sure. I'll take that one. Dan. Hi. So from a revenue perspective, that wasn't, our revenue was in line with our expectations on the expense side. And what you're calling out is just a little bit of timing that we're seeing on a couple things. One is we do have, we do have some onetime items that manifest in Q1 that will normalize throughout the rest of the year, that's costing us a couple hundred basis points. Obviously, if you take GenAI out of that plus that, and then we've got, the investments that we're adding back that offset our VCP savings. If you, if you pull it all together and normalize, you're up about, you're up a couple hundred basis points on the quarter and for the rest of the year, we're seeing that normalize further. So we are seeing, we are, we are, as I said earlier, we are reaffirming our guidance and we are seeing a normalized rest of the year. It's just a little, it's a little bumpy in Q1 in terms of the puts and takes.

And anything specific in terms of where those areas would be corporate, be it incentives, investments, for GenAI, etcetera. Any specificity you can give us there?

Yes. So a couple things we don't give, but we don't get direct specificity on line items for competitive reasons, obviously on our investments. But we've talked to you about the characteristics of our investments. We've got growth investments within research. We also have obviously inflationary, I mentioned this in the prepared remarks, our inflationary cost increases that manifest in merit and other things in volume in production. And then the other investments, obviously this shows up in our corporate expenses. We've got the investments we're making in our enterprise modernization programs that will continue on for the next couple of years.

Got it. And just to confirm if I have the numbers right, if they have $60 million cost savings benefit in yours that leave about $25 ish million for fiscal 2026 and beyond, just core, just total savings…

No.

Do I have that right?

And it's ten and it's ten for next year. Yes.

Yes. Beyond fiscal 25.

Beyond fiscal 2025. Well, we'll continue to, we haven't called 27 yet in terms of what we're looking at, but we're continuing to look at the VCP, not just run rate, but what else we can start getting benefit from as things come online from our investments. So it's a little too early to talk about that, but it'll be certainly above that.

Above that of what's announced. It's 10 million incremental. Okay, go ahead, please.

Of what's announced is 10 million. So it's 120 this year, 130 next year run rate. Yes.

Yes. Dan, it's important to note that we don't think we're done here. Yes, we're done with this program, but particularly with the investment we're making in modernizing our technology infrastructure. We see continued margin improvement. We haven't yet zeroed in on the numbers, but we're eager to continue to drive the kind of margin improvement trend that you're seeing in our current guidance.

Yes, and we, as we said, we just announced our final divestiture. We're in, we're just finalizing some of our transition services agreements. Those will be done by, most of them done by the end of the calendar, certainly all of them done by the end of the fiscal and that gives us opportunity as well to continuously improve our cost structure. So we're looking, we're looking at that iteratively.

Got it. And then I guess lastly, I've asked it before, but just leverage, around two times. But obviously cash flow is back end loaded, so should start to fall again as we look to the back half of the year. Just talk about your priorities for investing, excess cash flow at this stage. Thank you.

Thank you. Yes, sure. So we're always looking at, obviously we have our, we're very proud of our dividend program. That's not going to change. We're always looking at our share repurchase program and as I mentioned earlier, we're 25% up versus Q1, but we're looking, we're constantly looking at that for the year. And last year, as a reminder, was up versus the year before. So we're looking at those opportunities as they come down. And we're also, obviously some other use of, we've got our CapEx that we're constantly know, looking at and that's a spend that is a $30 million increase over prior year. And they were always looking at opportunities in the marketplace. So that's where our capital allocation looks right now in terms of cash flow. And as I've talked about before, we are long-term looking to get back to our steady state of at least 200 million, longer term and beyond.

Appreciate the color. Thank you.

And that concludes our Q&A session. I will now turn the conference back over to Mr. Kissner for closing remarks.

Thank you all for participating. We look forward to another update in December and look forward to continuing to share our progress with all of you. Thanks very much.

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