On December 5, 2024, John Wiley & Sons Inc (WLY, Financial) released its 8-K filing for the second quarter of fiscal year 2025, ending October 31, 2024. The company, a leading provider of academic journals, books, and online education solutions, reported a revenue of $427 million, surpassing the analyst estimate of $420 million. However, the earnings per share (EPS) of $0.74 fell short of the estimated $0.88.
Company Overview
John Wiley & Sons Inc is a prominent player in the media-diversified industry, primarily generating revenue through its Research segment. This segment offers peer-reviewed scientific, technical, and medical publishing services. The company also operates in the Learning segment, which has shown significant growth due to favorable market conditions and AI licensing. Geographically, the company derives most of its revenue from the United States, with additional contributions from the United Kingdom, China, Japan, Canada, and other countries.
Performance and Challenges
John Wiley & Sons Inc reported a high-single digit revenue growth in its Learning segment, driven by favorable market conditions and AI licensing. The Research segment experienced low single-digit growth, supported by strong demand for publishing and modest improvements in research solutions. However, the company faced challenges due to a significant year-over-year decline in legacy print and licensing revenue, which impacted overall performance.
Financial Achievements
The company achieved a GAAP operating income of $64 million, marking a 39% increase from the previous year. Adjusted results at constant currency showed a 3% increase in revenue to $423 million, with adjusted operating income rising by 32% to $69 million. Adjusted EBITDA grew by 14% to $106 million, and adjusted EPS increased by 36% to $0.97. These achievements highlight the company's ability to improve margins and drive growth despite market challenges.
Income Statement Highlights
John Wiley & Sons Inc reported a net income of $40.5 million for the quarter, compared to a net loss of $19.4 million in the same period last year. The improvement was largely due to higher impairment and restructuring charges in the prior year and foregone net income from divested businesses. The company's effective tax rate for the quarter was 17.3%, up from 11.7% in the previous year.
Balance Sheet and Cash Flow
The company's net debt-to-EBITDA ratio at the end of the quarter was 2.2, compared to 2.0 in the previous year. Net cash used in operating activities was $94 million, primarily due to higher annual incentive compensation payments and the cash earnings impact from divested assets. Free cash flow less product development spending was a use of $130 million, slightly improved from $132 million in the prior year.
Management Commentary
“Continuous improvement is a way of life for us now, and it’s beginning to pay off in our quality growth and margin expansion,” said Matthew Kissner, Wiley President and CEO. “Learning has had a good year so far, both Academic and Professional, and Research delivered low-single digit growth with leading indicators and favorable comparisons signaling a better second half ahead.”
Analysis and Outlook
John Wiley & Sons Inc's performance in the second quarter of fiscal 2025 reflects its strategic focus on growth and margin improvement. The company's ability to exceed revenue estimates despite challenges in legacy print and licensing revenue demonstrates its resilience and adaptability. The positive outlook for the second half of the fiscal year, driven by strong momentum in the Research segment, suggests potential for continued growth.
Overall, John Wiley & Sons Inc's latest earnings report highlights its strengths in navigating market challenges and leveraging opportunities in the Learning and Research segments. The company's strategic initiatives and focus on continuous improvement position it well for future success in the media-diversified industry.
Explore the complete 8-K earnings release (here) from John Wiley & Sons Inc for further details.
