John Wiley & Sons, Inc.

Good morning and welcome to Wiley's second quarter fiscal year 2020 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.

Good morning and welcome to Wiley's second quarter fiscal 2020 earnings update. In the room with me are Brian Napak, President and CEO, and John Kritzmacher, CFO and EVP, Operations. A few reminders to start. First, the call is being recorded and may include forward-looking statements. Wiley & Sons, Inc. to generally exclude adjusted EPS, free cash flow, less product development spending, adjusted operating income and margin, adjusted contribution of profit, adjusted EBITDA, and results on a constant currency basis and results excluding the impact of acquisitions. These performance measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to the calculation of similar measures used by other companies. They should not be viewed as alternatives to measures under GAAP. Wiley & Sons, Inc. This will eliminate any delays in viewing this slide transitions as well as remove any potential background noise if you prefer to ask a question. After the call, a copy of the presentation and a playback of the webcast will be available on our Investor Relations webpage. I'll now turn the call over to Brian Napak, Wiley's President and CEO.

Thanks, Brian. Let me start with a brief refresher about our business and our mission. In a sentence, Wiley empowers researchers, learners, universities, and corporations to achieve their goals We do this by delivering research and education in the high-demand subjects and careers that are fueling the global knowledge economy. We deliver must-have content, platforms, and services that drive real outcomes in these areas, and we are committed to delivering a compelling value proposition to our customers with business models and pricing that meet the needs of today's demanding markets. In total, Wiley accelerates scientific discovery and advances powerful, career-focused education. Our wonderful colleagues around the world are very proud of who we are and what we do. As a reminder, we operate and report in three segments. Our largest segment, Research Publishing and Platforms, is a strong performer with favorable market and cash generation fundamentals. Wiley is a leader in this market, which is growing around 3% annually, the highest rate since 2011. We are investing in this business to publish more with increased quality and speed and to support a more open research ecosystem. Through the first half, the business made up 52% of Wiley's revenue with an adjusted EBITDA margin of 34%. Our academic and professional learning segment includes educational content and courseware used in both university and corporate settings. While the transition away from traditional books is weighing on results, We see increasing momentum in our shift to innovative digital courseware, especially those that target high-growth subjects and career areas. This segment represented 36% of Wiley's revenue in the first half and yielded a 24% adjusted EBITDA margin. Today, our education service segment engages in the comprehensive management of online degree programs for universities and has grown to include a broad array of tech-enabled service offerings that address our partners' specific pain points. Increasingly, this includes delivering full-stack career credentialing education that advances specific careers with in-demand skills. We are a recognized leader in this market, which is now over $3 billion in size and is expected to approach $8 billion by 2025. Through the half, education services made up 12% of Wiley's revenue and generated an adjusted EBITDA margin of 8% up from 1% in the prior year period. Among Wiley's greatest strengths is our unparalleled network of customers and partners. This network is made up of the world's leading universities and corporations and, of course, millions of researchers, students, and professionals. We are leveraging this unique asset across all of Wiley's businesses Thank you for joining us. and we now anticipate revenue in this segment to be down by low single digits for the year. We continue to sharpen our focus toward high growth disciplines and must have digital courseware while also significantly enhancing our operating efficiency. That transition is progressing well. Having said that, we are seeing good underlying momentum in key areas across Wiley. In research, we are attracting more article submissions, growing publishing volume, and introducing new workflow tools that support our researchers. In academic and professional learning, as stated, we are shifting our publishing program toward high-demand disciplines and high-impact digital courseware, and we are growing in high-potential areas like corporate training and test prep. This transition is progressing steadily, and we are seeing positive signs in these strategic parts of the segment. In education services, we are growing nicely by extending the core OPM business and by delivering a broader array of essential university and career credentialing services that the market is demanding and that leverage our core Wiley skills and assets. And across the business, we're on track to improve operating efficiency with steady progress against our stated business optimization goals. Adjusted EBITDA grew by 3%, while EPS declined modestly due to investment and growth initiatives, including acquisitions. Our research business continues to report strong results with revenue up 4%. We continue to see terrific growth from open access publishing models and our subscription model remains steady. We are evolving toward a healthy blend of these complementary models. Demand metrics continue to be favorable with article submissions up 9% in the quarter and online usage continuing to grow with 3.3 billion Wiley platform sessions over the last 12 months. Researchers want to publish with Wiley and the data shows that we're gaining share. Learned societies continue to migrate to Wiley as their publishing partner. We are the global leader in this essential part of the research publishing ecosystem. Net society wins for calendar year 2020 total $8 million annually with a renewal rate of 88%. New Society Partnerships this quarter included the Alzheimer's Association, the American Dental Education Society, and the International Society for Developmental Neuroscience. We're extremely proud that 12 of the recent Nobel Prize recipients were Wiley authors. This brings our total count to well over 500. Scientific discovery continues to accelerate the world over, facilitated by peer-reviewed journals from Wiley. There is no substitute for the validation and promotion that our journals provide for our researchers and their discoveries. Adjusted EBITDA and research grew 6% in the quarter, driven by revenue growth and optimization savings. We are building lasting relationships with researchers, improving the author experience and expanding to support them across the value chain. This relationship is the foundation of our growth over the long term. As Judy Versus, the head of our research business, said at our recent investor day, researchers are our north star, and we are maniacally focused on their evolving needs. In our many customer listening sessions, the feedback is consistent. Researchers value our journal brands, and they want their research out faster for the world to see, and we are making that happen. In fact, we reduced the number of days from acceptance to publication by 40% in the last 12 months, with more progress to come. We're giving researchers new capabilities to help them work more effectively. In the past couple of months, we have launched two exciting workflow tools, Citrus and Manuscripts. Citrus is a filtering tool that puts machine learning to work for every researcher, generating a personalized feed of the latest and most relevant information on topics of specific interest to their research work. Manuscripts is a research collaboration platform that enables multiple authors to work together, editing and annotating research articles in real time. Manuscripts makes it easy to share, verify, and reproduce experimental results. We have also added other new capabilities, including a platform that offers continuous insights across different stages of drug development and introduced promotion services for researchers that provide comprehensive article preparation, journal selection, and article promotion support. We continue to improve the researcher experience by adding capabilities that enhance the productivity of the researcher workflow. Now on to academic and professional learning, which had a difficult quarter and first half, resulting from market-driven declines in book publishing. Challenges are most apparent in higher education publishing, as is evident across the higher ed sector. Our declines are significant, but in line with the market. While we see headwinds in the higher ed part of the academic and professional segment, we have strategies in place to address them, which I'll talk to in a moment. Overall revenue in academic and professional was $178 million, down 5% or 9% organically. This was a result of a 12% decline in books driven by print textbook revenue, which was down 23%. Note that print textbooks represent only about 5% of Wiley's overall revenue. Despite this, Thank you very much. We are rapidly extending the Zybooks model to other high-demand career disciplines like statistics and engineering. The integration of Zybooks and Newton is on track, and we feel good about the trajectory of these parts of the business. We also saw good second-quarter growth in test prep driven by the CMA and CFA programs, offsetting declines in CPA-related revenue in line with our expectations. We also saw good growth in corporate training. Here we signed 90 new training partners to market our assessment-driven professional development programs and 10 new corporate partners for whom we will implement broad digital learning programs based on our cross-knowledge platform. Among the new partners is Naval Group, a European defense and energy giant. As is typical, we will help build Naval's corporate university by establishing a digital learning offering for its 20,000 people. Year-over-year EBITDA performance for the academic and professional segment was impacted by the book revenue declines and our investments to grow the courseware business, including Zybooks. Adjusted EBITDA was down 19% to $53 million. As indicated, we continue to see students in higher education turn away from traditional textbooks and toward required digital courseware. There is reduced willingness to pay for non-essential content, such as flat textbooks, and we continue to see the evolution of our distribution channels toward new business models and more affordable solutions. As discussed earlier, we are actively responding to these challenges by rapidly shifting the focus of our business. We are investing in publishing for the growing disciplines, skills and careers that are driving education across the economy. These include STEM, business and IT education. We are accelerating our move toward digital courseware that drives results and we are actively driving affordability. This all has the demonstrated effect of increasing sell through and thus revenue while also enhancing customer satisfaction. We are also emphasizing our test prep and corporate training programs where we are seeing good market driven growth. And at the same time, we are realigning our expense base against proven opportunities and redoubling our focus on operating efficiency. We believe in education content for the long term, both for academic and professional markets. We have the right assets, a tight focus, and a sound strategic plan to return to growth. While not a major driver of Wiley's growth plan, this business segment can provide consistent revenues and maintain highly attractive profit margins. Education services delivered another strong quarter with revenue up 80% or 10% organically. Note, this will be the last quarter of Inorganic Contribution from the Learning House. Student enrollments are up 9% year over year driven by the implementation of new programs and partnerships. We added no new university partners this quarter, but the pipeline is solid and includes a broad array of schools and programs. At quarters closed, we had 65 university OPM partners, the largest OPM footprint in the industry. and we are seeing strong growth in the broader services portfolio which I'll talk about next. Adjusted EBITDA was up significantly to $8 million. Certain one-time items and the timing of expenses boosted our EBITDA margin this quarter to 14%. For the year, we expect EBITDA margin in the mid to high single digits. In summary, we continue to manage this business consistently and prudently to achieve and sustain profitable growth. The core business at Wiley Education Services is performing well and is becoming a platform for even broader growth. Based on the strength of the traditional comprehensive OPM business, we continue to extend our offerings using Wiley's core skills to address the varied needs of our university partners to extend to new markets and to help learners achieve their goals beyond their university degree with career credentialing services. Our targeted university services include academic design, marketing, student recruiting, student support, and much more. For example, schools everywhere are struggling to compete for students. Wiley has an industry-leading ability to help these schools drive growth by identifying and attracting just the right student body that will succeed in their degree programs. It's a complex, data-driven undertaking, and we do it very well. This quarter, we launched three new partners that require such targeted opportunities. Northern Illinois, Babson, and Lindenwood. This part of the segment is showing double-digit growth. Momentum is building for Wiley in Europe, particularly in the UK with university partners like Birmingham, Bath, Glasgow, and Nottingham Trent. The international segment is an important opportunity for us given our presence in key European markets and our reputation at global institutions worldwide. Increasingly, we are delivering career credential education to both students and professionals. Today, this full-stack education includes teacher professional development and IT skills training through which we deliver professional credits and job placement through our 500-plus corporate partners. Our stated strategy is to actively bridge the gap between education and employment by delivering career-enhancing education through our university partners and for our corporate partners. I'll now pass the call to John to take you through our consolidated financials.