John Wiley & Sons, Inc.

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Wiley's first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star one. Thank you. Brian Campbell, Wiley's Vice President of Investor Relations. You may begin your conference.

Thank you. And hello, everyone. I'm joined by Brian Nipak, Wiley's President and CEO, and Christina Van Tassel, 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 used 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 the transcript and a playback of the webcast will be available on our investor relations webpage at investors.wiley.com. I'll now turn the call over to Brian Napak.

Good morning, everyone, and welcome to Wiley's Q1 earnings call. Before I get to our Q1 results, I want to touch on a couple of foundational topics. Wiley, like all companies, is operating today in an uncertain global economy and continues to pose a variety of interesting and novel challenges. Despite this, our underlying markets remain strong and opportunity rich, and we are successfully executing our focus strategy. The evidence is in our current momentum. Wiley performs well through challenging economic cycles and periods of disruption. It does this for two primary reasons. First, scientific research is indispensable to economic progress and thus global spending on it continues through the cycles. Second, higher education enrollment tends to be counter-cyclical as workers react to soft labor markets by investing in themselves and their futures. Because of these factors, Wiley can take the long view and is benefiting from this today. Our core strengths serve us well in good times and bad. These strengths include must-have brands and an ability to create and distribute world-class content and tech-enabled services, all of which move the needle for researchers, learners, and leaders who use new knowledge and skills to achieve their objectives. And all of this is supported by a consistently strong Wiley balance sheet and cash flow. At Wiley, we're grounded in 215 years of serving the demand for scientific research and career-connected education, We continue to use this experience to find new ways to meet the world's ever-increasing need for knowledge and knowledge services. Today's Wiley is a digital company with 83% of our revenue coming from digital products, and 58% of our revenue is recurring. Over the past few years, we've found renewed growth by investing in transformative approaches to research and education that drive real-world outcomes, and these approaches have opened up new addressable opportunity for us worldwide. Finally, our mission and purpose dictate that we are and must always be a positive force for a more sustainable world, both through our work and as a corporate citizen. To that end, we will release our commitment to net zero environmental targets later this year. Let's turn to the key takeaways for the quarter. Revenue growth was driven by strength in the targeted growth areas that we have been talking about consistently for some time. These more than offset cyclical declines in our enrollment-dependent lines. Significantly, our earnings performance overall was largely as expected in Q1. As with other companies, we are seeing higher employment costs and increased T&E expenses resulting from the resumption of in-person travel and activity. Earnings were also impacted by continued targeted investment in our key growth areas, research publishing, research solutions, and corporate talent development. Research publishing grew nicely due to our aggressive open research strategy in which we're publishing more quality research with unit-driven P times Q economics. And we're doing so faster and ever more efficiently with industry-leading automation. This is what the research community wants, and in fact, this is what the research ecosystem needs. The foundation of our competitive advantage here remains the same, the enduring draw of our 1900 journal brands. Research Solutions is growing quickly, fueled by the rapid expansion of our network of clients and partners. Research Solutions is a terrific complement to our research publishing business, and we saw this in the quarter as our pipeline of multi-solution clients grew across our client network. Finally, corporate talent development is growing by strong double digits as we continue to help the world's leading corporations solve perhaps their biggest pain points. persistence shortage of talent with the critical technology and digital business skills that they need to succeed. In academic learning, we continue to operate in a challenging enrollment cycle. The labor market remains unusually strong despite recession fears, and many students are presently foregoing school for opportunities in the workforce. As a result, the overall U.S. spring enrollment was down nearly 5%, and summer enrollment in our programs was down 8%. For the remainder of the year, we expect better top-line performance compared to Q1, driven by research. We also see restructuring savings kicking in during the latter part of the year. Therefore, we are reaffirming our fiscal 23 guidance, which Christina will speak to. I'm also happy to point out that during Q1, we raised our quarterly dividend for the 29th consecutive year. This is something that very few companies can tout. Let's review our overall performance in more detail. Christina will speak to our segment performance later in the presentation. As usual, all variances exclude currency impact. Revenue for the quarter grew 4% or 2% organically. As I said, growth was driven by research publishing, research solutions, corporate talent development, and corporate training. These offset a 12% decline in university services, which was mainly due to the cyclical enrollment challenges that I've been talking about. Also contributing to the revenue performance in university services was our work to extend our university client relationships. Specifically, in certain renewals, we lowered tuition share as we worked collaboratively with our clients to ensure long-term, mutually advantageous relationships. Adjusted EBITDA declined 34%, in line with our expectations for the quarter. Investments in research Higher employment costs, higher T&E spend related to the resumption of in-person activities, and market-related challenges in university services all contributed to our Q1 performance. Adjusted EPS declined 60% due to the adjusted EBITDA performance, as well as lower pension income and higher interest expense. Adjusted EPS was also in line with expectations. As I mentioned, our Q1 financial results are not indicative of how we see the rest of the year playing out. Christina will now take you through our segment financial performance, our financial position, operational excellence initiatives, and our outlook. Afterwards, I'll pick it back up to discuss the recent OSTP guidance on federally funded research, and then how we're executing on our fiscal 23 commitments.