John Wiley & Sons, Inc.

Good morning and welcome to Wiley's first quarter fiscal 2026 earnings call. As a reminder, this conference is being recorded. After the speaker's remarks, we will conduct a question and answer session. To ask a question at this time, you'll need to press star followed by the number one on your telephone keypad. At this time, I'd like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

Hello, and thank you all for joining us. On the call with me are Matt Kistner, President and CEO, Craig Albright, Executive Vice President and CFO, and Jay Flynn, Executive Vice President and General Manager of Research and 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. 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'll refer to non-GAAP metrics on the call, and variances are on a year-over-year basis and will exclude defected assets and the impact of currency. Additional information is included in our filings of the SEC. A copy of this presentation transcript will be available on our investor relations website at investors.wiley.com. I'll now turn the call over to Matt Kistner.

Good morning and welcome to our first quarter earnings update. I hope you had a nice and restful summer. Before we discuss our first quarter results, I'd like to reflect on the progress and leadership we are demonstrating in the world of AI. When we completed our first AI licensing project in January 2024, we believed that our active participation in the new emerging AI world would pay dividends by building our expertise and developing strategic relationships with major AI developers. As I will describe later in my remarks, our early work here is opening up growth opportunities across our businesses and in the promising corporate R&D market. This quarter, we achieved a significant milestone by including content from other publishers in our latest licensing project, another demonstration of our leadership in this exciting new space. Our authoritative content, data, and services are increasingly in demand for the advancement of both AI science and AI learning, and we're moving decisively. After all, our two centuries aren't about age. They're about our proven ability to anticipate and drive transformation. Let's talk about the quarter. Tier 1 is our seasonally smallest period, and there is noise in our year-over-year comparisons and margin mix, which Craig will discuss. Our overall performance, however, was in line with our expectations. We drove mid-single-digit growth in research through AI licensing and open access momentum, and despite an unfavorable comp versus prior year. We executed a landmark $20 million AI licensing project this quarter for an existing foundational large language model customer, where for the first time we included content from our publishing partners. We also announced the key strategic partnership with Anthropic to accelerate AI across scholarly research by integrating institutional library subscriptions into CLAUD. all part of a pilot program designed to add value to our existing institutional offerings and support student use of safe, authoritative content when using AI. We increased our annual dividend for the 32nd consecutive year. Very few companies of our size or any size can say similar, demonstrating our long-term commitment to return cash to our shareholders. We also increased our spend on share repurchases in the quarter, and the board approved a $250 million repurchase authorization, a 25% increase over our previous program. Finally, I want to welcome Craig Albright as our new CFO. Craig brings 30 years of global leadership in finance and strategy, recently serving in multiple senior financial roles at Xerox. His track record of driving high-quality growth, disciplined investment, and cost synergies lines up perfectly with our ongoing objectives, and I look forward to closely partnering with him to take Wiley to the next level. Welcome, Craig. I also want to express my profound gratitude to Chris Caridi for his exemplary leadership throughout this transition. We are fortunate that Chris remains our chief accounting officer and finance transformation leader. Let's talk about our fiscal 26 commitments. As a reminder, these areas reflect how we have driven operational progress over the past 20 months, and they remain key focus areas for value creation. The first objective is to lead in research. We are driving above market growth in submissions and output up 25% and 13% respectively. Importantly, we're seeing double digit submissions growth in nearly all key geographies from China and India to the US, UK, and Japan. Germany, where we were the first publisher to strike a nationwide agreement, has returned to growth for the first time since the pandemic. Much of this volume growth goes to supporting and increasing the overall value of our recurring revenue models. Submissions growth also drives our Gold Open Access program, where revenue is a function of price and quantity. As a reminder, it takes about six months for a submitted article to be published, so these are good indicators for future performance. Remember that about two-thirds of research revenue is recurring, and we delivered a strong journal renewal season for calendar year 25, driven by volume and pricing growth. We continue to deliver double-digit gold open access growth driven by the enduring draw of our journal brands. Our open access flagship journal, Advanced Science, continues to be a great story with revenue growing nearly 50% over prior year. We also had a record month in July for OA submissions, so very good momentum there. Our large catalog of high-quality journals forms our robust competitive moat. This quarter, we continue to build on that position with 17 Wiley journals receiving a top category rank in the annual journal citation report, which measures the impact of peer-reviewed journals. Today, Wiley journals are responsible for over 10% of all citations in the index. Our second commitment is to deliver growth in AI and adjacent markets. I'll talk about this in the next couple of slides, but we're not just participating in the AI revolution. We're defining how our industry approaches knowledge licensing and partnership. We delivered $29 million in AI licensing revenue this quarter alone, up from $17 million in the prior year period, demonstrating the market's recognition of our leadership position. What sets us apart is our pioneering approach to publisher collaboration. The Wiley Nexus is our unified platform for the AI economy, connecting academic content to AI applications and streamlining licensing processes. Through comprehensive partnerships, the platform enables us to both aggregate scholarly content for AI training and develop cutting edge research tools using advanced vector database technology. By facilitating partnerships with services like Claude for Education, while ensuring publishers retain complete content sovereignty and existing business relationships, we leverage our specialized AI and legal expertise to deliver value across the publishing ecosystem. From streamlined licensing processes and enhanced institutional subscriptions to AI-powered discovery tools. We also continue to advance our AI subscription inference models with potential customers across select industry verticals, setting new standards for how enterprises access and utilize specialized knowledge through AI. While inference models and strategic partnerships require thoughtful development We're moving decisively to capture this transformational opportunity. For example, during the quarter, we consolidated multiple corporate sales functions into one unified team dedicated to driving growth in the corporate R&D space. Our third commitment is to drive operational excellence and discipline across the organization. This quarter, we reached an important milestone in the scaled migration of our new research publishing platform, the Research Exchange, with 1,000 journals successfully transitioned to the new technology and 350,000 unique users served. To refresh, We've built a best-in-class platform that combines all of our major publishing workflows into one integrated system using AI and machine learning to support authors, referees, and editors in managing article submissions, quality and integrity screening, and peer review. The advantages of this system include a faster and lower cost journal production process, a significantly improved author experience, and a unified information architecture that facilitates stronger management of the article production process. Wiley is also gaining from standardization while customers benefit from leading edge publishing technology, imperative when it comes to dealing with research integrity and harnessing AI. We've taken a measured approach to its rollout, And 92% of researchers have rated the system as easy to use. This quarter, the platform garnered a key industry award for excellence in research integrity. This is where we've taken a clear leadership position in the industry, both in terms of advocacy and product. Coming out of the quarter, we're increasingly confident in our full year outlook, driven by research trends and AI momentum. We see good growth in our contracted journal revenues for calendar year 25. Strong open access growth is expected to continue, driven by accelerating demand and output worldwide, including in the U.S. This gives us a publishing backlog of six months or more. AI licensing demand remains robust from both existing and prospective customers. The academic market remains steady at this point after two consecutive years of enrollment growth. We're watching full college enrollments, but haven't seen any early signals of enrollment challenges. On the professional publishing side, we have encountered some market headwinds around consumer spending and the retail channel, which we're watching. That said, we're also delivering above market growth in publishing output and title signings. We're monitoring corporate spending trends around assessments, but moving ahead on pricing and new product launches. And finally, our previously executed cost savings will begin to ramp up in Q2. Let me step back and review our current AI licensing models. which will continue to evolve as the AI market develops and matures. We think about the market opportunity in three buckets. The first is in training large language models using our own archival content to ensure accuracy and impact. The training market is evolving from a few large pre-training engagements to a wider array of smaller, more fine-tuning projects where developers require more specialized content, we continue to meet this demand. The second model is the Wiley Nexus, where we are combining our content with that of our publisher and society partners in research solutions. Here we help others navigate the complicated AI world by leveraging our relationships and expertise on their behalf. In our first deal this quarter, we generated 16 million of Nexus licensing revenue. Craig will discuss in detail, but margins are a bit lower here than in other AI agreements due to differing royalty rates. It's a win-win-win. We are able to maintain our leadership position with our corporate customers, expand our publisher partnerships who can benefit from our know-how, and generate new profitable revenue streams in the process. It's also another validation of our distinct competitive advantages, and that is our ability to partner across academic and corporate environments and connect them together. You're now seeing the benefit of this in AI. Both institutions and corporations need a trusted partner like Wiley. The third area, AI subscription models, involves licensing and embedding our content into vertical specific applications that ground models in authoritative content at the time of inference. The most common technique here is retrieval augmented generation or RAG. AI demand is shifting from article retrieval to structured reasoning. task-based, not document-based. With this shift, R&D-intensive corporations are increasingly using AI-powered content and tools to speed up product development, identify breakthroughs, and reduce turnaround times. Our high-value content, therefore, is critical. We can provide subscription access to a knowledge feed of Wiley content and data catalogs where accuracy, efficacy, and recency can all be ensured. We're already piloting an array of inference use cases in multiple industry verticals from pharmaceuticals to technology with early stage recurring revenue totaling 1 million in fiscal 25. Given the number of companies deploying AI applications and the depth and breadth of our content portfolio, the potential opportunity is significant. As I said at the start, we've moved decisively in a nascent market and executed the following. Large rights projects for training with three of the world's largest tech companies. Strategic development partnerships with three of the world's leading AI innovators, including Amazon Web Services, Perplexity, and Anthropic. The goal is to advance the researcher and learner experience, and we're just getting started. Inference pilots with three of the world's leading pharma companies to revolutionize drug discovery. as well as with a multinational chemical company for pattern recognition, and in support of the European Space Agency for Earth Observation. This market will take time to develop, but it is what excites us most. The corporate market is now a key strategic focus area for us, making up 80% of total US R&D spend, but only 10% of our revenue base. Over time, we expect this share to materially expand as we continue to build subscription-based and transactional AI businesses, bring our science analytics capabilities deeper into organizations, and expand on our knowledge services capabilities. One final affirmation. We believe it is our unique responsibility to engage with AI developers and R&D-centric corporations to ensure scientific integrity and information accuracy, to deliver optimal outcomes across research and learning, and power the latest models with only trusted authoritative content like Wiley's. One can think of it as the Wiley seal of approval. Now let's talk about AI innovation across our platform and product portfolio. Let's start with transforming publishing. As a reminder, we're rolling out leading edge research publishing platform in stages. More than half of our journals are now live. As you can see here, we are thinking about AI and its implications for what we do across the entire research value chain and actively incorporating it into our platform. from the first touchpoint with the author to an increasingly expanding set of touchpoints with the end-user consumer of the research. Our AI-powered workflows make submission fast and intuitive for researchers through a single consistent interface that streamlines processes and reduces administrative burden. A more efficient system will allow us to attract and retain more authors. Scientific integrity remains the industry-wide topic. We now have the latest AI-powered screening tools in place, fully integrated into the publishing workflow. These tools conduct 25 comprehensive checks at the initial screening, completing the process in under 10 minutes. Any potential concerns are automatically flagged for further review. This screening stage helps editors by filtering out papers with major scope or integrity issues. Already we've seen a 70% reduction in published papers citing problematic sources. We consider this another differentiator. We're also revolutionizing reviewer suggestions through sophisticated relationship mapping to find connections between authors, papers, and topics dramatically improving recommendations for quality and relevance. Not only can this platform deliver new content offerings, but we can use AI to match articles to journals, giving a better experience to authors, reviewers, and editors alike. It also provides an added benefit of keeping more submitted articles in-house that may have fallen out because of improper fit. In fiscal 25, we saw a 30% improvement in automated transfer referral conversion. We have AI initiatives going on across our product portfolio. In our academic business line, we've recently introduced four new AI tools for our STEM digital courseware product around tutoring, authoring, assessment, and student behavior insights. In professional, we continue to build out our AI-powered book author portal to improve launch efficiency and design. And of course, we're working with AWS to dramatically improve scientific search and perplexity to transform how learners interact with educational content. Let me also touch quickly on colleague productivity. Nearly 85% of our employees are actively using the latest AI tools in their daily work, and internal surveys show that AI sentiment and productivity run high across our organization. I'll now turn the call over to Craig, who will take you through our Q1 results, our financial position and capital allocation, and our full year outlook.