John Wiley & Sons, Inc.

Good morning and welcome to Wiley's third quarter and fiscal 2026 earnings call. As a reminder, this conference is being recorded. 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, press star one again. Thank you. At this time, I would like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

Good morning, everyone. With me today 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. Our comments and responses reflect management 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. 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 US 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. We will refer to non-GAAP metrics on the call, and variances are on a year-over-year basis and will exclude divested 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 at investors.wiley.com. I'll now turn the call over to Matt Kistner.

Thank you, Brian. Hello, everyone, and welcome to our fiscal Q3 earnings update. Before I get to our performance in progress, I want to acknowledge our price amid AI fears across the market. The fact is we don't share those same fears, quite the opposite. We couldn't be more confident in our position in the AI economy given our proprietary content advantage, wide mode in peer review research, and unparalleled partnership ecosystem. The ongoing opportunity is twofold. AI is expected to greatly accelerate scientific discovery and research publishing output. And our enriched data and AI solutions are foundational for corporate R&D AI models and applications. I will discuss this in more detail later in our call. The third quarter was fully in line with our stated expectations. Revenue performance was impacted by unfavorable comparables in research, which we called out in the second quarter, and soft market conditions in learning. We continue to accelerate in all major areas of focus. Research publishing continues to outpace the market, with global output up 11%, revenue up 4%, excluding AI revenue, and steady growth in our multi-year renewals. In AI and data services, we announced new leadership, launched our clinical outcome assessments partnership with IQVIA, and after quarter close, executed a strategic multi-year partnership with OpenEvidence to deliver trusted research at the point of medical care. We also secured a new AI model training customer, our first outside the U.S., and realized 7 million of AI revenue. We are rapidly advancing our technology transformation initiatives with the announcement of a multi-year managed services partnership with Virtusa. We also continue to deliver corporate expense savings on an adjusted EBITDA basis, down 21% in the quarter or 9 million versus prior year. We continue to deliver material margin expansion and cash flow growth with adjusted operating margin of 280 basis points, adjusted EBITDA up 250 basis points, and operating cash flow nearly doubling to 103 million. And we are returning more cash to shareholders with repurchases doubling in Q3 to $70 million year-to-date, as part of a $100 million full-year target. We've returned $126 million in dividend and repurchases in just nine months, a 37% increase over prior year. Let's turn to how we're executing on our fiscal 26 commitments. Our first objective is to lead in research. It's been a robust year for research. with revenue up 4% at constant currency and adjusted EBITDA up 6%. We continue to outpace the market in submissions and output up 26% and 11%. Strong demand is evident across all regions. We've now migrated over 80% of journals to our competitively advantaged research exchange platform. Importantly, this migration is what transforms our content from published articles into AI-ready data, the foundation that makes everything we're doing in gateway, licensing, and subscription knowledge feeds possible. And we continue to expand our journal portfolio through organic investment in our flagship advanced collection, with eight new journals planned for launch and revenue growth of 50% in our leading open access journal, Advanced Science. Our second objective is to deliver new growth in AI and adjacent markets. We've generated a record 42 million in AI revenue year to date above last year's total of 40 million with one quarter remaining. We continue to make critical inroads into the corporate market with strategic projects executed with healthcare innovators, IQVIA and OpenEvidence, and other customers for subscription knowledge feeds. We're now at 36 publishing partners for our Nexus content licensing service, and we are in active discussions with others. Finally, we continue to see strong researcher interest in our AI gateway for scholarly search delivered through partnership with leading companies like Anthropic and Amazon Web Services. Our third objective is to drive operational excellence and discipline across our organization. We continue to streamline our cost structure with corporate expenses on an adjusted EBITDA basis down 21% for the quarter and 12% year to date. Tech transformation took a significant step forward with our recent managed services partnership, which Craig will talk more about in detail. Let me run through our four key strategic priorities and value drivers. First, we are accelerating research core growth and delivering shared gains from our wide moat, scale, and highly favorable demand trends from global expansion and AI productivity. The research publishing market is growing at 3 to 4%, and we expect to deliver at the top end of that this year. We are delivering new AI and data analytics growth from our proprietary content in critical AI domains and our extensive partnership ecosystem. As noted, we've already surpassed last year's AI revenue total with 42 million and a quarter remaining. We are driving multi-year margin expansion. with our EBITDA margin up 500 basis points since fiscal 23 and plans for continued material improvement going forward. And finally, underpinning all of this is our discipline in managing our portfolio, deploying capital on high return investments, and returning cash to shareholders. Let's turn to our core. For much of Calendar 25, we've been navigating around proposed U.S. funding cuts to science and education. A year ago, I said that we remain fully confident that U.S. research would continue to receive federal support given the essential role that it plays in U.S. economic growth and U.S. global competitiveness. I'm pleased to report that federal investment in scientific research remains resilient, with Congress ultimately enacting significantly smaller reductions than those proposed by the administration, and in key cases, maintaining or modestly increasing agency budgets. This outcome reflects continued bipartisan recognition that sustained funding is critical to the nation's scientific infrastructure, long-term competitiveness, and innovation capacity. Our calendar 26 renewal season is about 82% complete, and we're encouraged by the growth we're seeing there. Our subscriptions and transformational agreements are must-have content which is core to institutions and essential to their missions. We recently marked a milestone of 125 multi-year transformational agreements for consortia representing over 3,000 institutions. Our recurring models representing about 70% of research publishing remain robust. Let's talk about open access as an incremental growth engine. As discussed, research output is ever increasing driven by global R&D spend and other factors. Submissions remain at record levels as the number of global researchers increase and productivity gains accelerate. The rate of research output is expected to rise significantly with AI. One recent study showed a threefold increase in the number of papers by researchers who use AI, and we're just at the beginning. Big global publishers like Wiley stand to benefit most. This volume increases the value of our multi-year subscription and transformational agreements and accelerates growth in author-funded open access, where revenue is a function of price times quantity. This model is growing consistently above 20% and demand and pricing power remain robust. I want to call out our investment in the Advanced Journal brand and Advanced Science in particular. Researchers are drawn to multidisciplinary publications like Advanced Science for the brand, the impact factor, and the breadth of the audience it reaches. It has become one of the leading open access journals in the world. The advanced portfolio as a whole will exceed 70 million in revenue in fiscal 26, growing at strong double digits. Long-term trends in research look increasingly favorable. AI is expected to be a major output accelerator, and research publishing remains essential for not only discovery and prestige, but to advance researchers' careers and secure additional funding. This is what makes the business and its growth so strong and durable through continuous technological and societal change. Because of this unexpected AI-driven volume acceleration, we're expanding our journal portfolio and modernizing our publishing platform and workflows to continuously benefit from this evolution. Large-scale, high-quality publishers like Wiley are reporting market share gains, and we expect this trend to continue for the foreseeable future. And as we've seen time and time again, research funding and publication remain must-haves across economic cycles and political uncertainties. What makes us so well positioned for the AI economy? First, we provide access to much of the world's proprietary scientific, technical, and medical content through our own portfolio and that of our publishing partners. As we know, science is constantly evolving. In fact, over 14,000 new peer review articles are published every day. Second, we enjoy an industry-leading position in fast-growing knowledge domains that are especially relevant for AI, chemistry, material science, oncology, technology and engineering, food science and finance. Wiley is the lifeblood. Third, in an ever-changing world saturated with wrong information and skepticism, Our trust and reputation are distinct advantages. Our motive is not only our journal brands, but our unmatched peer review networks and editorial boards. We are home to hundreds of Nobel Prize winners and the world's leading societies, from the American Cancer Society to the American Geophysical Union. Fourth, we're not encumbered by legacy platform businesses that we're trying to defend. We have embraced an AI-first approach and enjoy first mover advantage with model developers and corporations building out AI models and applications, so much so that other publishers want to be part of our network. Fifth, we have built an unparalleled partner ecosystem. How many companies can point to a partner network that spans the world's most prestigious universities and academic societies, the largest LLM providers and AI innovators, multinational corporations, and global publishers? Our ecosystem approach is our secret sauce. We're partnering, not competing. We're integrating, not building. We have the luxury of not having to defend existing business models which may be threatened by AI. Finally, this gives us an advantageous capital light model. We have the content advantage. We can then leverage external infrastructure and interoperability while enabling broader collaboration across the ecosystem. This reduces our capital requirements and creates network effects that benefit all participants. It also means we don't have to bet on a particular technology as our open approach works across all platforms. We see this already with our IQVIA and open evidence momentum and with our connector on CLAWD and AWS. With that in mind, let's turn to our AI and data strategy. At the foundational level, we're a research and learning publisher, leveraging our proprietary content and data for AI. Then comes our gateway platform, which addresses a problem every researcher faces today. AI tools are proliferating, but most are built on unverified or incomplete scientific content. The full potential of AI in science will only be realized if researchers have complete confidence in the authenticity of their AI tools and the AI environment. Gateway solves this by embedding peer-reviewed, full-text Wiley and partner content directly into the platforms where researchers already are, CLAWD, AWS, Perplexity, and others. We are gratified by the early response. In just four months, 9,000 researchers have registered on the platform, in addition to a growing number of institutions signing up for enterprise access. This is early but clear evidence of product market fit. Gateway is not just a search tool. It is the access layer through which trusted scientific knowledge enters the AI workflow, and the layer institutions will increasingly require as a baseline for responsible AI use in research. Finally, our enriched data and AI solutions become the foundation for domain-specific intelligence, which we've referred to as subscription knowledge feeds or retrieval augmentation generation. Customers here include corporations and partners in life sciences, healthcare, engineering and industrials, food and agriculture, and financial services. Wiley is at a pivotal point in its upward trajectory as AI-related demand for our content and research intelligence accelerates across industry verticals. The time was right to bring in a world-class leader to convert our content advantage into high-margin data services and commercialize our AI-driven offerings. And so we recently announced the appointment of Armahan Rafat as our Chief AI and Data Services Officer. Armahan brings over 25 years of experience leading technology and data organizations, serving in senior roles at Nostella, Thomson Reuters, Clarivate, and others. His track record for developing analytics products generating hundreds of millions of annual revenue has been exceptional. As he stated in the recent announcement of his appointment, in an era where AI is only as effective as the data that fuels it, the proprietary content Wiley publishes represents the verified foundational truth that AI and machine learning require. In terms of underlying momentum, we now count 10 corporate customers for our subscription services, and we have secured a new LLM customer for our training services. We continue to add more publishing partners to our licensing network. We expect to deliver AI revenue of 45 to $50 million this year, up from 40 million in fiscal 25 and 23 million in fiscal 24. we anticipate another big year for total ai revenue in fiscal 27. i'd like to share some examples of real use cases where we are converting our content advantage into practical solutions for major corporations and through recurring revenue models first Clinical outcome assessments, or COA, are scientifically validated instruments used in pharmaceutical trials to measure how patients feel, function, and respond. COAs are essential for demonstrating treatment impact and meeting regulatory standards for drug approval. Wiley and its partners have one of the largest collections of COAs going back decades. It is a rapidly growing area for us, expanding from 800,000 in 2021 to nearly 7 million today. What makes this different is what it means for the pharmaceutical customer. Previously, running a clinical trial meant assembling multiple vendors, from COA licensing to regulatory guidance. That friction costs time and money. Wiley Acuvia consolidates that into a single trusted relationship. Acuvia is the world's largest contract research organization, driving $16 billion of annual revenue, bringing deep pharmaceutical relationships regulatory expertise, and implementation scale. Wiley brings the validated instruments, a portfolio of 100 plus COA instruments managed on behalf of our society partners and trusted scientific heritage. So it's not just a licensing deal, it's a recurring workflow transformation. and the kind of deeply embedded relationship that compounds in value as trials grow more complex and the regulatory bar rises. We're really excited about this opportunity now and the scaling potential ahead. We've executed COA agreements with the top 20 pharma companies, and our global pipeline continues to grow. Two days ago, we announced a strategic partnership with Open Evidence, the most widely used clinical decision support platform among U.S. physicians, with more than 40% of doctors using the platform daily across 10,000 hospitals. Open Evidence will bring our trusted scientific content and that of our partners into their rapidly expanding AI platforms. The terms of the deal include a five-year multi-million dollar licensing agreement for a selection of over 400 journal titles and reference book, as well as the Cochrane database of systematic reviews. As part of the partnership, Wiley has taken a small equity position in open evidence, underscoring our mutual commitment to building the future of clinical AI together. Important to note, we consider this a first step in our multi-year collaboration. Let me finish with a quote from Open Evidence CEO and founder Daniel Nadler. The hard problem in medicine right now isn't just generating new knowledge. We're living through a golden age of biomedical research. The hard problem is also that it takes 17 years for a fraction of that research to reach the bedside. Wiley is an ideal partner in solving this problem for physicians. The depth and breadth of Wiley's content reinforces the advantages of open evidence for physicians, and that compounds over time. As with IQVIA, this partnership is not just a licensing arrangement. Wiley is embedding itself into the daily clinical decision-making of physicians. Our equity position reflects our conviction that this is where trusted scientific content meets its highest value application. And importantly, we see this as a template for many others, bringing Wiley's content advantage directly into the workflow platforms where critical high-stakes decisions are made. As I mentioned earlier, our partner ecosystem is a huge strategic advantage for us, bringing together AI innovators, R&D-centric corporations, leading institutions and other publishers. It's only the beginning. I'll now turn the call over to Craig.