# John Wiley & Sons, Inc.: Form 10-Q for the period ended Jul 31, 2024

- Company: [John Wiley & Sons, Inc.](/companies/wly.md) (CIK 107140)
- Form: 10-Q
- Filed: 2024-09-06
- Accepted by EDGAR: Sep 6, 2024, 12:05 ET
- Period: 2024-07-31
- Accession: 0000107140-24-000189
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/107140/000010714024000189/jwa-20240731.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/107140/000010714024000189/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-07-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-05-01 to 2024-07-31 | $403.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-05-01 to 2024-07-31 | $109.2m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2024-05-01 to 2024-07-31 | $248.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-05-01 to 2024-07-31 | $29.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-05-01 to 2024-07-31 | $12.8m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-05-01 to 2024-07-31 | $24.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-05-01 to 2024-07-31 | −$1.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-05-01 to 2024-07-31 | −$0.03 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-05-01 to 2024-07-31 | −$0.03 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-05-01 to 2024-07-31 | 54,377,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-05-01 to 2024-07-31 | −$88.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-05-01 to 2024-07-31 | $14.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-05-01 to 2024-07-31 | $19.2m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-05-01 to 2024-07-31 | $12.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-07-31 | $82.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-07-31 | $392.8m | us-gaap:AssetsCurrent |
| Total assets | at 2024-07-31 | $2.65bn | us-gaap:Assets |
| Current liabilities | at 2024-07-31 | $688.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-07-31 | $1.94bn | us-gaap:Liabilities |
| Long-term debt | at 2024-07-31 | $909.9m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-07-31 | $8.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-07-31 | $713.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 39,355 characters.

The information in our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read together with our Condensed Consolidated Financial Statements and related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our 2024 Form 10-K and our Consolidated Financial Statements and related notes set forth in Item 8 of Part II of our 2024 Form 10-K. See Part II, Item 1A, “Risk Factors,” below and “Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995,” above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. All amounts and percentages are approximate due to rounding and all dollars are in thousands, except per share amounts or where otherwise noted. When we cross-reference to a “Note,” we are referring to our “Notes to Unaudited Condensed Consolidated Financial Statements,” unless the context indicates otherwise.

### OVERVIEW

Wiley is one of the world’s largest publishers and a global leader in research and learning. The Company’s content, services, platforms, and knowledge networks are tailored to meet the evolving needs of its customers and partners, including researchers, students, instructors, professionals, institutions, and corporations. Wiley empowers knowledge seekers to transform today’s biggest obstacles into tomorrow’s brightest opportunities. For more than two centuries, the Company has been delivering on its timeless mission to unlock human potential. Wiley is a predominantly digital company with over 83% of its revenue for the year ended April 30, 2024 generated by digital products and services excluding the Held for Sale or Sold segment revenue. For the year ended April 30, 2024, 48% of revenue excluding the Held for Sale or Sold segment revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty.

On June 1, 2023, Wiley’s Board of Directors approved a plan to divest certain businesses that we determined are non-core businesses. Those businesses are University Services, Wiley Edge, and CrossKnowledge. On January 1, 2024 we completed the sale of University Services, and on May 31, 2024 we completed the sale of Wiley Edge with the exception of its India operations. The sale of Wiley Edge’s India operations closed on August 31, 2024. On August 2, 2024 we entered into an agreement to sell our CrossKnowledge business, which closed on August 31, 2024.

We report financial information for the following segments, as well as a Corporate category, which includes certain costs that are not allocated to the reportable segments:

- **Research** includes the reporting lines of Research Publishing and Research Solutions;
- **Learning** includes the Academic and Professional reporting lines and consists of publishing and related knowledge solutions;
- **Held for Sale or Sold** includes businesses held-for-sale including CrossKnowledge, as well as those sold in fiscal year 2025 which includes Wiley Edge, and in fiscal year 2024 University Services and Tuition Manager.

Through the Research segment, we provide peer-reviewed scientific, technical, and medical (STM) publishing, content platforms, and related services to academic, corporate, and government customers, academic societies, and individual researchers. The Learning segment provides scientific, professional, and education print and digital books, digital courseware to libraries, corporations, students, professionals, and researchers, as well as assessment services to businesses and professionals.

Wiley’s business strategies are tightly aligned with healthy solid growth trends, including ever-increasing global research and development (R&D) spend leading to consistent growth in scientific research output, the transition to open research, and the increasing application of new knowledge into solutions to solve real world problems. These strategies include driving publishing output to meet the global demand for peer-reviewed research and expanding platform and service offerings for corporations and societies. Learning strategies include selectively scaling high-value digital content, courseware, and assessments where the Company sees opportunity. We continue to implement strategies to efficiently and effectively manage print revenue declines while driving growth in our digital lines of business.

### RESULTS OF OPERATIONS – THREE MONTHS ENDED JULY 31, 2024

### FIRST QUARTER SUMMARY

- **US GAAP Results**: Consolidated Revenue of $403.8 million (-10%, compared with the prior year), Operating Income of $29.0 million (+$45.3 million, compared with the prior year operating loss), and Diluted Loss per Share of $(0.03) (+$1.64 per share, compared with the prior year diluted loss per share).
- **Adjusted Results at Constant Currency (excluding Held for Sale or Sold segment results**): Adjusted Revenue of $389.6 million (+6%, compared with the prior year), Adjusted EBITDA of $72.6 million (+22%, compared with the prior year), and Adjusted EPS of $0.47 (+74%, compared with the prior year).

### CONSOLIDATED RESULTS OF OPERATIONS

### Revenue:

Revenue for the three months ended July 31, 2024, decreased $47.2 million, or 10%, as compared with the prior year. On a constant currency basis, revenue decreased 10% as compared with the prior year.

Excluding the revenues from the Held for Sale or Sold segment, Adjusted Revenue increased 6% on a constant currency basis.

We executed a $21 million content rights project for training GenAI large language models of which $17 million was recognized in the three months ended July 31, 2024 primarily all in the Learning segment. On a constant currency basis excluding the GenAI project, Adjusted Revenue increased 2% as compared with the prior year.

### Adjusted Revenue

Below is a reconciliation of our consolidated US GAAP Revenue to Non-GAAP Adjusted Revenue:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **US GAAP Revenue, net** | **$403,809** | $451,013 |
| Less: Held for Sale or Sold segment (1) | **(14,186)** | (83,889) |
| **Non-GAAP Adjusted Revenue, net** | **$389,623** | $367,124 |

(1) Our Adjusted Revenue, net excludes the impact of our Held for Sale or Sold segment revenue.

See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.

### Cost of Sales:

Cost of sales for the three months ended July 31, 2024 of $109.2 million decreased $47.9 million, or 30%, as compared with the prior year. On a constant currency basis, cost of sales decreased 30% as compared with the prior year. This was primarily due to the prior year including employee and marketing costs related to the University Services business which was sold on January 1, 2024 and, to a lesser extent, lower employee costs related to the Wiley Edge business which was sold on May 31, 2024. Excluding the cost of sales from the Held for Sale or Sold segment, cost of sales increased 1% as compared with the prior year on a constant currency basis primarily due to higher royalty costs in both Research and Learning, partially offset by lower inventory and related costs.

### Operating and Administrative Expenses:

Operating and administrative expenses for the three months ended July 31, 2024 of $248.8 million decreased $7.0 million, or 3% as compared with the prior year. On a constant currency basis, operating and administrative expenses decreased 3% as compared with the prior year primarily reflecting lower employee related costs.

Excluding operating and administrative expenses from the Held for Sale or Sold segment, operating and administrative expenses increased 3% on a constant currency basis as compared with the prior year primarily due to higher technology related costs, bad debt expense, advertising and marketing costs and, to a lesser extent, higher travel and entertainment costs.

### Impairment of Goodwill:

We recorded an impairment of goodwill for the three months ended July 31, 2023 of $26.7 million. This charge is reflected in the Impairment of goodwill in the Unaudited Condensed Consolidated Statements of Net Loss.

In accordance with applicable accounting standards, we were required to test goodwill for impairment immediately before and after our segment realignment in the three months ended July 31, 2023. Prior to the realignment, we concluded that the fair value of the University Services reporting unit within the former Academic segment was below its carrying value, which resulted in a pretax noncash goodwill impairment of $11.4 million.

After the realignment, we concluded that the fair value of the CrossKnowledge reporting unit within the Held for Sale or Sold segment was below its carrying value, which resulted in a pretax noncash goodwill impairment of $15.3 million.

See Note 12, "Goodwill and Intangible Assets" for details on these charges.

### Restructuring and Related Charges:

We recorded restructuring and related charges in the three months ended July 31, 2024 and 2023 of $3.9 million and $12.1 million, respectively. These charges are reflected in Restructuring and related charges on our Unaudited Condensed Consolidated Statements of Net Loss.

### Global Restructuring Program

Beginning in fiscal year 2023, the Company initiated a global program (Global Restructuring Program) which was expanded in fiscal year 2024 to include those actions that will focus Wiley on its leading global position in the development and application of new knowledge and drive greater profitability, growth, and cash flow. We will focus on our strongest and most profitable businesses and large market opportunities in Research and Learning, as well as streamline our organization and rightsize our cost structure to reflect these portfolio actions. Under this program, we reduced our real estate square footage occupancy by approximately 35%.

Excluding actions related to the Held for Sale or Sold segment, we anticipate to yield annualized cost savings of approximately $75 million, with approximately $70 million of that to be realized this fiscal year from actions taken starting in fiscal year 2024.

For the three months ended July 31, 2024 and 2023, we recorded pretax restructuring charges of $7.5 million and $11.8 million, respectively, related to this program.

We anticipate ongoing severance related charges and facility-related costs associated with certain properties to result in additional restructuring charges in future periods.

See Note 9, “Restructuring and Related Charges” for more details on the Global Restructuring Program charges.

### Business Optimization Program

For the three months ended July 31, 2024 and 2023, we recorded pretax restructuring net credits of $(3.6) million and charges of $0.3 million, respectively, related to this program.

See Note 9, “Restructuring and Related Charges” for more details on the Business Optimization Program net credits and charges.

For the impact of our restructuring programs on diluted loss per share, see the section below, “Diluted Loss per Share.”

### Amortization of Intangible Assets:

Amortization of intangible assets was $12.9 million for the three months ended July 31, 2024, a decrease of $2.7 million, or 17%, as compared with the prior year. On a constant currency basis, amortization of intangible assets decreased 17% as compared with the prior year primarily due to the cessation of amortization for held-for-sale assets and, to a lesser extent, the completion of amortization of certain acquired intangible assets. See Note 3, “Divestitures” for more details on these held-for-sale assets.

### Operating Income (Loss), Adjusted Operating Income (OI) and Adjusted EBITDA:

Our operating income was $29.0 million for the three months ended July 31, 2024, compared with the prior year operating loss of $16.4 million. The increase was primarily due to lower costs of sales, and a goodwill impairment in the three months ended July 31, 2023, partially offset by a decrease in revenue.

Adjusted OI on a constant currency basis increased 83% as compared with the prior year. The increase in Adjusted OI was primarily due to an increase in Adjusted Revenue, partially offset by higher operating and administrative expenses.

Adjusted EBITDA on a constant currency basis increased 22% as compared with the prior year primarily due to an increase in Adjusted Revenue, partially offset by higher operating and administrative expenses.

### Adjusted OI

Below is a reconciliation of our consolidated US GAAP Operating Income (Loss) to Non-GAAP Adjusted OI:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **US GAAP Operating Income (Loss)** | **28,973** | (16,355) |
| Adjustments: |  |  |
| Restructuring and related charges | **3,870** | 12,123 |
| Impairment of goodwill | **—** | 26,695 |
| Held for Sale or Sold segment Adjusted Operating Loss (Income) (1) | **2,519** | (3,084) |
| **Non-GAAP Adjusted OI** | **$35,362** | $19,379 |

(1) Our Adjusted OI excludes the impact of our Held for Sale or Sold segment Adjusted Operating Loss or (Income).

### Adjusted EBITDA

Below is a reconciliation of our consolidated US GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Net Loss** | **$(1,436)** | $(92,264) |
| Interest expense | **12,787** | 11,334 |
| Provision (benefit) for income taxes | **24,439** | (14,459) |
| Depreciation and amortization | **37,253** | 43,728 |
| **Non-GAAP EBITDA** | **73,043** | (51,661) |
| Impairment of goodwill | **—** | 26,695 |
| Restructuring and related charges | **3,870** | 12,123 |
| Foreign exchange (gains) losses, including the write off of certain cumulative translation adjustments | **(234)** | 1,620 |
| (Gains) losses on sale of businesses and impairment charges related to assets held-for-sale | **(5,801)** | 75,929 |
| Other (income) expense, net | **(782)** | 1,485 |
| Held for Sale or Sold segment Adjusted EBITDA (1) | **2,519** | (6,521) |
| **Non-GAAP Adjusted EBITDA** | **$72,615** | $59,670 |

(1) Our Non-GAAP Adjusted EBITDA excludes the Held for Sale or Sold segment Non-GAAP Adjusted EBITDA.

### Interest Expense:

Interest expense for the three months ended July 31, 2024, was $12.8 million compared with the prior year of $11.3 million. This increase was primarily due to a higher weighted average effective interest rate.

### Foreign Exchange Transaction Gains (Losses):

Foreign exchange transaction gains of $0.2 million for the three months ended July 31, 2024 were primarily due to gains on our foreign currency denominated intercompany accounts receivable and payable balances, offset by losses on our third-party receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar. In fiscal year 2023 due to the closure of our operations in Russia, the Russia entity was deemed substantially liquidated. In the three months ended July 31, 2024, we wrote off an additional $0.5 million cumulative translation adjustment in earnings.

Foreign exchange transaction losses of $1.6 million for the three months ended July 31, 2023 were primarily due to losses on our third-party accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar. In the three months ended July 31, 2023, we wrote off an additional $0.9 million cumulative translation adjustment in earnings related to the closure of our operations in Russia.

### Gains (Losses) on Sale of Businesses and Impairment Charges Related to Assets Held-for-Sale:

For the three months ended July 31, 2024 and 2023, we recorded pretax gains (losses) on sale of businesses and impairment charges related to assets held-for-sale as follows:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| Wiley Edge | **$(168)** | $— |
| University Services | **1,489** | (40,659) |
| Tuition Manager | **120** | (2,068) |
| CrossKnowledge | **4,360** | (33,202) |
| Gains (losses) on sale of businesses and impairment charges related to assets held-for-sale | **$5,801** | $(75,929) |

These charges are reflected in Gains (losses) on sale of businesses and impairment charges related to assets held-for-sale on our Unaudited Condensed Consolidated Statements of Net Loss.

On May 31, 2024, we completed the sale of Wiley Edge which was included in our Held for Sale or Sold segment, with the exception of its India operations. The pretax loss on sale was $19.6 million. In connection with the held-for-sale classification, we recognized cumulative impairment charges of $19.4 million in the year ended April 30, 2024. Upon the completion of the sale, we recognized an additional loss of $0.2 million in the three months ended July 31, 2024 due to subsequent changes in the fair value less costs to sell, as well as changes in the carrying amount of the disposal group.

On January 1, 2024 we completed the sale of University Services, which was included in our Held for Sale or Sold segment. The pretax loss on sale was $105.6 million which was reduced during the three months ended July 31, 2024 due to third-party customer consents and working capital adjustments of $1.5 million that occurred in the first quarter of fiscal year 2025. In the three months ended July 31, 2024, there was a reduction in the pretax loss on the sale of our Tuition Manager business previously in our Held for Sale or Sold segment due to a selling price adjustment for cash received after the closing.

As of July 31, 2024, Wiley Edge's India operations and CrossKnowledge continue to be reported as held-for-sale. We measured the CrossKnowledge disposal group at the lower of carrying value or fair value less costs to sell. In the three months ended July 31, 2024, we reduced the held-for-sale pretax impairment by $4.4 million related to CrossKnowledge. The total impairment charge for CrossKnowledge is $51.0 million, which includes $55.4 million recognized in fiscal year 2024. The reduction of the impairment was due to subsequent changes in the fair value less costs to sell resulting from the continued progression of the selling process and indications of changes in the expected consideration for the business, as well as changes in the carrying amount of the disposal group.

In the three months ended July 31, 2023, we recorded a held-for-sale pretax impairment of $73.9 million which includes $40.6 million for University Services and $33.3 million for CrossKnowledge.

See Note 3, “Divestitures” for more details on the divestitures and the held-for-sale businesses.

### Provision (Benefit) for Income Taxes:

Below is a reconciliation of our US GAAP Income (Loss) Before Taxes to Non-GAAP Adjusted Income Before Taxes:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **US GAAP Income (Loss) Before Taxes** | **$23,003** | $(106,723) |
| Pretax Impact of Adjustments: |  |  |
| Impairment of goodwill | **—** | 26,695 |
| Restructuring and related charges | **3,870** | 12,123 |
| Foreign exchange gains on intercompany transactions, including the write off of certain cumulative translation adjustments | **(2,591)** | (6) |
| Amortization of acquired intangible assets | **12,969** | 16,668 |
| (Gains) losses on sale of businesses and impairment charges related to assets held-for-sale | **(5,801)** | 75,929 |
| Held for Sale or Sold segment Adjusted Loss (Income) Before Taxes (1) | **2,519** | (5,034) |
| **Non-GAAP Adjusted Income Before Taxes** | **$33,969** | $19,652 |

(1) Our Adjusted Income Before Taxes excludes the Adjusted Loss (Income) Before Taxes of our Held for Sale or Sold segment.

Below is a reconciliation of our US GAAP Income Tax Provision (Benefit) to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **US GAAP Income Tax Provision (Benefit)** | **$24,439** | $(14,459) |
| Income Tax Impact of Adjustments(1): |  |  |
| Impairment of goodwill | **—** | 2,697 |
| Restructuring and related charges | **749** | 2,936 |
| Foreign exchange gains on intercompany transactions, including the write off of certain cumulative translation adjustments | **(390)** | (34) |
| Amortization of acquired intangible assets | **1,809** | 3,873 |
| (Gains) losses on sale of businesses and impairment charges related to assets held-for-sale | **(925)** | 10,660 |
| Held for Sale or Sold segment Adjusted Tax Benefit (Provision)(2) | **372** | (996) |
| Income Tax Adjustments |  |  |
| Impact of valuation allowance on the US GAAP effective tax rate(3) | **(18,030)** | — |
| **Non-GAAP Adjusted Income Tax Provision** | **$8,024** | $4,677 |
| **US GAAP Effective Tax Rate** | **106.2%** | 13.5% |
| **Non-GAAP Adjusted Effective Tax Rate** | **23.6%** | 23.8% |

40

#### INDEX

(1) For the three months ended July 31, 2024 and 2023, substantially all of the tax impact was from deferred taxes.

(2) Our Adjusted Income Tax Provision excludes the Adjusted Tax Benefit (Provision) of our Held for Sale or Sold segment.

(3) In the three months ended July 31, 2024, there was an $18.0 million impact on the US GAAP effective tax rate due to the valuation allowance on deferred tax assets in the US.

The US GAAP effective tax rate for the three months ended July 31, 2024, was 106.2% compared to 13.5% for the three months ended July 31, 2023. The US GAAP effective tax rate for the three months ended July 31, 2024 was greater than the US GAAP effective tax rate for the three months ended July 31, 2023 primarily driven by US ordinary losses for which no tax benefit can be recognized as a result of the valuation allowance recorded against the net deferred tax assets.

The Non-GAAP Adjusted Effective Tax Rate was 23.6% for the three months ended July 31, 2024 compared to 23.8% for the three months ended July 31, 2023. The slight decrease in the Non-GAAP Adjusted Effective Tax Rate for the three months ended July 31, 2024 compared with the three months ended July 31, 2023 was primarily due to the mix of income.

### Diluted Loss per Share:

Diluted loss per share for the three months ended July 31, 2024 was $(0.03) per share compared with a loss per share of $(1.67) per share for the three months ended July 31, 2023. This decrease in the loss was primarily due to impairment charges related to assets held-for-sale in the prior year and, to a lesser extent, an operating loss in the prior year compared to operating income in the three months ended July 31, 2024. This was partially offset by an income tax benefit in the prior year compared to income tax expense in the three months ended July 31, 2024.

Below is a reconciliation of our US GAAP Loss per Share to Non-GAAP Adjusted EPS. The amount of the pretax, and the related income tax impact for the adjustments included in the table below are presented in the section above, “Provision (Benefit) for Income Taxes.”

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **US GAAP Loss Per Share** | **$(0.03)** | $(1.67) |
| Adjustments: |  |  |
| Impairment of goodwill | **—** | 0.43 |
| Restructuring and related charges | **0.06** | 0.16 |
| Foreign exchange gains on intercompany transactions, including the write off of certain cumulative translation adjustments | **(0.05)** | — |
| Amortization of acquired intangible assets | **0.20** | 0.23 |
| (Gains) losses on sale of businesses and impairment charges related to assets held-for-sale | **(0.09)** | 1.17 |
| Held for Sale or Sold segment Adjusted Net Loss (Income)(1) | **0.04** | (0.07) |
| Income tax adjustments | **0.33** | — |
| EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (2) | **0.01** | 0.02 |
| **Non-GAAP Adjusted EPS** | **$0.47** | $0.27 |

(1) Our Adjusted EPS excludes the Adjusted Net Loss (Income) of our Held for Sale or Sold segment.

(2) Represents the impact of using diluted weighted-average number of common shares outstanding (55.0 million and 55.8 million for the three months ended July 31, 2024 and 2023, respectively) included in the Non-GAAP Adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive.

On a constant currency basis, Adjusted EPS increased 74% primarily due to an increase in Adjusted Operating Income.

### SEGMENT OPERATING RESULTS

| RESEARCH Revenue: | Three Months Ended July 31, 2024 | 2023 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Research Publishing | **$230,951** | $223,000 | 4% | 4% |
| Research Solutions | **34,358** | 34,804 | (1)% | (1)% |
| **Total Research Revenue** | **265,309** | 257,804 | 3% | 3% |
| Cost of Sales | **70,722** | 70,267 | (1)% | (1)% |
| Operating Expenses | **128,329** | 122,635 | (5)% | (5)% |
| Amortization of Intangible Assets | **11,042** | 11,375 | 3% | 3% |
| **Adjusted Operating Income** | **55,216** | 53,527 | 3% | 3% |
| Depreciation and amortization | **22,559** | 23,212 | 3% | 3% |
| **Adjusted EBITDA** | **$77,775** | $76,739 | 1% | 1% |
| Adjusted EBITDA Margin | **29.3%** | 29.8% |  |  |

### Revenue:

Research revenue for the three months ended July 31, 2024 increased $7.5 million, or 3%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 3% as compared with the prior year primarily due to growth in Research Publishing in our institutional licensing and, to a lesser extent, open access models. Open access article output growth was approximately 14% as compared with the prior year.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 1% as compared with the prior year. This increase was primarily due to higher revenue, partially offset by the timing of employee benefit costs related to higher incentive compensation and, to a lesser extent, higher technology and royalty costs.

#### INDEX

| LEARNING Revenue: | Three Months Ended July 31, 2024 | 2023 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Academic | **$59,964** | $48,292 | 24% | 24% |
| Professional | **64,350** | 61,028 | 5% | 5% |
| **Total Learning Revenue** | **124,314** | 109,320 | 14% | 14% |
| Cost of Sales | **32,028** | 31,325 | (2)% | (2)% |
| Operating Expenses | **67,741** | 68,099 | 1% | 0% |
| Amortization of Intangible Assets | **2,045** | 2,270 | 10% | 10% |
| **Adjusted Operating Income** | **22,500** | 7,626 | # | # |
| Depreciation and amortization | **11,294** | 13,552 | 17% | 17% |
| **Adjusted EBITDA** | **$33,794** | $21,178 | 60% | 60% |
| Adjusted EBITDA Margin | **27.2%** | 19.4% |  |  |

\# Not meaningful

### Revenue:

Learning revenue increased $15.0 million, or 14%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 14% as compared with the prior year. This increase was primarily due to approximately $16 million related to an executed $21 million content rights project for training GenAI large language models in both Academic and Professional and, to a lesser extent, continued growth in Academic courseware, partially offset by a decrease in print book sales. On a constant currency basis excluding the GenAI project, Learning revenue decreased 1% as compared with the prior year.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 60% as compared with the prior year. This increase was primarily due to revenue performance and, to a lesser extent, a decrease in employee costs after recent restructuring actions and technology costs, partially offset by higher royalty costs, bad debt and marketing expenses.

#### INDEX

| HELD FOR SALE OR SOLD | Three Months Ended July 31, 2024 | 2023 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | --- | --- |
| **Total Held for Sale or Sold Revenue** | **$14,186** | $83,889 | (83)% | (83)% |
| Cost of Sales | **6,470** | 55,509 | 88% | 88% |
| Operating Expenses | **10,235** | 23,293 | 56% | 56% |
| Amortization of Intangible Assets | **—** | 2,003 | # | # |
| **Adjusted Operating (Loss) Income** | **(2,519)** | 3,084 | # | # |
| Depreciation and amortization | **—** | 3,437 | # | # |
| **Adjusted EBITDA** | **$(2,519)** | $6,521 | # | # |
| Adjusted EBITDA Margin | **(17.8)%** | 7.8% |  |  |

\# Not meaningful

### Revenue:

Revenue for Held for Sale or Sold decreased $69.7 million, or 83%, as compared with the prior year on a reported basis. On a constant currency basis, revenue decreased 83% as compared with the prior year. This was due to a decrease in University Services revenue due to the sale of the business on January 1, 2024, and placement revenues due to the sale of the Wiley Edge business on May 31, 2024.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased $9.0 million as compared with the prior year. This decrease was primarily due to lower revenue, partially offset by lower employment and marketing costs due to the sale of the University Services and Wiley Edge businesses.

| CORPORATE EXPENSES | Three Months Ended July 31, 2024 | 2023 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Operating Expenses | **$42,514** | $41,774 | (2)% | (2)% |
| Amortization of Intangible Assets | **(160)** | — | # | # |
| **Adjusted Corporate Expenses** | **(42,354)** | (41,774) | (1)% | (1)% |
| Depreciation and amortization | **3,400** | 3,527 | 4% | 3% |
| **Adjusted EBITDA** | **$(38,954)** | $(38,247) | (2)% | (2)% |

On a constant currency basis, adjusted corporate expenses of $39.0 million on an Adjusted EBITDA basis increased 2% as compared with the prior year. This was primarily due to an increase in technology related costs.

### LIQUIDITY AND CAPITAL RESOURCES

### Principal Sources of Liquidity

We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing, and financing needs in the next twelve months. Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures. Excess operating cash is used to fund shareholder dividends. Other discretionary uses of cash flow include share repurchases and acquisitions to complement our portfolio of businesses. As necessary, we may supplement operating cash flow with debt to fund these activities. The overall cash position of the Company reflects our durable business results and a global cash management strategy that considers liquidity management, economic factors and tax considerations. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure to any financial institution.

As of July 31, 2024, we had cash and cash equivalents of $89.4 million, including cash and cash equivalents classified as held-for-sale of $6.8 million, of which approximately all was located outside the US. Maintenance of these cash and cash equivalent balances outside the US does not have a material impact on the liquidity or capital resources of our operations. We intend to repatriate earnings from our non-US subsidiaries, and to the extent we repatriate these funds to the US, we will be required to pay income taxes in various US state and local jurisdictions and applicable non-US withholding or similar taxes in the periods in which such repatriation occurs. Accordingly, as of July 31, 2024, we have recorded a deferred tax liability of approximately $3.0 million related to the estimated taxes that would be incurred upon repatriating certain non-US earnings to the US.

On November 30, 2022, we entered into the second amendment to the Third Amended and Restated Credit Agreement (collectively, the Amended and Restated CA). See Note 15, “Debt and Available Credit Facilities” for more details on the amendment. The Amended and Restated CA provided for senior unsecured credit facilities comprised of the following (i) a five-year revolving credit facility in an aggregate principal amount up to $1.115 billion, which matures November 2027, (ii) a five-year term loan A facility consisting of $200 million, which matures November 2027, and (iii) $185 million aggregate principal amount revolving credit facility which matured in May 2024.

As of July 31, 2024, we had approximately $918.6 million of debt outstanding, net of unamortized issuance costs of $0.5 million, and approximately $388.1 million of unused borrowing capacity under our Amended and Restated CA and other facilities. Our Amended and Restated CA contains certain restrictive covenants related to our consolidated leverage ratio and interest coverage ratio, which we were in compliance with as of July 31, 2024.

### Analysis of Historical Cash Flows

The following table shows the changes in our Unaudited Condensed Consolidated Statements of Cash Flows.

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash used in operating activities | **$(88,712)** | $(82,335) |
| Net cash used in investing activities | **(23,807)** | (25,742) |
| Net cash provided by financing activities | **101,589** | 105,814 |
| Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | **$798** | $2,257 |

Cash flow from operations is seasonally a use of cash in the first half of Wiley’s fiscal year principally due to the timing of collections for annual journal subscriptions, which typically occurs in the beginning of the second half of our fiscal year.

Free cash flow less product development spending helps assess our ability, over the long term, to create value for our shareholders, as it represents cash available to repay debt, pay common dividends, and fund share repurchases, and acquisitions. Below are the details of Free cash flow less product development spending.

### Free Cash Flow less Product Development Spending:

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Net cash used in operating activities** | **$(88,712)** | $(82,335) |
| Less: Additions to technology, property and equipment | **(14,502)** | (20,086) |
| Less: Product development spending | **(3,351)** | (3,747) |
| **Free cash flow less product development spending** | **$(106,565)** | $(106,168) |

### Net Cash Used in Operating Activities

The following is a summary of the $6.4 million change in Net cash used in operating activities for the three months ended July 31, 2024 compared with the three months ended July 31, 2023 (amounts in millions).

|  |  |
| --- | ---: |
| **Net cash used in operating activities – Three months ended July 31, 2023** | $(82.3) |
| Net loss adjusted for items to reconcile net loss to net cash used in operating activities, which would include such noncash items as depreciation and amortization, impairment of goodwill, (gains) losses on sale of businesses and impairment charges related to assets held-for-sale, restructuring charges, and the change in deferred taxes | (12.8) |
| Working capital changes: |  |
| Accounts receivable, net and contract liabilities | (24.7) |
| Accounts payable and accrued royalties | 44.3 |
| Changes in other assets and liabilities | (13.2) |
| **Net cash used in operating activities – Three months ended July 31, 2024** | **$(88.7)** |

The unfavorable change in accounts receivable, net and contract liabilities was primarily due to higher Adjusted Revenues, and the timing of invoicing and collections with customers.

The favorable change in accounts payable and accrued royalties was primarily due to the timing of payments.

The unfavorable changes in other assets and liabilities noted in the table above was primarily due to higher payments for annual incentive compensation in fiscal year 2025 related to the prior fiscal year, partially offset by a favorable impact related to income taxes.

Our negative working capital (current assets less current liabilities) was $296.0 million and $419.2 million as of July 31, 2024 and April 30, 2024, respectively. This $123.2 million change in negative working capital was primarily due to the seasonality of our business. The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance. The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of July 31, 2024 and as of April 30, 2024 includes $367.3 million and $483.8 million, respectively, primarily related to deferred subscription revenue for which cash was collected in advance.

Cash collected in advance for subscriptions is used by us for a number of purposes, including funding operations, capital expenditures, acquisitions, debt repayments, dividend payments, and share repurchases.

### Net Cash Used In Investing Activities

Net cash used in investing activities for the three months ended July 31, 2024 was $23.8 million compared to $25.7 million in the prior year. The decrease in net cash used in investing activities was primarily due to a decrease in cash used of $5.6 million for additions to technology, property and equipment, and cash proceeds from a life insurance settlement of $2.1 million in fiscal year 2025, partially offset by the net cash transferred in fiscal year 2025 related to the sale of businesses. See Note 3, "Divestitures" for further details.

### Net Cash Provided By Financing Activities

Net cash provided by financing activities was $101.6 million for the three months ended July 31, 2024 compared to $105.8 million for the three months ended July 31, 2023. This decrease in cash provided by financing activities was primarily due to an increase in cash used to repurchase shares of $2.5 million in fiscal year 2025, and lower net borrowings in fiscal year 2025 of $1.7 million.

In the three months ended July 31, 2024, we increased our quarterly dividend to shareholders to $1.41 per share annualized versus $1.40 per share annualized in the prior year.

The following table summarizes the shares repurchased of Class A and Class B Common Stock (shares in thousands):

|  | Three Months Ended July 31, 2024 | 2023 |
| --- | ---: | ---: |
| Shares repurchased – Class A | **295** | 301 |
| Shares repurchased – Class B | **—** | — |
| Average price – Class A and Class B | **$42.34** | $33.25 |

47

## Market risk

As filed, 5,338 characters.

We are exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is our policy to monitor these exposures and to use derivative financial investments and/or insurance contracts from time to time to reduce fluctuations in earnings and cash flows when it is deemed appropriate to do so. We do not use derivative financial instruments for trading or speculative purposes.

### Interest Rates

From time to time, we may use interest rate swaps, collars, or options to manage our exposure to fluctuations in interest rates. It is management’s intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives.

The information set forth in Note 16, “Derivatives Instruments and Hedging Activities,” of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption “Interest Rate Contracts,” is incorporated herein by reference.

On an annual basis, a hypothetical one percent change in interest rates for the $419.1 million of unhedged variable rate debt as of July 31, 2024 would affect net income and cash flow by approximately $3.2 million.

### Foreign Exchange Rates

Fluctuations in the currencies of countries where we operate outside the US may have a significant impact on financial results. We are primarily exposed to movements in British pound sterling, euros, Canadian and Australian dollars, and certain currencies in Asia. The statements of financial position of non-US business units are translated into US dollars using period-end exchange rates for assets and liabilities and the statements of income are translated into US dollars using weighted-average exchange rates for revenues and expenses.

Our significant investments in non-US businesses are exposed to foreign currency risk. Adjustments resulting from translating assets and liabilities are reported as a separate component of Accumulated other comprehensive loss, net of tax within Shareholders’ Equity under the caption Foreign currency translation adjustment.

During the three months ended July 31, 2024 and 2023, we recorded foreign currency translation gains in Accumulated other comprehensive loss, net of tax of approximately $15.0 million and $11.2 million, respectively, primarily as a result of the fluctuations of the US dollar relative to the British pound sterling.

Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses on the Unaudited Condensed Consolidated Statements of Net Loss as incurred. Under certain circumstances, we may enter into derivative financial instruments in the form of foreign currency forward contracts to hedge against specific transactions, including intercompany purchases and loans.

The information set forth in Note 16, “Derivatives Instruments and Hedging Activities,” of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption “Foreign Currency Contracts,” is incorporated herein by reference.

### Sales Return Reserves

The estimated allowance for print book sales returns is based upon historical return patterns, as well as current market trends in the businesses in which we operate. In connection with the estimated sales return reserves, we also include a related increase to inventory and a reduction to accrued royalties as a result of the expected returns.

The reserves are reflected in the following accounts of our Unaudited Condensed Consolidated Statements of Financial Position:

|  | July 31, 2024 | April 30, 2024 |
| --- | ---: | ---: |
| Increase in Inventories, net | **$7,578** | $7,833 |
| Decrease in Accrued royalties | **$(2,965)** | $(3,112) |
| Increase in Contract liabilities | **$24,023** | $25,393 |
| Print book sales return reserve net liability balance | **$(13,480)** | $(14,448) |

A one percent change in the estimated sales return rate could affect net income by approximately $0.6 million. A change in the pattern or trends in returns could affect the estimated allowance.

### Customer Credit Risk

In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is principally remitted to us between the months of December and April. Although currently we have minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 16% of total annual consolidated revenue, and no one affiliated group of subscription agents accounts for more than 10% of total annual consolidated revenue.

Our book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. No single book customer accounts for more than 7% of total consolidated revenue and 22% of accounts receivable at July 31, 2024. The top 10 book customers account for approximately 10% of total consolidated revenue and approximately 35% of accounts receivable at July 31, 2024.

## Controls and procedures

As filed, 1,352 characters.

The Company’s Chief Executive Officer and Chief Financial Officer, together with the Chief Accounting Officer and other members of the Company’s management, have conducted an evaluation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the quarter ended July 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 450 characters.

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024, that if they were to occur, could materially adversely affect our businesses, consolidated financial condition, and results of operations. For a discussion of our risk factors, refer to Item 1A. “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024.

Filed Sep 6, 2024.
Source: SEC EDGAR, the filing index for accession 0000107140-24-000189. Last ingested by Listed: Nov 10, 2026, 22:22 ET. No prices; not investment advice.