Wiley's Q1 2026 Earnings Call: Contradictions Emerge in AI Strategy, Research Revenue Outlook, and Learning Business Momentum

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: Adjusted revenue up 1% YOY
• EPS: Adjusted EPS up 2% YOY

Guidance:

• Reaffirmed FY26 outlook: revenue growth low–mid single digits.
• Adjusted EBITDA margin 25.5%–26.5% (vs 24% FY25).
• Adjusted EPS $3.90–$4.35 (vs $3.64 FY25).
• Free cash flow ≈ $200M; CapEx ~flat vs $77M FY25.
• Corporate expenses to decline from Q2 as cost savings ramp.
• AI revenue $29M in Q1; variability expected; demand robust; inference subscriptions to build over time.
• Journal renewal season (CY2026) runs Nov–Apr; strong OA momentum and ~6+ month publishing backlog.

Business Commentary:

* AI Licensing Growth: - Wiley reported $29,000,000 in AI licensing revenue for Q1, a significant increase from $17,000,000 in the prior year period. - The growth was driven by strategic partnerships, including a landmark AI licensing project worth $20,000,000, and expansion in the corporate R&D market.

• Journal Renewals and Open Access Demand:
• Wiley achieved a strong journal renewal season, with a focus on volume and pricing growth.

• This was fueled by a 50% year-on-year revenue growth in its open access flagship journal, Advanced Science, and a record month for Open Access submissions in July.

• Operational Transformation and Cost Management:

• Wiley's operational cost management and savings started to ramp up, which will support margin expansion in Q2.

• The company continues to implement cost-saving measures, such as the scaled migration of its new research publishing platform, the Research Exchange.

• Dividend and Share Repurchases:

• Wiley increased its annual dividend for the 32nd consecutive year and authorized a $250,000,000 share repurchase program.
• These actions demonstrate the company's commitment to returning cash to shareholders and confidence in its financial position.

Sentiment Analysis:

• Management reaffirmed full-year guidance and highlighted $29M AI revenue in Q1 with robust demand. Adjusted revenue grew 1% and adjusted EPS rose 2%, but adjusted EBITDA declined 3% and Learning revenue fell 8% on professional retail softness. Temporary $4M corporate costs and mix headwinds (Nexus margins ~45% vs ~75% for own content) weighed on margins. Confidence expressed for Q2 and full year.

Q&A:

• Question from Daniel Moore (CJS Securities): Can you elaborate on the Anthropic partnership—content licensing into Claude vs co-developing tools?
  Response: Wiley is integrating institutional access to Claude, connecting users to a Wiley vectorized database of authoritative content to embed safe, high-quality sources in researcher/student workflows.

• Question from Daniel Moore (CJS Securities): What is the revenue model for the Anthropic agreement?
  Response: It primarily enhances and upsells institutional library subscriptions rather than serving as a major standalone revenue stream initially.

• Question from Daniel Moore (CJS Securities): Will this change your AI investment plans or development spending trajectory?
  Response: No major increase; focus is tool-agnostic integrations and inexpensive pilots, with modernization to make content easily accessible rather than building proprietary AI tools.

• Question from Daniel Moore (CJS Securities): Of the $16M Nexus revenue, how much was Wiley vs partner content, and what’s the margin impact?
  Response: The $20M deal blended Wiley and partner content; $16M was partner (Nexus). Nexus deals carry ~45% EBITDA margins versus ~75% for Wiley-only content; it’s additive to, not a replacement for, Wiley content deals.

• Question from Daniel Moore (CJS Securities): How are journal renewals for the upcoming cycle trending?
  Response: Early in the season, outlook is solid and guidance reaffirmed; no concerning signals so far.

• Question from Daniel Moore (CJS Securities): Research Publishing declined 1% despite strong submissions/output—when does that translate to growth?
  Response: Q1 is seasonally small and lapped a $5M prior-year renewal benefit; underlying trends align with 3–4% market growth and strong OA momentum.

• Question from Daniel Moore (CJS Securities): What’s driving professional publishing softness and how persistent could it be?
  Response: Retail channel demand was weaker, potentially macro-related; monitoring closely while other Learning areas remain stable and enrollments steady.

• Question from Daniel Moore (CJS Securities): Are the ~$4M higher corporate costs nonrecurring?
  Response: Yes; they reflect completed strategic consulting projects. Corporate spend should decline from Q2 as savings flow through.

• Question from Daniel Moore (CJS Securities): Does higher Nexus revenue affect FY26 margin outlook?
  Response: Minimal impact; overall margin expansion plans remain on track.

• Question from Daniel Moore (CJS Securities): How are you prioritizing capital allocation and buybacks given the stock’s valuation?
  Response: Maintain dividend, be opportunistic with buybacks under increased authorization, reduce debt where sensible, and invest in high-return organic growth.