John Wiley & Sons: Leveraging AI to Build a Defensible, High-Margin Future

John Wiley & Sons (WLY) is transforming itself into a high-margin, AI-driven knowledge powerhouse. With its blend of strategic AI licensing deals, recurring revenue streams, and operational discipline, the company is positioning itself as a rare blend of defensive stability and growth-oriented innovation. Let's unpack why WLY is a compelling long-term investment.

The AI Pivot: From Publishing to Platform Powerhouse

Wiley's AI licensing revenue skyrocketed to $40 million in fiscal 2025, up 74% from the prior year. This growth stems from partnerships with tech giants like Amazon Web Services and Perplexity, as well as vertical-specific projects (e.g., spectral data tools for chemists and AI models for Earth observation). These deals not only generate high-margin revenue but also expand Wiley's footprint in corporate R&D ecosystems—a sector with minimal competition for its deep, trusted content library.

The Learning segment, while facing headwinds from declining legacy products, now derives meaningful growth from AI agreements. For instance, a recent $18 million deal in Q4 2025 will contribute $9 million in revenue this quarter alone, signaling sustained demand. Meanwhile, vertical-specific AI pilots—like healthcare and pharmaceutical tools—generated $1 million in recurring revenue last year. These projects are early-stage but have the potential to scale as industries increasingly rely on AI for innovation.

Margin Expansion: A Story of Discipline and Leverage

Wiley's operational efficiency is striking. Its Adjusted EBITDA margin rose to 24% in 2025, up from 22.8% in 2024, and management aims to push this to 25.5%-26.5% by 2026. This expansion is driven by:
- Cost-cutting: Corporate expenses fell 4% annually due to tech modernization and process streamlining.
- Recurring revenue leverage: Over 50% of revenue is recurring, with digital products (80% of total revenue) and multi-year journal subscriptions insulating the business from volatility.
- Segment improvements: The Research segment's margin hit 32.1%, while Learning's margin surged to 37.4%, reflecting disciplined pricing and cost control.

Recurring Revenue: The Foundation of Stability

Wiley's recurring revenue model is its secret weapon. In Research, two-thirds of revenue comes from predictable streams like journal renewals and open-access publishing, which grew at double-digit rates. Submissions to journals rose 19% in 2025, and published articles increased 8%, underscoring strong demand.

The Academic business is also thriving, with inclusive access models (digital courseware bundled into tuition) driving growth. Even in the Learning segment—where legacy products like backfile sales are shrinking—AI licensing and recurring digital tools offset declines, proving the model's adaptability.

R&D-Driven Growth: From Cloud to Corporate Markets

Wiley is investing strategically in cloud-based platforms and AI partnerships to future-proof its business. For example:
- A new research publishing system streamlined workflows, cutting costs while improving efficiency.
- Spectral data programs (critical for chemical research) are growing at double-digit rates.
- Corporate partnerships, like its work with the European Space Agency, embed Wiley's content into AI models used by Fortune 500 companies.

These initiatives don't just boost revenue—they create a defensible moat. Competitors can't replicate Wiley's 218-year-old content library or its trusted relationships with researchers and institutions.

Financial Health: Cash Flow King with Generous Shareholder Returns

Wiley's free cash flow hit $126 million in 2025, a 10% increase, and it's targeting $200 million by 2026. With net debt/EBITDA at a conservative 1.8x, the balance sheet is pristine. Shareholders are rewarded through:
- Dividends: A 3.5% yield, increased for the 31st consecutive year.
- Buybacks: $60 million in repurchases in 2025, nearly 1.4 million shares retired.

Why WLY is a Buy Now

Wiley offers a rare combination of defensive stability and high-margin growth:
- Recurring revenue and margin expansion insulate it from economic cycles.
- AI licensing and R&D partnerships open new markets, reducing reliance on traditional publishing.
- Free cash flow and shareholder returns ensure capital is put to work wisely.

Risks include execution delays in AI projects and regulatory changes, but Wiley's diversified revenue streams and strong balance sheet mitigate these.

Final Take: A 5-Star Long-Term Play

Wiley isn't just a publisher—it's a knowledge infrastructure provider. With AI unlocking new revenue streams, margins expanding, and recurring cash flows compounding, WLY is a buy for investors seeking durable growth. The stock trades at 16x forward earnings, a discount to its growth profile. Pair this with dividend growth and buybacks, and WLY is a rare gem in a volatile market: a stock that rewards patience and thrives in any economic climate.