Wiley's AI Paradox: Digital Acceleration vs Learning Drag in Growth Offensive Context

The latest results present a clear split between strength and weakness at John Wiley & Sons. Earnings per share hit $1.10, comfortably beating analyst expectations by 10%, though this was offset by revenue coming in slightly low at $422 million, just below forecasts. The divergence lies in the segments: the research arm delivered solid 5% growth, fueled by new AI licensing deals and robust demand. Conversely, the learning segment stumbled, slipping 11% as Amazon reduced inventory orders and broader consumer spending remained soft. This gap forced the company to leverage cost controls, driving operating income up 14% to $73 million despite the top-line pressure. Those efficiencies also powered a significant 250 basis point expansion in adjusted operating margins, reaching 18.8%. While AI revenue showed promise, nearing $100 million in two years, investors reacted nervously to the learning segment's struggles and the revenue miss, pushing the stock down 2.35% pre-market.

Management remains confident, however, viewing the learning decline as cyclical and expecting moderation in the second half of 2026 as Amazon's buying patterns stabilize.

AI Revenue Surge Powers Wiley's Margin Expansion

Wiley's accelerated digital transformation is gaining significant traction, with artificial intelligence emerging as a core engine of recent growth. The company achieved a notable milestone by reaching $100 million in AI licensing revenue within just under two years, a pace that management now expects to surpass the $40 million mark for fiscal year 2025. This rapid scaling of AI-generated income is directly contributing to stronger profitability. Specifically, Wiley reported a 250 basis point expansion in margins during the second quarter of 2026, a gain explicitly attributed to the robust performance of its AI initiatives alongside solid research licensing and submission volumes.

The strong AI revenue stream is not only boosting top-line growth but also enhancing the core research segment's contribution to Wiley's overall financial health. This momentum in AI and research services provides a critical offset against headwinds encountered elsewhere. Notably, the Learning segment faced an 11% decline, primarily due to shifts in Amazon inventory management and persistent consumer demand weakness, though leadership anticipates these pressures will moderate in the second half of the year. Despite the Learning segment challenges, Wiley remains focused on returning capital to shareholders, executing share repurchases worth $21 million in the quarter – a 69% increase compared to the prior-year period – bringing cumulative returns to $73 million through buybacks and dividends year-to-date.

The impressive trajectory of Wiley's AI business underscores the effectiveness of its strategic pivot, demonstrating both rapid revenue generation and positive margin impact. However, the sustainability of this AI-driven growth and its ability to fully counterbalance ongoing weaknesses in the Learning segment remain key watchpoints for investors assessing the company's overall trajectory and the execution risks inherent in scaling new technology platforms.

Learning Segment Vulnerabilities & Recovery Pathways

Meanwhile, Wiley's learning segment faces headwinds from external market pressures. The education-focused division slid 11% in Q2 2026, according to its earnings report, primarily due to Amazon's inventory reductions and broad consumer spending weakness. This creates an uneven growth profile for Wiley, as the segment's performance remains highly sensitive to the e-commerce giant's purchasing decisions. Company leadership acknowledges this dependency risk, noting that Amazon accounted for a significant portion of their learning segment sales in recent years. While management expects the decline to moderate in H2 2026 as Amazon's buying patterns normalize, full-year revenue for this unit will still remain below last year's levels. The research segment's 6% growth-including $6 million in AI-related income-helped offset the learning segment's weakness, demonstrating how technology initiatives can provide stability when core businesses face pressure. For investors, this vulnerability underscores the importance of monitoring Amazon's inventory strategy and consumer confidence metrics, while viewing Wiley's AI investments as a potential offset to structural challenges in traditional education publishing.

Growth Thesis Risk & Scenario Framework

Wiley's growth thesis is under pressure after mixed Q2 2026 results revealed both resilience and vulnerabilities. The company beat EPS forecasts by 10% at $1.10 but missed revenue estimates by 0.71% to $422 million. This performance triggered a 2.35% pre-market stock decline, reflecting investor skepticism about the learning segment's struggles and AI scalability.

The research segment grew 5%, driven by strong demand for AI licensing and submissions. AI revenue neared $100 million in two years, with $6 million generated in Q2 alone, signaling rising penetration in academic markets. However, this $6 million base remains modest compared to the segment's overall size, highlighting scalability limits.

Meanwhile, the learning segment declined 11% due to Amazon's inventory reductions and weak consumer spending. Management expects this decline to moderate in H2 2026, but full-year results may stay pressured, underscoring digital transition pace concerns.

Cost controls helped operating income jump 14% to $73 million, with adjusted operating margins expanding 250 basis points to 18.8%. The company reaffirmed full-year EBITDA guidance at 25.5-26.5%, showing confidence in its long-term logic.

Share repurchases surged 69% to $21 million, part of $73 million returned to shareholders via buybacks and dividends. This capital return boost follows AI revenue projected to exceed $40 million in FY25, offering upside if execution remains strong. However, risks linger: deep Amazon dependency, limited AI scalability at the current base, and uncertainties around digital adoption trends could dampen growth if not addressed.