Wiley (WLY): A Buy Before Earnings Amid AI-Driven Revenue Tailwinds and Margin Expansion

The global knowledge economy is undergoing a profound transformation, with artificial intelligence (AI) reshaping industries and redefining competitive advantages. In this evolving landscape, John Wiley & Sons (WLY) stands out as a strategic player, leveraging its research and publishing expertise to capitalize on AI-driven demand. Recent financial results underscore Wiley's ability to navigate macroeconomic headwinds while expanding margins and accelerating innovation. With a compelling mix of recurring revenue models, AI licensing growth, and disciplined capital allocation, Wiley presents a compelling case for pre-earnings entry.

AI Licensing and Research Segment Resilience

Wiley's Research segment has emerged as a cornerstone of its growth strategy, driven by open-access publishing and AI licensing initiatives. In Q3 2025, the segment reported a 5% revenue increase at constant currency, with AI licensing contributing $9 million to the quarter and $30 million year-to-date. This performance highlights the company's ability to monetize AI-related content and tools, a trend that aligns with the broader market's appetite for AI-driven solutions.

The segment's adjusted EBITDA margin expanded to 32.7% in Q3 2025, a 180-basis-point improvement year-over-year. This margin expansion reflects the power of Wiley's recurring revenue model, which accounts for 75% of the segment's output. Such resilience is critical in an environment where discretionary spending remains volatile, as it ensures stable cash flows and pricing power across economic cycles.

Margin Expansion and Strategic Cost Rationalization

Wiley's margin trajectory has been further bolstered by cost rationalization efforts, particularly in corporate shared services. The company's adjusted EBITDA margin for the full business improved to 23.2% in Q3 2025, up 50 basis points from the prior year. This progress has prompted management to raise its 2026 margin target to 25% or higher, signaling confidence in the sustainability of its cost discipline and operational efficiency.

The Learning segment, while facing a 6% revenue decline in Q3 2025, masked broader operational improvements. The company's operating income rebounded to $52 million in the quarter, reversing a $46 million loss in Q3 2024. This turnaround underscores Wiley's ability to prioritize high-margin activities and divest underperforming assets, such as the University Services division, which generated $120 million in cash proceeds in Q4 2025.

Capital Allocation and Shareholder Returns

Wiley's commitment to disciplined capital allocation further strengthens its investment case. In Q4 2025, the company executed $60 million in share repurchases, a 34% increase compared to the prior year. Total shareholder returns for the period reached $137 million through dividends and buybacks. Management has signaled that 2025 buybacks will remain "opportunistic," balancing liquidity needs with strategic reinvestment in AI and open-access initiatives.

The proceeds from the University Services divestiture are being directed toward debt reduction, which will lower annual interest expenses and enhance financial flexibility. This approach aligns with a broader trend among knowledge-based firms to optimize balance sheets while investing in high-growth areas.

A Pre-Earnings Case for Wiley

With earnings season approaching, Wiley's fundamentals present a compelling setup for investors. The company's guidance reaffirmation-despite a challenging macroeconomic environment-demonstrates operational resilience. The Research segment's 32.7% EBITDA margin and AI licensing revenue of $30 million highlight its ability to generate value from emerging technologies. Meanwhile, Q4 demand indicators, including robust buyback activity and debt reduction, suggest a company in motion.

For investors seeking exposure to the AI-driven knowledge economy, Wiley offers a rare combination of recurring revenue stability, margin expansion, and strategic agility. As the market anticipates Q4 2025 results, the case for a pre-earnings entry is reinforced by Wiley's track record of navigating uncertainty while capitalizing on long-term trends.