Wiley Shares Rebound as AI-Driven Earnings Beat Tempers Revenue Warning
Research segment strength and cost cuts help offset a sharp decline in the company's educational Learning division, leading to a mixed investor reaction.
Shares of John Wiley & Sons (NYSE: WLY) recovered from pre-market losses to trade higher on Thursday after the publishing and research giant posted second-quarter earnings that surpassed analyst expectations but trimmed its full-year revenue forecast, revealing a stark divergence in the performance of its core divisions.
The company’s stock, which initially fell over 2% in pre-market trading, climbed more than 1% to $38.28 by the afternoon. The reversal reflects a complex quarterly report where robust growth in its Research segment, powered by artificial intelligence deals, was weighed down by significant headwinds in its traditional Learning business.
Wiley reported adjusted earnings per share of $1.10 for the quarter ending October 31, comfortably beating Wall Street estimates of $0.97. Revenue came in at $421.8 million, slightly ahead of the consensus forecast of $416.4 million. The positive results were largely driven by the company's Research division, which saw a 6% increase in revenue, bolstered by a $6 million content licensing project for AI model training.
This move into AI licensing signals a strategic adaptation for the 200-year-old publisher, positioning its vast repository of academic and scientific content as a valuable resource for training large language models. The company noted it has realized $35 million year-to-date from such AI-related projects and is expanding its partnerships, including collaborations with Amazon Web Services and Anthropic.
However, the strength in research was offset by an 11% decline in Wiley's Learning segment, which provides educational materials and digital courseware. Management attributed the slump to "market-related softness," including changes in inventory practices at Amazon, weaker consumer spending, and enrollment pressures in certain academic disciplines. This weakness prompted the company to narrow its full-year revenue outlook from low-to-mid single-digit growth to exclusively "low-single-digit growth."
Despite the lowered revenue expectations, Wiley reaffirmed its guidance for adjusted EPS and free cash flow, pointing to a successful cost-cutting program. According to its earnings release, the company achieved significant margin expansion, with adjusted operating margin increasing by 250 basis points through disciplined operational efficiency.
"Our strong Q2 results and year-to-date performance reflect sharp execution on our key strategic priorities," said Brian Napack, President and CEO, in a statement. He emphasized the growth in Research and momentum in AI as key drivers that, combined with cost discipline, are enabling the company to navigate challenges in the education sector.
Underscoring its confidence, Wiley also boosted its return of capital to shareholders, repurchasing $21 million of its shares in the quarter—a 69% increase over the same period last year. The company also recently raised its dividend for the 32nd consecutive year.
For investors, Wiley presents a tale of two businesses. The future trajectory of its stock will likely depend on whether the high-growth, AI-powered Research and Platforms segment can continue to innovate and expand its lead, sufficiently outpacing the structural pressures facing its legacy education-focused operations.