WLY Q3 Deep Dive: Research and AI Growth Offsets Learning Segment Weakness

Academic publishing company John Wiley & Sons (NYSE:WLY) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 1.1% year on year to $421.8 million. Its non-GAAP profit of $1.10 per share was 13.4% above analysts’ consensus estimates.

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StockStory’s Take

Wiley’s third quarter results reflected a mix of strong momentum in its research business and continued headwinds in its learning segment. Management credited robust growth in research publishing and demand for AI content licensing as key drivers, while acknowledging persistent challenges in learning due to shifting retailer inventory strategies and softer consumer spending. CEO Matthew Kissner pointed to “another AI licensing project for an existing LLM customer” and highlighted that research volumes remain at “record levels worldwide,” but also described the year for learning as “unusual,” attributing declines to external factors such as Amazon’s inventory management and cyclical consumer demand.

Looking ahead, Wiley’s guidance is anchored by optimism in research growth and expanding AI opportunities, but tempered by expectations for continued learning weakness. Management expects research to benefit from high article submissions, growing open access demand, and partnerships with leading AI firms. CFO Craig Albright emphasized ongoing cost discipline and margin expansion efforts, stating that free cash flow improvements and capital allocation will support both reinvestment and shareholder returns. However, management is closely monitoring trends in higher education enrollment and corporate training demand, signaling a watchful stance toward macroeconomic pressures.

Key Insights from Management’s Remarks

Wiley management attributed the quarter’s outcome to research strength, new AI partnerships, and operational discipline, while learning faced cyclical and retailer-driven headwinds.

• Research drives growth: Research publishing saw strong global demand, with article submissions up 28% and double-digit growth in open access publishing. Management noted that 80% of volume is international, with China and India showing rapid gains and Brazil highlighted for expansive nationwide agreements.
• AI licensing momentum: Wiley executed another licensing deal for AI model training, putting the company close to $100 million in AI training revenue in less than two years. The company’s AI gateway platform, launched with partners like Anthropic and AWS, aims to deepen recurring corporate subscriptions.
• Learning segment declines: The learning division continued to face challenges, driven by Amazon’s inventory adjustments, soft consumer spending, and an 8% drop in computer science enrollments. Management views most of these pressures as cyclical, though some academic trends may prove longer-lasting.
• Operational efficiency gains: Through technology transformation and AI-driven productivity improvements, Wiley expanded its operating margin. Actions included automating manual processes and reducing corporate costs across technology, HR, and finance.
• Strategic capital allocation: Wiley accelerated share repurchases and acquired a high-impact journal, strengthening its position in growth areas like optics and photonics. Management cited a disciplined approach to balancing buybacks, reinvestment, and debt reduction as central to its strategy.

Drivers of Future Performance

Management expects future results to be shaped by resilient research demand, AI monetization, and ongoing operational discipline, while learning faces cyclical recovery challenges.

• Research and AI expansion: Wiley sees robust research activity and growing AI licensing opportunities as core to future growth. High submission rates and new partnerships with AI developers are expected to support recurring revenue, particularly as corporate R&D clients adopt Wiley’s content for AI applications.
• Learning recovery uncertain: While inventory normalization at retailers may ease some pressure, management remains cautious about a quick rebound in learning due to persistent soft professional demand and enrollment declines in select disciplines. The segment’s outlook is tied to broader macroeconomic and education trends.
• Margin and cash flow focus: Operational efficiency initiatives, including technology consolidation and AI-driven automation, are expected to drive margin improvement and free cash flow. Management projects capital allocation will prioritize both reinvestment in high-growth areas and disciplined shareholder returns.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be watching (1) the pace of AI licensing deals and adoption of Wiley’s AI gateway by corporate clients, (2) stabilization or improvement in the learning segment as retailer inventory trends normalize, and (3) continued growth in research submissions and open access publishing. Execution on operational efficiency and progress in international markets will also be key signposts for sustained performance.

Wiley currently trades at $34.95, down from $37.89 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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