Q3 2021 John Wiley & Sons Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to Wiley third quarter 2021 earnings call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
I'll ask the question. During this time, you will need to press star and the number one on your telephone keypad.
If you require any further assistance. Please press star zero I would now like to turn the call over to <unk>, Vice President of Investor Relations, Brian Campbell. Please go ahead.
Thank you Hello, everyone and welcome to the wildly third quarter 2021 guidance update.
Mr. Brian the APAC, President and Chief Executive Officer, John <unk>, Chief Financial Officer.
John and John will make the formal comments and then we'll open up for questions.
The reminders to start.
All of it being recorded and May include forward looking statements you.
You Shouldnt rely on the statements as actual results may differ materially and are subject to factors discussed on our SEC filings.
The company does not undertake any obligation to update or revise forward looking statements to reflect subsequent events or circumstances.
Also let me provide non-GAAP measures of the supplement to evaluate underlying operating profitability and performance trends.
The measures do not have standardized meanings prescribed by U S GAAP.
And therefore may not be comparable to similar measures used by other companies.
Nor should they be viewed as alternatives the measures under GAAP.
Unless otherwise noted we will refer to non-GAAP metrics on the call and variances are on a year over year basis and will exclude the impact of currency.
After the call of a copy of this presentation and the playback of the webcast will be available on our Investor Relations webpage on.
I'll now turn the call over the wireless President and CEO, Brian net bank.
Good morning, everyone. Thanks for joining us today.
While the continued to deliver strong results in the third quarter based on the consistent execution of our customer centric strategies and the research and education.
More than a year into the pandemic. It is clear that Wiley is very well positioned to help our core customers researchers and learners achieve their goal in a very different and sometimes very challenging world.
Learn of the settled into online and hybrid education like never before.
Wiley.
They need to succeed on their personal career journeys.
Researchers of conducting their work and increasingly virtual and open way and Wiley has what they need to get the discoveries out to the world as quickly as possible, where they can drive understanding of innovation.
Without doubt the Covid pandemic has demonstrated yet again, the enduring strength of the research and education markets. The.
The demand for high quality peer reviewed research continues to grow and the.
<unk> has never been more urgent for affordable education that connects people directly to good jobs.
While he is committed to making the overall knowledge ecosystem more productive.
And all of that we do our goal is the increase the speed volume and impact of research and education.
By succeeding at debt, we will achieve our company's mission, which is to unlock human potential.
Today Wiley is a digital company that draws 83% of its revenue from digital products and services, which grew at 7% in total over the past 12 months.
Overall, 55% of Wiley revenue today is recurring.
Our digital research content on platforms generate billions of user sessions, each year and our digital courseware of online degree programs support greater affordability and impact on education, and thus rapidly increasing unit volume.
Beyond revenue growth of digital revenue streams delivered strong profitability based on the attractive sustainable business models.
In the past year, we've seen an acceleration of three longstanding trend that define our market the move toward open research in a more productive research ecosystem the <unk>.
Gration to online and hybrid education, and University and corporate settings.
The increase the adoption of digital tools and courseware needed the power online and hybrid education.
Our strategy the organized around these trends and they are paying off.
We are capitalizing on the move to open the research today under.
Under the paid of published OE model revenue is a direct function of price and quantity of articles published we are achieving significant volume growth based upon the draw of our strong brands and the execution of our publishing strategy supported by the market strong underlying article growth.
Combined with strong pricing power. This volume growth is allowing us to achieve double digit revenue growth.
The recent acquisition of Hendawi further strengthens our growth potential I will talk about this a bit later.
The second positive trend the growth of online degrees in hybrid education has accelerated significantly in the past year helped along by the pandemic.
Wiley has long been a gold standard strategic partner for universities, helping them to design and deliver effective degree programs and demand for these services continues to rise the school's plan theyre increasingly digital futures.
This has translated into double digit growth in online enrolment in the student starts both key indicators for future growth.
The third trend towards digital curriculum reflects the maturation of online content and courseware as the preferred media the effective learning.
This trend, which has been ongoing for years has benefited from the strong acceleration of online Mark online education.
Happily the growth of digital content and courseware is outpacing the decline of print over the past fiscal year.
It seems that the world has figured out that our digital courseware simply of more effective product that can be delivered at a lower price.
The print products.
On a point of view of products like our XI book when more adoption.
And then gained significantly higher sell through and each adoption by obsoleting substitute such as OCR use book and rentals.
As you can see our strategies are directly aligned with the core market trends and we're confident in the direction that we're headed.
The Wiley team delivered another strong quarter of execution and performance revenue was up 2% adjusted EBITDA was up 7% and adjusted EPS was up 6%.
Our Q3 revenue performance was driven by research with Hendawi contributing $2 million of inorganic revenue and strong organic growth in education services.
Solid adjusted EPS growth in the quarter was the result of topline revenue performance lower costs from business optimization, and Covid related savings offsetting 12 dilution related to the <unk> acquisition.
Our GAAP EPS performance was impacted by of $21 million restructuring charge, primarily related to the reduction of our real estate footprint as we shift to more of a hybrid working model across Wiley.
For the first nine months of fiscal 'twenty, one revenue was up 3% over prior year to $1 4 billion.
Adjusted EBITDA was up 16% to $309 million and adjusted EPS was up 20 per 20% to $2 nine.
Free cash flow year to date with $80 million or <unk> $74 million higher than prior year due to strong earnings performance and lower Capex.
Our EBITDA margin for the nine month period of 22% compared to 19% in the prior year.
So overall, we're pleased with where we are after three quarters.
Now, let's take a look at our three segments.
The key highlights for research publishing the platforms include our strong ongoing publishing output the strategic momentum in our platforms and our corporate offerings and the acquisition of <unk>.
Revenue was up 1% in the quarter and 4% year to date.
Research adjusted EBITDA was even with prior year as we targeted additional investment in improving our publishing infrastructure and workflows.
Our research adjusted EBITDA margin was for the quarter, 34%.
Fully in line with our expectations, we've seen modest COVID-19 related pressure on our calendar year 'twenty, one journal subscription renewals.
Of this pressure was offset by continued double digit growth in open access publishing and corporate solutions.
Research platforms continued to perform well with revenue up 4%.
Research article output continues to grow nicely of 17% year to date and research consumption being the usage of the Wiley online library was up over 20%.
Context, our world class litter on the content platform hosted over 4 billion user sessions in the past 12 months and maintained the 99% client retention rate.
Notably our strategic read on publish agreements are succeeding generating publishing volumes from these deals that are exceeding expectations.
In the quarter, we signed a multi year reading published agreement with Italy, when we see a good pipeline ahead.
We continue to see opportunities in Asia the <unk>.
Recently entered a 10 year strategic partnership with the Chinese Medical Association publishing House, one of China's leading health Science publishers.
We will be providing the online home for the entire CMA publishing portfolio and we will also launch 10 co published open access journals.
This important deal Leverages, our global leadership in publishing and platforms and further extend what extends Wiley unmatched Global network of Society University and corporate partners.
One of these expanding research platforms offering includes the hosting and management of career centers for our partners that help researchers and other job seekers connect with great jobs.
In the quarter, we added the American College of veterinary internal medicine, and the American hence the large anthropological association among others to a growing list of career center clients. As you can tell career advancement is the consistent theme across Wiley in both education and research and here, we are helping the REIT.
Search community to connect directly with their next jobs.
And the final months of the year, we are focused on closing out calendar year 'twenty, one subscription renewals, while continuing to advance our volume based publishing strategies and as always improving our efficiency.
For the nine months research adjusted EBITDA is up 11% for an EBITDA margin of 36%, although we anticipate of ramp up of investment in Q4 related to enabling publishing growth and the integration of handout.
Now I want to give you some insight into this recent acquisition.
And now is one of the world's fastest growing scientific research publishers in the true innovator in open access publishing in fact and value of the first subscription publisher to convert its entire portfolio of journals. The OE nearly 15 years ago.
This addition, augments our strategy of three very important way.
And Valerie brings a fast growing portfolio of over 200 open access journals that complements Wiley journal portfolio extremely well by.
By expanding our portfolio and strategic discipline, we can seamlessly provide a high quality publishing home for more of the articles that are submitted to wiley growing our output and increasing author satisfaction.
Second as an early leader in open access and value has built an innovative publishing platform and of publishing process that is highly efficient very user friendly.
Just help them to grow fast and profitably.
When combined with wildly strong platforms and services the Hendawi platform and their approach will enhance the efficiency of the productivity and the customer satisfaction of the publishing process across Wiley.
Today in value provides the platform services to other publishers, who are adapting to the OE transition.
This can represent a real struggle for survival for many publishers in the society.
So the third way that the valley augments our strategy is by enhancing Wiley research platforms business by increasing the breadth of the offerings that we can provide to our market leading network of society and publishing partners.
We're very excited about joining forces with the excellent team at <unk> and leveraging all of that they bring the wireless.
Third quarter highlights for academic and professional learning include continued strong digital growth in education publishing and an improving outlook for professional learning as it rebounds from Covid, along with the overall margin gains from optimization.
Revenue was down 4% for the quarter due to declines in printed course material continued exam cancellations and test prep and delayed purchasing pattern for digital products when compared to print.
The print decline offset of 11% growth in digital content, including 45% growth inside of books courseware.
Digital courseware Activations were up over 20% in the quarter and year to date.
The nations are a key performance metric for us and I'm pleased to report that our core Wiley plus platform recorded 1 million Activations recently for the first time in its history and XI book has now surpassed 325000 users at <unk> at over 900 University.
Professional learning so a significant improvement this quarter results for trade publishing with growth entitle output and E. Book sales are dummies franchise continued to be a bright spot with double digit revenue growth driven by timely publishing of new titles on the hot topics and to stop investing in remote learning.
We also saw positive developments in corporate learning with significant up sell growth of existing clients and a strong ship the virtual delivery of corporate training.
This is a very positive development for this increasingly digital business.
Adjusted EBITDA for the quarter rose, 2% per the EBITDA margin of 29% year to date revenue on adjusted EBITDA, We're down 7% and 8% mainly due to COVID-19 related challenges.
In the fourth quarter, we will continue to execute on our strategy to grow digital content and courseware of wet as always a particular focus on high demand career disciplines.
Education services had a strong third quarter with double digit growth in online enrollment strong organic revenue growth and margins and the addition of new degree programs and the University partnerships.
Revenue rose, 24% or 13% organically driven by 15% growth in student enrollment new student enrollment in our existing programs grew 29% an important leading indicator of future revenue growth.
We signed full service partnerships with Tel Aviv University in Israel, Lebanon American University in Lebanon, and in the U S, New Mexico Highlands University and Springhill College.
We're also we also added a partnership with New York University for Unbundled services, Wiley will support undergraduate graduate and doctoral online programs at the schools and a variety of high demand disciplines like healthcare the computer science.
Our focus on driving strong profitable growth continues to bear fruit with an adjusted EBITDA margin of 19%.
This achievement, coupled coupled with accelerating revenue momentum reflects our focus on building a strong growth business for the long term.
We're doing it through our broad partner reach and our relentless focus on excellent outcome through the student journey pre application all the way through graduation, and in fact career success.
Wiley them three our last mile training service is gaining momentum as corporate demand for tech talent returns to its strength.
As a reminder, M. Three one of the <unk> III addresses one of the global economy greatest needs by finding training and placing job ready tech talent with leading corporations.
Placement growth is accelerating as companies continue to wrestle with the dearth of IP and digital skills in the workforce, we signed three new corporate clients this quarter, including two very important fortune 500 companies and we see a growing pipeline ahead as companies plan for the post Covid economy.
In the fourth quarter in education services, we anticipate strong online enrollment growth to continue and the demand for online programs to remain high.
So cross Wiley our global team delivered another strong quarter of execution efficiency and momentum.
I'll now pass the call over to John.
Thank you, Brian and good morning, everyone as Brian noted our team continues to effectively execute on our growth strategies and business optimization initiatives delivering favorable results and building momentum.
Our strong balance sheet consistency of annual cash flows and ample liquidity enable us to confidently invest acquire and return cash to shareholders.
Our improved year to date earnings reflect of 15% increase in adjusted EBITDA, including a 240 basis point improvement in our adjusted EBITDA margins of nearly 22%.
Adjusted EPS growth of 22% contributed to cash flow performance well ahead of prior year with cash from operations and free cash flow favorable to prior year by $66 million and $75 million respectively.
Capital expenditures, including technology property and equipment and product development spending.
$75 million for the nine months period running $8 million lower than prior year.
We continue to expect full year capital expenditures to be around the $100 million.
With the investment focused on developing and enhancing tech enabled products and services in our core growth areas.
On optimizing workflows, particularly in research.
We acquired Hendawi of this quarter for $298 million funded by cash on hand, and borrowings from our existing revolving credit facility.
As noted at the time of the acquisition Hendawi attractive financial profile includes strong revenue growth and EBITDA margin in excess of 40%.
And combining hendawi with wireless research business, we are well positioned to realize significant revenue and cost synergies and the acquisition is expected to be accretive to our adjusted EPS in fiscal year 'twenty three.
Our net debt to EBITDA ratio inclusive of borrowings certain value was $2 two at quarter end.
With respect to acquisitions, we will remain opportunistic as we look to add scale and tech enabled capabilities and research and online education.
Our quarter end debt balance was $163 million higher than the same time last year to the acquisitions, while our interest expense was down nearly $2 million given the benefit of the lower interest rate environment.
In terms of liquidity, we reported $91 million of cash on hand, and we ended the quarter with undrawn credit capacity of $529 million.
Our current dividend yield is roughly two 7%.
We resumed share repurchases in early January following our announcement of the Hendawi acquisition.
Within our brief open trading window in January we spent $7 million on a 147000 shares at an average cost per share of $48 and nine.
No 660000 shares remain on our 2016 share repurchase authorization and $200 million of Authorised purchases remain in our 2020 program.
We continue to design and implement the material improvements in the efficiency and effectiveness of our operations and research we continue to invest in optimizing our end to end publishing operations driving improvements and publishing cycle time and cost per article.
As Brian noted, we will gain scale advantage from the addition of the Hendawi portfolio to our article Cascade strategy.
In addition, and the OE operates of low cost publishing platform and efficient infrastructure, which we will leverage more broadly for open access publishing.
And the academic and professional learning, we're investing in our e-commerce capabilities for both education and trade publishing and we're revitalizing our popular dummies dot com website with an improved digital content platform.
In education services, we are further improving our recruitment operations from lead generation through the student application and enrollment driving EBITDA margin performance in line with our profitable growth strategy.
As part of our overall business optimization program, we recorded a restructuring charge this quarter of $21 million related to our previously reported 12% real estate footprint reduction.
We are permanently shifting to a virtual work environment for many of our smaller offices and implementing a hybrid working model at our larger facilities.
As a result of these real estate actions, we anticipate annual run rate savings of approximately $8 million beginning in fiscal 'twenty two.
And finally as noted last quarter, we continued to generate significant COVID-19 related savings on travel events and facilities expenses were taking actions to sustain much of these savings and our post pandemic operations.
Turning to our full year outlook, given our solid year to date performance and foreign exchange impacts we are raising our guidance for revenue EBITDA EPS and cash flow.
The raised outlook is inclusive of Hendawi impacts.
For revenue, we now project of range of one nine to $1 $92 billion.
Up from the previous range of $1 86, five to $1 85 billion.
And up from 183 billion and.
In fiscal 'twenty.
At the segment level, we continue to project low single digit revenue growth in research and double digit revenue growth in the education services.
Low we're raising the organic growth projection for education services.
The mid to high single digits.
We continue to project of mid single digit decline in academic and professional learning.
Note our revenue outlook includes approximately $10 million of additional revenue from and value.
Revenue growth moving this optimization gains and expense savings continue to fuel our strong profit growth.
Now anticipate adjusted EBITDA of $395 million to $410 million up from the prior range of 380% of $395 million and up from $356 million in fiscal 'twenty.
And Dow is roughly neutral to EBITDA for the year.
We are modestly raising our adjusted EPS guidance to a range of $2 60 to $2 75.
Up from the prior range of $2 50 to $2 70.
And up from $2 40.
In fiscal 'twenty.
Our adjusted EPS outlook includes approximately <unk> 15 of dilution from <unk>.
Primarily related to transaction costs and purchase accounting impacts.
And finally, we are raising our free cash flow guidance from $175 million to $200 million.
I am sorry to 100.
So $200 million to $225 million up from $173 million in the prior fiscal year.
The anticipated year over year cash flow improvement reflects higher earnings and relatively flat cash tax payments Inc.
<unk> the $21 million cash cares.
Tax refunds, which we recorded last quarter that cash refund was received in early February.
And I always operating impact is projected to be cash flow neutral for this fiscal year, but we anticipate it to be modestly cash flow accretive in fiscal 'twenty two.
While delivering these results we will continue to invest in market driven growth opportunities and open research online education and digital curriculum and then the optimization programs to generate sustained efficiencies. We will continue to fund these investments through those optimization savings and strong cash generation.
I'll now pass the call back to Brian.
And John.
So let me recap the key takeaways from the third quarter of.
Our business has remained strong through the use of thus far and a challenging year for all we've continued to execute our strategy, which builds on the core trends in our interest in our important market, namely open research online education and digital curriculum.
As a result, we're growing research output significantly and growing our digital platform business, we're growing the adoption and consumption of high impact of affordable digital content and courseware.
We're growing enrollment in a high quality career focused degree programs.
We're expanding our unmatched network of leading universities societies and corporate partners. This unique asset supports Wiley success across research and education.
We continue to selectively advance our core strategy to an M&A, adding some value of this quarter to accelerate our open research growth strategy.
And we are consistently working to improve our efficiency on our profitability.
The upshot is that the Wiley team has delivered solid results for the quarter and year to date and this is allowing us to raise our full year outlook.
And as always Wiley performance as the team effort year in year out our wonderful colleagues around the world demonstrate their dedication to each other to our customers and to our important mission, which remains to unlock human potential through the advancement of research and education.
And thank the team for extraordinary efforts and its many accomplishments and I will now open the floor to any comments and questions.
Thank you at this time of anybody ask the question. Please press star one on your telephone keypad again that as share button on your telephone keypad. The first question comes from Daniel Mark and team.
The Securities Your line is open.
Brian and John Good morning, Thanks for taking the questions.
Hi, Dan.
Wanted to a lot.
Color on the Hendawi, but did want to pick up there as well, Brian maybe just give a little bit more color into the.
Potential revenue synergies that you've described the or alluded to over time.
Just how the two fit together and how you see that.
The one plus one equaling a little bit more than two.
Yes, absolutely.
As the baseline Hendawi is obviously an extremely successful company in and of itself is growing very rapidly in the nicely profitable as you know.
But by becoming part of the widely portfolio. It really is a one plus one equals three.
It's really critical as we move forward debt.
That we maintain scale and.
The gross scale, but that we grow scale on the right ways.
The number one way that these two companies Wiley and Hendawi complement each other has to do with the exploitation of that scale.
Which we've talked about in a variety of of call.
Researchers want to get their research out to the world in the best possible Journal as quickly as they can in that order.
And so what they do is they choose the journal.
One of say one of our leading health Science journal and they submit it to that Jeremy.
Sometimes that article gets accepted sometimes it gets rejected.
If it gets rejected.
The author is forced to resubmit that journal somewhere else.
To the extent that we in our portfolio has a high quality journal that fits that article better. We can move the article from journal won to channel to order Journal tree or the journal for and we can do it quickly and seamlessly and this is an important part of our.
An important part of our strategy, thereby allowing the researchers to get their article out faster. So as I think you know Dan we.
Today.
Published about 25% of the articles that we received.
We believe that there is the opportunity to publish that even more.
At the published even more greater percentage of <unk>.
Significantly greater percentage of those articles, we know this because of those articles get published elsewhere.
So we track them and we see that large portion of the articles that we reject yet published elsewhere. So if we have an apex of very high quality title.
On the.
High quality of title and then we have an aligned debt of journal and Thats, what Hendawi does it aligns with our journal in these high demand disciplines of extremely well and they're not just journals that are unrelated to our journal that was one of the great pieces of.
The synergy we identified then we can run the run a higher percentage of the submission through publication and as you know in the OE P Times Q model, then we can monetize those even better so scale really matters and high quality scale matters. So youll see published with our publisher like us with a high.
The quality.
The portfolio of titles aligned with the good Cascade mechanism to do very well the.
Second way.
Is that Hendawi is is also a very.
The very strong profit debt was uniquely created and tailored to the open at debt experience.
That's the platform and its processes, whereby which they can process on open access article much faster than is typically the enormity of the industry.
And that process helps us at Wiley to have greater author satisfaction, because they want to get it out there quickly and wanted to get the article out there quickly and so we can we can take those lessons and move them across Wiley both the platform and the processes that allow us to enhance the wiley platforms and processes. Conversely, we have many platforms and content.
Management that are far more advanced than what than what the valleys. The small company could possibly have invested so we can bring those efficiencies and content management and so forth.
Two to Hendawi.
And then of course, we have a very successful.
Ah.
A very successful research platforms business built on our Literatim platform that.
That is sold to publishers and societies around the world.
And we had a very successful solutions business, whereby which we support society and publishers in their in their efforts and we can take those great hendawi assets and we can add them to our assets the havent, even more robust offering out there on the marketplace.
It's really is the case, where we can take full advantage of Hendawi and that we can take full advantage of us and we can go forward into the open access world with really an unmatched.
Net of capabilities, the very exciting and as you know as we move towards debt the OE P times Q model.
There's a lot of opportunity to the extent, we can attach ourselves.
More closely to the consistent growing article.
Submission rate that happens around the world every year, where the.
Submissions grow in high single digits every year.
That's very helpful and I just want to confirm I think you did say dilutive for the year by <unk> 15.
The included 12, Samsung fiscal Q3 is that right John.
Yes, that's correct.
Got it.
On a push you, but do you see the potential at least for the deal will be may be accretive on it.
On a little faster than your fiscal 'twenty three goal or are there discreet.
The investments that you intend to continue to make.
And it.
I think it's a little early part of the call. Then we've only had the team on board with US now for two months, we feel very good about the progress that we're making and the rate at which the business will grow but we can give you an update on that when we come back around with our expectations for fiscal 'twenty two on June.
Sounds good.
In gears education services margins once again.
Really strong.
Easily exceeding the 15% goal.
Wondering if you don't see maybe a little bit of of that goal as being modestly conservative or do you see an opportunity to perhaps accelerate investment given the strong results we've seen.
Yes, it's a great question on I can certainly understand why you are asking.
The answer is we have a growth business here of growth business in a changing market. We are a leader we intend to continue to be a leader and we continue to continue the treated as a profitable growth business.
At 15%.
We are very comfortable at that 15% plus.
The number that we put out there for a long time and we're going to continue to look for opportunities to invest to keep our growth rate.
The good and in higher as you as you know this debt of business that is at a higher profitability rate than ever before.
And we're very pleased with that but we also recognized the huge potential that exists in the transformation of education from traditional to hybrid and online and in many ways. This is our moment to capitalize on that and we need to be we need to be targeting those opportunities to bring on new partners to expand the.
Mark to make them successful and to ultimately grow our enrollment in the breadth of our services that we provide to those people. So so I think we're going to stick with 15% plus is the answer.
Understood certainly makes sense and maybe one more and I'll jump back in queue.
Academic <unk> professional learning I think we as we said it looks like courseware is.
Now offsetting the declines in print.
Just talk maybe about your confidence in.
And in that on a go forward basis, and similarly in professional learning with the vaccine accelerating it sounds like Youre corporate professional partners are feeling a little bit better any more color or commentary there would be really helpful.
Both good questions so with respect to.
With respect to the education publishing side, we really are optimistic about the trajectory and what I called in my comments the maturation.
Of the of the digital courseware market.
We're very pleased with our offerings, we feel very strongly about the love the trajectory that we're on.
Having said that we see.
Still have a good portion of our business is print and print will continue to decline. The good news is that we are gaining unit dramatically in unit share so while we're not ready.
To call bottom in terms of the that trajectory.
We do like where it's going we're exceeding we're increasingly optimistic and.
It's always it's always a great temptation to say now is the moment, but I think what we can say is we have of business that is moving definitively in the right direction, where the price value proposition has normalized to an extent that people are buying the products that we are selling instead of looking for alternatives the substitutes and if the growth rate of of <unk>.
As an example of that I don't know what is so so we're feeling good about it and.
And the and so we're going to avoid we're going to avoid of specific statement about an inflection point per se.
But the but the trends are going definitively in the right direction.
Great and then on the on the professional side some of that Youre seeing some green dot it there as well, yes got it so sorry, I forgot part too.
On the professional learning.
Most definitely rebounding as you may recall, we were down up to 70% in our in our businesses that support in person training in the beginning.
And we were very worried about corporate budgets and the like and what we're seeing is that our retention rate on our upsell rates in our in our corporate learning business is very good and so where it's been a little troubling for companies as they are trying to look out into the future.
But we had some concern as you know about what happened when we cross into calendar year 'twenty, one but in fact are up sales in our retention of remained high.
Our pipeline looks look very good and in the parts of our business that the that support in person training that part that was down 70%, 70%. We're now back up to two between 80 and 90% of where we were before which is terrific given that we're still in a significant COVID-19 situation.
And one of the main reasons that where there is that 85% of our trainings are now done virtually so yeah. It's bouncing back on both sides, we like those businesses those parts of our business, we're going to continue to do well and come back and I think we're really we're really on the right trajectory, but also.
This movement toward.
Toward virtual team training and virtual professional development.
Would you still require of instructor in front of the classroom.
As of really optimistic.
Optimistic development for those businesses and frankly, it has far exceeded that transition has far exceeded my expectations.
Spurred by.
Okay.
We would of any move anywhere near as fat there. So once we get back obviously, we need to get back to where we were before and 85% of the 100% but.
But I'm really pleased because obviously when we go digital we not only have a business that moves into more.
Anable on recurring revenue models by great profitability and also we can reach much larger audience is when you don't have to get a bunch of people together in the classroom.
Again, we're not exactly where we want to be.
And you can see by the by the segment segment financial but the trajectory again.
Is where we want the gallon consistent and aligned with the Wiley strategy.
Really helpful. I'll pass it off and circle of perhaps circle back if there are no others. Thanks.
Thank you.
Okay, and if any of it it would like to ask a question in case the star one on your telephone keypad. The next question comes from Greg <unk> from Sidoti Your line is open.
Hey, guys. Thanks for taking my questions.
Can you I guess first off can you help us understand a little bit around the swings on accounts receivable the seemed to have spiked in <unk> and then came on.
Weigh down on <unk> can you give us a little color on that.
On the year over year basis in total.
The.
So youre looking at the comparison back to.
Year end of April does that what are you comparing.
Correct, Yes, just like the.
I'm just trying to gauge the seasonality of.
A large spike on the year over year basis income receivables in <unk>.
On the year over year basis.
It looks like it came way down just kind of trying to triangulate that with where you might end up the year and receivables so that I understand your cash.
Cash flow guidance, a little bit better.
So there is there is a good bit of seasonality to our receivables.
And the lot of that the seasonality swings around the timing of our subscription renewal.
Susan.
Well as you know we've introduced some other elements to our business. The addition of <unk>.
Mm three and window each of our business. So there are things some things that are going to.
Inorganically move around our receivable balances as well.
What I would say is that you should.
You should be aware of that from a collections perspective, our collections performance continues to be strong we have not encountered any significant issues in terms of defaults.
We do have a little bit of upward pressure on receivables coming from.
Some of our customers who are.
Particularly on the library side, certainly a bit weird.
Budget challenges and so we've had challenges around the payment schedule sort of extended in rare cases.
The payment periods for our customers trying to be accommodating to their particular budget challenges, but overall most of the what youre seeing the seasonality of as I said and what Youre seeing on what would be really clear about is there any risks around collectability.
Understood.
And then just switching gears, just trying to understand that new student growth.
And just kind of could you give us a little bit more.
Color behind why I think you said it was 29%.
Just trying to understand is that reflective in addition of some of the new.
New account wins or.
Just trying to understand do you think those will be full time.
Students or is there going to be maybe a lower retention rate given COVID-19 on on that new student Spike.
Yes, the Super question. The first thing I'll say the answer the last debt.
Have exceedingly high retention rates of through to graduation, and our online programs. It has been consistent throughout this throughout the.
On the period, leading up to Covid and through Covid, we see no evidence that there would be any increase in.
In.
In the.
Deterioration of our retention rates.
In the in the go forward period. So we're very pleased and by the way, we're really proud of that because we're in the business of getting people degrees of affordable degrees, the get them jobs and so to the extent that we as the company don't focus on impacts first we will lose in our and our clients will lose on the students will do the Mets unacceptable.
So now where is it coming from.
On the answer is it's certainly our new our new clients or we will take a little while the standup. There's always there are always new clients coming on line and inside new clients, we are always adding.
Adding new programs and then most importantly, we are trying to grow those programs that we do have the degree programs and that's where it's coming from it's really coming from the existing clients on existing programs.
The to be sure, we're always adding new ones.
It's not the core here of the core is endemic underlying growth in interest in online education and in the success with which we are we are finding students.
Efficiently and effectively which is what drives our terrific profitability. If we find the efficiently effectively we match them up with a program that works for them at a university that works for them.
And we ensure that they are successful through congratulation. So this is this is not some cyclical are COVID-19 related.
On.
Sort of sort of move this is the way we've been over time, having said that of course Covid has.
The accelerated the interest in online.
The degree but.
But we believe a large part of that is permanent how much remains to be seen so.
That will be sorted out as we get towards next year and so forth the ones. You're once you are in the program, we expect retention rates that are.
As outstanding as the retention rates, we have always delivered to our clients interest students.
Great and then just one final one just trying to understand the.
The 25%.
Published article percentage.
I appreciate all of the color on DIY, but also if im not mistaken.
Some of these some of the opportunities were missed in the past was it due to not having the right systems in place to find where that article might land and Thats why you sort of lost that article opportunity I don't want to throw the word of AI, but I believe you're building the system that would hopefully identify.
A.
Where some of the submissions could go is that correct and where are you. If so where are you on the process.
Yes, the topic is the really important topic I would not agree that we lost or missed opportunities. What I would say is that there is an unexploited opportunity that exist that has always existed for all publishers and exists for us to do a better job we've been honest pathway from the old print World, where you are.
Had a limited number of articles that you could squeeze between two pages and ship out the people to the digital world, where they're sort of.
The unlimited shelf space and through that process.
The editorial standards must remain high.
But with the high editorial standards, we want to try to find a home for for all of those articles I think 25% of just fine right, but it's not good enough. It's not debt. So I wouldn't characterize it as the deficit, which really for us it's an unexploited opportunity and yes, you are absolutely right we are.
We are working very hard to make the process to organize ourselves to develop the systems, including AI driven submit.
Submission and editorial review.
Some of that allow us to process articles faster and to route them to the appropriate journal faster and then should they be rejected by that journal.
Send them on to their next journal and ask the with the others permission for submission to another journal, we're absolutely investing that youre, absolutely right to focus on a hugely important and.
And we do think that there is that big opportunities as the source of significant investment for us when we do it we do.
Gain.
Higher return on investment because we publish a higher percentage of the articles, but we also make the authors happy this is what they want.
They don't want to have to go through another multi month process of submitting it to another journal, where they have to get the review and I would also agree with you that in the past, we havent been and all publishers havent been as efficient as they could be and where all of them moving from a largely manual process to a very much automated process, which is the point that you.
Very wisely underlying and that automated processes sorts of great focus for us and great opportunity going forward.
That's very helpful. Thanks, a lot.
At this time might have gone with part of that question. Thank you I kind of the call back over.
Youre manpack for closing remarks.
Terrific well, thanks again for joining us today, and we will very much look forward to sharing our fourth quarter results and full year results in June.
Thank you everyone that does conclude today's conference call you may now disconnect.
Yeah.
And on.
John.
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