Q3 2022 John Wiley & Sons Inc Earnings Call

Okay.

Good morning, My name is Rob and I'll be your conference operator today.

At this time I would like to welcome everyone to the wireless third quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your <unk>.

L. A phone keypad, if you would like to withdraw your question again press Star one.

While these vice President of Investor Relations, Brian Campbell, you May begin your conference.

Hello, everyone. A few reminders to start the call is being recorded and May include forward looking statements you shouldn't rely on these statements as actual results may differ materially and are subject to factors discussed in our SEC filings.

The company does not undertake any obligations to update or revise forward looking statements to reflect subsequent events or circumstances.

Wiley provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends.

These measures do not have standardized meaning prescribed by U S. GAAP and therefore cannot be comparable similar measures used by other companies nor should they be viewed as alternatives to measures under GAAP.

Otherwise noted we will refer to non-GAAP metrics on the call and variances on a year over year basis, and will exclude the impact of currency.

After the call a copy of this presentation and a playback of the webcast will be available on our Investor Relations webpage.

I'll now turn the call over to wireless President and CEO , Brian <unk>.

Okay.

Hello, everyone. Thanks for joining our Q3 earnings call.

Our exceptional team delivered another quarter of solid revenue growth and we continue to track to our full year guidance for revenue earnings and cash flow.

Kristina will talk more about the outlook later in our presentation by the way. This is our first official Wiley earnings call together and it's great to have Christine as a partner.

She's already having incredible impact on the company.

I'll start today's call by saying, we have of course being closely watching the devastating events in Ukraine.

Wildly strongly condemns Russia's invasion of Ukraine, and we called for a cease fire and immediate return to peace.

Further we call for constructive engagement and dialogue to resolve this conflict and achieve lasting peace. It serves all people.

As a global company with significant operations across Europe , we have many colleagues customers partners and loved ones directly or indirectly affected by this conflict.

Our hearts are with them and all the people of Ukraine.

To support humanitarian efforts in Ukraine and across Europe .

Okay.

On a happier note this year marks why at least 215th anniversary.

215 years of unlocking human potential by advancing research and education, which we are proudly done through good times and bad through the industrial Revolution, the digital Revolution, globalization and numerous periods of disruption, including recently to global Pandemics.

We're immensely proud to be an important part of the ongoing American journey, and we will be celebrating this milestone throughout the year.

And while these core wherein the knowledge business the creation, the dissemination and the application of new information and new knowledge.

We do our work through scientific research and career connected education.

And in a world, where new information is being created faster than ever where new discoveries insights and innovations are the essential lifeblood of every career and every industry.

Knowledge is a pretty good business to be in.

Okay.

As a leader in the knowledge industry, while he does three things we enabled discovery through scientific research, we powered career connected education for learners and professionals and we shape workforces for employers.

Year in and year out the world spends more on what while he does and with good reason.

Research and education powered the global knowledge economy.

Well at least tightly focused on two strategies that target the seismic trends driving the knowledge economy first.

We're leading the industry's transition to open research with our research publishing and research solutions.

Our impact goal here is for more cutting edge research to be available to more people faster. So it can drive more innovation and advancement.

While the second strategy is to bridge the widening talent gap with career connected education products and education services.

Our impact goal here is to ensure that the massive global investment in education delivers a meaningful ROI versus saidi in the form of career advancement and corporate strategic success.

Simply stated from our customers' point of view wildly helps the world's researchers and learners to succeed in their chosen fields.

And we help universities and corporations to achieve their goals through research and education. So they can win in the increasingly competitive global knowledge economy.

While we achieved this impact to our portfolio of branded content platforms and services with 82% of our revenue Tech enabled we offer everything to the world through our market responsive business models, we deliver it all through an unmatched network of University and corporate partners.

And we succeed as business as a business through sharp execution.

While these consistent strategies and open research and career connected education are paying off with solid revenue and EBITDA growth over the three year period through the Covid lockdowns in year to date.

Despite the significant transitions in our sector in a very unusual two year period, we're expecting to generate over $400 million in EBITDA and over $200 million in cash flow. This fiscal year, while surpassing the $2 billion Mark in revenue for the first time ever.

All of this shows that after 215 years wildly as foundation really strong and performing well.

And we believe that our hard work and investment in innovation is setting us up for continued profitable success in the long term.

As you know wildly drug drives positive real world impact in everything we do.

Whether it's by delivering more research discoveries to the world or by unlocking the career potential of millions of learners and workers worldwide.

As I've said before the more research and alert researchers and learners that we help the greater the societal impact.

And as evidenced in our performance positive impact is good for business.

We are committed to continuous progress and ESG for the second straight year Wiley has been officially certified as carbon neutral.

More significantly we are actively working to lock in on our science based targets, which will provide us with a clear route to sustainability by reducing our greenhouse gas emissions.

We continue to drive improvement in our ESG ratings, the latest coming from S&P corporate sustainability assessment.

Which saw our ESG score triple it is now well above average for our industry.

This comes after us to sustain Olympics ranked widely in the top fourth percentile for low ESG risk among 14000 companies.

In fact, we were named as one of the top rated ESG companies for 2022 by sustained Olympics with regional distinction.

We still have a long way to go but we're committed to meaningful progress.

Yes.

Okay. So let's talk about third quarter results.

As a reminder, all variances exclude currency impact.

Our team delivered overall revenue growth of 7% or 4% organic growth.

Adjusted EBITDA and adjusted EPS were down, 5% and 9% mainly due to planned investments and higher technology costs in research and education services.

Revenue was up 10% in research and 18% in Ed services, while down 1% in APL.

I'll review the specifics of our Q3 segment performance in the next few slides and then pass it to Christina to review our results through nine months.

But let me start by commenting briefly on current geopolitical and economic conditions.

With regard to Ukraine.

Both Russia, and Ukraine are small markets for us. So we do not expect to see any material revenue impact.

While it does have a technology development center in Russia, one of several around the world and we have solid contingency plans in place for this location.

As in all locations to ensure business continuity.

We're confident in those plans, but continue to monitor this very uncertain situation and we will adapt as circumstances change.

As you would expect this terrible situation is weighing on all of our colleagues.

And it is getting a lot of management attention right now.

From an economic point of view there is a renewed focus on inflation in the supply chain dynamics that have been prevalent through the pandemic.

Christina is following these topics very closely we do not foresee any material impact from these factors to affect our fiscal 'twenty two results and we are watching for inflationary pressure on wages print publishing and other costs as we look to next year.

While supply chain management has presented some challenges for us none have been material and are largely digital nature means that any issues are limited as a reminder, physical products make up only about 18% of our revenue further our operations and production teams have done an outstanding job of minimizing any disruption.

And through the pandemic.

As you would expect another issue we are watching closely right now is the great resignation.

Like all companies widely has seen a modest elevation in our turnover recently, but nothing that raises any major issues.

At the same time, we're winning great new talent with critical skill sets and we continue to see very high engagement overall.

We remain highly attuned to how our colleagues are doing both personally and professionally, particularly after a very trying two year period significantly.

Significantly they consistently report being highly motivated by our purpose and our important work.

As I said at the beginning of the pandemic in the spring of 2020 wildly has successfully navigated periods of uncertainty for 200 years and we'll continue to do so.

From a segment performance perspective research continues to deliver consistent revenue and profit growth with revenue up 10% or 5% on an organic basis and adjusted EBITDA up 4% for Q3 EBITDA margin of 33%.

Our performance continues to be driven by solid growth in OE publishing corporate solutions and research platforms.

To refresh there are two complementary parts of this business.

Research publishing, which is migrating to OE and research solutions in which we deliver best in breed infrastructure and publishing services to help other players in the ecosystem such as publishers societies associations and corporations to thrive in the increasingly complex knowledge ecosystem.

On the publishing side, while it's been unlocking the ever increasing demand for peer reviewed research by moving our journal portfolio toward open access.

In 2019 as you May recall, we saw what the market wanted and OE and we jumped in the driver's seat.

Since we have delivered above market growth in the new P times, Q economy, where revenue.

This is a direct function of the number of articles published and the price we charge.

The future looks very good for both volume and pricing based upon the long term underlying market growth and our ability to win based on the enduring value of our journal brands.

Our broad collection of high quality brands provides both a flywheel to drive demand in the mode to defend the wildly system.

Okay.

During the quarter momentum continued to accelerate for our transformational read and publish models with major signings in the U S. These included the California Library Consortium, The Carolina consortium, the Big 10 Alliance and the department of energy as well as consortia in Denmark, Israel, Japan, The Republic of Korea.

And Slovenia.

These multiyear agreements provide access to all of Wiley journals for an annual fee, while granting researchers at these institutions the ability to publish with Wiley.

To date, we've signed 25 major transformational agreements worldwide and we expect this momentum to continue.

These agreements.

<unk> will continue to replace our legacy read only deals.

It is important to know from a reporting perspective that the hybrid nature of these agreements is increasingly blurring the line between business models and revenue wise and for this reason, we will no longer separate out open access revenue growth rates or OE share of revenue.

Our research article output is up 9% year to date, including the addition of Hendawi put down on an organic basis from last year's unprecedented COVID-19 surge, which saw a 16% increase in output as millions of researchers focused on documenting their research.

The overall trend line. However continues to be positive with two year average output growth of 6% per year.

OE article output is up 25% year to date on an organic basis.

On the research solutions front Wiley is enabling the complex OE transitioned for the rest of the research ecosystem, we're helping societies and publishers by delivering critical platforms and services that enable content delivery production transaction processing and audience monetization.

The transition to OE is highly complex, it's costly and fraught with risk.

Widely scaled capabilities ensure that our partners survive and thrive.

We recently made three small, but strategic acquisition acquisitions to round out our end to end solutions in this area.

They include J&J editorial knowledge unmatched and E Journal press.

Together, they will allow us to deliver a full range of capabilities to our partners and clients, including Copywriting and payment services as well as journal workflow technologies.

Okay.

Strong momentum continues for our corporate solutions lines with revenue up 11% in the quarter, 19% year to date.

While these value proposition here continues to expand.

Our platform enables corporations to reach 15 million researchers and leveraged 179 million monthly impressions, our knowledge hubs allow consumer product companies like Procter <unk> gamble to engage and activate our valuable audiences and our career centers help pharmaceutical companies like Pfizer to fill their critical skill and talent gap.

Yes.

In summary, we continue to see strong momentum across research and this is reflected in our current operating performance and in the success of our strategic initiatives, which are delivering even greater opportunity for widely going forward.

APL revenue declined 1% this quarter with education publishing down, 2% and professional learning flat adjust.

Adjusted EBITDA rose, 4% due to cost savings initiatives for.

For our Q3 EBITDA margin of 30%. This is up from 29% in the prior year period.

Overall, while API with APL revenue declined modestly this quarter year to date revenue growth of 3% is tracking to our full year outlook. We continue to drive margin improvement overall, and we feel very good about the consistent demand and long term prospects for digital career connected education for both students.

And for professionals.

Within the segment Education publishing performance was driven by lower year on year enrollment in the U S and unfavorable comparisons to last year's unusual COVID-19 bump.

For the quarter, we saw continued growth in digital content in <unk> and an alpha courseware offset by declines in printed course material and test prep products.

Let me say a few words about the current unusual phase in the University content market.

In 2020 in the first half of 2021 Covid drove record numbers of students into digital programs in settings, where our digital content and courseware were simply essential.

More recently.

There has been a natural return to Earth of digital enrollment numbers.

Made worse by a very strong economy.

Postsecondary education has always been countercyclical in this year. Some students have predictably chosen to defer school to preserve pursue career opportunities.

Consequently undergraduate numbers are down a surprise down over 6% since the fall of 2019, that's $1 million less students in the U S system.

All of this naturally affects our Ed pub revenue, which is down 2% year to date modestly off what we expected.

As you will see in a moment, we are seeing similar enrollment driven effects in our University services business.

That said, we remain quite confident in the long term global trends in post secondary education, along with the opportunities for our winning content and courseware to returned to growth as we emerge from this unusual period.

Okay.

In our professional learning lines of business revenue was flat year over year due to the easing of the pandemic related tailwind that we saw last year for professional books, including our dummies products.

On the positive side, the strong recovery in corporate soft skills training programs continued for both virtual and in person delivery with growth up 18% in the quarter and 28% year to date.

On the education services side, we saw revenue growth of 18% for the quarter driven by strong growth in corporate services.

Here talent development revenue rose, 112% as demand continued to accelerate for our tech talent development programs.

This offset a 3% decline for University services, mainly due to this year's unusual cyclical U S University enrollment declines.

As expected growth investments resulted in an adjusted EBIT decline of 14% for the quarter, our adjusted EBITDA margin was 13%.

On the corporate side, we're rapidly signing new clients upselling existing clients and expanding into new verticals the <unk>.

Five multinational clients. We signed this quarter include top financial services firms and a leading global technology company.

And the pipeline remains very strong.

We also grew tech placements of 122% with our existing client base of Fortune 100 customers.

We continue to make very good progress in our strategy to upsell additional tech training services to our expanding network of corporate clients.

For example, one of our key global clients has recently agreed to an upscale tech program.

Involving hundreds of employees.

And other clients are exploring the same.

On the University side online enrollment in our programs has slowed compared to last year's unprecedented COVID-19 surge up 3% year to date, but down modestly for the quarter for.

For context, if you look at it over a two year period, our online enrollment CAGR is around 7%.

So what's happening in online degrees first as I said above were coming down from the unusual COVID-19 bump that drove students to flow into online programs.

As things began to return to normal in the second half of 2021, the Delta and Omicron variant significantly disrupted both student demand and school admission processes.

Third as I noted potential students are now faced with a very strong economy that is lowering them away from school and into work.

Again, though we remain confident in the underlying trends in online post secondary education. Despite the near term challenges presented by these unique market conditions.

While these high impact services continue to be in demand and this quarter, we signed a large top 25 institution renewed two multiyear partnerships and added 22, new degree programs and we're seeing continued interest from potential new partners.

We're also seeing very good momentum in Australia, one of our newer markets, where our work with Latrobe University is now delivering over a dozen degree programs along with innovative certifications in short Corp. Short course programs in areas like cyber security and artificial intelligence.

These shorter career connected programs are great. Examples of the education that today's career focused students want right now worldwide.

The single biggest challenge facing universities is student acquisition.

As they fight for survival in an increasingly competitive market schools must attract and enroll students, which is increasingly costly and very complex.

<unk> impressive capability in this area is a key source of differentiation and it includes digital marketing and end to end student enrollment services.

This past quarter, we augmented while <unk> core value proposition by adding X Y Z media to the widely family, which we acquired for $45 million.

X y Z as a market leader in student marketing.

They generate over 140000 highly qualified students leads per year for universities.

Beyond this they are quite profitable.

We know the X Y Z team very well because we've been in it we've been a major client of theirs for years.

This enhanced capability is already generating new students for our client programs improving client success accelerating new program launches and enhancing new partner acquisition prospects.

For its full year, ending December 2021 X Y Z generated approximately $15 million in revenue and $3 million of EBITDA.

In summary education service continues to grow continues to accelerate and corporate services as we signed major new clients and delivered record placements.

And University services, we have needed local enrollment challenges.

Challenges to work through but we remain confident in our long term ability to drive both growth and profit while helping our partners to deliver career connected online degrees and credentialing programs that the market is demanding.

I'll now pass it over to Kristina to take you through our year to date results full year outlook and our financial position.

Thank you, Brian and good morning, everyone before I begin I just wanted to say how proud I am to be part of Wiley.

After only a few months in the job I am struck by the team's incredible strength and talent and the collective passion for our mission and mission that changes lives for the better.

As Brian noted the team continues to deliver on our growth strategies and we are driving solid year to date performance.

On an enterprise level, we are tracking to our overall full year outlook with revenue up 8% to 154 billion or 5% organically, including research growth of 10%.

<unk>, 3%.

In AG services at 16%.

However, there is some variability to note, namely education services, where rapid growth in corporate talent development and offsetting unforeseen slowdown in University services.

Adjusted EBITDA is up 4% to $322 million.

And it's driven by year to date profit contributions from research and APL offset by investments in both growth and business optimization initiatives.

These initiatives, which were highlighted at the start of the year, including include open access growth to meet global demand and scaling research partner solutions.

In career connected education, where we arent backing to expand our corporate pipeline and existing relationships as.

As well as scaling our digital courseware offerings.

We continue to embed operational excellence across the organization and this will be a sharp focus on mine going forward.

Getting back to our financial results adjusted EPS through nine months is up 4% to $3 nine.

As a reminder, while lease adjusted EPS metrics exclude the impact of certain noncash items directly related to acquisitions, particularly the advocate amortization of acquired intangibles.

As Brian noted, we don't expect any material impact from inflation. This year and we're currently assessing what potential impact that could be for fiscal 'twenty three.

Consistent cash generation continues to be a foundational strength for Wiley.

It enables us to execute on our strategic plans pay.

Pay for tuck in acquisitions and return cash to shareholders.

Through nine months cash flow from operations of $158 million is ahead of prior year by 2% or $309.

Free cash flow of $77 million is down from $80 million were higher cash earnings offset by higher <unk>.

By higher Capex and annual compensation payments.

With regard to our balance sheet net debt to EBITDA ratio was 91, 9% at the end of January compared to two two at the same time last year <unk>.

Liquidity continues to be steady with $190 million of cash on hand, and undrawn revolving credit capacity of more than $516 million.

Capex of nine month, Capex for nine months, a $6 million higher than prior year, and we allocated $71 million to acquisitions and research and University of services, which Brian already highlighted.

We will continue to be active in M&A as we seek out targeted acquisitions and capabilities that support our key growth areas.

We continue to return to capital we continue to return capital to our shareholders with $83 million devoted to dividends and share repurchases throughout that through nine months.

This is up $65 million from the prior year.

Our current dividend yield is around two 8% and we repurchased 448000 shares year to date at an average cost per share of $55 48.

There is approximately $200 million remaining in current authorizations.

Now.

Let's turn to our outlook.

Given our year to date performance and leading indicators, we are reaffirming our fiscal 'twenty two guidance ranges, which are.

Revenue growth of mid to high single digits to a range of two point or $7 billion to $2 1 billion.

Adjusted EBITDA in a range of $415 million to $435 million with profit gains on higher revenue tempered by investments to drive profitable growth in research and education services.

Adjusted EBITDA EBITDA excuse me adjusted EPS in a range of $4 to $4 25.

And free cash flow in the range of 200 $220 million.

Higher cash earnings are expected to be partially offset by higher capex higher net cash taxes higher annual compensation payments for fiscal year 'twenty one performance.

Note that revenue and adjusted EPS are trending towards the lower end of guidance due to the due to the aforementioned market conditions and University of services and education publishing.

Our year to date FX rates are in line with the rates prevailing when we issued our guidance back in hand.

Outlook assumes current FX rates prevail for the remainder for the remainder of the year.

I look forward to presenting our fiscal 'twenty three guidance coming up in June this year.

Finally, we are working to enhance our investment profile.

This is another focus area for me.

Part of that is to ensure that were easily located therefore, we will be changing our ticker symbol from J W. H and J W. B.

<unk> and <unk>, which more closely aligns to our global Wiley brand.

We will be issuing a press release in the coming week and the change is expected to go into effect on April one.

And recently, our ongoing efforts to raise the profile of the Wiley brand reached a new milestone with the launch of our external brand campaign.

This campaign, a first for Wiley will allow us to clearly terribly exciting Wiley story, while reaching new audiences and broadening and broadening our overall exposure.

And with that I'll pass it back to Brian with my sincere thanks for a great first quarter together.

Well, thank you very much Christina.

I will just summarize with the key takeaways for the quarter before opening it up to questions.

<unk> third quarter results are consistent with our expectations and reflect the consistent execution of our well established strategies.

Good momentum in the research publishing and solutions, and notably in corporate products and services across Wiley.

This momentum offset some counter cyclical challenges in academic content and University services.

To date, we are managing well through some very unusual geopolitical dynamics economic conditions and post COVID-19 labor market changes.

Our year to date performance continues to be solid with revenue earnings and cash flow tracking the guidance, which we are reaffirming.

The company is on the verge of surpassing $2 billion in revenue for the first time in its long history.

The long term positive trends that define our markets continue and while these growth strategies are tightly aligned with these trends. Our recent acquisitions will serve to further strengthen our strategies and differentiate wireless.

As always while it continues to drive real world impact with everything we do while continuing to advance our ESG and sustainability agenda.

And finally, while he remains a foundational a strong company with consistent cash generation very solid balance sheet and a large recurring revenue base.

Once again, our hearts and support are with those in Ukraine, and we hope for a rapid return to peace.

I want to thank our wonderful colleagues around the world for their consistently great work and dedication in these very unusual and trying times.

And I want to thank all of you for joining us and I will now open the floor to any comments and questions.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.

And we have your first question from the line of Daniel Moore from CJS Securities. Your line is open.

Thank you good morning, Brian Good morning, Cristina Thanks for taking the questions.

Sorry.

Research, Thanks start with research if I could.

Maybe just talk about what's driving the acceleration in growth in publishing platforms and.

And do we expect.

Above trend growth to continue here in the near term.

Yes.

We're very excited about our opportunities on the solutions side of that business.

What's driving it today is consistent growth.

Across most of the segments, we're seeing very very good growth in corporate solutions.

We are.

We are seeing good growth in.

Across all of our platforms that we're moving and significantly as you know Dan we have some acquisitions and one of them Hendawi added significantly to our growth on a year on year year on year comparison basis, having said that Ada Hendawi, we're seeing exceptional growth, we're seeing fantastic growth in OE.

In our submissions and they have recently.

Surpass their prior record of articles published so we're feeling really good about that acquisition. So it's pretty it's pretty we feel pretty good I will also note that where we're seeing a really good really good rebound in the interest that corporate <unk>.

Market has in accessing our huge audience and that has driven our our corporate solutions business.

Up significantly so we're very pleased about that.

<unk>.

All systems go.

Helpful. Maybe switch gears to add services and three clearly accelerating talk about how much of that is sort of the market recovering from COVID-19 impacted comp period versus increased penetration in the marketplace as well as within your customer base.

Yes, well look.

It's a great question and we're Super excited about the potential for us in corporate talent development and corporate training overall, we have.

We have seen.

The right product at the right time for the right problem. The right problem in the World is an enormous gap that corporations see in.

Employee base with regard to their ability to fill seats with.

Tech skills and digital business skills, and that's what we do.

As you know we not only.

We not only train the people we find them we make sure. They are successful we nurture them through the first 18 months of their career right. It's a fantastic product with incredible results. As a result, we're seeing yes, we're seeing penetration in the increased penetration in the marketplace with great customer acquisition and a great pipeline.

Seeing increasing demand from the clients that we have who see this solution that is working for them and theyre looking to apply it in new areas. We're seeing it applied in new areas. So where we started with a pretty focused set of skill sets that we were training acquiring talent and training for we're now seeing it across multiple <unk>.

Multiple job categories and multiple subject areas.

We've seen.

And interest broadening in the economy from the core verticals that we were that we were serving.

It is not post Covid, we know we had an enormous talent gap going into the Covid period and that talent talent gap was concentrated in tech and digital digital business skill areas, but as we know we today have a record 11 million open jobs.

And those jobs need to be built.

So we are in the business of where our business filling I wouldn't say this is driven by COVID-19 at all I would say, it's driven by a fundamental underlying.

Gap in the marketplace that will persist for many years to come and we have the right product at the right time, and we are broadening and expanding that product to be able to gain more share the available opportunity.

That's helpful very helpful. Brian Let me.

So we will stick with Ed services, but switch to the online program management side.

You detailed some of the surgery or a target headwinds and greatly appreciate the color. Some of your competitors are struggling.

Hey, Dan Dan Dan can you hear me, yes, I want to interrupt you because you broke up at the very beginning so I'm going to ask you to rewind to the beginning of the question. If you don't mind, otherwise I won't get the whole thing.

Can you hear me now.

Okay and yet.

Yes, just on online program management SKU, you laid out some of the near term market headwinds very well.

Your competitors are clearly struggling more.

Significantly it would appear.

Maybe talk about your offering relative to some others whether there is.

Some opportunity in terms of market share gains.

How do you how long do you anticipate.

These headwinds to last in other words when do you think we can get back to growth.

Yes.

Yes, it's a terrific question.

I will say in preface as I said in the script that we believe strongly in the future of postsecondary education and the need for universities to partner with organizations like us in order to achieve their goals.

They are having trouble.

We're having trouble on a lot of levels acquiring students, it's increasingly competitive they need us more more than ever.

But in terms of of <unk>.

Where we stand in the market.

Everybody knows what he's got gold standard services in this area.

We're very comfortable with the with our position relative to differentiation and so forth. We just recently significantly improve that differentiation with X y Z because we're bringing we're now bringing to the market what we call internally proprietary students supply, meaning we're bringing students through X y Z.

As opposed to having to go out and compete in the market for it so that gives us that.

It gives us a differential advantage over others in the marketplace with regard to what we do.

From a company perspective in the marketplace.

We are.

I wouldn't say that you cannot you can characterize our performance as demonstrating anything other than the consistency of our relationships with consistency of delivery.

But unfortunately affected by some economic factors that simply are out of our control and.

And some of these factors are are obvious. This idea that students are going back to work well when will they when will that boom and when will the.

Increasing salaries being offered to.

Two students.

Or to potential students.

Allow them to go back to school or be less that less attractive as they go back to school, it's hard to exactly say right now because in some ways.

It's a very unusual moment we saw.

We saw Covid do remarkably strange things to student behavior, and quite frankly, we're still sorting it out but.

But we do see and that translated in many odd ways. So for example last summer we saw students.

Graduate earlier than we thought they were going to graduate why was that will be turns out because during COVID-19 . They took away more credits than they would have taken if they were out in the world. So they got through their degrees faster.

<unk>.

So we're seeing a lot of these things sort out.

So the answer to your question is really as the economy normalizes.

This business will normalize and we should.

Return to the trajectory that we're on and while that is not a full and complete answer because it's because we don't have a crystal ball.

And so we can't we can't speak with definitive clarity, but I do believe over time, we will revert to a very normal situation, where universities are competing in the market for students. They are matriculating into through on a normalized basis and theyre, putting them out into the job market I will say, we're going to see an increased focus on the one of the things were.

<unk> focused on right now, which is these non traditional credentials and.

And shorter courses because what we see among our among our client base and what we see in the marketplace and this is what the market wants.

But that's just a shifting of.

Product focus like happens in any market over time, so long term, we feel pretty good.

Shorter term, where shorten our way through it like everybody else.

Very helpful.

The detail on Xyz appreciate the color there.

Talk about do we think about that as being theres more investment to be added to it or are there maybe any cost synergies just wondering if theres a pathway from getting 3 million ish in EBITDA to <unk>.

$5 million to $6 million over a period of time.

Yes, well that business was growing very nicely when we bought it we anticipate it will continue to grow it's going to provide two things for us Dan. The first thing. It is going to provide is it's going to provide this idea of proprietary students supply to us that we can funnel into our programs where possible.

And through that there will be a there are natural synergies because we're now instead of having to go to.

The open market, meaning Google and advertising to find students, we now get them for free.

Now having said that we.

We are of course, we of course are meaning to continue this business as a business we get to the second main point, which is we completely intend to be out there in the market and will continue to sell for the rest of the market.

Because we are it's very widely right, where we're in it for the ecosystem and we will continue to provide those.

Those leads through the rest of the market and as we do as there is continued competition among universities, which is only going to continue in the years to come that's what we've seen the leads generated by our by our capability like M. Three.

We will be increasingly valuable in the marketplace to us.

But also too to universities all around the country. So that's important.

In terms of Av.

Synergies I would say that we were already in this business. We had a small small part a widely that was already generating proprietary leads in this way and it adds to that Arsenal.

And to the extent that we are that we are.

Managing the student journey from the minute they think about a degree or a certification and they go online and they type into the Google search bar.

Artificial intelligence certifications.

From that moment through to the end of their college career or their master's degree or their certification. The idea that we can vertically integrate that you bet there are there.

Opportunities for optimization, there are opportunities for increased conversion there are opportunities for cost synergies. We are so in terms of the specifics of <unk> three and its financials you have to think about that now as two things one is as a business that serves the marketplace and to us as a core.

Ability that allows us to do a better job for universities in their most painful pinpoint.

Which is student acquisition and that that is an integrated part of the rest of what wildly provides to these to these universities. So I cant provide a simple answer to the financials of <unk> of X y Z.

Because of the robustness of its integration with well while he is doing.

But we anticipate significant benefits well over and above.

The numbers that are on the page.

Got it maybe last one and I'll see if there's others, but.

You mentioned inflation a couple of times.

You are relatively well insulated certainly for the rest of my coverage list, but still.

You may now not immune so are there levers you can or thinking about pulling.

To offset some of the potential impacts as we think about fiscal 'twenty three and beyond.

Proactively.

And second to that is.

How are you thinking about fiscal 'twenty three from an investment year versus may be.

Bottomline growth year.

I'm sure you'll give more detail on June , but don't blame me for asking.

Yes.

I never blame you for asking Dan. So there's two questions. There one is about our investment expectations going forward and the second is about our expectations about inflation and the ability to offset well as you know Wiley is very.

Reasonably insulated from inflationary pressures in the supply chain.

A small portion of why we're 85% digital Bryan nailed that amongst 383% digital.

At this point in time, and so so from a supply chain perspective, any effect would be relatively would be relatively modest.

And the largest cost for US is of course, our people and in the current environment of the.

The war for talent.

Things like the great resignation.

Must focus on ensuring that colleagues are not only happy here, but they feel they feel fairly compensated. So we have to take a good look at that that's really our biggest exposure, but the good news is our products are must have products and we've seen through good times and bad we just haven't seen the price pre.

Sure, particularly in areas like research that others have seen we feel very confident in our ability to price both in the P times Q model.

We've spoken about overall, we feel like the incredible brand portfolio, we have will come out on top.

As we move to this this P times Q model and the evidence supports that and our pricing by the way to answer.

But even in the even in the more legacy parts of our business, we're not seeing the price pressure that you would have expected. During this terrible period over the last couple of years, let's say there is not any but.

But the reason being if your research library, you can't be without wireless products, you just can't be.

And there is really good value for money because we put in.

Put in another 250 to 300000 articles into that product that you are buying from us every year. So.

So it's.

So we are insulated there there are certainly areas.

Where you could see some price pressure, but if you think about it across Wiley there's just.

We shouldnt see we shouldn't see too much price pressure so from an inflation perspective, we should be able to manage our internal cost to the extent possible, albeit kristina and I need to be thinking very closely about our people costs and.

And beyond that.

To the extent possible, we won't have what others have in some areas, which is price pressure. We should have we should be pretty well insulated there. So I'm not I'm not given the prognosis here, which is the beginning of an answer to your second question.

Honestly, Kristina and I are in the middle of the planning process for next fiscal year, we're just looking at the roll ups.

And we're just sort of getting through that process. So we will be able to provide a better view on that in.

In June .

With regard to our investment look the investment that we've made over the last few years for those of you following and I know Dan how closely you follow.

The investments we have made have been paying off.

We've invested heavily in in the modernization of business models and the infrastructure to support those models and customer acquisition capability development and these.

And I think it's clear that our investments have paid off and.

Unfortunately, our markets continue to evolve and we must continue to invest in the business in order to in.

In order to make sure that we are achieving the growth that we need to be successful in the long run I'm not telegraphing anything other than to say that that we expect to continue to invest in this business and as we.

While we're not providing any guidance now as we look at it we will see the areas that we want to invest in and we will do so with the.

With the long term and long term in mind having.

Having said that we are completely committed.

Two.

Two.

Protecting our margins.

Two route to delivering.

The return that our inspect.

The consistent returns that our investors have come to expect from.

From John Wiley, So so I can't really tell you anything on that until June , but we will get there.

Our process is helpful. Thanks for the color.

Alright, well, thank you very much.

Again, if you would like to ask a question Press Star then the number one on your telephone keypad.

And there are no further questions at this time, Mr. Brian APAC I turn the call back over to you for some closing remarks.

Alright, well again, thanks, everybody for joining.

And we'll look forward to sharing our fourth quarter and full year results in June and an outlook on next year.

This concludes today's conference call. Thank you for your participation you may now disconnect.

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