Q3 2022 John Wiley & Sons Inc Earnings Call
<unk> active engagement and dialogue to resolve this conflict and achieve lasting peace that 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, we pledged to support humanitarian efforts in Ukraine and across Europe .
On a happier note.
This year marks why at least 215th anniversary.
That's 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.
While these core we are in the knowledge business the creation the determination and the application of new information and new knowledge.
We do our work through some scientific research and career connected education.
And in a world, where new information is being created faster than ever with new discoveries insights and innovations are the essential lifeblood of every career and every industry.
Knowledge is a pretty good business to be in.
As the leader in the knowledge industry wildly does three things.
We enabled discovery through scientific research Repower career connected education for learners and professionals and we shape workforces for employers.
Year end and year out the world spends more on what Wiley does and with good reason.
Research and education power the global knowledge economy.
While we are tightly focused on two strategies that target the seismic trends driving the knowledge economy first.
We are leading the industry transition to open with search with our research publishing and research solutions.
Our impactful 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 product and education services.
Our impactful here is to ensure that the massive global investment in education delivers a meaningful ROI for society 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 through 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 drugs drive 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 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.
We 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.
Okay.
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 and research and education services.
Revenue was up 10% in research and 18% in Ed services, while down 1% in APM.
I will 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.
So 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.
<unk> 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 our colleagues.
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 results and we're 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 through the pandemic.
As you would expect another issue we are watching closely right now is the great resignation.
All companies widely has seen a modest elevation in our turnover recently, but nothing that raises any major issues at.
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 Cigna.
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 widely has successfully navigated periods of uncertainty for 200 years, and we will 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 their two complementary parts of this business.
Research publishing, which is migrating to OE and research solutions in which we delivered best in breed infrastructure and publishing services to help other players in the ecosystem such as publishers societies associations incorporations 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 towards open access.
In 2019 as you May recall, we saw what the market wanted and OE and we jumped in the driver's seat.
Ever since we delivered above market growth in the new P times, Q economy, where revenue.
As 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.
During the quarter momentum continued to accelerate for our transformational read and published models with major signings in the U S. These included the California Library Consortium for 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 will continue to replace our legacy REIT only deals.
It is important to note from a reporting perspective that the hybrid nature of these agreements is increasingly blurring the line between business models and revenue lives 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 wildlings, enabling the complex the OE transition 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.
Wildly scale 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.
Leading copywriting and payment services as well as journal workflow technologies.
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 billion 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 gaps.
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.
ACL revenue declined 1% this quarter with education publishing down, 2% and professional learning flat adjusted.
Adjusted EBITDA rose, 4% due to cost savings initiatives.
For Q3, EBITDA margin of 30%, which is up from 29% in the prior year period.
Overall, while APM API 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.
Professionals.
Within this 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 <unk> in 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 winning content and courseware to return to growth as we emerge from this unusual period.
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 book, 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.
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.
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 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 bumped that drove students to flow into online programs.
Second 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.
And 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 this unique market conditions.
While these high impact services continue to be in demand and this quarter, we signed a large top 25 institution.
Two multi year 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.
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.
Slightly as impressive capability in this area as a key source of differentiation and it includes digital marketing and end to end student enrollment services.
This past quarter, we augmented wireless core of our value proposition by adding X Y Z media to the widely family, which we acquired for $45 million.
Okay.
X y Z as a market leader in student marketing.
They generate over 140000 highly qualified student leads per year for University.
Beyond this we are quite profitable.
So 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 these students for our client programs improving client success accelerating new program launches and enhancing new partner acquisition prospects.
Where it's full year <unk>.
Remember 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.
With enrollment 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 want to say, how proud I am to be part of Wiley.
After only a few months that job I am struck by the team's incredible strength and talent and the collective passion for our mission and mentioned that change.
On an enterprise level, we are tracking to our overall full year outlook with revenue up 8%.
And to 154 billion or 5% organically, including research growth of 10% <unk>, 3% and add services at 16%.
However, there is some variability to note, namely education services for our rapid growth in carpet talent development and offsetting unforeseen slowdown in University services.
Adjusted EBITDA is up 4% to $322 million.
It is driven by year to date profit contribution 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.
And career connected education.
We are investing to expand our corporate pipeline and existing relationships.
As well as scaling our digital courseware offerings.
We continue to embed operational excellence across the organization and.
And this will be a sharp focus in mind going forward.
Getting back to our financial results adjusted EPS through nine months is up 4% to $3 nine.
As a reminder.
<unk> adjusted EPS metrics exclude the impact of certain noncash items directly related to acquisition, particularly the 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.
They enabled us to execute on our strategic plan.
And paint.
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 three.
$309.
Free cash flow of $77 million down from $80 million were higher cash earnings offset by higher offset by higher capex and annual compensation payments.
With regard to our balance sheet.
Net debt to EBITDA ratio was one 9% at the end of January compared to two two at the same time last year.
Quiddity continues to be steady with $190 million of cash on hand, and undrawn revolving credit capacity of more than $550 million.
Capex of nine month, Capex for nine months at $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 continued to return to capital we.
We continue to return capital to our shareholders with $83 million devoted to dividends and share repurchases throughout not through nine months.
This is up $65 million from the prior year.
Our current dividend yield is around two 8% and repurchased 448000 shares year to date at an average cost per share of $55 48.
There is approximately 200 heaters and we are reaffirming our fiscal 'twenty two guidance ranges, which are.
Revenue growth of mid to high single digits to.
The range of two point, our $7 billion to $2 1 billion.
Adjusted EBITDA in a range of $415 million to $435 million of profit gains and higher revenue tempered by investments to drive profitable growth in research and education services.
Adjusted 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 aforementioned market conditions and University 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.
This 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.
It is another focus area for me.
Part of that is to ensure that we are easily located.
Therefore, we will be changing our ticker symbol from J W. H and J W beam tw ally and Tommy outlet.
<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 widely brand reached a new milestone with the launch of our external brand campaign.
This campaign, a first for Wiley will allow us to clearly tell the exciting Whalley story, while reaching new audiences and broadening 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.
Ill just summarize with the key takeaways from 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 strategy.
Good momentum in the research publishing and solutions, and notably in corporate products and services across Wiley.
This.
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 we remain the foundation of <unk> 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.
Oh and thank our wonderful colleagues around the world for them 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 will pause for just a moment to compile the Q&A roster.
And we have your first question is from the line of Daniel Moore from CJS Securities. Your line is open.
Thanks, Good morning, Brian Good morning, Christina Thanks for taking my questions.
Research, Thanks start with research if I could.
Maybe just talk about what's driving the acceleration in growth in publishing platforms.
Do we expect.
Above trend growth to continue here in the near term.
Yes.
We're very excited about our opportunities on the solution 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 <unk>.
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 interests that corporate.
Corporate 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 and.
All systems go.
Helpful, Maybe switch gears to services.
<unk> clearly accelerating talk about how much of that is sort of a market recovery from COVID-19 impacted comp period versus increased penetration in the marketplace as well as within your customer base.
Yes.
It's a great question, we're super excited about the potential for us in corporate talent development and corporate training overall, we have we have seen.
We have 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.
Their employee base with regard to their ability to fill seats with <unk>.
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 increased penetration in the marketplace with great customer acquisition and a great pipeline we're seeing.
Increasing demand from the clients that we have who see this solution that's 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 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 so it is not post COVID-19 .
Though we had an enormous talent gap going into the COVID-19 period and that talent talent.
Million open jobs.
And those jobs need to be filled.
So we are in the business of our business volume I wouldn't say this is driven by Covid 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 tough.
Very helpful.
So Brian let me again.
Okay.
And we'll stick with that services that switched to the online program management side.
You detailed some of the surgery for target headwinds.
We appreciate the color some of your competitors are struggling.
Hey, Dan.
Can you hear me.
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.
And yet.
Yes online program management.
You laid out some of the near term market headwinds very well.
Your competitors are clearly struggling.
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 long do you anticipate.
These headwinds to last in other words when do you think we can get back to growth.
Yes, it's a 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 goal.
They're having trouble they are having trouble on a lot of levels acquiring students, it's increasingly competitive they need us more more than ever.
But in terms of Av Av.
Where we stand in the market.
Everybody knows what he's got gold standard services in this area.
And 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 are bringing students through X y Z.
As opposed to having to go out and compete in the market for it so that gives us a.
That gives us a differential advantage over others in the marketplace with regard to what we do from a.
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 some of these factors are are up when will they run will that boom and when will the.
The increasing salaries being offered to.
Two students.
Our two potential students.
Allow them to go back to school or be less less attractive as they go out so 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 ways. So for example last summer we saw students.
Graduated earlier than we thought they were going to graduate why was that so if it 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.
Predicted that.
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 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 <unk> 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.
Focused on right now, which is these non traditional credentials and.
And shorter courses I don't know 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 thats just a shifting of.
Product focus like happens in any market over time, so long term, we feel pretty good.
Shorter term, where sort of our way through it like everybody else.
Very helpful.
As is the detail on X y Z appreciate the color there.
Talk about how 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 let's say $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 are of course, we of course are meaning to continue this business as businesses get to the second main point, which is we completely intend to be out there in the market and we'll continue to do 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, where that's important.
In terms of Av.
Synergy.
I would say that we were already in this business, we had a small small part a wildly 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 of certification and they go online and they type into Google search bar.
Artificial intelligence, so 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.
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 capability that allows us to do a better job for universities in their most painful pinpoint.
Which is student acquisition.
That is an integrated part of the rest of world, while we provide fleet.
So I can't provide a simple answer to the financials of end of X y Z.
Because of the robustness of its integration with ROE while he is doing.
But we.
<unk>.
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.
<unk>.
Sure relatively well insulated certainly the rest of my coverage list, but still.
Not immune so are there levers you can or thinking about pulling.
To offset some of the potential impact.
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.
Yeah.
I never blame you for asking the answer 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 whereas you know Wiley is very.
Reasonably insulated from inflationary pressures.
In the supply chain.
A small portion of why we're 85% percent digital.
At this point in time, and so so from a supply chain perspective, any effects would be relatively.
We would be relatively modest.
And the Lord.
Alan.
Things like the Grace.
Resignation.
We 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.
Pressure, particularly in areas like with search that others have seen we feel very confident in our ability to price both in the P times Q model.
Which we've spoken about overall, we feel that 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's not any but the.
But the reason being if youre a research lab or you can't be without wireless products, you just can't be and there is really good value for money because we put in.
We 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.
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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 we should be pretty well insulated there. So I'm not I'm not given the prognosis here.
Since the beginning of an answer to your second question, because honestly Kristina and I are in the middle of the planning process for next fiscal year. We are just looking at the Rollouts.
And we're just sort of getting through that process. So it 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 model and customer acquisition capability development and these.
And I think it's clear that our investments have paid off.
Unfortunately, our markets continue to evolve and we must continue to invest in the business in order to.
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 were.
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 involve long term in mind having.
Having said that we are completely committed.
Two.
Two.
Protecting our margins.
And to delivering the return that our inspect the consistent returns that our investors have come to expect from.
From John Wiley so.
Can't really tell you anything on that until June , but we will get there then.
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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Yes.