In the online universe, print publishers have an immense challenge. Some continue to innovate to stay in the game. Educational publisher John Wiley & Sons (NYSE: WLY) exceeded expectations in its Q1 2024 earnings report despite an 11% year-over-year revenue decline to $468.5 million. Non-GAAP earnings-per-share were $1.21, 49.4% greater than Wall Street estimates of $0.81. The firm's projected full-year revenue of $1.67 billion (midpoint) for the upcoming fiscal year 2025 is slightly higher than analysts anticipated. However, it still implies a 10.8% decline compared to the previous year. While gross margins contracted from 77.5% to 73.7% year-over-year, free cash flow increased significantly to $164.5 million, up 81% from the previous quarter. Investors responded positively to the results, with the stock price jumping 11.7% following the announcement.

Success Comes Among Difficult Headwinds

The publishing industry is navigating a transformative time. Artificial intelligence (AI) is a “mixed blessing” to publishers and media outlets, presenting challenges to the very idea of content creation. AI also offers opportunities to nimble organizations that can effectively harness it. Publishers also face challenges due to digitization and shifting attention online. This requires a strategic pivot to digital subscriptions and new content formats. In addition to the digital landscape and AI, other global events that the industry must adapt to include the aftermath of the pandemic and inflation (e.g., higher paper costs).

Can Wiley Continue To Gain Ground Going Forward?

John Wiley & Sons, founded in 1807, has seen its industry go through momentous change. In its recent report, Wiley & Sons’ interim CEO Matthew Kissner expressed confidence in the company’s research growth, generative AI momentum, and performance and profit momentum. Historically, the business has had flat sales growth over the past five years and declining revenue in the last two years. This shows difficulties with long-term growth. However, free cash flow generation is strong, and management anticipates a major GenAI project with a large tech company in fiscal year 2025. This contributes to a revenue outlook that surpasses current consensus estimates.  

Neither Julie Stoller nor Stocks.News have positions in this company.