John Wiley & Sons Inc.
06/24/2026 | Press release | Distributed by Public on 06/24/2026 12:37
Annual Report for Fiscal Year Ending April 30, 2026 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The information in our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read together with our Consolidated Financial Statements and related notes set forth in Part II, Item 8, as well as the discussion included in Part I, Item 1, "Business," "Cautionary Notice Regarding Forward-Looking Statements "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995" and "Non-GAAP Financial Measures," along with Part I, Item 1A, "Risk Factors," of this Annual Report on Form 10-K. All amounts and percentages are approximate due to rounding and all dollars are in thousands, except per share amounts or where otherwise noted. When we cross-reference to a "Note," we are referring to our "Notes to Consolidated Financial Statements," in Part II, Item 8, "Financial Statements and Supplementary Data" unless the context indicates otherwise.
Overview
Wiley is a global leader in authoritative content and research intelligence for the advancement of scientific discovery, innovation, and learning. The Company's content, services, platforms, and knowledge networks are tailored to meet the evolving needs of its customers and partners, including institutions, societies, corporations, researchers, students, instructors, and other professionals. Wiley is a predominantly digital company with 85% of its revenue for the year ended April 30, 2026, generated by digital products and services. For the year ended April 30, 2026, 48% of revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty.
We report financial information for the following reportable segments, as well as a Corporate category, which includes certain costs that are not allocated to the reportable segments:
•Research includes the reporting lines of Research Publishing and Research Solutions;
•Learning includes the Academic and Professional reporting lines and consists of publishing, courseware, and assessments.
Wiley also reported a Held for Sale or Sold segment in the years ended April 30, 2025 and 2024, which primarily included non-core businesses which were classified as held-for-sale until the date of sale, as well as other businesses which were sold. Through the Research segment, we provide peer-reviewed STM journals, content platforms, and related publishing and audience solutions to academic, corporate, and government customers, academic societies, and individual researchers. The Learning segment provides scientific, professional, and education print and digital books to researchers, professionals, and students, digital courseware for instructors and students, and assessment services to businesses and professionals.
Wiley's business strategies are tightly aligned with consistent long-term growth trends, including (1) ever-increasing global R&D investment and researcher productivity gains from AI, leading to growth in scientific research output and the number of institutions and researchers worldwide, and (2) the ever-increasing need for authoritative content to fuel AI models and applications. These strategies include expanding our publishing program and journal portfolio to meet the global demand for peer-reviewed research, driving additional value in our subscription-based models for universities and corporations, volume-based models for open access, content licensing opportunities for applications in AI and data analytics, and content platform and service offerings for corporations and societies. AI and data analytics is our emerging growth engine, leveraging our proprietary content, data, and partnership ecosystem for corporate models and applications. Learning strategies include selectively scaling high-value digital content, courseware, and assessments to meet targeted opportunities in education and professional development.
On June 1, 2026, subsequent to the end of fiscal year 2026, we acquired Emerald Publishing for £337.5 million (approximately $452 million), funded with available cash and proceeds from our revolving credit facility. Emerald Publishing is a research publisher headquartered in Leeds, England, with a portfolio of over 480 peer-reviewed journals, 8,000 books, and 3,000 business cases across disciplines with particular emphasis on economics, business, finance, engineering, and the social sciences. The acquisition was made to extend our scale in our Research business and to strengthen our proprietary content advantage in AI. See Note 21, "Subsequent Event" for further details.
Index
Consolidated Results of Operations
FISCAL YEAR 2026 AS COMPARED TO FISCAL YEAR 2025 SUMMARY RESULTS
SUMMARY
•US GAAP Results: Revenue of $1,676.5 million (consistent with the prior year), Operating income of $276.9 million (+25% compared with the prior year), and Diluted Earnings per Share of $4.16 (+$2.63 compared with the prior year).
•Adjusted Results at Constant Currency (excluding Held for Sale or Sold segment results): Adjusted Revenue of $1,676.5 million (consistent with the prior year), Adjusted Operating Income of $296.2 million (+18%, compared with the prior year), Adjusted EBITDA of $439.6 million (+10% compared with the prior year), and Adjusted EPS of $4.19 (+15% compared with the prior year).
•Net Cash Provided by Operating Activities of $260.5 million (+$57.9 million compared with the prior year), and Free Cash Flow Less Product Development Spending of $195.3 million (+$69.5 million compared with the prior year).
Revenue:
Revenue for the year ended April 30, 2026, decreased $1.1 million, essentially flat compared with the prior year. On a constant currency basis, revenue decreased 1% as compared with the prior year. Excluding the revenues from the Held for Sale or Sold segment, Adjusted Revenue was consistent with the prior year on a constant currency basis.
AI license revenue was $49.1 million in the year ended April 30, 2026 compared to $40 million in the prior year. The AI license revenue in the year ended April 30, 2026 includes $19.4 million of revenue related to content which Wiley has licensed from other publishers. The period to period comparability of AI license revenue can fluctuate due to timing and the nature of the underlying content.
Adjusted Revenue
Below is a reconciliation of our consolidated US GAAP Revenue, net to Non-GAAP Adjusted Revenue, net:
|
Year Ended April 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| US GAAP Revenue, net | $ | 1,676,528 | $ | 1,677,609 | |||||||
|
Less: Held for Sale or Sold segment
|
- | (17,382) | |||||||||
| Non-GAAP Adjusted Revenue, net | $ | 1,676,528 | $ | 1,660,227 | |||||||
See the "Segment Operating Results" below for additional details on each segment's revenue and Adjusted EBITDA performance.
Cost of Sales:
Cost of sales for the year ended April 30, 2026, of $431.5 million, increased $0.1 million, and was consistent with the prior year. On a constant currency basis, cost of sales decreased 1% as compared with the prior year. This was primarily due to lower inventory costs primarily in Learning and, to a lesser extent, the prior year including employee costs primarily related to the Wiley Edge business which was sold on May 31, 2024. These factors were partially offset by higher royalty costs.
Excluding the cost of sales from the Held for Sale or Sold segment, cost of sales increased 1% on a constant currency basis primarily due to higher royalty costs which includes higher royalty on AI license revenue from content licensed from other publishers, partially offset by lower inventory costs primarily in Learning.
Index
Operating and Administrative Expenses:
Operating and administrative expenses for the year ended April 30, 2026, of $895.9 million decreased $51.5 million, or 5%, as compared with the prior year. On a constant currency basis, operating and administrative expenses decreased 7% as compared with the prior year primarily due to restructuring and cost savings initiatives resulting in lower employee costs and, to a lesser extent, lower professional fees.
On a constant currency basis, operating and administrative expenses excluding expenses from the Held for Sale or Sold segment decreased 6% as compared with the prior year. This decline was primarily due to restructuring and cost savings initiatives resulting in lower employee costs and, to a lesser extent, lower professional fees.
Restructuring and Related Charges:
We recorded restructuring and related charges in the years ended April 30, 2026 and 2025 of $19.2 million and $25.6 million, respectively. These charges are reflected in the Restructuring and related charges in the Consolidated Statements of Income (Loss). These amounts include a credit of $(0.1) million and $(3.8) million for the years ended April 30, 2026 and 2025, respectively, related to the Business Optimization Program, a prior restructuring initiative.
Global Restructuring Program
Beginning in fiscal year 2023, the Company initiated the Global Restructuring Program which was expanded in fiscal year 2024 to include those actions that will focus Wiley on its leading global position in the development and application of new knowledge and drive greater profitability, growth, and cash flow. We will focus on our strongest and most profitable businesses and large market opportunities in Research and Learning, as well as streamline our organization and rightsize our cost structure to reflect these portfolio actions. Under this program, we reduced our real estate square footage occupancy by approximately 35%.
In the fourth quarter of fiscal year 2025, the program was further extended due to the completion of our divestitures with a focus on optimizing our cost structure, with particular emphasis on aligning our technology costs and other corporate expenses. As a result of these initiatives, this expanded program will include severance related charges, facility-related costs associated with certain properties, and other activities.
Excluding actions related to the Held for Sale or Sold segment, we anticipate to yield annualized cost savings of approximately $120 million, with approximately $110 million of that realized this fiscal year from actions taken starting in fiscal year 2024.
For the years ended April 30, 2026 and 2025, we recorded pretax restructuring charges of $19.3 million and $29.4 million, respectively, related to this program.
In the first quarter of fiscal year 2027, the program was further expanded to include additional portfolio and cost optimization actions. As a result of these initiatives, we expect to incur additional restructuring charges in future periods, which includes severance, consulting, and facility-related costs associated with certain properties.
See Note 7, "Restructuring and Related Charges" for more details on these charges.
For the impact of our restructuring program on diluted earnings per share, see the section below, "Diluted Earnings per Share (EPS)."
Amortization of Intangible Assets:
Amortization of intangible assets was $53.1 million for the year ended April 30, 2026, an increase of $1.2 million, or 2% as compared with the prior year. On a constant currency basis, amortization of intangible assets was consistent with the prior year primarily due to the completion of amortization of certain acquired intangible assets, offset by amortization expense related to acquired definite lived intangible assets, including those acquired as part of an acquisition.
Index
Operating Income, Adjusted Operating Income (OI) and Adjusted EBITDA:
Operating income for the year ended April 30, 2026, of $276.9 million increased $55.5 million, or 25% as compared with the prior year. On a constant currency basis, operating income increased 25% as compared with the prior year. The increase was primarily due to lower operating and administrative expenses, partially offset by a decrease in revenue.
Adjusted OI and Adjusted EBITDA on a constant currency basis for the year ended April 30, 2026 increased 18% and 10%, respectively, as compared with the prior year. The increase in Adjusted OI and Adjusted EBITDA was primarily due to lower operating and administrative expenses, partially offset by higher cost of sales.
Adjusted OI
Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted OI:
|
Year Ended April 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| US GAAP Operating Income | $ | 276,859 | $ | 221,409 | |||||||
| Adjustments: | |||||||||||
| Restructuring and related charges | 19,203 | 25,561 | |||||||||
|
Held for Sale or Sold segment Adjusted Operating Loss
|
- | 3,578 | |||||||||
|
Legal settlement
|
108 | - | |||||||||
| Non-GAAP Adjusted OI | $ | 296,170 | $ | 250,548 | |||||||
Adjusted EBITDA
Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA:
|
Year Ended April 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Net Income | $ | 221,617 | $ | 84,161 | |||||||
| Interest expense | 43,848 | 52,547 | |||||||||
| (Benefit) provision for income taxes | (6,531) | 58,717 | |||||||||
| Depreciation and amortization | 143,477 | 147,126 | |||||||||
| Non-GAAP EBITDA | 402,411 | 342,551 | |||||||||
| Restructuring and related charges | 19,203 | 25,561 | |||||||||
| Net foreign exchange transaction losses | 6,564 | 8,142 | |||||||||
| Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale | 4,828 | 23,340 | |||||||||
| Other expense (income), net | 6,533 | (5,498) | |||||||||
|
Held for Sale or Sold segment Adjusted EBITDA
|
- | 3,578 | |||||||||
| Legal settlement | 108 | - | |||||||||
| Non-GAAP Adjusted EBITDA | $ | 439,647 | $ | 397,674 | |||||||
Interest Expense:
Interest expense for the year ended April 30, 2026, was $43.8 million compared with the prior year of $52.5 million. This decrease was primarily due to a lower weighted average effective interest rate and a decrease in the total debt outstanding.
Index
Foreign Exchange Transaction Losses:
Foreign exchange transaction losses were $(6.6) million for the year ended April 30, 2026, and were primarily due to losses on our foreign currency denominated third-party receivable and payable balances and, to a lesser extent, losses on our intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar.
Foreign exchange transaction losses were $(8.1) million for the year ended April 30, 2025, and were primarily due to losses on our intercompany accounts receivable and payable balances and, to a lesser extent, losses on our foreign currency denominated third-party receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar. In the year ended April 30, 2025, we wrote off an additional net gain of $1.4 million in cumulative translation adjustments from our Russian entity which was formally liquidated in the fourth quarter of fiscal year 2025.
Net Loss on Sale of Businesses, Assets, and Impairment Charges Related to Assets Held-for-Sale:
For the years ended April 30, 2026 and 2025, we recorded pretax loss on sale of businesses, assets, and impairment charges related to assets held-for-sale as follows:
|
Year Ended
April 30,
|
|||||||||||
| 2026 | 2025 | ||||||||||
| CrossKnowledge | $ | (2,309) | $ | 4,119 | |||||||
| University Services | (934) | (12,578) | |||||||||
| Wiley Edge | (422) | (14,852) | |||||||||
| Other disposition activity | (1,163) | (29) | |||||||||
| Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale | $ | (4,828) | $ | (23,340) | |||||||
These charges are reflected in Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale on our Consolidated Statements of Income (Loss). See Note 4, "Acquisition and Divestitures" for more details on these divestitures.
Other (Expense) Income, Net:
Other (expense), net was $(6.5) million for the year ended April 30, 2026 compared with the prior year Other income, net of $5.5 million, a decrease of $12.0 million. This change was primarily due to foregone interest income due to the sale of the University Services Seller Note on June 5, 2025 and, to a lesser extent, an increase in pension expense for our defined benefit plans.
Index
(Benefit) Provision for Income Taxes:
Below is a reconciliation of our US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes:
|
Year Ended April 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| US GAAP Income Before Taxes | $ | 215,086 | $ | 142,878 | |||||||
| Pretax Impact of Adjustments: | |||||||||||
| Restructuring and related charges | 19,203 | 25,561 | |||||||||
| Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments | 2,881 | 5,590 | |||||||||
| Amortization of acquired intangible assets | 53,050 | 51,864 | |||||||||
| Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale | 4,828 | 23,340 | |||||||||
|
Held for Sale or Sold segment Adjusted Loss Before Taxes
|
- | 3,578 | |||||||||
|
Legal settlement
|
108 | - | |||||||||
| Non-GAAP Adjusted Income Before Taxes | $ | 295,156 | $ | 252,811 | |||||||
Below is a reconciliation of our US GAAP Income Tax (Benefit) Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate:
|
Year Ended April 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| US GAAP Income Tax (Benefit) Provision | $ | (6,531) | $ | 58,717 | |||||||
|
Income Tax Impact of Adjustments(1):
|
|||||||||||
| Restructuring and related charges | 4,682 | 5,947 | |||||||||
| Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments | 464 | 1,170 | |||||||||
| Amortization of acquired intangible assets | 11,298 | 10,231 | |||||||||
| Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale | 480 | 2,368 | |||||||||
|
Held for Sale or Sold segment Adjusted Tax Benefit
|
- | 807 | |||||||||
| Income Tax Adjustments | |||||||||||
|
Impact of withholding tax on Sri Lanka distribution
|
(982) | - | |||||||||
|
Impact of valuation allowance on the US GAAP effective tax rate
|
58,324 | (26,008) | |||||||||
|
Impact of change in Germany statutory tax rate on deferred tax balances
|
4,286 | - | |||||||||
| Impact of change in certain US state tax rates in 2025 | - | (117) | |||||||||
| Non-GAAP Adjusted Income Tax Provision | $ | 72,021 | $ | 53,115 | |||||||
|
|
|||||||||||
| US GAAP Effective Tax Rate | (3.0)% | 41.1% | |||||||||
| Non-GAAP Adjusted Effective Tax Rate | 24.4% | 21.0% | |||||||||
|
(1)
|
For the years ended April 30, 2026 and 2025, substantially all of the tax impact was from deferred taxes.
|
||||
The Company's effective tax rate for the year ended April 30, 2026, was primarily driven by the impact of the US valuation allowance release, the enactment of tax rate reductions in Germany, and the rates of tax imposed on income earned in foreign jurisdictions.
Index
In fiscal year 2024, due to losses in the US resulting from impairments, restructuring activities, and the acceleration of amortization expense on capitalized software, we concluded it was more likely than not that a portion of our deferred tax assets would not be realized. As a result, we established a valuation allowance of $53.5 million, which increased to $77.3 million in fiscal year 2025.
During fiscal year 2026, we concluded that it was more likely than not that substantially all US deferred tax assets would be realized based on all available positive and negative evidence, having demonstrated sustained US profitability, which is objective and verifiable, and taking into account anticipated future earnings. As a result, we decreased our valuation allowance by approximately $70.0 million, of which $58.3 million was reflected in our GAAP Income Tax Provision only and $11.7 million in our Non-GAAP Adjusted Income Tax Provision.
The Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2026, was 24.4%. The Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2025, was 21.0%. The increase in the Non-GAAP Adjusted Effective Tax Rate before these items was primarily due to the mix of earnings by jurisdiction for the year ended April 30, 2026.
Diluted Earnings Per Share (EPS):
EPS for the year ended April 30, 2026, was $4.16 per share compared to $1.53 per share in the prior year. This increase was primarily due to higher income before taxes, and a benefit for income taxes in fiscal year 2026 compared with a provision for income taxes in the prior year.
Below is a reconciliation of our US GAAP Earnings Per Share to Non-GAAP Adjusted EPS. The amount of the pretax and the related income tax impact for the adjustments included in the table below are presented in the section above, "(Benefit) Provision for Income Taxes."
|
Year Ended April 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| US GAAP Earnings Per Share | $ | 4.16 | $ | 1.53 | |||||||
| Adjustments: | |||||||||||
| Restructuring and related charges | 0.27 | 0.36 | |||||||||
| Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments | 0.05 | 0.08 | |||||||||
| Amortization of acquired intangible assets | 0.79 | 0.76 | |||||||||
| Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale | 0.08 | 0.38 | |||||||||
|
Held for Sale or Sold segment Adjusted Net Loss
|
- | 0.05 | |||||||||
| Income tax adjustments | (1.16) | 0.48 | |||||||||
| Non-GAAP Adjusted EPS | $ | 4.19 | $ | 3.64 | |||||||
On a constant currency basis, Adjusted EPS increased 15% primarily due to an increase in Adjusted Operating Income, partially offset by an increase in the Adjusted Effective Tax Rate.
Index
SEGMENT OPERATING RESULTS:
|
Year Ended April 30, |
% Change Favorable (Unfavorable) |
Constant Currency % Change Favorable (Unfavorable) |
|||||||||||||||||||||
| RESEARCH | 2026 | 2025 | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Research Publishing | $ | 965,767 | $ | 922,553 | 5 | % | 3 | % | |||||||||||||||
| Research Solutions | 164,175 | 152,906 | 7 | % | 6 | % | |||||||||||||||||
| Total Research Revenue | 1,129,942 | 1,075,459 | 5 | % | 4 | % | |||||||||||||||||
|
|
|||||||||||||||||||||||
| Cost of sales | 303,702 | 278,867 | (9) | % | (8) | % | |||||||||||||||||
| Direct expenses | 331,192 | 336,484 | 2 | % | 4 | % | |||||||||||||||||
| Allocated Corporate expenses | 167,578 | 160,959 | (4) | % | (3) | % | |||||||||||||||||
| Amortization of intangible assets | 44,866 | 43,569 | (3) | % | 0 | % | |||||||||||||||||
| Adjusted Operating Income | 282,604 | 255,580 | 11 | % | 10 | % | |||||||||||||||||
| Depreciation and amortization | 92,472 | 89,302 | (4) | % | (2) | % | |||||||||||||||||
| Adjusted EBITDA | $ | 375,076 | $ | 344,882 | 9 | % | 8 | % | |||||||||||||||
| Adjusted EBITDA Margin | 33.2% | 32.1% | |||||||||||||||||||||
Revenue:
Research revenue for the year ended April 30, 2026, increased $54.5 million, or 5%, as compared with the prior year. On a constant currency basis, revenue increased 4% as compared with the prior year.
Research Publishing revenue on a constant currency basis increased 3% primarily due to continued growth in author-funded open access and, to a lesser extent, recurring revenue models which includes subscriptions and transformational agreements. These increases were partially offset by softness in ancillary products. Research Solutions revenue on a constant currency basis increased 6% primarily due to AI licensing as a service revenue which includes content licensed from other publishers, partially offset by a decrease in recruitment and, to a lesser extent, marketing services due to lower corporate customer spending.
Research AI licensing revenue for the year ended April 30, 2026 was $33.1 million as compared to approximately $11 million in the prior year. Open access article output growth was approximately 25% as compared with the prior year.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA increased 8% as compared with the prior year. This increase was primarily due to higher revenue and, to a lesser extent, restructuring and cost savings initiatives, partially offset by higher royalty costs.
Index
|
Year Ended April 30, |
% Change Favorable (Unfavorable) |
Constant Currency % Change Favorable (Unfavorable) |
|||||||||||||||||||||
| LEARNING | 2026 | 2025 | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Academic | $ | 318,757 | $ | 333,693 | (4) | % | (5) | % | |||||||||||||||
| Professional | 227,829 | 251,075 | (9) | % | (10) | % | |||||||||||||||||
| Total Learning Revenue | 546,586 | 584,768 | (7) | % | (7) | % | |||||||||||||||||
|
|
|||||||||||||||||||||||
| Cost of sales | 127,807 | 144,758 | 12 | % | 13 | % | |||||||||||||||||
| Direct expenses | 136,301 | 142,204 | 4 | % | 5 | % | |||||||||||||||||
| Allocated Corporate expenses | 107,909 | 114,703 | 6 | % | 7 | % | |||||||||||||||||
| Amortization of intangible assets | 8,184 | 8,253 | 1 | % | 1 | % | |||||||||||||||||
| Adjusted Operating Income | 166,385 | 174,850 | (5) | % | (5) | % | |||||||||||||||||
| Depreciation and amortization | 41,148 | 43,900 | 6 | % | 7 | % | |||||||||||||||||
| Adjusted EBITDA | $ | 207,533 | $ | 218,750 | (5) | % | (6) | % | |||||||||||||||
| Adjusted EBITDA Margin | 38.0% | 37.4% | |||||||||||||||||||||
Revenue:
Learning revenue for the year ended April 30, 2026, decreased $38.2 million, or 7%, as compared with the prior year. On a constant currency basis, revenue decreased 7% as compared with the prior year.
Academic revenue on a constant currency basis decreased 5% primarily due to a decline in print book sales and, to a lesser extent, licensing revenue including AI, partially offset by higher digital content growth. Professional revenue on a constant currency basis decreased 10% primarily due to a decline in print and digital sales through retail channels and, to a lesser extent, a decrease in licensing revenue including AI.
Learning AI licensing revenue for the year end April 30, 2026 was $16.0 million compared to approximately $29 million in the prior year.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA decreased 6% as compared with the prior year. This decrease was primarily due to lower revenue, partially offset by lower inventory costs, royalty costs, and restructuring and cost savings initiatives.
Index
|
Year Ended April 30, |
% Change
Favorable
(Unfavorable)
|
Constant Currency
% Change
Favorable
(Unfavorable)
|
|||||||||||||||||||||
| HELD FOR SALE OR SOLD | 2026 | 2025 | |||||||||||||||||||||
| Total Held for Sale or Sold Revenue | $ | - | $ | 17,382 | # | # | |||||||||||||||||
|
|
|||||||||||||||||||||||
| Cost of sales | - | 7,755 | # | # | |||||||||||||||||||
| Direct expenses | - | 10,365 | # | # | |||||||||||||||||||
| Allocated Corporate expenses | - | 2,840 | # | # | |||||||||||||||||||
| Amortization of intangible assets | - | - | # | # | |||||||||||||||||||
|
Adjusted Operating Loss
|
- | (3,578) | # | # | |||||||||||||||||||
| Depreciation and amortization | - | - | # | # | |||||||||||||||||||
| Adjusted EBITDA | $ | - | $ | (3,578) | # | # | |||||||||||||||||
| Adjusted EBITDA Margin | 0.0% | (20.6)% | |||||||||||||||||||||
# Not meaningful
Revenue:
Held for Sale or Sold revenue for the year ended April 30, 2026, decreased $17.4 million as compared with the prior year due to the sale of Wiley Edge on May 31, 2024, with the exception of its India operations which sold on August 31, 2024, and CrossKnowledge on August 31, 2024.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA was zero for the year ended April 30, 2026 compared to a loss of $3.6 million in the prior year due to the sale of the Wiley Edge and CrossKnowledge businesses.
|
Year Ended April 30, |
% Change
Favorable
(Unfavorable)
|
Constant Currency
% Change
Favorable
(Unfavorable)
|
|||||||||||||||||||||
| CORPORATE EXPENSES | 2026 | 2025 | |||||||||||||||||||||
| Unallocated Corporate expenses | $ | 152,819 | $ | 179,882 | 15 | % | 16 | % | |||||||||||||||
| Adjusted Unallocated Corporate Expenses | (152,819) | (179,882) | 15 | % | 16 | % | |||||||||||||||||
| Depreciation and amortization | 9,857 | 13,924 | 29 | % | 30 | % | |||||||||||||||||
| Adjusted EBITDA | $ | (142,962) | $ | (165,958) | 14 | % | 15 | % | |||||||||||||||
On a constant currency basis, adjusted corporate expenses of $143.0 million on an Adjusted EBITDA basis decreased 15% as compared with the prior year. This was primarily due to restructuring and cost savings initiatives resulting in lower employment costs, and professional fees.
Index
FISCAL YEAR 2025 AS COMPARED TO FISCAL YEAR 2024 SUMMARY RESULTS
Discussions of our results of operations for the year ended April 30, 2025 compared to April 30, 2024 have been omitted under this item, but may be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended April 30, 2025, which was filed with the SEC on June 25, 2025.
LIQUIDITY AND CAPITAL RESOURCES:
Principal Sources of Liquidity
We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing, and financing needs in the next twelve months. Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures. Excess operating cash is used to fund shareholder dividends and share repurchases. Other discretionary uses of cash flow include investments and acquisitions to complement and grow our portfolio of businesses. As necessary, we may supplement operating cash flow with debt to fund these activities. The overall cash position of the Company reflects our durable business results and a global cash management strategy that considers liquidity management, economic factors, and tax considerations. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure to any financial institution.
As of April 30, 2026, we had cash and cash equivalents of $75.6 million, of which approximately 96% was located outside the US. Maintenance of these cash and cash equivalent balances outside the US does not have a material impact on the liquidity or capital resources of our operations. We intend to repatriate earnings from our non-US subsidiaries, and to the extent we repatriate these funds to the US, we may be required to pay taxes in various US state and local jurisdictions and withholding or similar taxes in applicable non-US jurisdictions in the periods in which such repatriation occurs. Accordingly, as of April 30, 2026, we have recorded a deferred tax liability of approximately $2.2 million related to the estimated taxes that would be incurred upon repatriating certain non-US earnings to the US.
On November 30, 2022, we entered into the second amendment to the Third Amended and Restated Credit Agreement (collectively, the Amended and Restated CA). See Note 14, "Debt and Available Credit Facilities" for more details on the amendment. The Amended and Restated CA provided for senior unsecured credit facilities comprised of the following (i) a five-year revolving credit facility in an aggregate principal amount up to $1.115 billion which matures November 2027, (ii) a five-year term loan A facility consisting of $200 million which matures November 2027, and (iii) $185 million aggregate principal amount revolving credit facility which matured in May 2024. We also may request an increase in the aggregate commitments provided that the total credit exposures of all lenders shall at no time exceed $2 billion, and any such request shall be in minimum increments of $50 million, subject to the approval of the lenders. On May 15, 2026, we entered into the third amendment to the Third Amended and Restated Credit Agreement for the establishment of incremental term commitments in an aggregate principal amount of $300.0 million, increasing the total available lines of credit to $1,590.5 million.
As of April 30, 2026, we had approximately $683.4 million of debt outstanding, net of unamortized issuance costs of $0.3 million, and approximately $606.9 million of unused borrowing capacity under our Amended and Restated CA and other facilities. Our Amended and Restated CA contains certain restrictive covenants related to our consolidated leverage ratio and interest coverage ratio, which we were in compliance with as of April 30, 2026.
Contractual Obligations and Commercial Commitments
A summary of contractual obligations and commercial commitments, excluding unrecognized tax benefits further described in Note 13, "Income Taxes," of the Notes to Consolidated Financial Statements, as of April 30, 2026, is as follows:
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Payments Due by Period (in millions) |
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| Total |
Within Year 1 |
2-3 Years |
4-5 Years |
After 5 Years |
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Total debt(1)
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$ | 683.7 | $ | 12.5 | $ | 671.2 | $ | - | $ | - | |||||||||||||||||||
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Interest on debt(2)
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54.8 | 35.5 | 19.3 | - | - | ||||||||||||||||||||||||
| Non-cancellable leases | 102.7 | 20.2 | 31.7 | 29.2 | 21.6 | ||||||||||||||||||||||||
| Minimum royalty obligations | 350.3 | 98.8 | 131.9 | 69.8 | 49.8 | ||||||||||||||||||||||||
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Other operating commitments(3)
|
278.6 | 95.9 | 132.9 | 49.8 | - | ||||||||||||||||||||||||
| Total | $ | 1,470.1 | $ | 262.9 | $ | 987.0 | $ | 148.8 | $ | 71.4 | |||||||||||||||||||
| (1) |
Total debt is exclusive of unamortized issuance costs of $0.3 million.
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||||
| (2) |
Interest on debt includes the effect of our interest rate swap agreements and the estimated future interest payments on our unhedged variable rate debt, assuming that the interest rates as of April 30, 2026, remain constant until the maturity of the debt.
|
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| (3) | Other operating commitments consist primarily of non-cancellable commitments under technology contracts, including cloud hosting, software licensing, and related services agreements. | ||||
Analysis of Historical Cash Flow
The following table shows the changes in our Consolidated Statements of Cash Flows:
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Year Ended April 30, |
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| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 260,519 | $ | 202,591 | |||||||
| Net cash provided by (used in) investing activities | 28,105 | (94,018) | |||||||||
| Net cash used in financing activities | (298,303) | (125,330) | |||||||||
| Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | $ | (581) | $ | 3,146 | |||||||
Cash flow from operations is seasonally a use of cash in the first half of Wiley's fiscal year principally due to the timing of collections for annual Journal Subscriptions and Transformational Agreements, which typically occurs in the beginning of the second half of our fiscal year.
Free cash flow less product development spending helps assess our ability, over the long term, to create value for our shareholders, as it represents cash available to repay debt, pay common dividends, and fund share repurchases, and acquisitions. Below are the details of Free cash flow less product development spending.
Free Cash Flow Less Product Development Spending:
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Year Ended April 30, |
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| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 260,519 | $ | 202,591 | |||||||
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Less: Additions to technology, property, and equipment
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(51,166) | (61,473) | |||||||||
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Less: Product development spending
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(14,012) | (15,228) | |||||||||
| Free cash flow less product development spending | $ | 195,341 | $ | 125,890 | |||||||
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Net Cash Provided By Operating Activities
2026 Compared to 2025
The following is a summary of the $57.9 million change in Net cash provided by operating activities for the year ended April 30, 2026, as compared with the year ended April 30, 2025 (amounts in millions).
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Net cash provided by operating activities - Year ended April 30, 2025
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$ | 202.6 | |||
|
Net income adjusted for items to reconcile net income to net cash provided by operating activities, which would include such noncash items as depreciation and amortization, net losses on sale of businesses, assets, and impairment charges related to assets held-for-sale, restructuring charges, and the change in deferred taxes
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38.8 | ||||
| Working capital changes: | |||||
| Accounts receivable, net and contract liabilities | (11.4) | ||||
| Accounts payable and accrued royalties | (20.7) | ||||
| Changes in other assets and liabilities | 51.2 | ||||
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Net cash provided by operating activities - Year ended April 30, 2026
|
$ | 260.5 | |||
The unfavorable change in accounts receivable, net and contract liabilities was primarily due to the timing of customer billings and collections.
The unfavorable change in accounts payable and accrued royalties was due to the timing of payments.
The favorable changes in other assets and liabilities noted in the table above was primarily due to lower contributions to defined benefit plans in fiscal year 2026, lower costs related to cloud computing arrangements, lower inventory levels and other changes in working capital. This was partially offset by a larger decline in accrued employee related costs in fiscal year 2026. This decline reflects both lower incentive compensation expense accrued during the year and lower cash payments for prior year annual incentive compensation.
Our negative working capital (current assets less current liabilities) was $359.3 million and $381.0 million as of April 30, 2026, and April 30, 2025, respectively. The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions (which includes Transformational Agreements) for which cash has been collected in advance. The contract liabilities will be recognized as revenue when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2026, and as of April 30, 2025 include contract liabilities of $451.4 million and $462.7 million, respectively, primarily related to deferred subscription revenue for which cash was collected in advance. Cash collected in advance for subscriptions is used by us for a number of purposes, including funding operations, capital expenditures, acquisitions, debt repayments, dividend payments, and share repurchases.
Net Cash Provided By (Used In) Investing Activities
2026 Compared to 2025
Net cash provided by investing activities in the year ended April 30, 2026, was $28.1 million compared to net cash used in investing activities of $94.0 million in the prior year. The change in investing activities was primarily due to the $115.3 million in cash received in fiscal year 2026 as a result of selling the remaining University Services assets in June 2025 and, to a lesser extent, lower additions for technology, property, and equipment of $10.3 million. This was partially offset by higher additions for publication rights of $17.4 million in 2026. See Note 4, "Acquisition and Divestitures" for further details on the sale of the University Services assets.
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Net Cash Used In Financing Activities
2026 Compared to 2025
Net cash used in financing activities in the year ended April 30, 2026, was $298.3 million compared to $125.3 million in the year ended April 30, 2025. The change in cash used was primarily due to net debt repayments of $120.3 million in fiscal year 2026 compared with net debt borrowings of $13.5 million in fiscal year 2025, and an increase in cash used for purchases of treasury shares in fiscal year 2026 of $39.7 million.
In the years ended April 30, 2026 and 2025, our quarterly dividend to shareholders was $1.42 and $1.41 per share annualized, respectively.
In fiscal year 2020, our Board of Directors authorized a share repurchase program of up to $200 million of Class A or B Common Stock, which was fully utilized as of April 30, 2026. In the first quarter of fiscal year 2026, our Board of Directors authorized an additional share repurchase program of up to $250 million of Class A or B Common Stock. As of April 30, 2026, $207.4 million of share repurchase authority remained under this authorization.
The following table summarizes the shares repurchased (shares in thousands):
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Year Ended April 30, |
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| 2026 | 2025 | ||||||||||
| Shares repurchased - Class A | 2,843 | 1,186 | |||||||||
| Shares repurchased - Class B | 7 | 173 | |||||||||
| Average price - Class A and Class B | $ | 35.08 | $ | 44.16 | |||||||
During the years ended April 30, 2026 and 2025, we purchased $100.0 million and $60.0 million, respectively, under these programs.
The total amount purchased and the average price per share excludes excise taxes payable on share repurchases and may differ from the share repurchases reflected in Purchases of treasury shares in our Consolidated Statements of Cash Flows. For the year ended April 30, 2026, the total amount repurchased and the total shares repurchased includes unsettled purchases, and such amount differs from the amount reflected in Purchases of treasury shares in our Unaudited Condensed Consolidated Statements of Cash Flows.
2025 Compared to 2024
A discussion of changes in our cash flows for the year ended April 30, 2025, compared to the year ended April 30, 2024, has been omitted under this item, but may be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year ended April 30, 2025, which was filed with the SEC on June 25, 2025.
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RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, ACCOUNTING GUIDANCE, AND DISCLOSURE REQUIREMENTS
We are subject to numerous recently issued statements of financial accounting standards, accounting guidance, and disclosure requirements. The information set forth in Part II, Item 8, "Financial Statements and Supplementary Data" in Note 2, "Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards," of the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K is incorporated by reference and describes these new accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES:
The preparation of our Consolidated Financial Statements and related disclosures in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and revenue and expenses during the reporting period. We review these estimates and assumptions periodically using historical experience and other factors and reflect the effects of any revisions on the Consolidated Financial Statements in the period we determine any revisions to be necessary. Actual results could differ from those estimates, which could affect the reported results. In Part II, Item 8, "Financial Statements and Supplementary Data" in Note 2, "Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards" of the Notes to Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in preparation of our Consolidated Financial Statements. Set forth below is a discussion of our more critical accounting policies and methods.
Revenue Recognition:
In Part II, Item 8, "Financial Statements and Supplementary Data," see Note 2, "Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards" in the section "Summary of Significant Accounting Policies", and see Note 3, "Revenue Recognition, Contracts with Customers," of the Notes to Consolidated Financial Statements for details of our revenue recognition policy.
Sales Return Reserves:
In Part II, Item 8, "Financial Statements and Supplementary Data," see Note 2, "Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards" in the section "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements for details of our sales return reserves.
A one percent change in the estimated sales return rate could affect net income by approximately $2 million. A change in the pattern or trends in returns could also affect the estimated allowance.
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed:
In connection with acquisitions, we allocate the cost of the acquisition to the assets acquired and the liabilities assumed based on the estimates of fair value for such items, including intangible assets. The excess of the purchase consideration over the fair value of assets acquired and liabilities assumed is recorded as goodwill. The determination of the acquisition date fair value of the assets acquired, and liabilities assumed, requires us to make significant estimates and assumptions, such as, if applicable, forecasted revenue growth rates and operating cash flows, royalty rates, customer attrition rates, obsolescence rates of developed technology, and discount rates. We may use a third-party valuation consultant to assist in the determination of such estimates.
In Part II, Item 8, "Financial Statements and Supplementary Data," see Note 4, "Acquisition and Divestitures" of the Notes to Consolidated Financial Statements for details of our acquisition.
Goodwill and Indefinite-lived Intangible Assets:
Goodwill is reviewed for possible impairment at least annually on a reporting unit level during the fourth quarter of each year. Our annual impairment assessment date is February 1. A review of goodwill may be initiated before or after conducting the annual analysis if events or changes in circumstances indicate the carrying value of goodwill may no longer be recoverable.
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A reporting unit is the operating segment unless, at businesses one level below that operating segment - the "component" level, discrete financial information is prepared and regularly reviewed by management, and the component has economic characteristics that are different from the economic characteristics of the other components of the operating segment, in which case the component is the reporting unit.
As part of the annual impairment test, we may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In a qualitative assessment, we would consider the macroeconomic conditions, including any deterioration of general conditions and industry and market conditions, including any deterioration in the environment where the reporting unit operates, increased competition, changes in the products/services and regulatory and political developments, cost of doing business, overall financial performance, including any declining cash flows and performance in relation to planned revenues and earnings in past periods, other relevant reporting unit specific facts, such as changes in management or key personnel or pending litigation, and events affecting the reporting unit, including changes in the carrying value of net assets.
If the results of our qualitative assessment indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we are required to perform a quantitative assessment to determine the fair value of the reporting unit.
Alternatively, if an optional qualitative goodwill impairment assessment is not performed, we may perform a quantitative assessment. Under the quantitative assessment, we compare the fair value of each reporting unit to its carrying value, including the goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeded its carrying value, there would be no indication of impairment. If the fair value of the reporting unit were less than the carrying value, an impairment charge would be recognized for the difference.
We derive an estimate of fair values for each of our reporting units using a combination of an income approach and a market approach. Absent an indication of fair value from a potential buyer or similar specific transactions, we believe that the use of these methods provides a reasonable estimate of a reporting unit's fair value.
Fair value computed by these methods is arrived at using a number of key assumptions including forecasted revenues and related growth rates, forecasted operating cash flows, the discount rate, and the selection of relevant market multiples of comparable publicly-traded companies with similar characteristics to the reporting unit. There are inherent uncertainties, however, related to these factors and to our judgment in applying them to this analysis. We believe that the combination of these methods provides a reasonable approach to estimate the fair value of our reporting units.
Income Approach Used to Determine Fair Values
The income approach is based upon the present value of expected cash flows. Expected cash flows are converted to present value using factors that consider the timing and risk of the future cash flows. The estimate of cash flows used is prepared on an unleveraged debt-free basis. We use a discount rate that reflects a market-derived weighted average cost of capital. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting unit's expected long-term operating and cash flow performance. The projections are based upon our best estimates of forecasted economic and market conditions over the related period including growth rates, expected changes in forecasted operating cash flows, and cash expenditures. Other estimates and assumptions include terminal value long-term growth rates, provisions for income taxes, future capital expenditures, and changes in future cashless, debt-free working capital. Changes in any of these assumptions could materially impact the estimated fair value of our reporting units. Our forecasts take into account the near and long-term expected business performance, considering the long-term market conditions and business trends within the reporting units. However, changes in these assumptions may impact our ability to recover the allocated goodwill in the future. For further discussion of the factors that could result in a change in our assumptions, see "Risk Factors" in this Annual Report on Form 10-K.
Market Approach Used to Determine Fair Values
The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the reporting unit's operating performance (the Guideline Public Company Method). These multiples are derived from comparable publicly-traded companies with similar investment characteristics to the reporting unit, and such comparable data are reviewed and updated as needed annually. We believe that this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to our reporting units and Wiley.
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The key estimates and assumptions that are used to determine fair value under this market approach include current and forward 12-month revenue and EBITDA results, as applicable, and the selection of the relevant multiples to be applied. Under the Guideline Public Company Method, a control premium, or an amount that a buyer is usually willing to pay over the current market price of a publicly-traded company is considered and applied to the calculated equity values to adjust the public trading value upward for a 100% ownership interest, where applicable.
In order to assess the reasonableness of the calculated fair values of our reporting units, we also compare the sum of the reporting units' fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units' fair values over the market capitalization). We evaluate the control premium by comparing it to control premiums of recent comparable market transactions. If the implied control premium is not reasonable in light of these recent transactions, we will reevaluate our fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions.
If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (such as a sustained decrease in the price of our common stock, a decline in current market multiples, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, heightened competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of), we may be required to record impairment charges in future periods. Any impairment charges that we may take in the future could be material to our consolidated results of operations and financial condition.
Fiscal Year 2026 and 2025 Annual Goodwill Impairment Test
As of February 1, 2026 and 2025, we completed a qualitative assessment for our annual goodwill impairment test for our reporting units within Research and Learning segments. This assessment included consideration of key factors including macroeconomic conditions, industry and market considerations, cost factors, financial performance, and other relevant entity and reporting unit-specific events. Based on our qualitative assessment, we determined it was not more likely than not that the fair value of any reporting unit was less than its carrying amount. As such, it was not necessary to perform a quantitative test. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed as of February 1, 2026.
Fiscal Year 2024 Segment Realignment Goodwill Impairment Test
In the first quarter of fiscal year 2024, we began to operate under a new organizational structure, which resulted in a change in our composition of our reportable segments, which resulted in a change in our reporting units. The Learning reportable segment includes two reporting units, Academic and Professional, and the Held for Sale or Sold reportable segment includes three reporting units, University Services, Wiley Edge, and CrossKnowledge. No changes were made to the Research reportable segment. As a result of this realignment, we were required to test goodwill for impairment immediately before and after the realignment. Since there were no changes to the Research reportable segment, no interim impairment test of the Research reportable segment goodwill was required.
Goodwill Impairment Before Realignment
Prior to the realignment, we concluded that the fair value of the Academic Publishing, Talent Development (which includes Wiley Edge) and Professional Learning reporting units were above their carrying values. Therefore, there was no indication of impairment. The carrying value of the University Services reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of $11.4 million. Such impairment reduced the goodwill of the University Services reporting unit to zero. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income (Loss).
University Services was adversely impacted by market conditions and headwinds for online degree programs, which lead to a decline in projected enrollments from existing partners, pricing pressures and revenue share concessions, and a decline in new partner additions over both the short-term and long-term which adversely impacted forecasted revenue growth and operating cash flows.
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The key assumptions underlying the estimate of the fair value of the University Services reporting unit included the following:
•Future cash flow assumptions - the projections for future cash flows utilized in the model were derived from historical experience and assumptions regarding future growth and profitability of the reporting unit. These projections include forecasted revenues and related growth rates, and forecasted operating cash flows, and are consistent with our operating budget and strategic plan. We applied a compounded annual growth rate of approximately 4.6% for forecasted sales in our projected cash flows through fiscal year 2031. Beyond the forecasted period, a terminal value was determined using a perpetuity growth rate of 3.0% to reflect our estimate of stable and perpetual growth.
•Discount rate based on the weighted average cost of capital (WACC) - the WACC is the rate used to discount the reporting unit's estimated future cash flows. The WACC is calculated based on a proportionate weighting of the cost of debt and equity. The cost of equity is based on a capital asset pricing model and includes a company-specific risk premium to capture the perceived risks and uncertainties associated with the reporting unit's projected cash flows. The cost of debt component is calculated based on the after-tax cost of debt of Moody's Baa-rated corporate bonds. The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the University Services reporting unit. The WACC applied to the University Services reporting unit was 17%.
•Valuation Multiples - for the Guideline Public Company Method, we applied relevant current and forward 12-month EBITDA multiples based on an evaluation of multiples of publicly-traded companies with similarities to the University Services reporting unit. The multiples applied ranged from 4.5x to 6.0x EBITDA.
Prior to performing the goodwill impairment test for University Services, we also evaluated the recoverability of long-lived assets of the reporting unit. The carrying value of the long-lived assets that were tested for impairment was approximately $231.0 million. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We considered the lower-than-expected revenue and forecasted operating cash flows over a sustained period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the University Services reporting unit exceeded the carrying value. Therefore, there was no impairment.
Goodwill Impairment After Realignment
After the realignment, we concluded that the fair value of the Academic, Professional, and Wiley Edge reporting units was above their carrying values. Therefore, there was no indication of impairment. As noted above, the goodwill of the University Services reporting unit was zero and no further testing of goodwill for impairment was required. The carrying value of the CrossKnowledge reporting unit was above its fair value, which resulted in a pretax noncash goodwill impairment of $15.3 million. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income (Loss).
CrossKnowledge was adversely impacted by a decline in the demand for its offerings, which resulted in lower sales and a decline in average contract value that adversely impacted forecasted revenue growth and operating cash flows.
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The key assumptions underlying the estimate of the fair value of the CrossKnowledge reporting unit included the following:
•Future cash flow assumptions - the projections for future cash flows utilized in the model were derived from historical experience and assumptions regarding future growth and profitability of the reporting unit. These projections include forecasted revenues and related growth rates, and forecasted operating cash flows, and are consistent with our operating budget and strategic plan. We applied a compounded annual growth rate of approximately 3.3% for forecasted sales in our projected cash flows through fiscal year 2032. Beyond the forecasted period, a terminal value was determined using a perpetuity growth rate of 2.0% to reflect our estimate of stable and perpetual growth.
•Discount rate based on the WACC - the WACC is the rate used to discount the reporting unit's estimated future cash flows. The WACC is calculated based on a proportionate weighting of the cost of debt and equity. The cost of equity is based on a capital asset pricing model and includes a company-specific risk premium to capture the perceived risks and uncertainties associated with the reporting unit's projected cash flows. The cost of debt component is calculated based on the after-tax cost of debt of Moody's Baa-rated corporate bonds. The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the CrossKnowledge reporting unit. The WACC applied to the CrossKnowledge reporting unit was 16%.
•Valuation Multiples - for the Guideline Public Company Method, we applied relevant current and forward 12-month EBITDA multiples based on an evaluation of multiples of publicly-traded companies with similarities to the CrossKnowledge reporting unit. The multiples applied ranged from 6.0x to 7.0x EBITDA.
Prior to performing the goodwill impairment test for CrossKnowledge, we also evaluated the recoverability of long-lived assets of the reporting unit. The carrying value of the long-lived assets that were tested for impairment was approximately $50.2 million. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We considered the lower-than-expected revenue and forecasted operating cash flows over a sustained period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the CrossKnowledge reporting unit exceeded the carrying value. Therefore, there was no impairment.
Wiley Edge Fiscal Year 2024 Interim Impairment Test
As a result of signing the stock and asset purchase agreement (Edge Agreement) with Inspirit Vulcan Bidco Limited, a private limited company incorporated in England & Wales (Inspirit) and the decrease in the fair value of the business which was impacted by a decline in placements in the third quarter of fiscal year 2024, we tested the goodwill of the Wiley Edge reporting unit for impairment. We estimated the fair value of the reporting unit based on the terms and conditions in the Edge Agreement at that time which reflected a selling price that included $10.0 million in cash, $18.3 million in the form of a loan, a fair value estimate for an earnout, and an estimate for a working capital adjustment.
We concluded that the carrying value of the Wiley Edge reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of approximately $81.7 million in the three months ended January 31, 2024. Such impairment reduced the goodwill of the Wiley Edge reporting unit to zero. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income (Loss). The impairment was due to subsequent changes in the fair value resulting from the continued progression of the selling process, indications of changes in the consideration for the business, and a decline in placements in the third quarter of fiscal year 2024, as well as changes in the carrying amounts of the disposal group.
Prior to performing the goodwill impairment test for Wiley Edge, we also evaluated the recoverability of long-lived assets of the reporting unit. The carrying value of the long-lived assets that were tested for impairment was approximately $141.5 million. We considered the changes in the fair value of the consideration for the business due to the continued progression of the selling process to be an indicator of impairment for its long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the Wiley Edge reporting unit exceeded the carrying value. Therefore, there was no impairment.
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Fiscal Year 2026 and 2025 Annual Indefinite-lived Intangible Impairment Test
We also review our indefinite-lived intangible assets for impairment annually, which consists of brands and trademarks and certain acquired publishing rights.
For fiscal year 2026 and 2025, we performed a qualitative assessment for our annual indefinite-lived intangible assets impairment test. This assessment included consideration of key factors including macroeconomic conditions, industry and market considerations, cost factors, financial performance, and other relevant entity and reporting unit-specific events. Based on our qualitative assessment, we determined it was not more likely than not that the fair value of any indefinite-lived intangible asset was less than its carrying amount. As such, it was not necessary to perform a quantitative test.
Intangible Assets with Definite Lives and Other Long-Lived Assets:
See Note 2, "Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards," in the section "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements for details of definite lived intangible assets and other long-lived assets.
Retirement Plans:
We provide defined benefit pension plans for certain employees worldwide. Our Board of Directors approved amendments to the US, Canada, and UK defined benefit plans that froze the future accumulation of benefits effective June 30, 2013, December 31, 2015, and April 30, 2015, respectively. Under the amendments, no new employees will be permitted to enter these plans and no additional benefits for current participants for future services will be accrued after the effective dates of the amendments.
The accounting for benefit plans is highly dependent on assumptions concerning the outcome of future events and circumstances, including discount rates, long-term return rates on pension plan assets, healthcare cost trends, compensation increases, and other factors. In determining such assumptions, we consult with outside actuaries and other advisors.
The discount rates for the US, Canada, and UK pension plans are based on the derivation of a single-equivalent discount rate using a standard spot rate curve and the timing of expected benefit payments as of the balance sheet date. The spot rate curves are based upon portfolios of corporate bonds rated at Aa or above by a respected rating agency. The discount rate for Germany is based on the expected benefit payments for the sample mixed population plan. The expected long-term rates of return on pension plan assets are estimated using forecasted returns for the asset classifications within the asset portfolio, and a composite return assumption range is determined using a weighted average based on each plan's target asset allocation percentage. Salary growth and healthcare cost trend assumptions are based on our historical experience and future outlook. While we believe that the assumptions used in these calculations are reasonable, differences in actual experience or changes in assumptions could materially affect the expense and liabilities related to our defined benefit pension plans. A hypothetical one percent increase in the discount rate would increase net income and decrease the accrued pension liability by approximately $0.9 million and $59.4 million, respectively. A one percent decrease in the discount rate would decrease net income and increase the accrued pension liability by approximately $0.6 million and $68.0 million, respectively. A one percent change in the expected long-term rate of return would affect net income by approximately $3.5 million.
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