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John Wiley & Sons (NYSE:WLY) Surprises With Q1 Sales, Stock Jumps 11.7%


Jabin Bastian /
2024/06/13 8:40 am EDT

Educational publishing company John Wiley & Sons (NYSE:WLY) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue down 11% year on year to $468.5 million. The company's full-year revenue guidance of $1.67 billion at the midpoint also came in 1.1% above analysts' estimates. It made a GAAP profit of $0.46 per share, down from its profit of $1.22 per share in the same quarter last year.

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John Wiley & Sons (WLY) Q1 CY2024 Highlights:

  • Revenue: $468.5 million vs analyst estimates of $438.7 million (6.8% beat)
  • EPS (non-GAAP): $1.21 vs analyst estimates of $0.81 (49.4% beat)
  • Management's revenue guidance for the upcoming financial year 2025 is $1.67 billion at the midpoint, beating analyst estimates by 1.1% and implying -10.8% growth (vs -7.2% in FY2024)
  • Gross Margin (GAAP): 73.7%, down from 77.5% in the same quarter last year
  • Free Cash Flow of $164.5 million, up 81% from the previous quarter
  • Market Capitalization: $1.99 billion

“We finished the year strong and head into Fiscal 2025 with full confidence in our Research trajectory, GenAI momentum, and profit and performance outlook,” said Matthew Kissner, Interim President and CEO.

Established in 1807, John Wiley & Sons (NYSE:WLY) is a global leader in academic publishing, providing educational materials, scholarly research, and professional development resources.

Media

The advent of the internet changed how shows, films, music, and overall information flow. As a result, many media companies now face secular headwinds as attention shifts online. Some have made concerted efforts to adapt by introducing digital subscriptions, podcasts, and streaming platforms. Time will tell if their strategies succeed and which companies will emerge as the long-term winners.

Sales Growth

Reviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one tends to sustain growth for years. John Wiley & Sons had weak demand over the last five years as its sales were flat, a poor baseline for our evaluation of quality. John Wiley & Sons Total Revenue

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. John Wiley & Sons's history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.2% annually.

This quarter, John Wiley & Sons's revenue fell 11% year on year to $468.5 million but beat Wall Street's estimates by 6.8%. We also like to judge companies based on their projected revenue growth, but not enough Wall Street analysts cover the company for it to have reliable consensus estimates.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

John Wiley & Sons has shown mediocre cash profitability over the last two years, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin averaged 8.4%, subpar for a consumer discretionary business.

John Wiley & Sons Free Cash Flow Margin

John Wiley & Sons's free cash flow clocked in at $164.5 million in Q1, equivalent to a 35.1% margin. The company's margin regressed as it was 2.9 percentage points lower than in the same quarter last year, but we wouldn't put too much weight on it because a business's working capital needs can be seasonal, causing quarter-to-quarter swings.

Key Takeaways from John Wiley & Sons's Q1 Results

We were impressed by how significantly John Wiley & Sons blew past analysts' revenue, operating margin, and EPS expectations this quarter. We were also glad its full-year revenue and EPS guidance topped Wall Street's estimates. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is up 11.7% after reporting and currently trades at $40.75 per share.

John Wiley & Sons may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.