# JOHN WILEY & SONS, INC. (WLY) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from JOHN WILEY & SONS, INC.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/107140/000010714023000092/jwa-20230430.htm
Accession: 0000107140-23-000092
Filing date: 2023-06-26
Report date: 2023-04-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/WLY/
All MD&A years: /company/WLY/mda/
Previous year: /company/WLY/mda/fy2022/ (FY 2022)
Next year: /company/WLY/mda/fy2024/ (FY 2024)

Item 7. 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 scientific research and career-connected education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over 200 years, Wiley has fueled the world’s knowledge ecosystem. Today, our high-impact content, platforms, and services help researchers, learners, institutions, and corporations achieve their goals in an ever-changing world. Wiley is a predominantly digital company with approximately 85% of revenue for the year ended April 30, 2023 generated by digital products and tech-enabled services. For the year ended April 30, 2023, approximately 57% of our revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty.

We have reorganized our Education lines of business into two new customer-centric segments. The Academic segment addresses the university customer group and includes Academic Publishing and University Services. The Talent segment addresses the corporate customer group and will be focused on delivering training, sourcing, and upskilling solutions. Prior period segment results have been revised to the new segment presentation. There were no changes to our consolidated financial results. Our new segment reporting structure consists of three reportable segments, as well as a Corporate expense category (no change), which includes certain costs that are not allocated to the reportable segments:

•Research includes Research Publishing and Research Solutions, and no changes were made as a result of this realignment;

•Academic includes the Academic Publishing and University Services lines. Academic Publishing is the combination of the former Education Publishing line and professional publishing offerings;

•Talent is the combination of the former Talent Development line, and our assessments (corporate training) and corporate learning offerings.

Through the Research segment, we provide peer-reviewed STM publishing, content platforms, and related services to academic, corporate, and government customers, academic societies, and individual researchers. The Academic segment provides scientific, professional, and education print and digital books, digital courseware, and test preparation services, as well as engages in the comprehensive management of online degree programs for universities. The Talent segment services include sourcing, training, and preparing aspiring students and professionals to meet the skill needs of today’s technology careers and placing them with large companies and government agencies. It also includes assessments (corporate training) and corporate learning offerings.

Wiley’s business strategies are tightly aligned with long term growth trends, including open research, career-connected education, and workforce optimization. Research strategies include driving publishing output to meet the global demand for peer-reviewed research and expanding platform and service offerings for corporations and societies. Education strategies include expanding online degree programs and driving online enrollment for university partners, scaling digital content and courseware, and expanding IT talent placement and reskilling programs for corporate partners.

Wiley has announced for fiscal year 2024 strategic actions that will focus Wiley on its strongest and most profitable businesses and large market opportunities in Research and Learning. We are divesting non-core education businesses, including University Services (known as online program management), Wiley Edge (formerly Talent Development) and CrossKnowledge. These assets will be reported as businesses held for sale starting in the first quarter of fiscal year 2024. We will be streamlining our organization and rightsizing our cost structure to reflect these portfolio actions. In addition, we will be changing our reportable segments for fiscal year 2024 reporting. These actions and our fiscal year 2024 transition year outlook are described further below in the section "Fiscal Year 2024 Transition Year Outlook."

29

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Consolidated Results of Operations

FISCAL YEAR 2023 AS COMPARED TO FISCAL YEAR 2022 SUMMARY RESULTS

SUMMARY

•US GAAP Results: Revenue of $2,019.9 million (-3% compared with the prior year), Operating income of $55.9 million (-$163.4 million compared with the prior year), and EPS of $0.31 (-$2.31 compared with prior year). US GAAP earnings performance primarily due to $99.8 million ($1.77 per share) of non-cash goodwill impairment in Education Services/University Services and restructuring charges totaling $49.4 million ($0.66 per share).

•Adjusted Results (at constant currency compared with the prior year): Revenue of $2,019.9 million (flat compared with the prior year), Adjusted EBITDA of $422.0 million (-2% compared with the prior year), and Adjusted EPS of $3.84 (-8% compared with the prior year).

•Net Cash Provided by Operating Activities of $277.1 million ($-62.0 million compared with the prior year) and Free Cash Flow of $173.0 million ($-50.3 million compared with the prior year).

Revenue:

Revenue for the year ended April 30, 2023 decreased $63.0 million, or 3%, as compared with the prior year. On a constant currency basis, revenue was flat as compared with the prior year including contributions from acquisitions. Excluding the contributions from acquisitions, revenue decreased 1% on a constant currency basis.

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, 2023 decreased $8.1 million, or 1% as compared with the prior year. On a constant currency basis, cost of sales increased 2% as compared with the prior year. This increase was primarily due to higher employee costs to support the growth in placements in the Talent segment, partially offset by lower royalty costs.

Operating and Administrative Expenses:

Operating and administrative expenses for the year ended April 30, 2023 decreased $42.2 million, or 4%, as compared with the prior year. On a constant currency basis, operating and administrative expenses were flat as compared with the prior year primarily reflecting higher technology related costs, travel and entertainment costs, and a $3.7 million charge related to the settlement of a litigation matter related to consideration for a previous acquisition. These were offset by lower professional fees, employment costs and facility related costs.

Impairment of Goodwill:

We recorded an impairment of goodwill in the year ended April 30, 2023 of $99.8 million. This charge is reflected in the Impairment of goodwill in the Consolidated Statements of Income.

In accordance with applicable accounting standards, we were required to test goodwill for impairment immediately before and after our segment realignment. Prior to the realignment, we concluded that the fair value of the Education Services reporting unit was below its carrying value, which resulted in a pretax non-cash goodwill impairment of $31.0 million. Education Services was adversely impacted by market conditions and headwinds for online degree programs. This has led to a decline in projected student 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. This was partially offset by projected growth in talent placements, partially due to expansion into new regions and the addition of new corporate clients, which are forecasted to have a positive impact on revenue growth and operating cash flows.

30

Index

After the realignment, we concluded that the fair value of the University Services reporting unit within the Academic segment was below its carrying value, which resulted in an additional pretax non-cash goodwill impairment of $68.8 million. 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.

See Note 11, "Goodwill and Intangible Assets" for details on these charges.

Restructuring and Related Charges (Credits):

Fiscal Year 2023 Restructuring Program

In May 2022, the Company initiated a global program to restructure and align our cost base with current and anticipated future market conditions. This program includes severance related charges for the elimination of certain positions, the exit of certain leased office space which began in the first quarter of fiscal year 2023 and the reduction of our occupancy at other facilities. We are reducing our real estate square footage occupancy by approximately 22%. We realized $35 million in savings from actions starting in fiscal year 2023.

In the three months ended January 31, 2023, due to the political instability and military actions between Russia and Ukraine, we made the decision to close our operations in Russia which primarily consisted of technology development resources. We were substantially complete with our closure as of April 30, 2023, except for the formal liquidation of our Russian legal entity, which we expect to complete in our fiscal year 2024.

For the year ended April 30, 2023, we recorded pretax restructuring charges of $48.9 million related to this program, which includes $8.3 million related to the closure of our operations in Russia as described above. These charges are reflected in Restructuring and related charges (credits) on our Consolidated Statements of Income. This restructuring charge primarily reflects the following charges:

•Severance charges of $25.8 million for the elimination of certain positions;

•Impairment charges of $12.7 million, which included the impairment of operating lease right-of-use (ROU) assets of $7.6 million related to certain leases that will be subleased, and the related property and equipment of $5.1 million;

•Acceleration of expense of $2.1 million, which included the acceleration of rent expense associated with operating lease ROU assets of $0.9 million related to certain leases that will be abandoned or terminated and the related depreciation and amortization of property and equipment of $1.2 million;

•Ongoing facility-related costs with previously vacated properties that resulted in additional restructuring charges of $4.2 million; and

•Consulting, relocation and other costs of $4.1 million.

These actions are anticipated to yield annualized cost savings estimated to be approximately $70 million. We anticipate ongoing facility-related costs associated with certain properties to result in additional restructuring charges in future periods.

See Note 7, “Restructuring and Related Charges (Credits)” for more details on these charges.

Business Optimization Program

For the years ended April 30, 2023 and 2022, we recorded pretax restructuring charges of $0.5 million and credits of $1.4 million, respectively, related to this program.

These charges (credits) are reflected in Restructuring and related charges (credits) in the Consolidated Statements of Income. See Note 7, “Restructuring and Related Charges (Credits)” for more details on these charges (credits).

For the impact of our restructuring programs on diluted earnings per share, see the section below, “Diluted Earnings per Share (EPS).”

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Index

Amortization of Intangible Assets:

Amortization of intangible assets was $84.9 million for the year ended April 30, 2023, and was flat as compared to the prior year. On a constant currency basis, amortization of intangible assets increased 3% as compared with the prior year primarily due to the acceleration of expense of $4.6 million related to the discontinued use of the mthree trademark.

On January 1, 2020, Wiley acquired mthree, a talent placement provider that addresses the IT skills gap by finding, training, and placing job-ready technology talent in roles with leading corporations worldwide. Its results of operations are included in our Talent segment. In late May 2022, Wiley renamed the mthree talent development solution to Wiley Edge and discontinued use of the mthree trademark during the three months ended July 31, 2022. As a result of these actions, we determined that a revision of the useful life was warranted, and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of $4.6 million in the three months ended July 31, 2022.

Operating Income, Adjusted Operating Income (OI) and Adjusted EBITDA:

Operating income for the year ended April 30, 2023, decreased $163.4 million, or 75% as compared with the prior year. On a constant currency basis, operating income decreased 76% as compared with the prior year. The decrease was primarily due to the impairment of goodwill in the three months ended January 31, 2023 as described above, an increase in restructuring charges and, to a lesser extent, higher cost of sales.

Adjusted OI on a constant currency basis and excluding restructuring charges (credits), impairment of goodwill, legal settlement, and the accelerated amortization of an intangible asset, decreased 3% as compared with the prior year primarily due to an increase in cost of sales as described above, partially offset by lower operating and administrative expenses.

Adjusted EBITDA on a constant currency basis and excluding restructuring charges (credits), decreased 2% as compared with the prior year primarily due to a decrease in Adjusted OI.

Adjusted OI

Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted OI:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2023","","2022"],["Operating Income","$","55,890","","","$","219,276"],["Adjustments:"],["Restructuring charges (credits)","49,389","","","(1,427)"],["Impairment of goodwill","99,800","","","\u2014"],["Legal settlement (1)","3,671","","","\u2014"],["Accelerated amortization of an intangible asset (2)","4,594","","","\u2014"],["Non-GAAP Adjusted Operating Income","$","213,344","","","$","217,849"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","We settled a litigation matter related to consideration for a previous acquisition for $3.7 million during the three months ended January 31, 2023. This amount is reflected in Operating and administrative expenses on our Consolidated Statements of Income."],["(2)","As described above, we determined that a revision of the useful life of the mthree trademark was warranted, and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of $4.6 million in the three months ended July 31, 2022."]]
[[/GREPCENT_TABLE]]

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Index

Adjusted EBITDA

Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2023","","2022"],["Net Income","$","17,233","","","$","148,309"],["Interest expense","37,745","","","19,802"],["Provision for income taxes","15,867","","","61,352"],["Depreciation and amortization","213,253","","","215,170"],["Non-GAAP EBITDA","284,098","","","444,633"],["Impairment of goodwill","99,800","","","\u2014"],["Legal settlement","3,671","","","\u2014"],["Restructuring and related charges (credits)","49,389","","","(1,427)"],["Foreign exchange (gains) losses on intercompany transactions, including the write off of certain cumulative translation adjustments","(894)","","","3,192"],["Gain on sale of businesses and certain assets","(10,177)","","","(3,694)"],["Other income, net","(3,884)","","","(9,685)"],["Non-GAAP Adjusted EBITDA","$","422,003","","","$","433,019"]]
[[/GREPCENT_TABLE]]

Interest Expense:

Interest expense for the year ended April 30, 2023, was $37.7 million compared with the prior year of $19.8 million. This increase was primarily due to a higher weighted average effective interest rate.

Foreign Exchange Transaction Gains (Losses):

Foreign exchange transaction gains were $0.9 million for the year ended April 30, 2023, and were primarily due to the write off of the $1.1 million cumulative translation adjustment in earnings since the Russia entity was deemed substantially liquidated. As described above, we were substantially complete with our exit from Russia as of April 30, 2023.

Foreign exchange transaction losses were $3.2 million for the year ended April 30, 2022, and were primarily due to losses on our foreign currency denominated third-party and, to a lesser extent, intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar.

Gain on Sale of Businesses and Certain Assets:

The pretax gain on sale of businesses for the year ended April 30, 2023, was $10.2 million. As part of our ongoing initiatives to simplify our portfolio and focus our attention on strategic growth areas, we have completed two dispositions during the year ended April 30, 2023. Both were included in our Academic segment. On February 28, 2023, we completed the sale of Wiley's Efficient Learning test prep portfolio business. In addition, on March 31, 2023, we completed the sale of our advancement courses business. Neither disposition constituted a strategic shift, and the impact on our overall operations and financial results was not material. Accordingly, the operations associated with the dispositions are not reported in discontinued operations. See Note 4, "Acquisitions and Divestitures" for more details on these divestitures.

The gain on sale of certain assets for the year ended April 30, 2022, was due to the sale of our world languages product portfolio which was included in our Academic segment and resulted in a pretax gain of approximately $3.7 million.

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Index

Other Income, Net:

Other income, net was $3.9 million for the year ended April 30, 2023, a decrease of $5.8 million, or 60%, as compared with the prior year. On a constant currency basis, other income, net decreased 51%. This decrease was primarily due to lower pension income for our defined benefit plans, partially offset by a decrease in donations and pledges to humanitarian organizations to provide aid to those impacted by the crisis in Ukraine, and a curtailment and settlement credit due to the wind up of the Russia pension plan of $1.8 million.

Provision for Income Taxes:

Below is a reconciliation of our US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2023","","2022"],["US GAAP Income Before Taxes","$","33,100","","","$","209,661"],["Pretax Impact of Adjustments:"],["Impairment of goodwill","99,800","","","\u2014"],["Legal settlement","3,671","","","\u2014"],["Pension income related to the wind up of the Russia plan","(1,750)","","","\u2014"],["Restructuring and related charges (credits)","49,389","","","(1,427)"],["Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments","457","","","1,513"],["Amortization of acquired intangible assets","89,177","","","89,346"],["Gain on sale of businesses and certain assets","(10,177)","","","(3,694)"],["Non-GAAP Adjusted Income Before Taxes","$","263,667","","","$","295,399"]]
[[/GREPCENT_TABLE]]

Below is a reconciliation of our US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2023","","2022"],["US GAAP Income Tax Provision","$","15,867","","$","61,352"],["Income Tax Impact of Adjustments (1):"],["Legal settlement","716","","\u2014"],["Pension income related to the wind up of the Russia plan","(437)","","\u2014"],["Restructuring and related charges (credits)","12,151","","(260)"],["Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments","132","","597"],["Amortization of acquired intangible assets","20,183","","20,816"],["Gain on sale of businesses and certain assets","(3,860)","","(922)"],["Income Tax Adjustments"],["Impact of increase in UK statutory rate on deferred tax balances (2)","2,370","","(21,415)"],["Non-GAAP Adjusted Income Tax Provision","$","47,122","","$","60,168"],["US GAAP Effective Tax Rate","47.9","%","","29.3","%"],["Non-GAAP Adjusted Effective Tax Rate","17.9","%","","20.4","%"]]
[[/GREPCENT_TABLE]]

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Index

[[GREPCENT_TABLE]]
[["(1)","For the years ended April 30, 2023 and 2022, substantially all of the tax impact was from deferred taxes."],["(2)","In the three months ended July 31, 2021, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023. This resulted in a $21.4 million non-cash deferred tax expense from the re-measurement of the Company\u2019s applicable UK net deferred tax liabilities during the three months ended July 31, 2021. These adjustments impacted deferred taxes. For the year ended April 30, 2023, we recorded a $2.4 million non-cash deferred tax benefit related to pensions due to the UK statutory rate change. These adjustments impacted deferred taxes."]]
[[/GREPCENT_TABLE]]

The effective tax rate was 47.9% for the year ended April 30, 2023, compared to 29.3% for the year ended April 30, 2022. Our rate for the year ended April 30, 2023, was higher due to the rate differential with respect to certain restructuring charges, the impairment of non-deductible goodwill resulting from the segment realignment described in Note 11, "Goodwill and Intangible Assets," offset by a benefit of $2.4 million relating to the effect of the increase in the UK statutory tax rate on UK pensions. On June 10, 2021, the UK increased its statutory corporate tax rate from 19% to 25% effective April 1, 2023. The 29.3% effective tax rate for the year ended April 30, 2022, was increased by a similar $21.4 million nonrecurring, noncash US GAAP deferred tax expense relating to the UK statutory tax rate increase described above.

Excluding the UK rate change, the tax implications of certain restructuring and related actions, and other unusual items, the Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2023, was 17.9%. The Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2022, excluding the impact of the UK statutory rate change, was 20.4%. The decrease in the Non-GAAP Adjusted Effective Tax Rate before these items was primarily due to a more favorable mix of earnings by jurisdiction for the year ended April 30, 2023.

Diluted Earnings Per Share (EPS):

Diluted earnings per share for the year ended April 30, 2023, was $0.31 per share compared to $2.62 per share in the prior year. This decrease was due to lower operating income and, to a lesser extent, higher interest expense and lower other income. These were partially offset by a lower provision for income taxes and, to a lesser extent, an increase in the gain on sale of businesses and certain assets, and foreign exchange transaction gains.

Below is a reconciliation of our US GAAP EPS 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, “Provision for Income Taxes.”

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2023","","2022"],["US GAAP EPS","$","0.31","","","$","2.62"],["Adjustments:"],["Impairment of goodwill","1.77","","","\u2014"],["Legal settlement","0.05","","","\u2014"],["Pension income related to the wind up of the Russia plan","(0.02)","","","\u2014"],["Restructuring and related charges (credits)","0.66","","","(0.02)"],["Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments","0.01","","","0.02"],["Amortization of acquired intangible assets","1.21","","","1.21"],["Gain on sale of businesses and certain assets","(0.11)","","","(0.05)"],["Income tax adjustments","(0.04)","","","0.38"],["Non-GAAP Adjusted EPS","$","3.84","","","$","4.16"]]
[[/GREPCENT_TABLE]]

On a constant currency basis, Adjusted EPS decreased 8% primarily due to an increase in interest expense, lower pension income, and lower Adjusted OI. These were partially offset by a lower provision for income taxes.

35

Index

SEGMENT OPERATING RESULTS:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,","","% Change Favorable (Unfavorable)","","Constant Currency % Change Favorable (Unfavorable)"],["RESEARCH","2023","","2022"],["Revenue:"],["Research Publishing (1)","$","926,773","","","$","963,715","","","(4)","%","","(1)","%"],["Research Solutions (1)","153,538","","","147,628","","","4","%","","7","%"],["Total Research","1,080,311","","","1,111,343","","","(3)","%","","\u2014","%"],["Cost of Sales","286,361","","","300,373","","","5","%","","2","%"],["Operating Expenses","463,731","","","468,012","","","1","%","","(4)","%"],["Amortization of Intangibles","46,235","","","47,731","","","3","%","","(1)","%"],["Restructuring Charges (see Note 7)","2,182","","","238","","","#","","#"],["Contribution to Profit","281,802","","","294,989","","","(4)","%","","(4)","%"],["Restructuring Charges (see Note 7)","2,182","","","238","","","#","","#"],["Adjusted Contribution to Profit","283,984","","","295,227","","","(4)","%","","(3)","%"],["Depreciation and Amortization","93,008","","","94,899","","","2","%","","(1)","%"],["Adjusted EBITDA","$","376,992","","","$","390,126","","","(3)","%","","(2)","%"],["Adjusted EBITDA Margin","34.9","%","","35.1","%"]]
[[/GREPCENT_TABLE]]

# Not meaningful

[[GREPCENT_TABLE]]
[["(1)","As previously announced in May 2022, our revenue by product type previously referred to as Research Platforms was changed to Research Solutions. Research Solutions includes infrastructure and publishing services that help societies and corporations thrive in a complex knowledge ecosystem. In addition to Platforms (Atypon), certain product offerings such as corporate sales which included the recent acquisitions of Madgex Holdings Limited (Madgex), and Bio-Rad Laboratories Inc.\u2019s Informatics products (Informatics) that were previously included in Research Publishing moved to Research Solutions to align with our strategic focus. Research Solutions also includes product offerings related to certain recent acquisitions such as J&J, and EJP. Prior period results have been revised to the new presentation. There were no changes to the total Research segment or our consolidated financial results. The revenue reclassified was $93.3 million and $80.3 million for the years ended April 30, 2022 and 2021, respectively."]]
[[/GREPCENT_TABLE]]

Revenue:

Research revenue for the year ended April 30, 2023 decreased $31.0 million, or 3%, as compared with the prior year. On a constant currency basis, revenue was flat as compared with the prior year. Excluding revenue from acquisitions, organic revenue decreased 1% on a constant currency basis. This decrease was primarily due to lower article volume in Research Publishing, notably in Hindawi, and to a lesser extent corporate spending headwinds in Research Solutions. Starting in the three months ended January 31, 2023, open access publishing was adversely impacted by the publishing pause in a Hindawi special issues program. The program was suspended temporarily due to the presence in certain special issues of compromised articles. As a result, Hindawi revenue for the year ended April 30, 2023 decreased $3.0 million on a constant currency basis as compared with the prior year. We have closed four Hindawi journals and retracted over 1,700 articles. We expect a decrease in fiscal year 2024 revenue of $30 to $35 million due to this disruption.

Excluding Hindawi, Wiley’s Research revenue for the year ended April 30, 2023 on a constant currency basis was flat as compared with the prior year. Open access article output was flat for the year ended April 30, 2023, as compared with the prior year. Excluding Hindawi, open access article output growth was approximately 6% for the year ended April 30, 2023.

36

Index

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 2% as compared with the prior year. This decrease was primarily due to investments to optimize and scale publishing and solutions, higher employment costs and, to a lesser extent, travel and entertainment costs due to the resumption of in-person activities. These were partially offset by lower royalty costs largely due to the product mix. We expect a decrease in fiscal year 2024 Adjusted EBITDA of $25 to $30 million due to the Hindawi disruption as described above.

[[GREPCENT_TABLE]]
[["","Year Ended April 30,","","% Change Favorable (Unfavorable)","","Constant Currency % Change Favorable (Unfavorable)"],["ACADEMIC:","2023","","2022"],["Revenue:"],["Academic Publishing","$","481,752","","","$","531,705","","","(9)","%","","(7)","%"],["University Services","208,656","","","227,407","","","(8)","%","","(8)","%"],["Total Academic Revenue","690,408","","","759,112","","","(9)","%","","(7)","%"],["Cost of Sales","286,647","","","309,220","","","7","%","","6","%"],["Operating Expenses","312,159","","","333,098","","","6","%","","4","%"],["Impairment of Goodwill (see Note 11)","99,800","","","\u2014","","","#","","#"],["Amortization of Intangibles","23,323","","","25,547","","","9","%","","9","%"],["Restructuring Charges (Credits) (see Note 7)","10,366","","","(470)","","","#","","#"],["Contribution to Profit","(41,887)","","","91,717","","","#","","#"],["Restructuring Charges (Credits) (see Note 7)","10,366","","","(470)","","","#","","#"],["Impairment of Goodwill (see Note 11)","99,800","","","\u2014","","","#","","#"],["Adjusted Contribution to Profit","68,279","","","91,247","","","(25)","%","","(23)","%"],["Depreciation and Amortization","79,741","","","81,721","","","2","%","","1","%"],["Adjusted EBITDA","$","148,020","","","$","172,968","","","(14)","%","","(13)","%"],["Adjusted EBITDA Margin","21.4","%","","22.8","%"]]
[[/GREPCENT_TABLE]]

# Not meaningful

Revenue:

Academic revenue decreased $68.7 million, or 9%, as compared with the prior year. On a constant currency basis, revenue decreased 7% as compared with prior year. Excluding revenue from acquisitions, organic revenue decreased 8% on a constant currency basis. This decrease was primarily due to a decrease in Academic Publishing due to a decline in print, partially offset by an increase in digital courseware. University Services revenue decreased primarily due to continued online enrollment challenges, and lower tuition share in services. For the year ended April 30, 2023, University Services experienced a 5% decline in online enrollment.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 13% as compared with the prior year. This decrease was primarily due to lower revenues and, to a lesser extent, inflationary impacts on inventory, and higher technology and distribution costs. These were partially offset by expense savings from restructuring activities, and lower annual incentive compensation.

37

Index

[[GREPCENT_TABLE]]
[["","Year Ended April 30,","","% Change Favorable (Unfavorable)","","Constant Currency % Change Favorable (Unfavorable)"],["TALENT:","2023","","2022"],["Total Talent Revenue","$","249,181","","","$","212,473","","","17","%","","24","%"],["Cost of Sales","119,533","","","91,065","","","(31)","%","","(40)","%"],["Operating Expenses","86,032","","","85,891","","","\u2014","%","","(5)","%"],["Amortization of Intangibles","15,203","","","11,558","","","(32)","%","","(35)","%"],["Restructuring Charges (see Note 7)","3,009","","","23","","","#","","#"],["Contribution to Profit","25,404","","","23,936","","","6","%","","10","%"],["Restructuring Charges (see Note 7)","3,009","","","23","","","#","","#"],["Accelerated Amortization of an Intangible Asset","4,594","","","\u2014","","","#","","#"],["Adjusted Contribution to Profit","33,007","","","23,959","","","38","%","","41","%"],["Depreciation and Amortization","19,448","","","21,997","","","12","%","","7","%"],["Adjusted EBITDA","$","52,455","","","$","45,956","","","14","%","","18","%"],["Adjusted EBITDA Margin","21.1","%","","21.6","%"]]
[[/GREPCENT_TABLE]]

# Not meaningful

Revenue:

Talent revenue increased $36.7 million, or 17%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 24% as compared with prior year. This increase was primarily due to double-digit growth in placements and, to a lesser extent, an increase in assessments (corporate training), partially offset by a decrease in corporate learning. For the year ended April 30, 2023, we delivered approximately 18% growth in talent placements in talent development (Wiley Edge).

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 18% as compared with the prior year. This was due to revenue, partially offset by increased inflationary impacts on placements, and investments to scale talent development (Wiley Edge).

CORPORATE EXPENSES:

Corporate expenses for the year ended April 30, 2023, increased $18.1 million, or 9%, as compared with the prior year. On a constant currency basis and excluding restructuring charges (credits) and a legal settlement, these expenses decreased 7% as compared with the prior year. On a constant currency basis, Adjusted EBITDA decreased 8% as compared with the prior year. This was primarily due to lower employee related costs, including lower annual incentive compensation for fiscal year 2023.

FISCAL YEAR 2022 AS COMPARED TO FISCAL YEAR 2021 SUMMARY RESULTS

Revenue:

Revenue for the year ended April 30, 2022, increased $141.4 million, or 7%, as compared with the prior year on a reported and on a constant currency basis including contributions from acquisitions. Excluding the contributions from acquisitions, revenue increased 5% on a constant currency basis.

See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.

38

Index

Cost of Sales:

Cost of sales for the year ended April 30, 2022, increased $75.3 million, or 12%, as compared with the prior year. On a constant currency basis, cost of sales increased 11% as compared with the prior year. This increase was primarily due to higher employee costs and, to a lesser extent, higher student acquisition costs in Academic and increased royalty costs in Research.

Operating and Administrative Expenses:

Operating and administrative expenses for the year ended April 30, 2022, increased $56.9 million, or 6%, as compared with the prior year. On a constant currency basis, operating and administrative expenses increased 5% as compared with the prior year primarily reflecting higher editorial costs due to additional resources to support investments in growth, technology costs to support growth initiatives, higher advertising and marketing costs and, to a lesser extent, higher employee-related costs.

Restructuring and Related (Credits) Charges:

For the years ended April 30, 2022 and 2021, we recorded pretax restructuring credits of $1.4 million and charges of $33.3 million, respectively primarily related to our Business Optimization Program.

In November 2020, in response to the COVID-19 pandemic and the Company’s successful transition to a virtual work environment, we increased use of virtual work arrangements for postpandemic operations. As a result, we expanded the scope of the Business Optimization Program to include the exit of certain leased office space beginning in the third quarter of fiscal year 2021, and the reduction of our occupancy at other facilities. We are reducing our real estate square footage occupancy by approximately 12%. These actions resulted in a pretax restructuring charge of $18.3 million in the year ended April 30, 2021.

In addition, we also incurred ongoing facility-related costs associated with certain properties that resulted in additional restructuring charges of $1.8 million and $3.7 million in the years ended April 30, 2022 and 2021, respectively.

We anticipate ongoing facility-related costs associated with certain properties to result in additional restructuring charges in future periods.

These (credits) charges are reflected in Restructuring and related (credits) charges in the Consolidated Statements of Income (Loss). See Note 7, “Restructuring and Related (Credits) Charges” for more details on these (credits) 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 $84.8 million for the year ended April 30, 2022, an increase of $10.2 million, or 14%, as compared with the prior year. On a constant currency basis, amortization of intangible assets increased 13% as compared with the prior year primarily due to the intangibles acquired as part of the Hindawi acquisition completed in fiscal year 2021 and, to a lesser extent, other acquisitions completed in fiscal year 2022, partially offset by the completion of amortization of certain acquired intangible assets. See Note 4, “Acquisitions and Divestitures” for more details on our acquisitions.

Operating Income, Adjusted Operating Income (OI) and Adjusted EBITDA:

Operating income for the year ended April 30, 2022 increased $33.8 million, or 18% as compared with the prior year on a reported and on a constant currency basis. The increase was primarily due to the increase in revenue and, to a lesser extent, lower restructuring charges, partially offset by an increase in cost of sales and operating and administrative expenses.

39

Index

Adjusted OI on a constant currency basis and excluding restructuring (credits) charges decreased 1% as compared with the prior year primarily due to an increase in cost of sales, operating and administrative expenses and, to a lesser extent, amortization of intangible assets, partially offset by higher revenues as described above.

Adjusted EBITDA on a constant currency basis and excluding restructuring (credits) charges, increased 3%, as compared with the prior year primarily due to revenue performance, partially offset by an increase in operating and administrative expenses, and cost of sales.

Adjusted OI

Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted OI:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2022","","2021"],["US GAAP Operating Income","$","219,276","","","$","185,511"],["Adjustments:"],["Restructuring and related (credits) charges","(1,427)","","","33,310"],["Non-GAAP Adjusted OI","$","217,849","","","$","218,821"]]
[[/GREPCENT_TABLE]]

Adjusted EBITDA

Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2022","","2021"],["Net Income","$","148,309","","","$","148,256"],["Interest expense","19,802","","","18,383"],["Provision for income taxes","61,352","","","27,656"],["Depreciation and amortization","215,170","","","200,189"],["Non-GAAP EBITDA","444,633","","","394,484"],["Restructuring and related (credits) charges","(1,427)","","","33,310"],["Foreign exchange transaction losses","3,192","","","7,977"],["Gain on sale of certain assets","(3,694)","","","\u2014"],["Other income, net","(9,685)","","","(16,761)"],["Non-GAAP Adjusted EBITDA","$","433,019","","","$","419,010"]]
[[/GREPCENT_TABLE]]

Interest Expense:

Interest expense for the year ended April 30, 2022 was $19.8 million compared with the prior year of $18.4 million. This increase was due to a higher average debt balance outstanding, which included borrowings for the funding of acquisitions and, to a lesser extent, higher weighted average effective interest rate.

Foreign Exchange Transaction Losses:

Foreign exchange transaction losses were $3.2 million for the year ended April 30, 2022 and were primarily due to losses on our foreign currency denominated third-party and, to a lesser extent, intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar.

40

Index

Foreign exchange transaction losses were $8.0 million for the year ended April 30, 2021 and were due to the unfavorable impact of the changes in exchange rates on US dollar cash balances held in the UK to fund the acquisition of Hindawi and the net impact of changes in average foreign exchange rates as compared to the US dollar on our third-party accounts receivable and payable balances.

Gain on Sale of Certain Assets:

The gain on the sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic segment and resulted in a pretax gain of approximately $3.7 million during the year ended April 30, 2022.

Other Income, Net:

Other income, net was $9.7 million for the year ended April 30, 2022, a decrease of $7.1 million, or 42%, as compared with the prior year. This decrease was primarily due to $3 million in donations and pledges made in the year ended April 30, 2022 to humanitarian organizations to provide aid to those impacted by the crisis in Ukraine.

Provision for Income Taxes:

Below is a reconciliation of our US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2022","","2021"],["US GAAP Income Before Taxes","$","209,661","","","$","175,912"],["Pretax Impact of Adjustments:"],["Restructuring and related (credits) charges","(1,427)","","","33,310"],["Foreign exchange losses (gains) on intercompany transactions","1,513","","","(1,457)"],["Amortization of acquired intangible assets","89,346","","","79,421"],["Gain on sale of certain assets","(3,694)","","","\u2014"],["Non-GAAP Adjusted Income Before Taxes","$","295,399","","","$","287,186"]]
[[/GREPCENT_TABLE]]

Below is a reconciliation of our US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2022","","2021"],["US GAAP Income Tax Provision","$","61,352","","$","27,656"],["Income Tax Impact of Adjustments(1):"],["Restructuring and related (credits) charges","(260)","","8,065"],["Foreign exchange losses (gains) on intercompany transactions","597","","(363)"],["Amortization of acquired intangible assets","20,816","","18,511"],["Gain on sale of certain assets","(922)","","\u2014"],["Income Tax Adjustments:"],["Impact of increase in UK statutory rate on deferred tax balances(2)","(21,415)","","(3,511)"],["Impact of US CARES Act(3)","\u2014","","13,998"],["Impact of change in certain US state tax rates in 2021(2)","\u2014","","(3,225)"],["Non-GAAP Adjusted Income Tax Provision","$","60,168","","$","61,131"],["US GAAP Effective Tax Rate","29.3","%","","15.7","%"],["Non-GAAP Adjusted Effective Tax Rate","20.4","%","","21.3","%"]]
[[/GREPCENT_TABLE]]

41

Index

[[GREPCENT_TABLE]]
[["(1)","For the year ended April 30, 2022, substantially all of the tax impact was from deferred taxes. For the year ended April 30, 2021, except for the $8.4 million current tax impact from the US CARES Act noted below, substantially all of the tax impact was from deferred taxes."],["(2)","These adjustments impacted deferred taxes in the years ended April 30, 2022 and 2021."],["(3)","The tax impact was $8.4 million from current taxes and $5.6 million from deferred taxes in the year ended April 30, 2021."]]
[[/GREPCENT_TABLE]]

The effective tax rate was 29.3% for the year ended April 30, 2022, compared to 15.7% for the year ended April 30, 2021. Our effective tax rate for the year ended April 30, 2022, was increased by $21.4 million due to an increase in the UK statutory rate during the three months ended July 31, 2021. On June 10, 2021, the UK announced an increase to its statutory corporate income tax rate from 19% to 25% effective April 1, 2023, resulting in this nonrecurring, noncash US GAAP deferred tax expense. The 15.7% tax expense rate for the year ended April 30, 2021, benefited by $14.0 million from provisions in the Coronavirus Aid Relief and Economic Security Act (the CARES Act) and certain regulations issued in late July 2020, which enabled us to carry certain net operating losses back to a year with a higher statutory tax rate.

Excluding the expense from the UK rate change, the Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2022, was 20.4%. The Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2021, excluding the impact of the UK statutory rate change, the CARES Act, and state tax expense from rate changes, was 21.3%. The Non-GAAP Adjusted Effective Tax Rate before these items decreased because the year ended April 30, 2021, included US state tax expenses from our expanded presence due to employees working in additional locations given the COVID-19 pandemic.

Diluted Earnings Per Share (EPS):

Diluted earnings per share for the year ended April 30, 2022 was $2.62 per share compared to $2.63 per share in the prior year. This decrease was due to a higher weighted average number of common shares outstanding in the year ended April 30, 2022 as net income was flat compared to the year ended April 30, 2021. Net income was flat as higher operating income and, to a lesser extent, lower foreign exchange losses and the gain on sale of certain assets were offset by higher provision for income taxes and, to a lesser extent, lower other income, net.

Below is a reconciliation of our US GAAP EPS 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, “Provision for Income Taxes.”

[[GREPCENT_TABLE]]
[["","Year Ended April 30,"],["","2022","","2021"],["US GAAP EPS","$","2.62","","","$","2.63"],["Adjustments:"],["Restructuring and related (credits) charges","(0.02)","","","0.44"],["Foreign exchange losses (gains) on intercompany transactions","0.02","","","(0.02)"],["Amortization of acquired intangible assets","1.21","","","1.08"],["Gain on sale of certain assets","(0.05)","","","\u2014"],["Income tax adjustments","0.38","","","(0.13)"],["Non-GAAP Adjusted EPS","$","4.16","","","$","4.00"]]
[[/GREPCENT_TABLE]]

On a constant currency basis, Adjusted EPS increased 1% primarily due to a lower Non-GAAP Adjusted Effective Tax Rate, partially offset by lower Other income, net and, to a lesser extent, lower Adjusted OI.

42

Index

SEGMENT OPERATING RESULTS:

[[GREPCENT_TABLE]]
[["","Year Ended April 30,","","% Change Favorable (Unfavorable)","","Constant Currency % Change Favorable (Unfavorable)"],["RESEARCH:","2022","","2021"],["Revenue:"],["Research Publishing (1)","$","963,715","","","$","892,176","","","8","%","","8","%"],["Research Solutions (1)","147,628","","","123,173","","","20","%","","20","%"],["Total Research Revenue","1,111,343","","","1,015,349","","","9","%","","9","%"],["Cost of Sales","300,373","","","275,377","","","(9)","%","","(8)","%"],["Operating Expenses","468,012","","","429,916","","","(9)","%","","(9)","%"],["Amortization of Intangible Assets","47,731","","","37,033","","","(29)","%","","(28)","%"],["Restructuring Charges (Credits) (see Note 7)","238","","","(36)","","","#","","#"],["Contribution to Profit","294,989","","","273,059","","","8","%","","9","%"],["Restructuring Charges (Credits) (see Note 7)","238","","","(36)","","","#","","#"],["Adjusted Contribution to Profit","295,227","","","273,023","","","8","%","","9","%"],["Depreciation and Amortization","94,899","","","83,866","","","(13)","%","","(13)","%"],["Adjusted EBITDA","$","390,126","","","$","356,889","","","9","%","","10","%"],["Adjusted EBITDA Margin","35.1","%","","35.1","%"]]
[[/GREPCENT_TABLE]]

# Not meaningful

[[GREPCENT_TABLE]]
[["(1)","As previously announced in May 2022, our revenue by product type previously referred to as Research Platforms was changed to Research Solutions. Research Solutions includes infrastructure and publishing services that help societies and corporations thrive in a complex knowledge ecosystem. In addition to Platforms (Atypon), certain product offerings such as corporate sales which included the recent acquisitions of Madgex Holdings Limited (Madgex), and Bio-Rad Laboratories Inc.\u2019s Informatics products (Informatics) that were previously included in Research Publishing moved to Research Solutions to align with our strategic focus. Research Solutions also includes product offerings related to certain recent acquisitions such as J&J, and EJP. Prior period results have been revised to the new presentation. There were no changes to the total Research segment or our consolidated financial results. The revenue reclassified was $93.3 million and $80.3 million for the years ended April 30, 2022 and 2021, respectively."]]
[[/GREPCENT_TABLE]]

Revenue:

Research revenue for the year ended April 30, 2022 increased $96.0 million, or 9%, as compared with the prior year on a reported and constant currency basis. Excluding revenue from acquisitions, organic revenue increased 5% on a constant currency basis. This increase was primarily due to an increase in publishing and, to a lesser extent corporate solutions. Research Publishing has continued growth due to Transformational Agreements (read and publish). Excluding the impact from acquisitions, Open Access article output growth was approximately 27% for the year ended April 30, 2022 as compared with the prior year.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 10% as compared with the prior year. This increase was primarily due to higher revenue, partially offset by higher editorial costs due to additional resources to support investments in growth, which includes the impact of the acquisition of Hindawi and, to a lesser extent, higher cost of sales including the incremental impact of acquisitions, technology, and sales-related costs.

43

Index

[[GREPCENT_TABLE]]
[["","Year Ended April 30,","","% Change Favorable (Unfavorable)","","Constant Currency % Change Favorable (Unfavorable)"],["ACADEMIC:","2022","","2021"],["Revenue:"],["Academic Publishing","$","531,705","","","$","538,643","","","(1)","%","","(2)","%"],["University Services","227,407","","","230,371","","","(1)","%","","(1)","%"],["Total Academic Revenue","759,112","","","769,014","","","(1)","%","","(2)","%"],["Cost of Sales","309,220","","","294,365","","","(5)","%","","(5)","%"],["Operating Expenses","333,098","","","333,858","","","\u2014","%","","1","%"],["Amortization of Intangible Assets","25,547","","","23,786","","","(7)","%","","(7)","%"],["Restructuring (Credits) Charges (see Note 7)","(470)","","","3,457","","","#","","#"],["Contribution to Profit","91,717","","","113,548","","","(19)","%","","(20)","%"],["Restructuring (Credits) Charges (see Note 7)","(470)","","","3,457","","","#","","#"],["Adjusted Contribution to Profit","91,247","","","117,005","","","(22)","%","","(23)","%"],["Depreciation and Amortization","81,721","","","77,823","","","(5)","%","","(5)","%"],["Adjusted EBITDA","$","172,968","","","$","194,828","","","(11)","%","","(12)","%"],["Adjusted EBITDA Margin","22.8","%","","25.3","%"]]
[[/GREPCENT_TABLE]]

# Not meaningful

Revenue:

Academic revenue decreased $9.9 million, or 1%, as compared with the prior year on a reported basis. On a constant currency basis, revenue decreased 2% as compared with prior year. Excluding revenue from acquisitions, organic revenue decreased 2% on a constant currency basis. This decrease was due to Academic Publishing due to a decrease in education publishing due to lower US college enrollment and some easing of prior year COVID-19-related favorability for courseware and content and, to a lesser extent, test preparation. This was partially offset by an increase in professional publishing. This decrease was also due University Services due to a decrease in student enrollments. For the year ended April 30, 2022, University Services experienced an 8% decrease in online enrollment.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 12% as compared with the prior year. This decrease was due to lower revenue, higher student acquisition costs in University Services, and higher print product costs. This was partially offset by lower operating expenses.

44

Index

[[GREPCENT_TABLE]]
[["","Year Ended April 30,","","% Change Favorable (Unfavorable)","","Constant Currency % Change Favorable (Unfavorable)"],["TALENT:","2022","","2021"],["Total Talent Revenue","$","212,473","","","$","157,138","","","35","%","","35","%"],["Cost of Sales","91,065","","","55,593","","","(64)","%","","(63)","%"],["Operating Expenses","85,891","","","91,833","","","6","%","","6","%"],["Amortization of Intangible Assets","11,558","","","13,866","","","17","%","","17","%"],["Restructuring Charges (see Note 7)","23","","","577","","","(96)","%","","(96)","%"],["Contribution to Profit","23,936","","","(4,731)","","","#","","#"],["Restructuring Charges (see Note 7)","23","","","577","","","(96)","%","","(96)","%"],["Adjusted Contribution to Profit","23,959","","","(4,154)","","","#","","#"],["Depreciation and Amortization","21,997","","","23,828","","","8","%","","7","%"],["Adjusted EBITDA","$","45,956","","","$","19,674","","","#","","#"],["Adjusted EBITDA Margin","21.6","%","","12.5","%"]]
[[/GREPCENT_TABLE]]

# Not meaningful

Revenue:

Talent revenue increased $55.3 million, or 35%, as compared with the prior year on a reported and constant currency basis. This increase was primarily due to an increase in placements in talent development (Wiley Edge) and, to a lesser extent, driven by a strong recovery in assessments (corporate training) from prior year COVID-19 lockdown impacts. For the year ended April 30, 2022, we delivered approximately 112% growth in IT talent placements in talent development (Wiley Edge).

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased $26.3 million as compared with the prior year. This was due to an increase in revenue, partially offset by higher employee-related costs due to increased investments to accelerate growth in talent development (Wiley Edge).

CORPORATE EXPENSES:

Corporate expenses for the year ended April 30, 2022 decreased $5.0 million, or 3%, as compared with the prior year. On a constant currency basis and excluding restructuring (credits) charges, these expenses increased 16% as compared with the prior year. This was primarily due to higher employee-related costs, marketing costs and, to a lesser extent, technology-related spending.

45

Index

FISCAL YEAR 2024 TRANSITION YEAR OUTLOOK

Wiley has announced strategic actions that will focus Wiley on its strongest and most profitable businesses and large market opportunities in Research and Learning. We are divesting non-core education businesses, including University Services (known as online program management), Wiley Edge (formerly Talent Development) and CrossKnowledge. These assets will be reported as businesses held for sale starting in the first quarter of fiscal year 2024. We will be streamlining our organization and rightsizing our cost structure to reflect these portfolio actions. The benefits of these actions will be realized in fiscal year 2025 and fiscal year 2026.

Wiley’s fiscal year 2024 outlook excludes businesses held for sale: University Services, Wiley Edge (Talent Development), and CrossKnowledge, as well as those businesses sold in fiscal year 2023 (test prep and advancement courses). Collectively, these businesses generated $393 million of revenue (19% of our consolidated revenue) and $43 million of Adjusted EBITDA (10% of our consolidated Adjusted EBITDA) in fiscal year 2023.

Wiley’s go-forward reporting structure will consist of two reportable segments: (1) Research and (2) Learning, as well as a Corporate expense category (no change), which includes certain costs that are not allocated to the reportable segments. Research is unchanged with reporting lines of Research Publishing and Research Solutions. Learning will include reporting lines of Academic (education publishing) and Professional (professional publishing and assessments). Wiley will begin to report on this structure in the first quarter of fiscal year 2024.

(amounts in millions, except Adjusted EPS)

[[GREPCENT_TABLE]]
[["Metric","Fiscal Year 2023 All Company","","Fiscal Year 2023 Ex-Divestitures","","Fiscal Year 2024 Outlook Ex-Divestitures"],["Adjusted Revenue (1)","$2,020","","$1,627","","$1,580 to $1,630"],["Research","","","$1,080","","Flat (+3% ex-Hindawi)"],["Learning","","","$547","","Down low single digits"],["Adjusted EBITDA (1)","$422","","$379","","$305 to $330"],["Adjusted EPS (1)","$3.84","","$3.48","","$2.05 to $2.40"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","Wiley\u2019s fiscal year 2024 outlook (\u201cAdjusted Revenue,\u201d \u201cAdjusted EBITDA,\u201d and \u201cAdjusted EPS\u201d) exclude businesses held for sale, including University Services, Wiley Edge (formerly Talent Development), and CrossKnowledge, as well as those sold in fiscal year 2023, Test Prep and Advancement Courses."]]
[[/GREPCENT_TABLE]]

Fiscal Year 2024 Transition Year Outlook

•Adjusted Revenue – Projected year-over-year performance excluding divestitures primarily due to the Hindawi special issues publishing pause and continued softness in consumer and corporate spending. Research revenue is expected to be flat. Excluding Hindawi, our base business is anticipated to grow 3% driven by open access and solutions. In Learning, we are anticipating a low-single decline. We expect steadier market conditions in professional publishing than we saw in fiscal year 2023, but enrollment and print demand remain constrained in higher education, offsetting a modest growth expectation in our professional line. Note, this is a new metric defined as revenue adjusted to exclude businesses held for sale or sold.

•Adjusted EBITDA – Projected year-over-year decline excluding divestitures primarily due to projected revenue performance, notably Hindawi, particularly in the first half of the year, and to a lesser extent the Learning revenue decline. Other contributors include higher employment costs, notably a standard reset of incentive compensation after fiscal year 2023 underperformance ($30 million of Adjusted EBITDA impact) and wage inflation ($20 million of Adjusted EBITDA impact). Wiley is implementing its multi-year business optimization program by expanding its scope to drive operating efficiency and modernization while reducing corporate overhead. Wiley’s Adjusted EBITDA margin for its go-forward business is projected to be 19-20%, down from 23.3% in fiscal year 2023. The Company expects to more than recover its fiscal 2023 margin of 23.3% as it exits fiscal year 2024 and progress from there in fiscal year 2025 and fiscal year 2026.

•Adjusted EPS – Projected year-over-year decline excluding divestitures due to lower projected Adjusted EBITDA, and further impacted by $0.42 of non-operational items including a higher tax rate (-$0.21/share), pension expense (-$0.11/share), and interest expense (-$0.10/share). Our Adjusted Effective Tax Rate is expected to rise from 17.9% in fiscal year 2023 to approximately 25% in fiscal year 2024. Wiley’s higher tax rate is primarily due to a less favorable mix of earnings by country and an increase in the UK statutory rate. Wiley froze its US and UK pension programs in 2015, and they are approximately 90% funded.

46

Index

Wiley is not providing a Free Cash Flow outlook due to the uncertainty around both the timing of divestitures and the size and scope of restructuring payments.

In August 2022, the White House Office of Science and Technology Policy (OSTP) issued guidance for US federal agencies to make federally funded research freely available starting no later than December 31, 2025, without an embargo. For reference, approximately 10% of Wiley’s published articles today are funded by US federal departments impacted by this guidance, and approximately 27% of those articles are already open access. Wiley has been working for several years with the OSTP and other stakeholders around the world to support the orderly transition to open research. This new guidance is aligned with Wiley’s stated strategy and mission and is supported by the growth the Company is seeing in open research publishing. Wiley supports multiple publishing models to execute against the industry’s shared objective of unlocking access to scientific research and improving the efficiency of peer review and publication. Those models include journal subscriptions (“pay to read”), transformational agreements (“pay to read and publish”), and open access (“pay to publish”). In the past three years, our open access revenues, including from transformational agreements, have increased from less than 9% of total Research Publishing revenues to approximately 32% today. Based on our assessment of the guidance, we do not believe it will have a material financial impact on our Company.

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 foreseeable future. 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. Other discretionary uses of cash flow include share repurchases and acquisitions to complement 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, 2023, we had cash and cash equivalents of $106.7 million, of which approximately $104.6 million, or 98%, 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 will be required to pay income taxes in various US state and local jurisdictions and applicable non-US withholding or similar taxes in the periods in which such repatriation occurs. Accordingly, as of April 30, 2023, we have recorded an approximately $2.8 million deferred tax liability 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 a (i) five-year revolving credit facility in an aggregate principal amount up to $1.115 billion, (ii) a five-year term loan A facility consisting of $200 million, and (iii) $185 million aggregate principal amount revolving credit facility through May 2024.

47

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As of April 30, 2023, we had approximately $748.3 million of debt outstanding, net of unamortized issuance costs of $0.7 million, and approximately $749.5 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, 2023.

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, 2023 is as follows:

[[GREPCENT_TABLE]]
[["","Payments Due by Period (in millions)"],["","Total","","Within Year 1","","2\u20133 Years","","4\u20135 Years","","After 5 Years"],["Total debt(1)","$","749.0","","","$","5.0","","","$","35.0","","","$","709.0","","","$","\u2014"],["Interest on debt(2)","164.3","","","33.9","","","74.4","","","56.0","","","\u2014"],["Non-cancellable leases","171.5","","","26.5","","","48.5","","","32.3","","","64.2"],["Minimum royalty obligations","385.5","","","98.1","","","147.5","","","93.6","","","46.3"],["Other operating commitments","85.2","","","51.4","","","33.7","","","0.1","","","\u2014"],["Total","$","1,555.5","","","$","214.9","","","$","339.1","","","$","891.0","","","$","110.5"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","Total debt is exclusive of unamortized issuance costs of $0.7 million."],["(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, 2023 remain constant until the maturity of the debt."]]
[[/GREPCENT_TABLE]]

Analysis of Historical Cash Flow

The following table shows the changes in our Consolidated Statements of Cash Flows:

[[GREPCENT_TABLE]]
[["","Years Ended April 30,"],["","2023","","2022","","2021"],["Net cash provided by operating activities","$","277,071","","","$","339,100","","","$","359,923"],["Net cash used in investing activities","(98,398)","","","(194,024)","","","(433,154)"],["Net cash used in financing activities","(168,568)","","","(131,638)","","","(47,086)"],["Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash","$","(3,570)","","","$","(7,070)","","","$","11,629"]]
[[/GREPCENT_TABLE]]

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, 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.

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Index

Free Cash Flow Less Product Development Spending:

[[GREPCENT_TABLE]]
[["","Years Ended April 30,"],["","2023","","2022","","2021"],["Net cash provided by operating activities","$","277,071","","","$","339,100","","","$","359,923"],["Less: Additions to technology, property and equipment","(81,155)","","","(88,843)","","","(77,407)"],["Less: Product development spending","(22,958)","","","(27,015)","","","(25,954)"],["Free cash flow less product development spending","$","172,958","","","$","223,242","","","$","256,562"]]
[[/GREPCENT_TABLE]]

Net Cash Provided By Operating Activities

2023 compared to 2022

The following is a summary of the $62.0 million change in Net cash provided by operating activities for the year ended April 30, 2023, as compared with the year ended April 30, 2022 (amounts in millions).

[[GREPCENT_TABLE]]
[["Net cash provided by operating activities \u2013 Year ended April 30, 2022","$","339.1"],["Net income adjusted for items to reconcile net income to net cash provided by operating activities, which would include such noncash items as depreciation and amortization, impairment of goodwill, restructuring and related charges (credits), and the change in deferred taxes","(27.8)"],["Working capital changes:"],["Accounts receivable, net and contract liabilities","6.6"],["Accounts payable and accrued royalties","6.5"],["Changes in other assets and liabilities","(47.3)"],["Net cash provided by operating activities \u2013 Year ended April 30, 2023","$","277.1"]]
[[/GREPCENT_TABLE]]

The favorable change in accounts receivable, net and contract liabilities was primarily due to the timing of collections and billings with customers.

The favorable change in accounts payable and accrued royalties was due to the timing of payments.

The unfavorable changes in other assets and liabilities noted in the table above was primarily due to higher restructuring payments in fiscal year 2023, and lower employee related costs due to lower annual incentive compensation for fiscal year 2023.

Our negative working capital (current assets less current liabilities) was $354.3 million and $418.6 million as of April 30, 2023 and April 30, 2022, respectively. The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance. The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2023 and as of April 30, 2022 include contract liabilities of $504.7 million and $538.1 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.

2022 compared to 2021

The following is a summary of the $20.8 million change in Net cash provided by operating activities for the year ended April 30, 2022 as compared with the year ended April 30, 2021 (amounts in millions).

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Index

[[GREPCENT_TABLE]]
[["Net cash provided by operating activities \u2013 Year ended April 30, 2021","$","359.9"],["Net income adjusted for items to reconcile net income to net cash provided by operating activities, which would include such noncash items as depreciation and amortization and the change in deferred taxes","(16.3)"],["Working capital changes:"],["Accounts payable and accrued royalties","47.5"],["Accounts receivable, net and contract liabilities","(23.3)"],["Changes in other assets and liabilities","(28.7)"],["Net cash provided by operating activities \u2013 Year ended April 30, 2022","$","339.1"]]
[[/GREPCENT_TABLE]]

The favorable change in accounts payable and accrued royalties was due to the timing of payments.

The unfavorable change in accounts receivable, net and contract liabilities was primarily the result of sales growth, as well as the timing of billings and collections with customers.

The unfavorable changes in other assets and liabilities noted in the table above was primarily due to an increase in employee-related costs, including payments due to higher annual incentive compensation payments in fiscal year 2022, partially offset by a favorable change in income taxes, and a decrease in restructuring payments.

Our negative working capital (current assets less current liabilities) was $418.6 million and $462.7 million as of April 30, 2022 and April 30, 2021, respectively. The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance. The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2022 and as of April 30, 2021 include contract liabilities of $538.1 million and $545.4 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 Used In Investing Activities

2023 Compared to 2022

Net cash used in investing activities in the year ended April 30, 2023 was $98.4 million compared to $194.0 million in the prior year. The decrease in cash used in investing activities was primarily due to a decrease of $68.4 million in cash used to acquire businesses. Additionally, cash proceeds related to the sale of businesses and certain assets increased $12.2 million. See Note 4, “Acquisitions and Divestitures” for more information related to the acquisitions and divestitures that occurred in the years ended April 30, 2023 and 2022. For additions of technology, property, and equipment and product development spending decreased $7.7 million and $4.1 million, respectively.

2022 Compared to 2021

Net cash used in investing activities in the year ended April 30, 2022 was $194.0 million compared to $433.2 million in the prior year. The decrease in cash used in investing activities was due to a decrease of $224.2 million in cash used to acquire businesses. See Note 4, “Acquisitions and Divestitures” for more information related to the acquisitions that occurred in the years ended April 30, 2022 and 2021. Additionally, cash outflows for the acquisitions of publication rights and other activities decreased $24.0 million. This was partially offset by an increase of $11.4 million for additions of technology, property, and equipment.

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Index

Net Cash Used In Financing Activities

2023 Compared to 2022

Net cash used in financing activities in the year ended April 30, 2023 was $168.6 million compared to $131.6 million in the year ended April 30, 2022. This change was primarily due to an increase in net debt repayments of $27.9 million and, to a lesser extent, a $5.0 million increase in cash used for purchases of treasury shares, and $4.5 million of cash used for costs related to the second amendment of the Amended and Restated CA.

2022 Compared to 2021

Net cash used in financing activities was $131.6 million in the year ended April 30, 2022 compared to net cash used of $47.1 million in the year ended April 30, 2021. This change was primarily due to net debt repayments of $11.0 million in the year ended April 30, 2022 compared with net debt borrowings of $30.7 million in the year ended April 30, 2021 and, to a lesser extent, a $24.7 million change from book overdrafts, and a $14.2 million increase in cash used for purchases of treasury shares.

Dividends and Share Repurchases

In the year ended April 30, 2023, we increased our quarterly dividend to shareholders to $1.39 per share annualized versus $1.38 per share annualized in the prior year.

In the year ended April 30, 2022, we increased our quarterly dividend to shareholders to $1.38 per share annualized versus $1.37 per share annualized in the prior year.

During the year ended April 30, 2020, our Board of Directors approved an additional share repurchase program of $200 million of Class A or B Common Stock. As of April 30, 2023, we had authorization from our Board of Directors to purchase up to $162.5 million that was remaining under this program. During the years ended April 30, 2023 and 2022, we purchased $35.0 million and $2.5 million, respectively, under this program. No share repurchases were made under this program during the year ended April 30, 2021. The share repurchase program described above is in addition to the share repurchase program approved by our Board of Directors during the year ended April 30, 2017 of four million shares of Class A or B Common Stock. As of April 30, 2022, no additional shares were remaining under this program for purchase.

The following table summarizes the shares repurchased of Class A and B Common Stock (shares in thousands):

[[GREPCENT_TABLE]]
[["","Years Ended April 30,"],["","2023","","2022","","2021"],["Shares repurchased \u2013 Class A","831","","542","","308"],["Shares repurchased \u2013 Class B","1","","2","","2"],["Average Price \u2013 Class A and Class B","$","42.07","","","$","55.14","","","$","50.93"]]
[[/GREPCENT_TABLE]]

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.

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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. These estimates include, among other items, sales return reserves, allocation of acquisition purchase price to assets acquired and liabilities assumed, goodwill and indefinite-lived intangible assets, intangible assets with definite lives and other long-lived assets, and retirement plans. 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 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 $2.6 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, “Acquisitions and Divestitures” of the Notes to Consolidated Financial Statements for details of our acquisitions.

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.

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.

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Index

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, each based on an applicable weighting. We assess the applicable weighting based on such factors as current market conditions and the quality and reliability of the data. 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. Assumptions for sales, net earnings, and cash flows for each reporting unit were consistent among these methods.

Fiscal Year 2023 and 2022 Annual Goodwill Impairment Test

As of February 1, 2023, we completed a quantitative assessment for our annual goodwill impairment test for our University Services reporting unit. We concluded that the fair value of the reporting unit was above the carrying value and, therefore, there was no indication of impairment. For our other reporting units, we performed a qualitative assessment by reporting unit as of February 1, 2023. 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, 2023.

As of February 1, 2022, we completed a quantitative assessment for our annual goodwill impairment test for our reporting units. We concluded that the fair values of our reporting units were above their carrying values and, therefore, there was no indication of impairment.

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.

53

Index

Changes in any of these assumptions could materially impact the estimated fair value of our reporting units. As noted below, the University Services reporting unit incurred an interim goodwill impairment. If the University Services reporting unit fair value decreases further in future periods, we could potentially have an additional impairment which would be limited to the remaining allocated goodwill of approximately $11 million as of April 30, 2023. 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.

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 2023 Segment Realignment Goodwill Impairment Test

In the third quarter of fiscal year 2023, 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. See Note 20, “Segment Information,” for more details. The Academic reportable segment includes two reporting units, Academic Publishing and University Services, and the Talent reportable segment includes two reporting units, Talent Development and Professional Learning. No changes were made to the Research reportable segment. As a result of this realignment, we are 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.

We estimated the fair value of the reporting units using a weighting of fair values derived from an income and a market approach. Under the income approach, we determined the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on our best estimates of forecasted economic and market conditions over the period including growth rates, expected changes in operating cash flows. The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market approach estimates fair value based on market multiples of current and forward 12-month revenue or EBITDA, as applicable, derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

54

Index

Goodwill Impairment Before Realignment

Prior to the realignment, we concluded that the fair value of the Academic & Professional Learning reporting unit was above its carrying value. Therefore, there was no indication of impairment. The carrying value of the Education Services reporting unit was above its fair value which resulted in a pretax non-cash goodwill impairment of $31.0 million. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income.

Education Services was adversely impacted by market conditions and headwinds for online degree programs. This has led to a decline in projected student 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. This was partially offset by projected growth in talent placements, partially due to expansion into new regions and the addition of new corporate clients, which are forecasted to have a positive impact on revenue growth and operating cash flows.

The key assumptions underlying the estimate of the fair value of the Education 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 8.5% for forecasted sales in our projected cash flows through fiscal year 2036. 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 Education Services reporting unit. The WACC applied to the Education Services reporting unit was 15%.

•Valuation Multiples – for the Guideline Public Company Method, we applied relevant current and forward 12-month revenue multiples based on an evaluation of multiples of publicly-traded companies with similarities to the Education Services reporting unit. The multiples applied ranged from 1.1x to 1.2x revenue.

The following hypothetical changes in the valuation of the Education Services reporting unit would have impacted the goodwill impairment as follows (absent of any related impact in discount rates applies):

•A hypothetical 1% increase to revenue growth and EBITDA margins would have reduced the impairment charge by approximately $30 million.

•A hypothetical 1% decrease to revenue growth and EBITDA margins would have increased the impairment charge by approximately $25 million.

Prior to performing the goodwill impairment test for Education 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 $467.0 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 Education 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 Publishing, Talent Development 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 non-cash goodwill impairment of $68.8 million. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income.

55

Index

University Services was adversely impacted by market conditions and headwinds for online degree programs which led 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.

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 3.7% for forecasted sales in our projected cash flows through fiscal year 2036. 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 11.0%.

•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 6.0x to 7.0x EBITDA.

The following hypothetical changes in the valuation of the University Services reporting unit would have impacted the goodwill impairment as follows (absent of any related impact in discount rates applies):

•A hypothetical 1% increase to revenue growth and EBITDA margins would have reduced the impairment charge by approximately $15 million.

•A hypothetical 1% decrease to revenue growth and EBITDA margins would have increased the impairment charge by approximately $12 million.

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 $326.0 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.

Fiscal Year 2023 and 2022 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 2023, 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.

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For fiscal year 2022, we estimated the fair value of these indefinite-lived intangible assets using a relief from royalty method under an income approach. The key assumptions for this method were revenue projections, a royalty rate as determined by management in consultation with valuation experts, and a discount rate. We concluded that the fair values of these indefinite-lived intangible assets were above their carrying values and therefore, there was no indication of impairment.

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 $1.2 million and $76.2 million, respectively. A one percent decrease in the discount rate would decrease net income and increase the accrued pension liability by approximately $0.3 million and $89.2 million, respectively. A one percent change in the expected long-term rate of return would affect net income by approximately $5.1 million.

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