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 one of the world’s largest publishers and a global leader in research and learning. The Company ’ s content, services, platforms, and knowledge networks are tailored to meet the evolving needs of its customers and partners, including researchers, students, instructors, professionals, institutions, and corporations. Wiley is a predominantly digital company with 83% of its Adjusted Revenue for the year ended April 30, 2025, generated by digital products and services. For the year ended April 30, 2025, 48% of Adjusted Revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty. See below for the reconciliation of consolidated Revenue to Adjusted Revenue.
We report financial information for the following reportable segments, as well as a Corporate category, which includes certain costs that are not allocated to the reportable segments:
• Research includes the reporting lines of Research Publishing and Research Solutions;
• Learning includes the Academic and Professional reporting lines and consists of publishing, courseware, and assessments.
Wiley also reports a Held for Sale or Sold segment, which primarily includes non-core businesses which were classified as held-for-sale until the date of sale, as well other businesses which were sold as described further below.
Through the Research segment, we provide peer-reviewed scientific, technical, and medical (STM) journals, content platforms, and related publishing and audience solutions to academic, corporate, and government customers, academic societies, and individual researchers. The Learning segment provides scientific, professional, and education print and digital books to researchers, professionals, and students, digital courseware for instructors and students, and assessment services to businesses and professionals.
Wiley’s business strategies are tightly aligned with consistent long-term growth trends, including ever-increasing global R&D investment, leading to growth in scientific research output and the number of institutions and researchers worldwide. These strategies include expanding our publishing program and journal portfolio to meet the global demand for peer-reviewed research, driving additional value in our subscription-based models for universities and corporations, volume-based models for open access, content licensing opportunities for applications in science and innovation, and content platform and service offerings for corporations and societies. Learning strategies include selectively scaling high-value digital content, courseware, and assessments to meet targeted opportunities in education and professional development.
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Consolidated Results of Operations
FISCAL YEAR 2025 AS COMPARED TO FISCAL YEAR 2024 SUMMARY RESULTS
SUMMARY
• US GAAP Results : Revenue of $1,677.6 million (-10% compared with the prior year due to foregone revenue from divested businesses), Operating income of $221.4 million ($+169.1 million compared with the prior year), and Diluted Earnings per Share of $1.53 (+$5.18 compared with the prior year).
• Adjusted Results at Constant Currency (excluding Held for Sale or Sold segment results): Adjusted Revenue of $1,660.2 million (+3% compared with the prior year), Adjusted Operating Income of $250.5 million (+29%, compared with the prior year), Adjusted EBITDA of $397.7 million (+8% compared with the prior year), and Adjusted EPS of $3.64 (+31% compared with the prior year).
• Net Cash Provided by Operating Activities of $202.6 million ($-5.0 million compared with the prior year), and Free Cash Flow Less Product Development Spending of $125.9 million ($+11.6 million compared with the prior year)
Revenue:
Revenue for the year ended April 30, 2025, decreased $195.4 million, or 10%, as compared with the prior year. On a constant currency basis, revenue decreased 10% as compared with the prior year. Excluding the revenues from the Held for Sale or Sold segment, Adjusted Revenue increased 3% on a constant currency basis. AI license revenue was $40 million in the year ended April 30, 2025 compared to $23 million in the prior year.
Adjusted Revenue
Below is a reconciliation of our consolidated US GAAP Revenue, net to Non-GAAP Adjusted Revenue, net:
Year Ended
April 30,
US GAAP Revenue, net
Less: Held for Sale or Sold Segment (1)
Non-GAAP Adjusted Revenue, net
Our Adjusted Revenue net excludes the impact of our Held for Sale or Sold segment revenue.
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, 2025, of $431.4 million, decreased $148.3 million, or 26% as compared with the prior year. On a constant currency basis, cost of sales decreased 26% as compared with the prior year primarily due to the prior year including employee and marketing costs related to the University Services business which was sold on January 1, 2024 and, to a lesser extent, lower employee costs related to the Wiley Edge business which was sold on May 31, 2024.
Excluding the cost of sales from the Held for Sale or Sold segment, cost of sales decreased 1% on a constant currency basis primarily due to lower product development and inventory-related costs, partially offset by higher royalty costs.
Operating and Administrative Expenses:
Operating and administrative expenses for the year ended April 30, 2025, of $947.4 million decreased $66.1 million, or 7%, as compared with the prior year. On a constant currency basis, operating and administrative expenses decreased 7% as compared with the prior year primarily reflecting lower employee related costs and, to a lesser extent, lower depreciation and amortization, partially offset by an increase in enterprise modernization costs.
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Excluding the operating and administrative expenses from the Held for Sale or Sold segment, operating and administrative expenses decreased 1% as compared with the prior year on a constant currency basis primarily due to lower depreciation and amortization and, to a lesser extent, employments costs, partially offset by an increase in enterprise modernization costs.
Impairment of Goodwill:
We recorded an impairment of goodwill in the year ended April 30, 2024, of $108.4 million. T his charge is reflected in the Impairment of goodwill in the Consolidated Statements of Income (Loss).
Due to the segment realignment in the first quarter of fiscal year 2024, we were required to test goodwill for impairment immediately before and after our segment realignment in accordance with applicable accounting standards. Prior to the realignment, we concluded that the fair value of the University Services reporting unit within the former Academic segment was below its carrying value, which resulted in a pretax noncash goodwill impairment of $11.4 million. 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. Such impairment reduced the goodwill of the University Services reporting unit to zero.
After the realignment, we concluded that the fair value of the CrossKnowledge reporting unit within the Held for Sale or Sold segment was below its carrying value, which resulted in a pretax noncash goodwill impairment of $15.3 million. CrossKnowledge was adversely impacted by a decline in the demand for its offerings, which resulted in lower sales and a decline in average contract value, that adversely impacted forecasted revenue growth and operating cash flows. Such impairment reduced the goodwill of the CrossKnowledge reporting unit to zero.
As a result of signing the agreement to sell Wiley Edge and the decrease in the fair value of the business which was impacted by a decline in placements in the third quarter of fiscal year 2024, we tested the goodwill of the Wiley Edge reporting unit within the Held for Sale or Sold segment for impairment. We concluded that the fair value of the Wiley Edge reporting unit was below its carrying value, which resulted in a pretax noncash goodwill impairment of $81.7 million in the three months ended January 31, 2024. Such impairment reduced the goodwill of the Wiley Edge reporting unit to zero. See Note 11 , “Goodwill and Intangible Assets ” for details on these charges.
Restructuring and Related Charges:
We recorded restructuring and related charges in the years ended April 30, 2025 and 2024 of $25.6 million and $63.0 million , respectively. T hese charges are reflected in the Restructuring and related charges in the Consolidated Statements of Income (Loss).
Global Restructuring Program
Beginning in fiscal year 2023, the Company initiated the Global Restructuring Program which was expanded in fiscal year 2024 to include those actions that will focus Wiley on its leading global position in the development and application of new knowledge and drive greater profitability, growth, and cash flow. We will focus on our strongest and most profitable businesses and large market opportunities in Research and Learning, as well as streamline our organization and rightsize our cost structure to reflect these portfolio actions. Under this program, we reduced our real estate square footage occupancy by approximately 35%.
In the fourth quarter of fiscal year 2025, the program was further extended due to the completion of our divestitures with a focus on optimizing our cost structure, with particular emphasis on aligning our technology costs and other corporate expenses. As a result of these initiatives, this expanded program will include severance related charges, facility-related costs associated with certain properties, and other activities.
Excluding actions related to the Held for Sale or Sold segment, we anticipate to yield annualized cost savings of approximately $100 million, with approximately $80 million of that realized this fiscal year from actions taken starting in fiscal year 2024.
For the years ended April 30, 2025 and 2024 , we recorded pretax restructuring charges of $29.4 million and $61.6 million, respectively, related to this program.
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See Note 7 , “Restructuring and Related Charges” for more details on these charges.
Business Optimization Program
For the years ended April 30, 2025 and 2024 , we recorded pretax restructuring credits of $(3.8) million and charges of $1.4 million , respectively, related to this program.
See Note 7 , “Restructuring and Related Charges” for more details on these credits and charges.
For the impact of our restructuring programs on diluted earnings (loss) per share, see the section below, “Diluted Earnings (Loss) per Share (EPS).”
Amortization of Intangible Assets:
Amortization of intangible assets was $51.8 million for the year ended April 30, 2025, a decrease of $4.2 million , or 7% as compared with the prior year. On a constant currency basis, amortization of intangible assets decreased 8% as compared with the prior year primarily due to the cessation of amortization for held-for-sale assets and the completion of amortization of certain acquired intangible assets. See Note 4 , “Acquisitions and Divestitures” for more details on these divestitures.
Operating Income, Adjusted Operating Income (OI) and Adjusted EBITDA:
Operating income for the year ended April 30, 2025, of $221.4 million increased $169.1 million, as compared with the prior year. On a constant currency basis, the operating income increase was consistent with the reported increase as compared with the prior year. The increase was primarily due to lower costs of sales, and the $108.4 million impairment of goodwill in the prior year and, to a lesser extent, lower operating and administrative expenses, and restructuring charges, partially offset by a decrease in revenue.
Adjusted OI on a constant currency basis increased 29% as compared with the prior year. The increase in Adjusted OI was primarily due to an increase in Adjusted Revenue and, to a lesser extent, lower operating and administrative expenses.
Adjusted EBITDA on a constant currency basis increased 8% as compared with the prior year primarily due to an increase in Adjusted Revenue, partially offset by higher operating and administrative expenses.
Adjusted OI
Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted OI:
Year Ended
April 30,
US GAAP Operating Income
Adjustments:
Restructuring and related charges
Impairment of goodwill
Held for Sale or Sold segment Adjusted Operating Loss (Income) (1)
Non-GAAP Adjusted OI
Our Adjusted OI excludes the impact of our Held for Sale or Sold segment Adjusted Operating Loss or (Income).
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Adjusted EBITDA
Below is a reconciliation of our consolidated US GAAP Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA:
Year Ended
April 30,
Net Income (Loss)
Interest expense
Provision for income taxes
Depreciation and amortization
Non-GAAP EBITDA
Impairment of goodwill
Restructuring and related charges
Net foreign exchange transaction losses
Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale
Other (income) expense, net
Held for Sale or Sold segment Adjusted EBITDA (1)
Non-GAAP Adjusted EBITDA
Our Non-GAAP Adjusted EBITDA excludes the Held for Sale or Sold segment Non-GAAP Adjusted EBITDA.
Interest Expense:
Interest expense for the year ended April 30, 2025, was $52.5 million compared with the prior year of $49.0 million. This increase was primarily due to a higher weighted average effective interest rate on borrowings.
Foreign Exchange Transaction (Losses):
Foreign exchange transaction losses were $(8.1) million for the year ended April 30, 2025, and were primarily due to losses on our intercompany accounts receivable and payable balances and, to a lesser extent, losses on our foreign currency denominated third-party receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar. In the year ended April 30, 2025, we wrote off an additional net gain of $1.4 million in cumulative translation adjustments from our Russian entity which was formally liquidated i n the fourth quarter of fiscal year 2025.
Foreign exchange transaction losses were $(3.0) million for the year ended April 30, 2024, and were primarily due to losses on our foreign currency denominated third-party receivable and payable balances and, to a lesser extent, losses on our intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar. In fiscal year 2023, due to the closure of our operations in Russia, our Russian entity was deemed substantially liquidated. As a result, cumulative translation adjustments associated with that entity were recognized. In the year ended April 30, 2024, we wrote off an additional net gain of $1.0 million in cumulative translation adjustments from our Russian entity.
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Net Loss on Sale of Businesses, Assets, and Impairment Charges Related to Assets Held-for-Sale:
For the years ended April 30, 2025 and 2024, we recorded pretax loss on sale of businesses, assets, and impairment charges related to assets held-for-sale as follows:
Year Ended
April 30,
CrossKnowledge
Wiley Edge
University Services
Tuition Manager
Sale of assets
Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale
These charges are reflected in Net (loss) gain on sale of businesses, assets, and impairment charges related to assets held-for-sale on our Consolidated Statements of Income (Loss).
On August 31, 2024, we completed the sale of CrossKnowledge which was included in our Held for Sale or Sold segment. The pretax loss on sale was $51.3 million after accounting for the assets sold, liabilities transferred upon sale, transaction costs, and the write-off of cumulative translation adjustments in earnings. In connection with the held-for-sale classification prior to the sale, we recognized cumulative impairment charges of $51.0 million on the remeasurement of the disposal group at the lower of carrying value or fair value less costs to sell, which included $55.4 million recognized in fiscal year 2024. Upon the completion of the sale, we recognized a net gain of $4.1 million in the year ended April 30, 2025, primarily due to subsequent changes in the fair value less costs to sell, as well as changes in the carrying amount of the disposal group.
On May 31, 2024, we completed the sale of Wiley Edge which was included in our Held for Sale or Sold segment, with the exception of its India operations which sold on August 31, 2024. The pretax loss on sale was $34.3 million after accounting for the assets sold, liabilities transferred upon sale, transaction costs, and the write-off of cumulative translation adjustments in earnings. In connection with the held-for-sale classification, during fiscal year 2024, we recognized cumulative impairment charges of $19.4 million on the remeasurement of the disposal group at the lower of carrying value or fair value less costs to sell. Upon the completion of the sale, we recognized a net loss of $14.9 million in the year ended April 30, 2025, primarily due to subsequent changes in the fair value less costs to sell including reducing the fair value of the contingent consideration in the form of an earnout from $15.0 million to zero in the third quarter of fiscal year 2025, partially offset by the sale of the India operations. See Note 4 , "Acquisitions and Divestitures" for further details.
On January 1, 2024, we completed the sale of University Services, which was included in our Held for Sale or Sold segment. On June 5, 2025, Wiley entered into an agreement with Metis Aggregator L.P. and Vistria AP Aggregator, LLC to sell the Seller Note, the fiscal year 2026 University Services Earnout, and the TVG Investment, and agreed with Upper Holdings and Academic Partnerships on the fiscal year 2025 University Services Earnout for total cash consideration of $119.5 million (Sale Agreement), which was fully paid in June 2025. As a result of this Sale Agreement, all amounts due to Wiley in accordance with the University Services Agreement have been settled. In the year ended April 30, 2025, due to the process of selling these assets, as well as third-party customer consents, working capital adjustments, and changes in the costs to sell, we recognized an additional net loss on sale and impairments of assets of $12.6 million.
In the year ended April 30, 2025, there was a reduction in the pretax loss on the sale of our Tuition Manager business previously in our Held for Sale or Sold segment of $0.1 million due to a selling price adjustment for cash received after the closing.
In the year ended April 30, 2025, we sold a facility which was reflected in Technology, property, and equipment, net in our Consolidated Statements of Financial Position which resulted in a pretax loss on sale of $0.2 million.
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In the year ended April 30, 2024, we recorded a held-for-sale pretax impairment of $74.8 million which includes $19.4 million for Wiley Edge and $55.4 million for CrossKnowledge. The pretax loss on the sale of University Services and Tuition Manager was $107.0 million and $1.5 million, respectively.
See Note 4 , “Acquisitions and Divestitures” for more details on these divestitures.
Other Income (Expense), Net:
Other income, net was $5.5 million for the year ended April 30, 2025 compared with the prior year Other (expense), net of $(4.0) million, an increase of $9.5 million. This change was primarily due to an increase in interest income related to the seller notes as a result of the sale of University Services and Wiley Edge. See Note 4 , “ Acquisitions and Divestitures ” for more details on these divestitures.
Provision for Income Taxes:
Below is a reconciliation of our US GAAP Income (Loss) Before Taxes to Non-GAAP Adjusted Income Before Taxes:
Year Ended
April 30,
US GAAP Income (Loss) Before Taxes
Pretax Impact of Adjustments:
Impairment of goodwill
Restructuring and related charges
Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments
Amortization of acquired intangible assets
Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale
Held for Sale or Sold segment Adjusted Income Before Taxes (1)
Non-GAAP Adjusted Income Before Taxes
Our Adjusted Income Before Taxes excludes the Adjusted Income Before Taxes of our Held for Sale or Sold segment.
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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:
Year Ended
April 30,
US GAAP Income Tax Provision
Income Tax Impact of Adjustments (1) :
Impairment of goodwill
Restructuring and related charges
Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments
Amortization of acquired intangible assets
Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale
Held for Sale or Sold segment Adjusted Tax Provision (2)
Income Tax Adjustments
Impact of valuation allowance on the US GAAP effective tax rate (3)
Impact of change in certain US state tax rates in 2025 (4)
Non-GAAP Adjusted Income Tax Provision
US GAAP Effective Tax Rate
Non-GAAP Adjusted Effective Tax Rate
For the years ended April 30, 2025 and 2024 , substantially all of the tax impact was from deferred taxes.
Our Adjusted Income Tax Provision excludes the Adjusted Tax Provision of our Held for Sale or Sold segment.
In the years ended April 30, 2025 and 2024 , there was a $26.0 million and $30.2 million, respectively, impact on the US GAAP effective tax rate due to the valuation allowance on deferred tax assets in the US.
Change in the allocation of state apportionment factors and applicable state tax rates.
The Company's effective tax rate for the year ended April 30, 2025, was primarily driven by the impact of the US valuation allowance, the rates of tax imposed on income earned in foreign jurisdictions, and state taxes.
In fiscal year 2024, due to temporary differences in the US, our deferred taxes reversed from a net deferred tax liability position to a net deferred tax asset position. Due to losses in the US resulting from impairments, restructuring, and acceleration of amortization expense on capitalized software, we concluded it was more-likely-than-not that all or a portion of our deferred tax asset may not be realized. As a result, we established a valuation allowance of $30.2 million. During fiscal year 2025 we increased this valuation allowance by $26.0 million, because of an increase in the US net deferred tax asset attributable primarily to interest expense disallowance and the capitalization of R&D expenses.
Excluding the restructuring and related charges, impact of valuation allowance, and other adjustments noted in the table above, the Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2025, was 21.0%. The Non-GAAP Adjusted Effective Tax Rate for the year ended April 30, 2024, was 21.4%. The decrease in the Non-GAAP Adjusted Effective Tax Rate before these items was primarily due to the mix of earnings by jurisdiction for the year ended April 30, 2025.
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Diluted Earnings (Loss) Per Share (EPS):
EPS for the year ended April 30, 2025, was $1.53 per share compared to a loss of $(3.65) per share in the prior year. This increase was primarily due to an increase in operating income, a decrease in the pretax net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale, partially offset by an increase in the provision for income taxes in the year ended April 30, 2025.
Below is a reconciliation of our US GAAP Earnings (Loss) Per Share to Non-GAAP Adjusted EPS. The amount of the pretax and the related income tax impact for the adjustments included in the table below are presented in the section above, “Provision for Income Taxes.”
Year Ended
April 30,
US GAAP Earnings (Loss) Per Share
Adjustments:
Impairment of goodwill
Restructuring and related charges
Foreign exchange losses on intercompany transactions, including the write off of certain cumulative translation adjustments
Amortization of acquired intangible assets
Net loss on sale of businesses, assets, and impairment charges related to assets held-for-sale
Held for Sale or Sold segment Adjusted Net Loss (Income) (1)
Income tax adjustments
EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (2)
Non-GAAP Adjusted EPS
Our Adjusted EPS excludes the Adjusted Net Loss (Income) of our Held for Sale or Sold segment.
Represents the impact of using diluted weighted-average number of common shares outstanding (55.7 million shares for the year ended April 30, 2024) included in the Non-GAAP Adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive.
On a constant currency basis, Adjusted EPS increased 31% primarily due to an increase in Adjusted Operating Income and, to a lesser extent, an increase in interest income.
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SEGMENT OPERATING RESULTS:
Year Ended
April 30,
% Change
Favorable
(Unfavorable)
Constant Currency
% Change
Favorable
(Unfavorable)
RESEARCH
Revenue:
Research Publishing
Research Solutions
Total Research
Cost of Sales
Direct Expenses
Allocated Corporate Expenses
Amortization of Intangibles
Adjusted Operating Income
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
Revenue:
Research revenue for the year ended April 30, 2025, increased $32.8 million, or 3%, as compared with the prior year. On a constant currency basis, revenue increased 3% as compared with the prior year primarily due to an increase in author-funded open access, institutional models, AI licensing revenue and, to a lesser extent, Research Solutions, partially offset by a decrease in ancillary and print products. The increase in Research Solutions was due to an increase in databases, and content solutions for corporations, partially offset by a decrease in recruitment. Open access article output growth was approximately 16% as compared with the prior year. Research AI licensing revenue for the year ended April 30, 2025 was approximately $11 million.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA increased 5% as compared with the prior year. This increase was primarily due to higher revenue, partially offset by higher employment related costs.
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Year Ended
April 30,
% Change
Favorable
(Unfavorable)
Constant Currency
% Change Favorable
(Unfavorable)
LEARNING
Revenue:
Academic
Professional
Total Learning Revenue
Cost of Sales
Direct Expenses
Allocated Corporate Expenses
Amortization of Intangibles
Adjusted Operating Income
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
Revenue:
Learning revenue for the year ended April 30, 2025, increased $10.0 million, or 2%, as compared with the prior year. On a constant currency basis, revenue increased 2% as compared with the prior year primarily due to an increase in licensing revenue, including AI revenue, and growth in Academic from steady market conditions, notably student enrollment, the shift to inclusive access, and growth in digital content and courseware, partially offset by a decrease in Academic print book sales and retail channel softness in Professional. Learning AI licensing revenue for the year end April 30, 2025 was $29 million compared to $23 million in the prior year due to demand for Academic and Professional backlisted content.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA increased 9% as compared with the prior year. This increase was primarily due to higher revenue and, to a lesser extent, a decrease in employee costs as a result of recent restructuring actions, and lower technology costs.
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Year Ended
April 30,
% Change
Favorable
(Unfavorable)
Constant Currency
% Change
Favorable
(Unfavorable)
HELD FOR SALE OR SOLD
Total Held for Sale or Sold Revenue
Cost of Sales
Direct Expenses
Allocated Corporate Expenses
Amortization of Intangibles
Adjusted Operating Income
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
# Not meaningful
Revenue:
Held for Sale or Sold revenue for the year ended April 30, 2025, decreased $238.2 million, or 93%, as compared with the prior year on a reported and constant currency basis as compared with the prior year. This was primarily due to the sale of University Services on January 1, 2024, Wiley Edge on May 31, 2024, with the exception of its India operations which sold on August 31, 2024, and CrossKnowledge on August 31, 2024.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA decreased $35.7 million as compared with the prior year. This decrease was primarily due to the sale of the University Services, Wiley Edge, and CrossKnowledge businesses.
Year Ended
April 30,
% Change
Favorable
(Unfavorable)
Constant Currency
% Change
Favorable
(Unfavorable)
CORPORATE EXPENSES
Unallocated Corporate Expenses
Adjusted Corporate Expenses
Depreciation and Amortization
Adjusted EBITDA
On a constant currency basis, adjusted corporate expenses of $166.0 million on an Adjusted EBITDA basis increased 2% as compared with the prior year. This was primarily due to an increase in enterprise modernization costs.
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FISCAL YEAR 2024 AS COMPARED TO FISCAL YEAR 2023 SUMMARY RESULTS
Discussions of our results of operations for the year ended April 30, 2024, compared to April 30, 2023, have been omitted under this item, but may be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended April 30, 2024, which was filed with the SEC on June 26, 2024.
LIQUIDITY AND CAPITAL RESOURCES:
Principal Sources of Liquidity
We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing, and financing needs in the next twelve months. Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures. Excess operating cash is used to fund shareholder dividends and share repurchases. Other discretionary uses of cash flow include investments and acquisitions to complement and grow our portfolio of businesses. As necessary, we may supplement operating cash flow with debt to fund these activities. The overall cash position of the Company reflects our durable business results and a global cash management strategy that considers liquidity management, economic factors, and tax considerations. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure to any financial institution.
As of April 30, 2025, we had cash and cash equivalents of $85.9 million, of which approximately all was located outside the US. Maintenance of these cash and cash equivalent balances outside the US does not have a material impact on the liquidity or capital resources of our operations. We intend to repatriate earnings from our non-US subsidiaries, and to the extent we repatriate these funds to the US, we may be required to pay taxes in various US state and local jurisdictions and withholding or similar taxes in applicable non-US jurisdictions in the periods in which such repatriation occurs. Accordingly, as of April 30, 2025, we have recorded a deferred tax liability of approximately $2.2 million related to the estimated taxes that would be incurred upon repatriating certain non-US earnings to the US.
On November 30, 2022, we entered into the second amendment to the Third Amended and Restated Credit Agreement (collectively, the Amended and Restated CA). See Note 14 , “Debt and Available Credit Facilities” for more details on the amendment. The Amended and Restated CA provided for senior unsecured credit facilities comprised of the following (i) a five-year revolving credit facility in an aggregate principal amount up to $1.115 billion which matures November 2027, (ii) a five-year term loan A facility consisting of $200 million which matures November 2027, and (iii) $185 million aggregate principal amount revolving credit facility which matured in May 2024.
As of April 30, 2025, we had approximately $799.4 million of debt outstanding, net of unamortized issuance costs of $0.4 million, and approximately $500.7 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, 2025.
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, 2025, is as follows:
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Payments Due by Period
(in millions)
Total
Within
Year 1
Years
Years
After 5
Years
Total debt (1)
Interest on debt (2)
Non-cancellable leases
Minimum royalty obligations
Other operating commitments
Total
Total debt is exclusive of unamortized issuance costs of $0.4 million.
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, 2025, remain constant until the maturity of the debt.
Analysis of Historical Cash Flow
The following table shows the changes in our Consolidated Statements of Cash Flows:
Years Ended April 30,
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash
Cash flow from operations is seasonally a use of cash in the first half of Wiley’s fiscal year principally due to the timing of collections for annual Journal Subscriptions and Transformational Agreements, which typically occurs in the beginning of the second half of our fiscal year.
Free cash flow less product development spending helps assess our ability, over the long term, to create value for our shareholders, as it represents cash available to repay debt, pay common dividends, and fund share repurchases, and acquisitions. Below are the details of Free cash flow less product development spending.
Free Cash Flow Less Product Development Spending:
Years Ended April 30,
Net cash provided by operating activities
Less: Additions to technology, property and equipment
Less: Product development spending
Free cash flow less product development spending
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Net Cash Provided By Operating Activities
2025 Compared to 2024
The following is a summary of the $5.0 million change in Net cash provided by operating activities for the year ended April 30, 2025, as compared with the year ended April 30, 2024 (amounts in millions).
Net cash provided by operating activities – Year ended April 30, 2024
Net income adjusted for items to reconcile net income to net cash provided by operating activities, which would include such noncash items as depreciation and amortization, net losses on sale of businesses, assets, and impairment charges related to assets held-for-sale, restructuring charges, and the change in deferred taxes
Working capital changes:
Accounts receivable, net and contract liabilities
Accounts payable and accrued royalties
Changes in other assets and liabilities
Net cash provided by operating activities – Year ended April 30, 2025
The favorable change in accounts receivable, net and contract liabilities, was primarily due to the timing of collections and billings to 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 employee related costs which was due t o higher annual incentive compensation paid in fiscal year 2025 related to fiscal year 2024 performance, and h igher costs related to cloud computing arrangements associated with targeted enterprise modernization work in fiscal year 2025. These cloud computing costs are capitalizable and amortized but included in cash flow from operations rather than cash flow from investing activities. These factors were partially offset by lower restructuring payments in fiscal year 2025.
Our negative working capital (current assets less current liabilities) was $381.0 million and $419.2 million as of April 30, 2025, and April 30, 2024, 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 revenue when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2025, and as of April 30, 2024 include contract liabilities of $462.7 million and $483.8 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
2025 Compared to 2024
Net cash used in investing activities in the year ended April 30, 2025, was $94.0 million compared to $106.6 million in the prior year. The decrease in cash used in investing activities was primarily due to $14.6 million of lower additions for technology, property, and equipment in fiscal year 2025, partially offset by higher net cash transferred in fiscal year 2025 related to the sale of businesses and assets. See Note 4 , “Acquisitions and Divestitures” for more information related to the divestitures that occurred in the years ended April 30, 2025 and 2024.
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Net Cash Used In Financing Activities
2025 Compared to 2024
Net cash used in financing activities in the year ended April 30, 2025, was $125.3 million compared to $107.2 million in the year ended April 30, 2024. This increase in cash used was primarily due to lower net debt borrowings of $14.3 million in fiscal year 2025, and a $15.4 million increase in cash used for purchases of treasury shares in fiscal year 2025, partially offset by a $9.1 million change in book overdrafts.
In the years ended April 30, 2025 and 2024 , our quarterly dividend to shareholders was $1.41 and $1.40 per share annualized, respectively.
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, 2025, we had authorization from our Board of Directors to purchase up to $57.4 million that was remaining under this program. During the years ended April 30, 2025 and 2024, we purchased $60.0 million and $45.1 million, respectively, under this program.
The following table summarizes the shares repurchased of Class A and B Common Stock (shares in thousands):
Years Ended April 30,
Shares repurchased – Class A
Shares repurchased – Class B
Average Price – Class A and Class B
The total amount purchased and the average price per share excludes excise taxes payable on share repurchases and may differ from the share repurchases reflected in Purchases of treasury shares in our Consolidated Statements of Cash Flows.
2024 Compared to 2023
A discussion of changes in our cash flows for the year ended April 30, 2024, compared to the year ended April 30, 2023, has been omitted under this item, but may be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended April 30, 2024, which was filed with the SEC on June 26, 2024.
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RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, ACCOUNTING GUIDANCE, AND DISCLOSURE REQUIREMENTS
We are subject to numerous recently issued statements of financial accounting standards, accounting guidance, and disclosure requirements. The information set forth in Part II, Item 8, “Financial Statements and Supplementary Data” in Note 2 , “Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards,” of the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K is incorporated by reference and describes these new accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES:
The preparation of our Consolidated Financial Statements and related disclosures in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and revenue and expenses during the reporting period. These estimates include, among other items, sales return reserves, allocation of acquisition purchase price to assets acquired and liabilities assumed, assets and liabilities held-for-sale, 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 2 , “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards” in the section "Summary of Significant Accounting Policies”, and see Note 3 , “Revenue Recognition, Contracts with Customers,” of the Notes to Consolidated Financial Statements for details of our revenue recognition policy.
Sales Return Reserves:
In Part II, Item 8, “Financial Statements and Supplementary Data,” see Note 2 , “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards” in the section “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for details of our sales return reserves.
A one percent change in the estimated sales return rate could affect net income by approximately $2.2 million. A change in the pattern or trends in returns could also affect the estimated allowance.
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed :
In connection with acquisitions, we allocate the cost of the acquisition to the assets acquired and the liabilities assumed based on the estimates of fair value for such items, including intangible assets. The excess of the purchase consideration over the fair value of assets acquired and liabilities assumed is recorded as goodwill. The determination of the acquisition date fair value of the assets acquired, and liabilities assumed, requires us to make significant estimates and assumptions, such as, if applicable, forecasted revenue growth rates and operating cash flows, royalty rates, customer attrition rates, obsolescence rates of developed technology, and discount rates. We may use a third-party valuation consultant to assist in the determination of such estimates.
In Part II, Item 8, “Financial Statements and Supplementary Data,” see Note 4 , “Acquisitions and Divestitures” of the Notes to Consolidated Financial Statements for details of our acquisitions.
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Assets and Liabilities Held-for-Sale:
In response to changes in market conditions and our ongoing initiatives to simplify our portfolio to drive sustained performance improvement , we may also strategically realign our resources and consider disposing of certain businesses. We classify assets as held-for-sale when management commits to a plan to sell, the assets are available for immediate sale in their present condition, we have initiated an active program to find a buyer, and the sale is probable within one year. Assets must be actively marketed at a reasonable price, and the plan should indicate completion is likely without significant changes.
The disposal group that is classified as held-for-sale is initially measured at the lower of its carrying value or fair value less any costs to sell. The determination of the fair value less costs to sell is based on indicative sales values and may require us to make judgments on significant estimates and assumptions regarding forecasted information such as revenue growth, gross profit, EBITDA, depreciation and amortization, capital expenditures, and discount rates. We may use a third-party valuation consultant to assist in the determination of such estimates. The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held-for-sale and any subsequent change is reported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held-for-sale.
The disposal group's fair value was based on the selling price components in the purchase agreements for University Services and Wiley Edge, which included earnouts. These earnouts were valued using a Monte Carlo simulation and classified as Level 3 in the ASC Topic 820 fair value hierarchy. This method considers the terms of the purchase agreements and our best estimates of forecasted revenue or gross profit for the earnout periods. It simulates a range of possible outcomes based on estimated volatility. The fair value was calculated as the present value of the average potential payouts, using a risk-adjusted discount rate. The earnout amount may change based on final results.
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 divestitures.
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.
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.
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We derive an estimate of fair values for each of our reporting units using a combination of an income approach and a market approach. Absent an indication of fair value from a potential buyer or similar specific transactions, we believe that the use of these methods provides a reasonable estimate of a reporting unit’s fair value.
Fair value computed by these methods is arrived at using a number of key assumptions including forecasted revenues and related growth rates, forecasted operating cash flows, the discount rate, and the selection of relevant market multiples of comparable publicly-traded companies with similar characteristics to the reporting unit. There are inherent uncertainties, however, related to these factors and to our judgment in applying them to this analysis. We believe that the combination of these methods provides a reasonable approach to estimate the fair value of our reporting units.
Income Approach Used to Determine Fair Values
The income approach is based upon the present value of expected cash flows. Expected cash flows are converted to present value using factors that consider the timing and risk of the future cash flows. The estimate of cash flows used is prepared on an unleveraged debt-free basis. We use a discount rate that reflects a market-derived weighted average cost of capital. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating and cash flow performance. The projections are based upon our best estimates of forecasted economic and market conditions over the related period including growth rates, expected changes in forecasted operating cash flows, and cash expenditures. Other estimates and assumptions include terminal value long-term growth rates, provisions for income taxes, future capital expenditures, and changes in future cashless, debt-free working capital. Changes in any of these assumptions could materially impact the estimated fair value of our reporting units. Our forecasts take into account the near and long-term expected business performance, considering the long-term market conditions and business trends within the reporting units. However, changes in these assumptions may impact our ability to recover the allocated goodwill in the future. For further discussion of the factors that could result in a change in our assumptions, see “Risk Factors” in this Annual Report on Form 10-K.
Market Approach Used to Determine Fair Values
The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the reporting unit’s operating performance (the Guideline Public Company Method). These multiples are derived from comparable publicly-traded companies with similar investment characteristics to the reporting unit, and such comparable data are reviewed and updated as needed annually. We believe that this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to our reporting units and Wiley.
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.
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Fiscal Year 2025 and 2024 Annual Goodwill Impairment Test
As of February 1, 2025 and 2024, we completed a qualitative assessment for our annual goodwill impairment test for our reporting units within Research and Learning segments. This assessment included consideration of key factors including macroeconomic conditions, industry and market considerations, cost factors, financial performance, and other relevant entity and reporting unit-specific events. Based on our qualitative assessment, we determined it was not more likely than not that the fair value of any reporting unit was less than its carrying amount. As such, it was not necessary to perform a quantitative test. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed as of February 1, 2025.
Fiscal Year 2024 Segment Realignment Goodwill Impairment Test
In the first quarter of fiscal year 2024, we began to operate under a new organizational structure, which resulted in a change in our composition of our reportable segments, which resulted in a change in our reporting units. The Learning reportable segment includes two reporting units, Academic and Professional, and the Held for Sale or Sold reportable segment includes three reporting units, University Services, Wiley Edge, and CrossKnowledge. No changes were made to the Research reportable segment. As a result of this realignment, we 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.
Goodwill Impairment Before Realignment
Prior to the realignment, we concluded that the fair value of the Academic Publishing, Talent Development (which includes Wiley Edge) and Professional Learning reporting units were above their carrying values. Therefore, there was no indication of impairment. The carrying value of the University Services reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of $11.4 million. Such impairment reduced the goodwill of the University Services reporting unit to zero. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income (Loss).
University Services was adversely impacted by market conditions and headwinds for online degree programs, which lead to a decline in projected enrollments from existing partners, pricing pressures and revenue share concessions, and a decline in new partner additions over both the short-term and long-term which adversely impacted forecasted revenue growth and operating cash flows.
The key assumptions underlying the estimate of the fair value of the University Services reporting unit included the following:
• Future cash flow assumptions – the projections for future cash flows utilized in the model were derived from historical experience and assumptions regarding future growth and profitability of the reporting unit. These projections include forecasted revenues and related growth rates, and forecasted operating cash flows, and are consistent with our operating budget and strategic plan. We applied a compounded annual growth rate of approximately 4.6% for forecasted sales in our projected cash flows through fiscal year 2031. Beyond the forecasted period, a terminal value was determined using a perpetuity growth rate of 3.0% to reflect our estimate of stable and perpetual growth.
• Discount rate based on the weighted average cost of capital (WACC) – the WACC is the rate used to discount the reporting unit’s estimated future cash flows. The WACC is calculated based on a proportionate weighting of the cost of debt and equity. The cost of equity is based on a capital asset pricing model and includes a company-specific risk premium to capture the perceived risks and uncertainties associated with the reporting unit’s projected cash flows. The cost of debt component is calculated based on the after-tax cost of debt of Moody’s Baa-rated corporate bonds. The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the University Services reporting unit. The WACC applied to the University Services reporting unit was 17%.
• Valuation Multiples – for the Guideline Public Company Method, we applied relevant current and forward 12-month EBITDA multiples based on an evaluation of multiples of publicly-traded companies with similarities to the University Services reporting unit. The multiples applied ranged from 4.5x to 6.0x EBITDA.
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Prior to performing the goodwill impairment test for University Services, we also evaluated the recoverability of long-lived assets of the reporting unit. The carrying value of the long-lived assets that were tested for impairment was approximately $231.0 million. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We considered the lower-than-expected revenue and forecasted operating cash flows over a sustained period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the University Services reporting unit exceeded the carrying value. Therefore, there was no impairment.
Goodwill Impairment After Realignment
After the realignment, we concluded that the fair value of the Academic, Professional, and Wiley Edge reporting units was above their carrying values. Therefore, there was no indication of impairment. As noted above, the goodwill of the University Services reporting unit was zero and no further testing of goodwill for impairment was required. The carrying value of the CrossKnowledge reporting unit was above its fair value, which resulted in a pretax noncash goodwill impairment of $15.3 million. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income (Loss).
CrossKnowledge was adversely impacted by a decline in the demand for its offerings, which resulted in lower sales and a decline in average contract value that adversely impacted forecasted revenue growth and operating cash flows.
The key assumptions underlying the estimate of the fair value of the CrossKnowledge reporting unit included the following:
• Future cash flow assumptions – the projections for future cash flows utilized in the model were derived from historical experience and assumptions regarding future growth and profitability of the reporting unit. These projections include forecasted revenues and related growth rates, and forecasted operating cash flows, and are consistent with our operating budget and strategic plan. We applied a compounded annual growth rate of approximately 3.3% for forecasted sales in our projected cash flows through fiscal year 2032. Beyond the forecasted period, a terminal value was determined using a perpetuity growth rate of 2.0% to reflect our estimate of stable and perpetual growth.
• Discount rate based on the WACC – the WACC is the rate used to discount the reporting unit’s estimated future cash flows. The WACC is calculated based on a proportionate weighting of the cost of debt and equity. The cost of equity is based on a capital asset pricing model and includes a company-specific risk premium to capture the perceived risks and uncertainties associated with the reporting unit’s projected cash flows. The cost of debt component is calculated based on the after-tax cost of debt of Moody’s Baa-rated corporate bonds. The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the CrossKnowledge reporting unit. The WACC applied to the CrossKnowledge reporting unit was 16%.
• Valuation Multiples – for the Guideline Public Company Method, we applied relevant current and forward 12-month EBITDA multiples based on an evaluation of multiples of publicly-traded companies with similarities to the CrossKnowledge reporting unit. The multiples applied ranged from 6.0x to 7.0x EBITDA.
Prior to performing the goodwill impairment test for CrossKnowledge, we also evaluated the recoverability of long-lived assets of the reporting unit. The carrying value of the long-lived assets that were tested for impairment was approximately $50.2 million. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We considered the lower-than-expected revenue and forecasted operating cash flows over a sustained period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the CrossKnowledge reporting unit exceeded the carrying value. Therefore, there was no impairment.
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Wiley Edge Fiscal Year 2024 Interim Impairment Test
As a result of signing the stock and asset purchase agreement (Edge Agreement) with Inspirit Vulcan Bidco Limited, a private limited company incorporated in England & Wales (Inspirit) and the decrease in the fair value of the business which was impacted by a decline in placements in the third quarter of fiscal year 2024, we tested the goodwill of the Wiley Edge reporting unit for impairment. We estimated the fair value of the reporting unit based on the terms and conditions in the Edge Agreement at that time which reflected a selling price that included $10.0 million in cash, $18.3 million in the form of a loan, a fair value estimate for an earnout, and an estimate for a working capital adjustment.
We concluded that the carrying value of the Wiley Edge reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of approximately $81.7 million in the three months ended January 31, 2024 . Such impairment reduced the goodwill of the Wiley Edge reporting unit to zero. This charge is reflected in Impairment of goodwill in the Consolidated Statements of Income (Loss). The impairment was due to subsequent changes in the fair value resulting from the continued progression of the selling process, indications of changes in the consideration for the business, and a decline in placements in the third quarter of fiscal year 2024, as well as changes in the carrying amounts of the disposal group.
As described further above in Part I, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Critical Accounting Policies and Estimates - Assets and Liabilities Held-for-Sale” of this Annual Report on Form 10-K, the fair value of the earnout was based on a Monte Carlo simulation.
Prior to performing the goodwill impairment test for Wiley Edge, we also evaluated the recoverability of long-lived assets of the reporting unit. The carrying value of the long-lived assets that were tested for impairment was approximately $141.5 million . We considered the changes in the fair value of the consideration for the business due to the continued progression of the selling process to be an indicator of impairment for its long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the Wiley Edge reporting unit exceeded the carrying value. Therefore, there was no impairment.
Fiscal Year 2025 and 2024 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 2025 and 2024 , we performed a qualitative assessment for our annual indefinite-lived intangible assets impairment test. This assessment included consideration of key factors including macroeconomic conditions, industry and market considerations, cost factors, financial performance, and other relevant entity and reporting unit-specific events. Based on our qualitative assessment, we determined it was not more likely than not that the fair value of any indefinite-lived intangible asset was less than its carrying amount. As such, it was not necessary to perform a quantitative test.
Intangible Assets with Definite Lives and Other Long-Lived Assets:
See Note 2 , “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards,” in the section “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for details of definite lived intangible assets and other long-lived assets.
Retirement Plans:
We provide defined benefit pension plans for certain employees worldwide. Our Board of Directors approved amendments to the US, Canada, and UK defined benefit plans that froze the future accumulation of benefits effective June 30, 2013, December 31, 2015, and April 30, 2015, respectively. Under the amendments, no new employees will be permitted to enter these plans and no additional benefits for current participants for future services will be accrued after the effective dates of the amendments.
The accounting for benefit plans is highly dependent on assumptions concerning the outcome of future events and circumstances, including discount rates, long-term return rates on pension plan assets, healthcare cost trends, compensation increases, and other factors. In determining such assumptions, we consult with outside actuaries and other advisors.
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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 $1.0 million and $63.4 million, respectively. A one percent decrease in the discount rate would decrease net income and increase the accrued pension liability by approximately $0.6 million and $73.0 million, respectively. A one percent change in the expected long-term rate of return would affect net income by approximately $3.7 million.
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