Christina Van Tassell: The EBITDA loss for…
Daniel Moore: Not the delta, but the actual impact, the negative impact of EBITDA and the overall for Hindawi in ’24?
Christina Van Tassell: We’ll get back to you on the details behind that. But for now, you could just — you could summarize it by saying that our revenue will be down and [Multiple Speakers] together, yes.
Daniel Moore: Got it. Sticking with Research, just pretty healthy growth, obviously, 3% projected ex-Hindawi. In terms of the P times Q model, is there any way as OA and mix model become a bigger piece, how to think about the relative mix of P times Q embedded in that guidance?
Brian Napack: Yeah. As you know, we’ve been discussing for a while, as we move through these transformative agreements or transitional agreements, we stopped discussing them as individual items. I will say that OA, if you were to separate it out now, is around 33%, 34%, maybe a little bit less than that. But it’s growing significantly. We made a bet on the P times Q model, that has played out. So as we’ve moved from more traditional subscription or remodels to the P times Q model, we’ve certainly seen a direct correlation and the math play out about our assumptions there. So how should we — I’m not sure I’m 100% getting at your question, Dan, if you want to clarify if I missed something.
Daniel Moore: Yeah. That’s — it’s obviously a volume driven model to some extent and just kind of getting a sense of pricing relative to the volume growth.
Brian Napack: So relative — yeah, relative to both parts of it. So if you simplified the world into a binary between subscription and OA or P times Q, you would — I would say a couple of things. One is, it’s all driven by volume ultimately because the value of our subscription model is about the volume of product we put in there and the quality of our brands, that’s sort of the equation. And the same is true on the other side, on the P times Q side. If we have the brands, we have the pricing power. If we have the brands, we get the volume. If we get the volume and we have pricing power, the future is bright. Because I will say that we — as you would expect, we modeled this out at the beginning with multiple scenarios to see whether we could be bold enough to make the commitment we have to OA, and we have been at or above our expected case all the way through since we began this four years ago.
So good pricing power on the side of OA. And I’ll say — yes, I’ll just leave it at that.
Daniel Moore: Makes perfect sense. Switching gears, in terms of the divestments, I understand timing is very much out of your control, and hopefully, there’ll be patience there. But are the expectations that these would be sold as a package or individually and any way to sort of put maybe even large guardrails around what your expectations would look like from a proceeds perspective?
Brian Napack: Yeah. We won’t be commenting on proceeds today. We’re making a strategic decision here, not a financial one. And we’re not — so as we look forward, what I will say is, we are proceeding as rapidly as the markets will allow and in some cases, we’re proceeding very rapidly. These are very high quality assets with lots of potential in parts of the market that should do very well in the long run. And we, in each of them, have assets that are considered gold standard. So we expect a very healthy market for them. Having said that, it’s a very odd time to be coming to market. And so we have to be patient in how we look at it. The valuations in the space are not what they once were, and we have to be reasonable in our expectation.
So I don’t want to set expectations too high. Having said that, to repeat what I said a minute ago, these are great assets and we expect significant interest. And in fact, we’ve already seen significant interest in them, not just in the past years, but actually we’ve got plenty of — we’ve had plenty of inbound even without this call. And I expect we’ll get more from here on in.
Daniel Moore: Makes sense. The…
Brian Napack: Yeah. You also asked another question — Dan, you also asked another question, which was packaged or individual. The answer is, if I were bet man, I would say we’re selling it individually, but they are fantastic assets. And for investors who understand — deeply understand this space, they’ll recognize that these are terrific assets and there could be a packaged sale. But I’m not going to odds make it at this point in time.
Daniel Moore: Sure. Shifting back to the core — or the remaining businesses, the Learning business. Academic and Professional Publishing have been under some pressure, obviously cyclical here, but some longer term pressures on print. The shift to digital is well documented. Looking out beyond this year, is there inflection to — and I understand the synergies between that and the Research business, obviously. But is there an inflection to positive growth kind of over the next one, two, three years that you see? And what would drive that?
Brian Napack: Yeah. So specifically with regard to the last question, I don’t want to set outsized expectations regarding those businesses. What I’ll say is that there are significant pockets of growth within our Academic — excuse me, within our Learning business. We’ve seen our platform — our digital and platform businesses such as zyBooks grow at an extremely fast rate. The digital products do very well. And as we look to the Professional lines, the traditional publishing part of it, what we always call our trading business tends to go up and down based upon the trends in publishing, which are consumer demand driven. But a very solid business. I don’t expect lots of growth out of it for sure, but it’s a very solid business.
And on the Professional, on the assessment or team development business, it’s a terrific business with lots of growth and great profitability characteristics. We — the only thing that I would say in addition about growth itself is that print is — has continued to be an issue. It will continue to be issue. But overall, it contributes to a very solid base that is very profitable and very compatible with the rest of the businesses. The choices we’re making today are about aligning businesses where we are strong, we have proven assets and brands where we have compatibility and can drive synergies to reduce redundancy and duplication, where we can win and where they can benefit Wiley financially. So while we’re not looking at that overall segment as a profound growth driver, it has very attractive financial characteristics from a profitability perspective.
And so as such, with its compatibility and synergy, it fits very well with the overall portfolio. And I think you’ll see increasing synergies over time.
Daniel Moore: Indeed, no doubt. Christina, just to…
Brian Napack: I also want to — Dan, I also want to stress that what we saw last year was were market related headwinds related more to consumer demand than to structural changes in the business. We’ve continued to see unit volumes hold up. The issue is — has been inventory channel over time. But we saw consumer demand issues, we saw some enrollment issues. And we all know consumer demand ebbs and flows, we all know enrollment has ebbed in the last couple of years. We expected to return to growth. So some of the things, just as we talked about on the Research side, some of the things that were going on demand-wise weren’t really about profound structural changes in the market. They were just about the ebbs and flows of demand.
Daniel Moore: Understood. Christina, I just want to clarify one or two things that I heard. I think I heard 23% plus EBITDA margin kind of entering fiscal ’25, expect to get back to that level on a run rate basis. Did I hear that correctly?
Christina Van Tassell: Yes. Yes, correct.
Daniel Moore: And the $100 million…
Christina Van Tassell: As we exit ’23 to ’24, yeah.
