John Wiley & Sons Inc

NYSE:WLY

Earnings Call Transcript 2021-Q3

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to Wiley's Third Quarter 2021 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the call over to Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

[Brian Campbell, Vice President of Investor Relations]

Thank you. Hello, everyone. Welcome to Wiley's third quarter 2021 earnings update. With me are Brian Napack, President and Chief Executive Officer; and John Kritzmacher, Chief Financial Officer. Brian and John will make some formal comments and then we'll open it up for questions.

Just a few reminders to start. The call is being recorded and may include forward-looking statements. You shouldn't rely on these statements, as actual results may differ materially and are subject to factors discussed in our SEC filings. The company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances.

Also, Wiley provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends. These measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to similar measures used by other companies, nor should they be viewed as alternatives to measures under GAAP.

Unless otherwise noted, we will refer to non-GAAP metrics on the call and variances are on a year-over-year basis and will exclude the impact of currency. After the call a copy of this presentation and a playback of the webcast will be available on our Investor Relations web page.

I'll now turn the call over to Wiley's President and CEO, Brian Napack.

[Brian Napack, President & Chief Executive Officer]

Good morning, everyone. Thanks for joining us today. Wiley continued to deliver strong results in the third quarter, based on the consistent execution of our customer-centric strategies in research and education.

More than a year into the pandemic, it is clear that Wiley is very well positioned to help our core customers, researchers and learners to achieve their goals in a very different and sometimes very challenging world.

Learners were settled into online and hybrid education like never before and Wiley has what they need to succeed on their personal career journeys. Researchers are conducting their work in increasingly virtual and open ways and Wiley has what they need to get their discoveries out to the world as quickly as possible, where they can drive understanding and innovation.

Without doubt the COVID pandemic has demonstrated, yet again, the enduring strength of the research and education markets. The demand for high-quality peer-reviewed research continues to grow and the need has never been more urgent for affordable education that connects people directly to good jobs. Wiley is committed to making the overall knowledge ecosystem more productive.

Digitally, in all that we do, our goal is to increase the speed volume and impact of research and education. By succeeding at this, we will achieve our company's mission, which is to unlock human potential.

Today Wiley is a digital company that draws 83% of its revenue from digital products and services, which grew at 7% in total over the past 12 months. Overall 55% of Wiley's revenue today is recurring.

Our digital research content and platforms generate billions of user sessions each year. And our digital courseware and online degree programs support greater affordability and impact in education and thus rapidly increasing unit volumes. Beyond revenue growth, our digital revenue streams deliver strong profitability based on attractive sustainable business models.

In the past year, we've seen an acceleration of three longstanding trends that define our markets: the move toward open research in a more productive research ecosystem, the migration to online and hybrid education in university and corporate settings; and the increased adoption of digital tools and courseware needed to power online and hybrid education.

Our strategies are organized around these trends and they're paying off. We are capitalizing on the move to open research today. Under the pay-to-publish OA model, revenue is a direct function of price and quantity of articles published. We are achieving significant volume growth based upon the draw of our strong brands and the execution of our publishing strategies, supported by the market's strong underlying article growth.

Combined with strong pricing power, this volume growth is allowing us to achieve double-digit OA revenue growth. The recent acquisition of Hindawi further strengthens our growth potential. I'll talk about this a bit later.

The second positive trend, the growth of online degrees in hybrid education has accelerated significantly in the past year, helped along by the pandemic. Wiley has long been a gold standard strategic partner for universities helping them to design and deliver effective degree programs and demand for these services continues to rise as schools plan their increasingly digital futures. This has translated into double-digit growth in online enrollment and new student starts both key indicators for future growth.

The third trend toward digital curriculum reflects the maturation of online content and courseware as the preferred media for effective learning. This trend which has been ongoing for years has benefited from the strong acceleration of online education.

Happily the growth of digital content and courseware is outpacing the decline of print over the past fiscal year. It seems that the world has figured out that our digital courseware is simply a more effective product that can be delivered at a lower price than legacy print products.

From Wiley's point of view, products like our zyBooks win more adoptions and then gain significantly higher sell-through in each adoption by obsoleting substitutes such as OER, used books and rentals. As you can see, our strategies are directly aligned with these core market trends and we're confident in the direction that we're headed.

The Wiley team delivered another strong quarter of execution and performance. Revenue was up 2%, adjusted EBITDA was up 7% and adjusted EPS was up 6%. Our Q3 revenue performance was driven by Research with Hindawi contributing $2 million in inorganic revenue and strong organic growth in Education Services.

Solid adjusted EPS growth in the quarter was the result of top-line revenue performance, lower costs from business optimization and COVID-related savings offsetting $0.12 of dilution related to the Hindawi acquisition. Our GAAP EPS performance was impacted by a $21 million restructuring charge primarily related to the reduction of our real estate footprint as we shift to more of a hybrid working model across Wiley.

For the first nine months of fiscal 2021, revenue was up 3% over prior year to $1.4 billion, adjusted EBITDA was up 16% to $309 million and adjusted EPS was up 20% to $2.09.

Free cash flow year-to-date was $80 million or $74 million higher than prior year due to strong earnings performance and lower CapEx. Our EBITDA margin for the 9-month period was 22% compared to 19% in the prior year. So overall, we're pleased with where we are after three quarters.

Now let's take a look at our three segments. The key highlights for Research Publishing & Platforms include our strong ongoing Publishing output the strategic momentum in our platforms and our corporate offerings and the acquisition of Hindawi. Revenue was up 1% in the quarter and 4% year-to-date.

Research adjusted EBITDA was even with prior year as we targeted additional investment and improving our Publishing infrastructure and workflows. Our Research adjusted EBITDA margin was for the quarter 34%.

Fully in line with our expectations, we've seen modest COVID-related pressure on our calendar year 2021 Journal Subscription renewals. This pressure was offset by continued double-digit growth in Open Access publishing and Corporate Solutions. Research platforms continue to perform well with revenue up 4%.

Research article output continues to grow nicely up 17% year-to-date. And Research consumption meaning usage of the Wiley online library was up over 20%. For context our world-class Literatum content platform has hosted over four billion user sessions in the past 12 months and maintains a 99% client retention rate.

Notably, our strategic read and publish agreements are succeeding, generating Publishing volumes from these deals that are exceeding expectations. In the quarter, we signed a multiyear read and publish agreement with Italy and we see a good pipeline ahead.

We continue to see opportunities in Asia. We recently entered a 10-year strategic partnership with the Chinese Medical Association publishing house one of China's leading health science publishers. We will be providing the online home for the entire CMA publishing portfolio and we will also launch 10 co-published Open Access journals.

This important deal leverages our global leadership in Publishing and Platforms and further extends Wiley's unmatched global network of societies, universities and corporate partners.

Wiley's expanding research platforms offering includes the hosting and management of career centers for our partners that help researchers and other job seekers connect with great jobs. In the quarter, we added the American College of Veterinary Internal Medicine and the American Anthropological Association among others to our growing list of career center clients. As you can tell, career advancement is a consistent theme across Wiley in both education and research, and here we are helping the research community to connect directly with their next jobs.

In the final months of the year, we are focused on closing our calendar year 2021 subscription renewals, while continuing to advance our volume based publishing strategies, and as always improving our efficiency. For the nine months, research adjusted EBITDA is up 11% for an EBITDA margin of 36%, although, we anticipate a ramp-up of investment in Q4 related to enabling publishing growth and the integration of Hindawi.

Now I want to give you some insight into this recent acquisition. Hindawi is one of the world's fastest-growing scientific research publishers and a true innovator in Open Access publishing. In fact, Hindawi is the first subscription publisher to convert its entire portfolio of journals to OA nearly 15 years ago.

This addition augments our strategy in three very important ways. First, Hindawi brings a fast-growing portfolio of over 200 Open Access journals that complements Wiley's journal portfolio extremely well. By expanding our portfolio and strategic discipline, we can seamlessly provide a high-quality publishing home for more of the articles that are submitted to Wiley growing our output and increasing author satisfaction.

Second, as an early leader in Open Access, Hindawi has built an innovative publishing platform and a publishing process that is highly efficient and very user friendly. This has helped them to grow fast and profitably. When combined with Wiley's strong platforms and services, the Hindawi platform and their approach will enhance the efficiency, the productivity and the customer satisfaction of the publishing process across Wiley.

Today, Hindawi provides its platform services to other publishers, who are adapting to the OA transition. This can represent a real struggle for survival for many publishers and society. So the third way that Hindawi augments our strategy is by enhancing Wiley's Research Platforms business by increasing the breadth of the offerings that we can provide to our market leading network of society and publishing partners. We're very excited about joining forces with the excellent team at Hindawi and leveraging all that they bring for Wiley.

Third quarter highlights for Academic & Professional Learning, include continued strong digital growth in Education Publishing and an improving outlook for Professional Learning, as it rebounds from COVID, along with the overall margin gain from optimization. Revenue was down 4% for the quarter due to declines in printed course material, continued exam cancellations in test prep, and delayed purchasing pattern for digital products when compared to print. The print decline offset 11% growth in digital content, including 45% growth in zyBooks courseware.

Digital courseware activations were up over 20% in the quarter and year-to-date. Activations are a key performance metric for us, and I'm pleased to report that our core WileyPLUS platform recorded one million activations recently for the first time in its history and zyBooks has now surpassed 325,000 users at over 900 universities.

Professional Learning saw a significant improvement this quarter, results for trade publishing with growth in title output and e-book sales. Our dummies franchise continued to be a bright spot with double-digit revenue growth driven by timely publishing of new titles and hot topics, such as stock investing and remote learning. We also saw positive development in Corporate Learning with significant upsell growth at existing clients and a strong shift to virtual delivery and corporate training. This is a very positive development for this increasingly digital business.

Adjusted EBITDA for the quarter rose 2% for an EBITDA margin of 29%. Year-to-date revenue and adjusted EBITDA were down 7% and 8% mainly due to COVID-related challenges. In the fourth quarter, we will continue to execute on our strategy to grow digital content in courseware, with as always a particular focus on high demand career discipline.

Education Services had a strong third quarter with double-digit growth in online enrollment, strong organic revenue growth and margin and the addition of new degree programs and university partnerships. Revenue rose 24% or 13% organically, driven by 15% growth in student enrollment. New student enrollment in our existing programs grew 29% an important leading indicator of future revenue growth.

We signed full-service partnerships with Tel Aviv University in Israel; Lebanon American University in Lebanon; and in the US, New Mexico Highlands University in Spring Hill College. We're also -- we also added a partnership with New York University for unbundled services. Wiley will support undergraduate graduate and doctoral online programs at these schools in a variety of high-demand disciplines like healthcare and computer science.

Our focus on driving strong profitable growth continues to bear fruit with an adjusted EBITDA margin of 19%. This achievement coupled with accelerating revenue momentum reflects our focus on building a strong growth business for the long term. We are doing it through our broad partner reach and our relentless focus on excellent outcomes through the student journey free application all the way through graduation and in fact career success.

Wiley's mthree, our last-mile training service is gaining momentum as corporate demand for tech talent returns to strength. As a reminder, mthree one of the -- mthree addresses one of the global economy's greatest needs by finding training and placing job-ready tech talent with leading corporation. Placement growth is accelerating as companies continue to wrestle with the dearth of IT and digital skills in the workforce. We signed three new corporate clients this quarter including two very important Fortune 500 companies and we see a growing pipeline ahead as companies plan for the post-COVID economy.

In the fourth quarter in Education Services we anticipate strong online enrollment growth to continue and the demand for online programs to remain high. So across Wiley our global team delivered another strong quarter of execution efficiency and momentum.

I'll now pass the call over to John.

[John Kritzmacher, Chief Financial Officer]

Thank you Brian and good morning everyone. As Brian noted our team continues to effectively execute on our growth strategies and business optimization initiatives delivering favorable results and building momentum. Our strong balance sheet consistency of annual cash flows and ample liquidity enable us to confidently invest acquire and return cash to shareholders.

Our improved year-to-date earnings reflect a 15% increase in adjusted EBITDA including a 240 basis point improvement in our adjusted EBITDA margin to nearly 22%. Adjusted EPS growth of 22% contributed to cash flow performance well ahead of prior year with cash from operations and free cash flow favorable to prior year by $66 million and $75 million respectively.

Capital expenditures including technology, property and equipment and product development spending were $75 million for the 9-month period running $8 million lower than prior year. We continue to expect full year capital expenditures to be around $100 million with investment focused on developing and enhancing tech-enabled products and services in our core growth areas and optimizing workflows particularly in research.

We acquired Hindawi this quarter for $298 million funded by cash on hand and borrowings from our existing revolving credit facility. As noted at the time of acquisition, Hindawi's attractive financial profile includes strong revenue growth and EBITDA margin in excess of 40%. In combining Hindawi with Wiley's Research business, we are well positioned to realize significant revenue and cost synergies and the acquisition is expected to be accretive to our adjusted EPS in fiscal year '23.

Our net debt-to-EBITDA ratio inclusive of borrowings for Hindawi was 2.2 at quarter end. With respect to acquisitions, we will remain opportunistic as we look to add scale and tech-enabled capabilities in research and online education. Our quarter end debt balance was $163 million higher than the same time last year due to acquisitions while our interest expense was down nearly $2 million, given the benefit of the lower interest rate environment.

In terms of liquidity, we reported $91 million of cash on hand and we ended the quarter with undrawn credit capacity of $529 million. Our current dividend yield is roughly 2.7%. We resumed share repurchases in early January following our announcement of the Hindawi acquisition.

Within our brief open trading window in January, we spent $7 million on 147,000 shares at an average cost per share of $48.09. Note 660,000 shares remain in our 2016 share repurchase authorization and $200 million of authorized purchases remain in our 2020 program. We continue to design and implement material improvements in the efficiency and effectiveness of our operations.

In Research, we continue to invest in optimizing our end-to-end Publishing operation, driving improvements in publishing cycle time and cost per article. As Brian noted, we will gain scale advantage from the addition of the Hindawi portfolio to our article cascade strategy. In addition, Hindawi operates a low-cost publishing platform and efficient infrastructure, which we will leverage more broadly for Open Access publishing.

In Academic & Professional Learning, we're investing in our e-commerce capabilities for both education and trade publishing and we're revitalizing our popular dummies.com website with an improved digital content platform.

In Education Services, we're further improving our recruitment operations from lead generation through to student application and enrollment driving EBITDA margin performance in line with our profitable growth strategy.

As part of our overall business optimization program, we recorded a restructuring charge this quarter of $21 million related to our previously reported 12% real estate footprint reduction. We are permanently shifting to a virtual work environment for many of our smaller offices and implementing a hybrid working model at our larger facilities. As a result of these real estate actions, we anticipate annual run rate savings of approximately $8 million beginning in fiscal '22.

And finally, as noted last quarter, we continued to generate significant COVID-related savings on travel, events and facilities expenses. We are taking actions to sustain much of these savings in our post-pandemic operations.

Turning to our full year outlook. Given our solid year-to-date performance and foreign exchange impacts, we are raising our guidance for revenue, EBITDA, EPS and cash flow. The raised outlook is inclusive of Hindawi's impact.

For revenue, we now project a range of $1.9 billion to $1.92 billion, up from the previous range of $1.865 billion to $1.885 billion and up from $1.83 billion in fiscal '20.

At the segment level, we continue to project low single-digit revenue growth in Research and double-digit revenue growth in Education Services although we're raising the organic growth projection for Education Services to mid to high single-digits. We continue to project a mid single-digit decline in Academic & Professional Learning.

Note, our revenue outlook includes approximately $10 million of additional revenue from Hindawi. Revenue growth business optimization gains and expense savings continue to fuel our strong profit growth. We now anticipate adjusted EBITDA of $395 million to $410 million, up from the prior range of $380 million to $395 million and up from $356 million in fiscal '20.

Hindawi is roughly neutral to EBITDA for the year. We are modestly raising our adjusted EPS guidance to a range of $2.60 to $2.75 up from the prior range of $2.50 to $2.70 and up from $2.40 in fiscal '20. Our adjusted EPS outlook includes approximately $0.15 of dilution from Hindawi, primarily related to transaction costs and purchase accounting impacts.

And finally, we are raising our free cash flow guidance from $175 million to $200 million -- I'm sorry to $225 million up from $173 million in the prior fiscal year. The anticipated year-over-year cash flow improvement reflects higher earnings and relatively flat cash tax payments including the $21 million cash CARES Act tax refund which we recorded last quarter. That cash refund was received in early February.

Hindawi's operating impact is projected to be cash flow neutral for this fiscal year, but we anticipate it to be modestly cash flow accretive in fiscal 2022. While delivering these results, we will continue to invest in market-driven growth opportunities in open research, online education and digital curriculum and in our optimization programs to generate sustained efficiencies. We will continue to fund these investments through those optimization savings and strong cash generation.

I'll now pass the call back to Brian.

[Brian Napack, President & Chief Executive Officer]

Thanks, John. So let me recap the key takeaways from the third quarter. Our business has remained strong through the year thus far. In a challenging year for all, we have continued to execute our strategy which builds on the core trends in our important markets namely open research, online education, and digital curriculum. As a result, we're growing research output significantly and growing our digital platforms business. We're growing the adoption and consumption of high-impact affordable digital content and courseware. We're growing enrollment in our high-quality career-focused degree programs. We are expanding our unmatched network of leading universities, societies, and corporate partners. This unique asset supports Wiley's success across research and education.

We continue to selectively advance our core strategy through M&A adding Hindawi this quarter to accelerate our open research growth strategy and we are consistently working to improve our efficiency and our profitability. The upshot is that the Wiley team has delivered solid results for the quarter and year-to-date, and this is allowing us to raise our full year outlook. As always Wiley's performance is a team effort. Year in and year out, our wonderful colleagues around the world demonstrate their dedication to each other, to our customers and to our important mission, which remains to unlock human potential through the advancement of research and education. I thank the team for its extraordinary efforts and its many accomplishments and I will now open the floor to any comments and questions.

[Operator]

Thank you. [Operator Instructions] Your first question comes from Daniel Moore from CJS Securities. Your line is open.

[Daniel Moore, CJS Securities]

Brian and John, good morning. Thanks for taking questions.

[Brian Napack, President & Chief Executive Officer]

Hi, Dan.

[Daniel Moore, CJS Securities]

I wanted to -- a lot of color on Hindawi, but I did want to pick up there as well. Can you Brian maybe just give a little bit more color into the potential revenue synergies that you've described or alluded to over time, just how the two fit together and how you see that one plus one equaling a little bit more than two?

[Brian Napack, President & Chief Executive Officer]

Yes. Absolutely. So as a baseline, Hindawi is obviously an extremely successful company in and of itself. It was growing very rapidly and was nicely profitable as you know. But by becoming part of the Wiley portfolio, it really is a one plus one equals three. It's really critical as we move forward that we maintain scale and grow scale, but that we grow scale in the right ways. So the number one way that these two companies Wiley and Hindawi complement each other has to do with the exploitation of that scale, which we've talked about in a variety of calls.

Researchers want to get their research out to the world in the best possible journal as quickly as they can in that order. And so what they do is they choose a journal, want to say one of our leading health science journals and they submit it to that journal. Sometimes that article gets accepted, sometimes it gets rejected. If it gets rejected, the author is forced to resubmit that journal somewhere else. To the extent that we in our portfolio have a high-quality journal that fits that article better, we can move the article from journal one to journal two or to journal three or to journal four and we can do it quickly and seamlessly. And this is an important part of our strategy, thereby allowing the researchers to get their article out faster.

So I think you know Dan, we today publish about 25% of the articles that we receive. We believe that there is the opportunity to publish that even more -- to publish even more greater percentage, significantly greater percentage of those articles. We know this because those articles get published elsewhere and so we track them and we see that a large portion of the articles that we reject get published elsewhere.

So, if we have an apex or very high-quality title and then we have an aligned set of journals and that's what Hindawi does, it aligns with our journals in these high-demand disciplines extremely well and they're not just journals that are unrelated to our journal that was one of the great pieces of synergy we identified then we can run a higher percentage of the submissions through publication.

And as you know in the OA P times Q model, then we can monetize those even better. So, scale really matters and high-quality scale matters. So, you'll see a publisher like us with a high-quality portfolio of titles aligned with a good cascade mechanism we do very well.

The second way is that Hindawi is also a very -- has a very strong process that was uniquely created and tailored to the Open Access experience. That's a platform and its processes whereby which they can process an Open Access article much faster than is typically the norm in the industry. And that process helps us at Wiley to have greater author satisfaction because they want to get it out there quickly, they want to get their article there quickly. And so we can take those lessons and move them across Wiley both the platform and the processes that allow us to enhance the Wiley platforms and processes.

Conversely, we have many platforms in content management that are far more advanced than what Hindawi as a small company could possibly have invested in. So, we can bring those efficiencies in content management and so forth to Hindawi.

And then of course, we have a very successful corporate -- a very successful research platforms business built on our Literatum platform that is sold to publishers and societies around the world. And we have a very successful Solutions business where by which we support societies and publishers in their efforts. And we can take those great Hindawi assets and we can add them to our assets to have an even more robust offering out there in the marketplace.

So, this really is a case where we can take full advantage of Hindawi, Hindawi can take full advantage of us and we can go forward into the Open Access world with really an unmatched set of capabilities. So, very exciting.

And as you know as we move toward the OA P times Q model, there's a lot of opportunity to the extent we can attach ourselves more closely to the consistent growing article submission rate that happens around the world every year where the submissions grow in high single-digits every year.

[Daniel Moore, CJS Securities]

Very helpful. And I just want to confirm. I think you did say dilutive for the year by $0.15 and that included $0.12 in fiscal Q3. Is that right John?

[John Kritzmacher, Chief Financial Officer]

Yes, that's correct Dan.

[Daniel Moore, CJS Securities]

Got it. And I don't want to push you but do you see the potential at least for the deal to be maybe accretive on it a little faster than your fiscal 2023 goal? Or are there discrete investments that you intend to continue to make around it?

[John Kritzmacher, Chief Financial Officer]

I think it's a little early for us to call Dan. We've only had the team on board with us now for two months. We feel very good about the progress that we're making and the rate at which the business will grow. So, we can give you an update on that when we come back around with our expectations for fiscal 2022 in June.

[Daniel Moore, CJS Securities]

Sounds good. Switching gears Education Services margins once again really strong, easily exceeding the 15% goal. I'm wondering if you don't see maybe a little bit of that goal as being modestly conservative. Or do you see an opportunity to perhaps accelerate investment given the strong results we've seen?

[Brian Napack, President & Chief Executive Officer]

Yes. Look it's a great question and I can certainly understand why you're asking. The answer is we have a growth business here a growth business in a changing market. We are a leader. We intend to continue to be a leader and we continue to treat it as a profitable growth business.

At 15% -- we are very comfortable at that 15% plus number that we've put out there for a long time and we're going to continue to look for opportunities to invest to keep our growth rate good and higher.

As you know this is a business that is at a higher profitability rate than ever before and we're very, very pleased with that. But we also recognize that the huge potential that exists in the transformation of education from traditional to hybrid and online and in many ways this is our moment to capitalize on that. And we need to be targeting those opportunities to bring on new partners to stand them up, to make them successful and to ultimately grow our enrollment and the breadth of our services that we provide to those people. So, I think we're going to stick with 15% plus is the answer.

[Daniel Moore, CJS Securities]

Understood. Certainly makes sense. And maybe one more and I'll jump back in queue. Academic & Professional Learning, I think, we -- as we said, it looks like courseware is now offsetting the declines in print. Just talk maybe about your confidence in that on a go-forward basis. And similarly in Professional Learning with the vaccines accelerating, it sounds like your corporate professional partners are feeling a little bit better. Any more color or commentary there would be really helpful.

[Brian Napack, President & Chief Executive Officer]

Both good questions. So, with respect to the Education Publishing side, we really are optimistic about the trajectory and what I called in my comments, the maturation of the digital courseware market. We're very pleased with our offerings. We feel very strongly about them and we love the trajectory that we're on. Having said that, we still have a good portion of our business that's print and print will continue to decline. The good news is that, we are gaining units dramatically and unit share.

So while we're not ready to call bottom in terms of that trajectory, we do like where it's going. We're exceeding -- we are increasingly optimistic. And it's always a great temptation to say now is the moment, but I think what we can say is we have a business that is moving definitively in the right direction, where the price/value proposition has normalized to an extent that people are buying the products that we are selling instead of looking for alternatives or substitutes. And if the growth rate of zyBooks isn't an example of that, I don't know what is. So, we're feeling good about it. And so, we're going to avoid a specific statement about an inflection point per se, but the trends are going definitively in the right direction.

[Daniel Moore, CJS Securities]

Great. And then on the professional side, sounds like you're seeing some green shoots there as well.

[Brian Napack, President & Chief Executive Officer]

Yes. Forgot it. Sorry, I forgot part two. The Professional Learning is most definitely rebounding. As you may recall, we were down up to 70% in our businesses that support in-person training in the beginning and we were very worried about corporate budgets and the like. And what we're seeing is that, our retention rate and our upsell rate, in our corporate e-learning business is very good. And so, we're -- it's been a little troubling for companies, as they've been trying to look out into the future. But we had some concern as you know about what happened when we cross into calendar year 2021. But in fact, our upsells and our retention have remained high and our pipeline looks very good.

And in the parts of our business that support in-person training, that part that was down 70%, we're now back up to between 80% and 90% of where we were before, which is terrific, given that we're still in a significant COVID situation. And one of the main reasons that we're there is that, 85% of our trainings are now done virtually. So yes, it's bouncing back on both sides. We like those businesses -- those parts of our business. They're going to continue to do well and come back and I think we're really on the right trajectory, but also, this movement toward virtual team training and virtual professional development, which used to require an instructor in front of a classroom, that's a really optimistic development for those businesses.

And frankly, it has far exceeded -- that transition has far exceeded my expectation, spurred by COVID. I don't think we would have moved anywhere near as fast there. So once we get back -- obviously, we need to get back to where we were before and 85% in the 100%. But I'm really pleased because obviously, when we go digital, we not only have a business that moves into more sustainable and recurring revenue models, but great profitability. And also, we can reach much larger audiences, when you don't have to get a bunch of people together in classrooms. So again, we're not exactly where we want to be and you can see by the segment financials. But the trajectory again is where we want to go and consistent and aligned with the Wiley strategy.

[Daniel Moore, CJS Securities]

Really helpful. I'll pass it on and perhaps circle back if there are no others. Thanks.

[Brian Napack, President & Chief Executive Officer]

Thank you.

[Operator]

[Operator Instructions] Your next question comes from Greg Pendy from Sidoti. Your line is open.

[Greg Pendy, Sidoti]

Hey, guys. Thanks for taking my questions. Can you -- I guess, first off, can you help us understand a little bit around the swings in accounts receivable? They seem to have spiked in 2Q, and then came way down in 3Q. Can you give us a little color on that, on a year-over-year basis, I'm talking?

[John Kritzmacher, Chief Financial Officer]

The -- so, you're looking at the comparison back to year-end April, is that what you're comparing?

[Greg Pendy, Sidoti]

Correct. Yes. I'm just trying to gauge the seasonality of -- you had a large spike on a year-over-year basis in receivables in 2Q. And on a year-over-year basis, it looks like it came way down. Just kind of trying to triangulate that with where you might end up the year in receivables, so that I understand your cash flow guidance a little bit better.

[John Kritzmacher, Chief Financial Officer]

So, there is a good bit of seasonality to our receivables, and a lot of that seasonality swings around the timing of our subscription renewal season as well as we've introduced some other elements to our business, the addition of mthree and Hindawi to our business.

So, there are some things that are going to inorganically move around our receivable balances as well. What I would say is that you should be aware that from a collections perspective, our collections performance continues to be strong.

We have not encountered any significant issues in terms of defaults. We do have a little bit of upward pressure on receivables coming from some of our customers, who are, particularly on the library side, struggling a bit with budget challenges, and so have had challenges around payment schedules.

So we've extended in rare cases the payment periods for our customers try to be accommodating to their particular budget challenges. But overall, most of what you're seeing is seasonality, as I said. And, what you're not seeing, I want to be really clear about is any risks around collectibility.

[Greg Pendy, Sidoti]

Understood. And then, just switching gears, just trying to understand that new student growth and just kind of -- if you could give us a little bit more color behind why -- I think you said, it was 29% up. And just trying to understand, is that reflective, in addition of some of the new account wins? Or -- and just trying to understand, do you think those will be full-time students or is there going to be maybe a lower retention rate given COVID-19 on that new student spike?

[Brian Napack, President & Chief Executive Officer]

Yes, super question. The first thing I'll say is answer the last bit. We have exceedingly high retention rates through to graduation in our online programs. It has been consistent throughout the period leading up to COVID and through COVID. We've see no evidence that there would be any increase in deterioration of our retention rate in the go-forward period.

So, we're very pleased. And by the way, we're really proud of that, because we're in the business of getting people degrees, affordable degrees that get them jobs. And so, to the extent that we, as a company, don't focus on impact first, we will lose and our clients will lose and the students will lose and that's unacceptable.

So, now where is it coming from? The answer is, it's -- certainly our new clients are -- will take a little while to stand up. There's always -- there are always new clients coming online. And inside new clients, we are always adding new programs. And then most importantly, we're trying to grow those programs that we do have, the degree programs. And that's where it's coming from, right?

It's really coming from the existing clients and the existing programs. To be sure, we're always adding new ones, but that's not the core here. The core is endemic underlying growth in interest in online education and in the success with which we are finding students, efficiently and effectively, which is what drives our terrific profitability.

We find them efficiently effectively. We match them up with a program that works for them at a university that works for them, and we ensure that they are successful through to graduation. So, this is not some cyclical or COVID-related, sort of move this is the way we've been over time.

Having said that, of course, COVID has accelerated the interest in online degrees, but we believe a large part of that is permanent. And much remains to be seen. So there's -- that will be sorted out, as we get toward next year and so forth. But once you're in the program, we expect retention rates that are as outstanding as the retention rates we have always delivered to our clients and to students.

[Greg Pendy, Sidoti]

Great. And then, just one final one, just trying to understand the 25% published article percentage. And I appreciate all the colour on, Hindawi. But also, if I'm not mistaken, some of the opportunities were missed in the past?

Was it due to not having the right systems in place to find? Where that article might land and that's why you sort of lost that article opportunity? I don't want to throw the word AI, but I believe, you're building a system that would hopefully identify, a -- where some of these submissions could go. Is that correct? And where are you -- if so, where are you in the process?

[Brian Napack, President & Chief Executive Officer]

Yes. The topic is a really important topic. I would not agree that we lost or missed opportunities. What I would say is that, there is an unexploited opportunity that has always existed for all publishers and exists for us to, do a better job.

We've been on a pathway from the old print world where you had a limited number of articles that you could squeeze between two pages and ship out the people to the digital world where there's sort of unlimited shelf space.

And through that process, the editorial standards must remain high. But with the high editorial standards, we want to try to find a home for all those articles. I think 25% is just a fine rate, but it's not good enough. It's not -- so I wouldn't characterize it as a deficit, which really for us, it's an unexploited opportunity. And yes, you're absolutely right.

We are working very hard to make the process -- to organize ourselves to develop the systems including AI-driven, submissions and editorial review systems that allow us, to process articles faster and to route them to the appropriate, journal faster.

And then, should they be rejected by that journal, send them on to their next journal, and ask people -- the author's permission for submission, to another journal. We're absolutely investing in that. You're absolutely right to focus on. It's hugely important. And we do think that there's that big opportunity. And it's a source of significant investment for us.

When we do it, we gain a higher return on investment, because we publish a higher percentage of articles, but we also make the authors happy. This is what they want right? They don't want to have to go to another multi-month process, of submitting it to another journal where they have to get the review. And I would also agree with you, that in the past, we haven't been and all publishers haven't been as efficient as they could be.

And we're also moving from a largely manual process to a very much automated process which is the point that you very wisely underlined. And that automated process is a source of great focus for us, and great opportunity going forward.

[Greg Pendy, Sidoti]

That's very helpful. Thanks a lot.

[Operator]

At this time, I have no further questions in queue. I turn the call back over, to Mr. Napack for closing remarks.

[Brian Napack, President & Chief Executive Officer]

Terrific. Well, thanks again for joining us today. And we will very much look forward to sharing our fourth quarter results and full year results, in June.

[Operator]

Thank you everyone. This will conclude today's conference call. You may now disconnect.