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John Wiley & Sons, Inc.  (NYSE:JW-A)
Q3 2019 Earnings Conference Call
March 05, 2019, 10:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Good morning, and welcome to Wiley's Third Quarter Earnings Call for Fiscal Year 2019. As a reminder, this conference is being recorded. At this time, I would like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead, sir.

Brian Campbell -- Vice President, Investor Relations

Thank you, and welcome to Wiley's third quarter fiscal 2019 earnings update. 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.

Wiley provides non-GAAP measures as a means to evaluate underlying operating profitability and performance trends. Non-GAAP metrics, which generally exclude items that impact comparability, comprise the following: adjusted EPS, free cash flow less product development spending, adjusted operating income and margin, adjusted contribution to profit and results on a constant currency basis.

These performance measures do not have standardized meanings prescribed by US GAAP, and therefore, may not be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures under GAAP. Also note, we abbreviate constant currency as CC. Please see the reconciliation and explanations of all non-GAAP financial measures presented in the supplementary information included in our press release. Important to note, all variances in this presentation exclude the impact of currency unless otherwise noted.

(Operator Instructions)

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 Brian Napack, Wiley's President and CEO.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Hello, everyone, and thanks for joining. With me, as always, is John Kritzmacher, our CFO and EVP of Operations.

At Wiley, we operate in a dynamic global economy. The world's many challenges demand more and better research, more and better education. New doors are opening for people who possess the right knowledge and the right skills, and new opportunities are opening for companies that can accelerate the generation and dissemination of new knowledge and for those that can enable the acquisition of skills and knowledge through powerful, affordable education. And that describes Wiley's domain.

Said succinctly, we drive the world forward with research and education. We are where we need to be to have impact and to get rewarded for it, namely, in research publishing and platforms; in education and professional publishing; in education services and delivery.

We have a mix of cash-generative and high-growth businesses, all with similar customers and ecosystems. We serve four important constituents: universities, corporations, researchers and learners, and we help them to achieve their all-important missions in research and education. We serve 6,000 institutions for our education and professional content, 10,000 institutions for our research content, 60-plus university partners for our degree program services, 600 scholarly and society partners, 1,000 corporate partners and 2,500 partners in corporate training, along with millions and millions of researchers and learners worldwide.

We're building off a strong foundation. We are aligned as an organization around six constant imperatives. One, to lead our markets and innovate relentlessly. We recently accomplished both of these things with the announcement of a groundbreaking partnership with Germany through Projekt DEAL, a consortium representing all 700 German academic institutions. We are the first and only publisher to fully align our interest with those of our customers in the dynamic research market. We have established an innovative mixed publishing model that gives our customers what they want and at highly favorable terms for Wiley. For an annual fee starting at $30 million, we will be providing German libraries and their research with access to all of our research content and the right to publish their new research in our journals if accepted by our editors.

We expect to generate modestly more revenue from this new arrangement from day one and to grow from there through higher publishing volumes. We also gained, as part of this agreement, additional value-creating elements. For example, we secured the right to publish a new top-tier flagship Open Access journal endorsed and supported by the leaders of the German open access movement. We're all very excited about this. Thanks to this agreement, our reputation in the research community as an innovative publisher and collaborator is very high. I can't say enough about our team and the work they put into this deal, which was two years in the making.

Imperative two for us is to lead and, thus, innovate in high-stakes, high-demand subjects, disciplines and careers. In our education businesses, this means that we focus in areas like science, technology, engineering, mathematics, business, finance, accounting and more. We are already leaders in these areas and are extending our lead by developing end-to-end offerings that deliver the real results that students and professionals want, better, faster, cheaper education.

For example, in accounting, we are a leader in both classroom curriculum content and in high-stakes test prep that helps people prepare for the CPA exam. We are now delivering a first-of-its-kind offering that combines the two, making learning much more practical and powerful, giving the customers what they want and what they really need: a faster, more efficient way to pass their CPA certification, and get a better job.

Imperative three is to be the strategic partner of choice in each of our spaces. This is a big part of Wiley's secret sauce. The evidence of our advantage here is clear in our unrivaled network of universities, corporations and scholarly societies and in the very high marks we garner from our many partners for our customer centricity and the outcomes we deliver.

Imperative four, to continually enhance the price value proposition for our customers in all of our businesses. To do that, we work to ensure that our products have the highest possible impact, the value in price value, while also focusing as a lean, efficient -- focusing on being as lean, efficient and agile as possible. On this count, we target being the lowest cost provider in each segment to ensure that the price-to-value ratio is as high as possible.

Imperative five, to fully leverage our global footprint. The knowledge economy is ubiquitous. Already, around half of our sales come from outside the US, and many of our products and services are relevant worldwide. People need test prep and certification solutions in India, degree program services in the UK, professional content in Australia, research content in China, corporate learning in France and so on. There is significant upside for us from this.

The final imperative is to obsessively improve, optimize and simplify everything that we do. We are assigning dedicated teams, bringing in outside resources and have embarked on a multi-year process to transform our operations. The result will be improved processes and products, enhanced customer experiences, higher service levels, shorter cycle times, faster speed to market, elevated organizational effectiveness and, of course, significant cost savings. More to come on this.

On to the quarter. We continue to experience significant positive momentum. Underlying growth was good across the organization, except for in book publishing, which weighed heavily on quarterly results. Research, Atypon, Test Prep, Wiley Education Services, Corporate Learning and Professional Assessment are all up and showing good growth.

I touched on the groundbreaking research partnership that we signed in Germany, and we have a few similar deals in the pipeline, specifically in Northern Europe. While we continue to believe in a multimodal world in research, we made a very important move in Germany to drive toward a sustainable, profitable future for research, and the market has responded very favorably. We received an unprecedented positive reaction in the research community, and some open access advocates are now promoting Wiley as the place to publish, exactly the desired effect.

So why is this a good deal for Wiley? First, we generated at least as much revenue from Germany as before, and the business model is volume-based. Thus, we can and expect to grow significantly by publishing more since the value of the deal is based on the volume of publishing that we do.

Second, the pricing of the deal is market-based. We set prices as we see fit for both our subscription and open publishing services. There are no governments or artificial mechanisms that limit our ability to gain remuneration for our valuable services.

Third, with this deal, we jumped into a clear leadership position, both in Germany and around the world. Instead of frustrating our customers, we are partnering with them to help them achieve their goals. Reputation means a lot in this business, and we expect it to drive publishing success as more researchers choose to publish with Wiley journals.

Fourth, by responding to the market, we are aligning with our customers and with the critical mega trends that are driving the future of research. We are on the right side of history here, and innovators like this -- innovations like this will ensure sustainable, profitable future.

Finally, at a higher level, this deal reaffirms that publishing and the publisher matter in the research ecosystem. Science, whether published under open access, subscription or hybrid models, depends on our portfolio of journal brands for validation and communication. And our value proposition remains the same or better.

As indicated, Wiley and Projekt DEAL are together launching important new value-creating initiatives as part of this partnership. I mentioned the new flagship Open Access journal that we are launching. This interdisciplinary journal will publish top-tier academic scholarship and will serve as a unique form for the development of new models of research communication. We are also together establishing an open science development group focused on innovative new publishing approaches.

Finally, the partners are together creating a new annual symposium for early career researchers, focused on cutting-edge innovation in the development and dissemination of research. This will give Wiley direct contact with the next generation of research leaders. In short, this deal is a true partnership between Wiley and the German market.

More broadly in research, we continue to make significant gains in and with Open Access, reporting 48% growth in the quarter and 40% through nine months. We're advancing rapidly in this high-growth area of the market, and our leadership position coming out of the German deal should only enhance our very good performance.

Going forward, we continue to believe that publishing models will vary by customer across regions, with some leaning more toward traditional models and some toward more mixed models. No one size is expected to fit all.

On the education side of Wiley, we closed The Learning House acquisition in the quarter and are off and running. The integration is going exceptionally well. This speaks to the leadership and great cultures on both sides. We are realizing both cost and revenue synergies.

On the revenue side, in the quarter, we signed eight new university partnerships, including the University of Kentucky, Loyola School of Law, Notre Dame College, Shawnee State University, University of West Florida, East Central University, Emmanuel College and Illinois College. Combined, we now have an industry-leading 60 partners and 800 programs with a strong pipeline to boot. Very exciting stuff for us.

Finally, the Board recently announced Jesse Wiley's appointment as our new Chairman. He becomes the first member of the seventh generation to assume that position. Jesse embodies the long-term thinking that defines our Board. As a long-standing Wiley executive, board member, Technology Committee Chair and forward-looking business leader, Jesse brings a deep understanding of our markets, customers and culture. He will chair what is a very strong, independent Board of business leaders and innovators. Matt Kissner has stepped down as Chairman, and after some prodding from me, will assume the role of EVP and Group Executive, helping us to go further, faster across all of our business units.

Now on to the unfavorable items this quarter. Book publishing saw a significant drop off this quarter due to a combination of market challenges and legacy issues around resource allocation and execution. We consider the level of decline to be a quarterly anomaly. We expect the numbers to improve next quarter, but that the overall segment will finish down somewhat more than expected. Performance here is clearly not good enough. I'll give some background.

In the past, the Company has made some ineffective decisions on resource allocation. In short, we didn't invest where we should have, namely, in our publishing franchises and our go-to-market efforts, and we overinvested in some places that we shouldn't have. These issues have been addressed decisively in the years since my arrival at Wiley, but it will take a bit of time for this to show up in our numbers, especially given the continued market transition.

The challenges were most evident in higher education course material, which represents less than 10% of total Wiley revenue through nine months. Today, we are implementing a very focused publishing program, differentiating digital product road maps and effective go-to-market plans. We'll get there, but it doesn't happen overnight. I am pleased by the pace of change in the concrete progress that we're making. Several examples of needle-moving initiatives include our book rental program, where print books remain very much in demand and many students prefer to rent them to lower their cost. We have ramped up our rental program to take advantage of this opportunity and have 35 titles in the program currently, growing to 150 before the next school year.

Inclusive Access. This is where we work with universities to provide discounted pricing in exchange for a commitment to full sell-through of our content. Like rental, IA improves affordability while also ensuring that all students have access to our materials on day one of a class. This is a proven improver of student outcomes. We've accelerated this program and are seeing good results with year-to-date growth of 58% albeit off of a small base.

Third and significantly, our new WileyPLUS solution is growing well and receiving great market feedback. It's only covering 12 courses so far, but we expect to cover 26 more for the fall semester. At that point, we'll have most of our Top 50 courses covered.

Beyond higher ed, we had a decent start to the year in STM and Professional Publishing, but unfortunately, saw a pullback in inventory levels in the quarter at some of our retail accounts. We expect to rebound here in Q4.

On a go-forward basis, we're making great progress in trade author signings, up 80% in major titles and in 60% -- and 60% in mid-level titles, which bodes well in this growing segment of the market.

Our education and professional book units are fundamentally good businesses: profitable, cash-generative, high-value and synergistic with other Wiley offerings. They remain constrained by format disruption and price value imbalance and, in some cases, a lack of investment. We're addressing all of these issues with haste.

With respect to cash flow, we are well behind prior year on cash provided by operating activities due to a combination of unfavorable working capital performance, lower earnings, a $10 million spend transfer from capital expenditures to cash from operations related to ASC 606 and a $10 million discretionary contribution to our US pension plan. Our unfavorable working capital performance in the quarter is largely due to delays in journal subscription billings and subsequent collections related to our ERP transition. We expect this to largely iron out by the end of April.

Our full year outlook for revenue and adjusted EPS is unchanged, but we are reducing our cash provided by operating activities projection to reflect less favorable working capital performance and the pension contribution. Free cash flow, however, is benefiting from lower CapEx.

With that, I'll turn the call over to John.

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Thank you, Brian, and good morning, everyone. As a reminder, I'll be excluding foreign exchange impacts from all variance discussions, unless otherwise noted. As Brian commented earlier, favorable third quarter revenue performance in Research, Atypon, Test Preparation, Education Services, Corporate Learning and Professional Assessment offset a higher rate of decline in book revenue.

Total Wiley revenue was up 1% at constant currency. Adjusted operating income was lower by $14 million or 21%, and adjusted EPS was down $0.19 or 22%. These results include one full quarter of results for The Learning House acquisition, which added revenue of $13 million but diluted operating income and EPS by $6 million and $0.11, respectively. Excluding the acquisition, Wiley's overall revenue was down 2%. Adjusted operating income was lower by $8 million or 12% and adjusted EPS was lower by $0.08 or 9%.

Adjusted operating income and adjusted EPS declines were primarily driven by lower Publishing segment revenue, accompanied by increased spending on marketing and enrollment services to accelerate growth in Education Services. For the nine-month period, revenue was even with prior year, with 2% growth in Research and 14% growth in Solutions, offsetting a 7% decline in Publishing.

Total Wiley adjusted operating income and adjusted EPS were both down 18%, primarily due to lower Publishing segment revenue, accompanied by higher investment in editorial and sales resources in Research and increased marketing and enrollment services spending in Education Services. Again, Learning House was favorable to year-to-date revenue by $13 million and unfavorable to operating income and EPS by $6 million and $0.11, respectively. Excluding the acquisition, revenue was down 1%, and adjusted operating income and adjusted EPS were down 15% and 14%, respectively.

As a reminder, our full year outlook, which excludes Learning House, is for even revenue performance and a mid-single digit decline in adjusted EPS.

Moving on to our segment results. Research revenue increased 5% overall, driven by 48% growth in Open Access and 10% growth in our Atypon publishing platform business. Total Journal revenue increased 4% for the quarter. Our licensed society publishing business has secured more than $3 million in net new business for calendar year 2019 and achieved a 97% retention rate for partnership renewals. Adjusted CTP was up 8% in the quarter, primarily due to revenue performance.

Year-to-date, Research revenue was up 2%, and adjusted CTP declined 4%, reflecting higher royalties and investment in editorial and sales resources to enable growth. Brian discussed our unprecedented deal with the German National Consortium. We are well positioned as a first mover in Germany, setting a solid foundation for open access publishing on favorable commercial terms and with significant potential for growth through increased research article publishing volume.

It is important to note that subscriptions make up a key part of this new partnership in Germany, and subscriptions will remain the dominant research publishing model around the world. But open access and mixed models are growing at a rapid rate, and we expect to lead that transition.

Publishing revenue declined by 13%, reflecting a 21% decline in Education Publishing and an 18% decline in STM and Professional Publishing. WileyPLUS revenue was higher by 8% due in large part to higher prior year revenue deferrals for courses extending across two semesters. Test Preparation was a bright spot in the quarter, with 24% growth driven by our CPA, CMA and ACT programs.

Brian spoke about the books business at length, so I'll just reiterate that we are implementing significant improvements in the higher education business, including new business models, and we're allocating more publishing capacity to the STM and professionals side of our Publishing business, where market expectations are more favorable.

Adjusted CTP was down 28%, mainly due to lower revenue. Year-to-date, revenue was down 7% and adjusted CTP lower by 16%.

We closed the Learning House acquisition on November 1, and the integration is proceeding as planned. Education Services was up 43% for the quarter, driven by The Learning House acquisition or 2%, excluding it. As Brian noted, momentum in that business is robust, with new partners, more programs and broader service capabilities.

Our reach in Education Services continues to expand, with graduate and undergraduate programs, US and international presence and market-leading full service and fee-for-service offerings. Corporate Learning performance continued to improve, with revenue up 5% for the quarter and 10% year-to-date. Meanwhile, the Professional Assessment business also improved, with revenue up 10% for the quarter and 8% year-to-date.

Adjusted CTP for Solutions was down $11 million, mostly in Education Services due to the dilution from Learning House and increased spending on marketing and enrollment services. Year-to-date, revenue was up 14% and adjusted CTP down 49%. Excluding Learning House, Solutions revenue was up 7% and adjusted CTP was down 15%, primarily due to increased marketing and enrollment services spending to drive future growth in Education Services.

Our balance sheet continues to provide significant capacity for organic investments and acquisitions. The $200 million change in our net debt position reflects our acquisition of Learning House, which was funded through our revolving credit facility.

Net cash provided by operating activities was lower by $143 million as compared to prior year. Our performance to-date reflects unfavorable working capital performance, lower earnings, a $10 million adverse impact from the implementation of ASC 606 and a $10 million discretionary contribution to our US pension plan.

Working capital performance reflects lower collections compared with the prior year due to delays in journal subscription, quoting and invoicing for calendar year 2019. These delays were primarily related to our transition to our new ERP order-to-cash implementation for Journal Subscriptions, and we expect to recover most of this collections lag by the end of our fiscal year. That said, we are lowering our cash provided by operating activities guidance, which I'll speak to further in just a moment.

Capital expenditures, including technology, property and equipment, and product development spending were down $45 million compared to prior year. This decline is due to the completion of Wiley's headquarters renovations at the end of fiscal 2018, the May 2018 implementation of our ERP order-to-cash release for Journal Subscriptions and, to a lesser degree, reporting changes from the adoption of ASC 606.

In the first nine months, the Company utilized $57 million of cash for dividends and approximately $35 million for share repurchases at an average per share cost of $55.21. As a reminder, we increased our quarterly dividend in June for the 25th consecutive year, a 3% increase to $0.33 per share.

Moving on to our outlook. We remain confident in our full year guidance for revenue and adjusted EPS, which excludes the impacts of our Learning House acquisition. Our revenue performance through the third quarter was in line with our annual guidance for even revenue performance, and we expect to carry that performance through to the full year.

Our adjusted EPS performance, excluding Learning House, was down 14%, and we expect to realize a mid-single digit EPS decline for the full year, as previously guided. Our improvement in the fourth quarter will be mostly driven by favorable cost and expenses as compared to the prior year fourth quarter.

We now expect cash provided by operating activities to be down in the mid-teens compared to the high-single digit decline originally forecasted. Relative to our prior guidance, the decline is primarily due to lower working capital performance and the $10 million discretionary contribution to our US pension plan.

While we are reducing our projection for cash provided by operating activities, we are also expecting impact of free cash flow to be mitigated by significantly lower CapEx. As compared to prior year, we now expect our capital expenditures to be lower by approximately $50 million.

In summary, we are confidently reaffirming our revenue and adjusted EPS guidance. And while we are lowering our projection for cash provided by operating activities, the impact of free cash flow will be substantially mitigated by lower capital expenditures.

I'll now pass the call back over to Brian.

Brian A. Napack:

Great. To briefly summarize, we're seeing favorable growth and momentum throughout our business, but it was offset by a difficult quarter for book publishing. The level of decline this quarter in book publishing is a bit of an anomaly, and we expect the year to finish somewhat lower than expected. We are addressing these issues through focused innovation and optimization.

We made a big move in Research by being the first publisher to partner with Germany on a mixed publishing model. We are seeing significant momentum in Education Services, and our integration is on schedule. I'm very excited about what this combined team is already bringing us in terms of culture, its ability to innovate and its partners and programs. And our Company, businesswide -- our companywide business optimization initiative is moving full steam ahead. It's an ambitious project with significant potential savings, and more to come on that in June.

With that as background, we welcome your questions and comments.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Drew Crum with Stifel.

Drew Crum -- Stifel Nicolaus -- Analyst

Okay. Thanks. Good morning, guys. While there's enthusiasm and optimism around this German National Consortium agreement that you signed, can you talk about what the impact will be to financial? And I guess maybe more longer term, you made a comment that you're seeing or anticipating more mix in open access type models. And just want to understand what the implications for growth in the margin profile for the Research biz will be given that dynamic. Thanks.

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Good morning, Drew.

Drew Crum -- Stifel Nicolaus -- Analyst

Good morning.

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Thanks for the questions. So with respect to the agreement that we've reached with Projekt DEAL in Germany, we expect from the start that there will be a modest increase in our revenues there. And so it is the near-term boost to our financial performance there in Germany from our subscriptions base, and it is importantly a platform for us to grow revenue based largely on output of -- the increased output of research articles in Germany. So we believe it's a real solid platform for migrating our business there to open access and giving us a runway for continued growth in Germany.

Looking more broadly across open access and its implications for our business longer term, there are couple of things to think about. One is the margin profile of Open Access is just as strong as the subscription model. It's a, as you know, a strong margin business with favorable characteristics, including favorable cash flow characteristics. The opportunity continues to be around the globe to publish more. Keep in mind, as we commented in the script, that the predominant model around the globe will continue to be subscription-based, and we will see a rotation in the direction of Open Access over an extended period of time. So there will be a slow migration, overall, in that mix of business. But the margin characteristics are similar and very favorable.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

And I'll just add that from a volume perspective, it's important to know that the volume of research that is published around the world every year is going up by mid-single-digits consistently, and it's happening on a global basis. So when you think about our -- what John suggested about our -- the revenue implications, but also the margin implications, as long as we continue to nurture and own the brands that people want to publish with, this is going to continue to be a very, very good business.

Different regions and different territories will quite literally have different needs, different funding mechanisms, different abilities to organize, and that leads to a mixed model world where some prefer one model, some prefer another. And Germany happens to have a particular alignment around a model that works for Germany due to the tight connection between the university infrastructure and the government infrastructure and funding. So they could do this. Most place in the world couldn't do this. But they can do other things. And so we are -- we intend to work with the market as opposed to fight the market. And this deal is a testament to the fact that when you do so, you are rewarded.

I know I spent time on the ancillary benefits of this deal, but you cannot underestimate that given the frustration that this market we're showing for these leaders, these vocal leaders of the open access movement will have expressed extreme frustration that they are now partnering with us on these important initiatives. And in fact, some of the lead negotiators of the deal are going to be leaders of our advisory board on our new journal. I can't overstate what a positive sign that is for the development of this marketplace.

Drew Crum -- Stifel Nicolaus -- Analyst

Okay, very helpful. Thank you. And then maybe kind of sticking with Research. You guys were pretty thorough around the discussion for the working capital shortfall and its impact on cash flow guidance for the year. Just curious as to how, in any way, this impacts your view for calendar '19 Journal Subscriptions growth. It sounds like most of this will reverse in the fiscal fourth quarter of '19, but are there any implications or impact, your view on calendar year '19 as it relates to journals and the cash flow that you think you can generate in fiscal '20?

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Sure, Drew. So let me be clear. What we're experiencing is what I would consider to be somewhat typical payings around migration to a new ERP, the implementation of order to cash on our ERP implementation is a really large undertaking. As we ran into a couple of feature functionality challenges in the migration that took a little bit longer to address than we expected, that caused a little bit of a lag in quoting, which caused a little bit of a lag in closing agreements. So we've got a timing issue around quoting, booking those quotes with customers and then collecting the cash.

We're catching up. We've made really good progress, and we've addressed the systems capabilities issues. We've made good progress in getting our quotes and signing on customers. And so we don't see an impact into our overall expectations for calendar year '19 subscription revenue. We're just operating at a little bit of a lag in terms of getting those subscriptions signed off and getting invoicing and then following up with collections. We expect to be mostly, but not entirely caught up by the end of April. But again, we don't see it as impacting our calendar year '19 revenue.

Drew Crum -- Stifel Nicolaus -- Analyst

Okay, perfect. And then just one numbers question, and I'll jump back into the queue. I believe you guys were guiding $0.10 of dilution from Learning House previously, and the updated guidance was $0.15 for fiscal '19. Is there any change in how you're thinking about fiscal '20 and beyond in terms of the ramp to breakeven for this acquisition?

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

There's certainly nothing different at all about our expectations around the ramp to improvement in EBITDA. Principal change in expectations here is that we've got a slightly higher level of amortization of acquired intangibles than was anticipated in our previous view. So we're going to see a $0.02 (ph), call it $0.03 or so annual impact from that. But otherwise, it's more or less consistent with what we had anticipated previously. So no change in terms of economic performance going forward, just a bit of an accounting impact on acquired intangibles.

Drew Crum -- Stifel Nicolaus -- Analyst

Okay. Okay, thanks, guys.

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Thank you.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Thank you.

Operator

Our next question comes from Dan Jacome with Sidoti & Company.

Daniel Jacome -- Sidoti & Company -- Analyst

Good morning.

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Good morning. How are you?

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Good morning.

Daniel Jacome -- Sidoti & Company -- Analyst

Not too bad. Thanks for the time. So staying on the Learning House, can you talk a little bit about the new regional partnerships that you were able to group into the quarter? That's definitely encouraging. I'm just wondering how much of that, if you can share with us, was already in the pipeline of Learning House when you acquired it? And how much was incremental? The only reason I'm asking is I'm just curious about the lead time and how quickly can you bring new customers onto the combined platform?

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Yes, I'll jump on that because I'm really enthusiastic. Significantly, these partners came from three buckets, and most of them were not existing Learning House pipeline buckets. So one is the existing Learning House pipeline; two is the WES, Wiley Education Service pipeline; and three are deals that were literally enabled because we put these two companies together. And I won't talk to specific deal by deal. But I will tell you that in a couple of these deals, it was literally the capabilities that were enabled because The Learning House capabilities are complementary to the WES capabilities. It was those capabilities that made some partners who were in the middle of decision-making process, saying oh, I want to work with those guys.

So it was very, very encouraging. So a couple of these spun up very, very quickly. Usually, these are long lead times sorts of deals. As you know, academia moves slowly. But even on a couple of the more high-profile ones, say, University of Kentucky, we are competing against the brand name provider that -- provider and providers that you would be familiar with, and we are beating them. We're not always beating them, but we're beating them quite frequently. And not on the little schools, but on a place like University of Kentucky.

So, we're very encouraged. Now of course, you know that once we sign them up, it takes a little while to design the program, to develop the curriculum, to attract the students and so forth, but we expect it to have material impacts in fiscal '20.

Daniel Jacome -- Sidoti & Company -- Analyst

Okay, that's terrific. Very helpful. And then I wanted to ask you about the Test Prep. I know you mentioned you wanted to make some significant changes to the Publishing segment. Just wondering kind of what's going to be your longer-term outlook trajectory for the business? Are you satisfied with the investment you've made on it? And are all the heavy-liftings already been done, or is it something that you'd like to further invest capital to potentially make this a bigger part of your overall portfolio?

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

You're specifically speaking about Test Prep?

Daniel Jacome -- Sidoti & Company -- Analyst

Yes. I know it's a small base, but I'm definitely curious.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Yes, we're optimistic. Look, the overall Test Prep market is a reasonably stable market. We have been growing very nicely due to the high quality of the products and the programs. And what you're seeing now in our growth is a real enhancement in our ability to acquire and convert students at a very efficient rate. So we are very, very pleased. We don't think that there's anything organically major that we need to do to stay on the trajectory we're on. So all the blocking and tackling's in place.

From an inorganic perspective, we like this space a lot. We think we're very good at it, and all the evidence would speak to that. And it has a highly complementary relationship with our core education content businesses. Interestingly, it is now, also, we are looking at synergies between our Test Prep businesses and our Education Service businesses because of course, degree programs oftentimes lead to a certification exam.

So organically, we're pursuing all these things. Would we look at inorganic opportunity? Absolutely, but it's a reasonably small sector. I wouldn't flag anything on the imminent horizon, but we like this space. We think we're good at it, and we would love to use our balance sheet to growth it. It's a nice space.

Daniel Jacome -- Sidoti & Company -- Analyst

Terrific. Thanks a lot.

Operator

Our next question comes from Daniel Moore with CJS Securities.

Daniel Moore -- CJS Securities -- Analyst

Thank you. Good morning. I'll start with the Journals business. Ex Open Access and ex currency, down 1% year-over-year, kind of for the quarter and the year. Is that the new normal from your perspective? Should we expect modest declines going forward? And is that even the right way to think about it? Or do you just think should we be thinking about it in conjunction with the traditional business and Open Access as one bucket?

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Good question, Dan. So I would suggest that you start to think about our Journals business in the concept -- in the space of total Journals revenue. So all in, including Subscriptions, Open Access and then the licensing and advertising and other revenues that come off of that Journals business, I do think you should think more collectively about it. The category itself of subscriptions on their own, we expect to be flattish. So probably more like flat than down a percent, but it's in that sort of flattish zone. We're seeing the growth, as we commented earlier, really coming in Open Access opportunities. And there are, as we've said, substantial opportunities for growth there.

Another thing that I should notice, as we start to move into these mixed models, the lines between revenue for Open Access and revenue for Subscriptions start to blur a little bit, so the distinction becomes less meaningful. And so it's something for us to consider as we speak with investors, going forward, is how do we best describe that, but the boundaries won't be quite as clear. In combination, Subscriptions revenue and Open Access revenue, we expect to see low-single digit gains each year.

Daniel Moore -- CJS Securities -- Analyst

Helpful. Okay. Shifting gears, if I look ex Learning House, the OPM business revenue was up 3% year-over-year. I think second quarter in a row of kind of a modest growth. I guess, what's keeping the overall from growing faster? And profitability, ex Learning House, I think was down maybe $2 million to $3 million year-over-year, just any more color on that?

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

So Dan, we're seeing, in the year-over-year comparison, we're seeing a bit of adverse impact from some of the partners that we've rolled off at the end of last year. So we had a rotation there, as you know, around some of our partnerships not winding up with our expectations for growth and so some rolled off. That's really what's limiting the year-over-year comparison. If you were to normalize for that, you'd see growth rates there in the higher-single digits for our Higher Ed Services business and now, of course, you're seeing the add-on effect of Learning House as part of the family. But if you were to reduce (ph) for something that look like same-store sales, if you will, then you'd see growth rates that are in the higher-single digits.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Yes, and we are -- we never want to be chasing every last student to put them into our programs. And so there are those in the marketplace who are looking to max out enrollment for whatever reason. The problem by -- with doing that is you wind up with underperformance for your partners because your retention of those students becomes less attractive. So your retention rates, your graduation rates go down as do your margins because your customer acquisition costs go up. We expect this business to grow nicely and reasonably quickly in double digits, and you -- that's what we're pursuing.

But we are not maxing out growth. We're building a business here for the long run so that we satisfy the needs and the missions of our partners, and that's why they like us, because we're not playing it just for us, we're playing it for the collective partnership. And you hear that word come up a lot from us now, as partnership really is, I think, the secret.

Daniel Moore -- CJS Securities -- Analyst

Okay. Great. We left off -- I think we had answered...

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

(multiple speakers) responding to Dan's questions around growth.

Operator

Yes. We had left off in the middle responding to Dan.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Okay, can we put Dan back in if we could?

Operator

(Operator Instructions)

Brian Campbell -- Vice President, Investor Relations

Or let's take the next caller if we could?

Operator

Yes. The next question comes from Nick Dempsey with Barclays.

Nick Dempsey -- Barclays -- Analyst

Yes, good morning, guys. So first question. I think the press is suggesting that the 10,000 articles published each year by German authors represent about 9% of your total published German articles per year. You pointed the rest of the world staying as a subscription model in Journals. So how do you pursue -- how is that line going to stay flat if you're essentially selling volume here, but you're going to have fewer subscription articles and more Open Access articles as a result of the German deal? That's question one.

Second question, on college textbooks. We've seen in the last three years a big swing out of December into January. Within your minus 21% for the quarter, was January notably better than November and December? Did you see that swing? And maybe just sneaking another one in there. Do you think the introduction of Cengage Unlimited, really, for the past couple of quarters, has impacted your growth rates?

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

So Nick, it's John. Let me respond first to your question around the arrangement that we have with Projekt DEAL in Germany. You're correct that, that marketplace represents approximately 10,000 articles published, it's actually just a small bit underneath that, that we publish in Germany each year. That actually represents a substantially smaller percentage of our overall publishing base than you referenced. It's more in the neighborhood of 5% than 9% or 10% of our overall publishing volume.

Your question around how does that evolve over time, how does that provide a platform for growth, with some articles being published open, it's really, as we've been speaking earlier, a migration of a mixed model where the open portion of the content will still be a relatively small percentage of what we publish overall, including Open Access publishing already in our base and adding Germany to that. And we don't see that small percentage of open having that size of an impact on the overall value of the subscription access that we sell.

So we believe, it actually migrates smoothly over time and still provides, in fact with increased article publishing, a platform for revenue growth in research publishing.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Yes. So adding to what John said, we publish but a small fraction of the articles that we receive. We have very high rates of articles that just don't get into one of our journals. Across our broad set of journals on a worldwide basis, the multiple and mixed models allow us to publish more of that as we cascade those articles from a place that it is submitted originally, a journal that is submitted to another relevant, potentially slightly lower tier journal that has different standards.

We know that a large portion of the articles that we receive are high quality and publishable. We know this for a variety of reasons, not the least of which, many of them, most of these articles do wind up getting published elsewhere. So to the extent that we have multiple funding sources, being subscription oriented or content funds or funder-provided publishing funds, we believe that, ultimately, the pie increases, it doesn't decrease. And when you combine that with the overall growth in net article volume worldwide and our share enhancement, then you wind up having math that works, and we've look at these six ways from Sunday and are highly confident in that.

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

And then Nick, you asked about the textbook business and, in particular, if we saw anything that distinguished the month of January from what we had in the way of performance for the November and December periods, I don't think that there's much that's all that distinguishable about the month of January. There are different patterns in the ordering season. We'll see print volume with a little bit more lead time going into the semester, obviously, than we would for lead time around digital purchases, and we've commented on what we've seen. But there's nothing that we saw, for example, on the month of January on print that would cause us to think something different about the spring semester for print.

You also asked about the performance relative to -- what do we think of the Cengage Unlimited offer, and do we think that that's eating into our share, I'll let Brian comment on that.

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

Yes, so Cengage Unlimited is a very interesting development. It's been an experiment, seems to be a pretty good uptake. And the early stats actually reinforce our optimism in the business rather than any issues of share shift. There is no evidence that professors or schools are choosing titles to adopt because of that, meaning, what content is prescribed by the university or the professor. But there's evidence that students want our content -- the professors want to continue to use our, meaning, publisher content that professors would like to have content available to their students at lower costs, and the students clearly prefer lower-cost models.

And so all of our analysis of this Cengage Unlimited deal tells us that our variety of business models that we're coming to market with, a couple of which I highlighted on the call earlier, and there are others, Cengage Unlimited being one of them, are part of the future plan. We don't see any adoption share shift happening because of this, at least I haven't seen any evidence of it. What we do see is an optimism that the high-quality published product that Wiley brings to market will continue to be of value to professors, to students and to universities.

So we don't view it as a negative development. We view this positive development. And anything that allows the normalization of the price and value, one of the core tenets that I highlighted earlier, is a good thing, and this seems to be doing both of those things.

Nick Dempsey -- Barclays -- Analyst

Thank you. That's very clear.

Operator

Thank you. This concludes today's question-and-answer session. I would now turn the conference back over to Mr. Brian Campbell.

Brian Campbell -- Vice President, Investor Relations

Thank you, everybody for joining us on the call. We will look forward to talking to you guys again in June. Thank you.

Duration: 55 minutes

Call participants:

Brian Campbell -- Vice President, Investor Relations

Brian A. Napack -- President and Chief Executive Officer, John Wiley & Sons, Inc. and Member of the Board

John Kritzmacher -- Chief Financial Officer and Executive Vice President, Technology, and Operations

Drew Crum -- Stifel Nicolaus -- Analyst

Daniel Jacome -- Sidoti & Company -- Analyst

Daniel Moore -- CJS Securities -- Analyst

Nick Dempsey -- Barclays -- Analyst

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