John Wiley & Sons (A Shares) (WLY 1.24%)
Q2 2021 Earnings Call
Dec 08, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to Wiley's second-quarter fiscal year 2021 earnings call. As a reminder, this conference is being recorded. At this time, I'd like to introduce Wiley's vice president of investor relations, Brian Campbell. Please go ahead.
Brian Campbell -- Vice President of Investor Relations
Thank you. Good morning, and welcome to Wiley's second-quarter 2021 earnings update. With me today 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 some questions.
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 and Chief Executive Officer
Good morning, everyone. Thanks for joining today. Our performance this quarter underscores the value of Wiley's role in the global economy. Through the year, we've seen an acceleration of the trends that have defined our markets for years, and this is driving a strong increase in the demand for scientific research and online education.
Our first half performance demonstrates that our long-standing strategy to lead in open research and digital career-focused education is paying off, especially in these extraordinary and challenging times. Now more than ever, the world is turning to research and education to help solve its unprecedented challenges. Scientific research is firmly in the spotlight, and it is more and more integrated into both corporate strategy and public policy. As part of the United Nation's Sustainable Development Goals, countries have pledged to substantially increase their R&D spending and their number of researchers by 2030.
Today, as always, we see investment flowing into the most critical fields of study, including areas such as renewable energy, artificial intelligence and, of course, vaccine science. This demonstrates how peer-reviewed research always remains essential to both problem-solving and innovation. At research institutions worldwide, demand to publish high-quality research keeps growing, and this is evidenced by a rapidly increasing publishing output. The demand to apply this research is also growing rapidly, and this shows in the record consumption of scientific content on our platforms.
COVID-19 has brought the future of education forward, accelerating the digital transformation of learning in universities, in companies and now, of course, in our homes. Career-enhancing education is increasingly delivered online, and it is finally becoming more affordable and more broadly available, exactly what the world needs. Once again, post-secondary education is proving to be countercyclical as people seek a leg up in a tough job market. Despite the practical challenges of delivering education in a pandemic, enrollment this fall in both four-year and graduate degree programs has been much better than initially anticipated, and we've seen very strong demand for our online degree programs.
We've seen similar growth in our digital content and courseware as people have pivoted to these lower-priced, higher-impact products. Beyond the traditional degree, demand is also increasing for new forms of credentials that are more focused and more affordable and that demonstrate that workers have exactly the skills that employers need most. Across Wiley, we view our role as to connect education to career outcomes. The pandemic has only accelerated the global focus on closing the skill gap, especially in areas such as IT and digital skills, and this has validated our focus on these areas.
Our strategy and research has been consistent: publish more and publish better, accelerate profitable growth in Education Services and drive growth in online curriculum and courseware. Our investments in these areas are producing results. Research Publishing & Platforms delivered robust growth again this quarter with increasing profitability, driven by continued gains in Open Access. In Education Services, we continued to deliver strong online enrollment growth and win university partnerships.
Importantly, we exceeded our fiscal '22 EBITDA margin goal of 15% both in the second quarter and for the first half of fiscal '21. As a reminder, our ed services plan is for double-digit revenue growth with sustainable EBITDA margin of at least 15%. In Academic & Professional Learning, Education Publishing continued to gain momentum as the digital transformation of university education accelerated, with revenue growth in digital content and courseware now outpacing the decline of print book sales. We continue to gain share in this highly competitive market.
Professional learning remains weighed down by COVID-19 lockdowns, particularly in face-to-face corporate training, although we are seeing very good early results from our rapid transition to online delivery. We continue to drive cost savings throughout Wiley, and the pandemic has allowed us to move even faster. As a digital company with a mission-driven culture, we transitioned rather seamlessly to a virtual operating model. Based on this success, we will be enabling more of our Wiley colleagues to work remotely post-COVID, allowing us to reduce our real estate footprint and generate material run rate savings.
Finally, Wiley's free cash flow through the first half was $32 million ahead of prior year, primarily due to improved earnings. Let's talk about our Q2 results in more detail. Growth in our areas of strategic focus such as research, online education and digital courseware offset COVID-driven declines in print books, test prep and in-person corporate training. Revenue rose 4% over prior year and was even on an organic basis.
Our earnings improvement this quarter was primarily driven by good top line performance, cost improvement from business optimization and COVID-related savings. Adjusted EPS and EBITDA and adjusted EBITDA were up 7% and 12%. On a GAAP basis, we reported an additional $14 million discrete tax benefit related to the U.S. CARES Act.
For the half, revenue was up 3% over prior year to $922 million. Adjusted EPS was up 33% to $1.41, and adjusted EBITDA was up 19% to $202 million. Our strategies in Research: to grow Open Access; drive platform growth; and optimize our publishing operations continue to bear fruit with revenue and adjusted EBITDA up 5% and 14%. Our adjusted EBITDA margin in the quarter was 37%, up from 35% in the prior-year period.
Underlying the business, we see very strong growth in article output, up 22% over prior year. Some of the increase can be attributed to the unique environment we're in, with the largest growth coming from pandemic-related subject areas like clinical medicine and epidemiology. That said, we believe strong demand to publish is here to stay. It's important to note that demand was very robust prior to COVID-19 with article submissions up 9% in the nine months through January 2020.
So we're seeing strong secular growth in the demand to publish which, of course, directly benefits us, especially as we grow the volume-driven Open Access model. Our strategic national agreements in Europe are succeeding, and they're generating publishing volumes that are materially exceeding our expectations. As a reminder, these multiyear agreements are a combination of pay-to-read and pay-to-publish models, and they are typically done with large national consortia in places like Germany and the U.K. We're seeing great momentum coming from these agreements in the form of increased article output and new publishing opportunities.
This quarter, we launched Natural Sciences, a major new flagship journal brand created in partnership with the influential Projekt DEAL Consortium out of Germany. We're very excited about this promising top-quality journal that will publish only the best research from around the world. On the consumption side, usage of our content continues to be very robust, with continued double-digit growth in full text downloads on the Wiley Online Library. Revenue from our research platforms rose 11% on new customer launches for Literatum, our industry-leading content distribution platform.
Our customer retention rate on a trailing 12-month basis continues to be an exceptional 98%. Corporate Solutions, which is another growth area for us in Research, continues to gain momentum. For example, we've been expanding our career center platform offerings, and this is starting to pay off in even deeper relationships with our leading network of societies, associations and corporations. For example, we now manage the job board for the world's largest scientific society, AAAS, the American Association for the Advancement of Science, and we recently secured job board contracts with the global pharmaceutical companies GlaxoSmithKline and Pfizer.
As a company, we're acutely focused on serving researchers and building a vibrant ecosystem that helps them to succeed, and our results are showing it. In the second half, we have two key objectives: first, successfully close calendar year '21 subscription renewals; and second, take full advantage of the continued strong demand to publish in our journals. Through October, we've closed about 20% of our annual renewals compared to 16% at this time last year, and we've made great progress in renewing key accounts. That said, we continue to anticipate modest pricing pressure in subscriptions due to COVID-related constraints in library budgets, but we expect to offset this with strong growth in Open Access where revenue is a direct function of the quantity of articles published.
As a market leader with nearly 1,700 journal brands and an unmatched reputation, we're in a terrific position to publish more, including publishing more of the submissions we received. In the nine months of calendar year '20, we received over 600,000 submissions, accepting around 25% of them. Many rejected manuscripts are high quality, but just don't fit a particular journal. We continue to improve the efficiency in transferring these articles to other Wiley journals where they do fit without sacrificing quality.
We're now using artificial intelligence to seamlessly evaluate and route articles to appropriate journals. Given the breadth of our journal portfolio, this cascading capability provides an important competitive advantage and source of growth. Overall, researchers want their work published in the best journal as possible, and they want it published faster, and they want it made more discoverable. Thus, we continue to enhance our publishing portfolio and drive innovation throughout the publishing process.
This allows us to consistently improve the impact of our journal brands and the value proposition for researchers. As part of this, we continue to reduce publishing cycle times, which increases researcher satisfaction while also improving our margins. In Academic & Professional Learning, we continue to deliver on our strategies to grow digital content and courseware, focus on career-oriented disciplines and pivot to online corporate training. Education Publishing revenue was even with prior year as digital growth offset print declines and the impact of COVID-19 on test prep.
Digital content revenue rose 32%, and zyBooks, our STEM courseware platform, rose 46%. Overall, we continue to gain market share in higher ed publishing, growing it from 4% in October '18 to 5% in October '20 on a 12-month trailing basis. Notably, fall enrollment numbers in higher education continue to be better than we had anticipated in the early days of COVID, although still down around 4% overall. In the past two years, we've been saying that our strategy to drive digital adoption would allow us to return to growth by driving significantly higher digital units from increased sell-through as we use digital courseware to recapture units that were lost from the sale of print books through nonrevenue-generating channels.
As you can see in our strong digital growth, the strategy is working, and we'll continue to capitalize on this favorable momentum. As noted, professional learning continues to be adversely affected by COVID-19. Revenue was down 13%, primarily due to severe limitations on in-person training. Results improved in the second quarter as we shifted to virtual learning, grew trade publishing output and benefited from some improvement in our bookstore business.
Our Dummies franchise was a bright spot this quarter with solid year-over-year growth from the publishing of timely new titles on topics such as succeeding in virtual work environments. Overall, Academic & Professional Learning revenue declined 5%, a significant improvement over the 12% and 16% declines we saw in the prior two quarters. Adjusted EBITDA was down 10% for second-quarter margin of 29%. Our strategy to help students achieve better outcomes while making education affordable and accessible is playing out in the success of our digital core square platforms, zyBooks and Knewton Alta.
We recently completed a breakthrough pilot for zyBooks at the University of Phoenix involving over 800 students. The data clearly showed that zyBooks helped students to persevere with their studies and significantly improve their performance on midterm and final exams. This, along with an affordable price, is helping zyBooks to win large course adoptions and grow by strong double digits. In other news, we recently announced a partnership with Southern New Hampshire University to redesign its online M.B.A.
program, which effectively removes two huge barriers for learners: cost and time to completion. Southern New Hampshire is the largest non-profit provider of online higher education in the country with over 135,000 students. To build this program, Wiley collaborated with the AICPA, the association of certified public accountants, to deliver business courses that allow learners to complete their M.B.A. in one year and at a materially lower cost than traditional degree programs.
For the second half, we expect current trends to continue, namely that digital content and courseware will grow strongly despite online enrollment headwinds. Print books, test prep and corporate training will remain challenged by COVID-19, although corporate training will continue to recover as it transitions from in-class to virtual delivery. I'm pleased to report that 84% of our corporate training sessions are now being delivered virtually, up from 20% at the same time last year. We expect our trade book sales to improve in the second half as we continue to publish more titles on high interest topics ranging from diversity, equity and inclusion to remote learning.
Finally, we anticipate profit improvement in the second half as we realize additional business optimization savings. In Education Services, our strategies to grow online program enrollment, to sign university partnerships and to drive strong profitable growth are working. For the quarter, revenue rose 27% or 6% organically, driven by 13% growth in student enrollment. New student enrollment in our existing degree programs grew 22%, a reliable leading indicator of future revenue growth.
Strong gains in our traditional tuition share programs were partially offset by lower sales of unbundled services as some clients were constrained by COVID-related budget issues. We signed full-service partnerships this quarter with the University of Montana and La Trobe University in Australia. We also signed one of our largest unbundled service partnerships to date with the University of Wyoming. The signing of La Trobe, one of Australia's largest universities with a total of 39,000 students, builds on our strong education publishing presence in the Australian market.
The partnership will start with five graduate programs in healthcare and business administration that will launch in March. An important accomplishment, as I mentioned earlier, is that we exceeded our fiscal '22 EBITDA margin target of 15% with a second-quarter margin of 21% and a first half margin of 17%. This milestone reflects our sharp focus on profitable growth and the optimization of the student journey from marketing to application and enrollment. We are building a balanced growth business for the long term.
Our focus on filling the IT and digital skills gap continues unabated through COVID. While hiring has been temporarily limited, corporate demand for tech talent remains higher than we originally anticipated, and we continue to fill critical roles for our blue-chip customers worldwide. As a reminder, mthree creates job-ready talent for the world's leading corporations, including Bank of America, Morgan Stanley and JPMorgan. It does so by finding training -- by finding, training and placing the right candidates directly into jobs with the specific hard and soft skills these clients require.
For the second half of the year, we anticipate strong online enrollment growth to continue and interest in online programs to remain high. We see a solid pipeline of potential new university partners and expansive opportunities inside our existing base. We feel good about the unique position we're in. No other competitor in the space has Wiley's university reach and globally respected brand.
IT talent placement volume is anticipated to be steady for the balance of the year as our corporate partners continue to build out their tech talent capacity. While mthree's near-term growth prospects remain a bit muted due to COVID, the intermediate and longer-term growth opportunity remains strong. We will continue to make material strides in business optimization in Education Services. The student journey from lead to enrollment is a particular area of focus with the result being lower student acquisition costs, greater lead conversion and much enhanced user experience for prospective students.
We continue to invest prudently in the business to drive growth by signing new partners, launching new programs, driving online enrollment and exploiting new opportunities brought on by the accelerated shift to virtual learning. We are also continuing to expand our offerings to provide learners with a full range of outcomes-based pathways to achieve their goals. For instance, we're gaining momentum with Wiley Beyond, a strategic education platform for corporations that helps employees to earn degrees and certifications through Wiley's unmatched network. We've signed our first corporate partners and see great opportunity ahead.
Wiley Beyond is another area where we are bridging education and career outcomes. I'll now pass the call over to John to take you through our financial profile, cost-saving initiatives and full-year outlook.
John Kritzmacher -- Chief Financial Officer
Thank you, Brian. Our cash flow from operations and free cash flow were favorable to prior year by $23 million and $32 million, respectively, primarily due to improved earnings, partially offset by unfavorable timing of working capital items. As a reminder, cash flow is normally a use of cash in the first half of our fiscal year due to the timing of collections for Journal Subscriptions, which are concentrated in the third and fourth quarters. Our strong balance sheet, consistency of annual cash flows and ample liquidity afford us the flexibility to continue investing, acquiring and returning cash to shareholders.
Capital expenditures, including technology, property and equipment and product development spending, were $47 million through the second quarter, roughly $9 million lower than prior year. We expect full-year capital expenditures to be approximately $100 million, with investment focused on adding and enhancing tech-enabled products and services in our core focus areas, along with continued investment in process optimization and workflow automation. With respect to acquisitions, we will remain opportunistic as we look to add scale and capabilities in Research Publishing & Platforms, as well as online education. Our quarter end debt balance was up $43 million compared to the same time last year, primarily due to acquisitions, while our interest expense was down $2 million, benefiting from the lower interest rate environment.
Our net debt-to-EBITDA ratio at quarter end was 1.9 times as compared to 1.8 times in the year ago period. In terms of liquidity, we reported $86 million of cash on hand, and we ended the quarter with undrawn capacity of $655 million. Our current dividend yield is around 4%, and we expect to resume share repurchases under our existing repurchase authorizations as global economic stability returns. As Brian noted, we've been expanding and accelerating our efforts to increase operational effectiveness and efficiency in this unique period.
In Research, we continue to invest in our publishing operations to drive improvements in publishing cycle time and cost per article. Brian has also noted the successful launch of our AI-enabled Transfer Desk Assistant and its immediate benefit to our article cascade strategy. In Education Publishing, we are investing in e-commerce and direct channel capabilities to take advantage of the accelerated shift to digital content and courseware. Through the half, e-commerce sales were up over 8% and now represent roughly 18% of Education Publishing revenue.
In Education Services, we are further optimizing student acquisition and marketing operations, which continue to fuel our EBITDA growth there. As part of our overall business optimization program, we recorded a restructuring charge this quarter of $2 million related to severance costs. We anticipate $4 million in run rate savings from these actions starting in fiscal '22. We continue 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. Among these actions, we will implement a hybrid working model for many of our colleagues and reduce our real estate footprint by approximately 12%. As a result of these real estate actions, we anticipate a third quarter pre-tax charge of approximately 15 to $20 million, yielding 7 to $8 million in run rate savings starting in fiscal '22. Turning to our forecast.
We are now initiating full-year guidance for fiscal 2021. Although our visibility remains somewhat limited given the recent surge of COVID cases and the potential return to widespread lockdowns, we have a better handle on the challenges and opportunities triggered by the pandemic, and we have confidence in projecting our full-year performance. For the full fiscal year, we expect revenue in a range of $1.865 billion to $1.885 billion, up from $1.83 billion in fiscal 2020. At the segment level, we are projecting low single-digit revenue growth in Research.
Education Services will deliver double-digit revenue growth, including the inorganic contribution from our mthree acquisition, and mid-single-digit growth on an organic basis. Growth in Research and Education Services will more than offset a single-digit decline -- a mid-single digit decline in Academic & Professional Learning. Revenue growth, business optimization gains and COVID-related savings will all contribute to improved year-over-year profit performance. We anticipate adjusted EBITDA of 380 to $395 million, up from $356 million in fiscal 2020 and adjusted EPS of $2.50 to $2.70, up from $2.40 in the prior year.
And finally, we expect free cash flow of 175 to $200 million, up from $173 million in fiscal 2020. The anticipated cash flow improvement reflects improved earnings, partly offset by unfavorable timing of working capital items. Our full-year forecast includes second half organic investments in strategic areas to fuel long-term profitable growth. The second half investment will largely be offset by business optimization and COVID-related savings.
I'll now pass the call back to Brian.
Brian Napack -- President and Chief Executive Officer
Thanks, John. So let me recap the key takeaways from our second quarter and first half. Our business remains strong as the pandemic has accelerated trends that support the core strategy that we've been consistently pursuing: open research, online education and digital content and courseware. We're seeing significant results from our efforts to publish more in research and grow our volume-driven revenue, to accelerate enrollment and profitable growth in Education Services, to return ed publishing to profitable growth by driving sell-through with affordable digital units and to improve margins by optimizing our structure and our processes.
To be sure, we're experiencing some COVID-related disruptions to in-person training and in print book sales, but this represents an increasingly small part of Wiley. Remember that around 85% of our revenue today is generated from digital products and tech-enabled services. The year has presented numerous unexpected challenges, but Wiley performed very well during the first half of 2020. We will continue working hard to deliver strong performance for the balance of the year while taking advantage of this unique moment to accelerate our strategies and improve how we operate.
Although the pandemic continues to weigh on the global economy and parts of our business, our core markets are resilient, essential and countercyclical. Our core strategies in open research and online education are succeeding, and prevailing trends in the market are reinforcing our direction of travel. As always, Wiley's performance is a team effort, so I want to thank our wonderful colleagues around the world for their commitment to our mission and for their many accomplishments this quarter. And as 2020 comes to a close, I wish them all and all of you a very joyful holiday season and the best of luck for a happy and healthy 2021.
I'll now open the floor to any comments and questions.
Questions & Answers:
Operator
[Operator instructions] Our first question comes from Daniel Moore with CJS Securities. Your line is now open.
Daniel Moore -- CJS Securities -- Analyst
Brian, John. Good morning, congrats on really solid results. Thanks for taking the questions. I wanted to start with, as I call it, the online program management.
But -- segment already exceeded your goal of 15% margin. Do you -- do we anticipate being able to sustain that level of profitability from here going forward? Just wondering if there's anything unusual in terms of seasonality or some of the investments in H2 might push that down before it comes back up.
Brian Napack -- President and Chief Executive Officer
Yes. I'll let John answer that after an initial comment. Basically, we set a target of 15-plus percent. We're over that now.
We're very pleased and proud of that. We believe that we can operate this business consistently, as we should, profitably while growing it significantly. And I think that the expectation we should have going forward is the 15-plus percent. There is definitely some seasonality and some ebbs and flows as the year goes through.
So I would basically reinforce the expectation rather than setting the expectation at a significantly higher level than we've already achieved. John, do you have anything to add to that?
John Kritzmacher -- Chief Financial Officer
Very little other than to say, yes, I completely agree that the year-to-date trend is a better way to think about sustainable performance there in line with our expectations around driving growth. So there is some seasonality. The 6-month trend is a better indicator of the momentum of our business there.
Daniel Moore -- CJS Securities -- Analyst
Very helpful. OK. Switching gears. Talked a little bit less about it typically, but corporate and professional learning, wondering if you anticipate the switch to digital delivery that you have taken, obviously, in the midst of pandemic.
Do you expect that to remain somewhat permanent? And what implications might be for growth and margins longer term?
Brian Napack -- President and Chief Executive Officer
Yes, it's a great question. In corporate, like everywhere else, and we've certainly seen it in our higher ed businesses, the transition to digital teaching and learning, digital training is one that comes at the expense of some very long and well-established trends and behaviors. We were extremely positively surprised by how well we have been recovering from the initial shutdown of in-person training. It's bounced back significantly better than we thought.
For example, originally, we were down 70%. And you can imagine, right, no in-person training means very little activity for us there. But already, we're back to down 30%, and that's terrific. And at this point, I believe that 80% or 85% -- I think 85%, we had in the comments, are already virtual.
And we're getting people who -- partners and companies who had said they would never go to virtual all of a sudden doing virtual. So we do expect that this has allowed us, as it has across our business, to lock in the digital transition in many of the places where teaching and learning exists. So how that translates into growth and into profitability remains to be seen. But certainly, trends that you've seen elsewhere as we move through digital transition should be consistent here.
So yes, we're moving faster than we thought, and we think we're locking in the game. And I think that's what really matters here.
Daniel Moore -- CJS Securities -- Analyst
Yes. That's certainly helpful. Maybe one more, just in terms of the cash generation. We guided, John, 175 to 200 million.
Just remind us timing and magnitude of any benefit of tax deferrals from CARES Act. Or if I'm getting that right, how that impacts cash flow this year? And just wondering if $100 million capex is sort of the new norm, or is that you're pulling forward some investments?
John Kritzmacher -- Chief Financial Officer
Sure. So with respect to the cash flow projection for the year, again, our expectations around free cash flow are being primarily driven by our earnings improvement year over year, and we're showing some good strength there as indicated by the full-year guide that we've given. There is some adverse impact that we're anticipating with respect to working capital. That's mostly due to, in some cases, elongated payment terms with certain customers, particularly on general subscriptions.
By the way, I should note that we're very pleased with our progress overall around collections. We're seeing minimal risk at this point in terms of bad debt or defaults. And so we're making really good progress on collections, but there is some elongation that plays into our forecast for the year. The expectation with regard to the CARES Act refund is that we'll receive that refund before the end of the year, so that will play into our cash results.
I would just note though that on a year-over-year basis, our cash taxes paid within that projection will be essentially flat with that refund. So it's a neutralizing effect on cash taxes in this year.
Daniel Moore -- CJS Securities -- Analyst
Very helpful. And I'm going to sneak one more in. Capital allocation, just given the strength of the balance sheet results and stickiness of the business and free cash flow trends that we're seeing, clearly better than expected. I guess why wait for an economic recovery to be opportunistic from a share buyback perspective?
Brian Napack -- President and Chief Executive Officer
Dan, I would say at this point in time, we are striking a balance between investment in the business and returning cash to shareholders and at the same time, also navigating what is somewhat of an uncertain period of time. I think we're getting closer to being on the other side of that uncertainty. And so we continue to closely evaluate the opportunity to begin, again, share repurchases, but we're going to proceed with some degree of caution there, again, looking for more economic stability before we go back deeply into our repurchase program.
Daniel Moore -- CJS Securities -- Analyst
OK. Thank you again for the color and look forward to chatting again next week. Thanks
Brian Napack -- President and Chief Executive Officer
Thank you, Dan.
Operator
Our next question comes from Sami Kassab with Exane BNP Paribas. Your line is now open.
Sami Kassab -- Exane BNP Paribas -- Analyst
Thank you and good morning gentlemen. I have a few questions, please. First, on the Research division. Could you please comment on the rate of revenue growth you're seeing in Open Access in H1? And also, can you discuss how significant might be the risk of seeing unbundling of the big deals in the remaining 80% of your contracts that are still up for renewal? That would be for Research.
Then secondly, on higher ed publishing. I understand you guided for mid-single-digit decline in Academic & Professional Learning, but could you perhaps guide for any revenue growth you expect to see in Education Publishing? Is it fair to expect a return to sustainable growth going forward in that subsegment? And lastly, on OPM, can you please elaborate on what is driving the decrease in student acquisition costs? Are you seeing overall deflation in digital advertising price points, for instance? Or has it more to do with some company-specific cost actions that you're undertaking?
Brian Napack -- President and Chief Executive Officer
Terrific. Sami. Thank you very much for those questions. Our rate of growth in Open Access is very, very strong.
I believe, and I'll ask John to actually give me the number now what the growth was in the first half, I believe it was -- well, John, can you quote the number?
John Kritzmacher -- Chief Financial Officer
Sure. So setting aside, if you normalize for the impact of the transitional agreements that we have under way and get to, if you will, an operational number, we're on the order of 40% growth in Open Access Publishing.
Brian Napack -- President and Chief Executive Officer
Yes. Which is great, right? That's exceptional growth. We're seeing very strong growth in Open Access, great enthusiasm for our brands. The model, as you know, the P times Q, price times quantity model, is one that we like a lot because it allows us to lock into the endemic growth in the marketplace, which, as you know, the article count in the world tends to go up by mid- to high-single digits every year.
And so we're very pleased with the growth we're showing. And it comes from a lot of different places. Certainly, we're getting far more submissions than we had gotten. We're up in the high 20s with regard to the volume of submissions.
I think it's up 28%. Our article output, based upon that, is up 22%. And that allows us -- we get these articles, allows us to cascade them through our system. So yes, we're feeling very good about the strong growth in Open Access, if that's answering the question on that.
The -- with regard to the big deal -- excuse me? John, do you --
Sami Kassab -- Exane BNP Paribas -- Analyst
Yes, please. With regard to the big deal?
Brian Napack -- President and Chief Executive Officer
Yes. I thought John was trying to break in. Never mind. Yes, with regard to the big deal -- I'm getting some feedback here, so I'm sorry if I'm a little hesitant.
There's some noise on the line. But with regard to the big deal, we have seen very consistent high renewals in our base of library subscription customers. As we've discussed, we have some price pressure this year. We're seeing no evidence of an unbundling though, because the bundle that we provide to our institutional clients is exceptionally important and plays a very, very important role in the success of their institutions.
Research winds up very high on top of the pile of things that they have to have in order to be successful library, successful institutions so they have a successful research and discovery program in their universities. So we're feeling strong and confident about that. With regard to higher ed, and you asked a specific question about the expectations going forward there. Higher ed is a business where print declines have gone on for some time.
As we said, the digital growth is now outpacing the print decline. We're very pleased to hear that, but we do expect the print declines to continue for some time. We do expect to return that business to profitable growth, as we've said. We're not providing a time horizon on it because of the uncertainties in the marketplace, but the strong growth that we're seeing in the adoption of our digital programs and the sell-through of -- in terms of when we get an adoption, the portion of the adoption students that we can monetize is significantly higher when we go digital.
So the math basically says we'll do better in the long run with lower-priced, higher-impact products with greater sell-through. We're -- so we're confident that we will return it to sustainable growth, and we'll keep our eye on it. You'll keep your eye on it in the months and years to come. With regard to OPM, our cost -- customer acquisition cost is -- has gone down because of an express strategy we made to improve the efficiency and the targeting of our advertising.
We are much more efficient in the targeting of our advertising and in the spend, and then we are much more efficient in the conversion of the leads that we generate into students. Very important. It's been a bit of a wild ride this year, as you can imagine, because of all the disruptions in the marketplace. But what we know is students continue to be interested in getting education in order to advance their career prospects, and our ability to get the right message to the right student is a testament to the efficiency and effectiveness of our marketing colleagues.
And then the student journey from once that lead is acquired to once they are -- have applied and are accepted is increasing significantly. So we're very pleased about that. There's no evidence of the cost, the endemic market costs going down for leads, but we're just getting better at finding the right students and converting them to -- finding the right potential students and converting them into actual students.
Sami Kassab -- Exane BNP Paribas -- Analyst
This is very helpful. I just don't understand why the outlook for higher ed publishing is perhaps a bit more constructive in the sense that if we now have digital growth offsetting print decline, why would it reverse? Is print to accelerate? Is digital to slow down? What is the uncertainty that kind of holds you back from a more affirmative outlook now that the inflection point seems behind us?
Brian Napack -- President and Chief Executive Officer
Well, what I would say is, I wouldn't say the inflection point is behind us. What I would say is what I said earlier, which is that digital is now outpacing print declines. So the issue here is that for a number of years, the industry, and we are not alone, has been looking for the bottom. And print sales continue to be challenged as it continues to become a less and less preferred format for the delivery and consumption of content.
So we're just being conservative in what we're saying about when we will see the benefit from it. But what we do know, and I think it's very important, I share your confidence, but -- and it is important to note that the vast majority of courses around the world are taught with content that is published by Wiley or one of the other leading publishers. And as we move from print to digital, it allows us to repatriate those sales, many of which were going through used channels or rental channels or other sorts of nonpaid channels. So we are feeling good about the business, but calling the exact moment of pivot is another story.
Sami Kassab -- Exane BNP Paribas -- Analyst
So it's not a view that OER might become more of a competitive pressure going forward? So you're cautious enough -- or conservativeness has nothing to do with a scenario where open education resources were to gain more share?
Brian Napack -- President and Chief Executive Officer
No, we don't. What we have found is that as we have -- as prices for our courseware have become more in line with expectations in the marketplace, we're gaining share, not losing share. And there is certainly a very small portion of the market that is OER at this point in time. But we participate in that market with our platforms.
And so no, we don't view that as a threat to the business. And the stuff that is moving in OER tends to be OER that comes at a price point. And so -- and by the way, most of the OER stuff is based again upon published content. So no, we don't view this as a -- my comments have no reflection on the OER phenomena.
Sami Kassab -- Exane BNP Paribas -- Analyst
Fantastic. Many thanks for your time. Thank you Brian. Thank you.
Brian Napack -- President and Chief Executive Officer
Thank you, Sami.
Operator
Our next question comes from Greg Pendy with Sidoti. Your line is now open.
Greg Pendy -- Sidoti & Company -- Analyst
Hey guys, thanks for taking my questions. I just wanted to understand the free cash flow guidance a little bit more. You mentioned a 3Q charge. Is that a cash charge or a pre-tax charge on the -- upwards of $15 million?
John Kritzmacher -- Chief Financial Officer
The Q3 charge, it will be a cash charge in the sense that -- in the sense of there are expenses that will be -- these are facility charges, right? So there'll be cash outlays over time to continue to pay those leases. So it's a cash charge in that sense, but it doesn't change the momentum of cash in the short term. Does that help? Does that answer your question?
Greg Pendy -- Sidoti & Company -- Analyst
I think so. Yes, that helps.
John Kritzmacher -- Chief Financial Officer
Your question is really specific to the restructuring charge, right? And more broadly, I commented earlier that we've got a few moving pieces. There are working capital elements at play given just the timing of collections and some of the impacts that we've seen around COVID on extended payment terms with certain customers to help get through a difficult time. So there's a bit of working capital movement, but the cash flows will be primarily driven by stronger earnings performance for the year, offsetted by working capital. The restructuring charge really doesn't have a material impact on the timing of cash flows for the year.
And as I said, the tax refund that we're anticipating is a neutralizing effect on cash taxes for the year as compared to prior year.
Greg Pendy -- Sidoti & Company -- Analyst
OK. And then just, I guess on that topic. Just trying to understand, I know you mentioned the extended payments for the accounts receivable. Should we be thinking about that, though, as -- and you've gone through 20% of the renewals, so does that stay elevated for a while as guys still have to work through 80% more renewals?
John Kritzmacher -- Chief Financial Officer
No, I would not describe this as being directly tied to the progress of renewals. We're talking about extended payment terms in very limited cases, many of which are related to the timing of government funding in various countries around the globe. But I wouldn't call the timing of our renewals an indicator per se for the broader population. It's a relatively narrow part of the population that is on extended payment terms.
Greg Pendy -- Sidoti & Company -- Analyst
OK. Great. And then just one final one, just on the inflection point, just trying to understand in digital versus print declines. Just trying to understand how much of that is potentially just being -- I know it's being accelerated given COVID, and you've mentioned that.
But how many students are potentially getting courseware bundled with their courses as they're online and may pivot back to print, I guess, if classes sort of return in person? Is that a potential maybe step -- slight step back that we might see? Not that the trend doesn't continue toward digital, but just trying to understand given the inflection point.
Brian Napack -- President and Chief Executive Officer
Yes. It's always a good question. The human behavior changes typically slowly. In this case, we've seen a very rapid change.
And what we see across our client base is that students and professors are adopting, first because they had to, because digital -- you just need the digital environment if you're going to teach virtually. But now what they're realizing is that it's working and that they can do so much more with it. We don't view -- but in terms of a bundle, they're not getting -- there are certainly bundles in this business. But the courses are typically -- the content is not typically bundled with the course.
The student typically has to go out and purchase that bundle, purchase that product themselves for the course. So there's not a bundling, unbundling effect, to be clear, Greg. There may be some professors or some students that choose to return to print, but we typically haven't seen that. We're -- the trends for satisfaction with digital products, particularly versus print products, has been increasing consistently over the years and is well above 50% now.
And so because of that, what we see is that this will be locked in and move forward -- will move forward with the digital units. I can't say there won't be some come back. But no, we view the acceleration of trends as an acceleration of trends. It's not a one-time thing to adapt to an unusual event in the marketplace.
Greg Pendy -- Sidoti & Company -- Analyst
Understood. Thanks a lot.
Operator
Our next question comes from Matilda Rozano with Barclays. Your line is now open.
Matilda Rozano -- Barclays -- Analyst
Hi. Thank you for taking my question. I've got a couple. So firstly, I wanted to ask whether your guidance for low single digit in Research for the year to April after growth of 5% in the first half means that we should expect journal growth to decline in calendar 2021 versus calendar 2020.
And then I wanted to ask if you could give a bit more color on the pricing pressure that you are seeing in renewals. Is that limited to U.S. institutions or more global? And lastly, what changed in enrollment in 2021 versus 2020 are you budgeting for planning for the college textbook business?
Brian Napack -- President and Chief Executive Officer
OK. John, why don't you pick that up? And if you can, I did not get the third question. So we may need to ask that -- we may need to repeat that one on the call.
John Kritzmacher -- Chief Financial Officer
Let me respond, Brian, to the first two, and then we can come back for clarification on the third question. So thank you. So your question with regard to Research revenue performance on the second half of the year, we are anticipating in the Research segment, modest growth in the second half as compared to the second half of the prior year. So you're correct.
It's presumed that we will realize a slower rate of growth. Some of that in our forecast is anticipating some pricing pressure as we've noted around the subscription renewals for calendar year '21. Again, we continue to expect that pressure to be modest. And so far, the evidence that we've seen is consistent with that.
But we have somewhat limited visibility. So our presumption at the moment is that we'll see some pressure there that will be pretty much offset or slightly more than offset by our growth in Open Access. But again, somewhat limited visibly, but those are our expectations. We've got pressure on the subscription side, upside on the Open Access side and that those are going to, relatively speaking, balance them out.
In terms of the geography around pricing pressure, I wouldn't say that it's distinguished in any particular part of the globe as we see it today. It's largely a function of the health of the university customers that are subscribers, so research universities that have a strong need for our research. So far, the pricing pressure has been, again, pretty limited in terms of both its breadth and depth. So there's no particular geography that I would point to and no particular customer base other than the institutions that are going to struggle more here are clearly those that have weaker overall financial position and challenges around getting through a pretty difficult period.
Can you then repeat for us your question around 2021 enrollment?
Matilda Rozano -- Barclays -- Analyst
Yes. I was just wondering basically what your expectations are for 2021 enrollments and how you're planning for that for your college textbook business compared to 2020.
Brian Napack -- President and Chief Executive Officer
We haven't -- it has been a bit of a moving target since the beginning of the COVID crisis. As we indicated in our comments, enrollment is -- has been significantly better than we expected it to be, with undergraduate being down a little bit and graduate programs and masters programs being up a little bit. Significantly, community colleges were hit quite hard, but we don't have too much exposure in the community college market, although it is obviously an important part of the education the education ecosystem. And so it's been a bit of a moving target.
We haven't projected the following academic year yet. And so we'll come back to that as we start to do an outlook for the -- for fiscal 21, which, as you know, for -- excuse me, fiscal '22, which, as you know, doesn't start for us until the middle of calendar year '21. So no real comment on forward looking, although we will continue to underscore the -- that, that enrollment tends to be tends to be countercyclical, and we expect the economic effect of COVID to last for quite some time.
Matilda Rozano -- Barclays -- Analyst
All right. Thank you.
Operator
Our next question comes from Matthew Walker with Credit Suisse. Your line is now open.
Matthew Walker -- Credit Suisse -- Analyst
Thanks so much. I've got three questions, if that's OK. The first is on Open Access. You've got very strong growth in Open Access revenues.
My understanding of the deals that you've been done on Open Access, there would be like an upper and lower band of revenue that the university partners would pay. So no sort of direct linkage or exponential linkage to the volume of articles published. It seems from what you're saying that actually there is a big opportunity to generate revenue from the number of articles published. So I was wondering if you could explain that.
The second question is you've answered some questions on the renewal season for journals and books. Have you've seen any impact from universities using the unsub company to help them get rid of unnecessary journals? And then the third question is, you mentioned your market share in higher education. I think you said, I could be wrong, that it went from 4% to 5%, which is a very strong performance. That sort of implies that the market is a bit worse than your performance.
So what would your growth look like if you hadn't gained any share at all?
Brian Napack -- President and Chief Executive Officer
Got it. Hopefully, we'll be able to cover all those questions, or I should say, I'll be able to remember all those questions. We'll start with the OA, with the OA growth. So first of all, let's remember that our OA growth, which is certainly very strong, is made up of two parts.
One part is the traditional gold away article by article business, which represents roughly two thirds of the growth that we -- a little less than two thirds of the growth that we have talked about this year. The other is the volume that comes from our strategic deals that we've been talking about for quite some time. And so that proportionality is important, first of all. Second of all, every deal is different.
Every deal has a different structure and different flavor to it. So there's no real way to fully answer your question in a single way. But what I will say is the model itself is built on price times quantity. And typically, there may be an upper bound, but then there are also ways for those articles to be published anyway because the articles continue to be delivered.
And in each one of our deals, there is a -- this price times quantity mechanism exists. The question is what happens if you do come to a maximum, if there is a maximum. And the answer is those articles get published anyway, and we have to figure out -- and somebody has to figure out how to fund those articles. So yes, there's -- every deal is different.
The relationship of price to quantity remains, and it plays out in different ways depending on the specific deals, geographies, budgets, etc., of the cases. So hopefully, that addresses that question.
John Kritzmacher -- Chief Financial Officer
Brian, if I could just jump in. I would just point out that our Open Access is much larger than just the transitional deals, right? They represent a significant element of our Open Access business, but the majority of our business in Open Access is actually outside of those transitional deals. And so there is lots of opportunity for us to drive growth out of our improvements in OA volume.
Brian Napack -- President and Chief Executive Officer
Yes. Yes, absolutely. And as I was saying, it's sort of one third, two thirds, with one third -- a little more than one third being the deals that John and I are talking about, if that's what you're referring to, John, I think it was.
John Kritzmacher -- Chief Financial Officer
Yes. I'm sorry.
Brian Napack -- President and Chief Executive Officer
Yes. No, it's fine. Fine. Great.
The second question was on renewals and the ability or desire of the universities or the librarians to use different sorts of services and different sorts of approaches to more -- to figure out how to reduce their paid commitment. And we have not seen this as a made -- it's certainly in the marketplace. Certainly, any smart buyer is always looking for ways to make sure they're only paying for what they really need and really use. And in fact, our relationships over the years have become increasingly focused on the performance, meaning the usage of the subscriptions that people are paying for, meaning the access to the content.
We've talked extensively about how significantly higher, how significantly elevated those have become over the last couple of years as our -- as the usage content increases, certainly accelerating in this past year. So there is a less belief that -- than you might expect that it is not something that they ought to be paying for. And we have not seen a material impact of any third-party services that seek to help libraries tailor their subscriptions. We haven't seen that effect in any material way on our business.
Then the last question. Let me see if I can recall it now. Market share. So yes, our market share has been increasing, and we are very pleased with that.
We're seeing it in increased adoptions and increased sell-through as we succeed with our programs. You will remember, if you've been following the story, which all of you have, that we took an approach of being very active and aggressive in our pricing in a -- in order to make sure that students and schools had access to reasonable pricing, which would drive, in theory, unit sales. And happily, what we've learned is as we significantly reduced our price points and simplified our models and increased the models by which people could get access to content for cheaper that our volume increases significantly offset our -- the effect of our price reductions. So that's really good to hear, right? So what we've been talking about for a long time is the normalization of price and value, where in the marketplace for higher ed content, there was a perception that there wasn't enough value delivered, and the prices were too high.
And everyone is familiar with that story, right, the $250 textbook. Well, now we're seeing price points -- we've driven price points down to the -- to, in many cases, $50, $60. And as we do that -- in a very simple structure. And as we've done that, what we've seen is we repatriate more units than we're losing in that.
And therefore, we're giving these digital products, which have significantly elevated value because of the homework systems, the community, the ability to collaborate on these systems for teachers to work with students directly. So we have this elevated outcomes, elevated value at a significantly lower price. And therefore the marketplace is kind of happy with it and rewards it, and we've been particularly aggressive in that area. So the market is still -- there's a lot of noise in the market as print declines and as digital grows.
But what we are clear and confident on is that we are doing very well relative to the market because of the various actions we've taken to both increase quality, reduce price and ultimately service the market in a very, very tailored way.The other thing to say is we tend to focus -- we're much more focused than most of the larger competitors. We are focused on areas where the content is absolutely necessary for the course -- for the student to be successful in a course in areas like accounting or IT and so forth. And that's why we -- and that's one of the reasons why we can do better, because the students can't do without our content. So hopefully, that gives you some color on the market share effect, and we continue to be pleased with how we're performing there.
Matthew Walker -- Credit Suisse -- Analyst
I think what I was trying to say is that all the people who talked about being close to the tipping point, it just so happens that they individually have gained a lot of market share. So it does suggest that the underlying market is not as healthy if you haven't gained any market share.
Brian Napack -- President and Chief Executive Officer
I would argue that you should study the industry statistics closely, and you'll see that there has materially been share shift, and there has been consistent increase in the number of units sold in the industry. So we are -- we won't go into discussion of relative performance to competitors, but what we can say is that we feel in the long run, we will have the units and the unit growth, and we will have -- we will continue to perform well relative to our competitors.
Matthew Walker -- Credit Suisse -- Analyst
OK, thank you very much.
Operator
We have a follow-up question from the line of Daniel Moore with CJS Securities. Your line is now open.
Daniel Moore -- CJS Securities -- Analyst
Thank you and I realize you've covered a lot already. Just ed services, just following up on the decline in marketing costs. Can you just talk briefly about the profitability curve today for a new partner institution compared to what maybe that was a couple of years ago? How quickly they get to breakeven and ramp to more mature levels of margins?
Brian Napack -- President and Chief Executive Officer
Yes. So every partner is different. Every partner requires a different upfront investment, and every partner has a different profile to get to maturity. What I can say is that the relationship between marketing cost and that is a significant relationship and that our ability to be a much more efficient acquirer of student lead is helping us to make sure that not just we get there faster, but that all of our programs are profitable.
As you know, we're very attentive to the profitability of our portfolio. So I won't make specific comments on the time to profitability because it's so variable, but I will say that our efforts to improve the efficiency of marketing and improve the efficiency of the student journey allows us to get there faster. I mean that's the point. As you know, Dan, as well as anybody, the upfront marketing investment is a big part of what we invest in when we stand up a new partner and what we do.
So the more efficient we can be there, the better the whole portfolio does, but certainly, the faster we are to profitability in a new partner.
Daniel Moore -- CJS Securities -- Analyst
Understood. OK thank you again.
Operator
We're showing no further questions in queue at this time. I'd like to turn the call back to Mr. Napack for closing remarks.
Brian Napack -- President and Chief Executive Officer
All right. All I'll say is thanks for joining us today. And once again, happy holidays. We look forward to talking to you around the time of our third-quarter results in March.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Brian Campbell -- Vice President of Investor Relations
Brian Napack -- President and Chief Executive Officer
John Kritzmacher -- Chief Financial Officer
Daniel Moore -- CJS Securities -- Analyst
Sami Kassab -- Exane BNP Paribas -- Analyst
Greg Pendy -- Sidoti & Company -- Analyst
Matilda Rozano -- Barclays -- Analyst
Matthew Walker -- Credit Suisse -- Analyst