How will the decline in revenue due to divested businesses impact Wiley's short‑term cash flow and guidance?

The quarter’s 2 % revenue dip – $397 MM versus $404 MM a year ago – is almost entirely the result of “foregone” revenue from businesses that have already been sold off. Because those units are no longer on‑the‑books, the cash‑flow impact is limited to the loss of their historic cash‑generation, not to any additional working‑capital or cap‑ex outlays. In fact, operating income jumped 7 % to $31 MM and EPS turned positive ( $0.22 vs. a negative prior‑year figure), indicating that the stripped‑down company is now running on a leaner cost base with a markedly higher margin. Short‑term free‑cash‑flow (FCF) is therefore likely to hold steady or even improve despite the top‑line contraction, as the cash that would have been tied to the divested units is being replaced by higher profitability on the remaining portfolio.

From a guidance perspective, management will probably trim its revenue outlook to reflect the permanently reduced topline, but it can comfortably raise or keep operating‐margin targets, given the 7 % income gain. Analysts should therefore adjust forecasts by removing the divested‑business revenue stream while assuming a modest uplift in margin (mid‑single‑digit to low‑teens percent). The market is likely to reward the improved profitability with a tighter spread between price and cash‑flow expectations, so the stock could trade at a modest premium despite the modest revenue dip.

Trading takeaway: The cash‑flow picture looks resilient, and guidance will most likely be revised down on revenue but buoyed by higher margins. If the stock has already priced in the revenue shortfall, the upside from a stronger profit base creates a buying opportunity on any pull‑back. Consider a small‑to‑moderate long position, with a stop just below the recent support level (≈ $6.80), while watching for a breakout above the short‑term resistance at $7.40 to confirm momentum.