Divergence

Divergence

Earlier this year we wrote about the collapse in the equity prices of publicly traded companies in the professional and scholarly publishing sector. We noted that “AI risk” appeared to be the primary reason for the downturn. After writing that issue of The Brief, it became clear that the sell-off was much wider, impacting a large swath of software companies. Dubbed the “SaaSpocalypse,” investors feared that much software could now be written by large language models, like Claude Code.

RELX and Wolters Kluwer, makers of legal (and clinical) software, were swept up in the SaaSpocalypse (as a general rule, it is not good to be swept up in anything with “-pocalypse” as a suffix). It is unclear why the stock prices of Wiley and Springer Nature, which few observers would categorize as SaaS companies, were also down. But there is a lot going on in the world, and sometimes markets are in the mood to shoot first and ask questions later (the trajectories of these companies in the equity markets has diverged, as we discuss below).

We thought it was time to check back in on these companies and see how they are faring in the post-SaaSpocalypse wastes. We expected to find grim circumstances: Underground bunkers, systems running on backup generators, coffee stations with nothing but hazelnut. What we found in looking through the most recent annual reports and earning statements from these companies was … business as usual? 

RELX. In its latest annual report (for the 2025 fiscal year), RELX reported overall revenue growth of 2% (4% at constant currency). Operating profits are up 4% (7% at constant currency). Zooming in to its Scientific, Technical & Medical division (aka “Elsevier”), reported revenue is up 3% (5% on a constant currency basis) to 2.7 billion GBP. Profits meanwhile climbed 6% (7% at constant currency) to over 1 billion GBP. (RELX 2025 Annual Report)

Wolters Kluwer. Overall, Wolters Kluwer reported a 3.5% gain in revenues and a 20% increase in operating profit for its 2025 fiscal year. Wolters Kluwer’s Health division, which includes its journals, Ovid, and UpToDate, posted 1% revenue gains (5% on a constant currency basis) to 1.6 billion euros. Operating profits are up 9% to 480 million euros. (Wolters Kluwer 2025 Annual Report)

Springer Nature. The German publisher reported revenues of 1.9 billion euro in 2025, which is up 6.2% over 2024. Operating profits meanwhile rose 9.2% to 543 million euro. (Springer Nature Annual Report 2025)

Wiley. Wiley’s fiscal year ends April 30, so we’ll have updated information soon. But it reaffirmed “low single digit” revenue growth on the most recent quarterly revenue report for the company overall. Wiley also noted that (as of Q3 2025) revenue in the Research division was up 2% (1% at constant currency). (Wiley Quarterly Report)

Informa. We are likewise waiting on Informa’s annual report, but it has issued results for 2025 along with guidance for 2026. Informa reported double-digit growth for the company overall. The Taylor & Francis division meanwhile reported a modest contraction of revenue of 3.9%, though operating margin has kept stable versus 2024. The company is, however, bullish on growth in 2026: “we are targeting further momentum in 2026 as we expand our journal portfolio, double down on international sales and target underweight customer segments, including the Corporate market.” (Informa PLC 2025 Full-Year Results)

In summary, the large, publicly traded scholarly and professional publishers appear to all be doing just fine. Revenues and profits are generally up by single digits. (For anyone looking for a deep dive into these annual reports, James Butcher has started a series of Journalology articles doing exactly this).

To be fair, annual and quarterly reports are lagging indicators, and equity prices are forward-looking indicators. Usually the latter are anchored in the former — but not always. It appears that the market’s view of these companies has diverged despite their reported results being comparable.

Wiley’s stock has made a spectacular recovery. The US publisher is up 33% for the year and only down 4% on a one-year basis. Springer Nature’s stock has also largely recovered: down slightly year-to-date but up 4% compared to a year ago. Informa is also down a bit so far this year but posting 22% gains from where it was this time last year. (Informa is such a different sort of company, however — we will save an analysis of its stock performance for another issue.)

Wolters Kluwer and RELX are a different story. Wolters Kluwer’s stock price remains down 53% compared to a year ago. RELX has reversed the worst of its losses (it is only down 9% year-to-date), but remains down 30% compared to a year ago.

Investors seem to have decided that SaaSpocalypse-related fears remain for RELX and Wolters Kluwer, whereas Wiley and Springer Nature (which have relatively little software revenues) are less exposed. That is one plausible narrative at least. If you believe that general-purpose LLMs will supplant specialized software that makes some sense. The risk of such a perspective is that the opposite could also be true: LLMs might simply become commodified “compute,” with more valuable specialized services built on top. In this scenario, makers of professional software like RELX and Wolters Kluwer might find themselves not supplanted but with improved products (and margins) built on commodified LLM technologies. It is also possible that both perspectives are true but are highly case dependent (some products may be supplanted by LLMs and others may successfully build on them).

One factor that may determine which software products succeed is content. Elsevier has explicitly embraced this view of the market and is circumspect in licensing the content it controls to AI companies. Exclusive content provides a competitive moat to products like Elsevier’s ClinicalKey AI and LeapSpace. Whether that moat will be sufficient is an open question. At this point the market appears skeptical.

Briefly Noted

LLM companies are launching health-focused products. March saw announcements of such products from Microsoft (Copilot for Health) and Perplexity (Perplexity Health). Both products are aimed at the consumer (patient) market. Both products combine LLM technology with curated content and personal data. Personal data derives from connections to wearables and health records. The combination is potentially potent but also raises the stakes in terms of the potential for adverse events. To this point, Microsoft is keen to emphasize that Copilot for Health does not replace professional advice and is meant to inform (not replace) discussions with a physician. Perplexity meanwhile has only a generic disclaimer at the bottom of its product announcement page that reads like it was cribbed from a pharmaceutical ad. One might expect more prominent messaging given recent reporting on the use of Perplexity in at least one tragic case of “doing your own research.”

While it has little hope of passing as is, the White House has proposed a fiscal year 2027 budget to Congress. In this $2.2 trillion behemoth there can be found this weirdly specific language:

Government-Wide Prohibition on Publishing and Subscription Fees. The Budget ends the diversion of research dollars to high priced publishers across the Government. The Budget prohibits the use of Federal funds for expensive subscriptions to academic journals and prohibitively high publishing costs unless required by Federal statute or approved in advance by a Federal agency. Research funded by taxpayers should be publicly accessible; yet many publications charge the Government to both publish and to access the same research study. There are numerous low-cost outlets to make federally-funded research publicly available.

To call out such a trivial detail (in the scheme of a $2.2 trillion budget) is odd, even for an administration that often breaks with precedent.

The American Society of Mechanical Engineers announced a new partnership with Wiley to publish the society’s approximately 35 journals plus conference proceedings.

The excellent two-part Scholarly Kitchen post “A Pulse on All Things AI” from Todd Toler (Wiley) and Angela Cochran (American Society of Clinical Oncology) resulted from calling up their publishing colleagues and asking, Where does your organization stand on AI? Part 1 covers the business landscape: licensing, revenue, and demand. Part 2 looks at organizational readiness, peer review, and where things are headed.

Some recent articles that caught our eye attempt to make sense of AI from a historical, cultural, or sociological perspective:

• “The Reverse-Centaur’s Guide to Criticizing AI.” This is a long read from Cory Doctorow about the dystopian world of human work, especially in the creative arts, that AI companies may leave in their wake. The central metaphor is that of the “reverse-centaur” — work where humans are assisting machines, rather than the other way around.
• “The Best Guide to the AI Revolution May Be Victorian Fiction.” Obviously. How could we not read this Bloomberg article by Martha Gimbel? How could you not read it?
• “Notes from the SaaS Funeral.” Reid Hoffman is skeptical of the claim that specialized software will be made obsolete by LLM’s anytime soon.

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The idea that a company will simply prompt its way to a fully functional HR system, accounts payable platform, or enterprise CRM anytime soon is completely off base, even if you ignore the compliance and security nightmare that would ensue if someone did vibecode their company’s unique payroll platform. —Reid Hoffman, Notes from the SaaS Funeral