RELX PLC (RELX) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with 8% net profit growth, improved operating margins, and 100% cash conversion. The partnership with Harvey is strategically aligned, and AI product uptake is promising. The exhibitions segment shows sustained growth, and the company's leverage is well-managed. While guidance for some areas is conservative, overall sentiment is positive, supported by strategic initiatives and financial health.
Key Financial Performance
Underlying Revenue Growth 7%, with a higher quality growth profile. Reasons include strong growth in Risk, STM, Legal, and Exhibitions segments.
Underlying Adjusted Operating Profit Growth 9%, driven by managing cost growth below revenue growth and higher-value analytics tools.
Adjusted Earnings Per Share Growth 10% at constant currency, attributed to strong operating results and cost management.
Interim Dividend Increase 7%, reflecting strong financial performance.
Risk Segment Revenue Growth 8%, driven by AI-enabled analytics, financial crime compliance, and digital fraud solutions.
STM Segment Revenue Growth 5%, supported by new product introductions, renewals, and strong article submission growth.
Legal Segment Revenue Growth 9%, driven by a shift towards higher-value legal analytics and successful AI platform growth.
Exhibitions Segment Revenue Growth 8%, with margins significantly above pre-pandemic levels.
Adjusted Operating Margin Improved to 34.8%, due to profit growth exceeding revenue growth.
Cash Conversion 100%, indicating strong cash flow management.
Net Profit Growth 8% at constant currency, supported by revenue and profit growth.
CapEx GBP 250 million, equating to 5% of revenue, reflecting investments in growth.
Net Debt to EBITDA Ratio 2.2x, within the typical range of 2 to 2.5x.
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Operating Highlights
ScienceDirect AI: Launched as a generative AI addition to the primary research platform, supporting strong volume growth in article submissions and publications.
Lexis+ AI: Integrated platform leveraging generative AI, showing successful growth in U.S. and international markets.
Protégé: Next-generation AI legal assistant launched earlier this year, progressing well and expanding across products and geographies.
Risk Segment: Strong growth driven by AI-enabled analytics, financial crime compliance, digital fraud solutions, and insurance solution expansions.
Exhibitions: Revenue growth of 8%, now above pre-pandemic levels, with margins significantly improved.
Cost Management: Cost growth managed below revenue growth across all business areas, contributing to margin improvements.
Print Transition: Print revenue reduced to 4% of total revenue, with print activities now managed separately to improve transparency and focus.
Shift to Analytics and Decision Tools: Ongoing strategic focus on higher growth analytics and decision tools, enhancing customer value and driving long-term growth.
Portfolio Adjustments: Proactive reduction in print-related activities through outsourcing, joint ventures, and asset disposals.
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Risk or Challenges
Print and print-related revenue decline: The company has been reducing its involvement in print-related activities, which now constitute only 4% of revenue. However, profit from print and print-related activities is expected to continue declining in the high single digits annually, which could impact overall profitability.
Currency fluctuations: Revenue growth in sterling was only 2%, impacted by the comparative strength of sterling against the U.S. dollar. This currency effect also impacted adjusted operating profit growth, which was 4% in sterling.
Exhibitions timing effects: Exhibitions faced cycling and timing effects, with 2025 being an 'odd' year, which could lead to variability in revenue and profit contributions from this segment.
Leverage and debt levels: Net debt at the end of June 2025 was GBP 7.5 billion, with a leverage ratio of 2.2x. While within the typical range, this level of debt could pose risks if market conditions deteriorate or interest rates rise.
Dependence on AI and analytics: The company’s growth is heavily reliant on the development and rollout of AI-enabled analytics and decision tools. Any delays or failures in these technological advancements could adversely impact growth.
Regulatory and compliance risks: The Risk segment is driven by financial crime compliance and digital fraud solutions. Changes in regulatory requirements or compliance standards could impact the demand for these services.
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Guidance & Outlook
Risk Segment: For the full year, we expect continued strong underlying revenue growth with underlying adjusted operating profit growth slightly exceeding underlying revenue growth.
STM Segment: For the full year, we expect continued good underlying revenue growth with underlying adjusted operating profit growth slightly exceeding underlying revenue growth.
Legal Segment: For the full year, we expect continued strong underlying revenue growth with underlying adjusted operating profit growth exceeding underlying revenue growth.
Exhibitions Segment: For the full year, we expect continued strong underlying revenue growth with an improvement in adjusted operating margin over the prior full year.
Print and Print-Related Activities: Going forward, we expect profit from print and print-related activities to continue to decline in the high single digits each year, in line with historical trends.
Group-Level Outlook: We expect another year of strong underlying growth in revenue and adjusted operating profit as well as strong growth in adjusted earnings per share on a constant currency basis.
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Shareholder Return Plan
Interim Dividend Increase: The interim dividend has been increased by 7% to 19.5p per share.
Share Buyback Program: The company has planned a GBP 1.5 billion share buyback program for 2025, of which GBP 1 billion has already been completed in the first half of the year. An additional GBP 75 million was deployed in July, leaving GBP 425 million to be completed in the remainder of the year.
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Key Q&A
Q:Have you seen any additional revenues from APCs due to the NIH's open access policy change?
A:The NIH's open access policy change is unlikely to have any significant impact on revenue trajectory. The company is seeing strong article submissions, new sales, and renewals, but these are not directly related to the NIH policy change.
Q:What is the rationale behind the partnership with Harvey in the Legal side?
A:The partnership with Harvey aligns with the company's strategic objective of developing sophisticated analytics and decision tools. Harvey focuses on use cases in the legal environment that benefit from seamless interaction with the company's tools, adding value for customers.
Q:Is the better free cash flow conversion related to the change in print segmentation?
A:No, the strong cash conversion in the first half is due to the timing of receipts and payments around June 30th, not related to print segmentation.
Q:How do you plan to monetize co-created products with Harvey?
A:The company is exploring pilot projects with Harvey to co-develop solutions for specific use cases. The monetization model is not yet defined and will depend on the outcomes of these pilots.
Q:Was the magnitude of the print decline similar across STM and Legal?
A:Both STM and Legal experienced print declines, with a slightly greater impact in STM due to proactive steps taken.
Q:Have there been any notable shifts in demand patterns from U.S. government agencies?
A:No, demand patterns from U.S. government agencies have been consistent with previous years.
Q:What guidance can you provide on Exhibitions margin for the full year?
A:Full-year margins in Exhibitions are expected to be up to 5 points lower than the first half due to seasonality, but there will still be a decent improvement in margin year-over-year.
Q:Could Legal's growth accelerate to 10% by the end of the year?
A:While Legal has strong momentum and new product introductions, it is unlikely to reach 10% growth this year due to the subscription-based model and longer sales cycles.
Q:What is the uptake of AI products in STM and Legal?
A:In Legal, the uptake of AI-integrated platforms like Lexis+ AI is strong, with double-digit spend uplift. In STM, uptake is more fragmented and slower due to longer sales cycles and product diversity, but similar double-digit spend uplift is observed.
Q:Is 8% growth in Exhibitions a new level to expect going forward?
A:Yes, 7-8% growth is considered the new ongoing level for Exhibitions, driven by value provided to customers and digital offerings.
Q:How much of the print revenue decline was due to disposals?
A:The revenue decline in print includes disposals and proactive steps, but the focus is on profitability rather than revenue.
Q:Will tougher shopping event comps impact insurance growth in Risk?
A:While shopping event comps may not be as strong as last year, the main growth driver in Risk is the rollout of higher value-add products, which continues to perform strongly.
Q:Are U.S. universities indicating potential budget constraints for renewals?
A:No significant impact is expected from U.S. university budget constraints on STM growth, as the company works with customers to meet their needs within budget constraints.
Q:What are you hearing from clients about demand in the legal industry?
A:The company is focused on adding value through new tools and platforms, which is more important than industry demand trends.
Q:What is the impact of digital tools on Exhibitions growth and margins?
A:Digital tools are an integral part of the value provided to customers, contributing to growth and margins, but their impact is not separately priced.
Q:How are you approaching leverage and M&A?
A:The company focuses on organic development but is open to acquisitions that enhance this. Leverage can go above the 2-2.5x range temporarily for larger acquisitions.
Q:Are there any changes in forward booking trends for Exhibitions?
A:No significant changes in forward booking trends for Exhibitions by region or vertical.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear answer on how co-created products with Harvey would be monetized, stating that they are exploring pilot projects without defining a specific model.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AOP
Bank
Executive Director
GBP share
Group
Nicholas
Research Division
STM Legal
acquisition
action
basis point
bias
cash flow
currency portfolio
disposal
dividend
effect Exhibitions
format
improvement
interest
line
majority
outsourcing venture
period
platform
portfolio effect
print activity
print version
service
share buyback
step
sterling
tax
transition
version content
RELX Transcript
RELX PLC (RELX) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call summary highlights strong product development, strategic market positioning, and positive financial outlooks, such as expanding profit margins and increased buybacks. The Q&A section reveals optimism about new sales and market opportunities, despite some vague responses. Overall, the company's strategic initiatives and financial health suggest a positive sentiment, likely leading to a stock price increase.
RELX PLC (RELX) Q2 2025 Earnings Call Transcript
Positive7-24
The earnings call reveals strong financial performance with 8% net profit growth, improved operating margins, and 100% cash conversion. The partnership with Harvey is strategically aligned, and AI product uptake is promising. The exhibitions segment shows sustained growth, and the company's leverage is well-managed. While guidance for some areas is conservative, overall sentiment is positive, supported by strategic initiatives and financial health.
RELX Plc (NYSE:RELX) Q4 2024 Earnings Call Transcript
Positive2-17
The earnings call summary indicates strong financial performance with 7% revenue growth and 10% operating profit growth. The company has improved its operating margin and reduced leverage, signaling financial health. The shareholder return plan is positive with increased buybacks and dividends. The Q&A highlights potential risks but shows management's confidence in growth areas like Exhibitions and new product launches. Despite some uncertainties in print and government funding, the overall sentiment remains positive, suggesting a stock price increase of 2% to 8%.
RELX PLC (RELX) Q3 2024 Sales/Trading Statement Call Transcript
Neutral10-24
RELX Slides
RELX Report
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