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01/10 16:41
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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.
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.
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.
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.
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.
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.
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%.
The earnings call summary suggests strong financial performance with 10% growth in adjusted EPS and operating profit, a 7% dividend increase, and improved margins. The Q&A section indicates optimism about AI product adoption and minimal negative impact from print declines. Management's responses were somewhat vague, but overall sentiment remains positive due to strong financials and strategic focus on innovation. Despite some uncertainties, the positive financial metrics and strategic initiatives are likely to lead to a stock price increase in the short term.
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