RELX(RELX) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 7% underlying revenue growth and a 10% underlying adjusted operating profit growth, with adjusted earnings per share increasing by 10% at constant currency [17][21][34] - Cash conversion remained strong at 95%, with total free cash flow for the first half exceeding GBP 1 billion [22][23] - The effective tax rate for the first half was 23%, up from the previous year, with net profit increasing by 8% at constant currency [44] Business Line Data and Key Metrics Changes - In the Risk segment, underlying revenue growth was 8% and adjusted operating profit growth was 9%, driven by AI-enabled analytics [7] - The STM segment saw a 4% underlying revenue growth, with a shift towards higher growth segments, although print revenue declined at a rate twice as fast as usual [8] - The Legal segment improved its underlying revenue growth to 7%, up from 6% last year, with adjusted operating profit growth at 9% [9] - Exhibitions delivered a strong underlying revenue growth of 16%, reflecting an improved growth profile [37] Market Data and Key Metrics Changes - The company noted a significant increase in article submissions, with a growth rate of over 20% across the portfolio, indicating a positive trend in the STM market [36][62] - The competitive landscape in the legal sector is evolving, with increased focus on AI tools and analytics, potentially impacting market share dynamics [3][90] Company Strategy and Development Direction - The company’s strategic direction remains focused on enhancing long-term growth through a shift towards higher-value analytics and decision tools [15][16] - The company aims to sustain strong long-term growth in the Risk segment, continue improving growth in STM and Legal, and enhance the growth profile in Exhibitions [16] - The introduction of generative AI tools is expected to further drive growth and customer value [3][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong underlying revenue growth and adjusted operating profit growth for the year, despite potential normalization in article submission growth [47][66] - The company is actively addressing industry challenges related to research integrity and competition from open access publishers [51][62] - Management acknowledged the importance of technology evolution in the legal industry and the need for law firms to adapt [29][90] Other Important Information - The company completed GBP 700 million of its GBP 1 billion share buyback program in the first half and plans to continue with additional buybacks [23][40] - The company has made two small acquisitions for a total of GBP 61 million in the first half [40][45] Q&A Session Summary Question: Concerns about article submission growth impacting future STM organic growth - Management acknowledged the historical high article submission volumes but indicated that normalization should not significantly impact long-term growth rates [4][66] Question: Changes in the competitive landscape over the years - Management confirmed that while the competitive landscape has changed, it does not significantly impact their strategy, as they have been focusing on AI-supported legal analytics for over a decade [3] Question: Performance details within the Risk segment - Management noted that underlying revenue growth in Risk was strong, with specific segments performing better than others, but predicting exact performance remains challenging [33] Question: Expectations for the tax rate for the full year - Management indicated that the 23% tax rate observed in the first half is a good starting point for the full year, with some potential variability [57] Question: Impact of print revenue decline on STM growth - Management stated that while print revenue is declining faster than usual, this is part of a strategic shift towards digital and higher growth segments [8][81] Question: Future growth potential in the Legal segment - Management expressed optimism about improving the growth trajectory in Legal, emphasizing the importance of organic development and partnerships [91][92]