RELX reported half-year revenue of £4.6bn, with underlying growth of 7%. Growth was broad-based across business units, with recovery in the largely face-to-face Exhibitions unit the standout.
Underlying operating profit grew 10% to £1.6bn. Cost controls meant there was an improvement in margins from 33.0% to 34.1%.
Free cash flow rose 8.5% to £1.0bn. Net debt rose 8.2% since the start of the year to £7.0bn, largely due to shareholder returns.
An interim dividend of 18.2p was announced, up 7%. Of the previously announced £1bn share buyback, £700mn was completed in the first half, a further £50mn has been completed since 1 July, and the remaining £250mn is targeted for the rest of the year.
Guidance for the year is unchanged, pointing to underlying growth in revenue and adjusted operating profit.
The shares rose 1.5% in early trading.
Our view
RELX, a leading data solutions provider, operates across four main segments: Risk, Legal, Exhibitions and Scientific, Technical & Medical (STM). The company provides critical data analytics services to top insurance companies, law firms, and academic institutions.
Growth is coming from all fronts, with the post covid recovery in the Exhibition business leading the way. But it's not just face-to-face activity driving the growth. The space is becoming increasingly digitised, and the new streamlined operation means margins are set to improve from pre-pandemic levels. It's a relatively small piece of the pie, but enough to move the dial.
Its fully digital products are the real lever though, accounting for 84% of group revenue. This is the area we're most excited about. The company has a large competitive moat due to its proprietary, hard-to-replicate, data and its sophisticated analysis that produces valuable customer insights.
Data analytics is also a relatively anti-cyclical area, meaning it tends to be essential irrespective of economic conditions. Plus, over 50% of the company's revenue comes from recurring subscription models, providing stable and predictable cash flows.
Being weighted heavily toward electronic services has other benefits too. Earnings are very high quality, meaning almost all of the group's operating profit is backed by operating cash flow. Add in a strong balance sheet and shareholder returns are well supported. There’s a modest 1.9% forward dividend yield on offer and buybacks are also an important part of the returns strategy. The group returned £800mn last year buying back shares, and has already executed £750mn in 2024. As ever, no returns are guaranteed.
Future growth is going to be driven by improving data analytics, the use of AI being a key element. It's an exciting area given the boom we've seen this year but not something RELX is new to. Having huge troves of data starts to really shine through when you build and train AI tools on top of it. Lexis+ AI is the shiny new AI-driven platform available for legal users, and the roll out is continuing to do well.
We like the business. Recurring revenue, as well as high quality earnings, are key attractions and providing data analytics is an area we see growing. But there's no such thing as a free lunch, and the valuation at around 27 times expected earnings has continued its march above the long-term average. That adds pressure to deliver and increases the chances of short-term volatility.
RELX key facts
All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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