RELX Plc Q2 FY2021 earnings call

Management Statement and Operational Highlights

• Organic Growth: Focus on developing sophisticated analytics and decision tools across segments to add value to customers.
• Acquisitions: Made five small acquisitions in the first half, with recent acquisitions performing well.
• ESG Performance: Continued improvement in internal metrics and external ratings.
• Financials: Revenue growth 4% constant currency, adjusted operating profit growth 11% constant currency, adjusted EPS growth 10% constant currency. Interim dividend increased 5%. Cash conversion strong at 112%, leverage reduced to 2.8x.

Segment Performance

• Risk: Underlying revenue growth 10%, underlying adjusted operating profit growth 12%. Transactional revenue (c.60% of divisional total) grew double digits; subscription revenue (c.40%) returned to historical growth rates. Business Services (c.45% of divisional revenue) had double-digit revenue growth. Fraud and identity: ThreatMetrix and Emailage grew ~30%. Financial Crime and Compliance: Alignment of acuity strengthened customer proposition. Insurance (c.40% of divisional total) had strong revenue growth from analytics rollout and adjacent verticals. Data Services (c.10% of divisional revenue) saw growth in petrochemicals and agriculture; Government (c.5% of divisional revenue) had strong growth from analytics rollout.
• STM: Underlying revenue growth 4%. Electronic revenue (c.88% of total) continued good growth; print revenue (c.12%) stabilized. Primary research: Strong growth in articles published. Databases and tools and electronic reference (c.1/3 of divisional revenue) saw strong growth in medical education, clinical solutions, etc. Print books (c.5% of divisional revenue) stabilized.
• Legal: Underlying revenue growth 3%, underlying adjusted operating profit growth 6%. Electronic revenue (c.88% of total) continued growth; print revenue declines moderated. North America (c.2/3 of divisional revenue) growth driven by legal analytics and Lexis+ rollout.
• Exhibitions: Revenue declined 36% in constant currencies for the first half. Events held in China, Japan, U.S. had digital initiatives, but revenue outcome depends on reopening pace.

Guidance

• Risk: Expect underlying revenue growth slightly above historical trends, underlying adjusted operating profit growth broadly matching revenue growth.
• STM: Expect underlying revenue growth slightly above historical trends, underlying adjusted operating profit growth slightly exceeding revenue growth.
• Legal: Expect underlying revenue growth in line with or slightly above historical trends, underlying adjusted operating profit growth exceeding revenue growth.
• Exhibitions: Revenue outcome for full year depends on reopening pace; operating results benefit from lower cost structure than prior year.

Risks

• Pandemic Impact: Disrupted exhibitions revenue and potential impact on other segments' growth if restrictions continue.
• Competitive Landscape: Threat of competitors offering similar or better analytics and decision tools, potentially affecting market share.
• Economic Uncertainty: Impact on customer spending power, affecting revenue growth in various segments.

Question and Answer

Q: On RBA, sequential quarter-on-quarter improvement in revenues?

A: Improvement seen, subscription side had different pattern last year but transactional side growing with good momentum.

Q: Exhibitions shows in July generating £50M, gap vs 2019?

A: Ranges, some up, some down; China/U.S. events more domestic, international events tougher without travel.

Q: STM selling publications to Mark Allen Group, material?

A: Immaterial, excluded from underlying revenues.

Q: Resuming share buyback?

A: Leverage still above historic range, focus on leverage reduction first.

Q: Lexis+ adoption, new sales related to Lexis+?

A: Lexis+ well received, majority new and renewing customers opt for it, driving new sales.

Q: Exhibitions event count vs 2019?

A: Lower than 2019, rescheduling and pushing events, focus on operable markets.

Q: ThreatMetrix growth sustainability post-cookie removal?

A: Not directly comparable, no significant impact seen.

Q: Exhibitions role in RELX?

A: Exhibition division aims to integrate analytics and digital tools, supporting customers through pandemic.

Q: First half growth not from delayed 2020 revenue?

A: No, growth represents current performance, not delayed revenue.

Q: Forward bookings in Exhibitions?

A: Good appetite for face-to-face events, but uncertainty on restrictions affecting bookings.