RELX Plc Q4 FY2023 earnings call

Management Statement and Operational Highlights

• Financial Results: 2023 had underlying revenue growth 8%, underlying adjusted operating profit growth 13%, adjusted earnings per share growth 11% at constant currency. Proposed 8% increase in full year dividend to 58.8p per share.
• Segment Details: Each segment discussed growth drivers (e.g., Risk's Business Services, STM's analytics, Legal's legal analytics shift, Exhibitions' face-to-face activity).
• Strategic Direction: Leverage customer understanding, content, data, and technology to build sophisticated analytics tools for professional customers.
• Financial Metrics: ROIC up 1.5 pts to 14%, cash conversion 98%, net debt to EBITDA 2.0x. Deployed GBP 800M on share buybacks in 2023, with GBP 1B announced for 2024.
• Corporate Responsibility: Rated AAA by MSCI for 8th consecutive year, ranked 2nd in sector globally by Sustainalytics.

Segment Performance

• Risk: Business Services, representing around 45% of divisional revenue, saw growth driven by financial crime compliance, digital fraud, and identity solutions with new sales strengthening in H2. Insurance, ~40% of divisional revenue, grew due to expanded solution sets across markets. Specialized industry data services, over 10% of divisional revenue, had strong growth led by Commodity Intelligence and Aviation. Underlying revenue growth 8%, underlying adjusted operating profit growth slightly exceeding underlying revenue growth.
• STM: Analytics development drove shift to higher growth segments. Databases, tools, etc., ~45% of divisional revenue, grew from higher value-add analytics. Primary Research, Academic and Government, ~45% of divisional revenue, saw growth from article submissions, especially pay-to-publish open access articles. Underlying revenue growth 4%, underlying adjusted operating profit growth in line with revenue growth.
• Legal: Underlying revenue growth improved to 6% (up from 5% prior) due to shift to higher-growth legal analytics. Underlying adjusted operating profit growth 8%. Strong growth in Law Firm and Corporate Markets. Lexis+ AI launched commercially in Oct, initial reaction positive.
• Exhibitions: Strong revenue growth 30% from face-to-face activity, profitability improved with lower cost base. Underlying adjusted operating margin above pre-pandemic levels.

Guidance

• Risk: Expect continued strong underlying revenue growth, with underlying adjusted operating profit growth slightly exceeding underlying revenue growth.
• STM: Anticipate continued good underlying revenue growth, with underlying adjusted operating profit growth slightly exceeding online revenue growth.
• Legal: Expect continued strong underlying revenue growth, with underlying adjusted operating profit growth exceeding revenue growth.
• Exhibitions: Project strong underlying revenue growth and further improvement in adjusted operating margin.

Risks

• No specific risks detailed, but general market and competitive dynamics, and economic factors (e.g., interest rate impacts on interest expense, currency movements) are implied.

Question and Answer

Q: On Lexis+ AI commercial launch and M&A expectations A: Erik mentions mixed adoption at renewal cycles and positive customer feedback; Nicholas says M&A focus on bolt-on opportunities, no change in approach.

Q: STM metrics and Exhibition biannual events impact A: Erik discusses strong article submission growth in STM, especially pay-to-publish; Nicholas says biannual events cycling in 2024 likely boost Exhibitions revenue by ~5-6%.

Q: Pricing differences with Thomson Reuters and Lexis+ AI uptake A: Nicholas clarifies revenue growth from more value per customer, not pure price increase; Erik says Lexis+ AI has strong interest, wide law firm adoption.

Q: STM database tools proportion and Exhibitions future A: Nicholas says database tools ~40% of STM divisional revenue; Erik outlines Exhibitions moving to higher value-add, growth, and margin post-COVID.

Q: STM journal renewals, Legal growth vs Thompson, Exhibition future A: Erik comments STM journal renewals going well; no comment on Lexis vs Thompson market share; Exhibition on track for higher value-add, growth, margin post-COVID.