RELX’s 2024 revenue grew by 7% on an underlying basis to £9.4bn. A decline in print was more than offset by broad strength elsewhere, with exhibitions enjoying the fastest growth at 11%.
Underlying operating profit was up by 10% to £3.2bn, helping to drive free cash flow up slightly to £2.1bn.
Acquisition spend after disposals was £100mn contributing to an increase in net debt from £6.4bn to £6.6bn.
RELX has proposed a 7% increase in the full-year dividend to 63p and intends to increase share buybacks 50% to £1.5bn this year.
There was no specific guidance, but the company is expecting to deliver another year of strong growth in underlying revenue and operating profit.
The shares were flat 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 have been improving and we see this as a key area where RELX can continue to bring the offering into the digital age.
Its fully digital products are the real lever though, accounting for 83% 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.
Cash demands are split across internal and external investment to grow the business and then areas like debt management and returns to shareholders. There’s been a healthy improvement in the balance sheet over the past few years that means management can look to pivot more of that cash to other areas, like shareholder returns.
The proofs in the pudding. There’s a modest 1.7% forward prospective dividend yield on offer, plus the buyback’s just been given a hefty 50% increase for the coming year – though nothing is 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 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. The AI rollout is still in its early phase, so there are some risks on the execution side to keep an eye on.
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 31 times expected earnings and that adds pressure to deliver and increases the chances of short-term volatility.
Environmental, social and governance (ESG) risk
The commercial services industry is low/medium risk in terms of ESG. Social and governance risks are the most acute - like product governance, data privacy & security, and labour relations - as exposure to environmental risks is minimal. Companies operating within facilities maintenance are also exposed to community relations and emissions risks.
According to Sustainalytics, RELX’s overall management of material ESG issues is strong.
In 2022, RELX’s board reviewed the company’s progress on sustainability and social responsibility goals, with regular updates from the global head of ESG. The CEO and CFO’s annual incentives are now tied to non-financial targets like carbon reduction and responsible sourcing. Employees receive training on data privacy, security, and business ethics, with a global mentorship programme and regular employee surveys to support human capital management.
RELX key facts
All ratios are sourced from LSEG Datastream, 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.
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