Wolters Kluwer N.v. · EURONEXT:WKL
Wolters Kluwer — H1 2024 Earnings Presentation
45 slides from Wolters Kluwer's earnings presentation, Aug 31, 2024
Slide 1: Wolters Kluwer 2024 Half-Year Results
Wolters Kluwer 2024 Half-Year Results Nancy McKinstry, CEO Kevin Entricken, CFO July 31, 2024 2024 Half-Year Results 1
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements. These statements may be identified by words such as "expect", "should", "could", "shall", and similar expressions. Wolters Kluwer cautions that such forward-looking statements are qualified by certain risks and uncerta
Slide 3: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2024 Half-Year Results 3
Slide 4: Introduction
Introduction Good start to the year; on track to meet full-year guidance Financial Results Strategic and ESG Progress Accelerate Organic growth +6% Expert solutions up +8% Expert organically, 59% of revenues Solutions Adjusted operating profit margin 26.5%, up 40bps Recurring cloud software revenues
Slide 5: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2024 Half-Year Results 5
Slide 6: First-half 2024 results
First-half 2024 results Organic growth 6%; margin up 40 basis points; diluted adjusted EPS up 11% in constant currencies; ROIC improved; adjusted FCF impacted by timing of payments (€ million, unless otherwise stated) HY 2024 HY 2023 Δ Δ CC Δ OG Revenues 2,891 2,725 +6% +6% +6% Adjusted operating pr
Slide 7: Revenues by division
Revenues by division Organic growth 6%, led by Tax & Accounting and Corporate Performance & ESG (€ million) HY 2024 HY 2023 Δ Δ CC Δ OG Health 771 725 +6% +6% +6% Tax & Accounting 775 735 +5% +6% +7% Financial & Corporate Compliance 540 519 +4% +4% +4% Legal & Regulatory 458 423 +8% +8% +5% Corporat
Slide 8: Revenues by type
Revenues by type Digital and services subscriptions sustained 8% organic growth; overall trend in non-recurring revenues stabilized off a low base Organic Growth (%) Organic Growth (%) Recurring Revenue Types (82% of total) Non-recurring Revenue Types (18% of total) 75% of total LR ELM Transactional
Slide 9: Adjusted operating profit by division
Adjusted operating profit by division Adjusted operating profit margin increased 40 basis points, driven by Financial & Corporate Compliance and Legal & Regulatory Margin (€ million) HY 2024 HY 2023 Δ Δ CC Δ OG HY 2024 HY 2023 Health 223 217 +3% +3% +3% 28.9% 30.0% Tax & Accounting 271 258 +5% +5% +
Slide 10: Adjusted net profit and EPS
Adjusted net profit and EPS Adjusted EPS up 11% in constant currencies: higher financing and tax cost more than offset by effect of lower shares outstanding (€ million, unless otherwise stated) HY 2024 HY 2023 ∆ ∆ CC Revenues 2,891 2,725 +6% +6% Adjusted operating profit 765 711 +8% +8% Adjusted ope
Slide 11: Adjusted free cash flow
Adjusted free cash flow Cash conversion partly reflects timing of large vendor payments (€ million, unless otherwise stated) HY 2024 HY 2023 ∆ ∆ CC Adjusted operating profit 765 711 +8% +8% Depreciation, amortization, and impairment of other intangibles 127 111 Depreciation of right-of-use assets 31
Slide 12: Movement in net debt
Movement in net debt We retain a robust financial position with leverage at 1.6x (€ million, unless otherwise stated) HY 2024 FY 2023 HY 2023 Net debt at start of period (2,612) (2,253) (2,253) Adjusted free cash flow 445 1,164 495 Dividends paid (276) (467) (247) Acquisition spending, net of cash a
Slide 13: Dividends and share buybacks
Dividends and share buybacks 2024 interim dividend €0.83; on track to complete 2024 share buyback of €1 billion Dividend per Share (€) Share Buybacks (€ million) Intended Total Completed 2.08 dividend 1,000 1,000 1,000 1.81 1.57 1.36 1.18 410 603 350 350 Interim 0.72 0.83 dividend 350 0.47 0.54 0.63
Slide 14: Results summary
Results summary First half 2024 saw good organic growth and margin increase; balance sheet remains strong; on track to meet full-year guidance Organic growth Adjusted operating Diluted adjusted EPS +6% profit margin up +11% in constant 26.5% up 40bps currencies ROIC improved to 17.5% Adjusted FCF St
Slide 15: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2024 Half-Year Results 15
Slide 16: Health
Health Organic growth +6%, led by Clinical Solutions +8%; margin reflects operational gearing and mix shift offset by one-time write-offs € million HY 2024 HY 2023 Δ Δ CC Δ OG Clinical Solutions • Organic growth +8%, driven by strong Revenues 771 725 +6% +6% +6% renewals for UpToDate and drug databa
Slide 17: Tax & Accounting
Tax & Accounting Organic growth +7%, with recurring cloud software up +17%; margin stable despite increased product investment € million HY 2024 HY 2023 Δ Δ CC Δ OG Tax & Accounting North America • Organic growth +7%, driven by double-digit Revenues 775 735 +5% +6% +7% growth in CCH Axcess cloud sui
Slide 18: Financial & Corporate Compliance
Financial & Corporate Compliance Organic growth +4%, supported by recurring revenues up +5%; margin reflects operational gearing and favorable timing of expenses € million HY 2024 HY 2023 Δ Δ CC Δ OG Legal Services • Organic growth +6%, driven by 6% growth in Revenues 540 519 +4% +4% +4% service sub
Slide 19: Legal & Regulatory
Legal & Regulatory Organic growth +5%, led by digital subscriptions up +7%; margin reflects operational gearing and efficiencies Legal & Regulatory Information Solutions € million HY 2024 HY 2023 Δ Δ CC Δ OG • Organic growth +5%, driven by digital Revenues 458 423 +8% +8% +5% information solutions u
Slide 20: Corporate Performance & ESG
Corporate Performance & ESG Organic growth +7%, led by double-digit growth for CCH Tagetik CPM and Enablon; margin reflects increased investment € million HY 2024 HY 2023 Δ Δ CC Δ OG EHS/ORM2 (Enablon) • Organic growth +12%, with recurring cloud Revenues 347 323 +7% +7% +7% revenue up +23% Adjusted
Slide 21: Strategic progress
Strategic progress Continued to execute on our 2022-2024 strategic plan Product development spend1 to be approximately • Grew expert solutions +8% organically to reach 59% of total revenues Accelerate 10% of revenues • Grew cloud-based software +16% organically Expert Solutions • Continued enhancing
Slide 22: Generative AI
Generative AI Continued to integrate GenAI into our solutions: as of today, all divisions have launched GenAI-enabled features Wolters Kluwer solution GenAI features Launch UpToDate (U.S.) GenAI-enhanced search Oct. 2023 Health Lippincott Medical Education platform GenAI-enabled summarization Jan. 2
Slide 23: Tax & Accounting acquisition
Tax & Accounting acquisition European cloud software products complement our existing European tax and accounting solutions and enable end-to-end coverage of workflow • On July 29, we announced an agreement to Secure document exchange between acquire cloud-based financial workflow and accounting fir
Slide 24: Corporate Transparency Act
Corporate Transparency Act Our BOI1 platform streamlines reporting, creating efficiencies for professional firms and business entities expected to handle larger volumes Wolters Kluwer BOI Platform • Launched January 2, 2024. • The first end-to-end, digital platform enabling bulk filing and secure st
Slide 25: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2024 Half-Year Results 25
Slide 26: Guidance 2024
Guidance 2024 Group-level guidance is unchanged: we expect sustained good organic growth in line with prior year and an increase in the margin Performance indicators 2024 Guidance 2023 Actual Adjusted operating profit margin* 26.4%-26.8% 26.4% Adjusted free cash flow** €1,150-€1,200 million €1,164 m
Slide 27: Divisional outlook 2024
Divisional outlook 2024 Expect increase in group adjusted operating profit margin to be driven by Financial & Corporate Compliance, Legal & Regulatory, and Corporate Performance & ESG Division 2024 outlook by division Organic growth to be in line with prior year (FY 2023: 6%). The margin to be Healt
Slide 28: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2024 Half-Year Results 28
Slide 29: Revenues by type
Revenues by type (€ million) HY 2024 HY 2023 ∆ ∆ CC ∆ OG Digital and services subscriptions 2,177 2,023 +8% +8% +8% Print subscriptions 61 66 -8% -8% -8% Other recurring 143 139 +3% +4% +4% Recurring revenues 2,381 2,228 +7% +7% +7% Print books 56 54 +2% +2% +2% FCC transactional1 168 162 +3% +3% +3
Slide 30: Revenues by media format
Revenues by media format (€ million) HY 2024 HY 2023 ∆ ∆ CC ∆ OG Software 1,318 1,226 +8% +8% +7% Other digital1 1,145 1,076 +6% +6% +7% Total Digital 2,463 2,302 +7% +7% +7% Services 281 269 +4% +4% +4% Print 147 154 -4% -4% -4% Total revenues 2,891 2,725 +6% +6% +6% ∆: % Change; ∆ CC: % Change in
Slide 31: Software revenues
Software revenues HY 2024 Revenues HY 2024 Software Organic growth HY 2024 (HY 2023): €2.9 billion Revenues €1.3 billion Total software: +7% (+7%) Split by Media Format Cloud software: +16% (+15%) Top software products Cloud CCH Axcess/ 39% TAA ▤ software ProSystem fx ServicesPrint revenues 3 eOrigi
Slide 32: Reconciliation: adjusted net financing costs to financing results
Reconciliation: adjusted net financing costs to financing results (€ million) HY 2024 HY 2023 Adjusted net financing costs (25) (10) Employee benefits financing component (1) (1) Change in fair value of financial assets - - Result on divestment of financial assets - - Divestment related results on e
Slide 33: IFRS profit and diluted EPS
IFRS profit and diluted EPS (€ million, unless otherwise stated) HY 2024 HY 2023 ∆ Adjusted operating profit 765 711 +8% Amortization & impairment of acquired intangibles and impairment of goodwill (74) (75) Results on divestments of operations 0 5 Other non-benchmark items1 (1) (9) Operating profit
Slide 34: Balance sheet
Balance sheet (€ million, unless otherwise stated) June 30, 2024 Dec. 31, 2023 June 30, 2023 Goodwill and intangible assets 5,992 5,920 5,983 Property, plant and equipment 78 79 81 Right-of-use assets 227 241 255 Deferred tax and other non-current assets 102 100 112 Total non-current assets 6,399 6,
Slide 35: Debt maturity profile
Debt maturity profile Debt Maturity Profile – June 30, 2024 (€ million) Net debt breakdown: € million Gross financial debt 3,522 Lease liabilities 258 Total gross debt 3,780 Less: Collateral 3 845 Less: Cash & cash equivalents 845 Net debt 2,932 708 619 557 564 535 512 135 61 70 10 9 1 Cash & cash 2
Slide 36: Currency impact
Currency impact HY 2024 Revenues by Currency British pound 3% Other 7% Euro 22% U.S. dollar 68% Impact in € million on Adjusted operating Average rates Revenues profit 1 Euro HY 2024 HY 2023 HY 2024 HY 2024 U.S. dollar 1.08 1.08 (3) (1) British pound 0.86 0.88 2 0 Canadian dollar 1.47 1.46 0 0 Austr
Slide 37: Growth rates
Growth rates ∆ ∆ CC ∆ OG % % Change % Net Effect* % % Currency in Constant Acquisitions Organic HY 2024 HY 2023 Change Impact Currencies & Disposals Growth Revenues Health 771 725 +6% 0% +6% 0% +6% Tax & Accounting 775 735 +5% -1% +6% -1% +7% Financial & Corporate Compliance 540 519 +4% 0% +4% 0% +4
Slide 38: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2023 • Appendix: Financial Supplement • Appendix: ESG Metrics 2024 Half-Year Results 38
Slide 39: Sustainability and ESG Metrics
Sustainability and ESG Metrics • ESG Ratings • Environmental • Social: employee culture • Social: diversity • Governance • Governance: board skills 2024 Half-Year Results 39
Slide 40: ESG Ratings
ESG Ratings Sustainalytics ESG Risk Rating MSCI ESG Rating 0 10 20 30 40 50 AAA AA Wolters Kluwer 13.2 A FactSet 16.5 BBB Intuit 16.9 BB Sage Group 16.8 B Aspen Technology 16.3 CCC Dassault Systèmes 14.2 Constellation Software 25.9 2019 2020 2021 2022 2023 2024 Sustainalytics risk rating: scale rang
Slide 41: Environmental
Environmental HY 2024 Progress Scope 1 & 2 Emissions per FTE1 • SBTi-validated emissions-reduction targets Metric tons CO2e emissions/FTE commit us to reduce scope 1 and 2 by 50% and 1.5 scope 3 by 30% by 2030 (2019 base year) • Office footprint (m2) reduced by 4% organically 1.0 1.08 compared to De
Slide 42: Social: employee culture
Social: employee culture Employee Engagement Score1 Belonging Score Wolters Kluwer High-Performing Norm 100 Glint Top 25% Belonging measures 100 the extent to which 84 employees believe 73 75 72 76 77 75 they can bring their 74 75 authentic selves to 76 77 78 work and be accepted for who they are 50
Slide 43: Social: diversity
Social: diversity Supervisory Board Members: % Female Executive Board Members: % Female 80% 80% 67% 57% 50% 50% 50% 50% 50% 50% 43% 43% 43% 43% 40% 40% HY 2024 With the appointment of HY 2024: 50% David Sides in 2024, this ratio is currently 50% 0% 0% 2018 2019 2020 2021 2022 2023 2018 2019 2020 202
Slide 44: Governance
Governance Product Development Spend Cybersecurity Maturity Score (includes operating expenses and capital expenditures) Indexed (2020 = 100.0) % of Total Revenues 120 12% 110 10% Based on NIST-CSF* HY 2024: 11% 100 Framework 8% Indexed 2020 = 100.0 90 6% 2018 2019 2020 2021 2022 2023 2018 2019 2020
Slide 45: Governance: board skills
Governance: board skills Ann Ziegler Jack de Kreij David Sides Heleen Kersten Sophie Vandebroek Chris Vogelzang • American, 1958 • Dutch, 1959 • American, 1970 • Dutch, 1965 • American, 1962 • Dutch, 1962 • Chair, Supervisory • Vice-Chair, • Member, Selection • Co-Chair, Selection • Member, Audit •