Rws Holdings Plc · LSE:RWS
Rws — H1 2024 Earnings Presentation
35 slides from Rws's earnings presentation, Jun 12, 2024
Slide 1: RWS Half Year Results 2024
RWS Half Year Results 2024 12 June 2024 1 © 2024 RWS
Slide 2: Ian El-Mokadem, Chief Executive; Candida Davies, Chief Financial Officer
Ian El-Mokadem Candida Davies Chief Executive Chief Financial Officer Officer 2 © 2024 RWS
Slide 3: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Discussion / Appendix 3 © 2024 RWS
Slide 4: Who we are
Who we are A unique, world-leading provider of technology-enabled language, content and intellectual property services; well-diversified, with many leading market positions Clear structural demand £47bn market size Attractive drivers markets >8,000 corporate clients Proprietary language and in 159 c
Slide 5: What we do
What we do Using a unique combination of technology and human expertise, we support our clients to create, collect, transform and analyse, launch and manage content This helps our clients grow, by ensuring they are understood anywhere, in any language Content Analyse & Launch & Create Collect Transf
Slide 6: Encouraging trends and start to H2 support full year performance in line with expectations
Encouraging trends and start to H2 support a full year performance in line with market expectations H1 FY24 performance Encouraging interest in TrainAI LXD Evolve, pioneering new 2 divisions returned to linguistic AI solution growth; improving trend vs. Starting to broaden client Increasing source o
Slide 7: AI – RWS's right to win
AI – RWS’s right to win Increasing appetite from clients to harness AI to meet their language, content & other emerging needs Data creation Technology & validation expertise capability Ability to deploy large Proprietary communities Deep capabilities… technology for human …enabling continuous innova
Slide 8: Evolve & HAI join established set of AI-related solutions
Evolve & HAI join established set of AI-related solutions RWS supporting clients throughout their AI journey EXPLORING AI BUILDING AI USING AI Tech Services TrainAI U S I N G Weaver Language Language A I Weaver Trados Train your AI Understand Deliver translation CLIENT PRODUCTS & SOLUTIONS Choose th
Slide 9: Language eXperience Delivery (LXD) – increasingly critical to the Group
Language eXperience Delivery (LXD) – increasingly critical to the Group Increased AI dominant Supply chain Supply chain volume consolidation expertise • Now managing 73% • >60% of LS & RI • All language • Sourcing & managing of Language content is machine specialists, in-house large communities for
Slide 10: H1 FY24 represents further step towards a return to growth
H1 FY24 represents further step towards a return to growth; progressive dividend maintained REVENUE GROSS MARGIN ADJUSTED PBT2 ADJUSTED PBT MARGIN2 ADJUSTED BASIC EPS3 £350.3m 45.7% £45.6m 13.0% 9.1p - 4.4% (reported) + 0 bps - 16% - 190 bps - 14% - 2.0% (OCC)1 HY23: £366.3m HY23: 45.7% HY23: £54.4m
Slide 11: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Discussion / Appendix 11 © 2024 RWS
Slide 12: Income statement
Income statement • Reported revenue down -4.4% year on year: 6 months ended 6 months ended HY24 Actuals 31-Mar-24 31-Mar-23 vs. HY23 • Like-for-like1 revenue decline -6.1% (adjusting for Propylon) (£m) (£m) (£m) • Organic constant currency2 -2.0% Revenue 350.3 366.3 (16.0) • Gross margin maintained
Slide 13: Group revenue bridge
Group revenue bridge REPORTED ORGANIC CONSTANT REVENUE CURRENCY1 GROWTH REVENUE GROWTH -4.4% Reported -3% Language Services +2% +3% -2.0% OCC +0% -15% Regulated Industries -12% -5% Language & Content +2% Technology -3% +0% IP Services +4% -4% Group -2% 1 Adjusted to reflect a like-for-like compariso
Slide 14: Net cash bridge & cash conversion
Net cash¹ bridge & cash conversion HY24 HY23 Cash conversion² 30% 85% • Net cash flow from operating activities: £37.4m • Cash conversion impacted by: • Weaker business performance • Continued planned investments; and • Temporary lengthening of debtor days, expected to normalise by year end • £25m c
Slide 15: Balance sheet
Balance sheet As at As at Non-current assets 31 March 2024 30 September 2023 (£m) (£m) • Goodwill decreased by £15m due to the impact of FX Non-current assets 990.5 1,025.6 • Intangible assets have decreased by £15m due to the Trade and other receivables 227.3 212.3 impact of FX (£7m) and associated
Slide 16: Tracking our Growth Model and ESG progress
Tracking our Growth Model and ESG progress Measure FY23 H1 FY23 H1 FY24 1 Organic revenue growth at constant currency -6.0% -6.8% -2.0% Building long-term client 2 Net Promoter Score (Rolling 12 months) 42 42 36 relationships 3 Repeat revenue rate (Services) 95% 98% 93% Deepening our cultural 1 1 25
Slide 17: Significant progress made with business transformation launched in FY22
Significant progress made with business transformation launched in FY22 Delivered (FY22-FY24) To follow (FY25-27) • Key growth initiatives launched & contributing Existing programmes: • Technology product improvements made and • Finance – Phase 2 SSC & ERP implementation transitions underway • Compl
Slide 18: Investments governed by capital allocation policy
Investments governed by capital allocation policy Continued strong cash generation and disciplined capital allocation Continue to support divisions to drive base case organic growth BAU spend and sustain infrastructure Invest to accelerate organic Invest in growth areas, technology products and infr
Slide 19: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Discussion / Appendix 19 © 2024 RWS
Slide 20: Strong portfolio, unique production platform
Strong portfolio, unique production platform Language Regulated Language and IP Services Services Industries Content Technology • Patent translation & OPERATING DIVISIONS • Localisation solutions • Life sciences • Linguistic AI - neural filing to multiple verticals MT • Financial services • Search,
Slide 21: Language Services
Group revenue share: HY24 – 45% (FY23: 45%) Language Services H2 focus Return to organic constant currency growth • Further growth momentum with TrainAI • Securing new Evolve wins Performance • Roll out of marketing campaign to support HAI • 2% organic growth in constant currency, driven by growth i
Slide 22: Regulated Industries
Group revenue share: HY24 – 21% (FY23: 22%) Regulated Industries H2 Focus Market conditions remain challenging, actions being taken to improve performance with early • Securing Evolve wins • Sustaining early signs of revenue improvement in April & May signs of progress • Further cost actions for FY2
Slide 23: Language and Content Technology
Group revenue share: HY24 – 20% (FY23: 19%) Language and Content Technology Good progress with AI-centred solutions (Language H2 focus Weaver & Evolve) and SaaS licences, offset by • Sustaining momentum with Language Weaver and Evolve weaker performance in content technology • Recovering sales perfo
Slide 24: IP Services
Group revenue share: HY24 – 15% (FY23: 14%) IP Services H2 Focus Return to organic constant currency growth driven by strong Eurofile revenues, with good drop • Worldfile revenue growth through to profit • Continued volume transition into LXD and adoption of LXD working practices • Preparing for dep
Slide 25: M&A – continuing to look at range of attractive opportunities
M&A – continuing to look at range of attractive opportunities Localisation New Assets that Data PRIORITIES assets with capabilities in broaden our annotation attractive AI technology natural language solutions end market & technology-enabled processing capabilities exposure language services All tar
Slide 26: ESG progress
ESG progress Environment Social & Governance Assurance community Science-Based Targets Joined Meta’s Open Loop Awarded Silver Medal by approved by SBTi programme EcoVadis – 2nd year running RWS Foundation supporting Trados Accessibility Project Scope 1 & 2: 54.6% & matching local Objective to develo
Slide 27: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Discussion / Appendix 27 © 2024 RWS
Slide 28: FY24: Current trading and outlook
FY24: Current trading and outlook • We continue to expect revenue to be stronger in the second half, building on an improving OCC trend, and driven by: Growth • Some recovery in higher margin parts of the business • Impact of H1 wins in the TrainAI and Evolve Investing to • Continuing to invest in A
Slide 29: Q&A
Q&A 29 © 2024 RWS
Slide 30: Agenda
Agenda Group Overview Group Financials Operational Performance Summary Appendix 30 © 2024 RWS
Slide 31: Technology evolution and market growth
Technology evolution and market growth Successive technology waves have improved efficiency/productivity and lowered price/cost-to-serve Localisation market growth Statistical Machine 2020s Translation (SMT) 2010s Terminology databases / electronic 2000s dictionaries LLMs / Generative AI 1990s Neura
Slide 32: 20+ years' AI experience gives us deep capability and a competitive moat
20+ years’ AI experience gives us deep capability and a competitive moat Established Thought Technology Responsible Internal enterprise- leadership R&D player deployment grade solutions investment Trados c£35m* >60% >40 Data Tridion patents Privacy FY23 MT first Language >100 Weaver peer- 500 Securi
Slide 33: Shareholders
Shareholders As of 30 April 2024 Top shareholders Holding (%) Andrew S Brode 24.5 Liontrust Asset Management 13.4 Octopus Investments 5.4 Jupiter Asset Management 3.4 33 © 2024 RWS
Slide 34: KPI definitions
KPI definitions Measure Definition Building long-term client relationships 1 Organic revenue growth at constant currency Calculated as a like-for-like comparison between reporting periods and assumes constant currency across both reporting periods 2 Net Promoter Score Rolling 12 month score from all
Slide 35: About RWS
About RWS RWS Holdings plc is a unique, world-leading provider of technology-enabled language, content and intellectual property services. Through content transformation and multilingual data analysis, our combination of AI-enabled technology and human expertise helps our clients to grow by ensuring