Rws Holdings Plc · LSE:RWS
Rws — FY2024 Earnings Presentation
40 slides from Rws's earnings presentation, Dec 12, 2024
Slide 1: RWS Full Year Results 2024
RWS Full Year Results 2024 A return to growth in second half, driven by AI-led solutions 12 December 2024
Slide 2: Ian El-Mokadem, CEO and Candida Davies, CFO
Ian El-Mokadem Candida Davies Chief Executive Officer Chief Financial Officer
Slide 3: Agenda
Agenda 01 Overview 02 Financial Review 03 Strategic and Operational Review 04 Current Trading and Outlook 05 Appendix
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 Attractive Unique Attractive Community Enviable client markets platform financial profile management profile £49bn market size
Slide 5: What we do
What we do Content value chain Analyse & Launch & We leverage technology and Create Collect Transform Engage Manage combine it with human expertise to deliver solutions We support our clients to create, collect, transform, Multiple mediums analyse & engage, launch and manage content This helps our c
Slide 6: Return to growth in the second half, driven by AI-led solutions
Return to growth in the second half, driven by AI-led solutions Return to growth AI & Technology progress Efficiency & transformation Group grew 2% OCC¹ in H2 AI-related products & services Gross Margin improved to 46.9% account for 25% of Group’s revenues Language Services & IP Services grew LXD –
Slide 7: FY24 represents further step towards a return to growth
FY24 represents further step towards a return to growth; progressive dividend maintained Revenue Gross Margin Adjusted PBT2 Adjusted PBT Margin2 Adjusted Basic EPS3 £718.2m 46.9% £106.7m 14.9% 21.6p - 2.1% (reported) + 58 bps - 11% - 151 bps - 7% 0.0% (OCC)1 FY23: £733.8m FY23: 46.3% FY23: £120.1m F
Slide 8: Pivoting successfully towards AI-led & more specialist solutions
Pivoting successfully towards AI-led & more specialist solutions Established services (FY24: 65% of Group revenue): • Localisation revenues in Language Services • Specialist localisation services in Regulated Industries and IP Services • AI / technology being harnessed to deliver volume growth more
Slide 9: Human in the loop
Complete set of tech-enabled solutions for all client needs HIGH Key technology Solution Client characteristics components Genuine Intelligence Specialised services - Highly technical (e.g. Linguistic - Premium content Blending artificial and human Trados / Term bases Validation, IP - High touch (of
Slide 10: Agenda
Agenda 01 Overview 02 Financial Review 03 Strategic and Operational Review 04 Current Trading and Outlook 05 Appendix
Slide 11: Income statement
Income statement Reported revenue down -2.1% FY ended FY ended FY24 Actuals • Like-for-like1 revenue decline -3.1% (adjusting for Propylon and PatBase) 30-Sep-24 30-Sep-23 vs. FY23 • Organic constant currency2 0.0% (£m) (£m) (£m) Revenue 718 734 -16 Gross profit 336 340 -3 Gross margin increased to
Slide 12: Group revenue bridge
Group revenue bridge -2% Reported Reported Organic constant revenue YoY currency1 revenue YoY +4% +0% -4% 0% OCC1 Language Services -1% +3% Regulated Industries -10% -7% Language & Content Technology +4% -1% IP Services -2% +3% Group -2% 0% 1 1 Adjusted to reflect a like-for-like comparison between
Slide 13: Net cash bridge & cash conversion
Net cash¹ bridge & cash conversion FY24 FY23 Cash conversion3 51% 74% Decrease in cash conversion driven by peak investment in transformation and working capital movement Cash generated from operations £95m £25m cash received as initial consideration for PatBase in May 2024 £50m share repurchase pro
Slide 14: Balance sheet
Balance sheet As at 30 Sept 2024 As at 30 Sept 2023 (£m) (£m) Non-current assets Non-current assets 928.2 1,025.6 • Goodwill (£571m) decreased by £38m due to Trade and other receivables 211.2 212.3 FX impact Other current assets 5.6 1.7 • Other non-current assets (£357m) decreased by £60m due to the
Slide 15: Group currency analysis
Group currency analysis The company’s hedging policy is to hedge 50% of net surplus cash flows on an annual basis Currency management remains a priority USD surplus being actively managed: • Natural hedge through USD debt • Hedged at transactional level for major currencies: • USD/GBP forwards in pl
Slide 16: Tracking our Growth Model and ESG progress
Tracking our Growth Model and ESG progress Measure FY23 FY24 1 Organic revenue growth at constant currency -6.0% 0.0% Building long-term client relationships 2 Net Promoter Score (Rolling 12 months) 42 48 3 Repeat revenue rate (Services) 95% 95% 1 Deepening our cultural and technical expertise 1 Inc
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 Finance – phase 1 ERP implementation & SSC completion (Nov 24) Technology product improvements made and transitions und
Slide 18: Agenda
Agenda 01 Overview 02 Financial Review 03 Strategic and Operational Review 04 Current Trading and Outlook 05 Appendix
Slide 19: Strong portfolio, unique production platform
Strong portfolio, unique production platform Operating Language Regulated Language and IP Services divisions Services Industries Content Technology Localisation solutions Life sciences Linguistic AI – neural MT Patent translation for multiple verticals & filing Financial services Language technology
Slide 20: Language Services
Group revenue share: FY24 – 46% (FY23: 45%) Language Services OCC¹ growth – H1: +2% H2: +3% First half OCC¹ growth momentum maintained, underpinned by delivery of TrainAI programmes and further Evolve wins Performance Revenue¹ (£m) Adjusted operating 3% organic growth in constant currency, driven by
Slide 21: Regulated Industries
Group revenue share: FY24 – 20% (FY23: 22%) Regulated Industries OCC¹ growth – H1: -12% H2: -2% Impact of corrective actions delivered strong second half recovery, accompanied by continued progress with Linguistic Validation Performance Revenue¹ (£m) Adjusted operating Encouraging second half perfor
Slide 22: Language and Content Technology
Group revenue share: FY24 – 20% (FY23: 19%) Language and Content Technology OCC¹ growth – H1: -4% H2: +3% Second half recovery driven by improving performance in content technology, alongside strong year in Linguistic AI, particularly Language Weaver Performance Revenue¹ (£m) Adjusted operating Reve
Slide 23: IP Services
Group revenue share: FY24 – 14% (FY23: 14%) IP Services OCC¹ growth – H1: +4% H2: +2% Return to OCC¹ growth driven by strong Eurofile revenues and good growth in renewals Performance Revenue¹ (£m) Adjusted operating Return to growth with 3% organic constant currency growth profit² (£m) 102.3 26.9 99
Slide 24: M&A – continuing to look at range of attractive opportunities
M&A – continuing to look at range of attractive opportunities Priorities New capabilities in AI technology Localisation assets & technology-enabled language Assets that broaden our natural AI data with attractive end services in text & multimedia language processing capabilities services market expo
Slide 25: Agenda
Agenda 01 Overview 02 Financial Review 03 Strategic and Operational Review 04 Current Trading and Outlook 05 Appendix
Slide 26: FY25: Current Trading and Outlook
FY25: Current Trading and Outlook Growth outlook Investing to pivot Current trading & full year Tailwinds: Continue to pivot in response to industry Expect to deliver modest organic revenue transition and invest in: growth at constant currency, with growth in • Appetite for AI & specialised solution
Slide 27: Q&A
Q&A
Slide 28: Agenda
Agenda 01 Overview 02 Financial Review 03 Strategic and Operational Review 04 Current Trading and Outlook 05 Appendix
Slide 29: FY25: Summary Guidance
FY25: Summary Guidance Financial guidance x • Low single digit OCC growth, volume offsetting price • PatBase year on year impact on operating profit -£3m pressure • Depreciation c.£15m / amortisation of non-acquired • Gross Margin broadly flat intangibles c.£25m and acquired intangibles c. £45m • Ov
Slide 30: 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 LLMs / Generative AI Neural Machine Translation (NMT) Statistical Machine CAT tools / Translation (SMT) Translation Terminology Manageme
Slide 31: 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 R&D Responsible Internal enterprise-grade leadership investment player deployment solutions Trados >40 c£35m* c.55% Data Privacy Tridion patents FY24 MT first Language >100 Weaver peer- >500 Secur
Slide 32: Evolve – award-winning linguistic AI solution
Evolve – award-winning linguistic AI solution How Evolve helps clients 1) secure AI adoption 2) faster time to market 3) significant efficiencies 4) quality at scale 5) self-improving Continuous learning from linguistic data via feedback loop > Quality Estimation > 3 further translations > Post-edit
Slide 33: TrainAI integrates seamlessly into our clients' AI journey
TrainAI integrates seamlessly into our clients’ AI journey How TrainAI helps clients - 1) domain expertise 2) data/content creation 3) Reinforcement Learning from Human Feedback (RLHF) 4) risk mitigation 5) locale support CUSTOMER Choose Define LLM Build model Model Tuning Monitor model a model obje
Slide 34: Language eXperience Delivery (LXD) – increasingly critical to the Group
Language eXperience Delivery (LXD) – increasingly critical to the Group Increased volume AI dominant Supply chain Supply chain consolidation expertise Now managing c.72% of c.55% of LS, RI & IP Services Language Services, content is machine LXD manages all language Sourcing & managing large Regulate
Slide 35: Investments governed by capital allocation policy
Investments governed by capital allocation policy Continued strong cash generation and disciplined capital allocation Invest to accelerate Appropriate capex Dividend Acquire for Share organic growth & and prudent further growth repurchase maintain BAU leverage Invest in growth Return to more Progres
Slide 36: Deployment: 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 Tech Services TrainAI Language Weaver Trados Client Products & Solutions Choose the right AI Train your AI with dependable, Understand content in Deliver translation projects strategies and t
Slide 37: ESG progress
ESG progress Environment Social & community Governance Assurance Science-Based Targets RWS Foundation supporting Joined Meta’s Open Loop Awarded Silver Medal by approved by SBTi Trados Accessibility Project programme (Feb 24) EcoVadis – 2nd year running (improving product for the Scope 1 & 2: 54.6%
Slide 38: KPI definitions
KPI definitions Measure Definition Calculated as a like-for-like com parison between reporting periods and assumes constant currency 1 Organic revenue growth at constant currency across both reporting periods Building long-term client relationships 2 Net Promoter Score Rolling 12 month score from al
Slide 39: Shareholders
Shareholders As of 30 November 2024 24.5% 13.8% 5.8% 3.6% Andrew S Brode Liontrust Asset Octopus Jupiter Asset Management Investments Management RWS Full Year Results 2024 39
Slide 40: About RWS Holdings plc
RWS Holdings plc is a unique, world-leading provider of technology-enabled language, content and intellectual property solutions. Through content transformation and multilingual data analysis, our combination of AI-enabled technology and human expertise helps our clients to grow by ensuring they are