RWS (RWS) H1 2024 earnings summary

Executive summary

• Group revenue for H1 2024 was £350.3m, down 4% year-over-year, with organic constant currency revenue declining 2%, but growth returned in Q2 and positive momentum is expected into H2.

• AI-related products and services now exceed 25% of group revenues, with new launches such as Evolve and HAI and strong client interest driving future growth.

• Language Services and IP Services divisions returned to growth on an organic constant currency basis, while Regulated Industries faced headwinds but showed signs of recovery.

• Gross margin was maintained at 45.7% despite revenue softness, reflecting cost efficiencies and operational improvements.

• Interim dividend increased by 2% to 2.45p per share, reflecting a progressive capital allocation policy and confidence in future prospects.

Financial highlights

• Adjusted profit before tax was £45.6m (13% of revenue), down 16% year-over-year; adjusted EPS was 9.1p, down 14%.

• Net debt at period end was £38.9m, after significant outflows for dividends and share buybacks; cash and cash equivalents were £64.6m.

• Cash conversion dropped to 30%, impacted by investments and temporary lengthening of debtor days.

• CapEx was 6.9% of revenue, in line with transformation investment profile.

• Free cash flow was £10.2m, down from £34.8m in the prior period.

Outlook and guidance

• Full-year performance is expected to be in line with market expectations, with stronger H2 revenue and recovery in higher-margin segments.

• FY24 consensus: revenue £735.1m, adjusted PBT £113.8m, adjusted EPS 22.8p.

• Continued investment in AI capabilities, product launches, and business transformation to drive long-term growth.

• CapEx expected to normalize to ~4% of revenue post-2024 as transformation programs complete.