RWS (RWS) H2 2024 earnings summary

Executive summary

• Returned to growth in H2 FY24, with 2% constant currency organic growth, led by AI-led solutions and improved performance across all divisions; AI-related products now represent 25% of group revenues.

• Group revenue for FY24 was £718.2m, down 2.1% reported, flat at constant currency; gross margin improved to 46.9%.

• Adjusted profit before tax fell 11% to £106.7m; adjusted EPS declined 7% to 21.6p.

• Highest ever Net Promoter Score (NPS) of +48, with 83 of the world’s top 100 brands as clients and 95% repeat revenue.

• CEO transition underway, with Ben Faes to succeed Ian El-Mokadem in January.

Financial highlights

• FY24 revenue: £718.2m, down 2.1% reported, flat at constant currency; organic revenue down 3%.

• Gross margin improved by 60bps to 46.9%, reflecting efficiency gains and restructuring.

• Adjusted profit before tax: £106.7m, down 11%; adjusted PBT margin 14.9%.

• Adjusted EPS: 21.6p, down 7% year-over-year.

• CapEx at 6.4% of revenue, expected to decline in FY25.

• Total dividend up 2% to 12.45p.

• Net cash at year-end: £61.5m; net debt: £12.9m.

• Cash conversion at 51%, expected to improve in FY25.

Outlook and guidance

• FY25 guidance: low single-digit organic constant currency growth, with volume growth offsetting price pressure.

• Gross margin expected to remain broadly flat; overheads to rise by ~£15m due to amortisation, inflation, and bonus reinstatement.

• Performance expected in line with market expectations; positive start to FY25.

• Continued investment in AI capabilities, SaaS growth, and efficiency programs.

• Free cash flow and cash conversion anticipated to improve as CapEx normalizes.