- Underlying revenue growth for 8% for first 9 months of year
- All divisions in positive territory, but smallest unit (exhibitions) up 32%
- Re-iterates full year outlook for sales and underlying operating profit to ‘remain above historical levels’
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“This statement neatly encapsulates the reasons why RELX is one of our largest holdings in our two UK-focused HL Select funds. The analytics company, that also operates one of the world’s largest exhibition companies, is continuing to grow on all fronts.
RELX reports underlying revenue growth of 8% year to date. This has been driven by 8% growth in its risk division, slower rates of growth in its legal and scientific, technical and medical divisions, which were offset by a 32% revenue surge in its exhibitions business.
The exhibitions division is not only bouncing back post-pandemic but has also succeeded in growing like-for-like event revenues to levels above what they achieved pre-pandemic. In the legal division, a new platform Lexis+AI is progressing well in customer testing, bringing the powers of generative AI to legal research and analysis.
In risk, growth is being driven by Financial Crime Compliance and digital ID verification and fraud protection tools. Some may look at the growth drivers in the risk division as a rather depressing summation of the modern era, but the key is, RELX identified the trends and positioned the business to benefit. RELX are predominantly selling IP-derived services, which makes for robust gross margins and strong cash flow. This dependability of income and cash has allowed the group to lift its dividend by over 250% since 2005 with no reductions along the way. Today’s statement suggests the wheels are still firmly on the wagon, with news that growth in the STM division is increasingly coming from products beyond the core academic journals being most welcome.
Much of the group’s revenues are earned on a recurring basis, either subscriptions or multi-period contracts, giving RELX good visibility of future income. How the market reacts today remains to be seen, for most investors will already have been expecting a statement along these lines, given the group’s predictability. So far, the shares have opened fractionally lower against the backdrop of a weak wider market opening.”
