RWS Holdings Shares Decline Following FY24 Update
RWS Holdings plc, a leading provider of technology-enabled language and intellectual property services, announced that it has returned to growth in the second half of the fiscal year 2024 (FY24), driven by strong performance from its AI-focused solutions. The company is set to release its full-year results on December 12, 2024.
Following the update, the stock dropped by 17% as of 11:23 AM London time. RWS reported a 2% increase in organic constant currency (OCC) revenue for the second half of FY24. This increase offset the 2% decline reported in the first half, bringing the full-year figures in line with last year's levels. This growth is attributed to significant improvements in the Regulated Industries and Language & Content Technology sectors. The company highlighted the progress of AI-driven products such as TrainAI, Language Weaver, and Evolve, which contributed to the growth of Language Services and IP Services.
Despite the positive OCC revenue growth, reported revenues for FY24 are anticipated to decline by 2% to £718 million due to adverse currency movements. Nevertheless, RWS expects to achieve adjusted pre-tax profit (PBT) within market expectations before currency adjustments. The company also improved its net debt position, reporting a decline from £39 million as of March 31, 2024, to approximately £14 million by the end of September 2024.
Looking ahead to the fiscal year 2025 (FY25), RWS anticipates modest organic revenue growth in constant currency, as increased volumes are expected to balance ongoing pricing pressures. However, currency fluctuations are projected to continue negatively impacting reported revenue and adjusted PBT.
RWS CEO Ian El-Mokadem expressed confidence in the company's performance amid challenging market conditions and highlighted investments in growth initiatives and efficiency actions aligned with the medium-term strategy established in 2022. El-Mokadem emphasized the momentum gained by AI-centric solutions like TrainAI and Language Weaver and the company's investment in sales effectiveness and efficiency supported by its unique LXD platform. He believes these factors position RWS to emerge strongly from the current market transition.