Wolters Kluwer 2024 Nine-Month Trading Update
Wolters Kluwer 2024 Nine-Month Trading Update
Alphen aan den Rijn, October 30, 2024 – Wolters Kluwer, a global
leader in professional information, software solutions and
services, today releases its scheduled 2024 nine-month trading
update.
Highlights
- Full-year 2024 guidance reiterated.
- Nine-month revenues up 6% in constant currencies and up 6%
organically.
- Recurring revenues (83% of total revenues) up 7% organically;
non-recurring revenues up 2%.
- Expert solutions revenues (59% of total revenues) grew
8% organically.
- Cloud software revenues (18% of total revenues) grew 16%
organically.
- Nine-month adjusted operating profit up 8% in constant
currencies.
- Nine-month adjusted operating profit margin increased.
- Nine-month adjusted free cash flow up 9% in constant
currencies.
- Third quarter benefitted from favorable timing of vendor
payments.
- Net-debt-to-EBITDA ratio 1.8x as of September 30, 2024.
- Share buyback 2024: on track to reach €1 billion by
year-end.
- Share buyback 2025: mandate signed to repurchase up to €100
million in January and February 2025.
Nancy McKinstry, CEO and Chair of the Executive Board,
commented: “I am pleased to report 6% organic growth through
the first nine months, supported by continued growth in recurring
revenues, led by our expert solutions including cloud-based
software platforms. Investments in product innovation remained at
record levels as we continue to pursue opportunities to support our
customers in their drive for improved performance, outcomes, and
efficiencies. We are on track to meet our full-year
guidance.”
Nine Months to September 30, 2024
Total revenues were up 6% in the first nine months of 2024,
despite a slightly weaker U.S. dollar in the third quarter.
Excluding the effect of currency, acquisitions, and divestments,
organic growth was 6% in the first nine months (9M 2023: 5%).
Recurring revenues (83% of total revenues) sustained 7% organic
growth (9M 2023: 7%; HY 2024: 7%). Within recurring revenues,
cloud software revenues grew 16% organically (9M 2023: 15%).
Non-recurring revenues (17% of total revenues) increased 2%
organically (9M 2023: 2% decline), benefitting from the improved
trend in Legal Services transactional fees in the Financial &
Corporate Compliance division compared to last year. Apart from
transactional fees, non-recurring revenues include print books,
on-premise software licenses, software implementation services, and
other non-subscription products and services.
Revenues from North America (64% of total) grew 6% organically
(9M 2023: 4%) while revenues from Europe (28% of total) grew 5%
(9M 2023: 7%). Asia Pacific & ROW (8% of total) grew 7%
organically (9M 2023: 8%).
Nine-month adjusted operating profit increased 8% in constant
currencies. The nine-month adjusted operating profit margin
improved, mainly driven by our Financial & Corporate Compliance
and Legal & Regulatory divisions. Restructuring expenses, which
are included in adjusted operating profit, increased. Product
development spend (CAPEX + OPEX) was maintained at 11% of revenues
(9M 2023: 11% of revenues).
Health: Nine-month revenues increased 6% in constant currencies
and 6% organically (9M 2023: 6%). Clinical Solutions recorded 8%
organic growth (9M 2023: 7%), led by clinical decision tool
UpToDate and our clinical drug databases (Medi-Span and UpToDate
Lexidrug). The UpToDate patient engagement solution delivered good
growth. Surveillance, compliance, and terminology software saw
improved organic growth, mainly reflecting the Invistics drug
diversion business acquired in June 2023. Health Learning, Research
& Practice recorded 3% organic growth (9M 2023: 4%), with good
organic growth in medical research against a challenging comparable
alongside improved growth in education and practice. In September
2024, we completed the previously announced divestment of Learner’s
Digest International (LDI).
Tax & Accounting: Nine-month revenues increased 5% in
constant currencies, reflecting the transfer of our Chinese legal
research solution (BOLD) from Tax & Accounting to Legal &
Regulatory at the start of the year. On an organic basis, revenues
grew 7% (9M 2023: 8%). The North American business recorded 7%
organic growth (9M 2023: 8%), driven by double-digit organic growth
in our cloud-based software suite, CCH Axcess. While outsourced
professional services continued to see strong growth, print books
and other non-recurring revenues recorded slower growth. Tax &
Accounting Europe sustained 7% organic growth
(9M 2023: 7%) and began integrating the cloud software
business acquired in September from the Isabel Group. Tax &
Accounting Asia Pacific & ROW organic revenues were stable.
Financial & Corporate Compliance: Nine-month revenues
increased 5% in constant currencies. On an organic basis, revenues
rose 5% (9M 2023: 1%), with recurring revenues up 6%
organically (9M 2023: 5%) and non-recurring transactional revenues
up 3% (9M 2023: 7% decline). Legal Services grew 7% organically
(9M 2023: 1%), supported by services subscriptions and 6%
growth in Legal Services transactions. Subscriptions to our
Beneficial Ownership Information (BOI) platform continued to build,
in line with expectations. Financial Services recorded 3% organic
growth (9M 2023: 0%), reflecting growth in recurring revenues and a
stabilization in transactional revenues.
Legal & Regulatory: Nine-month revenues grew 8% in constant
currencies, partly reflecting the transfer of BOLD into the
division and bolt-on acquisitions. On an organic basis, revenues
grew 5% (9M 2023: 4%). Legal & Regulatory Information Solutions
grew 5% organically (9M 2023: 4%), supported by 7% growth in
digital information solutions. Legal & Regulatory Software
revenues grew 7% organically (9M 2023: 5%), led by double-digit
organic growth at Legisway and continued growth in ELM
transactional revenues.
Corporate Performance & ESG: Nine-month revenues increased
7% in constant currencies. On an organic basis, revenues increased
by 7% (9M 2023: 8%), as recurring cloud software revenues
sustained growth of 12%, but non-recurring on-premise license fees
and software implementation services declined 2% (9M 2023:
0%). Our EHS & ESG1 unit (Enablon) delivered 14%
organic growth (9M 2023: 15%), driven by 21% growth in cloud-based
software revenues, partly offset by a decline in on-premise
software license revenues. Within Corporate Performance Management,
the CCH Tagetik CPM platform delivered 9% organic growth
(9M 2023: 14%), driven by 17% organic growth in cloud software
accompanied by a decline in on-premise software licenses and modest
growth in services. Our Audit & Assurance (TeamMate) and
Finance, Risk & Reporting (OneSumX) units posted modest organic
growth for the nine-month period.
Corporate: Costs decreased in constant currencies as increased
personnel costs were more than offset by lower miscellaneous
expenses.
Cash Flow and Net Debt
Nine-month adjusted operating cash flow increased 7% in constant
currencies, reflecting fewer large vendor payments in the third
quarter. Nine-month adjusted free cash flow increased 9% in
constant currencies.
Total dividends paid to shareholders amounted to €491 million in
the first nine months, including the 2023 final dividend and the
2024 interim dividend (withholding tax to be paid in October).
Total acquisition spending, net of cash acquired and including
transaction costs, was €332 million in the first nine months,
primarily related to the acquisition of Isabel Group assets
completed in September 2024. Share repurchases amounted to €762
million in the first nine months.
As of September 30, 2024, net debt was €3,356 million
(year-end 2023: €2,612 million), reflecting acquisition spending
and cash returns to shareholders. Twelve months’ rolling
net-debt-to-EBITDA was 1.8x (compared to 1.5x at year-end
2023).
Sustainability Update
Throughout 2024, we have continued to invest in programs
designed to attract, engage, retain, and develop talent globally.
Our workforce turnover rate remained stable throughout the first
nine months at around 10%. Human resources programs currently
emphasize career development and manager enablement while
continuing initiatives to support an inclusive and engaging
workplace culture. In the third quarter, we rolled out our Annual
Compliance Training, which covers cybersecurity, data privacy, and
business ethics. As of the end of October, over 99% of employees
globally have completed the exercise.
Our global real estate team made better-than-expected progress
in further rationalizing our office footprint, having been able to
exit certain office leases earlier than planned. Through the first
nine months of 2024, we have achieved an 8% organic reduction in
office space (m2) compared to year-end 2023, thereby reducing our
Scope 1 and 2 greenhouse gas emissions.
We continued work to align our sustainability reporting with the
European Sustainability Reporting Standards (ESRS) set by the EU
Corporate Sustainability Reporting Directive (CSRD).
Share Cancellation 2024
On September 13, 2024, we cancelled 10.0 million shares that
were held in treasury, as approved by shareholders at the AGM in
May 2024. Following this cancellation, the number of issued
ordinary shares is now 238,516,153. As of September 30, 2024, 235.8
million shares were outstanding, and 2.7 million shares were held
in treasury.
Share Buyback Program 2024 and 2025
In February 2024, we announced a 2024 share buyback program of
up to €1 billion. In the year to date, through October 28, 2024, we
have completed approximately 85% of this buyback, having
repurchased €853 million in shares (5.8 million shares at an
average price of €147.64). A third-party mandate is in place to
complete the final tranche of €147 million in the period starting
October 31, 2024, up to and including December 27, 2024.
For the upcoming year 2025, we have this week signed a
third-party mandate to execute up to €100 million in share buybacks
for the period starting January 2, 2025, up to and including
February 24, 2025.
We continue to believe this level of share buybacks leaves us
with ample headroom to support our dividend plans, to sustain
organic investment, and to make selective acquisitions. The share
repurchases may be suspended, discontinued, or modified at any
time.
Third party mandates are governed by the limits of relevant laws
and regulations (in particular Regulation (EU) 596/2014) and
Wolters Kluwer’s Articles of Association. Repurchased shares are
added to and held as treasury shares and are either cancelled or
held to meet future obligations arising from share-based incentive
plans. We remain committed to our anti-dilution policy which aims
to offset the dilution caused by our annual incentive share
issuance with share repurchases.
Full-Year 2024 Outlook
Our group-level guidance for 2024 is unchanged. See table below.
We expect sustained good organic growth in 2024, in line with the
prior year, and an increase in the adjusted operating profit
margin.
Full-Year 2024 Outlook |
|
Performance indicators |
2024 Guidance |
2023 Actual |
Adjusted operating profit margin* |
26.4%-26.8% |
26.4% |
Adjusted free
cash flow** |
€1,150-€1,200 million |
€1,164 million |
ROIC* |
17%-18% |
16.8% |
Diluted adjusted EPS growth** |
Mid- to high single-digit |
12% |
*Guidance for adjusted operating profit margin and ROIC is in
reporting currency and assumes an average EUR/USD rate in 2024 of
€/$1.10. **Guidance for adjusted free cash flow and diluted
adjusted EPS is in constant currencies (€/$ 1.08). Guidance
reflects share repurchases of €1 billion in 2024. |
|
In 2023, Wolters Kluwer generated over 60% of its revenues and
adjusted operating profit in North America. As a rule of thumb,
based on our 2023 currency profile, each 1 U.S. cent move in the
average €/$ exchange rate for the year causes an opposite change of
approximately 3 euro cents in diluted adjusted EPS2.
We include restructuring costs in adjusted operating profit. We
now expect 2024 restructuring expenses to increase to approximately
€20-€25 million (FY 2023: €15 million). We expect adjusted net
financing costs3 in constant currencies to be
approximately €55 million. We expect the benchmark tax rate on
adjusted pre-tax profits to be in the range of 23.0%-24.0% (FY
2023: 22.9%).
Capital expenditures are expected to be at the upper end of our
guidance range of 5.0%-6.0% of total revenues (FY 2023: 5.8%). We
continue to expect the full-year 2024 cash conversion ratio to be
around 95% (FY 2023: 100%) due to lower net working capital
inflows.
Our guidance assumes no additional significant change to the
scope of operations. We may make further acquisitions or disposals
which can be dilutive to margins, earnings, and ROIC in the near
term.
2024 outlook by division
Our guidance for full-year 2024 organic revenue growth by
divisions is summarized below. We expect the increase in full-year
adjusted operating profit margin to be driven by our Finance &
Corporate Compliance, Legal & Regulatory, and Corporate
Performance & ESG divisions.
Health: we expect full-year 2024 organic growth to be in line
with prior year (FY 2023: 6%). The division margin is expected to
decline slightly due to one-time write-offs to streamline the
portfolio.
Tax & Accounting: we expect full-year 2024 organic growth to
be slightly below prior year (FY 2023: 8%) due to slower growth in
non-recurring revenues and the absence of one-time favorable events
in Europe. The division margin is expected to decline slightly due
to increased product investment.
Financial & Corporate Compliance: we expect full-year 2024
organic growth to be higher than prior year (FY 2023: 2%) with
Legal Services transactions recovering and Financial Services
transactions stable.
Legal & Regulatory: we expect full-year 2024 organic growth
to be in line with or slightly better than prior year (FY 2023:
4%).
Corporate Performance & ESG: we expect full-year 2024
organic growth to be in line with or slightly higher than in the
prior year (FY 2023: 9%) as Finance, Risk & Reporting revenues
stabilize.
About Wolters Kluwer
Wolters Kluwer (EURONEXT: WKL) is a global leader in
information, software solutions and services for professionals in
healthcare; tax and accounting; financial and corporate compliance;
legal and regulatory; corporate performance and ESG. We help our
customers make critical decisions every day by providing expert
solutions that combine deep domain knowledge with technology
and services.
Wolters Kluwer reported 2023 annual revenues of €5.6 billion.
The group serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 21,400
people worldwide. The company is headquartered in Alphen aan den
Rijn, the Netherlands.
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and
are included in the AEX, Euro Stoxx 50, and Euronext 100 indices.
Wolters Kluwer has a sponsored Level 1 American Depositary Receipt
(ADR) program. The ADRs are traded on the over-the-counter market
in the U.S. (WTKWY).
For more information, visit www.wolterskluwer.com, follow us on
LinkedIn, Facebook, YouTube, and Instagram.
Financial Calendar
February 26, 2025
Full-Year 2024
Results
March 12, 2025
Publication
of 2024 Annual Report
May 6,
2025 First-Quarter
2025 Trading Update
May 15,
2025 Annual
General Meeting of Shareholders
May 19,
2025 Ex-dividend
date: 2024 final dividend ordinary shares
May 20,
2025 Record
date: 2024 final dividend
June 11,
2025 Payment
date: 2024 final dividend ordinary shares
June 18,
2025 Payment
date: 2024 final dividend ADRs
July 30,
2025 Half-Year
2025 Results
August 26,
2025 Ex-dividend
date: 2025 interim dividend ordinary shares
August 27,
2025 Record
date: 2025 interim dividend
September 18,
2025 Payment date:
2025 interim dividend
September 25,
2025 Payment date:
2025 interim dividend ADRs
November 5,
2025 Nine-Month 2025
Trading Update
Media |
Investors/Analysts |
Dave Guarino |
Meg Geldens |
VP, Head of Global
Communications |
Investor
Relations |
t +1-646 954
8215 |
t +31
(0)172-641-407 |
press@wolterskluwer.com |
ir@wolterskluwer.com |
|
|
Stefan Kloet |
|
Associate Director,
Global Communications |
|
m +31 (0)612 22 36
57 |
|
press@wolterskluwer.com |
|
Forward-looking Statements and Other Important Legal
Information
This report contains forward-looking statements. These
statements may be identified by words such as “expect”, “should”,
“could”, “shall” and similar expressions. Wolters Kluwer cautions
that such forward-looking statements are qualified by certain risks
and uncertainties that could cause actual results and events to
differ materially from what is contemplated by the forward-looking
statements. Factors which could cause actual results to differ from
these forward-looking statements may include, without limitation,
general economic conditions; conditions in the markets in which
Wolters Kluwer is engaged; conditions created by global pandemics,
such as COVID-19; behavior of customers, suppliers, and
competitors; technological developments; the implementation and
execution of new ICT systems or outsourcing; and legal, tax, and
regulatory rules affecting Wolters Kluwer’s businesses, as well as
risks related to mergers, acquisitions, and divestments. In
addition, financial risks such as currency movements, interest rate
fluctuations, liquidity, and credit risks could influence future
results. The foregoing list of factors should not be construed as
exhaustive. Wolters Kluwer disclaims any intention or obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Elements of this press release contain or may contain inside
information about Wolters Kluwer within the meaning of Article 7(1)
of the Market Abuse Regulation (596/2014/EU). Trademarks referenced
are owned by Wolters Kluwer N.V. and its subsidiaries and may be
registered in various countries.
1 EHS & ESG (formerly EHS/ORM) = environmental,
health, and safety & environmental, social, and governance.
2 This rule of thumb excludes the impact of exchange
rate movements on intercompany balances, which is accounted for in
adjusted net financing costs in reported currencies and determined
based on period-end spot rates and balances.
3 Adjusted net financing costs include lease interest
charges. Guidance for adjusted net financing costs in constant
currencies excludes the impact of exchange rate movements on
currency hedging and intercompany balances.
- 2024.10.30 Wolters Kluwer Nine-Month 2024 Trading Update
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