AUS
NZ
UK
CA
USA
IND
Highlights:
- RWS Holdings projects flat revenue growth for a second consecutive year.
- Growth in AI-based products like TrainAI and Language Weaver offsets broader market challenges.
- Currency impacts continue to affect revenue and profit outcomes.
RWS Holdings (LSE:RWS), the language translation and content technology firm, saw its shares tumble by 15% following an announcement that revenue would remain static for a second consecutive year. The company revealed that, despite a 2% rise in underlying second-half revenue offsetting a similar decline in the first half, overall performance for the year ending September 30 will see flat results. This outcome reflects a mixed performance across its divisions, with strong recoveries in Regulated Industries and Language & Content Technology leading the way.
AI-driven product lines, including TrainAI, Language Weaver, and Evolve, showed notable growth, which RWS attributes to increasing demand for AI-powered solutions. Both Language Services and IP Services also experienced growth, though currency fluctuations took a toll on the annual revenue, expected to come in at £718 million—around 2% lower than last year. Adjusted profits, though within expected guidance, will also reflect a £3 million impact due to adverse currency conditions.
Looking ahead, RWS anticipates modest organic revenue growth at constant currency for the coming fiscal year, driven by volume increases in services like Language and IP, but with ongoing price pressures limiting higher growth potential. The company’s financial position improved over the last six months, with net debt reduced to £14 million by the end of September, thanks in part to better cash collection.
Chief executive Ian El-Mokadem acknowledged the challenges faced over the past year but expressed optimism about the progress in the second half. “The market has been more challenging than expected,” he said, “but we have driven significant improvements in performance across the group.” El-Mokadem added that AI-centred solutions, including TrainAI and Language Weaver, are showing strong traction and are well-positioned for future growth.
Despite the challenges, RWS continues to advance its AI-driven offerings, which it believes are critical to navigating the evolving market landscape. However, foreign exchange is expected to remain a headwind into 2024-25, impacting both reported revenue and adjusted profit figures. Following the update, RWS shares were trading at 135.38p, down by 23.82p, as the market reacted to the mixed results and currency-related pressures.
