RWS Holdings plc

Good morning, everyone, and thank you for joining us this morning. We're here today to mark a definitive shift in the RWS story. Over the next hour, we're going to walk you through how we are accelerating our evolution from a service-led company into a technology-first future. This isn't just a plan. It's a shift that's already underway. I'm Ben Fass, the CEO of RWS, and joining me today is Candy Davis, our CFO, who's been instrumental in navigating this year of change. And I'm also pleased to have Christina Scott here, our Chief Product and Technology Officer, who's driving the innovation that you will hear about. In terms of our agenda, Candy will kick us in with the financial detail for FY25. I'll then return to deep dive into the new growth strategy we've put in place, including a closer look from Christina at our product technology roadmap, which is central to this pivot. And finally, we'll wrap up with our outlook and guidance for FY26 and beyond. Before I hand over to Candy, let me set the context for the journey that we've been on, particularly since we last spoke in June. Looking back, FY25 was a definitive inflection point for RWS. While we navigated a complex environment, the headline here is our trajectory. We saw a strong exit rate and a distinct positive shift in dynamic during the second half. We haven't stood still. We fundamentally reshaped the company to be fit for the future. First, we refocused our strategy. We redesigned our operating model to be more agile, accountable, and efficient. And this new structure is not just a concept. It's already been fully operational since the start of FY26 in October. We've also injected fresh energy into the leadership team with new talents and successfully relaunched our brand to reflect on new direction. Crucially, we see strong momentum in AI services a trend that we see accelerated into FY26. Our acquisition of PaperCup is fully integrated, giving us leading capabilities in the vital AI for video space. To win in this fast-paced tech environment, you cannot work in isolation. And I'm proud of the deep collaboration that we've established with major tech players. Partnerships that really allow us to build, to develop, and to distribute superior products. And finally, this is really key, our SaaS revenue is continuing to climb. It now accounts for 46% of our licensed revenue, up from 39% last year. This shift is vital because it builds a predictable recurring revenue base. And Christina will show you shortly how our robust product pipeline is fueling this transition. Looking ahead, FY26 is all about accelerating that momentum and demonstrating a clear return to profitable growth. Our focus is simple and threefold. We're targeting high growth opportunity. We are executing an ambitious product innovation roadmap. and we are driving efficiencies to fuel this transformation. To put it simply, we're focusing our sales effort on the most attractive market, we're building products that our clients need, and we're running a leaner and smarter organization. With that context, I will hand over to Candy to walk you through FY25. Thank you.

Thanks, Ben. So let me take you through the financial performance for the year ended 30th September 25. Overall, it was a challenging year financially, but one where management took decisive action on cost control whilst also focusing on building a refreshed operating model designed to lead the shift to a technology-first AI solutions partner. As you can see, we reported revenue of 690 million, reflecting an organic constant currency decline of 0.7%. Gross margin declined year-on-year by 350 basis points to 43.4%, primarily impacted by adverse mix. I'll give you some more colour on that shortly. Adjusted profit before tax was 60.4 million, with a strong delivery of 42 million in the second half, following 18 million in the first half. This translates to an adjusted basic EPS of 12.1 pence. Adjusted EBITDA was £101 million and adjusted EBITDA margin 14.6%, down 500 BIPs on the prior year. Capital expenditure was £26 million versus £46 million last year, which reflects both lower spend related to the transformation initiatives and the change in the capitalisation treatment of some of our technology R&D. Operational free cash flow was £80 million, a 46% increase year-on-year, supported by improvement in our networking capital as well as the lower capex. Finally, I can confirm that the Board is recommending a final dividend of £4.6, bringing the total dividend per share for the year to £7.05, following a reset of the dividend in line with the adjusted profit performance in the year. As I'm reporting on FOLIA25 results, this slide shows the legacy structure, and Ben will talk to the new segments and their performance later in the presentation. The FOLIA24 OCC revenue adjusts FOLIA24 reported revenues by subtracting the predisposal PAT base revenue and restating these numbers at FOLIA25 FX. Year on year in organic constant currency, the FOLIA25 revenue at the group level was broadly flat, with repeat revenues stable at 95%, a slight headwind from price, and promising new logo wins. From a divisional standpoint, IP services revenue was flat on a constant currency basis, with strong growth in renewals offset by the decrease in Eurofile on the back of lower grant applications. Language services grew 3% in constant currency, with our data services AI-led proposition TrainAI performing strongly within enterprise clients, and we continue to win new business across the division. From a core localization perspective, we saw clients grow more confident in machine-first translation for non-specialized services. In regulated industries, the OCC decline of 10% is primarily driven by a linguistic validation business due to a reduced number of projects and client delays, as well as some softer trading conditions and spending cuts in both life sciences and finance and legal. Fresh management and the new operating model, which places RI within the broader transform segment, was put in place from October 1st, is expected to resolve some internal operational issues whilst also moving forward on a leaner cost base. Finally, our language and content tech division was flat year-on-year in organic constant currency terms. SAS revenues grew 14% versus prior year, and as Ben's mentioned, this now represents 46% of licensed revenue versus the 39% last year. Moving to gross margin, which declined 350 bps year-on-year to 43.4%, driven largely by some unfavorable mix dynamics. And I'll highlight the four main areas. Firstly, we have a number of new growing services which are currently lower margin, such as renewals and IP services, train AI, and the geographic area of APAC within language services. As these areas grow, we expect to see margins improve through both automation and economies of scale. Secondly, as mentioned at the half year, we experienced some teething issues as a couple of larger clients moved to newer automated delivery models. The majority of these issues have now been resolved through tech and process improvements and, to some degree, increased pricing. We also continue to drive SAS revenues to secure recurring revenue that come with slightly lower margins. And finally, this year, we also experienced a lower than expected revenue in the higher margin areas of Eurofile within IP services and linguistic validation in regulated industries. Looking at price, price was a tailwind in our language and content tech division by increases through renewals. We did experience modest downward price pressure in our translation services as clients expect continued efficiencies from AI and automation. But you can see that in-year efficiencies supported 150 bits margin expansion, which more than offset this pressure. As machine translation consumption increases, we continue to adapt our processes, tooling and overall cost structure to drive the benefit of tech first and protect and grow our gross margin. As mentioned briefly on the previous slide, we're actively pursuing operational and functional efficiency through a combination of process improvements, automation and simplification, leading to headcount offshoring and reduction. The total FTE at the end of full year 25 was just over 7,600, a reduction of over 400 or 6% versus a year ago. Please note these figures exclude contractors, freelancers and other casual workers. This, alongside continued offshoring, equates to annualised overhead savings of about £14 million, 50% of which was realised in the year. As a result, revenue per FTE increased 5% in folio 25 to 90k. So moving to the adjusted profit before tax bridge, where the waterfall summarises the main impacts year on year. And firstly, looking at the trading items, where the decline in volume, mix and price has been fully offset by the efficiency initiatives. These include the 150 bits seen in gross margin from headcount reduction, offshoring and other non-comp and Venn initiatives, the reduction in overhead, headcount and offshoring, and some additional one-off items such as reduced sales commission and other discretionary cost control measures. And then the non-trading items for £32 million. There was a £10 million overall impact from increased amortisation related to historic investments and the change in the capitalisation treatment of technology R&D. Whilst gross R&D investment levels remained broadly flat year on year, as explained at the half year, we have expensed more technology investment this year rather than capitalising it, and the offsetting impact is seen in the CapEx number. And overall, FX impact in the year was £20 million adverse, with the strengthening of the pound versus the dollar. The full year 25 average of the cable was £131 versus £127 last year, and the euro £118 versus £117. Adjusting items totaled 160 million in folio 25. This is primarily due to a non-cache goodwill impairment charge of 88 million relating to our core localisation services within both RI and language services and the weaker performance of linguistic validation. It also reflects the shift in direction towards a technology first offering and more technically the increase in WAC rates. Exceptional items are mostly restructuring and integration costs, enabling the new strategic direction and leaner operating model. And finally, acquisition costs in full year 25, which were primarily the deferred consideration for proper loan acquisition. Moving to cash, the business remains strongly cash generative with operational free cash flow of £80 million up £25 million year on year. This increase reflects working capital improvements and tighter capex discipline more than offsetting the decline in adjusted EBITDA. The group had a net debt position of £25 million at 30 September, an increase of debt of £12 million versus a year ago. Working capital focus delivered a £13 million improvement, driven by enhanced receivables collection and payables optimisation, and the increase in deferred revenue as SAS licences grow. Capital expenditure reduced this year to £26 million of revenue, as I said, reflecting both the reduction in the spend in internal transformation initiatives and the change in capitalisation treatment. And the acquisition, exceptionals and other includes primarily exceptional items and acquisition costs as discussed in the previous slide, whilst the dividends reflect the interim dividend for full year 25 and the final dividend for full year 24. Finally, I'm happy to confirm that we completed an amend and extend of our RCF in early October, extending the facility to $285 million through to October 2029. And with that, I'll pass back to Ben.

Right, so turning now to our growth strategy, I want to share the vision we have for RWS and the specific pillars that we are executing to get there. RWS has evolved significantly over the last few years, and it's a shift that isn't always obvious when you look at the numbers quarter on quarter. But with the strategy we're presenting today, we are accelerating that evolution to become a true technology-first leader. The best way to understand this evolution is to look at our revenue mix. Today, more than a quarter of our revenue is already derived from AI-related products and services, whether that's from data services to fine-tune client models or AI workflows to adjust the output of AI. Sorry. We expect this to become our dominant revenue stream in the future, exceeding 50% of our revenue share. We see the same trajectory in SaaS. We've moved rapidly from 24% to 46% today of our licensed revenue, and we project this will climb to over 75%. To give you a sense of scale, this year, our technology processed one trillion words. That's roughly the equivalent of half the text of all of the public internet out there. And to do that manually, to give a sense also of that scale, you would need about one million linguists working full year, full time for a year to do this. Yet, even one trillion words is a fraction of the demand that we see coming. we see a clear path to our technology translating over 5 trillion words in the future. Conversely, traditional localization, where humans handle every step, used to be our largest segment. Today, it's less than a third, and we expect this to settle just below 20%. Now, we do see a natural flaw there. There is a stable baseline of regulated work that will always require expert human validation. And this creates a natural high-value flow for this segment. Because there are clients who actually restrict us to use machine translation for policy reasons. And there's also a long tail of rare languages where AI isn't quite ready. The direction of travel isn't able, but we see this flow. So why is this shift happening? And it all starts with our client. Their fundamental goals haven't changed. They still need to reach new market, new audience, to protect their IP, to ensure compliance, to do this in a safe and secure way. What has changed is the speed and scale required to do this. Speed is now really the currency. Content breaks daily. And if localization lags, that content becomes irrelevant. Time to market is really everything. At the same time, the environment that they're operating in is exploding. We are past the tipping point where actually half of the Internet is AI generated. Content is becoming multimedia first. It's hyper-personalized. It's hyper-personalized by audience and by channels like TikTok or Instagram. We are also seeing shifting in trade routes. We see, for example, a surge in demand from our Chinese customers who now export directly to other Asian markets. and that creates demand for new language pair that were previously niche. And finally, what we hear from our clients is they're facing a flood of AI innovation. New models appear every week, and it is incredibly complex for a CMO or a CTO to know which tool to use. They're looking to us to help them navigate this use of AI efficiency without risking their brand reputation or their data security. And this is really what makes RWS a strategic partner rather than just a service provider. That brings us to our vision. Fundamentally, our mission at RWS is to build the cultural intelligence layer to enterprise AI. Let me break this down. We know that very soon, already today, our lives will be surrounded with AI-powered experiences. Imagine your alarm clock that briefs you in the morning, your autonomous car that drives you to work, probably very soon your robots that will make you your dinner. Can't wait for that. But for those experiences to be truly adopted, for them to be wonderful rather than just functional, they need to adapt to who we are. They need to understand our culture, our nuance, and the context they operate in. The current enterprise AI focus heavily on maximizing the IQ. They want to make large language model as smart as possible. But there is a deficit, especially as soon as you move to non-English market or to complex cultural context, that intelligence drops off. Our mission, to put it simply, is to bring the EQ, the emotional intelligence, to that tech stack by solving three critical deficits in particular. Those three critical deficits that hold AI back today are, sorry, first, the data deficit. There is a gap between generic raw data and the high-quality domain-specific data needed to train AI for mission-critical tasks. Second, the culture deficit. Generic models today struggle to build genuine relationships. And we bridge the gap between robotic output and culturally resonant communication. And third, the trust deficit. Speed is useless without safety. And we close the gap between automated speed and the expert validation required for regulated industry and IP protection. If AI is going to play a central role in our lives, it must understand how we are, how we behave, how we communicate. And this is an immense opportunity ahead of us. To capture this opportunity, our strategy is simple and focused on three growth pillars. First, a new go-to market where we're focusing our firepower on large enterprise and high growth verticals. A ambitious innovation roadmap, where we're really building that cultural intelligence product at scale, blending our tech with human expertise. And operational excellence. We're implementing an efficiency plan to deliver faster, leaner experience to our clients. Let's take each pillar in turn, starting with our go-to-market. As I signaled during our interim results in the summer, we've moved this strategy now into full execution. And we're shifting from transactional sales to solution selling, where we're integrating directly our technology into our client tech stack. That creates stickiness, scalability, and recurring relationships. We're also being much more selective, and we're focusing on industry that need us the most. Those industries that are global by nature, that are highly regulated, or that are managing high-value brands. We do this from a position of strength. RWS already works with half of the Fortune 500 company, including the world's largest tech company out there. And they trust us because of our global footprint and our heritage of quality. To leverage this, we've reshaped our sales team. We now have dedicated focus on nurturing our most valuable existing clients and hunting for new strategic logos. We're expanding also our reach through partners. And a prime example of this partner-led approach is Microsoft. I'm delighted to share that RWS is one of the very first partners integrated directly into Copilot. At their Ignite conference a month ago, less than a month ago, Microsoft outlined a vision where Copilot becomes the orchestrator of the enterprise, the single entry point for all the tasks that you need. So instead of toggling between different applications, a user simply asks Copilot to get the job done. And I'm proud that all localization technology were part of that launch. This means that if you're a Trados or a LanguageWeaver customer, you can now access all technology directly within Copilot. You don't have to leave your workflow, and you find right there a secure, approved translation tool. It is right there, using your company's tone of voice and your company's glossary. Now, of course, with over half a billion professionals using Microsoft 365, this is a formidable distribution channel for us. As of today, we're the only, the sole third-party translation agent, including in Copilot. That, for me, stands really as a powerful testament to the quality of our product, but also to the agility of our tech team. And on that note, I'll hand over to Christina to take you deeper into our product roadmap.