RELX: AI Tools Are Reshaping Growth Trajectories, but Capital Allocation Remains Conservative
Strong H1 shows STM and Legal acceleration on AI-enabled platforms, while buyback funds a larger return to shareholders.
RELX · Earnings Call · 2026-07-23
Strong H1, Acceleration in STM and Legal
RELX delivered a solid first half, with divisional revenue growth of 7% and adjusted operating profit growth of 9%. The company continues to shift its mix toward higher-margin analytics and decision tools, with growth across all four business areas: Risk 8%, STM 6%, Legal 10%, and Exhibitions 6% despite some travel disruption. As Erik Engstrom noted, “Underlying revenue growth was 7%. Underlying adjusted operating profit growth was 9%.” — Erik Engstrom · 2026-07-23 The adjusted operating margin improved 70 basis points to 35.5%, aided by cost discipline and operating leverage.AI Tools: The New Growth Engines
The standout theme is the increasing contribution of AI-enabled products. In risk STM, underlying revenue growth accelerated to 10% in Legal and 6% in STM, driven by adoption of Lexis+ with Protege and LeapSpace. Erik Engstrom highlighted the positive early traction: “It's important to look at LeapSpace as a continued evolution of the ScienceDirect AI.” — Erik Engstrom · 2026-07-23 The company is also seeing strong growth in article submissions, with article submissions up over 20% while published volumes grow at a more selective 7%. As Engstrom noted, “we continue to see that there is significant growth in submissions to the company.” — Erik Engstrom · 2026-07-23 The company's AI strategy is not just about tools; it's about embedding them into a trusted content platform, creating a moat that competitors like Harvey and Lagora have yet to replicate.Capital Allocation: Buybacks Steady, M&A Optional
Free cash flow conversion remained strong at 98%, supporting a GBP 1.75 billion buyback out of a GBP 2.25 billion program. Nick Luff reiterated that “we focus on ensuring that cost growth remains below revenue growth.” — Nicholas Luff · 2026-07-23 This discipline is not new; in February, Erik reminded investors that “we have worked with this strategy inside Risk with the evolution of AI tools... for over 15 years.” — Erik Engstrom, Chief Executive Officer · 2026-02-12 The company is funding this buyback while keeping leverage at 2.3x, within its 2-2.5x target range. M&A remains opportunistic, with an emphasis on organic development. As Luff said, “the primary focus is on the organic development.” — Nicholas Luff · 2026-07-23 This echoes prior calls, where management consistently prioritized internal innovation over large acquisitions.Risks and Competition: Eyeing the Long Game
Management pushed back on fears that AI-native legal tech companies could disrupt their franchise. Erik Engstrom argued that the legal information market is only $5 billion, while the workflow software space is $25 billion and growing to $100 billion. RELX will not compete directly in workflow software but will integrate the best tools into its content platform. As he put it,The company also downplayed risks from U.S. government research funding changes and the Anthropic settlement, noting that settlement proceeds are an offset to costs, not revenue. While the Middle East uncertainty nudged Exhibitions growth, the team remains confident in the underlying trajectory. In July 2025, management noted that “Lexis+ reached about 80% penetration after about 4 years” — Erik Engstrom, CEO · 2025-07-24 — a benchmark they expect AI tools to follow, suggesting there is still ample room for growth. The first half underscores RELX's ability to monetize AI through a trusted content backbone. The stock trades at a premium multiple, and the growing free cash flow and disciplined capital allocation provide a cushion against any macro headwinds.We are an information-based company with higher value-add AI-enabled tools on top. That's what we sell, and that's our value add.