RWS (RWS) H2 2025 earnings summary

Executive summary

• Marked a strategic pivot from a service-led to a technology-first, AI-driven business model, fully operational from FY26, with new leadership and a brand relaunch.

• SaaS transition accelerated, with SaaS revenue now 46% of license revenue, up from 39% year-over-year.

• Strong partnerships with Microsoft, AWS, Cohere, and Google Cloud underpin product innovation and market reach.

• Acquisition of Papercup integrated, enhancing AI for video capabilities.

• Industry awards and a robust product pipeline signal momentum into FY26.

Financial highlights

• FY25 revenue: £690.1 million, down 3.9% reported and 0.7% organic constant currency.

• Gross margin declined to 43.4%, mainly due to adverse mix and operational challenges.

• Adjusted profit before tax: £60.4 million; adjusted basic EPS: 12.1p; total dividend: 7.05p.

• Adjusted EBITDA: £101 million, margin 14.6% (down 500 bps year-over-year).

• Operational free cash flow: £80.1 million, up 46% year-over-year.

Outlook and guidance

• FY26: Return to low single-digit organic constant currency revenue growth.

• Generate division expected to grow mid-teens; Protect mid-single digits; Transform to see low to mid single-digit decline as legacy work is exited.

• Gross margin expansion of 150 bps and adjusted operating margin up 100 bps targeted for FY26.

• Medium-term: Group growth to accelerate as tech-led offerings offset traditional service declines.

• Free cash flow conversion expected to normalize to 60-70% in the medium term.