Wolters Kluwer First-Quarter 2024 Trading Update
Alphen aan den Rijn, May 1, 2024 - Wolters Kluwer, a global leader in
professional information, software solutions and services, today releases its
first-quarter 2024 trading update.
Highlights

  * Full-year 2024 guidance reiterated.
  * First-quarter revenues up 6% in constant currencies and up 6% organically.
      * Recurring revenues (82%) up 7% organically; non-recurring revenues up
        1% organically.
      * Expert solutions revenues (59%) up 8% organically.
      * Cloud software revenues (18%) up 16% organically.
  * First-quarter adjusted operating profit margin increased.
  * First-quarter adjusted free cash flow increased in constant currencies.
  * Net debt-to-EBITDA was 1.4x as of March 31, 2024.

* 2024 share buyback: EUR353 million of intended share buyback of EUR1 billion completed in the year through April 29, 2024.
Nancy McKinstry, CEO and Chair of the Executive Board, commented: "We've had a
good start to the year, with 6% organic growth and improvements in the margin
and free cash flow. We continued to invest in scaling our expert solutions,
rolling out several new products, and expanding into adjacent markets. And, we
are increasing our investment in deploying artificial intelligence to bring
benefits to customers. I am pleased to reiterate our full-year guidance."
First-quarter 2024 developments
First-quarter revenues increased 5% in reporting currencies, reflecting organic
growth of 6% (1Q 2023: 6%), slightly offset by the impact of currency due to the
weaker U.S. dollar compared to a year ago (average EUR/USD rate was EUR/$1.09 in
1Q 2024 versus EUR/$1.07 in 1Q 2023).
Recurring revenues (82% of revenues), which include subscriptions and other
repeating revenue streams, sustained 7% organic growth (1Q 2023: 7%). Non-
recurring revenues (18% of revenues) increased 1% organically, slowing slightly
compared to a year ago (1Q 2023: 2%). Within non-recurring revenues,
transactional revenues posted 3% organic growth (1Q 2023: 1% decline), as
Financial & Corporate Compliance transactional trends started to stabilize and
Legal & Regulatory transactional revenues (ELM Solutions) remained strong.
Organic growth in software license and implementation fees and other non-
recurring revenues slowed to 1% (1Q 2023: 2%). The adjusted operating profit
margin increased in the first quarter compared to first quarter 2023.
Health revenues increased 7% in constant currencies and 7% organically (1Q
2023: 5%). Clinical Solutions delivered 9% organic growth (1Q 2023: 6%),
reflecting good renewal rates in clinical decision support and clinical drug
information. Our referential drug data and patient engagement solutions
(formerly Lexicomp and Emmi) were brought under the UpToDate brand. Health
Learning, Research & Practice recorded 5% organic growth (1Q 2023: 3%),
benefitting from new journal launches, including NEJM AI, a title focused on AI
in Medicine.
Tax & Accounting revenues increased 6% in constant currencies, with organic
growth of 8% (pro forma 1Q 2023: 9%) partly offset by the transfer of our
Chinese legal research solution Bold (2023 revenues: EUR21 million) to the Legal &
Regulatory division. North American organic growth slowed to 8% as expected (pro
forma 1Q 2023: 11%) partly due to the challenging comparable created by last
year's tax guide publication schedule. Europe recorded a strong start to the
year despite the absence of last year's one-time benefits in Germany and Spain.
Asia Pacific & Rest of World grew 2% organically (1Q 2023: 7%) as print books
turned down.
Financial & Corporate Compliance revenues grew 4% in constant currencies and 4%
organically (pro forma 1Q 2023: 2%). Recurring revenues increased 6% organically
(pro forma 1Q 2023: 5%). Transactional and other non-recurring revenues began to
stabilize (1% organic increase in 1Q 2024 compared to pro forma decline of 4% in
1Q 2023) but remain difficult to predict. Legal Services grew 4% organically
(pro forma 1Q 2023: 2%), supported by sustained organic growth in service
subscriptions alongside stable transactional revenues. Financial Services
revenues grew 3% organically (pro forma 1Q 2023: 1%), supported by 4% organic
growth in recurring revenues and a slight upturn in transactional revenues
compared to decline a year ago.
Legal & Regulatory revenues grew 8% in constant currencies and 5% organically
(pro forma 1Q 2023: 4%), reflecting the transfer into the division of the Bold
legal research solution from the Tax & Accounting division. Legal & Regulatory
Information Solutions grew 4% organically (1Q 2023: 4%), with sustained growth
in digital products more than offsetting decline in print. Legal & Regulatory
Software revenues grew 6% organically (pro forma 1Q 2023: 5%), buoyed by
sustained double-digit growth in volume-driven transactional revenues at ELM
Solutions related to the on-boarding of new customers.
Corporate Performance & ESG revenues grew 7% in constant currencies and 7%
organically (pro forma 1Q 2023: 10%). Recurring revenues sustained double-digit
organic growth, while non-recurring revenues declined in the quarter. Our
EHS/ORM(1) unit (Enablon) delivered 8% organic growth (1Q 2023: 22%), driven by
double-digit growth in recurring cloud subscriptions partly offset by decline in
non-recurring software license fees against a challenging comparable. The CCH
Tagetik Corporate Performance Management (CPM) platform delivered 13% organic
growth (1Q 2023: 16%), driven by Europe and Asia Pacific & ROW. Our corporate
tax, internal audit (TeamMate), and Finance, Risk & Reporting (OneSumX) units
all recorded low single-digit organic growth in the quarter.
Cash flow and net debt
First quarter cash conversion declined compared to first quarter 2023, as
expected, due to a working capital outflow in the quarter compared to an inflow
in first quarter 2023. Adjusted free cash flow increased in constant currencies,
mainly due to favorable timing of financing cost and tax paid in the quarter. A
total of EUR252 million in cash was deployed towards share repurchases during the
quarter. Net acquisition spending was negligible.
Net debt was EUR2,499 million as of March 31, 2024, compared to EUR2,612 million at
December 31, 2023. Net-debt-to-EBITDA, based on rolling twelve-months EBITDA,
was 1.4x at the end of March 2024, compared to 1.5x at year-end 2023.
In March, 2024, we issued a new EUR600 million Eurobond with a 5-year term and
3.250% annual coupon.
Shares outstanding, share buybacks, and dividends
As of March 31, 2024, the number of issued ordinary shares outstanding
(excluding 9.3 million shares held in treasury) was 239.2 million.
In the year to date (through April 29), we have repurchased 2.5 million ordinary
shares for a total consideration of EUR353 million (average share price EUR141.86).
This includes a block trade of EUR48.0 million executed on February 22, 2024, to
offset the dilution caused by our incentive share issuance.
For the period starting May 2, 2024, up to and including December 27, 2024, we
have engaged third parties to execute approximately EUR647 million in share
buybacks on our behalf, within the limits of relevant laws and regulations (in
particular Regulation (EU) 596/2014) and Wolters Kluwer's Articles of
Association. For the period after November 10, 2024, this mandate is subject to
authorization by the AGM on May 8, 2024. Share repurchases will be used for
capital reduction purposes through share cancelation. The share repurchase
program may be suspended, discontinued, or modified at any time.
At the Annual General Meeting to be held on May 8, 2024, shareholders will be
asked to approve a total dividend of EUR2.08 over financial year 2023, an increase
of 15% compared to the 2022 dividend. If approved, the final dividend of EUR1.36
per share will be paid to shareholders on June 4, 2024 (ADRs: June 11, 2024).
The interim dividend for 2024 will be set at 40% of the 2023 total dividend.
Sustainability developments
Across the group, the focus in early 2024 has been on reinforcing a range of
initiatives that foster diversity, engagement, and belonging, including career
development programs and employee networks. Our global real estate team began
executing on plans to deliver a reduction in square meters of office space in
2024, while at the same time improving the quality of workspaces for employees.
These plans will help us reach our SBTi(2)-validated targets.
Full-year 2024 outlook
Our group-level guidance for 2024, shown in the table below, is unchanged. We
continue to expect sustained good organic growth in 2024, in line with the prior
year, and a further modest increase in the adjusted operating profit margin. Due
to phasing of investment expenses, margin improvement is expected to be modest
in the first half.
Full-Year 2024 Outlook
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Performance indicators 2024 Guidance 2023 Actual
-------------------------------------------------------------------------------
Adjusted operating profit
margin* 26.4%-26.8% 26.4%
Adjusted free cash flow** EUR1,150-EUR1,200 million EUR1,164 million ROIC* 17%-18% 16.8%
Diluted adjusted EPS
growth** Mid- to high single-digit 12%
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*Guidance for adjusted operating profit margin and ROIC is in reporting
currency and assumes an average EUR/USD rate in 2024 of EUR/$1.09.
**Guidance for adjusted free cash flow and diluted adjusted EPS is in
constant currencies (EUR/$ 1.08). Guidance reflects share repurchases of
EUR1 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 EUR/$ exchange rate for the
year causes an opposite change of approximately 3 euro cents in diluted adjusted
EPS(3).
We include restructuring costs in adjusted operating profit. We expect 2024
restructuring costs to be in the range of EUR10-EUR15 million (FY 2023: EUR15
million). We expect adjusted net financing costs(4) in constant currencies to
increase to approximately EUR60 million. We expect the benchmark tax rate on
adjusted pre-tax profits to increase and to be in the range of 23.0%-24.0% (FY
2023: 22.9%).
Capital expenditures are expected to remain at the upper end of our guidance
range of 5.0%-6.0% of total revenues (FY 2023: 5.8%). We 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 2024 organic revenue growth by division is summarized below. We
expect the increase in full-year 2024 adjusted operating profit margin to be
driven primarily by our Health, Legal & Regulatory, and Corporate Performance &
ESG divisions. The Tax & Accounting margin is expected to decline slightly due
to increased product investment.
Health: we expect full-year 2024 organic growth to be in line with prior year
(FY 2023: 6%).
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 outsourced
professional services and the absence of one-off favorable events in Europe.
Financial & Corporate Compliance: we expect full-year 2024 organic growth to be
in line with or better than prior year (FY 2023: 2%) as transactional revenues
are expected to stabilize.
Legal & Regulatory: we expect full-year 2024 organic growth to be in line with
prior year (FY 2023: 4%).
Corporate Performance & ESG: we expect full-year 2024 organic growth to be
better 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 EUR5.6 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 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
(http://www.wolterskluwer.com), follow us on LinkedIn
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Financial Calendar

  May 8, 2024          Annual General Meeting of Shareholders
  May 10, 2024         Ex-dividend date: 2023 final dividend
  May 13, 2024         Record date: 2023 final dividend
  June 4, 2024         Payment date: 2023 final dividend, ordinary shares
  June 11, 2024        Payment date: 2023 final dividend ADRs
  July 31, 2024        Half-Year 2024 Results
  August 27, 2024      Ex-dividend date: 2024 interim dividend
  August 28, 2024      Record date: 2024 interim dividend
  September 19, 2024   Payment date: 2024 interim dividend
  September 26, 2024   Payment date: 2024 interim dividend ADRs
  October 30, 2024     Nine-Month 2024 Trading Update
  February 26, 2025    Full-Year 2024 Results
  March 12, 2025       Publication of 2024 Annual Report
  Media                     Investors/Analysts
  Dave Guarino              Meg Geldens
  Global Communications     Investor Relations
  t +1 646 954 8215         t +31 (0)172-641-407
  press@wolterskluwer.com   ir@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 pandemics; 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.
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(1) EHS/ORM = environmental, health & safety and operational risk management.
(2) SBTi = Science Based Targets initiative.
(3) 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.
(4) 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.
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