RELX PLC FY25 Profit Rises, Lifts Dividend; Sees Growth In FY26; Intends GBP 2 Bln Buybacks

RELX reported fiscal 2025 results showing revenue of £9.59bn (up 2% year-on-year; underlying growth 7%), profit before tax of £2.75bn (from £2.56bn) and EPS of 112.6p (from 103.6p). Adjusted profit before tax rose to £3.06bn with adjusted EPS of 128.5p (from 120.1p). The board proposed a full-year dividend of 67.5p (up 7%) with a final dividend of 48.0p payable June 18, and announced a £2.25bn share buyback program for 2026 (£250m already executed). Management expects another year of strong underlying revenue and adjusted operating profit growth and strong adjusted EPS growth on a constant currency basis.

Analysis

Market structure: RELX's FY25 results (adjusted EPS up to 128.5p, underlying revenue +7%, announced £2.25bn 2026 buyback with £250m done) transfer value to shareholders and reduce free float, favoring active funds and options buyers. Competitors in information & compliance (e.g., Wolters Kluwer WKL.AS, Pearson) face increased pricing pressure as RELX can fund selective discounts and M&A from buybacks and cash flow. Cross-asset: expect modest tightening in RELX credit spreads, slight sterling support on buyback/domestic demand, and downward pressure on equity volatility as buybacks are executed.

Risk assessment: Tail risks include data-privacy/regulatory rulings (EU/US) that could hit high-margin analytics, and a macro downturn that cuts corporate subscription spend—both could reverse guidance within 3–12 months. Immediate (days) upside is buyback-driven, short-term (weeks/months) depends on tranche cadence and FX translation, long-term (quarters/years) hinges on retention rates and margin mix; watch net debt/EBITDA (>2.5x) as a debt-funding trigger. Hidden dependencies: revenue skew to US and STEM/academic budgets, and buybacks reducing float which raises future volatility.

Trade implications: Tactical long bias in REL.L ahead of further buyback execution and FY26 cadence—expect EPS accretion of mid-to-high single digits if full £2.25bn executed; use defined-risk options to lever exposure. Relative-value: long RELX vs short weaker buyback peers (WKL.AS) to capture buyback-fueled EPS delta over 6–12 months. Entry window: next 2–6 weeks before second tranche; exit or trim on any quarter with underlying revenue <3% or adjusted EPS guide cut.

Contrarian angles: Consensus may underappreciate underlying 7% organic growth vs headline 2% (FX noise), so upside is underpriced if buybacks proceed. Conversely, market may be complacent about funding risk—if buybacks push net leverage above historical norms or trigger rating actions, downside could be abrupt. Historical parallels: information-services firms often re-rate after disciplined buybacks and sustained retention; key unintended consequence is reduced liquidity and activist attention if strands of the business underperform.

Key Decisions for Investors

• Establish a 2–3% long position in REL.L within the next 2 weeks (size as % of portfolio), target +12–18% total return over 12 months assuming full £2.25bn buyback; set a stop-loss at -10% or exit if adjusted EPS guidance is cut or underlying revenue falls below 3% y/y.
• Buy a 12-month call spread on REL.L (long 12-month ATM call, short 15% OTM call) sized ~1% portfolio to capture buyback-driven upside with defined max loss; close pre-next earnings release or if implied vol rises >30% from today.
• Initiate a pair trade: long REL.L 2% vs short WKL.AS 1.5% (beta-adjust) for 6–12 months to exploit buyback/earnings-quality dispersion; unwind if the RELX/WKL spread moves against position by >10% or if Wolters announces equal-or-greater capital return programs.
• If already long REL.L, sell 3–6 month covered calls 8–12% OTM to monetize dividend uplift (67.5p FY) and buyback momentum; reduce position by 50% if GBP weakens >5% within 30 days or if net debt/EBITDA guidance trends toward >2.5x.