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.

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.