Quality Thesis

RELX arrived on its fiscal 2025 earnings call with a message that felt calibrated for a market suddenly spooked by artificial intelligence: the company is not a publisher scrambling to defend yesterday’s product, but a data-and-decision-tools business that has been training machines for years—and is now using generative AI to sell more, not less.

An AI story built on old-fashioned assets

Chief Executive Erik Engstrom opened with results that, in a calmer tape, would have sounded like catnip for quality-growth investors. Underlying revenue rose 7% in 2025, while underlying adjusted operating profit climbed 9%, translating into 10% adjusted earnings-per-share growth at constant currency. The adjusted operating margin expanded by just under a point to 34.8%, and cash conversion held at a hefty 99%.

Yet the Q&A quickly revealed what’s really driving the share price lately: fear that AI-enabled workflow tools from Big Tech or legal-tech upstarts could erode RELX’s franchises—especially in legal, where excitement around “agentic” assistants is colliding with investor anxiety about commoditization. Morgan Stanley’s George Webb asked the question hanging over the sector: are there any early indicators that the adoption cycle could stall, or that competition could force a deceleration? RELX’s response was essentially a reframing. The company does not see itself as a workflow-software vendor in the generic sense. It sees itself as the steward of trusted, continually updated content and datasets—an “information base” that becomes more valuable, not less, as AI makes it easier to extract insight.

That distinction matters because it defines where RELX wants to compete. Engstrom described a “technology-agnostic” posture—partnering with major model providers including OpenAI and Anthropic, testing new releases early, and embedding whatever adds measurable customer value. At the same time, he was explicit about what RELX won’t do: license out the crown jewels. The data, he argued, is the centerpiece of the strategy, built from decades of public records, thousands of licensed sources, contributory databases with network effects, and proprietary content created in-house. Replicating that blend at scale, he implied, is the hard part.

Risk and legal carry the weight

If the market’s worry is disruption, RELX’s numbers tell a different story: broad-based momentum and operating leverage across every business area.

The risk division—already RELX’s profit engine—posted 8% underlying revenue growth and 10% underlying adjusted operating profit growth. Engstrom emphasized that more than 90% of divisional revenue now comes from machine-to-machine interactions, a reminder that much of the business is not a chat interface but industrial-scale decisioning. When asked why large language models would struggle to “break into” risk, management pointed to heavy regulation around data usage, the complexity of combining thousands of sources, and the sheer volume of automated transactions—Engstrom cited an example of processing roughly 400 million transactions per day within a single contributory database offering. In other words, this is a market where math, compliance, and distribution often beat novelty.

Legal, the segment most exposed to the AI narrative, looked anything but fragile. Underlying revenue growth improved to 9% and underlying adjusted operating profit rose 12%. Management said the enterprise-wide subscription customer base for Lexis+ AI more than doubled over the past year, with “multiple hundreds of thousands” of users globally, and usage rising even faster than the customer count. Protege, its integrated assistant and workflow layer, is moving from concept to cadence: Engstrom said the company is nearing 300 workflow-specific tools, with the capability to launch more at a pace of “two or three a day.” The refrain was consistent: these are content-enabled workflows, designed to deepen the value of RELX’s verified legal corpus rather than compete head-on with office-administration software.

STM (scientific, technical & medical) offered a quieter but telling signal: underlying revenue grew 5% and profit 7%, supported by a sharp increase in research activity. RELX said article submissions rose more than 20% in 2025 and published articles increased 10%, and that momentum has continued into 2026. New tools such as LeapSpace are aimed at productivity gains for researchers, with management framing the addressable market as essentially every institution already using its platforms—and, over time, potentially individual researcher subscriptions. The catch is timing: universities buy slowly. But the direction—higher-value analytics layered on trusted content—mirrors the legal playbook.

Capital returns, margin discipline, and the “selloff” question

CFO Nick Luff did what good CFOs do in nervous markets: he talked about the plumbing. RELX ended the year at 2.0 times net debt-to-EBITDA—low end of its range—even after £270 million of acquisitions and a completed £1.5 billion buyback. The company proposed a 7% dividend increase to £0.675 per share and announced a larger 2026 buyback of $2.25 billion, already partially deployed.

He also addressed a less glamorous headwind: print. RELX has been actively reducing its involvement in print-related activities, which drove a more than 20% revenue reduction in that slice, with profits expected to keep declining at a high-single-digit rate annually. Rather than a surprise, it sounded like a managed runoff—one that makes the remaining business more digital, more subscription-heavy, and typically more margin-accretive.

So why did the stock sell off?

The earnings call itself nods to “broad concern or fear” sweeping across equities, and RELX is getting caught in the same AI crossfire as other information and software-adjacent names. But the call’s details argue that investors are pricing in a disruption narrative that the operating data doesn’t support: accelerating legal growth, industrial-scale risk platforms that already live in machine-to-machine workflows, expanding margins, strong cash conversion, and rising capital returns. On the evidence of fiscal 2025—and the early 2026 tone—RELX looks less like an AI victim and more like a toll collector on the transition, which makes the recent selloff in the shares look overdone.