RWS: Language tech firm bets on AI to boost growth as it forecasts drop in profit
Language services group RWS Holdings is expecting a fall in profit as it bets on its artificial intelligence offerings to provide much-needed growth.
The group, which translates patents and other technical documents, said in a trading update on Tuesday that it expected to report an adjusted pretax profit of around £45m in the six months ending on 31 March 2024.
This figure would be down from £54m during the same period in 2023. RWS said its guidance reflected “soft activity levels from certain market segments”, ongoing investments and year-on-year foreign exchange differences.
RWS added that the decline would be partially offset by increased use of its Language eXperience Delivery platform and cost reductions made in the second half of last year.
The firm’s organic constant currency revenue declined by two per cent over the half-year, compared with a seven per cent decline in the first half of 2023. Meanwhile, it expected reported revenue to come in at £350m, down four per cent year-on-year.
“We remain mindful of the wider macroeconomic and geopolitical environment and the continuing market pressures seen in the prior year, which is making visibility in certain segments of our business less clear in the short term,” RWS said.
The firm touted the fact that its Language Services and IP Services divisions had returned to growth. Meanwhile, it said it was seeing “growing traction” with its AI-based offerings, which supported “a number of new business wins in the first half”.
Chief executive Ian El-Mokadem commented: “Our successes with TrainAI and Evolve demonstrate that our AI-enabled solutions are resonating with clients at this pivotal moment for our industry. Through our unique combination of proprietary technologies and longstanding linguistic expertise, we are uniting the best of human and artificial intelligence to deliver innovative new offerings and support internal efficiency.”
He added: “It has been disappointing that we have not seen the recovery in Regulated Industries as quickly as we would have hoped and that sales in some parts of our content management software business have been slower than planned. We expect both to show some recovery in the second half.
“Delivery of the board’s full-year expectations remains dependent on continuing to successfully leverage our growth initiatives and AI offerings to compensate for ongoing headwinds in some areas.”