Full-Year 2020 Outlook suspended due to COVID-19 uncertainty
Following a good start to the year and prior to the global spread of COVID-19, we were aiming to deliver another year of solid organic growth and improvement in adjusted operating profit margin, adjusted free cash flow, return on invested capital (ROIC), and diluted adjusted EPS in 2020. However, the impact of unprecedented measures put in place to contain the spread of COVID-19 have created significant uncertainty and challenges for the coming quarters and we therefore suspend our specific 2020 guidance until we have greater clarity on selling conditions and revenue trends.
We expect renewal rates for existing digital and services subscriptions and other recurring revenue products to show resilience, but we note that new sales of subscription products are more difficult in current market conditions. Sales of new software licenses and implementation services are likely to be postponed while transactional volumes, training, books and other non-recurring revenue products1 are likely to be weak in current conditions.
We have prepared cost reduction plans for various revenue growth scenarios in 2020 aiming to protect margins while sustaining key product and strategic investments. We are closely monitoring fast-changing market conditions and will adapt our response as needed. Like many companies, in mid-March, we transitioned over 95% of Wolters Kluwer’s 19,000 employees to a global work-from-home status, with only minimal disruption to date on business continuity and productivity.
Our first-quarter 2020 trading update (May 6, 2020) can be found here.
1Non-recurring revenues includes revenues from transactional services, software license sales and implementation services, training, advertising, print books, and other products not sold on a subscription basis.