Q2 2021 Thomson Reuters Corp Earnings Call
[music].
Good day, everyone and welcome to day Thomson Reuters Q2, 2021earnings call. My name is Sue and I'm. Your event manager joined the presentation. Your lines will remain on listen only.
You need assistance at any stage. Please key star zero, and then operate totally happy to assist you.
I'd like to advice all parties. The conference is being recorded for replay purposes, and now I'd like to hand over to Frank Golden Head of Investor Relations. Please go ahead.
Good morning, and thank you for joining us today for our second quarter 2021 earnings call.
Joined today by our CEO, Steve faster and our CFO, Mike Eastwood.
Each of whom will.
We'll take your questions following our presentation.
Once we get through as many questions as possible. We would appreciate it if you would limit yourselves to 1 question each and 1 follow up when we open the lines.
Throughout today's presentation, when we compare period performance period on period, we discuss revenue growth rates before currency as well as on an organic basis. We believe this provides the best basis to measure the underlying performance of the business.
Today's presentation contains forward looking statements and non <unk> financial measures actual results may differ materially due to a number of risks and uncertainties related to the COVID-19 pandemic and other risks discussed in reports and filings that we provide from time to time to regulatory agencies, you may access fees.
Documents on our website or by contacting our Investor Relations Department, Let me now turn it over to Steve <unk>.
Thank you Frank and thanks to all of you for joining us today.
Before I speak to outperformance for the quarter.
I wanted to take a moment to acknowledge the loss of.
Our much loved colleague and outstanding Pulitzer Prize, winning journalist Donnish Siddiqi.
Donny was tragically killed while on assignment in Afghanistan last month the.
The impact of his loss has been significant for all of us.
Especially as Reuters news colleagues and we will continue to honor his memory.
Thank you for your respect and acknowledgment of done its just passing.
Yeah.
Now, we'll move to our financial performance for the second quarter.
I'm pleased to report the momentum we saw in the first quarter accelerated in the second quarter.
Our strong performance was above our expectations.
And positions us well for the second half of the year.
This strong performance reflects several things.
<unk>.
The solidity of our franchises are must have products.
And our market positions.
Second the strength of the information services market itself.
Which is presenting us with opportunities to expand our positions and further accelerate growth.
Third the realization and conviction by our customers that they need to reapportioning their spend towards our products and solutions.
It can fit their workflow and drive growth and productivity.
And finally customers have growing confidence in both an improving economic environment.
And their own future prospects.
So we're pleased with our first half performance, which increases our confidence in our prospects for the second half of the year and for 2022.
Now to the results.
Prevailing tie wins are playing to our strength and contributing to strong revenue and sales growth.
The second quarter's total company organic revenue growth of 7% was the highest in over a decade.
And the Big 3 businesses also grew at 7%.
This revenue growth was mirrored by strong sales growth across the company.
As customers position themselves to meet expected demand.
We also continue to execute aggressively on our change program and achieved run rate savings of $19 million as of June 30th.
The program is on track and.
And we will continue to ramp it up in the second half.
Given the strong first half performance, we are raising our full year guidance. We now forecast total company organic revenue growth between 4% and 4.5% and organic revenue growth for the big 3 are between 5.5% and 6%.
Total company EBITDA margin is forecast to range between 31% and 32% and the big 3 EBITDA margin is now forecast to be approximately 39% and.
And free cash flow is now expected to range between $1.1.
And $1.2 billion.
Lastly, today, we announced a new $1.2 billion share buyback program.
If we were able to complete the buyback program this year.
We will have returned over $2 billion to shareholders in 2021, including dividends.
Okay.
Second quarter reported revenues were up 9% with organic revenues up 7%.
Revenue growth was solid for each business segment, including strong growth from our Latin American.
In Asia and emerging markets businesses.
Which grew organically more than 20 per cent and 10% respectively.
Adjusted EBITDA increased 5% to $502 million, reflecting.
Reflecting a margin of 32, 7%.
Excluding cost related to the change program. The adjusted EBITDA margin was 35, 4%.
This strong performance resulted in adjusted earnings per share of <unk> 48.
Compared to 44 cents per share in the prior year period.
Turning to the results for the segments.
As I mentioned the big 3.
<unk> organic revenue growth of 7% per quarter, a very strong performance.
Legal second quarter performance was impressive with organic revenue growth of 6%.
The highest quarterly growth since 2008.
And building on 5% growth for the first quarter. The U S. Legal market is quite healthy, particularly in small law with sentiment continues to be strong.
As attorneys anticipate solid demand over the next 12 months.
With this strong growth isn't isolated small law, it's across the business small.
Mid and large firms government and across our product lines and geographies.
A few examples.
First with Florida continues to achieve strong sales growth.
And ended the quarter at 57% ACB penetration compared to 52% at year end 2020.
We continue to forecast, an ACB penetration rate between 50% between 60% and 65% by year end.
Second practical law as reported in the legal segment continued its strong performance growing double digit.
We forecast similar growth going forward.
And we continue to invest in these key growth initiatives.
Third our government business, which is managed within our legal segment continues to see good momentum and grew 8% organically.
We forecast governments growth to accelerate in the second half of the year.
And fourth find law and our businesses in Canada, Europe, and Asia, All grew mid to upper single digit in the quarter.
Finally, legal also achieved very strong sales for both the quarter.
Half year recording double digit recurring sales growth, reflecting the strength and health of the legal market and our customers' willingness to spend.
Turning to the corporate business organic revenues grew 4% with.
We forecast revenues will accelerate in the second half of the year with healthy growth expected from our direct and indirect tech businesses risk the legal products sold into corporates.
And from Europe, Latin America, and Asia and emerging markets.
Tax and accounting as organic revenues grew 15%.
Benefiting from a 43 per se.
<unk> increase in transactional revenues, primarily driven by the year over year timing of individual tax filing deadlines.
Recurring revenue growth was also strong at 9%.
Reuters news organic revenues grew 6% in the quarter, a very good performance driven by the professionals business, including strong Reuters events growth as it begins to recover from the negative impact from COVID-19 in 2020.
And global print organic revenues also grew 6%.
Partly due to an easier prior year comparable.
But also attributable.
To a gradual return to office by our customers and higher third party revenues.
In summary, it was a very strong quarter and our businesses are in a solid position.
But we take nothing for granted and we still have much hard work to do in executing our change program.
Keep the growth of 6 per cent 2.8 per cent by 2023, so in closing.
Working to transform Thomson Reuters into a leading content driven technology company, we're making good progress, but we still have much to accomplish.
We're off to a strong start and we're confident the 2021 is setting the foundation to position us to be able to consistently and sustainably drive strong operating and financial performance that builds value for our customers colleagues and share holders for a long time.
Let me know hand, it off to Mike who will discuss the second quarter's results in detail.
Thank you, Steve and thanks for joining us today.
As a reminder, I will talk with revenue growth be poor currency and an organic basis.
Let me start by discussing the second quarter revenue performance of our big 3 segments Orgs.
Organic revenues and revenues that constant currency or both up 7 per cent for the quarter.
This marks the fourth consecutive quarter, our big 3 segments have grown at least 5 per cent.
And represents the highest growth for a bakery segments in over a decade.
Legal professionals revenues increased 7% and organic revenues were up 6%.
Recurring organic revenue grew 6% and transaction revenues increased 14%.
Due to our Westlaw practical law and government businesses.
Please note 60% of practical walled revenues are recorded in the legal professionals segment and 40% is recorded in the corporate segment.
Westlaw edge continue to contribute about 100 basis points to legal as organic revenue growth, while continuing to maintain a healthy premium.
And edge has now been adopted by all U S Federal government courts and by courts in 44 states.
Our government business, which is reported within legal and includes much of a risk fraud and compliance offerings had a strong quarter with total revenue growth of 10% and organic growth of 8%.
And our corporate segment total and organic revenues increased 4% black.
By a recurring organic revenue growth of 5%.
Transactions organic revenue grew 1%.
Due to a difficult prior year comparison with $4 million a 1 time clear revenue was recorded and did not reoccur this year.
We forecast corporate revenue to accelerate in the second half of the year.
And finally tax and accounting total and organic revenues grew 15%.
Growth was driven by the Latin American businesses.
Audit solutions, which includes confirmation and a 43% increase in transaction revenues, resulting from the year over year timing of individual tax filing deadlines.
I will remind you last year pay per return revenue shifted from the second quarter to the third quarter.
Normalising for this tiny organic revenues for tax and accounting or up 10% in queue too.
Moving to Reuters news.
Total and organic revenues increased 6% per.
Primarily due to our professional business, which includes orders events.
This performance was slightly better than we had anticipated.
And global print total and organic revenues increased 6% in the quarter.
This performance was better than expected driven by higher third party revenues for printing services.
And a gradual return to office by our customers.
Despite this higher performance, we still forecast full year revenues to decline between 4% and 7%.
On a consolidated basis second quarter total and organic revenues each increased 7%.
Before turning to profitability less look closer at recurring and transaction revenue results for the second quarter.
Starting on the left side total company organic revenue for the second quarter of 2021 was up 7% compared to a 2% decline in the second quarter of 2020 due to the impact of COVID-19.
If we look at Q2.2021 performance for the Big 3 you will see organic revenues increased 7%.
A strong performance and well above the 2% performance in Q2.2020.
Total company recurring organic revenues grew 5% in Q2.
210 basis points above Q2, 2020, and the big 3 recurring organic revenues grew 6%, which was above last year's second quarter growth of 4%.
Trying to the grass in the bottom right of the slide transaction revenues were up significantly year over year as a second quarter of 2020 was impacted by COVID-19, which affected our implementation services and the Reuters events business.
We continue to remain encouraged by the momentum in 2021, especially for recurring revenues given us confidence in trajectory of the business and the sustainability of higher revenue growth beyond 2021.
We're also providing guidance for the third quarter, given the various impacts related to COVID-19.
Starting with the total TR chart on the top left.
We estimate third quarter total and organic revenues will grow between 3.5% and 4%.
The big 3 total and organic revenues are forecast to grow between 5% and 5.5% in the third quarter.
Victory growth will be slightly depressed due to the timing of tax and accounting pay per return revenues in 2020 that shifted $6 million from Q2 Q3 due to the delay in the tax filing deadline.
We forecast third quarter revenue growth of low single digit for tax and accounting.
On a normalized basis, we expect revenue growth of mid single digits for tax and accounting.
Moving to Reuters news, we forecast third quarter total and organic revenues to grow between 2% and 3%.
Driven by all Reuters news business lines.
Finally, global print third quarter revenues are expected to decline between 5% and 8% and we forecast full year revenues to decline between 4% and 7%.
Turning to our profitability performance in the second quarter.
Adjusted EBITDA for the Big 3 segments was 487 million.
Up 14% from the prior year period, and the related margin increased 180 basis points due to strong margin improvement across each of the segments.
The strong EBITDA margin improvement for each of the 3 businesses was driven by higher revenue growth and a benefit from 2020 cost savings initiatives.
I will remind you that change program operating costs are recorded at the corporate level.
Moving to borders news.
Adjusted EBITDA was 35 million $10 million more than prior year period, driven by revenue growth 2020 cost savings initiatives and timing.
Global Prince adjusted EBITDA was $56 million with the margin of 37, 9% a decline of about 260 basis points future higher costs and the dilutive impact of lower margin third party print revenue.
So an aggregate total company adjusted EBITDA was 502 million.
A 5% increase vs Q2.2020.
The increase resulted from the higher revenues, partially offset by change program costs, which I will address in a moment.
The second quarter's adjusted EBITDA margin was 32.7% and was 35, 4% on an underlying basis.
Excluding costs related to the change program.
This slide provides more granularity regarding our expectations for a reported adjusted EBITDA margin for the full year 2021.
For the first 6 months total company adjusted EBITDA margin was 34.1% and the big 3 segments adjusted EBITDA margin was 45%.
On an underlying basis, excluding change program cost total company adjusted EBITDA margin was 35.7%.
And as Steve mentioned, we are increasing our full year total company guidance for adjusted EBITDA margin to a range of 31% to 32% and for the big 3 segments to approximately 39%.
And while first half performance is impressive we continue to recommend you assess our adjusted EBITDA margin on a full year basis as we expect the margin to decline in the second half for several reasons.
First.
We expect to increase our investment in the change program, which will have a negative impact of between 150 to 200 basis points for the total company.
Second we forecast additional business as usual investments outside of the change program in advance of 2022.
For example, we will invest more and go to market initiatives enterprise technology and data and analytics capabilities.
This will dilute the margin between 150 and 200 basis points for the total company in between 202 hundred 50 basis points for the big 3 segments.
And finally savings from the change program are forecast to provide a benefit to total company and big 3 adjusted EBITDA margin of 100 to 150 basis points.
We believe we have good visibility into the levers at our disposal to achieve our updated full year margin guidance and are confident in our ability to achieve our target of 31% to 32%.
Now, let me turn to our earnings per share free cash flow performance and change program cost.
Starting with earnings per share adjusted EPS was 48 per share vs 44 per share in the prior year period.
A 9% increase the.
The increase was mainly driven by higher adjusted EBITDA.
Currency has no impact on adjusted EPS in the quarter.
Let me now turn to our free cash flow performance for the first half.
Ah reported free cash flow was $618 million vs $340 million in the prior year period and.
An improvement of $278 million.
Consistent with previous quarters. This slide removes the distorting factors impacting free cash flow performance.
Working from the bottom of the page upwards, the cash outflows from discontinued operations component of our free cash flow was 36 million more in the prior year period.
This was primarily due to payments to the UK tax authority related to the operations of our former refunded business.
Also in the first half we may $28 million of change program payments as compared to refinance if related separation cost of $76 million in the prior year period.
So if you adjust for these items comparable free cash flow from continuing operations was 692 million.
311 million better than the prior year period.
This increase primarily due to higher EBITDA.
Favorable working capital movements and dividends from our interest in <unk>.
Now an update on our change program cost for the second quarter and the rest of 2021.
Let me start by saying none of the annual estimates have changed from what we provided last quarter with a full year.
Standard in the second quarter was within the range provided last quarter at $71 million, including $41 million of Opex plus $29 million of Capex.
This brings the first half total spend to $91 million.
We know anticipate spending between 210 and $260 million in the second half Opex plus capex.
Spend is forecast to step up related to cloud migration streamlining internal systems third party contractors to support the change program and higher capital expenditures.
For the full year, we expect change program spend Opex, plus plus capex to be at the lower end of the range of 300 billion to $350 million.
And there is no change in the anticipated split of about 60% Opex and 40% Capex.
We will continue to provide quarterly updates from our change program spend as we move through the year.
Now an update on a run rate change program savings for the second quarter.
In the second quarter, we achieved $71 million of annual run rate operating expense savings.
This brings the total annual run rate operating expense savings up to $90 million will the change program.
We are currently on track with our run rate savings expectations.
As a reminder, we anticipate operating expense savings of 600 million by 2023, while reinvesting 200 million back into the business for a net savings of $400 million.
We will continue to provide quarterly updates on our annual run rate change program savings as we move through the year.
And as Steve outline.
Today, we increased our full year outlook per revenue growth margin and free cash flow, which is reflected on the slide.
Lastly, we reaffirm the balance of our full year 2021 guidance as.
As well as our 2022 and 2023 guidance previously provided.
And we remain confident in achieving the targets for all metrics.
Let me now turn it back to Frank for questions.
Thank you, Mike and that concludes our presentation for the second quarter. So we've I would like to open the lines for questions. So soon forget out the first question. Please.
Please keep your first question is from the line of carry Pepsi.
From PSA Securities. Please go ahead.
Hey, guys from morning.
Encouraging center results here I guess, a couple of things stood out to me with the first I wanted to ask is just talked about having had the strongest half first half bookings in a while and yet you know a lot of the investments and changed you're making to improve user experience and improve and innovate around the products haven't really taken hold yet so.
What's driving are there any sort of either big areas of success or or themes, you're seeing that are driving those strong new bookings.
Yeah.
Thanks for the question I would say 2 things and I'm sure Michael supplement.
So the first is.
We've seen a a pretty.
The gradual but pretty constant sort of improvement 3.
3.
The second quarter in the sentiment about customers.
Confidence.
Dude, making longer term investments in their own businesses.
And so that I think has helped.
Sick and having said that the last 2 weeks, obviously, there's been a bit of a shaky economy, but we don't see any impact on that so far.
Businesses.
I think the second thing is the 7 growth initiatives that we called out Bedau Investor day, we're starting to see.
I think the green shoots from from those investments from the focus on those areas.
And and we are increasingly optimistic about.
About those plus growth issues.
That year I will just supplement with the little additional granularity in regards to the 7 strategic initiative practical all which is split between legal professionals in corporate so as I mentioned.
10% organic growth in the second quarter.
Government, responding compliance, which I mentioned, 8%.
Organic growth in the second quarter and that businesses driving to nearly $500 million for the full year.
Confirmation that we acquired in July of 19, along with high <unk> in July of 19 continue to perform very well confirmation part of the overall audit offerings that we discussed during investor day.
Gary you mentioned in regards to the bookings very pleased with the overall net sales for the first and second quarter of this year across the board, including within our corporate business Corpus was 4% in the second quarter as we go into Q3 Q4 based on the net sales improvement that we've seen in recent quarters. There we have high confidence that corporate swollen.
Tolerate into Q3 Q4, but very pleased with the overall performance of ourselves from account management teams in the first half of the year year.
Great. Thanks, and then the quick quick follow up just what changed in your thinking around the buybacks. Obviously, that's a very positive announcement and it sort of a change from how you explained it historically and should we read into that any less optimism around near term M&A potential. Thank you.
Optimism is as high as ever Gary we're very blessed and fortunate to have a lot of optionality and being able to balance both buybacks with also acquisitions. We continue to look at acquisitions, primarily within our big 3 segments. So we are prepared ready willing Gary to put additional capital to work with that.
Acquisitions in the big 3 as we identify candidates that we are very comfortable with that that has to include.
Candidates that we can certainly integrate that very quickly that meets the needs of our customers and accelerate our organic growth, but Gary. Please do not read buybacks is any less optimism equal to hire optimism, but we just have the ability to do both buybacks in acquisitions Gary.
[noise] keys. So your next question is from the line of true Mcdonald's.
B C capital markets. Please go ahead.
Yes, thanks, very much share good morning income of my questions already answered out of the cage here, Steve just cutting it maybe slightly different and just looking for a.
Probably a simple answer here, we've seen 2 consecutive increases in your in 2021 at work.
And both of those coming you know.
Quarter. After you provided the initial outlook so with your kind of 4 drivers of growth here.
Is there 1 single driver here that is really lifting the trajectory.
And if there is 1 or 2.
Does that just continue to lift as we kind of go forward here and then second question just around.
<unk> renewed COVID-19.
In packs.
<unk> talked about still some uncertainty.
Internationally.
A little bit more uncertainty now domestically here in in North American, particularly the US maybe talk to.
You are working assumptions here as to what unfolds in the back half of the year. Thank you.
Yeah.
Right that's true.
So.
<unk> the Christian.
The the first part.
Not the beauty of this business is we're not unduly reliant on any 1 lever.
So we've got.
Strength across the big 3 and within the Big 3 we have.
Multiple.
Growth bits and so we're pleased with the trajectory we see against those current bit, but we're not we're not unduly rely on any 1 of them to fire to fire on all cylinders from us too.
Has to achieve.
<unk> gardens growing food.
In terms of the your question will things continue to lift.
We went out 6 months into the change program.
<unk> comments, where we are happy with the stock that we've made but having said that.
6 months will be crucial execution, so with very focused on on net execution.
Led by Christy Roth and standard Pearson people across across their businesses.
And so I would say.
Lips, let's focus on that let's get through that before we.
Shipped out guys too true sort of further further optimism.
What we're trying to do is fundamentally reinvent the customer experience.
To your point, we still got an awful lot of work to do to to get through that.
But we are very optimistic that in success, it's gonna create a much higher customer satisfaction and give us the ability to grow our business.
Compelling and interesting ways.
And then in terms of the the.
The sort of uncertainty around COVID-19 in the Delta bearings.
We saw the impacts of cargo Donau business from 2020, particularly.
Reuters events.
The shipment built holds in print and softness and transactional.
2.2021, we've seen strength.
A rebound and all of those areas.
And so I think as we go forward, we sort of cautiously optimistic that things will continue to improve but certainly talk to our colleagues in places like Brazil, India, Indonesia.
We don't see any improvement yet so we keeping our expectations appropriately modest fear.
And we're watching very carefully as to what happens in the United States. If things continue to open up with confidence continues to increase or if there's.
Applause.
Net improvement, but as we sit here today.
We are confident that.
That how products and solutions will be more relevant.
And more valuable to our customers across the big 3 P&I in no matter, what environment that moved to the particularly in a sort of hybrid more flexible work environment.
That's great. Thank you.
Keyes you next question is from an online of caffeine free credit 6. Please go ahead.
Great actually wanted to start with just extending our sympathies to your loss and congratulate you folks on the results.
A I I want to talk a little bit about change program, specifically as it relates to come to the cloud conversion and how we should think about that within the context to the retention.
Specifically within legal Steve if we could because I think there's a real big opportunity you know kind of mid down market on the legal side. So just how are we thinking about that in terms of retention around those initiatives and are you starting to see the signs of that already just given the strength you've already seen in legal is at the strength of the client's relative to the law.
Cycle was that product is that change program, maybe just help us understand because obviously really really nice I'll come on the legal side.
Yeah.
So just as a reminder, in terms of our cloud migration. We started the year of 20 per cent of our revenues.
Public cloud went out with 33.
And we're on track to get 2 L stated target.
90% or more.
8 in the 2023, so on track from that perspective, and and credit to al technology and operations extending the hardworking.
Guiding us through that.
So I think the impacts.
OPEC.
Starting to be felt so to to your to your point Kevin.
Within legal.
Think the strength of illegal business is based on a couple of things firstly.
West Flores.
And secondarily practical wall.
Certainly high cute.
So.
You know, it's a product pits are paying off and we would quite a lot of talent and a lot of investment to those product pitch and it's paying off when we continue.
Can we plan to continue that focus on that level of investment be most key.
Firstly, secondly, I think we're seeing a very vibrant legal market, particularly the United States.
Can you speak with the heads of Wolfram themselves talk about shortage of his associates.
The biggest challenge is hiring talent and meeting the needs of their customers scheduling the meetings and the colds that they have with their clients.
So there's a there's a pretty robust liberal of activity going cross Meade.
Meat and large firms I don't think that the impact of the change program and the improvement in customer experience has been filled in legal yet we just at the stop and so I think that is.
As I said earlier that requires great execution for us, but very focused on that.
And we're cautiously optimistic that once we execute we'll see some will cease from upside benefits.
Yeah, Kevin I would supplement in addition to the cloud conversion being an enabler for our retention by the way legal is over our retention was slightly over 90% a year to day. The digital work that we're doing cleaning up David 1 carin strips areas. There will also help us Kevin, especially within small think as you're aware I would have.
Lower retention and a small wall higher retention in the global law led by feels stern, Paul Westlaw, 90%, 95%. So the combination of Steve mentioned cloud conversion digital Omnichannel work that we're doing.
Optimist optimistic that we'll see the improvement in retention I've stated in prior calls that were forecasting 100 basis points per total TR over the time horizon, certainly remain confident with that.
Great and then just real quick a follow up.
The buyback does does woodbridge participate in that or it'll be open market or just you know it. It sounds like you also reference to 10 B 5 Mike 1 point, but just any thoughts in terms of clarity on on on the buyback.
Sure Kevin is certainly a woodbridge will have the opportunity to participate like all shareholders. In Woodbridge has always been a great shareholder in great supportive hours. So they have the opportunity to participate.
Kevin.
Thanks, so much great job.
Huh.
Think he you next.
Is from the only all entries kind of non J P. Morgan. Please go ahead.
Hi, all.
Heard the Westlaw edge penetration numbers from the quarter and for the year and I wasn't sure if I heard the westlaw edge.
Revenue organic revenue growth contribution to legal I remember in the past has been like 100 basis points to legal.
Yeah, how long do you think westlaw edge could I continue to add Atmos range and maybe make a mentioned about the westlaw edge product roadmap as you add more margin walls will that be additional revenues for current westlaw edge customers.
Andrew a great series of questions. There are 57% ACB penetration as of June 30th.
Forecast that very confident will be in the 60% to 65% per year and that continues into 2022 [noise]. We will before we pick out there as we approach the latter part of 2022, Andrew I would anticipate us launching what we referred to internally is less LOL edge chewed auto.
That's the next version of less lull edge, Andy Martin's briefly referenced it during the March Investor day, but 100 per 100 basis points a lift in the second quarter, which is consistent with what we've been seeing Andrew and prior quarters. There. So no no change there we anticipate that continuing for several more quarters and we think.
<unk> <unk> can help continue with that momentum so we do not see any decrease.
In less law overall in the mid term time horizon, Andrew they're very competent their Wii, Steve and I were in Minneapolis, Saint Paul with that Andy Martin's David Long, Mike Day, recently, and making good progress on less lull edge to the other.
Well said thank you.
See you next question is from the line of tiny Captain Ah smoking Stanley. Please go ahead.
Thank you.
Corporate twist, a little bit later than I was expecting and I think there's still a way to go and it got to the 7 and 9 per cent target that you mentioned you mentioned corporate will accelerate in the back half of the year. So just maybe what's going on in corporate 10, what are the main drivers that are gonna help that accelerated and get up to that.
Target level by 23.
Yeah. Thanks, Thanks, Tony Thanks for the question sorry.
Just by way of context.
A history of Thomson Reuters corporate says a as a distinct segment is a relative newcomer and so I think it's fair to say that when <unk>, the president corporate stepped into that role.
In December of last year.
In the context of I'll be 3 it's something of a startup.
And so he's been working hard on a number of things. The first is I think he's assembled world class team.
Pulling together a bunch of punks with extensive experience with.
With with some very very talented newcomers from.
Predominantly software.
Governments secondarily human it team spent the last 6 months.
<unk> the the big areas of opportunity, we didn't corporate conserving general counsel's and hits, a tax and heads of risk.
Can we see if he can.
Some some pretty significant growth opportunities, which is reflected.
Not only you know second half predictions, but also outlook for the for the next couple of years and I include indirect tax and the recently announced a partnership with with Oracle.
I also.
It also includes the.
Increased penetration of some of the key legal products like wish Lauren practical low to the general counsel's offices, and then last but certainly not least.
<unk> brought in compliance business, which which previously has been more focused on government agencies through steeply and his team.
Pretty big opportunity to better serve the heads of risks risk income bonds within within corporations with with clear and tiara serious and some of the other punished we have.
All of that adds up to the accelerating growth rate that you see.
Country.
Great I also wanted to ask about what you're seeing in terms of your own hiring I always heard from so many other income services company is that turnover is maybe a little bit higher right now like I said that at our labor market.
Just in terms of what are you, saying.
In terms of voluntary turnover and ease of finding good people. Thanks.
Yeah, Tony So 1 of the things that I'm.
Very proud of an out.
And now at last I did months or so has been <unk> ability to attract low cost talent.
You have an objective.
True true to create the best team in business information services in and we started that journey Ah. Most recent addition to the team was share Wilkinson Who's now Chief Information Officer.
She joined from NHS digital Wishy was previously to see young.
And and share is the latest unit in a long line of of I think correct. Your talent that we've added to the existing.
Long tenure.
T T a bench a challenge.
Just you know I talk to and I look at that final sign or are we getting the people that we need and want.
Externally.
The answer is yes, I think secondarily is al talent development, New talent development.
Approach working for.
Existing Ti talent and I think I would give a cautious shifts to that with more work to go we are seeing up and downhill organization an uptick.
In in nutrition, and voluntary attrition the mark the the labor market is hot.
And of course, the virtual working virtual working environment I think has given people not only a TR, but across the industry a little bitch brought them their aperture a little bit in terms of the kinds of opportunities prepared to to entertain and the types of colds. They prepared to take so we are reminded very vigilant.
To make sure that that attrition doesn't become a problem for us. It is not tonight, just picked up but it still manageable and we'll we'll put in place all the measures we made to ensure the best times because.
Perfect. Thank you.
Your next question is from the line of Georgetown Goldman Sachs. Please go ahead.
Hi, Thanks. Good morning, you seem very good traction with your change program with respect to efficiency gains and benefits to the top line as well just wanted to.
Explore the potential for margins longer term certainly you you have the 20th 23 targets out there for for EBITDA margins that that will be integrated but as you think longer term, where do you think overall corporate EBITDA margins can can trend too with giving your progress.
So far with change initiatives.
Yeah, Georgia, where certainly will remain very confident in regards to the guidance that we for Friday at 422 and 23. So for 2023 is 38, 40%. We remain very confident that we're not prepared to day date George to talk about 24, 25 day I would just say as we go into 24.
Sure.
We should certainly see continued sustainability some potential increases given the operating leverage that we have in our business as discussed before once we hit 3 per cent organic growth, which we are the operating leverage kicks in given that about 60% to 65% of our costs are fixed in nature. So.
Focus on 22.23 guidance now George.
Understood and then let me be a follow up question on the corporate side.
You you talked about various drivers accelerate the growth to to your longer term targets.
And for a book by by 2023.79 per cent.
As you think about cross selling how big of a lover's that cross selling legal and taxing accounting within incorporate in terms of your.
Full of getting to that <unk> 2023 target, how big of a driver's constantly.
Yeah sure I address the cross so question I would just supplement Tony's question previously that Steve addressed 1 of the reasons, we have optimism with our Q3 Q4 uptick in corporate overall organic revenue is the underlying book the business that we built in Q1 Q2, so the net sales performed really well.
And the first half half of the year in regards to cross sales George we're at the early stage. The early innings right now in cross. So we are optimistic there, especially with snail, pendants as Steve mentioned earlier in the chair about 7 or 8 months now. So we still believe we have good optimism in regards to accelerating.
It's a relatively small portion now for total key are about 15% of our gross sales are generated the across cell activity comparable within corporate so we have significant opportunity over the time horizon to generate more cross cell activity and that's something that so Neil was working with David Wang and Sean Malhotra and.
Product can engineering to ensure that as we enhance our products and build new products that they will enhance our opportunities for further cross so yeah towards the other thing I would add to that is is the.
We're excited about the possibilities that will the crude to tee off from the.
Partnership.
And.
It's a learning experience for us it's partnerships are not something that the company is not a lot of in the past.
And we are cautiously optimistic that with those learnings we can both expand that relationship would consider others at different parts of al about products that.
In Georgia, just 1 final point US a statement to an austere Wilkinson Kirstie, Andrew others working on the change program at core component thereof is expanding our salesforce dot com and in common instances there have a sales force and that will certainly help I think about the infrastructure and underlying business systems.
It makes it easier for Uhm I'll go to market teams led by Brian packed a rally to drive cross though.
Great. Thank you very much.
Okay. So your next question is true.
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T T securely cheese. Please go ahead.
[noise] I assume that for me can you guys hear me.
Yes, yes, we.
Yeah, Yeah, it's bench.
Valentini so [noise].
First off congrats on the results from the share price today I assume a new all time high will help without a employee retention that you were talking about earlier. My question is quite simple, there's a ton of optimism and the result share it and your and your commentary so far to several of the questions, whether it's Wifi abstraction, whether it's true.
Improvement in corporate from across the board.
Is there a reason you're not increasing your 2000 twenty-three target yet is that just simply saying that is still a weighted often do you want to be conservative or I have to assume there's an upward bias true true those targets now unless there's some unforeseen sort of macro negative events between now and then is is that a fair conclusion.
Yeah dance I would address it as follows optimism is balanced with reality that we have to execute like Hell every day and we have to win every day, but that's our approach today and that's going to be our approach tomorrow, we're not going to take anything for granted and we have to earn it. So there are a lot of quarters between now and 2023 so low.
Confident in our team, but we also are grounded in the reality that we have a lot of work to do with our change program.
Steve referenced earlier in the rest of this year and into 2022.
So what I would say events, we reaffirm we're very confident today in our 2023 and will provide an update in February 122, and 23. So we're gonna continue to to work or change program. We're gonna work on accelerating the top line, we're going to work on improving our customer experience and we take care of our employees and we take care of.
Of our customers I think our confidence level in 2023 will just continue to increase that would be my viewpoint.
I'll leave it there thanks.
Date operating we'd like to take 1 final question. Please.
Thank you you will final question is from the line of 10-K C band No capital market. Please go ahead.
Yeah..2 for me can we just revisit the the change in the buyback.
Messaging I mean.
Like you've been pretty consistent that you wanted to retain a certain level of flow and whatnot. Just if you could walk us through what how you are thinking has changed their and and what we investors should think about in terms of how much you plan to execute on on the buyback program and the second 1 for you Steve 1 of the law.
Leavers you haven't talked about is is pricing power.
Could you just from a high level, maybe walk us through your thinking on that in terms of how that factors in in terms of your organic growth assumptions. Thanks.
Yeah, Tim Let me focus on the first question Force I'm Gonna give you a 2 part answer first historically, we've talked about 70% being an important threshold in regards to Woodbridge ownership prior.
Prior to today's announcement on the bike back 66% ownership by Woodbridge, and we've talked about maintaining at around 70% based on our recent analysis a different way to look at it is the availability of public float [laughter] given that our market cap now exceeds 50 million.
Working with our outside advisers, they feel like $10 million 10 billion 10 billion of public float.
It's really a sufficient amount so right now we have 20 billion. So that gives us great confidence in being able to do the 1.2 billion today, Tim and we can certainly consider more.
If the board agrees over the time horizon, certainly balancing that with M&A. So I think it's a combination of.
That's kind of 70 per cent threshold that we've discussed in the past, but also balancing that with the availability of public flow, which exceeds 20 billion today and and our advisors believe.
Believe that we are in a very good position to be able to do additional buybacks like today Jim.
And then Tim the second part of your question with regard to pricing.
We have a good.
A good record all.
Getting price.
Is appropriate is particularly asleep at new features and functionality throughout throughout products.
The change program is about transforming a customer experience.
It's a couple of months when we reported Q3 in early November and have a good day.
Thank you presenters and thank you everyone for joining that concludes our call. Please disconnect your lines and enjoy the rest of your day.
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Mhm.