Q3 2021 Thomson Reuters Corp Earnings Call

Good day and welcome to the Q3 2021 earnings call. My name is Joanne and I'm. Your event manager during the presentation. Your lines will remain on listen only and if you require assistance at any time, Keith key star and zero on your telephone and a coordinator will be happy to see Steve I'd like to advice all parties.

This is being recorded for replay purposes, and now I'd like to hand, David Frank Golden Head of Investor Relations. Please proceed.

Thank you.

Morning, and thank you all for joining us today for our third quarter 2021 earnings call.

I'm joined today by our CEO, Steve <unk>, and our CFO, Mike Eastwood each of whom will report our results. We will take your questions. Following our presentation.

To enable us to get to as many questions as possible. We would appreciate it if you would limit yourselves to one question each and one follow up when we open the phone lines.

Throughout today's presentation, when we compare 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 I am for other 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.

Access these documents on our website or by contacting our Investor Relations Department.

Now ill turn it over to Steve pastor.

Thank you Frank and thanks to all of you for joining US Tonight I'm pleased to report the momentum we saw in the first half of the year continued in the third quarter.

Revenue and sales performance was strong.

Exceeded our expectations and position us well for Q4 and 2022.

We expect to close out the year on a strong footing and appreciate the efforts of our sales and our go to market teams.

This strong performance demonstrates our market to remain healthy and growing and our products across legal tax corporates and risk fraud compliance fit the needs of our customers.

Products enable them to effectively equip their professionals to better serve their clients.

We're also seeing improving customer engagement, including 8000 registrations for our annual legal tax and corporate synergy conferences around the world.

These conferences are a premier events for professionals, who want to understand the future of the professions.

The latest trends and experience how tools and data driven technology can transform their firms organizations agencies enrolls.

Our leadership team, including the president of our corporate business, So Neil N detail and the president about tax and accounting professionals business Elizabeth Easter him will be joining nearly 2000 of our customers for the upcoming synergy conferences in November in Nashville.

And as I mentioned last quarter our.

Customers continued to exhibit confidence.

In both an improving economic environment.

And in your own prospects.

This potent ecosystem plays to our advantage and we will continue to capitalize on the opportunities we are seeing to drive growth and expand out positions.

Now to the results.

Our third quarter results reflected a standout performance.

For about five business segments recorded organic revenue growth of 6%.

That performance resulted in total company organic revenue growth, 5%, putting us well above the three 5% to 4% third quarter guidance provided in August.

Our healthy markets are providing us with a tailwind.

That tailwind coupled with our nine months results give us confidence in our prospects for the fourth quarter.

As a result, we once again raised our full year revenue and free cash flow guidance.

Full year total company organic revenue growth is now forecast to be between four five and 5% and approximately 6% for the big three businesses.

Free cash flow for the year is now forecast to be approximately $1.2 billion.

Turning to our change program, we're making consistent progress as we work through as we work towards becoming an integrated.

Operating company.

As of September 30th we recorded runway savings of about $130 million, putting us on a path to achieve $200 million by year end I'll remind you our aggregate savings target is $600 million by the end of 2023 $200 million of which we plan.

And to reinvest in the business.

Finally, we were active during the quarter executing on the $1 $2 billion share buyback program, we announced in August we've already bought back $1 $1 billion of stuck and we expect to complete the program before year end.

So given the progress we're making we also reaffirmed our guidance for 2022 and 2023.

Now to the results for the quarter.

Okay.

Third quarter reported revenues were up 6% with organic revenues up 5%. Thanks to strong results from the big three businesses and Reuters.

Contributing to this performance with strong organic growth of more than 20% from our Latin American businesses, and nearly 10% growth from our Asia and emerging market businesses.

Adjusted EBITDA declined 7% to $458 million due to costs related to the change program.

Resulting in a margin of 30%.

Excluding change program costs adjusted EBITDA margin was 33, 5%.

Adjusted earnings per share for the quarter was 46 cents compared to 39 cents per share in the prior year period.

Turning to the results by segment the Big three businesses achieved organic revenue growth of 6% for the quarter.

<unk> third quarter performance was again strong with organic revenue growth of 6%. This was legal second consecutive quarter of 6% Cogs its highest quarterly growth rate implied about a decade.

The U S legal market continues to be very healthy across the board for small mid and large sized spends as well as for government and across geographies.

For example, west lower age continues to achieve strong sales growth and ended the quarter with an annual contract value or a C V penetration of 60% achieving our full year ACB penetration guidance.

Second practical law as reported in the legal segment continues its strong performance again growing double digits, we forecast similar growth in 2022 and continued to invest in these key legal workflow initiatives.

Third our government business, which is managed within our legal segment.

Continues to perform and grew 10% organically.

And fourth find law grew over 10% and our legal businesses in Canada, Europe and Asia. All grew in mid single digit in the quarter.

Legal again achieved strong sales for both the quarter and nine month periods recording double digit recurring sales growth, reflecting customers' willingness and ability to invest in productivity enhancing products.

Turning to the corporates business organic revenue growth increased two 6% from 4% in the first half of the year. This improvement came from increasing demand from customers for our legal tax and risk products.

And in tax and accounting organic revenue growth of 6% with stronger than expected. Thanks to our audit solutions products and a strong performance by our Latin American tax business, which is called Domingo.

Which grew more than 20%.

Reuters news organic revenues also increased 6% the second consecutive quarter of 6% growth. This was driven by the professional business, which includes Reuters events, which grew over 60% and continues to recover from the negative impact of COVID-19 in 2020.

Finally, global print organic revenues declined 5% less than expected due to a continued gradual return to office by our customers and higher third party print revenues.

In summary, it was another strong quarter, but were taking nothing for granted.

We continue to invest in the businesses to enable us to better support our customers and properly position us for 2022 and beyond we still have much work to do in executing our change program and we've assembled a talented team over the past 18 months, who are working well together and clearly understand our goals and timelines.

Pleased with our progress to date.

One additional comment regarding growth as you can see on this slide momentum has been building for our big three businesses over the past 11 quarters, which we believe will continue in the fourth quarter and into next year.

I know that many investors have historically viewed out market is slower growing and.

And have perceived our legal and tax businesses in particular as low single digit growers.

We firmly believe that's not the case and in fact, I think that with successful execution of the change program combined with appropriate investments, we can improve growth on a sustainable basis.

Our markets abroad and dynamic.

And we have strong positions in the right sub segments.

Also we have numerous levers to pull across our businesses and we're investing in our strategic seven initiatives, which are performing well and we expect they will continue to do so.

This confluence of factors places us in a position where we believe we can grow mid single digit on a consistent basis over the cycle.

These factors position us well to achieve the upper end of the range about 2022 revenue guidance of 4% to 5% will discuss about 2022 guidance when we report our fourth quarter and full year results in February.

Let me share. An example of products that we believe will continue to contribute to sustainable mid single digit revenue growth just referred to.

First your record recall at our Investor Day, I discussed our goal of becoming a content driven technology company, which includes excelling at product innovation and successfully integrating our products to provide customers with a seamless offering while delivering an excellent customer experience.

We expect this will further increase customer loyalty and increase retention as we continually enhance our products, adding to organic growth.

And at Investor Day, I highlighted seven strategic priorities reflected on this slide.

Those include several of our legal workflow solutions IQ practical law and contract Express.

Last month, we released the latest version of high Cube.

This release features key integrations with practical law contract Express elite <unk> and Microsoft teams and includes more than 50 enhancements and upgrades.

An example of an integrated workflow solution that customers are asking for.

It helps legal professional and other corporate professionals working with our legal team to identify their work and improve client satisfaction.

This leverages contract express to automate improve documents eight.

It enables lawyers destruction messes with practical law and and integrates elite three data with high cube visualization tools to provide greater transparency around client spend and work in progress.

This is truly an integrated legal workflow solution and an example of content driven technology.

Today. These four legal products are growing double digit.

Comprising over 10% of total company revenue and.

And are contributing to the improving growth in both our legal and corporate segments.

<unk> is just one example of how we're building holistic solutions for our customers through greater product innovation and integration.

I expect to share more such examples of product innovation with you in the coming quarters. One final example of how we're driving innovation before I turn it over to Mike.

Two weeks ago, we announced the establishment of a $100 million corporate venture capital fund focused on the future of professionals.

Thomson Reuters benches will continue will concentrate on investments and portfolio support for companies building breakthrough innovations that will allow professionals to operate more productively and with greater insights hidden focus across the legal tax and accounting risk fraud compliance and news and media markets.

To identify and support innovative companies to help out customers to live up more to their clients.

The fund will be overseen by our Chief strategy Officer, Pat will but it's an example of how we're thinking about driving more innovation across the company and seeking new opportunities to further strengthen our businesses.

Now, let me turn it over to Mike for more detail on the results for the quarter.

Thank you, Steve and thanks for joining us today.

As a reminder, I will talk to revenue growth before currency and on an organic basis.

Let me start by discussing our third quarter revenue performance of our big three segments.

Organic revenues and revenues at constant currency were both up 6% for the quarter.

This marks the fifth consecutive quarter, our big three segments have brought at least 5%.

Legal professionals total and organic revenues increased 6% in the third quarter.

Recurring organic revenue grew 6% and transaction revenues increased 10% related to our elite fine law and government businesses.

Lastly, all edge added about 100 basis points, the legals organic growth rate and maintaining a healthy premium and is expected to continue to contribute at a similar level going forward.

Our government business, which is reported within legal and includes much of our risk routing compliant compliance businesses had a strong quarter with total revenue growth of 11%.

And organic growth of 10%.

In our corporate segment total and organic revenues increased 6% due to recurring organic revenue growth of 7% and transactions organic revenue growth of 2%.

Recurring revenue was driven by practical all indirect tax and clear.

As well as our businesses in Latin America, and Asia and emerging markets.

And finally tax and accounting total and organic revenues grew 6% driven by 10% recurring organic revenue growth.

Growth was driven by the Latin American businesses and audit solutions, which includes combination.

Transactions organic revenue declined 9%, resulting from the year over year timing of individual tax filing deadlines.

I will remind you last year paper return revenue shifted from the second quarter to the third quarter.

<unk> for this timing organic revenues for tax and accounting, we're up 11% in Q3.

Moving to waters news.

Third quarter performance was strong achieving total and organic revenue growth was 6%.

Primarily due to agency business and professional business, which includes Reuters events.

And global print total and organic revenues declined 5% at the lower end of the range, we had forecast of minus 5% to minus 8%.

We expect full year global print revenues to decline between 4% and 6%.

On a consolidated basis third quarter total and organic revenue each increased 5%.

Before turning to profitability, let's look closer at recurring and transaction revenue results for the third quarter.

Starting on the left side total company organic revenue for the third quarter of 2021 was up 5% compared to 2% in the third quarter of 2020 due to the impact of Covid.

If we look at Q3 2021 performance for the Big three you will see organic revenues increased 6%.

Compared to 5% in the same period last year.

Total company recurring organic revenues grew 6% in Q3.

230 basis points above Q3, 2020, and the big three recurring organic revenues grew 7%, which was above last year's third quarter growth of 5%.

Turning to the graph in the bottom right of this slide transaction revenues were up 8% as of third quarter of 2020 was impacted by Covid.

Effected our implementation services and the borders events business.

We continue to remain encouraged by our momentum in 2021, especially for recurring revenues.

It gives us confidence in a directory of the business and sustainability beyond 2021.

As.

Obviously stated by Steve we have increased our full year revenue guidance.

Starting with the total TR chart on the top left.

Now estimate full year total and organic revenues will grow between four 5% and 5%.

This is an increase from the previous guidance of 4% to four 5%.

The big Greenfield organic revenues are now forecast to grow approximately 6% for the full year.

From the previous guidance of five 5% to 6%.

Moving to Reuters news, we forecast full year total and organic revenues to grow between 3% and 5% driven mainly by our broadest professional business.

This is an increase from the previous guidance of 2% to 3%.

Finally, global Pratt full year revenues are expected to decline between 4% and 6%.

An improvement from our previous guidance of a 4% to 7% decline.

Turning to our profitability performance in the third quarter adjusted EBITDA for the Big three segments was $468 million up 7% from the prior year period.

The strong EBITDA growth for each of the three businesses was driven by higher revenue growth and a benefit from 2020 cost savings initiatives.

All set by incremental business as usual investments in advance of 2022.

As discussed in the second quarter, we are investing more in go to market initiatives enterprise technology, and data and analytics capabilities and the second half of 2021 with a greater concentration of spend in Q4.

I will remind you the change program operating cost are recorded at the corporate level.

Moving to Reuters news.

Adjusted EBITDA was 25 million $2 million more than the prior year period, driven by revenue growth.

Global Print's adjusted EBITDA was $52 million with a margin of 35%.

A decline of about 600 basis points due to the decrease in revenues and the dilutive impact of lower margin third party revenue.

So in aggregate total company adjusted EBITDA was $458 million, a 7% decrease versus Q3 2020.

Excluding costs related to the change program adjusted EBITDA increased 4%.

The third quarter's adjusted EBITDA margin was 30% and was 33, 5% on an underlying basis, excluding cost related to the change program.

Now, let me turn to our earnings per share free cash flow performance and change program cost.

Yeah.

Starting with earnings per share adjusted EPS was <unk> 46 per share versus <unk> 39 per share in the prior year period.

An 18% increase.

The increase was primarily driven by a decrease in depreciation and amortization and lower income taxes, partially offset by lower adjusted EBITDA.

For the full year, we have decreased our tax rate guidance to between 14% and 16% due to favorable results from the settlement of prior tax years in various jurisdictions.

Currency had a <unk> <unk> positive impact on adjusted EPS in the quarter.

Let me now turn to our free cash flow performance for the first nine months.

Our reported free cash flow was 1 billion versus $881 million in the prior year period, an improvement of $120 million.

Consistent with previous quarters. This slide remove the distorting factors impacting free cash flow performance.

Working from the bottom of the slide upwards to cash outflows from the discontinued operations component of our free cash flow.

$59 million more than the prior year period.

This was primarily due to payments to the UK tax authority related to our former <unk> business.

And the first nine months, we made $94 million of change program payments as compared to refinish it related separation costs.

$7 million in the prior year period.

So if you adjust for these items comparable free cash flow from continuing operations was just shy of $1 2 billion.

327 million better than the prior year period.

This increase was primarily due to higher EBITDA and favorable working capital movements and dividends from our interest in <unk>.

Now an update on our change program run rate savings.

In the third quarter, we achieved $42 million of annual run rate operating expense savings.

This brings the cumulative annual run rate operating expense savings up to $132 million, while the change program.

We are forecasting to achieve 200 million accumulative annual run rate operating expense savings by the end of this year.

As a reminder, we anticipate operating expense savings of $600 million by 2023, while reinvesting $200 million back into the business or a net savings of $400 million.

Achieving $200 million of operating expense savings by the end of 2021 would put US one third of the way towards our goal of $600 million of gross savings by 2023.

We will continue to provide quarterly updates.

On run rate change program savings.

Now an update on our change program cost for the <unk>.

Third quarter and the rest of 2021.

Spend during the third quarter was 79 million, which included $53 million of Opex and $26 million of Capex.

Total spend in the first nine months of the year was $170 million.

We now anticipate Opex and Capex spending between 120 $150 million in the fourth quarter.

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 now expect change program Opex and Capex spend to be between $290 million and 320 million. This is slightly lower than the previous guidance range of 300 million to 300 $350 million.

We expect a lower spend in 2021 to carryover into 2022, as we are still expecting to incur approximately $600 million over the course of the program.

We will provide formal guidance on change program spend for 2022, when we report our fourth quarter results in February.

There is no change in the anticipated split of about 60% Opex and 40% Capex.

We will continue to provide quarterly updates on our change program spend.

And as Steve outlined today, we increased our full year outlook for total TR and baked III revenue growth.

We also increased our full year free cash flow guidance to approximately $1 2 billion.

Additionally, we have slightly lowered our guidance on change program spend for both Opex and Capex for 2021 and carry that under spend over to 2022.

We have also decreased our effective tax rate outlook, both of which are reflected on this slide.

Lastly, we reaffirm the balance of our full year 2021 guidance 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 Steve that concludes our formal remarks.

On our third quarter results and we'd like to open the call now for questions. So if we could have the first question operator please.

Anthony Thanks Heath, just a reminder to ask a question.

And then one on your telephone and if you decide to withdraw that question Don and team.

We'll be advised win to ask your question.

First question for today comes from the line of Queen Mcdonald's with RBC.

These crazy three or late in the call.

Thanks, very much and good morning.

My two questions first a great team here, you're tracking to the upper end.

Of your growth.

Growth guidance for next year. So thank you for that data points.

Just wondering in the current inflationary environment could you just give.

Give us some context around how volume.

Since price dynamics are changing if at all as we move to the end of this year and into next and then just as a follow up.

On the M&A environment.

Maybe Steve if you can provide us just with an update on kind of where things stand on that front and how you're balancing that with the with the buybacks. Thank you.

Drew thanks for the questions in regards to the inflationary and the volume price dynamics, we're not currently seeing much change.

In regards to the pricing dynamics that we've discussed on prior calls they remained very consistent throughout 2021, just as a reminder, a significant number of our customer contracts under multi year group agreements with about 60% and legal 40% within corporates and 10% with some within our tax business there.

So something we're certainly keeping an eye on drew.

But no significant changes thus far on the price volume dynamics, there I Echo Steve's comments earlier, we're seeing very very strong consistent performance for all of our sales and account management teams, which are driving the results.

Yes, Andrew.

Steve So.

The answer to your M&A question.

As we've mentioned on prior.

Quarterly calls we have a.

Pretty robust pipeline that we're constantly.

Replenishing of opportunities really focused in and around our big three.

And.

We've spent the last quarter of doing as we did the previous quarters, which is looking hard at a number of those.

Remember those targets and it's not for lack of trying we haven't done any any meaningful deals in.

In 2021.

I'd, particularly call out Scott Nelson, who leads a lot about M&A related activities for <unk>.

He is.

<unk> and hard work the reason we haven't done it if we hold the bar very high we want to make sure that Thomson Reuters since the advantage Donna if any asset that we buy and that the business. We buy is complementary to rather than complicated of.

The change program.

And additive to the customer experience.

As you noted prices are elevated so that just keeps that by.

Even even Han and we're optimistic that as we continue to turn that turn the crank on that pipeline.

Deals will come into view that makes sense for us, but we'll continue to be unapologetic, we don't do the.

We are very very focused on the core business to existing and new customers in the change program.

And M&A will be secondary to that.

I would just supplement in regards to your question on M&A.

Activity and look at capital strategy overall, certainly we are nearly complete the $1 2 billion.

Buyback question might be what we consider additional buybacks in 2022, it's an option that we have also has mentioned before.

We discussed the annual dividend increase with our board every January I would anticipate an increase as we go into 2022, we had a 7% dividend increase for 2021. It wouldn't surprise me. If we are in the 10% range, which is the midpoint from our value creation model for 2022, and beyond which would certainly rich.

Flex our confidence in the free cash flow generation.

That's that's all great color. Thank you.

And our next question comes from the line of Kevin Mcveigh with Credit Suisse. Please proceed Kevin your line of Cogs.

Great. Thanks, so much and congratulations on a really just that.

Exceptional outcome, given the change program and everything it's just really underscores the execution hey.

I guess this is the creative flavor, Mike within the context of the V.

We see fund and if I heard you right Steve It sounds like you know the legal you've got the highest growth.

And a decade it feels like there's a little bit of a structural component to that.

Can you help us understand how much kind of maybe the retention improvement was associated with that as opposed to.

New products.

Hi, I'm, just any incremental comments on new product innovation and how we should think about that longer term growth within the context of the D. C. On you just announced.

Yeah.

I'll start and Kevin.

And I'm sure Michael Ed Thanks for the post the word of congratulations where we're particularly appreciative of all of the hard work that.

That I have colleagues.

We have put in this year and particularly in the third quarter.

In terms of legal I think the thing Thats pleasing is that.

That sort of uplift in performance and a robust year to date is not reflective of any one particular sub segment.

In legal or any one particular product.

Or price in favor of quantity of us versus or I think it's a pretty balanced diversified.

Set of contributors.

The Sinton mentioned small law as an example has really picked up through the through the second and third quarters. So the smallest of all of our legal customers are an important part of that business are starting to be more optimistic about the level of activity that they are seeing amongst their clients mid.

Midlevel continues to perform in the largest law firms of course, particularly those with diversified.

Corporate finance related.

Practices.

We are enjoying a good year so.

We're pretty.

We're pretty optimistic about where that sits and we think we can continue to continue that performance as we said.

As it pertains to new product innovation. This is a major area of focus for us at Thomson Reuters.

You will remember that.

Pretty early on in the going last year after Mike and I.

Took out Roe.

You went out and we attracted David Wang as our new Chief product Officer, David came from Facebook, we elevated Shawn mihal.

As our head of engineering based.

With us in Toronto.

In our Tech Center, we also under Kirstie Ross' leadership with replenished.

The elevated some of the talent within our within our operations and technology function more broadly to make sure that we're building on a very very solid foundation.

The product that I talked about which integrates practical law and contract for express.

<unk> is an example of that.

And we have more to come you will see us I think be pretty modest.

Terms of our cadence of product innovations through 2022, but with a very aggressive exploration thereafter to become.

The leader in terms of product innovation in the segments that we serve and it's a really important part of the focus that we're putting on putting on the company and it is the primary focus and then sort of the <unk>.

Bolt on M&A will be the secondary focus after that.

Kevin I will just supplement the entire portfolio the legal did really well in the third quarter, we've talked quite a bit about less LOL edge with the 100 basis points of impact for us.

We will continue to drive additional penetration with western I'll add as we go into 2022, we've already get to 60%. This year, which was our goal of 60 to 65 practical law Ley by mall, all did really well in our regions in Asia emerging markets and government Ikea.

Hi to you that we acquired in July of 2019 as.

Well, so really solid performance I think you asked about retention, Kevin Bill illegal business, we're approaching 91%, which was a slight uptick versus 2020, so really good performance across the board for legal.

Okay.

It took an uptime, congrats again and really just fantastic outcome.

Yes, Thanks Kim.

So.

Thank you. Our next question comes from the line of tiny Cat and from Morgan Stanley. Please Crazy Kennedy.

Thank you.

Wanted to ask another question about the venture.

Venture Capital Fund that you started are you viewing this as an M&A incubator or a way to keep sort out more on the ground with trends in the industry or is this really just an interesting investment Avenue for you and and way too sorry, guys.

Get innovation I guess.

Yes, Hi, Tony.

I think I think it's a little bit of all of them, but I would put more emphasis on.

On.

Opening in increasing our aperture to new innovations at the periphery of our core segments I think.

That for me is the biggest area of focus as I said.

In response to Kevin's question, we've got a real <unk>.

Francis on putting an organic buildup of new product innovations to serve our customers in our core markets that is a huge area of focus and we view this as supplementary theres a.

Theres, a fair amount of venture capital money going into for example, legal workflow solutions.

In areas like risk fraud, and compliance and we want to make sure that as a company and as a group we're very much keeping abreast of those and aware of those and we can't think of a better way than to put some capital to work to make sure that we have.

Continually getting smarter as to what's going on in and benefiting.

From those innovations and allowing our customers to benefit from them.

As to whether it leads to M&A down the track I would certainly hope it does.

But that's probably not the primary focus.

Terrific.

To ask also.

Last quarter, you had expected <unk> to come in at five five and a half for the big three came in at six so that was a great result.

Thank you expected tax and accounting to be low single digit and that came in ahead.

Was there anything in particular that drove the strength or where are you trying to be conservative because of the difficult comp.

Just anything on sort of where are the real strong outperformance came from versus what you had been thinking last quarter.

Yeah, Tony I'm happy to start there I think it really happened across the board. We just shared some comments with Kevin in regards to legal so I'll just focus on the corporate segment now we had really strong performance from practical law as a reminder, practical all comes in both legal professionals incorporate the indirect tax business did well as did <unk>.

Clear once again clear split between the government business and also corporates within tax <unk> accounting, we had really strong performance as Steve mentioned from our Latin America businesses, specifically Dominion the tax business and within Elizabeth business Audit solutions did really really well so we.

Had really good momentum across the board Tony from all of the segments, including print and Reorders.

So I don't have orders events, we haven't done any physical events. Thus far through Q3, we will have a physical event for orders.

An in person in Q4 to really good momentum across the board or Tony.

And retention is a slightly increasing across all of our segments I mentioned reorders earlier, but we're seeing a slight uptick also in corporates and tax and accounting for retention.

Thank you.

Thank you Tony and our next question comes from the line of George Tong with Goldman Sachs. Please proceed George.

Hi, Thanks, good morning.

With what's what edge ECB penetration reached 60% in the quarter can you provide your updated thoughts on where you'd like to see penetration by yearend and longer term.

Georgia two components, there I would say by year end, we're looking at 63% to 65% for year end 2021 over the time horizon, we think penetration will reach around 75%. So additional runway as we go throughout 2022 and by the time, we reached the Max penetration.

We'll have released westleigh edge to dot owes what we're referring to it.

Internally there so George we're very confident we'll be able to sustain the 100 basis points lift that we're seeing from a less LOL edge in recent quarters.

Very confident on Westwood, all edge and in the next version.

Got it that's helpful.

You're seeing progress all seven investment areas of the change program can you talk a bit about where in the <unk> program Youre seeing the most progress.

Yeah.

Yes George.

Good morning.

Look I think as we laid out at Investor day and beyond.

Got three components to the change program with the first is building a whole new set of capabilities and service of our customers, particularly in digital self serve omnichannel.

We have introduced the first versions of those all of those capabilities to some of our marquee products here in the United States.

And I would say that that is on a little bit ahead of track, but its very modest in the context of our full product suite and all the geographies that we that we do business change. So I would say a good start but much work to do.

The second component of the change program of course is the modernization of our operations and technology stack.

We think that we can significantly enhance the customer experience by.

Improving and making more contemporary that tech stack, a big part of that causes to my question about of our revenues and our products to the cloud we've set out an aspiration to get to well above 90%.

2023.

As a percent of revenues in the cloud where we're currently at about 35, which is slightly ahead of where we thought we'd be so good.

A good progress, but still a long way to go.

And then the third is really optimizing and right sizing.

Our organization now organization structure and design and <unk>.

Location strategy and there I think we've made.

Made really good headway.

In 2021, so far.

We put the sort of if we could.

To get up I think executing at or slightly ahead of plan on that one.

I think the impact is pretty evenly spread across those three big believers.

And I would say the change for our team is on track or slightly ahead of.

I thought it would be at this point, having said that we have an awful lot of work to do through the back end of this year.

And throughout 2022 to build the kind of capabilities and service of our customers and to make out of colleagues working lives.

Zero.

More productive.

Good good good start much today it George I would just add one additional milestone in regards to our customer experience, we refer to it internally as our customer success platform. It don't experience. We've got 85000 customers on it as of today and we're seeing a significant increase in the number of first time log ins and also the number of self service.

Action, so that speaks really well for our customer experience journey.

Got it very helpful. Thank you.

Okay.

Thank you George our next question comes from the line of money.

From Barclays. Please proceed with your lighten occur.

Thank you I was just hoping you can address.

Pricing environment than perhaps you've seen in between the big three segments, how much of that growth is coming from price volume.

Yes.

Sure.

I'll start with that in regards to pricing I mentioned earlier with <unk> question, the pricing that we're seeing in 2021.

Thus far is very consistent with what we've seen in the last couple of years provide complement.

Starting with tax and accounting professionals, we see approximately 5%.

As a directional viewpoint there.

<unk> is around 3% and LIBOR is 2% as I mentioned earlier can fluctuate quarter to quarter and year to year, given the number of multiyear contracts that we have across the segments, but pricing pretty consistent thus far this year.

Okay got it and just.

Any changes there.

Particularly on the legal side, which I think has been the most competitive historically or it has westleigh ads and some job innovations.

Widen that gap, even more now.

So a couple of comments went up for me I would say.

First of all we're very focused as I said earlier on.

On product innovation roadmap, we're happy with.

With what West, Florida, just being able to do for our customers. We're.

We're happy with the ICB penetration that we have driven.

That to date, and where we can take it.

For the rest of the year and beyond we're very focused on the next generations.

Of that product and have others.

Highly respectful of out of out of our competitors.

But I don't think at the moment, we're seeing anything notable in terms of.

In terms of changing level of competitive intensity.

Alright, thank you.

Yeah.

Thank you and our next question comes from the line of Andrew <unk> with J P. Morgan. Please proceed.

Hi, I just wanted to make sure I understood the fourth quarter implied guidance, obviously I heard your comments about continued momentum that built in the year into fourth quarter I think when you. When you do the math you get somewhere around four 3% organic revenue growth to make that full year $4.

5% to 5% for the year total company could you just go over.

That dynamic versus the 5% that you just reported.

No.

It does seem like a touch of deceleration and as you answer the question maybe also touch on.

Kind of recent trends in net sales to give us a sense of how you go forward momentum.

Sure Andrew in regards to net sales momentum has been good across the board as a reminder, Q4 is our largest quota period about 30% of our quota.

<unk> in Q4 and that splits by month about 30 October 30 November 40% December which is one of the reasons why we're waiting until February to update our 'twenty two 'twenty three guidance at that point, we would have full visibility into the net sales and book of business there.

In regards to Q4, Andrew I think the momentum continues certainly the year over year comps comes into play there to some degree given the COVID-19 impact.

I think overall, we feel good about the momentum across the board for all of the segments as we head into Q4, but it is the highest quota period for us.

Got it thank you.

Uh huh.

Thank you Andrew our next question comes from the line of <unk> <unk> with Canaccord Genuity.

Yeah.

Good morning, Thanks for taking my questions and congrats on the results. So far two for me first just to kind of follow up on that.

A question around competitive.

Reaction of competitive backdrop.

Can you just generally comment about when you look at that.

Element you have sort of more concerned about the incumbents the larger players have been competing with <unk>.

It more at the.

Software start ups that may be coming up with sort of.

More maybe.

<unk> innovative workflow solutions.

Maybe just talk about that landscape, a little bit and then secondly for Mike.

Can you just remind us about the UK tax dispute to where things stand I know that originally we were expecting an outflow in Q3 on account of that thank you.

Yes. Thanks.

Dave I'll start and then with the competitive question and Petsmart conducted a U K tax.

The tax question.

So.

We are very focused on but as I said the primary focus was on our product roadmap and and just getting better and better at understanding and.

And predicting meeting and exceeding our customers' needs. That's the primary focus however, very very respectful of the competitors in our core segments that have been with us for years and also the new and emerging particularly sort of V C.

In private equity funded software players.

I wouldn't.

I wouldn't put communicated it would be greater emphasis on one than the other.

With respect both both we watch carefully what they do and the kinds of.

Of new innovations are driving I think the picture probably varies a little bit as you move outside of the United States, where.

It does seem to be a little bit more activity amongst the new startups and software oriented players.

Relative to <unk>.

Relative to some of the larger incumbent clients, but but it's really a pretty consistent picture and quite balanced across both.

In regards to the U K tax dispute we did make a payment in Q1 of 2021 and we made the second payment in Q3. So those payments for 2021 are behind us as the majority of those payments are reflected on our balance sheet as a long term receivable.

Our intent and believe that we will recover those over the time horizon.

Yeah.

Thank you.

Thanks, Laura Thank you and our next question comes from the line of.

With Scotiabank. Please proceed.

Good morning, Steve could you give us maybe a sense of where you would see opportunity to broaden out the platform in the big three verticals.

The second part that maybe ties to it is.

Give us a sense of where you're at on the product rationalization journey as a move towards more of a platform. We've noted that you've obviously given end of life notices on products like E Discovery point and others and then just final one.

Can you recap that cloud transition comment as well I think I heard you say, 90% up from 35. Thanks.

Yeah sure. Thanks, Paul.

<unk>.

We see plentiful opportunities.

To expand within the within each of the big three.

Just a couple of quick examples.

I gave the example in my prepared remarks about.

The extension of <unk> and the integration of hockey with practical law.

<unk>.

Contract Express in the late <unk>.

We are just scratching the surface in terms of.

Our presence in.

Legal workflow software and our ability to.

Integrate that software without.

Flagship research products.

We really think we're just scratching the surface and we're excited by what we see.

With high Q, and how we've been able to.

Hudson grow very significantly over the last year or two.

That looks like an acquisition that we made where we've been able to sort of really take it to a different a different place relative to where it was prior to Thomson Reuters ownership.

And accounting.

Being very.

Significant growth in order.

On the back of the confirmation acquisition. So that's I think one example in tax and accounting, where we see some opportunity I think the other air and texting accounting is international.

Heavily U S focused in tax and accounting and I think that's a that's an industry.

And our customer need that is truly global.

We'd like to think that there is some some lots of runway internationally and then incorporates this is al I'll sort of heme essentially our newest business unit.

And.

We put the pieces in place under <unk> leadership, and we're starting to see that pick ups of 4% for the first half and then 6% for the third quarter. So the signs are good of good vibrancy in corporates and there are many areas of opportunity there including.

Areas like indirect tax and global trade, the one that I'd really point to those.

This quarter in compliance.

Our risk franchises with clear and Trs SaaS under Steve <unk> leadership, a very government focused.

We're proud of that both of those businesses and particularly proud of what Steve and his team have been able to do.

But in addition to that we think that our ability to.

To provide risk fraud and compliance solutions.

The highly sensitive.

What unique.

And we're excited about exploring that further in the corporate segment going forward. So that's the first part.

Part of your question on product rationalization, I think we're making good progress, but we've got a long way to go as a result of.

Many many acquisitions over the years, we do have I think a fairly long tail products.

With that.

So that we can.

<unk> rationalized from a financial perspective, they are not particularly significant in terms of there.

Important to our financial profile, but but the more we rationalize the simpler we become.

Obviously, the less complex.

<unk>, some technology challenges become and I think thats, a very important part of the journey that we're on.

Just to clarify on that cloud thirdly, and lastly, my cloud.

Conversion comment so.

We're making a transition whereby in 2023.

By the end of 2023, we will have over 90% of our revenues.

In the public cloud.

And so that's the journey. We're on we're currently at 35%, which is slightly ahead of where we expect it to be.

End of the third quarter 2021, so happy with that journey progressing well and are optimistic that we'll get to exactly where we want to get.

Operator, we'd like to take one final question. Please.

Thank you our last question comes from the line of Douglas Arthur with Keybanc. Please proceed Douglas.

Yes. Thank you.

Mike You mentioned.

And I guess slide eight.

<unk>.

Benefit you got from the events business, even though it was still virtual coming back and you've also called out a couple of some strong growth in some international markets I'm just wondering when you look.

The year over year growth Q3 to Covid quarter.

Still COVID-19 last year is there any way to sort of normalize.

The organic growth for some of the Covid comps that you had a year ago.

That is not relevant in the third quarter.

Let me break it down kind of dug into feed becker's there in regards to the royalties events business. Our revenue in 2021 is currently forecasted to double our revenue in 2020. So we think about normalizing 2021 2020 with Covid. There are two key items that Atwood <unk>.

<unk> first one being the borders events as I, just mentioned and the second one would be global print global print was certainly impacted in 2020, given the number of office closures, we had for our print and obviously the physical shipment shipments there very pleased with the progress that Jennifer Prescott, Ryan Kesler had driven.

This year with the print business, but those would be the two key items to focus on from a normal I would call a normalization certainly the transactional revenue comes into play.

All these events and print would be the two larger ones.

I asked about the international businesses, we refer to them as our regions within the company.

And America, another quarter of 20% growth led by agents and Amy and then Asia and emerging markets led by Jackie roads about 20% from Latin America and 10%.

Sure.

Doug.

Okay, great. Thank you.

Okay.

That will be our final question, we'd like to thank you all for joining us for third quarter results. Please feel free to follow up with us and we look forward to speaking to in February when we report our Q4 results have a good day.

Thank you and that Keith Rachel Conference call for today, you May now disconnect. Thank you for joining and have a very good day. Thank you everyone.

Yes.