Q1 2022 Thomson Reuters Corp Earnings Call

May 3, 2022

Gary Elizabeth Bisbee: Thank you Matt. Good morning everyone and thank you for joining us today for our first quarter 2022 earnings call. I'm joined by our CEOs, Steve Hasker and our CFO, Mike Eastwood, each of whom report our results and take your questions following the remarks. To enable us to get through many questions as possible, we'd appreciate it if you'd limit yourself to one question and one follow up, when we open the phone lines later. 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 our business. Today's presentation stands forward-looking statements and non-IFRS financial measures. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide from time to time to regulatory agencies. You may access these documents on the website or by contacting our Investor Relations Department. Let me now turn it over to Steve Hasker

Speaker 2: Today's presentation stands forward-looking statements and non-IFRS financial measures. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide from time to time to regulatory agency.

Speaker 2: You may access these documents on the website or by contacting our Investor Relations Department. Let me now turn it over to Steve Hasker

Steve Hasker: Thank you Gary, and thanks to all of you for joining us today. Before I begin with the review of our Q1 results, I must recognize our Reuters news colleagues and express our great appreciation for the difficult but important work that they are doing on the ground in Ukraine to provide us all with unbiased and reliable news, video and imagery. Their efforts, which come at significant personal risk, can simplify the best of our company purpose which, as you know, is to inform the way forward in the principles of trust and transparency that all of us at Thompson Reuters aspire to achieve. Now on to our Q1 highlights. I'm pleased to report that the momentum that built throughout 2021 continued in the first quarter of 2022, with both sales and revenue exceeding our expectations. Four of our five business segments again recorded organic revenue growth of 6% or greater and the total company organic revenues grew seven percent. Our big three business segments also grew 7% organically. We have growing conviction that our businesses are benefiting from a significant prevailing tailwind driven by a step change in the complexity of regulation and compliance, in our legal, acts, and risk-related markets. The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work. When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Speaker 3: I must recognize our Reuters news colleagues and express our great appreciation for the difficult but important work that they are doing on the ground in Ukraine to provide us all with unbiased and reliable news, video and imagery.

Speaker 3: Their efforts, which come at significant personal risk, can simplify the best of our company purpose which, as you know, is to inform the way forward in the principles of trust and transparency that all of us at Thompson Reuters aspire to achieve. Now on to our Q1 highlights.

Steve Hasker: Now on to our Q1 highlights. I'm pleased to report that the momentum that built throughout 2021 continued in the first quarter of 2022, with both sales and revenue exceeding our expectations. Four of our five business segments again recorded organic revenue growth of 6% or greater and the total company organic revenues grew seven percent. Our big three business segments also grew 7% organically. We have growing conviction that our businesses are benefiting from a significant prevailing tailwind driven by a step change in the complexity of regulation and compliance, in our legal, acts, and risk-related markets. The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work. When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Speaker 3: I'm pleased to report that the momentum that built throughout 2021 continued in the first quarter of 2022, with both sales and revenue exceeding our expectations.

Speaker 3: Four of our five business segments again recorded organic revenue growth of 6% or greater and the total company organic revenues grew seven percent. Our big three business segments also grew 7% organically.

Speaker 3: We have growing conviction that our businesses are benefiting from a significant prevailing tailwind driven by a step change in the complexity of regulation and compliance, in our legal, acts, and risk-related markets. The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work.

Speaker 3: Driven by a step change in the complexity of regulation and compliance.

Speaker 3: In our il legal acts and risk-related markets.

Speaker 3: The resulting need for trusted, accurate and actionable content and technology. Plays to our strengths as to the accelerating trends of digitization and changing ways of work.

Steve Hasker: Four of our five business segments again recorded organic revenue growth of 6% or greater and the total company organic revenues grew seven percent. Our big three business segments also grew 7% organically. We have growing conviction that our businesses are benefiting from a significant prevailing tailwind driven by a step change in the complexity of regulation and compliance, in our legal, acts, and risk-related markets. The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work. When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Steve Hasker: Four of our five business segments again recorded organic revenue growth of 6% or greater and the total company organic revenues grew seven percent.

Steve Hasker: of our five business segments again recorded organic revenue growth of 6% or greater and the total company organic revenues grew seven percent. Our big three business segments also grew 7% organically. We have growing conviction that our businesses are benefiting from a significant prevailing tailwind driven by a step change in the complexity of regulation and compliance, in our legal, acts, and risk-related markets. The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work. When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Speaker 3: Plays to our strengths as to the accelerating trends of digitization and changing ways of work.

Speaker 3: When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Speaker 3: These tailwinds position us, we in keeping our recent momentmenum.

Steve Hasker: Due to the Q1 revenue strength and healthy book of business or ACB growth, we are raising our full year revenue outlook. We now see total revenue rising by 5.5 percent and big three revenue by 6.5 percent up from our prior views of 5 percent and 6 to 6 and a half percent respectively.

Speaker 3: We are raising our full year revenue outlook.

Speaker 3: We now see total revenue rising by 6% and big three revenue by 6%.

Speaker 3: Up from our prior views of 5% and six percentto 6% and a half percent respectively.

Steve Hasker: We maintained our margin outlook as we continue to invest in our businesses and customer success and also absorb heightened inflationary pressures. Overall the strong start to the year provides confidence that we on the right path to achieve our 2022 and 2023 targets.

Speaker 3: Overall the strong start to the year provides confidence that we on the right path to achieve our 2022 and 2023 targets.

Steve Hasker: Turning to our Change program, we continue to make steady progress on key initiatives. As of March thirty-first, we've achieved annualized operating expense run rate savings of $305 million dollars and we're on a path to achieve 500 million dollars per year end and the full targeted $600 million dollars by year-end 2023. And lastly remain in a strong position with ample capital capacity.

Speaker 3: As of March thirty-first, we've achieved annualized operating expense run rate savings.

Speaker 3: Of $305 million and we're on a path to achieve $5 million per year end.

Speaker 3: And the full targeted $6 million by year-end 2020. -three.

Speaker 3: And largely remain in a strong position. Ample capital capacity.

Steve Hasker: We continue to assess inorganic opportunities to strengthen our Big Three customer markets. And share repurposes remain another option based on the timing of these inorganic opportunities.

Speaker 4: marckets.

Speaker 3: And share repurchposes remain another option based on the timing of these inorganic opportunities.

Steve Hasker: Our big three business segments also grew 7% organically. We have growing conviction that our businesses are benefiting from a significant prevailing tailwind driven by a step change in the complexity of regulation and compliance, in our legal, acts, and risk-related markets. The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work. When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Steve Hasker: Now to the results for the quarter. First quarter reported revenues of both 6%, with organic revenues up 7%. As Michael explained in more detail, our revenue growth benefited by close to 1%, from transactional revenue that is unlikely to recur at this level and to a lesser extent timing. But even adjusting for these items, organic revenue grew at a healthy 6%, driven by organic recurring revenue growth 7%.

Speaker 3: As Michael will explained in more detail, our revenue growth benefited by close to 1%.

Speaker 5: From transactional revenue that is unlikely to recurure and disspable and, to a lesser extent, economy.

Speaker 5: But even adjusting for these items, organic revenue grew at a healthy 6%, driven by organic recurring revenue growth 7%.

Steve Hasker: This recurring revenue growth is an improvement from 6% in Q3 and Q4 of 2021. Adjusted EBITDA increased to $600 billion dollars. Reflecting 50 basis point margin improvement of 35.8%, excluding costs related to the Change program. The adjusted EBITDA margin is 37.9%. This strong performance resulted in adjusted earnings per share of 66 cents, up 58 cents in the prior year period. Returning to first quarter results by segment, the big three businesses achieved organic revenue growth 7%, reflecting broad strength.

Speaker 5: Adjusted EBITDA increased to $6 billion.

Speaker 5: Reflecting 50 basis point margin improvement to 36% and.

Speaker 5: Excluding costs related to the change program.

Speaker 3: The adjusted EBITDA margin 37 or 9%, and.

Speaker 3: This strong performance resulted in adjusted earnings per share of 66 cents, up 58 cents in the prior year period.

Speaker 5: Returning to first quarter results by SG.

Speaker 3: The big three businesses achieved organic revenue growth 7%, reflecting broad strerength.

Steve Hasker: Legal continued its recent momentum delivering a fourth consecutive order of 6% organic growth. The legal market remains healthy across all key segments. Small biz and large sized US firms, corporate general council, government suppliers and key overseas markets.

Speaker 5: Bid and large sites, U's bonds, corporate general Council, government blies and key overseas markets.

Steve Hasker: For instance, Westlaw Edge adoption continues to drive revenue and we continue to expect annual contract value or ACV penetration, to approach 75% by year-end, from 65% at the end of 2021.

Steve Hasker: Second Practical law, as reported in the legal segment, had a terrific quarter growing mid teams. We forecast this growth to continue for the remainder of the year and I'll discuss Practical Law in more detail shortly.

Steve Hasker: The resulting need for trusted, accurate and actionable content and technology plays to our strengths as to the accelerating trends of digitization and changing ways of work. When combined with our Change program progress to date and an increased focus on innovation these tailwinds position us well in keeping our recent momentum.

Speaker 5: We forecast this growth to continue for the rentp remainder of the year and I'll discuss practical laord more detail shortly.

Steve Hasker: Third our government business, which is managed within our legal segment, grew 9% organically in Q1 and we see acceleration is likely the balance of the year. Fourth, our legal businesses in Canada and Asia also grew organically at double-digit rates.

Speaker 3: Gre 9% organically in Q1 and we see acceleration as likely. The balance.

Speaker 3: Fourth, our legal businesses in Canada. Asia also grew organically at double-digit rates.

Steve Hasker: Turning to corporate's organic growth momentum continued with revenue up 8%. While transactional revenue contribute, underlying growth trends continue improvement seen in the second half of 2021. We remain confident the corporate segment achieving 7% to 9% organic growth 2023, as discussed during our March 2021 best to date.

Speaker 5: While transactional revenue contribute, underlying growth trends continue improvement seen in the second half of 2021. We remain confident the corporate segment achieving 7% to 9% organic growth 2023, as discussed during our March 2021 best D.

Steve Hasker: Tax and accounting had another healthy quarter with organic revenue growth 11% or 10%, excluding timing benefit of a return to historical tax filing deadlines.

Speaker 5: With organic revenue brought 11% or 10%, excluding timing benefit of a return to historical tax piling deadlines.

Steve Hasker: Our Latin American business Dominio, grew nearly 30% in the quarter and remains the key growth drive.

Steve Hasker: Reuters's news: organic revenues increased 9% in Q1. Growth occurred across all lines of business, particularly benefiting from the segment's professional business, which includes digital advertising, custom content and Reuters' events. And the increase in our London Stock Exchange group, LSEG news agreement.

Steve Hasker: Finally global print organic revenues were flat compared with the prior period, which were better than expected due to higher third-party print revenues and timing benefits that we expected to normalize in the remainder of 2022.

Steve Hasker: One other update. We recently closed the acquisition of ThoughtTrace, which brings key talent and legal contract analysis technologies.

Speaker 5: Which brings key talent and legal contract analysis technology.

Steve Hasker: We believe ThoughtTrace will accelerate a time to market with a key capability sent AI-based contract analysis, which we see as a powerful combination now editorial content. We see these capabilities bolstering both our legal workflow and Practical Law offerings over time. We also recently closed the acquisition of Gestta, an accounting focused software provider in Brazil that enhances client automation and integrates seamlessly Domino offering.

Speaker 5: Which we see as a powerful combination. Now editorial contact. We see these capabilities bolstering both our legal workflow and Practical law offerings over time. We also recently closed the acquisition of jesa.

Speaker 5: Accounting foused software provider in Brazil that enhances client automation.

Speaker 5: And integrate seamlessly about domino off.

Steve Hasker: We welcomeed the ThoughtTrace adjusted teams to TR and we look forward to working with them to build their very significant potential.

Steve Hasker: In summary, we're very pleased with our results and we're excited about the momentum building within our businesses.

Steve Hasker: Now let me take a few minutes to discuss several key contributors to the recent event in our legal professional segment and why we are confident in its forward prospects.

Steve Hasker: I want to provide a bit more transparency around our legal professionals revenue mix and what is driving the strength, strengthening performance. As background organic revenue growth of legal has accelerated 4% in 2018 and 19' to 6% in 2021 in Q1 2022, driven by several facts. First, we have seen solid acceleration in recent years from our West, our key Westlaw brand, which is benefited from rising adoption of the higher-value Westlaw offering. Second, we have several other offerings within legal. They're increasingly contributing to our growth.

Steve Hasker: This includes three of our seven strategic growth focus areas: Practial Law, risk broad compliance, legal workflow solutions. In total, and non Westlaw businesses comprised nearly half of legal's revenue and a growing at high single digit pace. Like Westlaw, these businesses have accelerated in recent years.

Steve Hasker: Looking forward, we remain confident in the growth potential of both Westlaw and the Non Westlaw offerings, supported by healthy market demand and our robust product program.

Steve Hasker: For Westlaw, key drivers include continued penetration of the premium edge offering and the future launch of Westlaw Edge 2.0. Outside of Westlaw, we continue, we expect continued double-digit growth from our RFC franchise legal workflow and Practical Law offerings. As a result, we believe the positive big shift toward a higher growth on Westlaw offerings, is likely to continue in the next few years and which we expect to sustain our recent revenue momentum.

Speaker 5: Is likely to continue in the next few years and which we expect to sustain our recent revenue momentum.

Steve Hasker: Building upon this legal professional discussion, I will expand, expand a little bit on Practical law, which has been a terrific and in many ways under appreciated story, with an important growth drive for our legal professionals and corporate segment.

Steve Hasker: Like Westlaw, Practical Law provides strong value to go [inaudible] and corporate general councils through a blend of Premium content, technology and analytics.

Speaker 3: Premium content, technology and analytics.

Steve Hasker: Our 650 Practical Law Attorney editors. They bring very significant practice experience of [inaudible] Have a broad range of practice areas, jurisdictions and industry sector.

Speaker 3: It bring very significant practice experience co walers.

Speaker 3: Have a broad range of practice areas, jurisdictions and industry sector.

Steve Hasker: Leveraging technology. In each search capabilities and analytics, they create and maintain a wealth of know-how resources. Including standard documents and clauses, how to guides and explanations, checklists, and legal and regulatory updates, among others.

Speaker 3: In que, search haabilities and analytics. They create and maintain a wealth of know-how resources.

Speaker 3: Including standard documents, clouses out to guides and explanations, checklists and legal and regulatory updates, among others.

Steve Hasker: Practical Law has proven to be a key resource for both lawyers and corporate users, as it helps these professionals work more effectively and efficiently.

Steve Hasker: With both more firms and corporations facing tight labor markets and cost pressures, the efficiency benefits of practical will resonate particularly well today.

Steve Hasker: However Practical Law's success is not a recent phenomenon since its acquisition by Thompson Routers in 2013. Practical Law has grown revenue at 16% compound annual growth rate, more than tripling in total. This includes mid-teens growth in both 2021 and Q1 2022. Today, the business approaches $500 million dollars in revenue, with roughly 60% in legal professionals to 40% corporates.

Steve Hasker: Looking forward, we remain bullish on Practical Law's potential. We expect revenue growth gains to continue, in addition to opportunities to further penetrate both the law firm and corporate markets, new product innovation and content enhancements are key drivers. This includes two recent major upgrades, featuring both enhanced and expanded content, technology and analytics.

Speaker 3: Featuring both enhanced and expanded content, technology and analytics.

Steve Hasker: We recently launched the global customer experience, which brings expanded international editorial content, global product integration and an improved user experience.

Steve Hasker: Also, the Practical Law dynamic package that launched last summer brings incremental content, improve search capabilities and advanced enhanced analytics. In both cases, the expanded content and enhanced capabilities command a premium price point, which like the Westlaw Edge rollout, should contribute nicely to growth with adoption is expected to increase over the next few years. With meaningful life spacing both the legal and corporate markets, executing our go-to-market strategies remains another key driver of Practical Law. By 12 illustrates the broad appeal of Practical Law across customer performance personas. Rather than going through these details, I'll wrap-up my commentary by explaining a real world example of how Practical Law can drive meaningful ROI from a law firm customer. In our scenario, a large corporate claim needs to understand noncompete laws in all 50 states with a modest labor and employment practice, an associate lawyer is assigned to research statutes and case laws and prepare a 50 state survey on noncompetes. This associate could easily spend in excess of 100 hours on this project, with a partner spending several more reviewing the work. The same work with Practical Law will take four hours. And using the quick compared tool from the Practical Law Dynamic Package, the law firm could illustrate the findings in a compelling visual schematic. As this example illustrates, the efficiency and accuracy benefits from Practical Law can be very significant. We believe they provide a growing tailwind for demand, given rising pressure on law firms to do more with less while managing increasing risk and complexity.

Speaker 3: And prepare a 50 -st survey on noncompetes. This associate could easily spend in excess of 100 hours on this project, with a partner spending several more reviewing the work. The same work with Practical: all we take four hours.

Speaker 3: And using the quick compared tool from the practical or dynamic package.

Speaker 3: The law firm could illustrate the findings in a compelling visual schematic. As this example illustrates, the efficiency and accuracy benefits from practical wall can be very significant. We believe they provide a growing tailwind for demand, given rising pressure on law firms to do more with less while managing increasing risk and complexity.

Steve Hasker: Let me now turn it over to Mike, who will provide more details on the full financial results.

Mike Eastwood: Thank you, Steve. Thanks for joining us today.

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

Mike Eastwood: Let me start by discussing the first quarter revenue performance of our big three segments.

Mike Eastwood: Revenues grows 7%, organically and at constant currency for the quarter.

Mike Eastwood: This marks the fourth consecutive quarter our big three segments have grown at least 6%.

Mike Eastwood: Legal professionals total revenues increased 5% and organic revenues increased 6%.

Mike Eastwood: Organic growth was driven by Practical Law, Find Law and our government RFC business.

Mike Eastwood: Westlaw Edge continues to add about 100 basis points to legal's organic growth rate, is maintaining a healthy premium and is expected to continue to contribute at a similar level going forward. Supported by the planned release of Westlaw Edge 2.0 during the second half of this year. In our corporate segment, total and organic revenues increased 8% for the quarter, with both recurring and transactional growing 8%.

Speaker 2: Supported by the planned release of Westlaw Edge two during the second half of this year. In our corporate segment. Total and organic revenues increased 8% for the quarter, with both recurring and transactional growing 8% and.

Speaker 2: In our corporate segment. Total and organic revenues increased 8% for the quarter, with both recurring and transactional growing 8% and.

Mike Eastwood: Corporate's growth benefited from transactional revenue strength that is unlikely to recur at Q1 levels. However, recurring revenue growth of 8% continues the momentum that began in the second half of 2021.

Speaker 2: However recurring revenue growth of 8% continues the momentum that began in the second half of 2021 and.

Mike Eastwood: Recurring revenue was driven by clear Practical Law and indirect tax.

Mike Eastwood: And finally Tax and Accounting's total and organic first quarter revenues grew 11%, with Latin America again leading the momentum.

Mike Eastwood: Please note the return to April tax filing deadlines plans from May in 2021, increased growth by approximately 1.5% which will reverse in Q2.

Mike Eastwood: Moving to Reuters news, total and organic revenues increased 9%, primarily due to our professional business and the increase in our LSEG News agreement.

Speaker 2: Total and organic revenues increased 9%, primarily due to our professional business and the increase in our lsag use agreement.

Mike Eastwood: Lastly, global brint total and organic revenues were flat to prior year period, ahead of expectations.

Mike Eastwood: Higher third-party revenues for printing services and timing of new sales grow the outperformance. So we expect both to normalize in the remainder of 2022. On a consolidated basis, first quarter total and organic revenues each increased 7%.

Speaker 5: So we expect both to normalize in the remainder of 2020 -two. On a consolidated basis, first quarter total and organic revenues each increased 7%.

Speaker 5: On a consolidated basis, first quarter total and organic revenues each increased 7%.

Mike Eastwood: One last note on revenue, as it relates to the Russia Ukraine conflict, our exposure to the region is immaterial, at less than ten million annually.

Speaker 2: As it relates to the Russian uraine conflict. Our exposure to the region is immaterial, at less than one million annually.

Mike Eastwood: Returning to our profitability, adjusted EBITDA big three segments was five hundred and eighty-four million. Up 11% from the prior year period, a 42.9% margin rising 190 basis points.

Speaker 2: Up 11% from the prior year period, a 43% margin rising 190 basis points.

Mike Eastwood: Improvement was driven by Legal and Tax and Accounting due to higher revenues and Change program savings.

Mike Eastwood: I will remind you the Change Program operating costs are recorded at the corporate level.

Mike Eastwood: Moving to Reuters News, adjusted EBITDA was thirty-seven million, nine million more than the prior year period, driven primarily by revenue growth.

Speaker 5: nine million more than the prior year period, driven primarily by revenue growth.

Mike Eastwood: Global Print, adjusted EBITDA was 53 million, a margin of 37%, a decline of 290 basis points due to the dilutive impact of lower-margin third-party print revenue.

Speaker 5: A decline of 290 basis points due to the dilutive impact of lowloer-marg third-party print revenue.

Mike Eastwood: In aggregate, total company adjusted EBITDA with six hundred million, a 7% increase versus Q1 2021.

Mike Eastwood: Excluding costs related to the Change Program in both periods, adjusted EBITDA increased 11%.

Mike Eastwood: The first quarter's adjusted EBITDA margin was 35.8% or 37.9% on an underlying basis excluding cost related to the change program.

Speaker 5: Excluding cost related to the change program.

Mike Eastwood: Moving on to earnings per share, first quarter adjusted EPS was 66 cent. Up from 58 cents in the prior year period.

Speaker 5: From 58 cents in the prior year period.

Mike Eastwood: The increase was mainly driven by higher adjusted EBITDA.

Mike Eastwood: Let me now turn to our free cash flow performance for the first quarter.

Mike Eastwood: Reported free cash flow was 86 million versus 239 million in the prior year period.

Mike Eastwood: Consistent with previous quarters, the slide removes the distorting factors impacting our free cash flow. Working from the bottom of the page up, the cash out flows from the discontinued operations component or free cash flow was 22 million more than the prior year period.

Speaker 5: The cash outflows from the discontinued operations component of our fty cash flow was 22 million more than the prior year period.

Mike Eastwood: This was due to payments to the UK tax authority related to the operations of our former reventative business.

Mike Eastwood: Also in the current quarter, we made 114 million of Change Program payments as compared to 12 million in the prior year period. If you adjust for these items, comparable free cash flow from continuing operations was two hundred and fifty-nine million, 29 million lower than the prior year period, primarily due to annual incentive plan bonuses.

Speaker 2: 29 million lower than the prior year period, primarily due to annual incentive plan bonuses.

Mike Eastwood: We reaffirm our 2022 full year free cash flow outlook of approximately one point three billion.

Mike Eastwood: Speaking of our free cash flow, we wanted to provide an update to a disclosure we initially made at our 2018 Investor Day.

Mike Eastwood: We continue to expect our free cash flow to exceed our adjusted earnings by comfortable margin, as it has in recent years.

Mike Eastwood: This pattern of converting more than 100% of our adjusted earnings into free cash flow backs up well over our information services peers and indicates a high-quality earnings stream, as the earnings are more than backed up our free cash flow.

Mike Eastwood: Three factors drive this strong conversion. First, we expect our capital expenditures will be less than our depreciation and amortization by approximately 140 to 170 million in 2023, as the reduction in capital intensity has a quicker impact to free cash flow due to the timing of the depreciation runoff.

Mike Eastwood: Second, we expect our cash taxes to be lower than our PNL taxes by approximately 100 to 100 and fifty million in 2023.

Mike Eastwood: As mentioned last quarter, Expect our effective tax rate to decline to the upper teens in 2023.

Speaker 5: Expect our effective tax rate to decline to the upper teens in 2020. -three and.

Mike Eastwood: And as a rule of thumb, our cash tax rate is forecast to be approximately 5% below our effective tax rate.

Mike Eastwood: Lastly, we expect 25 to 50 million of miscellaneous items that drive the variance between the PNL and cash flow.

Mike Eastwood: We expect annual pension cash contributions to be lower than annual pension expense.

Mike Eastwood: In addition, expenses related to our employee stock purchase plan and equity-based compensation have no impact on free cash flow.

Mike Eastwood: We also expect to receive dividends from LSEG over part of our free cash flow.

Mike Eastwood: I will now provide an update on the progress related to our Change Program.

Mike Eastwood: In the first quarter, we achieved 88 million of annual run rate operating expense savings. This brings the cumulative annual run rate Change Program operating expense savings to three hundred and five million.

Mike Eastwood: This increases our confidence in reaching approximately five hundred million of annualized savings by year-end and six hundred million gross operating expense savings by 2023.

Mike Eastwood: As a reminder, we anticipate reinvesting two hundred million of the projected six hundred million of savings back into the business for net savings of four hundred million.

Mike Eastwood: Now an update on our Change Program costs for the first quarter and remainder of 2022.

Mike Eastwood: Let me start by saying none of the annual estimates have changed from what we provided last quarter.

Mike Eastwood: Spend in the fourth quarter with 62 million, comprised of 34 million of OpEx and 28 million of CapEx.

Mike Eastwood: We anticipate 130 to 150 million total spend in the first half in 160 to 180 million in the second half of 2022. For the full year, We continue to expect 305 million of Change Program investments, which would bring total 2021 and 2022 cumulative investments approximately six hundred million.

Speaker 5: We continue to expect 305 million of exchange program investments, which would bring total 2021 and 2082 cumulative investments.

Speaker 5: Approximately six hundred million.

Mike Eastwood: We also continue to anticipate a split of approximately 60% OpEx and 40% EpEx.

Speaker 5: 60% OpEx and 40% fpex.

Mike Eastwood: Let me conclude with our outlook for 2022 and 2023.

Mike Eastwood: As Steve outlined, they've increased our full year 2022 outlook for total TR and big three revenue growth.

Mike Eastwood: We now forecast total organic revenue rising by approximately 5.5% and Big Three by approximately 6.5%, up from the prior 5% and 6%-6.5% respectively.

Speaker 2: Up from the prior 5% and 6%. six point 5% respectively.

Mike Eastwood: We are maintaining our adjusted EBITDA margin outlook of approximately 35% as we continue to monitor potential inflationary impacts and excess investment opportunities to drive continued success in revenue momentum.

Mike Eastwood: There is no change to other 2022 outlook items and we reaffirm our 2023 targets.

Mike Eastwood: Looking to the second quarter, we expect revenue growth for total TR in the Big Three to be comparable to our updated full year forecast of approximately 5.5% and 6.5% respectively. We expect our adjusted EBITDA margin to be approximately 200 basis points below the full year outlook of approximately 35%. Due to the normal seasonality in our Tax And Accounting segment and the cadence of Change Program investments.

Mike Eastwood: We also see our effective tax rate at the midpoint of our 19 21% full year arrange in summary, we remain confident in achieving our 2022 and 2023, targets aided by the strong start to the year and healthy underlying momentum in our key businesses.

Mike Eastwood: Overtime, we continue to believe we can achieve faster revenue growth, higher profitability and significantly higher free cash flow as we benefit from transforming to a content-driven technology company. That means I'll turn it back to Gary for questions.

Gary Elizabeth Bisbee: Thanks Steve and Mike. Matt, we're ready to begin the Q&A portion of the call. Thank you Gary, so everyone if you would like to ask a question, Please press Star than one on your telephone.

Gary Elizabeth Bisbee: Thanks Steve and Mike. Matt, we're ready to begin the Q&A portion of the call.

Operator: Thank you Gary, so everyone if you would like to ask a question, Please press Star than one on your telephone. And the first one is coming from the line of Vince Valentini from TD Securities. Please go ahead.

Gary Elizabeth Bisbee: you Gary, so everyone if you would like to ask a question, Please press Star than one on your telephone.

Multiple speakers: And the first one is coming from the line of [inaudible] from D D Securities. Please go ahead. Yes, Thanks very much, great quarter. I'll leave it others to ask about that. I just given the environment in in the tech sector and multiples collapsing in in a lot of spaces, I'm wondering if you give us any update on an acquisition targets. I assume this is potentially good news scenario for you guys with being cash rich with a strong balance sheet and looking for strategic acquisitions that will bolster your growth. Is, is there any hope that these things are getting more evident? Given more value, what valuations are doing?

Multiple speakers: And the first one is coming from the line of [inaudible] from D D Securities. Please go ahead.

Vince Valentini: Yes, Thanks very much, great quarter. I'll leave it others to ask about that. I just given the environment in in the tech sector and multiples collapsing in in a lot of spaces, I'm wondering if you give us any update on an acquisition targets. I assume this is potentially good news scenario for you guys with being cash rich with a strong balance sheet and looking for strategic acquisitions that will bolster your growth. Is, is there any hope that these things are getting more imminent? Given more value, what valuations are doing?

Steve Hasker: Hi Vince, Steve here. Thanks for the question. Look, I think we're I think we're closer for two reasons: 1, we're another a quarter through the change program and building confidence in our in the capabilities we're building and and the our execution will remain the same. And we think that the further we get along that journey, the more of an advantage to acquire it we will be, and so we're making good progress there. And secondary, as you say, there's been some pretty significant changes in in public valuations and and put potentially towards the end of this year private technology-related valuation. So I think both of those two things provide us with some optimism that we'll be able to to do one or more acquisitions, additive to the customer experience that we provide. Yes, and I'll just supplement as a remainder to everyone the first staunch of the lsad state

Mike Eastwood: Yes Vince I'll just supplement as a remainder to everyone the first staunch of the lSEG state The lockup expires Q1 2023, as we've previously stated, it's our intent to monetize the first state, which is approximately one third in Q1 23. the second item I would emphasize, Vince is Steve mentioned in his prepared remarks, depending on the cadence sequencing of acquisitions, we still have the option of considering additional share buybacks, comparable to what we did in 2021.

Steve Hasker: and I'll just supplement as a remainder to everyone the first staunch of the lsad state

Speaker 2: The lockup expires Q1 2023, as we've previously stated, it's our intent to monetize the first state, which is approximately one third in Q1 23. the second item I would emphasize, Vince is Steve mentioned in his prepared remarks, depending on the cadence sequencing of acquisitions, we still have the option of considering additional share buybacks, comparable to what we did in 2021.

Vince Valentini: Can I just clarify one thing? You said Steve, that public valuations have come down. You're expecting private valuations could come down later this year. Does that imply you haven't seen them come down yet?

Steve Hasker: Well there's always a gap between the sort of the expectations of sellers, which tend.. tend to lag, and the expectations of buyers, which sort of price in any declines pretty quickly. So we haven't seen any significant transactions that would indicate just yet that that correction has occurred. But we think, we think it might. Thank you.

Gary Elizabeth Bisbee: Thank you.

Operator: And the next question is coming from Heather Balsky, from Bank of America. Please go ahead.

Multiple speakers: Please go ahead, Hi can. Can you share some color in terms of the demand you're seeing from your customer base in Legal and Accounting as well? And there's there's general concern about sort of state of the economy and and things slowing with rising rate. I'm curious, just sort of what you've seen in the past in terms of your customers demands in in a slower economic environment. Thanks. Yeah Heather let me start. Steve, we start, and catch Mike can provide some more historical context because he was. He was at TI during the You know, 08-09 financial crises. We continue- I listed this in my remarks- we continue to see robust demand for our solutions in, you know, in all Big Three segments and it's really being driven by a need to automate and simplify their work flows.

Multiple speakers: Please go ahead,

Heather Nicole Balsky: Hi can. Can you share some color in terms of the demand you're seeing from your customer base in Legal and Accounting as well? And there's there's general concern about sort of state of the economy and and things slowing with rising rate. I'm curious, just sort of what you've seen in the past in terms of your customers demands in in a slower economic environment. Thanks. Yeah Heather let me start. Steve, we start, and catch Mike can provide some more historical context because he was. He was at TI during the You know, 08-09 financial crises. We continue- I listed this in my remarks- we continue to see robust demand for our solutions in, you know, in all Big Three segments and it's really being driven by a need to automate and simplify their work flows.

Steve Hasker: Yeah Heather let me start. Its Steve, we start, and perhaps Mike can provide some more historical context because he was. He was at TR during the you know, 08-09 financial crises. We continue- I listed this in my remarks- we continue to see robust demand for our solutions in, you know, in all Big Three segments and it's really being driven by a need to automate and simplify their work flows.

Steve Hasker: Yeah Heather let me start. Its Steve, we start, and perhaps Mike can provide some more historical context because he was. He was at TR during the you know, 08-09 financial crises.

Speaker 9: And access content that gives them a competitive advantage and and allows them to be more efficient and effective in the their work and sort of coming through and coming out of COVID that that trend continued unabated. So far, the sort of turbulence in the broader geopolitical and macroeconomic environment has not translated into any [inaudible] in that demand in any of the three segments and I just pointed the fact that 80% of our revenues are recurring and so that gives us I think real confidence through the rest of this year and justification for raising our revenue guidance. So all of the businesses supply we're in the robust category because of that 80% revenue recurring revenue. But me let me ask Mike to supplement based on our historical experience through through difficult economic terms. I had an additional two points in addition to Steve's point on 80% recurring growth. The key factor with that 80% recurring is now multiyear contracts as a reminder approximately 60% of our legal revenues under multiyear contracts. About 40% of our Corporates revenue multiyear and 10% of tax Tax And Accounting is multi year that's a key point. The second point Heather we saw really strong Q1 net sales and that's far early indicators of strong April results there. So based on that Heather remain positive. We'll have to continue to monitor it obviously throughout Q2 in the full year. But I think this the strength of our multiyear contracts certainly helps us. Thank you and a followup question on the margin guide. You talked about the information being one of the factors that led you to to maintain at the quarter for the full year. Curious as sort of your ability to take price against that and um.

Steve Hasker: We continue- I listed this in my remarks- we continue to see robust demand for our solutions in, in all Big Three segments and it's really being driven by a need to automate and simplify their work flows. And access content that gives them a competitive advantage and and allows them to be more efficient and effective in the their work and sort of coming through and coming out of COVID that that trend continued unabated.

Steve Hasker: We continue- I listed this in my remarks- we continue to see robust demand for our solutions in, you know, in all Big Three segments and it's really being driven by a need to automate and simplify their work flows.

Steve Hasker: So far, the sort of turbulence in the broader geopolitical and macroeconomic environment has not translated into any softening in that demand in any of the three segments and I just pointed the fact that 80% of our revenues are recurring and so that gives us I think real confidence through the rest of this year and justification for raising our revenue guidance. So all of the businesses supply we're in the robust category because of that 80% revenue recurring revenue. But me let me ask Mike to supplement based on our historical experience through through difficult economic terms. I had an additional two points in addition to Steve's point on 80% recurring growth. The key factor with that 80% recurring is now multiyear contracts as a reminder approximately 60% of our legal revenues under multiyear contracts. About 40% of our Corporates revenue multiyear and 10% of tax Tax And Accounting is multi year that's a key point. The second point Heather we saw really strong Q1 net sales and that's far early indicators of strong April results there. So based on that Heather remain positive. We'll have to continue to monitor it obviously throughout Q2 in the full year. But I think this the strength of our multiyear contracts certainly helps us. Thank you and a followup question on the margin guide. You talked about the information being one of the factors that led you to to maintain at the quarter for the full year. Curious as sort of your ability to take price against that and um.

Speaker 9: I experience through three difficult economic terts. It had an at additional two ints addition to Steve' point on 80% recurring growth. The key factor with that 80% recurring is now multiyear contracts as a reminder approximately 60% of our legal revenues under multiyear contracts. About 40% of our Corporates revenue multiyear and 10% of tap taacks and accounting is multi year that's a key point. The second point how their we saw really strong Q1 net sales and that's far early indicators of respond April results there. So based on that have their remain positive'll have to continue to monitor it obviously throughout Q2 in the full year. But I think this the strength of our multiyear contracts certainly helps us Thank you and a followup question on the margin guide. Be you talked about the information being one of the factors that led you to to maintain at the quarter for the full year. Curious sort of your ability to take pric against that and and.

Steve Hasker: I had an additional two points in addition to Steve's point on 80% recurring growth. The key factor with that 80% recurring is now multiyear contracts as a reminder approximately 60% of our legal revenues under multiyear contracts. About 40% of our Corporates revenue multiyear and 10% of tax Tax And Accounting is multi year that's a key point. The second point Heather we saw really strong Q1 net sales and that's far early indicators of strong April results there. So based on that Heather remain positive. We'll have to continue to monitor it obviously throughout Q2 in the full year. But I think this the strength of our multiyear contracts certainly helps us. Thank you and a followup question on the margin guide. You talked about the information being one of the factors that led you to to maintain at the quarter for the full year. Curious as sort of your ability to take price against that and um.

Mike Eastwood: I had an additional two points in addition to Steve's point on 80% recurring growth. The key factor with that 80% recurring is now multiyear contracts as a reminder approximately 60% of our legal revenues under multiyear contracts. About 40% of our Corporates revenue multiyear and 10% of tax Tax And Accounting is multi year that's a key point. The second point Heather we saw really strong Q1 net sales and that's far early indicators of strong April results there. So based on that Heather remain positive. We'll have to continue to monitor it obviously throughout Q2 in the full year. But I think this the strength of our multiyear contracts certainly helps us.

Speaker 12: Thank you and a followup question on the margin guide. You talked about the information being one of the factors that led you to to maintain at the quarter for the full year. Curious as sort of your ability to take price against that and um. Is it a timing issue? I'm just curious as to what's going on there. Yes, certainly Heather. In regards to the margin, I'll mention a few items. You touched on the potential for inflationary headwinds, but another key factor for us is the opportunity to make additional investments in our businesses to support our customers. That's something that we'll continue to assess. Specifically, in regards to inflation, I'll touch on two aspects. That pricing that you mention also at some color in regards to, in regards to the cost side, on pricing, our pricing in Q1 was fairly consistent with prior year as it was up slightly, but the strength of the revenue, what was really the underlying performance of the business. So a slight uptick in pricing as we go through the full year. Our current estimate is a slight uptick versus 2021, but not hugely significant as a reference point in 2021,

Heather Nicole Balsky: Thank you and a followup question on the margin guide. You talked about the information being one of the factors that led you to to maintain at the quarter for the full year. Curious as sort of your ability to take price against that and um. Is it a timing issue? I'm just curious as to what's going on there. Yes, certainly Heather. In regards to the margin, I'll mention a few items. You touched on the potential for inflationary headwinds, but another key factor for us is the opportunity to make additional investments in our businesses to support our customers. That's something that we'll continue to assess. Specifically, in regards to inflation, I'll touch on two aspects. That pricing that you mention also at some color in regards to, in regards to the cost side, on pricing, our pricing in Q1 was fairly consistent with prior year as it was up slightly, but the strength of the revenue, what was really the underlying performance of the business. So a slight uptick in pricing as we go through the full year. Our current estimate is a slight uptick versus 2021, but not hugely significant as a reference point in 2021,

Speaker 12: Yes, certainly Heather. In regards to the margin, I'll mention a few items. You touched on the potential for inflationary headwinds, but another key factor for us is the opportunity to make additional investments in our businesses to support our customers. That's something that we'll continue to assess. Specifically, in regards to inflation, I'll touch on two aspects. That pricing that you mention also at some color in regards to, in regards to the cost side, on pricing, our pricing in Q1 was fairly consistent with prior year as it was up slightly, but the strength of the revenue, what was really the underlying performance of the business. So a slight uptick in pricing as we go through the full year. Our current estimate is a slight uptick versus 2021, but not hugely significant as a reference point in 2021,

Mike Eastwood: Yes, certainly Heather. In regards to the margin, I'll mention a few items. You touched on the potential for inflationary headwinds, but another key factor for us is the opportunity to make additional investments in our businesses to support our customers. That's something that we'll continue to assess. Specifically, in regards to inflation, I'll touch on two aspects. That pricing that you mention also at some color in regards to, in regards to the cost side, on pricing, our pricing in Q1 was fairly consistent with prior year as it was up slightly, but the strength of the revenue, what was really the underlying performance of the business. So a slight uptick in pricing as we go through the full year. Our current estimate is a slight uptick versus 2021, but not hugely significant as a reference point in 2021,

Mike Eastwood: Our price increases, which vary by segment, Tax And Accounting, was 5%. Our corporate segment 3%, and Legal two and a half percent, yielding the weighted average there. On the cost side, we did provide higher merit increases in April this year, which is our annual increase there. And if you look at the supply- traditional supply chain impact- our Print business- we refer to it as the three P's- print, paper and postage- certainly we're seeing higher price and cost there in the print business, which is about 10% of our total revenue. Given all of those potential inflationary factors- Heather, we have considered those in our updated guidance for 2022 and when we reaffirmed our guidance for 2023. So, based on what we know on the potential inflationary factors Heather, we think we've been prudent in factoring into our margin and full guidance for 22' and 23'.

Multiple speakers: Okay Thank you. The next question is coming from Drew Mccranolds from RBC Capital Markets. Please go ahead.

Heather Nicole Balsky: Okay Thank you.

Operator: The next question is coming from Drew McReynolds from RBC Capital Markets. Please go ahead.

Drew McReynolds: Yeah Thanks very much to follow up for me, just following upon Vince's MNA question. First, thanks for the drill down on the legal and particularly legal solutions business very, very helpful. You know, I think for those that have followed some of your MNA over the years, finding things like Practical law, you know are just amazing assets you know that generate that kind of growth over years and years. Wondering, I guess for you Steve, if you've identified you know Practical Law like assets out there or are these you know more difficult to find? Just in general, just would love to get that that context and then second, follow up. You know we've all known kind of complexity drives the end markets for Legal Tax And Accounting. You're going through a kind of post COVID work from home period. Just even bigger picture than that where else is the complexity growing in these end markets. Just wanted to just better understand more that that bigger picture of structural tailwind.

Multiple speakers: is the complexity growing in these end markets. Just wanted to just better understand more that that bigger picture of structural tailwind. Thank you. Yeah thanks great, great questions. But no 2: acquisitions are the same obviously, but. But you know what we're seeing amongst our law firm customers in particular but but increasingly the general Council's offices as well, is a real need to invest in technology and work work post software and to have the content flow seamlessly through that software. So we think this sort sort a combination of you need content and I obviously am learning and software is- is a very valuable play at this time and it plays to some degree. Your second question: you know the law firms like, like law firms,

Multiple speakers: is the complexity growing in these end markets. Just wanted to just better understand more that that bigger picture of structural tailwind.

Multiple speakers: Thank you. Yeah thanks great, great questions. But no 2: acquisitions are the same obviously, but. But you know what we're seeing amongst our law firm customers in particular but but increasingly the general Council's offices as well, is a real need to invest in technology and work work post software and to have the content flow seamlessly through that software. So we think this sort sort a combination of you need content and I obviously am learning and software is- is a very valuable play at this time and it plays to some degree. Your second question: you know the law firms like, like law firms,

Greg Parison: Thank you. Yeah thanks great, great questions. But no 2: acquisitions are the same obviously, but. But you know what we're seeing amongst our law firm customers in particular but but increasingly the general Council's offices as well, is a real need to invest in technology and work work post software and to have the content flow seamlessly through that software. So we think this sort sort a combination of you need content and I obviously am learning and software is- is a very valuable play at this time and it plays to some degree.

Steve Hasker: Your second question: you know the law firms like, like law firms, Financial institutions and Thomson Reuters and business information service providers are sort of finding their footing in a in a earlier sort of a post COVID world but certainly a world. But that involves more time back in office than the last two years and with that comes more, more technology investment in a potentially less real estate investment and more technology investment. So we think that there will be quite a few opportunities for us to build organically and and buy inorganically in this space. I think the 1, while not a direct parallel to Practical Law, is for trace and we look at this, this area of contract analysis. It's enormously time consuming, for general counsels and for law firms to go through hundreds, if not thousands of contracts.

Multiple speakers:

Speaker 9: When the law and the regulation changes and be able to to quickly and seamlessly update them and have confidence that that process has been has been effectively correctly done, and so' it's a big area of demand. I had a conversation with with a number of our legal customers and sort of describe for trace and describe the investments that we're going to make in it and what the outcomes of that will be, and they're excited about it. So we'll see how that plays out. In terms of your second question, look at whether good for humanity or not. We certainly see lots of examples of increasing compliance related complexity. So cyber is one area where getting comfortable with sort of data management, privacy and and management of cyber related risks.

Steve Hasker: When the law and the regulation changes and be able to to quickly and seamlessly update them and have confidence that that process has been has been effectively correctly done, and so' it's a big area of demand. I had a conversation with with a number of our legal customers and sort of describe for trace and describe the investments that we're going to make in it and what the outcomes of that will be, and they're excited about it. So we'll see how that plays out.

Steve Hasker: In terms of your second question, look at whether good for humanity or not. We certainly see lots of examples of increasing compliance related complexity. So cyber is one area where getting comfortable with sort of data management, privacy and and management of cyber related risks.

Steve Hasker: The legal landscape gets more complicated in terms of rules and regulations, not less for corporations- big, small and medium- and we don't know of many tax codes they're getting simpler. And so it really is across across our business that we see this sort of rise in complexity and what that presents in a in a inflationary environment, in a talent constrained marketplace, Is that company companies need reliable partners to help them handle that complexity and, in a sense, take it off of their plate. And that's what we're here to do, and we think we're one of the few players can do it effectively at scale in a truly trusted and transparent manner.

Speaker 9: Is that company companies need reliable partners to help them handle that complexity and, in a sense, take it off of their plate. And that's what we're here to do, and we think we're one of the few players can do it effectively at scale in a truly trusted and transparent manner.

Speaker 14: Yes that's helpful. Thank you. [inaudible], and the next question is coming from Kevin Mclewee, from Credit Suites.

Drew McReynolds: Yes that's helpful. Thank you.

Speaker 14: [inaudible], and the next question is coming from Kevin Mclewee, from Credit Suites.

Gary Elizabeth Bisbee: Thanks Drew

Operator: and the next question is coming from Kevin McVeigh, from Credit Suisses. Please go ahead.

Multiple speakers: Please go ahead. Great. Thanks so much and congratulations on the Change Program. Can you give us a sense, because obviously things have changed a lot since you started the Change Program. I want to talk about maybe retention a little bit across the enterprise. Can we talk about that? And then maybe pricing expectations, kind of today versus kind of when you started the Change Program, we would still a little more color around again, retention and pricing, as we're kind of working our way through change. Sure Kevin, let me start within regards to retention, I believe Kevin, back March of 21, at Investor Day, we estimated that we could improve our overall retention for a total T R by roughly 100 basis points over the time horizon, where approximately 91% today, which is a slight uptick over the last 12 to 15 months. We remain optimistic Kevin, in regards to being able to achieve that

Multiple speakers: Please go ahead.

Kevin Damien McVeigh: Great. Thanks so much and congratulations on the Change Program. Can you give us a sense, because obviously things have changed a lot since you started the Change Program. I want to talk about maybe retention a little bit across the enterprise. Can we talk about that? And then maybe pricing expectations, kind of today versus kind of when you started the Change Program, we would still a little more color around again, retention and pricing, as we're kind of working our way through change. Sure Kevin, let me start within regards to retention, I believe Kevin, back March of 21, at Investor Day, we estimated that we could improve our overall retention for a total T R by roughly 100 basis points over the time horizon, where approximately 91% today, which is a slight uptick over the last 12 to 15 months. We remain optimistic Kevin, in regards to being able to achieve that

Mike Eastwood: Full 100 basis points left and I think it's directly correlated to the work that we're doing with Cursty Roth, Andrew Pierce, Crystal and others in regards to our customer experience, and we're continuing to do that. So I think we're on the right trajectory. Kevin, on improving our retention, as we've discussed before, our retention does vary by customer size, with significantly higher retention for large customers, lower retention for the smallest customers, but that's where the work that we're doing with digital self serve in the overall into end customer experience. We remain optimistic. That'll help us not only with retention but also attract new customers and new logos. Second question there on regards to pricing, consistent with what I shared with Heather, to me just repeat that for everyone's benefit Kevin, a slight uptick in our pricing in Q1 versus 2021 it does vary by segment. As I mentioned, Tax And Accounting about 5%, corporates three and legal two and a half. Based on what we see right now over the course of the year, we see a slight uptick for the full year compared to last year. one factor there is the multiyear contracts that we talked about earlier in one of the questions. As we do implement some price increases or multi-year contracts, it'll certainly be a timing impact as to when that price is realized. Kevin, I think those were the two questions on retention in pricing and Steve may want to touch on the last one. Kevin you initially talked about the change in program. If we largely look at the work streams that we started on the change program 15 months ago- we're continuing the March on each of those- certainly that we learned things in our various puts and takes. There are- and we pivot along the way, as you would expect us to there, but we'll remain on track and a lot of heavy lifting remaining for the year. But I think we'll be in a really good spot Kevin, at the end of twenty two on the Change Program. Steve may want to add some comments.

Speaker 15: it does vary by segment. As I mentioned, Tax And Accounting about 5%, corporates three and legal two and a half. Based on what we see right now over the course of the year, we see a slight uptick for the full year compared to last year. one factor there is the multiyear contracts that we talked about earlier in one of the questions. As we do implement some price increases or multi-year contracts, it'll certainly be a timing impact as to when that price is realized. Kevin, I think those were the two questions on retention in pricing and Steve may want to touch on the last one. Kevin you initially talked about the change in program. If we largely look at the work streams that we started on the change program 15 months ago- we're continuing the March on each of those- certainly that we learned things in our various puts and takes. There are- and we pivot along the way, as you would expect us to there, but we'll remain on track and a lot of heavy lifting remaining for the year. But I think we'll be in a really good spot Kevin, at the end of twenty two on the Change Program. Steve may want to add some comments.

Steve Hasker: You know through the pandemic, there was an assumption that things would return to some some version of what they were before, whereas I think, as we sit here today, we realized that we're in a hybrid working environment that just won't resemble the 2019 work environment. We've got very significant: we're providing our colleagues with much more flexibility in terms of where they from, where they work and how they work together in service of our customers, and that affords us a company flexibility in terms of investing in real estate and physical locations.

Mike Eastwood: Kevin, the last point I would make with some of the talent created [inaudible] that we've joined, and looking at our product development road maps and the timing of the leases and frequency thereof, to me, that's probably one of the positive factors that we have as we think about our product development road map over the next couple of years. I think that's such a key factor.

Speaker 16: Thank you so much. The next question is coming from Andrews Steinerman. From JP Morgan, Please go ahead.

Kevin Damien McVeigh: Thank you so much.

Operator: The next question is coming from Andrews Steinerman. From JP Morgan, Please go ahead.

Stephanie Yee: Hi good morning. This is Stephanie Yee sitting in for Andrew. Just a question on your public cloud migration. Can give us an update there? Is it progressing on track? Is it accelerating? Just any color you can provide on that front.

Steve Hasker: Yes Stephanie it's it's ahead of track. So as you may remember we, we've got to about 33%. I mean by the end of last year and that that continues to that continues to accelerate and we're looking at you know, we're about 50 or more now. We're looking to get 90% plus by the you know in the back end of 2023. So we're on track with that I think what it does is provide us a bit of flexibility as to whether to continue to invest in that and accelerate it further or to use some of that some of that sort of progress that's a little ahead of where we thought we'd be to accelerate some other areas and that that's one of the areas that that will solve for the next few months. But we are very happy with the way that's going and it is ahead of track and I think it provides us with with increased confidence that that we can use it to support the rate of innovation, particularly for our a couple of dozen products. Okay okay, great. If I can just ask one more on Practical Law, can you talk about the geography difference in terms of the traction you're gaining? So I think it had great adoption in the UK. It was a little bit more nascent in the US a few years ago. Have you seen most of the pickup in adoption being in the US or can you just comment on kind of the geographic split and in terms of the customer mix?

Speaker 9: with increased confidence that that we can use it to support the rate of innovation, particularly for our a couple of dozen products. Okay okay, great. If I can just ask one more on Practical Law, can you talk about the geography difference in terms of the traction you're gaining? So I think it had great adoption in the UK. It was a little bit more nascent in the US a few years ago. Have you seen most of the pickup in adoption being in the US or can you just comment on kind of the geographic split and in terms of the customer mix?

Stephanie Yee: Okay okay, great. If I can just ask one more on Practical Law, can you talk about the geography difference in terms of the traction you're gaining? So I think it had great adoption in the UK. It was a little bit more nascent in the US a few years ago. Have you seen most of the pickup in adoption being in the US or can you just comment on kind of the geographic split and in terms of the customer mix?

Speaker 3: When we bought. When we bought the company, it was a predominantly, if not entirely, UK-based offering, though it was built on practical know-how, of the UK law, and one of the things that Thomson Reuters has been able to do is it bring that the United States and and ramp it up very significantly here. So we've done the same in other other markets, like like Australia and and so forth. So you know, I think a big, it's a interesting proof point for us because it does gist that that we can take an acquired asset that's perhaps a bit constrained to a single market geographic market and we can really make create great value by bringing it to it to other markets. I think the other example where we're well underway doing that is high Q. Right, which we bought back to 2019 and one of the things it's also a UK focused legal workflow software offering and some of the biggest growth we've seen of High Q made with law firms and general counsels offices here in the United States. So we've taken that, replicated it with IQ as well. It's definitely added by one additional dimension. You asked specifically about geography and maturity and penetration there, kind of a dual path. There is the maturity level with law firms versus the general Counsel's. That Steve just reference, and we have stronger growth right now with general counsels, as is additional opportunity the further the penetration there. So I think of as a dual access Stephanie, geographic expansion, but also general Counsel versus law firm.

Steve Hasker: When we bought. When we bought the company, it was a predominantly, if not entirely, UK-based offering, though it was built on practical know-how, of the UK law, and one of the things that Thomson Reuters has been able to do is it bring that the United States and and ramp it up very significantly here. So we've done the same in other other markets, like like Australia and and so forth. So you know, I think a big, it's a interesting proof point for us because it does gist that that we can take an acquired asset that's perhaps a bit constrained to a single market geographic market and we can really make create great value by bringing it to it to other markets. I think the other example where we're well underway doing that is High Q. Right, which we bought back to 2019 and one of the things it's also a UK focused legal workflow software offering and some of the biggest growth we've seen of High Q made with law firms and general counsels offices here in the United States. So we've taken that, replicated it with High Q as well.

Speaker 9: that that we can take an acquired asset that's perhaps a bit constrained to a single market geographic market and we can really make create great value by bringing it to it to other markets. I think the other example where we're well underway doing that is high Q.

Speaker 9: Right, which we bought back to 2019 and one of the things it's also a UK focused legal workflow software offering and some of the biggest growth we've seen of High Q made with law firms and general counsels offices here in the United States. So we've taken that, replicated it with IQ as well. It's definitely added by one additional dimension. You asked specifically about geography and maturity and penetration there, kind of a dual path. There is the maturity level with law firms versus the general Counsel's. That Steve just reference, and we have stronger growth right now with general counsels, as is additional opportunity the further the penetration there. So I think of as a dual access Stephanie, geographic expansion, but also general Counsel versus law firm.

Mike Eastwood: Hi Stephanie added by one additional dimension. You asked specifically about geography and maturity and penetration there, kind of a dual path. There is the maturity level with law firms versus the general Counsel's. That Steve just reference, and we have stronger growth right now with general counsels, as is additional opportunity the further the penetration there. So I think of as a dual access Stephanie, geographic expansion, but also general Counsel versus law firm.

Speaker 3: definitely added by one additional dimension. You asked specifically about geography and maturity and penetration there, kind of a dual path. There is the maturity level with law firms versus the general Counsel's. That Steve just reference, and we have stronger growth right now with general counsels, as is additional opportunity the further the penetration there. So I think of as a dual access Stephanie, geographic expansion, but also general Counsel versus law firm.

Multiple speakers: Okay okay great, that's awesome color, thank you. And the next question is coming from[inaudible] from Cannon Core Genuity? Please go ahead. Good morning, thanks for taking my question. I wanted to ask you a little bit about SME exposure. I mean staying within the subject of some concerns around macro level slowdowns. Wanted to get a sense of how you seeing sort of the traction in the SME space and can you just update us or remind us about sort of the exposure you have to SME level customers and then a quick follow-up, to the extent that you can discuss this on West Law Edge 2.0 very generally, how much of a step up are we talking about in terms of the product? Obviously, that would sort of manifest itself in pricing and our part as well, but any kind of color you can provide on that front will be useful. Thank you.

Stephanie Yee: Okay okay great, that's awesome color, thank you.

Multiple speakers: And the next question is coming from[inaudible] from Cannon Core Genuity? Please go ahead. Good morning, thanks for taking my question. I wanted to ask you a little bit about SME exposure. I mean staying within the subject of some concerns around macro level slowdowns. Wanted to get a sense of how you seeing sort of the traction in the SME space and can you just update us or remind us about sort of the exposure you have to SME level customers and then a quick follow-up, to the extent that you can discuss this on West Law Edge 2.0 very generally, how much of a step up are we talking about in terms of the product? Obviously, that would sort of manifest itself in pricing and our part as well, but any kind of color you can provide on that front will be useful. Thank you.

Operator: And the next question is coming from Aravinda Galappathhige from Cannon Core Genuity. Please go ahead.

Aravinda Suranimala Galappatthige: Good morning, thanks for taking my question. I wanted to ask you a little bit about SME exposure. I mean staying within the subject of some concerns around macro level slowdowns. Wanted to get a sense of how you seeing sort of the traction in the SME space and can you just update us or remind us about sort of the exposure you have to SME level customers and then a quick follow-up, to the extent that you can discuss this on Westlaw Edge 2.0 very generally, how much of a step up are we talking about in terms of the product? Obviously, that would sort of manifest itself in pricing and our part as well, but any kind of color you can provide on that front will be useful. Thank you.

Steve Hasker: Aravinda, I'll start and that Michael supplement here. So on SME what we have: strong presence among small law firms, strong presence among small tax, particularly small Tax And Accounting firms. We have, I think, modest but very promising presence amongst small to medium enterprises in the corporate sector. So you see, you have to sort of differentiate is to- whether you're talking about that, professional services firms and their size versus the Corporates. We think the SME sector itself and that's that it would incorporate's led by an executive called Brad Rohrer. You know Brad new team are doing a good job, but it's a modest. We have a modest starting point. Think there's lots of upside upside there. We're not overly exposed to that segment. Segment should have take a disproportionate head hitting more difficult economic climate. I'm sure Michael supplement that. Just on Westlaw Edge, what we won't do today is to sort of go into any significant detail as to what that product is, sort of competitive reasons. But the sort early testing we've done with customers very, very promising, and suggests that that will sort of continue the trajectory that we've we had have customers have enjoyed. And a wish for 1.0, the 2.0 will be at least at least that sort of value add to customers in the experience that they have with the product. Yes and Brad we plan to launch West Law Edge 2.0 in the second half of this year. At that time Paul Fischer, President of Legal Professionals, David Long, our Chief Product Officer, will do some external launches there with and we'll share more there. I think from a financial lens perspective, Westlaw Edge 1.0 we've been sharing consistently has been generating about one hundred basis points of organic growth for us very consistently, over the last four years since we launched it in July of 2018. We fully assume and we have strong confidence that Westlaw Edge 2.0 will continue that. So the 6% organic growth that legal has now achieved for four consecutive quarters, we believe will continue for the full year 22 and into 2023. So we do not believe there will be any drop-off in legal professionals our organic growth as we shift into Westlaw Edge 2.0.

Multiple speakers: significant detail as to what that product is, sort of competitive reasons. But the sort early testing we've done with customers very, very promising, and suggests that that will sort of continue the trajectory that we've we had have customers have enjoyed. And a wish for 1.0, the 2.0 will be at least at least that sort of value add to customers in the experience that they have with the product. Yes and Brad we plan to launch West Law Edge 2.0 in the second half of this year. At that time Paul Fischer, President of Legal Professionals, David Long, our Chief Product Officer, will do some external launches there with and we'll share more there. I think from a financial lens perspective, Westlaw Edge 1.0 we've been sharing consistently has been generating about one hundred basis points of organic growth for us very consistently, over the last four years since we launched it in July of 2018. We fully assume and we have strong confidence that Westlaw Edge 2.0 will continue that. So the 6% organic growth that legal has now achieved for four consecutive quarters, we believe will continue for the full year 22 and into 2023. So we do not believe there will be any drop-off in legal professionals our organic growth as we shift into Westlaw Edge 2.0.

Mike Eastwood: Aravinda, Brad we plan to launch Westlaw Edge 2.0 in the second half of this year. At that time Paul Fischer, President of Legal Professionals, David Long, our Chief Product Officer, will do some external launches there with and we'll share more there. I think from a financial lens perspective, Westlaw Edge 1.0 we've been sharing consistently has been generating about one hundred basis points of organic growth for us very consistently, over the last four years since we launched it in July of 2018. We fully assume and we have strong confidence that Westlaw Edge 2.0 will continue that. So the 6% organic growth that legal has now achieved for four consecutive quarters, we believe will continue for the full year 22 and into 2023. So we do not believe there will be any drop-off in legal professionals our organic growth as we shift into Westlaw Edge 2.0.

Speaker 15: assume and we have strong confidence that Westlaw Edge 2.0 will continue that. So the 6% organic growth that legal has now achieved for four consecutive quarters, we believe will continue for the full year 22 and into 2023. So we do not believe there will be any drop-off in legal professionals our organic growth as we shift into Westlaw Edge 2.0.

Speaker 18: Thank you. The next question is from Tony Kaplan from Morgan Stanley : Please go ahead. This is a Greg Parison for Tony. Thanks taking my question and congrats on a strong quarter. Wanted to ask about government: it's been a strong growth driver for you for some time now. Do you talk about what's driving a strong growth? What are you expecting for the next few years and just maybe broadly about the sustainability of the growth? Thanks. Yes thanks, Greg. So. Look, I think what, what sort of drives the growth that will sustain the growth is an extraordinarily extraordinary and enduring set of relationships with with key government agencies [inaudible] these team have been had in the long time and have a fantastic set of relationships that a bipartisan that are enduring,

Aravinda Suranimala Galappatthige: Thank you.

Speaker 18: The next question is from Tony Kaplan from Morgan Stanley : Please go ahead. This is a Greg Parison for Tony. Thanks taking my question and congrats on a strong quarter. Wanted to ask about government: it's been a strong growth driver for you for some time now. Do you talk about what's driving a strong growth? What are you expecting for the next few years and just maybe broadly about the sustainability of the growth? Thanks. Yes thanks, Greg. So. Look, I think what, what sort of drives the growth that will sustain the growth is an extraordinarily extraordinary and enduring set of relationships with with key government agencies [inaudible] these team have been had in the long time and have a fantastic set of relationships that a bipartisan that are enduring,

Operator: The next question is from Toni Kaplan from Morgan Stanley : Please go ahead.

Toni Michele Kaplan: This is a Greg Parison for Toni. Thanks taking my question and congrats on a strong quarter. Wanted to ask about government: it's been a strong growth driver for you for some time now. Do you talk about what's driving a strong growth? What are you expecting for the next few years and just maybe broadly about the sustainability of the growth? Thanks. Yes thanks, Greg. So. Look, I think what, what sort of drives the growth that will sustain the growth is an extraordinarily extraordinary and enduring set of relationships with with key government agencies [inaudible] these team have been had in the long time and have a fantastic set of relationships that a bipartisan that are enduring,

Greg Parison: This is a Greg Parison for Toni. Thanks taking my question and congrats on a strong quarter. Wanted to ask about government: it's been a strong growth driver for you for some time now. Do you talk about what's driving a strong growth? What are you expecting for the next few years and just maybe broadly about the sustainability of the growth? Thanks.

Steve Hasker: Yes thanks, Greg. So. Look, I think what, what sort of drives the growth that will sustain the growth is an extraordinarily extraordinary and enduring set of relationships with with key government agencies [inaudible] these team have been had in the long time and have a fantastic set of relationships that a bipartisan that are enduring, And they're built on trust and they're built on delivery. So we think that that that that sort of positioning and the growth trajectory are imminently sustainable. The business today includes a number of things, including the clear franchise, which is a unique, a unique data set, a unique franchise. Thomson Reuters Special Service, TRSS through a security cleared set of analysts.

Speaker 9: And they're built on trust and they're built on delivery. So we think that that that that sort of positioning and the growth trajectory are imminently sustainable. The business today includes a number of things, including the clear franchise, which is a unique, a unique data set, a unique franchise. Thomson Reuters Special Service, TRSS through a security cleared set of analysts.

Steve Hasker: The business today includes a number of things, including the Clear franchise, which is a unique, a unique data set, a unique franchise. Thomson Reuters Special Service, TRSS through a security cleared set of analysts. very very talented set of analysts with the track record of of highly impactful work and, of course, Pondera acquisition that we made in 2020, amongst other things. We see, we see real sort of growth and and an upside in all three of those and, in fact, we'd love to further invest in those businesses.

Steve Hasker: today includes a number of things, including the clear franchise, which is a unique, a unique data set, a unique franchise. Thomson Reuters Special Service, TRSS through a security cleared set of analysts.

Speaker 9: very very talented set of analysts with the track record of of highly impactful work and, of course, [inaudible] acquisition that we made in 2020, [inaudible] We see, we see real sort of growth and and an upside in all three of those and, in fact, we'd love to further invest in those businesses.

Steve Hasker: Within the sort of rubric of our risk broaden compliance, broader franchise to both apply that to government agencies and to and to the Corporate sector. The last part of it is our, It was the Acquisition of case files, which is which the automation of of the activities courts. And we see lots of promise and activity outside of the United States court in the court systems. Now we see some inside the United States states like Arizona grew quickly, a number of other states court systems, are sort of very much analog in their appearance today and are moving quite slowly toward a digital future. So we'll be there with and for them when they're ready. But certainly the progress we've seen in the UK, in Canada, and in places like South Africa has being has been more robust in the court systems. Greg, I'd add two additional points, Westlaw is also a contributor to the government growth.

Steve Hasker: systems. Greg, I'd add two additional points, Westlaw is also a contributor to the government growth.

Steve Hasker: systems. Greg,

Speaker 15: Steve Rubly and team have done a great job of penetration of Westlaw Edge into or at the state and federal level. And you specifically ask Greg, about sustainability in the next few years. We have strong confidence there, based on the visibility of current pipeline product, road maps, et cetera. At 9% organic growth for government in Q1, we anticipate double-digit for the full year and, if you look into 2023 we would expect a similar 10% type organic growth for government Greg.

Mike Eastwood: Greg,I'd add two additional points, Westlaw is also a contributor to the government growth. Steve Rubly and team have done a great job of penetration of Westlaw Edge into or at the state and federal level. And you specifically ask Greg, about sustainability in the next few years. We have strong confidence there, based on the visibility of current pipeline product, road maps, et cetera. At 9% organic growth for government in Q1, we anticipate double-digit for the full year and, if you look into 2023 we would expect a similar 10% type organic growth for government Greg.

Speaker 15: Greg.

Toni Michele Kaplan: Great that's very helpful. Thank you and for my follow up. I want to talk about cross sell? I think Mike, you talked about a 15% of your revenue being generated from cross sell. This was maybe a year ago that you said that I guess, maybe there's an update there and I guess broadly, you know where do you think that figure could get to over time? How big of a driver can it be, you know? Does digital self serve? Can that sort of you know bring that number higher? And if maybe you just talk about the kind of you know how much that can to contribute to organic growth? Thanks. Yes, Greg. About 15 months ago I shared the roughly 15% of our gross sells activity driven by cross sell activity. That's in the 20% range today Greg, and we do see that continuing to rise. We've made additional investments in talent and tools and systems in regards to our commercial excellence, commercial policy area that will help fuel that. A little early today Greg, for me to give you a long term view and what it it be, but I can safely say I see sustained increased opportunity. I'd add two additional points, Westlaw is also a contributor to the government growth.

Greg Parison: Great that's very helpful. Thank you and for my follow up. I want to talk about cross sell? I think Mike, you talked about a 15% of your revenue being generated from cross sell. This was maybe a year ago that you said that I guess, maybe there's an update there and I guess broadly, you know where do you think that figure could get to over time? How big of a driver can it be, you know? Does digital self serve? Can that sort of you know bring that number higher? And if maybe you just talk about the kind of you know how much that can to contribute to organic growth?

Steve Hasker: I'd add two additional points, Westlaw is also a contributor to the government growth.

Mike Eastwood: Thanks. Yes, Greg. About 15 months ago I shared the roughly 15% of our gross sells activity driven by cross sell activity. That's in the 20% range today Greg, and we do see that continuing to rise. We've made additional investments in talent and tools and systems in regards to our commercial excellence, commercial policy area that will help fuel that. A little early today Greg, for me to give you a long term view and what it it be, but I can safely say I see sustained increased opportunity.

Mike Eastwood: As we move over the time horizon in each of our segments there. You mentioned the digital self-serve. That will definitely help us with cross-sell activity, but also the work that we're doing with product, once again with David Wong, Charlie Cox on the design side. So I think its part of that product innovation that's also an element of cross-sell that will definitely help us out Greg.

Multiple speakers: Great Thanks so much and congrats again. you, Thank you Greg. The next question is coming from Douglas Arthur from Huber research. Please go ahead.

Multiple speakers: Great Thanks so much and congrats again. you, Thank you Greg. The

Greg Parison: Great Thanks so much and congrats again.

Multiple speakers: Thank you Greg. The next question is coming from Douglas Arthur from Huber research. Please go ahead.

Multiple speakers: Thank you Greg. The

Mike Eastwood: Thank you Greg. The

Gary Elizabeth Bisbee: Thank you Greg.

Operator: The next question is coming from Douglas Arthur from Huber research. Please go ahead.

Doug Arthur: Yes, thank you. Steve lot of your information service appears of lower guidance for 2022. Are you really, your business mix is a lot more resilient, as shown by your guidance change. So I guess the question is, on the margin, what sort of if, if some softness in demand developed later the year in legal or corporates particularly, what sort of areas would you be tracking to see if there was any softness in demand I assume as mostly on the project side?

Mike Eastwood: The

Steve Hasker: Yes I mean thank you for the question. It's worth remembering remember 80% of our revenues are recurring, so I understand your question but it is a a very small portion of our business and that's not to say we're not focused on winning every customer every day and increasing our retention, taking price where we can, and fundamentally proving the customer experience to sort of drive better NPS and more receptivity to our innovations. We're focused on all those things.

Speaker 9: And I don't want to let the 80% recurring revenue sort of be a source of arrogance or complacency. It's not, so please don't take that from that answer. But this is a business that provides an enormous amount of forward visibility. So I can't give you a good answer. I don't think there are particular areas that we look at and say that that could be a problem. We're just used to the extent we're selling advertising will will involve will always involve a sort of a transactional nature to it and rise and fall as that markets do. And and print of course in a long term secular decline and so we're always carefully monitoring sort of trajectory of that and we see that being on a on a fairly manageable glide path at the moment. Then our transactional revenue, yes there's a degree of variability to it. We had some benefits from that in the first quarter but you have to remember, I mean these are although they are transactional they're essential.

Q1 2022 Thomson Reuters Corp Earnings Call

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