Q3 2023 Thomson Reuters Corp Earnings Call

Good day, everyone and welcome to the Thomson Reuters third quarter earnings call Today's conference is being recorded.

This time I'd like to turn the call over to Gary Bisbee head of Investor Relations. Please go ahead.

Thank you Allie.

Good morning, everybody and thank you for joining us today for our third quarter 2023 earnings call.

And today by our CEO, Steve pastor, our CFO, Mike Eastwood, each of whom will discuss our results and take your questions. Following their remarks.

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

Throughout today's presentation, when we compare performance period on period, we discuss revenue growth rates before currency as well as on an organic basis. We believe this provides the best basis to measure the underlying performance of the business.

I'd like to highlight this quarter change slight change to our non <unk> measures getting with the with this quarter's results. We now add back to adjusted earnings the noncash intangible amortization expense related to acquired software like will discuss this change in more detail in a few minutes to help with your models note that we've posted a.

Stork overstatement of revision of the <unk>.

Don I FRS calculation to the IR website.

Today's presentation contains forward looking statements and non I FRS financial measures actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide the regulatory agencies. You may access these documents on our website or by contacting our Investor Relations Department, Let me now turn it over to Steve Asker.

Thank you Gary and thanks to all of you all of you for joining US today, let me start by saying that we are deeply saddened to learn that.

Operator: Good day, everyone, and welcome to the Thomson Reuters third quarter earnings call. Today's conference is being recorded.

Gary Bisbee: At this time, I'll extend a call over to Gary Bisbee. Head of investor relations, please go ahead. Thank you, Allie.

On Friday October 13th religious visual journalist you sign them up dollar was killed when a shell had him.

While he was filming cross border five between Israel and Lebanon.

Gary Bisbee: Good morning, everybody. And thank you for joining us today for our third quarter 2023 earnings call. I'm joined today by our CEO, Steve Hasker, our CFO, Mike Eastwood, each of whom will discuss our results and take your questions following the remarks. To enable us to get to as many questions as possible, we would appreciate it if you'd limit yourself to one question and one follow-up each when we open the phone lines.

He also Donnie and my meze to other religious journalists and colleagues from AFP and Al Jazeera.

Also injured in the shelling.

ECM was an experienced talented passionate journalist and he's lost is deeply felt newsrooms and across Thomson Reuters.

Gary Bisbee: Throughout today's presentation, when we compare performance period on period, we discuss revenue growth rates before currency, as well as on an organic base. We believe this provides the best basis to measure the underlying performance of the business.

Our thoughts are with E Sims friends and family as.

As well as our Reuters colleagues, who continue to report in escalating conditions from Gaza.

Reporting on world events with accuracy integrity independence and freedom from bias is core to what we stand for.

Gary Bisbee: I'd like to highlight this quarter, a change, slight change to our non-IFRS measures. Getting with this quarter's results, we now add back to adjusted earnings, the non-cash and tangible emeritization expense related to acquired software. Michael discussed this change in more detail in a few minutes. To help with your models, note that we've posted a historical restatement or revision of the non-IFRS calculation to the IR website.

And it is critically important for our journalists to be able to do so safely.

Now I'll move to reviewing our Q3 highlights solid momentum continued in the third quarter with revenue largely inline and margins ahead of our expectations.

As was the case in the second quarter, a majority of the margin beat.

Gary Bisbee: Today's presentation contains 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 for regulatory agencies. You may access these documents on our website or by contacting our investor relations department.

<unk> from the timing of expenses, which we expect to largely normalize in the fourth quarter.

Mike will provide further explanation in context.

Total company organic revenues grew 6% driven.

Driven by healthy recurring and transactional growth.

The big three segments grew 7% organically.

Steve Hasker: Let me now turn it over to Steve Hasker. Thank you, Gary, and thanks to all of you for joining us today.

We continue to see good momentum for many areas in our portfolio.

Steve Hasker: Let me start by saying that we are deeply saddened to learn that on Friday, October 13th, Roger's visual journalist, Isam Abdullah, was killed when a shell hit him while he was filming cross-border fire between Israel and Lebanon. Taia Al-Sadani and Maia Naze, who other Roger's journalists and colleagues from AFP and Al-Jazeera, were also injured in the shelling. Isam was an experienced, talented, passionate journalist, and his loss is deeply felt in our newsrooms and across Thompson Reuters.

Whistler precision strong start continues.

With more than 3000 sales to date.

It is earning a large and rising premium.

That supports the upcoming launch of generative capabilities.

Our international businesses continued their double digit trajectory with 14% organic growth.

And many of our key products remain double digit growers, including practical law.

Confirmation.

Sure Prep and.

And high cube.

Steve Hasker: Our thoughts are with Isam's friends and family, as well as our Roger's colleagues who continue to report in escalating conditions from Gaza. Reporting on world events with accuracy, integrity, independence, and freedom from bias is core to what we stand for, and is critically important for our journalists to be able to do so safely.

These areas of strength are tempered somewhat by an uncertain macro backdrop.

And tysabri customer discretionary budgets, particularly in our corporate segment.

Sales cycles at corporates remained elongated.

And garage from digital advertising in the events business at Reuters news remain subdued.

All in we are largely maintaining our full year 2023 outlook, including for organic revenue growth adjusted EBITDA margins and free cash flow, Mike will discuss several tweaks to other guidance items in a few minutes.

Steve Hasker: Now we'll move to reviewing our Q3 highlights. Solid momentum continued in the third quarter, with revenue largely in line and margins ahead of our expectations. As was the case in the second quarter, a majority of the margin beat resulted from the timing of expenses which we expect to largely normalize in the fourth quarter. Michael provide further explanations in context. Total company organic revenues grew 6%, driven by healthy recurring and transactional growth.

Looking forward our confidence around the generative AI opportunities continues to strengthen.

We made good progress against our build partner by approach in the third quarter closing the <unk> acquisition and.

And continuing progress on our product Roadmaps.

Steve Hasker: Smith, the big three segments grew 7% organically. We continue to see good momentum from many areas in our portfolio. Westlaw Precision's strong start continues with more than 3,000 sales to date. It is earning a large and rising premium that supports the upcoming launch of Genitive AI capabilities. Our international businesses continued their double digit trajectory with 14% organic growth. And many of our key products remain double digit growers, including practical law, confirmation, shore prep, and high queue.

Reaction to case text and our Gen. II pilots has been extremely encouraging cut.

Customers are taking the acquisition.

Our commitment to heavy investment in our product Roadmaps as a clear sign of our intent to lead in the application of generative AI and they have expressed their confidence and trust in our ability to do so.

During due to a growing conviction in the generative AI opportunities, we're accelerating our investment in the short term, which we expect will pay off through stronger cross over the next few years.

Lastly, our capital capacity and liquidity remain a key asset.

That we are focused on deploying to create shareholder value and we made good progress on this during the third quarter.

Steve Hasker: These areas of strength are tempered somewhat by an uncertain macro backdrop, entire customer discretionary budgets, particularly in our corporate segment. Sales cycles at corporates remained elongated, and growth from digital advertising and the events business at Reuters News remained subdued. All in, we are largely maintaining our full year 2023 outlook, including for organic revenue growth, adjusted EBITDA margins, and free cash flow. Michael discussed several tweaks to other guidance items in a few minutes.

We monetized an additional $1 5 billion about <unk> stake in September.

Completed the acquisition of <unk> in August and.

<unk> also completed two small bolt on purchases.

Today.

We are launching a new 1 billion dollar share repurchase program.

And we plan to pay down our $600 million maturing debt issue later this month with cash on hand.

We remain committed to a balanced capital allocation approach and continue to assess additional inorganic opportunities.

Steve Hasker: Looking forward, our confidence around the Genitive AI opportunities continues to strengthen. We made good progress against our build partner by approach in the third quarter, closing the case tech acquisition, and continuing progress on our product road maps. Reaction to case tech and our Gen AI pilots has been extremely encouraging. Customers have taken the acquisition, our commitment to heavy investment, and our product road maps as a clear sign of our intent to lead in the application of Genitive AI, and they have expressed their confidence and trust in our ability to do so.

Now to the results for the quarter third quarter organic revenues grew 6% organic recurring and transactional revenue grew 7% and 9%, respectively and print revenue declined modestly as expected.

Reported revenue grew 1% with currency, having little impact and net divestitures, a 5% drag adjusted.

EBITDA increased 18% to $632 million, reflecting a 560 basis point margin improvement to 39, 6%.

The margin expansion resulted in part from Chinese program expenses in the prior year.

Steve Hasker: Due to our growing conviction in the Genitive AI opportunities, we're accelerating our investment in the short term, which we expect will pay off through stronger growth over the next few years. And lastly, our capital capacity and liquidity remain a key asset that we are focused on deploying to create shareholder value. And we made good progress on this during the third quarter. We monetized an additional $1.5 billion of our LSEG in September, completed the acquisition of case tech in August, and have also completed two smaller bolt-on purchases.

And expense timing that will largely normalized in the fourth quarter.

Mike will discuss this in more detail.

Adjusted earnings per share grew 41% from the prior year period to 82 cents.

Turning to the third quarter results by segment, the Big three businesses achieved organic revenue growth of 7% legal organic revenue again grew 6% driven by continued west la precision momentum.

<unk> for our key offerings remains healthy led by West La practical law and high Q and customer interest in our AI driven offerings and product roadmap remains extremely strong including for co Council, which.

Steve Hasker: Today, we are launching a new $1 billion share repurchase program, and we plan to pay down a $600 million maturing debt issue later this month with cash on hand. We remain committed to a balanced capital allocation approach, and continue to assess additional inorganic opportunities.

Which we acquired as part of <unk>.

Corporate organic revenue growth remained stable with last quarter at 7% recurring revenue grew at 8%, while transactional revenue was slightly lower.

Practical law indirect tax clear in our international regions remain key growth drivers.

Steve Hasker: Now to the results for the quarter. Third quarter organic revenues grew 6% organic recurring and transactional revenue grew 7% and 9% respectively. And print revenue declined modestly as expected. Reported Revenue Group 1% with currency having little impact and net the vestiges a 5% drag. Adjusted EBITDA increased 18% to $632 million, reflecting a 560 basis point margin improvement to 39.6%. The margin expansion resulted in part from change program expenses in the prior year and expense time that were largely normalised in the fourth quarter.

And accounting organic organic revenue growth rose, 12% with recurring revenue up 9% and transactional up 20%.

Our Latin America operations confirmation ensure prep each contributed meaningfully to growth.

Reuters news organic revenues rose 3%.

Added by the news agreement with data and analytics business of <unk>.

And by timing in the advent calendar with more events in Q3 compared with the prior year digital advertising revenue improved slightly compared with recent quarters. The uneven macro trends remained a headwind and lastly, global print organic revenues met our expectations declining 4% year over year in summary.

Steve Hasker: Michael discussed this in more detail. Adjusted earnings per share grew 41% from the prior year period to 82 cents. Turning to the third quarter results by segment, the big three businesses achieved organic revenue growth of 7%. Legal organic revenue, again, grew 6% driven by continued West Law Precision Momentum. Demand for our key offerings remains healthy, led by West Law, Practical Law and High Q, and customer interest in our AI driven offerings and product roadmap remains extremely strong, including for co-counsel, which we acquired as part of case tax.

We're pleased with our results and the solid momentum in the business.

So before I turn it over to Mike I'll provide a brief update on the <unk> acquisition, and our degenerative II product roadmap.

We are very pleased to have closed the acquisition of <unk> on August 17th and we're excited C. J killer and his team and now part of Thomson Reuters.

Early integration is off to a very good start and collaboration amongst the teams strong for example, our product teams are working well together as we begin to execute against the joint product roadmap.

Integration of the <unk> go to market sales team into our legal segment is underway and we're moving quickly to take advantage of the high customer interest in our <unk>.

Steve Hasker: Corporate organic revenue growth remained stable with last quarter at 7%, recurring revenue grew at 8%, while transactional revenue was slightly lower. Practical Law indirect tax clear and our international regions remained key growth drives. Taxing accounting or organic revenue growth rose 12% with recurring revenue up 9% and transactional up 20%. Our Latin America operations, confirmation and short prep each contributed meaningfully to growth. Reuters news, organic revenues rose 3%, aided by the news agreement with data and analytics business of LSEG and by timing in the events calendar, with more events in Q3 compared with the prior year. Digital advertising revenue improved slightly compared with recent quarters, though uneven macro trends remained ahead with. Lastly, global print organic revenues met our expectations declining 4% year over year.

Generally AI offerings. This includes work to accelerate our timelines for bringing case takes non research co counsel skills into several key overseas markets.

While the product roadmap work remains in its early stages. We have agreed on several key principles that will guide our generative AI approach.

First we are taking a best of approach to bring generative II to our legal research offerings that will result in a single legal research AI capability.

This will leverage our extensive and proprietary west la content.

And the best Technology from case text and Thomson Reuters.

Our teams are working well together.

Early testing shows this best of breed approach is yielding superior results.

Second we plan to brand all generative AI capabilities within our legal portfolio under the co counsel night.

Steve Hasker: In summary, we're pleased with our results and the solid momentum in the business.

Industry reception to code Council has been very strong.

Steve Hasker: So before I turn it over to Mike, I'll provide a brief update on the case tax acquisition and our generative AI product roadmap. We are very pleased to have closed the acquisition of case tax on August 17th, and we're excited CEO Jake Heller and his team are now part of Thompson Reuters. Early integration is off to a very good start and collaboration amongst the teams is strong. For example, our product teams are working well together as we begin to execute against the joint product roadmap.

And we see an opportunity to leverage a consistent identity across our growing portfolio of generative AI offerings.

And third we are working to embed and distribute the co counsel AI assistant across a legal offerings. Currently while co council has very compelling skills. There are only available through the <unk> website.

We see a big opportunity to bring case to bring co counsel's capabilities to.

So the places attorneys work, including Westfall practical law high Q.

And third party applications like Microsoft word and teams.

Steve Hasker: Integration of the case tax go-to-market sales team into our legal segment is underway. And we're moving quickly to take advantage of the high customer interest in our joint generative AI offerings. This includes work to accelerate our timelines for being case tax non-research co-council skills into several key overseas markets. While the product roadmap work remains in its early stages, we have agreed on several key principles that will guide our generative AI approach.

In addition to the branding and distribution, we see significant value for users.

From the AI assistant experience.

Co counsel will help to find the right skill for the problem the customer is trying to solve.

Which weren't available across a range of applications should provide meaningful workflow automation and user experience enhancements.

And fourth we will continue to aggressively invest to expand the SKU that co counsel offers outside of legal research.

Steve Hasker: First, we are taking a best of approach to bring generative AI to our legal research offerings that will result in a single legal research AI capability. This will leverage our extensive and proprietary West Law content and the best technology from Case Text and Thomson Reuters. Our teams are working well together and our early testing shows this best of breed approaches you link superior results. Second, we plan to brand all generative AI capabilities within our legal portfolio under the co-counsel name.

Its current seven non research skills are an exciting opportunity for Thompson Reuters.

And we have a compelling roadmap of future new skills in development now.

Our focus is to preserve the pace of development and innovation that case takes brings as we grow the roster of skills and capabilities offered through accounts.

And lastly, we are building on a single technology platform as part of our integration. We are building a common AI skills factory platform informed by <unk> technology that we believe will allow us to build future skills in a more scalable and fast up way.

Steve Hasker: Industry reception to co-counsel has been very strong and we see an opportunity to leverage a consistent identity across our growing portfolio of generative AI offerings. And third, we are working to embed and distribute the co-counsel AI assistant across our legal offerings. Currently while co-counsel has very compelling skills, they're only available through the Case Text website. We see a big opportunity to bring co-counsel's capabilities to the place's attorney's work, including West Law, practical law, high queue, and third party applications like Microsoft Word and Teams.

So looking forward our confidence in the degenerative eye opportunity continues to strengthen.

Our teams have moved with speed and decisiveness never seen before at Thomson Reuters customer feedback and reaction to the <unk> acquisition the.

Steve Hasker: In addition to the branding and distribution, we see significant value for users from the AI assistant experience. Co-counsel will help to find the right skill for the problem the customer is trying to solve, which when available across a range of applications should provide meaningful workflow automation and user experience enhancements. And fourth, we will continue to aggressively invest to expand the skill that co-counsel offers outside of legal research. Its current seven non-research skills are an exciting opportunity for Thompson Reuters.

The Microsoft intelligent drafting announcements in our early pilots have all been very positive. We're excited about our product roadmap, which includes multiple key launches over the next few months.

First up is bringing generative AI capabilities into Westwood precision.

Which will be debuted at our November 15th launch event in New York City.

The AI assisted.

Assisted research tool in West La precision provides an enhanced.

Search experience and quality legal research memo output that Leverages Westwood, leading content along with technology from both Tia and case text customer pilots have gone very well and excitement around this capability drove September to be the strongest month to date for precision upgrades.

We expect to deliver a number of additional key product launches by January 2024, including co counsel core.

Steve Hasker: And we have a compelling roadmap of future new skills in development. Our focus is to preserve the pace of development and innovation that Case Text brings as we grow the roster of skills and capabilities offered through co-counsel. And lastly, we're building on a single technology platform. As part of our integration, we're building a common AI skills factory platform informed by Case Text Technology that we believe will allow us to build future skills in a more scalable and faster way.

Practical law answers.

Council core is our new offering based on the non research skills. Currently offered in co counsel and will be supplemented by additional skill launches in Q4 2023 and.

In 2024.

<unk> is our generative NII driven conversational experience within practical law.

We expect to bring the west La AI assisted research co counsel core and practical answer offerings to additional geographies, including the UK, Canada and Australia in 2024, and we have a strong pipeline of additional launches and capability enhancements that we expect to deliver.

Steve Hasker: So looking forward, our confidence in the generative AI opportunity continues to strengthen. Our teams have moved with a speed and decisiveness never before seen before at Thompson Reuters, customer feedback and reaction to the Case Text acquisition, the Microsoft intelligent drafting announcement, and our early pilots have all been very positive.

Through 2024.

I'd also note that while this discussion is focused on a legal offerings. Our teams are also innovating innovating with generative AI in our tax and corporates markets and we'll be sharing with customers the number of generative.

Steve Hasker: We're excited about our product roadmap, which includes multiple key launches over the next few months. First up is bringing generative AI capabilities into West Law precision, which will be debuted at a November 15 launch event in New York City. The AI assisted research tool in West Law precision provides an enhanced search experience and quality legal research memo output that leverages West Law's leading content along with technology from both TR and Case Text.

Proof of concepts at our synergy user conferences later this month.

We look forward to updating you on our progress and the continued pipeline evolution over the next few quarters.

And I'll now turn it over to Mike to review our financial performance.

Thanks again for joining us today.

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

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

Steve Hasker: Police, customer pilots have gone very well and excitement around this capability drove September to be the strongest month to date for precision upgrades. We expect to deliver a number of additional key product launches by January 2024, including co-counsel core and practical law answers. Co-counsel core is our new offering based on the non-research skills currently offered in co-counsel and will be supplemented by additional skill launches in Q4 2023. Practical law answers is our generative AI driven conversational experience within practical law.

Organic revenue grew 7% for the third quarter, continuing the trend of 6% or better baked III growth that began in the second quarter of 2021.

Total revenue rose, 1%, including the impact of divestitures.

Legal professionals organic revenue grew 6% driven by continued less law precision momentum.

Elite divestiture and a partial quarter benefit from case Tac.

Key drivers from a product perspective remain less law practical law.

Steve Hasker: We expect to bring the West Law AI assisted research, co-counsel core and practical law answers offerings to additional geographies, including the UK, Canada and Australia in 2024. And we have a strong pipeline of additional launches and capability enhancements that we expect ever through 2024.

And our international businesses.

We expect good momentum to continue in the fourth quarter.

On west La precision I am happy to report penetration trends continue to go well.

After 13 months precision is at 15% penetration and is 25% ahead of edge on a dollar basis.

Steve Hasker: I also note that while this discussion is focused on our legal offerings, our teams are also innovating with generative AI in our tax and corporates markets and will be sharing with customers a number of generative AI, proof of concepts at our synergy user conferences later this month. We look forward to updating you on our progress and the continued pipeline evolution over the next few corners.

In our corporate segment organic revenue again grew 7%.

We continue to fill the impacts of the sales cycle lengthening we have mentioned in recent quarters and expect fourth quarter growth has softened slightly in part due to a difficult comparison.

Tax and accounting had another good quarter growing 12% organically.

Michael Eastwood: And I'll now turn it over to Mike to review our financial performance. Thanks, Steve. Thanks again for joining us today. As a reminder, I will talk to revenue growth before currency and on organic basis. Let me start by discussing the third quarter revenue performance of our big three segments. Organic revenue grew 7% for the third quarter, continuing the trend of 6% or better big three growth that began in the second quarter of 2021.

Recurring and transactional revenue grew 9% and 20% respectively.

We expect growth to moderate somewhat in the fourth quarter, driven by lower seasonal mix from our fastest growth offerings.

Moving to Reuters news.

Organic revenues increased 3% meeting our expectations.

Lastly, global print organic revenues decreased 4% also in line with our expectations.

Michael Eastwood: Total revenue rose 1% including the impact of the vestitures. Legal professionals organic revenue grew 6% driven by continued West law precision momentum, the elite, the vestiture and a partial quarter benefit from case tech. He drivers from our product perspective remain less law, practical law, high q and our international businesses. We expect good momentum to continue in the fourth quarter. On less law precision, I am happy to report penetration trends continue to go well.

On a consolidated basis organic revenues increased 6% for the third quarter.

Turning to our profitability adjusted EBITDA for the Big three segments was $566 million.

Up 7% from the prior year period, with a 44% margin rising 210 basis points.

This exceeded our prior expectations due to the timing of several expenses, including incentive compensation acquisition.

<unk> integration related cost and productivity initiatives.

Michael Eastwood: After 13 months, precision is at 15% penetration and is 25% ahead of edge on the dollar basis. In our corporate segment, organic revenue again grew 7%. We continue to fill the impacts of the cell cycle, LinkedIn, we have mentioned in recent quarters and expect fourth quarter growth to soften slightly in part due to a difficult comparison. Tax and accounting had another good quarter growing 12% organically, recurring and transactional revenue grew 9% and 20% respectively.

We expect certain of these timing factors to normalize in the fourth quarter.

Moving to Reuters news adjusted EBITDA was $37 million.

Up $4 million from the prior year with a margin of 24%.

Revenue growth and a currency benefit drove margins.

Global Print's adjusted EBITDA was $55 million with a margin of 39, 6%.

520 basis points.

<unk> and plant expense timing benefited profitability, though we expect these to reverse in the fourth quarter.

Michael Eastwood: We expect growth to moderate somewhat in the fourth quarter driven by a lower seasonal mix from our fastest growth offering. James, Moving to Reuters News, Organic Revenue's increased 3% meeting our expectations. Lastly, Global Print Organic Revenue's decreased 4% also in line with our expectations. On a consolidated basis, Organic Revenue's increased 6% with a third quarter. Turning to our profitability, adjusted EBITOP with a big three segments with $566 million. Up, 7% from the prior year period with a 44% margin rising 210 basis points.

In aggregate total company adjusted EBITDA was $632 million, an 18% increase versus Q3 2022.

Excluding costs related to the change program in the prior period adjusted EBITDA increased 9%.

Turning to earnings per share.

Third quarter adjusted EPS was <unk> 82.

Up from 58 from the prior year period.

The increase was mainly driven by higher adjusted EBITDA with the last 12 months share repurchases also contributing.

Currency had no impact on adjusted EPS in the quarter.

Let me explain a change we're making to our non <unk> adjusted net earnings and EPS definitions.

Michael Eastwood: This exceeded our prior expectations due to the timing of several expenses, including incentive compensation, acquisition integration-related cost, and productivity initiatives. We expect certain of these timing factors to normalize in the fourth quarter. Moving to Reuters News, adjusted EBITOP with $37 million. Up, $4 million from the prior year with a margin of 20.4%. Revenue growth and a currency benefit drove margins. Global Print's adjusted EBITOP was $55 million with a margin of 39.6% up 520 basis points.

Beginning with this quarters results, we now add back to adjusted earnings of noncash intangible amortization expense related to acquired software.

We have historically added back non software M&A related intangible amortization, but not the software component.

This change in definition aligns our reporting more closely with how peer company Street M&A related intangibles.

On a year to date basis, the change increases our adjusted EPS by <unk> <unk>, including <unk> in the third quarter.

Michael Eastwood: Editorial and plan expense timing benefited profitability, though we expect these to reverse in the fourth quarter. In aggregate, total company adjusted EBITOP was $632 million and 18% increase versus Q3 2022. Excluding cost related to the change program in the prior period, adjusted EBITOP increased 9%. Turning to Arnie's per share, third quarter adjusted EPS was $82.00. Up from $58 cents from the prior year period. The increase was mainly driven by higher adjusted EBITOP with the last 12 months share repurchases also contributing, currency had no impact on adjusted EPS in the quarter.

To help with your models, we have posted historical restatement.

Of our non <unk> earnings calculation to our Investor Relations website.

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

Ported free cash flow was $1 3 billion versus $814 million in the prior year period.

Consistent with previous quarters. This slide removes the storting factors impacting our free cash flow.

Working from the bottom of the page upwards, the cash inflow from discontinued operations was $24 million.

Which is a $90 million improvement from the prior year period.

Also in the nine months, we made $80 million of change program payments as compared to $275 million in the prior year period.

Michael Eastwood: Let me explain a change we're making to our non-IFRS adjusted net earnings and EPS definitions. Beginning with this quarter's results, we now add back to adjusted earnings, the non-FASH intangible amortization expense related to acquired software. We have historically added back non-software M&A related intangible amortization but not the software component. This change in definition aligns our reporting more closely with how peer companies treat M&A related intangibles. On a year-to-date basis, the change increases our adjusted EPS by 8 cents, including 4 cents in the third quarter.

If you adjust for these items comparable free cash flow from continuing operations was $1 3 billion one.

$159 million higher than the prior year period, due largely to higher EBITDA.

Next I will provide an update on our London stock Exchange group holding.

During September we sold an additional 15 million shares in a public market transaction.

We have now sold 55 1 million shares year to date and have $16 9 million shares remaining.

A couple of additional points.

As part of our September transaction. We also wrote call options on $3 5 million additional shares with exercise date running through next March.

Michael Eastwood: To help with your models, we have posted a historical restatement of our non-IFRS earnings calculation to our investor relations website. Let me now turn to our free cash flow performance for the first nine months. Reported free cash flow was 1.3 billion versus 814 million in the prior year period. Consistent with previous quarters, this slide removes the distorting factors impacting our free cash flow. Working from the bottom of the page upwards, the cash inflow from discontinued operations was 24 million, which is a $90 million improvement from the prior year period.

And we have an additional $6 1 million shares that become eligible for sale in 2024.

Michael Eastwood: Also in the nine months, we made 80 million of change program payments as compared to $275 million in the prior year period. If you adjust for these items, comfortable free cash flow from continuing operations was 1.3 billion, 159 million higher than the prior year period due largely to higher EBITDA.

Second our tax basis on the remaining $16 9 million shares is approximately $750 million.

For your math, we would assume a 25% capital gains tax rate on gains above $750 million.

Third the value of foreign exchange hedges held against our <unk> stake were $90 million as of September 30th.

We currently have approximately 92% of our remaining <unk> position hedged.

Bolstered by the <unk> monetization and healthy free cash flow our capitalization remained strong with a net debt to EBITDA leverage ratio of only 0.8 times.

This remains well below our two five times long term target.

Due to the strong liquidity, we plan to replay a 600 million bond maturity later this month with cash on hand.

Michael Eastwood: Next, I will provide an update on our London Stock Exchange Group holding. During September, we sold an additional 15 million shares in a public market transaction. We have now sold 55.1 million shares year to date and have 16.9 million shares remaining.

And as Steve mentioned, we have announced a new $1 billion and CIB share repurchase program.

These announcements continue our work to deploy our capital capacity.

Year to date, we have invested $1 2 billion in strategic M&A.

Michael Eastwood: A couple of additional points. First, as part of our September transaction, we also wrote call options on 3.5 million additional shares with exercise dates running through next March. And we have an additional 6.1 million shares that become eligible for sale in 2024. Second, our tax basis on the remaining 16.9 million shares is approximately 750 million. For your math, we would assume a 25% capital gains tax rate on gains above 750 million.

Returned $2 7 billion through share repurchases ended June return of capital transaction.

And grown our per share dividend by 10%.

We remain focused on following a balanced capital allocation approach that drives long term shareholder value creation.

Let me conclude with our updated 2023 outlook.

Let me start by providing a bit of color on the financial impact of our recent acquisitions.

In addition to the case tax acquisition, Steve discussed we have closed two smaller tuck ins.

Michael Eastwood: Third, the value of foreign exchange hedges held against our LSAC stake were 90 million as of September 30th. We currently have approximately 92% of our remaining LSAC position hedged. Also, about the LSAC monetization and healthy free cash flow, our capitalization remains strong, but they net debt to EBITDA leverage ratio of only 0.8 times. This remains well below our 2.5 times long-term target. Due to this strong liquidity, we plan to replace 600 million bond maturity later this month with cash on hand.

Imogen a digital media asset management platform from borders.

And the buyout of our joint venture partner for West La Japan.

Imogen brains compelling capabilities to Reuters News agency customers through a cloud native digital media management and distribution platform.

And fully owning west La Japan positions us to bring enhanced technology.

And better innovation for our legal legal customers in the third.

<unk> third largest economy.

The total purchase price across these three transactions was approximately $700 million, which we funded with cash on hand.

Michael Eastwood: And as Steve mentioned, we have announced a new 1 billion NCIB Care Repurchase Program. These announcements continue our work to deploy our capital capacity. Year to date, we have invested 1.2 billion in strategic M&A, returned 2.7 billion through share repurchases and the June Return of Capital Transaction, and grown our per share dividend by 10%.

In aggregate, we see these three businesses contributing $60 million or more of revenue in 2024.

Growing in excess of 25%.

<unk> is expected to contribute more than half of this revenue.

On an annualized basis, we expect these acquisitions to be approximately 80 basis points dilutive to our adjusted EBITDA margins.

Michael Eastwood: We remain focused on following a balanced capital allocation approach that drives long-term shareholder value creation Let me conclude with our updated 2023 outlook Let me start by providing a vivid color on the financial impact of our recent acquisitions In addition to the case tech acquisitions, Steve discussed we have closed two small tuck-ins, Imogen, a digital media asset management platform from borders, and the buy-out of our joint venture partner for Westlaw, Japan Imogen brings compelling capabilities to Reuters news agency customers through a cloud-native digital media management and distribution platform, and fully owning Westlaw, Japan positions us to bring enhanced technology and better innovation for our legal, legal customers in the world's third largest economy The total purchase price across these three transactions was approximately 700 million, which we funded with cash on hand. In aggregate, we see these three businesses contributing 60 million or more of revenue in 2024, growing in excess of 25 percent, case tech is expected to contribute more than half of this revenue On an annualized basis, we expect these acquisitions to be approximately 80 basis points dilutive to our adjusted EBITDA margins including roughly 30 basis points from non-recurring integration expenses that should fall off within 24 months For 2023, we see a 30 basis point headwind to margins from these acquisitions with an incremental 50 basis points impact in 2024 Profitability from the acquired assets is expected to improve nicely in 2025, and we see these businesses trending towards our total company margins over the long term Let me close with the discussion of our outlook As Steve outlined, we are largely maintaining our full year 2023 outlook, including for organic revenue growth of 5.5 to 6 percent, adjusted EBITDA margin of approximately 39 percent, and pre-cash flow of approximately 1.8 billion We are making two updates to our 2023 outlook.

Including roughly 30 basis points from nonrecurring integration expenses that should fall off within 24 months.

For 2023, we see a 30 basis point headwind to margins from these acquisitions with.

With an incremental 50 basis points impact in 2024.

Profitability from the acquired assets is expected to improve nicely in 2025, and we see these business is trending towards our total company margins over the long term.

Let me close with a discussion of our outlook.

As Steve outlined we are largely maintaining our full year 2023 outlook.

Including for organic revenue growth of five 5% to 6%.

Adjusted EBITDA margin of approximately 39%.

And free cash flow of approximately $1 8 billion.

We are making two updates to our 2023 outlook.

We are lowering our interest expense outlook to $170 million to $180 million from the prior $190 million.

This incorporates the accelerated pace of <unk> monetization that continued in Q3 and.

And also the benefit from higher interest rates on our cash balances.

Second we are updating our outlook for depreciation and amortization of software to incorporate the recent acquisitions and narrowed the range with one quarter left in the year.

We also have broken this down into two line items to support the new non <unk> adjusted earnings presentation.

Amortization of acquired software, which will now be added back to adjusted earnings rises by $20 million due to the recent M&A.

Looking forward.

We are currently in our 2020 for planning cycle, and we will provide more detailed 2020 for guidance on our Q4 conference call in February.

However, given the significant opportunities to expand our medium to longer term growth profile through Jan AI and growth investments.

Currently anticipate reinvesting much of our underlying operating leverage during 2024.

We remain confident in our ability to continue to expand margins over the mid to long term given our business models operating leverage.

We have conviction these organic and inorganic investments will pay off over the next few years through accelerated revenue growth.

Michael Eastwood: First, we are lowering our interest expense outlook to 170 to 180 million from the prior 190 million. This incorporates the accelerated pace of LSAG monetization that continued in Q3, and also the benefit from higher interest rates on our cash balances. Second, we are updating our outlook for depreciation and amortization of software to incorporate the recent acquisitions in near of the range with 1.4 or less in the year We also have broken this down into two line items to support the new non-IFRS-adjusted earnings presentation. Emeritization of acquired software, which will now be added back to adjusted earnings, rises by 20 million due to the recent MNA.

We will discuss this in more detail on our Q4 Paul.

And in an Investor day, we are planning for mid March.

I will provide one more early view on 2024.

We expect our effective tax rate to be approximately 19%.

<unk> roughly 2% due to the adoption of the OECD global minimum tax regulations across several of our key markets.

We expect our cash tax rate to increase by a similar amount, but remain roughly 5% below our effective tax rate.

The fourth quarter.

We expect organic revenue growth to be within our full year, five 5% to 6% range.

We see our fourth quarter adjusted EBITDA margin at approximately 37% impacted by the timing of normalization of certain expenses.

Michael Eastwood: Looking forward, we are currently in our 2024 planning cycle and will provide more detail 2024 guidance on our Q4 conference call in February. However, given the significant opportunities to expand our medium to longer-term growth profile through Gen AI and growth investments, we currently anticipate reinvesting much of our underlying operating leverage during 2024. We remain competent in our ability to continue to expand margins over the mid to long-term, given our business models operating leverage. We have conviction these organic and inorganic investments will pay off over the next few years through accelerated revenue growth.

Select growth investments and productivity initiatives and the aforementioned M&A dilution.

Let me now turn it back to Gary for questions.

Thank you Ali we're ready to begin the Q&A.

Perfect. Thank you, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.

A speaker phone please machinery function is released.

Your signature.

We do ask that you limit yourself to one question and one follow up question.

Again, it is star one if you'd like to ask a question.

And we will go ahead and take our first question from Jeremy.

Michael Eastwood: We will discuss this in more detail on our Q4 call and in an investor day we are planning for mid-March. How will provide one more early view on 2024? We expect our effective tax rate to be approximately 19%, rising roughly 2% due to the adoption of the OECD global minimum tax regulations across several of our key markets. We expect our cash tax rate to increase by similar amount, but remain roughly 5% below our effective tax rate.

Drew Mcreynolds with RBC. Please go ahead.

Yeah, Thanks, very much and good morning.

Just two ones for me.

First on maybe for you Mike just on organic revenue growth in Q3 are you able to.

Let us know what the contribution is from divestitures and acquisitions.

In the quarter, and then secondly, a little bit bigger picture, maybe for you Steve on.

Just all the Gen AI roadmap. Thank you for all the granularity.

Which is nice to see can.

Can you just comment on as you continue to work through and evolve. This roadmap how are you looking at monetization of every.

Michael Eastwood: We expect organic revenue growth to be within our full year, 5.5% to 6% range. We see our fourth quarter adjusted EBITDA margin at approximately 37%, impacted by the timing normalization of certain expenses, the lacked growth investments in productivity initiatives, and the aforementioned M&A delusion.

Anything you are putting in place and what are you seeing on the competitive landscape.

Move through the year here.

Yes drew on the first question in regards to the impact of M&A for Q3. It was up five percentage points, our organic revenue growth was 6% and if you factor in the reported revenue was 1%, leaving that Delta up 5% just want to ensure drew that I was addressing your question.

Gary Bisbee: Let me now turn it back to Gary for questions. Thank you, Ali.

Operator: We're ready to begin the Q&A. Perfect. Thank you, ladies and gentlemen. If you like that's good question, please press star one on your telephone keypad. If you're using a speaker phone, please make sure your mute function is released. Do allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow-up question. Again, it is star one if you like that's good question.

Yes, that's fine.

Yes.

And I think the second question related to the Gen II.

Yes. Thanks.

Good to hear from you so.

We expect in terms of sort of.

Revenue generation from the roadmap, we expect to deliver some revenue as a result of Gen II.

Drew Mcreynolds: And we'll go ahead and take our first question from Drew McRenald with RBC. Please go ahead. Yeah, thanks very much and good morning. Just two ones for me. First on, maybe for you, Mike, just on organic revenue growth in Q3. Are you able to let us know what the contribution is from the vestitures and acquisitions in the quarter?

In 2020 for us, especially in the second half of the year.

However, based on that sort of roadmap timing.

With a bunch of releases this year and a bunch in the first quarter.

And then the lag between bookings and revenue.

Annual subscription business models, we see we will see a larger ramp in 'twenty five and beyond than we will in 2004 in terms of the competitive landscape.

We've certainly seen a couple of announcements in the last couple of weeks from now from.

Michael Eastwood: And then secondly, a little bit bigger picture, maybe for you, Steve, on just all the Gen AI roadmap. Thank you for all the granularity, which is nice to see. Can you just comment on, you know, as you continue to work through and evolve this road map, you know, how are you looking at monetization of everything you're putting in place? And what are you seeing on the competitive landscape as you've moved through the year here?

From our sort of traditional competitors and legal.

We haven't seen as much in tax and accounting or risk governments and so forth.

But without sort of hopefully without a hit of arrogance, we're confident in where we see first and foremost because of the customer reaction to that which we've put in front of them.

And I think secondly that reaction and the and the roadmap. We're putting forward reflects the fact that our starting point is we believe superior.

<unk> unique and proprietary content.

Michael Eastwood: Thank you. Yeah, I drew on the first question in regards to the impact of NNA for Q3. It was a 5% response point. It's our organic revenue growth was 6% and if you factor in the reported revenue, it was 1% leaving that delta of 5%. It's one of the insurgery that I was addressing your question. Yeah, that's fine, Mike.

With <unk>, two we had a pretty sizable lead in terms of access to two Jack GPT for in the sort of science behind combining large language models with proprietary unique datasets.

And we love, what Jake Heller and the team are bringing.

We are in the early going and then.

Supplement that with some of the talent that we have particularly.

Steve Hasker: And I think the second question related to the GNI. Yeah, thanks, Drew. Good to hear from you. So, we expect in terms of sort of, you know, revenue generation. From the road map, we expected to deliver some revenue as a result of GNI in 2024, especially in the second half of the year. However, I mean, based on that sort of road map timing with a bunch of releases this year and a bunch in the first quarter.

David Wong ahead of products for the Altra head of engineering and Joel her role.

A bit of Ti labs, so we're pretty confident I hope not arrogant drew but.

We will keep our eye on the competitors, but but first and foremost ally on the customer Steve do you want to expand we're starting with legal but we see a great office.

I cross tax and a full slate of offerings I saw I talked in my remarks about.

About west La and practical Laura <unk>.

We will also bring to NII in the short term into into checkpoint.

Steve Hasker: And the lag between bookings and revenue in our annual subscription business models, we see, we'll see a larger ramp in 25 and beyond than we're willing in 24 in terms of the competitive landscape. We've certainly seen a couple of announcements in the last couple of weeks from our sort of traditional competitors in legal. We haven't seen as much in tax and accounting or risk and government and so forth. But, you know, without sort of, hopefully without a hit of arrogance, we're confident in where we sit first and foremost, because of the customer reaction to that, which we put in front of them.

And then next year, you'll see us expand into our other our other tax and ultimately our risk products. So we've got to move through that.

Through the gears there.

Very very disciplined and rigorous way.

And we think that.

We think that.

It not only helps us better serve our existing customers it will particularly in 'twenty five and beyond open up some new Tam for us in terms of workflow software.

In and around legal tax risk that some of the other customer segments. We serve so we're excited about exploring that over time as well.

Steve Hasker: And I think, secondly, you know, that reaction in the road map, we're putting forward reflects the fact that our starting point is we believe superior, you need can proprietary content with case text to a pretty sizable lead in terms of access to chat GPT for and the sort of science behind. Combining large language models with proprietary unique data sets. And we love what Jake heller and the team are bringing to PR in the early going and then supplement that with some of the talent that we have, particularly David long ahead of products, want to hire ahead of engineering and Joel, who's ahead of PR labs. So we're pretty confident. I hope not arrogant through, but we'll keep our eye on the competitors. But, but first, the foremost, our own the customer.

Thanks Thats helpful. Thank you.

Our next question will come from Merrill Lynch.

Yes.

Canaccord Genuity. Please go ahead.

Good morning. Thanks for taking my question. My question was around sort of organic growth I mean, you consistently delivered and that sort of.

656% organic growth in closer to seven for the big three.

I wanted to understand.

To what extent has the price component.

Of that growth changed over the last several quarters I mean is it.

Are you seeing more of that come from price is less of it how should we think of that.

Dynamic going forward and.

Steve Hasker: Steve, do you want to expand, we're starting with legal, but we see a great opportunity across tax and our full plate of offerings. Yeah, I saw, I mean, I talked in my remarks about, about Westlaw and practical law and high Q. We'll also bring to NAI in the short term into, into checkpoint. And then next year, you'll see us expand into our other, our other tax and ultimately our risk products. So we're going to move through that through through the years there.

More general follow up was on your incremental investments into AI.

Maybe for Steve how are you thinking of sort of assessing that in the near term call. It. The next 12 months, where you may not see a lot of revenue.

Maybe just help us understand what sort of the demand metrics.

We're looking for as you sort of ramp up this spend thanks.

Yeah, Evan in regards to your first question in regards to pricing impact in 2023, we would estimate approximately 30 to 40 basis points in total.

Steve Hasker: You know, you know, you know, you know, very, very disciplined and rigorous way. And we think that, we think that it not only helps us better serve our existing customers, it will, particularly in 25 and beyond, open up some new terms for us, in terms of workflow software, in and around legal tax risk and some of the other customer segments we serve. So we're excited about exploring that over time as well.

Across the firm or calendar year 'twenty three versus 22, just as a reminder, we do have the multiyear contracts that come into play in regards to pricing opportunities with illegal having about 60% of their contracts with multi year normally three years in nature, but your direct question 30 to 40 basis points.

Drew Mcreynolds: Thanks for your time. Thank you.

Price lift incremental incremental price lift in 'twenty three versus 22, I think the second part of the question Steve.

Aravinda Galappatthige: Our next question will come from Aravinda Galappatthige with can't accord it. Genuinely, please go ahead. Good morning, thanks for taking my question. My question was around sort of organic growth. I mean, you've consistently delivered in that sort of, you know, six, five, six percent organic growth and closer to seven for the big three. I wanted to understand the, you know, to what extent has the price component of that growth changed over the last several quarters. I mean, is it, are you seeing more of that come from price less of it? How should we think of that dynamic going forward?

The investments, yes, thanks, Eric.

Look we view generative II and its transformative impact on professionals as a as a once in a generation.

Disruptive change in one place.

Plays to our strengths and one that we've moved I think very quickly in 2023.

<unk>.

To position ourselves against.

The the principal way that we are assessing and we will continue to.

To assess.

Our investments in the customer reaction.

Steve Hasker: And my, my more general follow-up was on your incremental investments into AI. Maybe Steve, like, how are you thinking of sort of assessing that in the near term, call it the next 12 months, where you may not see a lot of revenue, you know, maybe just help us understand what sort of the main metrics are that you're looking for as you sort of ramp up this spent. Thanks. Yeah, Evan, in regards to your first question, regards to pricing impact in 2023, we would estimate approximately 30 to 40 basis points in total across the farm for calendar year, 23 versus 22.

Two the proofs of concepts the pilots the beta versions and ultimately the Gi releases those products.

I'm more optimistic today than I was the last time.

We talked about Gen II investments based purely on that customer reaction.

Two other comments, we're going to apply the same rigor.

This set of investments over the next.

Three or so year period, as we did to the change program.

Just assure you we will be our toughest critics in terms of making sure that we have line of sight to a beta customer impact firstly, and secondly, expanding tabs and as I say, we're growing in confidence around those signals, but we will we will stay very very close to our customers and the buckets.

Steve Hasker: Just as a reminder, we do have the multi-year contracts that come into play in regards to pricing opportunities with a legal having about 60% of their contracts with multi-year normally three years in nature, but your direct question. 30 to 40 basis points of price lift incremental, incremental price lift in 23 versus 20 to think the second part of the question, Steve, really.

And and we will keep you apprised of what we're hearing.

Thank you.

Yeah.

Next question comes from Vincent Valentini with TD Cowen. Please go ahead.

Yes, thanks very much.

Steve Hasker: Yeah, investments. Yeah, thanks, Aaron. So, look, we view generative AI and its transformative impact on professionals as a, as a one thing of generation disruptive change and one that plays to our strengths. And one that we've moved and it's very quickly in 2023 to position ourselves against the principle way that we are assessing and will continue to assess our investments is in the customer reaction to the proofs of concepts, the pilots, the beta versions and ultimately the GA releases of those products.

Mike Your commentary about margins in 2024 I.

I want to make sure I understand their properties.

Quick rough math, if we assume <unk>.

6% revenue growth and 3% normalized increase in your fixed costs that would drive in a normal year of 150 to 160 basis points of margin expansion and Thats, what I would think of as normal operating leverage. So when you say most of that is going to be reinvesting.

Does that mean, the entire 150 or maybe you can still grow margins by 50 basis points, but two thirds of what the normal growth would've been.

Be reinvested.

Yes.

Steve Hasker: And I'm more optimistic today than I was the last time, you know, we talked about generate our investments based purely on that customer reaction. Two other comments, we're going to apply the same rigor to this set of investments over the next three or so year period as we did to the change program. And I'm just to show you, we will be our toughest critics in terms of making sure that we have line of sight to better customer impact firstly and secondly, expanding times. And as I say, we're growing in confidence around those signals, but we'll stay very, very close to our customers and the markets. And we'll keep your price of what we're hearing. Thank you.

Our perspective, when we talk about operating leverage at roughly 6% organic we see about 75 basis points of operating leverage that applies just I'll call. It quick math, 4% increase to our fixed costs, which are about 65% in nature and then you assume the remaining variable cost growth before.

<unk>, if you apply those assumptions it would yield approximately 75 basis points of operating leverage for total TR, what we're reflecting currently based on our preliminary planning, we see significant growth opportunities to reinvest that operating leverage of approximately <unk>.

75 basis points in 2024, but really emphasizing for my prepared remarks, as we go into 'twenty five 'twenty six we have confidence we will we will expand our margin in 'twenty five 'twenty six given that operating leverage, but we want to take full advantage as we see an.

Vince Valentini: Next question comes from Vince Valentini with TD Count. Please go ahead. Yeah, thanks very much. Mike, you're commentary about margins in 2024. Want to make sure I understand that properly. So, I mean, very quick rough math. If we assume 6% revenue growth and 3% normalized increase in your fixed costs, that would drive in a normal year. There are 150 to 160 basis points of margin expansion. That's what I would think of as normal operating leverage.

Michael Eastwood: So, when you say most of that is going to be reinvested, does that mean the entire 150 or maybe can still grow margins by 50 basis points, but two thirds of what the normal growth would have been would would be reinvested? Vince, from our perspective, when we talk about operating leverage at roughly 6% organic, we see about 75 basis points of operating leverage. That applies just, I'll call it quick math, 4% increase to our fixed costs, which are about 65% in nature.

Asian to make those investments organically inorganically in 24 that should propel further growth acceleration in 'twenty five 'twenty six Vince.

Okay.

Follow up just on.

Sort of.

The nature of how you're providing guidance.

Last quarter, you told US Q3 was going to be weak because of opex timing.

Sort of talking down and maybe it's already 6% margins and you've delivered 39, 6% now you're saying that's going to roll into Q4.

It seems like something else is happening I don't know if youre deciding to.

Well a lot of discretionary expenses into Q4 some of the Gen. AI investments that you could have made next year you can accelerate those into Q4 is it more of that or is it more you're just padding yourself to try to be more cautious because of macro or competitive headwinds in Shanghai.

Michael Eastwood: And then you assume the remaining variable calls grow proportionately. If you apply those assumptions, it would yield approximately 75 basis points of operating leverage for total TR. What we're reflecting currently based on our preliminary planning, we see significant growth opportunities to reinvest that operating leverage of approximately 75 basis points in 2024.

Yeah, I'll hit it head on no padding involved events with a business our size Youre always going to have a number of puts and puts and takes one factor that comes into play.

<unk> four items into Q4 events, we have M&A dilution in Q4 from take case tax and from Sherpa, That's number one.

Michael Eastwood: Or, but really emphasizing from our prepared remarks as we go into 25, 26, we have confidence we'll expand our margin in 25, 26 given that operating leverage, but we want to take full advantage as we see an obligation to make those investments organically and organically in 24 that should propel further growth acceleration in 25, 26, Vince.

To the.

The level of growth investments will increase in Q4, not only gen. AI, we talked a lot about gen AI, but we have additional growth opportunities across the firm that we are pursuing this item to number three which really is part of your question, though we call. It a normalization of expenses there certainly been some timing items.

In the last couple of quarters.

That we we have transparency that will normalize in Q3 Q4, I'm sorry in the fourth element is productivity initiatives that we have in play that will materialize in Q4 for those four reasons, Vince we have strong visibility into the 37% EBITDA margin for Q4, which.

Michael Eastwood: Okay, follow up just on the sort of the nature of how you provide guidance. The last quarter you told us Q3 was going to be weak because of op X timing, sort of talking down to maybe 36% margins, and you've delivered 39.6%. Now you're just saying that's going to roll into Q4. It seems like something else is happening. I don't know if you're deciding to pile a lot of discretionary expenses into Q4.

It would yield approximately 39%.

Full year.

Oh wait an update on that on February Thank you Mike.

Look forward to providing yet okay.

Our next question will come from Betsy <unk> with Bank of America. Please go ahead.

Hi, Thank you for taking my question I was hoping to hold in our legal business.

Michael Eastwood: Some of the GNI investments that you could have made next year, you can accelerate those into Q4. Is it more that or is it more you're just patting yourself to try to be more cautious because of macro or or competitive headwinds or some kind? Yeah, I'll hit head on no patting involved events with the business. Our size. You're always going to have a number of puts and puts and takes one factor that comes into play.

Expectations for the fourth quarter, but also how things shaped up versus your expectation.

You exited Ali.

Hmm.

Can you kind of help cost that government business getting better in the back half, but they're supposed to be some acceleration I'm curious about the puts and takes more quarter and then how are you.

You think about the fourth quarter from here.

Michael Eastwood: I'll mention four items into Q4 events. We have M&A dilution in Q4 from take case text and from sure prep. That's number one. Number two, the level of growth investments will increase in Q4 not only GNI. We talked a lot about GNI, but we have additional growth opportunities. I'm across the firm that we are pursuing that's item to number three, which really is part of your question that we call it the normalization of expenses.

Yes. It is.

Steve Thanks for the question I'll start and then I'm sure Michael.

<unk>.

Ed.

As a general point, we see.

Growing strength.

<unk> business.

Both Fisher and his team.

Particularly.

Neal Stern goal and with Simic market AD supported by our product and engineering folks.

Michael Eastwood: There's certainly been some timing items in the last couple quarters that we we have transparency that will normalize in Q3 Q4. I'm sorry. And the fourth element is productivity initiatives that we have in play that will materialize in Q4 for those four reasons. We have strong visibility into the 37% EBITDA margin for Q4, which would yield approximately 39% for the full year. We'll wait and update on that on February. Thank you, Mike.

We have done a very good job of.

Of strengthening our core products, which helped us quite a lot about whistler and practical law and how cute.

And certainly those are increasing in the sort of health and the growth prospects. So as a general point in the fourth quarter.

We expect to see that.

Growing strength.

And having a carrying into next.

And next year and beyond and the integration of generative II really built upon that.

They are injecting degenerative AIG very healthy products and healthy franchises if it does it did.

Yes.

Michael Eastwood: Forward to providing you update.

<unk>, Mike what would you add.

It is a good summary.

Heather Balsky: Our next question will come from Heather Balsky with Bank of America. Please go ahead. Hi, thank you for taking my question.

Heather I would just as always emphasized practical law led by Emily Colbert continues to perform really well for us and high queue that we acquired back in July of 2019.

Heather Balsky: I was hoping to hone in on the legal business and expectations for the fourth quarter, but also just housing shaped up versus your three-two expectations. You exited elite, you kind of had partial government business getting better in the back half. There's some acceleration. I'm curious about the puts and takes in the quarter, and then how you think about the fourth quarter from here. Yeah, Heather, let's see. Thanks for the question. I'll start and then I'm sure Michael will add.

<unk> to be one of our strongest growth assets, we talked a lot about west la precision NII as we should but if you think about the full breadth and depth of assets that Paul Fisher has within legal and practical law and Heikki continued very strong growth trajectories, you asked about government there.

<unk> to monitor that pipeline very closely and be.

A strong pipeline in Q4, Q1, and it's a matter of timing closing those deals either.

Heather Balsky: As a general point, we see growing strengths in our legal business, both Fisher and his team, particularly Neil Sternthol and Liz Zimic, Mark Adad, supported by our product and engineering folks. We've done a very good job of strengthening our core products. I talked quite a lot about West Law and Practical Law and IQ and certainly those are increasing in their health and their growth prospects. As a general point in the fourth quarter, we expect to see that growing strengths and having it carrying into the next year and beyond.

Maybe to follow up with governments or reason that you didn't see the acceleration in the third quarter or is it something else.

It really just timing anytime we deal with government agencies, the the level of precision in regards to the timing of those closures is a little less precise than what we see with the nongovernment customers there, but based on our pipeline we are optimistic off a strong <unk>.

Four in Q1.

Great. Thank you.

Next question will come from Scott <unk> with CIBC. Please go ahead.

Hi, Good morning, Rob I won't ask a question on the on the organic growth and maybe a little longer term, but when you look out to 2025, when you start to really feel the impact of the journey initiatives do you have a sense of internally how much you're hoping.

Heather Balsky: The integration of generative AI really builds upon that. We're injecting generative AI into very healthy products and healthy franchises. If that's a good starting point, Mike, what would you add? I think it's a good summary. Heather, I would just as always emphasize practical law led by Emily Colbert continues to perform really well for us and IQ that we're required back in July of 2019 continues to be one of our strongest growth assets.

That will impact the organic growth rate I'm sort of trying to get an idea is this is this a significant step change or is it more of an incremental increase in growth rate. When you look out at 2025.

Scott It's Steve Thanks for the question I'll start Michael I'll add.

Look I think we'll say more about that in February and we'll say more at an investor day in March I think where we're still in the process of sort of learning and quantified as I've said a couple of times that.

Heather Balsky: We talked a lot about West Law precision in Genai as we should, but if you think about the full breadth and depth of assets that Paul Fisher has within legal, practical law and IQ continued, very strong growth trajectories. You asked about government there, continuing to monitor that pipeline very closely and we have strong pipeline in Q4, Q1 and it's a matter of timing closing those deals, Heather. I just follow up with government the reason that you didn't see the acceleration in the third quarter, or was it something else?

The most important sort of yeah.

<unk> for us is the customer reaction to.

So the product investments that we're making.

And that has been.

Better than certainly better than I expected.

More forceful or trust more confidence more excitement from our customers.

Then peso.

Hoped for.

As to sort of what that results as I say, we will come back in February Investor day, and can be more specific but we see.

Heather Balsky: I really just timing any time we deal with government agencies, the level of precision in regards to the timing of those closures is a little plus precise than what we see with the non government customers there, but based on our pipeline, we're optimistic on a strong Q4 and Q1. Okay, thank you.

Meaningful revenue acceleration, particularly sort of through the 'twenty five 'twenty six 'twenty seven as a result of these investments.

And as I said before we're going to apply the same rigor as we did in the change program.

So every dollar of the investments that we make both in terms of Opex and Capex.

And we'll be very rigorous about ensuring that that that flows through Mike what would you add I would say Scott during our March Investor day, each of our segment presidents.

Scott Fletcher: Next question will come from Scott Fletcher with CIBC. Please go ahead. Hi, good morning, I want to ask a question on the organic growth and maybe a little longer term. So when you look at 2025, when you start to really feel the impact of the Genai. Thank you. Do you have a sense of internally and how much you're hoping that will impact the organic growth rate? I'm sort of trying to get an idea, is this a significant stepchangers and more of an incremental increase in growth rate when you look at it 2025? Scott, it's Steve. Thanks for the question.

Deeper and to your specific question on the organic growth for.

For tax and accounting professionals Brits legal international et cetera. So I think that will be quite helpful. For you Scott.

Okay perfect.

Okay, and then maybe just a quick follow up like in terms of the.

Do you see both of the future growth coming from the expanding functionality of the current product set or on the new opportunity that you've talked about the sort of the Tam expansion.

Steve Hasker: I'll start, Michael, I'll add what I think we'll say more about that in February and we'll say more at an investor day in March. I think we're still in the process of sort of learning and quantifying as I said a couple of times that the most important sort of yardstick for us is the customer reaction to the product investment that we're making. And that has been better than, certainly better than I expected.

Scott, We think it's well, it's probably too early to quantify it give you a percentage, but we think it will be pretty balanced.

At least.

At least.

There's sort of three different choices. The first is <unk>.

Pretty significant value from our from our core existing products and Thats going to result in we think a little bit more price and meaningful uptick in retention, which is something we've been focused on for a period of time, but.

Steve Hasker: You know, more forceful, more trust, more confidence. We're exciting from our customers and then perhaps I don't even even hoped for. As to sort of what that results, as I say, we'll come back in February and investor day and be more specific, but we see meaningful revenue acceleration, particularly sort of through the 25, 26, 27 as a result of these investments. And as I said before, we're going to apply the same rigorous we did in the change program to that to every dollar of the investment that we make both in terms of our picks and capics and we'll be very rigorous about ensuring that that that flows through Mike, what would you add?

Really to see the results.

The results of that.

The second is in these new skills, particularly that which which builds upon the case takes care council skill set.

And extending that into it.

Legal workflows and ultimately taking the same kind of capabilities in detection accounting and risk workflows.

And the third is we've got our eyes on some some some new addressable markets.

Some of those domestically in the United States in North America, and some of those in the international market. So I wont give you the sort of proportionality between the three of those but again when we come back in at Investor Day, we'll be able to be much more specific about those.

Steve Hasker: I would say us got during the March investor day, each of our assignment, president, staff, paper, and to your specific question on the organic, or tax accounting professionals, Fritz, legal, international, et cetera. So I think that would be quite helpful for you Scott. Okay, yeah, that's good.

Thank you that is helpful.

Next question will come from Manav Patnaik with Barclays. Please go ahead.

Thank you.

I just wanted to get your latest thoughts on I think the additional inorganic opportunities you called out earlier in the call I mean, you obviously have.

Steve Hasker: Okay, and then maybe just a quick follow up like in terms of the use you see most of the future growth coming from the expanding functionality of the current product set or on the new opportunity to talk about the sort of a tan expansion. We've got we think it's probably too early to quantify give you a percentage, but we think it'll be pretty balanced. You know, we see at least, at least sort of three different cases, the first is pretty significant value from our from our core existing products.

Super solid balance sheet cash is piling up just.

Could it be more large bunch.

A bunch of midsized, how do you think about what we should be thinking about when you mentioned that.

Yes, manav, thanks, we don't need or particularly want larger deals I mean, if something came along that we thought was very much in the interest of our customers and our shareholders that we wouldnt hold back but.

We don't sit here and so to say to you.

Be great to do sort of some larger more transformative deals we don't want them and we don't think we need them.

Steve Hasker: And that's going to result in we think a little bit more price and meaningful uptick and retention, which is something we've been focused on for a period of time, but we're yet really to see the results, the results of that. The second is in these new skills, particularly that which which builds upon the the case takes co counsel skill set and extending that into legal workflows and ultimately taking the same kind of capability since tax accounting and risk workflows.

So it's more in that sort of in the in the category.

Offshore prep.

Which we're very excited about we think <unk> and his team has done a wonderful job of continuing to accelerate that business and also integrating into.

So a couple of different areas.

Building on <unk>, if there are other generative AI capabilities, we can add.

Steve Hasker: And the third is we've got our eyes on some new addressable markets, some of those domestically in the United States and North America and some of those in the international market. So I won't give you the sort of proportionality between the three of those, but again, when we come back in at investor date, we'll be able to be much more specific about those. Thank you. That's helpful.

Accelerate our progress into legal workflow software.

Tax and accounting automation.

Something building onshore prep that we're always.

Operator: Next question. We'll come from it.

Looking out for under Elizabeth <unk> leadership.

And.

And then the other areas that Dave.

<unk> and the team have.

I think gotten enough.

Gotten us all very well educated and.

<unk> changed to sort of look for opportunities as risk fraud, and compliance building upon the clear and Trs starting point.

Manav Patnaik: My name is with Barkley, please go ahead. Thank you. Steve, I just wanted to get your latest thoughts on, you know, I think the additional inorganic opportunities you called out early in the call. I mean, you obviously have a, you know, super solid balance sheet, cash is piling up. Just, you know, is it going to be more larger deal, a bunch of mid-sized things? How do you think about what we should be thinking about when you mention that?

And we really need to find the right one there so.

No promises as to what we might do in the short term and the other area that builds upon.

Our core capabilities, our content and our relationships with general counsels, and hence attacks and other executives.

Is is ESG and so we will continue to look at ESG, but.

As always and I promise, we're going to keep the bar really high.

Manav Patnaik: Yeah, Manav, thanks. We don't need or particularly want blood. I mean, if something came along that we thought was very much in the interest of our customers and our shareholders, then we wouldn't hold back. But, you know, we don't sit here and sort of say, you know, we'd be great to do sort of some larger, more transformative deals. We don't want them and we don't think we need them. So it's more in that sort of in the in the category of a short prep, which we're very excited about.

For those deals and make sure that they are beneficial to our shareholders.

Got it and then Mike just to follow up on your margin commentary I guess that that 75 basis points you talked about that is before the dilution from the deals you called out is that correct.

That's correct are really two components there of an app that we were addressing roughly to 80 basis points cumulative dilution or the M&A activity as we head into 2024, and then I was mentioning our current intent to reinvest the operating leverage of 75 basis points so too.

Manav Patnaik: We think Dave Wiley and his team have done a wonderful job. But continue to accelerate that business and also integrating into, so a couple of different areas. I mean, you know, building on case text, if there are the generative AI capabilities, we can add that in accelerate our progress into legal workflow software. Tax and accounting automation is something building on short prep that we're always looking out for and are with these dreams leadership.

Separate components there.

Got it thank you.

Okay.

Our next question will come from Andrew <unk> with Jpmorgan. Please go ahead ma'am.

Hi, Mike I think I heard a comment earlier.

And the crop that net realized price for oil Thompson was about 30 to 40 basis points better in 2003 and 2010. So just tell me did I hear that right and then if you can just tell us what net realized price.

Manav Patnaik: And then the other areas that Dave Larson and the team have, I think, gotten us all very well educated and keen to sort of look for opportunities whose risk fraud and compliance, building upon the clear and TRS starting point, and we really need to find the right one there. So, you know, no promises as to what we might do in the short term. And the other area that builds upon our core capabilities, our content and our relationships with general councils and heads of tax and other executives is ESG.

Tried to get 23 overall and some of the color and the segments.

Yes, Andrew you heard that correctly, it's approximately 30 to 40 basis points incremental.

<unk> 23 versus 22, if you look at total TR firm wide. We are in the three to three 5% range Andrew.

Andrew for total TR, which varies by segment.

Manav Patnaik: And so we'll continue to look at ESG. But as always, no promises. We're going to keep the bar really high for those deals and make sure that they're beneficial to our shareholders. And then might just to follow up on your margin commentary, I guess that 75 basis points you talked about that is before the delusion from the, the deals you called out is that correct. That's correct. Really two components there. I'm going to add that we were addressing roughly the 80 basis points cumulative delusion for the MNA activity as we had into 2024. And then I was mentioning our current intent to reinvest the operating leverage of 75 basis points. So two separate components there. Got it. Thank you.

I've shared in prior calls at the higher price realization normally happens in our tax <unk> accounting professionals business.

Followed by corporates, and then legal that's kind of sequentially how.

High to low in regards to the annual price increases and to my comment earlier those annual price increases the realized price increase is influenced by the multi year nature and when those contracts come up for renewal. So quick answer 30 to 40 basis points higher in 'twenty three versus 22 then.

On average roughly three to three 5% for total TR.

Alright anything interesting news print in terms of pricing.

It certainly varies if you think about the new the Reuters business you have to break it into two components. The <unk> contract and then all other.

Andrew Sehrman: Our next question will come from Andrew Sehrman with JP Morgan. Please go ahead. Hi, Mike. I think I heard a comment earlier in the, in the call that net realized price for all Thompson was about 30 to 40 basis points better in 23 than 22. So just tell me did I hear that right. And then if you can just tell us, you know what net realized price is trending in 23. Overall, and some of the color in the second.

Components, we have a contractual calculation.

Thats driven by CPI and FX movements for the <unk> contract, which varies year to year, and then others within Brent business, depending on the print titles, there's quite a wide distribution for price increases footprint.

Okay. Thank you.

Uh huh.

Our next question will come from Toni Kaplan with Morgan Stanley. Please go ahead.

Andrew Sehrman: Yes, Andrew, you heard that correctly. It's approximately 30 to 40 basis points incremental in 23 versus 22. If you look at total PR, firm wide, we're into three to three and a half percent range. Andrew for total PR, which varies by segment. I've shared in prior calls at the higher price realization. It only happens in our tax and accounting professionals business. Followed by corporates and then legal.

Thanks, so much.

Just regarding case tax have you been able to retain the people that you want to keep so far and are you keeping case separately.

So that they can continue innovating there or is the plan to integrate them into the larger organization.

Tony.

With case text ensure prep, where close to batting a thousand so far in terms of keeping the talent.

Michael Eastwood: That's going to mentally how high to love in regards to the annual price increases. And to my comment earlier, there's annual price increases that realize price increases is influenced by the multi-year nature. And when those contracts come up for renewal, so quick answer, 30 to 40 basis points higher in 23 versus 22. Then on average, roughly three to three and a half percent for total PR.

So we're thrilled with that.

And we'll just keep focusing on making sure that that those folks CV opportunity here.

Both in terms of our purpose and their own career opportunities.

But so far I would say it's been it's been really exciting.

From that point of view.

I mentioned in my remarks, we are the go to market with.

Michael Eastwood: Anything interesting in news or print in terms of pricing. It certainly varies. If you think about the new, the rotors business, you have to break it into two components. The L side contract and then all other components. We have a contractual calculation that's driven by CPI and FX movements for the L side contract, which varies year to year. And then others within print business, depending on the print titles, this is quite a wide distribution for pricing increases for print. Okay, thank you.

<unk> were up.

We have an integrated data where the process of integrating that completion that completed that integration into pulse wishes teams, that's going well and that obviously provides.

More career development opportunities for the go to market executives within <unk>.

David Wong is working closely with Jag Heller on the product side.

In conjunction with with with engineering and labs.

Make sure that.

At TR.

That case text speak and continue to do so and in the first few months, where we are.

Very much on track with that I made in my in my comments I made the comment that.

Tony Kaplan: Our next question will come from Tony Kaplan with Morgan Stanley. Please go ahead. Thanks so much.

Our teams have moved with speed and decisiveness never seen before so we're off to a good start and it's up to us Tony just to continue that trajectory.

Steve Hasker: Just regarding case text, have you been able to retain the people that you want to keep so far and are you keeping case text separately, like so that they can continue innovating there or is the plan to integrate them into the larger organization? Tony, both with case text and short prep, we're close to batting a thousand so far in terms of keeping the talent. So we're thrilled with that. And we'll keep focusing on it, making sure that those folks see the opportunity here and both in terms of our purpose and their own career opportunities.

Perfect that sounds great and then.

Just for my follow up.

Just looking at your clients maybe corporate.

Our law firms anything to discuss them with regard to sort of budget going into the end of the year and how you're thinking about just pressure on them.

Given the macro and shrank here or the like.

And to the end of the year and into next year. Thanks.

Yes, so with regards to the law firms are legal business has held up well in 2023 notwithstanding.

Steve Hasker: But so far, I would say it's been really exciting from that point of view. I mentioned in my remarks, we are the go-to market with case text where we have integrated that or the process of integrating that, completing that integration into Paul Fisher's teams. That's going well, and that obviously provides more career development opportunities for the go-to market executives within case text. David Wong is working closely with Jay Keller on the product side in conjunction with engineering and labs who make sure that we're to move at case text speed and continue to do so.

A reduction in billable hours for many of our customers.

Capital markets.

Corporate.

Division <unk>.

Equity and debt Raisings less M&A transactions flowing through their billable hours. However, there litigation practices. They are restructuring practices in one or two other areas have to varying degrees picked up the slack and so that all of our businesses.

It remained robust as has as tax and accounting when you go across the corporate so that's where the elongated solid sales cycles have.

Have hurt us.

You mentioned that.

Well, probably four or five quarters ago, and it's continued it's not getting worse, but we don't see it getting better either so we monitor it carefully.

Steve Hasker: And in the first few months where we're very much on track with that, I've made in my comments, I made the comment that our teams have moved with a speed and decided to just never seen before at PR. So we're off to a good start and it's up to us Tony just to continue that trajectory.

And the other comment I would make as you know lower Clayton Mcdonald is now six months into the role as president.

As we enter into next year.

No matter, what no matter, what the macro environment brings some of the moves that lowers making.

And her leadership I think will start to.

Steve Hasker: Terra Rebick, that sounds great, and then just for my follow-up, you know, just looking at your clients, maybe corporates or law firms, anything to discuss with regard to sort of budgets going into the end of the year and how you're thinking about just pressure on them, you know, given macro uncertainty or the like, you know, into the end of the year and then into next year, thanks. Yeah, so with regard to the law firms, you know, our legal business has held up well in 2023, notwithstanding a reduction in billable hours for many of our customers, capital markets, and corporate divisions, so they've seen, you know, fewer equity and debt raising less M&A transactions flowing through their billable hours.

Start to reflect in the.

The impact we are making with our corporate customers.

Thanks, a lot.

Our next question will come from Maher Yaghi with Scotiabank. Please go ahead.

Yes. Thank you for taking my question.

Steve.

Want to ask you how is the current economic environment.

<unk> in your view on how 2024 is going to look like I know, it's not in guidance mode here, but if you can just help us understand your views on qualitatively on 24 compared to 23, and maybe just to close the loop.

On on 24 margins Mike.

So if I start that 39% in 2023.

EBITDA margin that 75 basis points improvement in operating leverage as you said, there's going to be.

Steve Hasker: However, their litigation practices, their restructuring practices, and one or two other areas, have two varying degrees picked up the slack, and so that part of our business is remained robust, as has tax and accounting. When you go across the corporates, that's where the elongated sales cycles have heard us, you know, and we mentioned that probably four or five quarters ago, and it's continued. It's not getting worse, but we don't see it getting better either, so we monitor it carefully, and the other comment I'd make is, you know, Laura Clayton McDonald is now six months into her role as president, so I think as we, as we enter into next year, no matter what the, no matter what the macro environment brings some of the moves that Laura's making, and her leadership, I think we'll start to start to reflect, you know, in the impact of the making with our corporate customers. Thanks a lot.

Invested so the incrementally basically the 50 basis point incremental dilution in 'twenty four from the acquisition of case tax that's basically our landing zone is 38 and a half for 2024 as to my understanding this properly.

You know, Matt so let.

Let me let me just say, let me start off thanks, Thanks for the question.

Sure.

Mike and ran an evidence our head of it and I have just been driving us through the <unk>.

Planning process for 2024, so we've got a lot of that thinking done but.

Not all of it but a lot of it done.

The underlying assumption for 'twenty four from a sort of a macro perspective is more of the same.

<unk>, where we look at a year, where we're likely to have two wars going on.

We're likely to have.

Higher for longer interest rate environment, and the presidential election, it's sort of hard I think to expect.

rian: Our next question will come from at Marjogi with the Scotia Bank, please go ahead. Yes, thank you for taking my question. Steve, I wanted to ask you how, how is the current economic environment educating your view on how 2024 is going to look like? I know we're not in guidance mode here, but if you can just help us understand your views on qualitatively on 24 compared to 23, and maybe just to close the loop on on on 24 margins, Mike.

I think I think the full hardie for us or anyone else to bank on a on a quick rebound and thats the assumption that Max.

Sort of putting throughout.

Our budgeting and forecasting process between fault block.

And the second part of the question on regards to 2024 margin once again, not providing guidance today, but your math sounds directionally a reasonable.

Based on the components that you laid out directionally reasonable.

Thank you.

Uh huh.

rian: So if I start at 39% in 2023 on the EBITDA margin, that 75 basis points improvement in operating leverage, as you said, is going to be invested, so the incrementally basically the 50 basis point incremental dilution in 24 from the acquisition of case text that's basically your landing zone is 38.5 for 2024 is am I understanding this properly? Thank you.

Next question will come from George Tong with Goldman Sachs. Please go ahead.

Alright. Thanks. Good morning, you had previously guided to legal organic growth accelerating in the second half of the year can you elaborate on any factors that may have pushed this acceleration now, particularly with given the organic benefits from case tax coming in at least coming out.

Sure, we still continue George to anticipate.

A higher tick up as we go into Q4 and into 2020 tool for our final mile business.

Michael Eastwood: Yeah, let me, let me, let me start off. Thanks, thanks for the question. Mike and, and Rian and Evans, our head of FNA have just been driving us through the planning process for 2024. So we've got a lot of that thinking done, but the not all of it, but a lot of it done. The underlying assumption for 24 from a sort of a macro perspective is more of the same. You know, I think where we look at a year where we're likely to have two wars going on, we're likely to have higher for longer interest rate environment and a presidential election.

Temporary the gross on in Q3 for us in as a factor for us to consider into <unk>.

<unk> into Q4, there and the other component is the timing of our government. So the two items that really.

<unk> when you get into rounding of legal professionals is fine law and the government business George.

So we're very pleased with the trajectory of legal overall as we go into Q4 and two full year 2020 for George.

Got it that's helpful and then on tax business very strong growth there driven by Latin America, but can you talk a little bit about some of the sustainability of that growth is that being driven by regional inflation.

Michael Eastwood: It's sort of hard, I think, to expect. You know, I think I think it would be full hardy for us or anyone else to bank on a quick rebound. And that's the assumption that Mike. Fox, sort of putting through our budgeting and forecasting process between four. Yeah, in the second part of the question, on regards to 2024 and margin, once again, not providing guidance today, but your mouth sounds directionally reasonable based on the components that you laid out, but directly reasonable. Thank you.

Is it persistent is it more one time, how would you think about <unk> growth going forward.

Yes, sorry.

Mike will give you a more thoughtful answer.

George I will but I think it's driven by superb execution from.

From Hadrian, Phineas and <unk> and their teams.

Down in Brazil.

Their ability to understand and anticipate customer needs before as customers are having those needs are incorporated into the dominiak product.

George Tong: Next question, we'll come from George Tong with Goldman Sachs, please go ahead. Alright, thanks.

George Tong: Good morning. You had previously guided to legal organic growth, accelerating in the second half of the year. Can you elaborate on any factors that may have pushed this acceleration out, particularly given the organic benefits from case techs coming in and at least coming out? Sure, we still continue George to anticipate a higher pickup as we go into Q4 and then into 2020 or our final business, tempered the gross funding Q3 for us.

Is the best I've ever seen it.

As long as we continue to do that.

We will continue to see great performance from that part of the business.

And.

The next most obvious thought you might have as well can we can we take that DNA in spread throughout.

Throughout Thomson Reuters and Thats, certainly something that <unk>, our head of international spoke yourself.

Yeah, George I would just emphasize that the 12% organic growth for tap in Q4, 10% for the full year roughly is not solely driven by Latin America, We've got strong assets across ensure prep and Steve mentioned earlier, Dave ball.

George Tong: And there's a factor for us to consider into 20 into Q4 there and the other component is the timing of government. So the two items that really flexes when you get into rounding of league professionals is fine law in the government business. So we're very pleased with the trajectory of legal overalls who go into Q4 and to four year 2024 George. Got it. That's helpful. And then on tax business, very strong growth there driven by Latin America, but can you talk a little bit about some of the sustainability of that growth?

The founder CEO sharp drop and then confirmation that we acquired back in July of 2019, I continue to do incredibly well, so I think Elizabeth <unk> the president.

Is really managing the full breadth and depth of assets. There. So latam is performing well, but likewise sure confirmation and other assets within tax and accounting.

Very helpful. Thank you.

Yep. Thanks, George I think we have time for one more question. If there is one in the queue.

George Tong: Is that being driven by regional inflation? Is it persistent? Is it more one time? How would you think about tax growth going forward? Yeah, sorry. Michael, give you a more thoughtful answer, George, than I will, but I think it's driven by superb execution from from Adrian Finini and my condos, Barbara and their teams down in Brazil. I mean, they their ability to understand and anticipate customer needs before as customers are having those needs and incorporate it into the diminutive product is the best I've ever seen.

And the last caller will come from Doug Arthur with Huber Research. Please go ahead.

Yes. Thanks, So everything has been covered just just I guess a question on your ownership position in <unk> any updated thoughts on the remaining piece.

No Doug.

To continue to monetize at the pace that we have discussed previously currently we're looking at Q1 2024 in Q1 2025 contractually when the next tranche is are eligible to be monetize it doesn't mean, we app to monetize in Q1 24 in Q1 25.

George Tong: And as long as we continue to do that, we'll continue to see great performance from that part of the business. And the next, I suppose, obvious thought you may have was, well, can we can we take that DNA and spread it throughout throughout tons of water? So that's certainly something that's back key now ahead of international focus on. Yeah, George, I would just emphasize that the 12% organic growth for tapping Q4 10% for the full year roughly is not solely driven by Latin America.

I would just emphasize we continue to hold <unk> as a financial investment we're pleased with the level of accelerated monetization in calendar year 'twenty three and we hope to continue to pace signed 'twenty four 'twenty five but very pleased with the overall monetization there.

Okay, great. Thank you.

Thank you Doug.

Alright.

I think we will end the call there. Thanks, Thank you very much everyone.

George Tong: We've got strong assets across and sure prop and Steve mentioned earlier date while the founder CEO sure prop and then confirmation that we're fired back into live 2019. I continue to do incredibly well. So I think Elizabeth B. Ström, the president is really managing the full breath and death of assets there. So Latin is performing well, but likewise, sure prop confirmation and other assets within tax and accounting. Very helpful. Thank you.

And feel free to reach out to the IR team. If we can help a follow ups.

And with that that does conclude today's call. Thank you for your participation you may now disconnect.

Operator: Thanks, George.

Douglas Arthur: I think we have time for one more question if there is one in the queue. And the last caller will come from a does Arthur with viewer research. Please go ahead.

Douglas Arthur: Yeah thanks, everything's been covered. Just I guess a question on your ownership position in LSEG. Any updated thoughts on the remaining piece? No Doug, we'll continue to monetize at the pace that we have discussed previously. Currently, we're looking at Q1 2024. In Q1 2025, contractually, when the next tranches are eligible to be monetized, it doesn't mean we have to monetize in Q1 2024 and Q1 2025. I just emphasize, we continue to hold LSEG as a financial investment. We're pleased with the level of accelerated monetization in calendar year 23. And we hope to continue to pace in 2425, but very pleased with the overall monetization there.

Operator: Okay, great. Thank you. Thank you, Doug. All right.

Operator: I think we'll end the call there. Thank you very much, everyone. And feel free to reach out to the IR team if we can help follow up.

Operator: And with that, that does conclude today's call. Thank you for your participation. You may now.