Q3 2023 Thomson Reuters Corp Earnings Call

Good day, everyone and welcome to the Thomson Reuters third quarter earnings call.

<unk> conference is being recorded.

At this time I'd like to turn the call over to Gary Bisbee.

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.

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

To 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 a change slight change to our non <unk> measures beginning 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.

Historical restatement of revision of the non Ifr S 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.

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

And on Friday October 13th religious visual journalist ECM Abdullah was killed when a shell had him.

Gary Bisbee: Electrons call over to Gary Bisbee. Head of investor relations, please go ahead. Thank you, Allie.

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.

So are you also Donnie and my meze through other religious journalists and colleagues from AFP and Al Jazeera.

Gary Bisbee: 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. 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.

Also injured in the shelling.

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

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. Beginning with the with this quarter's results, we now add back to adjusted earnings, the non cash and tangible amortization expense related to acquired software.

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 in line and margins ahead of our expectations.

Gary Bisbee: Michael discussed this change in more detail in a few minutes. To help with your models, note that we've posted a historical statement or revision of the non-IFRS calculation to the IR website.

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 regulatory agencies. You may access these documents on our website or by contacting our Investor Relations Department.

Results 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. Taya Al-Sadani and Maya 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 he's lost his deeply felt in our newsrooms and across Thompson Reuters.

With slow precision strong start continues with more than 3000 sales to date.

He is earning a large and rising premium.

That supports the upcoming launch of generative 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.

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 that corporates remained elongated.

And growth 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 with the case in the second quarter, majority of the margin beat resulted from the timing of expenses which we expect to largely normalize in the fourth quarter.

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.

Steve Hasker: Michael provides further explanations and context. Total company organic revenues grew 6% driven by healthy recurring and transactional growth. Smith, the big three segments grew 7% organically. We continue to see good momentum from many areas in our portfolio. West law precision 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 the 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.

And continuing progress on our product Roadmaps.

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

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 II and they have expressed their confidence and trust in our ability to do so.

During due to our 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 we.

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 Rogers 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.

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

Completed the acquisition of <unk> August.

And it also completed two smaller bolt on purchases.

Today.

We are launching a new $1 billion 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 <unk>.

Steve Hasker: Michael discussed several tweaks to other guidance items in a few minutes. 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 text acquisition, and continuing progress on our product road maps. Reaction to case text 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. 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.

Inorganic opportunities.

Now to the results for the quarter third quarter organic revenues grew 6% organic recurring and transactional revenue grew 7%.

Scent 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 $633 million.

<unk>, a 560 basis point margin improvement to 39, 6%.

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

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.

Steve Hasker: 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 LSEC in September, completed the acquisition of case text in August, and have also completed two smaller bolt-on purchases. 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.

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 we acquired as part of <unk>.

Corporate <unk> organic revenue growth remained stable with last quarter at 7% recurring revenue grew at 8% while transaction revenue was slightly lower.

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

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

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 grew 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 timing that were largely normalised in the fourth quarter.

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

Roche's news organic revenues rose, 3% aided by the news agreement with data and analytics business of <unk>.

And by timing of the events 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 <unk>.

Summary were pleased with our results and the solid momentum in the business.

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 text.

So before I turn it over to Mike I'll provide a brief update on the <unk> acquisition, and our generative AI product Road map.

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

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.

Steve Hasker: Corporate organic revenue growth remained stable with last quarter at 7%, recurring revenue grew at 8%, while transaction revenue was slightly lower. Practical law indirect tax clear and our international regions remained key growth drives. Action accounting 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. Royce's news organic revenues rose 3%, added 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. And 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 ne.

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

Industry reception to co council has been very strong.

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

Steve Hasker: So before I turn it over to Mike, I'll provide a brief update on the case text acquisition and our generative AI product roadmap. We are very pleased to have closed the acquisition of case text 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 among the teams is strong. For example, our product teams are working well together as we begin to execute against the joint product roadmap.

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

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

So the places attorneys work, including west flow practical or <unk>.

And third party applications like Microsoft word and teams.

Steve Hasker: Integration of the case text 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 text 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.

The AI assistant experience.

Co counsel will help to find the right skill for the problem the customers 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 SKU that co counsel offers outside of legal research.

Steve Hasker: First, we are taking a best of approach to bring genitive 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 approach is Euling Superior Results. Second, we plan to brand all genitive 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.

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're building on a single technology platform as part of our integration. We are 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 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 genitive 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 are 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, IQ 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.

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.

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

First up is bringing generative AI capabilities into Westwood precision.

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

AI assisted research tool in west La precision provides an enhanced.

Search experience and quality legal research memo output that Leverages westwood's, leading content along with technology from both Tia and case text <unk>.

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 code Council and we will be supplemented by additional skill launches in Q4 2023.

Steve Hasker: 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. So looking forward, our confidence in the generative AI opportunity continues to strengthen.

In 2024.

<unk> is a degenerative AI 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: 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. We're also innovating innovating with generative AI in our tax and corporates markets and we'll be sharing with customers the number of generative III proof.

Steve Hasker: We're excited about our product roadmap, which includes multiple key launches over the next few months.

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

Steve Hasker: 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.

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

I will 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 an organic basis.

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

Steve Hasker: Next. 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-council core and practical law answers. Co-council core is our new offering based on the non-research skills currently offered in co-council 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.

<unk>, 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 <unk> precision momentum.

<unk> divestiture and a partial quarter benefit from case Tac.

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

And our international businesses.

Steve Hasker: We expect to bring the West Law AI assisted research, co-council 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 from over through 2024.

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, 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.

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.

Steve Hasker: 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, Steve.

Tax and accounting had another good quarter.

Going 12% organically.

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

Michael Eastwood: Thanks again for joining us today. As a reminder, I will talk to revenue growth before currency and on a 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. The 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.

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.

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.

Michael Eastwood: He drivers from our product perspective remain West law, practical law, high q and our international businesses. We expect good momentum to continue in the fourth quarter. On West law 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. In our corporate segment organic revenue again through 7%. We continue to fill the impacts of the cell cycle lengthening we have mentioned in recent quarters and expect fourth quarter growth to soften slightly in part due to a difficult comparison.

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 integration related cost and productivity initiatives.

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%.

Michael Eastwood: Tax and accounting had another good quarter growing 12% organically recurring and transactional revenue grew 9% and 20% respectively. We expect growth to moderate somewhat in the fourth quarter driven by a lower seasonal mix from our fastest growth offering. Moving to Reuters news, organic revenues increased 3%, needing our expectations. Lastly, global print organic revenues decreased 4%, also in line with our expectations. On a consolidated basis, organic revenues increased 6% with a third quarter.

520 basis points.

Editorial and plan expense timing benefited profitability, though we expect these to reverse in the fourth quarter.

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

Excluding cost 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.

Michael Eastwood: 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 integration related costs, and productivity initiatives. 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 20%.

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.

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.

Michael Eastwood: Revenue growth and a currency benefit drove margins. Global print adjusted EBITDA was 55 million with a margin of 39.6% up 520 basis points. Editorial and plan expense timing benefited profitability, though we expect these to reverse in the fourth quarter. In aggregate, total company adjusted EBITDA was 632 million, and 18% increase versus Q3 2022. Excluding cost related to the change program in the prior period, adjusted EBITDA increased 9%. Turning to earnings per share, third quarter adjusted EPS was 82 cents, up from 58 cents 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 the adjusted EPS in the quarter.

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

To help with your models, we have posted a 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.

Reported 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.

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-pash intangible amortization expense related to acquired software. We have historically added back non-software M&A related intangible amortization, but not the software component.

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.

Michael Eastwood: 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.

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 20 billion.

And we have an additional $6 1 million shares that become eligible for sell 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.

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

Michael Eastwood: 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, if you adjust for these items, comparable free cash flow from continuing operations was 1.3 billion. 159 million higher than the prior year period due largely to higher EBDA.

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

Bolstered by the <unk> monetization and healthy free cash flow, our capitalization remains 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 in 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. 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.

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

<unk> 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.

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 Reorders News agency customers through a cloud native digital media management and distribution platform.

Michael Eastwood: Also about the LSAC monetization and healthy free cash flow, our capitalization remains strong with a net debt to EBDA leverage ratio of only 0.8 times. This remains well below our 2.5 times long term target. Due to the strong liquidity, we plan to replace 600 million bond maturity later this month with cash on hand.

And fully owning west La Japan positions us to bring enhanced technology and better innovation for our legal legal customers.

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

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.

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.

Michael Eastwood: 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 Reuters, 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.

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%.

Michael Eastwood: And fully owning Westlaw, Japan positions us to bring enhanced technology and better innovation. In addition to our 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 revenue in 2024, growing in excess of 25%. Case tech is expected to contribute more than half of this revenue.

And free cash flow of approximately $1 8 billion.

We are making two updates to our 2023 outlook.

First 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 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.

Michael Eastwood: On an annualized basis, we expect these acquisitions to be approximately 80 basis points dilutive to our adjusted EBITM 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.

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.

Michael Eastwood: 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 5.5% to 6%. Adjusted EBITM margin of approximately 39%, and pre-cash flow of approximately 1.8 billion.

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: We are making two updates to our 2023 outlook. 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 one quarter left in the year.

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%.

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 a similar amount, but remain roughly 5% below our effective tax rate.

Michael Eastwood: We also have broken this down into two line items to support the new non-IFRS-adjusted earnings presentation. Emeritization of required software, which will now be added back to adjusted earnings, rises by 20 million due to the recent M&A.

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 GNI 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'll go ahead and take our first question from Jeremy.

Michael Eastwood: We will discuss this in more detail on our Q4 call and 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%, 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.

Yes, 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 everything you are putting in place and what are you seeing on the competitive landscape.

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 elect growth investments and productivity initiatives, and the aforementioned M&A delusion.

You move through the year here. Thank you.

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%.

Operator: Let me now turn it back to Gary for questions. Thank you, Allie. We're ready to begin the Q&A. Perfect. Thank you, ladies and gentlemen. If you like that's a good question, please press star one on your telephone keypad. If you're using a speaker phone, please make sure you move function is released to 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 a good question.

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.

Yes, that's fine Mike.

Yes.

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

Yes. Thanks good.

Good to hear from you so.

Yes.

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 McRennel with RBC. Please go ahead. Yeah, thanks very much and good morning. Just two ones for me. At first on, maybe for you might 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. And then secondly, a little bit bigger picture, maybe for you Steve, on just all the Gen AI roadmap.

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 our sort.

Traditional competitors and legal.

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

Drew Mcreynolds: 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? Thank you. Yeah, I drew on the first question in regards to the impact of NNA for Q3.

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.

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.

Drew Mcreynolds: It was at five percentage points. Our organic revenue growth was six percent, and if you factor in the reported revenue, it was one percent, leaving that delta of five percent. I want to ensure, Drew, that I was addressing your question. Yeah, that's fine, Mike. 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.

With <unk>, two we had a pretty sizable lead in terms of access to to check 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 to <unk>.

We are in the early going and then.

To supplement that with some of the talent that we have particularly.

David Wong ahead of products for the Alterra 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 great opportunities.

Drew Mcreynolds: From the road map, we expect 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. And the lag between bookings and revenue and the, you know, and your subscription business models, we feel we'll see a larger ramp in 25 and beyond than we're willing in 24 in terms of the competitive landscape.

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.

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.

Drew Mcreynolds: We've certainly seen a couple of announcements in the last couple of weeks from our, from, from our sort of traditional competitors in legal, we haven't seen as much in, in tax and accounting or risk and government and so forth, but, you know, without sort of, I hope, 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 I think, secondly, it, you know, that reaction in the, in the road map, we're putting forward reflects the fact that our starting point is we believe superior unique and proprietary content.

No.

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.

We're excited about exploring that over time as well.

Thanks, Ron that's helpful. Thank you.

Our next question will come from Arvind.

Yes.

<unk> with Canaccord Genuity. Please go ahead.

Drew Mcreynolds: With case text who are a pretty sizable lead in terms of access to, to chat, TPT4 and the sort of science behind, combining large language models with proprietary unique data sets. And we love what Jay Keller and the team are bringing to TR in the early going. And then supplement that with some of the talent that we have, particularly David Wong, a head of production. So we're pretty confident. I hope not arrogant through, but we'll keep our eye on the competitors, but, but first and foremost, our on the customer.

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

Six 5%, 6% organic growth in closer to 7% for the big three.

I wanted to understand.

To what extent has the price component.

All 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.

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

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

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.

Maybe just help us understand what sort of the <unk>.

The main metrics that you detailed 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.

Drew Mcreynolds: 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 times for, 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. Thanks for your time, Paul. Thank you.

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 our legal having about 60% of their contracts with multi year normally a three years in nature, but your direct question 30 to 40 basis point.

<unk> 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 Canacorda Genuity. 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?

So the investments yes, thanks, Eric.

Look we view generally for AI and it's transformative impact on professionals as a as a once in a generation.

Relative change and one that <unk>.

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

To position ourselves against.

The principal way that we are assessing and we'll continue to.

To assess.

Our investments in the customer reaction.

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

Aravinda Galappatthige: 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, Aravinda, 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.

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.

As I say, we're growing in confidence around those signals, but we will we will stay very very close to our customers in the market.

Aravinda Galappatthige: 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 for 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 questions, Steve, really. Yeah, investments. Yeah, thanks, Aravinda. So, look, we view generative AI and its transformative impact on professionals as a once in a generation disruptive change and one that plays to our strengths.

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

Thank you.

Aravinda Galappatthige: 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. And I'm more optimistic today than I was the last time, you know, we talked about generate investments based purely on that customer reaction to other comments.

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

Yes, thanks very much.

Mike Your commentary about margins in 2024 I.

I want to make sure I understand that properly.

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 that's what I would think of as normal operating leverage. So when you say most of that is going to be reinvested.

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

Yes Mitch.

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.

Aravinda Galappatthige: 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 just assure 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 we'll stay very, very close to our customers in the markets. And we'll keep your price of what we're hearing. Thank you.

<unk>, if you apply those assumptions it would yield approximately 75 basis points of operating leverage for total TR.

Reflecting currently based on our preliminary planning, we see significant growth opportunities to reinvest that operating leverage of approximately 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, we see an obligation to make those investments organically inorganically in 24 that should propel further growth acceleration in 'twenty five 'twenty six Vince.

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. We 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, 150 to 160 basis points of margin expansion, that's what I would think of as normal operating leverage.

Vince Valentini: 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 in 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.

Okay.

Follow up just on.

Just sort of.

The nature of how you provide guidance.

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

Im talking about and maybe 36% margins and you've delivered 39, 6% now you're saying that's going to roll into Q4.

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 investments that you could've 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.

Competitive headwinds in Shanghai.

Yeah, I'll hit 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.

Vince Valentini: 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. Or, but really emphasizing from our prepared remarks, as we go into 2526, we have confidence we'll expand our margin in 2526 given that operating leverage, but we want to take full advantage, we see an obligation to make those investments organically and organically in 24 that should propel further growth acceleration in 2526, Vince.

I mentioned four items into Q4 events, we have M&A dilution in Q4 from take case tax and from shore Prep that's number one.

Number two.

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. The we call. It a normalization of expenses, they've certainly been some timing items.

And the last couple of quarters.

That we we have transparency.

Parents 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 or those for reasons, we have strong visibility into the 37% EBITDA margin for Q4, which would yield approximately 30%.

Vince Valentini: Okay, follow up just on the sort of the nature of how you provide guidance. 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.

9%.

The full year.

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

Look forward to providing yet okay.

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 all our numbers.

Vince Valentini: 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, Vince. 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.

Yes.

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

You exited Ali.

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.

Vince Valentini: 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 talk a lot about GNI, but we have additional growth opportunities on 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.

Ill add.

As a general point, we see.

Growing strength in our legal business.

Both Fisher and his team.

Particularly.

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

They've done a very good job of.

Vince Valentini: There's certainly been some timing items in the last couple quarters that 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, Vince, 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. Forward to providing the update.

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

And certainly those are increasing and they're in their 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 <unk>.

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

They are injecting degenerative II to very healthy products and healthy franchises.

Good.

<unk>, Mike what would you add.

It is a good summary, 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: Our next question, welcome from Heather Balsky with Bank of America. Please go ahead. Hi, thank you for taking my question.

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 future. Thank you for each of your expectations. You exited a lead. 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 the quarter and then how you think about the fourth quarter from here. Yeah, Heather, let's be.

<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 book growth trajectories, you asked about government there.

You have to monitor that pipeline very closely and be.

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

Heather Balsky: Thanks for the question. I'll start and then I'm sure Michael will add. As a general point, we see growing strength in our legal business, all Fisher and his team, particularly Neil Sternthall and Liz Zimic, Mark Adad, supported by our product and engineering folks have 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 sort of health and their growth prospects.

I just follow up with government. The 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 you were optimistic on.

Our strong Q4 and Q1.

Great. Thank you.

Heather Balsky: So as a general point in the fourth quarter, we expect to see that that growing strength and having it carrying into the next year and beyond. And the integration of generative AI really built upon that, you know, we're injecting generative AI into very healthy products and healthy franchises. We think that's a good starting point. Mike, what would you add? I think it's good summary. Heather, I would just as always emphasize practical law led by Emily Cobert continues to form really well for us and IQ that we required back in July of 2019 continues to be one of our strongest growth assets.

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

Hi, Good morning, I want to ask a question on the on.

On the organic growth and maybe a little longer term, but when you look at the 2025 when you start to really feel the impact of the journey initiatives do you have a sense of internally at how much you're hoping.

That will impact the organic growth rate.

I'm trying to get an idea is this is this a significant step change or is there 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 will say more at Investor day in March I think where we're still in the process.

Heather Balsky: We talked a lot about West Law precision in Gen. AI as we should. But if you think about the full breadth and depth of assets that Paul Fisher has within legal, you know, 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. I just follow up with government the reason that you didn't see the acceleration in the third quarter, or was it something else?

Sort of learning and quantified as I've said a couple of times.

The most important sort of.

Yardstick for us is the customer reaction.

Two 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.

The peso.

Hi, Praful.

As to sort of what that results is a site we will come back in February in Investor day, and be more specific but we see.

Heather Balsky: I really just timing any time we go with government agencies, the level of precision in regards to the timing of those closures is a little plus precise. Then what we see with the non government customers there, but based on our pipeline view, 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 Gen. AI. Richard, do you have a sense of internally 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 step change or is it more of an incremental increase in growth rate when you look at it 2025? Scott, Steve, thanks for the question.

Deeper and to your specific question on the organic growth for tax and accounting professionals routes legal international et cetera. So I think that will be quite helpful. For you Scott.

Okay.

Yes.

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

Do you see both of the future growth coming from.

Are you expanding functionality of the current product set or on the new opportunity that you've talked about sort of the Tam expansion.

Scott Fletcher: 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 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, you know, more forceful, more trust, more confidence, more excitement from our customers than perhaps I'd even hoped for.

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

I think it would be pretty balanced.

We see at least.

At least.

Sort of three different cases, the first is.

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.

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.

Scott Fletcher: So, 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 extending that into legal workflows, and ultimately taking the same kind of capabilities since tax 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 and at Investor Day, we'll be able to be much more specific about those.

Scott Fletcher: And we'll be very rigorous about ensuring that that flows through Mike, what would you add? 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 growth or tax accounting professionals, Fritz, legal, international, et cetera. So I think that would be quite helpful for you Scott. Okay, yeah. 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.

Thank you that is helpful.

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

Thank you.

Steve 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.

Super solid balance sheet cash is piling up.

Is it going to be more large bunch.

A bunch of midsize deals how do you think about what we should be thinking about maybe you mentioned that.

Scott Fletcher: We've got we think it's probably too early to quantify it, 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 core existing products. 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.

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. Then we wouldnt hold back but.

We don't sit here and sort of say to you.

Be great to do sort of some larger more transformative deals.

And we don't think we need them so.

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

Offshore prep.

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

Scott Fletcher: The second is in these new skills, particularly that which builds upon the case takes co counsel skill set. And extending that into, you know, legal workflows and ultimately taking the same kind of capability since tax accounting and risk workflows. 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.

Into <unk>.

A couple of different areas.

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

Accelerate our progress into legal workflow software.

Tax and accounting automation.

Is something building onshore prep that we're always.

Looking out for under Elizabeth <unk> leadership.

And.

Scott Fletcher: But again, when we come back in at investor date, we'll be able to be much more specific about those.

And then the other areas that Dave.

<unk> and the team have.

I think gotten enough.

Scott Fletcher: Thank you. That is helpful.

Cognizant will very well educated.

Unknown Attendee: Next question. We'll come from it. My name's Panayk with it.

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

Manav Patnaik: Barkley, please go ahead. Thank you. You guys 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? Bunch of mid-sized students, 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 a tax 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. We don't want a larger deal. 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.

For those deals and make sure that they.

<unk> 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 80 basis points.

Manav Patnaik: So it's more in that sort of in the, in the category of a short prep, which we're very excited about. We think Dave Wile and his team have done a wonderful job of both continuing, accelerate that business and also integrating into, uh, into, to, uh, so a couple of different areas. I mean, you know, building on case text, if there are the generative AI capabilities, we can add, um, that, that, that in accelerate our progress into legal workflow software, um, tax and accounting automation is, uh, is something building on short prep that we're always looking out for under Elizabeth Bstrom's leadership.

Relative dilution for 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 to two 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 off Thomson was about 30 to 40 basis points better than 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, uh, and then the other areas that, that Dave Larson and the team have, have, I think, gotten in our, uh, gotten us all very well educated and, uh, and keen to sort of look for opportunities whose risk fraud and compliance building upon the clear and TRS starting point. Um, and we, we really need to find the right one there. So, um, you know, no promises as to what we might do in the short term.

It's trending in 'twenty, three 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're into three to three 5% range.

Manav Patnaik: And the other area that builds upon, um, our core capabilities, our content and our relationships with general councils and heads of tax and other executives. Um, is, uh, is ESG. And so we'll continue to look at ESG. But, uh, as always, no promises. We're going to keep the bar really high, um, for, for those deals and make sure that, that they're beneficial to our shareholders. Got it. Um, and then might just to follow up on your margin commentary.

Andrew for total TR, which varies by segment.

Shared in prior calls at the higher price realization normally happens in our tax and 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, there is 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 at 30% to 40 basis points higher in 'twenty three versus 22, then on.

Manav Patnaik: I guess that, that's 75 basis points you talked about. That is before the delusion from the, the deals you called out. Is that correct? Uh, that's correct. Uh, really two components there. Um, and add that we were addressing roughly the 80 basis points, um, cumulative delusion for the MNA activity as we head 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.

Unknown Attendee: See.

Average roughly three to three 5% for total TR.

Anything interesting news or 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 components, we have a contractual calculation.

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, um, in the call that net realized price for all of Thompson was, uh, 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, you know, tell us, you know, what net realized price, um, is trending in 23 overall.

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

Andrew Sehrman: And, um, you know, some of the color in the second. Yes, Andrew, you heard that correctly. It's approximately 30 to 40 basis points incremental in 23 versus 22. If you look at total TR, firm wide, we're into three to three and a half percent range. Andrew for total TR, which varies by segment. I've shared in prior calls that the higher price realization only happens in our tax and accounting professionals business. Followed by corporates and then legal, that's going to mentally how high to love in regards to the annual price increases.

Okay. Thank you.

Uh huh.

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

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.

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

Tony both with case text ensure prep where close to batting a thousand so far in terms of keeping the talent.

So we're thrilled with that.

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

Andrew Sehrman: 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 TR. 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.

Both in terms of our purpose and Theyre on Korea.

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.

<unk> were up.

We have integrated that are in the process of integrating that completion that completely on integration into pulp fishes teams, that's going well and that obviously provides.

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

Andrew Sehrman: 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.

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

In conjunction with with with engineering and labs.

Andrew Sehrman: Okay, thank you.

Make sure that.

We at TR.

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

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.

Tony Kaplan: 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 a 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.

So we're off to a good start and it's up to us Tony just to continue that trajectory.

Perfect that sounds great and then.

Just for my follow up yeah.

Just looking at your clients, maybe corporate or law firms anything to this.

With regard to sort of budget going into that ended the year and how youre thinking about just pressure on them.

Given macro uncertainty here or the like.

Yeah.

End of the year and into next year. Thanks.

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

A reduction in billable hours for many of our customers.

Tony Kaplan: 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 in 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 are to move at case text speed and continue to do so.

Capital markets and corporate.

Division, so they've seen fewer equity and debt raisings less M&A transactions.

Through their billable hours. However, the litigation practices. They are restructuring practices in one or two other areas have to varying degrees picked up the slack and so that out of our businesses.

Robust as has <unk>.

Tax and accounting when you go across the corporate so that's where the elongated sales cycles have.

Have hurt us.

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.

And the other comment I'd make is lower Clayton Mcdonald is now six months into the role as president and so I think as we as we enter into next year.

Tony Kaplan: And in the first few months, we're very much on track with that. I've made it 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.

Tony Kaplan: Terrific, that sounds great.

No matter, what no matter, what the macro environment brings some of the moves that lowest Viking.

And in her leadership I think we'll start to see.

Start to reflect.

Unknown Attendee: And then just for my follow up, 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 businesses 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 and A transactions, flowing through their billable hours.

And the impact we are making with our cost corporate customers.

Thanks, a lot.

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

Thank you for taking my question.

Steve I wanted to ask you 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 <unk> 23, and maybe.

Just to close the loop on.

On on 24 margins Mike.

So if I start at 39% in 2023 on the EBITDA margin that 75 basis points improvement in operating leverage as you said, there's going to be.

Unknown Attendee: However, their litigation practices, their restructuring practices, and one of the work to other areas, have two varying degrees picked up slack, and so that part of our businesses has remained robust as has taxing accounting. When you go across the corporates, that's where the elongated soil cycles have 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.

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.

Thank you.

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

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

Unknown Attendee: So we're monitoring 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 and her leadership, I think we'll start to start to reflect, you know, in the impact of making with our corporate customers. Thanks a lot.

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.

Think when 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, it's sort of hard I think to expect.

Mariagi: Our next question will come from at Mariagi with Scotia Bing. 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 it's 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.

That's the assumption that Max.

Putting through all of them.

Our budgeting and forecasting process between yeah.

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.

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

Mariagi: So if I start at 39% in 2023 on the EBITDA margin that 75 basis points improvement and 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 and a half for 2024 is am I understanding this properly? Thank you.

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 given the organic benefits from <unk> coming in and at least coming out.

Sure, we still continue George to anticipate.

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

Steve Hasker: Yeah, let me, Steve, 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 that a lot of it done a lot of the underlying assumption for 24 from a sort of macro perspective is more of the same. 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 that growth some in Q3 for us in as a factor for us to consider into.

<unk> 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 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 can you talk a little bit about some of the sustainability of that growth is that being driven by regional inflation.

Steve Hasker: It's sort of hard, I think, to expect. You know, I think I think we fool 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 for 24. Yeah, in the second part of the question, on regards to 2024 and March, I'm once again not providing guidance today, but your math 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 tax growth going forward.

Yes, sorry.

Mike will give you a more thoughtful answer.

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

From Hadrian Canadian <unk> and their teams down.

Down in Brazil.

It's their ability to understand and anticipate customer needs before as customers are having those needs and incorporate it into the dominiak product.

George Tong: Next question, we'll come from George Tong with Goldman Sachs, please go ahead. Hi, 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 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 takeoff as we go into Q4 and then into 2020 for our final business, tempered the gross funding Q3 for us and there's a factor for us to consider into 20 or there in the other component is the timing of government.

Is the best I've ever say.

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.

George Tong: So the two items that really flexes when you get into rounding of legal professionals is fine law in the government business, George, but we're very pleased with the trajectory of legal overalls who go into Q4 and to four year 2024 George.

Throughout the Thomson Reuters and Thats, certainly something that back pain, our head of international and spoke yourself.

Yes, 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, We've got strong assets across ensure prep and Steve mentioned earlier, Dave ball.

The founder CEO sure prop and then confirmation that we acquired back in July of 2019 continues 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.

George Tong: That's helpful. And then on tax business, very strong growth there, driven by Latin America, it can talk a little bit about some of the sustainability of that growth, 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.

Very helpful. Thank you.

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

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

Yes. Thanks 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 tranches are eligible to be monetize it doesn't mean, we opt to monetize in Q1 24 in Q1 25.

George Tong: 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 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 mortars?

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 Cy 'twenty four 'twenty five but very pleased with the overall monetization there.

George Tong: And that's certainly something that that came out 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. 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 acquired back in July of 2019. I continue to do incredibly well.

Okay, great. Thank you.

Thank you Doug.

Alright.

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 a follow ups.

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

George Tong: So I think Elizabeth B. Ström, the president, is really managing the full breath and doubt the past that's there. So Latin is performing well, but likewise sure prop confirmation and other assets within tax and accounting. Very helpful. Thank you.

Unknown Attendee: Thanks, George.

Doug 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 Doug Arthur with human research. Please go ahead.

Doug 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 apt 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.

Operator: All right, 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.

Operator: You may now.