Q4 2023 Thomson Reuters Corp Earnings Call

Operator: The Bulletproof Executive 2013 Good day, everyone, and welcome to the Thomson Reuters Q4 2023 earnings call. Today's conference is being recorded. At this time, I'd like to turn the call over to Gary Bisbee. Please go ahead, sir.

Good day, everyone and welcome to the Thomson Reuters Q4, 2023 earnings call. Today's conference is being recorded at this time I'd like to turn the call over to Gary Bisbee. Please go ahead Sir.

Gary E. Bisbee: Thank you Jennifer.

Gary E. Bisbee: Thank you, Jennifer. Good morning, and thank you, everyone, for joining us today for our fourth quarter 2023 earnings call. I'm joined today by our CEO, Steve Hasker, and 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'd appreciate it if you would limit yourself to one question and one follow-up when we open the phone line.

Gary E. Bisbee: And thank you everyone for joining us today for our fourth quarter 2023 earnings call I'm joined today by our CEO, Steve ask her and our CFO, Mike Eastwood, each of whom will discuss our results and take your questions. Following their remarks to enable us to get to as many questions as possible. We would appreciate it if you would limit yourself to one question and one follow up when we open the phone.

Gary E. Bisbee: Throughout today's presentation, when we compare performance period-on-period, we discuss revenue growth before currency, as well as on an organic basis. We believe this provides the best basis to measure the underlying performance of the business. Today's presentation contains forward-looking statements and non-IFRS financial measures. However, actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You may access these documents on our website or by contacting our Investor Relations Department. I will now turn it over to Steve Haskell.

Gary E. Bisbee: Yeah.

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

Gary E. Bisbee: Today's presentation contains forward looking statements and non <unk> financial measures actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies.

Gary E. Bisbee: May access these documents on our website or by contacting our Investor Relations Department.

Gary E. Bisbee: I'll turn it over to Steve Asker.

Steve Hasker: Thank you, Gary, and thanks to all of you for joining us today. 2023 was a year of continued progress at Thomson Reuters. But let me start by reviewing some of our key accomplishments. Firstly, we delivered another year of good financial results, meeting or exceeding our key financial targets. Full-year organic revenue grew 6%, with the fourth quarter growing at seven. The big three segments also accelerated in Q4, growing 8% versus 7% for the full year. Despite lingering inflationary pressures and heavy investment,

Steve Asker: Thank you Gary and thanks to all of you for joining US today 2023 was a year of continued progress at Thomson Reuters, but.

Steve Asker: So let me start by reviewing some of our key accomplishments.

Steve Asker: Firstly, we delivered another year of good financial results meeting or exceeding our key financial targets.

Steve Asker: Full year organic revenue grew 6%.

Steve Asker: With the fourth quarter growing at 7%.

Steve Asker: Big three segments also accelerated in Q4 growing 8% versus 7% for the full year.

Steve Asker: Despite lingering inflationary pressures and heavy investment.

Steve Hasker: Our full-year adjusted EBITDA margin rose by 420 basis points to 39.3%, and we delivered $1.9 billion of free cash flow, slightly ahead of target, although the macroeconomic and geopolitical backdrop remains uncertain.

Steve Asker: Our full year adjusted EBITDA margin rose by 420 basis points to 39, 3% and.

Steve Asker: And we delivered $1 $9 billion of free cash flow slightly ahead of targets.

Steve Asker: Although the macroeconomic and geopolitical backdrop remains uncertain, we have many areas of strength in our portfolio.

Steve Hasker: We have many areas of strength in our portfolio. Westlaw Precision's strong performance continues. Our international businesses maintain their growth trajectory in the teens. And we have many other products delivering double-digit revenue growth, including practical law. Confirmation.

Steve Asker: Whistler precision strong performance continues.

Steve Asker: Our international businesses maintained the growth trajectory in the teens.

Steve Asker: And we have many other products delivering double digit revenue growth, including practical law confirmation Shaw prep and high Q.

Steve Hasker: Shaw Prep and Haikyuu, 2023 saw significant and important progress from an innovation perspective. The clear highlight was our efforts around generative AI, culminating in the November launch of the AI-assisted research capability within Westlaw Precision. But the progress is far broader than just Westlaw.

Steve Asker: So any twenty-three saw significant and important progress from an innovation perspective, the clear highlight was our efforts around generative II, culminating in the November launch of the AI assisted research capability within west La precision.

Steve Asker: But the progress is far broader than just wistful.

Steve Hasker: We have integrated our new colleagues from the August acquisition of Case Tech, launched CoCouncil Corp to extend the reach of Casetec's legal AI assistant offering, and we are working to deliver against a robust product roadmap that includes several key launches in the next few months. Our Capital Capacity and Liquidity remain a key asset that we are focused on deploying to create shareholder value, and we made strong progress on this during 2023. We monetized nearly $5.5 billion of our stake in LSEG and returned more than $3 billion to shareholders. Since the beginning of 2023, we have invested nearly $2.1 billion in six acquisitions, including our purchase of a majority stake in e-invoicing leader Aguero. These acquisitions bolster key franchises and improve the quality and growth prospects of our portfolio. Looking forward, our conviction about the medium-term growth potential for Thomson Reuters is increasing. As we stated last quarter, we're accelerating investment in 2024 to take advantage of our potential, particularly around our generative AI offerings and recent acquisitions, which Mike will discuss in more detail.

Steve Asker: We have integrated our new colleagues from the August acquisition of case text.

Steve Asker: Launched co counsel core to extend the reach of case text legal AI assistant offering and we are working to deliver against our robust product roadmap that includes several key launches in the next few months, our capital capacity and liquidity.

Steve Asker: A key asset that we are focused on deploying to create shareholder value and.

Steve Asker: And we made strong progress on this during 2023.

Steve Asker: We monetized nearly $5 5 billion of our stake in L. Sig and returned more than $3 billion.

Steve Asker: Shareholders.

Steve Asker: Since the beginning of 2023, we've invested nearly $2 1 billion and six acquisitions, including our purchase of a majority stake in E Invoicing leader Aguera. These.

Steve Asker: These acquisitions bolster key franchises and improve the quality and growth prospects of our portfolio.

Steve Asker: Looking forward our conviction around the medium term growth potential Thomson Reuters is rising as we stated last quarter. We are accelerating investment in 2024 to take advantage about potential, particularly around our generative AI offerings and recent acquisitions.

Steve Asker: As Mike will discuss in more detail, we are guiding for organic revenue growth of approximately 6% in 2024.

Steve Hasker: We are guiding for organic revenue growth of approximately 6% in 2024, and we're focused on driving acceleration from that level in 2025 and beyond. To that point, we're also introducing a financial framework for 2025 and 2026, in which we see organic revenue growth of 6.5% to 8%. Now to the results for the quarter.

Steve Asker: We're focused on driving acceleration from that level in 2025 and beyond.

Steve Asker: That point, we're also introducing a financial framework for 2025 and 2026.

Steve Asker: In which we see organic revenue growth of six 5% to 8%.

Steve Asker: Now to the results for the quarter, our fourth quarter organic revenues grew 7% improved.

Steve Hasker: Our fourth-quarter organic revenues grew 7%, improving from 6% in recent quarters. Organic, recurring, and transactional revenue grew 7% and 16%, respectively, while print revenue declined modestly, as expected. Reported revenue grew 3%, with currency a slight drag and net divestitures having a 4% negative impact. Adjusted EBITDA increased 12% to $707 million, reflecting a 300 basis point margin improvement to 38.9%. The margin expansion was driven by change program expenses in the prior year and high margin contribution from Reuters' transactional revenue. Adjusted earnings per share grew 31% from the prior year period to $0.98.

Steve Asker: Improving from 6% in recent quarters.

Steve Asker: Organic recurring and transactional revenue grew 7% and 16% respectively, while print revenue declined modestly as expected.

Steve Asker: <unk> revenue grew 3% with currency, a slight drag and Nick divestitures, having a 4% negative impact.

Steve Asker: Adjusted EBITDA increased 12% to $707 million, reflecting a 300 basis point margin improvement to 38, 9%.

Steve Asker: The margin expansion was driven by change program expenses in the prior year and Mod and high margin contribution from Royce's transactional revenue.

Steve Asker: Adjusted earnings per share grew 31% from the prior year period to 98 cents.

Steve Hasker: Turning to the fourth quarter results by segment, the Big 3 businesses delivered 8% organic revenue growth, an all-time high, and up from 7% in recent quarters. Legal organic revenue growth improves to 7% driven by continued Westlaw precision momentum. Demand for our key offerings remains healthy, led by Westlaw, Practical Law, and Casetech.

Steve Asker: Turning to the fourth quarter results by segment the.

Steve Asker: The big three businesses delivered 8% organic revenue growth and all time high and up from 7% in recent quarters.

Steve Asker: Legal organic revenue growth improved to 7% driven by continued Westwood precision momentum.

Steve Asker: Demand for our key offerings remains healthy led by West La practical law case text and strong performance in our international markets.

Steve Hasker: A strong performance in our international market. Customer interest in our AI-driven offerings and product roadmap remains extremely strong, with several additional launches coming in the next few months. Corporate's Organic Revenue Growth was 7%, in line with the growth last quarter. Both recurring and transactional revenues grew 7%. Practical law, indirect tax, and clear, and our international regions remain key growth drivers. Tax and accounting organic revenues grew 10%, driven by recurring and transactional growth of 10% and 14%, respectively. Our Latin America operations, Ultratex and ShorePrep, each contributed meaningfully to growth. Reuters' news organic revenues rose a robust 9%, driven primarily by generative AI-related content licensing revenue that was largely transactional. Sluggish digital advertising and events growth continued amid uneven macro conditions and a change in the timing of events versus last year. And lastly, global print organic revenues met our expectations, declining 4% year-over-year.

Steve Asker: Customer interest in our AI driven offerings and product roadmap remains extremely strong with several.

Steve Asker: Additional launches coming in the next few months corporates organic revenue growth was 7% in line with the growth last quarter, both recurring and transactional revenues grew 7% track.

Steve Asker: Practical law indirect tax clear in all international regions remain key growth drivers.

Steve Asker: And accounting organic revenues grew 10% driven by recurring and transactional growth of 10% and 14% respectively.

Steve Asker: Latin America operations Ultra tax and short prep each contributed meaningfully to growth.

Steve Asker: Reuters news organic revenues rose a robust, 9% driven primarily by generative AI related content licensing revenue that was largely transactional in nature.

Steve Asker: Sluggish digital advertising and events growth continued.

Steve Asker: Uneven macro conditions and a change in the timing of events versus last year, and lastly, global print organic revenues met our expectations declining 4% year over year in summary, we're pleased with our results and the solid momentum in the business.

Steve Hasker: In summary, we're pleased with our results and the solid momentum in the business. All-year organic revenues rose 6%. Reported revenue grew 3% Currency had a slight negative impact, and net divestiture is a 3% drag. Adjusted EBITDA increased 15% to $2.7 billion, with a 39.3% margin, up 420 basis points year-over-year. Revenue growth and having changed program expenses in the prior year drove the margin gain. Adjusted earnings per share for the year was $3.51 compared to $2.62 per share in the prior year.

Steve Asker: Full year organic revenues rose 6%.

Steve Asker: Reported revenue grew 3% with currency, a slight negative impact to net divestitures of 3% drag.

Steve Asker: Adjusted EBITDA increased 15% to $2 7 billion with a 39, 3% margin up 420 basis points year over year revenue growth.

Steve Asker: And having change program expenses in the prior year drove the margin gain adjusted earnings per share for the year was $3.51 compared to $2 62 per share in the prior year.

Steve Hasker: And let me finish on the financials for the full year by noting we met or exceeded all of our 2023 guidance metrics. Now I'll spend a few minutes discussing 2023 product highlights and progress on our M&A strategy. Product and innovation remain an important focus, and 2023 was a year of tremendous progress for our product and engineering organization. The emergence of GPT-4 and advanced generative AI technology ushered in significant change for our product organization, which had to reprioritize on the fly, re-imagine customer experiences, and then quickly deliver TR quality product innovation. Our teams have moved with a speed and decisiveness never seen before at Thomson Reuters, and we're beginning to see tangible results from these efforts. The launch of the AI-assisted research capability within Loeffler Precision in November went well. Customer feedback remains positive, and fourth quarter sales set records for the Westlaw franchise.

Speaker Change: Let me finish on the financials for the full year by noting we met or exceeded all of our 2023 guidance metrics.

Speaker Change: Now I'll spend a few minutes discussing 2023 product highlights and progress executing on our M&A strategy.

Steve Asker: Product innovation remains an important focus and in 2023 was a year of tremendous progress for our product and engineering organization.

Steve Asker: The emergence of GPT for an advanced generative AI technologies I should in significant change for our product organization, which had to re prioritize on the fly re imagined customer experiences and then quickly deliver T a quality product innovations.

Steve Asker: Our teams have moved with speed and decisiveness never seen before at Thomson Reuters and we're beginning to see tangible results from these efforts.

Steve Asker: The launch of the AI assisted research capability within Lewisville precision in November has gone well and customer.

Steve Asker: Customer feedback remains positive and fourth quarter sales set records for the Westwood franchise. We have also made good progress with case text, including the launch of co counsel core a robust package of legal workflow tools offered through case text legal AI assistant.

Steve Hasker: We have also made good progress with Kacetext, including the launch of CoCouncil Corp., a robust package of legal workflow tools offered through Kacetext's Legal AI Assistant. 2023 also featured a broad range of expanded features, new capabilities, and design enhancements across our portfolio, including several listed on this slide. Looking into 2024, we're excited about our product roadmap, which includes a series of important launches in capability enhancement. This includes adding generative AI capabilities to Practical Law and Checkpoint, and the launch of Practical Law Cause Finder, and also an intelligent drafting solution delivered through Microsoft Word.

Steve Asker: 2023 also featured a broad range of expanded features new capabilities and design enhancements across our portfolio, including several listed on this slide.

Steve Asker: Looking into 2024, we're excited about our product roadmap, which includes a series of important launches and capability enhancements. This includes adding generative AI capabilities to practical law and checkpoint and the launch of practical law clause finder and also an intelligent drafting solution delivered.

Steve Asker: Through Microsoft word.

Steve Asker: We also plan to bring co counsel core and westward journey II capabilities to several key international markets.

Steve Hasker: We also plan to bring co-counsel core and Westlaw Gen-AI capabilities to several key international markets and a number of new skills to the co-counsel legal AI assistant. We look forward to highlighting a number of our product innovations and our upcoming investor. 2023 was also an eventful year for Thomson Reuters from a capital allocation perspective. I'll leave the discussion of shareholder returns to Mike and focus here on our progress at putting capital to work through acquisition. Since the beginning of 2023, we've invested nearly $2.1 billion in six acquisitions. Through these purchases, we've added important capabilities to each of the big three segments. Complimented, we have completed two strategic tuck-ins at Reuters News and taken full control of Westlaw Japan after buying out our former joint venture partner. A few summary thoughts.

Steve Asker: And at a number of new skills to the co counsel legal AI assistant we look forward to highlighting a number of our product innovations at our upcoming Investor day.

Steve Asker: 2023 was also an eventful year for Thomson Reuters from a capital allocation perspective.

Steve Asker: I'll leave the discussion of shareholder returns to Mike and focus here on our progress at putting capital to work through acquisitions.

Steve Asker: Since the beginning of 2023, we've invested nearly $2 $1 billion in six acquisitions.

Steve Asker: Through these purchases we've added important capabilities to each of the big three segments complemented.

Steve Asker: We completed two strategic tuck ins that Reuters news.

Steve Asker: Taken full control of West La Japan after buying out how former joint venture partner.

Speaker Change: A few summary thoughts.

Steve Hasker: PaceText added critical capabilities and talent to accelerate our Gen AI aspirations in legal professionals, and over time, more broadly, across the entire TR portfolio. Shawprep and Peguero have added leading-edge technology that complements our existing capabilities and allows for truly end-to-end workflow automation solutions for our tax and accounting and corporates markets, respectively. At Reuters, we've added compelling media asset management technology for our agency business through Imogen and subscription professional content focused on the insurance industry, both aligned with the growth strategy of this business. These acquisitions deepen our focus on content-enabled technology, which is what we do best. They also continue efforts to execute the TR Acquisition Playbook, which entails acquiring high-quality businesses... Integrating them into TR's product suite, investing in their growth, and leveraging our extensive distribution and customer relationships to drive profitable, long-term growth. And while it remains early, integration efforts are off to a good start.

Speaker Change: Paste text added critical capabilities and talent to accelerate our gen II aspirations and legal professionals and over time more broadly across the entire portfolio.

Steve Asker: Sure Prep and <unk> have added leading edge technology that complements our existing capabilities and allows for truly end to end workflow automation solutions for our tax <unk> accounting and corporates markets respectively.

Steve Asker: Royce's, we've added a compelling media asset management technology for our agency business through imaging.

Steve Asker: And subscription professional content focused on the insurance industry, both aligned with the growth strategy of this business unit.

Steve Asker: These acquisitions deepened our focus on content enabled technology, which is what we do best.

Steve Asker: They also continue efforts to execute the T. Our acquisition playbook. This entails acquiring high quality businesses integrating them into Trs product suite investing behind that growth and leveraging our extensive distribution and customer relationships to drive profitable long term growth and while it remains early.

Steve Asker: Integration efforts are off to a good start customer feedback has been strong and we're retaining key talent at a very high right. When we can see that these acquisitions in total.

Steve Hasker: Customer feedback has been strong, and we're retaining key talent at a very high rate. When we consider these acquisitions in total, We've added approximately $200 million in revenue, growing at strong double digits. This is slightly more than the revenue divested through the sale of a majority stake in Elite, which was not growing. As a result, our portfolio today is stronger, more strategically aligned with better growth prospects than it had 18 months ago. Let me provide a bit more discussion of the Pagaro acquisition. Note that we went into significant detail about Pagaro on an investor call on January 19th, so I'll just summarize a few points here.

Steve Asker: We've added approximately $200 million of revenue.

Steve Asker: Growing at strong double digits. This is slightly more than the revenue divested through the sale of a majority stake in elite, which was not growing.

Steve Asker: As a result, our portfolio portfolio today is stronger more strategically aligned with better growth prospects than it it had 18 months ago.

Steve Asker: Let me provide a bit more discussion of the <unk> acquisition note that we went into significant detail about together on an investor call on January 19.

Speaker Change: So I'll just summarize a few points here first.

Steve Hasker: First, the e-invoicing opportunity is significant, and we see strong growth continuing as planned implementation of digital tax regulations in more than 80 countries brings a wave of regulatory-driven demand growth. Second, Pagaro is a market leader with what we believe is a differentiated solution. In addition to offering a single global platform, which is unique in the market, the company's modern technology and robust compliance capabilities are, in our view, market-leading.

Steve Asker: The E invoicing opportunity is significant and.

Steve Asker: And we see strong growth continuing as planned implementation of digital tax regulations and more than 80 countries brings a wave of regulatory driven demand growth second <unk> is a market leader with what we believe a differentiated solutions.

Steve Asker: In addition to offering a single global platform, which is unique in the market the company's modern technology and robust compliance capabilities are market, leading in our view third.

Steve Hasker: Pagaro is a compelling product fit with Thomson Reuters. The combination of Pagaro's e-invoicing compliance with our one-source indirect tax should yield significant benefits for our customers, including enhanced compliance capabilities, better end-to-end workflow automation, and global scale through a single trusted vendor. And fourth, Figueroa has an attractive financial model with strong long-term growth and profit potential. The company has a proven track record of double-digit revenue growth and is highly profitable in its scalable market. We see a pathway to robust overall profitability in the next few years as its investment markets scale up. And finally, our current ownership of Pregero is approximately 85%. Assuming we acquire 90% or higher ownership by the end of our tender offer period. We will look to undertake a squeeze-out process in order to take full ownership of the business. We'll consolidate Peguero's financials as of January 17th, the day we achieve majority ownership of the company. Mike, it's over to you.

Steve Asker: <unk> is a compelling product fit with Thomson Reuters, it's the combination of <unk> E invoicing compliance offerings without one source indirect tech solutions should yield significant benefits for our customers, including enhanced compliance capabilities better end to end workflow automation and global scale through a single truck.

Steve Asker: <unk>, Linda and fourth the Garo has an attractive financial model with strong long term growth and profit potential. The company has a proven track record of double digit revenue growth and is highly profitable and it's scaled markets. We see a pathway to a robust overall profitability in the next few years.

Steve Asker: Its investment markets scale up.

Steve Asker: And finally <unk>.

Steve Asker: Current ownership is approximately 85%, assuming we acquire 90%, Ohio.

Steve Asker: Ownership by the end of our tender offer period, we will look to undertake a squeeze out process in order to take full ownership of the business will consolidate <unk> financials as of January 17th the day, we achieved majority ownership of the of the company Mike over to you. Thank you, Steve and thanks for joining us today.

Mike Eastwood: Thank you, Steve, and thanks for joining us today. As a reminder, I will talk to revenue growth before currency and on an organic basis. Let me start by discussing the fourth quarter revenue performance for our Big Three segment. Organic revenues improved sequentially from 7% in recent quarters to 8% in the fourth quarter, a new high watermark for the Big Three.

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

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

Mike Eastwood: Organic revenues improved sequentially from 7% in recent quarters to 8% in the fourth quarter.

Mike Eastwood: A new high watermark for the big three.

Mike Eastwood: Total revenue rose 3%, including the impact of divestitures, while legal professionals' organic revenue grew 7% driven by continued Westlaw Precision momentum. Key drivers from a product perspective remain Westlaw, Practical Law, IQ, and our international businesses, with Case Techs also contributing. Government grew 7% in the quarter, while fine law was a modest headwind to the segment growth rate. We expect good momentum for legal professionals to continue into 2024. Our Westlaw Precision AI-assisted research launch in November contributed to another strong quarter for Westlaw Precision cells.

Mike Eastwood: Total revenue rose, 3%, including the impact of divestitures.

Mike Eastwood: Legal professionals organic revenue grew 7% driven by continued west la precision momentum.

Mike Eastwood: Key drivers from a product perspective remain less law practical all Ikea and our international businesses with case tax also contributing.

Mike Eastwood: Government grew 7% in the quarter, while fine law was a modest headwind to the segment growth rate.

Mike Eastwood: We expect good momentum for legal professionals to continue into 2024.

Mike Eastwood: Our west La precision AI assisted research launch in November contributed to another strong quarter for west La precision sales.

Mike Eastwood: I am happy to announce precision penetration continues to rise, hitting 26% as of December 31st, which on a dollar basis is approximately 50% ahead of edge. In our corporate segment, organic revenues again grew 7%, driven by 7% growth in both recurring and transactional revenue. Practical Law, Clear, and our international businesses were key drivers. Paxson Accounting had another good quarter, growing 10% organically. Recurring and transactional revenue grew 10% and 14%, respectively. Latin America remains a key driver for our tax and accounting segment.

Mike Eastwood: I am happy to announce precision penetration continues to rise.

Mike Eastwood: Getting 26% as of December 31st which on a dollar basis is approximately 50% ahead of edge.

Mike Eastwood: In our corporate segment organic revenues again grew 7%.

Mike Eastwood: <unk> by 7% growth in both recurring and transactional revenue.

Mike Eastwood: Practical law clear and our international businesses were key drivers.

Mike Eastwood: Tax and accounting had another good quarter growing 10% organically.

Mike Eastwood: Recurring and transactional revenue grew 10% and 14% respectively.

Mike Eastwood: Latin America remains a key driver for our tax and accounting segment.

Mike Eastwood: Looking to 2024, we expect transactional revenue growth will continue to outpace recurring revenue as higher growth products, including confirmation and SurePrep, are transactional in nature. Moving to Reuters news, organic revenue increased 9% for the quarter, driven primarily by growth from generative AI content licensing revenue. We expect additional licensing revenue in the first quarter of 2024, which will likely drive at least mid-teens growth for the segment in Q1. However, revenue from these agreements is largely transactional. Lastly, global print organic revenues declined by 4%.

Mike Eastwood: Looking to 2024, we expect transactional revenue growth will continue to outpace recurring revenue is higher growth products, including confirmation and share a prop are transactional in nature.

Mike Eastwood: Moving to Reuters news organic revenue increased 9% for the quarter, driven primarily by growth from generative AI content licensing revenue.

Mike Eastwood: We expect additional licensing revenue in the first quarter of 2024, which will likely drive at least mid teens growth for the segment in Q1.

Mike Eastwood: The revenue from these agreements is largely transactional.

Mike Eastwood: Lastly, global print organic revenues declined 4%. This was in line with our expectations.

Mike Eastwood: This was in line with our expectations. On a consolidated basis, fourth quarter organic revenues grew by 7 percent. Turning to our profitability, adjusted EBITDA for the big three segments was $624 million, 1% better than the prior year period with a 43.1% margin declining 80 basis points. The year-over-year decline results from timing normalization of certain expenses, select growth investments, and productivity initiatives, as well as dilution from 2023 M

Mike Eastwood: On a consolidated basis fourth quarter organic revenues grew by 7%.

Mike Eastwood: Turning to our profitability adjusted EBITDA for the Big three segments was $624 million one.

Mike Eastwood: 1% better than the prior year period, with a 43, 1% margin declining 80 basis points.

Mike Eastwood: Year over year decline results from timing normalization of certain expenses.

Mike Eastwood: Select growth investments and productivity initiatives as well as dilution from 2023 M&A.

Mike Eastwood: Moving to Reuters News, Adjusted EBITDA was $61 million, up $21 million from the prior year period, with a margin of 27.9%. The AI content licensing agreement I mentioned earlier contributed meaningfully to profit growth, adding approximately 6.5% to the voter segment margin in the quarter. Global Prints adjusted EBITDA was $55 million, with a margin of 36.4%, an increase of 30 basis points. However, excluding foreign exchange impacts, segment margins would have eased lower.

Mike Eastwood: Moving to Reuters news adjusted EBITDA was $61 million up $21 million from the prior year period with a margin of 27, 9%.

Mike Eastwood: The AI content licensing agreement I mentioned earlier contributed meaningfully to profit growth.

Mike Eastwood: Adding approximately six 5% to border segment margin in the quarter.

Mike Eastwood: Global Print's adjusted EBITDA was $55 million with the margin of 36, 4% an increase of 30 basis points.

Mike Eastwood: Excluding foreign exchange impacts segment margins would have eased lower.

Mike Eastwood: In aggregate, total company adjusted EBITDA was $707 million, a 12% increase versus Q4 2022. The combination of Reuters AI revenue and a slight favorability in some of our expenses contributed to a better than expected adjusted EBITDA margin for the fourth quarter. Turning to earnings per share, fourth quarter adjusted EPS was $0.98, up from $0.75 in the prior year period. Higher adjusted EBITDA, a lower share count, and lower interest expense drove the year-over-year growth. However, currency had a 2 cent favorable impact on adjusted EPS in the quarter.

Mike Eastwood: In aggregate total company adjusted EBITDA was 707, Million% to 12% increase versus Q4 2022.

Mike Eastwood: The combination of orders AI revenue and a slight favorability in some of our expenses contributed to a better than expected adjusted EBITDA margin for the fourth quarter.

Mike Eastwood: Yeah.

Mike Eastwood: Turning to earnings per share.

Mike Eastwood: Fourth quarter adjusted EPS was <unk> 98 cents up from 75 in the prior year period.

Mike Eastwood: Higher adjusted EBITDA, a lower share count and lower interest expense drove the year over year growth.

Mike Eastwood: Currency had a <unk> <unk> favorable impact on adjusted EPS in the quarter.

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

Mike Eastwood: Let me now turn to our free cash flow performance for the full year. Reported free cash flow was $1.87 billion, up 40% from $1.34 billion 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 $14 million, which is an $81 million improvement from the prior year period. Also, in the 12 months, we made $90 million of change program payments as compared to $324 million in the prior year period. If you adjust for these items, comparable free cash flow from continuing operations was $1.94 billion.

Mike Eastwood: Reported free cash flow was 187 billion up 40% from 134 billion in the prior year period.

Mike Eastwood: Consistent with previous quarters. This slide removes the starting factors impacting our free cash flow.

Mike Eastwood: Working from the bottom of the page upwards, the cash inflow from discontinued operations was $14 million.

Mike Eastwood: Which is an $81 million improvement from the prior year period.

Mike Eastwood: Also in the 12 months, we made $90 million of change program payments as compared to $324 million in the prior year period.

Mike Eastwood: If you adjust for these items comparable free cash flow from continuing operations was $1 94 billion.

Mike Eastwood: $216 million higher than the prior year period, primarily due to higher EBITDA. I will now provide an update on our capital structure and several capital allocation items. As you can see, our capital structure and liquidity position remain quite strong as we exit 2023. We had $1.3 billion of cash on hand at December 31st.

Mike Eastwood: $216 million higher than the prior year period, primarily due to higher EBITDA.

Speaker Change: I will now provide an update on our capital structure and several capital allocation items.

Speaker Change: As you can see our capital structure and liquidity position remain quite strong as we exited 2023.

Speaker Change: We had $1 3 billion of cash on hand at December 31st.

Mike Eastwood: We have an under-owned $2 billion reviving credit facility, and we also have approximately $1.9 billion of availability on our $2 billion commercial paper program. Our December 31st leverage ratio was 0.8 times below our 2.5 times internal target, as noted in our value creation model.

Speaker Change: We have an undrawn $2 billion revolving credit facility.

Speaker Change: And we also have approximately $1 $9 billion of availability on our 2 billion commercial paper program.

Speaker Change: Our December 31 leverage ratio was 0.8 times below our two five times internal target.

Speaker Change: As noted in our value creation model.

Speaker Change: We will use approximately $800 million of cash on hand to fund that the gambro acquisition, leaving our leverage ratio well below our target.

Mike Eastwood: We will use approximately $800 million of cash on hand to fund the Figueroa acquisition, leaving our leverage ratio well below our target. Next, I will provide several updates on our London Stock Exchange Group Holdings. In 2023, we sold 56 million shares for nearly $5.5 billion in gross proceeds. Of the remaining 16 million shares we own, 2.6 million could be sold through the exercise of the call options we sold in September. And we have 6.1 million additional shares that are eligible for sale in 2024. Our tax basis on the remaining 16 million shares is approximately $650 million. For your math, we would assume a 25% capital gains tax rate on gains above $650 million.

Speaker Change: Next I will provide several updates on our London stock Exchange group holding.

Speaker Change: In 2023, we sold 56 million shares for nearly $5 5 billion of gross proceeds.

Speaker Change: Other remaining 16 million shares we own two 6 million could be sold through exercise of the call options. We sold in September.

Speaker Change: And we have $6 1 million additional shares that are eligible for sale in 2024.

Speaker Change: Our tax basis on the remaining 16 million shares is approximately $650 million.

Speaker Change: Well your math, we would assume a 25% capital gains tax rate on gains above $650 million.

Mike Eastwood: Lastly, the value of foreign exchange hedges held against our LSAC stake was $26 million as of December 31st. We currently have approximately 86% of our remaining LSAC position at. From a liquidity and capital structure standpoint, we remain in an enviable position with below-target leverage and strong cash flow bolstered by proceeds from the monetization of our LSAC stay. We remain focused on value creation, and we expect to continue with our balanced capital allocation approach that includes annual dividend growth, strategic M&A, and capital returns. We have ample capacity to pursue all three of these strategies in 2024 and beyond. Steve touched on our approach to M&A and the recent Pagaro acquisition. So I will focus on the two other key components of our balanced capital allocation approach. We are progressing with the $1 billion NCIB, or share buyback, we announced last November, having repurchased approximately $500 million worth of our shares as of the end of January.

Speaker Change: Lastly, the value of foreign exchange hedges held against our <unk> stake were $26 million as of December 31.

Speaker Change: We currently have approximately 86% of our remaining <unk> position hedged.

Speaker Change: From a liquidity and capital structure standpoint, we remain in an enviable position with the low target leverage and strong cash flow bolstered by proceeds from the monetization of our <unk> stake.

Speaker Change: We remain focused on value creation, and we expect to continue with our balanced capital allocation approach that includes annual dividend growth strategic M&A and capital returns.

Speaker Change: We have ample capacity to pursue all three of these strategies in 2024 and beyond.

Speaker Change: Steve touched on our approach to M&A and recent Big Arrow acquisition. So I will focus on the two other key components of our balanced capital allocation approach.

Speaker Change: We are progressing with the $1 billion and CIB or share buyback, we announced last November.

Speaker Change: <unk> repurchased approximately $500 million worth of our shares as of the end of January.

Mike Eastwood: We anticipate completing the program in the second quarter. And finally, today we announce a 10% increase in our annual dividend to $2.16 per share, 20 cents from $1.96 in 2023. This marks the 31st consecutive year of annual dividend increases for the company and the third consecutive 10% increase.

Speaker Change: We anticipate completing the program in the second quarter.

Speaker Change: And finally today, we announced a 10% increase in our annual dividend to $2 16 per share up <unk> 20 from $1 96 and 2023.

Speaker Change: This marks the 30 <unk> consecutive year of annual dividend increases for the company and the third consecutive 10% increase.

Mike Eastwood: The increase will be effective with our Q1 dividend payable next month. Let me conclude with a discussion of our 2024 outlook and a financial framework for our expectations in 2025 and 2026. Starting with 2024, we forecast organic revenue growth of approximately 6%. We see total revenue growth of approximately 6.5%, slightly outpacing the organic growth rate due to the benefit from recent M&A. Nat of the Elite Divestiture

Speaker Change: The increase will be effective with our Q1 dividend payable next month.

Speaker Change: Let me conclude with a discussion of our 2020 for outlook and a financial framework for our expectations in 2025 and 2026.

Speaker Change: Starting with 2024, we forecast organic revenue growth of approximately 6%.

Speaker Change: We see total revenue growth approximately six 5% slightly outpacing the organic growth rate due to the benefit from recent M&A net.

Speaker Change: Net of the elite divestiture.

Mike Eastwood: We see the big three segments growing revenue by approximately 7.5%, continuing this strong trend of modest acceleration we have seen in recent years. One point to note on the revenue outlook: it is negatively impacted by accounting for the hyperinflationary environment in Argentina, which dilutes our organic revenue growth calculation by approximately 40 basis points.

Speaker Change: We see the big three segments growing revenue by approximately seven 5%.

Speaker Change: Continuing the strong trend of modest acceleration, we have seen in recent years.

Speaker Change: One point to note on the revenue outlook.

Speaker Change: It is negatively impacted by accounting for the hyper inflationary environment in Argentina, which dilutes, our organic revenue growth calculation by approximately 40 basis points.

Speaker Change: Absent this impact.

Mike Eastwood: Absent this impact, our outlook would call for modest organic revenue growth acceleration in 2024, driven by underlying improvement from all Gen AI initiatives and acquisitions. M&A is expected to contribute approximately 50 basis points to our 2024 growth. We are forecasting an adjusted EBITDA margin of approximately 38%, down from 39.3% in 2023.

Speaker Change: Our outlook would call for modest organic revenue growth acceleration in 2024.

Speaker Change: Driven by underlying improvement from all Gen AI initiatives and acquisitions.

Speaker Change: M&A is expected to contribute approximately 50 basis points to our 2020 for growth.

Speaker Change: We are forecasting a 2024 adjusted EBITDA margin of approximately 38%.

Speaker Change: Down from 39, 3% in 2023.

Mike Eastwood: Our M&A activity since mid-2023 is expected to be roughly 120 basis points diluted to 2024 margins, which includes 35 basis points of integration expenses that we expect to fall off within 24 months. As we previewed last quarter, we are choosing to reinvest our underlying operating leverage in 2024 into accelerated organic investment, particularly in the generative AI area. We do not take this decision lightly, but we see significant opportunity through these investments to expand our medium to longer-term growth profile. As I mentioned last quarter, we expect our effective tax rate to rise in 2024, driven primarily by the implementation of OECD global minimum tax regulations across several key markets. We now expect an effective tax rate of approximately 18% this year, up from 16.5% in 2023, but below our initial expectation for 19% discussed last quarter.

Speaker Change: Our M&A activity since mid 2023 is expected to be roughly 120 basis points dilutive to 2020 for margins, which includes 35 basis points of integration expenses that we expect to fall off within 24 months.

Speaker Change: As we previewed last quarter, we are choosing to reinvest our underlying operating leverage in 2024 into accelerated organic investments, particularly in the generative AI area.

Speaker Change: We do not take this decision lightly, but we see significant opportunity through these investments to expand our medium to longer term growth profile.

Speaker Change: As I mentioned last quarter, we expect our effective tax rate to rise in 2024, driven primarily by the implementation of OECD global minimum tax regulations across several key markets.

Speaker Change: We now expect an effective tax rate of approximately 18% this year.

Speaker Change: Up from 16, 5% in 2023, but below our initial expectation for 19% discussed last quarter.

Mike Eastwood: Moving to capital intensity, we see 2024 accrued CapEx as a percent of revenue of approximately 8.5%. This is broadly a continuation of the level for 2023, with a slight increase related to Peguero. This level of SIN includes incremental investments in M&A-related integration and more broadly in product development, including in support of our generative AI product roadmap. We forecast 2024 free cash flow of approximately $1.8 billion.

Speaker Change: Moving to capital intensity, we see 2020 for accrued capex as a percent of revenue of approximately eight 5%.

Speaker Change: This is broadly a continuation of the level for 2023 with a slight increase related to <unk>.

Speaker Change: This level of spend includes incremental investments in M&A related integration and more broadly in product development, including in support of our generative AI product roadmap.

Speaker Change: We forecast 2020 for free cash flow of approximately $1 8 billion.

Mike Eastwood: This includes an expected increase in cash taxes of roughly $90 million, higher year-over-year CapEx of approximately $90 million, and lower dividends from our LSAC stake resulting from the 2023 monetization. For the CapEx increase, note that approximately two-thirds of the increase results from integration costs and growth investments in KSTX and Progero. Let me call out one other modeling note for 2024. We expect to transition approximately $20 million of revenue from our global print business into our legal professional segment in 2024. This content has been added to Westlaw, which we believe will provide customers with a richer experience.

Speaker Change: This include an expected increase in cash taxes of roughly $90 million.

Speaker Change: Here year over year, Capex of approximately $90 million and lower dividends from our <unk> stake, resulting from the 2023 monetization.

Speaker Change: Well the Capex increase note that approximately two thirds of the increase results from integration cost and growth investments in case tax and per gara.

Speaker Change: Let me call out one other modeling note for 2024.

Speaker Change: We expect to transition approximately $20 million of revenue from our global print business into our legal professional segment in 2024.

Speaker Change: This content has been added to west La which we believe will provide customers with a richer experience.

Mike Eastwood: We see this transition aiding our legal professional segment's organic revenue growth by approximately 80 basis points and reducing the growth rate of our global print segment by approximately 400 basis points. This transition is expected to be substantially complete by the end of 2024. Turning to the first quarter.

Speaker Change: We see this transition aiding our legal professional segment organic revenue growth by approximately 80 basis points.

Speaker Change: And reducing the growth rate of our global print segment by approximately 400 basis points.

Speaker Change: This transition is expected to be substantially complete by the end of 2024.

Speaker Change: Turning to the first quarter.

Mike Eastwood: We expect organic revenue growth to be approximately 8%, boosted by the expectation of additional AI licensing revenue at Reuters. We see our first quarter adjusted EBITDA margin at approximately 40%, benefiting from normal seasonal strength from our tax and accounting professional segment and Reuters licensing revenue. Partially offset by M&A dilution and select growth investment. Looking beyond 2024, we are focused on delivering further revenue growth acceleration and a return to margin expansion. For the 2025 to 2026 period, we forecast an organic revenue growth range of 6.5% to 8% driven by 8% to 9% for the big three segments. We will work to deliver acceleration within this range over the next few years as our Gen-AI investments pay off and recent M&A scales. For margins, we anticipate delivering 75 basis points of expansion in 2025, followed by at least 50 basis points annually thereafter. However, I would note this is an organic outlook and could be impacted by future M&A. We expect our capital intensity to remain at approximately 8%.

Speaker Change: We expect organic revenue growth to be approximately 8%.

Speaker Change: Boosted by the expectation for additional AI licensing revenue at borders.

Speaker Change: We see our first quarter adjusted EBITDA margin at approximately 40%.

Speaker Change: Benefiting from normal seasonal strength from our tax and accounting professional segment and the Reorders licensing revenue.

Speaker Change: Largely offset by M&A dilution and select growth investments.

Speaker Change: Looking beyond 2024, we're focused on delivering further revenue growth acceleration and a return to margin expansion.

Speaker Change: For the 2025 to 2026 period, we forecast an organic revenue growth range of six 5% to 8%.

Speaker Change: Driven by 8% to 9% for the big three segments.

Speaker Change: We will work to deliver acceleration within this range over the next few years as our Gen AI investments pay off.

Speaker Change: And recent M&A scales.

Speaker Change: For margins, we anticipate delivering 75 basis points of expansion in 2025.

Speaker Change: Followed by at least 50 basis points annually thereafter.

Speaker Change: I would note this is an organic outlook and could be impacted by future M&A.

Speaker Change: We expect our capital intensity to remain at approximately 8% were relatively stable with the recent trend.

Mike Eastwood: We're relatively stable with the recent trend after some of our acquisition integration spending moderates. We expect our free cash flow to remain robust over the next several years, growing to a range of $2 billion to $2.1 billion in 2026. This assumes some further increase in our effective and cash tax rates beyond 2024.

Speaker Change: After some of our acquisition integration spending moderates.

Speaker Change: We expect our free cash flow to remain robust over the next several years.

Growing to a range of 2 billion to $2 1 billion in 2026.

Speaker Change: This assumes and further increase in our effective and cash tax rates beyond 2024.

Mike Eastwood: Stable capital spending and rising margins. We are also providing medium-term targets for several capital strategy-based metrics. This includes maintaining our 2.5x leverage target and a dividend payout ratio of 50-60% of free cash flow. Additionally, we're making a new commitment to return at least 75% of our free cash flow annually in the form of dividends and share repurchases. And we target a return on invested capital that is double or more the weighted average cost of capital over time. On this point, accounting for M&A can depress ROIC in the short term, though we would expect our returns to continue to rise on an organic basis.

Speaker Change: Stable capital spending.

And rising margins.

Speaker Change: We are also provide a medium term targets for several capital strategy based metrics.

Speaker Change: This includes maintaining our two five times leverage target and a dividend dividend payout ratio of 50% to 60% of free cash flow.

Mike Eastwood: We're making a commitment to return at least 75% of our free cash flow annually in the form of dividends and share repurchases.

Speaker Change: And we target a return on invested capital that is double or more our weighted average cost of capital over time.

Mike Eastwood: On this point the accounting for M&A can depress ROIC in the short term.

Mike Eastwood: So we would expect our returns to continue to rise on an organic basis.

Gary E. Bisbee: We look forward to providing more detail around the drivers of this outlook at our planned investor day on March 12th in New York City. With that, I will hand it back to Gary for questions. Thank you, Jennifer.

Mike Eastwood: We look forward to providing more detail around the drivers of this outlook at our planned Investor Day on March 12 in New York City.

Gary E. Bisbee: With that I will hand, it back to Gary for questions.

Gary: Thank you Jennifer we're ready to begin the Q&A.

Operator: We're ready to begin the Q&A. Thank you. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Speaker Change: Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment and again that star one if you'd like to ask a question.

Gary E. Bisbee: And again, that's Star 1 if you'd like to ask a question. And we'll go first to Scott Fletcher from CIBC. Hi, and I appreciate it. You'll share some of the drivers from yesterday, but I'm wondering if, Looking at 2025, particularly in the big three, could you sort of give us an idea? http://TheBusinessProfessor.com We are going to be driving. 2012 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Office of Communications and Creative Services, Sure, Scott.

And we'll go first to Scott Fletcher from CIBC.

Scott Fletcher: Hi, good morning.

Speaker Change: Mike I. Appreciate you just mentioned that Youre youll share some of the drivers in Investor day, but I'm wondering if you could.

Scott Fletcher: Just looking at the 2025 and 2026 acceleration in organic growth.

Gary E. Bisbee: Particularly in the big three could you sort of give us an idea.

Gary E. Bisbee: Which segment.

Scott Fletcher: Specifically are going to be driving that acceleration is it mostly legal given that Jenny I rollout at first there or any color there would be helpful. Thank you.

Scott Fletcher: Sure Scott. Thanks for the question, we see growth acceleration across all of the big three segments over the time horizon, 25% to 26, certainly to your point with the legal with Gen AI and the roadmap that we started there west la precision with the code Council core the as practical law.

Gary E. Bisbee: Thanks for the question. We see growth acceleration across all the big three segments over the time horizon of 25 to 26. Certainly, to your point about legal with Gen AI and the roadmap that we started there, Westlaw Precision with the Code Council Core, the Ask Practical Law AI, and the Practical Law Clause Finder, certainly legal has a head start there on the Gen AI roadmap.

Gary E. Bisbee: And the practical law.

Gary E. Bisbee: <unk> binder.

Gary E. Bisbee: Certainly legal has a head start there on the Gen AI roadmap.

Gary E. Bisbee: But given the opportunities across the horizon, Scott, to achieve that 6.5% to 8% organic growth, we see acceleration across all three segments. And I think, Scott, just as a reminder, if you think about that acceleration to 6.5% to 8%, the product roadmap, the investments we made in 2023, the investments in 2024, but also the recent acquisitions in the last 13 months, excuse me, with SurePrep in tax and accounting, CaseTex in legal, and then Pagaro within corporates with e-invoicing and indirect tax. Given that those acquisitions cross the big three segments, that's what gives us additional confidence that we'll see acceleration across the big three, Scott. Thanks. As a follow-up, if we're thinking about that in the big three... Is that something you see?

Gary E. Bisbee: Given the opportunities across the horizon, Scott to achieve that six and six 5% to 8% organic growth, we see acceleration across all three segments.

Gary E. Bisbee: And I think Scott just as a reminder, if you think about that acceleration to six 5% to 8% the product roadmap. The investments we made in 'twenty three the investments in 'twenty four but also the recent acquisitions in the last 13 months excuse me with sharp drop in tax and accounting.

Gary E. Bisbee: In our case tax and legal and then for Garo within corporates with E invoicing and indirect tax given that those acquisitions across the big three segments. That's what gives us the additional confidence that we will see acceleration across the big three Scott.

Speaker Change: Okay. Thanks, and then as a <unk>.

Speaker Change: Follow up if we're thinking about that and the big three 8% to 9% organic growth and $25 26.

Speaker Change: Is that something.

Gary E. Bisbee: www.kenhub.com The Bulletproof Executive 2013, Certainly, as we get into that 25-26 time horizon, the 8-9% for the Big 3 will be sustainable. Price increases, certainly a component of that, Scott. I think I shared in the November earnings call, on a weighted average basis, about 3.5% on the composite, which was up about 30-40 basis points versus calendar year 22. The multi-year contracts that you mentioned certainly play a factor into the time of when we increase our prices, but roughly 3.5% for 2023, Scott, on the price. Just to add to that.

Speaker Change: Staying above those levels or is that a function.

Scott Fletcher: Part of the price increases rolling out over the contract lengths given you've got sort of three year term that would take you into 2026.

Gary E. Bisbee: Certainly as we get into that 'twenty five 'twenty six time horizon, the 8% to 9% for the big three will be.

Gary E. Bisbee: Sustainable price increases certainly a component of that Scott I think I shared in the November earnings call on a weighted average basis about three 5% on the composite which was up about 30% to 40 basis points versus calendar year 'twenty two the multiyear contracts that you mentioned certainly.

Gary E. Bisbee: <unk> a factor into the time of <unk>.

Gary E. Bisbee: Increase our prices.

Gary E. Bisbee: But roughly three five for 2023, Scott on the prices.

Speaker Change: So Steve just to add to that.

Gary E. Bisbee: I think the confidence around the sustainability of that elevated growth comes from both our organic investment investments and inorganic so on the organic front, what we're starting to see and it is various days is.

Gary E. Bisbee: I think that the confidence around the sustainability of that elevated growth comes from both our organic investments and inorganic. So on the organic front, what we're starting to see these days is an expanded role in serving the professionals that are in our customer bases. And we think that that's going to make us, you know, even more relevant.

Gary E. Bisbee: He has an expanded role in serving the professionals that are.

Gary E. Bisbee: I would now customer basis.

Gary E. Bisbee: And we think that that's going to make us.

Gary E. Bisbee: And even more relevant.

Gary E. Bisbee: And then on inorganics, you know, I made reference in my remarks to the portfolio shift to some higher growth assets and businesses. So it's really the combination of those two things that gives us confidence around the sustainability of those higher growth rates going forward. Scott, I might be anticipating questions from you or others. Just a reminder about the GEN-AI revenue, I think Gary, Steve, and I plan to provide additional metrics as we progress during 24 on that, but the revenue will certainly lag the sales of GEN-AI, which we anticipate revenue from the GEN-AI beginning to pick up more in the second half of 24, and that goes into 2025, if helpful. Thank you. We'll go next to Drew McReynolds from RBC.

Gary E. Bisbee: And larger out of there.

Gary E. Bisbee: Working lives and then on the inorganic I made reference in my remarks to the portfolio shift to some higher higher growth.

Gary E. Bisbee: Assets and businesses. So it's really the combination of those two things that gives us gives us confidence around the sustainability of those high growth rates going forward.

Gary E. Bisbee: Scott it might be anticipating questions from you or others. Just a reminder, within the <unk> revenue I think Gerry Steve and I plan to provide additional metrics as we progress during <unk>.

Gary E. Bisbee: 24 on that but the revenue will certainly lag the sales of <unk>, which we anticipate revenue from the.

Gary E. Bisbee: Beginning to pick up more in the second half of 'twenty four and that goes into 2025 it helped.

Drew Mcreynolds: Okay, great. Thank you very much.

Drew Mcreynolds: Thank you we'll go next to drew Mcreynolds from RBC.

Steve Hasker: Yeah, thanks very much. Good morning. Can you hear me?

Drew Mcreynolds: Yes, thanks very much good morning can you hear me.

Steve Hasker: Very well, Drew. Okay, great. Yeah, my question is just around the competitive landscape. I'd love to get an update on what your assessment of that would be, just given the pace of change and everybody kind of launching their own Gen AI versions of different products. And then maybe a follow-up to that. Steve, in the past, you've talked a little bit about the end markets that you serve and the transitional transformation that inevitably will be taking place at law firms and tax and accounting firms. What have you seen to date?

Drew Mcreynolds: Very well drew.

Drew Mcreynolds: Okay Super.

Steve Hasker: Yes my.

Steve Hasker: My question is just around the competitive landscape.

Steve Hasker: Specifically, either new entrants or your your peers that are also deploying Shanghai Jenny I, just would love to get an update on kind of what your assessment in terms of.

Steve Hasker: That would be just given the pace of change.

Steve Hasker: Body launching their own journey I versions of different products, and then maybe a follow up to that.

Steve Hasker: Steve in the past you've talked a little bit about the <unk>.

Steve Hasker: And markets that you serve and the transition of our transformation that inevitably will be taking place at law firms in tax and accounting firms.

Steve Hasker: What have you seen to date.

Steve Hasker: And presumably not a lot, but if not, you know, when do you think those end markets will begin to accelerate their pace of transition? Thank you. Yeah, thanks Drew, great questions.

Steve Hasker: Presumably not a lot, but if not when do you think those end markets begin to accelerate their pace of transition. Thank you.

Speaker Change: Yeah, Thanks, great questions. So.

Steve Hasker: With regard to the competitive landscape, I think we're seeing, I'm sure you're seeing the flurry of announcements from new entrants, and some of our traditional competitors, making moves. I can only really comment on the conversations that I and my colleagues have with our customers, be they existing customers or new prospects. The feedback we're getting on both launches to date and our product roadmap is extremely positive and growing. And I think that's based on a couple of different things, you know, particularly for those customers who've had a chance to really kick the tires on our offerings and test the accuracy and incremental value of our offerings relative to some of the competitors. You know, our repositories of content are deeper and broader than anyone else in the industries that we serve, particularly in legal.

Steve Hasker: With regard to the competitive landscape I think we're seeing I'm sure you are seeing what the flurry of announcements of new entrants some of our traditional competitors.

Steve Hasker: Making moves.

Steve Hasker: I can only really comment on on the conversations that I have in my colleagues have without customers be that existing customers or new prospect.

Steve Hasker: And the feedback we're getting on al both launches to date and.

Steve Hasker: And our product roadmap is.

Steve Hasker: Extremely positive and growing.

Steve Hasker: And I think Thats based on a couple of different things, particularly for those customers, who had a chance to really.

Steve Hasker: Kick the tires on our offerings and test the accuracy.

Steve Hasker: And incremental value of our offerings relative to some of the competitors.

Steve Hasker: Ill now repositories of content, a deeper and broader than.

Steve Hasker: Anyone else in the industries that we serve particularly in legal.

Steve Hasker: And that is being recognized as a key value component in any Gen AI-driven solution. Secondly, you know, we enjoy but don't take for granted, very deep and broad customer relationships and their trust-based customer relationships. So, in terms of doing it right and protecting client proprietary information and all the sort of data privacy rules that will inevitably come as Gen AI evolves, there's a level of trust in TR's plans and execution, I should say. And then, thirdly, talent.

Steve Hasker: And that is being recognized as a key value component in any J J NII driven.

Steve Hasker: Solution.

Steve Hasker: Secondly, we enjoy.

Steve Hasker: But don't take for granted.

Steve Hasker: Very deep and broad customer relationships.

Steve Hasker: They trust based customer relationships. So in terms of in terms of doing it right and protecting.

Steve Hasker: Client proprietary information.

Steve Hasker: All of the sort of data privacy.

Steve Hasker: Rules, but that will inevitably come as <unk> evolves.

Steve Hasker: There's a level of trust and Tee us plans.

Steve Hasker: Exhibition.

Steve Hasker: And execution I should say and then thirdly talent.

Steve Hasker: As you know, we've put a lot of effort into making sure that we have the best product, engineering, and labs teams. And we're just starting to scratch the surface in terms of the results of that. So, those three things give us a lot of confidence coming out of 2023 into 2024. But I would also say it's early days.

Steve Hasker: As you know we've put a lot of effort.

Steve Hasker: Into.

Steve Hasker: Making sure that we have the best product and engineering and labs teams and we're just starting to scratch the surface in terms of in terms of the results of that so those three things give us a lot of confidence coming out of 2023% to 2024, but I would also say it's early days I think this is sort of gen II driven transformation.

Steve Hasker: I think this sort of Gen AI-driven transformation will be a multi-year journey, and we're certainly not going to rest on our laurels based on what we've been able to achieve in the early going. And that, I think, leads to the second part of the question.

Steve Hasker: <unk> will be.

Steve Hasker: Will be a multi year journey and we're certainly not.

Steve Hasker: Going to.

Steve Hasker: Risks on our laurels based on what we've been able to achieve in the early going and that sort of I think leads to the second part of the question.

Steve Hasker: You know, the good news is as we explore with our customers the role of Thomson Reuters content-driven technology in their work lives. We just see that role expanding, as I said in response to Scott's question. And we see a world in which a customer in a year or two's time, perhaps longer, perhaps shorter, says, well, that was Thomson Reuters who, traditionally, my chief knowledge officer or my librarian leaned on for many, many years to provide great content. And now I'm really running my practice, I'm running my business, I'm running my department on their content-driven technology.

Steve Hasker: The good news is as we as we explore without customers the role of Thomson Reuters content driven technology in their work lives. We just see that Raul expanding as I said in response to Scott's question.

Steve Hasker: And we see a world in which a customer in a year or two's time, perhaps perhaps longer perhaps shorter says well that was Thomson Reuters, who are traditionally my chief knowledge officer or by librarian.

Steve Hasker: Leaned on for many many years to provide great content and now I'm really running my practice running my business I'm running my pop on the content driven technology.

Steve Hasker: We see a fairly clear line to that expanded role. But your point about adoption, we also see that as that role expands, we see a greater need for change management at the customer site. And some customers are expecting us to be very much front and center in that change management program, and others are keen to navigate a lot of that themselves. I think it's early days, Drew, in terms of their scoping out that change management and figuring out what it looks like and what resources will be required over what period of time. But we'll certainly be shoulder to shoulder with them as they figure that out. Very helpful.

Steve Hasker: We see a fairly clear line to that expanded role.

Steve Hasker: But your point about adoption. We also see is that roll experience, we see a greater need for change management at the customer.

Steve Hasker: And some customers are expecting us to be very much front and center to that change.

Steve Hasker: Change management program and others, others are keen to sort of navigate a lot of that themselves.

Steve Hasker: I think it's early days drew in terms of that.

Steve Hasker: They're scoping out of that change management and figuring out what it looks like and what resources would be required over what period of time, but we will certainly be b b shoulder to shoulder with them as they figure that out.

Steve Hasker: Very helpful. Thank you.

Steve Hasker: Thank you. Thank you. We'll go next to Kevin McVeigh from UBS, graduate.

Kevin Mcveigh: Thank you we'll go next to Kevin Mcveigh from UBS.

Kevin Mcveigh: Kevin Mcveigh from UBS.

Mike Eastwood: Congratulations to all of our graduates. Congratulations, well, all that, of the United States. I don't know if this is for Steve or Mike.

Kevin Mcveigh: I want to start.

Kevin Mcveigh: We typically don't do this but just congratulate the execution you folks have had because.

Kevin Mcveigh: It's been a major transformation of the business and it's really gone flawlessly. So he just wanted to call that out because I think it's really important.

Mike Eastwood:

Kevin Mcveigh: I don't know if this for Steve or Mike, but.

Kevin Mcveigh: When you think about those medium term targets, you know kind of going from six to six and a half to eight.

Mike Eastwood: Think about those medium-term targets. Any way to think about building that up a little bit, how much... http://www.youtube.com.uk has done a lot of high-growth acquaintances. Yeah, can I just make a comment or two or a reaction or two, Kevin, to your questions and then turn it over to Mike. So, thanks for your points about execution, Kevin. We're proud, but I hope not arrogant, about what we've been able to do, the work we've been able to get through. We were very deliberate way back in 2020 in saying we're going to go through this change program, and in doing so, we'll make a two-part pivot, first, from portfolio to operating, and second, from holding to, sorry, from holding company to portfolio to operating company, and then And we're, you know, we've achieved a lot in getting through that. You know, kudos to Kirstie Roth and Jason Scaravage, to Mary Alice Fuchik, to Sean Mahalter, and a legion of others who've really driven a lot of that hard work and executed along the way.

Mike Eastwood: Is there any way to think about build that up a little bit how much of that is is retention versus pricing and then.

Speaker Change: You've done a lot of high growth acquisitions that are in the base now and maybe how that contributes because it feels like a first step to me as opposed to.

Speaker Change: Ceiling, if you would maybe can we start there.

Speaker Change: Yes can I, just I'll, just coming out or reaction to Kevin to your questions and then turn it over to Mike.

Mike Eastwood: So.

Speaker Change: Thanks for your points about.

Speaker Change: Execution Kevin.

Mike Eastwood: We're proud.

Mike Eastwood: But I hope not arrogant about what we've been able to the work we've been able to get through we were very deliberate backing way back in 2020, and saying we're going to go through this change program and in doing so we will make it to part pivot for us from a portfolio of operating in the chicken from holding to.

Mike Eastwood: Sorry from from holding company to the portfolio.

Mike Eastwood: Operating company and then from content to content, driven technology, and where we've achieved a lot in getting through that.

Mike Eastwood: Kudos to Christy Rossi adjacent scar revised maryalice future to shorten muhajirun Legion of others, who have really driven.

Mike Eastwood: A lot of that hard work.

Mike Eastwood: And executed along the way and as a group I think we've learned a lot and we're getting stronger and stronger.

Steve Hasker: And as a group, I think we've learned a lot, and we're getting stronger and stronger. As it pertains to, you know, some of the key metrics that we're very focused on, like, you know, we're going to be able to, you know, measure the Net Promoter Score and Net Recurring Revenue, the sort of broader set of customer success metrics. We're just getting started. You know, I think there's sort of an appropriate level of modesty as to how much progress we've made and how much upside there is for our big three segments should we be able to accelerate and build more momentum. Now, over to you, Mike.

Mike Eastwood: As it pertains to.

Steve Hasker: To some of the key metrics that we're very focused on like net promoter score and net.

Steve Hasker: Net.

Mike Eastwood: Recurring revenue this quarter.

Mike Eastwood: Broader set of customer success metrics, we're just getting started I think.

Mike Eastwood: There's sort of an appropriate level of modest to use to how much progress we've made in <unk>.

Mike Eastwood: Much upside there is for out for our big three segments should we.

Mike Eastwood: Should we be able to accelerate and build more momentum.

Steve Hasker: Mark.

Mike Eastwood: Yeah, Kevin, you touched on the key building blocks; I would synthesize retention, price, M&A, and new products. In regards to retention, as I've shared in prior calls, we're roughly 91% of revenue that's based on, I'm sorry, retention that's based on the revenue of total TR that significantly varies between small customers, midsize customers, and large customers, with our largest customers having the largest or the I would anticipate pricing being relatively stable over the time horizon. If you look at the recent acquisitions in the last 13 months, SurePrep, Kstex, and Priguero, certainly they are a key component of that acceleration as we go into 25 and 26. I would just call out Dave Weil, who is the co-founder, leader, and CEO of SurePrep. We're into 14 months now with Dave, and incredibly pleased and proud of Dave and the team being part of TR. Then we go to Kstex with Jay Keller and his team. We have five, six months into it, and great progress there. And then, most recently, with Priguero.

Mike Eastwood: Yeah, Kevin you touched on the key building blocks I would just emphasize retention price M&A and new product.

Mike Eastwood: In regards to retention as I've shared in prior calls we have roughly 91% of revenue that's based on I am sorry retention. That's based on revenue for total TR that significantly varies between small customers midsized customers and large customers with our largest customers having the largest of the highest retention rates.

Mike Eastwood: I would anticipate pricing being relatively stable over the time horizon. If you look at the recent acquisitions in the last 13 months sure Prep case tax and pig Arrow certainly they are a key component of that acceleration as we go into 'twenty five 'twenty six I would just call out.

Mike Eastwood: Dave while who is the co founder leader CEO sharp drop.

Mike Eastwood: We are into 2014 months now, let Dave and incredibly pleased and proud of Dave and the team.

Mike Eastwood: Being part of T. R. Then we go to case tax with Jake Heller and his team at five six months into it great progress there and then most recently with <unk>. So as we do that walk or bill to six 5% to 8%. Those recent acquisitions are certainly key factors and then we go to the fourth factor.

Mike Eastwood: So as we do that Walker bill to six and a half to 8%, those recent acquisitions are certainly key factors. And then we go to the fourth factor. With the new products, we're quite confident, probably more confident than my tenure at TR in our product roadmap. We've talked a hell of a lot about legal, and Emily Colbert, Mike Dane, Jay Keller, and others have done a great job with the product roadmaps for legal. But then if you think about tax and accounting professionals, already double digits with Parita and the team leading the product roadmaps there and integrating with Ray Grove and IDT, that gives us just the confidence.

Mike Eastwood: With the new products, we're quite confident more confident in my tenure at TR and our product roadmap, we've talked a hell of a lot about legal and Emily Colbert, Mike Dana J <unk> done a great job in others.

Mike Eastwood: With the product Roadmaps for legal but then if you think about tax and accounting professionals already double digit with purina and team leading the product roadmaps, there and incorporates with rate growth in <unk> I think that gives us just the.

Mike Eastwood: If you think about those four main levers of retention, price, acquisition, and new product, it is the combination of those four, Kevin, that gives us the confidence to achieve that six and a half to eight. The one that we will provide you with more visibility on as we progress during 2024 is our gen AI as it evolves and really builds up a lot of momentum, a lot of confidence there. But we'll provide additional quantitative information on gen AI evolution during the course of 24. Thanks, Kevin. Thank you. We'll go next to Tim Casey with BMO. Thanks. Good morning. Can you talk a little bit about your international aspirations?

Mike Eastwood: Just the confidence if you think about those four main levers of retention price acquisition and new product.

Tim Casey: The combination of those four Kevin that gives us the confidence to achieve that six five to eight the one that we will provide you with more visibility on as we progress. During 2024 is our NII because as that evolves and really builds up a lot of momentum a lot of confidence there that will provide additional quantitative.

Tim Casey: Information on NII evolution during the course of 'twenty four.

Tim Casey: Great. That's very helpful. I'll leave it at one just because it was and it was a long winded question. So thank you.

Tim Casey: Alright, Thanks, Kevin.

Mike Eastwood: Thank you we'll go next to Tim Casey with BMO.

Tim Casey: Hi, Thanks, Good morning can you talk a little bit about.

Tim Casey: And your international aspirations. It seems there's more commentary on expanding in international markets on this call right.

Steve Hasker: It seems there's more commentary on expanding into international markets on this call. I don't know if I'm overthinking that, but in the past, you've, I think the strategy has been to grow with your multinational corporates internationally, and now it's, Some of the products that're in certainly Pagaro have more of an international flavor. Any thoughts there?

Steve Hasker: I don't know if I'm over thinking that but in the past you've you've I think the strategy has been to grow with your multinational corporates internationally and now it seems some of the products. That's certainly peguero have a more international footprint any thoughts there would be helpful. Thanks.

Speaker Change: Yeah. Thanks, Tim.

Steve Hasker: Yeah, thanks, Tim. You know, we, as you've seen, over a number of years now, our international assets are a source of pride in so far as, you know, they've been growing in the mid-teens, certainly Latin America higher than that, and AEM a little bit lower.

Steve Hasker: As you've seen over a number of years now.

Steve Hasker: All international.

Steve Hasker: Our international assets are a source of pride in so far as.

Steve Hasker: They've been growing in the mid teens, certainly Latin America higher than that and I am a little bit lower.

Steve Hasker: <unk>.

Steve Hasker: And this reflects the focus of Adrian Panini in Latin America and Jackie Rhodes in AEM, who are one of their customers here in Canada. You're doing the same. So, you know, while today it's around about 20% of our revenues, international, so it's a relatively modest part of the overall business. We do see higher growth prospects in those markets, and that really comes from, as you say, the opportunity in corporate to better serve corporations across the world with our legal, our tax, and risk solutions. Aguero is an asset that's heavily focused on the international markets, the invoicing space, and we see lots of potential that really has that as a core driver. And of course, Case Text, with its co-counsel product, that is perhaps not constrained in the same way that traditional research products have been in common law markets and sort of case law precedent markets.

Steve Hasker: This reflects the focus of Adrian Panini.

Steve Hasker: In Latin America, and Jackie Raj and importantly, customer screen dicing here in Canada.

Steve Hasker: The science.

Steve Hasker: Well today.

Steve Hasker: It's around about 20% of our revenues.

Steve Hasker: International So it's a relatively modest part of the overall business, we do see higher growth prospects in those markets.

Steve Hasker: And that really comes from she said the opportunity and corporates.

Steve Hasker: Better serve corporations across the world without without legal in our tax and risk solutions.

Steve Hasker: Garo.

Steve Hasker: As an asset.

Steve Hasker: It's heavily focused in the international markets be invoicing space, So we see lots of potential.

Steve Hasker: A driver.

Steve Hasker: And of course, our case text with its co council product.

Steve Hasker: That is perhaps not.

Steve Hasker: Ah constrained in the same way the traditional research products have been.

Steve Hasker: Commonwealth markets and sort of cash flow pretty soon markets. The co counsel skills are just as relevant civil Civil war markets as they are anywhere else. So.

Steve Hasker: The co-council skills are just as relevant in civil war markets as they are anywhere else. So, really, on the back of those and the continued performance of the Dominio assets in Brazil, and the acquisition of Westport in Japan, we're increasingly bullish about what we can do in international markets. And I would add one other thing, which is, you know, the higher those growth prospects become, and the more sort of organic and inorganic opportunities we see, I think the more exciting career paths it provides for many of our talented folks who want to spend time in markets, and some of the international talent who want to spend time in North America. And certainly, Mary Allison and her team have been very focused on creating those pathways for our, Yeah, Tim, I would say the And at our March 12 Investor Day, Matt King, we have a section dedicated to international businesses and international growth aspirations.

Steve Hasker: So it really on the back of those in the.

Steve Hasker: Continued performance of the Dominion assets in Brazil, with the acquisition of Wistful, Japan, we're increasingly bullish about what we can do.

Steve Hasker: In our international markets and I would add one other thing which is.

Steve Hasker: The higher those growth prospects become and the more sort of organic and inorganic opportunities we see.

Steve Hasker: I think the more exciting Korea parts. It provides to me about many of the talented folks who want to spend time in markets.

Steve Hasker: And some of the international talent, who want to spend on North America. It certainly marry Allison entertainment being very focused in creating a pathway for our people, yes, Tim I'll just add two points, our Latin America revenue has doubled in the last three year period, driven by the menu.

Steve Hasker: And at our March 12th Investor Day, Matt Kean, we have a section dedicated to international businesses in international growth aspirations.

Mike Eastwood: Thank you. Thank you. We'll go next to George Tong with Goldman Sachs. Hi, thanks. Good morning.

Speaker Change: Thank you.

Mike Eastwood: Thank you we'll go next to George Tong with Goldman Sachs.

George Tong: Hi, Thanks, good morning, you're guiding to organic revenue growth of 8% to 9% for the big three and 25, and 26, which would be a nice acceleration from center remember that half. This year can you provide additional details at the segment level and where most of that growth acceleration should come from.

Mike Eastwood: You're guiding to organic revenue growth of 8 to 9% for the big three and 25 and 26, which would be a nice acceleration from sentiment at half this year. Can you provide additional details at the segment level and where most of that growth acceleration should come from? Yeah, George. I think we covered quite a bit of that in the earlier comments. I'll just reemphasize those points.

Mike Eastwood: Yes, George I think we covered quite a bit of that in the earlier comments I'll just reemphasize those points also during the Investor day.

Mike Eastwood: Also, during Investor Day, we will have each of our segment presidents presenting on each of their businesses. And consistent with what we did at the March 2021 Investor Day, whereby we provided organic growth ranges for each of the big three segments, we will once again provide that on March 12, for 2526 for each of the big three. The core points that we mentioned earlier are our product roadmap, significant investments in 23, and even more investments in 2024 across the big three segments, so new product introductions, features, capabilities, including Gen AI across the big three. And then the second big factor, George, is the M&A, SurePrep in tax and accounting, Kstex in legal, and then Pegera within the corporate, specifically invoicing indirect tax.

Mike Eastwood: We will have each of our segment presidents presenting on each of their businesses and consistent with what we did at the March 2021, Investor day, whereby we provided organic growth ranges for each of the big three segments. We will once again provide that on March 12.

Mike Eastwood: For $25 26 for each of the big three the core points.

Mike Eastwood: Points that we mentioned earlier is our product roadmap significant investments in 23, even more investments in 2024 across the big three segments. So new product introductions features capabilities, including Gen AI across the big three.

Mike Eastwood: And then the second big vector George is the M&A.

Mike Eastwood: Sure prop in tax and accounting case tax and legal and then figure out within the corporate specifically invoicing indirect tax so the product pipelines in the M&A.

Mike Eastwood: So the product pipelines and the M&A are big contributors to our growth profile for 25 and 26. Also, back to Kevin's question earlier, retention will certainly play a factor as we expand or increase our retention rates going into 2526. Got it. That's helpful.

Mike Eastwood: Big contributors to our growth profile for 25, and 26 also back to <unk>.

Mike Eastwood: Kevin's question earlier retention will certainly play a factor as we expand or increase our retention rates going into 'twenty five 'twenty six.

Speaker Change: Got it that's helpful. And then sort of similar question, but around margins as you look out to 2020 five 'twenty six how would you rank order the margin expansion opportunity across the big three and do you see any reason why structurally long term margins should be different across the big three segments.

Mike Eastwood: And then sort of a similar question, but around margins. As you look out to 2025-26, how would you rank the margin expansion opportunity across the big three? And do you see any reason why, structurally, long-term margins should be different across the big three segments? Yes, we will see some margin expansion across each of our big three segments. By the time we reach 25 and 26, I think over the long term, we will continue to see some deltas or differences between margin across the three. Specifically, within legal professionals, we have Westlaw.

Mike Eastwood: Yes, we will see some margin expansion across each of our big three segments.

Mike Eastwood: By the time, we reached 25 and 26 I think over the long term, we will continue to see some deltas are differences between margin across the three specifically within legal professionals, we have less law west La is about $1 8 billion for total tier of that about one.

Mike Eastwood: Westlaw is about $1.8 billion per total TR. Of that, about $1.5 billion is within legal professionals. So that provides a significant amount of scale if you look at legal professionals, which is circa $2.9 to $3 billion of current revenue. So I think if you look over the long term time horizon, we'll continue to see a delta between legal professionals and corporates and also TAP and corporates. You'll see legal and TAP with higher margins in the long term. Got it. That's helpful.

Mike Eastwood: $5 billion is within legal professionals. So that provides a significant amount of scale. If you look at legal professionals, which is circa two $9 billion to $3 billion of.

Mike Eastwood: With current revenue. So I think we if you look over the long term time horizon, we will continue to see a delta between legal professionals in corporates and also tap and corporates youll see legal and tap with the higher margins.

Mike Eastwood: Long term yeah.

Mike Eastwood: Got it that's helpful. Thank you.

Mike Eastwood: Thank you. Indeed. Thank you. We'll go next to Heather Balsky from Bank of America. Hey, it's Waheed Amin on behalf of Heather.

Mike Eastwood: Indeed.

Waheed Amin: Thank you we'll go next to Heather Belsky from Bank of America.

Waheed Amin: Hey, it's <unk> on for Heather.

Steve Hasker: Thanks for taking our question. I just wanted to talk more about your M&A. You guys have been pretty, pretty aggressive in the last year.

Mike Eastwood: Question.

Waheed Amin: Just wanted to talk more about eliminating double the money.

Waheed Amin: We aggressively last year. So can you just talk about your.

Steve Hasker: So can you just talk about your M&A path moving forward? And is the strategy still the same as going for higher growth companies or going after Gen AI-based companies? Or have you adopted that?

Steve Hasker: Amyloid pumped on moving forward in the strongest.

Steve Hasker: She was looking for.

Steve Hasker: Both companies are going.

Steve Hasker: Jenny Wang based companies or have you exhausted that already.

Speaker Change: Yeah. Thanks.

Steve Hasker: Because as I remarked.

Steve Hasker: Yeah, thanks Wade. As I remarked, we've spent about $2.1 billion over the last 12 or 18 months on half a dozen acquisitions. We've really sort of meta-exceeded our criteria, and we think that criteria is pretty rigorous and robust, so starting with, you know, additive to the customer experience, predominantly in the big three, but we've also seen a couple of tuck-ins in Reuters, firstly. We are, as you know, not bringing tech debt. We're doing a lot of work to clean up our tech debt through the Change Program, and we don't plan to add to it.

Steve Hasker: We spent about $2 $1 billion over the last 12 or 18 months on.

Steve Hasker: On a half a dozen acquisitions in there.

Steve Hasker:

Steve Hasker: Really sort of met or exceeded our criteria and we think the criteria is pretty pretty rigorous and robust. So so starting with additive to the customer experience predominantly in the big three but we've also seen a couple of tuck ins in Reuters.

Steve Hasker: Firstly secondly.

Steve Hasker: Are you, bringing in not bringing ticked. It. So we have a lot of work to clean up that picked up through the change program, we don't plan to add to it.

Steve Hasker: Thirdly, and I think equally importantly, the ability to take a product which is, you know, highly valued by our customers and prospective customers, and really leverage our distribution. Relationships to accelerate its growth rate. And that's been a playbook that's served Thomson Reuters well, way back to practical law, you know, Westlaw and practical law, and certainly been the case with Short Prep. We're optimistic. We're optimistic about the likes of Poggero and Case Text against that playbook as well.

Steve Hasker: Thirdly, and I think equally importantly, the ability to take a product, which which is.

Steve Hasker: Which is valued highly valued by our customers and prospective customers and really leverage our distribution and our customer relationships to two acts.

Steve Hasker: Celebrate its growth rate and that's that's been our playbook.

Steve Hasker: Playbook, that's sort of Thomson Reuters will.

Steve Hasker: Way back to practical law with Florida practical law.

Steve Hasker: And certainly been the case with short we're optimistic.

Steve Hasker: We're optimistic about.

Steve Hasker: The likes of Euro.

Steve Hasker: And in case text against that playbook as well. We also look at the culture of the acquired businesses.

Steve Hasker: We also look at the culture of the acquired businesses, and it's not to say that we're not looking to diversify our culture and inject new ideas. We want to make sure that the incentives are right and that the new team will gel with our existing folks. And that's certainly been the case with these recent acquisitions. And, last but not least, we want to make sure that there's value creation for our shareholders, not just the selling share. So those deals have very much been against that playbook, and we have a pipeline, you know, that we sort of continually replenish and refresh that's very consistent with that. Some of those potential acquisitions are GEN-AI-based, but not all of them. But what we do try to make sure is that we're not gonna acquire businesses that will be significantly disrupted by GEN-AI. So, for example, if we look at content assets, we wanna make sure that it's content that has a relevant and robust valuable role in a large language modeling environment, not vice versa.

Steve Hasker: Not to say that we're not looking to diversify our culture and and.

Steve Hasker: And inject.

Steve Hasker: New aspects to it but we want to make sure that the.

Steve Hasker: Incentives arrived and.

Steve Hasker: And the new team will Joe with without existing folks and that's certainly been the case with these recent acquisitions to date.

Steve Hasker: And then last but not least we want to make sure that there is value creation for our shareholders not just the selling shareholders. So those deals are very much bidding against that playbook.

Steve Hasker: And we have a pipeline that we sort of continually.

Steve Hasker: Plenish and refresh that's very consistent with that.

Steve Hasker: Some of those.

Steve Hasker: Potential acquisitions, our Gen II based.

Steve Hasker: But but but not all of them, but what we do in.

Steve Hasker: Try to make sure that we're not going to acquire businesses that will be significantly disrupted by G&A and so.

Steve Hasker: For example, if we look at content assets, we want to make sure that it's content that has a.

Steve Hasker: A relevant and robust valuable role in a large language model.

Steve Hasker: <unk>.

Steve Hasker: No not not vice versa.

Steve Hasker: So youll see.

Steve Hasker: I would say you'll see more of the same over the next year or two, very sort of very much consistent with that playbook, some of which, you know, directly leverage Gen AI, and some we think will have value in that environment of the time. Got it. Thank you. Thank you. We'll go next to Manav Patnaik from Berkeley.

Steve Hasker: More of the same.

Steve Hasker: Over the next.

Manav Patnaik: Year or two.

Manav Patnaik: Gary sort of very much consistent with that playbook.

Manav Patnaik: Some of which directly.

Manav Patnaik: Leveraging G&A I in some we think we will have value in that environment over time.

Manav Patnaik: Got it thank you.

Manav Patnaik: Thank you we'll go next to <unk> connect from Barclays.

Steve Hasker: Thank you. You know, I think we've asked the question about acquisitions a lot, but I just wanted to revisit kind of the portfolio that you saw today. You know, you've done a bunch of divestitures in the last two years. Should we be thinking of more coming down the road? I think you might have considered print at some point.

Manav Patnaik: Thank you.

Manav Patnaik: I think we've asked the question on acquisitions, a lot, but I just wanted to revisit kind of the portfolio that you sold today and he's done a bunch of divestitures. The last two years, just just I should we should we be thinking with more coming down. The road I think you might have considered print at some point. So just wanted to address that topic.

Steve Hasker: So just wanted to address that topic. Yeah, nothing imminent, nothing to announce today, Manav, but look, as you've seen, we're pretty rigorous in sorting through the portfolio on an ongoing basis and making sure that each of the franchises they're in plays a key role in serving our customers and that the returns on any investment are the best they can possibly be relative to the alternatives. So, again, nothing to announce today, Manav, but it is an ongoing effort and I think it will always be to be candid. Okay.

Speaker Change: Yeah, nothing nothing imminent nothing to announce today manav.

Steve Hasker: But look as you've seen we're a we're pretty rigorous in sort of going through the portfolio on an ongoing basis and making sure that that.

Steve Hasker: At that.

Steve Hasker: That each of the.

Steve Hasker: The franchises there in plays a key role in serving our customers.

Steve Hasker: And that and that the returns on any investment.

Steve Hasker: Are the best they can possibly be relative to the alternative so again nothing to announce today manav, but but it is an ongoing.

Steve Hasker: In an ongoing effort and I think always will be to be candid.

Steve Hasker: And then, you know, I apologize if I missed this, but just on the topic of GEN AI, you know, just trying to appreciate the trade-off between the expenses of the investment versus, you know, versus the growth benefit, I guess, that you're embedding in your 25-26 guidance. I think you said you'd spend like $100 million a year on GEN AI or something like that. Is that still the case?

Manav: Got it and then I apologize if I missed this but just on the topic of Jamie I just trying to appreciate the Rudolph the team the expenses of the investment vessel.

Steve Hasker: Listen the growth benefit I guess that you're embedding in your 'twenty five 'twenty six guidance I think you said you'd spend like $100 million a year on <unk> something like that is that still.

Steve Hasker: Still the case and is the right way to think about it that you need some of the big investments acquisitions next year and so now any growth will just help you.

Steve Hasker: And is the right way to think about it that you've made some big investments and acquisitions this year, and so now any growth will just help you, you know, leverage the bottom line and enhance your guidance? Yeah, so you're right with regard to the $100 million investment and $23 million. We plan to continue it at that intensity. We'll constantly sort of revisit whether that's the right number and whether we're getting adequate and exciting returns from that. A couple of things, though, and I don't have the split, but it's worth noting that But that pertains to a couple of different things. One is the development of a general AI platform. So Sean Mahalter and his team and Joel Horan have built a Gen AI platform that serves, you know, firstly, Westlaw Precision AI research memos but also other legal products and can and will be extended into other parts of the business, including Reuters News. And so there's a level of sort of common and shared capabilities. It's not, you know, discrete products. And then, of course, there are the investments required in developing and launching the specific applications like Westlaw AI research memo, like Practical Law, Cause Finder, and so forth.

Steve Hasker: So the bottom line and hence your guidance.

Speaker Change: Yeah, So you're right with regard to the $100 million.

Steve Hasker: Investment in 'twenty, three we plan to continue at about that intensity.

Speaker Change: We will constantly sort of revisit whether that's the right number.

Steve Hasker: And whether we're getting.

Steve Hasker: At adequate and exciting returns from that.

Steve Hasker: A couple of things, though and I don't have the split, but it's worth noting that the.

Steve Hasker: That pertains to a couple of different.

Steve Hasker: Things one is the development of a G&A AI platform, So shlomo alternatives team and Joel her on them.

Steve Hasker: Built a gen II platform that serves firstly wistful precision II research, Myanmar, but also the other legal products and can and will be extended into other parts of the business, including Reuters news.

Steve Hasker: And so there's a there's a level of sort of common and shared capabilities. It's not.

Steve Hasker: Discrete products and then of course, there are the investments required.

Steve Hasker: Developing and launching.

Steve Hasker: The specific applications like wishful II research memory like practical law correspond or and so some of the things that I mentioned, so theres two of those things in and the investment in the platform side of things is probably a little heavier in the early going and then lightens up as we start to.

Steve Hasker: Some of the things I mentioned. So there are two of those things. And, you know, the investment in the platform side of things is probably a little heavier in the early going and then lightens as we start to start to leverage that across more and more products. Thank you. Thank you. We'll go next to Maher Yaghi from Scorch Bank.

Maher Yaghi: Start to leverage that across more and more product launches.

Maher Yaghi: Thank you.

Maher Yaghi: Thank you we'll go next to her Yankee from Deutsche Bank.

Mike Eastwood: Great, thank you for squeezing me in. I wanted to go back to one of the slides at the end of your presentation talking about your expected debt leverage over the medium term. You're focusing on $2.5 billion. To get there, it's about $4 billion in additional acquisitions. So my question is, when we think about return on invested capital for Thomson, how should we think about the movement on that metric as you undertake these kinds of significant acquisitions over the medium term? And a follow-up question on organic growth for 2025-2026. How much of the acceleration in organic growth is coming from adding on these companies that you have been buying recently, like Case-Texas and Pat Gero, versus your existing portfolio seeing acceleration in its revenue growth itself?

Maher Yaghi: Great. Thank you for squeezing me in I wanted to go back to one of the slides at the end of your presentation talking about your expected debt leverage over the medium term.

Mike Eastwood: Youre focusing on two five that's like to get there it's about $4 billion of additional acquisitions. So my question is.

Mike Eastwood: When we think about the return on invested capital for the poor Thompson.

Mike Eastwood: How should we think about.

Mike Eastwood: The movement on that metric as you undertake.

Mike Eastwood: These kind of significant acquisitions over the you know.

Mike Eastwood: Medium term and in the follow up question on organic growth.

Mike Eastwood: For 'twenty five 'twenty six.

Mike Eastwood: How much of the acceleration in organic growth is coming from adding on these companies that you haven't been buying recently like piece Texan Garo.

Mike Eastwood: Versus.

Mike Eastwood: Your existing portfolio.

Mike Eastwood: Acceleration in its.

Mike Eastwood: Revenue growth itself.

Mike Eastwood: Thank you. We have to break those down there in regards to your questions there. I think you're referring to page 29 of the presentation.

Mike Eastwood: Break those down there in regards to your questions. There I think you're referring to page 29.

Mike Eastwood: The presentation first the net debt net debt leverage.

Mike Eastwood: And first, the net net debt leverage is 2.5 times over the long run. Those of you who have followed us for many years know that we've consistently provided our value creation model, which reflects that we're currently below one times. To your point, Mayor, we have significant flexibility. We have significant optionality.

Mike Eastwood: $2 five over the long run those of you who followed us for many years, we've consistently provided our value creation model, which reflects that we're currently below one times to your point there we have significant flexibility some significant optionality and to Steve's point on his discuss.

Mike Eastwood: And to Steve's point about his discussions today on M&A, given the opportunities that we see with the pipeline, we have a lot of flexibility. A lot of flexibility. So not much more I can say there about how we're going to be very, very prudent in deploying our capital, given that we are at roughly one times today and two and a half times our internal target. Our bank covenants provide up to four and a half times the amount of flexibility on R.O.I.C.

Mike Eastwood: <unk> today on M&A.

Mike Eastwood: Given the opportunities that we see with the pipeline we have a lot of flex a lot of flexibility. So not much more I can say there that we're going to be very very prudent in deploying our capital given that we are roughly at one times today and two five times is our internal target our bank covenants provide up to four five.

Mike Eastwood: <unk>.

Mike Eastwood: A lot of flexibility on ROIC see additional focus on that in recent years, certainly as we make acquisitions might there be times, where you have some ebb and flows given the impact of M&A on the ROIC, but I think over the long run focusing on two time I'm, sorry, why we feel very good.

Mike Eastwood: Additional focus on that in recent years, certainly as we make acquisitions, might there be times where you have some ebb and flows given the impact of M&A on the R.O.I.C. But I think over the long run, focusing on two times our R.O.I.C., we feel very comfortable achieving, recognizing that acquisitions can have some near-term impact on that. Your third question on organic growth for 2526, I'll refer back to Kevin's question earlier today. I think 2526 revenue growth acceleration, the four vectors I mentioned earlier, tension, pricing, the product roadmap, and then M&A. You mentioned M&A specifically in your question.

Mike Eastwood: <unk>, achieving recognizing that acquisitions can have some near term impact on that your third question on organic growth for 'twenty five 'twenty six I'll refer back to Kevin's question earlier today, I think 'twenty five 'twenty six revenue growth acceleration.

Mike Eastwood: <unk> as I mentioned earlier tension pricing the product road map and then the M&A you mentioned the M&A specifically in your question.

Mike Eastwood: I stated in my prepared remarks about 50 basis points of contribution in calendar year 24. If you look at 2526, there'll be additional contribution from the M&A. Thank you very much, and Dave. Thank you. We'll go next to Doug Arthur from Huber Research. Yeah, Mike, can you...

Mike Eastwood: I stated in my prepared remarks about 50 basis points of contribution in calendar year 'twenty. Four if you look at 'twenty five 'twenty six there'll be additional contribution from the M&A.

Speaker Change: Thank you very much.

Mike Eastwood: Dave.

Mike Eastwood: Thank you we'll go next to Doug Arthur from Huber Research.

Mike Eastwood: Yeah.

Douglas Middleton Arthur: Yeah, Mike can you hear me.

Mike Eastwood: Very well, Doug. Yeah, just quickly on your margin guidance specifically for, for, you know, companies that are notably conservative in their guidance that far out. What what what do you see is sort of the main puts and takes emphasis, but where could you be conservative in that?

Douglas Middleton Arthur: Very well Doug.

Douglas Middleton Arthur: Just quickly on your margin guidance, specifically for 2024.

Douglas Middleton Arthur: Company has been notably conservative in their guidance that far out what do you see as sort of the main puts and takes I know you went through the investment.

Douglas Middleton Arthur: Emphasis, but where could you be conservative in that margin guide I guess is my question.

Douglas Middleton Arthur: Yeah, the approximately a 38% is our best lens, Doug as of today I would just emphasize two points one.

Mike Eastwood: Yeah, approximately 38% is our best lens, Doug, as of today. I'll just emphasize two points. One, as stated in the prepared remarks, the M&A that we've done recently will dilute our margin by about 120 basis points in calendar year 24. The other point, Doug, I mentioned during the November earnings call, about 75 basis points is the operating leverage contribution for us. If you assume 6% organic growth, a 4% increase in our fixed costs, which are 65%, and then variable costs flow through, that yields about 75%. So given the M&A dilution of 120 basis points, and we're reinvesting the operating leverage, that gets us to about 38%. And if there's any variation there too during the course of the year, Doug, we'll keep you posted. But that's our best transparent lens today, given those two key items.

Mike Eastwood: As stated in the prepared remarks, the M&A that we've done recently will dilute our margin by about 120 basis points in calendar year 'twenty for the other point I mentioned during the November earnings call.

Mike Eastwood: 75 basis points is the operating leverage contribution for us if you assume 6% organic growth, 4% increase in our fixed costs, which are 65% and then variable costs flow through that yields about 75% so given the M&A.

Mike Eastwood: M&A dilution of 120 basis points, and we're reinvesting the operating leverage that gets us to that approximately 38% and if there's any variation there two during the course of the year, Doug We'll keep you posted but thats, our best transparent lands today, given those two key items.

Mike Eastwood: Nope, that makes sense. Okay, thank you very much. Thank you, Doug. Jennifer, I think we have time for one final question, please. Thank you. We'll go to Sami Kassam from BNP Paribas.

Speaker Change: No it makes sense.

Doug: Interesting framework, okay. Thank you very much.

Sami Kassam: Thank you Doug Jennifer I think we have time for one final question. Please.

Sami Kassam: Thank you, we'll go to Sami <unk> from BNP Paribas.

Steve Hasker: Yes, hello, thank you, can you hear me? Yes, Sammy. Aye, Sammy. Yes, thank you. Good morning, gentlemen. We talked a lot about the GEN-AI contribution to the top line, but can you help us understand the cost efficiencies that this new technology may help the company achieve in the next two or three years and perhaps highlight a few initiatives you have underway to deploy GEN-AI internally? Thank you, gentlemen. Yeah, that's a great question, Sammy. So, Kirstie Roth and Mary Alice Buczyk are spearheading an effort to look end-to-end at our core operations and our functions to figure out where we can successfully apply generative AI tools. In some cases, you know, with our legal department under Norrie Campbell's leadership, it'll be internal applications of our own tools, whereas within the engineering and content, and editorial areas, it'll be some of the off-the-shelf tools that we all are starting to read about and understand.

Speaker Change: Yes, Hello. Thank you can you hear me.

Speaker Change: Yes, I mean as Sammy.

Speaker Change: Thank you good morning, gentlemen, we talked a lot about <unk> contribution to the top line, but can you help us understand.

Steve Hasker: The cost efficiencies that.

Steve Hasker: Technology May help the company Oh excuse me that in the next two or three years and perhaps.

Steve Hasker: <unk> hired a few initiatives you have ongoing Detroit generate internally. Thank you gentlemen.

Speaker Change: Yeah great.

Speaker Change: Great question Sami Thank you.

Steve Hasker: So Christy, we're often marriott's future Kara.

Steve Hasker: Our.

Steve Hasker: Spearheading an effort to look.

Steve Hasker: It out.

Speaker Change: At our core.

Speaker Change: Operations and functions.

Steve Hasker: Functions to figure out where we can successfully apply generally by all the tools in some cases without legal department under Norrie Campbell's leadership.

Steve Hasker: It'll it'll be internal applications of out of our own tools, whereas within the <unk>.

Steve Hasker: Within the engineering and content to content and editorial areas it'll be some of the off the shelf tools that we will that we all are starting to read about and understand.

Steve Hasker: We're not here to quantify what the sort of financial impact of that will be today, but we're pretty excited about the ability to improve employee sentiment, improve the sort of underlying productivity of the various parts of our company and the team as a whole, and ultimately see some interesting financial benefits. But I think it's too early, Sammy, for us to put a stake in the ground, but as we all know, under Mike's leadership, we'll be very focused on ensuring that any investments we make in applying those tools across the company bring an attractive return for our shareholders.

Steve Hasker: We're not here to quantify what the what the sort of financial impact of that.

Steve Hasker: We will be today, but we're pretty excited about the ability to improve.

Steve Hasker: Employee sentiment.

Steve Hasker: Improve the sort of underlying productivity.

Steve Hasker: Of the various parts of our company and the team as a whole and ultimately see some some interesting financial benefits, but I think it's too early semi for us to put a stake in the ground, but but as we all.

Steve Hasker: Under Mike's leadership, we'll be very focused on ensuring that that any investments we make in applying those tools across the company. There is a there's a.

Steve Hasker: An attractive return for our shareholders.

Steve Hasker: Thank you very much. Thanks, Sammy. Great. Thank you. Thank you, Jennifer. We'll leave it there. Thank you. That does conclude today's conference. Thank you for your participation. You may now disconnect.

Speaker Change: Thank you very much.

Steve Hasker: Yeah.

Sammy: Thanks, Jeremy.

Steve Hasker: Okay.

Steve Hasker: Okay.

Speaker Change: Great. Thank you that does thank.

Speaker Change: Thank you Jennifer will leave it there.

Speaker Change: Thank you that does conclude today's conference.

Speaker Change: Thank you for your participation you may now disconnect.