Q4 2023 Thomson Reuters Corp Earnings Call

Operator: 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 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 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 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'd appreciate it if you would limit your.

Self to one question and one follow up when we open the phone lines.

Gary 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 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 Bisbee: Today's presentation contains forward looking statements and non <unk> financial measures.

Gary Bisbee: 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 mean, 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 letting.

Steve Asker: 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 one $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, Shaw Prep, and High Q.

Steve Asker: Whistler precision strong performance continues our.

Gary Bisbee: Our international businesses maintained the growth trajectory in the teens.

Gary Bisbee: And we have many other products delivering double digit revenue growth, including practical law.

Gary Bisbee: Confirmation Shaw prep and high Q.

Steve Hasker: 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.

Gary Bisbee: Tony 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.

Gary Bisbee: But the progress is far broader than just wistful.

Gary Bisbee: We have integrated our new colleagues from the August acquisition of case text.

Steve Hasker: We have integrated our new colleagues from the August acquisition of Case Tech, launched co-council core to extend the reach of the case text 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. As Mike will discuss in more detail,

Gary Bisbee: 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.

Gary Bisbee: Capital capacity and liquidity remain a key asset that we are focused on deploying to create shareholder value and.

Gary Bisbee: And we made strong progress on this during 2023.

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

Gary Bisbee: Shareholders.

Gary Bisbee: 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 a gara.

Gary Bisbee: These acquisitions, both the key franchises and improve the quality and growth prospects of our portfolio.

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

Gary Bisbee: 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.

Gary Bisbee: And we're focused on driving acceleration from that level in 2025 and beyond.

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

Gary Bisbee: In which we see organic revenue growth of six 5% to 8%.

Gary Bisbee: Now to the results for the quarter.

Gary Bisbee: Our fourth quarter organic revenues grew 7% improving from 6% in recent quarters.

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.

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

Gary Bisbee: Reported revenue grew 3% with currency, a slight drag and Nick divestitures, having a 4% negative impact.

Gary Bisbee: Adjusted EBITDA increased 12% to $707 million.

Gary Bisbee: <unk>, a 300 basis point margin improvement to 38, 9%.

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

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

Gary Bisbee: Turning to the fourth quarter results by segment.

Steve Hasker: Turning to the fourth quarter results by segment, the big three 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.

Gary Bisbee: The big three businesses delivered 8% organic revenue growth and all time high and up from 7% in recent quarters legal organic revenue growth improved to 7% driven by continued Westwood precision momentum.

Gary Bisbee: 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, clear, and our international regions remain key growth drivers.

Gary Bisbee: Customer interest in our AI driven offerings and product roadmap remains extremely strong with several 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%.

Gary Bisbee: Arctic law indirect tax clear in our international regions remain key growth drivers.

Steve Hasker: 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.

Gary Bisbee: Tax and accounting organic revenues grew 10% driven by recurring and transactional growth of 10% and 14% respectively.

Gary Bisbee: Latin America operations Ultra tax and short prep each contributed meaningfully to growth.

Gary Bisbee: <unk> news organic revenues rose a robust, 9% driven primarily by generative AI related content licensing revenue that was largely transactional in nature.

Gary Bisbee: Sluggish digital advertising and events growth continued.

Gary Bisbee: When 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 are 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 has 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 were $3.51, compared to $2.62 per share in the prior year.

Gary Bisbee: Full year organic revenues rose 6%.

Gary Bisbee: <unk> revenue grew 3% with currency, a slight negative impact of net divestitures of 3% drag.

Gary Bisbee: Adjusted EBITDAR increased 15% to $2 7 billion with a 39, 3% margin up 420 basis points year over year revenue growth and having changed programming expenses in the prior year drove the margin gain.

Gary Bisbee: Adjusted earnings per share for the year was $3.51 compared to.

Gary Bisbee: $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 remains 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 has ushered in significant change for our product organization, which had to reprioritize on the fly, reimagine 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 Lewislaw Precision in November went well. Customer feedback remains positive, and fourth quarter sales set records for the Westlaw franchise.

Speaker Change: And 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.

Speaker Change: Product innovation remains an important focus and in 2023 with a year of tremendous progress for our product and engineering organization.

Gary Bisbee: The emergence of GPT for an advanced generative AI technologies.

Gary Bisbee: She didn't significant change for our product organization, which had to re prioritize on the fly re imagine customer experiences and then quickly deliver T a quality product innovations.

Gary Bisbee: 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.

Gary Bisbee: The launch of the AI assisted research capability within Lewisville precision in November has gone well.

Gary Bisbee: Customer feedback remains positive.

Gary Bisbee: Fourth quarter sales set records for the Westwood franchise.

Steve Hasker: We have also made good progress with Kacetext, including the launch of CoCouncilCore, 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.

Gary Bisbee: 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 <unk> legal AI assistant.

Gary Bisbee: 23 also featured a broad range of expanded features new capabilities and design enhancements across our portfolio, including several listed on this slide.

Gary Bisbee: 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.

Gary Bisbee: Through Microsoft word.

Gary Bisbee: 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

Gary Bisbee: 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.

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

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

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

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

Steve Hasker: 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. 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. Shorprep 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.

Gary Bisbee: We completed two strategic tuck ins that Reuters news and taken full control of West La Japan after buying out how former joint venture partner.

Speaker Change: A few summary thoughts pace.

Speaker Change: <unk> added critical capabilities and talent to accelerate our <unk> aspirations and legal professionals and over time more broadly across the entire portfolio.

Gary Bisbee: Sure prep and per Garo 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.

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

Gary Bisbee: Subscription professional content focused on the insurance industry, both aligned with the growth strategy of this business unit.

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

Gary Bisbee: They also continue our 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.

Gary Bisbee: <unk> integration efforts are off to a good start customer feedback has been strong and we're retaining key talent at a very high rate 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 of 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, and has 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.

Gary Bisbee: We've added approximately $200 million of revenue.

Gary Bisbee: 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.

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

Gary Bisbee: 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.

Gary Bisbee: So I'll just summarize a few points here first the E invoicing opportunity is significant and.

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.

Gary Bisbee: 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.

Gary Bisbee: 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 offer with our one-source indirect tax solution 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.

Gary Bisbee: <unk> is a compelling product with Thomson Reuters, it's the combination of <unk> E invoicing compliance offerings without one source indirect tax 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.

Gary Bisbee: <unk> vendor 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.

Gary Bisbee: Its investment markets scale up and.

Gary Bisbee: And finally <unk>.

Gary Bisbee: Current ownership is approximately 85%, assuming we acquire 90% or higher.

Gary Bisbee: Ownership by the end of our tender offer period, we will look to undertake a squeeze out process.

Gary Bisbee: Order to take full ownership of the business, we will consolidate <unk> financials as of January 17th the day, we achieve 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 segments. Organic revenues improved sequentially from 7% in recent quarters to 8% in the fourth quarter, a new high watermark for the Big Three.

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

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

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

Mike: A new high watermark for the big three.

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

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

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

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

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

Mike: 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: I am happy to announce precision penetration continues to rise getting 26% as of December 31st which on a dollar basis is approximately 50% ahead of edge.

Mike: Yeah.

Mike: In our corporate segment organic revenues again grew 7% driven by 7% growth in both recurring and transactional revenue.

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

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

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

Mike: 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 bid team growth for the segment in Q1. However, revenue from these agreements is largely transactional. Lastly, global print organic revenues declined four percent.

Mike: Looking to 2024, we expect transactional revenue growth will continue to outpace.

Mike: <unk> revenue has higher growth products, including confirmation and share prop are transactional in nature.

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

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

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

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

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

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

Mike: 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: Moving to Reuters news adjusted EBITDA was $61 million.

Mike: Up $21 million from the prior year period with a margin of 27, 9%.

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

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

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

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

Mike: In aggregate total company adjusted EBITDA was $707 million, a 12% increase versus Q4 2022.

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 two cent favorable impact on adjusted EPS in the quarter.

Mike: 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: Yeah.

Mike: Turning to earnings per share.

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

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

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

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

Mike: Consistent with previous quarters. This slide removes a distorting factors impacting our free cash flow.

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

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

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

Mike: 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: $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 undrawn $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. We will use approximately $800 million of cash on hand to fund the Figueroa acquisition, leaving our leverage ratio well below our target.

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

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

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

Mike: As noted in our value creation model.

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

Mike Eastwood: 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.

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

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

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

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

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

Mike: Lastly.

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.

Mike: The value of foreign exchange hedges held against our <unk> stake were $26 million as of December 31.

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

Mike: 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.

Mike: We remain focused on value creation, and we expect to continue with our balanced capital allocation approach that includes annual dividend growth.

Mike: Strategic M&A and capital returns.

Mike: 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.

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

Mike Eastwood: We anticipate completing the program in the second quarter. And finally, today we announced a 10% increase in our annual dividend to $2.16 per share, up 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: 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 31st consecutive year of annual dividend increases for the company and its 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.

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

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.

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

Mike: One point to note on the revenue outlook.

Mike: 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.

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% in 2024, down from 39.3% in 2023.

Mike: Absent this impact.

Mike: Our outlook with call for modest organic revenue growth acceleration in 2024.

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

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

Mike: We are forecasting.

Mike: Casting a 2024 adjusted EBITDA margin of approximately 38% down.

Mike: Down from 39, 3% in 2023.

Mike: Our M&A activity since mid 2023 is expected to be roughly 120 basis points dilutive to 2020 for margins.

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.

Mike: Which includes 35 basis points of integration expenses that we expect to fall off within 24 months.

Mike: 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.

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

Mike: 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.

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

Mike: Up from 16, 5% in 2023.

Mike: 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 funding 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.

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

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

Mike: 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 Road map.

Mike: We forecast 2020 for free cash flow of approximately one 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 node 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.

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

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

Mike: Well the Capex increase note that approximately two thirds of the increase results from integration cost.

Mike: And growth investments in case tax and for 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%.

Mike: Benefiting from normal seasonal strength from our tax and accounting professional segment and the water is licensing revenue.

Mike: Partially offset by M&A dilution and select growth investments.

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

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

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

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

Mike: And recent M&A scales.

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

Mike: Siloed by at least 50 basis points annually thereafter.

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

Mike: 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 moderated. 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.

Mike: After some of our acquisition integration spending moderates.

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

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

Mike: This assumes a 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, but we would expect our returns to continue to rise on an organic basis. 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: Stable capital spending.

Mike: And rising margins.

Mike: We are also providing medium term targets for several capital strategy based metrics.

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

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

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

Mike: On this point the accounting for M&A can depress ROIC in the short term, but we would expect our returns to continue to rise on an organic basis.

Mike: 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.

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

Gary Bisbee: 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.

Gary Bisbee: 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.

Scott Fletcher: 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. I appreciate you. You shared some of the drivers yesterday, but I'm wondering if, Looking at 2025, particularly in the big three, could you sort of give us an idea? www.youtube.com.uk we are going to be driving.

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

Scott Fletcher: Hi, good morning.

Scott Fletcher: Mike I. Appreciate you just mentioned that Youre youll share some of the drivers I think investor day, but I'm wondering if you could.

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

Scott Fletcher: Particularly in the big three could you sort of give us an idea.

Scott Fletcher: Which segment.

Scott Fletcher: Specifically are going to be driving that acceleration.

Speaker Change: So given that Jenny I rollout is first there or any color there would be helpful. Thank you.

Jenny: 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 log precision with co counsel core the AST practical law.

Mike Eastwood: First News. Sure, Scott. 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.

Jenny: And the practical law.

Jenny: <unk> binder.

Jenny: Certainly legal has a head start there on the Gen AI roadmap.

Mike Eastwood: 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.

Jenny: 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.

Jenny: 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 2003 the investments in 'twenty four but also the recent acquisitions in the last 13 months excuse me with sharp drop in tax and accounting.

Jenny: 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>.

Mike Eastwood: As a follow-up, if we're thinking about that in the big three... Is that something you...?, https://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: Follow up if we're thinking about that in the big three 8% to 9% organic growth in 'twenty five and 'twenty six.

Scott Fletcher: Is that something you get.

Jenny: Staying above those levels or is that a function.

Speaker Change: The price increases rolling out over the contract lengths, giving you've got sort of three year term that would take you into 2026.

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

Speaker Change: Sustainable price increase is 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.

Speaker Change: <unk> a factor into the time of Lindsay in.

Speaker Change: Increase our prices.

Speaker Change: But roughly three and a half for 2023, Scott on the prices.

Speaker Change: So Steve just to add to that.

Steve Asker: 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 very early days is using.

Steve Hasker: I think 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, an even more relevant and larger part of their working lives.

Steve Asker: He has an expanded role in serving the professionals that are.

Speaker Change: In our customer basis.

Steve Hasker: And we think that that's going to make us.

Speaker Change: And even more relevant.

Speaker Change: And larger out of there.

Mike Eastwood: And then on inorganics, 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.

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

Speaker Change: 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.

Speaker Change: Scott it might be anticipating questions from you or others. Just a reminder, within the Gen. AI revenue I think Gerry Steve and I plan to provide additional metrics as we progressed during <unk>.

Mike Eastwood: Just a reminder on 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 on 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

Drew Mcreynolds: 24 on that but the revenue will certainly lag the sales of <unk>, which we anticipate revenue from the Gen AI beginning to pick up more in the second half of 'twenty four and that goes into 2025 Thats helpful.

Speaker Change: Okay, great. Thank you very much.

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

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

Steve Hasker: Very well drew.

Drew Mcreynolds: Okay Super.

Drew Mcreynolds: Yeah, thanks very much. Good morning. Can you hear me?

Mike Eastwood: Yes.

Drew Mcreynolds: Question is just around the competitive landscape.

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: Specifically, either new entrants or your.

Steve Hasker: Or your peers that are also deploying Shanghai Jenny.

Steve Hasker: Love to get an update on kind of what your assessment in terms.

Steve Hasker: That would be just given the pace of change and everybody kind of launching their own <unk> version with a different products and then maybe a follow up to that.

Drew Mcreynolds: Steve in the past you've talked a little bit about the end 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.

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

Steve Asker: 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 of new entrants by some of our traditional competitors, you know, making moves. I can only really comment on the conversations that I have and my colleagues have with our customers, be they existing customers or new prospects, and the feedback we're getting on both our 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 regards to the competitive landscape I think we're seeing I'm sure you're seeing what the flurry of announcements.

Steve Hasker: Of new entrants some of our traditional competitors.

Steve Asker: Making moves.

Speaker Change: I can only really comment on on the conversations that I have in my colleagues have without customers existing customers or new prospects.

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

Speaker Change: And our product roadmap is.

Steve Hasker: Extremely positive and and growing.

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

Speaker Change: 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 than 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.

Steve Hasker: J J NII driven <unk>.

Steve Hasker: Solution.

Steve Hasker: Secondly, we enjoy.

Steve Hasker: But don't take for granted.

Speaker Change: Very deep and broad customer relationships.

Steve Hasker: And they trust based customer relationship so in terms of.

Steve Hasker: In terms of doing it right and protecting.

Speaker Change: Todd proprietary information.

Steve Hasker: And all that sort of data privacy.

Steve Hasker: Rules, but.

Steve Hasker: Evidently come as <unk> evolves.

Speaker Change: There is a level of trust and Tee us plans.

Speaker Change: Exhibition.

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

Speaker Change: As you know we've put a lot of effort.

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: 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: It will be.

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

Mike Eastwood: Going to <unk>.

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: 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 role expanding as I said in response to Scott's 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: And we see a world in which a customer in a year or twos time, perhaps perhaps longer perhaps shorter says well that was Thomson Reuters, who are traditionally 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, we see a fairly clear line to that expanded role.

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. Some customers are expecting us to be very much front and center in that change management program, and others are keen to sort of navigate a lot of that themselves. I think it's early days, Drew, in terms of that, that they're 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: But your point about adoption. We also see is that roll experience, we see a greater need for change management at the customer site.

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

Steve Hasker: Management program and others, others came to sort of navigate a lot of that themselves.

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

Steve Hasker: We'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: Yeah.

Speaker Change: Very helpful. Thank you.

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

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

Kevin Mcveigh: Kevin Mcveigh from UBS.

Kevin Mcveigh: I just wanted to start and just.

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

Kevin Mcveigh: I don't know if this is for Steve or Mike. Think about those medium-term targets. The end. Thank you. Thank you. Any way to think about, build that up a little bit, how much... done a lot of high-growth acts. Yeah, can I just make a comment or a reaction or two, Kevin, to your questions and then turn it over to Mike. So, thanks for your points about execution, Kevin.

Mike Eastwood: 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.

Kevin Mcveigh:

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

Mike Eastwood: When you think about those medium term targets, you know kind of going from six to six five to eight.

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

Speaker Change: Was pricing and then.

Kevin Mcveigh: 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.

Mike Eastwood: Ceiling, if you would maybe can we start there.

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

Kevin Mcveigh: So.

Speaker Change: Thanks for your points about.

Mike Eastwood: Execution Kevin.

Steve Hasker: 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 and operating, and the 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 Scaravaglia, to Mary Alice Futryk, to Sean Malhotra, and a legion of others who've really driven a lot of that hard work and executed along the way.

Speaker Change: We're proud.

Steve Hasker: 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 a two part pivot for us from a portfolio of operating in the second from holding to.

Steve Hasker: Sorry from holding company to the portfolio.

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

Steve Hasker: Kudos to Christy Rossi, and Jason scar revised Maryalice future to Shaw and Mohawk for Legion of others who've really driven.

Steve Hasker: A lot of that hard work.

Steve Hasker: 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, 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 <unk>.

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

Mike Eastwood: Recurring revenue this quarter.

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

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

Mike Eastwood: It's upside there is for out for our big three segments should we.

Steve Hasker: Should we be able to accelerate and build momentum over two months.

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 Pergero, certainly they are a key component of that acceleration as we go into 25 and 26. I would just call out Dave Weil, who was 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 Pergero.

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 peguero 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 enter 2014 months now, let Dave and incredibly pleased and proud of Dave and the team.

Mike Eastwood: Being.

Mike Eastwood: T. R. Then we go to case tax with Jake Heller and his team at <unk>.

Mike Eastwood: Six months into a great progress there and then most recently with <unk>. So as we do that work are build 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 and 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 and others with.

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

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

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, because as that evolves and really builds up a lot of momentum, a lot of confidence there, that will 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.com. Thanks. Good morning. Can you talk a little bit about your international aspirations?

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, but we 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: 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 why 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 product sets and certainly put garo.

Tim Casey: 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's in certainly Pogaro have more of an international appeal. Any thoughts there?

Tim Casey: Our 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 insofar as they've been growing in the mid-teens. Certainly Latin America is higher than that, and I am a little bit lower.

Speaker Change: As you've seen over a number of years now.

Steve Hasker: Our international.

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

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 corporates, the better-served corporations across the world with our legal, our tax, and risk solutions. Aguero is an asset that's heavily focused on the international markets, in 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, you know, 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.

Speaker Change: This reflects the focus of Adrian Panini.

Steve Hasker: In Latin America, and Jackie <unk>.

Steve Hasker: Importantly customers screen vaccine here in Canada.

Steve Hasker: Europe 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: To 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 will be invoicing space. So we see lots of potential.

Steve Hasker: Cool.

Steve Hasker: <unk>.

Steve Hasker: And of course, our case text, whether it's Coke 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 of 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: Hi, those growth prospects become 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 Alison and her team have been very focused in creating most pathway. So 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.

Speaker Change: Thank you.

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

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.

George Tong: 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.

George Tong: 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 25-26 for each of the big three. The core points that we mentioned earlier are our product roadmap, significant investments in 2023, and even more investments in 2024 across the big three segments. So new product introductions, features, and capabilities, including Gen AI across the big three. And then the second big vector, George, is 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 our significant investments in 23, even more investments in 2024 across the big three segments of 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: Sharp drop in tax and accounting case tax and legal and then pick error 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 25 and 26. 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 at 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 the 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 less loans about $1 8 billion for total TR 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. www.thompsonreuters.com Got it.

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 at.

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.

Speaker Change: Long term yeah.

Speaker Change: Got it that's helpful. Thank you.

Mike Eastwood: Indeed.

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

George Tong: That's helpful. Thank you. Indeed. Thank you. We'll go next to Heather Balsky from Bank of America. Hey, it's Waheed Aminan for Heather.

Waheed Aminan: Hey, it's where heat on for Heather.

George Tong: Question.

Waheed Aminan: Just wanted to talk more about your M&A.

Waheed Aminan: Pretty aggressively in the last year or so can you just talk about.

Heather Balsky: 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.

Waheed Aminan: Amyloid pumped on moving forward.

Waheed Aminan: You, obviously still especially those logos.

Waheed Aminan: Both companies are.

Waheed Aminan: Golar from Johnny Wong based companies or have you exhausted that already.

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 Genii-based companies? Or have you exhausted that?

Waheed Aminan: Yeah. Thanks Wahid so.

Steve Hasker: Because as I remarked.

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: 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 that really sort of met or exceeded our criteria, and we think that criteria is pretty rigorous and robust. So starting with, you know, adding value to the customer experience, predominantly in the big three, but we've also seen a couple of tuck-ins in Reuters, firstly. Secondly, and, I think equally importantly, the ability to take a product which is valued, highly valued by our customers.

Speaker Change: Uh huh.

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 ticked. It through the change program, we don't plan to add to it and thirdly, and I think equally importantly, the ability to take a product, which which is.

Steve Hasker: No.

Steve Hasker: Which is valued highly valued by our customers and prospective customers and really leverage our distribution and our customer relationships to accelerate its growth rate and that's that's been applied.

Steve Hasker: 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, 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. 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. News on Fox.

Steve Hasker: Our playbook that's.

Steve Hasker: Thomson Reuters will.

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

Steve Hasker: <unk> certainly been the case with short we're optimistic.

Steve Hasker: We're optimistic about.

Steve Hasker: <unk>.

Steve Hasker: Garo.

Steve Hasker: And in case text against that playbook as well. 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.

Steve Hasker: And inject.

Steve Hasker: New aspects to it but we want to make sure that the incentives are right and.

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

Steve Hasker: 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: 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 <unk>.

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

Steve Hasker: Not not vice versa, So I would say youll see.

Manav Patnaik: 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 Barclays.

Steve Hasker: More of the same.

Manav Patnaik: Over the next.

Manav Patnaik: Year or two.

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

Manav Patnaik: Some of which directly leveraging gen II and in some we think we will have value in that environment over time.

Manav Patnaik: Got it thank you.

Manav Patnaik: Yeah.

Manav Patnaik: Thank you we'll go next to Amanda 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.

Steve Hasker: 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've printed with print at some point. So just wanted to address that topic.

Manav Patnaik: So just wanted to address that topic. Yeah, nothing imminent, and 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 always will be, to be candid. I got it.

Manav Patnaik: Yeah, no nothing nothing imminent nothing to announce today manav.

Manav Patnaik: As you've seen we're we're pretty rigorous in sort of going through the portfolio on an ongoing basis and making sure that.

Manav Patnaik: That.

Manav Patnaik: That each of the of the franchises there in plays a key role in serving our customers.

Manav Patnaik: And that and that the returns on any investment.

Manav Patnaik: Where are the best they can possibly be relative to the alternative so again nothing to announce today manav, but but it is an ongoing.

Manav Patnaik: You know an ongoing effort and I think always will be to be candid.

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

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

Steve Hasker: Listen the growth benefit I guess that you're embedding in your 2005 2006 guidance I think I told you it's been like $100 million a year on <unk> something like that is that still the case and then the right way to think about it but you've made some of the big investments acquisitions next year and so now any growth, which is how can you lever.

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 homecare guidance.

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

Steve Hasker: Investment 23, we plan to continue at about that intensity.

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

Steve Hasker: And whether we're getting.

Steve Hasker: 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.

Steve Hasker: A couple of different things one is the development of a G&A AI platform. So Sean will alternate entertainment <unk> built a gen. II platform that serves firstly Whistler precision II research memo, 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 in developing and launching.

Steve Hasker: The specific applications like wish floor, II research memory like practical law correspond or and so forth. Some of the things I mentioned, so there's two of those things and.

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: 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.

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.

Maher Yaghi: Great. Thank you for squeezing me in.

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. 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 K-Stex and Tagheo, versus your existing portfolio seeing acceleration in its revenue growth itself?

Maher Yaghi: I wanted to go back to one of the slides at the end of your presentation talking about.

Maher Yaghi: <unk> debt leverage.

Maher Yaghi: Over the medium term.

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

Maher Yaghi: When we think about the return on invested capital for the poor Thompson.

Maher Yaghi: How should we think about.

Maher Yaghi: The movement.

Maher Yaghi: On that metric as you undertake this.

Maher Yaghi: Just kind of significant acquisitions over the.

Maher Yaghi: Medium term and in the follow up question on organic growth.

Maher Yaghi: For 'twenty five 'twenty six.

Maher Yaghi: 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.

Maher Yaghi: Versus.

Maher Yaghi: Existing portfolio has seen acceleration in 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 and first in that net debt leverage of 2.5 over the long run. Those of you who have followed us for many years, we've consistently provided our value creation model, which reflects that we're currently below one times.

Speaker Change: Yeah break those down.

Mike Eastwood: In regards to your questions. There I think you are referring to page 29.

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

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

Mike Eastwood: To your point, Mayor, we have significant flexibility, significant optionality, and to Steve's point in his discussions today on M&A, given the opportunities that we see with the pipeline, we have 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 roughly at one times today and two and a half times is our internal target. Our bank covenants provide up to four and a half times a lot of flexibility. On ROIC, additional focus on that in recent years. Certainly, as we make acquisitions, there may 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 times is why we feel very comfortable achieving, recognizing that acquisitions can have some near-term impact on that.

Mike Eastwood: And to Steve's point on his discussions today on M&A gives.

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.

Mike Eastwood: Two five times is our internal target our bank covenants provide up to four five times.

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.

Mike Eastwood: Given the impact of M&A on the ROIC C, but I think over the long run focusing on two time Im sorry, why we feel very comfortable achieving recognizing that acquisitions can have some near term impact on that your third question on organic growth for 'twenty five 'twenty six.

Mike Eastwood: 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. 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...

Douglas Middleton Arthur: Back to Kevin's question.

Mike Eastwood: Earlier today, I think 'twenty five 'twenty six revenue growth acceleration.

Mike Eastwood: Vectors I mentioned earlier tension pricing the product roadmap and then the M&A you mentioned the M&A specifically in your question.

Douglas Middleton Arthur: Stated in my prepared remarks about 50 basis points.

Douglas Middleton Arthur: <unk> contribution in calendar year 'twenty four if you look at 'twenty five 'twenty six there'll be additional contribution.

Douglas Middleton Arthur: The M&A.

Douglas Middleton Arthur: 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.

Douglas Middleton Arthur: Very well, Doug. Yeah, just quickly on your margin guidance specifically for, or, 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?

Dave: 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.

Douglas Middleton Arthur: 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.

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.

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

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 <unk>.

Mike Eastwood: 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.

Douglas Middleton Arthur: 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 Parabis.

Speaker Change: No it makes sense.

Sami Kassam: 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.

Sami Kassam: Yes, hello. Thank you. Can you hear me?

Sami Kassam: Yes, Hello. Thank you can you hear me.

Steve Hasker: 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 ongoing to deploy GEN-AI internally? Thank you, gentlemen. Yeah, that's a great question, Sammy. Thank you. 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.

Sami Kassam: Yes, Sami as Sammy.

Speaker Change: Yes. Thank you good morning, gentlemen.

Steve Hasker: A lot about <unk> contribution on the top line, but can you help us understand.

Steve Hasker: The cost efficiencies.

Steve Hasker: Technology May help the company.

Steve Hasker: And the next two or three years and perhaps.

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

Steve Hasker: Yeah.

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 into the win at all.

Speaker Change: At our core.

Steve Hasker: Our operations and functions.

Steve Hasker: <unk> functions to figure out where we can successfully apply generally by all our 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.

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 are all 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... 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.

Sami Kassam: 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.

Sami Kassam: Yeah.

Speaker Change: Thanks, Jeremy.

Sami Kassam: Okay.

Sami Kassam: Sure.

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.