Q1 2024 Thomson Reuters Corp Earnings Call

Yeah.

Operator: Good day, and welcome to the Thomson Reuters first quarter earnings call. As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to Mr. Gary Bisbee, Head of Investor Relations. Please go ahead.

Good day and welcome to the Thomson Reuters first quarter earnings call. As a reminder, today's call is being recorded at this time I'd like to turn the call over to Mr. Gary Bisbee head of Investor Relations. Please go ahead.

Gary Bisbee: Thank you, Maddie. Good morning, and thank you all for joining us today for our first quarter 2024 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 their remarks. To enable us to get to as many questions as possible, we'd appreciate it if you'd limit yourself to one question and follow up on each when we open the phone line.

Gary Bisbee: Thank you Paddy hi, good morning, and thank you all for joining us today for our first quarter 2024 earnings call.

Gary Bisbee: I'm joined today by our CEO, Steve <unk>, 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.

And if you limit yourself to one question follow up each when we open the phone lines.

Gary Bisbee: Throughout today's presentation, when we compare performance period on period, we discuss revenue growth rates before currency, as well as on an organic basis. We believe this provides the best basis to measure the underlying performance of our 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 agents. You may access these documents on our website or by contacting our Investor Relations Department.

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

Gary Bisbee: Today's presentation contains forward looking statements and non <unk> financial measures actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You may access these documents on our website or by contacting our Investor Relations Department.

Gary Bisbee: Let me now turn it over to Steve Hasker.

Gary Bisbee: Now I'll turn it over to Steve Heska.

Stephen Hasker: Thank you, Gary, and thanks to all of you for joining us today. With many of you having spent several hours with us at our Investor Day in March, we plan to keep our remarks today concise and focused on our first quarter results. 2024 has started out on a strong note, with revenue and profits exceeding our expectations. Total company organic revenues rose 9%. With the big three segments growing by 10%, in addition, strong revenue flow through boosted margins, driving a healthy profit beat.

Stephen Hasker: Thank you Gary and thanks to all of you for joining US today with many of you having spent several hours with us at our Investor Day in March we plan to keep our remarks today concise and focused on our first quarter results.

Stephen Hasker: 24 has started out on a strong note with revenue and profits exceeding our expectations total.

Gary Bisbee: Total company organic revenues rose 9%.

Gary Bisbee: With the big three segments growing by 10%. In addition, strong revenue flow through boosted margins driving a healthy profit beat.

Stephen Hasker: To incorporate the Q1 upside, we are raising our full-year 2024 revenue outlook and now see organic growth in a range of 6% to 6.5%, including seven and a half percent to eight percent for the big three segments, up from our prior outlook of approximately six percent and seven and a half percent, respectively. While we are pleased with the strong start to the year, I would caution that the revenue upside was driven largely by transactional revenue and strength from seasonal offerings, which are unlikely to recur at this level through the remainder of the year. Mike will provide additional detail on our outlook in a few minutes.

Gary Bisbee: We incorporate the Q1 upside we are raising our full year 2024 revenue outlook and now see organic growth in a range of 6% to six and a half.

Gary Bisbee: Including seven 5% to 8% for the big three segments up from our prior outlook of approximately 6% and seven 5% respectively. While we are pleased with the strong start to the year I would caution that the revenue upside was driven largely by transactional revenue and strength from seasonal offerings.

Gary Bisbee: Which are unlikely to recur at this level through the remainder of the year, Mike will provide additional detail on our outlook in a few minutes.

Stephen Hasker: At our March 12th Investor Day, we discussed our innovation focus and why we are confident in our outlook for future revenue growth acceleration. As part of that discussion... We highlighted two important market dynamics that are providing what we expect to be long-term demand tailwinds for our business. The first is the rising complexity of regulatory compliance. And the second is generative AI.

Gary Bisbee: And on March 12, Investor Day, we discussed our innovation focus and why we are confident in our outlook for future revenue growth acceleration.

Gary Bisbee: As part of that discussion we highlighted two important market dynamics that are providing what we expect to be long term demand tailwind for our business. The first is the rising complexity of regulatory compliance and the second is generative II.

Stephen Hasker: We believe our portfolio is uniquely positioned for these tailwinds, and we continue to invest heavily in innovation and our product roadmap as we seek to play a larger role in the success of our customers. These efforts are contributing to the growing product momentum we see from many areas in our business. Our capital capacity and liquidity remain a key asset that we are focused on deploying to create shareholder value, and we have made good progress on this during the first quarter.

Gary Bisbee: We believe our portfolio is uniquely positioned for these tayo wins.

Gary Bisbee: And we continue to invest heavily in innovation and our product roadmap as we seek to play a larger role in the success of our customers.

Gary Bisbee: These efforts are contributing to the growing product momentum, we see for many areas in our business our capital.

Gary Bisbee: Capital capacity and liquidity remain a key asset that we are focused on deploying to create shareholder value and we have made good progress on this during the first quarter in.

Stephen Hasker: In February, we raised our 2024 annual dividend by 10% to $2.16. We successfully acquired Peguero for approximately $800 million, and we repurchased approximately $350 million of our shares. Year-to-date, we have also sold approximately 11.7 million shares of the London Stock Exchange Group, or LSEG, generating gross proceeds of $1.4 billion. Looking forward, we remain committed to a balanced capital allocation approach, and we continue to assess additional in

Gary Bisbee: In February we raised our 2024 annual dividend by 10% to $2.16.

Gary Bisbee: We successfully acquired <unk> for approximately $800 million and we repurchased approximately $350 million of our shares year to date. We have also sold approximately 11 7 million shares of the London Stock Exchange group will L. Sig generating gross proceeds.

Gary Bisbee: <unk> of $1 $4 billion looking forward, we remain committed to a balanced capital allocation approach and we continue to assess additional inorganic opportunities.

Stephen Hasker: Now to the results for the quarter. Our first quarter organic revenues grew 9%, improving from 7% in the fourth quarter of 2023. Organic, recurring, and transactional revenue grew 9% and 22%, respectively, while print revenue declined 10% in line with our expectations. Reported revenue grew 8%. Adjusted EBITDA increased 19% to $806 million, reflecting a 390 basis point margin improvement to 42.7%. The margin expansion was driven by strong revenue growth and the timing of certain expenses. Adjusted earnings per share grew $0.30 from the prior year period to $1.11.

Gary Bisbee: Now to the results for the quarter.

Gary Bisbee: Our first quarter organic revenues grew 9% improving from 7% in the fourth quarter of 2023 organic recurring and transactional revenue grew 9% and 22% respectively. While print revenue declined 10% in line with our expectations reported revenue.

Gary Bisbee: <unk> grew 8%.

Gary Bisbee: Adjusted EBITDA increased 19% to $806 million, reflecting a 390 basis point margin improvement to 42, 7%. The margin expansion was driven by strong revenue growth and the timing of certain expenses.

Gary Bisbee: Adjusted earnings per share grew 30 sent from the prior year period to $1 11.

Stephen Hasker: Turning to the first quarter results by segment, the big three businesses delivered 10% organic revenue growth, an all-time high, and up from 8% in the fourth quarter of 2023. Legal organic revenue grew 7%, driven by continued Gen-AI momentum in Westlaw Precision and CoCouncil. Demand for our key offerings remains healthy, led by Westlaw, Practical Law, CoCouncil, HiQ, and strong performance in our international markets, partially offset by lower growth at Findlaw.

Gary Bisbee: Turning to the first quarter results by segment, the Big three businesses delivered 10% organic revenue growth and all time high and up from 8% in the fourth quarter of 2023.

Gary Bisbee: Legal organic revenue grew 7% driven by continued gen AI momentum in west La precision and co Council.

Gary Bisbee: Demand for our key offerings remains healthy led by West La practical law Co Council <unk> and strong performance in our international markets, partially offset by lower growth at fine law.

Stephen Hasker: Corporate's organic revenue growth was 12%, up from 7% in the fourth quarter and well ahead of our expectations. Organic recurring and transactional revenue grew 11% and 16%, respectively. Very strong, seasonal revenues were a key driver, with the inclusion of Peguero also boosting growth. Trust, indirect tax, practical law, and our international markets were key growth drivers in the first quarter. Tax and accounting organic revenues grew 14%, driven by recurring and transactional growth of 14% and 15%, respectively.

Gary Bisbee: Corporates organic revenue growth was 12% up from 7% in the fourth quarter and well ahead of our expectations organic recurring and transactional revenue grew 11% and 16% respectively very strong seasonal revenues were a key driver.

Gary Bisbee: With the inclusion of per Garo also boosting growth.

Gary Bisbee: Just indirect tax practical law, and our international markets, where Keith with key growth drivers in the first quarter tax and accounting organic revenues grew 14%.

Gary Bisbee: Driven by recurring and transactional growth of 14% and 15% respectively.

Stephen Hasker: Strong seasonal demand for tax and audit products and an even comparison boosted growth, and our Latin American operations, Ultra Tax, Shore Prep, and Confirmation were all key contributors. Reuters News Organic revenues rose 17%. It was driven, as expected, by generative AI-related content licensing revenue that was largely transactional in nature. Excluding this, Reuters' revenue grew modestly, driven primarily by the news agreement with the data and analytics business of LSEC. Lastly, Global Print Organic Revenues met our expectations, declining 10% year-over-year, impacted by the migration of customers from a global print product, Westlaw, which we discussed last quarter. And in summary, we're very pleased with the strong start to the year. Let me now hand it over to Mike to review our financial performance.

Gary Bisbee: Seasonal demand for tax and audit products in an easy comparison boosted growth and I'll, let Latin American operations Ultra tax Shaw prep and confirmation were all key contributors.

Gary Bisbee: Reuters news organic revenues rose 17%.

Gary Bisbee: As expected by generative II related content licensing revenue that was largely transactional in nature.

Gary Bisbee: Excluding this royalty revenue grew modestly driven primarily by the news agreement with the data and analytics business of L. Sig.

Gary Bisbee: Lastly, global print organic revenues met our expectations declining 10% year over year impacted by the migration of customers from our global print product.

Gary Bisbee: The west La which we discussed last quarter and in summary, we're very pleased with the strong start to the year, Let me now hand, it over to Mike to review our financial performance. Thanks, Steve Thanks, again for joining us today.

Michael Eastwood: Thanks, Steve. Thanks again for joining us today. As a reminder, I will talk through revenue growth before currency and on an organic basis. Let me start by discussing the first quarter revenue performance for our Big Three segments. Organic revenues improved sequentially from 8% to 10% in the first quarter, a new high water mark for the big three. Total revenue rose 9%, including the impact of acquisitions and investments. Legal Professionals' organic revenue grew 7%.

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

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

Michael Eastwood: Organic revenues improved sequentially from 8% to 10% in the first quarter, a new high watermark for the big three.

Michael Eastwood: Total revenue rose, 9%, including the impact of acquisitions and divestitures.

Michael Eastwood: Legal professionals organic revenue grew 7%.

Michael Eastwood: Key drivers from a product perspective remain Westlaw, CoCouncil, Practical Law, HiQ, and our international business. Government grew 6% in the quarter, while fine law remains a headwind to the segment growth rate. Legal professionals' revenue growth also included a benefit of $4 million due to migrating customers from a global print product to Westlaw, as I previewed last quarter. In our corporate segment, organic revenues grew 12%, improving sharply from 7% in pre-selection. Recurring revenue grew 11% while transactional revenue was up a robust 16% year over year. Several factors drove the improvement. Seasonal offerings contributed significantly, especially one-source tax information reporting within trust and, to a lesser extent, confirmation.

Michael Eastwood: Key drivers from a product perspective remain less law co counsel practical law.

Michael Eastwood: <unk> and our international businesses.

Michael Eastwood: Government grew 6% in the quarter, while fine law remains a headwind to the segment growth rate.

Michael Eastwood: Legal professionals revenue growth also included a benefit of $4 million due to migrating customers from a global print product to west La as I previewed last quarter.

Michael Eastwood: In our corporate segment organic revenues grew 12%.

Michael Eastwood: Improving sharply from 7% in recent.

Michael Eastwood: Recurring revenue grew 11%, while transactional was up a robust 16% year over year.

Michael Eastwood: Several factors drove the improvement.

Michael Eastwood: Seasonal offerings contributed significantly, especially one source tax information reporting with entrust and to a lesser extent confirmation.

Michael Eastwood: The inclusion of Peguero added roughly 30 basis points to organic growth, and Indirect Tax, Practical Law, and our international segments all delivered strong growth. While this was clearly an encouraging result, there was a bit more than 2.5% contribution from items we see as unlikely to recur beyond Q1, including outsized tax information reporting revenue and select comparison favorability versus the first quarter of 2023. For Q2, we expect a return to growth rates closer to the 2023 trend than the first quarter level.

Michael Eastwood: The inclusion of the Gara added roughly 30 basis points to organic growth.

Michael Eastwood: And indirect tax practical law and our international segments, all delivered strong growth.

Michael Eastwood: While this was clearly an encouraging result, there was a bit more than two 5% contribution from items, we see is unlikely to recur beyond Q1.

Michael Eastwood: Including outsized tax information reporting revenue and select comparison favorability versus first quarter of 2023.

Michael Eastwood: For Q2, we expect a return to growth rates closer to the 2023% trend in the first quarter level.

Michael Eastwood: Saxon Accounting also had a very strong quarter, growing 14% organically. Recurring and transactional revenue grew 14% and 15%, respectively. Seasonal revenue strength from SurePrep and confirmation, along with continued robust growth from our Latin America businesses, were key drivers. In addition, we face an easier comparison as Q1 of 2023 included a minor revenue reserve that we called out last year. This benefited the segment revenue growth rate by nearly 2% this quarter. Moving on to Reuters News.

Michael Eastwood: Tax and accounting also had a very strong quarter growing 14% organically.

Michael Eastwood: Recurring and transactional revenue grew 14% and 15% respectively.

Michael Eastwood: Seasonal revenue strength from <unk> confirmation, along with continued robust growth from our Latin America businesses were key drivers.

Michael Eastwood: In addition, we faced an easier comparison as Q1 of 2023 included a minor revenue reserve that we called out last year.

Michael Eastwood: This benefited the segment revenue growth rate by nearly 2% this quarter.

Michael Eastwood: Organic revenue increased 17% for the quarter, driven primarily by transactional revenue from additional generative AI content licensing agreements, as we had previewed last quarter. Excluding this revenue, Reuters' organic revenue increased approximately 3%. Lastly, global print organic revenues declined 10%, or 6% when excluding the impact of the revenue shift to legal professionals I mentioned earlier.

Michael Eastwood: Moving to Reuters news organic revenue increased 17% for the quarter drill.

Michael Eastwood: Driven primarily by transactional revenue from additional generative AI content licensing agreements as we had previewed last quarter.

Michael Eastwood: Excluding this revenue orders organic revenue increased approximately 3%.

Michael Eastwood: Lastly, global print organic revenues declined 10%.

Michael Eastwood: Or 6% when excluding the impact from the revenue shift to legal professionals I mentioned earlier.

Michael Eastwood: This was in line with our expectations. On a consolidated basis, first quarter organic revenues grew by 9%. In total, the seasonal strength, which is unlikely to recur beyond Q1, along with the Reuters transactional content licensing revenue and select comparability items I mentioned, contributed approximately 2% to Q1 revenue growth. Now, turning to our profitability. Adjusted EBITDA for the big three segments was $716 million, up 15% from the prior year period, with a 45.8% margin.

Michael Eastwood: This was in line with our expectations.

Michael Eastwood: On a consolidated basis first quarter organic revenues grew by 9%.

Michael Eastwood: In total the seasonal strength, which is unlikely to recur beyond Q1, along with the Reuters transactional content licensing revenue.

Michael Eastwood: And select comparability items I mentioned contributed approximately 2% to Q1 revenue growth.

Michael Eastwood: Turning to our profitability adjusted.

Michael Eastwood: EBITDA for debate III segments was $716 million up 15% from the prior year period with a 45, 8% margin.

Michael Eastwood: Segment margins rose nicely across all big three segments, driven primarily by strong revenue growth and the timing of expenses. We expect technology, product, and acquisition integration spending to increase in the second quarter versus the Q1 spend level and persist at a higher level through the remainder of the year. Moving to Reuters News.

Michael Eastwood: Segment margins rose nicely across all big three segments, driven primarily by strong revenue growth and the timing of expenses.

Michael Eastwood: We expect technology product and acquisition integration spending to increase in the second quarter versus the Q1 spend level and persist at a higher level through the remainder of the year.

Speaker Change: Moving to Reuters news.

Michael Eastwood: Adjusted EBITDA was $60 million, with a 28.3% margin. The significant profit increase from the prior year period is largely attributable to the revenue flow-through from the aforementioned generative AI content licensing deals. We expect margins to return to more typical historical levels for the remainder of the year.

Speaker Change: Adjusted EBITDA was $60 million with a 28, 3% margin.

Speaker Change: This significant profit increase from the prior year period is largely attributable to the revenue flow through from the aforementioned generative AI content licensing deals.

Speaker Change: We expect margins to return to more typical historical levels for the remainder of the year.

Michael Eastwood: Global print suggested EBITDA was $47 million, with a margin of 38.2%. In aggregate, total company adjusted EBITDA was $806 million, a 19% increase versus Q1 2023. Returning to earnings per share, adjusted EPS was $1.11 for the quarter, up 32% from $0.84 in the prior year period. The increase was mainly driven by higher adjusted EBITDA and a lower share count. Currency had no impact on adjusted EPS for the quarter.

Speaker Change: Global Print's adjusted EBITDA was $47 million with a margin of 38, 2%.

Speaker Change: In aggregate total company adjusted EBITDA was $806 million, a 19% increase versus Q1 2023.

Michael Eastwood: Turning to earnings per share adjusted EPS was $1 11 for the quarter.

Michael Eastwood: 32% from 84 in the prior year period.

Michael Eastwood: The increase was mainly driven by higher adjusted EBITDA and a lower share count.

Michael Eastwood: Currency had no impact on adjusted EPS in the quarter.

Michael Eastwood: Let me now turn to our free cash flow performance for the first quarter. Reported free cash flow was 271 million, up 101% from 133 million in the prior year period. Consistent with previous quarters, this slide removes the distorting factors impacting our pre-cash flow. If you adjust for the discontinued operations component of our free cash flow and change program payments of $63 million in the prior year period, Comparable free cash flow from continuing operations was $272 million, up $78 million year-over-year, primarily due to higher EBITDA. We continue to successfully monetize our stake in the London Stock Exchange Group.

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

Speaker Change: Reported free cash flow was $271 million.

Speaker Change: 101% from $133 million in the prior year period.

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

Speaker Change: If you adjust for the discontinued operations component of our free cash flow and change program payments of $63 million in the prior year period.

Speaker Change: Comparable free cash flow from continuing operations was $272 million.

Speaker Change: Up $78 million year over year, primarily due to higher EBITDA.

Speaker Change: We continue to successfully monetize our stake in the London stock Exchange group.

Michael Eastwood: In the first quarter, we sold 10.1 million shares for $1.2 billion in gross proceeds. This includes 7.5 million shares sold in a March block trade and 2.6 million shares sold through exercise call options. Yesterday, we sold an additional 1.6 million shares to LSAG for gross proceeds of approximately $175 million. Following these sales, our remaining stake is 4.3 million shares, which are eligible for sale in Q1 2025. Our tax basis on the remaining shares is approximately $100 million. For your math, we would assume a 25% capital gains tax rate on gains above $100 million.

Speaker Change: In the first quarter, we sold $10 1 million shares for $1 2 billion of gross proceeds.

Speaker Change: This includes seven 5 million shares sold in a March block trade and two 6 million shares sold through exercise call options.

Speaker Change: Yesterday, we sold an additional one 6 million shares to L. Sag for gross proceeds of approximately $175 million.

Speaker Change: Following these sales our remaining stake is $4 3 million shares which are eligible for sale in Q1 2025.

Speaker Change: Our tax basis on the remaining shares is approximately $100 million.

Speaker Change: Or your math, we would assume a 25% capital gains tax rate on gains above $100 million.

Michael Eastwood: I will conclude with our updated 2024 outlook. As Steve outlined, we are increasing our 2024 total and organic revenue growth outlooks for TR and the big three to incorporate the first quarter upside. We now see total revenue growth of 6.5% to 7%, up from approximately 6.5%. And organic revenue growth of 6% to 6.5%, up from approximately 6%. Total Big 3 revenue growth of 8% to 8.5%, up from approximately 8%, and organic Big 3 revenue growth of 7.5% to 8%, up from approximately 7.5%.

Speaker Change: I will conclude with our updated 2020 for outlook.

Speaker Change: As Steve outlined we are increasing our 2024 total and organic revenue growth outlooks for TR and the big three to incorporate the first quarter upside.

Speaker Change: We now see total revenue growth of six 5% to 7% up from approximately six 5%.

Speaker Change: Organic revenue growth of 6% to six 5% up from approximately 6%.

Speaker Change: Total baked III revenue growth of 8% to eight 5% up from approximately 8%.

Speaker Change: And organic baked III revenue growth of seven 5% to 8% up from approximately seven 5%.

Michael Eastwood: We are maintaining other 2024 guidance metrics, including adjusted EBITM margins of approximately 38 percent and free cash flow of approximately $1.8 billion. I would note our full-year effective tax rate outlook remains approximately 18 percent, despite the first quarter coming in at 19.1 percent. We expect tax developments later in the year will bring the four-year rate down to 18 percent. For the second quarter of 2024, we see organic revenue growth of approximately 6%, with the growth rates for our corporates, tax, and accounting, and broader segments moderating as the Q1 seasonal strength wanes and above-trand transactional growth rates return to more typical levels. We see a Q2 adjusted EBITDA margin of approximately 36%, reflecting a pickup in the pace of investments we're making in product, infrastructure, and acquisition integration. Let me now turn it back to Gary for questions.

Speaker Change: We are maintaining other 2024 guidance metrics, including adjusted EBITDA margins of approximately 38% and free cash flow of approximately one 8 billion.

Speaker Change: I would note our full year effective tax rate outlook remains approximately 18% the.

Speaker Change: Despite the first quarter coming in at 19, 1%.

Speaker Change: We expect tax developments later in the year will bring the full year rate down to 18%.

Speaker Change: For the second quarter of 2024, we see organic revenue growth of approximately 6% with the growth rates for our corporate tax and accounting and broader segments moderating as the Q1 seasonal strength wanes and above trend transactional growth rates.

Speaker Change: Returned to more typical levels.

Speaker Change: We see a Q2 adjusted EBITDA margin of approximately 36%.

Speaker Change: Reflecting a pickup in the pace of investments, we're making in product.

Speaker Change: Infrastructure and acquisition integration.

Speaker Change: Let me now turn it back to Gary for questions.

Gary Bisbee: Thank you, Maddie. We're ready to begin the Q&A.

Gary Bisbee: Thank you Matti, where we're ready to begin the Q&A.

Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit your questions to one question and one follow-up question.

Gary Bisbee: Thank you if you would 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. Please limit your questions to one question and one follow up question again, Chris.

Operator: Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. And we will take our first question from Drew McReynolds with RBC.

Gary Bisbee: Star one to ask a question, we'll pause for just a moment.

Gary Bisbee: And an opportunity to signal for questions.

Drew Mcreynolds: Yeah, thanks. Thanks very much.

Gary Bisbee: We will take our first question from drew Mcreynolds with RBC.

Drew Mcreynolds: And good morning. Obviously, a very strong quarter, you know, one of the strongest I can ever recall, and obviously, Steve and Mike, in your comments, you're careful not to kind of indicate this is recurring, clearly. But certainly, there are a lot of good things happening here. So I guess the question, as you look out for the remainder of the year, when you think about the underlying business, excluding, you know, the year-over-year comps, the seasonality, the Reuters news impact, etc., relative to where you were a couple of months ago, like where are you a little bit more optimistic? On the trajectory of the big three in the core business? And, you know, where are there still some kind of sources for caution? Thank you.

Drew Mcreynolds: Yeah. Thanks, Thanks, very much and good morning.

Drew Mcreynolds: So obviously, a very strong quarter.

Drew Mcreynolds: One of the strongest I can ever recall.

Speaker Change: Obviously, Steve and Mike in your comments Youre careful market to kind of indicate that things recurring clearly.

Drew Mcreynolds: But certainly there's a lot of good things happening here. So I guess the question as you look out for the remainder of the year. When you think about the underlying business excluding.

Speaker Change: The year over year comps with seasonality, the Reuters news impact et cetera.

Speaker Change: Relative to where you were a couple of months ago, like where are you a little bit more optimistic on the trajectory of the big three in the core business and where are there still some kind of sources for caution. Thank you.

Stephen Hasker: Drew, thanks for the question. It's Steve.

Speaker Change: But gerry thanks.

Gerry: Thanks for the question Steve.

Speaker Change: I think the headline for me is.

Speaker Change: These cautious optimism we're pleased with the start to the year I think it sets us up.

Stephen Hasker: Look, I think the headline for me is cautious optimism. You know, we're pleased with the start of the year. I think it sets us up to continue our investment program and look for opportunities to better serve our customers. But it is only one quarter, and so we're pleased with the start, but we're not going to sort of declare victory just yet.

Speaker Change: Two.

Speaker Change: To continue our investment.

Speaker Change: <unk> investment program.

Speaker Change: And and look for opportunities to better serve our customers but.

Speaker Change: But it is only one quarter.

Speaker Change: And so we're pleased with the start but we're not.

Speaker Change: We're not going to sort of declare victory just yet.

Michael Eastwood: Drew, I'll add a few additional items as a reminder for everyone. Q1 is our smallest sales quota for the year, with Q4 being the largest, which reflects a kind of tempering our level of enthusiasm after the first quarter.

Speaker Change: Drew I'll add a few additional items. So as a reminder for everyone Q1 is our smallest sales quota for the year with Q4 being the largest.

Drew Mcreynolds: Which reflects kind of tempering our level of enthusiasm after the first quarter.

Michael Eastwood: The question, kind of, Drew, is what do you have to believe for continued strong revenue performance? Very consistent with Investor Day, I would highlight four items. Number one is our Gen-AI acceleration, which we've consistently stated we expect to accelerate in the second semester of 24, and then as we go into 2025, I think about that Gen-AI acceleration as pace acceleration in the sequencing, given the upcoming product releases we have with Gen-AI.

Drew Mcreynolds: It's a question kind of drew is why do you have to believe four key.

Speaker Change: Continued strong revenue performance very consistent with the Investor day, I would highlight four items.

Speaker Change: Number one is our gen AI acceleration, which we've consistently stated we expect to accelerate in the second semester 24, and then as we go into 2025, I think about that Gen AI acceleration pace acceleration and the sequencing given the upcoming product releases, we have with Nai.

Speaker Change: The second areas is retention, we continue to be approximately 91% for total TR.

Michael Eastwood: A third area that we focus on is in regards to the recent M&A. We're very pleased where we are today. But if you think about sustaining the pace of organic growth and accelerating it over the time horizon, M&A is a key factor. And then, thirdly, fourth, fourth, would be pricing. So I think those are the four areas, Drew, that we continue to focus on as we look over the time horizon. OK, that's great.

Speaker Change: A third area that we focus on is in regards to the recent M&A.

Speaker Change: We're very pleased where we are today, but if you think about sustaining the pace of organic growth and accelerating over the time horizon on M&A.

Speaker Change: M&A is a key factor and then thirdly fourth fourth area would be pricing. So I think those were the four areas.

Speaker Change: Through that we continue to focus on as we look over the time horizon.

Drew Mcreynolds: Okay, that's a great contact. Thank you.

Speaker Change: Okay Thats great context, thank you.

Aravinda Galappatthige: We will take our next question from Arvinda Galpathic, with Concord Genuini.

Speaker Change: We will take our next question from Linda.

Linda: Linda Golf passage.

Linda: Concord Genuity.

Aravinda Galappatthige: Good morning, thanks for taking my question. You know, one thing that obviously jumped out, including on Invest Today was sort of the breadth of your new product development pipeline. Maybe Steve, it would be helpful to sort of focus us on the main new initiatives on that front that we should be thinking about in terms of what can sort of really materially push the organic number up. I mean, is it sort of the drafting product? Is it sort of the co-council sort of going across to the other professions? Maybe just sort of help focus that so that we know what exactly to be watching more closely?

Linda: Good morning, Thanks for taking my question.

Linda: One thing that obviously jumped out.

Linda: <unk> on Investor day was sort of feed the breadth of your new product.

Speaker Change: The development pipeline.

Linda: Maybe Steve it will be helpful to sort of set of focus us on like sort of the main.

Linda: Maine, and new initiatives on that front that we should be thinking about in terms of what cancer really materially push the organic number up I mean is it.

Linda: The drafting product is it sort of co counsel sort of going across to the other professions.

Linda: Maybe just sort of help focus that test of it.

Linda: We know what exactly to be watching more closely.

Stephen Hasker: Yeah, Aravinda, thanks for the question. I think, as you know, we've got an ambitious... Product Development and Innovation Roadmap for this year and beyond. I think, certainly, for us as a company, we've turned a new page in terms of our aspirations, and I hope our capability to put new products in the hands of our customers and make their professional lives easier and more productive and, ultimately, more successful. The answer to your question is that it's pretty balanced across the product.

Speaker Change: Yes. Thanks for the question I think as you know we've got an ambitious.

Speaker Change: Product development and innovation roadmap for this year and beyond.

Speaker Change: I think certainly for us as a company.

Speaker Change: We've turned a new page in terms of al.

Speaker Change: In terms of our explorations and I hope our capability to put new products in the hands of our customers and make there.

Speaker Change: The professional lives easier and more productive and ultimately more successful.

Speaker Change: The answer to your question is it's pretty balanced across the product. So I know that doesn't make things easier for you but.

Stephen Hasker: So I know that doesn't make things easier for you, but the biggest area of focus to date has been in legal with Westlaw Gen AI and Practical Law Gen AI and the extensions to come in intelligent drafting and also, of course, not only the sort of investment in co-counsel skills but also the announcement that we're going to have co-counsel run as our AI capability across all of our products. So the sort of starting point for us, which has been very much customer and market driven, has been legal.

Speaker Change: We have the biggest area of focus to date has been in legal with.

Speaker Change: With wistful.

Speaker Change: <unk> with practical law NII.

Speaker Change: And the extensions to come and intelligent drafting and also of course.

Speaker Change: Not only the sort of investment in the co counsel skills, but also the the announcement that we're going to have co counsel run us out AI capability across all of our products. So that's the sort of starting point for us, which has been very much customer and market driven as Brendan legal, but having said that we've got an aggressive program.

Stephen Hasker: But having said that, you know, we've got an aggressive program in accounting, audit, and tax as well with Checkpoint Edge, AI Assistant Research, with, you know, integrating OneSource and Pagaro and modernizing and updating UltraTax and VirtualOffice in addition to a series of investments under Elizabeth Beastrom and Dave Weil in the audit space. And then lastly, we'll migrate Clear to the cloud and modernize that and get it Fed So it's going to be a very busy year.

Speaker Change: In accounting audit in Texas, well with checkpoint edge.

Speaker Change: My assistant research.

Speaker Change: Integrating <unk>.

Speaker Change: And in modernizing and updating ultra <unk> and virtual office. In addition to a series of investments under Elizabeth boost driven type while in the audit space and then lastly.

Speaker Change: Migrate clear to the cloud and modernize that get it fed ramp compliance. So it's going to be a very busy year and I think the good news.

Stephen Hasker: And I think the good news, uh, in a sense is that we're not overly dependent on any one of these products hitting the ball out of the park. We think that all of them will add value to our customer sets. All of them are getting positive responses, and those that have been launched.

Speaker Change: In a sense is that we're not overly dependent on any one of these products hitting the ball out of the park.

Speaker Change: We think that all of them will add value to our customer sets all of them are getting positive responses in those that have been launched.

Michael Eastwood: Um, more so. And so it's a pretty diversified story. Mike, anything to add there? That's a great summary, Steve.

Speaker Change: More so.

Speaker Change: So it's a pretty diversified story, Mike anything to add there that's a great summary.

Aravinda Galappatthige: Thanks. A quick follow-up from Mike. I know that on prior calls, Mike had sort of clarified that the weighted average price increase was about 3.5%. We're still, I just wanted to confirm, we're looking at a similar level this year. Is that correct? Yes, Aravinda, very concerned.

Speaker Change: Thanks, a quick follow up for Mike I know that in prior calls Mike.

Michael Eastwood: Sort of clarified that.

Michael Eastwood: The weighted average price increase was about three and a half a cent.

Speaker Change: We still I just wanted to confirm we're looking at a similar level. This year is that.

Speaker Change: Is that correct.

Michael Eastwood: Yes, Aravinda, very consistent in that range of three and a half percent, maybe slightly higher as we progress during the year, but that's a good estimate. Thank you. Sure. We will take our next question from Manav Patnaik with Barclays. Good morning.

Speaker Change: Yes.

Michael Eastwood: Very consistent in that range of three 5%, maybe slightly higher as we progress during the year, but thats a good estimate.

Speaker Change: Thank you.

Speaker Change: Sure.

Manav Patnaik: We will take our next question from Manav Patnaik, with Barclays.

Speaker Change: We will take our next question from Manav Patnaik with Barclays.

Manav Patnaik: Good morning, I guess I just have in a more of a capital allocation refresh your question if you call it but.

Manav Patnaik: I think you've done most of the buybacks that you are kind of authorized two you've raised the dividend. So the first part is just what should we expect on those two fronts and then.

Speaker Change: Second part is on M&A and I know you had the capital I was just curious how you think about whether your team has the capacity to keep doing more deals and in what timeframe.

Michael Eastwood: Yeah, happy to start with that, Manav. Just as a reminder for everyone, we did increase our dividends by 10% in Q1 of 2024. That was the third consecutive year.

Speaker Change: Yeah happy to start with that Manav, just as a reminder for everyone. We did increase our dividend by 10% in Q1 of 2024 that was a third consecutive year.

Manav Patnaik: We take it one year at a time, but I would anticipate.

Manav Patnaik: That we would increase it dividends by another 10% in Q1 of 2025, just to manage expectations second from a buyback perspective, the $1 billion and CIB share buyback that we announced in November 2023, we are close to $850 million on that so we'll definitely and complete it.

Speaker Change: By June 30, as previously discussed and then that leaves us to the big item.

Michael Eastwood: We take it one year at a time, but I would anticipate, Manav, that we would increase its dividends by another 10% in Q1 of 2025, just to manage expectations. And then that leads us to the big item, which is M&A. Certainly, with $8 billion of capital capacity between now and 2026, our near-term focus will be on identifying strategic M&A, just to continue to strengthen our portfolio and meet customer needs. So if you look across the big three, we're optimistic with our pipeline there, but we'll continue to be very rigorous, very diligent, and maintain a high bar.

Speaker Change: Is M&A, certainly with $8 billion of capital.

Speaker Change: Capacity between now and 2026, our near term focus will be on identifying strategic M&A.

Speaker Change: Just to continue to strengthen our portfolio and meet customer needs. So if you look across the big three we're optimistic with our pipeline there, but we will continue to be very rigorous very diligent maintain a high bar.

Michael Eastwood: On your question on capacity for M&A, we certainly have that. If you look over the last three years, we have added capacity resources across our team, so financial capacity is not a concern, and then from a resource bandwidth perspective, not a concern. It's something that we continuously assess, but we feel like we're in good shape.

Speaker Change: On your question on capacity for M&A, we certainly have that if you look over the last three years, we have.

Speaker Change: Added capacity.

Speaker Change: Our resources across our team so capacity financial capacity, not a concern and denim from a resource bandwidth not of concern is something that we continuously assess but we feel like we're in good shape there.

Stephen Hasker: Yeah, just to add to that, Manav, thanks for the question. I mean, if you look at the last 18 months and the two and a bit billion we've spent, you know, it's been pretty evenly spread. And we certainly didn't set out to do that.

Speaker Change: Just to add to that Matt. Thanks for the question I mean, if you look at the last 18 months and the 208 billion. We've spent it has been.

Matt: It's been pretty evenly spread and we certainly didn't set out to do that.

Speaker Change: Not a democratic process by any means in terms of how we prosecute M&A opportunities but.

Speaker Change: <unk> within within tax <unk> accounting.

Speaker Change: And.

Speaker Change: Dave why don't these team has been a great addition to our tax and accounting team, obviously pick arrows in the corporate space in invoicing Directx.

Stephen Hasker: It's not a democratic process by any means, in terms of how we prosecute M&A opportunities, but, you know, sure preps within, within tax and accounting. And, and, and, you know, Dave Weil and his team have been a great addition to our tax and accounting team. Obviously, Piguero's in the corporate space, and he invoicing indirect tax, and Case Text, Jay Keller, and the team https://www.youtube.com.au We're focused on Reuters and Westlaw Japan as an international asset.

Speaker Change: And <unk> did take Hiller on the Tamar.

Speaker Change: Sure.

Speaker Change: Our focused initially had been focused initially their product set on the legal professional though as I said, we see real opportunity to take that set of capabilities and skills across all of the big three and potentially even leverage it in the newsroom under <unk> leadership so.

Speaker Change: And then of course imaging the insurer.

Speaker Change: Where we're focused on Reuters and Whistler, Japan as an international asset so that's been pretty well will spread.

Stephen Hasker: So it's been pretty well, well spread. And, you know, Kirsty Roth and her operations and technology team have shown tremendous capacity to onboard and integrate these acquisitions. So I think as we sit here today, we'll continue, as Mike said, to hold the bar very high for acquisitions. We're not going to get deal fever or anything like that.

Speaker Change: Kirstie, we're often in their operations and technology teams have shown tremendous capacity to onboard and integrate these acquisitions. So I think as we sit here today, we will continue as Mike said to hold the bar very high.

Speaker Change: For acquisitions.

Speaker Change: Get deal fever, or anything like that but we're confident that.

Stephen Hasker: But we're confident that the teams are primed and ready should we see the right assets. Just one final comment, I think we've discussed this in the past with Adrian Fannini, who leads Latin America. Now, more broadly, our international assets. We remain keen to expand our international footprint from approximately 20 percent of revenue today, and Adrian will lead the charge on that for us internationally.

Speaker Change: That the teams are primed and ready should we see the right assets.

Speaker Change: One final comment other than that I think we've discussed this in the past with Adrian <unk>, who leads Latin America now more broadly our international assets, we remain keen to expand our international footprint from approximately 20% of revenue today and Adrian will lead the charge on that for us internationally.

Speaker Change: Got it thank you very much.

Vince Valentini: We will take our next question from Vince Valentini with TD Cowen.

Speaker Change: We will take our next question from Vince Valentini with TD Cowen.

Vince Valentini: Thanks very much. Mike, can I make sure we, or I, understand the seasonal non-recurring boosts and how they impact things this quarter and going forward? So am I right to... If there's 250 basis points of boost in the corporate sector, and 200 basis points of tax, the revenue increment there would be, pretty high flow through to EBITDA, and that may be part of the reason why the margins were so strong in this quarter and so much better than what the full year guidance implies. I'll leave that as part A of the question and pause.

Vince Valentini: Thanks very much.

Speaker Change: Yes.

Vince Valentini: Mike can I make sure we.

Vince Valentini: Understand.

Vince Valentini: These seasonal nonrecurring boost and how they impact.

Michael Eastwood: Things this quarter and going forward so.

Michael Eastwood: Am I right.

Michael Eastwood: If there is 250 basis points of Bush and the corporate sector 200 basis points ex that.

Michael Eastwood: Revenue.

Michael Eastwood: Increment there would be.

Michael Eastwood: Pretty high flow through to EBITDA and that may be part of the reason why the margins were so strong in this quarter and so much better than what the full year guidance implies I'll leave that as part of your question.

Michael Eastwood: Yeah, maybe if I could just take these one at a time as you go through them, Vince. Your summary is spot on. It's a good insight, and a good summary there. Okay.

Speaker Change: Yeah, I'll, just maybe if I could just take these one at a time as you go through them. Vince Your summary is spot on it's a good good insights good summary, there.

Vince Valentini: So then the go-forward question, I'm just, no criticism at all, the results are strong, I just want to make sure I understand it, is the, do you expect these timing benefits to wash out by the end of this year, like so that you've already sort of given Q2 guidance, it seems like some of the margin benefit will wash out as early as Q2, but for the revenue, will it all normalize by the end of the year, or is this just setting up a more difficult comparison for year-over-year growth in 2025? Yeah, I think, Vince, as we

Speaker Change: Okay.

Speaker Change: So the go forward question I'm just.

Speaker Change: No criticism at all the results are strong I just want to make sure I understand it is the.

Speaker Change: Do you expect these timing benefits to wash out by the end of this year.

Speaker Change: You've already sort of given Q2 guidance it seems like some of the margin.

Speaker Change: It will wash out as early as Q2, but for the revenue will at all normalize by the end of the year or is this just setting up a more difficult comparison for year over year growth in 2025.

Michael Eastwood: Yeah, I think Vince, as we progress during the course of the year. I provided the Q2 guidance for you both on revenue and EBITDA. I think we remain quite optimistic as we progress during the year. I'll provide some additional insights here.

Speaker Change: Yes.

Speaker Change: Vince as we progressed during the course of the year and it provided the Q2.

Vince Valentini: Guidance, where you both on revenue and EBITDA I think we remain quite optimistic as we progress during the year I'll provide some additional insights here I think one of the items that we were very pleased with the corporate performance certainly in Q1, but we're continuing to monitor the sales pipeline full.

Michael Eastwood: I think one of the items that we were very pleased with the corporate's performance, certainly in Q1, but we're continuing to monitor the sales pipeline for the corporates. We had mentioned in prior quarters some elongation of sales cycles there. We saw some improvements in corporates in Q1. We're cautiously optimistic that that will improve in the course of the year. Certainly, we'll keep you posted on the revenue front each quarter, and we've maintained our EBITDA margin there.

Vince Valentini: For the corporates, we had mentioned in prior quarters. Some elongation of sales cycles. There. We saw some improvements in corporates. In Q1, we are cautiously optimistic that that will progress during the course of the year certainly we will keep you posted on the revenue front each quarter.

Vince Valentini: And we've maintained our EBITDA margin there we think we continue to have opportunities.

Michael Eastwood: We think we continue to have opportunities to make investments there. As a reminder, as we progress during the year, Q4 of 2023 included $18 million of generative AI revenue from Reuters, so that creates a stronger or more difficult year-over-year comparison. So there are some additional things to consider, Vince, as we progress during the remainder of the year.

Vince Valentini: To make our investments there as a reminder, as we progress during the year Q4 of 2023.

Vince Valentini: Included $18 million of generative AI revenue from borders so that creates a stronger or more difficult year over year can Pat comparisons. So there are some additional puts and takes to consider events as we progress during the remainder of the year.

Speaker Change: Fair enough. Thank you.

Speaker Change: Uh huh.

Heather Balsky: We will take our next question from Heather Balsky with Bank of America.

Speaker Change: We will take our next question from Heather <unk> with Bank of America.

Heather Balsky: Hi, thank you for taking my question. Um, I was hoping you could just help us understand the sequencing for legal, both thinking about how you performed in 4Q into 1Q and how we should think about trends for the rest of the year. And if there's any seasonality there, you posted, I think, a six organic x the print shift last quarter was seven. I know there tends to be some noise just because of how you round the numbers. So, I imagine that potentially the basis point Delta is a little bit different than how it looks on paper.

Heather: Hi, Thank you for taking my question.

Heather: I was hoping you could just help us understand the sequencing for legal both thinking about how you performed in <unk> and how we should think about trends for the rest of the year and if theres any seasonality. There you posted I think a six organic ex the print shaft last quarter was seven.

Heather Balsky: But can you help us understand the trends there? Was there any seasonality? Was Fines Law a bigger drag? And then the follow-up question there is specific to Fines Law. So, that's been a drag for some time. Anything you can do there to help accelerate that growth? Thank you.

Speaker Change: I know there tends to be some noise just because of how you round the number so am.

Speaker Change: I imagine that potentially the basis point Delta is a little bit different than how it looks on paper.

Speaker Change: But can you help us understand the trends there was there any seasonality.

Speaker Change: With a bigger drag.

Speaker Change: And then the follow up question. There is specific to find law that's been a drag for some time anything you can do there to help accelerate that growth.

Speaker Change: Yeah.

Michael Eastwood: Sure, Heather, I'm going to start and then Steve will supplement. If you go back to Q4 2023 versus Q1 2024 for legal professionals, organic growth, each rounded to seven. However, Heather, we don't report at the decimal level, but if you look at the 7%, Q1 2024 is a stronger seven in Q1 2024 than Q4 2023. I think that's a really important point.

Speaker Change: Sure Heather I'm going to start and then Steve will supplement if you go back to Q4 2023 versus Q1 'twenty four for legal professionals.

Speaker Change: Organic growth each.

Speaker Change: Grounded to seven however, Heather.

Speaker Change: We don't report on the decimal level, but if you look at the 7% Q1 2024 is a stronger seven.

Speaker Change: In Q1, 24, then Q4 'twenty three I think that's a really important point.

Michael Eastwood: Then, Heather, just as a reminder, if you dissect our legal professionals, I won't go through every category of business, but we talk a lot about Westlaw, practical law, co-counsel, IQ, and then we get to government and fine law. As we discussed today, government was 6% in Q1 2024, which is fairly consistent with recent quarters, which gets to the heart of your question on fine law. As a reminder, Fine Law is the leading provider of marketing solutions and lead generation for attorneys and law firms.

Stephen Hasker: Heather just as a reminder, if you dissect our legal professionals I won't go through every category of business, but we talked a lot about west La practical law Co Council.

Stephen Hasker: And then we get to government and fine law as we discussed today government was 6% in Q1 of 'twenty, four which is fairly consistent with recent quarters, which gets to the heart of your question on fine law.

Michael Eastwood: This focuses, Heather, more on solo or single-attorney firms and small law firms. It's about $300 million in annual revenue led by Mark Haddad there. It's quite different than our core research offerings of Westlaw and practical law. Then, as we go into Q2, Q4, through Q4, we're optimistic that we'll see incremental step-ups in legal professionals overall, but that rounding, once again, is a key factor that Q1 is certainly a stronger seven than Q4 of 23. Steve?

Speaker Change: As a reminder, fine law as the leading provider of marketing solutions lead generations for attorneys and law firms. This focus is Heather Moore on solo a single attorney firms and small law firms, it's about $300 million in annual revenue led by Mark said dad there it is.

Speaker Change: Quite different than our core research offerings of less law and practical law Mark entertain doing a solid job in Q1, we are optimistic as we go into Q2 Q3.

Speaker Change: We'll see continued progression, but the reason we're very transparent on fine law. If you look at our optimism in regards to the legal research offerings with west La and practical law. The acceleration for total it's just suppressed a little bit by fine law. So that's why we're calling it out but we are seeing.

Speaker Change: Solid.

Speaker Change: Progression with fine law, it's just lower than what we're seeing with the growth overall, Heather for west La and practical law. So hopefully that gives you a context and then as we go into Q2 Q4 through Q4, we will often optimistic that we'll see incremental step ups in <unk>.

Speaker Change: Who are professionals overall, but that rounding once again is a key factor that Q1 is certainly a stronger <unk> than Q4 of 'twenty three.

Stephen Hasker: Yeah, Heather, the only thing I'd add is, you know, we mentioned that the investment today, I'm sure you've heard this, we sort of said, look, we firmly believe that this increase in complexity associated with regulatory compliance and, equally importantly, generative AI will give us the opportunity in a few years to play a larger role in the success of our customers. Everything we see today reinforces that.

Heather Balsky: Yes, the only thing I'd add is.

Speaker Change: We mentioned at the Investor Day.

Speaker Change: We sort of said look we firmly believe that.

Speaker Change: That.

Speaker Change: This increasing complexity associated with regulatory compliance and equally importantly, Jim generative II gives us the opportunity.

Speaker Change: He has to play a larger role in the success of our customers everything we see today reinforces that.

Stephen Hasker: But we also said that the sort of magnitude of that expanded role and the timing of getting there remains unclear at this point. And I think it still remains unclear a quarter or so later. So as you can imagine, you know, our legal professionals business run by Raghu and Ryan Kessler, General Counsel, Laura Clayton McDonald, Aaron Brown, Steve Rubley, Pat Evelyn. But, you know, the customer reaction's been very strong, but it's also the customers, I think, will behave differently, and they'll pick up at different paces.

Speaker Change: But we also said that the sort of magnitude of that in his expanded role and the timing of getting getting there remains unclear at this point and I think it still remains unclear a quarter or so on.

Speaker Change: So as you can imagine.

Speaker Change: Legal professionals business run by Roku in.

Speaker Change: With Ron Kessler as to finance and also the General Counsel focus which is included in corporate Center, Laura Macdonald and Aaron Brown I mean, they are very focused on the quarterly progress as you can imagine as as Steve verbally and put even in the in the government space, an application to courts and government department, but the customer.

Speaker Change: The customer reaction has been very strong but its also the customers I think we will behave differently and that will pick up at different paces. So what what we're focused on is is that quarterly progression, but more importantly is getting as fast as we can to that broader destination of playing a bigger role in the success of our customers using these <unk>.

Stephen Hasker: So what we're focused on is that quarterly progression, but more importantly, getting as fast as we can to that broader destination of playing a bigger role in the success of our customers using these Gen AI-fueled products in and beyond legal. And so it's an exciting journey, but likely to be a multi-year journey before we get to where we want to.

Speaker Change: Products in and beyond the legal and so it's a.

Speaker Change: An exciting journey, but likely to be a multiyear journey before we get too.

Speaker Change: We got to where we want to had a just a couple of additional points in case, it's helpful to round out the discussion on legal I didn't mentioned that in my prepared remarks, but the west la precision ACB penetrations about slightly over 30% at the end of Q1.

Michael Eastwood: Heather, just a couple additional points in case it's helpful to round out the discussion on legal. I didn't mention it in my prepared remarks, but the Westlaw Precision ACB penetration was about slightly over 30% at the end of Q1. And one of the things that we'll do in subsequent quarters, certainly by year-end, is an additional kind of operating metric that will help you in regards to our progression on GEN-AI and legal and across the board, that 30% ACB penetration for precision.

Speaker Change: And one of the things that we'll do in subsequent quarter certainly by year end is an additional operating metric that will help you in regards to our progression on <unk> in legal and across the board that 30% ACB penetration for precision.

Heather Balsky: Thanks very much. One, we'd love more metrics. And two, it sounds like the 6% was for government. And I misheard that. So I appreciate the clarification. Thank you.

Speaker Change: Thank you very much one we'd love more metrics into so it sounds like the 6% what's your government.

Speaker Change: And if I Miss heard that so I appreciate the clarification. Thank you.

Michael Eastwood: Chair. Thanks, Heather.

Speaker Change: Sure. Thanks Heather.

Scott Fletcher: We will take our next question from Scott Fletcher with CIBC.

Speaker Change: We will take our next question from Scott <unk> with CIBC.

Scott Fletcher: Thanks, good morning. I'm sort of following on some of the comments on adoption there. I'm curious, as you're rolling out the Gen AI enhancements to products like Westlaw or Practical Law, where there are use cases in legal and in corporates, is there any difference in the adoption rate or the early intention to, I guess, pay up for the new products, maybe between law firms and corporates?

Scott: Thanks, Good morning.

Scott: Sort of following on some of the comments on adoption there.

Scott: I'm curious as you're rolling out the Gen AI enhancements to products like West La practical law, where there's use cases in legal and corporates are is there any difference in the adoption rate there will be early attention too.

Speaker Change: I got to pay up for the new products.

Speaker Change: Maybe between the law firms.

Speaker Change: Great.

Stephen Hasker: Scott, it's a great question, but I think it's a little early to tell. I mean, we're certainly seeing a tremendous appetite for the products, and we're getting very favorable reactions to our products and favorable comparisons to the sort of various other offerings in the marketplace. So for us, there are reasons for optimism; we have a much larger business serving law firms than we do general counsels. But I think, you know, the pricing is holding up in both so far, but it's early days.

Speaker Change: Scott It's a great question I think it's a little early to tell I mean, we're certainly seeing.

Scott: Tremendous appetite for.

Speaker Change: For the products and we're getting very favorable reactions to our products and favorable comparisons to the sort of various other offerings in the marketplace. So for us reasons for optimism.

Speaker Change: We have a much larger business serving law firms than we do general counsels.

Speaker Change: <unk>.

Speaker Change: But I think.

Speaker Change: The pricing is holding up in both so far but it's early days. So I think as the quarters roll on we will have more to say on that but.

Stephen Hasker: So I think as the quarters roll on, we'll have more to say on that. But today, you know, the pricing that we're asking for is holding up quite well in both the general counsel's selling process, so that into the law firms, you know, large, medium, and small.

Speaker Change: Today.

Speaker Change: The pricing that we're asking for is holding up quite well in both the general counsels.

Speaker Change: The selling process that into a law firms large medium and small.

Scott Fletcher: Okay, thanks, that's helpful. And then just a second question. I'm just curious if there's been any changes to that, you know, $100 million internal investment target for the AI investments, whether that, you know, 100 million doesn't go as far in AI given any cost increases, or if there's more opportunity to Yeah, certainly, Scott, that $100 million that

Speaker Change: Okay. Thanks, that's helpful. And then just a second question.

Speaker Change: Curious if there's any been any changes to that $100 million internal investment target for the AI investments, whether thats, a $100 million doesn't go as far and AI, given any cost increases or if there's more opportunity to spend more.

Speaker Change: Forward.

Michael Eastwood: Yeah, certainly, Scott, that 100 million that we discussed throughout calendar year 23 has increased. If you look at calendar year 24, it's in excess of the 100 million that we discussed last year. And it's one that we work with our team on constantly to ensure that we are deploying investments optimally there, but it's in excess of 100 million this year, Scott, which is baked into our guidance.

Speaker Change: Yes, certainly Scott that $100 million that we discussed throughout calendar year 'twenty three has increased so if we look at calendar year 'twenty four.

Forward: It's in excess of the $100 million that we discussed last year and it's one that we work with our team on constantly to ensure that we are deploying investments opt.

Speaker Change: Optimally there, but it's in excess of $100 million this year Scott.

Speaker Change: Which is baked into our guidance.

Kevin Mcveigh: We will take our next question from Kevin McVeigh, with UBS.

Speaker Change: We will take our next question from Kevin Mcveigh with UBS.

Kevin Mcveigh: Great, thanks so much. Going back to EBITDA a little bit, is there any way to think about how much of the overperformance was on revenue as opposed to the timing of some expenses? Maybe, Mike, we could start there.

Kevin Mcveigh: Great. Thanks, so much.

Kevin Mcveigh: <unk>.

Kevin Mcveigh: Going back to the EBITDA, a little bit is there any way to think about how much.

Kevin Mcveigh: The over performance on the revenue as opposed to the timing of some expenses.

Kevin Mcveigh: Mike we could start there.

Michael Eastwood: Yes, certainly it's a combination. Kevin, I didn't break that down in the prepared remarks, but certainly, given our business model and the operating leverage that we have, given that 60, 65 percent of our costs are fixed in nature, given the level of organic revenue growth that we achieved this year, that creates higher operating leverage in Q1 than you would have seen historically. So that's a factor. I think I've previously discussed that 6% organic.

Michael Eastwood: Yes, certainly it's a combination.

Michael Eastwood: Kevin I didn't break that down in the prepared remarks, but certainly given our business model and the operating leverage that we have given that 60% 65% of our costs are fixed in nature.

Michael Eastwood: Given the level of organic revenue growth that we achieved this year that creates higher operating leverage in Q1 than you would have seen historically, so thats a factor I think I previously discussed at 6% organic growth you see about $75 75 basis points of flow through on an annual basis. So.

Michael Eastwood: growth, you see about 75 basis points of flow through on an annual basis. So at the 9%, you'll see a higher flow through in Q1 of 2024. Certainly on the timing of expenses, I mentioned as we go into Q2 of the remainder of the year, we'll see a step up in areas like technology, product, and the integration for the recent M&A there. Also, a reminder, Kevin, in regards

Speaker Change: At the 9% Youll see a higher flow through and in.

Speaker Change: In Q1 of 2024, certainly on the timing of expenses I mentioned as we go into Q2 and the remainder of the year, we will see a step up in areas like technology products and the integration for the recent M&A.

Speaker Change: They're also a reminder, Kevin in regards to flow through if you look at the Reuters generative AI the flow through on that is actually larger when you think about operating leverage but it's actually the flow through on those reorders generative AI content licensing deals would be even.

Michael Eastwood: Regarding flow through, if you look at Rorters' generative AI, the flow through on that is actually larger. When you think about operating leverage, but it's actually the flow through on those Rorders generative AI content licensing deals would be even higher than what you would see normally on an incremental dollar of revenue. Then once again, as a reminder, as you get into Q4 this year, we're going to have a tougher comp because we have that 18 million generative AI deals from borders in Q4 of 2023.

Speaker Change: Higher than what you would see normally on an incremental dollar of revenue then once again as a reminder, as you get into Q4. This year, we're going to have a tougher comp because we had that $18 million.

Speaker Change: Generally with AI deals from Reorders in Q4 of 2023.

Speaker Change: Okay. That's helpful and then.

Michael Eastwood: Transcripts provided by Transcription Outsourcing, LLC. Is there any, like, when you think about that Q1 Delta, because again, there's clearly a structural, appreciating that it's going to decelerate or What drove that... Yeah, I think it... Right? Yeah, the four items that you just mentioned, I framed them on Drew's initial question; I framed that under the context of what do you have to believe for sustained stronger revenue as we go forward? If I go back to Q1 of 2024, I would just emphasize four items that really contributed to the really strong organic growth performance.

Speaker Change: Appreciating that there's a certain amount of transactional revenue right, 10% is still as far as I can go back as high as it's ever been I mean, clearly there is a structural component to that.

Speaker Change: And I think he did a nice job framing out the kind of four variables on that that can AI retention M&A pricing and so on and so forth.

Speaker Change: Is there any like when you think about that Q1, the delta because again there is clearly a structural.

Michael Eastwood: Up in the organic growth any way to frame across those four levers what drove that.

Speaker Change: Appreciating that it's going to be down slightly or.

Speaker Change: What drove that.

Speaker Change: Yeah.

Michael Eastwood: Number one, the Reuters AI licensing revenue, which was $25 million of absolute revenue. Number two, the seasonal tax offerings, tax, and audit offerings that occurred both in tax and accounting professionals and in corporates. The third, we did have some timing items quarter by quarter. And then fourth, we did have some easier year over year comps.

Speaker Change: Right.

Speaker Change: Four items that you just mentioned I framed up on Drews initial question I framed out under the context of why do you have to believe for sustained stronger revenue as we go forward. If I go back to Q1 of 2024 I would just emphasize.

Speaker Change: Four items that really contributed to the really strong organic growth performance number one to Reuters AI licensing revenue, which was $25 million of absolute revenue number two the seasonal tax offerings tax and audit offerings that occurred both in tax <unk> accounting professionals and incorporate.

Kevin Mcveigh: So those were the four items. Kevin, if you look strictly at Q1 2024, when I addressed Drew's initial question, I was thinking more specifically about what you have to believe for accelerated organic growth. Hopefully, that's helpful, Kevin. Very helpful. Thank you. We will take our next question from Tim Casey with BMO.

Speaker Change: The third we did have some timing items quarter over quarter, and then fourth we did have some easier year over year comp. So those were the four items. Kevin If you look strictly at Q1 2024, when I address Drews initial question I was thinking more respectively on what you have to believe for accelerated.

Speaker Change: Organic growth.

Kevin Mcveigh: That's helpful. Kevin.

Kevin Mcveigh: Very helpful. Thank you.

Speaker Change: Sure.

Tim Casey: We will take our next question from Tim Casey with BMO.

Speaker Change: We will take our next question from Tim Casey with BMO.

Tim Casey: Thanks, Steve could you talk a little bit how the international strategy is evolving with <unk>.

Tim Casey: <unk> is in the fold and maybe I was hoping you could unpack it in terms of.

Tim Casey: What your aspirations are there and in that context, how much of it is.

Tim Casey: With your current clients as they come.

Tim Casey: Customers as they grow internationally, how much of it is.

Tim Casey: Is exploiting a girl beyond what it already does and then if if M&A is a meaningful factor in that initiative. Thank you.

Stephen Hasker: Sure Tim, let me try to tick through those points, and I'm sure Mike will add more. So just as a reminder, about a tiny bit shy of 20% of our revenues comes from international markets, so outside of the United States. Today, so we think that's a pretty big opportunity. You know, we think we can take many of the capabilities that serve our customers in the United States to those markets. You know, and we've got a very strong starting position in Brazil, a strong starting position in Australia, New Zealand, parts of Europe. So, it's not a standing start.

Tim Casey: Sure Tim Let me, let me try to tick through those points and I'm sure Michael will add so just as a reminder.

Speaker Change: About <unk>.

Stephen Hasker: Tiny bit shy of 20% of our revenues is coming from international market, So outside of the United States.

Michael Eastwood: Today, So we think thats, a pretty big opportunity. We think we can take many of the capabilities that that serve our customers in the United States to those markets.

Stephen Hasker: And we've got very strong starting position in Brazil was strong starting position of Australia, and New Zealand parts of Europe.

Stephen Hasker: It's not a standing start we're certainly focused on the back of the Whistler Japan.

Stephen Hasker: We're certainly focused on the back of the Westlaw Japan acquisition to accelerate growth there. We're investing in Brazil and Mexico and eyeing opportunities in Southeast Asia from a sort of a regional standpoint. And Europe remains opportunistic. That's sort of the geographic lens. From a sort of a product and capability lens, yes, Peguero is a big step forward for us. Peguero, we think, is the only sort of single platform e-invoicing solution that there is.

Stephen Hasker: Acquisition to accelerate there.

Stephen Hasker: We are investing in Brazil and Mexico.

Stephen Hasker: And on and off opportunities in southeast Asia from a sort of a regional standpoint.

Speaker Change: And Europe remains opportunistic.

Stephen Hasker: So sort of a geographic lens from a sort of a product and capability lens, yes, <unk> is a big step forward for us.

Stephen Hasker: We think as the <unk>.

Stephen Hasker: Sort of single platform E. Invoicing solution that there is the competitors respect them as we do have cobbled together.

Stephen Hasker: The competitors, respect them as we do, have cobbled together solutions across different geographies. So, Peguero has a pretty interesting starting point, heavily focused on Europe today. Continental Europe, the UK, and particularly Scandinavia, given its heritage.

Stephen Hasker: Our solutions across different geographies. So <unk> is a pretty interesting starting point.

Speaker Change: Heavily focused in Europe today.

Stephen Hasker: Continental Europe, UK, and particularly Scandinavia, given its heritage.

Stephen Hasker: So the opportunity to take that to Latin America and take that to Southeast Asia as e-invoicing mandates roll out is, we think, a pretty exciting one. Secondly, the Co-Council. One of the things that we're most excited about, and there are many things that are exciting about the case text acquisition for us, but one of the things that's exciting about co-council is that it's not geographically bound. And as we launch or introduce the idea of launching co-council in different markets and really providing the TR size and scale behind that set of capabilities, the reaction has been very strong in all the markets that we're And they're not just common law markets, and they're not just the markets that we've traditionally had, for example, Westlaw or practical law. So that's the second part.

Stephen Hasker: So the opportunity to take that to Latin America, and take that to southeast Asia is enforcing mandates rollout, we think it's a pretty exciting one.

Stephen Hasker: Secondarily co council one of the one of the things that we're most excited and there are many things that are exciting about about the <unk> acquisition for us, but one of the things that's exciting about co council.

Stephen Hasker: It's not geographically bound and as we launch or introduce the idea of launching co counsel in different markets and really providing the TR size and scale behind that.

Stephen Hasker: That set of capabilities.

Stephen Hasker: The reaction has been very strong.

Stephen Hasker: In all the markets that we're talking about and not just common law markets and not just the markets that we've traditionally had for example, with lower practical law.

Stephen Hasker: So thats the.

Stephen Hasker: I think thirdly, of course, the Dominio asset in Brazil is very strong, and we're exploring opportunities to sort of extend that because it has a unique set of data and it has a unique customer acquisition engine. You know, and I think Adrian and the team have done a wonderful job of adding new customers on a sustained basis over the years. So we're certainly focused on continuing that. Lastly, on the customer basis, you know, I think we're just starting to scratch the surface in terms of better serving global customers, whether that's Fortune 500 or Fortune 1000, and Laura Clayton McDonald's been focused on exploring that opportunity, https://www.youtube.com.au

Stephen Hasker: The second part I think thirdly of course, the Dominion asset in Brazil was very strong and we're exploring opportunities to sort of extend that because it has a unique.

Stephen Hasker: It has a unique set of data.

Stephen Hasker: And it has unique.

Stephen Hasker: Customer acquisition.

Stephen Hasker: Jim.

Stephen Hasker: And I think Adrian and the team have done a wonderful job.

Stephen Hasker: Of of adding new customers on a sustained basis over the year. So so we're certainly focused on continuing that lastly on the customer basis.

Stephen Hasker:

Stephen Hasker: I think we're just starting to scratch the surface in terms of.

Stephen Hasker: Better serving global customers, whether that's fortune 500, Fortune 1000, and Laura Clayton Mcdonald.

Stephen Hasker: <unk> to exploring that opportunity.

Stephen Hasker: Starting with companies that are headquartered in the United States.

Stephen Hasker: Europe, but I think the international opportunity for us, we'll be adding new customers.

Stephen Hasker: Because of our relatively modest starting position, but Mike what would you add.

Michael Eastwood: I wouldn't add any items; I would just double down in regards to the level of optimism and encouragement with Laura's team, Aaron Brown, Ray Groves, Thunton Garrow, Ian Voicing, and the broader indirect tax. I'm optimistic that we'll have positive achievements to share in future quarters with indirect tax overall.

Stephen Hasker: I wouldn't add any items I would just double down in regards to the level of optimism and encouragement with large team Erin Brown railroads Sun Aero E invoicing in the broader indirect tax and optimistic that we'll have.

Michael Eastwood: Positive <unk>.

Michael Eastwood: <unk> to share his win in future quarters with indirect tax overall.

Speaker Change: Thank you.

Andrew Charles Steinerman: We will take our next question from Andrew Steinerman of J.P. Morgan.

Michael Eastwood: We will take our next question from Andrew Steinman with J P. Morgan.

Stephanie: Hi, this is Stephanie stepping in for Andrew. I want to ask about the 2024 guide. So you're raising a little bit the revenue growth, but you're keeping the margin guide the same. So I guess that implies that you see additional opportunities to reinvest that flow through or have, I guess, costs been going up. And so that's why the margin guide is the same.

Andrew Charles Steinerman: Hi, This is Stephanie you stepping in for Andrew.

Andrew Charles Steinerman: I wanted to ask about the 'twenty 'twenty four guide so you're raising a little bit the revenue growth that you are keeping the margin guide. The same. So I guess is the implication that you see additional opportunity to reinvest that flowed through or half yes.

Stephanie: Cost and climbing up and so that's why the margin guidance the same.

Michael Eastwood: Stephanie is the former in regards to the opportunities to invest. We're very encouraged by the roadmaps that we shared during Investor Day and just the six to eight weeks since Investor Day. Certainly, our teams continue to identify additional opportunities. So maintaining the EBITDA margin and free cash flow is a reflection of the opportunities that we see to drive our top line in 24, 25 and beyond.

Speaker Change: It's definitely is the former in regards to the opportunities to invest we're very encouraged with roadmaps that we shared during investor day, and just the six to eight weeks since Investor day, and certainly our teams continue to identify additional opportunities so maintaining the EBITDA margin and free cash flow.

Michael Eastwood: <unk> is a reflection of the opportunities that we see.

Michael Eastwood: To drive our top line in 'twenty, four 'twenty five and beyond.

Stephanie: Okay, that sounds great. And can I just ask you about the competitive landscape, and I'm thinking more so about generative AI, whether you're really seeing the same incumbents in terms of on the field, or whether startups are part of the conversation?

Speaker Change: Okay that sounds great.

Speaker Change: And can I just ask about <unk>.

Michael Eastwood: Can you comment on the competitive landscape and I'm thinking more about generative AI, what there youre really.

Speaker Change: <unk> seen the same incumbents in terms of on the fields are whether startups are part of the conversation.

Stephen Hasker: Yeah, Stephanie, I think we're seeing a bit of both. As alluded to earlier, we'd like to think we're not overly focused on our competitors; we want to be overly focused on our customers and better serving them, but a lot of respect for both the folks that have been competing with TR for long periods of time and those that are new and emerging. I think it's a pretty balanced mix, you know, as you'd expect with a technology that's disruptive and potentially has transformative capabilities in terms of the professions we serve.

Speaker Change: Yeah, Stephanie I think we're seeing a bit of both.

Speaker Change: As I alluded to earlier, we we like to think we're not overly focused on on our competitors, we want to be overly focused on our customers and better serving them, but a lot of respect for both the folks that have been competing with <unk> for long periods of time and those that are new and emerging I think it's a pretty it's a pretty balanced mix.

Stephen Hasker: As you'd expect with with a technology that is disruptive and potentially as transformative capabilities in terms of the professionals we serve.

Stephen Hasker: And having said all that, you know, I think we've made a good start, if not a very good start, in the generative AI world with both our organic investments and the pre-existing talent that we have in and around advanced machine learning and large language models. And then, of course, the addition of case text, I think, has been a real boost to us as well. So the job ahead of us is just to continue to accelerate in this area. And if we do that, you know, we'll be very well placed relative to any and all competitors.

Stephen Hasker: Having said all that.

Stephen Hasker: I think we've made a good start.

Stephen Hasker: If not a very good start in the generative II world with both our organic investments and the.

Stephanie: Okay, that all makes sense. Thank you.

Stephen Hasker: Pre existing talent that we have in and around advanced machine learning and large language models and then of course. The addition of <unk> I think was a real its been a real boost to us as well so that the job ahead of US is just to continue to accelerate in this area and if we do that we'll be very well placed.

Stephanie: <unk> to any and all competitors.

Stephanie: Okay that all makes sense. Thank you.

Speaker Change: Thanks, Stephanie.

Toni Kaplan: We will take our next question from Toni Kaplan with Morgan Stanley.

Stephanie: We will take our next question from Toni Kaplan of Morgan Stanley.

Speaker Change: Thank you.

Toni Kaplan: Earlier you talked about the improvement in the pipeline and sales trends in corporate, and it also sounded from an earlier answer like legal was maybe improving as well. Maybe if you could just put a fine point on that.

Toni Kaplan: Earlier, you talked about the improvement in our pipeline and sales trends in corporate.

Toni Kaplan: And you know it also sounded from an earlier answer like legal ways may be improving as well maybe if you could just put a fine point on that are you seeing improving trends in the selling environment and legal and any changes to the sales cycle, our pipelines there and maybe just at Sao.

Stephen Hasker: Are you seeing improving trends in the selling environment in legal and any changes to the sales cycle or pipelines there? It sounds like maybe corporate you saw improvement but are still a little bit cautious or just watching it to make sure that's sustainable. What would drive that to really lead you to believe like, "OK, we're out of the woods on that as well?"

Stephen Hasker: Like maybe corporate year.

Stephen Hasker: You saw improvement, but are still a little bit cautious or just watching it to make sure that sustaining I guess, what what would drive that.

Stephen Hasker: Really when you take a belief like okay. We're out of the woods on that as well. Thanks.

Stephen Hasker: Yeah, Toni, look, I think I think you're right. On both fronts, in corporates, you know, we've talked about prolonged sales cycles for the last five or six quarters. We saw in Q1 a bit of a reprieve in that, which flowed through to our results. It's too early to declare victory there, but I think we'd like to see a few more quarters of that before we come back to you and say, you know, there are improved trading conditions within corporates.

Speaker Change: Yeah, Tony look I think I think you're right.

Stephen Hasker: On both fronts incorporates we've talked for the last five or six quarters about prolonged sales cycles.

Stephen Hasker: We saw in Q1, a bit of a reprieve in that which flowed through to our results.

Stephen Hasker: It's too early to declare victory there I think we'd like to see a few more quarters of that before we come back to you and say they are improved trading conditions within corporates.

Stephen Hasker: In legal, you know, we've been picking up steam quarter on quarter. We certainly did through 2023, and that continued in 24. So the opportunity ahead of us is just to continue that, that sort of steady, steady improvement. But so that the trajectories are quite different.

Stephen Hasker: In legal we've been we've been picking up steam quarter on quarter, we certainly did through 2023.

Stephen Hasker: And that continued in 24, so that the opportunity ahead of US is just to continue that that sort of steady.

Stephen Hasker: That steady improvement, but the.

Stephen Hasker: The trajectories are quite different.

Stephen Hasker: And.

Speaker Change: And we remain vigilant mark anything to add no I would just double emphasize that Tony what gives what would give us stronger confidence. There is just repeat performance in Q2 Q3 in.

Michael Eastwood: And we remain vigilant. Mike, anything to add? No, I would just double emphasize that, Toni, what would give us stronger confidence there is just repeat performance in Q2, Q3. In regards to the corporates, net sales, book of business, we have strong confidence in the team, but it's something that we just need to see. We've spent quite a bit of time with the corporates team this year, and we are quite encouraged by what we see, and hope to report another good Q2, Q3, in corporates, and that will give us that confidence that you're inquiring about, Toni.

Michael Eastwood: In regards to the corporates.

Mike: Net sales book of business, we have strong confidence in the team, but it's something that we just need to see we've spent quite a bit of time with the corporate team this year.

Speaker Change: Quite encouraged by what we see.

Speaker Change: And hope to report another good Q2, Q3 incorporates and that would give us that confidence that you are enquiring about Tony.

Speaker Change: Perfect. Thank you.

Michael Eastwood: Uh huh.

Keen Fai Tong: We will take our next question from George Tong of Goldman Sachs.

Michael Eastwood: We will take our next question from George Tong with Goldman Sachs.

Keen Fai Tong: Hi, Thanks, good morning.

Keen Fai Tong: Good morning. You've rolled out several products with new generative AI features lately. Can you talk a little bit about traction with how you're monetizing those additional functionalities and how the incremental monetization compares with the investment that you're making congenitive age?

Keen Fai Tong: You've rolled out several products with new generative AI features lately can you talk a little bit about traction with how you're monetizing those additional functionalities and how the incremental modernization compares with investments that youre, making degenerative AI.

Stephen Hasker: Yeah, George, I would say, you know, very encouraging early progress, and their comparisons to any sort of competitive offers that might exist, and also their propensity to pay. But it is early, particularly relative to the investments that we've made. I mean, in a sense, we started the investment program with a one-time $600 million or thereabouts spend through the change program. We continued that with $100 million last year. And, as Mike said earlier on this call, a little bit more than that through this year.

Speaker Change: Yes, George I would say.

Speaker Change: Very encouraging early progress.

Stephen Hasker: Both in terms of the.

Stephen Hasker: In terms of the overall customer risks.

Stephen Hasker: Reception to those new products in.

Stephen Hasker: And their comparisons to any sort of competitive offers that might exist.

Stephen Hasker: And also the propensity to.

Stephen Hasker: Two pi, but it is early.

Stephen Hasker: So, and you add to that $650 million with the case text acquisition. So, relative to that order of magnitude, it's early days. But, as I said, we're optimistic, and all the early signs are positive, but it is early. So, we look forward to coming back and reporting ongoing progress as it occurs. George, just in regards to comparison to the investment, our ability to deliver margin and sustain our guidance for full year 24, given that we expect an uptick in Gen-AI, I think is indicative of the return on investment that we're getting on Gen-AI.

Stephen Hasker: Particularly relative to the investments that we've made I mean in a sense. We started the investment program with a onetime 600 million or thereabout spin through the change program. We continue that with the $100 million last year and as Mike said earlier on this call a little bit more of more than that.

Stephen Hasker: Through through this year, so and you add to that $650 million.

Stephen Hasker: <unk> fixed acquisitions, so so relative to those.

Stephen Hasker: That order of magnitude.

Stephen Hasker: It's early days, but as I said, we're optimistic and all the all the early signs of.

Stephen Hasker: Positive, but it is early so we look forward to coming back and reporting ongoing progress as it occurs alright, George just in regards to comparison to the investment of our ability the birds are.

Stephen Hasker: Jen and sustaining.

Stephen Hasker: Our guidance for full year 'twenty four given that we expect an uptick in gen. AI I think is indicative of the.

Stephen Hasker: The return on investment that we're getting on the NII.

Keen Fai Tong: Got it. That's helpful. And just to follow up on the topic of Gen-AI, can you talk about the different ways in which you're monetizing? Is it consumption-based? Is it modules upsell-based? Is it part of the standard package? What are the different ways that you can monetize Gen-AI? Uh, George, I think that the...

George: Got it that's helpful and just a follow up on the topic of Jenny can you talk about the different ways in which you're monetizing the consumption based modules upsell base is it part of the standard package.

Keen Fai Tong: Or the different ways that you can monetize journey.

Stephen Hasker: Uh, George, I think that the simplest way to answer that is we've been experimenting with... with multiple different options. What we're trying to focus on is making it as simple as possible for our customers to adopt these products from a sort of pricing and proposition standpoint, while at the same time, articulating the value, because we think the value is very significant in terms of time saved, in terms of overall efficiency and productivity, and quality of work product. So, you know, we're squarely aimed at increasing the profitability of our customers and prices accordingly. But similar to my early answer, it was early days, and lots of experimentation going on.

Speaker Change: George I think the simplest way to answer that is we've been experimenting with.

Stephen Hasker: With with Ah.

Stephen Hasker: Multiple different options, what we're trying to focus on.

Stephen Hasker: Is making it as simple as possible for our customers too.

Stephen Hasker: To adopt these products from a sort of a pricing.

Stephen Hasker: Proposition standpoint, while at the same time.

Stephen Hasker: Articulating the value because we think the value is very significant in terms of time saved in terms of the.

Stephen Hasker: The overall efficiency and productivity the quality of work product.

Stephen Hasker: So we are squarely aimed at increasing the profitability.

Stephen Hasker: All of our customers and and pricing accordingly, but similar to my earlier answer early days.

Stephen Hasker: Lots of experiments experimentation going on.

Speaker Change: Got it thank you.

Sami Kassab: We will take our next question from Sami Kassab of BNP Paribas.

Stephen Hasker: We will take our next question from Sami Kassab with BNP Paribas.

Sami Kassab: Thank you very much, and good morning, gentlemen. Steve, you said that the increased complexity of regulatory compliance was a driver of growth. In that context, do you see the Corporate Transparency Act as a meaningful driver of your performance this year, or is it just one out of many examples of complexification? And secondly, could you please elaborate on the... On the impact of GenAI on your cost efficiency, on the previous call, you said it was too early to quantify the impact, but have the last three months perhaps brought any more visibility in terms of the impact of GenAI on your own cost base? Thank you. Yeah, yeah, thanks Sami. Great question.

Sami Kassab: Thank you very much and good morning, gentlemen, Steve you said that the increased complexity of regulatory compliance as a driver of growth in that context do you see the corporate transparency Act as a meaningful driver of your performance this year.

Sami Kassab: Just one out of many examples of Complexification and secondly, yes could you please elaborate on.

Speaker Change: Our wound packet of journey II on your cost efficiency in the previous call. You said it was too early to quantify the impact, but how have the last three months, perhaps brought any mortgage ability in terms of the impact of Jenny I on your own coffee. Thank you yeah. Yeah. Thanks, Amy great questions. So I would say with regard to.

Stephen Hasker: Yeah, yeah, thanks Sammy, great questions. So I would say with regard to the Corporate Transparency Check, one of many, one of many, many, you know. I think every market in which we operate, every segment in which we operate, we're seeing more and more regulations, more and more rules, whether they be laws, whether they be various sort of industry professional body, you know, guidelines, whether they be internal internal processes, you know, that appears to be a gift which keeps giving.

Speaker Change: The corporate transfer inject one of many.

Stephen Hasker: One of many many I think every market in which we operate every segment, which we operate we're seeing more and more regulations more and more rules, whether they'd be whether they'd be laws, whether they'd be various sort of industry professional body guidelines, whether they be internal.

Stephen Hasker: Internal processes.

Stephen Hasker: That appears to be a gift which keeps giving.

Stephen Hasker: And as I've said a number of times before, it's not an option for corporations or their advisors to just add more headcounts to cope with that burden; technology has to play a big role in alleviating that burden, and we're one of, we think, one of the few players who can really meaningfully take advantage of that. So that, I would suggest, Sami, is just one of many.

Stephen Hasker: And as I've said, a number of times before it is not an option for corporations or their advisers to just add more head counts to cope with that burden.

Stephen Hasker: Technology has to has to play a big role in alleviating that burden and we're one of we think one of the few players who can really meaningfully take advantage of that so that I would suggest Sam he is one of many.

Stephen Hasker: In terms of our internal Gen-AI, Mary Alice Vucek, our Chief People and Communications Officer, and Kirsty Roth, who, of course, runs Operations and Technology, they, with their teams, are leading this effort in its early days. Lots of experiments and tests going on. I think cautious optimism as to what that's going to yield for us, but we're going to be pretty conservative in terms of providing guidance on cost efficiencies. We want to see the benefits, and we want to make sure that it's in the best interest of our customers before we get out ahead of ourselves in terms of the financial implications. I'm going to defer to Mike in future quarters to make that call as to when we'll communicate around that, but we're in no hurry.

Stephen Hasker: With regard to that in terms of our internal.

Stephen Hasker: <unk>.

Speaker Change: Maryalice music out.

Stephen Hasker: <unk>.

Stephen Hasker: People and Communications officer, and Kristy royalty of course runs our president technology. They with their teams are leading this effort early days.

Stephen Hasker: Lots of experiments and tests going on I think cost cautious optimism as to what that's going to yield for us, but we're going to be pretty conservative in terms of providing sort of guidance on.

Stephen Hasker: On cost efficiencies, we want to see the benefits.

Stephen Hasker: And we want to make sure that it's in service of our customers before we.

Stephen Hasker: Get out ahead of ourselves in terms of the financial implications, so I'm going to defer to Mike and future future quarters to make that call as to when we will when we will communicate around that but we're in no hurry.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Gary Bisbee: Thank you. We're at the top of the hours, Maddie. I think we'll end the call there. But thank you, everyone, for your attention.

Speaker Change: We're at the top of the hours Matti I think we will end the call there but.

Speaker Change: Thank you everyone for <unk>.

Gary Bisbee: For your attention.

Operator: Okay, thank you. Thanks, everybody.

Speaker Change: Okay. Thank you thanks, everybody.

Operator: Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.

Speaker Change: Thank you. This concludes today's call. Thank you for your participation you may now disconnect.

Operator: Uh huh.

Operator: Yeah.