Q1 2024 Thomson Reuters Corp Earnings Call

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 Matti.

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: 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 you can appreciate it if you'd limit yourself to one question.

Gary Bisbee: 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: 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.

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, Let me know.

Stephen Hasker: Let me now turn it over to Steve Hasker.

Gary Bisbee: Turn it over to Steve basket.

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.

Steve: 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.

Steve: And focused on our first quarter results.

Steve: 2024 has started out on a strong note with revenue and profits exceeding our expectations.

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.

Gary Bisbee: To incorporate the Q1 upside we are raising our full year 'twenty 'twenty four 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.

Gary Bisbee: 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.

Stephen Hasker: Mike will provide additional detail on our outlook in a few minutes. 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,

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

Michael Eastwood: 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 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. 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.

Michael Eastwood: We believe our portfolio is uniquely positioned for these tayo wins.

Michael Eastwood: 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.

Michael Eastwood: These efforts are contributing to the growing product momentum, we see for 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.

Stephen Hasker: 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. 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 inorganic opportunities.

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

Michael Eastwood: We successfully acquired a garo 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 L. Sig generating gross proceeds.

Michael Eastwood: <unk> of $1 $4 billion looking.

Michael Eastwood: 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 by $0.30 from the prior year period to $1.11.

Michael Eastwood: Now to the results for the quarter.

Michael Eastwood: 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.

Michael Eastwood: While print revenue declined 10% in line with our expectations reported revenue grew 8% adjusted.

Michael Eastwood: 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.

Michael Eastwood: Adjusted earnings per share grew 30 sent from the prior year period.

Michael Eastwood: To one dollar and 11 cents.

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 co-counseling. 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.

Michael Eastwood: 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.

Michael Eastwood: Legal organic revenue grew 7% driven by continued Jane AI momentum in west La precision and co Council.

Michael Eastwood: Demand for our key offerings remains healthy.

Michael Eastwood: Led by West La practical law co counsel IQ and strong performance in our international markets, partially offset by lower growth at find law Court.

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.

Michael Eastwood: 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.

Michael Eastwood: With the inclusion of per Garo also boosting growth.

Michael Eastwood: Trust 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%.

Michael Eastwood: 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. Thanks.

Michael Eastwood: <unk> 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.

Michael Eastwood: Reuters news organic revenues rose 17%.

Michael Eastwood: Driven as expected by generative AI related content licensing revenue that was largely transactional in nature.

Michael Eastwood: Excluding this royalty revenue grew modestly driven primarily by the news agreement with the data and analytics business of <unk>.

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

Michael Eastwood: West La which we discussed last quarter and in summary, we're very pleased with the strong start to the year, Let me hand, it over to Mike to review our financial performance.

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 divestments. Legal Professionals' Organic Revenue grew 7%.

Michael Eastwood: Thanks, Steve Thanks, again for joining us today.

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

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

Michael Eastwood: <unk> revenues improved sequentially from 8% to 10% in the first quarter.

Michael Eastwood: 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 recent years, recurring revenue grew 11% while transactional was up over 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 IQ 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% improving.

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 Pagero 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.

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

Michael Eastwood: Tax and accounting also had a very strong quarter.

Michael Eastwood: 14% organically.

Michael Eastwood: <unk> and transactional revenue grew 14% and 15% respectively.

Michael Eastwood: Seasonal revenue strength from <unk> and 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. Moving to Rorters News, 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, orders organic revenue increased approximately 3%. Lastly, global print organic revenues declined 10%, or 6% when excluding the impact from the revenue shift to legal professionals I mentioned earlier.

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

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

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% or.

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 and select comparability items I mentioned contributed approximately 2% to Q1 revenue growth.

Michael Eastwood: Turning to our profitability.

Michael Eastwood: Adjusted EBITDA for debate three 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.

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 Rorder's news,

Michael Eastwood: 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.

Michael Eastwood: And persist at a higher level through the remainder of the year.

Michael Eastwood: Moving to Reuters news adjusted.

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.

Michael Eastwood: Adjusted EBITDA was $60 million with a 28, 3% margin.

Michael Eastwood: 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.

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

Michael Eastwood: Global Prints 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. Turning to earnings per share, adjusted EPS was $1.11 for the quarter, up 32% from 84 cents 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.

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

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

Michael Eastwood: The increase was mainly driven by higher adjusted EBITDA.

Michael Eastwood: And a lower share count.

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

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

Michael Eastwood: Reported free cash flow was $271 million.

Michael Eastwood: 101% from $133 million in the prior year period.

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

Michael Eastwood: 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.

Michael Eastwood: Comparable free cash flow from continuing operations was $272 million.

Michael Eastwood: Up $78 million year over year, primarily due to higher EBITDA.

Michael Eastwood: 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 cells, 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.

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

Michael Eastwood: This includes seven 5 million shares sold in a March block trade and $2 6 million shares sold through exercise call options.

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

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

Michael Eastwood: Our tax basis on the remaining shares is approximately $100 million.

Michael Eastwood: Where your math, we would assume a 25% capital gains tax rate on gains above $100 million.

Michael Eastwood: I will conclude with our updated 2020 for outlook.

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 Three revenue growth of 7.5% to 8%, up from approximately 7.5%.

Michael Eastwood: As Steve outlined we are increasing our 2024 total and organic revenue growth outlooks for TR.

Michael Eastwood: And the big three to incorporate the first quarter upside.

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

Michael Eastwood: Organic revenue growth of 6% to six 5% up from approximately 6%.

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

Michael Eastwood: 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 EBITDA margins of approximately 38% and free cash flow of approximately $1.8 billion. I would note our full year effective tax rate outlook remains approximately 18%, despite the first quarter coming in at 19.1%. We expect tax developments later in the year will bring the full-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-trend 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.

Michael Eastwood: We are maintaining other 2024 guidance metrics, including adjusted EBITDA margins of approximately 38%.

Michael Eastwood: And free cash flow of approximately one 8 billion.

Michael Eastwood: I would note our full year effective tax rate outlook remains approximately 18%.

Michael Eastwood: Despite the first quarter coming in at 19, 1%.

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

Michael Eastwood: 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.

Michael Eastwood: <unk> returned to more typical levels.

Michael Eastwood: We see a Q2 adjusted EBITDA margin of approximately 36%.

Michael Eastwood: Reflecting a pickup in the pace of investments, we're making in product infrastructure and acquisition integration let.

Michael Eastwood: 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 Paddy 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 pressed.

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: One to ask a question, we'll pause for just a moment.

Gary Bisbee: On an opportunity to signal for questions.

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

Drew Mcreynolds: Yeah, thanks. Thanks very much.

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

Stephen Hasker: And good morning. Obviously, a very strong quarter, you know, one of the strongest I can ever recall, and obviously, Stephen, Mike, in your comments, you're careful not to kind of indicate that 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.

Drew Mcreynolds: So obviously, a very strong quarter.

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

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

Drew Mcreynolds: But certainly there is 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.

Drew Mcreynolds: The year over year comps the seasonality, the Reuters news impact et cetera.

Stephen Hasker: Relative to where you were a couple of months ago, like, where are you a little bit more optimistic about the trajectory of the big three in the core business? And, you know, where are there still some sources for caution? Thank you.

Gary Bisbee: 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: Sure. Thanks.

Speaker Change: 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.

Speaker Change: It's us up.

Gary Bisbee: Two.

Gary Bisbee: To continue our investment.

Gary Bisbee: Our investment program.

Gary Bisbee: And and look for opportunities to better serve our customers but.

Gary Bisbee: But it is only one quarter.

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, you know, and so we're pleased with the start, but we're not gonna sort of declare victory just yet.

Gary Bisbee: So we're pleased with the start but we're not.

Gary Bisbee: 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: Hi, drew I'll add a few additional items as a reminder for everyone. Our Q1 is our smallest sales quota for the year with Q4 being the largest.

Speaker Change: 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 what do you have to believe four key.

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

Gary Bisbee: 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 as pace acceleration and the sequencing given the upcoming product releases, we have with Nai.

Gary Bisbee: The second area 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, and fourthly, the area would be pricing. So I think those were the four areas, Drew, that we continue to focus on as we look over the time horizon. OK, that's great, Todd.

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

Gary Bisbee: 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 is a key factor and then thirdly.

Gary Bisbee: The fourth area would be pricing. So I think those were the four areas.

Gary Bisbee: Drew that we continue to focus on as we look over the time horizon.

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

Drew Mcreynolds: Okay. That's good context. Thank you.

Drew Mcreynolds: We will take our next question from Linda.

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

Linda: Linda Golf passage.

Linda: Concord <unk> genuity.

Stephen Hasker: 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 other professions? Maybe it could just sort of help focus that so that we know exactly what to be watching more closely.

Linda: Good morning, Thanks for taking my question.

Linda: One thing that obviously jumped out.

Linda: On Investor day was sort of feed the breadth of your new product.

Linda: The development pipeline.

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

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

Speaker Change: Maybe just sort of help focus that test of it.

Speaker Change: 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 Mike there.

Speaker Change: 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, with 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: The biggest area of focus to date has been in legal with.

Speaker Change: With with wistful.

Speaker Change: Gen II with practical law to NII.

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

Speaker Change: Not only that 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 this is sort of starting point for us which has been very much customer and market driven is bringing 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, integrating OneSource and Pagaro and modernizing and updating UltraTax and Virtual Office, 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 FedRAMP compliant.

Speaker Change: In accounting audit and tax as well with checkpoint edge.

Speaker Change: Assistant research with integrating one source and per Garo.

Speaker Change: <unk>.

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

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

Stephen Hasker: So it's going to be a very busy year, and I think the good news. In a sense, 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, more so. And so it's a pretty diversified story. Mike, anything to add there? That's a great summary, Steve.

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.

Speaker Change: Two our customer sets all of them are getting positive responses in those that have been launched.

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 sort.

Michael Eastwood: <unk> 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: That correct.

Michael Eastwood: Yes, I've been very consistent in that range of 3.5%, 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.

Speaker Change: Very consistent in that range of three 5% may be slightly higher as we progress during the year, but thats a good estimate.

Speaker Change: Thank you.

Speaker Change: Sure.

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

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

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

Manav Patnaik: You've done most of the buybacks that you 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.

Manav Patnaik: 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.

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 the third consecutive year.

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.

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.

Manav Patnaik: 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 completed 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 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.

Manav Patnaik: Is M&A, certainly with $8 billion of capital.

Manav Patnaik: Pasty between now and 2026, our near term focus will be on identifying strategic M&A.

Manav Patnaik: Just to continue to strengthen our portfolio and meet customer needs. So if you look across the big three we are 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 there.

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

Manav Patnaik: Added capacity.

Manav Patnaik: 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 thanks for the question I mean, if you look at the last 18 months and the 200 billion, which spent it's been.

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

Stephen Hasker: It's not a democratic process by any means, in terms of how we prosecute M&A opportunities, but, you know, perhaps within tax and accounting. 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's invoicing indirect tax.

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.

Manav Patnaik: And.

Manav Patnaik: And Dave <unk> and his team have been.

Manav Patnaik: A great addition to our tax and accounting team, obviously <unk> in the corporate space in invoicing indirect tax.

Stephen Hasker: And Case Tech, Jay Keller, and the team are initially focused initially, have been initially focused, their products head 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 them in the newsroom under Alessandra's leadership. So, you know, and then, of course, Imogen, the insurer, was focused on Reuters and Westlaw. Japan is an international asset. So it's been pretty well spread.

Manav Patnaik: And <unk> did take Hiller on the Tamar.

Manav Patnaik: <unk>.

Manav Patnaik: Our focused initiatives focused initially their products hit 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.

Manav Patnaik: And then of course imaging the insurer.

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

Stephen Hasker: 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 see 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, but we're confident that the teams are primed and ready should we see the right assets. Just one final comment from Annette, I think we've discussed this in the past.

Manav Patnaik: And.

Manav Patnaik: Christie, we're often in their operations and technology team has done a tremendous capacity to onboard and integrate these acquisitions. So I think as we sit here today will continue as Mike said to hold the bar very high correct positions, we're going to get deal fever, or anything like that but we're confident that.

Manav Patnaik: That the teams are primed and ready should we see the right assets and just one final comment other than that I think we've discussed this in the past with Adrian Panini, 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 Adrienne.

Stephen Hasker: And just one final comment, Manav, I think we've discussed this in the past with Adrian Panini, who leads Latin America, now more broadly our international assets. We remain keen to expand our international footprint from the approximately 20 percent of revenue today, and Adrian will lead the charge on that for us internationally.

Manav Patnaik: He will lead the charge on that for us internationally.

Speaker Change: Got it thank you very much.

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

Vince Valentini: 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...

Vince Valentini: Thanks very much.

Vince Valentini: Mike can I make sure we.

Vince Valentini: I understand.

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

Vince Valentini: This quarter and going forward so.

Michael Eastwood: Am I right.

Michael Eastwood: If there's 250 basis points of Bush and the corporate sector 200 basis points.

Michael Eastwood: If there's 250 basis points of boost in the corporate sector, 200 basis points, 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 this quarter and so much better than what the full year guidance implies. I'll leave that as part A of the question.

Vince Valentini: Revenue.

Vince Valentini: Increment there would be.

Vince Valentini: 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.

Vince Valentini: 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, it's a good summary there.

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

Michael Eastwood: Okay. 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 given 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.

Vince Valentini: Do you expect these timing benefits to wash out by the end of this year show that you've already sort of given Q2 guidance. It seems like some of the margin bent.

Vince Valentini: Benefit will wash out as early as Q2, but for the revenue will at all normalized 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: Yeah, I think Vince as we progressed during the course of the year I provided the Q2.

Speaker Change: 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.

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 progress during 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.

Speaker Change: We're very pleased with the corporates performance certainly in Q1, but we're continuing to monitor the sales pipeline full.

Speaker Change: 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.

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

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.

Speaker Change: To make investments there as a reminder, as we progressed during the year Q4 of 2023.

Speaker Change: Included $18 million of generative AI revenue from borders so that creates a stronger or more difficult year over year compact comparison. 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.

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

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

Heather: Hi, Thank you for taking my question.

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: 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 check last quarter was.

Heather: 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?

Speaker Change: I know there tends to be some noise, how you round the numbers so.

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

Speaker Change: But that 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 yeah. 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: Round it to seven.

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

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. 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.

Steve: In Q1 'twenty four then Q4 'twenty three I think that's a really important point.

Steve: Then Heather just as a reminder, if you dissect our legal professionals I won't go through every category of business, but we've talked a lot about west La practical law co counsel IQ and then we get to government and fine law.

Steve: As we discussed today government was 6% in Q1, 24, which is fairly consistent with recent quarters, which gets to the heart of your question on fine law.

Steve: As a reminder, fine law as the leading provider of marketing solutions lead generations for attorneys and law firms. This focuses heather Moore on solo a single attorney firms and small law firms, it's about $300 million in annual revenue led by Mark had died there it is.

Michael Eastwood: It's quite different than our core research offerings of Westlaw and practical law. Mark and the team are doing a solid job in Q1. We're optimistic as we go into Q2, and Q3. We'll see continued progression. The reason we're very transparent on fine law is that if you look at our optimism in regards to the legal research offerings of Westlaw and practical law, the acceleration for total is just suppressed a little bit by fine law.

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

Steve: 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 that's why we're calling it out but we are seeing.

Michael Eastwood: That's why we're calling it out, but we are seeing some solid progression with fine law. It's just lower than what we're seeing with the growth overall, Heather, for Westlaw and practical law. Hopefully, that gives you context. Then as we go into Q2, Q4, through Q4, we're optimistic that we'll see incremental step-ups in legal professionals overall. That rounding, once again, is a key factor that Q1 is certainly a stronger seven than Q4 of 23. Steve?

Steve: Solid.

Steve: 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>.

Steve: Who are professionals overall, but that rounding once again is a key factor that Q1 is certainly a stronger seven than Q Q4 dollars 23 state yes.

Stephen Hasker: Yeah, Heather, the only thing I'd add is, you know, we mentioned at the invest 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 over the next few years to play a larger role in the success of our customers. And everything we see today reinforces that. But we also said that the sort of magnitude of that expanded role and the timing of getting there remain unclear at this point.

Speaker Change: The only thing I'd add is.

Steve: We mentioned at the Investor Day.

Steve: We sort of said look we firmly believe that.

Steve: That.

Steve: This increase in complexity associated with regulatory compliance.

Steve: And equally importantly, Jim generative II.

Speaker Change: Give us the opportunity.

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

Steve: But we also said that the sort of magnitude of that an 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.

Stephen Hasker: And I think it still remains unclear a quarter or so on. 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, And so it's an exciting journey, but likely to be a multi-year journey before we get to where we want to be.

Steve: So as you can imagine legal professionals business run by Roku in with.

Steve: With Ron Kessler as the 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 is Steve <unk> in the in the government space, an application to courts and government departments, but the customer.

Steve: The customer reaction has been very strong, but its also the customers I think will behave differently and they 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>.

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

Steve: Yeah.

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

Steve: We got to where we want to have.

Michael Eastwood: Yeah, 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 operating metric that will help you in regards to our progression on Gen-AI and legal and across the board. But that's 30% ACB penetration for precision.

Steve: Just a couple of additional points in case, it's helpful to round out the discussion on legal I didn't mention that in my prepared remarks, but the west la precision ACB penetrations 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.

Steve: All kind of 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.

Steve: Yeah.

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

Speaker Change: Thank you very much why do we love more metrics into so it sounds like the 6% was for government.

Speaker Change: If I misheard that but I appreciate the clarification. Thank you.

Heather Balsky: 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: Curious as you're rolling out the Gen AI enhancements to products like West far 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.

Scott: To pay up for the new products.

Scott: Maybe between the law firms in the corporate.

Stephen Hasker: Scott, it's a great question, but I think it's a little early to tell.

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

Stephen Hasker: I mean, we're certainly seeing 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 to be optimistic. You know, we have a much larger business serving law firms than we do general councils. But I think, you know, the pricing is holding up in both so far, but it's early days. 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, uh, selling process for law firms, you know, large, medium, and small.

Scott: Tremendous appetite for.

Scott: 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.

Scott: So for us reasons for optimism.

Scott: Yeah.

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

Scott: But I think.

Scott: 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.

Scott: Today.

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

Scott: The selling process.

Scott: Into the 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's, 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: I'm just curious if there's any been any changes to that.

Speaker Change: <unk> million dollars internal investment target for the AI investments, whether that's a $100 million doesn't go as far and AI, given any cost increases or if there's more opportunity to spend more just looking 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 you look at calendar year 'twenty four.

Speaker Change: 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.

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

Speaker Change: Which is baked into our guidance.

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

Kevin Mcveigh: 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: Going back to the EBIT to a little bit.

Kevin Mcveigh: Any way to think about how much.

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

Kevin Mcveigh: Maybe 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% 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.

Speaker Change: Yes, certainly it's a combination.

Speaker Change: 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, given the level of organic revenue growth that we achieved this year that creates higher operating leverage in Q1.

Speaker Change: One then 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 at the 9% Youll see a higher flow through and.

Michael Eastwood: I think I previously discussed that 6% organic growth, you see about 75 basis points of flow through on an annual basis. So at 9%, you'll see higher flow through in Q1 of 2024. Certainly on the timing of expenses, I mentioned as we go into Q2 and the remainder of the year, we'll see a step up in areas like technology, product, and integration for the recent M&A. Also, a reminder, Kevin, in regards to flow through, if you look at Reuters Generative AI, the flow through on that is actually larger.

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: 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: When you think about operating leverage, but it's actually the flow through on those Reuters Generative AI content licensing bills would be even higher than what you would normally see on an incremental dollar of revenue. Then once again, as a reminder, as you get into Q4 of this year, we're going to have a tougher comp because we have those 18 million Generative AI deals from Reuters 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 of generative AI deals from orders in Q4 of 2023.

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

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 at the kind of four variables on that that Gen AI retention M&A pricing, so on and so forth.

Kevin Mcveigh: [inaudible] Is there any, like, when you think about that Q1 Delta, because again, there's clearly a structural, appreciating that it's going to be 7 or 8. What drove that truck full of change?

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

Speaker Change: Step 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.

Kevin Mcveigh: Yeah.

Michael Eastwood: 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 went back to Q1 of 2024, I would just emphasize four items that really contributed to the really strong organic growth performance. Number one, the Reuters AI licensing revenue, which was $25 million of absolute revenue.

Speaker Change: Right Yeah. The four items that you just mentioned I framed up on Drews initial question I framed out 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.

Michael Eastwood: <unk> items that really contributed to the really strong organic growth performance number one to grow orders 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 in corporates.

Michael Eastwood: Number two, seasonal tax offerings, tax and audit offerings that occurred both in tax and accounting professionals' offices 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: 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 organic.

Michael Eastwood: <unk> growth.

Kevin Mcveigh: Hopefully thats helpful. Kevin.

Speaker Change: Very helpful. Thank you.

Speaker Change: Sure.

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

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

Michael Eastwood: 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.

Tim Casey: Thanks, Steve could you talk a little bit how the international strategy is evolving with our borrowers in the fold and maybe I was hoping you could unpack it in terms of.

Steve Hasker: 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: 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 Michael will add more. So just as a reminder, a tiny bit shy of 20% of our revenues come 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.

Tim Casey: About <unk>.

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

Speaker Change: 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, Australia, and New Zealand parts of Europe.

Speaker Change: So 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 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 nature of it. From a sort of a product and capability lens, yes, Pegero is a big step forward for us. Pegero, we think, is the only sort of single platform e-invoicing solution that there is.

Speaker Change: Acquisition.

Stephen Hasker: <unk>.

Stephen Hasker: To accelerate there.

Speaker Change: We are investing in Brazil and Mexico.

Stephen Hasker: Golf opportunities in southeast Asia from a sort of a regional standpoint.

Stephen Hasker: In Europe remains opportunistic.

Tim Casey: So sort of a geographic lens from a sort of a product and capability lens, yes, <unk> was a big step forward for us.

Stephen Hasker: We think as beyond Lee.

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, and have bubbled together solutions across different geographies. So Peggero 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.

Tim Casey: 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 Thats exciting about co council.

Stephen Hasker: Is it is not geographically bound and as we launch or introduce the idea of launching co counsel in different markets and really providing the 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 that's the.

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

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 has been focused on exploring that opportunity.

Stephen Hasker: It has a unique set of data.

Stephen Hasker: And it has a 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 years. 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, or fortune 1000, and lower Clayton Mcdonald.

Stephen Hasker: <unk> to exploring that opportunity.

Michael Eastwood: I wouldn't add any items; I would just double down.

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

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

Speaker Change: 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, Thompson, 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.

Michael Eastwood: 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 on Arrow 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.

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

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

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

Stephanie Yee: Hi, this is Stephanie Yee 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.

Stephanie Yee: And I wanted to ask about the 'twenty 'twenty four guide and so youre raising a little bit the revenue growth that you're keeping the margin guide the same.

Stephanie Yee: So I guess is the implication that you see additional opportunity to reinvest that flowed through or have less cost than going 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 in 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 topline in 'twenty, four 'twenty five and beyond.

Stephanie Yee: 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.

Stephanie Yee: And can I just ask about <unk>.

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

Stephanie Yee: Sustained 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. You know, 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.

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

Stephanie Yee: As I alluded to earlier we.

Stephen Hasker: 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 TF or <unk>.

Stephen Hasker: 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. 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.

Stephanie Yee: 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 would 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.

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

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

Stephen Hasker: A pre existing talent that we have in and around advanced machine learning and large language models and then of course. The addition of <unk>.

Stephen Hasker: 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: <unk> I think was a real 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 relative to any and all competitors.

Speaker Change: Okay that all makes sense. Thank you.

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

Toni Kaplan: Thank you.

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

Toni Kaplan: It also sounded from an earlier answer like legal ways may be improving as well.

Toni Kaplan: 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 or pipelines, there and maybe just it sounds like maybe corporate here.

Stephen Hasker: Are you seeing, you know, improving trends in the selling environment in legal and any changes to the sales cycle or pipelines there? And maybe just, 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? I guess, what would drive that to, you know, really lead you to believe like, okay, we're out of the woods on that as well? Thanks.

Stephen Hasker: <unk> 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 believe like okay. We're out of the woods on that as well. Thanks.

Stephen Hasker: Yeah, Toni, look, I think you're right on both fronts. In corporates, 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 I think flowed through to our results. 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 there are improved trading conditions within corporations.

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 flow 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 there are improved trading conditions within corporates.

Stephen Hasker: In legal, we've been picking up steam quarter on quarter. We certainly did through 2023, and that continued in 2024, so the opportunity ahead of us is just to continue that steady improvement. The trajectories are quite different, and we remain vigilant. Mike, anything to add? No, I would just double emphasize, Toni.

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

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

Speaker Change: That steady improvement but.

Mike: The trajectories are quite different.

Stephen Hasker: And.

Mike: 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.

Michael Eastwood: I would just double emphasize, Toni, what would give us stronger confidence there is just repeat performance in Q2 and Q3 in regards to the corporate's 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, and we are quite encouraged by what we see, and hope to report another good Q2, Q3 in corporate, and that would give us that confidence that you're inquiring about, Toni.

Michael Eastwood: In regards to the corporates.

Michael Eastwood: 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.

Michael Eastwood: Im quite encouraged by what we see 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 that you're making with congenitive AI?

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 monetization compares with investments that youre, making degenerative AI.

Stephen Hasker: Yeah, George, I would say, you know, very encouraging early progress, both in terms of the overall customer reception for those new products 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.

Speaker Change: Yes, George I would say you know.

Stephen Hasker: Very encouraging early progress.

Stephen Hasker: Both in terms of the.

Stephen Hasker: In terms of the overall customer reach.

Stephen Hasker: Reception to those new products.

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

Stephen Hasker: And also their propensity to.

Stephen Hasker: To pay but it is early.

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 dollar 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: 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. 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.

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

Stephen Hasker: <unk> acquisition, 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 George just in regards to comparison to the investment of our ability the birds are.

Stephen Hasker: 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: 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.

Stephen Hasker: 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...

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.

Stephen Hasker: Or the different ways that you can monetize journey.

Keen Fai Tong: 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, you know, similar to my earlier answer, these are 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.

Keen Fai Tong: With with <unk>.

Keen Fai Tong: Multiple different options, what we're trying to focus on.

Keen Fai Tong: Is making it as simple as possible for our customers too.

Keen Fai Tong: To adopt these products from a sort of a pricing and.

Keen Fai Tong: Proposition standpoint, while at the same time.

Keen Fai Tong: Articulating the value because we think the value was very significant in terms of time saved in terms of.

Keen Fai Tong: The overall efficiency and productivity the quality of work product.

Keen Fai Tong: We are squarely aimed at increasing the profitability.

Keen Fai Tong: All of our customers and in pricing accordingly, but similar to my earlier answer early days in <unk>.

Keen Fai Tong: 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.

Keen Fai Tong: 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 impact of Gen-AI on your cost efficiency. In 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 Gen-AI on your own cost base?

Sami Kassab: Thank you very much and good morning, gentlemen.

Sami Kassab: 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 of many examples of complex application.

Sami Kassab: And secondly, yes could you please elaborate on.

Sami Kassab: 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 have the last three months, perhaps brought any mortgage ability in terms of the impact of Jenny I on your own cost base. Thank you.

Stephen Hasker: Thank you. Yeah. Yeah. Thanks, Sami. Great question.

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.

Steve: Yeah. Thanks, Amit great questions. So I would say with regard to the corporate transfer inject one of many.

Stephen Hasker: 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 that'd be various sort of industry professional body guidelines, whether they be internal.

Stephen Hasker: Internal processes.

Stephen Hasker: That 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 one of many. In terms of our internal Gen-AI, Mary Alice Vucek, our Chief People and Communications Officer, and Kirsty Roth, who, of course, runs Operations Technology, they, with their teams, are leading this effort. In the early days,

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 good 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 one of many.

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

Stephen Hasker: <unk>.

Speaker Change: Mary Alice music out.

Stephen Hasker: <unk>.

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

Stephen Hasker: Lots of experiments and tests going on. I think with 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 cost efficiencies. We want to see the benefits, and we want to make sure that it's in the best service of our customers before we get out ahead of ourselves in terms of the financial implications. So 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.

Sami Kassab: Thank you.

Sami Kassab: 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.

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

Sami Kassab: And we want to make sure that it's.

Sami Kassab: Best service of our customers before we.

Sami Kassab: 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 will when we'll communicate around that but we're in no hurry.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

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

Speaker Change: Thank you everyone for.

Speaker Change: For your attention.

Operator: Okay, thank you. Thanks, everybody.

Mike: Okay. Thank you thanks, everybody.

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

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

Operator: Uh huh.

Operator: Yeah.