Thomson Reuters Q2 Profit Down, Adj. EPS Beats Market; Backs FY25 Outlook

Thomson Reuters (TRI) reported sharply lower Q2 net earnings of $313 million, a 63% decline year-over-year, but its adjusted earnings per share of $0.87 exceeded analyst estimates, while revenues of $1.79 billion met expectations, up 3% driven by recurring revenue growth. Despite the GAAP profit decline, the company maintained its fiscal 2025 outlook, projecting robust organic revenue growth of 7.0-7.5% and an adjusted EBITDA margin of approximately 39%, signaling underlying operational strength and confidence in future performance.

Analysis

Thomson Reuters reported a mixed second quarter, characterized by a significant divergence between GAAP and adjusted results. While reported net earnings plunged to $313 million, a 63% year-over-year decline, the company's operational performance appears robust. Adjusted earnings per share of $0.87 surpassed Wall Street's consensus estimate of $0.83, and total revenues of $1.79 billion met expectations, driven by a solid 3% increase in recurring revenues. More importantly, management reaffirmed its full-year 2025 guidance, signaling strong underlying confidence. The company continues to project 7.0% to 7.5% organic revenue growth and an expansion of its adjusted EBITDA margin to approximately 39% from 38.2% last year. The forward-looking guidance for Q3, anticipating approximately 7% organic revenue growth, suggests an acceleration from the current quarter's total revenue growth rate. The combination of an adjusted earnings beat, stable recurring revenue, and a confident outlook on growth and margin expansion largely overshadows the dramatic fall in GAAP profit, which may be attributable to non-operational or one-off factors not detailed in the report.

Key Decisions for Investors

• Investors should look past the headline GAAP earnings decline and focus on the strength in underlying fundamentals, including the adjusted EPS beat and the 5% growth in operating profit.
• The reaffirmed fiscal 2025 guidance, especially the robust 7.0-7.5% organic growth forecast and margin expansion to 39%, is the key positive signal and should be the primary basis for evaluating the company's trajectory.
• Consider the stock's stability, supported by growth in recurring revenues and a consistent dividend, while monitoring Q3 results to confirm the company achieves its guided acceleration in organic growth and profitability.