Thomson Reuters (TRI) Q4 2025 Earnings Transcript

Core Insights - The company expresses confidence in its ability to leverage proprietary content and expertise to deliver professional-grade AI solutions, particularly in the legal sector, amidst growing competition in AI [1][5][6] - The company has reported strong financial results for 2025, with organic revenue growth of 7% and an adjusted EBITDA margin of 39.2%, indicating solid operational performance [7][12][14] - The company is committed to a balanced capital allocation strategy, including a 10% increase in annual dividends and ongoing share repurchase programs, while maintaining a strong liquidity position with $11 billion of capital capacity through 2028 [11][28][30] Financial Performance - Full-year organic revenue grew 7%, driven by a 9% increase in the Big Three segments, with adjusted EBITDA increasing by 6% to $2.9 billion [12][13][14] - Fourth quarter organic revenues also grew 7%, with legal organic revenue increasing by 9%, supported by strong performance from Westlaw and co-counsel products [12][23][24] - Free cash flow for 2025 was reported at $1.95 billion, slightly exceeding expectations, driven by EBITDA growth [27] AI and Innovation - The company is focusing on AI-driven workflows, with plans to integrate advanced AI capabilities into its legal and tax offerings, which are seen as significant growth opportunities [6][9][10] - The launch of Westlaw Advantage has been successful, with early sales indicating a new standard in legal research capabilities [5][42] - The company has developed over 300 AI use cases across various departments, demonstrating a commitment to leveraging AI for operational efficiency [17][18] Capital Allocation and M&A Strategy - The company executed a $1 billion share repurchase program and completed four acquisitions for approximately $850 million in 2025, enhancing its capabilities in key segments [29][30] - The company aims to return 75% of its free cash flow to investors in 2026, indicating a strong commitment to shareholder value [46][30] - The company maintains a cautious approach to M&A, focusing on strategic acquisitions that enhance customer experience and align with its long-term goals [55][56] Market Position and Competitive Advantage - The company believes its unique content sets and deep domain expertise create a significant barrier to entry for competitors in the legal research space [41][40] - The percentage of annualized contract value from GenAI-enabled products has increased to 28%, reflecting the growing integration of AI into the company's offerings [24][72] - The company sees a strong demand for its AI-driven tools across all firm sizes, indicating a broad market appeal and potential for growth [71]