HOUSTON--(BUSINESS WIRE)-- #elmsolutions--Wolters Kluwer Legal & Regulatory's ELM Solutions business today published the most recent installment of its award-winning LegalVIEW Insights report series, which finds the legal market at a crossroads where rate volatility, reputational premiums, and the accelerating impact of AI are poised to reshape the rules of engagement in 2026. Jennifer McIver, Legal Operations and Industry Insights expert at Wolters Kluwer ELM Solutions: "Expect rate dynamics to remain any. ...

Financial Data and Key Metrics Changes - Total company organic revenues rose by 7%, with the big three segments growing by 9% [4][10] - Adjusted EBITDA increased by 10% to $672 million, reflecting a margin increase to 37.7% [10][26] - Adjusted EPS was $0.85 for the quarter, compared to $0.80 in the prior year [26] Business Line Data and Key Metrics Changes - Legal Professionals segment saw organic revenue growth of 9%, up from 8% in the first half of 2025 [6][11] - Corporates segment organic revenues grew by 7%, driven by offerings in Legal, Tax, and Risk portfolios [11][23] - Tax and Accounting organic revenues grew by 10%, supported by strong performance in Latin America and the U.S. [11][24] - Reuters News organic revenues rose by 3%, primarily due to growth in the agency business [12][25] - Global Print organic revenues declined by 4% year on year [12][25] Market Data and Key Metrics Changes - The percentage of annualized contract value from GenAI-enabled products increased to 24%, up from 22% in the previous quarter [25] - The company expects organic revenue growth of approximately 7% in Q4, including about 9% for the big three segments [31] Company Strategy and Development Direction - The company is focused on leveraging AI innovations to enhance product offerings, particularly in the Legal Professionals and Tax and Accounting segments [5][21] - A balanced capital allocation approach is maintained, with a commitment to assess additional inorganic opportunities [8][9] - The company completed a $1 billion share repurchase program and remains well-capitalized with a net leverage of only 0.6 times [8][9] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed the full-year 2025 revenue and profit outlook, expecting approximately 9% organic revenue growth for the big three segments [4][29] - Temporary factors affecting growth include slower commercial print volumes, U.S. Federal government cancellations, and softer bookings trends in Corporates [5][29] - The company is optimistic about the long-term value proposition in government despite recent downgrades and cancellations [44][45] Other Important Information - The company is updating its 2026 financial framework, expecting organic revenue growth of 7.5% to 8% and margin expansion [32] - Free cash flow outlook for 2026 is raised to approximately $2.1 billion, reflecting confidence in operational efficiency [33] Q&A Session Summary Question: What are the recurring impacts of government and corporate headwinds? - Management remains confident in the corporate segment's growth potential despite temporary sales softness, expecting 9% to 11% organic growth next year [40][43] Question: How is customer reaction to AgenTik AI? - Customer feedback has been very positive, with significant changes in behavior noted among users, indicating strong adoption of the new tools [45][46] Question: What is the impact of the government shutdown on contracts? - Cancellations occurred prior to the shutdown, which has minimal impact on current revenue [52] Question: How does the company view competition in the AI assistant space? - New players have entered the AI assistant space, but the company is confident in its position and product development plans [68] Question: What is the pricing strategy in light of AI product value? - The company follows a price-to-value principle, ensuring pricing aligns with the efficiencies provided by AI products [93][94] Question: How does the company see AI affecting the tax business? - The tax business is expected to benefit from AI advancements, enabling more efficient processes and advisory services [114][115]

Financial Data and Key Metrics Changes - Total company organic revenues rose 7% with the big three segments growing by 9% [4][7] - Adjusted EBITDA increased 5% to $678 million, reflecting a 70 basis point margin increase to 37.8% [7][28] - Free cash flow for 2025 was $843 million, up 4% from the prior year period [29] Business Line Data and Key Metrics Changes - Legal organic revenue grew 8%, driven by Westlaw and co counsel [8][24] - Corporates organic revenue grew 9%, with key contributions from legal, tax, and risk portfolios [9][24] - Tax and accounting organic revenues grew 11%, driven by Latin American and US businesses [9][24] - Reuters News organic revenues rose 5%, with all major lines contributing [10][25] - Global print organic revenues declined 7% [10][25] Market Data and Key Metrics Changes - The percentage of annualized contract value from GenAI-enabled products increased to 22%, up from 20% [26] - The company expects organic revenue growth of 7% to 7.5% for the full year 2025 [30] Company Strategy and Development Direction - The company is focused on leveraging Agentic AI to enhance legal and tax/accounting portfolios [5][11] - There is a commitment to a balanced capital allocation approach, with $10 billion of capital capacity through 2027 [6][78] - The company aims to continue investing in innovation and strategic M&A opportunities [6][78] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed the full year 2025 outlook for organic revenue, adjusted EBITDA margin, and free cash flow [4][30] - The company remains confident in delivering its guidance for 2026, with organic revenue growth targets for the big three segments [31] Other Important Information - The company has introduced several new AI-powered products, including CoCounsel for Tax, Ready to Review, and Ready to Advise [15][16][18] - The integration of AI capabilities is seen as a key differentiator in the competitive landscape [48][50] Q&A Session Summary Question: Can you provide a sense of the percentage of workflow currently being automated? - Management indicated that automation is still relatively modest in legal but more advanced in tax and accounting, with significant time-consuming tasks being automated [36][38] Question: How does the company view its competitive position in the market? - Management believes they are ahead of competitors in tax and accounting innovations and highlighted the unique capabilities of their deep research technology [47][50] Question: What are the drivers behind the margin performance in the quarter? - Key factors included good operating leverage, timing of expenses, and revenue mix, with expectations for margin performance to normalize in the second half of the year [56][58] Question: How is the company thinking about excess capital and potential return of capital transactions? - The company prioritizes strategic M&A for capital deployment, with a commitment to return 75% of free cash flow, potentially including share buybacks [79][80] Question: What is the adoption rate of GenAI-enabled products across different segments? - The larger portion of GenAI-enabled products is currently in the legal segment, but growth is expected across all segments as new products are launched [110]