Thomson Reuters(US:TRI)2020-11-03 18:26Financial Data and Key Metrics Changes - Reported revenues increased by 2%, organic revenues were up 2.5%, and revenues at constant currency rose by 3% [10] - Adjusted EBITDA increased by 42% to $491 million, reflecting a margin of 34% [10][48] - Adjusted earnings per share rose to $0.39 from $0.27 in the same quarter last year [10][54] Business Line Data and Key Metrics Changes - The Big 3 businesses (Legal, Corporates, and Tax & Accounting) achieved organic revenue growth of nearly 5% [9][35] - Legal segment revenues increased by 4% before currency, with organic revenues up 3% [11][35] - Corporates segment organic revenues grew by 5.5%, while Tax & Accounting's organic revenues bounced back by 10% [14][35] Market Data and Key Metrics Changes - Reuters News organic revenues declined by 2%, and Global Print organic revenues fell by 7% [15][41] - The Government business within the Legal segment grew 9% organically [13][35] Company Strategy and Development Direction - The company is transitioning from a holding company to an operating company, aiming to strengthen its businesses and enhance customer experience [20][29] - There is a focus on integrating AI and machine learning with unique content to become a leading content-enabled technology company [22][23] - The company plans to streamline its product offerings and reduce complexity to improve customer experience and drive growth [24][25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite the challenging macro environment [7][9] - The company is increasing guidance for adjusted EBITDA margin and free cash flow for the full year, expecting a consolidated adjusted EBITDA margin of about 32% [16][63] - Management is optimistic about organic growth opportunities without the need for transformational M&A [28][29] Other Important Information - The company expects to close the sale of Refinitiv to the London Stock Exchange Group in the first quarter of 2021, with an expected interest worth about $8.8 billion pre-tax [60] - Free cash flow for the first nine months was reported at $881 million, a significant improvement from a negative $50 million in the prior year [56] Q&A Session Summary Question: Can you provide insight into the level of stepped-up OpEx investments for growth initiatives? - Management confirmed there will be significant OpEx investments in Q4 related to organic growth initiatives across various segments [74][76] Question: What is driving the strong new sales in the Legal segment? - Management attributed the strong performance to effective customer focus and strong products like Westlaw Edge and Practical Law [81][83] Question: How does the competitive environment look for Westlaw? - Management indicated that while competitors are active, they remain focused on innovation and customer partnerships rather than competitive dynamics [89] Question: Can you break down the investments between CapEx and OpEx? - Management stated that capital intensity is expected to decline as revenue grows, with additional investments planned for Q4 to capitalize on near-term opportunities [92][93] Question: What is the outlook for share repurchases? - Management does not anticipate additional share buybacks this year, with discussions planned for the January Board meeting regarding 2021 [124] Question: What is the status of M&A activity? - Management noted a return of M&A activity and emphasized a rigorous approach to pursuing acquisitions that enhance customer experience and reduce complexity [126][128] Question: How is the small law firm segment performing? - Management reported that the small law segment, which constitutes about one-third of total revenue, has rebounded well post-COVID disruptions [133][135]