Thomson Reuters(US:TRI)2023-11-01 19:15Financial Data and Key Metrics Changes - Total company organic revenues grew 6%, with the Big 3 segments achieving 7% organic growth [5][20][133] - Adjusted EBITDA increased 18% to $632 million, reflecting a margin improvement to 39.6% [113][132] - Adjusted earnings per share rose 41% from the prior year to $0.82 [13][132] - Free cash flow for the first nine months was $1.3 billion, up from $814 million in the prior year [141][159] Business Line Data and Key Metrics Changes - Tax & Accounting organic revenue grew 12%, with recurring revenue up 9% and transactional revenue up 20% [7][12] - Global Print's adjusted EBITDA was $55 million with a margin of 39.6%, up 520 basis points [3] - Legal Professionals organic revenue grew 6%, driven by Westlaw Precision momentum and the Casetext acquisition [133][155] Market Data and Key Metrics Changes - International businesses achieved 14% organic growth, with key products like Practical Law and Confirmation showing double-digit growth [19] - Reuters News organic revenues rose 3%, aided by a new agreement with LSEG and an improved events calendar [21][19] Company Strategy and Development Direction - The company is focused on generative AI opportunities, with a commitment to heavy investment in product roadmaps [2][8] - A new $1 billion share repurchase program was launched, alongside plans to pay down $600 million in maturing debt [6][30] - The integration of Casetext is underway, with a focus on enhancing legal offerings through generative AI capabilities [134][120] Management's Comments on Operating Environment and Future Outlook - Management maintains a full-year 2023 outlook of 5.5% to 6% organic revenue growth and an adjusted EBITDA margin of approximately 39% [17][114] - The macroeconomic environment remains uncertain, with elongated sales cycles in the Corporates segment impacting growth [19][83] - Management expressed confidence in the generative AI initiatives leading to meaningful revenue acceleration in 2025 and beyond [68][69] Other Important Information - The company has monetized an additional $1.5 billion of its LSEG stake and completed the acquisition of Casetext [6][124] - Adjusted EPS calculations now include noncash intangible amortization expenses related to acquired software [4][28] Q&A Session Summary Question: Contribution from divestitures and acquisitions in Q3 organic revenue growth - The impact of M&A for Q3 was up 5 percentage points, with organic revenue growth at 6% [162] Question: Expectations for legal business in Q4 - Anticipated higher growth in Q4, with Practical Law and HighQ continuing to perform well [44][102] Question: Future growth from generative AI initiatives - Management is still quantifying the impact but expects significant revenue acceleration from generative AI investments [68][71] Question: Pricing impact in 2023 - Estimated pricing impact is approximately 30 to 40 basis points higher in 2023 compared to 2022 [38][62] Question: Retention of talent from Casetext acquisition - The integration of Casetext is progressing well, with a focus on retaining key talent [97][80] Question: Economic environment's impact on 2024 outlook - Management expects a challenging macro environment to persist into 2024, affecting growth expectations [101][84]