The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Vince Valentini - TD Securities Equity Research - Analyst
: Mike, your commentary about margins in 2024, I want to make sure I understand that properly. So I mean very quick rough math, if we assume 6%
revenue growth and 3% normalized increase in your fixed costs, that would drive in a normal year 150 to 160 basis points of margin expansion.
That's what I would think of as normal operating leverage. So when you say most of that is going to be reinvested, does that mean the entire 150
or maybe you can still grow margins by 50 basis points, but 2/3 of what the normal growth would have been would be reinvested?
Question: Vince Valentini - TD Securities Equity Research - Analyst
: Okay. And a follow-up just on the sort of the nature of how you provide guidance. Last quarter, you told us Q3 was going to be weak because of
OpEx timing, sort of talking down to maybe 36% margins, and you've delivered 39.6%. Now you're just saying that's going to roll into Q4.
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NOVEMBER 01, 2023 / 1:00PM, TRI.TO - Q3 2023 Thomson Reuters Corp Earnings Call
It seems like something else is happening. I don't know if you're deciding to pile a lot of discretionary expenses into Q4, some of the gen AI
investments that you could have made next year, you can accelerate those into Q4. Is it more that? Or is it more you're just padding yourself to try
to be more cautious because of macro or competitive headwinds of some kind?
Question: Vince Valentini - TD Securities Equity Research - Analyst
: We'll wait an update on that on February.
Question: Maher Yaghi - Scotiabank Global Banking and Markets, Research Division - Analyst
: Steve, I wanted to ask you, how is the current economic environment educating your view on how 2024 is going to look like? I know it's -- we're
not in guidance mode here, but if you can just help us understand your views on, qualitatively, on '24 compared to '23.
And maybe just to close the loop on '24 margins, Mike. So if I start at 39% in 2023 on the EBITDA margin, that 75 basis points improvement in
operating leverage, as you said, is going to be invested. So the -- incrementally, basically, the 50 basis point incremental dilution in '24 from the
acquisition of Casetext, that's basically your landing zone is 38.5% for 2024. Am I understanding this properly?
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