Thomson Reuters Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Fletcher - CIBC - Analyst : Hi, good morning, everyone. I wanted to ask a question on M&A, given there's from a capacity on the balance sheet from a particularly as it relates to AI deals. You've now got a few of some of the smaller end of the key facts on the larger side, at least from a capital deployed standpoint. I'm just wondering, as you get further down the road map of general high, are you more comfortable looking at larger die deals that involve a significant GenAI component? Or does the risk reward and get more challenging as you start to look at larger deals? On the GenAI standpoint, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, TRI.TO - Q3 2024 Thomson Reuters Corp Earnings Call

Question: Scott Fletcher - CIBC - Analyst : Okay, great. And then just to follow up on the M&A front, is there anything you can you provide any detail on sort of how much of the margin impact in the quarter, which was organic versus inorganic in terms of integration?

Question: Scott Fletcher - CIBC - Analyst : That's fine, thanks.

Question: Manav Patnaik - Barclays - Analyst : Thank you. I just wanted to ask you to be at 15% of ACV from GenAI enabled products. I'm guessing most of that is on the legal side, listen, Tax & Accounting. And I guess over time, what is the right number that that 15% should grow to?

Question: Manav Patnaik - Barclays - Analyst : And Mike, maybe just a follow-up just on the moving parts apologies, I missed it, but I guess you mean the organic guide this 50 basis points for the overall growth of the same. So, what is the moving pieces on the divestiture and the two acquisitions?

Question: Manav Patnaik - Barclays - Analyst : Okay, thank you.

Question: Vincenzo Valentini - TD Cowen - Analyst : Thank you very much. And I start with a clarification. The 15% ACV is that just on Big 3 recurring revenue or doesn't include news in print, does it include transaction revenue?

Question: Vincenzo Valentini - TD Cowen - Analyst : Thank you. And a question, and there's not much to criticize and what you guys are doing it. It's obviously great execution but if I can take a little, I mean, finalized looks like you're getting four times EBITDA for it, and you can't do any better now with the assets you're looking to sell, or should we expect other non-core stuff to be that low on the divestiture pricing? And if it's that cheap one, what I just keep it flat, really hurting you is it?

Question: Vincenzo Valentini - TD Cowen - Analyst : Thank you.

Question: Kevin McVeigh - UBS Equities - Analyst : Great. Thanks so much. Just wanted to just clarify that the $200 million of GenAI investment up from $100 million, is that all kind of reflected in the P&L is well set? I mean, you're seeing some pretty good momentum on the license sales, things like that. But just is that all sounds like '24 for making and just maybe help us understand that a little bit because it is a critical part to the story.

Question: Kevin McVeigh - UBS Equities - Analyst : No, that's super helpful. And Mike, that would be the same or split is the $100 million goes up to $200 million in the same split in terms of OpEx as opposed to CapEx.

Question: Kevin McVeigh - UBS Equities - Analyst : Got it. And then just real quick, especially real at Investor Day, it feels like the organic growth in the Big 3 is accelerating kind of even faster than what we would have thought. Is that the kind of pacing of the GenAI or and just maybe is at retention starting to improve? Just any thoughts around the broad strokes here on the organic growth?

Question: Kevin McVeigh - UBS Equities - Analyst : Super helpful. Thank you.

Question: Aravinda Galappatthige - Canaccord Genuity - Analyst : Good morning, thanks for taking my question. Is just a quick come down, I guess housekeeping question before the main one with respect to corporate costs. I mean it does look like you're tracking below the guide meaningfully when I look at the nine-month numbers, is there anything we should sort of consider when you look at Q4 there?

Question: Aravinda Galappatthige - Canaccord Genuity - Analyst : Okay, great. And then maybe just going back to the $200 million in spend. Obviously, you have the space to continue to invest in and then sort of the encouragement from the results you're seeing so far that tap the 75 basis points margin expansion that you originally guided for 2025, is that $200 million level, recognizing, of course, only half of that is OpEx or can that is there more room to grow that within that margin guide? I just wanted some colour on that. Thank you.

Question: Aravinda Galappatthige - Canaccord Genuity - Analyst : Thank you very much.

Question: Andrew Steinerman - JP Morgan - Analyst : Hi, Steve, as law firms have embraced Thomson Reuters GenAI enabled products in I have you seen law firms change any of their intentions around hirings and or practices around value billing?

Question: Andrew Steinerman - JP Morgan - Analyst : Makes sense. Thank you.

Question: Maher Yaghi - Scotiabank - Analyst : Great. Thank you for taking my question. And just my first one relates to your NCIB program I noticed that you did not buy any stock during the Q3 because you exhausted your NCIB back in Q2. As we stand today, your leverage is very healthy at 0.5 times. What are your plans in terms of returning capital shareholders here for with another potential NCIB program? And if so, what should we expect a similar size to 2023, or the formulaic requirements allow you to see or to buy more than the $10 million of last year? The second question is on case tax, so with one year now under your belt, can you update us on the performance that you have been able to achieve on the right assets to close the transaction? Maybe if you can provide some metrics on revenues or amplification implications to existing products, i.e., of delivering on your expectations and the returns of expectations? Thank you.

Question: Maher Yaghi - Scotiabank - Analyst : Great. Thank you very much.

Question: Toni Kaplan - Morgan Stanley - Analyst : Thank you. I wanted you go back to the last half and I definitely understand the growth challenges you've been having their and unnecessary focus that you're paying to it, just wondering if the sale also represents a shift in strategy with regard to small law firms, is there less of a focus their wishes and this was not the right product to be selling to them and you're better off selling AI products? Thanks.

Question: Toni Kaplan - Morgan Stanley - Analyst : Very helpful. I was also hoping you could give us an update on your thoughts here how you're pricing the CoCounsel product, if there's been any changes to that and how you think about pricing at across different customer types?

Question: Toni Kaplan - Morgan Stanley - Analyst : Thanks, guys.

Question: Drew McReynolds - RBC Capital Markets - Analyst : Thank you, and good morning and the hopped on late, so hopefully not repetitive here. I did hear an earlier question, Mike, on the organic revenue growth guidance increment, where you broke it down in terms of three components. So super helpful their bigger picture when we look at the 7% kind of guided growth for 2024 and an acceleration in 2025 or kind of firmly into high single digits here, which I think the long-standing tops and followers is great to see on at that high level, can you just kind of update us on whether you had the components are drivers of that growth has changed with respect to price? Obviously can't expansion you talk at your March Investor Day market share on how much of this is asset mix, evolution, etc, just again at a high level? And then second, maybe for you, Steve, on the Genetic AI. acquisition with material. I'm fascinated from my perspective on kind of the next generation capability here on the agency side on, can you kind of give us a sense schedule what additional capabilities that acquisition projects? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, TRI.TO - Q3 2024 Thomson Reuters Corp Earnings Call

Question: Drew McReynolds - RBC Capital Markets - Analyst : Thanks for the context.

Question: George Tong - Goldman Sachs - Analyst : Hi, good morning. The legal business has been 7% organic revenue growth for several quarters now. Can you talk about when you expect legal organic growth to accelerate and what the top drivers will be?

Question: George Tong - Goldman Sachs - Analyst : Got it. That's helpful. And then you touched a little bit about your pricing philosophy with vertical Council. Can you discuss how you plan to monetize journey on more broadly across the segments, given the step-up in investments, how much of a pricing for revenue uplift in return you expect from GenAI?

Question: George Tong - Goldman Sachs - Analyst : Got it. That's helpful. Thank you.

Question: Doug Arthur - Huber Research Partners - Analyst : Yes, thanks. Just on Reuters news, you made an interesting comment that some of the AI modelling a tower is becoming recurring in nature of this does that sort of change your outlook for that business of the intermediate in term basis?

Question: Doug Arthur - Huber Research Partners - Analyst : Got it. Okay. Thank you.

Question: Sami Kassab - EXANE BNP - Analyst : Thank you, very much and good morning, everyone. I'm trying to put some context around the 15% share of ACV from GenAI and every product. Now given the relative contract length across the Big 3, I'm tempted to fill that every year renewal from the new good professional division probably account for around 15% to 20% of total decrease ACV and therefore given that most of the GenAI revenue sitting the legal profession, am I right to conclude that it moves over the last 12 months or so pretty much every single law firm that had to renew decided to trade up to a GenAI product, would that be a fair statement or if not, then could you comment on the share of renewables in legal that trade-up to GenAI? Thank you, Steve. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, TRI.TO - Q3 2024 Thomson Reuters Corp Earnings Call

Question: Sami Kassab - EXANE BNP - Analyst : Thank you.