Thomson Reuters Reports First-Quarter 2024 Results

TORONTO, May 2, 2024 – Thomson Reuters (TSX/NYSE: TRI) today reported results for the first quarter ended March 31, 2024:

• Revenue momentum continued in the first quarter
  o   Total company revenues up 8% / organic revenues up 9%
      - Organic revenues up 10% for the “Big 3” segments (Legal Professionals, Corporates and Tax & Accounting Professionals)
• Based on Q1 performance, moderately raised 2024 outlook for total and organic revenue growth
  o   Maintained guidance on all other metrics
• Sold 10.1 million shares of London Stock Exchange Group (LSEG) in the first quarter for gross proceeds of $1.2 billion
• Raised annual common dividend by 10% to $2.16
• Repurchased over $350 million of the company’s common shares in the first quarter
  o   Current $1.0 billion share buyback program expected to conclude by end of the second quarter of 2024

“We have delivered an encouraging start to 2024, underscored by a strong financial performance and raised outlook, building on the momentum of the past year,” said Steve Hasker, President and CEO of Thomson Reuters. “As we chart our course through 2024, we remain committed to investing in content-driven technology that helps professionals make complex decisions with confidence. With an exciting AI product roadmap and strategic acquisitions shaping our core operations, we are confident we will continue to lead the way in transforming professional work.”

Mr. Hasker added, “Looking ahead, we remain focused on continuing our track record of solid execution, as we work to accelerate Thomson Reuters’ growth potential. This includes a continued focus on allocating capital to drive sustainable long-term value creation.”

Consolidated Financial Highlights - Three Months Ended March 31

Revenues increased 8%, driven by growth in recurring and transactions revenues. Net divestitures had a 1% negative impact on revenues and foreign currency had no impact.   

• Organic revenues increased 9%, driven by 9% growth in recurring revenues (76% of total revenues) and 22% growth in transactions revenues. Global Print revenues decreased 10% organically.
• The company’s “Big 3” segments reported organic revenue growth of 10% and collectively comprised 83% of total revenues.

Operating profit increased 10%, primarily reflecting higher revenues.

• Adjusted EBITDA increased 19%, also reflecting higher revenues. The related margin increased to 42.7% from 38.8% in the prior-year period. Foreign currency had no impact on the adjusted EBITDA margin.

Diluted EPS decreased to $1.06 compared to $1.59 in the prior-year period as the prior-year period included a significant increase in the value of our investment in LSEG. In the first quarter of 2024, diluted EPS benefited from a reduction in weighted-average common shares outstanding due to share repurchases and the company’s June 2023 return of capital transaction.

• Adjusted EPS, which excludes the changes in value of the company’s LSEG investment, as well as other adjustments, increased to $1.11 per share from $0.84 per share in the prior-year period, primarily due to higher adjusted EBITDA. Adjusted EPS also benefited from a reduction in weighted-average common shares.

Net cash provided by operating activities increased by $165 million due to the cash benefits from higher operating profit. The prior-year period also included $63 million of payments associated with the company’s Change Program, which was completed at the end of 2022.

• Free cash flow increased $138 million primarily due to the same factors as above.

Highlights by Customer Segment – Three Months Ended March 31

Unless otherwise noted, all revenue growth comparisons by customer segment in this news release are at constant currency (or exclude the impact of foreign currency) as Thomson Reuters believes this provides the best basis to measure their performance. 

Legal Professionals

Revenues increased 1% to $721 million, as organic revenue growth of 7% was largely offset by the negative impact from net divestitures.

• Recurring revenues increased 4% (97% of total, 7% organic). Organic growth was primarily driven by Westlaw, Practical Law, CoCounsel, HighQ and the segment’s international businesses.
• Transactions revenues decreased 44% (3% of total, increased 4% organic).

Adjusted EBITDA increased 7% to $342 million.

• The margin increased to 47.4% from 44.6% driven by higher revenues and lower costs.

Corporates

Revenues increased 16% to $507 million, including the acquisition impact of Pagero. Organic revenues increased 12%.

• Recurring revenues increased 13% (73% of total, 11% organic). Organic growth was primarily driven by Practical Law, Indirect Tax, Pagero and the segment’s international businesses.
• Transactions revenues increased 26% (27% of total, 16% organic). Organic growth was primarily driven by strong seasonal demand at Trust and Confirmation.

Adjusted EBITDA increased 26% to $193 million.

• The margin increased to 37.8% from 35.1%, driven by higher revenues.

Tax & Accounting Professionals

Revenues increased 17% to $328 million. Organic revenues increased 14%.

• Recurring revenues increased 14% (61% of total, all organic). Organic growth was driven by the segment’s Latin America business and UltraTax.
• Transactions revenues increased 23% (39% of total, 15% organic) primarily due to seasonal strength at SurePrep, UltraTax and Confirmation.  

Adjusted EBITDA increased 21% to $181 million.

• The margin increased to 55.0% from 51.4%, primarily driven by higher revenues.

The Tax & Accounting Professionals segment is the company’s most seasonal business with approximately 60% of full-year revenues typically generated in the first and fourth quarters. As a result, the margin performance of this segment has been generally higher in the first and fourth quarters as costs are typically incurred in a more linear fashion throughout the year.

Reuters News

Revenues of $210 million increased 21% (17% organic) driven primarily by Generative AI related content licensing revenue that was largely transactional in nature.

Adjusted EBITDA increased 105% to $60 million driven by higher revenues.

Global Print

Revenues of $124 million decreased 10% on an organic basis, impacted in part by the migration of customers from a Global Print product to Westlaw.

Adjusted EBITDA decreased 6% to $47 million.

• The margin increased to 38.2% from 36.5%, reflecting lower costs.

Corporate Costs

Corporate costs were $17 million, compared to $23 million in the prior-year period.   

2024 Outlook

The company moderately raised its 2024 outlook for total and organic revenue growth due its strong performance in the first quarter and maintained all other measures in its outlook.    

The company’s outlook for 2024 in the table below assumes constant currency rates and excludes the impact of any future acquisitions or dispositions that may occur during the remainder of the year. Thomson Reuters believes that this type of guidance provides useful insight into the anticipated performance of its businesses.

The company expects its second-quarter 2024 organic revenue growth to be approximately 6% and its adjusted EBITDA margin to be approximately 36%.

The company continues to operate in an uncertain macroeconomic environment, reflecting ongoing geopolitical risk, uneven economic growth and an evolving interest rate and inflationary backdrop. Any worsening of the global economic or business environment, among other factors, could impact the company’s ability to achieve its outlook.

Reported Full-Year 2023 Results and Full-Year 2024 Outlook

(1)      Non-IFRS financial measures. See the “Non-IFRS Financial Measures” section below as well as the tables and footnotes appended to this news release for more information.
(2)      Full-year 2023 interest expense excludes a $12 million benefit associated with the release of a tax reserve that is removed from adjusted earnings.

The information in this section is forward-looking. Actual results, which will include the impact of currency and future acquisitions and dispositions completed during 2024 may differ materially from the company’s 2024 outlook. The information in this section should also be read in conjunction with the section below entitled “Special Note Regarding Forward-Looking Statements, Material Risks and Material Assumptions.”

Acquisitions

In first quarter of 2024, the company acquired 99.58% of Pagero Group AB (Pagero) for $767 million. Pagero is a global leader in e-invoicing and indirect tax solutions, which it delivers through its Smart Business Network. Pagero links customers, suppliers, and institutions, allowing for the automated, compliant, and secure exchange of digital orders, invoices, and other business documents.

In January 2024, the company also acquired World Business Media Limited, a cross-platform, subscription-based provider of editorial coverage for the global P&C and specialty (re)insurance industry. This acquisition is in line with Reuters’ strategic priority to provide must-have news and insight for new customer markets and professional verticals.

Dividends

In February 2024, the company announced a 10% or $0.20 per share annualized increase in the dividend to $2.16 per common share, representing the 31^st consecutive year of dividend increases. A quarterly dividend of $0.54 per share is payable on June 10, 2024 to common shareholders of record as of May 16, 2024.

Share Repurchases – Update on $1.0 Billion Buyback Program

In November 2023, Thomson Reuters announced its plans to repurchase up to $1.0 billion of its common shares.

From November 2023 through April 30, 2024, the company repurchased approximately 5.6 million of its common shares under this buyback program, for a total spend of $819 million. As of April 30, 2024, Thomson Reuters had approximately 450.7 million common shares outstanding.

Subject to market conditions, the company anticipates completing the $1.0 billion program by the end of the second quarter of 2024.

LSEG Ownership Interest

Thomson Reuters indirectly owns LSEG shares through an entity that it jointly owns with Blackstone’s consortium. During the first quarter of 2024, the company sold 10.1 million shares that it indirectly owned and received $1.2 billion of gross proceeds.

On May 1, 2024, the company agreed to sell to LSEG approximately 1.6 million LSEG shares that it indirectly owned for approximately $175 million in an off-market purchase pursuant to the terms of a buyback contract that was approved by LSEG’s shareholders on April 25, 2024. In order to enable the off-market purchase, LSEG agreed to a limited variation of the contractual lock-up provisions previously agreed between LSEG and the Blackstone consortium/Thomson Reuters entities that hold the LSEG shares.

As of May 1, 2024, after the completion of the above transaction, Thomson Reuters indirectly owned approximately 4.3 million LSEG shares, which had a market value of approximately $0.5 billion based on LSEG’s closing share price on that day. These shares are subject to amended lock-up provisions that allow our company to sell all of the remaining shares after January 29, 2025.

Thomson Reuters

Thomson Reuters (NYSE / TSX: TRI) informs the way forward by bringing together the trusted content and technology that people and organizations need to make the right decisions. The company serves professionals across legal, tax, accounting, compliance, government, and media. Its products combine highly specialized software and insights to empower professionals with the data, intelligence, and solutions needed to make informed decisions, and to help institutions in their pursuit of justice, truth and transparency. Reuters, part of Thomson Reuters, is a world leading provider of trusted journalism and news. For more information, visit tr.com.

NON-IFRS FINANCIAL MEASURES

Thomson Reuters prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

This news release includes certain non-IFRS financial measures, which include ratios that incorporate one or more non-IFRS financial measures, such as adjusted EBITDA (other than at the customer segment level) and the related margin, free cash flow, adjusted earnings and the effective tax rate on adjusted earnings, adjusted EPS, accrued capital expenditures expressed as a percentage of revenues, selected measures excluding the impact of foreign currency, changes in revenues computed on an organic basis as well as all financial measures for the “Big 3” segments.

As of September 30, 2023, Thomson Reuters amended its definition of adjusted earnings to exclude amortization from acquired computer software.  While the company has always excluded amortization from acquired identifiable intangible assets other than computer software from its definition of adjusted earnings, this change aligns its treatment of amortization for all acquired intangible assets. Prior period amounts were revised for comparability.

Thomson Reuters uses these non-IFRS financial measures as supplemental indicators of its operating performance and financial position as well as for internal planning purposes and the company’s business outlook. Additionally, Thomson Reuters uses non-IFRS measures as the basis for management incentive programs. These measures do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial performance calculated in accordance with IFRS. Non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the appended tables.

The company's outlook contains various non-IFRS financial measures. The company believes that providing reconciliations of forward-looking non-IFRS financial measures in its outlook would be potentially misleading and not practical due to the difficulty of projecting items that are not reflective of ongoing operations in any future period. The magnitude of these items may be significant. Consequently, for outlook purposes only, the company is unable to reconcile these non-IFRS measures to the most directly comparable IFRS measures because it cannot predict, with reasonable certainty, the impacts of changes in foreign exchange rates which impact (i) the translation of its results reported at average foreign currency rates for the year, and (ii) other finance income or expense related to intercompany financing arrangements and foreign exchange contracts. Additionally, the company cannot reasonably predict (i) its share of post-tax earnings or losses in equity method investments, which is subject to changes in the stock price of LSEG or (ii) the occurrence or amount of other operating gains and losses that generally arise from business transactions that the company does not currently anticipate.

ROUNDING

Other than EPS, the company reports its results in millions of U.S. dollars, but computes percentage changes and margins using whole dollars to be more precise. As a result, percentages and margins calculated from reported amounts may differ from those presented, and growth components may not total due to rounding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL RISKS AND MATERIAL ASSUMPTIONS

Certain statements in this news release, including, but not limited to, statements in Mr. Hasker’s comments, the “2024 Outlook” section, and the statements regarding the company’s anticipated completion of its buyback program in the second quarter of 2024, are forward-looking. The words “will”, “expect”, “believe”, “target”, “estimate”, “could”, “should”, “intend”, “predict”, “project” and similar expressions identify forward-looking statements. While the company believes that it has a reasonable basis for making forward-looking statements in this news release, they are not a guarantee of future performance or outcomes and there is no assurance that any of the other events described in any forward-looking statement will materialize. Forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from current expectations. Many of these risks, uncertainties and assumptions are beyond the company’s control and the effects of them can be difficult to predict.

Some of the material risk factors that could cause actual results or events to differ materially from those expressed in or implied by forward-looking statements in this news release include, but are not limited to, those discussed on pages 19-35 in the “Risk Factors” section of the company’s 2023 annual report. These and other risk factors are discussed in materials that Thomson Reuters from time-to-time files with, or furnishes to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission (SEC). Thomson Reuters annual and quarterly reports are also available in the “Investor Relations” section of tr.com.

The company's business outlook is based on information currently available to the company and is based on various external and internal assumptions made by the company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the company believes are appropriate under the circumstances. Material assumptions and material risks may cause actual performance to differ from the company’s expectations underlying its business outlook. In particular, the global economy has experienced substantial disruption due to concerns regarding economic effects associated with the macroeconomic backdrop and ongoing geopolitical risks. The company’s business outlook assumes that uncertain macroeconomic and geopolitical conditions will continue to disrupt the economy and cause periods of volatility, however, these conditions may last substantially longer than expected and any worsening of the global economic or business environment could impact the company’s ability to achieve its outlook and affect its results and other expectations. For a discussion of material assumptions and material risks related to the company’s 2024 outlook see page 67 of the company’s 2023 annual report. The company’s annual report was filed with, or furnished to, the Canadian securities regulatory authorities and the U.S. SEC and are also available in the “Investor Relations” section of tr.com.

The company has provided an outlook for the purpose of presenting information about current expectations for the period presented. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements which reflect expectations only as of the date of this news release.

Except as may be required by applicable law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.

CONTACTS

MEDIA
Gehna Singh Kareckas
Senior Director, Corporate Affairs
+1 613 979 4272
gehna.singhkareckas@tr.com

INVESTORS
Gary Bisbee, CFA
Head of Investor Relations
+1 646 540 3249
gary.bisbee@tr.com

Thomson Reuters will webcast a discussion of its first-quarter 2024 results and its 2024 business outlook today beginning at 9:00 a.m. Eastern Daylight Time (EDT). You can access the webcast by visiting ir.tr.com. An archive of the webcast will be available following the presentation.