The logo of Thomson Reuters at the entrance of its Paris headquarters, on March 7, 2016.Charles Platiau/Reuters
Thomson Reuters Corp. TRI-T reported higher third-quarter revenue and raised its full-year targets as strong sales of its products and new revenue from generative artificial intelligence helped the company beat analysts’ profit expectations.
The information software and news provider said it expects to spend more than US$200-million on investments in artificial intelligence in 2024, not including acquisitions, roughly doubling its level of investment from 2023. That contributed to higher costs that weighed on third-quarter operating profit and margins, but is intended to set Thomson Reuters up for faster increases in revenue over the coming years.
Thomson Reuters has rapidly ramped up the use of AI in its products over the past two years, in particular for the legal professionals who form the largest part of the company’s clientele. Chief executive Steve Hasker said he expects to continue investing at least US$200-million annually in the burgeoning technology for the next few years, not including the cost of acquisitions.
During the quarter, Thomson Reuters closed deals to buy Safe Sign Technologies and Materia, both of which are startups working on applying AI to specific legal, tax, accounting and audit professionals, and has spent US$2.2-billion on deals over the past 18 months. Thomson Reuters has about US$10-billion it could spend buying companies through 2027. “We’d like to continue to do those types of acquisitions,” Mr. Hasker said in an interview.
He said there is growing evidence that the company’s strategy to build some new AI capabilities in-house, while making acquisitions or striking partnerships to snap up others, “is paying off for us.”
Thomson Reuters reported revenue of US$1.72-billion in the quarter that ended Sept. 30, up 8 per cent from a year earlier. Revenue increased 7 per cent, excluding the effects of acquisitions and foreign currency fluctuations.
Profit was US$301-million, or 67 US cents per share, compared with US$367-million or 80 US cents in the same quarter last year.
After adjusting for certain items, Thomson Reuters said it earned 80 US cents per share, which was better than analysts’ consensus estimate of 76 US cents, according to data from the London Stock Exchange Group.
Thomson Reuters now expects organic revenue – which strips out the impact of deals and currency – to increase by 7 per cent this year, raising its previous target of 6.5 per cent. In its three main business lines that serve legal, corporate as well as tax and accounting professionals, it expects organic revenue to rise by 8.5 per cent, up from prior guidance of 8 per cent.
All three of the company’s core divisions reported significant increases in revenue year-over-year, led by a 12-per-cent increase in the corporate unit, boosted by the company’s acquisition of digital invoicing specialist Pagero Group AB. Legal revenue rose 8 per cent, and the tax and accounting division was up 9 per cent.
Chief financial officer Mike Eastwood attributed some of the company’s optimism to strong sales to corporate, tax and accounting customers, as well as new revenue from licensing the company’s content to generative AI companies.
It also comes against an economic backdrop that has been better in 2024 than Mr. Hasker had expected, in spite of wars in Ukraine and Gaza, an economic slowdown in China, and a broad slump in mergers and acquisitions.
Looking ahead, Mr. Hasker said the outcome of the U.S. election matters to Thomson Reuters’s clients, with implications for trade, tax and economic performance. “I’m not here to say one [candidate] will be better than the other,” he said. “But I think that they’re fairly stark choices.”
Whatever the outcome, however, as interest rates continued to fall toward more normal levels, and mergers and initial public offerings look likely to pick up again, “I’m cautiously optimistic heading into 2025,” he said.
Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.