[TRI] Thomson Reuters: Q3 2026 Earnings Test AI Legal Growth After Print Exit

Thomson Reuters (TRI on the Toronto Stock Exchange and Nasdaq) sells authoritative content, workflow software and AI tools to lawyers, tax and audit professionals, corporate legal and compliance teams and news organizations. Its Third quarter 2026 (three months ended September 30, 2026) results are scheduled for 2026-11-03, making these Q3 2026 earnings the first report after the print exit[1]. In the latest disclosed quarter, the second quarter of 2026, revenue on the old basis that still included print was $1.954 billion, up 9%, with organic growth of 8%; the three core segments for legal, corporate and tax, audit and accounting customers (the "Big 3") grew 10% organically, adjusted EBITDA was $745 million for a 38.1% margin, adjusted EPS was $0.99 and quarterly free cash flow was $727 million versus $566 million a year earlier[2][3]. Because the company sold 51% of its Global Print business on October 1, print is reported as a discontinued operation from the third quarter; on October 19 the company restated its August third-quarter outlook (about 8% organic growth and an about 36% margin) on the new basis as about 9% organic growth and an adjusted EBITDA margin of about 35%, including about $19 million of severance[1][3]. The third-quarter consensus compiled by the Drillr earnings calendar is EPS of $0.89 and revenue of about $1.800 billion; the calendar does not state whether the EPS figure is adjusted or whether the revenue figure excludes print[4].

Three things matter most in this report. The first is whether Legal Professionals can hold 10% organic growth and a quarterly margin near 49% while government transaction revenue softens: the segment had second-quarter revenue of $772 million and 10% organic growth, the business excluding government has grown 11% for two straight quarters, and management has flagged slower government growth in the third quarter, so this segment directly tests whether AI upgrades add revenue or replace existing products[2][3]. The second is whether Tax, Audit & Accounting can move from 8% back to about 10%: the segment's organic transactions growth fell from 11% in the first quarter to 6% in the second, management admitted a sales-execution problem, and the third quarter is the first chance to see whether that was a one-off[5][3]. The third is whether the continuing-operations margin holds about 35% and whether the new-basis full-year outlook due on November 3 keeps a margin gain of about 100 basis points: the restated year-earlier margin was 35.8%, the full-year promise rests mainly on the fourth quarter, and the third-quarter margin and new outlook will show whether severance, brand marketing and large-language-model spending ran above plan[1][2].

Company Background and Business Structure

Thomson Reuters is a Toronto-based, subscription-led professional information company; it was known as The Thomson Corporation before April 2008, and its Reuters news unit was founded in 1851[6]. The company has about 450,000 customers, its largest customer accounts for about 5% of revenue, and it had about 27,100 employees at the end of 2025; Woodbridge, controlled by the Thomson family, owned about 70% of the common shares as of March 2026, and Steve Hasker is chief executive[6][2]. The company has kept trimming non-core assets: it sold FindLaw in 2024 and its remaining minority stake in the Elite business in 2025[6].

On the continuing-operations basis published on October 19, which excludes print, the company has four segments with combined 2025 revenue of $6.986 billion[1]. Legal Professionals had 2025 revenue of $2.843 billion and a 47.6% adjusted EBITDA margin, selling Westlaw, Practical Law, CoCounsel and CLEAR to law firms and governments; Corporates had revenue of $2.023 billion and a 35.9% margin, selling ONESOURCE, indirect tax, Pagero e-invoicing, CLEAR and Confirmation to corporate legal, tax, trade and compliance departments; Tax, Audit & Accounting Professionals (TAA) had revenue of $1.291 billion and a 46.9% margin, selling tax, audit and document-processing software mainly to accounting firms; and Reuters had revenue of $853 million and a 20.4% margin[1][2]. The first three segments together produced $6.157 billion, about 88% of continuing revenue, and they carry most of the company's growth and profit[1]. Part of Reuters revenue sits in one long-term contract: Reuters supplies news to the Data & Analytics business of London Stock Exchange Group (LSEG), an agreement that produced $398 million in 2025, the current minimum annual value, and runs to October 1, 2048[6].

The print separation changed both the company's consolidation scope and its reporting basis. On July 14 the company announced the sale of a 51% stake in Global Print to capital accounts advised by KKR, with about $500 million of gross proceeds at closing, a retained 49% interest in the joint venture, and retained intellectual property rights and editorial control over its content[7]. The deal closed on October 1 and the joint venture now operates as Westbridge Print; from October 1, Westbridge Print pays Thomson Reuters a royalty equal to 20% of its Professional revenue (about 85%–90% of its total revenue) and reimburses transition services, and the company says these two arrangements should largely offset stranded separation costs from the fourth quarter[1]. The company also agreed to provide financial support designed to give KKR a minimum return on its equity investment under certain circumstances, and it has not disclosed an amount[2].

Financial History and Current Position

For full-year 2025, Thomson Reuters reported revenue of $7.476 billion on the old basis ($7.258 billion in 2024) and organic growth of 7%; recurring revenue was $6.084 billion with 9% organic growth, transactions revenue was $902 million and print revenue was $490 million[6][2]. Old-basis adjusted EBITDA was $2.936 billion for a 39.2% margin, free cash flow was $1.95 billion and accrued capital expenditure was 8.2% of revenue[2][1]. Excluding print, 2025 continuing revenue was $6.986 billion, adjusted EBITDA $2.617 billion, the margin 37.4% and adjusted EPS $3.34; for the third quarter of 2025, the year-earlier comparison for the coming report, continuing revenue was $1.658 billion, adjusted EBITDA $593 million, the margin 35.8% and adjusted EPS $0.71[1].

Growth carried into the first half of 2026, while the margin stayed roughly flat. First-quarter revenue on the old basis rose 10%, organic revenue rose 8% and the Big 3 grew 9% organically; second-quarter old-basis revenue was $1.954 billion, up 9%, with 8% organic growth, 10% organic growth in the Big 3, adjusted EBITDA of $745 million and a 38.1% margin, up 30 basis points and including $8 million of severance[5][2][3]. First-half old-basis revenue was $4.041 billion, operating profit was $1.197 billion and operating cash flow was $1.425 billion versus $1.191 billion a year earlier[2]. On the continuing basis, second-quarter revenue was $1.843 billion with a 36.8% margin, and first-half revenue was $3.818 billion with a 39.0% margin[1].

Capital returns and debt actions were concentrated in the first half. In February the company raised its annualized dividend 10% to $2.62 per share; on May 4 it completed a $605 million return of capital and cut about 6.5 million shares through a share consolidation, then completed the $600 million buyback announced in February, and management said the two together reduced the share count by about 3%[5][2][3]. The company also repaid $500 million of 3.35% notes in May and raised its old-basis full-year net interest outlook to $180 million to $190 million[2]. Management estimates about $9 billion of capital capacity through 2028 for acquisitions and shareholder returns[3].

Operating Model

Revenue growth comes mainly from subscription renewals and product upgrades, with transaction volume as the second variable. In 2025, 81% of revenue came from subscriptions or similar contracts, typically with one- to five-year terms and renewal dates spread across the year, and the company's retention rate was 92%[6]. Revenue can therefore be approximated as renewal price increases plus upgrades to premium AI tiers plus new customers and seats plus transaction volume: the first three are recognized straight-line over the contract term and usually take one or more renewal cycles to show fully, while transactions revenue follows tax-return, document-processing, e-invoicing and confirmation volumes and clusters in the first- and fourth-quarter tax seasons[6][2]. The share of annualized contract value (ACV) from generative-AI-enabled products rose from 28% at the end of 2025 to 30% at the end of the first quarter of 2026 and 32% at the end of the second, the most direct gauge of upgrade progress[8][3].

On the profit side, the key is a relatively fixed cost base. The annual report says the company's short- to medium-term cost base is relatively fixed and generally not affected by revenue swings, so margins expand when revenue grows faster than costs[6]. Segment margins differ widely: in 2025 Legal earned 47.6%, TAA 46.9%, Corporates 35.9% and Reuters 20.4%; about 60% of TAA revenue falls in the first and fourth quarters while costs run evenly, so its third-quarter margin is the low point of the year, only 30.6% in the third quarter of 2025[1][2]. The 2026 margin turns on the balance among AI spending, brand marketing, severance and automation savings: management said the third-quarter margin carries about $19 million of severance, higher marketing, automation and innovation spending and modest acquisition dilution, while about $40 million of savings in the fourth quarter should lift the margin into the "low 40s"[3].

On the cash side, prepaid subscriptions and modest capital spending support the model. Subscriptions are mostly paid in advance or periodically, leaving $1.251 billion of deferred revenue on the balance sheet at the end of 2025 and making operating cash flow highly predictable[6]. Capital spending is mainly internally developed software: accrued capex was 8.2% of revenue in 2025 and the old-basis 2026 outlook is about 8.0%; free cash flow was $1.95 billion in 2025 and the old-basis 2026 target is about $2.1 billion[2]. Cash goes to acquisitions, an annually rising dividend, buybacks and capital returns, and the new-basis cash flow target will be updated with the new full-year outlook on November 3[3][1].

Industry and Competitive Position

Thomson Reuters holds an oligopoly position in legal, tax and compliance information, but AI is lowering the barriers to entry in that market. The company estimates the Big 3 market at about $31 billion, growing 8% to 11% over the next five years[6]. Corporates' main global competitors are LexisNexis, Wolters Kluwer and Bloomberg, and it also faces focused software providers such as Avalara, Mitratech, Vertex and Sovos; the largest accounting firms are significant customers and can also be competitors[6]. The company's advantage rests on proprietary editorial content in Westlaw, Practical Law and Checkpoint: more than 1,500 attorney editors and 2,500 subject-matter experts produce 1.6 million editorial enhancements a year, including the West Key Number System's 35 million legal classifications[6].

The limits of that advantage are also written into the annual report. The company acknowledges that well-funded, AI-focused new entrants have reduced barriers to entry and that some specialized players can adopt new technology faster or at lower prices[6]. Management's response is to position its products as "Fiduciary-Grade AI" built on authoritative content with verifiable output, and to lower costs with its own Thomson large language model: management said the model cost about $40 million and, trained on less than 10% of the company's legal content, already benchmarks on par with frontier models[2][3]. The disclosures cited here come only from Thomson Reuters, so competitors' growth and margins cannot be compared on the same basis, and any judgment about competitive position has to rely on the company's own growth, margins and ACV trend.

Core Debates

Can AI upgrades in Legal Professionals hold 10% organic growth and a 49% margin while government revenue softens?

This question decides how investors read AI's effect on Thomson Reuters: as a reinforcement or as a substitute. Legal Professionals had 2025 revenue of $2.843 billion, about 40% of continuing revenue, and is one of the most profitable segments[1]. The company points to Legal growth accelerating from 9% in the first quarter of 2026 to 10% in the second as proof that AI adds revenue; the third quarter is the first full reporting period after the release of the new CoCounsel Legal and also a quarter in which government transaction revenue is guided lower[5][2][3].

Current evidence supports acceleration but leaves room for another reading. Second-quarter Legal revenue was $772 million with 10% organic growth; recurring revenue was 97% of the total and grew 9%, driven by Westlaw and CoCounsel; the business excluding government grew 11% for two straight quarters after 9% in the second half of 2025, and government growth improved from 1% in the first quarter to 5%, but the CFO said it should soften in the third quarter because some transaction revenue will not recur at the same level[2][3]. The CFO also said pricing for premium tiers such as Westlaw Advantage is "comfortably covering" the growth in LLM costs and customer usage in 2026[3]. The other reading is that part of the acceleration came from renewal price increases and government transactions, while law firms are still trialing several AI tools on one-year contracts, a behavior management itself described; if rivals enter at lower prices, the upgrade premium could be squeezed at the next renewal[3].

The numeric baselines and the financial path are clear. The baseline for Legal organic growth is 10% in the second quarter, 11% excluding government, and the generative-AI share of ACV was 32% at the end of the second quarter; for the year-earlier comparison, third-quarter 2025 Legal revenue was $721 million, adjusted EBITDA $353 million and the margin 49.0%, against a 48.1% margin in the second quarter of 2026[3][1][2]. The chain runs from law firm and government customers upgrading to premium agentic tiers at renewal, to higher subscription prices and ACV, to Legal recurring revenue recognized over the contract term; Legal's second-quarter adjusted EBITDA of $371 million rises with it only if the upgrade premium covers model-usage and marketing costs[2][3].

What remains unresolved is the quality of growth, not just its speed. In the third quarter, watch whether Legal organic growth stays at or above 10%, whether the call reaffirms about 11% excluding government, how the margin compares with 49.0%, whether the ACV share rises toward about 34%, and how management describes usage and pipeline for the new CoCounsel Legal. The observable falsifiers are growth excluding government falling to 9% or lower with the company blaming churn or downgrades after law-firm trials; growth holding at 10% while the margin falls more than 100 basis points year over year because of model and marketing costs; or the ACV share stalling near 32%.

Was the Tax, Audit & Accounting sales stumble a one-off, and can growth return to 10% in the third quarter?

TAA is one of the fastest-growing segments and the only part of the business that clearly missed management's expectations this year. On the continuing basis, TAA had 2025 revenue of $1.291 billion, about 18.5% of continuing revenue[1]. It is the most direct application of AI automation in accounting, and management still holds its full-year 11% to 13% revenue growth outlook for the segment, with acceleration in the second half[8][3].

Management has an explanation for the second-quarter slowdown, and there is another possibility. TAA organic growth fell from 10% in the first quarter to 8% in the second, and organic transactions growth fell from 11% to 6%[5][2]. The CFO cited three causes: some timing; early-year messaging about a unified tax workflow vision that left customers and the sales force unsure what to buy now and hurt SurePrep sales in tax season; and two product updates that shifted about 1 percentage point of revenue recognition into the second half[3]. The company has added talent and changed some sales leadership, and the chief executive said the problem is not competitive[3]. The other reading is that customers are waiting for new platforms such as Ready to Review, so delayed buying is more than a one-season event, and AI-native tools may be pulling demand away in peripheral tasks such as document processing[8][3].

The third-quarter comparison base is low, which makes any deviation easier to see. TAA's growth baseline is 8% organic in the second quarter and 6% organic in transactions; third-quarter 2025 revenue for the segment was only $247 million, adjusted EBITDA $76 million and the margin 30.6%, compared with second-quarter 2026 revenue of $311 million and a 38.7% margin[2][1]. The chain runs from accounting firms buying tax, document-processing and audit software in tax season, to subscription revenue recognized over time and transactions revenue recognized on return and document volumes; the sales-execution problem first depresses transactions revenue, while the recognition shift from product updates should come back in the second half, and together they set TAA's revenue and margin at its seasonal low point[3][2].

The answer to this debate depends on whether transactions revenue recovers. In the third quarter, watch whether TAA organic growth returns above 10%, the transactions growth rate, revenue against the $247 million base, whether the margin exceeds 30.6%, and what management says about SurePrep sales and the next-generation CoCounsel for tax and audit. The observable falsifiers are TAA organic growth at 8% or lower with timing again given as the reason; organic transactions growth staying below 6% with references to customers waiting on the product roadmap; or a cut to the full-year 11% to 13% TAA growth outlook.

After the print separation, will severance and AI spending push the third-quarter margin below 35%?

A full-year margin gain of about 100 basis points is Thomson Reuters' central 2026 promise, but that promise now rests mainly on the fourth quarter. The old-basis full-year outlook calls for a gain of about 100 basis points from 39.2% in 2025, yet the old-basis margin improved only modestly in the first half and the third-quarter outlook is below the year-earlier level[2][1]. Removing print lowers the margin basis by about 1.8 percentage points, and the third quarter is both the first report on the new basis and the moment the company issues its new full-year outlook[1].

Current evidence shows the third-quarter margin weighed down by several one-time and investment items. On the continuing basis restated on October 19, the third-quarter 2025 margin was 35.8%, and the company's third-quarter outlook is about 35%[1]. Management cited about $19 million of severance, the largest CoCounsel brand campaign in more than a decade, automation and innovation spending and modest acquisition dilution; for the fourth quarter it pointed to about $40 million of savings and sharply lower severance than a year earlier ($19 million in the fourth quarter of 2025), with the margin reaching the "low 40s"[3]. Corporates lifted its second-quarter margin from 35.7% to 37.2% and shows the clearest operating leverage[2]. The other reading is that AI products need ongoing marketing and model spending, savings get reinvested, and fourth-quarter expansion falls short of plan.

The numeric baselines turn this question into a few lines that can be checked directly. The year-earlier continuing margin is 35.8% in the third quarter of 2025 (adjusted EBITDA of $593 million on revenue of $1.658 billion), the new-basis organic growth outlook is about 9%, second-quarter severance was $8 million, and the Corporates margin in the third quarter of 2025 was 36.3% (adjusted EBITDA of $177 million on revenue of $489 million)[1][3]. The chain runs from Big 3 revenue growth creating operating leverage over relatively fixed people and technology costs, offsetting severance, brand marketing, model costs and acquisition dilution, to the continuing-operations margin; once fourth-quarter savings land, the margin recovers and sets the full-year margin and the old-basis free cash flow target of about $2.1 billion[6][2][3].

What remains unresolved is the net effect of AI spending against savings. In the third quarter, watch the gap between the continuing margin and the roughly 35% outlook, whether organic growth reaches about 9%, whether severance stays within about $19 million, the Corporates margin against 36.3%, and the new-basis full-year margin and free cash flow outlook on November 3. The observable falsifiers are a third-quarter margin below 34.5% that the company attributes to higher-than-planned model usage or marketing; a new-basis full-year outlook that drops the margin gain of about 100 basis points; or a year-over-year decline in the Corporates margin, which would show that fast transactions growth is not producing operating leverage.

Risks and Falsifiers

The first risk is that AI-native competitors substitute for research and content products and squeeze renewal price increases. The annual report acknowledges that well-funded new entrants have reduced barriers to entry and may offer substitutes at lower prices; because 81% of revenue comes from one- to five-year subscriptions and retention was 92% in 2025, such substitution would not show up at once in quarterly revenue but would appear with a lag in Big 3 growth as downgrades, fewer seats or blocked price increases at renewal[6]. If Big 3 organic growth stays within the company's full-year 9.5% to 10.0% outlook, the generative-AI share of ACV keeps rising and the company reports no increase in renewal downgrades, concern about this risk eases[2][3].

The second risk comes from the change in reporting basis and the contingent support tied to the print separation. Print had 2025 revenue of $490 million and adjusted EBITDA of $185 million, and removing it leaves the continuing margin about 1.8 percentage points below the old basis, so the old-basis full-year outlook cannot be compared directly with new-basis results[1]. The company also committed to support a minimum return on KKR's equity investment under certain circumstances, which could create a contingent liability of undisclosed size[7][2]. If the third quarter is reported on the continuing basis given on October 19 and royalties and transition-service fees offset stranded costs in the fourth quarter as planned, leaving the margin effect roughly neutral, this risk stays mainly a matter of accounting basis; the company also expects the transaction to add 60 to 70 basis points to annual organic growth[1].

The third risk is that law firms are still trialing and comparing AI tools, making upgrade demand unstable. Law firms are testing several AI tools on one-year contracts, and government transactions revenue is set to soften in the third quarter[3]. On a third-quarter Legal revenue base of about $720 million, each 1-point drop in organic growth equals roughly $7 million of quarterly revenue and weighs on the Big 3 full-year growth outlook of 9.5% to 10.0%[1][2]. If third-quarter Legal organic growth is at least 10% and the company confirms growth excluding government is still about 11%, this risk has not materialized.

The fourth risk is that customers delay TAA purchases during the product-roadmap transition while AI-native rivals pull demand from document-processing tools such as SurePrep. Both the full-year 11% to 13% TAA growth outlook and the Big 3 full-year outlook depend on a second-half recovery, and with a third-quarter 2025 revenue base of only $247 million, a 2-point gap in growth equals about $5 million of revenue that falls almost entirely to profit[8][1]. If third-quarter TAA organic growth is at least 10% and organic transactions growth returns above 10%, this risk recedes clearly.

The fifth risk is that model-usage costs grow with adoption, brand and automation spending persists, and savings are absorbed by reinvestment. With continuing quarterly revenue of about $1.8 billion, every 50 basis points of margin equals about $9 million of adjusted EBITDA, which would pressure both the full-year margin goal and the free cash flow target of about $2.1 billion[1][2]. If the third-quarter margin is at least 35% and the new-basis full-year outlook keeps a margin gain of about 100 basis points, the concern about runaway costs does not hold[3].

What to Watch Next

• Legal AI upgrades: Legal organic growth against 10% in the second quarter (9% in the first); growth excluding government against two straight quarters of 11%; the Legal margin against 49.0% in the third quarter of 2025; the generative-AI share of ACV against 32%. A fall to 9% or below blamed on post-trial churn, a margin decline of more than 100 basis points, or an ACV share stuck near 32% would weaken the case.
• TAA sales recovery: organic growth and transactions growth against 8% and 6%; revenue and margin against $247 million and 30.6% in the third quarter of 2025. Growth at or below 8%, transactions below 6%, or a cut to the 11% to 13% full-year outlook would weaken the case.
• Margin on the new basis: the continuing margin against 35.8% a year earlier and the roughly 35% outlook, with severance within about $19 million; the Corporates margin against 36.3%; the new full-year outlook on November 3 against a gain of about 100 basis points and free cash flow of about $2.1 billion. A margin below 34.5%, a falling Corporates margin or a dropped margin gain would weaken the case.

Conclusion

Thomson Reuters is driven by subscription renewals, upgrades to premium AI tiers and tax-season transaction volume, and its financial position is solid: second-quarter 2026 old-basis revenue was $1.954 billion with 8% organic growth, the Big 3 grew 10% organically, quarterly free cash flow was $727 million, and the first-half margin excluding print was 39.0%[2][1]. The central unresolved relationship is the balance between AI spending and its payoff: generative-AI products already account for 32% of ACV and Legal growth has accelerated to 10%, yet the third-quarter continuing margin outlook of about 35% is below the 35.8% of a year earlier, and the full-year margin gain rests mainly on the fourth quarter[3][1].

Between the second-quarter release on August 5, 2026 and October 31, a limited search turned up mostly reprints of the results release, roundups of brokers' changing views on the shares, and stock-price coverage from the first half of 2026; it found no outside analysis published in that window with a clear independent judgment and a verifiable original text, so no outside view is cited here and it is not possible to say where outside institutions agree or disagree on the three core debates. The only market expectations available for comparison are the Drillr earnings calendar figures of $0.89 in EPS and about $1.800 billion in revenue, and their basis is not labeled[4].

The current understanding would be materially strengthened if several observations arrived together: Legal organic growth of at least 10% with a margin near 49.0%, TAA organic growth back above 10% with transactions revenue recovering, a continuing margin that holds about 35%, and a new-basis full-year outlook that keeps a margin gain of about 100 basis points. Conversely, if Legal growth excluding government slips below 9%, TAA again blames timing for slower growth, or the margin falls below 34.5% while the new outlook drops the margin gain, AI upgrade pricing power, sales execution or cost control would be weaker than management has described.

Sources

[1] TRI supplemental restated financial information 6-K 2026-10-19 · 2026-10-19 · 6-K · https://www.sec.gov/Archives/edgar/data/1075124/000119312526425302/d309783dex991.htm

[2] TRI Q2 2026 results release 6-K 2026-08-05 · 2026-08-05 · 6-K · https://www.sec.gov/Archives/edgar/data/1075124/000119312526333835/d125343dex991.htm

[3] TRI Q2 2026 earnings call 2026-08-05 · 2026-08-05 · earnings-call · https://gateway.drillr.ai/mcp/private

[4] Drillr earnings calendar TRI 2026-11-03 retrieved 2026-10-30 · 2026-10-30 · Drillr earnings calendar · https://gateway.drillr.ai/mcp/private

[5] TRI Q1 2026 results release 6-K 2026-05-05 · 2026-05-05 · 6-K · https://www.sec.gov/Archives/edgar/data/1075124/000119312526205012/d116991dex991.htm

[6] TRI 40-F filed 2026-03-05 · 2026-03-05 · 40-F · https://www.sec.gov/Archives/edgar/data/1075124/000119312526094222/tri-ex99_1.htm

[7] TRI Global Print joint venture release 6-K 2026-07-14 · 2026-07-14 · 6-K · https://www.sec.gov/Archives/edgar/data/1075124/000119312526302509/d85800dex991.htm

[8] TRI Q1 2026 earnings call 2026-05-05 · 2026-05-05 · earnings-call · https://gateway.drillr.ai/mcp/private