Thomson Reuters Corp. Q1 FY2025 earnings call

• Revenue: Total company organic revenues rose 6%, Big three segments grew 9%. Profits exceeded expectations due to revenue flow-through and favorable expense timing.
• Innovation: Launched CoCounsel Tax, Audit and Accounting and CoCounsel Chat experience in Westlaw and Practical Law. Heavily invested in innovation, especially AI.
• Portfolio: Prioritized resource allocation, increased investment in innovation, and optimized portfolio via acquisitions (SafeSend) and divestitures.
• Financials: Adjusted EBITDA was $809 million, essentially unchanged year-over-year with margin at 42.3%. Free cash flow was $277 million, up 3%.
• Dividend and Acquisitions: Raised 2025 annual dividend by 10%. Completed acquisition of SafeSend for $600 million.

The Big three segments had organic revenue growth of 9%. Legal organic revenues grew 8%, driven by Westlaw Precision, CoCounsel, Practical Law, and Government growth. Corporates organic revenues grew 9% due to offerings from Legal, Tax and Risk portfolios and international businesses. Tax & Accounting organic revenues grew 11% with key contributors like Latin American business, SurePrep, SafeSend, and UltraTax. Reuters News organic revenues declined 7% due to tough comparison from prior year's generative AI licensing. Global Print organic revenues declined 5% in line with expectations. In terms of revenue contribution, the Big three segments are significant drivers, with the proportion of revenue from products growing at double-digit rates having more than doubled since 2019.

• Reaffirm full year 2025 organic growth range 7%-7.5%, with Big three segments growing ~9%.
• Adjusted EBITDA margin to rise 75 basis points year-over-year to approximately 39%.
• Free cash flow expected ~$1.9 billion.
• Second quarter organic growth expected ~7%, adjusted EBITDA margin ~36%.

• Currency fluctuations: Impact from British pound, Argentine peso, and Brazil real.
• Economic volatility: Potential effect on demand environment.
• Product and acquisition performance: Dependence on key products and acquisitions performing as expected.

Q: Good morning. Wanted to ask a question on the demand environment, and if you've seen any changes to buying patterns or willingness to spend or close deals since obviously the trade war heated up over the course of this year.

A: Yes. Its Steve. I'll start and I'm sure Mike will add. I mean we're doubling down our efforts to meet and exceed our customers' needs. As you've seen from our results we have not yet seen a change in the demand environment. And as you know our business is very resilient with 80-plus percent of our revenues recurring with a highly diversified customer base and largely non-discretionary products in the content-driven technology space. Having said that, I think most of our customers across the spectrum are wondering what the sort of economic backdrop for the rest of this year will be, wondering, what the tariff picture when it settles if it settles will look like and what the implications would be. So I think there's a level of nervousness, but we haven't yet seen that play through. Mike?

Q: Good morning. The first question just to focus on that growth slide. The 68% the other products, I was just hoping you could help us with kind of the average growth there and the opportunity to accelerate those into that high-growth bucket.

A: Sure. One data point Manav there would be about a little 20% to 25% would be below 5% for us in case that's helpful for us. And that leaves about 40% to 42% that are in that 5% to 10% growth range. Hopefully that segmentation is helpful Manav.

Q: Hey. Thanks so much. Two questions I'll throw at you and you can take whatever order you want. The margin impact from foreign currency, you mentioned that was a tailwind in Q1. Can you just remind us what the main drivers of that are? Is it simply that you have less of your cost in US dollars versus the percentage of revenue? Are there any key currency exposures we should keep our eye on for Q2 and Q3 margin impacts? Second question. Going back to your good Slide number 9 that's already been referenced here. That 25% bucket that's growing 10% or more, can you identify what percentage of that 25% bucket are businesses that you did not own in 2019, so you've been able to augment the growth through acquisition? And I'm thinking of that as a way of -- you have a huge amount of cash you can use for acquisitions. Perhaps things are going to get cheaper if the macro environment is choppy. Can we think about that 25% bucket getting to 50% in the next five years and partially by using your acquisition funds in a savvy way?

A: Yeah. Let me try to attack each of those questions, Vince and I'll ask Steve to supplement. First in regards to your question on Q1 in regards to FX that's about 40 basis points Vince for Q1. If you think about currencies that have the biggest impact on us, it's the British pound Argentine peso and the Brazil real. There's others that have less significant impact, but those are the three that would have the larger impact in a given period. We would expect a smaller FX impact in Q2 assuming stable FX rates. So hopefully that addresses your questions on FX. Then if you go into the questions on the revenue mix, Gary that's probably one that we can follow up in the analyst calls later today, if it's okay, Gary. So Vince we'll take that as an action item when Gary speaks with each of you later today. He'll share that breakdown in regards to products that we did not have in 2019, so you have additional visibility.