Thomson Reuters Earnings Call: AI Growth Drives Outlook

Thomson Reuters Corp ((TSE:TRI)) has held its Q4 earnings call. Read on for the main highlights of the call.

Thomson Reuters Signals Confident Growth Trajectory Amid AI-Powered Upside

Thomson Reuters’ latest earnings call conveyed a clearly optimistic tone, with management highlighting broad-based organic revenue growth, expanding margins, and strong free cash flow alongside accelerating traction in its AI product suite. While the company openly acknowledged ongoing print decline, government-related softness, and some one-time restructuring and finance costs, executives repeatedly emphasized that these are manageable headwinds against a backdrop of robust demand in its core franchises and increasingly visible benefits from AI-enabled offerings. The reaffirmation of its 2026 framework, including further margin expansion and higher free cash flow, underscored management’s confidence that the earnings power of the business is still building.

Broad-Based Organic Revenue Growth Across Core Segments

Full-year organic revenue grew 7% in 2025, with the fourth quarter also delivering 7% organic growth year-over-year. The company’s “Big Three” businesses—Legal Professionals, Corporates, and Tax, Audit & Accounting—once again outpaced the group, collectively posting 9% organic growth in Q4. Within that, Legal Professionals and Corporates each grew 9%, while Tax, Audit & Accounting led the pack with 11% growth; Reuters posted 5% organic growth. This pattern reinforces the view that Thomson Reuters’ core information and workflow franchises continue to benefit from steady demand for mission-critical content and software, even as some smaller parts of the portfolio face structural or cyclical pressure.

Profitability Strength and Ongoing Margin Expansion

Profitability trends remained firmly positive. Adjusted EBITDA for 2025 increased to $2.9 billion, up about 6% year-over-year, with the adjusted EBITDA margin expanding 100 basis points to 39.2%. In the fourth quarter, adjusted EBITDA rose 8% to $777 million, and Q4 margins improved by 110 basis points to 38.7%. Adjusted EPS for the full year climbed to $3.92 from $3.77, and Q4 adjusted EPS rose to $1.07 from $1.01 a year ago. Management framed these improvements as evidence that investments in product, AI, and productivity are scaling efficiently, supporting higher margins while the company still funds growth and transformation initiatives.

Healthy Free Cash Flow and Shareholder-Friendly Capital Allocation

Free cash flow remained a key pillar of the story. Full-year free cash flow reached $1.95 billion, slightly exceeding the company’s roughly $1.9 billion outlook. Thomson Reuters returned a significant portion of this cash to investors, completing a $1 billion share repurchase program and announcing a 10% increase in the annual dividend to $2.62 per share. At the same time, it invested around $850 million in four strategic bolt-on acquisitions, reinforcing its core franchises and AI capabilities. Management estimates it has about $11 billion of capital capacity through 2028 and reiterated its commitment to a balanced capital allocation framework that blends organic investment, M&A, dividends, and buybacks.

2026 Financial Framework Reaffirmed

Despite market volatility and certain operational headwinds, management reaffirmed its 2026 financial framework. The company continues to target total organic revenue growth of 7.5%–8.0%, with the Big Three segments expected to grow around 9.5%. Within that, Legal Professionals is guided to 8%–9% growth, Corporates to 9%–11%, and Tax, Audit & Accounting to an even faster 11%–13%. Thomson Reuters also expects to expand its adjusted EBITDA margin by another 100 basis points in 2026, on top of the 39.2% delivered in 2025, and signaled that it aims to deliver similar annual margin expansion in 2027 and 2028. Free cash flow for 2026 is forecast at roughly $2.1 billion, reinforcing the view that the company’s cash generation is still on an upward trend.

AI Product Portfolio Gains Commercial Traction

AI was central to the call, both as a product differentiator and a future growth driver. Thomson Reuters has launched and expanded a suite of AI-enabled offerings, including Westlaw Advantage, CoCounsel for legal professionals, CoCounsel for Tax & Audit, and new “Ready to Advise/Review” tools. Management cited early commercial wins, including notable partnerships such as with Microsoft, as evidence that customers see value in these generative AI solutions. Importantly, AI-enabled products now account for 28% of annualized contract value, up from 24% just one quarter earlier. This rising share signals that AI is rapidly becoming embedded in the company’s revenue base rather than remaining a peripheral experiment.

Internal Productivity Gains from AI Adoption

Beyond customer-facing products, AI is driving tangible operational efficiencies inside Thomson Reuters. More than 85% of employees are active on OpenArena, the company’s internal AI environment, and there are roughly 300 AI use cases in development. Management highlighted specific improvements: call center average handle time has dropped by about 15%, first-call resolution has increased by 10%, and US content delivery to Westlaw has accelerated by 25% thanks to content-processing automation. These gains underscore how AI can both enhance customer experience and reduce internal costs, supporting the company’s long-term margin expansion ambitions.

Structural Decline in Print Remains a Drag

In contrast to the digital and AI growth drivers, the print business continues to face structural headwinds. Global Print organic revenue declined 6% in the fourth quarter and 5% for the full year. Management framed this as an ongoing trend rather than a temporary issue, reflecting the industry-wide migration from physical products to digital and cloud-based workflows. While print now represents a smaller piece of the overall portfolio, its consistent decline remains a modest drag on consolidated growth and underscores why Thomson Reuters continues to pivot aggressively toward digital and AI-driven offerings.

Government Business Softness Weighs on Legal Segment Growth

The Legal Professionals segment continued to grow solidly overall, but management called out weakness in government-related business as a notable constraint. Government growth slowed to 5% in the quarter, partly due to cancellations in certain contracts, and is expected to remain a headwind into the first quarter of 2026. Executives cautioned that this could create some quarter-to-quarter variability in reported growth rates within Legal, even though demand in other customer segments remains robust. Investors were reminded to factor in this government softness when interpreting near-term segment trends.

Restructuring and Severance Costs as Near-Term Headwinds

Thomson Reuters continued to invest in automation and productivity initiatives, and those efforts carried some short-term costs. The company recorded $19 million of severance in the fourth quarter tied to these programs and expects roughly $10 million more in the first quarter of 2026, bringing anticipated severance-related charges for 2026 to about $20 million. Management acknowledged these expenses as near-term headwinds to operating results but positioned them as necessary to unlock longer-term efficiency gains and support sustained margin expansion.

Interest and Other Finance-Related Pressures

The quarter also featured some modest finance-related pressures. Interest expense ran higher than previously forecast, partly due to the speed at which Thomson Reuters executed its $1 billion share repurchase program. At the same time, lower market interest rates reduced interest income, trimming a small source of earnings support. Currency movements had a minor negative effect as well, shaving about $0.01 off fourth-quarter adjusted EPS. While not central to the long-term story, these items contributed slightly to the noise in quarterly results and guidance.

AI Licensing Comps and Modest Reuters AI Revenue Contribution

Reuters’ reported performance was affected by tougher comparisons in AI-related content licensing. One-time generative AI content licensing revenue fell from $33 million in 2024 to $13 million in 2025, creating a headwind for year-over-year comparables. Within Reuters’ agency business specifically, generative AI transactional content licensing contributed only $5 million in the quarter—meaningful for that unit but small relative to the scale of Thomson Reuters overall. Management’s comments implied that while AI licensing is strategically important, investors should not overestimate its current size in the consolidated results.

M&A and Market Volatility Add Strategic Uncertainty

Despite an estimated $11 billion of capital capacity through 2028, management acknowledged that recent share-price volatility in the broader software sector and a pullback in valuations are adding complexity to the M&A environment. This uncertainty can affect both the timing and the pricing of potential larger strategic deals. Executives reiterated that the company will remain disciplined and selective, focusing on strategic fit and returns rather than deploying capital simply because it is available. For now, Thomson Reuters appears content to lean on tuck-in acquisitions, organic investment, and capital returns while monitoring private-market conditions.

Forward Guidance Highlights Sustained Growth and AI-Driven Upside

Looking ahead, Thomson Reuters reiterated its 2026 financial framework, anchoring investor expectations around sustained mid-to-high single-digit organic growth and steady margin expansion. The company is guiding total organic revenue growth of 7.5%–8.0%, with the Big Three segments around 9.5% and segment targets of 8%–9% for Legal Professionals, 9%–11% for Corporates, and 11%–13% for Tax, Audit & Accounting. Management expects adjusted EBITDA margins to expand by another 100 basis points from the 39.2% achieved in 2025, with a plan to continue delivering 100 basis points of annual expansion through 2028. The effective tax rate is expected to be about 19%, with cash taxes roughly 5 percentage points lower, and accrued capital expenditures are projected at around 8% of revenue. Free cash flow is forecast at approximately $2.1 billion in 2026, up from $1.95 billion in 2025. For the first quarter, the company guided to about 7% organic revenue growth and an adjusted EBITDA margin of roughly 42%. On capital allocation, Thomson Reuters plans to return about 75% of free cash flow to shareholders, including a 10% dividend increase to $2.62 per share and an implied roughly $500 million of share repurchases in 2026, following the $1 billion buyback completed in 2025.

In sum, the earnings call painted a picture of a company executing well on growth, profitability, and cash generation, while positioning itself early in the AI-driven transformation of professional information services. Short-term issues—such as print decline, government-related variability, restructuring charges, and modest finance and licensing noise—were acknowledged but framed as manageable within a larger story of strengthening fundamentals. For investors, the key takeaways are the durability of revenue growth in the Big Three, visible margin expansion, rising AI adoption across both products and operations, and a shareholder-friendly capital allocation policy backed by strong free cash flow and a sizable capital capacity.