Thomson Reuters Earnings Call Highlights AI-Fueled Growth

Thomson Reuters Corp ((TSE:TRI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Thomson Reuters’ latest earnings call struck an upbeat tone, with management emphasizing broad-based organic growth, accelerating adoption of AI products, and solid progress on margins and cash generation. While they acknowledged rising AI infrastructure costs, print headwinds, and some timing issues in tax and audit, leadership framed these as manageable against strong operational momentum.

Strong Top-Line Growth

Total company organic revenue grew 8% in Q1 2026, up from 7% through 2025, signaling accelerating demand across the portfolio. The Big 3 segments posted 9% organic growth, and management reaffirmed full-year organic growth guidance of 7.5%–8%, with the Big 3 targeted at roughly 9.5%.

AI Adoption and Product Momentum

Advanced AI products are scaling quickly, with 1 million users now on AI features, largely via CoCounsel, and monthly CoCounsel SKUs quadrupling year over year. Westlaw Advantage usage and deep research searches rose more than sevenfold in six months, and Thomson’s proprietary legal LLM is said to outperform frontier models on specialized legal tasks.

Profitability and Margin Expansion

Adjusted EBITDA rose 9% to $881 million in Q1, driving a robust margin of 42.2% and underscoring operating leverage. The Big 3 delivered $829 million of adjusted EBITDA with a 46.7% margin, and the company reiterated its goal of expanding full-year margins by about 100 basis points to roughly 40%.

Earnings and Cash Flow Strength

Adjusted EPS climbed 10% to $1.23 from $1.12 a year earlier, reflecting both higher profits and a lower share count. Free cash flow improved 19% to $332 million in Q1, with management still targeting approximately $2.1 billion of free cash flow for the full year.

Capital Allocation Actions

Thomson Reuters continued to return capital aggressively, lifting its annual dividend by 10% for the fifth consecutive year and buying back $262 million of stock in Q1. It also completed a $605 million return of capital and share consolidation that cut the share count by about 9 million shares, reinforcing a balanced approach with more than $9 billion in capital capacity through 2028.

Segment-Level Strengths

Legal Professionals excluding government accelerated to 11% organic growth in Q1, driven by strong demand for Westlaw, CoCounsel, and related tools. Corporate posted 9% organic growth, while Tax, Audit & Accounting grew 10%, powered by CoCounsel for tax and audit, Latin America, SafeSend, and SurePrep.

Orders and AI-Enabled ACV

Organic orders, measured as annualized contract value, rose 6% in the quarter, supported by the LSEG data agreement and agency-focused offerings. Importantly for the AI story, 30% of annualized contract value now comes from Gen AI-enabled products, up from 28% last quarter, showing rapid monetization of AI capabilities.

Print Revenue Decline

Global Print organic revenues fell 5% year over year in Q1, a continuation of the long-running secular decline in physical content formats. Management characterized this as fully in line with expectations as clients continue shifting toward digital and AI-powered solutions.

Slower Government Legal Growth

Government legal revenue was a weak spot, growing just 1% year over year as the company continued to lap earlier cancellations and downgrades. Executives said they expect growth in this segment to reaccelerate later in 2026, suggesting the current drag is more cyclical than structural.

Rising LLM and AI-Related Costs

Management noted that large language model and AI-related costs started to rise from mid-2024 and will pressure margins, particularly in the near term. These costs help explain an expected Q2 EBITDA margin around 38%, though executives emphasized that LLM expenses remain a modest portion of the overall cost base.

Severance and Acquisition-Related Costs

Q1 results absorbed $12 million of severance tied to “reimagining work” initiatives aimed at reshaping operations for an AI-first future. Tax, Audit & Accounting margins were temporarily diluted by the integration of Additive and SafeSend, investments in Dominio, and severance charges, leading to near-term margin pressure despite strong growth.

Revenue Timing Shifts in Tax and Audit

Tax, Audit & Accounting growth in the quarter was also distorted by two product updates that shifted revenue recognition into the second half of the year. This timing effect weighs on near-term reported revenue, but management maintained its robust full-year organic growth outlook of 11%–13% for the segment.

Higher Interest Expense from Capital Actions

The company raised its interest expense outlook by $30 million to $180–190 million to reflect roughly $1.2 billion of recent share repurchases and return-of-capital transactions. Even with higher interest costs, management believes the moves remain accretive to EPS and cash flow over time, and it still plans to pay down $500 million of bonds.

Guidance and Outlook

Management reaffirmed 2026 guidance for organic revenue growth of 7.5%–8%, with the Big 3 around 9.5% and double-digit growth targeted in Tax, Audit & Accounting. They see full-year adjusted EBITDA margins expanding about 100 basis points to roughly 40%, Q2 organic growth of 7%–8% with a 38% margin, and full-year free cash flow of about $2.1 billion, underpinned by rising AI-driven ACV.

Thomson Reuters’ earnings call painted a picture of a company successfully pivoting toward AI-driven, subscription-heavy revenue while managing the transition costs. For investors, the combination of accelerating organic growth, expanding margins, strong cash generation, and sizable capital returns appears to outweigh headwinds in print, government, and near-term AI costs.