Thomson Reuters Corp ((TSE:TRI)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Thomson Reuters struck an upbeat tone on its latest earnings call, highlighting a step-up in organic growth, accelerating adoption of its AI tools and firm progress on profitability and cash generation. Management acknowledged rising AI and restructuring costs and some timing-related revenue shifts, but stressed that these headwinds are manageable and fully reflected in guidance.
Strong Top-Line Growth Across the Portfolio
Total company organic revenue rose 8% in the first quarter of 2026, up from the 7% pace the group delivered through 2025. The company’s Big 3 segments posted an even stronger 9% organic gain, and management reiterated its full-year target for 7.5%–8% organic growth, with the Big 3 expected to land near 9.5%.
AI Adoption and Product Momentum Builds
AI is becoming a real growth engine, with advanced features such as CoCounsel now serving around 1 million users and monthly CoCounsel SKUs quadrupling year over year. Usage intensity is rising as well, with Westlaw Advantage users and deep research searches up more than sevenfold in six months and CoCounsel for tax and audit conversations up roughly fivefold since September.
Profitability and Margin Expansion Continues
Profitability kept pace with growth, as adjusted EBITDA increased 9% to $881 million in the quarter with a margin of 42.2%. The Big 3 businesses delivered $829 million of adjusted EBITDA, also up 9%, for a margin of 46.7%, and the company reaffirmed its goal of expanding full-year adjusted EBITDA margins by about 100 basis points to approximately 40%.
Earnings and Cash Flow Show Solid Momentum
Earnings and cash generation moved higher, with adjusted EPS climbing 10% year over year to $1.23. Free cash flow improved 19% to $332 million in the first quarter, and management continues to project about $2.1 billion of free cash flow for the full year, underpinning both investment and shareholder returns.
Capital Allocation and Shareholder Returns
Capital deployment remained active, as the company raised its annual dividend by 10% for the fifth year in a row and repurchased $262 million of stock in the first quarter. It also completed a $605 million return of capital and related share consolidation, trimming the share count by around 9 million shares, and sees more than $9 billion of capital capacity through 2028.
Segment-Level Strengths in Core Businesses
Growth was broad-based, with legal professionals excluding government accelerating to 11% organic growth compared with 9% in the prior quarter. The Corporate segment delivered 9% organic growth, helped by Pagero, Confirmation, Westlaw, CoCounsel and international operations, while Tax, Audit & Accounting grew 10% organically on the back of CoCounsel, Latin America, SafeSend and SurePrep.
Orders and AI-Enabled Contract Value
Demand indicators remained healthy, as organic orders measured by annual contract value increased 6% in the quarter, supported by the LSEG data agreement and agency business. AI continues to penetrate the installed base, with the share of annualized contract value derived from generative AI–enabled products rising to 30%, up from 28% last quarter.
Print Revenue Decline Continues
Legacy print activities remain a drag, with Global Print organic revenue declining 5% year over year in the first quarter. Management framed this as consistent with expectations and reflective of ongoing secular pressure on physical print, which is increasingly being offset by growth in digital and AI-led offerings.
Slower Government Legal Growth
Government-facing legal revenue was a softer spot, growing only 1% compared with the prior year as the company continued to cycle past earlier cancellations and downgrades. Leadership indicated that this subdued performance is temporary and expects government legal revenue growth to improve later in 2026 as these headwinds abate.
Rising LLM and AI-Related Costs
The push into AI does carry a cost, with management acknowledging that large language model expenses began rising in mid-2024 and are now showing up in margins. These AI-related costs are still a relatively small piece of the overall cost base but are factored into guidance and contribute to an expected second-quarter EBITDA margin of around 38%.
Severance and Acquisition-Related Pressures
Restructuring and integration efforts also weighed on profitability, with first-quarter results including $12 million of severance tied to reimagining work initiatives. In Tax, Audit & Accounting, margins faced dilution from acquisitions such as Additive and SafeSend, as well as investments in Dominio and severance costs, creating some near-term pressure despite strong underlying growth.
Revenue Timing Shifts in Tax, Audit & Accounting
Reported growth in Tax, Audit & Accounting was influenced by two product updates that shifted revenue recognition toward the back half of the year. These timing effects reduce near-term reported revenue but do not change the fundamentals, and management still expects full-year organic growth in the segment to land in the 11%–13% range.
Higher Interest Expense from Capital Actions
The company’s robust buyback and capital return program carries financing implications, and the outlook for interest expense was raised by $30 million to a range of $180 million to $190 million. Even so, management believes the recent $1.2 billion of repurchases and capital returns remain accretive to both EPS and cash flow in 2026, even with higher net interest costs.
Guidance Reaffirmed With AI as a Key Driver
Looking ahead, management reaffirmed 2026 guidance for organic revenue growth of 7.5%–8%, with the Big 3 expected to grow around 9.5% and Legal Professionals near 9%, supported by double-digit growth in legal ex-government. Corporate is guided to roughly 9%–11% organic growth and Tax, Audit & Accounting to 11%–13%, alongside around 100 basis points of margin expansion to about 40% and anticipated free cash flow of roughly $2.1 billion.
Thomson Reuters’ latest earnings call painted a picture of a business leaning into AI and data-driven products while continuing to expand margins and return significant capital to shareholders. While rising AI, severance and interest costs and legacy print declines remain watchpoints, management’s reaffirmed guidance and strong demand metrics suggest the company is well-positioned for continued growth in 2026.