Thomson Reuters Corp ((TSE:TRI)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Thomson Reuters Corp’s earnings call exuded a positive sentiment, underscored by robust financial performance and strategic capital allocation. The company demonstrated impressive growth in organic revenue, complemented by successful acquisitions and share repurchases. Despite certain challenges in specific revenue streams, Thomson Reuters showcased adaptability and resilience, particularly with its focus on AI innovation and ambitious revenue growth targets for the future.
Strong Organic Revenue Growth
Thomson Reuters reported a commendable 7% growth in full-year organic revenue, up from 6% the previous year. The company’s big three segments accelerated their growth, achieving a 9% increase compared to 7% in 2023. This growth underscores the company’s strong market position and ability to capitalize on emerging opportunities.
Generative AI Offerings and Product Innovation
A significant highlight of the call was the continued momentum in generative AI offerings, such as Westlaw Precision and Co-Counsel. The company launched several products with generative AI capabilities and plans to invest over $200 million in AI innovation by 2024. These ventures are expected to drive substantial future growth.
Successful Capital Allocation and Acquisitions
Thomson Reuters successfully completed the monetization of its LSIC stake and repurchased $639 million worth of shares. The company also raised its common dividend by 10% for the fourth consecutive year and invested around $1.6 billion in five acquisitions, reinforcing its strategic growth initiatives.
Positive Financial Performance Metrics
The company’s adjusted earnings per share for the year rose to $3.77 from $3.51 the previous year. Fourth-quarter organic revenues grew by 5%, and adjusted EBITDA increased by 2% to $718 million, showcasing its solid financial foundation.
Increasing Revenue Growth Targets
Thomson Reuters raised its revenue growth targets, forecasting organic revenue growth between 7% and 7.5% in 2025, and 7.5% to 8% in 2026. The company increased growth targets for its big three segments by 1%, reflecting its confidence in future performance.
Decline in Transactions and Print Revenue
The call revealed a 4% decline in transactions revenue and a 6% drop in print revenues in the fourth quarter, aligning with expectations. These declines were anticipated and are being addressed by the company’s strategic initiatives.
Reuters News Revenue Decline
Reuters News experienced a 3% decrease in organic revenue for the quarter, primarily due to challenging comparisons with the previous year’s substantial transactional generative AI licensing revenue.
Lower EBITDA Margin Due to Investments
The fourth-quarter adjusted EBITDA margin declined by 130 basis points to 37.6%, attributed to investments and higher incentive compensation costs. This margin contraction is seen as a strategic move to fuel future growth.
Forward-Looking Guidance
Thomson Reuters provided a detailed outlook for 2024, projecting a 7% organic revenue growth, with the big three segments expected to see a 9% increase. The company anticipates 7% to 7.5% growth in 2025 and 7.5% to 8% in 2026. The adoption of generative AI products is expected to contribute significantly to this growth, with free cash flow over $1.8 billion and a planned 10% dividend increase in 2025.
In summary, Thomson Reuters Corp’s earnings call was marked by a positive sentiment, driven by strong organic revenue growth and strategic investments in AI and acquisitions. Despite certain challenges, the company’s robust financial performance and forward-looking guidance reflect its solid market position and growth potential.
