THOMSON Reuters on Wednesday (Aug 2) reported higher sales and operating profit in the second quarter, helped by strong performance at its “Big 3” segments: Legal Professionals, Corporates and Tax & Accounting Professionals.

The news and information company reported adjusted earnings of 84 cents per share, 6 cents ahead of estimates.

Total revenue rose 2 per cent in the quarter to US$1.65 billion, slightly missing expectations, according to Refinitiv. The company said net divestitures had a 3 per cent negative impact on revenue, hit by the majority stake sale of the company’s Elite business to private equity firm TPG.

Thomson Reuters, which owns the Westlaw legal database, Reuters news agency and the Checkpoint tax and accounting service, said organic revenue was up 7 per cent for the “Big 3” segments that together account for the lion’s share of revenue and profit.

CEO Steve Hasker said he saw “good momentum across our portfolio despite an uncertain macro backdrop.” He added, “Importantly, our confidence around the opportunity that generative AI brings to us and our customers continues to strengthen.”

Thomson Reuters maintained its full-year 2023 outlook for organic revenue, adjusted Ebitda margin and free cash flow. It said the first half of the year gave it “increasing confidence” about its financial outlook but cautioned that “many signs that point to a weakening global economic environment” that could impact its guidance.

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The company sold 15.5 million shares of the London Stock Exchange Group (LSEG) in the second quarter, for gross proceeds of US$1.6 billion.

Organic revenue in the Reuters News division was up 1 per cent in the quarter, driven by a lower contractual year-over-year price increase in the company’s news agreement with LSEG, slower events growth and lower digital revenues.

Organic revenues in the Print division – which provides information to legal and tax professionals, government, law schools and corporations – fell 4 per cent, in line with the company’s expectations.

In an interview Wednesday, chief financial officer Michael Eastwood said the company has “a lot of flexibility, not just for M&A,” and that he anticipates going into 2024 “continuing with 10 per cent annual dividend increases and, if appropriate, continued return of capital.”

Last quarter, Hasker said the company plans to invest some US$100 million a year in artificial intelligence, separate from the company’s M&A budget, which will be about US$10 billion from 2023 to 2025, CFO Eastwood said at the time.

Asked Wednesday about how the company decides whether to build, partner or buy AI capabilities, Hasker said: “Our preference is to build ... We have an aspiration to be significantly more innovative, meet and exceed our customers’ expectations, and generative AI looks like a big opportunity to do that.”

Generative AI is a type of artificial intelligence that generates new content or data in response to a prompt, or question, by a user.

In June, the company announced plans for two acquisitions: Britain-based Imagen, a digital content asset management company, for an undisclosed price; and Casetext, a California-based AI company that helps legal professionals conduct research, analysis and prepare documents using generative AI, for US$650 million.

As of Jul 31, 2023, Thomson Reuters indirectly owned approximately 31.8 million LSEG shares, which had a market value of approximately US$3.5 billion, based on LSEG’s closing share price on that day. REUTERS