Thomson Reuters Corporation

Hey everyone and welcome to the Q3 2022 earnings call hosted by Gary Bisbee, head of investor relations. My name is Eniko and I'm your operator for today. During the presentation, your lines will remain on listen only. If you require assistance at any time, please just key star and zero on your phone and the coordinator will be happy to assist you. To get into the Q&A queue, please press star and one any time during the presentation. I would like to invite all parties that this conference is being recorded for replay purposes. And with that, I'd like to hand over to Gary. Please, go ahead.

Thank you, Nico. Good morning, everyone, and thank you for joining us today for our third quarter 2022 earnings call. I'm joined by our CEO, Steve Hasker, and our CFO, Mike Eastwood, who will discuss our results and take your questions following their remarks. To enable us to get to as many questions as possible, we would appreciate it if you'd limit yourself to one question and one follow-up each when we open the phone line. Throughout today's presentation, when we compare performance period on period, we discuss revenue growth before currency as well as on an organic basis. We believe this provides the best basis to measure the underlying performance of the business. Today's presentation contains forward-looking statements and non-IFRS financial measures. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You may access these documents on our website or by contacting our Investor Relations Department. Let me now turn it over to Steve Asker.

Thank you, Gary, and thanks to all of you for joining us today. I'll start by reviewing our Q3 highlights. I'm pleased to report good momentum continued in the third quarter with revenue and margins modestly ahead of our expectations. Total company organic revenues growth rose 6%, driven by 7% recurring revenue growth. Each of our big three segments recorded organic revenue growth of 6% or greater for a fifth straight quarter. Due to the strong year-to-date performance and healthy book of business, we are maintaining our full year 2022 outlook. Mike will provide more details on our outlook later in the call. While we acknowledge rising market concerns around slowing economic growth, we are blessed with a resilient business. 80% of our revenue is recurring and we operate in historically stable and growing end markets. Like all companies, we face inflationary pressures which we are working diligently to mitigate. We also continue to make investments to support our revenue momentum and our customer success. To date, we have not seen any significant changes in customer buying patterns except in a few pockets in our corporate segment where sales cycles have lengthened modestly. We believe this is due to both market factors and also sales territories where we are looking to fill open positions. I'm excited to discuss an important product development today. In mid-September, we launched a major upgrade to the Westlaw franchise with Westlaw Precision, which we had previously referred to as Edge 2.0. Precision offers meaningful improvement in search accuracy and efficiency. Initial customer response has been strong, and sales are off to a good start. Wentworth Precision is also a great example of what Thomson Reuters does best, which is to bring together unique content, artificial intelligence and machine learning capabilities, with modern software to create significant value for our customers. We simplify the increasingly complex compliance-related environments in which our customers operate. I will expand upon this important product launch momentarily. Our capital capacity and liquidity remain a key asset that we are focused on reinvesting to create shareholder value. We continue to execute the $2 billion share repurchase program we launched in June, having purchased $855 million worth of our shares through October 28th. As a reminder, we plan to complete the $2 billion program by early Q2 2023. We also continue to assess inorganic opportunities and expect to have ample capacity for both capital returns and strategic M&A. As a reminder, our acquisition focus areas include workflow automation software in our legal tax markets, risk fraud and compliance, as well as target international expansions. Now for the results for the quarter. Third quarter reported revenues grew 3%, which includes a 2% foreign currency drag. Organic revenue, which is a constant currency metric, rose 6%. Organic recurring revenue again grew 7%, with transactional revenue declining modestly in line with our expectations. Adjusted EBITDA increased to $535 million, reflecting 400 basis points margin improvement of 34%. Excluding costs related to the change program, the adjusted EBITDA margin was 37%. Adjusted earnings per share rose 24% year over year to $0.57. Earnings of the third quarter results by segment. The big three businesses achieved organic revenue growth of 6%, reflecting broad strengths. Legal continued its recent momentum, delivering a sixth consecutive quarter of 6% organic growth. The legal market remains healthy across all key segments, and we expect to see continued good momentum from Westlaw, Practical Law, IQ, and our other key offerings. Turning to corporates, organic revenue growth momentum continued, with revenue up 7%. Recurring revenue rose 9%, while transactional revenue softened as expected. Tax and accounting had another strong quarter, with organic revenue growth of 9%. A Latin American business led by Dominio grew 25% in the quarter, and remains a key growth driver. Reuters news organic revenues increased 5% in Q3. Growth occurred across all lines of business within Reuters. Finally, global print organic revenues was nearly flat, again better than expected, due to improved retention and timing benefits that we expect to normalize in the fourth quarter. In summary, we're pleased with our results and the solid momentum that continues across our businesses. Now we'll spend a few minutes discussing the recent launch of Westlaw Precision, our new flagship legal offering. Our Westlaw franchise is built on the foundation of more than 140 years of attorney-authored classifications, analysis, and editorial enhancement, with decades of machine learning and natural language processing technology. This combination of unique content and advanced technology brings significant value for our customers and provides real competitive advantage for our Westlaw franchise. Westlaw Precision, which launched in mid-September, continues our legacy of customer-driven innovation, following the release of Westlaw Next in 2010 and Westlaw Edge in 2018. We believe that precision is the largest step up in capability in the history of Westlaw. So what is Westlaw Precision? It's the most advanced legal research system in the market, delivering a more efficient and accurate way to conduct legal research and find on-point cases. It includes six new capabilities, foremost of which is precision research, as well as expanded key site functionality and several other tools that in aggregate deliver improved research speed and accuracy and significant enhancement for customer workflows. So let's drill down into the precision research capability. With Westwalk Precision, we're addressing two big issues in legal research. One is that important cases can be missed because they contain different language than that used by the customer during their search. The other is that irrelevant cases can be brought into the results because search terms can be used in a wide variety of contexts. More than two years ago, we hired 250 additional attorney editors, and have marked up case law at a far more granular level that includes not only the legal issue, but also a number of material facts and outcomes related to the case. This more detailed data tagging dramatically reduces irrelevant cases because users can target the context they want, and it reduces the risk of missed cases because our editors classify language variety to common legal issues and fact patterns. We have also enhanced the search experience by highlighting the most relevant parts of the case in the search results, making it far easier to quickly determine which cases meet the user's criteria. Looking forward, the deeper editorial analysis will be a further foundation and accelerating network effect for our next wave of investment in AI and future capability enhancements for the Westlaw franchise. To illustrate the superior outcomes, we asked over 100 practicing attorneys to complete legal research sessions with both our market-leading Westlaw Edge offering and the new Westlaw Precision. With Precision, users were able to find the same number of relevant cases in half the time and twice as many in the same time. In addition, 97% of those participating stated that Precision helped them find relevant cases faster while 90% believe they found relevant cases with precision they would not otherwise have found. Slide 12 shows a real-world example to further illustrate the new capabilities. With Westlaw research, an attorney can use filters to specify the legal issue, outcome, key fact patterns, and motion type. Due to this increased precision, the search for this issue returns just 10 cases instead of hundreds. and they're all highly relevant. As a result, the search can be done in two hours instead of five with traditional methods. While it is early days following the mid-September launch, we're very encouraged by the strong customer interest, feedback, and initial sales activity. The value proposition is resonating broadly with clients, and our teams are seeing traction in sales across all customer types, global large law firms, mid-size and small firms, state courts and government agencies, and corporate general counsels. We have closed more than 200 sales to date. While the bulk of these are edge clients that are upgrading to Precision, we have been pleased to see a number of firms that have double upgraded from Westfall Classic to Precision. And we've also seen a few wins from customers previously not using Westfall. Through the first six weeks, our experience with Precision compares favorably to the Edge launch four years ago. Let me close with a few thoughts around our expectations and financial impact from the launch. The meaningful enhancement in search speed and accuracy, along with a number of workflow improvements, adds significant value to users. As a result, Westlaw Precision is priced at a premium, which you expect to be similar to or slightly larger than the premium at which Edge is priced of a Westlaw Classic. We are comfortable targeting a similar penetration curve to the Westlaw Edge rollout, which saw steady contract value penetration growth of approximately 70% by the end of the fourth year after launch. We believe that 25% to 30% penetration by the end of 2023 is realistic. As a result, we're confident that our Westlaw franchise can continue to contribute approximately 1% to legal professional segment growth, in the next few years as it has in the recent past. We look forward to sharing updated color launch going forward. To that end, we're planning to host an investor analyst webcast on November 28th to provide a demo and deeper discussion of Westlaw precision capabilities. Let me now turn it over to Mike, who will provide more detail on the third quarter results.