Thomson Reuters Corporation

Good day, everyone, and welcome to the Thomson Reuters Fourth Quarter Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the call over to Gary Bisbee, Head of Investor Relations. Please go ahead.

Thanks, Jenny. Good morning, and thank you all for joining us today for our Fourth Quarter 2024 Earnings Call. I'm joined by our CEO, Steve Hasker, and our CFO, Mike Eastwood, each of whom will discuss our results and take your questions following their remarks. To enable us to get to as many questions as possible, we'd appreciate it if you'd limit yourself to one question and one follow-up each when we open the phone lines. Throughout today's presentation, when we compare performance period on period, we discuss revenue growth rates before currency, as well as on an organic basis. We believe this provides the best basis to measure the underlying performance of our businesses. Today's presentation contains forward-looking statements and non-IFRS and other supplementary financial measures, which are discussed on this special notes slide. 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 Hasker.

Thank you, Gary, and thanks to all of you for joining us today. 2024 was a year of continued progress at Thomson Reuters, so let me start by reviewing some of our key accomplishments. First, we delivered another year of good financial results, meeting or exceeding key financial targets. Full year organic revenue grew 7%, up from 6% in the prior year. The big three segments also accelerated, growing 9% for the year versus 7% in 2023. Amid organic and inorganic investments, our margins eased year over year as expected, but came in modestly ahead of our expectations. And we delivered just over $1.8 billion of free cash flow. We continue to see healthy momentum from many areas in our portfolio. Uptake of our generative AI offerings remains strong, with Westlaw precision and co-counsel momentum continuing. And we have many other products and regions delivering double-digit revenue growth, including practical law, confirmation, short prep, IARO, indirect tax, and our international businesses. 2024 saw significant and important progress from an innovation perspective as we continue to work to deliver on the product vision we shared at our 2024 Investor Day. We had several important product launches last year featuring generative AI capabilities. including CoCouncil 2.0, CoCouncil drafting, and Check Point Edge with CoCouncil. We also had dozens of other enhancements across the portfolio, and we're progressing with efforts to drive more seamless integration between our products. We continued with our build, partner, buy approach to investing in AI, including the strategic bolt-ons of SafeSign and Materia, which bolstered AI capabilities for our legal and tax and accounting businesses. All in, our investments in AI grew meaningfully to more than $200 million in 2024, a pace we expect to continue in 2025 and beyond. This continued AI investment is included in our outlook and financial framework that Mike will discuss later. Our capital capacity and liquidity remain a key asset that we are focused on deploying to create shareholder value. and we made strong progress on this during 2024. We completed the monetization of our LSEG stake in May, repurchased $639 million of our shares, and we'll raise our common dividend by 10% in 2025, the fourth consecutive year at this pace. Since the beginning of 2024, we have invested approximately $1.6 billion in five acquisitions, including Peguero and SafeSend. We also completed the fine law divestiture and sold two smaller non-core businesses in December. These moves bolster key franchises and improve the quality and growth prospects of our portfolio. Looking forward, our conviction around the medium-term growth potential for Thomson Reuters remains strong. As Mike will discuss in more detail, We are guiding for organic revenue growth of 7% to 7.5% in 2025 and updating our financial framework for 2026 to 7.5% to 8%, an improvement over the 6.5% to 8% for 2025 and 2026 that we discussed one year ago. We're also raising the 2026 revenue growth targets for each of the big three segments by 1% from our prior view. Now to the results for the quarter. Fourth quarter organic revenues grew by 5%, organic recurring revenues grew 8%, and transactions revenue decreased 4%, while print revenues declined 6% in line with expectations. A tough comparison at Reuters from significant transactional generative AI licensing revenue in the prior year, impacted growth rates. Adjusted EBITDA increased 2% to $718 million, reflecting a 130 basis point margin decline to 37.6%. This lower profitability was expected and resulted from investments to position the company for improving growth and the difficult comparison at Reuters. As I previously mentioned, we achieved our full year 2024 EBITDA margin outlook. Turning to the fourth quarter results by segment, the big three segments delivered 8% organic revenue growth. This is the fifth consecutive quarter of 8% or better growth for the big three. Legal organic revenue grew 7%, driven by continued momentum from Westlaw Precision and Co-Counsel. Corporate's organic revenue grew 10%, driven by offerings from our legal tax and risk portfolios. Tax and accounting organic revenues grew 7%. Our Latin American business and tax compliance offerings were key contributors. Reuters News organic revenues declined 3% driven by the difficult comparison of the prior year period. Lastly, Global Print organic revenues met our expectations, declining 6% year on year. In summary, we're pleased with our results. Full year organic revenues grew 7%, organic recurring and transactional revenue grew 8% and 10% respectively. while print revenues declined 7% in line with expectations. Adjusted EBITDA increased 4% to $2.8 billion, yielding a margin of 38.2%. And adjusted earnings per share for the year was $3.77 compared to $3.51 per share in the prior year. Let me finish on the results for the full year by noting we met or exceeded nearly all of our 2024 guidance metrics. A lone exception was the big three adjusted EBITDA margin, which fell slightly short amid investments, including dilutive M&A and other higher incentive compensation based on the strong 2024 performance. Now I'll spend a few minutes discussing our tax and accounting professionals business, including the recent SafeSend acquisition. Our tax and accounting professional segment, which we refer to as TAP, is a great business that one could argue we haven't discussed enough with you. It has been our fastest growing segment for many years, driven by a large and attractive market opportunity, deeply embedded offerings, and market leadership positions in both the US and Brazil. At our Investor Day last March, we detailed a favorable industry backdrop that benefits our TAP business. CPA firms faced ongoing talent shortages, increasing regulatory complexity, and growing demand, including for advisory services. This is fueling a relentless drive for efficiency and automation and rising technology investments by our customers as they transform their practices. Our organic product investments, M&A strategy, and open ecosystem approach are focused squarely on helping our customers thrive in this complex environment by automating tax and audit workflows, bringing enhanced efficiency and freeing up time for higher value work. One important aspect of tax and accounting growth has been its strong track record of M&A, as is illustrated through the success of Dominio, Confirmation and SurePrep acquisitions. In the 10, five and two years since we acquired these businesses, All three have compounded their revenue in excess of 20% growth annually. Given this history of success, we are very excited about the latest additions to our TAP portfolio. Materia, which we discussed last quarter, and SafeSend, which we acquired on January 2nd. SafeSend is a best-in-class provider of tax workflow automation software. Its cloud-native SaaS offerings automate the last mile of the tax return workflow, including assembly, review, e-signature, and secure delivery for both the individual and entity returns. We see SafeSend as a compelling strategic fit that continues our tax automation strategy, building on the successful 2023 acquisition of SurePrep, which provides first-mile automation. Similar to SurePrep, SafeSend solves key pain points for our customers and their clients by eliminating time-consuming manual tasks through the use of modern software. We expect SafeSend to deliver approximately $60 million of 2025 revenue, but the fair value adjustment to acquired deferred revenue that Mike will discuss in a few minutes. SafeSend is also solidly profitable before integration costs and expected growth investments. We're focused on executing our proven TR acquisition playbook to drive significant growth from SafeSend over time. Let me now discuss the forward product vision for our TAP business and why we remain bullish on its growth prospects. This slide shows key steps in the tax preparation workflow and how our offerings help with each step. SurePrep and SafeSend have bought important first mile and last mile automation capabilities, which in combination with our leading research and compliance software, allows us to provide a truly automated end-to-end tax workflow solution that is unmatched in the market. The October acquisition of Materia, which has developed agentic and generative AI capabilities for tax, audit, and accounting, meaningfully accelerates our roadmap and will power co-counsel for the TAP segment. We are especially excited about Materia's agentic capabilities, which we see as a key to enhancing and connecting our leading content and software offerings into a unified, automated, and intelligent customer experience across tax, audit, and advisory workflows. This provides several opportunities for further innovation that we believe will increase the value we provide to customers. In 2025, we expect to pilot a new review-ready offering that brings significant automation to the tax workflow, addressing some of the most time-consuming tasks for tax professionals and their clients. We also plan to introduce additional AI-powered audit automation capabilities, building on our 2024 launch of Audit Intelligence Analyze. As we free up our customers from manual low-value tasks, we plan to bring additional advisory capabilities, starting with tax planning later this year through our agentic AI assistant that allows our customers to provide incremental value to their clients while generating additional revenue for their practices. Looking forward, we have a number of growth opportunities to continue the strong momentum from our TAP franchise. This includes executing our M&A playbook on Materia and SafeSend, and delivering on a deep innovation roadmap across our tax and audit businesses to both enhance existing capabilities and extend the new product categories like advisory services. Our Dominio business in Brazil remains a key contributor, both as it grows its core offerings to CPAs and also introduces new adjacent capabilities. We're focused on executing against these opportunities and believe our tax and accounting segment is positioned to continue double-digit revenue growth and strong profits over the next few years. I'll now turn it over to Mike to review our financial performance.