Thomson Reuters profit tops estimates as it plans AI push By Reuters

Written by Helen Koster and Kenneth Lee

NEW YORK (Reuters) – Thomson Reuters on Tuesday reported higher-than-expected first-quarter sales and operating profit, helped by divestments and higher customer retention rates, as it plans a deeper investment in artificial intelligence.

The news and information company reported adjusted earnings of 82 cents a share, beating analyst expectations of 80 cents.

Total revenue rose 4% in the first quarter to $1.738 billion, beating expectations, Refinitiv estimates.

Thomson Reuters (NYSE:), which owns legal database Westlaw, Reuters news agency and tax and accounting service Checkpoint, said organic revenue rose 7% for its “big 3” segments: legal professionals, businesses, and tax and accounting professionals.

“While we acknowledge rising macroeconomic uncertainty, our core business is resilient,” CEO Steve Hasker said in a statement.

Thomson Reuters reaffirmed most financial estimates for 2023, but trimmed its full-year overall revenue growth forecast to 3% to 3.5%, from 4.5% to 5%, reflecting the sale of a majority stake in legal business management software company Elite to TPG.

Hasker said in an interview with Reuters that the company does not expect layoffs this year.

Shares, which hit a record high last month, fell about 1% in both New York and Toronto trading.

The company “had a good quarter,” analyst Matt Arnold of Edward Jones said in a note, but its positives had already been reflected in its stock, adding that he saw no catalyst for a decline in shares on Tuesday.

Hasker said that Thomson Reuters plans to spend about $100 million annually to invest in artificial intelligence. You’ll start to see generative AI built into mainstream products in the second half of this year. Generative AI is a type of artificial intelligence that generates new content or data in response to a question or request by the user.

The $100 million is separate from the company’s mergers and acquisitions budget, which will be about $10 billion between now and 2025, Michael Eastwood, Thomson Reuters’ chief financial officer, said in an interview.

Over the past three years, nearly all of the company’s mergers and acquisitions budget has been devoted to artificial intelligence, and executives see this trend continuing. AI features will be integrated into most major business divisions – legal, tax and accounting, and into the news business.

Artificial intelligence is already built into Thomson Reuters products such as Westlaw Edge and Practical Law. In 2022, the company acquired PLX AI, a real-time financial news service powered by technology.

The company said it sold 24.5 million shares London Stock Exchange Group (LON:) in the first quarter with total revenue of $2.3 billion. As of April 30, I owned 47.4 million shares of LSEG worth $5 billion.

Thomson Reuters said it was “increasingly confident” about its outlook, but noted that there were “many indications of a weak global economic environment” from high interest rates and geopolitical risks.

In April, the company said it would return $2.2 billion to shareholders through a cash dividend and reverse stock split after selling some of its shares in LSEG.