UPDATE 4-Thomson Reuters' adjusted EPS beats expectations, AI boosts results
(Adds share price, detail and background on AI)
By Kenneth Li
NEW YORK, Feb 8 (Reuters) - Thomson Reuters Corp on Thursday reported higher-than-expected quarterly profit, helped by lower costs and demand for AI-enhanced products for legal and other professional clients.
It also said it struck deals to license its news content to help train large AI language models.
The Toronto-based news and information provider reported adjusted fourth-quarter earnings of 98 cents per share. Wall Street expected 90 cents per share, according to LSEG data, and a year ago, the comparable figure was 75 cents a share.
Revenue rose 3% to $1.8 billion, largely in line with analyst estimates, according to LSEG data.
“We're in growth and investment mode. 2024 is an investment year for us," Steve Hasker, CEO of Thomson Reuters said in an interview on Thursday, highlighting increases in capital expenditure this year. "We see growth opportunities in 2025, 26 and beyond around generative AI, but not exclusively generative AI."
Shares rose about 2% in both U.S. and Canadian trading.
Generative AI, deployed across Thomson Reuters' product portfolio, is expected to play a bigger role in results this and upcoming years, executives said.
Hasker added, "It is not a cost-cutting year."
The company said it expected to end its $1 billion share buyback by the end of the second quarter and will increase its annualized dividend by 10% to $2.16 per share.
Thomson Reuters anticipates 2024 organic revenue, excluding gains from acquisitions, to rise by about 6%, or slightly ahead of estimates of 5.7%, according to LSEG data. Organic revenue could rise 6.5% to 8% in the 2025 and 2026 period.
Organic operating profit, excluding one-time gains, rose 12% from higher revenue and lower costs.
Revenue at three of the five divisions of Thomson Reuters rose in the quarter with a decline in the legal segment, impacted by the sale of business management software company Elite in 2023.
Reuters News revenue rose 11% and adjusted earnings before tax, depreciation and amortization rose 56%, in part from generative AI-related content licensing revenue, the company said.
Thomson Reuters did not specify the companies it has licensed its content to, nor the financial details of the deals.
LICENSING NEWS ARCHIVE
Hasker said deals to license the Reuters News archive reflect "the need for large language models to learn from accurate and unbiased information that's been produced by the world's best newsrooms and in accordance with the Trust Principles."
The Reuters Trust Principles is a set of obligations on Reuters and its employees to act at all times with integrity, independence and freedom from bias.
News organizations have demanded payment from tech companies over the use of copyrighted content to train AI models. The New York Times
sued
OpenAI and Microsoft Corp, accusing the tech companies of the unauthorized use of copyrighted works to train chatbots.
Thomson Reuters, which also owns the Westlaw legal database and the Checkpoint tax and accounting service, has earmarked $10 billion for acquisitions and about $100 million annually to invest further in AI.
In January, Thomson Reuters acquired a majority stake in Pagero Group AB, an e-invoicing tax company and also announced the purchase of World Business Media, a subscription-based provider of news and analysis on the insurance and reinsurance market.
Last year, it purchased legal AI firm Casetext for $650 million.
Executives said the company has spent about $2.1 billion to acquire companies and now has about another $8 billion to spend over the next three years.
(Reporting by Kenneth Li in New York Editing by Nick Zieminski)
