Thomson Reuters Stock Gains On Q2 Performance, Confirms Confidence in AI Opportunities, Sets High Growth Outlook for Q3

Thomson Reuters Corp (NYSE: TRI) reported second-quarter FY23 revenue growth of 2% year-on-year to $1.65 billion, slightly missing the consensus of $1.66 billion. 

Organic revenues increased by 5%, driven by recurring revenues. 

The "Big 3" segments (Legal Professionals, Corporates, and Tax & Accounting Professionals) collectively comprised 81% of total revenues and reported organic revenue growth of 7%. 

Legal Professionals' revenue grew 1% Y/Y to $705 million, Corporates' revenue rose 5% Y/Y to $392 million, and Tax & Accounting Professionals' revenue increased 5% Y/Y to $229 million.

Reuters News revenue grew by 3% Y/Y to $194 million, and the Global Print revenue fell 6% Y/Y to $133 million.

Adjusted EBITDA margin expanded by 540 bps to 40.1% due to higher revenue. Adjusted EPS of $0.84 beat the consensus of $0.77.

Thomson Reuters generated $596 million in free cash flow and held $2.86 billion in cash and equivalents. 

CEO Steve Hasker said, "Importantly, our confidence around the opportunity that generative AI brings to us and our customers continues to strengthen. We made good progress in executing our 'build, partner, buy' approach throughout the quarter, with organic AI builds progressing, our announcement of an intelligent drafting solution with Microsoft, and the announcement of our intention to acquire Casetext."

Outlook: Thomson Reuters expects Q3 organic revenue growth rate to be at the high end of the full year, 5.5% - 6.0%.

Thomson Reuters reiterated FY23 organic revenue growth of 5.5% - 6.0% and revenue growth of 3.0% - 3.5% (consensus $6.84 billion).

Price Action: TRI shares were trading higher by 2.75% to $138.65 on the last check Wednesday.