TRI — Thomson Reuters Corporation

Thomson Reuters Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total organic revenue increased by 8% year-over-year, with the "Big 3" segments (Legal Professionals, Corporates, Tax, Audit & Accounting) achieving 10% organic growth, up from 9% in previous quarters.
• Adjusted EBITDA rose 10% to $745 million, with a margin of 38.1%.
• Adjusted EPS improved by 14% to $0.99, benefiting from currency fluctuations.
• Free cash flow for the quarter was $727 million, a 29% increase from $566 million in Q2 2025.
• Recurring revenue accounted for 86% of total revenue, up 6 percentage points from 2023.

2. Strategic Updates and Business Highlights:

• Thomson Reuters announced a joint venture with KKR to sell a 51% stake in its Global Print business for approximately $500 million, which is expected to enhance focus on AI solutions while providing capital for growth.
• The company is investing heavily in AI, with a focus on its proprietary large language model, Thomson, which is expected to enhance its product offerings, particularly in legal services.
• The CoCounsel product is seeing strong user engagement and positive feedback, with a new version launched that integrates advanced AI capabilities.
• The company launched its largest brand campaign in over a decade, "The CoCo," to promote its AI offerings.

3. Forward Guidance and Outlook:

• Thomson Reuters raised its full-year 2026 revenue growth outlook to approximately 8%, with the Big 3 segments expected to grow between 9.5% to 10%.
• The company anticipates adjusted EBITDA margins of approximately 40% for the year.
• For Q3, organic revenue growth is expected to be around 8%, with an adjusted EBITDA margin of approximately 36%, accounting for $19 million in severance expenses.

4. Bad News, Challenges, or Points of Concern:

• The Tax, Audit & Accounting segment faced execution challenges, particularly in sales momentum due to confusion over product messaging. This has led to a shortfall in expected transactional revenue growth.
• Government-related revenue growth is anticipated to be softer in Q3, impacting overall performance.
• There are ongoing competitive pressures in the legal technology space, with law firms experimenting with multiple tools, which may affect long-term customer loyalty.

5. Notable Q&A Insights:

• CoCounsel has surpassed 1 million users, with increasing daily engagement noted as a key success metric.
• The Thomson model is expected to enhance CoCounsel's capabilities, providing a competitive edge in the legal market.
• Management emphasized the importance of innovation and AI in driving future growth, with a focus on maintaining a strong revenue mix and customer relationships.
• There is a potential shift towards consumption-based pricing models for AI offerings, reflecting customer interest in flexible pricing structures.
• The company remains committed to a balanced capital allocation strategy, focusing on innovation, dividends, and potential share repurchases, although no new buyback program is currently approved.