Thomson Reuters: Generative AI Driving Higher-Than-Expected Profits

Thomson Reuters: Generative AI Drives Higher-Than-Expected Profits

Thomson Reuters Corp has announced quarterly earnings that have exceeded expectations, thanks to cost reductions and the growing demand for enhanced products with Artificial Intelligence (AI) for professional and legal clients. Additionally, the company has revealed agreements to license its news content to train large AI language models.

In the fourth quarter, the Toronto-based news and information provider recorded adjusted earnings of 98 cents per share, surpassing Wall Street’s estimate of 90 cents per share, according to data from LSEG. This marks an increase from the previous year’s 75 cents per share.

Revenues also saw a 3% increase, reaching $1.8 billion, aligning with analysts’ forecasts, according to LSEG.

Thomson Reuters CEO, Steve Hasker, stated in a note that the company is currently in a phase of growth and investment, with 2024 being a year of focused investment. Hasker added, “We see growth opportunities around generative AI in 2025, 2026, and beyond, but not exclusively.”

Following the positive earnings report, the company’s shares experienced a 2% increase in both the US and Canadian markets. Generative AI, integrated across Thomson Reuters’ product portfolio, is expected to play a larger role in the company’s future results.

Thomson Reuters anticipates organic revenues, excluding acquisition gains, to grow by approximately 6% in 2024, slightly surpassing the estimated 5.7% growth, according to LSEG. Organic revenue is projected to increase between 6.5% and 8% in the 2025-2026 period.

Organic operating profit, excluding one-time gains, witnessed a 12% increase due to higher revenues and lower costs. Three out of five divisions at Thomson Reuters experienced revenue growth during the quarter, although the legal segment saw a decrease, influenced by the sale of the Elite business management software company in 2023.

Reuters News revenues increased by 11%, and adjusted pre-tax profits, depreciation, and amortization rose by 56%, largely attributed to revenue from generative AI-related content licensing.