Thomson Reuters maintained its financial targets for the year, despite tariff uncertainty, according to first-quarter results.CARLO ALLEGRI/Reuters
Thomson Reuters Corp. reported higher first-quarter revenue and maintained its financial targets for the year, despite economic upheaval from tariffs and trade disputes that has shaken some corporate customers’ confidence.
Revenue rose 1 per cent to US$1.9-billion in the three months that ended March 31, just shy of analysts’ estimate of US$1.93-billion, according to first-quarter earnings reported Thursday. After adjusting to exclude lost revenue from asset sales and fluctuating foreign currencies, revenue was up 6 per cent year-over-year.
More than 80 per cent of Thomson Reuters revenues are from multiyear contracts, which insulates the information, software and news provider from some of the turmoil in markets. But for most of the company’s legal, tax and corporate customers, the pressing question is, “What happens next?” chief executive officer Steve Hasker said in an interview.
“It‘s a difficult environment to make long-term investment decisions,” he added. The sales cycle for new software installations has held up well so far but could start to slow if the uncertainty in global markets persists.
“We haven’t seen it worsen yet, but there‘s certainly enough trepidation and questions by senior management teams to suggest that it might.”
Thomson Reuters earns 8 per cent of its revenue from contracts with governments, with about 40 per cent coming from the U.S. federal government. As the Department of Government Efficiency led by billionaire Elon Musk has slashed the federal work force and scrapped some government contracts, “we‘ve seen a couple of minor cancellations or downgrades, but nothing material,” Mr. Hasker said.
And as government agencies cut headcount and try to modernize their technology, it could present an opportunity for Thomson Reuters, he said, as government “will need to rely on workflow software in order to come into the current era, in some cases.”
However, he added, “it‘s obviously a fluid situation and efficiency is the flavour of the day.”
Thomson Reuters nonetheless reaffirmed its outlook for the year, which predicts revenue will rise by 3 to 3.5 per cent, and 7 to 7.5 per cent excluding acquisitions and dispositions, as well as currency effects.
“We‘ve made a robust start, and we‘re confident in our prospects for the rest of this year and next. But the environment is definitely much more uncertain today than it was three months ago,” Mr. Hasker said.
Thomson Reuters reported first-quarter profit of US$484-million, or 96 US cents per share, compared with US$478-million, or US$1.06 per share, in the same quarter last year.
On average, analysts expected earnings per share of US$1.01, according to data from the London Stock Exchange Group.
Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.
Revenue from Thomson Reuters’s legal division, which is its largest business, fell 4 per cent to US$693-million, after the company sold its FindLaw legal marketing business. Excluding lost revenue from the sale and currency changes, legal revenue was up 8 per cent from a year earlier.
Corporate revenue rose 7 per cent to US$541-million, and revenue from tax and accounting professionals increased 10 per cent to US$360-million in the quarter.
Thomson Reuters also boosted the share of revenue from contracts that comes from products equipped with generative artificial-intelligence technology, which underpins a new suite of software tools that the company has been rolling out in recent months. Products with “GenAI” capabilities now contribute 20 per cent of contract revenue, up from 18 per cent three months earlier.
The company has about US$10-billion that it could spend on acquisitions through 2027. But the market for mergers has been sluggish, and “the bar remains high” when evaluating deals, chief financial officer Mike Eastwood said.