Nov 3 (Reuters) - Thomson Reuters reported higher third-quarter revenue on Tuesday, boosted by recurring revenue in its big three divisions of legal, tax and accounting and corporates.
The Toronto-based content and technology company raised its full-year 2026 organic revenue guidance to an increase of between 8.5% and 9.0%, up from about 8%. Organic revenue tracks sales from existing businesses on a constant currency basis.
"We are pleased with our third-quarter momentum, as revenue growth and margins came in ahead of our prior expectations," Thomson Reuters CEO Steve Hasker said in a statement.
The owner of Westlaw legal database, Reuters news agency and the Checkpoint tax and accounting service reported a 10% rise in third-quarter revenue to $1.83 billion and adjusted earnings per share of 81 cents.
Thomson Reuters excluded financials from its global print division in its results, after completing the sale of a majority stake in the business during the quarter.
"The results continue to show strong demand for Thomson Reuters' products, including Westlaw and CoCounsel, with no evidence to date of a slowdown from AI-native entrants," said Maher Yaghi, an analyst at Scotia Capital, in a research note.
Revenue rose by double digits across the combined segments of legal, tax and accounting and corporates as a result of recurring revenue and new AI upgrades to CoCounsel Legal and CoCounsel Tax, Audit and Accounting, Thomson Reuters said.
Revenue at Reuters rose by 12%, boosted by a surge in licensing revenue from generative AI, with transaction revenue in the news division increasing by 56% to $44 million.
In the legal division, AI spending and $22 million in severance costs pressured margins, which fell to 46.6% from 49%.
Thomson Reuters executives said they expected higher revenue from premium tier pricing for AI agentic products to offset AI spending in the legal division.
Hasker said after publication of the results that Thomson Reuters was making progress in attracting new customers to its proprietary Thomson AI model and expected to announce Skadden, Arps, Slate, Meagher & Flom LLP as a new customer on Tuesday.
"It will be the first of many," Hasker said in an interview, with reference to the big US law firms.
Thomson Reuters Chief Financial Officer Gary E. Bischoping, Jr. said in an interview that about 34% of the company's underlying contract value, which breaks down a contract's total value, relied on generative AI in the third quarter, up from 32% in the second quarter and 24% last year.
Thomson Reuters shares have fallen 6.3% this year, compared with a 10% rise in the S&P 500, as of Monday.
Reporting by Kenneth Li in New York and Aditya Soni in Bangalore; Editing by Alexander Smith
Source: Reuters