Thomson Reuters (TRI) Q3 FY25 earnings call: guidance and Q&A

What is the recurring impact of government/corporate headwinds into next year, and is the 9-11% corporate growth target still comfortable? How are customers reacting to Agentic AI in Westlaw, and do they notice the difference from competitors?

Corporate softness is temporary and self-inflicted due to sales org changes, but the market opportunity is strong, and 9-11% growth for 2026 is confident. Government is turbulent but long-term confident. Westlaw Advantage and CoCounsel customer reaction is very strong, with lawyers changing behavior to interact more with the tool for argument refinement, recognizing the deep content access.

“Since he's had access to Westlaw Advantage, he is doing much more of that back and forth with our tool than he is with his partners.”

asked by Drew McReynolds · answered by Stephen Hasker

Were government cancellations due to the shutdown or prior? Is government spending being redirected, and will it come back? The Amazon call mentioned TR manipulating 1.5 million lines of code 4x faster; is this part of internal cost automation, and what are the future margin implications?

Government cancellations occurred prior to the shutdown, which has minimal impact. Spending is being redirected, causing turbulence, but TR is confident in its must-have tools for efficiency and law enforcement. The Amazon reference is to internal AI application for automation, which is a key driver for 2026 margin expansion and will continue to be a focus for efficiency.

“We're determined to be on the forefront of this AI transformation in 2 ways. One, in terms of our product development... Second example, ready to review and then in December, January, ready to advise in our Tax & Accounting, and we're excited about those.”

asked by Vince Valentini · answered by Stephen Hasker

Elaborate on "incremental competition in AI assistant space." Why did Tax & Accounting growth decelerate from 11% to 10%, and what gives confidence in 11-13% for 2026?

Competition in AI assistant space is in the "greenfield" area where CoCounsel operates, not in core franchises like legal research or tax engines. TR is happy with its position and aggressive product development. Tax & Accounting has quarterly fluctuations but remains confident in 11% for FY25 and 11-13% for FY26, driven by acquisitions (SafeSend, Additive, Materia), new launches (Ready to Advise, Ready to Review), and strong Latin America business.

“Where we have seen the entrance of new players is in the AI assistant space. Now that is a greenfield sort of white space opportunity for us.”

asked by Jason Haas · answered by Stephen Hasker

Can you provide a sense of the sizing and growth rates of your workflow business (CoCounsel) compared to other legal tech companies? Update on M&A strategy, particularly for larger deals.

CoCounsel is at least on par or outpacing newer competitors in size and growth, differentiating through integration of content and editorial expertise. For M&A, satisfied with tuck-ins; larger deals would be in risk, fraud, compliance, or indirect tax/e-invoicing, but current asset valuations are still high, requiring discipline.

“CoCounsel is at least on par or outpacing everybody else in terms of its size and its growth rate.”

asked by Manav Patnaik · answered by Stephen Hasker

How achievable is 9-11% corporate growth next year without further sales org changes? What is the pricing strategy for AI products, and how will pricing evolve?

Corporate growth is achievable due to solidified sales changes, encouraging October net sales, and strong pipeline coverage for Q4 and Q1 2026, supported by good products, strong demand, and growing TAM. Pricing strategy is "price to value," aiming to align with efficiencies driven by AI. The company does not price per seat, benefiting from fewer people doing work. Pricing is competitive and driving profitable growth, with potential for additional opportunity in 2026.

“Our principle is price to value. So the extent to which we're driving significant efficiencies in the practice of law or in the practice of audit, tax & accounting, we want to make sure that our products and services are aligned to that.”

asked by George Tong · answered by Stephen Hasker

Is the company nearing a peak in new product launches, with the next phase being more about penetration? How does this relate to margin expansion, given prior $200M incremental investments?

The rate of innovation will accelerate, especially for specialized AI tools trained on content and expertise. The company will continue to invest over $200 million in AI/Gen AI in 2026. Margin expansion is driven by operating leverage and internal automation, not reduced investment.

“Please, please do not correlate our confidence in expanding our margin in 2026 with us investing less. We will invest over $200 million this calendar year '25 in AI, Gen AI. That will continue into 2026.”

asked by Aravinda Galappatthige · answered by Michael Eastwood

How will AI advances affect the tax business, and does it have similar defensive capabilities as legal? Which Big 3 segment will drive most of the 2026 revenue acceleration?

AI application in tax is equally exciting due to acute talent shortages and value-based pricing models. AI agents automate "shoulder activities" around existing tax calculation engines, enabling more advisory services. Tax & Accounting Professional is expected to have the largest absolute increase in organic growth rate for 2026, driven by acquisitions, new launches (Ready to Advise, Ready to Review), and strong international performance.

“We actually think our tax & accounting customers are even more receptive to AI and technology in terms of improving their outputs and work and enabling, for example, tax professionals to automate the tax return process and move to more value-added advisory services for their clients.”

asked by Maher Yaghi · answered by Stephen Hasker