May 2 (Reuters) – Thomson Reuters Corp (TRI.TO) on Tuesday saw its first-quarter sales buoyed by sales and high customer retention as it plans deeper investments in artificial intelligence. reported that operating profit exceeded expectations.
The news and information company reported adjusted earnings of 82 cents per share, beating analyst estimates of 80 cents.
Refinitiv estimates total revenue rose 4% to $1,738 million in the fourth quarter, beating expectations.
According to Thomson Reuters, which owns the Westlaw legal database, Reuters news agency and Checkpoint tax and accounting services, organic revenues in the “Big 3” segments – legal, corporate and tax and accounting professionals – increased 7%.
“While we recognize the heightened macroeconomic uncertainty, our underlying business is resilient,” Chief Executive Officer Steve Hasker said in a statement.
Thomson Reuters has reaffirmed most of its 2023 financial forecasts, but cut its full-year total revenue growth forecast from 4.5% to 5% to 3% to 3.5%.
Husker said in an interview with Reuters that the company is not expecting any layoffs this year.
The stock, which hit a record high last month, fell about 1% in New York and Toronto trading.
Edward Jones analyst Matt Arnold said in a note that the company “delivered a strong quarter,” but that positive results were already being reflected in the stock, adding that the catalyst for Tuesday’s sell-off is unlikely. He added that he could not.
Husker said Thomson Reuters will spend about $100 million a year investing in artificial intelligence. In the second half of this year, we will start incorporating generative AI into our flagship products. Generative AI is a type of artificial intelligence that generates new content or data in response to user prompts or questions.
Thomson Reuters chief financial officer Michael Eastwood said in an interview that the $100 million is separate from the company’s M&A budget, which will be around $10 billion between now and 2025.
Nearly all of the company’s M&A budget has been allocated to artificial intelligence over the past three years, and management expects that trend to continue. AI capabilities will be built into most major lines of business, including legal, tax, accounting, and news businesses.
AI is already built into Thomson Reuters products such as Westlaw Edge and Practical Law. In 2022, the company acquired PLX AI, a real-time financial news service powered by this technology.
The company said it sold 24.5 million shares in London Stock Exchange Group (LSEG) (LSEG.L) in the first quarter, raising a total of $2.3 billion. As of April 30, the company owned his 47.4 million shares of LSEG, worth $5 billion.
Thomson Reuters said it was “increasing confidence” about the company’s outlook, but noted that there were “many signs of a weakening global economic environment” from high interest rates and geopolitical risks.
In April, the company announced that it would return $2.2 billion to shareholders through a cash distribution and reverse stock split after selling a portion of its LSEG stake.
Reporting by Helen Coster and Kenneth Li in New York; Editing by Nick Zieminski
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