Thomson Reuters Q4 revenue up 9%

Fourth-quarter revenue was $1.52 billion, compared with $1.41 billion a year ago. The average analyst forecast was $1.54 billion.

Revenue from Reuters News more than doubled to $155 million, reflecting a first-time contribution from the sale of a 55 per cent stake in Thomson Reuters’ largest division, financial & risk (F&R), to private equity investors led by Blackstone in October. The deal valued the unit, now a standalone business called Refinitiv, at about $20 billion.

Toronto-based Thomson Reuters, controlled by Canada’s Thomson family, retained a 45 per cent stake in Refinitiv, which sells data and news primarily to financial customers. Under the agreement with Blackstone, Refinitiv will pay at least $325 million, adjusted for inflation, annually to Reuters over 30 years, to secure access to its news service - equal to almost $10 billion in all.

Thomson Reuters has set aside $2 billion of the $17 billion proceeds from the Blackstone deal to make purchases to help grow its legal, tax and corporates businesses.

“There are opportunities out there but I think market valuations are challenging for everyone,” chief executive James Smith (photo) said in an interview with Reuters. “We have to make certain we find not only the right strategic fit but the fit that makes financial sense as well. It’s a pretty frothy M&A market at the moment.”

Following the F&R deal, legal and tax & accounting are now the company’s two biggest units.

Excluding exchange rate effects, legal revenue rose by four per cent during the quarter to $599 million. Tax & accounting sales rose by eight per cent to $248 million. Sales to corporate clients rose by seven per cent to $315 million.

“We’ve ended the year with good momentum in the sales line, as strong a profit mix as we’ve had in quite some time, and some solid demand from our customers,” Smith said. “We feel confident about how we’re entering 2019.”

For 2019, the company is forecasting adjusted earnings of $1.4 billion to $1.5 billion.

Smith said US tax reforms were helping to stimulate demand for the company’s tax and accounting products. “Rapid regulatory change is good for our business,” he said.

Thomson Reuters earnings excluding special items were 20 cents per share, down from 22 cents a year ago.

For 2018 as a whole, Thomson Reuters reported overall revenue growth of four per cent. Revenues excluding the impact of the Blackstone deal rose by 2.5 per cent.

For 2019, the company is forecasting organic revenue growth of three to 3.5 per cent. For 2020, it expects revenue growth of 3.5 per cent to 4.5 per cent, in line with guidance it gave last December. ■