AI-enhanced products help push Q4 profit higher
Thursday 8 February 2024
Thomson Reuters on Thursday reported higher-than-expected quarterly profit, helped by lower costs and demand for AI-enhanced products for legal and other professional clients.
It also said it struck deals to license its news content to help train large AI language models.
It did not identify the companies or the financial details.
CEO Steve Hasker said the deals reflect "the need for large language models to learn from accurate and unbiased information that's been produced by the world's best newsrooms and in accordance with the Trust Principles.”
The Trust Principles require Thomson Reuters and its employees to act at all times with integrity, independence and freedom from bias.
News organisations have demanded payment from tech companies over the use of copyrighted content to train AI models. The New York Times sued OpenAI and Microsoft Corp, accusing them of unauthorised use of copyrighted works to train chatbots.
The group reported adjusted fourth-quarter earnings of 98 cents per share. Wall Street expected 90 cents and a year ago, the comparable figure was 75 cents.
Revenue rose 3% to $1.8 billion, largely in line with analyst estimates.
“We're in growth and investment mode. 2024 is an investment year for us,” Hasker said in an interview with Reuters.. "We see growth opportunities in 2025, 26 and beyond around generative AI, but not exclusively generative AI.”
Generative AI, deployed across the Thomson Reuters product portfolio, is expected to play a bigger role in results this and upcoming years, executives said.
Hasker added, "It is not a cost-cutting year."
The company said it expected to end its $1 billion share buyback by the end of the second quarter and will increase its annualised dividend by 10% to $2.16 per share.
Thomson Reuters expects 2024 organic revenue, excluding gains from acquisitions, to rise by about 6%, or slightly ahead of estimates of 5.7%, according to LSEG data. Organic revenue could rise 6.5% to 8% in the 2025 and 2026 period.
Organic operating profit, excluding one-time gains, rose 12% from higher revenue and lower costs.
Revenue at three of the group’s five divisions rose with a decline in the legal segment, impacted by the sale of business management software company Elite in 2023.
Reuters News revenue rose 11% and adjusted earnings before tax, depreciation and amortization rose 56%, in part from generative AI-related content licensing revenue, the company said.
Thomson Reuters has earmarked $10 billion for acquisitions and about $100 million annually to invest further in AI. ■