Thomson Reuters Q3 earnings top estimates; outlook steady

By Nick Zieminski and Kenneth Li

NEW YORK (Reuters) -Thomson Reuters Corp beat third-quarter profit forecasts on Tuesday, helped by higher sales at its three biggest divisions, and kept its outlook for this year and next.

The information company warned, however, that any worsening of the global economic or business environment could impact its ability to achieve targets, and added that 2023 margins were trending toward the lowest end of their expected range.

“Our results and our outlook speak to the resilience of our business, particularly in the big three segments and their recurring revenue,” Chief Executive Steve Hasker said in an interview, calling Thomson Reuters (NYSE:) products essential and not discretionary spending for clients.

But looking into next year, he said the company was monitoring cost-related inflation, in particular the cost of labor, and said technology vendors had demanded “significant” price increases.

The Toronto-based company recorded $1.57 billion in sales during the quarter, up 3%, slightly below expectations of $1.59 billion. Adjusted earnings per share came in at 57 cents, 7 cents ahead of analyst estimates.

Thomson Reuters, which owns the Westlaw legal database and the Checkpoint tax and accounting service, maintained its financial guidance for the rest of this year, and still sees 2023 sales growing 5.5% to 6%. But it noted that 2023 margins were trending towards the lower end of the 39%-40% range amid heightened inflation and investments.

“The cost of labor is going up and it’s a very big part of our cost base,” Hasker said.

The company’s three main divisions – Legal Professionals, Tax & Accounting Professionals, and Corporates – reported single-digit increases in quarterly sales, as did the Reuters News division.

Reuters News makes about half its revenue from supplying Refinitiv, a data company spun off from Thomson Reuters and now owned by the London Stock Exchange Group (LON:) (LSE). Thomson Reuters holds a minority stake in the LSE, worth about $6.3 billion as of Friday.

Thomson Reuters’ peers include RELX Group’s LexisNexis, Bloomberg LP, News Corp (NASDAQ:)’s DowJones and Wolters Kluwer.

Hasker said valuations on potential acquisition targets were down 25% from their peak, calling these businesses, especially in the big three segments, a bit more reasonably priced. The company will be “quite a bit more aggressive in the next in the next few quarters in looking at acquisitions,” he said.

[ad_2]

Source link