Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Tuesday, May 5, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Stephen John Hasker
  • Chief Financial Officer — Michael Eastwood
  • Incoming Chief Financial Officer — [Name not stated]
  • Chair of the Board — Gary Elftman Bisbee

TAKEAWAYS

  • Organic Revenue Growth -- 8% overall, with Big Three segments (Legal Professionals, Corporates, Tax & Accounting Professionals) delivering 9% organic revenue growth.
  • Legal Professionals Segment -- 9% organic revenue growth; excluding government, growth accelerated to 11% driven by law firm momentum.
  • Tax, Audit & Accounting Professionals Segment -- 10% organic revenue growth, supported by products such as CoCounsel for Tax and Audit, SafeSend, and SurePrep.
  • Corporates Segment -- 9% organic revenue growth, with recurring revenue up 8% and transactional revenue up 12%.
  • Reuters News Segment -- 6% organic revenue growth, led by agency growth and LSAG contract; included $3 million in intercompany revenue for content licensing to internal products.
  • Global Print Segment -- 5% organic revenue decline, matching expectations.
  • Recurring and Transactional Revenue -- Both rose 8% and 10%, respectively, while print declined 5%.
  • Adjusted EBITDA -- $881 million, up 9%; margin at 42.2%, with the Big Three segments at $829 million (margin 46.7%).
  • Adjusted Earnings Per Share -- $1.23, up 10% from $1.12 in the prior year; currency impact was neutral.
  • Free Cash Flow -- $332 million, up 19% from $277 million last year.
  • Dividends and Repurchases -- Annual dividend raised 10% for fifth consecutive year; $262 million share repurchase and $605 million return of capital completed, reducing share count by about 2% (9 million shares).
  • AI-Enabled ACV (Annualized Contract Value) -- 30% of ACV from GenAI-enabled products as of March 31, up from 28% at prior quarter end and 15% five quarters ago.
  • AI Product Adoption -- Westlaw Advantage and CoCounsel user adoption running faster than historical upgrade cycles; through eight months, law firm revenue growth tied to these technologies reached 11%.
  • AI Product Usage Metrics -- Monthly CoCounsel skill users in legal quadrupled year over year; deep-research searches and Advantage users both up more than 7x in six months; CoCounsel for Tax and Audit weekly conversation volume grew about 5x since September.
  • Big Three 2026 Guidance -- Full-year organic growth expected to be 7.5%-8% overall; Big Three targeted at approximately 9.5%; Legal Professionals at 9%, Corporates 9%-11%, Tax, Audit & Accounting Professionals 11%-13%.
  • Margin Outlook -- 2026 adjusted EBITDA margin guided to 40%, up 100 basis points versus 2025; Q2 margin expected at approximately 38% due to typical tax seasonality, higher LLM costs, and modest M&A dilution.
  • Capital Capacity -- Estimated at over $9 billion for deployment through 2028 for dividends, buybacks, and acquisitions.
  • Severance Expenses -- $12 million incurred in the quarter as part of process reinvention initiatives.
  • Interest Expense Outlook -- Increased by $30 million to a range of $180 million-$190 million, to reflect February repurchase and capital return.
  • Tax Rate and Debt Management -- Expected 2026 effective tax rate of about 19%; $500 million bond repayment set for May using cash and commercial paper.
  • AI Strategic Position -- Management emphasized "fiduciary-grade AI" as unique market positioning, highlighting proprietary content, domain expertise, data privacy, and customer support as market differentiators.
  • Proprietary "Thompson" Legal LLM -- The in-house large language model has begun outperforming leading frontier models on certain legal tasks and offers optionality for future product integration and cost management.
  • CoCounsel Legal Next Product Update -- Rebuilt as an agentic AI companion for end-to-end legal workflows; currently in beta and on track for full launch in the third quarter, providing some late-year revenue benefit.
  • Leadership Change -- Chief Financial Officer Michael Eastwood retiring after 26 years; successor is an experienced technology and finance leader, with a transition underway.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Government Customer Growth -- Management expects "growth to remain subdued near term" within the Legal Professionals segment, with reacceleration not projected until late 2026.
  • Interest Expense -- "We are raising our interest expense outlook by $30 million to a range of $180 million to $190 million" due to share repurchases and capital return.
  • Severance Costs -- $12 million of severance expense was recognized in the quarter due to ongoing process transformation initiatives.

SUMMARY

Thomson Reuters Corporation (TRI 0.30%) reported organic revenue and EBITDA growth above its recent averages, with AI-enabled offerings accelerating adoption and market penetration across both large and smaller customers. The company raised its annual dividend by 10% for the fifth straight year and completed $262 million in share repurchases, alongside a $605 million capital return, further optimizing its share count. Margins and free cash flow remain robust, supported by productivity initiatives and ongoing automation, and management reaffirmed full-year 2026 guidance for organic revenue and margin expansion, despite projecting a near-term softness in government spending within the Legal segment. Strategic focus centers on expanding fiduciary-grade AI solutions, proprietary LLM advantages, and continued innovation across Westlaw Advantage and CoCounsel, with the in-house Thompson LLM already outperforming frontier models for certain legal applications.

  • The company expects a further step-up in AI-enabled product mix, as the artificial intelligence share of annualized contract value reached 30% from 15% five quarters prior, with a 2-3 percentage point quarterly growth run-rate.
  • Quarterly metrics indicate accelerating user activity—monthly CoCounsel legal users quadrupled year over year, and deep-research searches via Westlaw Advantage rose more than sevenfold in six months.
  • Management highlights strong adoption for AI-driven legal solutions even among smaller law firms, expanding overall addressable market opportunity.
  • Plans include paying down $500 million of maturing debt with cash and commercial paper, while maintaining an estimated $9 billion of capital deployment capacity through 2028.
  • Incoming CFO brings cross-sector technology and operational finance expertise, with the leadership transition described as seamless and already in progress.

INDUSTRY GLOSSARY

  • Fiduciary-Grade AI: Artificial intelligence designed to meet strict accuracy, accountability, and validation requirements in regulated professional fields such as law, tax, and audit.
  • LLM (Large Language Model): Advanced AI models trained on large datasets for complex language tasks; in this context, legal- and compliance-specific versions built on proprietary content.
  • GenAI-enabled ACV: The percentage of annualized contract value from products featuring generative AI functionality.
  • CoCounsel: Thomson Reuters Corporation (TRI 0.30%)’s AI-enabled digital assistant for legal, tax, and audit research and workflow automation.
  • Westlaw Advantage: An AI-powered legal research platform forming part of Thomson Reuters Corporation (TRI 0.30%)'s legal technology solutions.

Full Conference Call Transcript

Stephen John Hasker: Thank you, and thanks to all of you for joining us today. Before I begin our prepared remarks, I would like to recognize our colleagues at Reuters who learned yesterday that they have won two 2026 Pulitzer Prizes for journalism, bringing the total Pulitzer Prizes to 15 since 2008. So congratulations to Alessandra and everyone at Reuters. We have had a strong start to 2026, with revenue growth ahead of our prior expectations and margins in line. Total company organic revenues rose 8%, up from 7% throughout 2025, driven by 9% growth from the Big Three segments.

We are reaffirming our full-year 2026 outlook for organic growth in a range of 7.5% to 8%, including approximately 9.5% for the Big Three segments, and for our margins to rise by 100 basis points year over year to approximately 40%. Good momentum continues across many areas in our portfolio. This includes double-digit growth from key products, including CoCounsel, Pagero, SafeSend, SurePrep, and our international businesses. We continue to invest heavily in innovation, and we remain focused on delivering against our robust product road maps. Commercial momentum across our AI-enabled offerings continues to build, highlighted by strong adoption trends for Westlaw Advantage.

Later in my remarks, I will discuss why we are uniquely positioned to provide fiduciary-grade AI and provide an update on adoption and usage trends. We also remain excited by the development of Thompson, our proprietary legal-focused large language model. Thompson has begun to outperform leading frontier models on specific legal tasks and provides us with important optionality as we continue to execute our AI innovation roadmap. Our capital capacity and liquidity remain a key focus that we deploy to create shareholder value, and we made solid progress on this during the quarter. In February, we raised our annual dividend by 10% for the fifth consecutive year.

We repurchased $262 million of our shares in the first quarter, and yesterday we completed the previously announced $605 million return of capital and concurrent share consolidation. Together, these transactions have reduced our share count by approximately 2%. We remain committed to a balanced capital allocation approach, and we continue to assess a number of inorganic opportunities. With more than $9 billion of estimated capital capacity through 2028, we are positioned to be both aggressive and opportunistic. Now to the results for the quarter. First-quarter organic revenues grew 8%. Organic recurring and transactional revenue grew 8% and 10%, respectively, while print revenues declined 5%, in line with our expectations.

Adjusted EBITDA increased 9% to $881 million with a margin of 42.2%. Turning to the first-quarter results by segment, the Big Three segments delivered 9% organic revenue growth. Legal organic revenue again grew 9% despite softer government growth. Legal excluding government accelerated to 11% in Q1 from 9% last quarter, with continued momentum driven by offerings in our legal, tax, and risk portfolios and the segment’s international businesses. Tax, Audit & Accounting organic revenues grew 10%, driven by CoCounsel for tax and audit, our Latin American business, SafeSend, and SurePrep. Reuters’ organic revenues rose 6%, driven by growth in the agency business and our contract with LSAG. Lastly, Global Print organic revenues declined 5% year on year.

In summary, we are pleased with our start to 2026. I will now discuss a concept we have recently coined, which we call fiduciary-grade AI, and provide a few updates on customer adoption and usage. The AI workflow market is evolving rapidly, and we see three tiers of solutions emerging. First, general-purpose productivity tools that are broadly useful but lack domain depth. Second, professional-grade AI built for specific fields but for operating environments where some error is tolerable. And third, the one that defines our business, which is fiduciary-grade AI. Work in law, tax, and audit operates under strict regulatory and professional standards because the consequences of being wrong are severe.

A small error can mean a lost case, a failed audit, a meaningful financial exposure, or worse, the loss of customer trust. That is why professionals in these fields cannot rely on probabilistic answers. They need deterministic solutions that produce work they can verify, validate, and stand behind. We believe that the winners in fiduciary-grade AI will be those who train agents to automate complex work with the accuracy and accountability that fiduciary professions demand. This is a difficult standard, but one we are equipped to meet, and in fact one we believe we have met with Westlaw Advantage, because we bring four key assets that set a standard that cannot be matched.

The first asset is our proprietary authoritative content. Without authoritative data, you have no source of truth and thus cannot ground or validate your AI outputs. General-purpose models trained on broadly available information lack this source of truth. We have spent decades building and curating unique, proprietary content repositories in legal, tax, and compliance, including Westlaw, Practical Law, Checkpoint, and CLEAR. These are not easily replicable. The second asset is our deep domain expertise. We have the largest team of subject-matter experts in our markets, totaling approximately 2,600 people. This domain expertise is critical, as our experts not only help create our content but also play a key role in training our AI agents and evaluating and validating their output.

Let me share an example. Since last July, teams of seasoned attorneys and data scientists have invested thousands of hours building the CoCounsel Bench evaluation framework, a growing repository of gold-standard answers to real-world legal queries. CoCounsel Bench is used to evaluate and improve the performance of our AI products throughout development so that our AI solutions meet the exacting standards legal professionals require. The third asset is data privacy and governance. Our messaging to customers is very clear: their inputs will not become part of our AI output. When a client’s privacy is paramount, we protect their workflows, strategic approaches, and confidential information.

The idea that a fiduciary is training a third-party platform with their client’s confidential information is a third-rail issue for the professions that we serve, which makes our commitment in this area an important trust factor with our customers. The fourth is our customer support infrastructure. When a litigator is working through a complex research matter in Westlaw, or a CPA needs help understanding intricate tax regulations as they prepare a tax return, they can call our expert reference attorneys and tax analysts. We invest heavily in these capabilities to support our customers and their outcomes in real time. No frontier model or AI-focused startup offers this.

In summary, our authoritative content, trained domain experts, data privacy and governance, and our customer support together uniquely position Thomson Reuters Corporation to deliver fiduciary-grade AI solutions to the standards our professional customers demand. Let me next share a few updates on the success we are having with customer adoption of our AI products. I will start with an update on Westlaw Advantage. Customer feedback has been strong, supporting our view that the new agentic deep-research capabilities offer a meaningful step forward in performance. Through eight months, adoption is running faster than what we saw with the two prior Westlaw upgrade cycles, which contributed to our revenue growth from law firms accelerating to 11% in the quarter.

Last quarter, we mentioned our work on the next-generation version of CoCounsel Legal, which incorporates a similar agentic framework that has been so successful with Westlaw Advantage. Rebuilt from the ground up, it delivers on the vision we set out from the start: an AI companion that works alongside lawyers through every task and every stage of a matter, grounded in trusted sources of knowledge that they can rely on. Feedback from three customers that participated in the alpha development stage supports our optimism. We recently entered beta with a broader set of customers using the product and look forward to a full launch of next-generation CoCounsel Legal in the third quarter.

In February, we announced an important milestone: achieving 1 million users for the advanced AI features in our product portfolio through CoCounsel and Westlaw Advantage. On the topic of usage, let me share several other statistics to describe the growing customer interaction with our AI features and offerings. Firstly, monthly CoCounsel skill users in legal have quadrupled year over year, with strong growth in both the U.S. and international markets. Secondly, we have seen significant growth following the Westlaw Advantage launch, with the number of Advantage users and deep-research searches both up more than 7x in the last six months. Thirdly, CoCounsel for Tax and Audit weekly conversation volume has grown approximately 5x since September, reflecting accelerating adoption.

In summary, we remain excited about the building momentum from our AI solutions and the opportunities ahead as we execute against our innovation road maps. Before turning to the financials, I would like to acknowledge a very important leadership transition. Our Chief Financial Officer, Michael Eastwood, will be retiring at the end of this week after 26 years with Thomson Reuters Corporation. Michael has been a trusted partner to me and the board, and has played a central role in strengthening the company’s financial discipline, capital allocation, and operational execution through a period of significant transformation. I want to sincerely thank Michael for his many contributions and wish him well in his retirement.

At the same time, I am pleased to welcome our incoming Chief Financial Officer. He is an accomplished tech executive and finance leader who brings deep financial expertise, strong operational experience, and a long and successful track record of driving growth. He has been working closely alongside Michael, me, and the leadership team to ensure a seamless transition. We are confident in his leadership and look forward to partnering with him as we continue to execute our strategy. I will now turn it over to Michael for a review of our financial results.

Michael Eastwood: Thanks, Stephen, and thanks again for joining us today. As a reminder, I will talk to revenue growth before currency and on an organic basis. Let me start with the first-quarter revenue performance for our Big Three segments. Organic revenue grew 9% in the first quarter, continuing the strong trend from recent periods. Legal Professionals organic revenue grew 9% again this quarter despite the slower growth from government we discussed last quarter. Key product drivers remain Westlaw and CoCounsel. While government slowed to 1% year-over-year growth, Legal Professionals excluding government accelerated to 11% growth, up from 9% in the fourth quarter. The strength was broad-based, with our large, mid, and small law segments all growing at double-digit rates.

Our Corporate segment grew 9% organically, driven by 8% recurring and 12% transactional growth. Pagero, Confirmation, Westlaw, CoCounsel, and our international businesses were key contributors. Tax, Audit & Accounting organic revenue increased 10%; recurring and transactional revenues grew 10% and 11%, respectively. Our Latin America business, CoCounsel for tax and audit, SafeSend, and SurePrep were key drivers. The Tax, Audit & Accounting first-quarter growth rate was impacted by two product updates that shifted revenue recognition toward the second half of the year.

For the full year, we remain confident in our 11% to 13% revenue growth outlook with acceleration from Q1 levels, driven by rising revenue contribution from our newer AI-driven offerings in the U.S., a key product line extension at Domínio in Brazil, and the product updates I just mentioned. Moving to Reuters, organic revenue rose 6% for the quarter, driven primarily by growth from the news agreement with the data and analytics business of LSAG and our agency business. The latter included $3 million of intercompany transactional licensing revenue related to Reuters News content being used for other Thomson Reuters Corporation products. Finally, Global Print revenues decreased 5% on an organic basis.

On a consolidated basis, first-quarter organic revenues increased 8%, up from 7% throughout 2025 and slightly ahead of our expectation from a quarter ago. At the end of Q1, the percent of our annualized contract value, or ACV, from products that are GenAI-enabled was 30%, up from 28% last quarter. Turning to our profitability, adjusted EBITDA for the Big Three segments was $829 million, up 9% from the prior-year period, with a margin of 46.7%. Reuters adjusted EBITDA was $34 million with a margin of 16.1%. Global Print’s adjusted EBITDA was $53 million with a margin of 38.6%. In aggregate, total company adjusted EBITDA was $881 million, a 9% increase versus Q1 2025, reflecting a flattish year-over-year margin of 42.2%.

Our Q1 results included $12 million of severance expense related to our initiatives to reimagine how we work. Turning to earnings per share, adjusted EPS was $1.23, up 10% from $1.12 in the prior-year period. Currency had no impact on adjusted EPS in the quarter. For the first quarter, our free cash flow was $332 million, up 19% from $277 million in the prior year. EBITDA growth was the primary driver of the year-over-year increase in free cash flow. A quick update on capital allocation: in the first quarter, we repurchased $262 million of our shares through the NCIB announced in February. Yesterday, we completed the previously announced $605 million return of capital and concurrent share consolidation.

Together, these transactions reduced our share count by approximately 9 million shares, or 2%. I will conclude with a few thoughts on our outlook. As Stephen outlined, we are largely reaffirming our full-year 2026 guidance. We continue to expect organic revenue growth of 7.5% to 8%, with the Big Three growing approximately 9.5%. Within the Big Three, we now expect Legal Professionals to grow by approximately 9%, or the upper end of the prior 8% to 9% framework. We see 2026 adjusted EBITDA margins of approximately 40%, up 100 basis points versus 2025, and we expect free cash flow of approximately $2.1 billion.

We are raising our interest expense outlook by $30 million to a range of $180 million to $190 million to incorporate the $1.2 billion share repurchase and return of capital we announced February 25. Inclusive of the higher interest, we expect these transactions to be accretive to our per-share earnings and cash flow. We continue to expect the tax rate for the full year to be approximately 19%. We also plan to pay down the $500 million bond that matures later this month with cash and commercial paper borrowings. Turning to the second quarter, we expect organic revenue growth in a range of 7% to 8% and our adjusted EBITDA margin to be approximately 38%.

As a reminder, the sequential decline in our margin into Q2 is primarily due to the normal seasonality of our Tax, Audit & Accounting Professionals business segment. I would like to thank you all for your trust and engagement over my six years as CFO. It has been an honor to lead such a strong team, and I am really excited for and confident in the company’s future. I will now pass it to our incoming CFO.

Unknown Speaker: Thank you, Michael. I am truly excited to be joining Thomson Reuters Corporation at such a pivotal moment in the company’s evolution. Throughout my career, from my years at Dell, to my CFO roles at Varian Medical Systems and Finastra, and most recently as an operating partner at Hellman & Friedman, I have been drawn to organizations at the intersection of innovation, transformational growth, and value creation. Thomson Reuters Corporation is exactly that. What brought me here is the unique position this company holds: a trusted global content-driven technology company with strong competitive advantages, a clear strategic vision, a dynamic innovation engine, and an extraordinary opportunity ahead in the AI era.

I look forward to partnering with the leadership team to drive the next chapter of growth and value creation for our customers, our people, and our shareholders. I will now turn it to Gary Elftman Bisbee for the Q&A.

Gary Elftman Bisbee: Thanks. We will now open the call for questions.

Operator: Thank you. To ask a question, please press star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will go to our first question from Drew McReynolds with RBC. Please go ahead.

Drew McReynolds: Michael, congrats on everything—real powerhouse—and I appreciate all the transparency in your role as CFO. It has been great working with you. I have two questions. First, maybe for you, Stephen, on the legal LLM or the proprietary LLM, Thompson. Could you flesh that out a little bit? Obviously you are getting good results from it, but how it integrates into your product roadmap and maybe a little bit more granularity around that.

Then secondly, as you look at the fiduciary-grade AI segment of the market, at a high level in terms of potential TAM expansion within that segment as you roll out new AI capabilities, can you comment on some of the moving parts and how you are viewing TAM overall? Thank you.

Stephen John Hasker: Yeah, thanks, Drew, and thanks for your comments about Michael. I share your thoughts on his transparency. With regard to the Thompson model, you may remember we made a very small acquisition a number of years ago of a business called SafeSign, as distinct from SafeSend. SafeSign is a collection of scientists working under the direction of Jonathan Swartz, who is a Google DeepMind researcher. They are split between Cambridge, Harvard, and Imperial College. Essentially, what they had done, we thought, was some very early exciting work in building a large language model for legal.

Jonathan was attracted to Thomson Reuters Corporation because of the access to our data and our experts, and we were attracted to the quality of the team that Jonathan had built. We have really poured fuel on that fire, and Jonathan and his team, to their credit, have built a model which, as I mentioned in my prepared remarks, is outperforming the very latest frontier models for certain legal tasks. The punch line here, Drew, is it provides us with optionality. For example, we have built a series of AI products that are model-agnostic—CoCounsel and Westlaw Advantage.

We may decide to put some or all of the tasks performed by those agents across to the Thompson model, particularly if it continues to develop at the rate that it has been. Another option is that we have attracted significant interest from our largest and most sophisticated customers—law firms and general counsel’s offices—as to whether they can access models and start to use those models in conjunction with their own information. We are very excited about the work that Jonathan is doing and the early results, and toward the back end of this year, we will start to make some calls as to exactly how we are going to exercise the options I described, among others.

In terms of fiduciary-grade AI and TAM expansion, for some time we have been talking about the idea that law firms would replace some of their real estate spend with increased technology spend, and that ultimately, as these tools develop and change management within the firms takes hold, they may be able to automate significant tasks, particularly at the entry levels and particularly some of the research, document preparation, and document analysis work. With the next version of CoCounsel Legal, which as I mentioned is now in beta and is testing very strongly, we are starting to see real confidence around high-stakes work that has to be right and cannot hallucinate, with CoCounsel Next as a tool to support that.

We think the TAM expansion is just starting. We are starting to see it with the 11% organic growth in Legal in the first quarter, and we are confident that is a trend that will continue for a number of years to come. Couple that with our product roadmap and the change management support that we are increasingly providing to law firms and to general counsel’s offices, and our confidence is growing in the organic growth characteristics of our Legal Professionals business and of the legal portion of our Corporates business.

Drew McReynolds: Sounds great. Thank you.

Stephen John Hasker: Thanks, Drew.

Operator: We will next go to Stephanie Price with CIBC. Please go ahead.

Stephanie Price: Good morning. Two questions for me. On the 2026 revenue guide, could you talk a little bit about the cadence of revenue? With the Q2 outlook, it looks like first-half revenue is a bit ahead of the full-year guide. Can you talk about what gets you to the top and bottom end of that revenue guide? And then my second question is on Anthropic. Obviously, Thomson Reuters Corporation is a key client. How do you think about vendor relationships with the LLMs and how you envision these partnerships evolving over time? Thank you.

Michael Eastwood: Yeah, Stephanie, I will start and then ask Stephen to supplement. First, Q1 at 8% was slightly higher than the guidance we provided in February at 7% to 8%. Two key factors there. Legal Professionals had really strong demand for Westlaw Advantage, which we launched back in August 2025 at ILTACON. Second, we continue to have strong demand from our CoCounsel Legal product. Within Corporates, we had really strong growth from Pagero and also higher transactional revenue growth in Q1; a portion of that included a few million dollars that shifted from Q2 into Q1. For Q2, our total organic revenue guide is 7% to 8%.

A couple of factors to consider: we are not forecasting additional AI content licensing deals in Q2, which implies more modest revenue growth for Reuters, and we expect Corporate transactional growth to moderate from Q1 levels. For the full year, we remain very confident in delivering 7.5% to 8% organic revenue growth: Legal Professionals approximately 9%, Corporates 9% to 11%, and Tax, Audit & Accounting Professionals 11% to 13%, which gets you to approximately 9.5% for the Big Three. Regarding the range, the biggest swing factor is quarterly net sales. Q1 is traditionally the lowest sales quarter; Q4 is the highest. We are pleased with Q1 sales momentum and the Q2 pipeline across the Big Three.

Transactional revenue will vary by quarter and segment, but the continued momentum in bookings throughout the year is the main driver. Westlaw Advantage had a strong Q4 and strong Q1 contribution; we expect that to continue. CoCounsel Legal is progressing well. Overall confidence is high. I will pause there before we go to the Anthropic question.

Stephanie Price: It was. Thank you.

Stephen John Hasker: On Anthropic, as I mentioned, our AI platforms and agents have been built to be model-agnostic. We constantly evaluate the latest frontier releases to see which are best suited. Currently, for products like Westlaw Advantage and CoCounsel Legal, the Anthropic Claude models are best suited. We were one of the earliest enterprise customers to Anthropic and continue to work closely with them in terms of co-development in our products. But we have a level of independence and can change models as needed.

Stephanie Price: Thank you very much, and Michael, all the best.

Michael Eastwood: Thank you. Very kind, Stephanie.

Operator: Thank you. Next we will go to Kevin McVeigh with UBS. Please go ahead.

Kevin McVeigh: Great, thanks very much, and let me add my congratulations, Michael. You have done an exceptional job helping set you folks on the path today, and I wish you well. Can we talk about the AI-related ACV? You have seen pretty good momentum there—30%, up from last quarter. Any sense of where that ultimately settles? The spirit of my question is there has been concern, which we think is overdone; we think there is a real big opportunity beyond the core. Maybe talk about ACV growth and then, Stephen, some of the other addressable markets, whether it is mid to down market, that you can really start to focus on with the technology.

Michael Eastwood: Kevin, happy to start, and thank you for your kind remarks. Five quarters ago, we introduced the AI-enabled ACV metric at 15%. We are now at 30% as of March 31, a 2-point increase versus year-end. We expect that to continue to increase each month and each quarter, and we will continue to provide it quarterly. Key drivers include Westlaw Advantage, the high end of Practical Law, CoCounsel Legal, and CoCounsel Tax & Audit. As we launch CoCounsel Next later this year, we think that will further stimulate this metric. Also, as more of our OneSource suite becomes AI-enabled, at some point there could be a step change.

Right now, we are seeing 2 to 3 percentage points increase on a quarterly basis; we are very encouraged by the innovation pipeline, and we expect the metric to continue to increase over time. I will not speculate on an end state; we see steady increases from here.

Stephen John Hasker: On the mid to down market opportunity, historically when we put out a new version of Westlaw, the largest firms with the biggest budgets and the most sophisticated procurement organizations adopted first, and then we penetrated down market over time. Today, with CoCounsel, solo litigators and solo transactional attorneys in the U.S. Midwest, Canada, Australia, the U.K., and elsewhere are taking one look and signing up. Our small law and mid law teams have done a wonderful job getting these tools in the hands of customers of all sizes. That new dynamic is contributing to growth acceleration.

At the very top end, legendary litigators and transaction attorneys who historically refined arguments in conference rooms are increasingly using Westlaw Advantage for that process. That has exceeded my expectations in terms of the sophistication of the work we can automate and supplement. In the tax space, with products like Ready to Review and Ready to Advise, we are seeing appeal among smaller firms as well. So TAM is growing as firms spend more on technology, and it is also growing across the mid to down market and at the very top end. We see multiple growth vectors to explore in the coming years.

Kevin McVeigh: Great. Thanks so much.

Operator: Thank you. Next, we will go to Tim Casey with BMO. Please go ahead.

Tim Casey: Thanks. Good morning. Could you talk a little bit about EBITDA margins going forward? You kept the guide stable—how do you think about the balance between operating leverage and business mix? And as a follow-on, how should we think about transactional revenues—are they similar margins to recurring revenues, or are they lower margin? Thank you.

Michael Eastwood: Tim, I will start with each of those. For Q2, as noted, we expect a 38% adjusted EBITDA margin. For the full year, we remain confident in 100 basis points of margin expansion to approximately 40%, driven by two key factors: underlying operating leverage and growing benefits from our reimagine-how-we-work initiatives through AI-driven automation. Our leaders across the business continue to drive productivity. For Q2 specifically, three factors to consider: increased LLM costs; some modest M&A dilution; and seasonality in Tax, Audit & Accounting.

Turning to the second half, we have continued productivity benefits building into Q3 and Q4, the M&A dilution laps as we anniversary deals, and the year-over-year increase in LLM cost lessens as we lap the August 2025 Westlaw Advantage launch. That sequence gives us line of sight to the 100 basis points of full-year margin expansion. On transactional revenue profitability, it varies. Professional services are at the lower end of the margin range, while items like Reuters AI content licensing revenue are at the high end, with a distribution in between. So there is a wide margin dispersion within transactional revenue.

Tim Casey: Thanks, Michael. Just to follow up, is there not a concern that LLM costs will continue to increase as you lean into your proprietary Thompson model?

Michael Eastwood: As we have more AI offerings, LLM costs increase on a variable basis, but they remain a relatively small overall cost for Thomson Reuters Corporation, and we have appropriately factored them into our guidance. As Stephen discussed earlier, the Thompson LLM could also be an avenue to help us manage LLM costs over 2026 and 2027.

Stephen John Hasker: To add, the optionality around the Thompson model is twofold. First, the quality and accuracy of a model specifically created for legal tasks, and second, we can run it on a per-unit basis at a fraction of the cost of accessing a frontier model. Those two things are attractive, and we will keep investing and update you as we go.

Operator: Thank you. Next, we will go to Andrew Charles Steinerman with JPMorgan. Please go ahead.

Andrew Charles Steinerman: Hi there. Within the revenue guide, particularly for Legal Professionals for the year, what is assumed in terms of the government practice as we move through 2026? And overall, for the 2026 revenue guide, are you assuming a contribution from CoCounsel Legal Next?

Michael Eastwood: First, on government, we expect growth to remain subdued near term. We are optimistic regarding the reacceleration of government revenue once we lap the losses and downgrades that occurred last fall, so as we approach late 2026, we should see an uptick. For Legal Professionals overall, we have assumed that government growth remains subdued near term and then begins to increase as we move toward 2027. On CoCounsel Legal Next, we are very pleased with the progression and expect to launch in Q3. It will provide some degree of revenue contribution in the latter part of 2026, but the larger contribution will happen in 2027 due to revenue recognition dynamics.

We are a few weeks into beta with good momentum and expect strong sales in Q3 and Q4, with revenue contribution building into late 2026 and then 2027.

Andrew Charles Steinerman: Makes sense. Thank you very much.

Operator: Thank you. Next, we will go to Aravinda Suranimala Galappatthige with Canaccord Genuity. Please go ahead.

Aravinda Suranimala Galappatthige: Good morning. Thanks for taking my questions, and I want to offer my best to Michael as well—an outstanding tenure as CFO. On capital allocation, you announced a sizable buyback and return of capital. You bought back $262 million of shares as of March 31. Am I correct in assuming there have not been any more purchases since then, with the remaining approximately $38 million to go? And generally, your view on stepping that up—some comps have announced more sizable buybacks. You certainly have the flexibility—your thoughts?

Michael Eastwood: Sure, Aravinda. First, a reminder that we completed the $605 million return of capital yesterday, with the cash distribution executed. On the NCIB, we have not done any additional purchases beyond the $262 million in Q1. We do plan to complete the remaining approximately $38 million in the second quarter. Regarding our balanced capital allocation approach, we have increased the annual dividend by 10% for five consecutive years, remain focused on strategic M&A, and, as you point out, we have the optionality to consider additional capital returns. We will continue to discuss that with our board—our next meetings are in June and September.

No specific commitments today, but we agree additional NCIB repurchases are an option and can be accretive, balanced against strategic M&A opportunities.

Aravinda Suranimala Galappatthige: Thank you. And a quick follow-up on Westlaw Advantage Deep Research: any adoption numbers or targets you can share?

Michael Eastwood: We have not quoted specific adoption numbers for Westlaw Advantage since we pivoted to the broader GenAI-enabled ACV metric five quarters ago. I can share that ACV penetration for Westlaw Advantage is trending faster than the prior two Westlaw upgrade cycles. We are very encouraged by the fast start on sales and strong customer usage. In the first eight months since the August 2025 launch, sales have been very strong. The Q2 pipeline is strong across global large law, mid-sized firms, small law, and Europe. We anticipate Westlaw Advantage will continue to have a strong Q2, a strong 2026 overall, and into 2027.

Operator: Thank you. Next, we will go to Vince Valentini with TD Cowen. Please go ahead.

Vince Valentini: Thanks very much, and my congrats to Michael as well on a well-deserved retirement. Stephen, everything seems so good—overall results are strong and you called out many areas of strength. Is there anything that is worrying you these days? Are you seeing any customers who have left your platform either in legal or in tax? If so, have you done exit interviews to understand why—are any going to, say, Parley or Relativity or maybe just a native AI service like Claude and thinking that is good enough? Are you seeing any, call it, dark shoots that, if more customers started doing that, could be problematic?

Stephen John Hasker: Thanks, Vince. It is a great question. Everything worries me—the team here will tell you I am paranoid about a lot of things—but I will spare you the full list. On retention, since our change program, we have been very focused, and we are finally starting to see green shoots, with things ticking up across segments. There is nothing new or worrying in terms of customers moving away from our content-driven technology products across the Big Three. We are at a phase where many law firms are trialing different tools. You will see firms implementing CoCounsel alongside one or two other tools. That is why we are excited about CoCounsel Next.

We think it is a big step forward and represents the combination of content, expertise, data privacy, and support in ways that none of our competitors can match. As we put that into full release and scale it up in the U.S. and beyond, we expect to further differentiate.

Vince Valentini: Thanks. And can I just try to clarify something? I am not sure I understand the 7x and 5x figures you gave. Both Westlaw Advantage Deep Research and CoCounsel for Tax were not available a year ago. I assume that is not a year-over-year figure. You would not have given the number if there was not some relevance—can you help me unpack the start point for each of those?

Michael Eastwood: On Westlaw Advantage, the 7x growth Stephen mentioned was over the last six months, beginning a few months after launch. For CoCounsel for Tax & Audit, the 5x refers to the increase in the number of customer conversations in the product since September.

Stephen John Hasker: And to expand on why we highlighted those stats and why we are excited: we see TAM expanding as law firms and corporate legal, tax, and audit teams spend more on technology. AI is the means by which Thomson Reuters Corporation can play a larger role in our customers’ success. If you compare prior versions of Westlaw as a point solution to Westlaw and Practical Law integrated in CoCounsel, we envisage a world where the first thing a lawyer does in the morning is switch CoCounsel on and use it as a companion throughout the day—litigation research, drafting motions, SEC filings, and more. Similarly, Ready to Review and Ready to Advise in tax and accounting increase touch points with users.

That is an exciting growth vector we plan to fully explore over the coming years.

Operator: Thank you. We will now return to Kevin McVeigh with UBS. Please go ahead.

Kevin McVeigh: Thanks much, and again, congratulations, Michael.

Michael Eastwood: Thank you, Kevin.

Operator: Thank you. Next, we will go to Tim Casey with BMO. Please go ahead.

Tim Casey: Thanks. Good morning. Could you talk a little more about EBITDA margins and transactional revenue? You addressed this earlier, but any additional color?

Michael Eastwood: To recap, Q2 margin approximately 38% with seasonality, LLM costs, and modest M&A dilution. Full year approximately 40%, up 100 basis points, driven by operating leverage and productivity from AI automation. Transactional margins vary widely—professional services at the low end; Reuters AI content licensing at the high end—with a distribution across other transactional lines.

Operator: Thank you. Next, we will go to Andrew Charles Steinerman with JPMorgan. Please go ahead.

Andrew Charles Steinerman: Appreciate the follow-up. All set on my side—thank you.

Michael Eastwood: Thanks, Andrew.

Operator: Thank you. Next, we will go to Jason Daniel Haas with Wells Fargo. Please go ahead.

Jason Daniel Haas: Good morning, and thanks for taking my question. Was there any negative impact to sales cycles or anything from the conflict in the Middle East in Q1? Thanks.

Michael Eastwood: We did not see a negative impact in Q1 from the conflict on sales cycles or demand.

Stephen John Hasker: It is certainly one of several global events we monitor closely. While there are isolated customer conversations that may take a bit longer in impacted regions, the overall effect on our results and pipeline has been immaterial.