by Helen Coster and Kenneth Li

(Reuters) – Thomson Reuters, parent company of Reuters News, reported an increase in first-quarter revenue and operating profit on Tuesday, driven in part by divestitures and strong customer retention rates. customers, while it plans to invest more in artificial intelligence (AI).

Group revenue rose 4% in the quarter to $1.74 billion (€1.59 billion), beating expectations, according to Refinitiv estimates. Its adjusted earnings per share reached 82 cents, against expectations of 80 cents.

Thomson Reuters, which owns legal database Westlaw, news agency Reuters and accounting and tax service Checkpoint, reported organic revenue growth of 7% for its “Big 3″. segments”: Legal professionals, Businesses and Tax and accounting professionals.

“While we are mindful of elevated macroeconomic uncertainty, our underlying business is resilient and we maintain our outlook for 2023,” chief executive Steve Hasker said in a statement.

“We are also excited about recent developments in AI which we believe will provide many opportunities to better serve our customers while continuing to invest in their future.”

Thomson Reuters reaffirmed its full-year 2023 financial guidance, but cut its 2023 total revenue growth forecast to 3-3.5% from 4.5-5%, due to the sale of a majority stake in legal management software company Elite to TPG.

In an interview with Reuters on Tuesday, Steve Hasker said the company did not expect any layoffs this year.

INVESTMENTS IN AI

Thomson Reuters plans to spend $100 million annually to invest in artificial intelligence, Steve Hasker said. The company will begin integrating generative AI into its flagship products in the second half of this year.

The $100 million is separate from the company’s mergers and acquisitions budget, which will be about $10 billion by 2025, Thomson Reuters chief financial officer Michael Eastwood said in an interview. .

Over the past three years, nearly all of the company’s M&A budget has been allocated to artificial intelligence, and executives believe this trend is continuing. AI capabilities will be integrated into most major business divisions – legal, tax and accounting – as well as the information sector.

AI is already embedded in Thomson Reuters products such as Westlaw Edge and Practical Law. In 2022, the company acquired PLX AI, a real-time financial information service based on this technology.

The company said it sold 24.5 million shares of London Stock Exchange Group (LSEG) in the first quarter for gross proceeds of $2.3 billion.

As of April 30, Thomson Reuters owned 47.4 million LSEG shares, worth $5 billion.

Thomson Reuters said it was “increasingly confident” about its outlook, but noted “numerous signs of a weakening global economic environment” due to high interest rates and geopolitical risks.

In April, the company said it would return $2.2 billion to shareholders through a cash distribution and reverse stock split, after selling some of its LSEG stock. Shareholders will vote on the distribution and stock consolidation on June 14, the company said. The proposal must be approved by at least two-thirds of the votes cast.

(Reporting Helen Coster and Kenneth Li in New York, Nathan Vifflin, editing by Kate Entringer)

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