Thomson Reuters boosts targets further as earnings bounce back

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News and information giant Thomson Reuters Corp. issued a brighter forecast for the year after it reported a 9-per-cent increase in second-quarter revenue fuelled by a strong rebound in subscription sales from a slump in the early months of the COVID-19 pandemic last year.

The company upgraded its revenue target for the second straight quarter to a range of 4 per cent to 4.5 per cent for the full year, up from an initial prediction of 3 per cent to 4 per cent.

The more optimistic guidance is driven in part by “a significant pickup” in sales of subscription services that are outpacing cancellations, and have rebounded from a low point in the second quarter of 2020, chief financial officer Mike Eastwood said in a joint interview with chief executive officer Steve Hasker. At the same time, surveys of Thomson Reuters clients show “the sentiment is certainly much stronger” as businesses grow more confident about making longer-term investments as threats from the pandemic ease, Mr. Eastwood said.

In recent weeks, that bullish outlook has been tempered by resurgent cases of COVID-19 and the rapid spread of the Delta variant. After Mr. Hasker and Mr. Eastwood travelled to offices in Europe and Canada over the past two weeks, “we were a lot more cautious about the Delta variant and about its impact,” Mr. Hasker said. “I think we’ve moved from cautious optimism to caution.”

Yet Mr. Hasker said he expects a broad shift toward more flexible working arrangements across the corporate world will “unequivocally” benefit Thomson Reuters, which is increasingly focused on providing software and digital services to clients. And Thomson Reuters is six months into a two-year change program that aims to improve the experience for its customers by simplifying the business and relying more on artificial intelligence, machine learning and cloud-based software to make the most of the company’s vast array of data and information.

“I don’t think that the impact of the change program and the improvement in customer experience has been felt yet,” Mr. Hasker said in a conference call with analysts. “We’re just at the start.”

Thomson Reuters’s share price gained 5.6 per cent to close at $140.11 on the Toronto Stock Exchange on Thursday.

For the second quarter ended June 30, Thomson Reuters earned a profit of US$1.07-billion, or US$2.15 a share, compared with US$126-million, or 25 U.S. cents a share, in the same quarter in 2020. Operating profit was US$316-million, and total company profit was boosted by the increasing value of a US$7.5-billion stake Thomson Reuters owns in the London Stock Exchange Group.

Adjusted to exclude certain items, the company said it earned 48 US cents a share. On average, analysts expected adjusted earnings per share of 43 US cents, according to Refinitiv data.

Thomson Reuters also announced a plan to buy back US$1.2-billion in shares after completing a US$200-million share repurchase program earlier this year.

Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.

At Thomson Reuters’s largest division, which caters to legal professionals, revenue increased 7 per cent to US$673-million amid what Mr. Hasker described as “a very vibrant legal market.” Revenue from large corporations increased 6 per cent to US$348-million, driven by growth in Latin America and Asia.

Revenue from the tax and accounting division posted a strong gain of 17 per cent, year over year, to US$197-million. That increase was driven by revenue that spilled over to the second quarter because the annual U.S. federal tax filing deadline was extended from April to May. Excluding that boost, revenue would have increased 10 per cent, the company said.

Revenue from Reuters News increased 9 per cent to US$168-million as the company’s events business held more virtual gatherings, recovering from a plunge in event bookings early in the pandemic. But Thomson Reuters paused plans to begin charging readers for news on its Reuters website in June because of a disagreement with Refinitiv, its largest customer.

Discussions about the news paywall are continuing and “in a healthy place,” Mr. Hasker said in the interview. “We’re in no hurry to relaunch the paywall.”

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