Rising third-quarter revenue prompted Thomson Reuters Corp. to raise its expectations for the year for the third straight quarter as the news and information provider continues to see strong demand from professional services firms for its products and subscriptions.
Revenue increased 6 per cent to US$1.53-billion in the three months that ended Sept. 30 and the company now expects full-year revenue to rise by 4.5 to 5 per cent in 2021. Early this year, Thomson Reuters had predicted a rise of 3 to 4 per cent, but the impact from the COVID-19 pandemic on sales as well as its print products and Reuters Events business have eased more quickly than anticipated.
The company also said it is on track as it nears the midpoint of a two-year change program intended to modernize its technology and operations. The company has cut US$132-million in annual costs and expects that number to reach US$200-million by the end of the year.
“We’re happy with our first nine months, we’re well positioned for next year,” said chief executive officer Steve Hasker, in an interview.
Mr. Hasker said the company is monitoring supply chain bottlenecks and high inflation levels driven by supply shortages, but so far those global challenges have not been major disruptions for Thomson Reuters customers. Instead, law, tax and accounting firms are seeing “significant amounts of business activity,” which is driving up sales at Thomson Reuters. Revenue increased by 6 per cent in four of the company’s five business units, excluding currency changes and new revenue from previous acquisitions.
In the third quarter, Thomson Reuters reported a net loss of US$240-million, or 49 US cents a share, compared with a profit of US$241-million, or 48 US cents, in the same quarter last year. But the loss stemmed from a revaluation of the company’s US$7.1-billion stake in the London Stock Exchange Group, which Thomson Reuters required after selling its part ownership of Refinitiv, and not from any decline in its core business.
On an adjusted basis, the company said it earned 46 US cents a share, ahead of analysts’ consensus estimate of 38 US cents, according to data from Refinitiv.
Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.
With financial performance improving, executives at Thomson Reuters continue to hunt for deals that could bolster its three main business lines serving legal, tax and accounting, as well as corporate professionals. The company has a pipeline of potential targets and has been “going through that very regularly,” Mr. Hasker said. But with valuations for software companies riding high, “we’re content to be patient.”
“It’s not for lack of trying that we haven’t done any meaningful deals in 2021,” Mr. Hasker told analysts on a conference call on Tuesday. “We’ll continue to be unapologetic if we don’t do them.”
In the absence of deals, one option for the company would be to buy back more shares. Thomson Reuters has nearly completed its current US$1.2-billion buyback program, repurchasing US$1.1-billion by the end of the third quarter. But executives are also eyeing larger increases to the company’s dividend starting next year. After a 7-per-cent hike this year, chief financial officer Mike Eastwood said the payout to shareholders could increase by 10 per cent in 2022, subject to discussions with the board of directors.
“I think that 10 per cent [increase] could likely be [continued] on a sustained basis from 2022 and beyond, ” Mr. Eastwood said in an interview.
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