Thomson Reuters Corp. posted stronger third-quarter revenue and continued to tamp down spending, showing durability against the effects of a global pandemic even as the path to recovery remains unclear.
The news and information provider’s revenue increased 2 per cent to US$1.44-billion, and improved faster than expected across its key divisions, which serve lawyers, corporate professionals and accountants. The stronger results were driven by steady renewal rates for subscriptions, which generate 80 per cent of the company’s revenue, and new sales that outpaced cancellations.
The company also surpassed its goal to cut US$100-million in costs earlier than planned, partly because of a reduction in travel and entertainment expenses amid restrictions on travel and social contact. That has allowed Thomson Reuters to reinvest some of the savings in its businesses.
Yet the biggest risk to Thomson Reuters and its clients is still the lack of clarity about when the health crisis from COVID-19 might abate and economies will fully recover, added to the potential for a contested outcome from Tuesday’s election in the United States, where the Toronto-based company has a major presence.
“Across our customer set, I think we’re seeing resilience as we head through 2020,” chief executive officer Steve Hasker said in an interview. “But headed into next year, I think there’s a lot of uncertainty, and that’s from the largest law firms right down through the smallest law firms and the … tax and accounting firms. I don’t think anyone knows quite what 2021 holds.”
Thomson Reuters has not been immune to the effects of the pandemic. Its business providing print products, which was already in steady decline as companies switch to digital alternatives, has come under added pressure as remote working reduces demand for hard copies. Its events business, acquired last fall, has had to cancel in-person gatherings in favour of virtual meetings, which are sometimes less lucrative. And revenue from one-time transactions, which makes up about 10 per cent of annualized revenue across the company, has fluctuated as companies shift the timing of their spending.
For the three months that ended on Sept. 30, Thomson Reuters reported profit of US$241-million, or 48 US cents a share, compared with a loss of US$44-million, or 9 US cents a share, in the same quarter a year earlier.
On an adjusted basis, Thomson Reuters said it earned 39 US cents a share, beating analysts' consensus estimate of 38 US cents, according to Refinitiv.
Results from the third quarter of 2019 were affected by the company’s share of losses from its 45-per-cent stake in Refinitiv, a company spun out of the former financial and risk division of Thomson Reuters, which is awaiting approval to be sold to the London Stock Exchange in a US$27-billion deal.
Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.
Revenue from Thomson Reuters’s legal division rose 5 per cent to US$636-million, thanks in part to increasing subscriptions to the company’s Westlaw Edge legal research platform. Revenue from corporate clients also improved by 5 per cent to US$333-million. And though its tax and accounting arm posted flat revenue of US$165-million after selling its Aumentum government business last year, when excluding that sale and the effect of foreign currency, revenue was up 10 per cent.
Mr. Hasker, who took over as the company’s CEO seven months ago, continues to craft a plan to simplify the company, looking to streamline its suite of more than 350 products, improve customer satisfaction scores and standardize disparate technology systems. But Kirsty Roth, who was hired as chief operations and technology officer three months ago, is still evaluating potential changes, he said.
“We remain very confident in our ability to manage our way through this crisis, and cautiously optimistic about what 2021 and beyond hold for us," Mr. Hasker said.
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