Thomson Reuters Corp. posted higher profit and a modest uptick in overall revenue for the first quarter, while confirming its projection for gradual growth through the rest of the year.
Lower costs and better subscriber trends helped the global news and information giant beat analysts’ profit expectations, even as revenue in the company’s largest divisions grows slowly.
Thomson Reuters is looking to pick up some momentum as it emerges from a years-long turnaround plan. In February, chief executive officer Jim Smith declared that “an era of fixing things is over,” and the company is now looking for growth from several of its divisions, including from its Elektron data platform, which pumps data into trading rooms, to be read and analyzed by machines.
On Friday, Mr. Smith told analysts he expects revenue growth “to gradually accelerate” in 2017 – a trend he’s repeatedly signalled in recent quarters – and reaffirmed the company’s outlook.
“I’m sticking to my story that actually we’ve had for the last few years,” Mr. Smith said in an interview.
He also said it’s too early to predict the effect that global events such as Brexit, an election in France that’s still in progress, or negotiations over tax reform in the U.S. might have on Thomson Reuters’ business.
“It’s always preferable to operating in markets that are more optimistic and with clients that are more confident, and I think we see that in the markets,” Mr. Smith said. “But we’ll just have to wait and see.”
Two internal signals bode well for the company’s prospects. Sales in the its core financial and risk division outstripped cancellations in the first quarter. Net sales are a key metric, and had slipped into negative territory late last year as companies reviewed budgets and adjusted contracts. At the same time, the company recorded notable increases in subscriptions in its main divisions, including a 4-per-cent bump in its legal arm.
“That’s the strongest performance we’ve seen in some time,” Mr. Smith said.
Thomson Reuters also had lower expenses, as it begins to reap the cost benefits of a $212-million (U.S.) restructuring charge recorded late last year, when the company shed about 2,000 jobs.
First-quarter profit was $314-million, or 41 cents per share, up from $272-million or 34 cents a share in the same quarter last year.
Adjusted to exclude certain items, profit was 63 cents per share. Analysts surveyed by Thomson Reuters had expected profit of 53 cents a share.
Revenue rose 1 per cent to $2.82-billion, thanks in part to higher subscription revenues.
“Despite the beat, guidance was kept unchanged. The company is still calling for low single digit revenue growth,” said Drew McReynolds, an analyst at RBC Dominion Securities Inc., in a research note.
Revenue in the financial and risk division, which is the company’s largest, was flat year over year, as the company continues to shift some customers out of legacy products that are being discontinued. With the impact of currencies excluded, revenue in the division rose by 1 per cent.
Revenue in the legal division was also flat, or up 1 per cent excluding currency impacts, as transactional revenues were weaker than a year ago, partially offsetting the better subscriber trends.
The tax and accounting arm posted typically strong growth, with revenue up 7 per cent from the same quarter in 2016.
Mr. Smith also said the company is on track with plans to build out a new technology hub in Toronto, with 50 hires already on board and a number of offers outstanding. The plan is to add some 400 jobs over the next year and a half.
“The machine is running, we’re hiring as fast as we can,” Mr. Smith said.
Thomson Reuters’s share price was up 4 per cent in early trading on the Toronto Stock Exchange, and the firm will hold its annual meeting of shareholders in Toronto on May 3.Report Typo/Error