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Thomson Reuters Corp - $TRI - Earnings Analysis: Consistent revenue growth and strong recurring revenue base.

By sagebytes in Technology —

Business Model

Thomson Reuters generates revenue through a combination of recurring subscriptions, transactional sales, and print publications, serving professionals across legal, tax, accounting, compliance, government, and media sectors.

Revenue Sources

  • Recurring revenues account for a significant portion of total revenues (83% in Q4 2024).
  • Transactions revenues also contribute, though can fluctuate year to year.
  • Global Print revenues contribute, though are declining.

Income Statement Analysis

  • Revenues increased by 5% compared to Q4 2023, driven by growth in recurring revenues.
  • Operating profit increased significantly due to gains on the sale of FindLaw and other non-core businesses.

Balance Sheet Analysis

  • Cash and cash equivalents increased significantly, reflecting strong cash management.
  • Total assets decreased slightly, while total equity increased, indicating improved financial health.

Cash Flow Analysis

  • Net cash provided by operating activities decreased, primarily due to changes in working capital.
  • Net cash used in financing activities decreased significantly, as repayments of debt is reduced .

Capital Allocation

Thomson Reuters focuses on a balanced capital allocation approach, including annual dividend growth (10% increase announced), strategic M&A (SafeSend acquisition), and capital returns (share repurchases). The company has significant financial capacity to pursue these strategies. They have ample capacity to pursue all three of these strategies in 2025 and beyond.

Management Commentary

Good momentum continues with Q4 results meeting expectations

2025 outlook anticipates 7.0% - 7.5% organic revenue growth, ~39% adjusted EBITDA margin, and ~$1.9B of free cash flow

Modest Q4 adjusted EBITDA margin upside vs. expectations despite continued investments

Overall Sentiment: Positive, with a focus on continued growth, innovation, and shareholder value creation.

Recommendation

Rating: Buy

Reason for Rating: Strong financial performance, positive outlook, and strategic capital allocation support a buy recommendation.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/7/2025, 10:54:18 AM