Thomson Reuters revenue rises, shares fall on investment costs

By Kenneth Li and Aditya Soni

Nov 3 (Reuters) - Thomson ‌Reuters reported higher third-quarter ​revenue on ​Tuesday, but its shares fell on what some investors said were concerns over the impact of higher AI spending on profit.

The Toronto-based content and technology company raised its full-year 2026 organic revenue outlook to an increase of between 8.5% and ‌9.0%, up from about 8%. That figure tracks sales from existing businesses on a constant currency basis.

Thomson Reuters ⁠shares were down 7% at $113.46 on Nasdaq as some investors fretted over higher spending. Shares in the company have fallen by more than 14% so far in 2026, ‌compared with a 10% rise in the ‌S&P 500.

"The long-term expectation has been steady margin improvement in 2027 and beyond," said Doug Arthur, an analyst at Huber Research. "But Thomson Reuters is now hedging on that as they see additional growth opportunities. It's smart, but disappointing to investors," Arthur added.

The owner of ​the Westlaw legal database, the Reuters news agency and the Checkpoint tax and accounting service reported a 10% rise in third-quarter revenue to $1.83 billion and adjusted earnings per share of 81 cents.

"We are pleased with our third-quarter momentum, as revenue growth and margins came in ⁠ahead of our prior expectations," Thomson Reuters CEO Steve Hasker said in a statement.

Thomson Reuters excluded its global print division from the third-quarter results, after its sale of a majority stake ​in the business.

MARGIN PRESSURE

"The results continue to show strong demand for Thomson Reuters' products, including Westlaw and CoCounsel, with no evidence to date of a slowdown from AI-native entrants," said Maher Yaghi, an analyst at Scotia ​Capital, in a research note.

Revenue rose by double digits across the combined segments ‌of legal, tax and accounting and corporates as a result of recurring revenue and new AI upgrades to CoCounsel Legal and CoCounsel Tax, Audit and Accounting, Thomson Reuters said.

Revenue at Reuters rose by 12%, boosted by a ⁠surge in licensing revenue from generative AI, with transaction revenue in the news division increasing by 56% to $44 million.

In the legal division, AI spending, $22 million in severance costs and the impact of its purchase of AI data and analytics platform Noetica put pressure on margins, which fell to 46.6% from 49%.

Thomson Reuters executives ⁠said they expected higher revenue from premium tier pricing for AI agentic products to offset AI spending in the legal division.

"Can it (Thomson Reuters) turn AI into ​durable, recurring, high-margin revenue at scale?" said Adam Sarhan, CEO of 50 Park Investments in New York.

"One strong licensing quarter and a guidance raise help, but they do not fully answer that question—especially because adjusted EPS of 81 cents reportedly missed some expectations, and the market has been punishing any hint that growth ‌quality is softening," Sarhan added.

Hasker said that Thomson Reuters was making progress in attracting new customers to its proprietary Thomson AI model and expected to announce Skadden, Arps, Slate, Meagher & Flom LLP as a new "strategic ‌AI" partner on Tuesday.

"It will be the first of many," Hasker said in an interview, with reference to the big US law firms.

Thomson Reuters Chief Financial ⁠Officer Gary E. Bischoping Jr. said in an interview that ‌about 34% of the company's underlying contract ​value, which breaks down a contract's total value, relied on generative AI in the third quarter, up from 32% in the second quarter and 24% last year.

(Reporting by Kenneth Li in New York and Aditya Soni in Bangalore; Editing ‌by Alexander Smith)

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