Thomson Reuters Q1 2025 Earnings: A Mixed Bag of Resilience and Challenges

Thomson Reuters (TRI.TO) reported its first-quarter 2025 adjusted earnings per share (EPS) of US$1.12, a modest 1% increase from the prior-year period. While the result aligns with the company’s historical trajectory of steady, if unspectacular, performance, the quarter revealed both strengths and vulnerabilities. Underlying operational improvements in core segments were overshadowed by macroeconomic headwinds and the disruptive impact of generative AI on its news division.

Key Highlights

• Adjusted EPS of $1.12 met expectations, reflecting a 1% year-over-year (YoY) rise from $1.11 in Q1 2024.
• Revenue totaled $1.9 billion, up 1% YoY, but organic revenue growth of 6% highlighted resilience in key markets.
• Tax & Accounting Professionals segment shone with 11% organic revenue growth, driven by demand for cloud-based solutions.
• Reuters News segment revenue dropped 7% YoY, with EBITDA falling 34%, as AI-driven content challenges disrupted traditional news licensing models.

Operational Strengths and Strategic Moves

Thomson Reuters’ “Big 3” segments—Legal Professionals, Corporates, and Tax & Accounting Professionals—accounted for 84% of total revenue and delivered 9% organic growth, underscoring their stability. The Tax & Accounting division, in particular, reported a 170 basis-point margin improvement to 56.7%, demonstrating efficient scaling of its automation offerings.

The company’s $600 million acquisition of SafeSend in early 2025 aims to bolster tax automation capabilities, a move that could drive future EPS growth. Management emphasized that such strategic investments align with its long-term shareholder return priorities, including a 10% dividend hike to $2.38 per share, marking the 32nd consecutive year of dividend growth.

Challenges Ahead: AI, Currency, and Reuters’ Struggles

Despite strong core performance, several risks remain:
1. Foreign currency impacts: Currency headwinds reduced reported EPS by 1%, while net acquisitions/disposals (e.g., the FindLaw divestiture) dragged revenue by 4%.
2. Reuters News segment decline: The 7% revenue drop reflects a broader industry shift as clients increasingly rely on AI-generated content, reducing demand for traditional news subscriptions.
3. Full-year outlook: While the company reaffirmed its 7.0-7.5% organic revenue growth and 39% adjusted EBITDA margin targets, the Reuters division’s struggles could pressure margins if not stabilized.

Analyst Revisions and Market Perception

Analyst estimates for Q1 2025 had averaged $1.10 before the report, reflecting cautious expectations. The $1.12 result, while modest, exceeded these projections by 2%, briefly lifting TRI.TO shares in after-hours trading. However, lingering concerns about the Reuters division’s trajectory and macroeconomic uncertainties have kept the stock range-bound.

Conclusion: A Dividend Champion Navigating Crosscurrents

Thomson Reuters’ Q1 results affirm its status as a defensive, dividend-focused holding, but its future hinges on balancing core strengths with emerging risks. The Tax & Accounting division’s robust performance and margin gains provide optimism, while the Reuters segment’s decline demands innovation.

With its reaffirmed full-year guidance and shareholder-friendly policies, Thomson Reuters remains a stable play in an uncertain market. Investors should monitor:
- Reuters’ adaptation to AI: Can it pivot to AI-driven content licensing or partnerships?
- Currency trends: A stronger Canadian dollar could further pressure EPS.
- Execution on acquisitions: Will SafeSend deliver promised synergies?

For now, the stock’s 3.5% dividend yield and resilient cash flows make it a hold for income investors, though growth-oriented players may prefer more dynamic sectors. The path forward is clear: sustain core growth, reinvent journalism, and mitigate macro risks—or risk falling behind in a fast-changing landscape.