Thomson Reuters' (TSE:TRI) Returns On Capital Are Heading Higher

In the ever-evolving landscape of business information services, Thomson Reuters (TSE:TRI) stands out as a beacon of innovation and strategic foresight. The company's recent financial performance and strategic acquisitions, particularly the acquisition of SafeSend for $600 million in January 2025, underscore its commitment to enhancing returns on capital employed (ROCE) and driving long-term shareholder value. Let's delve into how these moves are poised to elevate Thomson Reuters' financial metrics and operational efficiencies.

Strategic Acquisitions and Synergies

Thomson Reuters' acquisition of SafeSend is a strategic move that aligns perfectly with its goal of increasing ROCE. SafeSend's tax automation capabilities will be integrated into Thomson Reuters' existing portfolio, creating a more comprehensive suite of tools for tax professionals. This integration is expected to yield significant cost savings and operational efficiencies, as the company can streamline its processes and reduce duplication of efforts.

Moreover, the acquisition of SafeSend is set to expand Thomson Reuters' customer base and increase its market share in the tax automation sector. By offering a more robust and comprehensive suite of tax automation tools, Thomson Reuters can attract new customers and retain existing ones, leading to increased revenue and profitability. This, in turn, will positively impact the company's ROCE, as higher pre-tax profits will be generated from the capital employed in its business.

Investment in Content-Driven Technology

Thomson Reuters' focus on investing in content-driven technology is a strategic move aimed at enhancing its operational efficiency and driving long-term growth. This investment strategy is expected to positively impact its ROCE by increasing the company's ability to generate higher pre-tax profits from the capital employed in its business.

For instance, Thomson Reuters reported a 13% ROCE for the trailing twelve months to June 2024, which is close to the industry average of 14%. This indicates that the company is already generating a respectable return on its investments. The company's strategic acquisitions, such as the acquisition of SafeSend, are part of this investment strategy. These acquisitions are expected to enhance the company's product offerings and operational efficiency, thereby increasing its ROCE in the long term.



Financial Outlook and Long-Term Returns

Thomson Reuters' full-year 2025 outlook anticipates organic revenue growth of approximately 7.0 - 7.5% and an adjusted EBITDA margin of approximately 39%. This indicates that the company expects to generate higher profits from its investments in content-driven technology, which will positively impact its ROCE. The updated financial framework for 2026 anticipates 7.5% - 8.0% organic revenue growth and 50 basis points or more of adjusted EBITDA margin expansion, further validating the expected long-term returns from these investments.

In summary, Thomson Reuters' investment strategy in content-driven technology and strategic acquisitions are set to positively impact its ROCE by increasing its operational efficiency and driving long-term growth. The company's positive financial outlook and strategic moves validate the expected returns from these investments in the long term. As an income-seeking investor, Thomson Reuters presents a compelling case for long-term growth and stability, making it a valuable addition to any diversified portfolio.