Ladies and gentlemen, thank you for standing by and welcome to the Thomson Reuters Q2 2017 Earnings Call. Now at this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, today's call is being recorded. I would now like to turn the conference over to your host Senior Vice President, Investor Relations, Frank Golden. Please go ahead, sir.

Good morning, and thank you for joining us as we'll report our financial results for the second quarter and half year. Jim Smith, our CEO; and Stephane Bello, our CFO will review the results in a moment. Now, following their presentations we will open the call for questions. We appreciate it if you would limit yourselves to one question each to enable us to get to as many questions as possible. Two items to point out before we get started this morning. First, a reminder that throughout today's presentation, when we compare our performance period-on-period, we discuss revenue growth rates before currency as we believe this provides the best basis to measure the underlying performance of the business. Second, I will remind you that consistent with the way we reported Q1 and how we provided guidance for the full year, we no longer report underlying operative profit. This reflects a simplification of our reporting structure and is in line with how we manage the business internally. I will note that on the last page of today's earnings release, there is a supplemental schedule that provides depreciation and amortization expense by business units as well as on a consolidated basis. Now today's presentation contains forward-looking statements. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You can access these documents on our website or by contacting our Investor Relations department. Now I'll ask Jim Smith to review the results for the quarter.

Thank you, Frank, and thanks to those of you on the call for joining us today. Our results for the second quarter reflected the continuing improvement in our business performance. It's a pleasure to report to you better than expected results overall for the first half of the year. Revenue growth continues to improve and margins are up significantly, benefiting from greater operating leverage. Earnings per share increased nearly 30% compared to a year ago. Given this performance and the improved trajectory of the business, we are raising our full-year outlook for earnings per share and EBITDA margin. More details on this in a moment. Now, in the second quarter reported revenues were slightly higher due to the impact of currency, but increased 2% at constant currency. The improved revenue performance as well as additional savings from our simplification initiatives led to a double-digit increase in EBITDA and a more than 200 basis point improvement in margin. Adjusted EPS for the quarter increased $0.13 to $0.60 per share, driven by the stronger operating performance. For the first six-month period, EPS was up more than 30% compared to the prior-year period. Now let me turn to the results for the quarter by business. I am pleased to report that all three business segments delivered positive organic growth in the quarter. That's the first time all units delivered quarterly organic revenue growth in two years. Revenues for our Financial business increased 2%, a 300 basis point increase from Q2 last year with all three geographies, Americas, EMEA and Asia reporting revenue growth. That growth was driven by our Elektron Data Platform and Risk businesses, which increased 8%. This was partly offset by a 5% decline in Desktop revenues and you might remember a little less than half of that was due to…

Thank you, Jim. Before I begin discussing the results, I'd like to remind you that I will talk to revenue growth before currency as we always do, because we believe that this is the most appropriate way to judge our performance. So, on a constant currency basis, second quarter revenues were up 2%. The Financial & Risk business was up 2%, Legal was up 1% and Tax & Accounting growth rate was 8%. Adjusted EBITDA was up 11% with the margin up 280 basis points to 30.1%. This was primarily driven by better operating performance in each business and by lower corporate costs. Currency had a 50 basis points positive impact on the margin during the quarter, which means that our EBITDA margin was still at the healthy 230 basis points before currency. As Jim pointed out, we forecast higher investments in our customer experience transformation program in the second half of the year, which is likely to lead to a slightly lower margin. Our new guidance for full-year EBITDA margin ranging between 29.3% and 30.3%, is 50 basis points higher than what we communicated six months ago and it fully reflects this additional investment. I will now provide some additional color on the performance of our individual segments starting with our Legal business. Overall, Legal revenues were up 1% and excluding U.S. Print, they were up 2% during the second quarter. Recurring revenues, which make up three quarters of the Legal revenues, were up 4%. Transactions 10% of the total were down 8% and U.S. Print, which makes up the difference was also down 8%. From a margin perspective, Legal's revenue growth and effective expense management led to 140 basis point margin improvement versus the prior-year period and that was 110 basis points before currency. Here's a more detailed…

Very good. Thank you very much, Stephane. That will conclude our formal remarks and we'd like to open it up for questions now. So if I can have the first question please, operator.

Thank you. [Operating Instructions] First question is from the line of Ato Garrett, Deutsche Bank. Please go ahead.

Hi. Good morning, guys. Just a couple – I think first, great job on the quarter. Glad to see the results from Financial & Risk and just wanted to drill down on that a little bit more. We're seeing the diminishing headwinds from pricing adjustments and lower impact from recoveries, so to me it sounds like we're going to tee up some nice acceleration in the back half of the year or at least the glide path is there for that. Can you just comment on what factors might drive that acceleration? What we can kind of expect about the business in the second half of the year and how we can start to think about it in terms of 2018 whether there is any changes to the competitive dynamic in Desktops or ongoing demand from the Elektron feed business or anything else that's going to be a long-term driver for that segment?

Sure, Ato. Let me try to quantify a little bit the impact that you refer to and I will start by saying that the year is unfolding very much as we expected in terms of revenue growth for Financial & Risk business. And we have said that we expected the impact both of recoveries and of the pricing adjustments to start diminishing over the course of the year with a more marked impact in the second half of the year. But we are very pleased that we are now done with the migration of our legacy asset management Desktops and we feel that the biggest impact of recoveries decline happened in the first half and that the second half should be much more neutral. So try to give you a quantification of these two impacts in aggregate, I'd say in the first half they were about or slightly above 100 basis points on the growth rate of Financial & Risk and in the second half, we would expect them to be 50 basis points or less. So you see, clearly, a diminishing impact of these two factors, which is, as I said, what we have expected all along.

Okay, great. And then just to follow-up on that, thinking about the business next year could you give just a way to think about how much that business might improve. But I know it's early on, you are not giving guidance or anything like that, but just if you have to sense for the persistence of the trend with the strong growth in Elektron and it seems like Desktop business, there are some declines there but looks like that side of the business should improve as well given some of the diminishing headwind that you discussed.

Yeah. I would say, if you look at the second quarter right for Elektron Data Platform revenues were 40% of the business, so they now represents – that now represents the largest component of F&R's revenue base and they were growing at 8% where as Desktops were declining 5%. What I would say, Ato, is that if you look at next year, I would expect probably the – at least as the business gets bigger and bigger the growth rate on the Elektron Data Platform piece of the business will still be quite respectable, but maybe not as high as 8%. And on the other hand, Desktop growth should hopefully start to improve as we stop seeing the impact of these negative factors. So there is still going to be a big difference in terms of Elektron data feeds business growing at a much faster pace than our Desktop business, but maybe the margin between the two is not going to be as extreme as what we've seen in Q2.

Next question is from the line of Vince Valentini, TD Securities. Please go ahead.

Yeah. Thanks very much, and again congrats on the very strong cost control and margins this quarter. But just stay on the revenues for a sec, is this CapEx increased to 9%, is that something that we should think of as more permanent as you strive to invest in revenue growth. If you can comment on how that transfers into 2018? And also, if you can just clarify the transaction revenues in F&R, do you have what the organic growth was versus the 8% that included that acquisition? Thanks.

Yes. Let me start with your CapEx question, Vince. There is a number of factors at play here. The first one as we mentioned in our remarks, right, we are taking advantage of the strong performance to accelerate some investments, particularly in our customer experience transformation. And so this will impact things like enhancing our order to cash systems, including order processing, invoicing and order capture as well as trying to provide better self-service functionality, so that our customers have a more consistent digital experience. For instance they should be able to change – to make changes to their accounts electronically rather than heading to call our customer reps. That's what you're going to see in the second half of the year. I would expect some of these customer experience investments to carry through in 2018. Second, we do have some investments growing to essentially meet regulatory requirements, I mean, we all speak about MiFID II. The investments we need to make in order to be MiFID II compliant and to enable our customers to be MiFID II compliant are quite large. I would say, between 2017 and 2018 they could be as high as like close to $100 million of investments and it's going to make the offering much more robust, obviously, but that hopefully a regulatory bubble that we're going to see passing once we through 2018, but that's reflected in the guidance that we have given you. The last point, I would mention is that to the extent as we've relied much less on acquisitions in order to ensure that we meet our objectives to continue to gradually improve organic growth rate, we have stepped up a little bit the level of product investments that we are making. So there's a little bit of a change in the mix of investments, particularly capital investments. We have been able to like drive down investments in pure infrastructure like platforms because we got few of these platforms now to enhance, but we at the same time stepped up a little bit investment in product investment and more particularly in the big four growth areas that we have always mentioned; Tax, Legal Solutions, Risk and Elektron data feeds. So that's the answer on CapEx, hopefully that helps you understand what is going on here. Now in terms of the organic growth in our transaction growth, it was about – in F&R it was about 4%. That was the organic growth rate for transactions in the second quarter and that's really up a little bit from the first quarter where transactions were up 1%.

Thank you.

Thank you. And next question is from the line of Andrew Steinerman, JPMorgan. Please go ahead.

Hi. This is Michael Cho in for Andrew. I just want to touch on – just follow-up to the previous discussion just now on reinvestment. So, I mean, we understand the margin improvement for guide for 2017, can you just, on the capital and reinvestment side, can you just give us a sense of the investment on the OpEx side in terms of the high-growth areas?

Yeah, we – look, investments happen both on the OpEx and CapEx side. We don't really carve out investment on the OpEx side because we think you should judge us on our performance in terms of overall margin performance. But essentially what you see in the margin performance is the improvement probably would be higher if we didn't make step up investments from an OpEx perspective, and we let the savings from the severance we took in the fourth quarter flow through completely. So there is an increased investment that you see both on the CapEx and the OpEx side and we've actually included both of these in the revised guidance we just gave you.

Okay. Thank you.

Next question is from the line of Drew McReynolds, RBC Capital Markets. Please go ahead.

Thanks very much. Just a quick one clarification from Stephane and then one for Jim. Stephane, just you alluded that the 50 basis point margin impact in Q2. Can you just give us the first half margin impact from FX?

Yes, why don't you ask your question for Jim and by the time Jim is done with that (29:26).

Yeah. For sure. Yeah, just I guess for you Jim just in your opening remarks you didn't specifically address the operating environment, obviously, just looking for any kind of incremental changes positive or negative across any of the regions in any of the businesses that kind of are worth noting? Thank you.

Yeah. Sure. I would start by saying, if you think about the nature of our relationship with our customers they are very much long-term relationships and given the subscription-based nature of our business, we tend to think in terms of years and multi-year relationship. So those – there aren't market shifts there kind of quarter-to-quarter in our relationships with customers, so there is not big swings there. I would say, however, that if you look around the world at our clients and you just saw this in the reporting particularly from financial institutions this quarter, there is a bit more optimism in the financial services sector. It varies region to region, but again that's reflected in their results to see, I begin to think about the potential of a world in which we return to more normalized environment for interest rates is certainly encouraging to financial institutions tempered a bit by some of the areas – volatility in certain areas of trading. But I would say, overall, the United States tends to be the most optimistic at the moment, the clients I speak with. Asia is Asia and continues to chug along and we were just noting the other day that's been 14 consecutive quarters of growth for us in Asia. That seems to be the expectations that we have for the future. And EMEA, while flat for us and it's certainly an improved environment there, there's just a little more uncertainty around things like MiFID II and Brexit. And if we look into both of those situations in Europe, we see certainly some opportunities and some questions around the MiFID development and more questions around Brexit. But all in all, it would be a bit of a more optimistic environment than we would have been facing a year-ago at this time, I would think.

And, Jim, if I can just follow up on that. Just on the U.S. Legal...

Yeah.

...industry, is there anything kind of that's worth noting there that's kind of different with how either big law or small law has been kind of trending? Are you seeing any stronger or weaker cyclical impact from within the Legal space?

Yeah, I think if you look back what you see is demand is pretty much continues to be depressed, particularly in litigation in the United States, which is surprising that it's been depressed for this long and you are continuing to see a bifurcation, if you look at within the Am Law 100, for example, those toward the top are doing really, really well right now with corporate work, and those at the bottom and in the middle are getting squeezed a bit more. So it's a bit of a mixed bag, but overall still relatively low demand in the legal sector. But one in which, frankly, we are encouraged by the solid performance of our underlying subscription revenues. And if you think about our business, having those core legal subscription businesses go ahead by 4%, is a really important part of our profitability story as well and then largely responsible, along with very prudent cost controls, largely responsible for the margin performance that we're seeing in our Legal business, because those are very sticky revenues and they are also very profitable revenue.

Okay.

And our next question is from the line of Paul Steep, Scotia Capital. Please go ahead.

If I may just before, Paul, if you don't mind, I'm sorry to interrupt you, I just wanted to get back to Drew on his other question. So the impact of currency for the first half was 40 basis points on margin. So our reporting margins, EBITDA margins for the first half were up 350 basis points. If you exclude currencies, they were up 310 basis points and the impact is entirely concentrated in our Financial & Risk business where the impact for the first half was also 40 basis points and actually the impact of currency on any of the other business was pretty neutral.

Great. Thanks. I guess, for Jim on Elektron, could you comment a little bit, we've seen now, I guess, five quarters of solid growth out of that business. Maybe talk a little bit about the trend driving the growth there? I know you are persistently launching new product, but what you actually see in terms of that market and potentially maybe how you would accelerate growth there? I know we keep calling it out as a growth driver. Thanks.

Sure. Look, I think, if you look at the demand for market data overall last year, according to some third party reports there that continue to grow. There seems to be a focus on the terminal side of the business, but actually overall the demand for market data has never been higher. And I think the Burton-Taylor report which you guys cite a lot, saw an overall 3.5% growth in the feed side of the business or an overall market data growth of 3.5% that's driven by those feeds side. So what do we see, we see more people wanting to connect more data. We see more people and more demand for our services around helping them to connect our data to their data and helping manage their information infrastructure. We see more and more folks looking for broader data feeds, looking for cleaner data feeds and tying it all together in their shops either things we do for them behind their firewalls or increasingly things we do as managed services for clients. So I don't think that's going to abate. In fact, I think, it's going to be a solid source of demand going forward and I feel really fortunate that we have been in that game for a long time and we have really good information architecture and really good infrastructure to handle it. And I think when you think about a world and what it might look like post MiFID II, I think, there will be fewer and fewer players capable of providing compliant solutions in that space. And as Stephane referenced in his earlier comments things like MiFID II and the increasing scrutiny around the regulatory environment for these services mean that the cost of interest is getting higher and higher and raising the bar. So we feel good about the continued demand in that space.

Just one quick follow-up for Stephane. Just on the charges at Q4, I think we're about halfway through those in terms of the cash outflow. When would we expect the remainder of that charge to sort of pull through? Thanks.

Yeah. Thank you, Paul. I would say, about half of that would be over the remainder of the year and the other half may slip into next year from a free cash flow perspective. And that's related really to the countries outside of North America.

Okay. Next question is Toni Kaplan, Morgan Stanley. Please go ahead. Toni M. Kaplan - Morgan Stanley & Co. LLC: Hi. I just wanted to ask in the F&R business given the increased popularity of quant investing, could you talk about how spend with a typical quant fund might differ from a typical fundamental fund provider? Thanks.

No, I would say that the probably stronger demand for feeds there because they are doing their own proprietary analytics around everything. So I actually haven't looked at it cut that way, but it would not surprise me to see a far greater mix of revenue on the feeds size – into the quants, but we will take a look at that and get back to you. Toni M. Kaplan - Morgan Stanley & Co. LLC: Okay. Great. And just on MiFID II, you talked a little bit about some of the cost implications that you are investing on the CapEx side, but just can you talk about your latest thoughts on what you are hearing from customers about sort of the changes that you might make or just forgetting numbers, just qualitatively what are sort of the key things you are thinking about in terms of implications on the top line for your business?

Sure. I think that we think about it kind of along three different ways as we think about it because that's what we hear our clients talk about. And I know and particularly to this audience, there is still a great deal of uncertainty particularly around how the research, the unbundling of research is going to play out. And I don't think anyone has a crystal ball looking into that one or has a more credible argument than anyone else. I think, there is a great uncertainty around that unbundling right now and we'll just see how it plays out. But largely for us we look at it and say, it's a compliance opportunity because the rules are changing in a pretty dramatic way. And we've got to make certain that our products comply with regulation particularly things around multilateral trade facilities, our Tradeweb business, things like that have to be completely compliant. And we have to make sure our platforms are compliant in all ways. And, frankly, I think that makes us, we think about raising the table stakes to be in the business that's the second way we look at it. One of those table stakes investments that we have to make to make sure that we are MiFID II compliant and there's been a lot of thought and we've all paid a lot of attention to a lot of the upstarts in the FinTech world and that sort of stuff. I think that having a MiFID II compliant platform to work and partner with FinTech startups makes us an attractive partner in that space both for our large clients and for those clients who want to bring specialty analytics and things like that to those large clients. So we think that's – we think that's going to…

The next question is from the line of Manav Patnaik, Barclays. Please go ahead.

Thank you. Good morning, gentlemen. Jim, early in the call you talked about moving away from defending your territory in asset management to growing it. Now I was wondering if you could maybe just frame that with some context on what your exposure to asset management is? And then what particular opportunities do you see, is it just the Risk and feeds business or is there more to it in terms of that growth you were referring to?

So I think that, I don't – Stephane, I don't know if you have the exact number as to how the asset management business breaks out in terms of percentages there, about $400 million in asset management.

Just for the Desktop.

Just for the Desktops in asset management. So, look I think there's feeds opportunity in asset management, there's no question about that. But I think there is also Desktop opportunities now particularly for the analyst world. We have a much better product on the asset management side now, and I don't know how many – I know many of you have seen demos of the product, but we are through that last mile, that most difficult last mile of the installations where we are taking – where we've been converting folks who have been on single Thomson ONE products and now giving them a suite of products that's got far more robust capability. And I think for certain players in the asset management space, we ought to have a far more attractive selling proposition and a far more attractive commercial proposition to go with it with a really interesting product. So I do think there's opportunity on the Desktop side for us as well. And the way we look at the Desktop side is, we don't think the world of Desktops and sales will grow and we don't think Desktops will be the driver of our growth overall, but we do have an opportunity to gain share and we continue to win our fair share of competitive bake-off. So we are going to continue to improve our products and invest in our products and invest in the customer services around those products and fight tooth and nail to take every last station that we can. I think it will be, again, not the growth driver of the business, but I think as Stephane mentioned earlier, we are at a point in second quarter where now non-desktop products, information products are exceeding the Desktop products in terms of the revenue mix, and I think that bodes well for our overall revenue growth.

Got it. And then, Stephane you mentioned I think those $100 million was what you are anticipating to invest to be MiFID compliant. Maybe I under-appreciated the amount you guys have to invest in there. What are the big buckets that you guys really need to invest to be MiFID compliant and so forth?

That would be a pretty long answer. We can go into more detail if you want after the call with you. But what I would say is that that's the amount over 2017 and 2018, I don't want to mislead you, thinking that this is the annual spend on MiFID. That's the overall amount. I would say, probably 60% or two-thirds of that would be incurred this year in 2017 and the balance is going to next year or so. This year is the big year in terms of investments behind MiFID. But it's essentially bringing more venues into our Elektron platforms and developing a number of products. We'll give you a few more details (45:50).

Yeah. We'll follow-up with you, Manav, after the call.

Okay, fine. Thanks a lot, guys.

Our next question is from the line of Peter Appert, Piper Jaffray. Please go ahead. Peter P. Appert - Piper Jaffray & Co.: Thank you. Good morning. So you've had really impressive margin leverage here in the last couple of years from these cost-cutting initiatives and then improved revenue growth. From some of your comments, it's sounding maybe like you are seeing the need for a little bit of step-up in investments spend. I am wondering if that might suggest that the margin leverage going for it is going to be much more dependent on revenue growth that we've seen the benefits from the cost-cutting, could you talk a little bit about that?

If I could jump in and Stephane could put any context he needs to around it. I want to be clear about that. I don't think we are at the end of our ability to continue to benefit from the scale in our business. And when we talked in 2013 about why we went down the road of transformation that we did it's because we had size but not scale, we're starting to see that scale. And I still believe when you look at our ability to operate more effectively and efficiently and to, I'll say, redirect costs but to get unneeded costs out of the system, I still think we're in the late, early innings to middle innings of that. And the truth is, Peter, the more progress we make, the more opportunity I see to do that. And then our great challenge is, what do we do, how much of that do we take to the bottom line and how much of that do we reinvest back into the business. There will be some temporary things that we need to do that will be; one-time investment behind MiFID II is a great example of that. That's point in time. We have to do that. Those are table stakes. Not going to change them. But then there are other opportunities that we see accelerating our investments behind things like cognitive computing and artificial intelligence, which are going to result in products in the market in the very near-term. And when we believe that those are going to payoff, we'll make those investments. So we'll just make those dynamic allocation decisions in real time. And we're quite happy to keep going after the cost base and there is lots of opportunity in our cost base to be more efficient and more effective. And we will just in real-time be managing how much of that we put back in where we think there is going to be a payoff and how much of that we take to the bottom-line. So we've got runway left on the efficiency side as well. I would hope we are going to see more opportunity to redeploy that. And I would hope that in the future we're going to see greater profit growth driven by revenue growth, but we're going to be very judicious about how we manage that journey. And given the large subscription base that kind of anchors our – and I mean, that positively and negatively anchors our business, right. It's going to be steady, gradual progress to seeing that top line move-up a point at a time. Peter P. Appert - Piper Jaffray & Co.: Okay. Thank you, Jim.

Our next question is from the line of David Chu, Bank of America. Please go ahead.

Thank you. So, Desktop revenue for F&R was down 3% ex the pricing adjustments. So does this suggest that Desktop's like subscriber count continues to decline year-over-year, is that a fair way to think about that?

Yes. It probably is a fair way to look at it.

Yeah. And I would think although, I don't have the numbers in front of me, I would say, I think the bulk of the head count reductions that we saw on Desktops would have been in Europe. Right.

Got you. Okay. Thanks. And then Stephane you mentioned that the higher-margin outlook incorporates additional costs for the customer experience initiatives, so without this what would margin guidance have been?

I think what you should expect to see is, actually if you look at the business the margins of our businesses, the trends continue to be good particularly Financial & Risk as they ramp up the growth rates, the revenue growth rate, we should see margins continue to expand in the second half . There is going to be some factors, as I mentioned in my remarks, right, if you recall, the Tax & Accounting business Q3 seasonally always a weak quarter, typically Q1 and Q4 are the stronger quarters, so Q3 you should see a drop in margin, but then we'd expect a good rebound in the fourth quarter. So if you look overall at the second quarter trends, we do expect the corporate cost to increase and I gave you some pretty definite guidance, I think, in terms of corporate costs being $120 million in the first half and going to $160 million in the second half, that's really what accounts for the margin guidance that we have given. And I would remind you that the guidance we have given at 29.3% to 30.3%, that represents an improvement, a year-over-year improvement of full year, which is really the way we think about it. We don't look at it on a quarterly basis so much. That's an improvement of 100 basis points to 200 basis points almost over last year.

Okay. So maybe I can just ask in another way. So how much OpEx costs for the customers like experience initiatives?

I would say, it's probably in the range of like about $30 million.

About $30 million. Okay, great. Thank you very much.

Thank you. And our final question is from the line of Doug Arthur, Huber Research. Please go ahead.

Yeah. Just a quick one. Jim, Europe F&R revenues were up, I believe, 1%. That seems like an important inflection, that's been a top market for you. Anything to elaborate on there? I know you've mentioned a few things already.

Yeah. We were very, very pleased to see that and you are right, it was noted, And I think, frankly, our sales team is executing a lot better in Europe this year. We have done some – we've reorganized some – just some of the way we go to market in Europe. And I think we have improved our customer service there, and I think that's starting to pay off. As I said, you'd look at while challenging environment particularly on the continent and uncertainty around Brexit, the sales teams have been knocking it out of the park and have really been executing well and the client relationships are as deep and broad as they have ever been. So, I think, it just – it really is a reflection of better execution in Europe. And as I say, if you look at the sales activity for Q2 that was kind of flattish, but that's a victory being flattish there and if we can get some price next year we should see for that quarter growth to continue. So I think as I said earlier more questions around Europe, but better execution in Europe as well.

Great, thank you.

So that is our final call, question rather and that will conclude our call. We'd like to thank you all for joining us for our second quarter and half year results, and we look forward to speaking with you again on the third quarter call.

Thank you. Ladies and gentlemen, that does conclude your conference. We do thank you for joining via using AT&T Executive TeleConference. You may now disconnect. Have a good day.