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

Good morning, and thank you for joining us as we report our financial results for the third quarter of the year. Our CEO, Jim Smith; and our CFO, Stephane Bello will review the results for the quarter in a moment. Following their presentations, we'll open the call for questions, and we appreciate it if you would limit yourselves to one question each to enable us to get to as many as possible. Two reminders before we get started. First, 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. And second, on the final page of today's earnings release, there is a supplemental schedule that provides depreciation and amortization expenses by business unit and also 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. And with that, I'd now like to turn it over to Jim Smith to take us through the results for the third quarter.

Well, thank you, Frank, and thanks to those of you on the call for joining us today. Let me begin by saying that we are pleased with our overall profit and earnings per share performance in the quarter. Our results clearly demonstrate that our transformation initiatives continue to deliver significant efficiencies and savings, resulting in an EBITDA margin above 30% for the third consecutive quarter and adjusted EPS was $0.68, the highest ever recorded by our company. That said, overall revenue growth was lower than we expected. But as we said before, turnaround stories don't always follow a straight line up. Our most promising growth initiatives continued to perform well, but other parts of the business underperformed expectations. With that in mind, let me assure you that we are committed to driving our growth initiatives forward and we will continue to invest in key product improvements and in customer service. Overall, the business continues to move in the right direction, just not as fast as we had expected. In addition, our transformation programs continue to make good progress and are delivering greater operating leverage. This improved leverage is expected to continue to generate bottom line growth in the near to medium term and provide the added fuel we need to accelerate top line growth in the future. We believe the additional savings from our transformation initiatives can fund this incremental investment, while at the same time, delivering both record EBITDA margin and adjusted EPS for the full year of 2017, with further improvement expected in 2018. Now turning to our third quarter results, revenues were up 2% on a reported basis and were up 1% at constant currency. The revenue performance as well as additional savings from our simplification initiatives led to a 70-basis-point improvement in the EBITDA margin. Currency…

Thank you, Jim. Before discussing the results, I would like to remind you that I will talk to revenue growth at constant currency as we always do, because we believe that this is the most appropriate way to judge our performance. So, on that basis, third quarter revenues grew 1%, with Financial & Risk and Legal both up 1% and Tax & Accounting up 5%. Adjusted EBITDA grew 4% with the margin increasing 70 basis points to 30.4%. This was primarily driven by better operating performance in each business, offset by higher corporate costs, where we made investments in our customer experience transformation program as Jim mentioned earlier. Currency had no impact on the year-over-year margin improvement during the quarter. I will now provide some additional color on the performance of our individual segments, starting with Legal. Overall Legal revenues were up 1% during the third quarter. Recurring revenues, which make up about three quarters of the total, were up 3%. And this was the ninth consecutive quarter of recurring revenue growth rate of at least 3%. Transactions, about 11% of the total, were down 8%. And the U.S. Print, which makes up the balance, was down 7%. From a margin perspective, Legal's revenue growth and continued effective expense management led to an 80 basis points margin improvement versus the prior-year period, jumping 40%. And this was a strong performance given the tough prior-year comparison. Here is a more detailed look at the revenue performance of the main sub segments in our Legal business during the third quarter. U.S. Online Legal Information which contributed 42% of total revenues was up 3%. Similar to what we saw last quarter, this was a function of favorable rounding and we continue to expect that the segment will grow about 2% for the full…

Thanks very much, Stephane and Jim and that concludes our formal remarks, and we would like to open the call now for questions, operator. So, the first question please.

Thank you. And we'll go to the line of Ato Garrett. Please go ahead.

Hi. Good morning guys. Just, of course, want to focus on Financial & Risk and some of the trends you highlighted there, was helpful to go through the factors underscoring the revenue performance in the quarter. But just as we think about the Elektron and Risk business going forward, you mentioned some of the longer sales times that are impacting that business. Can you just help us frame up how we could think about that business growing from here and in 2018 given those factors?

Yes, Ato, it's Stephane. Thank you for your question. Look, what we have seen in the quarter, and we can elaborate on that a little later, is a general slowdown in closing deals and we can come back on the factors that led that. And we saw that on a pretty broad based basis. So both on the desktop and on the Risk and feeds business, the Elektron Data Platform business and we think this is primarily related to the upcoming regulatory changes that we're going to see over the coming months. As you look at that portion of our revenue base, of F&R's revenue base, I think I've said in the past that we would expect that business to continue to experience like good growth characteristics and I would characterize good growth at mid-single digits. 8%, 9%, given the size that these businesses are growing is probably not something that you can sustain every quarter. There's going to be better quarters and worse quarters. But, on an ongoing basis, we see that business growing mid single-digit given the dynamics and the underlying trends that we're seeing there.

Okay. Great. Thanks, guys.

And next, we'll go to the line of Paul Steep. Please go ahead.

Great. Thanks. Could you talk maybe a little bit more about what you've seen out of MiFID. Do you think the slowdown is a temporary effect or do you think there's maybe more of a structural change going on just in terms of buying behavior, anything on that front? And then a follow-up on Stephane, can you just give us a little more commentary around the sustainability of the 40% margin in Legal? Thanks.

Thanks, Paul. Jim here, and I'll take the first part of that and Stephane can specifically respond to the latter question. So we think long-term, MiFID is a plus for us and is a positive for us. We do believe that short-term, it's putting some lack of clarity and some indecision into the pipeline and it slowed deal decisions in the third quarter. And if I can step back for just a moment, I think there are a couple of factors there. If I look at the third quarter, what I see is really a tale of two cities, or perhaps more importantly a tale of two continents. As Stephane, I think, accurately described earlier, if you look at our growth initiatives, they grew nicely as we thought they would grow. If you look in the areas where we expected headwinds to lessen, they did indeed lessen. As we completed the migration from the old Thompson ONE products through Asset Management on to Eikon, those headwinds lessened and the trends improved. If you look at the pricing actions that we got through on our foreign exchange terminals from last year, those headwinds lessened. If you looked in the Americas, in fact, the Americas overall performed quite solidly for the quarter as they have all year. But if you go to the UK and Europe, you see a different picture and we saw some unexpected softness around gross sales, particularly in Europe. While we did see an improvement in retention, overall, we saw softness in gross sales. And if you look at the – 75% of the miss in our gross sales number came from Europe. That was I think down to two factors, and one of those falls right to your question, which is MiFID. And if you think about…

And, Paul, regarding your second question, I think that the margins that we saw for our Legal business during the quarter were pretty exceptional. It was a pretty exceptional level. What we have said in the past is that what we're striving to do in Legal business is keep margins relatively flat where we're making the transition from businesses that are slow growth but very high margin to high growth businesses where the margin is still in the process of improving. So looking forward, I would not expect us to deliver 40% margin. I think we will be pretty pleased if we can keep the margins pretty steady in that business. And I will add that as you look at the period between now and the end of the year, we will make some investments in our Legal business, both in new products that you're going to see come out next year and also to drive efficiencies for the business as we always do.

Thank you.

And next we'll go to the line of Andrew Steinerman. Please go ahead.

Hi. This is Michael Cho from – calling in for Andrew. I just want to ask one more on the F&R segment trends. Just one particularly around the sell-side cancellations in Europe and Asia that you noted. I mean are these like you said more MiFID related permanent head count reductions, or do you get the sense it's driven by competition? And then just one follow-up, you mentioned that you talked about the near-term puts and takes from MiFID, but from a longer term – so why do you think MiFID II is a long-term positive for Thomson?

Well, first, if I think about what was happening on the desktop side, we think that's not competitive losses but rather just a general cost reduction, continued cost reduction efforts at European banks, and again, I say, not competitive losses. And when it comes to MiFID, I think, one, the bar has been raised for supplying MiFID-compliant solutions in the market data space. I think everything around the transparency requirements are going to require more market data, they're going to increase the demand, and they're going to have to be presented in a compliant way. We have released some special product enhancements and indeed some special products that help our clients to be compliant. So we think that we're very well positioned to benefit from the increasing focus on transparency and increasing need to make sure all market data is supplied in a transparent and compliant fashion. So we feel pretty good about that long term.

Okay, great. Thank you.

And next we'll go to the line of Vince Valentini. Please go ahead.

Yeah. Thanks very much. Two things, and apologies, still on the same topic, but I think this is the most important thing today, guys. But the outlook you're giving certainly suggests, correct me if I'm wrong, that we should not expect a bounce back in the organic revenue for F&R in Q4. These temporary issues and delays in purchase decisions as well as installation are probably not a one quarter thing. Is that the right way to think about what you're saying?

I think that's accurate, Vince. I think that – look, again, I just want to frame it with what we've expected, right. We said we expected growth this year to be better than last year; we still do. We've said that we expect 2018 to be better than 2017; we still do. The trajectory of that is I think what's in question and what will be determined by what the level of net sales are going to be in Q4 because that will determine the rate which we go into 2018. Trend lines are moving in the right direction. The question is pace. And again, until there's some more clarity around MiFID II and, frankly, there's some other uncertainty when you look at Europe, like GDPR, like Brexit that are factoring into the dialogs. And I don't think that uncertainty is going to clear up in the next 90 days.

Great. And the other thing on the MiFID, so I fully get long-term it seems like your businesses are well-positioned, especially the risk and compliance sort of software and services you have to help these banks become compliant with all these new regulations. But I don't get one thing is, if they have to be compliant as of January 1, shouldn't they already be implementing your software and services to be ready, they'd be in full trial mode already and beta-testing to make sure they're compliant day one? So it seems to me that they haven't bought those systems yet. Is it a second-order effect that you're expecting that once they get into it, they're going to realize, 'oh, crap, we don't have the proper internal systems. We tried to do it on our own and it didn't work, and now we need to look to outsource it to somebody like Thomson Reuters who has got expertise. Is that what you're hoping will happen?

No, I think what's happening, Vince, and what we're hearing all across the entire ecosystem that's feeding MiFID II is that there are lots of players that just aren't ready yet to be compliant and the regulators know that. And the regulators are trying to decide which bits are going to be enforced early and what an enforcement schedule is going to look like. Because if you just look at the sheer amount of work that has to happen to make it work, all the new venues that have to be on-boarded and a lot of opaque markets that have to be opened up to provide visibility into pricing, it's frankly going to be impossible for everyone to be completely MiFID compliant in January. So what we are hearing is it will be a rolling schedule of implementation and that schedule is not clear yet.

That's very helpful clarification. Thanks, Jim.

Yeah. Okay. Thanks.

Next we'll go to line of Anj Singh. Please go ahead. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC: Hi, good morning. Thanks for taking my question. A question for Stephane, could you talk a bit about your margin guidance range, which was maintained? In light of the strong year-to-date performance that you guys have shown, it seems to imply 4Qmargins can be flattish year-over-year, potentially down. So am I looking at that correctly? And I know you referenced some investments in Legal. So is this outlook driven by just new product investments? Is it just some conservatism or any other factors you could call out? Thank you.

Sure. Thank you for the question. We look at the margins, and as you know, we don't really manage the business for a given quarter. We really manage the business in terms of a trajectory over the long-term, and we look, as Jim said, on year-on-year improvement. As we look at the fourth quarter, so we're not really too stressed about what – like the fourth quarter. We do intend to make some added investments in the fourth quarter. And these investments will go into new products that we're trying to accelerate. And they will also go to some very specific program to improve customer experience, and we've got a number of initiatives that we have launched, and we will fund them in the fourth quarter and make sure that we do that within the guidance that we've given and I would say within the improved guidance for EPS that we've given. So, as a result of that, it may well be that the margin in the fourth quarter is not what we would traditionally be expecting for the fourth quarter. But, as I said, we're not really worried about that because we know exactly where we're spending that money, and it's to very, very specific investments program, which we hope are going to help us drive further growth going forward, which is for very obvious – whoever on the call, what we are very, very focused about, almost obsessed about at this point in time. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC: Okay, got it. That makes sense. Thank you.

And next we'll to the line of Manav Patnaik. Please go ahead.

Hi, this is actually Greg calling on for Manav. Just wondering if the growth for Elektron and risk is more in the mid-single digit range than the high-single digit range. Where do you think you need to get the desktop business to, to get the acceleration that you're looking for? And then just maybe a little bit more color on the longer lead times in Elektron and risk from sale to installation and what's the moving pieces there? Thanks.

Sure. So on your first question, we need growth in the desktop to improve from where it is today. And two things need to happen for that: one, we need to have a lower cancellation rate, and let me step back and give a little bit more color on our net sales than we usually do because obviously it's such a big issue on this quarter. As we said, we've seen net sales positive in the quarter but below our expectations. What we were expecting essentially is the ability to maintain same level of gross sales as we had seen in prior quarters. That did not happen for the reasons Jim explained. And we did expect to see a nice improvement in cancellations. Actually we did see that. Our cancellation levels were at the best levels. So the least bad levels, one that we've seen since Q1 2016, and that was a performance that we were counting on. And it was very much driven by essentially a much better performance on the best of buy side following the end of the migration in the second quarter. The only area where we saw some weakness was sell-side and desktop sales to the sell side. And that's we think very much driven by a continuing focus from our sell-side client on bringing their cost basis down. Overall, we would need the best of growth rate to improve from where it is today, minus 4% or so to get closer to breakeven. That's really what we want to see and what we hope to see. And that will be a combination of continued improvement in the cancellation rate and hopefully no more reduction in gross sales. We have to see how this gross sales performance does improve or does develop in Q4 and beyond. So that is the answer to your first question. And the second question you asked I think was about the time it takes to install the products, the time between sales and installation. And I would say there were really honestly two factors there that we're dealing with, one is the change in mix, as I said. And, as Jim mentioned, when you sell a desktop, you can – like getting sold typically within like two hours to two days. It goes very fast. When you sell a risk or a feeds product, the installation times are longer. And so that tends to extend the time between the time you book the net sales and the time you start booking revenue on these sales. The other factor, to be completely honest is that we are extending longer free-of-charge periods on some new sales in some very few particular instances. And so we're trying to be very disciplined about this, of course, but we've seen a slight increase of that during the quarter.

Helpful. Thank you.

And next, we'll go to the line of Peter Appert. Please go ahead. Peter P. Appert - Piper Jaffray & Co.: Thank you. Good morning. So you're coming up on the anniversary of the fourth quarter restructuring actions, and I'm just wondering if more restructuring is going to be required to continue to sustain margin improvement, basically have you used up the benefit of the savings from last year's actions?

Well, Peter, as Jim always says, right, we really try to implement these transformation initiatives in the least possible disruptive way. And we try to do that as much as we can in the run rate of the business. And in fact, that's what we've done over the last four years. We have taken some actions, particularly on the real estate front where we've shut down a number of sites that we had, closed offices, and took some onerous leases as a result. We've been able to ride the attrition curve as much as we could, but in some cases and some buckets of the organization, we had to take some actions. But we've managed to do that very much in the run rate of the business, as much as we could. Jim always says, if we see an opportunity to accelerate that and do something more meaningful, we will. But right now there is not much in the plan to do that. Peter P. Appert - Piper Jaffray & Co.: Maybe can I just rephrase it a little then. In the context of obviously soft revenue performance, just confidence level in the sustainability of margin improvement next year.

High. I can answer that one. It's still high. Again, as I said I think on the last quarterly call and repeated my remarks today, the further we go with our transformation – the more we achieve the more opportunities we see. And we still have areas that we haven't touched yet, where we think there's great opportunity for increased efficiency, but also effectiveness as we continue to move to digitize the business further. And so I've said before, we're late early innings or early middle innings, and that's kind of still where we are in the transformation program. And again just for context, I think you have to remember, this is a corporation that was managed in a very decentralized fashion and was built with hundreds of acquisitions over decades, and we're beginning to knit that together. We went after the most promising platform investments that we could make early on, but there's still plenty of opportunity for us to continue to work on our effectiveness and our efficiency. And that should do both things, that should allow us to keep the bottom line going in the foreseeable future here and also generate the kind of savings that we need to give us investment dollars to try to get the top line moving even faster. Peter P. Appert - Piper Jaffray & Co.: Thank you.

And one moment please, we'll go to the next question. And we'll go to Toni Kaplan. Please go ahead. Toni M. Kaplan - Morgan Stanley & Co. LLC: Hi, good morning. As a result of MiFID, I guess one indirect outcome that's been discussed is potential for industry consolidation in the asset management industry. So could you give us an update on what impacts you typically see when two of your F&R clients merge? And this is my second question, since everyone's asking two. Your margins were really great this quarter, and I just want to know basically, if part of this is head count related, basically how would you expect this to impact future growth? Thanks.

I'm sorry. Can you repeat the last question, like how is the margin expansion related to growth? Toni M. Kaplan - Morgan Stanley & Co. LLC: No, sorry. Basically if you're cutting heads, like can that impact future growth as well, or is it really just automation?

I think it's more the latter, it's more being more effective. If you look at our head count, it remained pretty steady since the beginning of the year. We tried to like push growth by redeploying resources where they are the most useful and really using the attrition rate by reducing headcounts where we feel there's room to do so, but growing resources in areas where we need these resources. So I don't think that the actions that we are taking are actually – that are helping the margins are negatively impacting the growth rate. We actually pay very close attention to make sure that that's not the case. And Jim you want to take the first question.

No, I'm happy to, look, I mean consolidation usually results in a decision process. And to the extent a consolidation reduces head count, then that generally means some desktops will go. If you have two folks who are taking our desktops and they take head count down, that will have an impact on desktops. There's no question about that. Consolidation also though may mean that two different providers are coming together and then there will be a bake off. So there's opportunity in that from time to time as well. So I think it just depends upon who consolidates. Toni M. Kaplan - Morgan Stanley & Co. LLC: All right. Thank you.

Next, we'll go to the line of David Ridley-Lane. Please go ahead.

Hi. This is David Chu for Ridley-Lane. So can you help quantify the difference in that sales levels versus the second quarter? So I ask because desktop revenue was down 100 basis points, but it sounds like the net sales differences were more meaningful.

I would just say that the net sales were below the level we saw in the second quarter and below what we saw in Q3 of last year. They were still positive. So that's the range that I would give at this stage.

Okay. And then how are you thinking about pricing for Eikon and Elektron as we head into 2018? And if you can remind us when you institute price increases?

Yeah, we do that at the beginning of each year. I'll be honest with you, it's too soon for me to say what the number will be exactly, but I would expect it's going to be very much in line with what we've done in prior year, which is a pricing increase in line with inflation rate pretty much.

Okay. So should we expect kind of these longer free periods to continue at least the start in 2018?

Again, I don't want to make too big of a deal on that, right, this is not the majority of our sale, these are in very, very distinct cases that are the exception more than the rule. And we do that with like a very, very small number of customers and within very, very specific circumstances. So, we will do everything we can to make sure that obviously we contain that as much as we can.

Okay. Great. Thank you.

And next we'll go to the line of Tim Casey. Please go ahead.

Thanks. Sticking with the top line story, is there anything we should think about in terms of Tax & Accounting that you're expecting. I know it's lumpy quarter-to-quarter, but maybe just a bit of color on that business and on F&R you've talked recently about cross-selling and removing some of the friction points with customers in terms of invoicing. Just an update on how those initiatives are coming? Thanks.

Sure. I'm happy to take this. Stephane please jump in and clarify. The Tax & Accounting business continues to, one, perform well and show great progress, and it's it doing across all fronts but the corporate channel is particularly interesting and exciting right now. We think there's great growth opportunity there, the professional segment what we sell to medium and small accounting firms continues to perform well. So we think that is a high single-digit growth business for us and kind of depending on what you define as high, mid to high, but depending about where in a given year and how many tax changes there are and that sort of stuff, but it's been a very solid business for us, and we think it should continue to be solid well into the future.

I agree. So I wouldn't take too much – we're not too concerned by one quarter performance, especially the subscription revenue growth rate in the quarter. As we say, right, one quarter doesn't set a trend in that business and we continue to see like good long-term potential as Jim said in the overall business. With regard to your other question, in terms of trying to eliminate friction points for the customer, there is a number of initiatives under the customer experience transformation program, we're trying to implement a number – we actually are doing some exciting things in two pilot initiatives in our (47:57) small law businesses and in our tax business here in Canada where we're trying to have like an end-to-end digital solution, which we never had, where we'll essentially at the end enable our customers to be able to do everything from browsing the product, trying a product, ordering it, trying to do everything digitally without having the need to have any human contact. We're trying to bring together various solutions that we had across each of our businesses in how they manage their accounts and where they're going to be able to – even in our Financial & Risk business were larger accounts will be able to make changes online themselves without having to go through the sales rep. Trying to give like the experience of – if you go to our website, it's kind of like, right now still a very dispersed number of different website in terms of front door, if you want, from a customer perspective, trying to rationalize that, trying to really like look at how better aligning our sales resources to the highest growth opportunities and really following a very disciplined approach that we've done in one business successfully that we're trying to evolve in other businesses. So there are like probably 10 initiatives that we're pursuing each with very rigorous plans behind them, specific funding and budget and timelines behind them as we are in the process of implementing that we will ramp up in the fourth quarter.

And if I could just add a little bit of color to that. I mean, this has been our big theme to our management conferences and sales conferences this year was all about transforming the customer experience and taking that kind of rigor that we had in the transformation of program and putting behind those initiatives that Stephane's just outlined, and we have engaged third-party research to measure how the whole goal of this is making it easier to do business with us, for clients to do business with us. And the third-party research that we've been doing with clients on that do show an improvement in our performance and their rating of how easy it is to do business with us. So one has to hope that that transfers into and maybe already is part of the increased retention rate, but certainly that transfers into customer satisfaction and greater retention rates and that's what it's all about.

Thank you.

Operator, we'd like to take one final question.

Thank you. And we'll go to the line of Drew McReynolds. Please go ahead.

Yeah, thanks very much. Just kind of back to the key topic here. So, Jim and Stephane, you've kind of commented with pretty good granularity on the F&R front, on the revenue side. So just to clarify, in terms of the overall operating environment if you essentially strip MiFID out, you're not seeing any particular change to kind of the recent quarters. And the second question, just on the M&A front, clearly we're going through or you're going through a kind of slower growth period or ramp up here than what you would have thought into 2018. Is there kind of any appetite here with a pretty good balance sheet to accelerate growth through acquisition or are you still kind of sticking to that focus on organic growth? Thank you.

So there's not a material change, a sudden change in the competitive environment or in the market environment. I think it's a steady continuation of the trends that we've seen and if anything, I think we're more competitive than we've ever been and that prompts some more competitive responses from other competitors in the market. But I think our position continues to strengthen and outside this unexpected kind of delay in the pipeline, we haven't seen material changes in the market. So that's not some kind of sea change that we weren't expecting. As far as M&A goes, look, we've dramatically shutdown M&A for the last few years. You will have noticed, we have made a few more acquisitions in the last few quarters than we've made – they've tended to be smaller and tactical. As we build out a platform that's better able to integrate, things will continue to look for opportunities to support our strategy to give us stronger positions in the growth areas that we're driving forward organically right now. But we don't have any intention of radically changing what we're doing on the M&A front, always keeping our eyes open for a really good opportunity. But we want to make certain that we are using M&A in support of a strategy, not as a strategy.

Thank you.

So that will be our final question and we would like to thank you all for joining us for our third quarter results.