Ladies and gentlemen, thank you for standing by and welcome to the Thomson Reuters Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host Head of Investor Relations for Thomson Reuters Mr. Frank Golden. Please go ahead sir.

Thank you and good morning and thanks everyone for joining us today. Today is a significant day for Thomson Reuters. Not only are we announcing continued improvement in the performance of the business but it also marks the beginning of an orderly succession to the next generation of management leadership which you have seen in today's press release and which Jim will discuss in a moment. We are also joined today by Mike Eastwood who will succeed Stephane as Chief Financial Officer and who many of you know from having him attended in Investor meetings which Mike participated over the past few years. Now as we have done in the past we will review the results of the fourth quarter and full year ‘19 and we will then discuss our outlook and priorities for the year ahead. Needless to say we have a lot to discuss today. So when we open the call for questions we would appreciate if you limit yourself to one question each to enable us to get to as many as possible. Now before we get started there is one reporting item to call to your attention. Following the completion of our transformation program in the fourth quarter of 2019 we now have a clear review of how to allocate our enterprise center expenses and certain revenues across our business segments. So we reassessed our allocation methodology and as a result we will adjust our cost allocations amongst the business segments beginning in the first quarter of 2020 such that adjusted EBITDA for Reuters News will increase and adjusted EBITDA for our other business segments will marginally decrease and we will transfer 14 million of revenues primarily from the Corporates business to our Legal business where it will be managed where it fits better. Importantly, there are no, I repeat no changes to our consolidated results. I'd direct you to the Investor Relations section of our website where we've posted a schedule that reflects our restated full year 2018 and 2019 quarterly results in the manner we will begin reporting in 2020 in which I just mentioned. Now before today's presentation when we compare performance period on period we discuss revenue growth rate before currency as well as on an organic basis as we believe this provides the best basis to measure the underlying performance of the business. 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. I'd now like to turn it over to Jim Smith.

Thank you Frank and thanks to all of you for joining us today. This is an especially important day for me and Stephane and not only because we can report that we've delivered what we told you we would deliver for the eighth year in a row. Earlier today I sent a note to my colleagues around the world telling them just how proud I've been that worked alongside them in the past three decades. I'm proud of where the business stands today and of the difference we make in the world. We are where we are today because of their hard work. I know I speak for Stephane as well and telling them just how much we've appreciated their support over the years. This morning is also so important because we get to tell you why we are so confident that Thomson Reuters couldn't be in a better place or in better hands for the next chapter in our remarkable story. Steve Hasker and Mike Eastwood are the right team to lead an extraordinary cast of professionals on to unimaginable heights. I look forward to supporting them in that journey. Now for the numbers. 2019 was our first full year of operations since completing the Refinitiv transaction and restructuring Thomson Reuters into customer focus segments. The results of these changes have been promising with our organic revenue growth rate accelerating more than 100 basis points compared to 2018 and adjusted underlying EBITDA margin increasing to more than 31%. For the third consecutive quarter we posted organic revenue growth of 4% in Q4 and the company is positioned to further improve our organic growth rate in 2020. We entered this year with our reorganization and separation from Refinitiv largely behind us. I'm particularly proud of the fact that we were…

Thank you Jim and good morning or good afternoon to all of you joining us today. As we move into the new year we have changed a bit the format for this portion of our quarterly reporting. Hopefully you will find the new format more crisp and more relevant but as we always do we welcome your input and feedback to ensure that what we present is helpful to you. So we start by providing some color on the revenue performance of our three core segments and then I will also provide details around recurring and transaction revenues in a moment. As a reminder I will talk to revenue growth before currency and on an organic basis. So organic revenue growth for the three core segments was 6% for the quarter and 5% for the year. Legal professionals revenues increased 4% during the fourth quarter with organic revenues also at 4%. Law firm’s revenues grew healthy 4 %, government related revenues had another strong quarter with 9% growth and our global Legal businesses were flat on a reported basis but up 4% organically. Westlaw Edge continues to yield a healthy premium with strong sales momentum as evidenced by the months of December being the best sales month since the launch. Edge contributed over 100 basis points to the legal segments growth rate in 2019 and as Jim previously mentioned the legal market remains healthy. According to Peer Manager, demand growth in the U.S. legal market in Q4 was at 1.1% which was slightly better than the full-year. Rates for hours worked increased a 4% in Q4 which was the highest increase recorded by Peer Manager and lawyer growth in Q4 was 2.4% the highest quarterly gain since the fourth quarter of 2011. So we continue to remain confident with regard…

Thank you, Stephane. And good morning or good afternoon to all of you. Let me start by saying I feel very honored to assume leadership of the finance organization at Thomson Reuters. I look forward to getting to know more of you at the upcoming conferences and meetings. As we look to 2020, let me first speak to our organic revenue growth and EBITDA margin performances. As mentioned earlier, we expect our organic revenue growth performance for 2020 range between 4% and 4.5% which would represent a 30 basis points, the 80 basis points improvement over 2019. This performance level stands in stark contrast to our average revenue growth performance over the 2009 to 2017 period when various factors primarily related to our financial business dragged our average organic revenue growth rate to about 0.3%. Interestingly, the 3.7% organic revenue growth performance we achieved in 2019 is very much in line with the average performance we achieved over the 2002 to 2008 period any time when our exposure to the financial services industry was much more reduced and when our business profile and revenue base were more similar to what they are today. So we feel our current level of organic growth performance as being back to where it was before 2008 and we also view it as something we can still approve upon in the coming years. Turning to our EBITDA margin performance. We see room to further improve from the 31.5% to 32% level we are projecting in 2020. Our margin guidance for 2020 reflects both the diluted impact of the acquisitions we completed last year as well as some organic investments we will continue to make in the business to further accelerate our growth. Given the stronger revenue growth performance the operating leverage inherent in our business…

Thanks Mike. Before we open the call for questions let me conclude with a few thoughts regarding this morning's announcement on succession. The appointments of Steve Haskers as my successor and Mike as Stephane's successor is the culmination of a deliberate plan executed by our board and in which Stephane and I have been active participants. Steve is a proven leader whose background and prior experience give him exactly the right skills to lead Thomson Reuters as we make the shift from product platform. I also firmly believe that now is the right time to pass the baton to the next generation of leadership. Our company is on its firmest footing in many years and the foundation has been laid for continued success that will serve the interest of all stakeholders for many years. As you've seen in this morning's announcement I'll become chairman of the Thomson Reuters foundation and will provide transition support to Steve among other duties. Stephane will become vice chairman of the corporation and will have responsibility for overseeing our investment in Refinitiv until the transaction closes with the London Stock Exchange group later this year. He also will oversee business development operations as we deploy the remainder of our investment funds. And will play a key role in developing the commercial policy that supports our evolving platform strategy. Stephane and I feel incredibly proud and fortunate to have two very talented and experienced executives to succeed us. Steve is widely respected as an innovative leader with an exceptional combination of integrity, intellect and people skills. He's an expert at information and media businesses and his deep capability with product, technology, partnerships and the ability to monetize data is just what we need to capitalize on the many opportunities the future holds. Mike is a 20-year Thompson veteran who's been working hand in glove with Stephane over the last several years. Mike has proven his financial and operational chops in a number of roles over those two decades. He has been a driving force in both our turnaround and in creating the new Thompson Reuters. So I'm confident that our future will be in very good hands with these two executives. And an extraordinary group of dedicated professionals on the broader leadership team. With that and I'll turn it back over to Frank.

Thank you Jim and Stephane and Mike and that concludes our formal remarks and our report on the quarter and the year and we would now like to open the call for questions. So operator if we could have the first question please.

[Operator Instructions] Our first question comes from the line of Gary Bisbee with Bank of America. Your line is open.

Hi guys. Good morning and congratulations everybody on the new roles. I guess a two-part on margins if I could. You called out some internal investments in 2020 to position the business for continued improving growth. I guess if you could give any color on exactly what those are, the size of those investments and then bigger picture as you think long term you did a great job eliminating stranded cost but is the organization right size given to smaller footprint you have now or there other opportunities to streamline and improve margins in addition of what should be healthy operating leverage as your growth businesses expand over the next few years. Thank you.

Sure Gary. This is Mike. I'll take the lead on that question at multiple parts. First in regards to our margin guidance of 31.5 to 32 certainly with organic growth guidance at 4 to 4.5 we're going to experience a good operating leverage in 2020 and as we move forward. Your specific question in regards to the organic investments that we're making a couple of examples would be our pivotal platform as Jim touched on earlier and we've just discussed in prior calls. Also we've made some additional investments in our go-to-market resources especially in the three big segments specifically regards to additional sales, account managers working with our customers. At the third example Gary it would be in the area of digital. We recently hired a new leader within the last six months to lead our digital initiatives. So that's going well. So those were three examples Gary of investments. Your last question in regards to right-sizing. Certainly we're very pleased that completed all of the one-time costs associated with the Refinitiv separation in 2019. We don't have any one-time cost plan for 2020 but we're going to certainly always consider opportunities that are rise to make us stronger and to expand margin and to have a good return for our shareholders.

Thank you.

Thank you. And our next question comes from the line of Drew McReynolds. Your line is open.

Thanks very much. Good morning and congrats Jim and Stephane on this succession and to you Mike as well. For me a big-picture question on the M&A front you're below your balance sheet target. There's obviously some funds still there to do tuck-in acquisitions. Is there any temptation here and maybe a question for new management but is there any temptation here to do larger M&A? You obviously have a valuation here that's much better than it has been in the past. You have the LSE as a potential source of funds. Just you seem to be very flush here with cash and just trying to figure out where ultimately all that funnels to. Thank you.

Let me try to take your question, Drew and obviously it's a question you should as you said earlier, direct to the new management team in terms of what their ambitions are. What I can tell you though is that we have a pretty robust pipeline of potential deals we can do straight in our wheelhouse at this point in time. So the initial priority I can promise you will be to try to see how many of these potential transaction we can land and as you said we have, we feel very fortunate to have a high degree of financial flexibility. So we have deployed about half of our investments going to be an investment fund. We get the other half deployed and we even have a bit more capacity beyond that if we feel the deals are strategic and financially attractive.

Thank you.

Thank you. And our next question comes from the line of Manav Patnaik with Barclays. Your line is open.

Thank you. Good morning gentlemen and congratulations to all of you as well. Jim maybe just for some perspective in terms of all the, I guess cleaning up and sorting through the deal you guys have done so forth what have you left or what is the next leg of work that I guess we could anticipate Steve and Mike to be doing? Is that kind of a shift to the cloud, re-platforming, AI just some high level color that would be appreciated.

Sure, I think all of the above Manav. I think you're exactly right and that's why I think they're the guys to lead it. I think in my conversations with Steve, it's extraordinary to find someone who shares the same strategic vision for what's possible and I think his intentions will be to build upon the platform that we've established here and bring his unique skillset and background to that task. We really believe that we have the foundation and the footprint to be successful and as Stephane said there's a lot of growth on the left and a lot of headroom and that we have to continue to grow our underlying businesses. And I think what you can expect is not a radical change in strategy but every effort to accelerate that strategy and to accelerate the growth.

Thank you and our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is open.

Thanks and I want to offer my congrats as well. Jim, can you talk about why news fits in the current portfolio? It's profitable. It promotes the brand and there's the legacy element but just talk about why it fits within Thomson Reuters which seems like it's now being positioned more like an information services company than a media company? Thank you.

Sure. Look, I think there's a lot for us in addition to the tradition and the emotional attachment to the news business that many of us in leadership share. I think as we think about the tools we want to provide our professional customers in the future kind of current awareness news being real-time plugged into their communities. It is very important and I think what we've tried to explore and what I'm sure well Steve and Mike will lead is further exploration along with Mike Friedenberg at Reuters who's working to develop more corporate verticals and to the extent that our unique news assets can help compliment, support and underpin the development of some of those professional verticals I see no reason why we can't have news feeds and integrate Reuters News into our professional products as successfully as we've done in financial markets.

Thank you.

Thank you and our next question comes from the line of Vince Valentini with TD Securities. Your line is open.

Yes. Thanks very much. Thanks for all the disclosure this morning and congrats everybody. If I can try to unpack the revenue a bit. I'm not sure if I heard you correct Stephane did you say the organic revenue growth for tax would have been 7% in Q4 instead of 12% if you take out that ultra tax timing shift?

That's correct.

Okay so if we adjust for that is it fair to say that the organic revenue growth guidance for 2020 would be pushing up towards 5% if not for that somewhat anomaly of December versus January revenue?

Well, I would say that -- the 5% impact that we've seen between our the tax accounting reporting revenue goes up 12 and what the underlying would have been absent that acceleration, it's about the same impact you are going to see in Q1 and as we said that timing impact. I frankly haven't done the math about what the guidance would be if you adjusted for that but that's why we really guide people to look at the annual revenue growth rate why this puts and takes every quarter but we certainly do expect to see a continuing upward trend in our organic revenue growth trajectory in 2020.

And last – sorry, Frank but it’s one really big related question, I promise. On your slide 12, the revenue target organic 3 to 5 and then add 1 to 2 for acquisitions is that 3 to 5 meant to be your longer-term target? Is that some sort of average over the course of a business cycle because it seems like you're trending already especially if you just for this tax item which is talked about you already trending towards the high end of that 3 to 5 and it sounds like things could get even better maybe 5% to 6% range within a year or two. I'm wondering why this target is only 3 to 5 and what that timeframe is supposed to be?

I would say we have to see how the business continues to be evolved, right? And to the extent that we move towards high role portions of the markets we serve, particularly the software piece of the market that target you could see a scenario we could exceed that target but we take it really one year at the time and when we need to change it that would be great but we will leave that to Steve and Mike depending on how things evolve over the coming years.

Let me just add to that event. As you see on the slide, it's kind of the gravity that surrounds the businesses that were in today as we said on our slide, it's kind of a 4% to 7% over the cycle. So in good economic times we're executing really well it should be high but as you have seen in the past it's not a business that precipitously falls off a cliff or goes backwards if the growth rate gets impacted a bit. So that's kind of an over the cycle and if we continue to execute well and market conditions continue to favor us, we'd expect to see continued growth in that number and you approach the higher end of the range in the best of times.

Thank you. And our next question comes from the line of Kevin McVeigh with Credit Suisse. Your line is open.

Great. Thank you. Hey, I wonder if just going back to that the organic growth or rather the revenue go to 4 to 7, in the organic to 3 to 5 what would be displayed the kind of what you're calling kind of the big three 80% of the revenue or so in that versus kind of the 20% the less traditional? So I guess what's the core the 80% growing at versus kind of the non-core in that 3% to 5% organic.

Kevin it's Mike. For the big three, I would refer back to the investor day guidance that we provided Legal is up 4 to 5 and we have Corporates and tax at both 6% to 8%. So those are the ranges that we're targeting for 2020 Kevin and then those would be offset with the Print decline of about 4% to 5% this year and then that lower growth with our Reuters business. Those are the overall components of the organic growth.

Great. And then if only one but just if you can enter great. What's the retention implied in those targets?

We saw continued improvement in 2019. We are in the 90-ish plus percent, Kevin. We had, I think our strongest retention in Legal in 2019 Kevin that we've experienced than in many years. I think legal was up, plus about 91% in 2019 and that certainly helped Kevin with Westlaw Edge and strong reception that we’ve received there.

If I could just add one bit of color Mike to that comment because I think it's interesting. I don't recall it ever happening. If you look among the large law firm segments as we define it, we had a 100% retention last year. We didn't lose a single customer and as I said I don't recall that happening before.

Right. Awesome. Congrats again totally.

Thank you.

Okay. Thank you. And our next question comes from the line of George Tong of Goldman Sachs. Your line is open.

Hi Jim, good morning I'd also like to add my congrats to Jim, Stephane and Mike. Within your Legal segment you converted 1/3rd of your customers to Westlaw Edge in 2019 and that number is going to 50% to 60% by the end of 2020. Can you discuss how much of a pricing lift you get from Westlaw Edge and how much organic growth in Legal will benefit from additional conversions this year compared to other drivers of accelerating growth such as further improvements in the retention rate?

Yes, sure George. I'll start and then Stephane if he wants to supplement. Just one point of clarification that 33% by year-end ‘19 that was the cumulative impact from July ‘18 through the end of ‘19. I want to notchback in 2018 to retarding 50% to 60%. We continue to experience a good overall premium list George, over that time period and we would expect about a 100 basis points of improvement in 2019 and 2020 from Westlaw Edge. Additional items that are contributing George would be the HighQ acquisition that we did in July of ‘19 and we have our government business led by Steve Rubley that is growing very nicely. That business is over 400 million now. So those are some of the key components for us George in 2020 for Legal. Stephane, anything to add?

George, just to say for obvious competitive reasons we prefer not to be too specific about the kind of price premium we are getting for Edge, but sufficient to say that it's sufficiently differentiated product from the traditional Westlaw that we have encountered really no issue with customers in terms of showing them the value that the new product brings compared to the other products.

Got it. Thank you.

Thank you and our next question comes from the line of Aravinda Galappatthige with Canaccord Genuity. Your line is open.

Good morning. Thanks for taking my questions and congrats Jim and Stephane on your tenure and all the best to Mike as well. My questions on the software and solutions component. I think Stephane you were good enough to give us a sense of how much of the Legal division had, how that split between content and software solutions. Is there, is it possible to give us a consolidated number there and connected to that, I mean on investor day I know that you've provided various part about how significant that software solutions piece is globally in terms of TAM. I was wondering at this point if you can talk to sort of the penetration of that $12 billion bucket. I know that obviously it's not just [indiscernible] going after that component. There are other players alongside you as well but how much of that [12 billion] today is penetrated and how do you see the future instead of exploitation of that opportunity.

Hi, it's Mike. I will take the first part of that question. In regards to the software I think Stephane shared we were around 30% during our last call, overall we are about 35% for total TR the highest piece within tax which is around 75% and Corporates is about 60%. So 35% would be the answer to your specific question for total TR. Jim do you want to comment in regards to the TAM question? Or Stephane?

Yes, if you want to [build up] on that Aravinda and essentially we think there's on the broader software market, this is a market that is highly fragmented where there's a lot of smaller players and so we see an opportunity to penetrate that market. We are very thinly penetrated in that market I would say overall and we see the opportunity to certainly accelerate a penetration and I think that acquisitions will play a role in that and as you've seen last year the type of acquisitions we are targeting are exactly in that space and so you should expect that as you see us deploy more capital behind acquisition, it's going to be very much to try to increase the penetration in that part of the market.

Thank you very much.

Operator, I think we’ll have one final question.

Perfect. And our last question does come from the line of Andrew Steinerman with JP Morgan. Your line is open.

Good morning. It's Andrew. Congrats to Mike and welcome back to the sector Steve Haskers. Jim you indicated Westlaw Edge penetration would reach 50% to 60% of Westlaw Legal revenue basis here and do you think that penetration could go much higher further out and when thinking about Westlaw Edge should we think of it as like a module like that's one step function where you might have additional modules coming out in Westlaw Edge and so that premium could be like multiple premiums as we go throughout the years ahead?

Yes. I think the penetration rate in ‘19 was like 33%, growing to 50% this year and just to be clear that is exactly how we think about it. And in terms of those modules that will continue to grow. We are in a constant state of development Westlaw Edge and if you think about our old product cycle that would have been you drop a big thing into the sales force at the beginning of the year and you start working on what you're going to do for the next year or two years out or that sort of thing and obviously the world has changed a lot since those days. If you look at what we did last year after launching Westlaw Edge we came out with Quick Check, we came out with case analyzer opportunities. Within the same year, and I think we're going to continue to see that kind of product velocity and depending upon where clients are in their contract cycle with us remember most of our clients are on multi-year contracts. We can use that to either extend the contract at premium prices or people that take on longer contracts can sometimes get that thrown in and each of the improvements thrown in. So I think it's an important part of both sustaining our premium pricing on overall Westlaw and for some clients generating additional sales with the new modules and the other thing I would add if you look at the underlying content that powers those AI tools I've actually been surprised to see, I think it's a 7% Mike correct me if I'm wrong on the number we've seen a 7% uplift in those underlying content sales because that content is required to power the analytics. So yes, it's going to be a constantly evolving product. I hope we certainly hope this is a gift that keeps on giving for years to come.

Thanks Jim.

I think that's our final question. So before we conclude let me just say that Jim and Stephane congratulations on completing your what I believe is your 33 and final earnings call together and congratulations for surviving all 33 relatively unharmed. I know that many of you or all of you will be interested in meeting both Steve and Mike over the course of the next short while. Steve's official start date will be March 15. So we expect that we will be on the road meeting with many of you shortly thereafter. So stay tuned for that but thanks to the team here for your work today and thank you all for joining us and we look forward to seeing you over the course the next couple of weeks. Have a good day.

Thank you.

Ladies and gentlemen this conference will be available for replay after 10:30 A.M. today through March 3, 2020. You may access the AT&T replay system at any time by dialing 1-866-207-1041 and entering access code 5 2 5 8 5 6 0. Those numbers again are 1-866-207-1041 and access code 5 2 5 8 5 6 0. That does conclude our conference for today. Thank you for your participation.