Thomson Reuters lifts full-year revenue forecast with focus on AI rollout

By Kenneth Li

Aug 5 (Reuters) - Thomson Reuters lifted its full-year revenue forecast on Wednesday, with CEO Steve Hasker saying that the Toronto-based content and technology company's focus was on investing and developing AI across its portfolio.

The company said last week that early results showed Thomson -- its proprietary large language model built for professional work and trained on content from Westlaw, Practical Law, Checkpoint and Reuters -- performed well against frontier models from Anthropic, OpenAI and Google.

Thomson Reuters, which owns Reuters News, raised its full-year organic revenue forecast to around 8%, from a previous range of 7.5% to 8%, as it reported second-quarter revenue rose 9% to $1.95 billion, just above estimates of about $1.9 billion.

Hasker said in an interview after the quarterly results that Thomson Reuters will focus on investing in Thomson and developing applications for legal, tax and accounting and audit professionals as it explores broader commercialization of the model.

"We could see the opportunity to create sovereign AI solutions for our biggest and most sophisticated customers, while at the same time powering products like Westlaw and Co-Counsel with that, which would give us greater speed, greater scalability, and a cost advantage," Hasker told Reuters.

Sovereign AI models are those developed and hosted by a specific organization or country, allowing them to retain full control over their models.

Hasker said he also saw applications in the news division, but did not provide any details. 

Thomson, he said, could help lower the cost of deploying AI at the company over time.

AI DISRUPTION CONCERNS

Thomson Reuters said earnings per share excluding items rose to 99 cents in the second quarter. This compared with Wall Street EPS forecasts of 96 cents.

"I think the quarter should help calm some of the AI-disruption concerns, at least in the near term," said Adam Sarhan, CEO of investment advisory firm 50 Park Investments in New York, adding that AI investments are beginning to show in results.

Shares in Thomson Reuters have been among those hit this year by fears over the challenges that AI newcomers, including Anthropic, pose to established companies, triggering a selloff in software, data and professional services stocks.

Thomson Reuters shares have underperformed the S&P/TSX Composite Index, which as of Tuesday was up 12.35% year to date. Thomson Reuters shares were down 15.28% over the same period. 

The shares were 1% lower on the Toronto Stock Exchange on Wednesday following the quarterly results.   

"A 9% revenue increase and an upward revision to full-year guidance suggest that customers are still paying for Thomson Reuters core products, even as AI changes how legal and tax information is consumed," Sarhan added.

Hasker said the company was starting to hear managing partners and general counsels at law firms express reservations about working with startups and frontier model makers, worried over protection of a client's intellectual property.

"They can't afford to be sort of having that data be used for training other models, or potentially leak out to other firms' clients," Hasker said.

Chief Financial Officer Gary E. Bischoping, Jr. said in an interview that about 32% of Thomson Reuters underlying contract value, which breaks down a contract's total value, relied on generative AI in the second quarter, up from 30% in the first.

Last month, Thomson Reuters announced the sale of 51% of its Global Print business to create a joint venture with KKR. It said selling the stake would allow Thomson Reuters to focus on its digital businesses and "fiduciary-grade AI", which is AI built to produce results that can be verified and audited. 

(Reporting by Kenneth Li in New York; additional reporting by Aditya Soni in Bangalore; Editing by Alexander Smith)