NYSE:TRI

Track all markets on TradingView - Prices are not updated in real time
Thomson Reuters Plunges 10% as Margin Pressure and Lower Free Cash Flow Overshadow Strong Revenue Growth

Thomson Reuters (NASDAQ: TRI) shares fell about 10% despite reporting strong third-quarter 2026 revenue growth and higher adjusted earnings, as margin compression, weaker free cash flow and unchanged core guidance appear to have disappointed investors.

Third-quarter revenue increased 10% year over year to $1.83 billion, with organic revenue growth also at 10%. The company’s “Big 3” segments — Legal Professionals, Corporates, and Tax, Audit & Accounting Professionals — collectively delivered 10% organic growth.

Adjusted EBITDA rose 10% to $651 million, while adjusted EPS increased 14% to $0.81. However, adjusted EBITDA margin slipped to 35.5% from 35.8%, with the Big 3 margin falling to 40.3% from 41.7%. The Legal Professionals margin declined particularly sharply, to 46.6% from 49.0%, reflecting higher technology and other costs.

Cash flow was another weak point. Operating cash flow fell 15% to $599 million, while free cash flow declined 23% to $408 million due to unfavorable working-capital movements, higher tax payments and increased capital spending.

The company updated its 2026 outlook to reflect the sale of a 51% stake in Global Print, but guidance for its Big 3 segments was unchanged. Full-year total revenue growth is expected at about 9.5%, organic growth at 8.5%-9.0%, and adjusted EBITDA margin at roughly 39%.

The 10% selloff appears to reflect concern that strong AI-related and organic revenue growth is not translating into enough incremental margin or cash flow. Investors may also have been looking for a stronger upward revision to the core Big 3 outlook given management’s positive commentary around CoCounsel and Thomson LLM.
💬
Author
The Investor 11-03-26