And Europe remains opportunistic. The — that’s sort of the geographic lens. From a sort of a product and capability lens, yes, Pagero is a big step forward for us. Pagero, we think, is the only sort of single platform e-invoicing solution that there is. Their competitors respect them, as we do, have cobbled together solutions across different geographies. So Pagero has a pretty interesting starting point, heavily focused in Europe today, continental Europe, the U.K. and particularly Scandinavia, given its heritage. So the opportunity to take that to Latin America and take that to Southeast Asia as e-invoicing mandates roll out, we think it’s a pretty exciting one. Secondarily, CoCounsel. One of the things that we’re most excited, and there are many things that are exciting about the Casetext acquisition for us, but one of the things that’s exciting about CoCounsel is it’s not geographically bound.
And as we launch or introduce the idea of launching CoCounsel in different markets and really providing the TR size and scale behind that set of capabilities, the reaction has been very strong in all the markets that we’re talking about. And they’re not just common law markets, and they’re not just the markets that we’ve traditionally had, for example, Westlaw or Practical Law. So that’s the second part. I think, thirdly, of course, the Dominio asset in Brazil is very strong, and we’re exploring opportunities to sort of extend that because it has a unique set of data and it has a unique customer acquisition engine. And I think Adrian and the team have done a wonderful job of adding new customers on a sustained basis over the years. So we’re certainly focused on continuing that.
Lastly, on the customer basis, I think we’re just starting to scratch the surface in terms of better serving global customers, whether that’s Fortune 500 or Fortune 1000. And Laura Clayton McDonnell has been focused on exploring that opportunity, starting with companies that are headquartered in the United States and Europe. But I think the international opportunity for us will be adding new customers because of our relatively modest starting position. But Mike, what would you add?
Michael Eastwood: I wouldn’t add any items. I would just double down in regards to the level of optimism and encouragement with Laura’s team, Erin Brown, on Pagero e-invoicing and the broader indirect tax and optimistic that we’ll have positive achievements to share as — in future quarters with Indirect Tax overall.
Operator: We will take our next question from Andrew Steinerman with JPMorgan.
Stephanie Yee: This is Stephanie Yee stepping in for Andrew. I wanted to ask about the 2024 guide. So you’re raising a little bit the revenue growth, but you’re keeping the margin guide the same. So I guess, is the implication that you see additional opportunity to reinvest that flow through? Or have, I guess, costs been going up, and so that’s why the margin guide is the same?
Michael Eastwood: Stephanie, it’s the former in regards to the opportunities to invest. We’re very encouraged with the road maps that we shared during Investor Day and just the 6 to 8 weeks since Investor Day. Certainly, our teams continue to identify additional opportunities. So maintaining the EBITDA margin and free cash flow is a reflection of the opportunities that we see to drive our top line in ’24, ’25 and beyond.
Stephanie Yee: Okay. That sounds great. And can I just ask about — can you comment on the competitive landscape? And I’m thinking more so about generative AI, whether you’re really just seeing the same incumbents in terms of on the field or whether startups are part of the conversation.
Stephen Hasker: Yes. Stephanie, I think we’re seeing a bit of both. And as I alluded to earlier, we’d like to think we’re not overly focused on our competitors. We want to be overly focused on our customers and better serving them. But a lot of respect for both the folks that have been competing with TR for long periods of time and those that are new and emerging. I think it’s a pretty balanced mix, as you’d expect, with a technology that’s disruptive and potentially has transformative capabilities in terms of the professions we serve. And having said all that, we — I think we’ve made a good start, if not a very good start, in the generative AI world with both our organic investments and the preexisting talent that we have in and around advanced machine learning and large language models.
And then, of course, the addition of Casetext, I think, was a real — have been a real boost to us as well. So the job ahead of us is just to continue to accelerate in this area. And if we do that, we’ll be very well placed relative to any and all competitors.
Operator: We will take our next question from Toni Kaplan with Morgan Stanley.
Toni Kaplan: Earlier, you talked about the improvement in the pipeline and sales trends in corporate. And it also sounded from an earlier answer, Legal was maybe improving as well. Maybe if you could just put a fine point on that. Are you seeing improving trends in the selling environment in Legal? And any changes to the sales cycle or pipelines there? And maybe just — it sounds like maybe Corporate — your — you saw improvement, but are still a little bit cautious or just watching it to make sure that’s sustaining. I guess, what would drive that to really lead you to believe, okay, we’re out of the woods on that as well?
Stephen Hasker: Yes. Toni, look, I think you’re right on both fronts. In Corporates, we’ve talked for the last 5 or 6 quarters about prolonged sales cycles. We saw in Q1 a bit of a reprieve in that, which I think flowed through to our results. It’s too early to declare victory there. We’d like to see a few more quarters of that before we come back to you and say there are improved trading conditions within Corporates. In Legal, we’ve been picking up steam quarter-on-quarter. We certainly did through 2023, and that continued in ’24. So the opportunity ahead of us is just to continue that sort of steady — that steady improvement. But — so the trajectories are quite different, and we remain vigilant. Mike, anything to add?
Michael Eastwood: No. I would just double emphasize that, Toni, what give — what would give us stronger confidence there is just repeat performance in Q2 to Q3 in regards to the Corporates net sales book of business. We have strong confidence in the team, but it’s something that we just need to see. We’ve spent quite a bit of time with the Corporates team this year, quite encouraged by what we see and hope to report another good Q2, Q3 in Corporates. And that will give us that confidence that you’re inquiring about, Toni.
Operator: We will take our next question from George Tong with Goldman Sachs.
George Tong: You’ve rolled out several products with new generative AI features lately. Can you talk a little bit about traction with how you’re monetizing those additional functionalities and how the incremental monetization compares with investments that you’re making in generative AI?
Stephen Hasker: Yes. George, I would say very encouraging early progress both in terms of the overall customer reception to those new products and their comparisons to any sort of competitive offers that might exist and also their propensity to pay. But it is early, particularly relative to the investments that we’ve made. I mean, in a sense, we started the investment program with a onetime $600 million or thereabout spend through the change program. We continued that with $100 million last year, and as Mike said earlier on this call, a little bit more than that,through this year. And you add to that $650 million with the Casetext acquisition. So relative to those — that order of magnitude, the — it’s early days. But as I said, we’re optimistic, and all the early signs are positive. But it is early. So we look forward to coming back and reporting ongoing progress as it occurs.
Michael Eastwood: George, just in regards to comparison to the investments of our ability to deliver margin and sustaining our guidance for full year ’24 given that we expect an uptick in gen AI, I think, is indicative of the return on investment that we’re getting on the gen AI.
George Tong: Got it. That’s helpful. And just a follow-up on the topic of gen AI. Can you talk about the different ways in which you’re monetizing? Is it consumption-based? Is it modules, upsell-based? Is it part of the standard package? What are the different ways that you can monetize gen AI?
Stephen Hasker: George, I think the simplest way to answer that is we’ve been experimenting with multiple different options. What we’re trying to focus on is making it as simple as possible for our customers to adopt these products from a sort of a pricing and proposition standpoint while, at the same time, articulating the value, because we think the value is very significant in terms of time saved, in terms of the overall efficiency and productivity, the quality of work products. So we’re squarely aimed at increasing the profitability of our customers and pricing accordingly. But similar to my earlier answer, early days and lots of experiments — experimentation going on.
Operator: We will take our next question from Sami Kassab with BNP Paribas.
Sami Kassab: Steve, you said that the increased complexity of regulatory compliance was a driver of growth. In that context, do you see the Corporate Transparency Act as a meaningful driver of your performance this year? Or is it just one out of many examples of complexification? And secondly, could you please elaborate on the impact of gen AI on your cost efficiency? In the previous call, you said it was too early to quantify the impact, but have the last 3 months perhaps brought any more visibility in terms of the impact of gen AI on your own cost base?
Stephen Hasker: Yes, yes. Thanks, Sami. Great questions. So I would say with regard to the Corporate Transparency Act, one of many, one of many, many. I think every market in which we operate, every segment in which we operate, we’re seeing more and more regulations, more and more rules, whether they’d be laws, whether they’d be various sort of industry professional body guidelines, whether they’d be internal processes, that appears to be a gift which keeps giving. And as I’ve said a number of times before, it’s not an option for corporations or their advisers to just add more headcounts to cope with that burden. Technology has to play a big role in alleviating that burden. And we’re one of — we think one of the few players who can really meaningfully take advantage of that.
So that, I would suggest, Sami, is one of many with regard to that. In terms of our internal gen AI, Mary Alice Vuicic, our Chief People and Communications Officer; and Kirsty Roth, who, of course, runs operations and technology, they, with their teams, are leading this effort. Early days. Lots of experiments and tests going on. I think cautious optimism as to what that’s going to yield for us. But we’re going to be pretty conservative in terms of providing sort of guidance on cost efficiencies. We want to see the benefits, and we want to make sure that it’s in best service of our customers before we get out ahead of ourselves in terms of the financial implications. So I’m going to defer to Mike in future quarters to make that call as to when we’ll communicate around that.
But we’re in no hurry.
Gary Bisbee: And we’re at the top of the hour, so Maddie, I think we’ll end the call there. But thank you, everyone, for your attention.
Michael Eastwood: Okay. Thank you.
Stephen Hasker: Thanks, everybody.
Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.
