Mike Eastwood: Yes. Kevin, you touched on the key building blocks. I would just emphasize retention, price, M&A and new product. In regards to retention, as I’ve shared in prior calls, we’re roughly 91% of revenue. That’s based on — I’m sorry, retention. That’s based on revenue of total TR. That significantly varies between small customers, midsized customers and large customers, with our largest customers having the largest — or the highest retention rate. I would anticipate pricing being relatively stable over the time horizon. If you look at the recent acquisitions in the last 13 months, SurePrep, Casetext and Pagero, certainly, they are a key component of that acceleration as we go into ’25 and ’26. I would just call out Dave Wyle, who is the Co-Founder, leader, CEO of SurePrep.
We are into 14 months now with Dave and incredibly pleased and proud of Dave and the team being part of TR. Then we go to Casetext with Jake Heller and his team. We have 5, 6 months into a great progress there and then most recently with Pagero. So as we do that Walker build to 6.5% to 8%, those recent acquisitions are certainly key factors. And then we go to the fourth vector with the new products. We’re quite confident, probably more confident than my tenure at TR and our product road map. We’ve talked hell of a lot about Legal and Emily Colbert, Mike Dahn, Jake Heller, done a great job and others with the product road maps for Legal. But then if you think about Tax & Accounting Professionals, already double digit with Purita and team leading the product road maps there and in Corporates with Ray Grove and IDT.
I think that gives us just the confidence. If you think about those four main levers of retention price, acquisition and new product, it is the combination of those four, Kevin, that gives us the confidence to achieve that 6.5% to 8%. The one that we will provide you with more visibility on as we progress during 2024 is our GenAI as that evolves and really builds up a lot of momentum, a lot of confidence there, but we will provide additional quantitative information on GenAI evolution during the course of ’24.
Kevin McVeigh: Great. Those are very helpful. I will leave at one just because — I know it was a long winded question. So thank you.
Mike Eastwood: Thanks, Kevin.
Steve Hasker: Thanks, Kevin.
Operator: Thank you. We will go next to Tim Casey with BMO.
Tim Casey: Thanks. Good morning. Can you talk a little bit about your international aspiration? It seems there’s more commentary on expanding into international markets on this call. I don’t know if I’m overthinking that. But in the past, you’ve — I think the strategy has been to grow with your multinational corporates internationally. And now it seems some of the product sets, and certainly Pagero, have a more international footprint. Any thoughts there would be helpful. Thanks.
Steve Hasker: Yes. Thanks, Tim. We — as you’ve seen over a number of years now, our international assets are a source of pride in so far as they’ve been growing in the mid-teens, certainly Latin America higher than that and AEM a little bit lower. And this reflects the focus of Adrian Fognini in Latin America and Jackie Rhodes in AEM where the customers can be basing here in Canada [technical difficulty] same. So while today, it’s around about 20% of our revenues in international. So it’s a relatively modest part of the overall is we do see higher growth prospects in those markets. And that really comes from to say the opportunity in Corporates to better serve corporations across the world with our legal and our tax and risk solutions.
Pagero is an asset that’s heavily focused in the international markets on e-invoicing space. So we see lots of potential really that as a core driver. And of course, Casetext with its CoCounsel product, that is perhaps not constrained in the same way that traditional research products have been to common law markets and sort of cash flow precedent market. The CoCounsel skills are just as relevant civil war markets as they are anywhere else. So really on the back of those and the continued performance of the Dominio assets in Brazil, the acquisition of Westlaw Japan, we are increasingly bullish about what we can do in international markets. And I would add one other thing, which is the higher those growth prospects become and the more sort of organic and inorganic opportunities we see, I think the more exciting career paths that provides to many of our talented folks who want to spend time in markets and some of the international talent who want to spend time in North America.
And certainly, Mary Alison and her team have been very focused on creating those pathways for our people.
Mike Eastwood: Yes. Tim, I would say there are two points. Our Latin America revenue has doubled in the last 3-year period driven by Dominio. And at our March 12 Investor Day, McKean, we have a section dedicated to international businesses and international growth aspirations.
Tim Casey: Thank you.
Operator: Thank you. We will go next to George Tong with Goldman Sachs.
George Tong: Hi. Thanks. Good morning. You’re guiding to organic revenue growth of 8% to 9% for the Big 3 in ’25 and ’26, which would be a nice acceleration from sentiment in half this year. Can you provide additional details at the segment level on where most of that growth acceleration should come from?
Mike Eastwood: Yes. George, I think we covered quite a bit of that in the earlier comments, so I will just reemphasize those points. Also during the Investor Day, we will have each of our segment Presidents presenting on each of their businesses. And consistent with what we did at the March 2021 Investor Day, whereby we provided organic growth ranges for each of the Big 3 segments, we will once again provide that on March 12 for ’25, ’26 for each of the Big 3. The core points that we mentioned earlier is our product road map, significant investments in ’23, even more investments in 2024 across the Big 3 segments. So new product introductions, features, capabilities, including GenAI across the Big 3. And then the second big vector, George, is the M&A, SurePrep in Tax & Accounting, Casetext in Legal and then Pagero within the Corporates, specifically e-invoicing Indirect Tax.
So the product pipelines and the M&A, big contributors to our growth profile for ’25 and ’26. Also back to Kevin’s question earlier, retention will certainly play a factor as we expand or increase our retention rates going into ’25, ’26.
George Tong: Got it. That’s helpful. And then sort of a similar question, but around margins. As you look out to 2025, ’26, how would you rank order the margin expansion opportunity across Big 3? And do you see any reason why structurally long-term margin should be different across the Big 3 segments?
Mike Eastwood: Yes. We will see some margin expansion across each of our Big 3 segments by the time we reach ’25 and ’26. I think over the long-term, we will continue to see some deltas or differences between margin across the three. Specifically within legal professionals, we have Westlaw. Westlaw is about $1.8 billion for total TR, of that about $1.5 billion is within legal professionals. So that provides a significant amount of scale if you look at legal professionals, which is circa $2.9 billion to $3 billion of current revenue. So I think we — if you look over the long-term time horizon, we’ll continue to see a delta between Legal Professionals and Corporates and also TAP and Corporates. You’ll see Legal and TAP with the higher margins long-term there.
George Tong: Got it. That’s helpful. Thank you.
Mike Eastwood: Indeed.
Operator: Thank you. We will go next to Heather Balsky from Bank of America.
Wahid Amin: It’s Wahid Amin on for Heather. Thanks for taking our question. Just wanted to talk more about your M&A. You guys have been pretty aggressive in the last year. So can you just talk about your M&A platform moving forward? And is the strategy still the same as growth for higher growth companies are going after GenAI-based companies? Or have you exhausted that already?
Steve Hasker: Yes. Thanks, Wahid. So look, as I remarked, we spent about $2.1 billion over the last 12 or 18 months on half a dozen acquisitions. And they’ve really sort of met or exceeded our criteria. And we think that criteria is pretty rigorous and robust. So starting with additive to the customer experience, predominantly in the Big 3, but we’ve also seen a couple of tuck-ins in Reuters, firstly. Secondly, bringing — not bringing tech debt. So we have a lot of work to clean up our tech debt through the Change Program. We don’t plan to add to it. Thirdly, and I think equally importantly, the ability to take a product which is valued highly valued by our customers and prospective customers and really leverage our distribution and our customer relationships to accelerate this growth rate.
And that’s been a playbook that served Thomson Reuters well way back to Practical Law — Westlaw and Practical Law and certainly been the case with SurePrep. We are optimistic about the likes of Pagero and Casetext against that playbook as well. We also look at the culture of the acquired businesses. And it’s not to say that we’re not looking to diversify our culture and inject new aspects to it. But we want to make sure that the incentives are right and that the new team will gel with our existing folks. And that’s certainly been the case with these recent acquisitions to date. And then last but not least, we want to make sure that there’s value creation for our shareholders, not just the selling shareholders. So those deals have very much been against that playbook.
And we have a pipeline that we sort of continually clinician and refresh. That’s very consistent with that. Some of those potential acquisitions are GenAI-based, but not all of them. But what we do try to make sure is that we are not going to acquire businesses that will be significantly disrupted by AI. So for example, if we look at content assets, we want to make sure that it’s content that has a relevant and robust valuable role in a large language model environment, not vice versa. So I would say you’ll see more of the same over the next year or two, very — sort of very much consistent with that playbook, some of which directly leveraging GenAI and some we think will have value in that environment over time.
Wahid Amin: Got it. Thank you.
Operator: Thank you. We will go next to Manav Patnaik from Barclays.
Manav Patnaik: Thank you. I think we’ve asked the question on acquisitions a lot, but I just wanted to revisit kind of the portfolio that you saw today. You’ve done a bunch of divestitures the last 2 years. Just should we be thinking of more coming down the road? I think you might have considered print at some point. So just wanted to address that topic.
Steve Hasker: Yes. Nothing imminent, nothing to announce today, Manav. But look, as you’ve seen, we are pretty rigorous in sort of going through the portfolio on an ongoing basis and making sure that each of the franchises they’re in plays a key role in serving our customers and that the returns on any investment are the best they can possibly be relative to the alternative. So again, nothing to announce today, Manav. But it is an ongoing effort and I think it always will be, to be candid.
