Thomson Reuters (TRI) J.P. Morgan Ultimate Services Investor Conference 2024 summary

Investment in generative AI

• Annual investment in generative AI is set at $200 million for 2025 and 2026, split evenly between operating expenses and capital expenditures.

• The investment level may be adjusted as learning continues, but current guidance incorporates this amount.

• Returns are tracked using a new metric: the portion of annual contract value (ACV) that is GenAI-enabled, with Westlaw Precision at 37% ACV penetration.

• GenAI investments are expected to drive organic growth, margin expansion, and free cash flow acceleration.

• The main constraint on further investment is talent acquisition, not financial resources.

Product strategy and pricing

• Legal AI assistant CoCounsel is envisioned as a central platform for lawyers, integrating access to Westlaw, Practical Law, and drafting tools.

• Products are increasingly bundled into integrated propositions, with enterprise-wide pricing rather than per-seat models.

• Price increases are expected as more value is delivered, especially to law firms, moving from point solutions to integrated suites.

• Migration to Westlaw Precision AI is ongoing, with significant runway for further adoption and no expected stall in organic growth.

• Smaller law firms and solo practitioners are showing increased interest in AI-enabled products, expanding the addressable market.

Segment performance and market dynamics

• Legal Professionals segment achieved 7% organic growth in Q3, with recurring growth at 8%.

• The divestiture of FindLaw will dilute growth by 75 basis points, but underlying growth is expected to accelerate in 2025.

• Market share has expanded, but the total addressable market is also growing as law firms increase technology spending.

• The legal business is nearly twice the size of its next largest competitor, supported by sustained investment in content and editorial expertise.