By Helen Coster
NEW YORK (Reuters) -Thomson Reuters Corp on Wednesday reported higher-than-expected third-quarter profit, helped by cost cuts and growth at its biggest divisions serving legal, tax and accounting professionals, and said it was making progress incorporating artificial intelligence into its products.
It reported adjusted earnings of 82 cents per share, above analyst forecasts of 71 cents.
“The three businesses that drive the lion’s share of financial results continue to plug along and generate really good organic growth,” said Edward Jones analyst Matt Arnold. “A lot of the costs associated with transforming the business over the last few years are winding down, and that’s allowing profitability to improve nicely on top of that organic growth.”
Shares were up more than 3% Wednesday in both New York and Toronto trading.
Total revenue rose 1% in the quarter to $1.59 billion, missing expectations of $1.61 billion, according to LSEG data.
In an interview, Chief Executive Steve Hasker said the company has made significant progress making generative AI a key component of its products.
Generative AI is a type of artificial intelligence that generates new content or data in response to a prompt or question by a user.
On Nov. 15, the company will launch AI enhancements to its flagship product, Westlaw Precision, in the U.S. Using a chat-based interface, new features will allow legal customers to ask a question in conversational format and receive an accurate answer in seconds, drawing from Thomson Reuters content.
“There’s nothing experimental about it,” Hasker said. “It will be a full-fledged launch.”
In the first half of next year, Thomson Reuters will launch new AI products beginning with legal, and later with tax and accounting around “intelligent contract analysis and drafting” in partnership with Microsoft (NASDAQ:MSFT) .
The company, which owns the Westlaw legal database, Reuters news agency and the Checkpoint tax and accounting service, announced a new $1 billion share repurchase program, and maintained its 2023 outlook except for updates to depreciation and amortization, and interest expense.
Hasker said the company achieved "solid momentum" in the quarter despite an uncertain economic environment.
Organic revenues in the Legal Professionals segment increased 6%, while total revenue fell 2%, reflecting sales of some divisions. Thomson Reuters sold a majority stake in Elite, a vendor of business management software for law firms, earlier this year to private equity firm TPG.
Organic revenues in the Reuters News division increased 3% in the quarter, driven by a contractual price increase and digital advertising growth.
Thomson Reuters has earmarked $10 billion for acquisitions and about $100 million per year in investments in AI capabilities.
In August, the company closed its $650 million cash acquisition of Casetext, a California-based AI company that helps legal professionals conduct research, analysis and prepare documents using generative AI.