Thomson Reuters earnings miss drives 9.9% share decline

By Grace Kim

Thomson Reuters shares were down 9.9% since the Nov. 3, 2026 release of third-quarter 2026 results. Adjusted earnings per share (EPS) of $0.81 missed the Zacks consensus estimate of $0.89 by 9%, while revenue of $1.83 billion fell 3.9% short of the $1.91 billion estimate. Both measures grew from a year earlier.

What did Thomson Reuters earn?

Adjusted EPS rose 14% from $0.71, supported by higher adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and a lower share count. Revenue rose 10%, and organic revenue also grew 10%, as the core businesses strengthened.

Generative artificial intelligence (AI)-enabled products represented 34% of annualized contract value, up from 24% a year earlier. On Oct. 1, 2026, Thomson Reuters sold a 51% stake in Global Print, now independently operated as Westbridge Print. Current and prior-period figures exclude the impact of treating the divestiture as discontinued operations.

Takeaway: Demand grew at a double-digit rate, but the estimate misses dominated the reaction.

Where did revenue growth come from?

Recurring revenue accounted for 88% of total revenue and rose 9% year over year; organic recurring revenue increased 8%, reflecting sustained demand for professional information and technology solutions. Transaction revenue climbed 27%, including 23% organic growth, helped by Pagero implementations and generative AI content licensing. The Big 3 core segments contributed 88% of total revenue.

• Legal Professionals: Revenue rose 9% to $788 million, with 9% organic growth. Westlaw and CoCounsel Legal supported recurring revenue; CLEAR, its online research, investigation and risk-management software platform, lifted transaction revenue.
• Corporates: Revenue rose 11% to $544 million, with 10% organic growth. Pagero, CoCounsel Legal, CLEAR and international operations supported performance; transaction revenue rose 32% on e-invoicing implementation activity.
• Tax, Audit & Accounting Professionals: Revenue rose 11% to $276 million, with 10% organic growth, supported by CoCounsel Tax, Audit & Accounting, SafeSend, SurePrep and Latin American operations.
• Reuters: Revenue rose 12% to $232 million, with 12% organic growth, including about $19 million in transactional generative AI content licensing. Excluding that licensing in both comparable periods, organic growth was 7%.

Takeaway: Recurring revenue supplied the base, while Pagero, CLEAR and AI licensing drove faster transaction growth.

What did costs do to profitability?

Adjusted EBITDA rose 10% to $651 million, but its margin contracted 30 basis points to 35.5% because of higher costs and Global Print’s discontinued-operations treatment. The quarter included $22 million of severance expense, reducing the adjusted EBITDA margin by about 120 basis points.

Legal Professionals’ margin fell 240 basis points to 46.6%, reflecting higher technology and other costs. Corporates produced $197 million of adjusted EBITDA, Tax, Audit & Accounting Professionals $83 million, and Reuters $56 million, up 37% on higher transaction revenue.

Operating profit fell 22% to $402 million, mainly because the prior-year quarter included a gain from Thomson Reuters’ sale of its remaining Elite minority interest; higher software amortization also weighed.

Takeaway: Cost pressure and amortization offset the top-line gains.

How are AI products and cash flow developing?

The next-generation CoCounsel Legal platform’s active user base grew more than 60% from August to September. Users completed 2.4 times the work recorded at the previous version’s peak. Thomson Reuters expanded Westlaw Brief Builder and added multinational legal research capabilities covering more than 100 countries.

The next-generation CoCounsel Tax, Audit & Accounting platform introduced agentic capabilities, or AI systems that perform tasks to produce finished professional work. Pagero expanded its geographic coverage by eight countries in 2026, supporting compliance requirements across more than 90 jurisdictions.

Net cash provided by operating activities fell 15% to $599 million, and free cash flow fell 23% to $408 million, reflecting unfavorable working-capital movements, higher income-tax payments and increased capital expenditure. Thomson Reuters completed a $600 million share-repurchase program and issued about $2 billion in notes during September.

Net leverage, or net debt relative to EBITDA, stood at 1.0 times on Sept. 30, 2026. Thomson Reuters also completed the Global Print sale to KKR-advised capital accounts for about $500 million in gross proceeds, retaining a 49% interest.

Takeaway: AI adoption accelerated, but cash conversion weakened.

What does the 2026 outlook require?

For 2026, Thomson Reuters expects total revenue growth of about 9.5% and organic revenue growth of 8.5%-9%, reflecting the Global Print exclusion. The unchanged Big 3 organic revenue outlook is 9.5%-10%. The company projects an adjusted EBITDA margin of about 39% and free cash flow of about $2.1 billion.

Capital expenditure should represent 8.5%-9% of revenue, and net interest expense should reach about $190 million. For the fourth quarter, management expects about 8% organic revenue growth and an adjusted EBITDA margin of about 42%. Slower Reuters growth and moderating transaction revenue should shape the quarter.

Takeaway: The forecast hinges on margin recovery and stronger cash flow.

Over the past year, Thomson Reuters shares lost 24.8%, against a 5% industry decline and a 10.7% S&P 500 gain. Zacks classified the shares as Rank #5 (Strong Sell).

Two broader earnings snapshots in the same report showed Waste Connections’ adjusted EPS of $1.58 beating consensus by 4% and rising 9.7% year over year; revenue of $2.64 billion beat by 1.2% and rose 7.3%. Rollins’ adjusted EPS of 34 cents missed by 2.9% and fell 2.9%; revenue of $1.09 billion missed by 3.2% but rose 6.2%.

The test now is whether Thomson Reuters can convert product demand into reported earnings and cash after the Q3 shortfall.