First quarter 2015 revenues were US$ 3.044 bn down 3% due to the negative impact of foreign currency (5%) Revenues grew 2% on constant currency. Revenues from ongoing businesses increased 2% (before currency) from the prior-year period driven by the Legal, Tax & Accounting and Intellectual Property & Science businesses, which grew 5% in aggregate (4% organically). Adjusted EBITDA decreased 2% from the prior-year period and the margin increased 20 basis points to 26.4%. Excluding the impact of currency in the quarter, the 2015 margin was 60 basis points higher than the prior-year period.
First-Quarter Business Segment Highlights (constant currency)
Financial & Risk
- Revenues were unchanged compared to the prior-year period and reflected a substantial improvement compared to a 3% organic decline in both the first quarter and the full-year 2014. This represented the segment’s best performance since the second quarter of 2012. Recurring revenues (75% of the segment’s revenues) decreased 1% (all organic) due to lower price realization resulting from the migration of some foreign exchange and buy-side customers to new products on Financial & Risk’s unified platform. Recurring revenues declined 2% (3% organically) in the first quarter of 2014.
- Transactions-related revenues (14% of the segment’s revenues) were up 3% due to increased foreign exchange volumes.
- Recoveries revenues (11% of the segment’s revenues) were flat for the quarter and are low-margin revenues. As some third-party clients move to “direct billing” with customers, Recoveries revenues are expected to decline over the balance of the year.
- By geography, revenues in Europe, Middle East and Africa (EMEA) were down 2%, revenues in the Americas were up 2% and revenues in Asia were down 1%.
- Net sales were positive overall and were positive in all regions. This marked the fourth consecutive quarter of positive net sales.
- EBITDA increased 1% primarily due to savings related to efficiency initiatives, which were partially offset by the impact of foreign currency.
- Revenues increased 3% (all organic). Excluding US print, revenues grew 5% (all organic). This represented the segment’s best performance since the first quarter of 2011.
- Solutions businesses (45% of the segment’s revenues) grew 10% (9% organic), driven by strong growth from FindLaw, UK Practical Law and Serengeti. Solutions businesses represent all of Legal’s revenue excluding US print and US online legal information.
- US online legal information (41% of the segment’s revenues) grew slightly, representing its first quarter of positive growth since 2009.
- US print (14% of the segment’s revenues) declined 6%, as expected.
- EBITDA decreased 2% and the margin was 34.4% compared to 35.4% in the prior-year period. The margin was negatively impacted by investments and some timing-related costs.
- Operating profit decreased 1% with a margin of 26.3% compared to 26.8% in the prior-year period. The margin was impacted by the same factors noted above.
Tax & Accounting
- Revenues increased 10% (7% organic) driven primarily by the Corporate and Professional businesses. Recurring revenues were up 11% (7% organic).
- EBITDA increased 10% and the margin was 33.8% compared to 33.0% in the prior-year period. The EBITDA margin increase was primarily related to the flow through from strong revenue growth.
- Operating profit increased 17% and the margin was 26.3% compared to 24.1% in the prior-year period. The margin improvement was primarily related to flow through from strong revenue growth and lower depreciation and amortization expense.
Intellectual Property & Science
- Revenues were flat as subscription revenue (79% of the segment’s revenues) growth of 3% was offset by an 11% decline in transactions-related revenues as the first quarter of 2014 had certain large one-time sales to Government and Academic customers which did not repeat in the first quarter of 2015.
- EBITDA decreased 17% with a margin of 25.3% compared to 29.6% in the prior-year period. The EBITDA margin decline was due to a lower margin revenue mix and some non-recurring expenditures.
- Operating profit decreased 25% with a margin of 16.0% compared to 21.0% in the prior-year period. The operating profit margin decrease was due to the same items that impacted the EBITDA margin.
Corporate & Other (Including Reuters News)
- Reuters News revenues were $74 million, up 1% compared to the prior-year period
- Corporate & Other costs were $75 million compared to $62 million in the prior-year period.
Business Outlook (Before Currency)
Thomson Reuters today re-affirmed its full-year business outlook for 2015 which was previously communicated in February 2015. The company’s 2015 Outlook assumes constant currency rates compared to 2014 and is based on the expected performance of the company’s existing businesses and does not factor in the impact of any acquisitions or divestitures that may occur during the year. In light of the increased volatility recently seen in the foreign currency markets, the company believes that currency is likely to have a higher-than-usual impact on its results in 2015.