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.

• This investment level is incorporated into margin expansion guidance: 75 basis points in 2025 and at least 50 basis points in 2026.

• 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.

• Talent acquisition, especially subject matter experts and data scientists, is a key constraint on scaling AI investment.

Product strategy and pricing

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

• Products are being integrated into enterprise-wide solutions, with pricing models shifting toward bundled offerings rather than per-seat or unbundled subscriptions.

• Price increases are expected as more value is delivered, especially to law firms, with a focus on pricing to value.

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

• Enterprise-wide pricing is maintained to benefit from efficiency gains in law firms, rather than per-seat pricing.

Segment performance and market dynamics

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

• Underlying growth is expected to accelerate incrementally into 2025, driven by GenAI, Westlaw Precision migration, and other product levers.

• Market share has expanded, but recent growth is also attributed to an expanding total addressable market as law firms increase tech spending.

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

• Small law firms and solo practitioners are showing increased interest in AI-driven products, broadening the customer base.