Hi, this is Heather Balsky, B of A Business and Information Services Analyst. I want to welcome you all to our fireside chat with Thomson Reuters CFO Mike Eastwood and President Legal Professionals Paul Fischer. It's a pleasure to have you all here. Before we kick things off, I just want to let the audience know that we will be taking your questions. There is a Q&A feature on the webcast, so if you do have a question while this is going on, please submit it. I'll start checking say about 20 minutes in to see if there are any questions in the queue. Otherwise, I have a long list to go through. And so with that, we'll kick it off with Mike. You're celebrating two years as CFO. What have been the biggest surprises for you since you were elevated to that role, and what are you most excited about looking forward? Heather, it's okay. I'll change that word, surprises, to key changes in the last two years, which might surprise a couple of people on the call here today. The first thing that I would mention is we have shifted from a paternalistic and democratic approach within Thomson Reuters to an approach that's much more focused on prioritization and accountability. That might sound very basic to many, but I'll expand on that. We had a legacy of managing to the middle, which means spreading the peanut butter to everyone, trying to make everyone happy. Now we're quite unapologetic in regards to narrowing our focus and being highly, highly laser-focused on prioritizing to the greatest investment opportunities and growth opportunities. Many on the call will be aware of the seven growth initiatives that we've been emphasizing last year at our Investor Day and during each of our subsequent earnings calls. The last item I would mention in regards to surprises, I call it changes. Historically, we have focused on content versus software, and now we're very much focused in regards to the convergence of, or the convergent power of content, software, AI, machine learning, and the cloud. Many will be aware that we, at the end of 2021, had nearly 40% of our revenue available on the cloud, and we're targeting to have 90% + by 2023, so those are some changes in the last two years that I think were necessary and were reaping the benefits, and if I had to synthesize it, I would say kind of relentless prioritization in regards to the highest investment and growth opportunities, which are reflected in our seven growth initiatives. In regards to what I'm excited about, it's quite a long list here. Very, very pleased with the progress we've made on our change program. We're roughly 15 months into our two-year change program. We've shared during each of our earnings calls the progress there. But I think the key contributor to the progress with the change program was the infusion of talent in the last 18 months. To mention a few names, Kirsty Roth, who's leading the overall change program, our Chief Operations and Technology Officer, David Wong, Chief Product Officer, Sarah Wilkinson, Chief Information Officer, and many individuals on their respective teams, including Kriti Sharma, who supports Paul Fischer with legal professionals there. So infusion there. Also, very excited, Heather, about our significant capital capacity. By 2025, we'll have nearly $15 billion of capital capacity. That's a result of our growing free cash flow. In 2023, our external guidance is $1.9 billion-$2 billion of free cash flow, which will grow subsequent to 2023, but we also have the London Stock Exchange Group shares that we own. We own nearly 13% of the London Stock Exchange Group. We'll be able to monetize the first tranche of the LSEG investment in Q1 of 2023, which helps us generate that $15 billion of capital capacity, which we can deploy to things such as acquisitions to help accelerate our growth and to areas like buybacks. I definitely want to touch on that a little bit more as we get through our session. But I'll ask you just sort of a macro question too before we kind of dig into things, which is, how do you think the pandemic and the pandemic period has influenced how your customers interact with your business and their willingness to adopt new offerings? Are there other macro tailwinds or drivers that you're benefiting from today? Yeah, Heather, I'll start with this, and I think Paul will probably have a couple of examples that he'll want to supplement with. For me, in the last two years, I think customers have seen in an increased way the benefit of investing in technology, productivity, and efficiency opportunities, which provides tailwinds and opportunities for us. I think customers are also much more comfortable with the cloud, especially smaller customers. Nearly 40% of our over $6 billion of revenue is generated from what some might call small firms, small law firms, small accounting tax firms, or SMBs. So many of those customers had some hesitancy two years ago in regards to cloud opportunities. They're much more open and receptive to cloud now. And the last one I will mention before passing to Paul, which is, I think, a macro tailwind for us, Heather, is we say complexity is our friend. And we see rising complexity within legal, tax, and compliance. Compliance, I mentioned because we have a growing Risk, Fraud, and Compliance business. With that growing complexity in those three areas of legal, tax, and compliance, we think that provides additional opportunities for us to meet our customer needs in many ways. But Paul, I could pass over to you if you want to supplement, Paul. Yeah, I'll do that, Mike. Thank you. Heather, part of your question also was how have our products worked in this environment? And I think our products migrated very, very well to work from home. And in many regards, law firms needed our products probably more in the work-from-home environment than they did in the office because they didn't have their colleagues around them. So our products moved very well. And I think from a big picture view, I think law firms realized early on that they had probably overinvested in real estate and underinvested in technology. Sense of tailwind that played to our advantage. I think since COVID hit, almost two years ago now, some interesting things have played out, especially last year. And that is law firm demand started returning really in July of 2020. It was down for a quarter, and then it started to return robustly, and that has continued, so when I say law firm demand, I'm talking about hours worked, and as we monitor that across the industry, those hours worked, that demand calculation is actually up now over 2019, so they've recovered everything that was lost for a period of time and then some, so demand is up. Hiring at law firms is at a pace we haven't seen in more than a decade, and so to meet that demand, they've been hiring, and at the same time, dealing with historic levels of attrition at the associate level, nearing 25% last year that we saw in our studies and surveys, so that plays to my advantage as the president of the legal business for our business because customers are doing two things. One is they're trying to be efficient with reduced staff and keeping that staff as efficient as possible. And then secondly, they want to put the very best tools in their associates' hands from a recruiting and retention perspective of talent. And we have the leading positions in a number of categories. And so both the increased demand, the need for efficiency, and then the resulting desire to put the best tools in their associates' hands has really played to our advantage, and we've been there to help our customers through that. I'll only supplement with two additional items for other parts of our business. First, within our tax and accounting professionals' business with regards to tailwinds that have happened in the last two years, given the federal stimulus programs, many of our tax and accounting professional clients have been, or customers have been working with their clients in regards to implementing, executing, and making the most of the federal stimulus programs. Within our government business, which is reported externally as part of legal professionals, it's nearly $500 million of annual revenue growing 10%. Given all of those federal programs, we've had the opportunity to work with our customers to help prevent and mitigate fraud that happens just given the vast amount of stimulus programs during 2020 and 2021. Then lastly, I would mention the opportunities with digital that have surfaced and self-serve. I think in the last two years, our customers have become much more receptive than they would have been to digital and self-service opportunities. That's great. Thank you for all that color. Thank you. And so you touched on the change program earlier. It's one of the big changes that you're making. A year in, what have been the key accomplishments, and what are you learning from this transformation so far? Heather, once again, it might sound basic, but I learned we should have done it a hell of a lot sooner. We've had a lot of opportunities to improve our end-to-end customer experience. We had opportunities to deliver more to our shareholders sooner. But be that as it is, I think in the last 15 months, we've made a lot of progress in regards to achieving the operating expense savings that we committed to. We committed to $600 million by 2023. We were at $217 million at the end of 2021. We're confident we'll achieve $500 million by the end of 2022 and then the full $600 million in 2023, with $200 million of that being invested longer term in regards to helping us grow our business. So really good progress there. I mentioned earlier the progress that we're making on our cloud. We're making progress in regards to accelerating our innovation with David Wong and the product team there. And we're making also progress with digital. With that said, we do have some heavy lifting still yet in 2022 in regards to our digital self-service program, which is being led by Andrew Pearce. As we make more progress with digital self-serve, I think we'll see a corresponding improvement in our customer experience, an increase in our Net Promoter Score, and also a corresponding increase in our retention rates, which are roughly 91% for total TR. So those are some things that we're seeing with our change program. But please, overall, where we are, but a program of this size, always some flips and takes. And we're laser-focused on completing the change program by the end of 2022. One key aim of the change program is to accelerate innovation and product development to drive organic growth. Can you talk about the changes you're making internally to get there? What's your targets in terms of the pace of new product introductions? Yeah, let me start at a macro level, and I'll pass it to Paul to talk about a couple of specific examples. I think, Heather, internally, we have a process called Enterprise Prioritization Committee, or EPC. And I give a lot of credit to David Wong, Dave Larson, in regards to driving that focus. Once again, we were historically spreading the peanut butter. The group is doing a great job in regards to investing our annual capital expenditures into those seven strategic initiatives that I mentioned earlier that we've shared now multiple times. That's created a big shift for us internally, really demonstrating to employees that it's a different day. Paul, maybe I can ask you to comment on the recent release of HighQ 5.6 and then also Practical Law Dynamic. And Paul, you may want to just loosely touch on Westlaw Edge 2.0 also, Paul. Yeah, yeah, Mike. There's a few in there. Let's start with HighQ. And we touched on this a little bit at our last, Mike. I think you spoke about this a little bit at our last earnings call. And we released a new version of HighQ in Q3 of last year. And it featured really important integrations with Practical Law and Contract Express, Elite 3E, and Microsoft Teams. And it was part of a bundle of more than 50 enhancements and upgrades. And it's really a strong proof point and an example of the integrated workflow solution that customers are asking for and that we're striving to build. And this applies to the legal segment. It also applies to corporate professionals, GCs, if you will, that are working on that, whose business rolls up through our corporate segment. But it applies across. Contract Express is something that the name alone won't give you the full description. We're really automating and improving documents there and building it into the HighQ workflow. With Practical Law, we're taking Matter Maps, and that's customizable workflow for associates and law firms to build out their workflow within HighQ, leveraging insights from Practical Law. We're really blending, and as Mike describes our business content-enabled tech, we're really blending our best stuff from the content side and the best stuff from the technology side. It's an example of an integrated legal workflow solution and really brings to life the content-driven technology aspiration that we have, and it's coming to life with our customers. On the Practical Law side, Practical Law was one of our best acquisitions, and it's become an organic growth machine for us. Now, at almost $500 billion of revenue across Thomson Reuters, legal and corporate primarily, it's still driving double-digit organic growth. And what we've done with Practical Law Dynamic is taken a lot of the learnings from Edge and Westlaw Edge, where we were applying machine learning to a set of content. We've done the same thing with Practical Law and taken those learnings across to deliver content. Really, what we're doing, the best of there is we're bringing our legal search engine and state-of-the-art visualization and charting tools. So we're doing the same machine learning approach to provide answers. So we've got a good starting point for customers to begin from. And then also, the charting tools provide tremendous context. This product demo is great with customers. And whether you're dealing with a partner or an associate, if you head down a research path or you're trying to provide guidance for a particular area, we'll help you step back and look at all the related items around it that you might want to look for and make sure you're checking the box on. Whether that's a partner, kind of summarizing or evaluating an associate's work, or a new associate trying to get started, it really applies equally well in both cases. So that's a couple of recent examples of innovation. And then, of course, Mike mentioned Edge 2.0 that we have coming out in the second half of the year. As we've looked at that market and we've looked at the success of Edge, Edge 2.0 is building upon what we've done. We haven't spoken about this in detail yet, both for competitive reasons and for commercial reasons. We're still selling Edge 1.0 very, very well. There are still big problems to solve. As we do our research, we see that some of the complex issues that associates are dealing with on the research side will sometimes take up, on average, 22 hours. There's real problems to be solved. The area that we can take the step forward in is we have hundreds of attorney editors that are marking up case laws that come in, summarizing, annotating, drawing connections with a key number system across. We can direct those attorney editors to pull markup forward in the process that machines can run over. We're starting from a place that no one else can compare to. And it really will deepen our moat further as a competitive offering. And we're excited to tell you more down the road. We first have to get a little further along and come out with our customer story. Mike. Paul and Heather, I'll just supplement in regards to that traditional product innovation in partnerships. With the addition of Sunil Pandita to our team about 18 months ago, he had a lot of partnership experience along with Chris Carlstead. In the last few months, we have signed partnership agreements with Oracle, SAP, AWS, illustratively. So as we look at 2022, 2023, and beyond, we feel like there's an opportunity to expand our partnerships across our big three segments, which should help sustain and accelerate our organic growth, and the second point in addition to partnerships is APIs. We are investing more with APIs to meet our customer needs, so Heather, those are just a few examples in regards to traditional kind of product innovation, but also commercial opportunities with the partnerships and APIs. That's really helpful. Thank you. So let's see here. So you also mentioned your seven strategic growth verticals. And I thought it'd be worth digging into those. Paul, with you here, I think we should dive into legal first. Westlaw is about 55% of the business, roughly. I'm sorry, Westlaw is about 55% of the legal business and is the primary focus of investors. But the other 45%, that's growing high single digits. Can you talk about what's in there and the growth drivers in that part of the business? Yeah, Heather, happy to do that. And I think I always want to start in the markets, and I've touched on that a little bit already. So we think there's really good market trends here, providing some tailwinds. Then the framing that you started heading down the path of is we grew 6% last year. And Westlaw is about half of our business growing at 4%. So the math takes us to high single digits, 8% average for those other products in the portfolio. And a few of those we've touched on a bit here. Practical Law is one of those. Almost $500 billion growing low teens%. Government, we haven't touched on too much here yet. Again, almost $500 billion of revenue. And this includes our risk, fraud, and compliance, just to be clear. That's also growing high single digits%, near double digits%. So two really big components that we're excited about, both from a market standpoint and how they're resonating with customers and the runway ahead of us. Legal workflow, great example with HighQ and Contract Express, a little over $200 million growing mid- to high-single digits. And we see a lot of opportunity with HighQ as a center of our platform to add on capabilities around that, organic or inorganic. Those could be things like contract analysis, drafting, document management. We see runway there as well. So a lot of good growers in there that we haven't focused on as much historically, but we're really excited about. A couple of other products you've heard us speak about are FindLaw and Elite, two more examples. FindLaw had a terrific year. It was hit disproportionately hard in the first quarter of COVID just because of the size of law firms that we're working with, but came back robustly last year. And we see good potential there going forward. So that's a few examples, Heather. That's helpful. And you kind of backed into how it's been growing this past year, but I'm just curious if you zoom out, can you help put the recent growth in perspective? How quickly has that non-Westlaw piece been growing in recent years? And how do you sustain that momentum despite the law of large numbers as you grow off a higher base? And sort of same question, but how much runway is left for these businesses? Yeah, we think we've just scratched the surface. When we're talking about things like our government growth opportunity, Risk, Fraud, and Compliance, we think we've just scratched the surface. Legal workflow, again, just scratched the surface. So we think there are tremendous growth opportunities. And what we're bringing to our internal discussions are we're going to do both. We're going to take Westlaw, which is such a sizable part of our portfolio, and continue to move the needle with something like Edge 2.0, while at the same time focusing on those smaller but higher growth opportunities. And really want to bring them together. I think Westlaw starts on the content side, moves towards AI, and then you've got workflow starting on the pure technology side. We want to bring those two closer together and really operate at the intersection of content and technology. And another part of the business that I wanted to dig into or appreciate more is the Risk, Fraud, and Compliance piece. We hear a number of info services companies going after that business who are different than, say, the credit bureaus. Can you help break down that business in terms of key assets and scale and kind of what Thomson Reuters is doing in that space, sort of the products that you're offering? Sure. Heather, I'll start there. Risk, Fraud, and Compliance for us for 2022 annualized approximately $400 million, growing double digits. For everyone's benefit, it is included externally in two of our segments. First, Legal Professionals, and then second, within Corporates. About 55% of the Risk, Fraud, and Compliance is reported within Legal Professionals. That's our government business led by Steve Rubley. The second component is about 45%, which is included within the Corporates segment. So it's the non-government piece. In regards to the specific assets, the largest asset is our product called Clear that will be over $200 million in 2022, which is sold to both the government and to corporates, roughly 50/50. Think of that as public and proprietary databases that we have on individuals and companies that the government and corporate customers use. We also have TRSS, which is Thomson Reuters Special Services, which is a group of analysts who provide a variety of services to primarily the U.S. government. Some will remember the third asset, Fundera, we acquired in 2020. It kind of rounds out our core set of offerings within risk, fraud, and compliance. This is an area, Heather, that we are investing more organically, but also is an opportunity that we believe we can supplement the organic growth with acquisitions in 2022, 2023, and beyond. We're quite interested and excited about what we can deliver for our customers with risk, fraud, and compliance. That's helpful. I wanted to—I have some other questions about the core business, but you mentioned supplementing that business with M&A. You spoke a lot about on the 4Q call that priorities for your excess cash is to do M&A, especially in 2022. I'm curious where your focus is, what would you like to buy, and what are your priorities there, and how would you think about given you have so much cash coming in, sort of use of cash in terms of M&A versus buybacks? Maybe, Heather, I'll start by trying to clarify my comment on the Q4 earnings call. I want to focus on the acquisition piece of it. Given the level of capital capacity that we're going to have between now and 2025, it's a sequencing. We're going to have sufficient capital for acquisitions, but also things like buybacks. Just want to clarify, we're not opposed to buybacks just near term, which is what I was trying to address on the February 8th earnings call, because we believe near term we have the opportunity to supplement our big three. We're focused on acquisitions that will enhance and support our big three customer segments, not starting a fourth vertical. Based on the acquisition pipeline that we have, we think there are sufficient opportunities to continue to grow and enhance our offerings in each of our big three segments. So from a cadence perspective, we are focused near term in regards to acquisition opportunities, but we'll also have sufficient capital for other initiatives such as buybacks. We're very interested, as I just mentioned, in risk, fraud, and compliance. Second, we're very interested in improving our legal workflow with things like contract analysis and document management. We're also interested in expanding internationally. Approximately 20% of our total revenue is generated outside of North America. So we'll be very surgical, but we think there are opportunities for us to expand internationally. Within our tax and accounting professionals business, we think we can continue to automate our customers' workflow there. And lastly, I would put in the category of capabilities. There could be opportunities for us to accelerate our work on digital self-serve SMB with some acquisitions that are more capability-driven. Helpful. Thank you. And on the corporate side, it's something we hear a lot about. You've kind of touched on it a little bit with some of the products and how they fall into the corporate. But can you help break down the mix of revenue between tax, legal, and you talked about RFC, but just kind of to provide the bigger picture. And how much of your corporate portfolio offerings? Well, I guess, are there anything unique to the corporate customer as well in there? Yeah, but several questions in there. Let me break them down. First, the corporate segment is about $1.5 billion in annual revenue. And we have stated that for 2023, our forecast is 7-9% organic growth. And we achieved 7% in Q4 of 2021 as a reference point. That $1.5 billion of current revenue consists of about 55% is tax products, about 30% would be legal products, and the remaining 15% would be risk, fraud, and compliance that I discussed a few minutes ago. In regards to, are there products that are dedicated to the corporate segment? A good example would be our indirect tax product, and illustratively, indirect tax, things like VAT that are specifically corporates. Another good example would be global trade management. Think of supply chain offerings that we provide our customers. There are some products that are dedicated to corporates, but there are other products like Paul mentioned with Westlaw and Practical Law that we're leveraging with law firms and with corporates in the form of general counsels. Although with Practical Law, we do have Practical Law Connect, which is more dedicated to corporate general counsels. Great. That's helpful. And I wanted to touch on SMB and the SMB market, including legal. How big of an opportunity is that? Is digital self-service, is that how you're going to penetrate that market deeper? And I have some follow-ups, but why don't we start there? Yeah. I'll try and frame it up in the macro and ask Paul to supplement. And Heather, I want to reference back to some market data that we provided during our investor day last year. We estimate our overall core market at about $28 billion, and we estimate our adjacent market opportunities at $19 billion. So that would yield a total market of about $47 billion. Of that $47 billion, we estimate about $22 billion would be classified as SMB, about $13 billion of the $28 billion and $9 billion of the $19 billion. So that's kind of high level from a total TAM or market perspective. For us within Thomson Reuters, if you look at our small legal customers, our small tax, small accounting, nearly 40% of our revenue comes from those smaller customers, which one might associate with SMBs. But if you think about some of the smaller customer opportunities that we have, we are continuing to work on that both in our corporate segment, legal, and in tax. And that's an area where I mentioned that from an acquisition perspective, we could have an opportunity to do an acquisition to help us accelerate our SMB. But Paul, you may want to supplement. Yeah. I would say from a legal perspective, having a very sizable small law focus in our group, there's really a continuum of opportunities. The first one is digital self-service. We've made really, really good progress with that. We see customers accessing their accounts, whether it be to add users, pay their bills, and learn about their invoices. And we've had a sizable percentage move into autopay, which when we're dealing with, it's like consumers for the most part, right? We're dealing with one to two-person law firms and on up from there. But it's very, very helpful for them when they sign up for autopay that we're receiving that every month, and we don't have to chase when they're a month behind or something like that. So that's been one tangible example that we didn't necessarily expect. But as they're coming in and self-serving, they're setting up that type of arrangement just like they're doing with their own personal bills at home. So self-service is first, renewals are second. We've also made tremendous progress with renewals and having a digital component, providing the offer, providing follow-ups, sometimes closing digitally or via self-service, sometimes contacting a person inside to say, "I've got two questions, and then I want to submit the order." But that's allowed our inside and field channels to move up market and go after higher value AOVs. We've seen benefit there. And then thirdly, it's on the new sale side. And there we've seen progress in putting tools and capabilities in our reps' hands. We have a tremendous amount of information on our websites to learn about the product offerings and how they fit. And then sometimes they'll, again, interact digitally or sometimes reach out to a rep. But that's really the continuum and where we're seeing the most progress. But it's meaningful, and it allows us, especially on the new sale side, to go after that longer tail of customers that's hard to reach with a pure rep-enabled salesforce. And are there any particular goals for 2022, 2023 in terms of your SMB efforts, or is it the things that you just spoke about and continuing to push those? Yeah. From my standpoint, we've got individual goals around all three of those categories. But Mike, I'll let you take that up a level across the aisle. Heather, I'll just refer back to our March 2021 investor day when we talked about adding the $100 million worth of revenue in addition to the $600 million of savings as part of our change program. A component of that $100 million is certainly related to SMB for us, which is incorporated within our overall guidance for 2022 and 2023. We haven't been more specific than that, Heather, in regards to calling out the specific piece for SMB, but it was quite important for us. And I'm just going to throw in one more as a question that I got. And it actually came up in another session of ours, which is there's a bit of an inflationary environment right now in general, but also on the labor side. And I'm curious sort of what your thoughts are in terms of pricing this year as you see labor inflation versus other years. Is it different this year? Yeah. Let me level set, Heather, first in regards to our historical pricing. If you look at 2019 through 2021, our pricing was fairly consistent in those three years, but it does differ by segment. Tax and Accounting Professionals at approximately 5%, Corporates at approximately 3%, and Legal Professionals at approximately 2.5%. What we've assumed is some level of price increase for 2022, 2023. However, the actual yield, the timing of achieving the pricing yield will vary. What I mean by that is within legal, 60% of our customers are under multi-year contracts. So even if we implement a pricing increase, it takes time for that to actually achieve. In Corporates, about 40% of the contracts are multi-year, and Tax and Accounting are only 10%. So that gives you the level of pricing that we have. We've built in some price lift into 2022, 2023 into our guidance. Okay. That's great. That's really helpful. So I appreciate you spending this time with us and answering our questions. And we look forward to speaking to you in the future. And thanks to everyone for joining. Okay. Thanks to everyone. Have a good day. Thank you. Bye. Thank you. Bye.