Thomson Reuters (TRI) Operational Quality Rating (AA) | 2025 Old York Registry
(AA) | Technology | Data & Analytics
By: Old York Financial
A Private Principal Report
the verdict
Old York Financial has assigned Thomson Reuters (TRI) an Operational Quality (AA) Rating. TRI is a "High-Floor, High-Ceiling" data monopoly. It earns an (AA) because it has successfully transitioned from a "News and Terminal" business into a GenAI-driven software engine.
While its reported ROIC (9-10%) looks pedestrian due to its $12.7 Billion Goodwill pile, its Adjusted Operational ROIC when removing the "M&A Bloat" is well north of 25%. With 84% recurring revenue and a 0.6x leverage ratio, it is one of the most structurally sound balance sheets in the Registry
the old york analysis
owner earnings: the recurring gold mine
Thomson Reuters sells "Certainty" to lawyers and accountants. That is the highest-margin product on earth.
2025 Net Cash from Operations: $2.65 Billion
(-) Accrued CapEx (8.2% of Revenue): ($0.61 Billion)
(+) Depreciation & Software Amortization: $0.83 Billion
OLD YORK OWNER EARNINGS: $2.87 Billion
Analyst Note: TRI is currently "Over-Investing" in AI ($100M+ per year), which temporarily suppresses FCF. Even with this aggressive spend, they generate nearly $3B in stay-in-place cash flow.
growth & market dominance
The "Big 3" Moat: Legal, Corporates, and Tax/Audit grew 9% organically in 2025. This is where the pricing power lives. If you are a Tier-1 Law Firm, you cannot fire Westlaw; you just pay the 5-7% annual increase.
The AI Pivot (CoCounsel): TRI has moved faster than almost any "legacy" firm on AI. 28% of their ACV (Annual Contract Value) is now tied to GenAI-enabled products. They aren't being disrupted; they are the disrupter.
LSEG Stake: They have been systematically selling their London Stock Exchange Group (LSEG) stake to fund $1B+ in annual buybacks. This is a "Shadow Balance Sheet" that most analysts ignore.
operational efficiency
Reported ROIC: 10.1%
OLD YORK ADJUSTED ROIC: 26.4%
The Math: TRI carries $12.7 Billion in Goodwill/Intangibles from decades of mergers. When we strip that "accounting air" and look at the actual cash required to run the "Big 3" segments, the efficiency is elite.
Adjusted EBITDA Margin: 39.2% (Heading toward 40% in 2026). This is "Software-Grade" profitability.
the fortress check
Net Debt to EBITDA: 0.6x (Stupidly strong).
Capital Allocation: The "Shareholder Cannibal" phase. In 2025, they repurchased $1.0 Billion in shares. For 2026, they just announced an additional $600M buyback and a $605M special capital return.
Dividend: 33 consecutive years of increases. They are a "Compounder Sovereign."
why it’s not rated (AAA)
The Global Print Anchor: They still have a shrinking "Books" business (Global Print) that declined 6% in 2025. An (AAA) company should not have a "melting ice cube" segment, even if it's small.
Goodwill Weight: Until that $12.7B in intangibles is further amortized or matched by even higher earnings, the "Return on Total Assets" remains in the (AA) tier.
M&A Reliance: To stay at (AA), they must continue to buy companies like SafeSend and Pagero. This introduces "Integration Friction" that a pure organic (AAA) doesn't have.
final determination
Rating: Old York Quality (AA)
Classification: The Analytics Sovereign.
Thomson Reuters is the ultimate "Mission Critical" business. It receives an (AA) because its revenue is essentially a "Tax" on the legal and accounting professions. It is the highest-quality data asset in the Canadian market.
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager.
