Good day, everyone, and welcome to the fourth quarter and full year 2022 earnings call, hosted by Gary Bisbee, Head of Investor Relations. My name is Ben, and I am your event manager. I would like to inform all participants that this conference is being recorded for replay purposes. Now, I will hand it over to your host. Gary, the floor is yours.

Thank you, everyone, for joining us today for our fourth quarter and full year 2022 earnings call. I'm here with our CEO, Steve Hasker, and our CFO, Mike Eastwood, who will share our results and answer your questions after their remarks. During today's presentation, we will compare performance period-on-period and discuss revenue growth rates both in currency and on an organic basis, as we believe this is the best way to assess the underlying performance of the business. Please note that today's presentation contains forward-looking statements and non-IFRS financial measures. Actual results may vary significantly due to various risks and uncertainties discussed in our reports and filings with regulatory agencies. You can access these documents on our website or by reaching out to our Investor Relations Department. Now I'll turn it over to Steve Hasker.

Thank you, Gary, and thank you all for being with us today. 2022 was a year of significant change and progress at Thomson Reuters, so I want to begin by highlighting some of our key achievements. We delivered another year of strong financial results, meeting or exceeding our key financial targets. In Q4 and for the full year, organic revenue increased by 6%, supported by a 7% rise in recurring revenue. The Big 3 segments also saw a 7% organic growth. Even with unprecedented inflationary pressures and ongoing investments, our full year margins improved by 410 basis points to 35.1%, and we met our free cash flow forecast of $1.3 billion. Given our performance in 2022 and a solid business outlook, the full year 2023 estimates for organic revenue and adjusted EBITDA margins remain unchanged from our last commentary. Mike will elaborate on this later in the call. We successfully concluded our Change Program at year-end, hitting our financial targets and making notable strides in transforming Thomson Reuters into a more streamlined and scalable enterprise. The progress made through the Change Program lays a strong foundation for sustainable future growth, which I will discuss further shortly. 2022 also saw advancements in innovation and product development, particularly with the September launch of Westlaw Precision. Our successes in 2022 also included a focus on product stability, performance improvements, and enhancing user experience, alongside new offerings and capabilities in our portfolio. We expanded our third-party product integrations as well. Our capital capacity and liquidity remain essential assets that we are focused on using to boost shareholder value, making good strides throughout 2022. By the end of the year, we repurchased $1.3 billion from the $2 billion share buyback program launched in June 2022, with plans to complete the program by early Q2. After finishing the buyback, we intend to execute a return of capital along with a concurrent share consolidation of at least $2 billion, funded by proceeds from our LSEG share sales. We’ve also made progress in M&A, successfully closing the $500 million acquisition of SurePrep on January 3, and completed three smaller tuck-in acquisitions in 2022. We will keep evaluating inorganic opportunities and are optimistic about executing additional strategic transactions in 2023 while concurrently completing the $2 billion share buyback and capital return plans. Briefly commenting on market conditions as we enter 2023, we recognize the challenging and uncertain macroeconomic landscape but are fortunate to have a resilient business model, where 80% of our revenues are recurring, operating in stable and growing end markets. We are closely monitoring customer sales activity, observing a lengthening sales cycle in corporates. However, as noted last quarter, the overall activity through early Q1 remains aligned with our 2023 targets. Regardless of macroeconomic developments, we will maintain our focus on utilizing our content, technology, and services for our customers' benefit. Now turning to quarterly results, reported revenues for Q4 grew 3%, impacted by a 2% foreign currency drag and a 1% decline from recent divestitures. Organic revenue, a constant currency measure, rose 6%, with organic recurring revenue increasing by 7% and transactional revenue aligning with expectations at 5%. Adjusted EBITDA rose to $633 million, marking a 950 basis point margin improvement to 35.9%. If we exclude Change Program costs, the adjusted EBITDA margin is 39.3%. Adjusted earnings per share surged 70% year-over-year to $0.73. In segment-specific fourth quarter performance, the Big 3 businesses achieved organic revenue growth of 7%. Legal organic revenue growth slowed to 5%, down from 6%, primarily due to weaker results in our ELITE and Government sectors, which Mike will cover in greater detail later. Nonetheless, demand for our legal solutions remains robust across all major segments, and we anticipate a return to the 6% growth trend in the latter half of 2023, supported by ongoing momentum in offerings like Westlaw, Practical Law, HighQ, and others. In Corporates, organic revenue momentum persisted, rising 9%, with recurring revenue up 11%, though we expected a softening in transactional revenue. Tax & Accounting experienced another strong quarter with organic revenue growth of 8%, driven by our Latin American business, led by Dominio, which grew over 25% in the quarter, serving as a key growth driver. Reuters News organic revenues grew 10% in Q4, with growth across all business lines, particularly in Reuters Events. Lastly, Global Print organic revenues dipped by 1%, but this was better than anticipated due to improved retention and better third-party print revenue, with timing benefits we expect to normalize in Q1 2023. In summary, we are pleased with our results and momentum across our businesses. For the full year, reported revenues increased by 4%, with organic revenues growing 6%. Adjusted EBITDA jumped 18% to $2.3 billion, driven by revenue growth and savings from the Change Program, resulting in a margin of 35.1%. Excluding Change Program costs, the adjusted EBITDA margin was 37.7%, a 380 basis point rise from 2021. Adjusted earnings per share for the year reached $2.56 compared to $1.95 per share the previous year. I would like to wrap up on the full year's financial results by highlighting that we met or exceeded almost all of our 2022 guidance metrics. The only exceptions were capital expenditures, which were slightly higher due to inflation, and total revenue growth, somewhat affected by Q4 divestitures. Now, I'll take a few moments to discuss the completion of the Change Program and several updates on growth. The end of 2022 signifies the conclusion of our Change Program, reflecting an extraordinary 20 to 24 months of effort and achievements at Thomson Reuters. The Change Program had two primary objectives: transitioning from a holding company to an operating company, and evolving from a content-focused firm to a technology-driven entity. These goals were pursued through numerous work streams, involving an investment of just under $600 million, with broad delivery against our financial targets and $540 million in run rate savings achieved by December 31. We outline several key accomplishments. While there is still work to do, we take pride in our achievements and the transformation we have undergone. Today, we are a more focused and performance-oriented company, with improved organic revenue growth, profitability, and a stronger portfolio. Looking ahead, we envision the greatest legacy of the Change Program as the foundation it sets for enhanced sustainable growth. This includes a more simplified product portfolio with concentrated investments in our best opportunities; improved customer-facing capabilities, including digital self-service; revamped customer platforms and user experience; modernized technology, such as expanded APIs, cloud conversion, enhanced cyber resilience, and reduced technical debt; and upgraded talent, featuring a flexible footprint, global capability centers, and exceptional talent throughout the organization. The resulting streamlined and scalable business, combined with the successes from our product and engineering teams, gives us confidence in our ability to innovate organically, positioning us well for continued healthy organic revenue growth in the future. On that note, I’d like to highlight a few factors that have driven our revenue growth acceleration in recent years. During our March 2021 Investor Day, we discussed the seven strategic growth priorities. We are committed to focusing our investments on these key areas, which grew 8% collectively in 2022, an improvement from 6.5% in 2021. Enhancing product and innovation remains a top priority, with the launch of Westlaw Precision being a key highlight of 2022, where we recorded over 750 sales across various customer types, including in court systems across 14 states. We are confident that this momentum will persist into 2023. Beyond Westlaw, 2022 also featured several significant product offerings and enhancements throughout our portfolio, including expanded HighQ Contract Lifecycle Management features, a new document intelligence solution in our Legal sector, a Free Trade Agreement Analyzer in Global Trade management, a new global beneficial ownership solution for CLEAR, and additional features and capabilities across various products in our Tax portfolio. Looking ahead to 2023, we boast a strong and targeted product roadmap, poised to continue delivering value to our customers and growth opportunities for Thomson Reuters. In addition to promoting organic growth, we are dedicated to creating shareholder value through the deployment of an estimated $11 billion in capital capacity from now until 2025. This positions us favorably to fund both strategic M&A efforts and substantial capital returns to our shareholders. Mike will provide commentary on shareholder returns, while I briefly address our M&A strategy. As previously stated, we are not pursuing transformational deals or looking to add new operating segments. Instead, we aim to acquire high-quality assets that reinforce our Big 3 customer segments. We identify several areas of interest and will maintain a disciplined approach, patiently searching for assets that align with our strategic, operational, and cultural criteria, while also meeting our financial targets. While we consider a variety of situations, our focus is on acquisitions that allow us to replicate our successful M&A approach, where we secure quality assets within our expertise, integrate and invest in them, and leverage our broad distribution and extensive customer reach to grow these businesses over several years. This strategy has been successfully executed multiple times in the past and most recently with the 2019 acquisitions of Confirmation and HighQ, where revenue has doubled during our three-plus years of ownership, and we see continued strong potential for both. Many earlier instances of this same strategy can be seen, such as with the 2013 acquisition of Practical Law. Transitioning from strategy to execution, we're excited to announce the closing of the SurePrep acquisition on January 3, and we warmly welcome the SurePrep team to Thomson Reuters. We believe SurePrep aligns perfectly with our acquisition philosophy, and we are committed to applying our acquisition strategy to drive substantial growth in this business over the long term. As a leading provider of tax workflow automation solutions, SurePrep's offerings enhance the efficiency of tax return processes by streamlining and automating initial workflow challenges. We believe SurePrep's advanced AI models are industry-leading and provide automated coverage of tax documents that is unmatched. SurePrep compellingly complements our Tax & Accounting division, as its document collection and data extraction technology, when combined with our leading research client software, enables us to provide comprehensive automated workflow solutions. In conclusion, we find ourselves in a robust position with considerable resources in a market that is becoming increasingly favorable for buyers. We are optimistic about the potential to complete additional acquisitions similar to SurePrep within the next 12 to 18 months, further enhancing our Big 3 segments’ offerings. To wrap things up, I want to emphasize two key points. First, our successful completion of the Change Program paves the way for more consistent growth in the future. Second, we are making substantial progress in deploying our significant financial resources while remaining focused on doing so in ways that enhance shareholder value. Mike, I’ll now turn it over to you.

Thank you, Steve, and thanks for joining us today. As a reminder, I will talk through revenue growth before currency and on an organic basis. Let me start by discussing the fourth quarter revenue performance of our Big 3 segments. Revenues rose 7% organically and 5% at constant currency for the quarter. This marks the seventh consecutive quarter our Big 3 segments in aggregate have grown at least 6%. Legal Professionals' organic revenue growth rate moderated slightly to 5%, which I will discuss on the next slide. Organic growth was driven by Westlaw, Practical Law, and HighQ. In our Corporates segment, organic revenues increased 9% for the quarter, driven by recurring revenue growth of 11%, offset by a 5% decline in transactional revenues. Practical Law, CLEAR, Direct Tax, and Global Trade were key drivers of recurring revenue growth. And finally, Tax & Accounting's organic revenues grew 8%, driven by recurring revenue growth of 8% and transactional revenue growth of 10%. Recurring revenue growth was driven by UltraTax and the segment's business in Latin America. Legal Professionals' organic revenue growth moderated slightly to 5% from the recent 6% pace. Momentum across much of our Legal segment remained strong. However, weaker performance at our ELITE, Legal ERP software, and Government businesses led the growth rate down to 5% in Q4. As we show on Slide 19, Government and Elite are a bit less than 25% of our Legal Professionals' revenue. The remaining majority, led by key franchises including Westlaw, Practical Law, and HighQ accelerated throughout 2022, growing by 7% year-over-year in Q4. We expect this level of growth to continue in 2023, bolstered by growing contribution from Westlaw Precision upgrades. Let me provide some color on Elite and Government. Elite is in the early stages of a transition from legacy on-premise software solutions to a cloud-based SaaS offering. We see this transition as a long-term positive as it will drive stronger recurring revenue and improved margins. However, during the transition, lower professional services revenue associated with the SaaS offerings versus the legacy offerings will be a revenue headwind. This impact is already incorporated in our 2023 outlook. However, it had a somewhat larger-than-expected impact on Q4 results. Our Government revenue decelerated in the second half and especially Q4. This resulted from 2022 slowdowns in the release of federal funding for and guidance around key benefit programs. The slower flow of funds caused a number of contract delays for our Risk, Fraud, and Compliance, or RFC offerings. We do not believe we have lost share with our Government RFC businesses, and we continue to have robust pipelines of future activity. The procurement impediments have largely been resolved, which we expect to result in a return to stronger bookings growth over the next few quarters. It is worth noting approximately 40% of our RFC revenue is in our Corporates segment, which continued to deliver double-digit growth for both Q4 and the full year. For our Legal Professionals segment in total, we believe 5% growth is likely again in Q1, with a return to the prior 6% trend likely in the second half of 2023, as Government improves and strong growth continues from our Westlaw, Practical Law, and HighQ businesses. Moving to Reuters News. Organic revenues increased 10%. Growth was led by Events and the news agreement with the Data & Analytics business of LSEG. Lastly, Global Print organic revenues declined 1%. The decrease was better than expected due to improved retention, better third-party print revenue, and timing benefits, which are expected to normalize in the first quarter of 2023. On a consolidated basis, fourth quarter organic revenues increased by 6%. Turning to our profitability. Adjusted EBITDA for the Big 3 segments was $618 million, up 27% from the prior year period, with a 43.9% margin rising 810 basis points. Improvement over prior year was due primarily to higher revenues, Change Program savings, and lower annual bonus accruals. As a reminder, the Change Program operating costs are reported at the corporate level. Moving to Reuters News. Adjusted EBITDA was $40 million, up $25 million year-over-year, with a margin of 19.8%, up sharply from the prior year. Events revenue growth and a currency benefit drove margins. Global Print's adjusted EBITDA was $59 million with a margin of 36.1%, an increase of 20 basis points. In aggregate, total company adjusted EBITDA was $633 million, a 40% increase versus Q4 2021. Excluding costs related to the Change Program in both periods, adjusted EBITDA increased 31%. The fourth quarter's adjusted EBITDA margin was 35.9% or 39.3% on an underlying basis, excluding costs related to the Change Program. Turning to earnings per share. Fourth quarter adjusted EPS was $0.73, up from $0.43 in the prior year period. The increase was mainly driven by higher adjusted EBITDA. Currency had a $0.01 negative impact on adjusted EPS in the quarter. Let me now turn to our free cash flow performance for the full year. Reported free cash flow was $1.34 billion, up 7% from $1.26 billion in the prior year period. Consistent with previous quarters, this slide removes distorting factors impacting our free cash flow. Working from the bottom of the page upwards, the cash outflows from discontinued operations was $1 million less than the prior year period and reflects payments to the U.K. tax authority related to the operations of our former Refinitiv business. Also in the 12 months, we made $324 million of Change Program payments as compared to $166 million in the prior year period. If you adjust for these items, comparable free cash flow from continuing operations was $1.7 billion, $241 million higher than the prior year period, primarily due to higher EBITDA. I will now provide an update on our capital structure and several capital allocation items. As you can see, our capital structure and liquidity position remained strong as we exited 2022, and they have improved with the recent sale of LSEG shares. We had $1.1 billion of cash on hand at December 31 and more than $2 billion as of January 31, with the proceeds received from the sale of LSEG shares to Microsoft. We have an undrawn $2 billion revolving credit facility, and we also have approximately $1 billion of availability on our $2 billion commercial paper program. Note that half of the commercial paper borrowings at year-end were used to fund the SurePrep acquisition, which closed on January 3. Our December 31 leverage ratio was 1.7x, below our 2.5x internal target, as noted in our value-creation model. Next, I will provide several updates on our London Stock Exchange Group holding. On January 31, we sold 10.5 million shares to Microsoft for approximately $1 billion of gross proceeds, leaving us with 61.5 million shares valued at approximately $6 billion, including the value of our FX hedges. In the past, we have discussed our ability to monetize one-third of our LSEG shares in each of 2023, 2024, and 2025. Our vesting schedule is actually a bit more front-loaded, allowing us to monetize approximately 31 million shares this year. Combined with the 10.5 million shares sold to Microsoft, this is nearly 60% of the 72 million shares we owned as we entered 2023. In terms of our 2023 plans, we will take a disciplined approach to our monetization, which we expect to begin in March after LSEG reports their year-end results, subject to market conditions. Given that both TR and Blackstone can monetize shares this year, it would be prudent to assume the sales happen in appropriately measured tranches throughout 2023. Two other quick points. First, our cost basis on the remaining 61.5 million shares after the Microsoft sale is $2.6 billion. For your math, we would assume a 25% capital gains tax rate on gains above $2.6 billion. Lastly, the value of the foreign exchange hedges we hold against our LSEG stake were in the money as of December 31 by $310 million, down from the $650 million we mentioned last quarter due to a stronger pound sterling. We currently have nearly 90% of our remaining LSEG acquisition hedged. From a liquidity and capital structure standpoint, we remain in an enviable position with below-target leverage and strong cash flow bolstered by proceeds from the monetization of our LSEG stake. We remain focused on value creation, and we expect to continue with our balanced capital allocation approach that includes annual dividend growth, strategic M&A, and capital returns. We have ample capacity to pursue all three of these strategies in 2023 and beyond. Steve touched on our approach to M&A and the recent SurePrep acquisition, so I will focus on the other two components of our balanced capital allocation approach. We are making strong progress on the $2 billion NCIB or share buyback we announced last June, having repurchased approximately $1.5 billion worth of our shares as of the end of January. We anticipate completing the $2 billion buyback by early April. Following the completion of the NCIB, we plan to use proceeds from our LSEG dispositions to fund a return of capital in 2023 of at least $2 billion, which will be combined with a share consolidation or reverse stock split. Assuming the current share price, this transaction would reduce our share count by at least 17 million shares or 3.5%. A key advantage of the return of capital versus a share buyback is the speed of execution, as the shares are retired immediately upon the close of the transaction. Given liquidity rules with NCIB buyback programs, it would take several quarters at a minimum to return a similar amount of capital through a share repurchase program. And finally, today we announced a 10% increase in our annual dividend to $1.96 per share, up $0.18 from $1.78 in 2022. This marks the 30th consecutive year of annual dividend increases for the company. The increase will be effective with our Q1 dividend payable next month. I will close this section with a reminder of our value-creation model, which continues to guide our long-term investment approach. As we execute to these principles, we believe Thomson Reuters is positioned to consistently and sustainably drive strong operating and financial performance that builds value for our shareholders over the long term. Let me conclude with our updated 2023 outlook. As Steve outlined, we are updating our 2023 guidance to incorporate current market conditions, the SurePrep acquisition, and the Q4 2022 divestitures. I will discuss our outlook over the next two slides. We continue to project our 2023 organic revenue growing by 5.5% to 6%. Including the divestitures we discussed last quarter and SurePrep, we see total revenue growth rising by 4.5% to 5%. For the Big 3, we continue to expect 6.5% to 7% organic revenue growth, and we see total revenue growth of 5.5% to 6%. As a reminder, both total revenue growth and organic revenue growth are constant currency metrics. We continue to forecast our adjusted EBITDA margin at approximately 39%, which is healthy expansion from the 2022 margin before Change Program costs of 37.7%. This incorporates the realization of significant Change Program cost savings, tempered somewhat by inflationary cost pressures, investments to drive customer success, and fund growth initiatives, and an estimated 50 basis points drag from SurePrep. We see our effective tax rate at approximately 18%, in line with our prior view. We forecast our accrued CapEx as a percent of revenue at approximately 7%, above our prior expectation for the high end of the 6% to 6.5% range. The slightly higher capital intensity results from inflationary pressures and product investments we discussed last quarter, in addition to the inclusion of SurePrep. We also plan to invest $30 million in 2023 on real estate optimization projects, which will be incremental to our accrued CapEx outlook. In 2023, we see M&A as a roughly $40 million free cash flow drag, resulting from SurePrep integration costs and growth investments at SurePrep and ThoughtTrace. We expect positive free cash flow contributions in 2024 from these acquisitions as integration costs subside and revenue ramps. All in all, we forecast free cash flow of $1.8 billion in 2023, below our prior $1.9 billion to $2 billion outlook. This incorporates the updated capital spending outlook, along with acquisition dilution and a $40 million impact from recent divestitures. Excluding M&A, the divestiture impact, and the real estate optimization spend, our free cash flow outlook would have been within the prior range, as is shown on Slide 32. While these items will weigh modestly on our 2023 free cash flow, we believe they are smart investments that will result in improved growth and profitability in 2024 and beyond. As we think about our quarterly phasing, please note the following: SurePrep's revenue is highly seasonal, with roughly half occurring in Q1, one quarter in Q2, and the remaining quarter split between Q3 and Q4. Costs are more consistent throughout the year, leading to strong profits in Q1, but losses in the second half. SurePrep will be integrated into our Tax & Accounting Professional segment. However, approximately 23% of revenue is with the Global 7 accounting firms and thus, will be in our Corporates segment. For the full year, we see margin dilution of approximately 250 basis points to our Tax & Accounting segment due to the inclusion of SurePrep. This includes a 300 basis point benefit to Q1, followed by 500 basis point drags in Q3 and Q4. For the first quarter of 2023, we see organic revenue growth at the low end of the full year 5.5% to 6% range. We expect Big 3 revenue to be consistent with Q4, but see growth moderating somewhat due to slower growth at Reuters News and a larger decline at Print. At Reuters, both a lower contractual price increase related to our LSEG news agreement versus 2022 and a lighter seasonal Events calendar in Q1 impact growth. We see a Q1 adjusted EBITDA margin of approximately 38%. This includes our expectation for $20 million of severance in Q1, which will be a 120 basis point drag.

Thank you. Ben, I think we're ready to begin the Q&A.

Our first question today comes from Aravinda Galappatthige from Canaccord.

Congratulations on the quarter and the guidance. I wanted to take a broader look at 2023. You've managed to maintain your revenue and EBITDA guidance, and you mentioned the slight variance in free cash flow. Given the macroeconomic environment and inflation, could you discuss how you achieved this? Was it mainly due to stronger-than-expected top line trends compared to when you initially set that guidance almost two years ago? Additionally, could you share your views on long-term margins in this context and the possibility of reaching 40% or more in the long run? I'll leave it at that.

Thank you, Aravinda. It's Steve. I'll begin, and I'm sure Michael will add to this. Our current position and the signals we're sending for this year highlight two main aspects. First, the resilience of our business model, which relies on 80% recurring revenues and serves stable, growing markets with essential products and solutions. This is the most significant point. Second, in 2020, we initiated the Change Program, which we implemented in 2021 and 2022. The primary goal was to streamline the company for future challenges while establishing a sustainable foundation for higher growth. We are concentrated on meaningfully increasing our organic growth rate, starting with our investment in seven growth initiatives that we discussed at Investor Day in March 2021. This focus has continued with developing core capabilities such as cloud migration, APIs, digital and self-service customer service, advanced data and analytics to support our sales and products, and a renewed emphasis on organic product innovation that the company has not experienced previously. As we proceed through 2023, we will provide more information, but our priority is definitely to drive a higher organic growth rate. This growth is expected to enhance margins due to the nature of our business model and the fixed structure of our cost base. Those are the key areas of focus. Mike, what would you like to add?

Yes, I'll add a couple of additional points, Aravinda. Let me start with our outlook, which is provided on Page 32. As a reminder to everyone, the total revenue growth guidance is below the organic revenue guidance due to the divestitures we had in Q4. This was about $155 million of annual revenue and approximately $40 million worth of EBITDA. Regarding our confidence, the December and Q4 bookings, sometimes referred to as ACV or a book of business, provided us with assurance. These bookings support our recurring revenue, which Steve mentioned is 80% of our total. We achieved 7% recurring growth in that segment in 2022, reinforcing our confidence. To Steve's point on operating leverage, as we maintain approximately 6% organic growth over the long term, our operating leverage is supported by about 65% of our fixed costs being fixed in nature. We will continue to invest in initiatives that sustain and boost that organic growth in the long term. So Aravinda, I hope we addressed each of your questions.

Thanks, Mike. I have a quick follow-up question. I was wondering about the proportion of operating expenses associated with headcount. I'm not sure if you can share that information, but I am curious.

Sure. About 65% of our costs are compensation-related, Aravinda. That includes base salary, annual incentive plan, long-term incentive plan commissions, commissions being the variable compensation for our sales force. So about 65% is compensation-related.

Our second question comes from George Tong from Goldman Sachs.

I wanted to dive deeper into factors leading to your updated EBITDA margin guidance and free cash flow guidance. Can you discuss the puts and takes behind the updates there, as well as where, from a segment perspective, the changes are happening and contributing within the year?

Sure. In regards to the EBITDA margin, George, let me address puts and takes. From a tailwind perspective, certainly the Change Program cost savings, we referenced the $540 million of annualized savings through December '22, is certainly a tailwind. In regards to headwinds, I would mention three, George. Inflationary cost pressure is number one. Second, investments to drive customer success and to fund the growth initiatives. In regards to customer success, that's referring to continuing to improve our end-to-end customer experience that will drive higher Net Promoter Scores and then should drive higher retention. As a reminder, George, our retention rate is about 91% for total TR, but it varies by segment. The third headwind in regards to EBITDA margin is the 50 basis points drag that I mentioned from the SurePrep acquisition for calendar year 2023. So those are the puts and takes for the EBITDA margin. In regards to free cash flow, which are noted on Page 33, I'll just highlight again the three items there. The divestitures that we did in Q4, that's a reduction of absolute free cash flow of $40 million. And then we are intentionally making investments for the two acquisitions we recently completed with SurePrep and ThoughtTrace, which we think is the right thing to do mid to long term. And then lastly, the North America real estate optimization. We own facilities in Minneapolis-St. Paul, in Dallas. We see an opportunity, George, to rightsize those facilities that we own into smaller campuses for us going forward, which would provide a stronger employee experience, a stronger workplace of the future for us. But those are the thoughts, George, on those questions.

Got it. Very helpful. You successfully completed your Change Program in the fourth quarter. Can you discuss key product investment and cost efficiency initiatives now that you're done with your Change Program as you look forward to 2023?

Yes, I'll start. It's Steve. Under the leadership of Matt Keen, who served as our Interim President at Reuters for a time, we have initiated an ongoing productivity initiative. This focuses on enhancing our speed, efficiency, and effectiveness across the entire company, all regions, products, and segments. We see significant opportunities in this area and aim to continuously improve. Regarding product investment, I’m pleased with the efforts of David Wong, Shawn Malhotra, and Jason Escaravage in sharpening our focus on the seven growth initiatives, particularly some exciting product innovations and launches this year. We will continue to invest in Westlaw Precision, transition HighQ to the cloud, and enhance our Indirect Tax and Global Trade sectors. Additionally, the ongoing work by Kirsty Roth in content modernization is expected to lead to a platform for some intriguing new launches in areas like CLEAR. There are six or so key areas we are concentrating on this year where our customers have shown demand and interest, and we are eager to pursue these opportunities.

Yes, George, I would just supplement our cloud migration, which we are at roughly 50% of our revenue available in the cloud at the end of December '22. Kirsty's team is driving that to nearly 90% by the end of 2023. Elizabeth Beastrom's Tax & Accounting Professionals business, we're continuing to invest in confirmation, virtual office, UltraTax there. And then lastly, to support our sales go-to-market teams, we're making continued sustained investments in our commercial tools and processes to help the sales team be more productive and efficient.

Our next question comes from Heather Balsky from Bank of America Securities.

There have been some headlines for the legal industry just regarding labor base and some layoffs and just tougher environment for the sector, especially at mid, I guess, lower deals and on the corporate side. I'm just curious kind of what you're seeing with regards to demand from your customers and legal customers' willingness to spend on a new tech going into potentially a tougher year in '23?

Yes, Heather, thank you for your question. We observed an acceleration in Q4 within our core legal products franchise, including Westlaw, Practical Law, and HighQ, and we expect this trend to continue. Our business model is not directly tied to the number of lawyers, so fluctuations in that area do not significantly impact us. What we are witnessing is a growing acceptance within the legal profession, from large global firms to mid-sized and smaller ones, that they need to increase their investment in technology and information to enhance productivity and profitability. This demand is particularly driven by general counsels at larger firms, while smaller firms are facing challenges with talent shortages that persist. We believe there is a strong opportunity here for our legal business to support a significant transformation towards a more technology-driven approach in law firms and general counsel's offices. We are excited about our potential role in this transformation over the next few years and believe that with our offerings like Westlaw, Practical Law, HighQ, and our acquisitions and plans, we will be well-positioned to benefit from these changes in the industry.

Yes, Heather, I would just add in addition to law firms and general counsel, we also have government, which is a big user of our legal products. Westlaw Precision has now been adopted by 14 states, led by Steve Rubley's team. We expect that to continue to expand in Q1 and Q2, and that's a big draw. Once the states adopt Westlaw Precision, that's a draw for law firms and others to get that.

That's great to hear. And as a follow-up, just it's helpful to hear what's going on in the legal market. Could you potentially provide some color on what you're seeing on the consulting side as well? Again, just all the sort of macro uncertainty.

Yes. So we don't have a big consulting or advisory business. We have some ...

I apologize. That's my bad. I actually meant accounting. I'm very sorry. I meant accounting. Sorry.

On the tax and accounting front, we see that the number and complexity of returns continue to increase. It's unlikely that this trend will reverse anytime soon, especially in the United States. Consequently, the demand for our software is rising, whether it’s related to tax returns or order confirmations. Additionally, there is going to be a generational shift in the profession. Many certified practicing accountants are nearing retirement, and there aren't enough new graduates entering the field. This situation makes the profession increasingly reliant on automated, technology-driven solutions, which is the rationale behind our acquisition of SurePrep. SurePrep automates the document process for tax returns using AI, streamlining a lot of the labor-intensive tasks associated with preparing returns. This trend mirrors my comments on the legal space; the tax and accounting sector will continue to rely more on technology to automate core processes. We believe our investments are positioning us to benefit from this shift in the future, and our recent results give us good reason for optimism. The talent leading our tax and accounting division, along with our efforts to attract, retain, and develop skilled professionals in product engineering and go-to-market roles, strengthen our confidence in this area.

Yes, Heather, I would just add two points. The recent acquisition of SurePrep in accounting really further down in regards to our confidence in that space. Just a reminder, Heather, the Dominio business in Brazil, that's led by our team, that business continues to grow about 25%. It's about $100 million in revenue, now 25% annual growth. And the team there is driving new customers, new logos of about a 10% annual increase there. So that's also fuel for the Tax & Accounting overall growth.

The following question comes from Vince Valentini from TD Securities.

Steve, am I interpreting your opening remarks properly when you say you want growth to improve? So you're making investments this year to improve growth in future years. Does that mean your bar is at least aspirationally for the Big 3 segments to do better than 6.5% to 7% growth in 2024?

Yes, the answer is yes. We have ambitious goals for our Big 3 growth and profitability, and we believe we are just beginning. We see significant potential in the legal profession and in the tax and accounting sectors. We think we can successfully revitalize our Government business. Additionally, we see opportunities in Corporates, which is a relatively new focus area for us. One specific area in Corporates will be expanding our Risk, Fraud, and Compliance franchise. Overall, we're excited about the growth potential across the board. We need to make the right investments in products and talent, and we have a solid track record in these areas. Regarding EBITDA margin and free cash flow guidance, I view that positively because we see further investment opportunities to drive growth in the coming years. Despite the economic climate in 2023, we are enthusiastic about the investment prospects ahead of us.

Yes. And Vince, just to clarify, those investment opportunities, organic and inorganic, to fuel that Big 3 long-term growth.

The following question comes from Drew McReynolds from RBC.

Just two quick ones for me. Maybe starting with you, Steve. When you laid out the Change Program and when you stepped into your role, you talked about a couple of different phases in what you wanted to do. And cross-selling was one that was more medium term once you had your organization kind of in a position to do more of it. So just what are your latest thoughts on boosting that activity looking forward? And secondly, on the outlook, I get the question, and maybe this is you're a victim of your own success, going back a couple of years when you provided three years of outlook. Just wondering what your latest thoughts are when you think about 2024 and 2025 and the provision of your expectations or guidance for those years?

Yes, let me address the second question first. We're not currently offering guidance for 2024 and 2025. As we progress through the year and gain more confidence and clarity regarding some of our investments, we expect to provide more information then. I want to emphasize the opportunities we see for investment and the potential within our core Big 3 franchises. We acknowledged cross-selling as part of the Change Program, identifying a couple of areas needing improvement. First, we found the existing number of products and solutions to be overly complex, which led to our divestitures. Second, we noted weaknesses and poor performance in customer service, particularly in the initial sales process and, more crucially, in support and follow-through. The Change Program has made significant investments in this area, and while we're starting to see improvements in our Net Promoter Score, it's still early. Thirdly, our cross-selling capabilities are inconsistent across the company, and the transition to an operating company is vital for sharing best practices throughout. We have begun an initiative in Corporates focused on enhancing next-generation customer success aimed at improving our cross-selling efforts, which we plan to extend to our other franchises this year and next. However, it is important to note that we are still in the early stages of recognizing the benefits of these efforts.

Our next question comes from CIBC.

This is Scott Fletcher. I wanted to ask a question about M&A valuations. Should we consider the price you paid for SurePrep as a benchmark for future deals? I understand that there are other factors involved in determining valuation, but I would like to understand the potential acquired revenue based on the capital plans you discussed.

Yes, Scott, that's a good question. I wish I could predict. We're actively engaged in discussions about various targets, as you would expect. Mike and his team are very thorough concerning the financial criteria we establish. We aim to ensure that any potential acquisition will benefit our customers. Our segment presidents and Brian Peccarelli play a crucial role in this process. We want to guarantee that the products and technologies involved are of high quality. We are not interested in taking on technical debt or having to fix issues. This is where David Wong, John Malhotra, Jason Escaravage, and Kirsty Roth contribute significantly. Additionally, culture is a key focus for us. We always strive to enhance our culture and recognize that we can benefit from new talent through acquisitions. Mary-Alice Vuicic ensures we consider how to merge businesses thoughtfully. Those are the criteria we use. Valuations have certainly decreased, and I'm hopeful they remain reasonable this year and next as we allocate part of the $11 billion in capital for M&A. Overall, I believe the strategy I mentioned—leveraging existing products and our distribution capabilities—allows us to pay a fair price while still delivering substantial value to our shareholders. That's where our focus lies, rather than merely seeking the lowest-priced deal and having to revive an acquisition target.

The following question comes from Andrew Steinerman from JPMorgan.

This is actually Stephanie Yee stepping in for Andrew. I'll just ask a question about client retention. I was wondering if you can just comment on what you've seen in 2022 in terms of your client retention rate versus 2021 and whether you've seen any improvement on that front? Maybe from some of the changes that you've made through your Change Program.

Sure, Stephanie. In regards to retention for 2022, we saw nearly a 50 basis point improvement overall. As we've discussed before, Stephanie, that varies by segment and subsegment. And for the benefit of the full group, our highest retention is with Neil Sternthal's customers within our global large law firm at 95% plus, if not higher. Also parts of our Government business have very, very high retention. Where we have the greatest opportunity, Stephanie, is with our smaller firms. And I mentioned during the prepared remarks and in the prior question about continued investments in our customer success, we're quite optimistic as we continue those investments into end-to-end customer experience. We're going to see a direct correlation in the continued improvement. So at roughly 91% overall, we definitely see opportunities to continue to improve retention in '23, '24, '25. We have also embarked on an NRR initiative within our Corporates segment, led by Brian Peccarelli and Maria and others in which we'll be expanding our NRR initiative to Legal as we go through '23, '24. So we definitely see continued upside, Stephanie, in retention in the coming years.

Up next is Manav Patnaik from Barclays.

This is Ronan Kennedy on for Manav. May I ask, do you provide kind of insight on the organic growth components, I guess, specifically through the Big 3 in terms of pricing, the cross and upsell innovation, etc., what they were for the fourth quarter, expectations for the first quarter in '23?

Ronan, we don't go into that level of granularity. And the item that we have consistently shared is in regards to price, whereby price varies by segment and subsegment. What we had shared in the past is that our Tax & Accounting Professional business historically has been about 5% price uplift on an annual basis, with Corporates being about 3% and our Legal business being about 2.5%. Ronan, what we see as we go into 2023, if I link back to Vince Valentini's question, we do see higher price lift in 2023 versus 2022, to Vince's question with our multiyear contracts, and just that natural extension. So price increases will be a little bit higher than the reference points I just made in 2023. But we don't go into any additional granularity, Ronan, in regards to the components thereof or organic growth.

Understood. And then may I just confirm with regard to '23 guidance assumptions, how you flesh out on the mix of what subs, nonsubs revenues will be, the assumptions around the Transactional, Print, and Events? And then also, can I confirm quantification of margin impacts from benefits of divestitures and if there's kind of a run rate of the portfolio pruning?

Yes. In 2022, those divestitures that we did in Q4 was $155 million in annual revenue and $40 million of annual EBITDA. So with that, you'll see a little bit of benefit from margin accretion as a result of those divestitures, which we have incorporated in our full year guidance.

Yes, I think we have time for one more question.

I wanted to ask you, now that you've delivered on and finished your Change Program, can you discuss if there are specific geographies or new areas? You talked about maybe Risk as a potential new area where you want to focus on. Can you discuss a little bit what you are looking to amplify in terms of investments, new areas for investments? And also, when you look at the $2 billion return program on capital, can you provide some guidepost as to when that program will be initiated and the needed milestones to be achieved in order to begin the process?

I'll address the first part, Mike. Regarding our investments, we aim to seize opportunities for international growth of our franchises. We recognize potential for expansion in Latin America as well as Southeast and North Asia, and we intend to formulate plans for this throughout the year. As for our product lines, we believe there's significant growth potential in serving customers within our core areas without straying too far from our Big 3. We have a strong starting position in areas like Risk, Fraud, and Compliance with CLEAR, Pondera, and TRSS, which positions us to expand our presence beyond government and corporate sectors. Additionally, we see a natural opportunity in ESG and are exploring ways to enhance our offerings there, particularly in how we can assist Heads of Tax, General Counsels, and Risk Officers in navigating an increasingly complex regulatory landscape. Our expertise lies in helping end customers and their advisers manage these challenges using content-driven technology, which is where we focus our efforts.

In regards to the capital returns, just a point of clarification. The $2 billion NCIB or share buyback that we began in June of '22, just to reiterate, that will be completed in early April. We're about $1.5 billion complete with that. To your direct question on the return of capital, let me share the sequencing. Step 1 in the sequencing is the monetization of our LSEG shares. As I noted in our prepared remarks today, that will be appropriately measured tranches throughout 2023, meaning we'll have a very disciplined approach there. So step 1 is the LSEG monetization. Step 2 is the return of capital. We'll use the proceeds from the LSEG monetization to fund the return of capital. And then third, we'll have the concurrent share consolidation, which will result in about $17 million reduction in share count based on today's share price there. So the timing will be driven by the timing as to when we complete the LSEG monetizations.

Great. I think we'll end the call there. Thanks, everybody, for your time and attention, and feel free to reach out if you have any follow-ups. Have a good day.

Thank you for joining, everyone. That concludes your conference. You may now disconnect. Please enjoy the rest of your day. Goodbye.