Thomson Reuters reported that revenue for its Tax & Accounting business rose by 9 percent before currency adjustments as operating profit dropped by 10 percent for the second quarter ended September 30. That came despite double-digit declines in print revenue which wiped out gains in its online tax research business.Tax and accounting revenue grew to $225 million, up from $210 million, a 7 percent increase after currency adjustments. Operating profit for the unit fell to $36 million, down from $40 million, as operating margins fell to 16 percent, down from 19 percent.
In an earnings Webcast today, CEO Tom Glocer said that organic growth for the tax and accounting business was up 5 percent before currency adjustments. "Our well-positioned and rapidly expanding tax and accounting business continues to take share and grow at above market rates," he said, adding that the unit's organic growth rate is accelerating.
In tax and accounting, corporate software and services segment rose by 11 percent organically, which was attributed to its property tax offering. Revenue from research and guidance products dropped because of a $5 million decline in print revenue. That area's 4 percent decline came despite the fact that print was only 10 percent of its revenue. CFO Bob DeLeo said that Checkpoint's organic growth matched the research area's 5 percent organic growth. He said that the company continues to make significant investments in tax and accounting and that the current margins do not reflect the performance Thomson Reuters expects in the long run.
Total company revenue fell by 1 percent before currency adjustments and by 4 percent afterward. The company's operating profit was down 32 percent. It was the first quarter results have been reported based on International Financial Reporting Standards instead of Canadian GAAP. Thomson Reuters total revenue was $3.28 billion,down from $3.41 billion a year ago. Operating profit fell to $378 million, down from $553 million. Net earnings dropped to $167 million, down from $406 million.
Although legal revenue grew by two percent, the company saw drops in software and ancillary services, including its Elite practice management applications. Large law firm revenue was flat because of layoffs. Revenue growth was driven by 4 percent growth from small and solo law firm and 7 percent growth from sales to governmental units.
