Thomson Reuters upgraded to ’A-’ by Fitch on strong cash flow

Investing.com -- Fitch Ratings has upgraded Thomson Reuters Inc.’s (NYSE:TRI) Long-Term Issuer Default Rating to ’A-’ from ’BBB+’ with a Stable outlook, while also upgrading the company’s senior unsecured notes to ’A-’.

The credit rating agency affirmed Thomson Reuters’ Short-Term IDR at ’F1’ and its Commercial Paper program at ’F1’. The upgrades reflect the company’s strong cash flow generation, sound balance sheet management, and consistent financial policies.

In the first half of 2025, Thomson Reuters used approximately $1 billion from its balance sheet to repay maturing notes, which reduced its gross leverage below 1.0x for the first time in several years. Fitch expects the company to generate free cash flow after dividends exceeding $750 million this year, giving it the option to meet its 2026 debt maturity without issuing new debt.

Fitch highlighted Thomson Reuters’ high barriers to entry due to its leading global market position, proprietary databases, and embedded workflow tools. The company maintains top-tier positions across its segments, with most occupying first or second place globally.

Over 80% of Thomson Reuters’ total revenue for the 12 months ended June 30, 2025, came from recurring subscriptions and similar contractual arrangements, providing significant operating stability. This recurring revenue model has resulted in customer retention rates exceeding 90%.

The company serves approximately 500,000 customers across various industries, with its products being essential tools for both large accounting and legal firms as well as in-house professionals at corporations. This diversification provides strong credit protection against economic fluctuations.

Thomson Reuters’ EBITDA margins have ranged between 37% and 40% over the past three years, significantly improved from 32% in 2020 and 2021. Fitch expects margins to remain above 37% as the company maintains operational efficiency while continuing to invest in product development and bolt-on acquisitions.

The 30-year news agreement between Thomson Reuters and Refinitiv, which survived Refinitiv’s acquisition by LSEG, provides a stable revenue stream with annual price increases indexed to inflation, though it represents only about 5% of total revenue.

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