Okay, good evening to our European listeners, and good afternoon to the folk in North America. For those of you that have not met in person, my name is Manav Patnaik, and I'm Barclays' Business and Information Services Analyst. As much as I'm missing our face-to-face sessions now, I am delighted that at least we're going ahead with this annual conference so far as virtually, and we have a record 14 of our coverage names that are participating in this conference, so that's been a great outcome, and I couldn't be happier to end day one's proceedings with Thomson Reuters' new CFO, Mike Eastwood, and also with him is Paul Fischer, who's the head of finance for Legal Professional, so thank you both for being here.
Thank you.
Thank you.
Before we get started, just one quick logistical item for the listeners. There will not be any live Q&A, so if you do have anything pressing, you can email me, and if I catch it, I can try and put that into our chat for the next 40 minutes or so. With that, let's just get started. Mike, maybe first to my earlier point about you recently taking over the CFO reins. A lot of us, a lot of the investors, and even some of us have not had the chance to really meet you in person, get to know you since you took over the CFO role, but you have been at Thomson Reuters for a long time, so maybe if you could just give a quick perspective on your tenure at Thomson Reuters, that might be a good start.
Yeah, absolutely. Happy to and thanks again for the opportunity today. I've been with Thomson Reuters for 20 years. I spent about six years with the legal business in Minneapolis, Saint Paul, Minnesota. I followed that with three years as CFO for the Intellectual Property and Science Business that we subsequently sold in 2016. I then went to Buenos Aires, Argentina, and was our Chief Operating Officer for our Latin America businesses for two years before going to Switzerland for three and a half years, working with Stephane Bello in a variety of corporate finance roles and I moved to Toronto in June of 2019 and became CFO March 15th of this year, at the same time timing Steve Hasker, so lots of different roles in our business units, corporate finance, and various locations for TR over the last 20 years.
Got it. Thanks for that quick bit of breadth. I think I mentioned this to Frank as well, but that experience of yours around these businesses, I think, really came through in your first earnings call a week or so now, and we really appreciate the candid disclosures you gave with all those questions, so just a side note on that.
Sure.
Paul, maybe just while you're on here, you've been at Thomson Reuters for about 10+ years, if I read that right. So maybe just a quick perspective on what your role is at the company.
Yeah, yeah. Quick perspective. I have been at Thomson Reuters actually for 23 years, so about the same as Mike, just a little longer, and it has been almost exclusively with the legal business. The first half, the first 10 years was spent with some of our smaller startup businesses, and the second half has spent with our larger Westlaw type businesses and then the CFO across legal, and I work across today. I'm the CFO for legal professionals, also for print, and legal professionals includes government, so that's my scope and my brief background.
Got it, and Mike, it's surely an interesting time to take over as CFO, but you also have a brand new CEO at the helm, and until just quickly chatting before this call, it sounds like you and Steve are both going into the office, so you have some level of communication and so forth, but how challenging is this situation right now in terms of trying to virtually command your troops?
It's a great question. I'll give you a little perspective. Steve and I came into our respective roles on March 15th. Our first big decision working with Mary Alice Vuicic, our Chief People Officer, and Brian Peccarelli, our Chief Operating Officer for the customer segments, was to make a decision regarding work from home, so effective March 16th, our employees began working from home. We have over 24,000 employees worldwide, so growth is normally top priority. A customer is top priority, but for us, it was about our employees. With over 24,000 employees worldwide, that was the focus or continues to remain the focus. In regards to working with Steve, Steve and I have been working in the same office very consciously now for eight weeks, and it's really helped us get to know each other and has helped me share some of my background and experiences with the company.
And it's worked out great, but we do have to be extra careful in regards to protection with the mask and the gloves and transportation and sorts. So it's worked out incredibly well for Steve and myself. But we do love, sorry to interrupt, but we spend an incredible amount of time each day on video conferences with our customers and with our employees worldwide. I know Steve personally spends time every day with our customers, and we'll comment on it later, but I would say our contact with our customers, if anything, has increased during this period, not in person, but via phone and video. Lots of contact with our customers and our employees.
Got it. And maybe just to flavor, 24,000+ employees you talked about. On the one hand, this massive shift to work from home, right? I mean, I think on the one hand, people are like, "Oh, you just go home, log into your computer, do your work." But on an enterprise level, that hurdle is a much bigger effort. So can you just talk about how Thomson Reuters managed through that?
Yeah. We have a team internally. We refer to that as the executive crisis team that we have, and we met daily for about eight weeks, and it's a cross-functional team of about 20 people, and sometimes we met multiple times on the weekends back in late March, early April, so we use our internal ECT cross-functionally to manage it. We actually had another call today. We're beginning to focus now on what the return to office looks like. Some people were saying return to work, but 98% of our employees have been working from home incredibly well. We're incredibly proud of the terrific job they've done for Thomson Reuters, but more importantly for our customers and supporting each other, so we have now shifted to begin talking about the return to office approach, which is being led by Mary Alice.
Got it. That's helpful. And maybe just one more on that. From a finance organization's perspective, everyone comes in with a downturn playbook, seemingly being prepared, but no one could have forecasted this situation. So did that downturn playbook have to shift a lot? How nimble were you? Just some perspective on how that changed for you guys.
Yeah. We certainly have what we consider a robust business continuity plan, or BCP, that we test on a regular basis, but none of us have experienced this. From a finance and accounting perspective, we couldn't be more proud. Linda Walker, our Chief Accounting Officer, led our close process for Q1, and we did not change any of our calendars or timing internally. We also used some external providers for portions of our general accounting, and I would say all of our external providers did an incredible job. PwC is our auditor, so they completed all of their review processes for Q1 remotely. So we did not change any of our calendars for the close, our reviews with the audit committee, reviews with PwC. Incredibly, incredibly, I guess, fortunate with all of that preparation, it paid off because everything went really well.
But it went well because we have a heck of a lot of talented employees who are very committed to each other and to our customers and shareholders during this really challenging period.
Got it. And maybe if you can just shift to the outlook change post-COVID, you had that really well-laid out waterfall chart on your one-year earnings deck. But maybe if you can just walk us through some of those moving pieces and how you went from what was originally 4.5%-5.5% revenue growth to 1%-2% for this year.
Yeah. For anyone who might be listening who has the presentation handy from last week, when I was referring to page 29, I was certainly the communicator last week along with Steve, but it was really an internal effort that included the presidents from our customer segments, their finance group, and their commercial teams. We worked very closely with them for several weeks on the three scenarios that we discussed last week. We debated internally whether or not to share scenarios last week, and we actually ended up deciding to share the range, which was the midpoint of what we refer to as the July and October scenario. So really great input from the presidents from each of the customer segments that allowed us to provide that last week. We ended up synthesizing it down into the four bricks that are shown on page 29.
The piece that is more tangible in nature would be the Reuters News piece, the Reuters Events business, which we acquired in October 2019. We had planned for about $50 million worth of revenue, and as I stated, $25 million of that happens in Q2, another $15 million in Q4. We have assumed essentially minimal revenue from that $50 million actually transpires this year. So when you look at the 100 basis points of impact for Reuters News, it's predominantly the Reuters Events business. Certainly, we will work very diligently with Michael Friedenberg, the President of Reuters News, and his team to do as much as we can virtually, digitally this year. And to the extent we can safely provide any of those conferences in Q4, we will certainly do that.
So from an additional downside with Reuters News, I think there's really minimal because we've assumed the Reuters Events has basically no revenue. The second brick in regards to the transactional revenue, that's largely related to our product offerings that require installations, and there are two vectors there. We can do a lot of our installations remotely. Some of the more complex ones is more efficient for us and our customers to actually do those on site. But we also had a portion of our customers who self-selected to say, "Can we please delay the installation?" We have a lot going on right now with COVID-19. Probably the third brick required the most discussion internally, which was the impact on net sales for our big three. We want to emphasize we're not forecasting negative net sales.
We're just forecasting a lower level of net sales, especially for second quarter, to some degree in third quarter and fourth quarter. And that's the piece that we really focused on with our segment presidents. As I mentioned last week, in April, we saw a good level of sales. The sales that happened in April were very consistent with what we had projected for Q2 overall. So based on today, what we saw in April is very consistent with our forecast. And then lastly, print. The print is primarily associated with lower sales for the year. I did mention that for the second quarter, we'll have a stronger negative impact because some shipments we cannot do because our clients just are not in the office. So that's a quick recap of slide 29 and the four areas that we took down for our overall revenue forecast.
Got it. Maybe if I can just go in reverse order of those four areas.
Sure.
The first one on the Global Print side, that business understandably has been under pressure, but it still seems to go on. Do you think, for example, Microsoft CEO said he'd seen two years' worth of digitization in two months, right? Do you think Global Print can? This is the shock that it needs to just right-size quicker than maybe what you guys think?
Yeah. I'll comment. I'll also ask Paul Fischer to comment on that. We certainly think this is a temporary delay in our shipments for 2020. We have a ProView offering, which is an e-reader version of our print, which is led by Elizabeth Beastrom, our President of Global Print with it. But we're certainly planning for this year for Q2, this to be more of a timing impact with the shipments happening in Q3. We did provide an estimate for the full year, which is a little higher than what we would normally expect, but we're not seeing this as the big step change that you just referenced. We'll certainly continue to make available to our clients our ProView e-reader option. But Paul, you may have some additional thoughts on print.
Yeah. A couple of additional comments there. The first one is the ProView e-reader certainly comes into play at a time like this in terms of being able to use and utilize print in an online format. So that comes into play. One of the big structural changes is that we have about 40% of our print under contract, and coming out of the last downturn, that was effectively zero. So the fact that we've extended some of the same multi-year practices from our other products to print makes a big difference. And then, quite frankly, and the reason we don't see this as a step change, as Mike was mentioning, is that law firms have libraries that they've maintained for many years. And while there's general pressure in that area, if you step back and create a gap in that or stop going forward, there's usability.
There's use cases within the firm still today. And if you stop now, you have this gap in your library that makes it much more ineffective and, to a certain degree, invalidates the prior purchases you've made and the value proposition you had within the firm. So those are a number of the reasons why we expect this to come back. And what we've seen to this point in the market is that customers are saying, "Pause," and, "Please hold the shipment until I'm back." But the cancellation rate has been a fraction of that.
Got it. And so just so I'm clear, all the content is available online, but it sounds like a lot of these law firms just like to have the big hardcover books in their libraries to scroll through them manually.
Yeah. A couple of things there. That does vary by geography. So that's more of the case in the U.S. than in other jurisdictions around the world. But from a U.S. perspective, yes, it's personal preference. And there are some things where you're researching with some ancillary materials, some treatises, and some secondary materials that you may want to have be accessing multiple different volumes or books at the same time. And so it comes back to maybe how you grew up researching. There might be some personal practices or just the utility of it still carries value. Even something like court rules that will be taken into court. And so the utility of it, they may have it marked up with different things that they've experienced in the past. And so there's still practices in play that make it very valuable within the firm.
Got it. And Mike, maybe just on the lower net sales component that you described, how much of that is a function of just your customer not being ready at the moment, distracted, or even virtually not ready? And how much of that is you guys need some more time to get all that squared off?
Certainly, we're prepared. So the latter point you just mentioned, I would say none of it is associated with us. When we think about net sales, we define that as our gross sales plus downgrades, cancellations plus price. So when you look at our lower net sales, it's on that first part, which is this lower volume. We are currently estimating that our clients will decrease the amount of volume activity that they'll have throughout 2020. We're assuming that the retention for 2020 will be approximately 90%, which is consistent with 2019. So retention roughly holds in 2020. We have good confidence on that, and we're continuing to see that through April. So it's more like lower volumes from lower commitments from our clients. Certainly, that's our assumption. And as we head into the Q2 earnings call, we'll have additional history that we can share with you and others.
Got it. And on the installation delays, I think that's self-explanatory. You talked about the complexities of that. But maybe just on the events front, fairly new acquisition. Can you just give a flavor of what are these kind of events that are being held?
Sure. Yeah. These are all in-person conferences on a variety of topics. For example, we recently had one scheduled in Barcelona that was more pharmaceutical in nature, so the number of topics vary, and I think traditionally they have been held in person, so that's why we've taken the conservative approach of saying we're not sure right now, although we're working on the digital offerings there, how much we can actually substitute with virtual, so we'll continue to monitor it very closely, but they're in-person conferences on a variety of topics.
Is there a way to think about a minimum percentage of attendees where an in-person makes sense before you just completely shift to virtual? Do you need 50%, 60%? I don't know what the break-even point is.
Yeah. We're currently working through that. Certainly, Michael Friedenberg and his team would be a little bit closer. So I wouldn't have percentages to share with today in that regard. But we are certainly looking at it from all different aspects as to when it's viable to hold it in person versus providing it virtually.
Got it. And then before we go into some kind of your business profile today versus the prior session, maybe just touch on the $100 million cost savings program that you laid out. How much of that is permanent? How much of that will come back if growth comes back and the different buckets of that?
Yeah. I'll focus on three primary categories versus on the travel and entertainment. It would be category one. Second would be consulting and advisory services. And third would be headcount management. On the headcount management, we're continuing to hire talent, but we're being very methodical, surgical in that regard, wanting to ensure that the headcount that we do add supports the growth areas or other strategic initiatives that we have. So those are the three primary pieces. We're very confident in our ability to deliver those savings this year. That $100 million will offset the impact of the lower revenue. So when you look at it from a free cash flow perspective, the lower revenue is being offset by the lower expenses. And the lower free cash flow comes from the timing of collections, which we believe is truly just timing.
So those are the big three categories illustratively for the $100 million. We feel like we will sustain that as we go into 2021. As I mentioned last week, the mix could be different. But in aggregate, we believe we can sustain that as we go into 2021.
Got it. And maybe thinking beyond 2021, any structural changes you see? For example, obviously, travel and entertainment probably cuts naturally. But work from home, everyone's talking about how we're going to save real estate costs. But is that easier said than done?
It's a great question. I think there are two parts there in regards to any structural changes. None planned today, but as always, we will always consider ideas and options that will add value for our shareholders, especially items that are really core to our business. In regards to work from home, we have a group that's actually working on that in regards to when we return to office. Will there potentially be some change in regards to real estate of the future? One of our phrases internally, "Imagine tomorrow" or "Imagine the workplace of tomorrow." So will there be some change? I believe there will, but I wouldn't be in a position today to articulate specifically those changes.
But I certainly believe there will be some changes because I think there will be some changes in just human behavior as a result of the last two-plus months that we've had in certain geographies, actually longer. So I do believe there will be some changes and opportunities for TR.
Got it, and talking about changes, having followed you guys for a long time, I mean, the company just has a portfolio and even within legal and accounting have changed quite a lot over the last years, and you had that really good slide, obviously, that showed how the businesses grew even during the last downturn, but I think what maybe would be more helpful here is just to talk about both legal and then tax and accounting as divisions in terms of what they used to be and how they're much better positioned today.
Yeah. I'll start that, and I'll ask Paul Fischer to supplement. I refer to it as legacy legal. Legacy legal included both corporate assets that also included print. The legacy tax and accounting also included some corporate assets and print. In the second half of 2018, with our new structure, we set up a new corporate segment. That was set up by taking a portion of assets from legacy legal and legacy tax and accounting. The primary focus was our customer. We felt like we could have more dedicated support for them with dedicated sales teams, which we have today. The other big change we made is we said, "Let's manage our print globally." Our print business was fragmented across our different segments, including Latin America, Asia, and emerging markets.
So I think Elizabeth Beastrom, Todd Roth have done a great job really managing our print on a global basis. A lot of the commercial policies, operations that we've been operating in the U.S., we've been able to quickly extend those to other geographies, which I think has been shown in the results in the last 18 months or so. So structurally, those were the big changes. And it was really a shifting of those corporate assets from legacy legal, legacy tax into the new corporate segment. Paul, your thoughts on other changes?
Yeah. Yeah. What I'd add to that is you described the structural change as well, and then within that, we have a subsegment focus. With Global Print now, we're taking print best practices. It's been a more competitive, dynamic market in the U.S., and we've taken a lot of what we've learned there and we're pushing that out globally, and looking at print in its entirety has allowed us to do that. Within the Legal Professionals business, we're pursuing firms differently based on size, so we've got the very small firms that we're approaching more digitally over the phone. Now we've converted a lot of customer meetings to webinars, so we're approaching that customer base at scale, if you will. And we've got a big digital play in there, especially on the renewal side that has served us very well.
When you go to the other extreme, we've got our largest firms that we've effectively got the Am Law 200 that we're approaching very, very directly with deep personal relationships, and that has served us well there as well. I think Steve and Mike quoted a number in the earnings call around the percent of our Westlaw revenue that's under contract through the rest of the year, and it's well in excess of 90%, and so those relationships and ongoing renewal discussions serve us incredibly well during this period of time, but also under the legal professionals umbrella, we also pursue government entities separately, and so there's a very, very good relationship back and forth in terms of transfer of value as our customer reps and account managers are selling into courts as they're selling Westlaw Edge in.
That has a tremendous benefit back to the law firm customers to basically say, "If our government customers are using a tool on your work product, you're going to want to do the same thing." So that has served us very well in the different focus areas. As well as government right now in this area of bigger government that's coming, they have tremendous growth opportunities around court automation and around fraud, waste, and abuse. So with that, within the structural changes underneath there, the subsegment focus has served us very well to go after individual customer sets and serve their needs that are incredibly different across the different sizes and characteristics of firms.
Got it. And maybe just a two-parter here. How much of your business today is on multi-year contracts? And what is the exposure to kind of the small customers that you have?
Sure. I'll break that down. In regards to our legal professionals, approximately 60% today are multi-year in nature, two to three years normally, followed by Corporates with approximately 40%, and then Tax & Accounting Professionals at 10%. The 10% for Tax & Accounting Professionals is driven by the mix between software and content. About 75% of our business within T ax & A ccounting Professionals is software. And they primarily have one-year annual renewal contracts with the large portion being in Q4. So that's the reason for the lower percentage within Tax & Accounting. Conversely, within the legal professionals business, about 30% of legal professionals is software.
Got it. Yeah. Because I guess for businesses like yours, I mean, I think the real long-term risk just ends up being how many of your customers really survive, right? And so that was why I had that question. But in terms of your initial discussions, you guys do that Peer Monitor. I don't know if that's been updated. But any sense of maybe the end markets in legal tax and accounting and if things could materially change?
Yeah. I'll start that and ask Paul to supplement with it. We're certainly having ongoing discussions with our clients with that. I think it's early to tell right now in regards to any long-term structural change that might happen. I would say the mix is certainly changing with more activity in what we call practice areas in bankruptcy and restructuring, for example, and less activity today in M&A kind of the practice areas with it. So too early today to say long-term structural changes.
I think Paul referenced earlier, one of the common themes that we're hearing from some of our law firm clients is maybe too much investment in real estate and not enough investment in technology, which we believe goes well for us as we move forward because we think we can continue to partner with them even more so in helping them provide solutions for the long term. But Paul, you're very close to the Peer Monitor Index.
Yeah. Yeah. I would say themes and outcomes. So the first one is we have seen our product usage remain very, very strong during this downturn. We had an initial dip, and now it's come back to near normal levels. And I think it just highlights to us the must-have nature of the products we sell. And so that serves us very well in a time like this. In terms of structural change in the legal market, there will be change. At this point, so much is going to depend on the duration of the downturn. But it's too early to predict that outcome. But we have seen some very early signals from our largest firms saying what Mike was reiterating a minute ago, and that is that they have come to us and said, "We've overinvested in real estate.
Looking at where we sit today and how well we could move to work from home, we probably underinvested in technology." So that plays very well to where we're going and the solutions and products that we offer in the market. I think at the very low end, Small Law was impacted a bit out of the gate by consumer demand in terms of their legal needs that had dipped pretty quickly with the downturn. And now they're starting to come back, and we think there's a pent-up demand there. So even a business of ours like FindLaw that is more directly impacted, we expect to rebound most quickly as well when we come out of the downturn. And we're starting to see some signs of that now.
Got it. Just to supplement to Paul's comment there, not only monitoring the product usage, we're also monitoring our call center activity in regards to the number of inquiries that our customers provide to us. We did see a similar dip in that product usage, a slightly decreased the first couple of weeks, but that has rebounded. Also, a lot of focus in regards to average handle or average response time. And as we go forward, our self-service options, continued investments in those areas that will make it more productive, efficient for our clients.
Got it. And we can move a little bit on to Westlaw Edge, right? So at the last Investor Day, that caught our eye. We did a deep dive and put out a report tying that to how everyone's leveraging AI and machine learning. So maybe just two parts. If you could first just help lay out what is Westlaw Edge, and then second, if you could just give us the update you gave us on the last call in terms of what the penetration and contribution from Westlaw Edge looks like today.
Yeah. Paul, if you want to tackle the first piece, what is Westlaw Edge, then I can address the penetration.
Yeah. Westlaw Edge is a variety of AI-enabled, or I'd call it content-enabled technology outputs. So Westlaw Edge is created on the backbone of 100 years of marked-up legal content. And that's what really differentiates us in the marketplace is the ability to add machine learning and artificial intelligence on top of the best and most marked-up content set by far. And that gives us the edge over any type of competitive offering. And really, we're going back to firms and allowing them to gain efficiencies through use of this and confidence. And both are equally important, especially in this environment. Being more efficient right now, everyone's driving towards that. And having confidence in your work product when you're working from home has never been more important. And there's a variety of features. We have enhancements to KeyCite. We have some direct questions that we're answering.
Our newest product launch is an enhancement to Edge, something called Quick Check, where you can effectively upload a brief or a component of your work product. And we will come back and tell you, "Are your links current? Are there different arguments you could be pursuing?" So we can effectively almost grade that work product, if you will. And so you can imagine that that can be valuable at the start of a research session to get clues into where you're going, or it can be at the end to effectively tell you how you did. But one thing to really keep in mind is that when the courts have access to the same tool and they are effectively grading, if you will, again, your work product, you must have the same access, right?
If the court is seeing something off of your work product, you're going to want to be able to see the same thing. So it's resonated very well through the month of April. It's continued to do well through the downturn. And we're really optimistic that this will carry on.
In regards to penetration, at the end of 2019, we were at 33%. We measure Westlaw Edge penetration based on ACV, or Annual Contract Value of our clients. We were approaching 40% at the end of March, and we remain confident that we'll achieve roughly 55% by the end of this year. That penetration will continue into 2021. One of the questions that we receive is, "What's one of the governors or why can't we go faster?" One of the reasons is our multi-year contracts, so as contracts come up for renewal, oftentimes that is the optimal time for clients to upgrade to Westlaw Edge, so as Paul mentioned in April, the Westlaw Edge sales continued at roughly the same volume and the same premium that we were experiencing before COVID-19, so around 55% penetration by the end of this year, and that continues into 2021.
That's contributing roughly 100+ basis points to legal professionals' growth. We saw that in Q1, and that's been the trend that we would expect as we complete the year.
Got it. And intuitively, the efficiency concept makes perfect sense. Can you talk about if the competition is doing anything different or even if they try and do, can they match up to your unique content? Because I think we've seen RELX and Wolters Kluwer make some acquisitions trying to do similar things.
Yeah. Yeah. We haven't seen a strong competitive offering in the market to date. The hurdle rate we've set here is pretty high to match, and we expect some competitive offerings or some offerings that will say they compare. I think, again, I would come back to the combination of technology and content. The markup that we have on the content gives us an incredible leg up, and we're seeing that especially against smaller providers who might have a tool that pretends to do something similar, but based on the content we can apply that technology against, it gives us an incredible leg up and advantage, so there will certainly be competing offers, but we think we will fare very well against them.
Got it. And I don't want to get too ahead of it, but you also now have Checkpoint Edge. I mean, how far behind the curve is that on the tax and accounting spectrum? And if there are any metrics there in terms of penetration, you can give us.
Sure. Checkpoint Edge was launched in the second half of 2019. We certainly have not achieved a level of penetration yet with Checkpoint Edge that we have with Westlaw Edge. We would anticipate that ramping as we go into the second half of 2020 and look forward to sharing our progress later this year and into 2021 with the Checkpoint Edge.
Got it. But I guess conceptually, it's a similar kind of concept as Westlaw Edge? Yeah.
It's similar. Yes. It's a similar concept in regards that it's our research tool for tax professionals, accounting professionals, which Westlaw Edge would be for legal professionals. But a very similar context in regards to that product.
Got it. And I finally got my taxes done this weekend. But just curious, does the delay in the tax filing impact you guys directly? Or how does the tax and accounting business get impacted there?
Sure. The most direct impact, what Manav is referring to, is that in the U.S., the delay from April 15th to July 15th. Normally, we start our sales season in the tax and accounting professionals' business after the April 15th deadline. So we do anticipate some timing in regards to sales activity that would normally happen in Q2, that shifting into Q3 for us. Our clients, based on our feedback, is they're trying to get their returns done as quickly as possible so that they can shift to their other parts of the business. But we do anticipate some timing impact on our sales activity that would normally happen in the second quarter for tax and accounting professionals.
Got it. Maybe just a quick question on the government. You talked about the potential for business there, them getting bigger involved, obviously, as things pursue. What is your government exposure today? And how fast is that growing? Or how can it grow?
Yeah. The government business is about $450 million on an annualized basis. Included in that $450 million is about $200 million worth of print with that. So I'm sorry, that's kind of separate with that. So the $450 does not include the print. But the two big areas that we focus on within government would be the CLEAR product, which is used for more investigative-type activity. And I think Paul referenced a second ago in regards to fraud, waste, and abuse with the Pondera acquisition being really important. Government has been growing 10+% now for several quarters. And we would expect that level of activity as we move forward.
Got it. And then in our last few minutes, I just wanted to touch on capital allocation. So firstly, just on M&A, you've been fairly active in the last 18 months. You talked about Pondera, which was recent. I think we covered Business Intelligence, which was the events business. But anything to call out in terms of whether the integration of the recent are done, complete? Any progress updates there?
Yeah. Several points. With the Refinitiv transaction with Blackstone, we earmarked $2 billion for a reinvestment fund. We've used approximately $1.3 billion of that with the acquisitions to date. Overall, pleased with the activity. We mentioned a HighQ acquisition earlier within legal. We did the Confirmation acquisition in July of 2019 for the tax and accounting professionals' space. And then back in Q4 of 2018, we acquired Integration Point, which is Global Trade Management, which is part of the corporate piece. We certainly have the capacity to do acquisitions. We're being very methodical in regards to looking at the acquisition pipeline now. Hopefully, there's a reset in valuations as we look forward. So we'll continue to look at potential opportunities in the second half of 2020 and certainly have the wherewithal when the timing's right.
Got it, and then the last question. I don't imagine long-term your free cash flow priorities change much from when Stephane and Jim were at the helm, but in the near term, is there any nuances to buybacks, dividends, and M&A that we should be keeping in mind?
Yeah. I would say the value creation model that Jim discussed into the second half of 2019, we remained committed to it. We remain committed to the 2.5x leverage ratio there. So we do not anticipate any change in regards to the capital strategy that we've had in recent years. We'll just look for opportunities to accelerate growth opportunities. We completed the last tranche of the buybacks, $200 million in February of this year. We do not anticipate any additional buybacks this year. As I mentioned last week, we remain committed to the dividend for this year of $1.52. And then we'll revisit that with the board in January of 2021. So we've remained fully committed to our capital strategy and value creation model.
Got it. Well, I think we just about run out of time. So I think we'll leave it there. But thank you so much, Mike and Paul, for your time. Really appreciate it. Hope to have you guys back next year and hopefully in person.
Thank you very much, and thanks for everyone for joining.
Thank you.
Thank you. Have a good day.
All right. Take care.
Bye-bye.