Morning again. This is Heather Balsky, BofA's Business and Information Services analyst. I wanna welcome you all to our fireside chat with Thomson Reuters, CEO, Steve Hasker, and Head of IR, Gary Bisbee. Steve, it's a pleasure to have you at our conference today. Gary as well.
Thanks for that.
Before we start, and for everyone in the room, you know, we'll offer some opportunity if people have questions. I also have plenty of questions to ask. Let's get started. Steve, I wanted to kick off with you're celebrating three years and I think two days as Thomson Reuters CEO. Congrats.
Thank you.
What do you view as your biggest accomplishment over the past three years?
I think, you know, we're proud of the transformation program, the Change Program that we ran. We designed it in 2020, so in sort of my first nine months at the company, we announced at the start of 2021 at Investor Day, we executed 2021, 2022. I think the results are by and large what we hoped them to be. It was breathtaking in terms of its depth and breadth, and I think it positions us in two ways. Firstly, to endure sort of whatever happens this year. You know, I think every morning we all get up and read a new headline and sort of see more tremors running through the macro environment.
Maybe most importantly, I think it gives us a platform for higher sustained organic growth in the years to come. That's, you know, I'd say that's the biggest, that's been the biggest achievement, so far. Lots of learnings along the way and so far proud of the way the team's been able to execute.
When you look forward to the next three years, what are you most excited about?
I think, you know, designing and taking a growth plan, a growth program, that takes advantage of all the hard work we've done in terms of solidifying our foundations, improving our customer experience, modernizing our tech stack, getting our org right, our talent right. I think what I'm excited about is sort of translating that hard work into a plan, talking about that at an investor day, at a date that Gary will decide, sort of probably in the fourth quarter, and then executing that 2024, 2025, 2026. You know, it's a simple sort of agenda from transformation to growth, but that's what we're trying to pursue.
Very excited. You're gonna be busy now.
Yeah. Very much so.
You mentioned tremors in the macro. There is a lot of uncertainty, and it's impacted some information services companies more than others of late. You know, have you seen any impact across your key verticals?
When we reported our earnings on February 9th, we sort of said, look, we continue to see elongation or prolonging of some of the sales cycles in corporates. We continue to see that. We're not seeing deals fall out of the pipeline, but we are seeing them getting pushed from sort of one quarter into the next and some more trepidation. Really no new news. We continue to be on track. However, the way our business works is the 3rd month of every quarter, so in this quarter, March, in terms of sales activity is the biggest. I think when we come back and report on May 2nd, we'll be able to sort of provide more transparency. So far so good.
Okay, that's helpful. Thinking about the durability of your business, if there's a recession, you know, how do you think about that? Where is the most risk? Where is the most resiliency? You know, I want your view on that.
Gary, do you want?
Yeah. Yeah. We've talked about, you know, the 80% recurring revenue, clearly, and a good portion of that locked up in multi-year contracts. Clearly, we believe we're more resilient than average. There's four areas that we would expect to see more of an impact if we had a prolonged slowdown or recession, and we're monitoring those very closely, as you'd imagine. The four are our print business, where you'd likely see, you know, the pace of declines there accelerate for some period of time. The 10% of our revenue that's transactional in nature, and, you know, we've done some work on that, and we think at least a third of that is really what we call heavily recurring transactional. Certainly there's some portion of that that is not, and thus is more discretionary.
We'd expect to see that weaken first. Not material total TR, but within our Reuters news business, they have some revenue from digital advertising, and they also have an events business. At the end of the day, it's a discretionary purchase. Those through, you know, through the Q4 continue to do well. But certainly those are areas we'd expect to see weakness. You know, to reiterate the first thing I said, we think we're very resilient, certainly on a relative basis, given the revenue model and, you know, and our customer retention and all of these factors. Those are the areas we'd expect to see weakness if and when it were to occur.
Got it. Thank you. You're talking about the Change Program. You've taken a lot of legacy costs, infrastructure out of business. Do you think there's more opportunity from here? You, you're doing that real estate sort of optimization too right now, right?
Yeah. We, we own, we're simply put, massive facilities in Eagan, Minnesota, and Ann Arbor, Michigan, and Dallas. We also own half of the building here in Times Square. You know, under any circumstance, we just don't need the space that we used to need. I think that goes of any business in the sector, not just us. That's one area that Mike called out on February ninth as something we'd like to work through this year and beyond. You know, and I, and I think the, you know, I don't view the 39% margin, EBITDA margin that we're shooting for this year as in any way a ceiling. You know, I think there is more opportunity.
You know, we've run a two-year transformation program. Those of you who've endured these before will know that the sort of, if you do it right, the results roll forward, and you see more and more opportunity. You get better and better at prioritizing and at driving efficiencies. I think we're on that path. I think we can and should move up in terms of our margin profile over time. I think one of the questions that we're wrestling with at the moment and this will be a sort of a, I think one of the biggest inputs too in discussions at our investor day is as we drive for higher organic growth in future years, we have pretty good operating leverage, as you can imagine, given our business model.
The question is how much of that leverage will we reinvest to drive further growth, both on OpEx and the CapEx front? We haven't decided that yet. It's a nice problem to have. I think, you know, we ought to see margins push up as we get better and better at prioritizing and more and more rigorous about our cost base, addressing more and more of the legacy infrastructure and tech issues. The question is, well, how much of that will we reinvest? That's what we're really debating at the moment.
Got it. Got it. Getting excited for the Investor Day.
That's right.
A key goal of the Change Program is to accelerate innovation and product development to drive organic growth. You're talking about that right now. You know, can you talk about the steps you've taken, you're taking internally to get there, to get, you know, innovation ramping? Do you have a target in terms of the pace of new product introductions?
Yeah, we do. We, we haven't talked about that publicly, so I won't put our head of engineering or product under even more pressure than they're under by revealing it. Essentially, I mean, if for those of you who've followed Thomson Reuters for a long time, organic product innovation was just not an area of focus. It wasn't something the company was well known for. There wasn't a lot of evidence of sort of, you know, regular impactful product iterations and releases. We went out and hired David Wong from Facebook as our head of product. He'd sort of spent time there under Chris Cox and others.
He really understands what it is to be a world-class product leader and equally importantly, how to make investments and translate them in an iterative way into product releases to meet and exceed customer needs. We also elevated Shawn Malhotra as head of engineering. Sean started, he's been at TR for a while, but he started his career at Intel and has that sort of pedigree of innovation. The two of them are really working on this, and I think the first example was Practical Law Dynamic. The second example was Westlaw Edge, Westlaw Precision. We've got probably another four or five, you know, reasonable size, at least for us, product innovations coming this year.
The aspirations are, to your question, to get faster and better. With releases, with the speed of releases and also just fundamental improvements to the product, new features, new functionality in addition to new products. We're starting from a pretty modest position. We think there's a lot of upside, and we'd like to see that sort of convert at the right pace into better price over time. That's what we're very focused on. I mean, it's one of the, it's one of the reasons that we went through the hard work of the Change Program, and it's one of the things that we're very explicitly as a team calling out and that our board are holding us accountable for. You know, exciting times if we can execute.
Yeah. Well, you're touching on price and the opportunity there. We, you know, we've seen it to some extent I think with Westlaw, but sort of what, I mean, I guess, how do you think about value pricing and that opportunity?
Yeah, I'll start. I'm sure Gary'll have additions. I think if for those of you who've talked to our customers, you realize that, you know, we serve sort of stable growing end markets. The switching costs away from our products tend to be pretty high. Often the sort of relationships between our people and the customers themselves are very strong. So, you know, you sort of walk away from those conversations as I do and say, "Okay, there's more opportunity for us to drive price than we traditionally have or do." We don't wanna get in a position where we're sort of overextending and putting the book of business under pressure, renewals under pressure and so forth.
This innovation agenda is critical to this because our ability to get price, you know, if the product is significantly better this quarter than it was last quarter, and the next release is coming fast on the heels and can show real tangible value and translate to an ROI for a customer, the ability of our salespeople to get price, the ability for us to drive price through our digital channels is just that much better. Again, I won't quantify it because, you know, we sort of haven't gotten that specific yet with investors. That's the sort of path we're on.
Yeah. The only thing I'd add is I think if you look at the portfolio, there's products that are in different areas, but the focus on driving growth is price, but there's also volume and mix, right? In some cases, volume, we've got products where there's a big runway of new customers or more users at a customer, however that works. Then there's some where the key value driver is incremental capability that gets you price. I think of that more as mix than just sort of price for pricing. Westlaw Precision, you get a significantly better outcome. We charge more to give you that better product. I think we, you know, we've got price-For price sake, which is inflation and, you know, backed up by some capability enhancement.
We've got significant capability improvements that are driving sort of this mix. We also have a lot of proxy portfolio where there's a real volume play as a key driver of that growth. We're focused on delivering all three of those, you know, in the algorithm, that delivers the revenue growth we're targeting.
You know what? I was gonna ask about Precision, but I'm gonna hold off and just follow up on what you said about the customer opportunity. You know, when you think about that, you know, I think, I guess when you say that, I think of things like Practical Law and some of the high-growth legal pro-products, and, you know, what you're doing in terms of the corporate side. Is that how to think about it?
Yeah. I mean, I think you could look at any of the big three segments and we could talk about this. You've got in Legal, Practical Law, HighQ, you know, is workflow collaboration software, which is early days from a penetration. That's really an opportunity in corporates where it's growing incredibly rapidly and we're just scratching the surface of that potential. In tax, certainly Domínio, our Latin American business is a significant volume grower. Confirmation business, the audit tool required a number of years ago, has strong volume growth. In corporates, it's Practical Law, it's CLEAR, it's HighQ, of small base but rapid growth. It's several of these other product Confirmation is a revenue stream there.
There, you know, there's a diversified mix, but certainly we have volume growth across each of the segments. We realize we need to do a better job telling the stories and trying to inform so people can get that confidence we have in the ability to deliver that. Certainly we see a lot of drivers of volume across our portfolio.
Yeah. Well, you guys have started honing in on different segments of your business during the call, which has been.
Thank you for noticing.
Yes, thank you for that. I wanna go back to Westlaw Precision 'cause it, you know, it was a big, long-awaited product launch and it just came out. Can you help us think about that launch and how it benefited from the Change Program, first off?
So a very important part of Westlaw Precision and the work that Mike Dahn and his product group did was embedding huge amounts of AI to support the attorney editors. We hired an additional 250 attorney editors. Mike's shorthand is if we hadn't equipped them with AI to make their sort of fundamental classification, codification note application work more productive, there would have been 1,300. We would have had 1,300 people working for two years versus the 250 that we had. You know, where we sit today is we want to apply more and more AI to that product and its next iterations, firstly. I think we're well-placed to do that given the investments in labs and the investments in our content modernization.
We'd also like to expand the number of practice areas as we go. Westlaw Precision focused on a relatively small number of practice areas. They have been very well received. We're sort of nearing the turn at 1,000 sales or thereabouts. It's on the same track or better as in terms of penetration as Westlaw Edge four or five years ago. We view it as the sort of start of the journey rather than the end. We're just gonna keep investing in it, in both the human side of it and also increasingly the AI side of it to support that trajectory.
You know, what's the customer reception been? I, you know, I recall you guys talking about the fact that you have customers who didn't adopt Edge but went to Precision.
Yeah.
I'm just curious about that.
Yeah. You know, and I've spoken with a lot of customers about this, both those who've bought, those who are considering buying, you know, those who are sitting on the fence. A couple of sort of punch lines here. One is the step forward in terms of innovation and impact for litigators from Precision is larger, significantly larger than it was for Edge. They look at this and say, "Wow, this is really a big step forward." Essentially what it does is it produces twice as good a research results in half the time. That's sort of the punchline for the vast majority of use cases. Again, we're just gonna continue on that path. The reaction's been really strong.
You know, Mike and his team are very good at this, so we had a lot of confidence in making that investment and backing him. You never know until you put it into the marketplace. That, the pipeline continues to grow. The sales continue to come through, so we're pretty happy with where we are.
Yeah. I think we said in the event we did last fall, you know, we believe this is the largest step up in capability, meaning larger than it was in Edge. I think if you ask our team, the ability of a salesperson to walk them through the value proposition, it's resonating really well, arguably better. I think, you know, feel really good about the potential.
Um-
I think it also speaks to, you know, it's the biggest single example of this content-driven technology approach. Combining unique content with AI machine learning and best-of-breed software. We did it with Practical Law Dynamic on a smaller scale. We've done it with Westlaw Precision. Next year we'll launch a new version of Clear. I mean, there's a whole series, Sort of applying this sort of combination of capabilities for the benefit of customers. We learn a lot each time, and we get a little bit better at it each time, and we make sure that the team sort of share those learnings and go forward on that basis.
Interesting to hear. And this may come up actually in this case, but I wanted to talk about your recent M&A as well and the SurePrep deal.
Yep.
You recently acquired. You know, what attracted you to the business and what's the opportunity?
We've done two deals in the last six months, both in AI. The first one was ThoughtTrace, which is AI-driven contract analysis, a smaller acquisition. Then we spent about $500 million on SurePrep, which is the leader in AI-driven automation of document ingestion for tax returns. I don't know, it's.
Exciting stuff.
Very exciting stuff. But it's extremely valuable because basically what SurePrep does is it uses AI to take all of the documents, be they pieces of paper or be they digital inputs, and it basically runs through those and then produces a first draft version of a tax return. it just takes an enormous amount of grunt work out of that process, the tax and accounting professional, and a real pain point that they endure in completing a customer's a tax return. It frees them up to provide more value-added advisory services. It enables them to change their business model in really healthy ways. we partnered with ThoughtTrace prior to acquiring them, and we partnered with SurePrep.
We had a good 12- 18 months of in the marketplace, selling SurePrep and UltraTax with GoSystem Tax together. We entered that M&A conversation with real confidence that we knew exactly what Dave Wyle and his team had built. We knew who they were, they knew who we are. I think that gave us great confidence that this was the one for us to do. As we think about sort of broader M&A, Heather, and the capital we have, the firepower we have to deploy, we don't see the need to do anything crazy. We don't see the need to. We don't have massive yawning gaps that we need to sort of do an unusual deal that'll surprise you.
We think we've got lots of runway in the big three. We'll focus on the big three. We'll focus on existing and new customers within those. This idea of sort of partnering before we buy, where we can pursue that, we will, so that we sort of de-risk it. The playbook, you know, there are a couple of different flavors of the playbook, but the one that's worked very well for us is this idea that we pursued first with Practical Law, then with HighQ, then with Confirmation, now with ThoughtTrace and SurePrep, which is taking a small but valued product and pushing it through our distribution. So basically availing it to all of our salespeople and really ramping it up.
That's, you know, Practical Law was less than $100 million in revenue before we bought it. It's now at $500 million. We shoot for a much higher number as we go forward. We've seen really good trajectory with HighQ and Confirmation. We're optimistic about ThoughtTrace and SurePrep. It's not a complicated playbook by any means.
Yeah.
As we think about, you know, the sort of look back in 3- 5 years' time as to did we deploy that capital very effectively, the M&A component of it, we think sticking to that playbook is, gives us a pretty good chance of having all of you say, "Okay, you know, that was value creating M&A.
I gotta ask, you know, what's the general M&A environment like right now for you? Are there other SurePrep or ThoughtTrace type transactions in your pipeline?
Yeah. We have a pretty full pipeline that we sort of constantly go forward and turn over. You know, I think for We got lucky in a sense that in 2021 and 2022, when valuations were extremely high for high growth software, SaaS businesses, we were focused on our transformation program and sort of getting our health and fitness to the level that we think it now is. We didn't get distracted. You know, ThoughtTrace was a small deal. SurePrep, a little bit bigger. As we look forward, we think our timing might be good, right? In the valuations, there seem to be more downward pressure on valuations than upward. Certainly in the public markets that's the case.
The best private companies are still pretty, particularly those that are showing good growth and add profitability or close, they're still pretty highly valued. I'd like to see them come down a little bit more. We may need to be a bit patient as we go through that. Optimistic about this one, but we're not gonna get deal fever. You know, we'll sort of stick to our playbook and make sure it works for our shareholders. Where we see that being the case, we'll bring those deals forward. Where we won't, we'll keep moving.
You know, I'm gonna second a question here then. You guys talked about once you finish your current buyback authorization or buyback program, doing another $2 billion. You have, you know, the cash coming in from London Stock Exchange or already had some of that come in. I guess, how did you kind of weigh the decision around buybacks and M&A?
I think, for us it's sort of both.
Mm-hmm.
You know, As we think about sort of picking through the different components, the first one is increasing our dividend.
Mm-hmm.
-which we consistently do and plan to continue doing. The second is looking, you know, at a focused set of M&A opportunities. The third is returning capital. You know, the NCIB and the return of capital we've talked about. Commencing in the third quarter of this year. It really is a balanced look. You know, we can obviously, if we don't find the acquisitions that we like, we can sort of increase the portion of returns of capital over time. We're hopeful that it'll…
When the dust settles and we get to sort of the end of 2025, we will have pursued a pretty balanced approach between increased dividends, accretive M&A or value creating M&A and bid actual returns of capital.
And-
You as well.
No, I think that's right. We believe balance is a good strategy. As Mike Eastwood emphasizes a lot, this is an "and" situation, not an "or." You know, we plan to do all three, grow the dividend, pursue M&A, and we have the luxury, given our capitalization, the Series II shares and our strong underlying cash flow to also, you know, return cash. We'll do all three this year and I think over the next three years.
Okay. Got it. I just wanted to just check very quickly if anyone in the audience might have a question. Back to my list. Not a problem. Lots to get through. I wanted to go back to something from your fourth quarter call. You said there's an opportunity to get the big three growth to exceed the 6.5%-7% 2023 outlook over the next few years. What are gonna be the growth drivers? We've probably hit on it a little bit during this conversation, but just kinda wanna put it all together in terms of products, go-to-market strategy, that gets you there.
Yeah, I think I sort of make a comment across all of the big three, and then a sentence or two on each one. Across all the three, we think we have a pretty significant medium to longer term tailwind here, which is that the complexity associated with compliance, legal compliance, tax compliance, risk compliance, potentially ESG compliance, is going up. I defy anyone to sort of say, "No, no, it's gonna. The tax code's gonna get simpler or the legal environment's gonna be streamlined." The risk environment, you know, we've got fraud under control. There's no prob. You know, we're one of the few companies we think who can help corporations, government agencies, and the advisors to corporations, government agencies, navigate this environment using content-driven software. That's a.
You know, that's the reason we think that if we're at 6.5%, 7% this year, that we can grow to higher rates on a sustainable basis over the next few years. As we look at legal, I think we're just at the start of a technology-driven transformation. Law firms, small, medium, and large, are saying, "Look, we realize we've spent too much on real estate over time and not enough on information and technology." We think we're one of the players that if we get up, continue to get our product set right, we'll benefit from that shift and that growth in spend. Bear in mind, the starting point is pretty modest. If you compare the legal profession and the percentage of their revenues that they spend on information technology, it's very low relative to other professions.
You could argue all day whether that's comparable, but that's certainly a fact. We think there's upside there. Tax and accounting, there's an interesting dynamic going on, which is the number of returns keeps going up and the complexity of returns keeps showing up. Yet the tax and accounting profession, particularly at the sort of medium to smaller end that we focus on or have always focused on, there's a lot of retirements coming, so they tend to be further into their careers and longer tenured. There just aren't the number of new graduates coming through. So the industry is going to be increasingly dependent on technology and automation. We think we're well positioned to really play through that.
Within corporates, this is our newest segment, and I think we've got a lot of improvement ahead of us in terms of our sales motion and the ways in which we go to market. I think we're still pretty clunky, and we've still got lots of opportunity. I also think, though, that something like risk, fraud, and compliance, we are a relative niche player in that today. You know, it's sort of argued that it's a $30 billion TAM around fraud, investigation, detection, prevention, growing at mid-teens. So that's a place we'll look to focus our M&A activity. That's a place where we've got an interesting starting point with CLEAR and the TRSS capabilities.
We think we can be one of the players that really has an important role and impactful role to play there. That's why as we look across, we're more optimistic than not about our ability to lift our organic growth going forward. You know, it's why we're very focused on getting our product investments right and our rate of innovation up, because that's the sort of dependency and I think the signs are good, but we're staying very focused on that.
That's interesting. What you mentioned on the legal side was interesting because we did a call a while back that was saying that law firms are also being motivated by the fact that some of their customers are asking law firms how, you know, how much they invest in technology, how innovative they are. There's pull from that side as well.
There's pull from the client side. There's also pull from the young talent side.
Mm.
When the top sort of graduates of law school, schools are considering which firm to join, you know, one of the things. They're asking some very difficult questions about the firm's purpose and ESG credentials and so forth, but they're also asking about which tools do you have available, you know, and what am I going to be working with? That's sort of a relatively new phenomenon in the profession, but it's a really important one.
Yeah.
If they get a sense that the firm is sort of stuck in the dark ages and not, you know, hasn't adopted Westlaw Precision, isn't on HighQ, isn't adopting some of these tools, then, you know, they'll sort of turn their attention to a competitive firm. There's pressure coming from both ends, which we think for us, you know, is healthy.
Yeah. Yeah. I think in finance, we kind of understand that dynamic very well. I wanted to talk to you a little bit about the margin dynamic, especially 2023, 'cause inflation's been a topic for you guys. I mean, it's been a topic in general, but, you know, the 2023 margins just, you know, how is inflation even after pricing? You know, what's that impact on your margin? Is there an opportunity to catch up further with regards to inflation? I mean, we already talked about your approach to pricing, but I wanted to kinda touch on that.
Let me start, I'm sure Gary will add here or correct. You know, we less than half of our organic revenue growth comes from price at the moment. We think there's an opportunity for us to get better at that, particularly, as I said, you know, as our rate of innovation goes up. The one of the constraints, though, is one of our great strengths, which is the multi-year contracts that a lot of our recurring revenues are under. That means that when you see the inflationary environment kick up, you know, our ability to sort of roll through price increases is a little bit dependent on very dependent on when those, when those contracts roll over.
We're not one of these firms that can sort of just kick into high gear and jack prices up as perhaps some of the industrials and others have done. We are very focused on increasing that. I think as it pertains to our margin, you know, one of the, one of the things we do, we set out the sort of margin guidance of 39% back when we launched the Change Program. I think we originally said we were gonna be 38%-40%. In February, we said we're reasserting at 39, and that was when inflation was at 1.6% or 1.4%.
Of 1.3.
1.3.
When we announced it.
Okay. Thank you, Gary. 1.3. You know, now we're in an environment and certainly the cost structure that we carry into 2023 is not at that sort of rate. What we've had to do, is a lot of prioritization and ask some really difficult questions of our teams about, you know, what comes first and what do they wanna do or what do we not need to do. As we sit here today, we're confident, as we said on February 9, that we can meet those expectations. I wouldn't kid anyone. It's not been easy.
Yeah.
You know, it's required real rigor and the sort of team coming together. I think, you know, the price lever, we've pulled a little bit or as much as we think is sensible, but there's more upside there over time, but it does take us a little bit longer to realize it. The cost side, you know, with Mike as our CFO, we're pretty rigorous. We think there's more opportunity, but it's involved some trade-offs.
Yeah. The only thing to add is because of that dynamic of multi-year contracts, I think it's safe to assume we have a bit more price in 2023 than 2022. I think it's, you know, we had a little more in the second half of 2022 than the first half, and that dynamic will play out this year. Mike said, I believe it was on the fourth quarter call, by the end of 2023, you know, not every single bit, but effectively the book will have been repriced to. That dynamic is 'cause 60% of the law firms have three-year contracts or multi-year, you know. It just takes time. We have price escalators in all of those, not a lot of them historically were CPI based.
I think there has been some margin pressure as Steve alluded, that we've made decisions to weather that. Certainly, certainly better pricing helps. You know, we continue to be focused on investment and inflation remains real.
Yeah.
Today for sure.
Yeah. We just had CPI, so yeah. You know, you have London Stock Exchange cash, but you also have a free cash flow story. Now that you're rolling off Change Program investments, can you just remind us what the cash flow story is from here? You know, and kind of some of the unexpected headwinds in 2023, modest headwinds, but headwinds. I know 2024 is a while from now. You know, you're not guiding to 2024, but anything we should be thinking about as we think about the next year?
You want me to take that?
Yeah.
Yeah. We, as you'll recall on this last call, we guided to $1.8 billion of free cash flow for 2023, and we called out three factors within that. There was a modest drag from the divestitures we did last year. There is a modest drag from investment we're making in the ThoughtTrace SurePrep acquisitions. There is also, I think it's fair to call it more of a non-recurring spend we expect to have as we pursue this real estate optimization. If you bucket those three together beyond 2023, they should be accretive to growth and profits. These are decisions we're making this year that we believe are long-term positives. I'd say two other things about free cash flow.
Q1 of last year, you may remember, Mike had a slide in his portion of our earnings call where he discussed why our free cash flow is meaningfully ahead of our adjusted net income. I'll let you go back and look at that for all the detail, but an important factor is our cash tax rate. It's approximately five percentage points below our book effective tax rate, we expect that to be the case for many more years into the future. You know, our free cash flow generation, you know, we think grows beyond this year for sure as we grow the business. You know, as you know with these business models, there's always a decision of incrementally how much do you invest in growth? Certainly we work through that.
Given our desire to grow faster, we'll not be shy about making high return investments to deliver that. I would think about that free cash flow base growing over the next few years, you know, roughly in line with profits is probably a fair assumption.
Thank you. You know, pretty much at the end, so I wanna thank you for your time.
Thanks, Heather.
Premiering our conference.
Thanks, everyone.
Thank you, guys.
Great.
Have a-