Clarivate Plc · NYSE:CLVT
Clarivate — Q4 2023 Earnings Presentation
32 slides from Clarivate's earnings presentation, Feb 27, 2024
Slide 1: Q4 2023 Earnings Call
Q4 2023 Earnings Call February 27, 2024
Slide 2: 1. Introduction
1. Introduction Mark Donohue VP Investor Relations
Slide 3: Safe Harbor Statement and Non-GAAP Financial Measures
Safe Harbor Statement and Non-GAAP Financial Measures Forward-Looking Statements This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events,
Slide 4: Agenda
Agenda 1. Introduction Mark Donohue Vice President Investor Relations 2. Business Review Jonathan Gear Chief Executive Officer 3. Financial Review Jonathan Collins Executive Vice President and Chief Financial Officer 4. Q&A All 4
Slide 5: 2. Business Review
2. Business Review Jonathan Gear Chief Executive Officer
Slide 6: Clarivate Turnaround Trajectory
Clarivate Turnaround Trajectory 2023 2024 - 2026+ 2025 Laying Innovating Positioned The Foundation For Growth To Drive Value Assessed transformation and Targeting improvement to low- Targeting mid-single digit organic made foundational changes single digit organic growth growth in line with market r
Slide 7: 2023 | Laying The Foundation
2023 | Laying The Foundation Assessed transformation and made foundational changes Starting Point Challenges Achieved in 2023 Centralized operating model Lack of ownership, loss of key Completed operating model Operating focused on efficiencies and resources and fragmented transition driving end mar
Slide 8: 2024-2025 | Innovating For Growth
2024-2025 | Innovating For Growth Targeting improvement to low-single digit organic growth Organization Wide Priorities Segment Priorities Academia & Government Organizational Excellence Continue to deliver on Research and Analytics Leverage organizational stability in operating growth and improve p
Slide 9: 2026+ | Positioned To Drive Value
2026+ | Positioned To Drive Value Targeting mid-single digit organic growth in line with market rates Growth Increased Delivering Acceleration Operating Leverage Returns • Positioned structurally and • Delivering profit margin • Poised to deliver significant operationally for inorganic accretion val
Slide 10: FY 2023 highlights
FY 2023 highlights Revenues $2.63B 2.4% subscription organic growth Strong Balance Sheet 92% renewal rate, up from 91% Leverage below 4x; long dated maturities BB- credit ratings from S&P and Fitch Adj. EBITDA¹ $1.12B 42.5% margin1 +70bps YoY Investing for Growth Capex at 9% to fund innovation; to 1
Slide 11: 3. Financial Review
3. Financial Review Jonathan Collins Chief Financial Officer
Slide 12: Q4 and FY 2023 Financial Results
Q4 and FY 2023 Financial Results Revenues Changes from Prior Year • Modest organic growth in Q4; FY $m except per share data Q4 ‘23 Q4 ‘22 Change FY ’23 FY ‘22 Change decline due to divestiture of MarkMonitor in Q4 ‘22 Revenues $684 $675 $9 $2,629 $2,660 $(31) Net Income Income / (Loss) from Operati
Slide 13: FY 2023 Revenues and Adj. EBITDA
FY 2023 Revenues and Adj. EBITDA1 Changes from Prior Year Organic Growth Year + Better - Worse $ millions • 2.4% subscription growth largely Revenues offset by 5% transactional decline Adj. EBITDA1 $7 Inorganic Impact $2,660 $25 $2,629 • MarkMonitor divestiture +0.3% completed in Q4’22 $25 ($63) Cos
Slide 14: Q4 and FY 2023 Cash Flow
Q4 and FY 2023 Cash Flow Changes from Prior Year Free Cash Flow1 $m Q4 ‘23 Q4 ‘22 Change FY ’23 FY ‘22 Change • One-time costs materially lower as acquisition integration is complete Adj. EBITDA1 $298 $304 $(6) $1,117 $1,113 $4 • Interest cost higher due to interest One-Time Costs (7) (17) 10 (61) (
Slide 15: FY 2024 Outlook
FY 2024 Outlook Organic Growth ~1.0% Organic Growth 0.0% 2.0% • Expect organic growth to improve modestly in all three segments • Anticipate Q1 organic decline of ~2% on challenging comps in IP ~$2,620m Revenues $2,570m $2,670m Revenues • Expect growth from subscription and re-occurring revenues, pa
Slide 16: FY 2024 Revenues and Adj. EBITDA Outlook
FY 2024 Revenues and Adj. EBITDA1 Outlook Changes from Prior Year Organic Growth Year + Better - Worse $ millions • Driven by A&G and IP segments, Revenues LS&H expected to be flat Adj. EBITDA1 ~$30 Inorganic Impact $2,629 ~$2,620 • Small divestiture in IP announced ~($30) in July 2023 ~1.0% ~($10)
Slide 17: FY 2024 Cash Flow Outlook
FY 2024 Cash Flow Outlook Changes from Prior Year Free Cash Flow1 $m 2024 Outlook 2023 Actuals Change • One-time costs expected to be lower as acquisition integration Adj. EBITDA1 ~$1,085 $1,117 ~$(30) complete One-Time Costs ~(40) (61) ~20 • Interest cost expected to be lower due to deleveraging an
Slide 18: Long Range Financial Targets
Long Range Financial Targets Revenue ($B) Adjusted EBITDA1 ($M) Organic Growth • 2023 starting point for organic growth lower than expected; $2.6 $2.6 expect to achieve mid-single digit $1,117 ~$1,085 4-6% organic growth in line with market >42% rates by 2026 0-2% 42.5% 41.5% 0.3% Adj. EBITDA • Expe
Slide 19: Financial Objectives
Financial Objectives 1 2 3 4 Accelerate organic Durable margins through Attractive cash flow Disciplined capital growth to market levels the investment cycle engine allocation Organic ~50% Free Flat MSD1 >42% >42% Margin2 $0.5B <4x <3x Leverage Growth Conv. Cash Flow2 2023 Actuals 2026 Target 19 1 M
Slide 20: 4. Q&A Session
4. Q&A Session
Slide 21: About Clarivate
About Clarivate © 2024 Clarivate Clarivate is the leading global information services provider. We connect people and organizations to intelligence they can trust to transform their Clarivate and its logo, as well as all other perspective, their work and our world. Our subscription and technology-ba
Slide 22: Appendix
Appendix Presentation of Certain Non-GAAP Financial Measures
Slide 23: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with generally accepted accounting principles in the United States of America (“US GAAP“), including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net In
Slide 24: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted EBITDA The use of Adjusted EBITDA instead of US GAAP has limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results of operations and operating cash
Slide 25: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted Net Income and Adjusted Diluted EPS We use Adjusted Net Income and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") in our analysis of the financial performance of the Company. We believe Adjusted Net Income and Adjusted Dilute
Slide 26: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin Three Months Ended Year Ended December 31, December 31, Descriptions (in millions); (unaudited) 2023 2022 2023 2022 Adjusted EBITDA adjustments Net income (loss) attributable to ordinary sha
Slide 27: Reconciliation of Non-GAAP Financial Measures (QTD)
Reconciliation of Non-GAAP Financial Measures (QTD) Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Descriptions Three Months Ended December 31, Adjusted Net Income and Adjusted Diluted EPS adjustments 2023 2022 1. Reflects the dilutive impact of mandatory convertible
Slide 28: Reconciliation of Non-GAAP Financial Measures (YTD)
Reconciliation of Non-GAAP Financial Measures (YTD) Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Descriptions Year Ended December 31, Adjusted Net Income and Adjusted Diluted EPS adjustments 2023 2022 1. Includes costs incurred to complete business (in millions, ex
Slide 29: Reconciliation of Operating Cash Flow to Free Cash Flow
Reconciliation of Non-GAAP Financial Measures Net Cash Provided By Operating Activities to Free Cash Flow Three Months Ended Year Ended December 31, December 31, (in millions); (unaudited) 2023 2022 2023 2022 Net cash provided by (used for) operating $ 190.9 $ 136.9 $ 744.2 $ 509.3 activities Capita
Slide 30: Reconciliation of FY2024 Adjusted EBITDA Outlook
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the FY2024 outlook and reconciles these measures to our Net income (loss) for the same period: Net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin
Slide 31: Reconciliation of FY2024 Adjusted Diluted EPS Outlook
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Diluted EPS for the FY2024 outlook and reconciles this measure to our Net income (loss) per share for the same period: Net Income (Loss) Per Fully Diluted Weighted Shares Outstanding to Adjusted Di
Slide 32: Reconciliation of FY2024 Free Cash Flow Outlook
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Free cash flow for the FY2024 outlook and reconciles this measure to our Net cash provided by operating activities for the same period: Net Cash Provided by Operating Activities to Free Cash Flow Year Endin