Clarivate Plc · NYSE:CLVT
Clarivate — Q2 2024 Earnings Presentation
36 slides from Clarivate's earnings presentation, Aug 6, 2024
Slide 1: Q2 2024 Earnings Call
Q2 2024 Earnings Call August 6, 2024
Slide 2: Introduction
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 includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results and therefore are, or may be deemed to be
Slide 4: Agenda
Agenda Introduction Mark Donohue Vice President Investor Relations Opening Remarks Andy Snyder Chairman of the Board Matti Shem Tov Chief Executive Officer Elect Business Review Jonathan Gear Chief Executive Officer Financial Review Jonathan Collins Executive Vice President and Chief Financial Offic
Slide 5: Opening Remarks
Opening Remarks Andy Snyder Chairman of the Board
Slide 6: Introduction: Matti Shem Tov, CEO Elect
Introduction Matti brings over 30 years experience of executive leadership experience in software and information services companies Previously served as Chief Executive Officer at ProQuest and Ex Libris, leading the company to become a prominent technology provider for academic, national, and resea
Slide 7: Business Review
Business Review Jonathan Gear Chief Executive Officer
Slide 8: Q2 2024 Overview
Q2 2024 Overview Revenues Academia & Government $650M +1% organic improvement from Q1 to Q2 H1 organic subscription growth >3% H1 1.5% organic subscription growth Launched new solutions across portfolio and won several multi-million-dollar contracts Adj. EBITDA¹ $274M 42% margin1 Intellectual Proper
Slide 9: A&G Solid Subscription Growth
A&G Solid Subscription Growth A&G Business Performance • Strong subscription growth of >3% in H1 driven by renewal rate of >96% • Q2 subscription growth lower than Q1, due to large on-time renewals in Q1 that were late last year, driving total Clarivate overall Q2 subs growth of <1% • Transactional
Slide 10: IP Stabilizing With Rebound To Growth In H2
IP Stabilizing With Rebound To Growth In H2 IP Business Performance Trademark Watch Analyzer • YTD high single digit growth in IP Management Software, with >80% win rate in large corporate IPMS competitive deals in APAC, Japan • Trademark search volumes stabilized, with growth supported by large sca
Slide 11: Delivering Embedded Use-Case Specific Intelligence In IP
Delivering Embedded Use-Case Specific Intelligence In IP Search Watch Research and Development IP Strategy Derwent Search New Patent Watch Solution New Suite of R&D Solutions Innography Rapid, precise patent search Scaled, rapid, orchestrated review of Technical, IP, market, and Patent analytics ins
Slide 12: LS&H Pressure Due To Customer Budget Headwinds
LS&H Pressure Due To Customer Budget Headwinds LS&H Business Performance Epidemiology Intelligence • Improved sales in international markets (Europe and APAC) and mid-size pharma; closed large consulting deal ($1M+) with top 201 pharma company focused on Diabetes and Obesity market • Discontinuation
Slide 13: Building A Growth Engine In Real World Data
Building A Growth Engine In Real World Data Product Platform Franchise Cohort-specific data and modules Commercial analytics modules Genomics enriched patient insights Life Science grade highly enriched Highly enriched electronic patient Highly enriched electronic patient records Data Type electroni
Slide 14: Financial Review
Financial Review Jonathan Collins Chief Financial Officer
Slide 15: Q2 2024 Financial Results
Q2 2024 Financial Results Changes from Prior Year Revenues $m except per share data Q2 ‘24 Q2 ‘23 Change H1 ‘24 H1 ‘23 Change • Q2 decline due largely to Valipat divestiture in April and Fx Revenues $650 $669 $(19) $1,272 $1,298 $(26) translation impact Income / (Loss) from Operations (240) (88) (15
Slide 16: Q2 2024 Revenues and Adj. EBITDA
Q2 2024 Revenues and Adj. EBITDA1 Changes from Prior Year Organic Year + Better - Worse $ millions • Organic decline pressured Revenues margins as operating expenses Adj. EBITDA1 were essentially flat $669 Inorganic $650 • Valipat divestiture completed in ($4) April net of nominal revenue ($9) ($6)
Slide 17: Q2 2024 Cash Flow
Q2 2024 Cash Flow Changes from Prior Year Free Cash Flow1 $m Q2 ‘24 Q2 ‘23 Change H1 ‘24 H1 ‘23 Change • Decline primarily due to working capital timing of receipts and Adj. EBITDA1 $274 $285 $(11) $511 $538 $(27) disbursements One-Time Costs (6) (14) 8 (25) (47) 22 Capital Allocation Interest (95)
Slide 18: Reaffirmed FY 2024 Outlook
Reaffirmed FY 2024 Outlook ~1.0% Organic Growth Organic Growth 0.0% 2.0% • Now expect full year growth below midpoint of the range • Anticipate a sequential ~$2,620m Revenues $2,570m $2,670m improvement returning to growth in Q3 in the range of flat to ~1% Revenues ~$1,085m • Expected near mid-point
Slide 19: FY 2024 Organic Growth Phasing
FY 2024 Organic Growth Phasing Subscription Revenue Type First Half Second Half Full Year • A&G leading with >3% sub growth in H1 with declines in LS&H and IP due to commercialization and patent intelligence, respectively • Subscription growth expected to Subscription <2% <2% <2% remain consistent t
Slide 20: FY 2024 Revenues and Adj. EBITDA Outlook
FY 2024 Revenues and Adj. EBITDA1 Outlook Changes from Prior Year Organic Year + Better - Worse $ millions • Expect stable subscription growth Revenues just below 2% will be diluted by Adj. EBITDA1 flat re-occurring and partially offset by modest transactional decline $2,629 ~$10 ~$0 ~$2,610 Inorgan
Slide 21: 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 lower on acquisition integration completion Adj. EBITDA1 ~$1,085 $1,117 ~$(30) • Interest cost lower on One-Time Costs ~(40) (61) ~20 deleveraging and TLB refi benefit Interest ~(26
Slide 22: 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 Capital Free Cash Flow1 Balanced ~10% >40% Profit Margin1 ~40% ~$400 Spending Conversion Allocation 1 See the Appendix for a
Slide 23: Q&A Session
Q&A Session
Slide 24: About Clarivate
About Clarivate © 2024 Clarivate Clarivate is a leading global provider of transformative intelligence. We offer enriched data, insights & analytics, workflow solutions and expert services in Clarivate and its logo, as well as all other the areas of Academia & Government, Intellectual Property and L
Slide 25: Appendix
Appendix Presentation of Certain Non-GAAP Financial Measures
Slide 26: 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 27: 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 28: 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 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net income (loss) to Adjusted EBITDA and Adjusted EBITDA margin Three Months Ended June 30, Six Months Ended June 30, Descriptions (In millions, except percentages) 2024 2023 2024 2023 1. Primarily reflects the net impact of foreign exchange gains and lo
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net income (loss) to Adjusted EBITDA and Adjusted EBITDA margin Year Ended December 31, Descriptions (In millions, except percentages) 2023 1. Includes costs incurred to complete business combination transactions, including Net income (loss) (911.2) acqu
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net income (loss) and Net income (loss) per share to Adjusted net income and Adjusted diluted EPS Three Months Ended June 30, Descriptions 2024 2023 1. Primarily reflects the net impact of foreign exchange gains and losses related (In millions, except pe
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net income (loss) and Net income (loss) per share to Adjusted net income and Adjusted diluted EPS Six Months Ended June 30, Descriptions 2024 2023 1. Primarily reflects the net impact of foreign exchange gains and losses related (In millions, except per
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net cash provided by operating activities to Free cash flow Three Months Ended June 30, Six Months Ended June 30, (In millions, except percentages) 2024 2023 2024 2023 Net cash provided by operating activities $ 126.2 $ 162.4 $ 302.4 $ 389.9 Capital expe
Slide 34: Reconciliation of Non-GAAP Financial Measures – 2024 Outlook
Reconciliation of Non-GAAP Financial Measures – 2024 Outlook The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the 2024 outlook and reconciles these non-GAAP measures to our Net income (loss) and Net income (loss) margin for the same period: Net income (l
Slide 35: Reconciliation of Non-GAAP Financial Measures – 2024 Outlook
Reconciliation of Non-GAAP Financial Measures – 2024 Outlook The following table presents our calculation of Adjusted diluted EPS for the 2024 outlook and reconciles this non-GAAP measure to our per share Net income (loss) for the same period: Net income (loss) per fully diluted weighted shares outs
Slide 36: Reconciliation of Non-GAAP Financial Measures – 2024 Outlook
Reconciliation of Non-GAAP Financial Measures – 2024 Outlook The following table presents our calculation of Free cash flow for the 2024 outlook and reconciles this non-GAAP measure to our Net cash provided by operating activities for the same period: Net cash provided by operating activities to Fre