Clarivate Plc · NYSE:CLVT
Clarivate — Q2 2022 Earnings Presentation
41 slides from Clarivate's earnings presentation, Aug 9, 2022
Slide 1: Q2 2022 Earnings Call
Q2 2022 Earnings Call August 9, 2022
Slide 2: 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 3: Agenda
Agenda Mark Donohue Introduction Head of Global Investor Relations Jerre Stead Business Review Executive Chair and Chief Executive Officer Jonathan Gear Executive Transition Chief Executive Officer - Elect Jonathan Collins Financial Review Executive Vice President and Chief Financial Officer Questio
Slide 4: Business Review
Business Review Jerre Stead Executive Chair & Chief Executive Officer
Slide 5: 2022 Q2 Business Highlights
2022 Q2 Business Highlights FINANCIAL RESULTS KEY HIGHLIGHTS Revenue Adjusted EBITDA 1 Cross-Selling Driving Increased Deal Size $687 million $274 million 2 Delivered Record Healthcare Data Sales ↑ $241M from prior year ↑ $85M from prior year 3 Won Large and Long-Term Contract in Asia 4.8% organic g
Slide 6: Cross-Selling Driving Increased Deal Size
1 2 3 4 5 Cross-Selling Driving Increased Deal Size Ongoing improvements from Q1 with increasing average deal sizes & larger deal values showing the growth potential of cross sell & account expansion WEB OF SCIENCE SOLD OUTSIDE OF A&G SCIENCE SOLDOUTSIDE SCIENCE SOLD OUTSIDEOFOF LS&HC LS&HC Driving
Slide 7: Delivered Record Healthcare Data Sales
1 2 3 4 5 Delivered Record Healthcare Data Sales Strong recovery in healthcare real world data (RWD) sales …tempered by macro-economic pressures due to high value, integrated and differentiated data and on trademark filings and hiring ramp in customized analytics... consulting services Delivered rec
Slide 8: Won Large and Long-Term Contract in Asia
1 2 3 4 5 Won Large and Long-Term Contract in Asia Awarded double-digit $ millions contract from the National Library Board in Singapore Long-term multi-year agreement Largest contract Innovative has ever signed in its 40+ years of operation Delivering an intuitive and exciting library experience to
Slide 9: Completed Colleague and Customer Surveys
1 2 3 4 5 Completed Colleague and Customer Surveys Colleague Engagement Customer Delight 85% response rate Over 18,000 customers responded globally Strengths Score Collaboration Score of 78, up 3 points from our updated 2021 baseline Managers providing feedback and direction 87 - Quality of Products
Slide 10: Published Annual Sustainability Report
1 2 3 4 5 Published Annual Sustainability Report Our global impact on Sustainable Development Goals (SDGs) All SDGs Quality Education 46% of Clarivate revenue is aligned to SDGs 26K+ public and academic libraries rely on our solutions Partnership for Goals Multiple SDGs 51% of our customers ranked i
Slide 11: The Clarivate Story
The Clarivate Story Revenue Adjusted EBITDA Adjusted Free Cash Flow $ billions $ millions $ millions ~$2.7 ~$625 $1.9 ~$1,140 $459 $800 $1.3 4.5% ~4.5% $487 $302 ~55% $1.0 57.4% $294 42.6% 42% $101 62.0% 1.2% 3.1% 30.2% 38.1% 34.4% 2019A 2020A 2021A 2022F 2019A 2020A 2021A 2022F 2019A 2020A 2021A 20
Slide 12: Leadership Transition
Leadership Transition Jonathan Gear Chief Executive Officer - Elect
Slide 13: Financial Review
Financial Review Jonathan Collins Executive Vice President & Chief Financial Officer
Slide 14: Q2 and H1 2022 Financial Results
Q2 and H1 2022 Financial Results Strong inorganic and solid Changes from Prior Year organic growth drove revenue increase of 54% in the quarter $ in millions except EPS Q2 ‘22 Q2 ‘21 Change H1 ‘22 H1 ‘21 Change Net Income attributable to Revenues, net $687 $446 $241 $1,349 $874 $475 ordinary sha
Slide 15: Q2 2022 Revenue and EBITDA Changes vs. 2021
Year + Better - Worse Q2 2022 Revenue and EBITDA Changes vs. 2021 Revenue Adj. EBITDA $ millions Organic growth of 4.8% was ~$3m below low end of expected range (5.5-6%) on $245 $687 softer transactional sales in IP $26 and consulting but delivered $22m of revenue growth at a profit conversion of
Slide 16: H1 2022 Revenue and EBITDA Changes vs. 2021
Year + Better - Worse H1 2022 Revenue and EBITDA Changes vs. 2021 Revenue Adj. EBITDA $ millions Organic Growth of 4.6% delivered $41m of revenue growth at a profit conversion $473 $1,349 of ~50% $39 Inorganic growth primarily from PQ contributed $473m +4.6% with a profit conversion of ~30% $41
Slide 17: Q2 and H1 2022 Cash Flow
Q2 and H1 2022 Cash Flow H1 increase in one-time costs Changes from Prior Year attributed to the pay out of the CPA Global equity plan $ in millions Q2 ’22 Q2 ‘21 Change H1 ’22 H1 ’21 Change Working capital change from Adj. EBITDA $274 $189 $85 $537 $354 $183 prior year attributable to seasonali
Slide 18: FY 2022 Updated Outlook
FY 2022 Updated Outlook Revised guidance Updated Full Year Guidance Ranges contemplates the relative strength of the USD ~4.5% compared to a basket of Organic Growth 4% 5% foreign currencies, namely the GBP and EUR, as well as a ~$2,730M global recession muting the Revenues $2,700M $2,760M growth
Slide 19: FY 2022 Revenue and EBITDA Changes vs. 2021
Year + Better - Worse FY 2022 Revenue and EBITDA Changes vs. 2021 Revenue Adj. EBITDA $ millions 4.5% organic growth expected to deliver ~$870 ~$100 ~$2,730 meaningful margin expansion with >50% profit conversion Inorganic growth from full +4.5% +/- 1% year of PQ at >30% margins ~$85 pre-cost sy
Slide 20: FY 2022 Quarterly Revenue Progression
FY 2022 Quarterly Revenue Progression Normal seasonality leads to Revenue and Organic Growth Rate Phasing slightly elevated levels of $ millions revenue in Q2 and Q4 $800 12.0% ~$720-$730 Anticipate organic growth $687 11.0% rate to progressively improve $700 $662 ~$650-$660 10.0% through remain
Slide 21: FY 2022 Cash Flow Outlook
FY 2022 Cash Flow Outlook Expect incremental profit will Changes from Prior Year fund higher integration and interest costs associated with $ in millions 2022 Outlook 2021 Actuals Change PQ acquisition and will be partially offset by higher cash Adj. EBITDA ~$1,140 $800 ~$340 taxes and capital spe
Slide 22: Key Financial Metrics Trends
Key Financial Metrics Trends Revenue on pace to nearly Revenue Adjusted EBITDA triple in 5 years bolstered by $ billions $ millions M&A and accelerating organic ~$2.7 ~$1,140 growth $1.9 $800 +/- 2% Profit margin expected to $487 $1.3 4.5% ~4.5% ~ 42% compress by ~50 bps this year $1.0 42.6% $29
Slide 23: Investment Highlights
Investment Highlights Leading Brands Accomplished Global Leadership Customer Team Base Substantial $100B Free Cash Addressable Flow Market Generation ~80% Significant Subscription / Operating Re-occurring Leverage Revenue 90%+ Subscriber Retention Rates 23
Slide 24: Appendix
Clarivate” APPENDIX
Slide 25: 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 Organic Revenues, Adjusted EBITDA, Adjusted EBITDA Margi
Slide 26: 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 27: 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 28: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Free Cash Flow and Adjusted Free Cash Flow We use free cash flow and adjusted free cash flow in our operational and financial decision-making and believe free cash flow and adjusted free cash flow is useful to investors because similar measures are
Slide 29: Reconciliation of Non-GAAP Financial Measures (QTD)
Reconciliation of Non-GAAP Financial Measures (QTD) The increase in organic revenue illustrates growth in businesses owned by the Company since January 1, 2021, the beginning of the earliest period presented. The following tables present the amounts of our subscription, re-occurring, and transaction
Slide 30: Reconciliation of Non-GAAP Financial Measures (YTD)
Reconciliation of Non-GAAP Financial Measures (YTD) The increase in organic revenue illustrates growth in businesses owned by the Company since January 1, 2021, the beginning of the earliest period presented. The following tables present the amounts of our subscription, re-occurring, and transaction
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Income (Loss) to Adjusted EBITDA Three Months Ended Six Months Ended Descriptions June 30, June 30, Adjusted EBITDA adjustments (in millions); (unaudited) 2022 2021 2022 2021 1. Reflects the deferred revenues adjustment made as a result of purchase a
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Descriptions Net Loss to Adjusted EBITDA Adjusted EBITDA adjustments 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, Accounting for Contract Assets and Contract Liabiliti
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Loss to Standalone Adjusted EBITDA Twelve Months Ended June 30, (in millions); (unaudited) 2022 Descriptions Net loss attributable to ordinary shares $ (29.9) Dividends on preferred shares 78.9 Adjusted EBITDA and Standalone Adjusted EBITDA Adjustmen
Slide 34: Reconciliation of Non-GAAP Financial Measures (QTD)
Reconciliation of Non-GAAP Financial Measures (QTD) Descriptions Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Adjusted Net Income and Adjusted Diluted EPS adjustments 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the
Slide 35: 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 Adjusted Net Income and Adjusted Diluted EPS adjustments Six Months Ended June 30, 1. Reflects the deferred revenues adjustment made as a result of purchas
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Year Ended December 31, Year Ended December 31, Descriptions 2021 2020 Adjusted Net Income and Adjusted Diluted EPS adjustments (in millions, except shares and per share amou
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Cash Provided By Operating Activities to Free Cash Flow and Adjusted Free Cash Flow Three Months Ended Six Months Ended June 30, June 30, (in millions); (unaudited) 2022 2021 2022 2021 Net cash provided by operating activities $ 97.2 $ 87.6 $ 164.6 $
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Cash Provided By (Used In) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow Year Ended December 31, (in millions); (unaudited) 2021 2020 2019 Net cash provided by operating activities $ 323.8 $ 263.5 $ 117.6 Capital expenditures (11
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Revenues, net for the 2022 outlook: Variance Increase/(Decrease) Percentage of Factors Increase/(Decrease) Revenues, Net Total Variance Total Variance Year Ending December 31, (Dollars) (Percentage) Acquisi
Slide 40: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Diluted EPS for the FY2022 Outlook and reconciles this measure to our Net income (loss) for the same period: Net Income (Loss) Per Fully Diluted Weighted Shares Outstanding to Adjusted Diluted EPS
Slide 41: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the FY2022 Outlook and reconciles this measure to our Net cash provided by operating activities for the same period: Net Cash Provided by Operating Activities