Slide 1: Q1 2023 Earnings Call
Q1 2023 Earnings Call May 9, 2023
Slide 2: Introduction
1. Introduction Mark Donohue VP Investor Relations 2
Slide 3: 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 3
Slide 4: Safe Harbor Statement and Forward-Looking Statements
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 5: Business Review
2. Business Review Jonathan Gear Chief Executive Officer 5
Slide 6: Q1 Highlights
Q1 Highlights Revenues Achieved Web of Science growth inflection $629M ~Flat organic growth point 3% org. subscription growth Evolved industry thought leadership, e.g. Top 100 Global Innovators and Drugs to Watch Adj. EBITDA1 $253M 40% margin Leveraging generative AI to continually evolve +60 bps Yo
Slide 7: Achieved Web of Science growth inflection point
Achieved Web of Science growth inflection point Returning to market growth rates Research and Analytics ‘22 ‘23 in Research & Analytics Renewal rate Pre-Print Citation Index launch (Q1) 96% Enhanced content through 2M+ pre- +350 bps YoY prints advancing scientific progress New subscription growth In
Slide 8: Evolved industry thought leadership
Evolved industry thought leadership Top 100 Global Innovators™ Drugs to Watch™ Recognizing cutting-edge innovators defining Predicting blockbuster drugs which will benefit their respective sectors millions of patients Bringing together our enriched best-in-class data Identified 15 potential late-sta
Slide 9: Leveraging generative AI to continually evolve our solutions
Leveraging generative AI to continually evolve our solutions Mission Critical, Expertly Curated Industry Solutions Continued deployment of AI across our portfolio to ensure only gold standard content is indexed within Web of Science™, build next Enriched Analytics & Workflow Expert generation search
Slide 10: Completed leadership transition
Completed leadership transition Bar Veinstein Gordon Samson Henry Levy President, Academia & Government President, Intellectual Property President, Life Sciences & Healthcare • Joined from Taranis, served as CEO, • Joined October 2020 with CPA • Joined from Veeva Systems, a leader formerly President
Slide 11: Enhanced governance through board of directors' changes
Enhanced governance through board of directors’ changes Improved efficiency • Reduced board size to 11 Further bolstering our deep industry expertise across our segments • Nominated Dr. Saraubh Saha as new independent director • Dr. Saha is a physician-scientist, pharmaceutical executive, and biotec
Slide 12: Continued deleveraging through further debt paydown
Continued deleveraging through further debt paydown $600 7.0 $500M $500 6.0 • $500M debt paydown in 2022. Targeting ~$400M 5.0 $400 ~$400M in 2023, achieved $125M in Q1 4.0 $300 4x <4x 3.0 • Aiming for <4x net leverage in 2023 $200 <3x 2.0 $100 1.0 • Long-term objective of <3x net leverage by end $0
Slide 13: Financial Review
3. Financial Review Jonathan Collins Chief Financial Officer 13
Slide 14: Q1 2023 Financial Results
Q1 2023 Financial Results Revenue Changes from Prior Year • Revenue 5% lower due to MarkMonitor Divestiture and Fx $m except per share data Q1 ‘23 Q1 ‘22 Change headwinds Revenues, net $629 $662 $(33) • ~Flat organic growth YoY Adjusted EBITDA 253 262 (9) Net Income Adjusted EBITDA Margin 40.2% 39.6
Slide 15: Q1 2023 Revenues and Adj. EBITDA changes vs. Prior Year
Q1 2023 Revenues and Adj. EBITDA1 changes vs. Prior Year Year + Better - Worse Revenues Adj. EBITDA1 $ millions Organic Growth • ~Flat organic growth was in line $662 with expectation $629 $1 $19 • Continued to invest in organic $13 growth leading to negative profit conversion Inorganic Impact • Mar
Slide 16: Q1 2023 Cash Flow
Q1 2023 Cash Flow Changes from Prior Year Free Cash Flow • One-time costs to complete $m Q1 ‘23 Q1 ‘22 Change ProQuest acquisition integration; Adj. EBITDA $253 $262 $(9) significantly lower YoY due to CPA equity plan payment in Q1 '22 One-Time Costs1 (33) (166) 133 • Higher interest YoY due to impa
Slide 17: FY 2023 Outlook
FY 2023 Outlook Reaffirmed Full Year Guidance Ranges Organic Growth • Expansion in 2023 from ~3.25% improvements expected in A&G Organic Growth 2.75% 3.75% (R&A) and transactional products and services ~$2,680m Revenues $2,630m $2,730m Adj. EBITDA Margin1 • Profit margin expansion driven by ~$1,130m
Slide 18: FY 2023 Revenues and Adj. EBITDA outlook vs. Prior Year
FY 2023 Revenues and Adj. EBITDA1 outlook vs. Prior Year Year + Better - Worse Revenues Adj. EBITDA1 $ millions Organic Growth • ~30% Adj. EBITDA margin conversion on ~3.25% organic ~$85 ~$2,680 $2,660 growth reflects operating expense investments to fuel ~$65 +3.25% ~$0 product innovation Inorganic
Slide 19: FY 2023 Cash Flow Outlook
FY 2023 Cash Flow Outlook Changes from Prior Year Free Cash Flow • One-time cost reduction due to Midpoint of $m 2022 Actuals Change completion of acquisition 2023 Outlook2 integrations Adj. EBITDA ~$1,130 $1,113 ~$20 • Higher cash interest payments due One-Time Costs ~(50) (215) ~165 to base rate i
Slide 20: 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 Q1 KPIs... R&A Organic Adj. EBITDA Free Cash Flow Term Debt 3% Growth 60bps Expansion1 66% Conversion1 $125M Pre-payment R&A
Slide 21: Q&A Session
4. Q&A Session Clarivate”
Slide 22: Thank you
Thank you © 2023 2022 Clarivate. All rights reserved. Republication or redistribution of Clarivate content, including by framing or similar means, is prohibited without the prior written consent of Clarivate. Clarivate and its logo, as well as all other trademarks used herein are trademarks of their
Slide 23: Appendix
Clarivate” APPENDIX
Slide 24: 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/Inorganic Revenues, Adjusted EBITDA, Adjusted EB
Slide 25: 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 26: 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 27: Reconciliation of Non-GAAP Financial Measures (YTD)
Reconciliation of Non-GAAP Financial Measures (YTD) The following table presents the amounts of our subscription, re-occurring, and transactional and other revenues, including as a percentage of our total revenues, for the periods indicated, as well as the drivers of the variances between periods. V
Slide 28: Reconciliation of Net income to Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures Net income to Adjusted EBITDA Three Months Ended Descriptions March 31, Adjusted EBITDA adjustments (in millions, except percentages); (unaudited) 2023 2022 1. Includes costs incurred to complete business combination transactions, including acquisitions,
Slide 29: FY 2022 Net loss to Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures FY 2022 Net loss to Adjusted EBITDA Year Ended December 31, Descriptions (in millions, except percentages); (unaudited) 2022 Adjusted EBITDA adjustments Net loss attributable to ordinary shares $ (4,035.6) 1. Reflects the deferred revenues adjustment mad
Slide 30: Net income to Adjusted Net Income and Adjusted Diluted EPS
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 March 31, Descriptions 2023 2022 Adjusted Net Income and Adjusted Diluted EPS adjustments (in millions, except per share amounts); (unaud
Slide 31: Net Cash Provided By Operating Activities to Free Cash Flow
Reconciliation of Non-GAAP Financial Measures Net Cash Provided By Operating Activities to Free Cash Flow Three Months Ended March 31, (in millions); (unaudited) 2023 2022 Net cash provided by operating activities $ 227.5 $ 67.4 Capital expenditures (59.3) (41.4) Free cash flow $ 168.2 $ 26.0 Year E
Slide 32: FY2023 Outlook Revenues and Adjusted EBITDA Reconciliation
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Revenues, net for the FY2023 outlook: Revenues, net Variance Increase/(Decrease) Percentage of Factors Increase/(Decrease) Total Variance Total Variance Year Ending December 31, (Dollars) (Percentage) Acqui
Slide 33: FY2023 Outlook Adjusted Diluted EPS Reconciliation
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Diluted EPS for the FY2023 outlook and reconciles this measure to our Net loss per share for the same period: Net loss Per Fully Diluted Weighted Shares Outstanding to Adjusted Diluted EPS Year End
Slide 34: FY2023 Outlook Free Cash Flow Reconciliation
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Free cash flow for the FY2023 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