Clarivate Plc · NYSE:CLVT
Clarivate — Clarivate Analytics — Investor Presentation (September 2019)
33 slides from Clarivate's investor presentation, Sep 3, 2019
Slide 1: September 2019 Presentation
September 2019 NYSE: CCC Presentation
Slide 2: Forward-Looking Statements
| 2 Forward - Looking Statements The accompanying materials contain certain forward - looking statements regarding Clarivate Analytics Plc (the “Company” or “ Clarivate ”), its financial condition and its results of operations, anticipated synergies and other future expectations . Forward - looking
Slide 3: Summary investment highlights
Summary investment highlights | 3 • Collection of high quality assets embedded in customer workflows 1 • Highly recurring subscription revenue model and high retention rates and subscription revenue mix 2 • Tailwinds in information services sector 3 • Business model enables cycle of profitable growt
Slide 4: Business overview
Business overview | 4 • Leading global provider of comprehensive intellectual property and scientific information, analytical tools and services • Products support the critical decisions made by universities, businesses, governments and law firms in the discovery, protection and commercialization of
Slide 5: Clarivate's purpose, vision, mission and values
Clarivate’s purpose, vision, mission and values | 5 Our purpose Our vision Our mission We are a trusted, indispensable partner to innovators everywhere by delivering critical data, information, workflow solutions and deep domain expertise. Own your actions We act with integrity and are accountable t
Slide 6: Powerful assets vital to broad customer base
Powerful assets vital to broad customer base | 6 Customers Web of Science Cortellis Used to navigate scientific and academic research discoveries, conduct analysis and evaluate research impact Used by life sciences firms for drug research, market intelligence and regulatory compliance Product Descri
Slide 7: Customer use examples across products
| 7 A professor planning a research program accesses Web of Science (“WOS”) to evaluate the current state of research in her discipline, identifying trends within highly regarded and relevant academic journals A university provost evaluating her university’s chemistry department accesses InCites to
Slide 8: Proving our value to customers
| 8 Proving our value to customers (1) Customer Delight Survey was conducted in June/July 2019 by CustomerFirstNow and consisted of 8,765 participants. Insight into customer decision - making critical to drive growth Products are highly valued by customers Offerings perceived as best - in - class Si
Slide 9: Large and growing predictive analytics and data market
Large and growing predictive analytics and data market (1) (2018E - 2021E predictive analytics and data market revenue; $ in B) Significant move up the value chain with smart data offerings • Integration into workflow tools of clients to provide predictive and prescriptive analytics , allowing for s
Slide 10: Business model enables cycle of profitable growth and reinvestment capacity
Business model enables cycle of profitable growth and reinvestment capacity | 10 Incremental margin growth from “build once, sell many times” model Proprietary “must - have” offerings Predictable a nd resilient recurring revenue streams through subscriptions with high renewal rates → 82% subscriptio
Slide 11: Strong operating leverage and margin expansion opportunity
Strong operating leverage and margin expansion opportunity | 11 Core operating leverage plus synergies drive incrementally higher margin expansion while also allowing for investment. Estimated adjusted EBITDA margin expansion sensitivity (bps) (1) Organic r evenue g rowth % 1% 2% 3% 4% 5% 6% +0% +55
Slide 12: Foundation set for attractive growth
Foundation set for attractive growth | 12 • Invested in best - in - class, cloud - based platforms for operational and business workflow backbone • Built out independent operating functions including Accounting, Treasury, HR, Payroll and Technology • Optimizing pricing model and service levels to ma
Slide 13: Management quickly executing with proven playbook
Management quickly executing with proven playbook | 13 First progress report Q2 Revenue growth (0.4%) (1) Adjusted revenue growth (at constant currency) 2.5% (1) Q2 Adjusted subscription growth (at constant currency) 4.9% (1) ACV growth 3.6% (2) 92% retention Rate (3) Proven playbook with multiple l
Slide 14: Recent progress on other initiatives
Recent progress on other initiatives | 14 • Entered into an agreement to pay $200 million to terminate the Tax Receivable Agreement (“TRA”) , previously established with the shareholders prior to our initial listing on the NYSE, including Onex and BPEA • Settling the TRA allows for: − Taking full ad
Slide 15: Financial highlights
Financial highlights | 15
Slide 16: Financial characteristics
34% 29% Financial characteristics | 16 • Compelling strategies to drive continued profitable growth • Scalable business model with significant operational leverage • High level of subscription revenue providing a resilient business model • Strong visibility due to annual, recurring subscription cont
Slide 17: Q2 2019 performance highlights
$755 $783 Q2'18 Q2'19 Q2 2019 performance highlights | 17 $133 $136 $106 $106 Q2'18 Q2'19 Science Group Intellectual Property Group $238 $242 $195 $203 $44 $40 Q2'18 Q2'19 Subscription Revenue Transactional Revenue $238 $242 Adjusted revenue by product group ($ in millions) Subscription vs. transact
Slide 18: YTD 2019 performance highlights
YTD 2019 performance highlights | 18 • Adjusted Revenue (1) growth of 2.4% YoY on a constant currency basis ‒ Science Group revenue growth of 3.3% YoY on a constant currency basis ‒ Intellectual Property Group revenue growth of 1.2% YoY on a constant currency basis ‒ Subscription revenue growth of 4
Slide 19: High levels of contracted revenue
$731.2 $755.1 $759.4 $767.0 $764.1 $782.6 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 High levels of contracted revenue | 19 Historical annualized contract value (ACV) (1) ($ in millions) (1) Annual Contract Value (“ACV”) is the annualized value for a 12 - month period following a given date of all su
Slide 20: Clarivate transformation: the next phase
Clarivate transformation: the next phase | 20 Decreasing costs by simplifying organization structures and rationalizing G&A functions to enhance customer - centric focus Using artificial intelligence and the latest technologies to reduce costs and increase efficiencies for content sourcing and curat
Slide 21: Summary investment highlights
Summary investment highlights | 21 • Collection of high quality assets embedded in customer workflows 1 • Highly recurring subscription revenue model and high retention rates and subscription revenue mix 2 • Tailwinds in information services sector 3 • Business model enables cycle of profitable grow
Slide 22: Appendix
Appendix | 22
Slide 23: Exceptional leadership team
0% 200% 400% 600% 800% 1,000% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1,056% S&P500 217% 332% Exceptional leadership team IHS share price performance under Jerre Stead’s leadership (1) (Indexed Total Shareholder Return; Nov. ’ 05 IPO – ’17FYE) • Preeminent business operator
Slide 24: Web of Science product example
| 24 • 150mm records (1) • 34,000+ journals indexed (1) • 1B+ citations (1) • 3.5mm peer review records (1) • 2.0mm+ unique monthly visitors (1) Industry - leading d ata and a nalytics platform High s takes u se c ases • Objective, independent, balanced selection ‒ 3,000 journals reviewed annually,
Slide 25: Product example: Cortellis
Product example: Cortellis | 25 Cortellis Cortellis is a leading drug development and commercialization database • Leading drug pipeline database valued by customers for its breadth and depth of content ‒ Curated database of over 70,000 drug program records with accompanying suite of analytical tool
Slide 26: Product example: Derwent Innovation
Product example: Derwent Innovation | 26 • Ranked #1 comprehensive patent research and analysis solution by Outsell • Sold globally into over 50 countries (1) • Over 80mm patent publications from 50 patent offices, which represent 98% of all patents published globally (1) Search Proprietary Content
Slide 27: Presentation of certain non-GAAP financial measures
Presentation of certain non - GAAP financial measures | 27 Adjusted Revenue, Standalone Adjusted EBITDA, and Standalone Adjusted EBITDA Margin, as presented, are examples of supplement al non - GAAP measures of Clarivate’s performance. Adjusted Revenue normalizes for the impact of purchase accountin
Slide 28: Presentation of certain non-GAAP financial measures (cont'd)
Presentation of certain non - GAAP financial measures ( cont’d) | 28 We also monitor Standalone Adjusted EBITDA because Clarivate’s credit agreement governing its credit facilities and its indenture governing its senior unsecured notes contain certain covenants (including debt incurrence and the mak
Slide 29: Reconciliation of non-GAAP financial measures and required reported data
Reconciliation of non - GAAP financial measures and required reported data Descriptions Adjusted EBITDA Adjustments 1. Deferred revenue fair value accounting adjustment arising from purchase price allocation in connection with the carve - out 2. Clarivate divested its non - core IPM product line in
Slide 30: Reconciliation of non-GAAP financial measures and required reported data
Reconciliation of non - GAAP financial measures and required reported data Descriptions Adjusted EBITDA Adjustments 1. Deferred revenue fair value accounting adjustment arising from purchase price allocation in connection with the carve - out 2. Clarivate divested its non - core IPM product line in
Slide 31: Reconciliation of non-GAAP financial measures and required reported data
Reconciliation of non - GAAP financial measures and required reported data Descriptions Adjusted EBITDA Adjustments 1. Deferred revenue fair value accounting adjustment arising from purchase price allocation in connection with the carve - out 2. Clarivate divested its non - core IPM product line in
Slide 32: Historical quarterly financial summary
Historical quarterly financial summary ($ in millions) Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Science Group $125.9 $132.5 $131.8 $137.9 $129.1 $136.1 Intellectual Property Group $105 . 9 $105.9 $103.9 $107.6 $105.1 $106 . 3 Adjusted Revenue (1) $231.8 $238.4 $235.7 $245.5 $234.2 $242.4 IPM
Slide 33: Enterprise Value Build
Enterprise Value Build Stock Price at 8/28/2019 @$18 @$19 @$20 Comments (As of August 28, 2019, $ in millions except per share values) Share Price Current Share Price $17.60 $18.00 $19.00 $20.00 (1) Enterprise Value Build Basic Shares Outstanding 305,285,681 305,285,681 305,285,681 305,285,681 (2) (
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