Slide 1: Q2 2023 Earnings Call
Q2 2023 Earnings Call August 3, 2023
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: Q2 2023 highlights
Q2 2023 highlights Revenues Onboarded new segment presidents and $669M ~Flat organic growth1 embedded operating model 3% org. subscription growth1 Partnership with AI21 Labs as part of Adj. EBITDA¹ generative AI strategy $285M 43% margin1 +3% points YoY Launched AI-powered Brand Landscape Analyzer f
Slide 7: A&G growth continued in Research & Analytics and key wins across Workflow Software Solutions
A&G growth continued in Research & Analytics and key wins across Workflow Software Solutions A&G Business Performance • Bar Veinstein joined as President, bringing 10+ years of industry experience • Continued growth momentum across Research and Analytics ; new subscription growth rate up 840 bps 1H
Slide 8: IP key wins with flagship IP management system IPfolio and differentiated product integrations
IP key wins with flagship IP management system IPfolio and differentiated product integrations IP Business Performance • Gordon Samson assigned as President, leveraging 9+ years industry experience at CPA Global • Driving turnaround in Patent Intelligence business through product innovation • ‘23 re
Slide 9: LS&H new product releases across R&D and healthcare provider solutions
LS&H new product releases across R&D and healthcare provider solutions LS&H Business Performance • Henry Levy joined as President, with 20+ years experience across Life Sciences consulting, CRO and SaaS leadership • Commercialization sub-segment experiencing macro headwinds • Pivoting near-term real
Slide 10: Partnership with AI21 Labs as part of Generative AI Strategy
Partnership with AI21 Labs as part of Generative AI Strategy Unleashing the power of AI to shape the next generation of solutions for libraries and academic institutions • Strategic partnership with AI21 Labs, a pioneer in generative AI • Partnership will combine curated and trusted Clarivate conten
Slide 11: Launched AI-powered Brand Landscape Analyzer for IP professionals
Launched AI-powered Brand Landscape Analyzer for IP professionals Single workflow solution enabling instant assessment of brand commercial and legal risks • Charts a new direction for trademark and brand research, empowering IP professionals to make decisions with greater agility, efficiency and con
Slide 12: Developed Cortellis Generative AI Proof of Concept
Developed Cortellis™ Generative AI Proof of Concept Bringing together curated Life Science & Healthcare datasets and Generative AI capabilities • Developed proof of concept fusing LLM’s and proprietary capabilities / algorithms bringing together structured and unstructured Life Science & Healthcare
Slide 13: Published 2022 sustainability report, advancing on our ESG goals
Published 2022 sustainability report, advancing on our ESG goals 46% 130M+ 25,000 hours Volunteered by Clarivate colleagues around of 2022 Clarivate students use our solutions to the world in 2022 revenue is aligned with UN Sustainable enhance their learning and Development Goals research experience
Slide 14: 3. Financial Review
3. Financial Review Jonathan Collins Chief Financial Officer
Slide 15: Q2 2023 Financial Results
Q2 2023 Financial Results Changes from Prior Year Revenues • Revenues are lower due to $m except per share data Q2 ‘23 Q2 ‘22 Change divestiture of MarkMonitor Domains business in Q4 2022 Revenues, net $669 $687 $(18) Income / (Loss) from Operations (88) 86 (174) Net Income • Non-cash impairment of
Slide 16: Q2 2023 Revenues and Adj. EBITDA
Q2 2023 Revenues and Adj. EBITDA1 Changes from Prior Year Organic Growth Year + Better - Worse $ millions • Subscription growth at 3% Revenues Adj. EBITDA1 • Transactional and re-occurring declined 5% $687 $6 $669 ($3) Inorganic Impact ($21) • Divestiture of MarkMonitor business in Q4 2022 Cost Syne
Slide 17: Q2 2023 Cash Flow
Q2 2023 Cash Flow Changes from Prior Year Free Cash Flow • Interest cost increase due to $m Q2 ‘23 Q2 ‘22 Change higher interest rates partially offset by deleveraging Adj. EBITDA1 $285 $274 $11 • Working capital improvement due One-Time Costs (14) (17) 3 to unwind of patent renewal Interest (96) (8
Slide 18: Updated FY 2023 Outlook
Updated FY 2023 Outlook Updated Full Year Guidance Ranges Organic Growth • Lowering range by ~225 bps at mid-point or ($60)m ~1.0% Organic Growth1 0.0% 2.0% 2.75% 3.75% • LS&H driving ~150 bps or ~($40)m due to commercialization products and services ~$2,635m $2,670m • IP driving ~75 bps or ~($20)m
Slide 19: FY 2023 Organic Growth Phasing
FY 2023 Organic Growth Phasing Subscription Revenue Type First Half Second Half2 Full Year • Expect stable growth from subscription business, which comprises ~60% of total revenues Re-occurring Subscription1 3% ~3% ~3% • Anticipate sequential improvement in re-occurring revenues due to timing of acc
Slide 20: Updated FY 2023 Revenues and Adj. EBITDA Outlook
Updated FY 2023 Revenues and Adj. EBITDA1 Outlook Changes from Prior Year Organic Growth Year + Better - Worse $ millions • Largely driven by A&G segment as Revenues LS&H and IP expected to be Adj. EBITDA1 relatively flat ~$25 $2,660 ~$20 ~$2,635 Inorganic Impact • Primarily ~$65m MarkMonitor divest
Slide 21: Updated FY 2023 Cash Flow Outlook
Updated FY 2023 Cash Flow Outlook Changes from Prior Year Free Cash Flow • One-time costs better than prior $m 2023 Outlook 2022 Actuals Change year due to materially lower acquisition integration costs Adj. EBITDA1 ~$1,115 $1,113 ~$0 • Interest cost increase due to One-Time Costs ~(60) (215) ~155 h
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 H1 KPIs... Organic Profit Margin Free Cash Flow Term Loan Flat 160bps 51% $150M Growth Expansion Conversion Pre-payment Belo
Slide 23: 4. Q&A Session
4. Q&A Session
Slide 24: About Clarivate
About Clarivate © 2023 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 25: Appendix
Appendix
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 Organic/Inorganic Revenues, Adjusted EBITDA, Adjusted EB
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 (QTD)
Reconciliation of Non-GAAP Financial Measures (QTD) 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 30: 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 31: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures Net Income (Loss) to Adjusted EBITDA Three Months Ended Six Months Ended June 30, June 30, Descriptions Adjusted EBITDA adjustments (in millions); (unaudited) 2023 2022 2023 2022 Net income (loss) attributable to ordinary 1. Includes costs incurred to co
Slide 32: Reconciliation of 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); (unaudited) 2022 Adjusted EBITDA adjustments Net loss attributable to ordinary shares $ (4,035.6) 1. Reflects the deferred revenues adjustment made as a result of pur
Slide 33: Reconciliation to Adjusted Net Income and Adjusted Diluted EPS (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 June 30, Adjusted Net Income and Adjusted Diluted EPS adjustments 2023 2022 1. Includes costs incurred to complete business combination
Slide 34: Reconciliation to Adjusted Net Income and Adjusted Diluted EPS (YTD)
Reconciliation of Non-GAAP Financial Measures (YTD) Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Descriptions Six Months Ended June 30, 2023 2022 Adjusted Net Income and Adjusted Diluted EPS adjustments (in millions, except per share amounts); (unaudited) Amount Pe
Slide 35: 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 Six Months Ended June 30, June 30, (in millions); (unaudited) 2023 2022 2023 2022 Net cash provided by operating activities $ 162.4 $ 97.2 $ 389.9 $ 164.6 Capital expenditures
Slide 36: Reconciliation of FY2023 Outlook Revenues and Adjusted EBITDA
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 Total Variance Variance Year Ending December 31, (Dollars) (Percentage) Acqui
Slide 37: Reconciliation of FY2023 Outlook Adjusted Diluted EPS
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 income (loss) per share for the same period: Net Income (Loss) Per Fully Diluted Weighted Shares Outstanding to Adjusted Di
Slide 38: Reconciliation of FY2023 Outlook Free Cash Flow
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