Core Viewpoint - The analyst previously held a buy rating for Clarivate (CLVT), believing the business was on a positive trajectory, especially with the stock trading at approximately 6x forward PE [1] Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on identifying businesses with potential for long-term scaling and significant terminal value [1] - Key factors considered include competitive moat, unit economics, reinvestment opportunities, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1] - The analyst emphasizes the importance of fundamental research and targets sectors with strong secular tailwinds [1] Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds sourced from friends and family [1] - The motivation for writing on Seeking Alpha is to share investment insights and receive feedback from other investors [1] - The aim is to help readers focus on the drivers of long-term equity value, advocating for analysis that is both analytical and accessible [1]

Core Insights - The "Pulse of the Library 2025" report by Clarivate highlights how libraries are adapting to rapid changes, including AI adoption, open science, and geopolitical pressures [1][5]. AI Adoption - There is a steady rise in AI adoption among libraries, with 67% exploring or implementing AI tools, up from 63% in 2024 [2]. - Libraries with AI literacy as part of training programs are more likely to be in moderate or active implementation phases, with 28% reporting this factor [3]. - Senior librarians show greater confidence in AI terminology, with 43% rating their confidence as 4 or 5 on a scale of 1 to 5, compared to 36% of junior librarians [7]. Regional Variations - AI adoption varies regionally, with 37-40% of libraries in Asia and Europe in initial implementation or beyond, compared to 14-16% in 2024 [7]. - The U.S. lags in AI adoption and confidence, with only 7% optimistic about AI's potential benefits, compared to 27-31% in Asia and other regions [7]. Library Missions and Challenges - Core library missions remain mostly unchanged from 2024, with a notable shift in academic libraries focusing on student engagement as a primary objective in 2025 (40%) [7]. - Budget constraints are a significant challenge, with half of U.S. and North American respondents expecting cuts to collections due to geopolitical pressures [7]. Survey Demographics - The report is based on insights from over 2,000 librarians across 109 countries, with 77% representing academic libraries and 46% of respondents located in the U.S. [5][8].

Core Insights - Clarivate PLC reported revenue of $623.1 million for the quarter ended September 2025, reflecting a slight increase of 0.1% year-over-year and exceeding the Zacks Consensus Estimate by 9.23% [1] - The company's EPS was $0.18, down from $0.19 in the same quarter last year, but still surpassed the consensus estimate of $0.16 by 12.5% [1] Revenue Breakdown - Intellectual Property revenues were $197.8 million, slightly above the average estimate of $191.24 million, but down 1% year-over-year [4] - Academia & Government revenues reached $332.5 million, significantly exceeding the average estimate of $288.24 million, with a year-over-year increase of 3.5% [4] - Life Sciences & Healthcare revenues totaled $92.8 million, below the average estimate of $94.26 million, marking an 8.2% decline year-over-year [4] - Re-occurring revenues were reported at $105.3 million, slightly below the average estimate of $106.89 million, reflecting a year-over-year decrease of 1.3% [4] - Subscription revenues amounted to $405.4 million, also below the average estimate of $409.61 million, with a year-over-year decline of 1.4% [4] - Transactional revenues were $112.4 million, significantly above the estimated $58.23 million, showing a year-over-year increase of 7.7% [4] Stock Performance - Over the past month, Clarivate's shares have returned -5%, contrasting with the Zacks S&P 500 composite's increase of 3.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Q3 revenue was $623 million, essentially flat compared to the same period last year, bringing year-to-date revenue to $1.84 billion [17] - The third quarter net loss was $28 million, an improvement driven by higher foreign exchange gains and the absence of a non-cash impairment charge recorded last year [17] - Adjusted diluted EPS was flat sequentially at $0.18, with changes attributed to the divestiture of ScholarOne [17] - Free cash flow was $115 million in Q3, totaling $276 million year-to-date, driven by adjusted EBITDA and working capital [22] Business Line Data and Key Metrics Changes - The A&G segment saw a 2% ACV growth, with a subscription mix now at 93% compared to 81% last year [7][8] - The Intellectual Property segment's recurring revenue was flat year-to-date, representing a 3% improvement in organic growth compared to the full year of 2024 [9] - Life Sciences and Health segment returned to 2% ACV growth, driven by new product introductions and AI integration [11] Market Data and Key Metrics Changes - The company secured over 100 contracts for its new content subscription framework, indicating strong market demand [8] - Renewal rates in Life Sciences and Health improved to 93%, up 100 basis points year-over-year [5] - The U.S. dollar remained weaker against foreign currencies, providing a foreign exchange tailwind on revenue [20] Company Strategy and Development Direction - The company is focused on executing its value creation plan, emphasizing product and AI development to drive organic growth [6][14] - Plans to streamline the business model and market focus include exiting A&G transactional books and the Life Sciences Real World Data Resell Market [15] - The company aims to enhance its core subscription and recurring revenue mix to improve predictability, achieving an 8% improvement this year compared to last year [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning the Intellectual Property segment to sustainable growth under new leadership [9][35] - The company anticipates continued acceleration in organic annual contract value and expects to raise revenue guidance by $50 million [24] - Management believes that operational efficiency and margin expansion will be achieved through the adoption of agentic AI [14] Other Important Information - The company has completed $150 million in share repurchases year-to-date and paid down $100 million in debt [5][23] - The strategic disposals are expected to lower revenue by approximately $90 million this year, with a similar impact anticipated next year [28] Q&A Session Summary Question: Insights on the patent renewal business and competitive landscape - Management noted that the patent and trademark renewal service declined by about 3% last year but is now flat year-to-date, with expectations for improvement under new leadership [35][36] Question: Updates on new innovations in the value creation plan - Management highlighted the introduction of AI-enabled products and a renewed focus on product innovation, with several new products expected to drive growth [41][42] Question: Impact of large ebook transactions on revenue and EBITDA - Management indicated that multiple large ebook transactions positively impacted revenue, with expectations for a decline in that area moving forward [47] Question: Potential of the business after strategic changes - Management expressed optimism about returning to market growth rates of 3-4% over time, citing strong fundamentals and a supportive customer base [48][49] Question: ACV acceleration and segment contributions - Management noted improvements across all segments, particularly in Life Sciences, with expectations for continued growth in the IP segment [55] Question: Trends in patents and trademarks - Management observed a gradual increase in patents in force and anticipated a recovery in volumes driven by innovation, particularly in AI [61][62] Question: Transactional revenues and their impact on guidance - Management explained that slower attrition of disposals contributed to improved revenue guidance, with a significant portion of revenue expected to decline next year [72]

Financial Data and Key Metrics Changes - Q3 revenue was $623 million, essentially flat compared to the same period last year, bringing year-to-date revenue to $1.84 billion [17] - The third quarter net loss was $28 million, an improvement driven by higher foreign exchange gains and the absence of a non-cash impairment charge recorded last year [17] - Adjusted diluted EPS was flat sequentially at $0.18, with changes attributed to the divestiture of ScholarOne [17] - Free cash flow was $115 million in Q3, totaling $276 million year-to-date, driven by adjusted EBITDA and working capital [22] Business Line Data and Key Metrics Changes - In the A&G segment, there was a 2% ACV growth, with a subscription mix now at 93% compared to 81% last year [7][8] - The Intellectual Property segment's recurring revenue was flat year-to-date, but showed a 3% improvement in organic growth rate compared to the full year of 2024 [9] - The Life Sciences and Health segment returned to 2% ACV growth, driven by new product introductions and AI integration [11] Market Data and Key Metrics Changes - The company secured over 100 contracts for its new content subscription framework, indicating strong market demand [8] - Renewal rates in the A&G segment were strong, with 90% of global subscriptions successfully renewed through October 27 [8] - The overall patents in force in core markets are expected to grow, indicating a potential recovery in the IP market [60] Company Strategy and Development Direction - The company is focused on executing its value creation plan, emphasizing product and AI development to drive organic growth [6][14] - There is a commitment to optimizing the business model by increasing the core subscription and recurring revenue mix [7] - The company is streamlining its business model by exiting non-core areas and focusing on strategic alternatives [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning the IP segment to sustainable growth under new leadership [9][34] - The company anticipates continued acceleration in organic annual contract value and recurring organic growth in the upper half of its guidance range [24] - There is optimism regarding the impact of AI on future growth, with expectations of a market recovery in the coming years [60] Other Important Information - The company has completed $150 million in share repurchases year-to-date and paid down $100 million in debt [5][23] - The company expects to maintain a balanced capital allocation strategy while investing in product innovation [30] Q&A Session Summary Question: Insights on the patent renewal business and competitive landscape - Management noted that the patent and trademark renewal service declined by about 3% last year but is now flat year-to-date, with expectations for improvement under new leadership [34] Question: Updates on the value creation plan and new innovations - Management highlighted the introduction of new AI-enabled products and a renewed focus on product innovation as key components of the value creation plan [42] Question: Impact of large ebook transactions on revenue and EBITDA - Multiple large ebook transactions positively impacted revenue in Q3, with expectations for a slower decline in disposals than previously anticipated [46][68] Question: Trends in the IP market and catalysts for recovery - Management indicated that the overall patents in force are expected to grow, with AI innovation likely to boost renewal volumes in the coming years [60] Question: AI initiatives and proprietary content - The majority of AI innovations support information services, with significant proprietary data being utilized to enhance product offerings [62]

Q3 2025 Earnings Call October 29, 2025 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, "forward-looking statements" within the meaning of the "safe harbor provisions" of the Private Securities Litigation Reform Act of 1995. These forward-looking statements c ...

Core Viewpoint - Clarivate PLC (CLVT) reported quarterly earnings of $0.18 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, but down from $0.19 per share a year ago, indicating a +12.50% earnings surprise [1][2] Financial Performance - The company achieved revenues of $623.1 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 9.23%, and showing a slight increase from $622.2 million year-over-year [2] - Over the last four quarters, Clarivate has exceeded consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Clarivate shares have declined approximately 28.4% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] - The current Zacks Rank for Clarivate is 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.17 on revenues of $602.2 million, while the estimate for the current fiscal year is $0.65 on revenues of $2.39 billion [7] - The outlook for the industry, particularly the Computers - IT Services sector, is favorable, ranking in the top 24% of over 250 Zacks industries, which historically outperforms the bottom 50% by more than 2 to 1 [8]

Revenue and Contract Value - Organic annualized contract value (ACV) grew by 1.6% compared to September 30, 2024, driven primarily by price increases [107]. - Total ACV decreased by 3.4% to $1,542.7 million as of September 30, 2025, compared to $1,596.4 million a year earlier, mainly due to the ScholarOne divestiture [107]. - Annual renewal rate improved to 93% for the nine months ended September 30, 2025, up from 92% in the same period of 2024 [109]. - Revenues for the three months ended September 30, 2025, were $623.1 million, a slight increase of 0.1% compared to $622.2 million in 2024 [115]. - Total revenues for the nine months ended September 30, 2025, were $1,838.2 million, a decrease of $55.5 million, or 2.9%, compared to $1,893.7 million in 2024 [123]. - Subscription revenues decreased by 1.4% year-over-year, primarily due to the ScholarOne divestiture and product group wind-downs [117]. - Subscription revenues for the nine months ended September 30, 2025, decreased by $20.1 million, or 1.6%, compared to the same period in 2024, primarily due to the ScholarOne divestiture [121]. - A&G segment revenues increased by $11.2 million, or 3.5%, for the three months ended September 30, 2025, driven by subscription growth from new sales and improved retention [122]. - EMEA revenues for the three months ended September 30, 2025, increased by $9.5 million, or 6.0%, primarily due to FX translation gains and strong subscription orders [124]. - The Americas segment revenues decreased by $36.3 million, or 3.6%, for the nine months ended September 30, 2025, primarily due to the ScholarOne divestiture [127]. - Transactional revenues for the nine months ended September 30, 2025, decreased by $37.7 million, or 10.6%, compared to the same period in 2024, primarily due to lower IP activity [121]. Expenses and Profitability - Net loss for the three months ended September 30, 2025, was $28.3 million, an improvement from a net loss of $65.6 million in the same period of 2024 [115]. - Total operating expenses for the three months ended September 30, 2025, were $579.1 million, down from $600.5 million in 2024 [115]. - SG&A costs decreased by 3.2% for the nine months ended September 30, 2025, primarily due to cost management and reductions in share-based compensation [131]. - Adjusted EBITDA for the three months ended September 30, 2025, was $252.4 million, compared to $264.4 million for the same period in 2024, reflecting a decrease of 7.6% [144]. - Adjusted EBITDA margin for the nine months ended September 30, 2025, was 40.6%, slightly down from 40.9% in 2024 [144]. - The company expects the wind-down of three product groups to reduce revenues and profit by less than 10% and 5%, respectively [118]. Cash Flow and Liquidity - Free cash flow for the nine months ended September 30, 2025, was $276.1 million, down 7% from $298.4 million in 2024 [150]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $468.6 million, a decrease of 7% from $505.3 million in 2024 [148]. - As of September 30, 2025, the company had $318.7 million in cash on hand and $768.5 million in available borrowing capacity [146]. - Outstanding borrowings as of September 30, 2025, totaled $4,441.8 million, with interest expenses of $199.4 million for the nine months ended September 30, 2025 [151]. - The company entered into a $500.0 million tranche of term loans in May 2025, using proceeds to redeem an equal amount of Senior Secured Notes due 2026 [152]. - Net cash used for investing activities decreased by 25% to $192.5 million for the nine months ended September 30, 2025, compared to $258.1 million in 2024 [148]. - The company anticipates that cash flow from operations and available cash will be adequate to meet liquidity needs and fund capital expenditures for the foreseeable future [158]. - The company has $350.5 million remaining under its current share repurchase program, valid through December 31, 2026 [156]. Impairments and Taxation - The company recorded a goodwill impairment charge of $302.8 million in the second quarter of 2024 due to declines in share price affecting the LS&H segment [134]. - The income tax provision for the nine months ended September 30, 2025, was $34.9 million, compared to $23.3 million in 2024, primarily due to the mix of jurisdictions in which pre-tax profits and losses were recognized [143]. Depreciation and Amortization - Depreciation and amortization expenses increased by 8.2% and 5.0% for the three and nine months ended September 30, 2025, respectively, driven by increased investment in computer software assets [133].

Financial Performance - Total revenues for Q3 2025 were $623.1 million, a slight increase of 0.1% from $622.2 million in Q3 2024[2] - Total revenues for the first nine months of 2025 were $1,838.2 million, a decrease of 2.9% from $1,893.7 million in the same period of 2024[4] - Total revenues for Q3 2025 were $623.1 million, slightly up from $622.2 million in Q3 2024, while revenues for the nine months ended September 30, 2025, decreased to $1,838.2 million from $1,893.7 million in the same period of 2024[26] - Subscription revenues for Q3 2025 decreased by $5.7 million, or 1.4%, compared to Q3 2024, totaling $405.4 million[31] - Transactional revenues increased by $8.0 million, or 7.7%, in Q3 2025, totaling $112.4 million compared to $104.4 million in Q3 2024[31] Net Income and Loss - Net loss for Q3 2025 was $28.3 million, significantly improved from a net loss of $65.6 million in Q3 2024, representing a 56.9% reduction[3] - The company reported a net loss of $28.3 million for Q3 2025, compared to a net loss of $65.6 million in Q3 2024, and a net loss of $204.2 million for the nine months ended September 30, 2025, down from a loss of $444.9 million in the same period of 2024[26] - Net income for Q3 2025 was a loss of $28.3 million, improving from a loss of $65.6 million in Q3 2024[33] - Forecasted net income (loss) for 2025 is between $(328) million and $(252) million, resulting in a net income margin of between (13.5)% and (10.3)%[39] Cash Flow and Capital Expenditures - The company generated $468.6 million in operating cash flow and $276.1 million in free cash flow through nine months of 2025[6] - Free cash flow for Q3 2025 was $115.5 million, down from $126.3 million in Q3 2024[38] - Free cash flow is forecasted to be between $300 million and $380 million, with net cash provided by operating activities estimated at $555 million to $635 million[41] - Capital expenditures for Q3 2025 were $65.6 million, down from $76.6 million in Q3 2024[38] - Capital expenditures for 2025 are projected to be $(255) million, impacting free cash flow calculations[41] Debt and Equity - As of September 30, 2025, total debt outstanding was $4,470.2 million, a decrease of $100.9 million from December 31, 2024[10] - The total shareholders' equity decreased to $4,903.8 million as of September 30, 2025, from $5,139.0 million at the end of 2024[23] Operational Metrics - Organic ACV grew by 1.6% compared to September 30, 2024, with the mix of organic recurring revenue to total revenue improving by 800 basis points to 88%[2] - Adjusted EBITDA for Q3 2025 was $252.4 million, down 4.5% from $264.4 million in Q3 2024[3] - Adjusted EBITDA for Q3 2025 was $252.4 million, with an adjusted EBITDA margin of 40.5%, compared to $264.4 million and 42.5% in Q3 2024[33] - Adjusted EBITDA is projected to be between $940 million and $1,000 million, with an adjusted EBITDA margin of 40.5% to 42.5%[39] Shareholder Actions - The company repurchased 11.7 million ordinary shares and allocated $50 million towards share repurchases in Q3 2025[6][12] Restructuring and Impairments - The company incurred $11.9 million in restructuring and other impairments during Q3 2025, compared to $4.0 million in Q3 2024[26] - The company anticipates incurring restructuring costs associated with the Value Creation Plan in 2025[39][40] Revenue Outlook - The full year 2025 revenue outlook was revised upward to between $2.42 billion and $2.45 billion, reflecting increased transactional book sales[12]

Core Insights - Clarivate Plc reported a slight increase in total revenues for Q3 2025, reaching $623.1 million, compared to $622.2 million in Q3 2024, indicating a growth of 0.1% [2][7] - The company experienced a net loss of $28.3 million in Q3 2025, an improvement from a net loss of $65.6 million in Q3 2024 [3][7] - Adjusted net income for Q3 2025 was $119.3 million, down from $134.1 million in Q3 2024, reflecting a decrease of 11.0% [3][7] Financial Performance - Total revenues for the first nine months of 2025 were $1,838.2 million, a decrease of 2.9% from $1,893.7 million in the same period of 2024 [4][7] - Organic revenues for the first nine months of 2025 increased by 0.2%, driven by a 0.6% rise in organic recurring revenues [4][7] - The company generated $468.6 million in operating cash flow and $276.1 million in free cash flow through the first nine months of 2025 [6][11] Shareholder Returns and Debt Management - Clarivate repurchased 11.7 million ordinary shares and allocated approximately $150 million for share repurchases in 2025 [2][6] - The company repaid $100 million of debt in Q3 2025, reducing total debt outstanding to $4,470.2 million [10][12] - The updated revenue outlook for 2025 was raised to between $2.42 billion and $2.45 billion, reflecting increased transactional book sales [12][13] Revenue Breakdown - Subscription revenues decreased by $5.7 million, or 1.4%, to $405.4 million in Q3 2025, while organic subscription revenues increased by 1.2% [8][26] - Transactional revenues increased by $8.0 million, or 7.7%, to $112.4 million, primarily due to higher transactional book sales [9][26] - The mix of organic recurring revenue to total revenue improved by 800 basis points to 88% for the first nine months of 2025, compared to 80% for the prior year [2][4] Outlook and Strategic Focus - The company remains committed to increasing its core subscription and recurring revenue mix while optimizing its business model [2][12] - Clarivate's strategic priorities include investing in innovation, driving operational efficiencies, and maximizing long-term value for shareholders [12][13] - The full-year 2025 outlook assumes no further acquisitions or divestitures, indicating a focus on organic growth [12][13]