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]

Group 1 - Clarivate Plc (NYSE:CLVT) is considered one of the best penny stocks to buy according to hedge funds, with a Hold rating assigned by RBC Capital and a price target of $6.00 [1] - Wolfe Research initiated coverage of Clarivate with a Peer Perform rating, setting a fair value range of $4 to $5, highlighting its strong market share but also noting risks from AI disintermediation and tighter budgets [2] - The analyst consensus rating for Clarivate is Hold, with a median price target of $3.68, indicating a potential upside of 35.87% from current levels [3] Group 2 - Clarivate operates in three segments: Academia and Government (A&G), Intellectual Property (IP), and Life Sciences and Healthcare (LS&H), providing global information, workflow solutions, and analytics [3] - Despite the potential of Clarivate as an investment, there are suggestions that certain AI stocks may offer greater upside potential with less downside risk [4]

Group 1 - Clarivate Plc has assisted Winbond Electronics Corporation in modernizing its intellectual property operations through the use of IPfolio, a cloud-based management platform that enhances data handling and efficiency [1] - The implementation of IPfolio has led to a 90% improvement in data accuracy and a 25% increase in operational efficiency for Winbond [1] - The integration with Clarivate's data systems has minimized manual entry and introduced automated data verification, resulting in a release of approximately 15% of management resources [1] Group 2 - The partnership is part of Clarivate's strategy to incorporate artificial intelligence into its intellectual property platforms, with new AI-powered solutions launched within the Innography platform for better competitive benchmarking and strategic insights [2] - Maroun S. Mourad, president of Clarivate's Intellectual Property division, emphasized Winbond's commitment to innovation, noting that the company has been recognized as a Top 100 Global Innovator for three consecutive years [3] - Glen Nath, Senior Vice President at Clarivate, highlighted that IPfolio offers Winbond enhanced visibility and control over its intellectual property portfolio, reflecting Clarivate's customer-focused approach [4] Group 3 - Dr. Pei-Lin Pai, chief technology officer at Winbond, stated that the decision to select IPfolio was based on its automation, synchronization, and secure collaboration features, which are crucial for improving internal workflows and scalability [5] - Following the news, Clarivate's shares experienced a premarket increase of 2.63%, trading at $3.90 [5]

Core Insights - Winbond Electronics Corporation has implemented Clarivate's IPfolio, a cloud-based intellectual property management platform, to modernize its IP management and enhance digital transformation [1][4]. Group 1: Implementation and Results - The implementation of IPfolio has led to a 90% improvement in data accuracy by integrating with Clarivate IP data, eliminating manual data entry errors [2]. - Real-time patent data updates have increased, and internal operational efficiency has improved by 25% [2]. - Management resources have been freed up by an estimated 15% due to automated data verification and other features [3]. Group 2: Company Background and Strategic Importance - Winbond is recognized as a Top 100 Global Innovator by Clarivate for three consecutive years, highlighting its commitment to innovation [4]. - The choice of IPfolio reflects Winbond's need for robust capabilities, advanced automation, and secure collaboration features [4]. - Winbond provides integrated circuit solutions globally, serving various markets including consumer electronics and automotive [4].

Core Insights - Clarivate Plc has launched two new solutions for Innography customers: Innography AI Classifier and Innography SEP Analyzer, aimed at enhancing patent portfolio management and licensing negotiations [1][4]. Group 1: Innography AI Classifier - The Innography AI Classifier utilizes AI technology powered by supervised machine learning and large language models, achieving up to 97% first-pass accuracy for patent classification [2]. - This tool allows patent professionals to categorize patents on a large scale, significantly reducing classification time from weeks to minutes [2]. - The AI Classifier can be used with or without training data, providing flexibility in patent portfolio analysis [2]. Group 2: Innography SEP Analyzer - The Innography SEP Analyzer normalizes and categorizes standard essential patent data, offering clear visualizations for summarizing and reporting results [3]. - This tool provides objective insights into competitor portfolios, facilitating faster licensing negotiations for patent strategists and licensing professionals [3]. - The SEP Analyzer, along with the AI Classifier, represents a significant advancement in leveraging AI technology for patent portfolio strategies [4].

Group 1 - Clarivate PLC (NYSE:CLVT) announced its 2025 Citation Laureates, recognizing 22 researchers for their contributions in various fields, including leukemia research and quantum computing [2] - The program has a strong track record, with 83 Citation Laureates having won Nobel Prizes, indicating Clarivate's influence in global research metrics [2] - Wolfe Research initiated coverage on Clarivate PLC with a "Peer Perform" rating and a year-end fair value range of $4-$5, citing the company's strong market position despite slower stock performance [3] Group 2 - Wolfe Research highlighted potential risks for Clarivate, including tighter academic budgets and the impact of AI disintermediation [3] - Clarivate operates as a global information services provider, delivering data-driven intelligence and analytics across multiple regions, including the Americas, EMEA, and Asia Pacific [4] - The company is listed among the 10 Cheapest Penny Stocks to Buy Now, indicating its current valuation attractiveness [4]