Clarivate(US:CLVT)2025-04-29 10:03Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents Clarivate Plc's unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, statements of operations, comprehensive income, equity, and cash flows Condensed Consolidated Balance Sheets Total assets reached $11.49 billion as of March 31, 2025, with significant intangible assets and goodwill, while total liabilities increased to $6.47 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $354.0 | $295.2 | | Other intangible assets, net | $8,341.4 | $8,441.2 | | Goodwill | $1,566.6 | $1,566.6 | | Total Assets | $11,492.7 | $11,490.2 | | Liabilities & Equity | | | | Current portion of deferred revenues | $978.8 | $859.1 | | Long-term debt | $4,521.1 | $4,518.7 | | Total Liabilities | $6,465.6 | $6,351.2 | | Total Shareholders' Equity | $5,027.1 | $5,139.0 | Condensed Consolidated Statements of Operations The company reported a net loss of $103.9 million on revenues of $593.7 million for Q1 2025, an increased loss compared to the prior year due to lower revenues and higher restructuring charges Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $593.7 | $621.2 | | Total operating expenses | $614.5 | $616.2 | | Income (loss) from operations | $(20.8) | $5.0 | | Net income (loss) | $(103.9) | $(75.0) | | Net income (loss) attributable to ordinary shares | $(103.9) | $(93.8) | | Basic and Diluted EPS | $(0.15) | $(0.14) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $171.2 million in Q1 2025, while net cash used in financing activities significantly decreased to $56.6 million due to lower debt repayments and no preferred dividends Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $171.2 | $176.2 | | Net cash used for investing activities | $(60.9) | $(64.4) | | Net cash used for financing activities | $(56.6) | $(95.2) | | Net change in cash and cash equivalents | $58.8 | $10.3 | | Cash and cash equivalents, end of period | $354.0 | $381.0 | Notes to the Condensed Consolidated Financial Statements Detailed disclosures cover accounting policies, revenue recognition, intangible assets, debt, equity, restructuring, segment performance, and legal contingencies, including revenue disaggregation and debt composition - The company operates and reports in three segments: Academia & Government (A&G), Intellectual Property (IP), and Life Sciences & Healthcare (LS&H)29 Revenue by Type (in millions) | Revenue Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Subscription revenues | $388.6 | $403.1 | | Re-occurring revenues | $105.9 | $102.5 | | Transactional revenues | $99.2 | $115.6 | | Total Revenues | $593.7 | $621.2 | Total Debt Outstanding (in millions) | Type | Maturity | Carrying Value (Mar 31, 2025) | | :--- | :--- | :--- | | Senior Secured Notes | 2026 | $700.0 | | Senior Secured Notes | 2028 | $921.2 | | Senior Notes | 2029 | $921.4 | | Term Loan Facility | 2031 | $1,999.2 | | Total debt outstanding | | $4,570.8 | - In Q1 2025, the company incurred $24.7 million in restructuring charges, primarily related to severance costs under its new 'Value Creation Plan' initiated in Q4 202467 - The company is involved in putative securities class action lawsuits alleging weaknesses in internal controls and misleading statements related to product quality and organic growth; the company believes the claims lack merit and is vigorously defending against them818283 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial performance, key indicators, and liquidity, noting a 4.4% revenue decline to $593.7 million due to divestitures, with 0.3% organic growth and solid liquidity Key Performance Indicators Key performance indicators include organic revenue growth, ACV, renewal rates, Adjusted EBITDA, and Free Cash Flow, with organic ACV growing 1.2% and the annual renewal rate improving to 94% - Total Annualized Contract Value (ACV) was $1,526.1 million as of March 31, 2025, a decline of 3.6% from the prior year, mainly due to the ScholarOne divestiture and product wind-downs94 - Organic ACV grew 1.2% year-over-year, driven by price increases94 - The annual renewal rate for the three months ended March 31, 2025, was 94%, compared to 93% for the same period in 202496 Results of Operations Q1 2025 revenues decreased 4.4% to $593.7 million due to disposals and unfavorable foreign exchange, despite 0.3% organic growth, leading to an operating loss of $20.8 million Revenue Change Analysis by Type (Q1 2025 vs Q1 2024) | Revenue Type | Change $ | Change % | Organic % Change | | :--- | :--- | :--- | :--- | | Subscription | $(14.5)M | (3.6)% | (0.6)% | | Re-occurring | $3.4M | 3.3% | 5.3% | | Transactional | $(16.4)M | (14.2)% | (2.3)% | | Total | $(27.5)M | (4.4)% | 0.3% | Revenue Change Analysis by Segment (Q1 2025 vs Q1 2024) | Segment | Change $ | Change % | Organic % Change | | :--- | :--- | :--- | :--- | | A&G | $(15.0)M | (4.7)% | 0.7% | | IP | $(8.2)M | (4.1)% | 1.3% | | LS&H | $(4.3)M | (4.2)% | (3.0)% | - Restructuring charges increased to $24.7 million from $9.5 million year-over-year, primarily due to the new Value Creation Plan118 Adjusted EBITDA Reconciliation (in millions) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) | $(103.9) | $(75.0) | | Adjusted EBITDA | $233.2 | $236.3 | | Net income (loss) margin | (17.5)% | (12.1)% | | Adjusted EBITDA margin | 39.3% | 38.0% | Liquidity and Capital Resources The company maintains strong liquidity with $354.0 million cash and $692.8 million available credit, reporting $171.2 million operating cash flow and $110.3 million free cash flow for the quarter - As of March 31, 2025, the company had $354.0 million of cash and cash equivalents and $692.8 million of available borrowing capacity under its revolving credit facility126 Free Cash Flow (non-GAAP, in millions) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $171.2 | $176.2 | | Capital expenditures | $(60.9) | $(64.4) | | Free cash flow | $110.3 | $111.8 | - The company has $450.0 million of availability remaining under its share repurchase program, which is authorized through December 31, 2026134 Quantitative and Qualitative Disclosures About Market Risk The company's market risks, primarily foreign currency and interest rate exposures, have not materially changed from those disclosed in its most recent annual Form 10-K - Market risks as of March 31, 2025, have not materially changed from those discussed in the annual report on Form 10-K for the year ended December 31, 2024140 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during Q1 2025 - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level142 - No changes occurred in internal control over financial reporting during Q1 2025 that materially affected, or are reasonably likely to materially affect, these controls143 Part II. Other Information Legal Proceedings This section directs readers to Note 13 of the financial statements for detailed information regarding the company's legal proceedings - For information on legal proceedings, the report directs readers to Note 13 - Commitments and Contingencies in Part I, Item 1145 Risk Factors The company reports no material changes to the risk factors previously disclosed in its most recent annual report on Form 10-K - There have been no material changes to the risk factors from those reported in the company's most recent Form 10-K146 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased approximately 11.7 million ordinary shares for $50.0 million, with $450 million remaining under the share repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Avg. Price Paid | Shares Purchased Under Program | Approx. Value Remaining Under Program | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | 121,079 | $5.09 | — | $500M | | Feb 2025 | 1,983,224 | $4.51 | 1,957,196 | $491M | | Mar 2025 | 11,278,186 | $4.25 | 9,695,062 | $450M | | Total | 13,382,489 | | 11,652,258 | | - The share repurchase program, authorized in December 2024, allows for up to $500.0 million in repurchases through December 31, 2026148 Other Information Gordon Samson, President of Intellectual Property, entered a Rule 10b5-1 trading plan on March 14, 2025, to potentially sell up to 150,000 ordinary shares - Gordon Samson, President, Intellectual Property, entered into a Rule 10b5-1 trading plan on March 14, 2025, to sell up to 150,000 ordinary shares149 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and the Interactive Data File (Inline XBRL) - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as exhibits152