Clarivate (NYSE:CLVT) Q4 2025 Earnings call February 24, 2026 09:00 AM ET Company ParticipantsJonathan Collins - CFOMark Donohue - VP of Investor RelationsMatti Shem Tov - CEOScott Wurtzel - SVP of Equity ResearchShlomo Rosenbaum - Managing DirectorConference Call ParticipantsAndrew Nicholas - Research AnalystAshish Sabadra - Managing Director and Senior Equity AnalystGeorge Tong - Managing Director and Senior Equity AnalystManav Patnaik - Managing Director and Senior Equity AnalystToni Kaplan - Executive D ...

Financial Data and Key Metrics Changes - Full-year organic revenue grew by 7%, driven by a 9% growth for the big three segments [9][12] - Adjusted EBITDA margin expanded by 100 basis points to 39.2%, meeting the company's outlook [9][14] - Free cash flow for 2025 was $1.95 billion, slightly ahead of expectations [9][24] - Adjusted earnings per share for the year was $3.92, compared to $3.77 per share in the prior year [14] Business Line Data and Key Metrics Changes - Legal organic revenue grew by 9%, driven by Westlaw and CoCounsel [12][21] - Corporate segment's organic revenue also grew by 9%, supported by legal, tax, and risk portfolios [12][21] - Tax, audit, and accounting organic revenues increased by 11%, driven by UltraTax and CoCounsel [12][13] - Reuters' organic revenues rose by 5%, primarily due to growth in the agency business [12][14] Market Data and Key Metrics Changes - The percentage of annualized contract value (ACV) from GenAI-enabled products increased to 28%, up from 24% in the previous quarter [22] - Global print organic revenues declined by 6% year-on-year, in line with expectations [12][14] Company Strategy and Development Direction - The company aims to leverage proprietary content and deep domain expertise alongside AI capabilities to deliver specialized workflows [8][10] - The strategy includes aggressive innovation and a focus on AI-driven solutions, particularly in legal workflows [8][10] - The company plans to continue its balanced capital allocation approach, including annual dividend growth and strategic M&A [11][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the medium-term growth potential, reaffirming a 2026 outlook for organic revenue growth of 7.5%-8% [11][27] - The company anticipates healthy margin expansion and strong free cash flow while continuing to invest in innovation [11][27] - Management noted that AI-driven workflows present a significant opportunity, particularly in legal services [8][10] Other Important Information - The company executed a $1 billion share repurchase program and announced a 10% increase in its annual common stock dividend [11][25] - The company invested $850 million in M&A, completing four strategic acquisitions [10][26] Q&A Session Summary Question: What drove the slowdown in legal recurring growth from Q3 to Q4? - Management indicated that the slowdown was associated with the government business, which is expected to slow further in Q1 due to cancellations [34][36] Question: What is the moat around Westlaw and Practical Law? - Management highlighted the unique content sets and deep domain expertise as key differentiators that are difficult for competitors to replicate [39][41] Question: How are share buybacks prioritized in the current environment? - Management acknowledged that share repurchases are attractive at current levels and will continue discussions with the board regarding this [45][46] Question: What is the size and adoption progress of CoCounsel? - Management noted that while specific dollar figures are not provided, the reception of CoCounsel has been encouraging across various law firm sizes [51][53] Question: How does the company plan to monetize AI product innovations? - Management stated that they do not price based on headcount and aim to price based on value, benefiting from increased efficiency in legal and tax departments [66][67]

Core Insights - Thomson Reuters reported a 3% increase in total revenues for Q2 2025, reaching $1,785 million, driven by a 3% growth in recurring revenues and a 5% increase in transaction revenues, despite a 7% decline in Global Print revenues [2][3][5] - The company launched new AI solutions, including CoCounsel Legal, aimed at enhancing its offerings in legal, tax, and accounting markets [1][5] - The company maintained its full-year 2025 outlook for organic revenue growth, adjusted EBITDA margin, and free cash flow [5][27] Financial Performance - Operating profit for Q2 2025 increased by 5% to $436 million, attributed to higher revenues and other operating gains [2][4] - Diluted earnings per share (EPS) decreased to $0.69, down 63% from $1.86 in the prior year, primarily due to currency losses and a significant non-cash tax benefit in the previous year [2][4] - Adjusted EBITDA rose by 5% to $678 million, with an adjusted EBITDA margin of 37.8%, up from 37.1% [2][4][5] Revenue Breakdown - The "Big 3" segments (Legal Professionals, Corporates, and Tax & Accounting Professionals) collectively accounted for 82% of total revenues, with organic revenue growth of 9% [6][8] - Legal Professionals segment revenues decreased by 2% to $709 million, while organic revenue growth was 8% [11][12] - Corporates segment revenues increased by 7% to $472 million, with organic growth of 9% [15][25] - Tax & Accounting Professionals segment revenues rose by 11% to $277 million, with organic growth of 11% [16][17] Cash Flow and Capital Allocation - Net cash provided by operating activities increased by $41 million to $746 million, reflecting higher operating profit [7][21] - Free cash flow for Q2 2025 increased by $25 million to $566 million [7] - The company repaid Canadian $1.4 billion (U.S. $1.0 billion) in notes with cash on hand in May 2025 [33] Outlook - The company expects approximately 7% organic revenue growth and an adjusted EBITDA margin of around 36% for Q3 2025 [28] - The full-year 2025 outlook remains unchanged, with total revenue growth projected at 3.0% to 3.5% and organic revenue growth at 7.0% to 7.5% [30][27]

Financial Performance - Revenues for Q2 2025 were $621 million, a decrease of $29 million compared to Q2 2024[58] - Adjusted EBITDA for Q2 2025 was $262 million, with a margin of 42.1%[15, 58] - Adjusted Diluted EPS for Q2 2025 was $0.18, a decrease of $0.02 year-over-year[15, 58] - The company utilized free cash flow to repurchase 11.5 million shares in Q2 2025[13] - H1 2025 Free Cash Flow conversion was 32%[13] Business Segments and Growth - Organic ACV grew by 1.3%, up 10 bps sequentially[13] - The renewal rate was 93%, an increase of 1% year-over-year[13] - Academia & Government (A&G) segment experienced 2% organic ACV & subscription revenue growth in H1 2025[13] - Intellectual Property (IP) segment returned to organic revenue growth in patent annuities in H1 2025[13] - Life Sciences & Healthcare (LS&H) segment returned to organic ACV growth in H1 2025[14] Strategic Initiatives and Outlook - The company is pursuing a refined path forward based on insights from the initial evaluation process of strategic alternatives and expects to complete the review and share the outcome with year-end results[46] - The company reaffirms FY 2025 guidance, expecting revenues of approximately $2390 million and Adjusted EBITDA of approximately $980 million[80]