CLVT - Earnings call transcript Q1 2024

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Operator

Good morning, ladies and gentlemen. Welcome to the Clarivate First Quarter 2024 Earnings Call. My name is Jaquita. I will be your moderator for today's call. [Operator Instructions]

to Vice conference with President like host, to Clarivate. now Donohue, Mark of would pass over the your I Investor Relations Mark, ahead. please go

Mark Donohue

the Earnings everyone. First morning, Thank for us Good you Quarter Call. Conference for XXXX joining Clarivate

Relations earnings As in consent and copyrighted of a prohibited, of section of information Clarivate property webcast in the or accompanying rebroadcast is in Any is reminder, whole website, is call Clarivate. part company's recorded, available clarivate.com. call this this Investor presentation being is of without the and prior

materially of During statements uncertainties our actual Clarivate's performance in from expressed statements that the laws. certain be the on filings performance that call, differ the with by involve to such we may website. or industry achievements the the other the to SEC forward-looking and statements. within applicable business results and make in forward-looking cause or or Such Clarivate's performance results could risks, anticipated differ of implied the developments factors results, may the Information from meaning or developments about unknown factors company's results, forward-looking cause known found achievements and anticipated can materially actual securities or

Reconciliation of on release to should non-GAAP non-GAAP adjusted isolation or measures and discussion enhance earnings Our include our for measures from will useful numbers. results Clarivate in understanding our not financial as or are ongoing these to in considered measures. measures they supplement believes substitute of website. are be an to order operating performance, presentation in are a GAAP supplemental and our available GAAP

Officer. will remarks. the of and take available are Jonathan be today Jonathan prepared Executive your me Gear, questions Collins, Chief the Officer; Financial Both With at conclusion to Chief

Gear. And with to to that, a the Jonathan turn pleasure over call it's

Jonathan Gear

will operational our Good plan which in investing earnings includes set our turn changes. our key segments to across everyone, in significant about I and achieve for & and and X on you XXXX Great. the our Life foundation of drivers growth year This growth to the today. the in I rates advance the quarter's plan. financial within few growth. Today, update Healthcare Mark. Thank call, we the our first on segments. innovating against required to progressing is were for Intellectual this growth growth drive years. initiatives we joining accomplishments so are XXXX last phase us on organic with Property you, some I'll could thanks performance. pursuit and of These market growth focused talked changes morning, On how Sciences next next important XXXX, These

do. the were to our still with But had have in Organic than work slightly X% was we revenue more Our line better we growth results expectations. anticipated. than decline

the driven We drive encouraged by growing growth. to to innovation are well in improvements last Subscription from first quarter. operational accelerated year well, in continues to changes year revenue investments the over X% at perform as see as future

to continue through value we place plan, the XX% are customers on of products the steady rates at phase This see end progress growth quarter. we our our a pleased investment the services. of we As the to is renewal and testament that of first

presentations to to view potential. our the had GenAI our product and the opportunity hope which growth our quarter by segment series of investments, We first Jonathan website. Collins highlighted This including led are covering our presentations, segments. a will past available webinars everyone the demonstrations, shortly. cover product more X March, released the presidents, of we results in our has on reach Clarivate strategy These detail each long-term

we are incorporating generative to technology drive AI. innovation and our Academia the leveraging Government content Within & while segment, best-in-class

solutions industry-leading into We're investing GenAI generic our insights analytics, more pace trusted research assist researchers day. intelligence data actionable of every and innovation through delivering research in Our strategy turn and learn help accelerating to solution. effectively and is our new GenAI students to research academic-specific the in leveraging including by more

grow portfolio content looking are content our further by aggregation non-English business to with and marketplace internationally expanding our We content. aggregation

Lastly, workflow continues set pursue to a and tiers our broader business expand geographies. of into new software customer

and We pleased users maximize on to I track ] we're more growth online deliver approximately with are are analytics constantly X% so the experience. for access decision the and expanding progress capabilities, am XXXX. segment library our software [ their can we advanced making, A&G exiting currently

of most the IP the supporting in global IP tasks nondiscretionary Clarivate ecosystem, process. the is across critical entrenched some deeply

on realize to We across several opportunity growth IP designed are working our initiatives the that portfolio. are

to market expect X% to XXXX. segment approximately within rates this as return and growth exit of we growth reaccelerate We

contributor I'm our the are Unycom have key a growth we the the quarters these progress commercial few of solutions, we with over very Under realized we remainder in of marketplace IPMS. with will leading new The success onboard our commercial excited IPFolio, the model, our last and focus. to winning FoundationIP management and the customers year. operating systems as including competitive be

always part have business, we IP has our a a been dedicated AI-based to and effort now AI of solutions. develop concerted While

is to that agile competitive case-specific help to We use be in integrated data expertise intelligence advantage. processes the have and science more into embedded decision-making gain business customers IP deliver

of IP patent collaborate service to risk. and workflow management a improve and ecosystem expanding external with productivity, a will will which simplify data, structured IP creating hub connected by cost collaboration and professionals providers in are and expertise. agents We operations and enable environment, solutions trademark reduce The

are and strengthen deepen With as and lean progress and great all a that challenges our customers has we adviser making to and the partner. positioned patent to connections offer. IP practice strong also ] Clarivate link maintenance customers' well trademark are an a solutions, trusted position to [ our with our between create further build to We consulting

the & Turning Life Sciences to segment. Healthcare

to Last acceleration growth solutions. high towards achieve To year, X pursuing AI-driven XXXX. we forward-thinking implemented refined We operational are workflow strategies scalable organic platforms the growth exit our and in single key focus through we're pursuing strategies. fuel designed digit this, and innovative,

to intelligence and modernizing which will rich platforms, actions. our analytics are data First, and translate predictive market recommended enable us we insights into our

We This core capabilities. AI intelligence Intelligence of analytic will focus enable experiences as leverage Discovery us for to accelerate safety connectivity, user will linking insights scalable platforms and higher that drug of advanced deliver to set such to Cortellis users. on a Drug cross-product exceptional with OFF-X drive degrees

innovation by across we Secondly, unlock assets broad invigorating differentiated expand product capability and organization leveraging our space. and the market white to are

expand new increasing segments attractive our existing in are developing products customers new our business. on and We and subscription-based scale to focusing reach

CMC achieved have departments in footholds regulatory OFF-X, Cortellis and Drug room For with R&D, of Triager Safety grow. example, plenty to strong pharmacovigilance and

subscription-based solutions real-world indications. focusing we are on areas and lastly, pharma therapy building differentiated And grade, data enriched,

will tailored We technology. our solutions directly core deliver across to medical and customers biotech pharma,

these expertise, life complex sciences we component ecosystem. R&D connected innovation. and to couple enable the key towards life technologies cloud-based compliance Clarivate companies internal target to and industry and a investments support for and and enhance life acquired to evidence-based will The strategies, recently of our intelligence data needs start-up large to of artificial automate reporting regulatory MotionHall with companies clients customer serves data that help within address solutions the in in Global QMS to our these is sciences spend a provider the While analyses a LS&H management. space accelerate solutions. vertical, of combined sciences of decisions

positively been Innovation few I management, the patent product map, version launched mentioned search process. and by which XXX This we reflected beta customers earlier improvement coupled with feature, Patent new has a are received point RWD in strategic a great our products. our our search basis made rate on recently progress Derwent Intelligence year-over-year. road of renewal in that have reviving the of and streamlines our We

recently quarter, releases patent tool, is I later also new strategy. alpha monitoring. will higher of version positioned in mastered AI-driven our We database, the Patent in a Earlier, data. search patent touched new a and claims comprehensively around alpha R&D Coupled an Intelligence we'll released new industry. with recently search leading Clarivate quality, data intelligence the release the launch released solution to in which features in our framework, and these on and RWD collaboration We medical leading additional

the seeing top XX secured pharmaceutical success global customers. X team as our with our already commercial of are We work, benefits

are the to path necessary clear we operational our a achieve progress set and closing, business and In making our product to plans. revitalize

are on Thank committed this successfully performance. the greater We delivering to growth and financial time objectives you your driving morning. for

through you me Collins, over walk the to our who'll let that, financials. With turn call Jonathan

Jonathan Collins

was QX morning, a financial and offset million acquisition compared results you, the The largely everyone. prior decrease by first favorable the our same from the compared $XXX and $X a an quarter revenue good to Jonathan, Slide was prior year. of decline was exchange. organic overview provides and foreign period Thank with million, partially of year. XX small

lower net year's last of attributed year. legal quarter not this last loss and million, first tax that recur The was favorable was income $XXX $XX to recognized than settlements decline million. year The million did $XX net

capital. by lower cash in the million year, which parts QX, amortization and quarter the depreciation and a $X.XX product like increased in over investments our impact flow was first items the EBITDA onetime expenses reduction $XXX period of the was to excludes a in diluted settlements, equal EPS, due adjusted driven innovation. last Operating $XX higher decrease from roughly in differences of in same million Adjusted these over quarter, working last $X.XX year timing

Please late the look our would in from of quarter. turn drivers the we XX in X% first with first year. than line February, the by the for and indicated at more changes quarter prior me earnings a the organically call On business now to closer decline QX bottom Page top

However, X.X%. slightly expectations came those at our a in negative above results

top driven factors on and changes line first this X were The key chart. highlighted the quarter to bottom by

million revenue organically. was down First, $XX

we While invest line nonsubscription as more X%, The X.X% million more our than top adjusted the subscription as impact we grew to to $X drive continue products expected. was business headwind than declined growth. our future EBITDA

associated impact MotionHall. acquisition lines. And the exchange Second, experienced bottom a with very of to top our small line had finally, benefit foreign we and inorganic the to small top a

year, as to was the year with source by prior XX almost are timing behind and of first our turn through me decreased of to were year. quarter, taxes from flow $XX differences cash disbursements. Working the driven adjusted cash a the over entirely integrations at of step in of normal timing decrease flat million, flow Please capital. adjusted period to costs in line compared last with $XX in acquisition a prior the and generally receipts essentially Interest offsetting due EBITDA both than in nearly million Onetime more to decline the was in free by us. million on differences $XXX the capital Page million to cash conversion mid-XXs. same $XX the working EBITDA Free rate now

increased Capital and to $XX invest B. of we our million expenditures to by a of term nearly product debt to the cash Loan million innovation. to our preferred in used stock service We free refinancing our Term continue dividend $X as with associated flow fees pay with prepay

now move guidance midpoint Beginning $X.XX of decline our at year-end a Slide our growth organic at the of earnings the billion look are should X% which X%, call improvement organic to full sequential expect the Today, X% year the the representing top yield provided to full midpoint X.XX%. the the be about we Please for entirely XX QX continue our of we of about with about a for at now we range. the February. at unchanged. another range. me reaffirming to year, remains of growth revenue guidance at expect page, We of for of about in

the Moving down page.

a XX.X% the billion profit of EBITDA We $X.XXX of resulting in midpoint margin about the at range in $X.XXX range. to of expect adjusted the billion,

$X.XX. $X.X at and to $XXX we anticipate We continue billion. between and of $X.XX EPS And the anticipate cash between free diluted bottom the flow adjusted page, finally, million

Please turn at for line year. we're Page a expecting to now bottom closer top XX the me compared look changes year and last full with to

adjusted the X expected and EBITDA be to factors. full with year changes first As driven revenue quarter our by will key results,

years. will investing to in on impact range to growth the innovation lower the at have organic no $XX we profit coming as top margin to a of modestly believe the guidance committed accelerate line, line, the will that growth organic midpoint leading about add but product in million bottom will we our First, remain

Second, selling the about X, of Valipat, closed and this April deduct will inorganic year. of million $XX revenue $XX which on about from million impact profit

finally, top February, not improve in the year. line translation a first back of this we this anticipate a small foreign headwind discussed execution bottom to And portfolio growth and our organic line, we in are million a last slightly on As pruning products transaction is of to priority step growth, as direction. the gains accelerating expected to exchange headwind million is dilutive year's this $XX $XX and recur on higher the the

of of adjusted behind expect is $XX some progress deleverage These cash completely B first compared our continue Onetime of improvement let's million the Loan as refinancing free EBITDA in step through million We about costs to to turn changes $XX to account in last flow the iteration expected this cash an $XX we million, decrease do last year. over the Term interest from the to to us. to by are to as for to and Page benefit to year items. continue other quarter. year X/X But change decline XX

payments timing to Taxes by will of jurisdictions. increase due $XX million approximately of

net year year. to in innovation similar cash $XXX will we target of free and at by spending our and in prepay negligible the XX [ is debt capital committed raise remain We The flow midpoint this these long-term about on of leverage expect be close the net impact of million million. to We And turns. to ] working of change to investing most capital last about changes $XX plan the of use to this intend in range. product

outlook XX this me with a the at year's trajectory turn objectives to outlined continues that for last how Please we year. Page now our towards financial look

to mid-single-digit of order objective, to years. primary achieve level organic level a flat us growth, we've order spending Our a of growth this fund year's essentially new XX% in innovation. in increased few from to aim revenues accelerate our In to capital is to lifting of last product

to innovation. durable our goal investment margins is achieve second Our to profit maintain we as product the make

XXs. to resources keeping the to while committed low our innovation are in We the margins in our drive product businesses of providing all

remain become a which attractive XX%. turns, announcement ability level now finally, third The in allocate by our And we free growth operating progressed was adjusted to to providing we've engine, disciplined outlined Global objective an us did a than on we with flow we above last acquisition manner. to cash segment. our to in leverage month of capital well conversion a delivering at EBITDA X Q M&A the catalyze We're of less execute bolt-on as LS&H the the committed

morning. Instructions] the take your I back I'm want to going thank to in Jaquita turn ahead. all over now listening of go to you this please to call [Operator Jaquita, for questions.

Operator

question from Kaplan comes line the Toni Instructions] first Morgan with [Operator The of Stanley.

Toni Kaplan

budgets I seeing talk was what's technology? hoping environment do the view we in tighter could having secular about Or maybe than customers And as cyclical? in you are IP, IP. happening related IP you in before? Or they particularly budgets? differently changes on any to allocated being were going Are just

Jonathan Gear

go progress directly IP, changes seeing on first, the nothing, couple and feeling a there as some market. seeing. mean Thanks thoughts neither Toni. more in making positive really the about and Sure, IPM your any to structural the question, answer the for we've been had I'll what the business then we're great question. no, seeing. trademark pressure IP. -- We're made give I know, uptake I'm in Maybe positive which, years. nor any change, negative you in of I'm little under last we're not

and to I some what have there. see would say. cautiously . That We positive market slowly is returning is begun indications

general. course. really in a But there anyway, callout So positive the it's market, around of a have we

XXXX, impacted. we're operating and back we seeing flipped This this business XXXX was were that impacted lost to where one to what revenue go It of is couple year the once year. the kind and ago, So into different business so a was model, this was with a area entering of years when even competition and success. of with competition was our own our And it tail impacted was impacted happens. that lost fairly long we sales. in It and last to

and of management customers, marketplace, expertise new back in IP the tremendously with our Under really competitively some the software our our we're under systems experts well not particularly globally. bringing aligning and Gordon's leadership model and doing who knows and

won Japan, late entering X I I very patent XXXX. head-to-heads into Obviously, in 'XX, a market. think we critical think in

progress the again, one systems a of while really annuities. onboarding positive. to implementation about there. feeling is defer convert the -- takes the our sales early we're to So But a which for there success It and of good to indicators extremely are top

Operator

The next question Balsky Heather comes from of BofA. the line with

Wahid Amin

through XQ a It's to you're Wahid on you bit to Amin your us for a just the guide. little growth? decline walk year-over-year Heather. on versus want I that's just seeing resulting return in touch what Can

Jonathan Collins

the expect will sequential Sure. the in continue first come what Thanks expect we quarter do business be to QX nonsubscription at our the over but quarter, improvements to a to the In rate, will from similar grow comparable second for subscription business. we question. the improvement is

our our better predominantly revenue in comps business is and pare QX, that will which reoccurring we'll So year-over-year. type, decline patent renewal improve on

And same too. true is business well, with as transactional the the

those saw expect both digits QX. QX a the in to decline areas, were which smaller declines down high in we that we pare of So in single to

So types trajectory expect continue we into but the the that we a QX. to the will move be balance is improvement the sequential through of order as nonsubscription in year,

Operator

next with Goldman The Greg the Sachs. of comes from line Tong question

Keen Fai Tong

George. It's

reoccurring key drivers? was a in you revenue revenue quarter. And and positive the transactional do When X.X% are down in what nonsubscription Your expect streams? your inflection the

Jonathan Collins

Yes, in into year. the their bringing year, the going half have next the moving we will this the on the Sure, benefit renewals highlighted of George. That that half first the we'll onboarded full second that key we the started in for on get for comps but be large we a Thanks And year, customer, win to fact drivers fully year. of that that we year. half of that are second last question. the expect in the also the side, reoccurring

From indicated, last has half And better first trademark will challenging side, Jonathan the started business in to second in improve challenging half. a transactional to comps got lap the of the and comps modestly, from we're first more it going half. they as on the year, pretty improve the

So those help that in the coming drivers nonsubscription second particularly from return in the half. business segment are to us big the that will going the to be growth of some IP are

Operator

The with next Surinder Thind question the line of comes from Jefferies.

Surinder Thind

should historical you think we [indiscernible]? here, you'd taking Just the step contextually about forward be think in you where and renewal back, of that as like How to think your terms a we think I XX%. mentioned about rates in look we as

Jonathan Gear

and Yes. break Maybe has including a JC seeing it I'll for us. pleased a anything we're missed. measure our I realigning the businesses, innovations, I very of IP. start general customers, with it I improvement feeling We're our renewal good been focused are improving. very across off progression. we're everything product critical in I'll in If good on that the up answer very on, let of kind where A&G, and about think I the rates. that That's We're really we then of we've seeing make back with mean that it's

the of We have on a bit the more IncoPat, work making and right my in & referred beta script. we're do bit Derwent, Science those Healthcare, Innography, more with I really Patent alpha work Intelligence Life now releases in that suite that products to to in investments and

to to now, that good doing but opportunity So right we're better an it's than see do XX% there's still improvement.

Operator

with Blair. Andrew The Nicholas comes the line of from William question next

Andrew Nicholas

growth terms and things number different release, press expecting sound But today the of we versus last that some, that talk on mentioned like guidance that about you're you alongside your think, organic could would improving you. the helpful. if we expect modestly reiteration a It things to doesn't kind that backdrop just what's that into midpoint get in In conditions. you notably macro front and when are if bit how to spoke X% be little you of get market I baked worse, what

Jonathan Gear

that on on I'll Maybe you year, Jonathan, market generally the mean in I and, are conditions market will. I'll Andrew, the neutral. the the comment as of kind dots conditions we kind thought of entering correct if have Sure. you it you general, number, connect

liked that A&G I than up. turn. would to that's A as bit we weakness saw business holding see largely we in weaker until generally think expect holding our a QX. continue up would within transactional is we -- some in that QX, we have we A&G kind so in of little

is -- Sub than as issue actually IP, at it's expected subs of are. positive earlier market -- individual than made is slightly trademarks. push. with been, of a really science expected. positive of where That's no with there. per Life better a up kind kind companies would generally looking question, all science situation say, we with life the And more individual I they some of pharma we is and the

compared good our nor bad incoming So I'd expectations. say neither to

connect Jonathan, dots the do you guide? want to the on

Jonathan Collins

got be a ago, You continue the second or business touched JG the benefit the And that items Andrew, in do better. half will slight a which to a of do trademark is will the on we we it. ones year, bit think last moment the think

As through book. also then see year, it patent And our renewal see we indicators on good the we move we there.

the the of some we patent through move the of modestly and that, balance just leading the So indicators us year. the of sense there will volumes that improve give renewals as

with in the started think and couple when the we our that, than we guide just original other market a line months conditions ago. we year gave generally are of what But expected

Operator

from The of Lau question line the next Owen comes with Oppenheimer.

Kwun Sum Lau

clients the think, top XX the pharmaceutical in So data framework some drag It real-world more you been transactional quarters? in shift. because I please color coming you has your X expect strategic But you your add of clients. highlighted to could on there? a to sign progress signed, and Do revenue the more global success

Jonathan Gear

there the I'm we've and with into And what to shows X data year that the ago. we wasn't into investments underlying with data, now it glad the milestones that you those RWD because a that. really pharma-ready making important very We're is expected really certainly noted us, converted Yes. been pleased we've database what Sure.

important looking the from as mentioned, very point, wins we it's team. first the, we're important X and indications the pharma, top XX very a those from for early for both proof So

getting the hoping were We kind to the X in up get entry of We've quarter. quarter. ended X in

So we it's harder really progress make and are we that. guess, it's levels be. top -- good other place We're with you not of do companies, because need X that to pharma there, timing to a certainly my is expect on

are in and discussed, kind level. the We monetize building help that And discussions of with the data then top database therapeutic will element at team Henry others analytical of to on to sell other is solutions forward. the data are way we another which solutions going in as

So would a is again, important the product. you. that progress our market very affirmation way it I view Thank critical and with of

Operator

Shlomo The Stifel. of next Rosenbaum from line comes question with the

Shlomo Rosenbaum

it. annually about First, housekeeping as -- paying investments in quarter maybe in to talk all I what of that had can items, of terms you're we deferred just Academia just about this saw you terms appreciate been about the XX not more contracting opposed is of changing paying growth those with days X%, we've the subscription I'm you of down And investments two is I wondering, I kind question, one advance? the If advance talk terms you're just in a year-over-year. then revenue that question. at frequently growth just X%. are seen & the evidence -- growing only and Government areas about vis-à-vis context then? growth actually this traction. prior And before the in to the Can pointing had X%-plus a you gaining And

Jonathan Collins

Sure.

A&G's So Shlomo, continue first We I'll QX. in to see on business cover performance the in A&G. subscription one traction our in do

and nice on had we continues So Science subscription growth, to improvement through, a investment. getting Web strong return come in we're of

quarter transactional second Jonathan been has bit smaller seen on softer. As highlighted, sales base. our a a It's the where we've now

not quarter is us QX A&G So business. a for big the . transactional in

The before, the in we Europe. in customers North as academic is year-end for America and many we've as get larger much Western spending of our second highlighted quarter, to

the second But a for be that's what's or quarter. of year growth, transaction A&G So will on quarter side. headwind Nice the a the transactional. the quarter bit on larger really important subscription this the A&G happening

As And we the real-world through deferred terms that year to related seen revenue. there. little also but see data was the real-world it data on selling a declines of as your decline bit bit point revenue, some running was model there's enter last flowing multiyear contracting we've a year, relates that the deals, to business through of of of for we a new we saw and deferred our business some last of

really that it's driving this we those stable revenue. at in will So But are deferred areas our year two growth subscription X%. believe be do

start Jonathan IP renewal our our real-world on business of as we improvement in we Patent within rate we to we in expect previously, indicated to subscription do monetize traction. Intelligence And into investments area start and some and as then get and year the move as within next the the data life sciences

Operator

line Sabadra Markets. the The Capital with comes Instructions] Ashish next RBC from of [Operator question

Ashish Sabadra

for we I wondering, bit. was about just growth focus a wanted forward? X.X% ACV in should the as that the how going think that quarter, implications moderated growth subscription ACV we to I about on think any

Jonathan Collins

in Yes. We in that And we we we bring bolster indicator year The and are particularly through move move through pretty the QX. see still need two X% highlighted area. ACV R&D the that's into the think new will a to to good this year. within the watch as in see this that able features think next Derwent to use the you, as corporate We did improvement Ashish. help IP, as as before, a and year have ACV deliver to being cases key of growth, market Intelligence this I we higher growth within the search in the to nearly Patent ones we just around in year, Thank areas X%. subscription and we year, Intelligence growth attrition Patent continue market later

year And for we're the then projects with think we'll the that the X ACV and We the progress making investments life well make early on within touched this those sciences indicators, in that wins Jonathan companies. that segment. pharma seminal large

to few areas over the those subscription ACV in continued improve So and next focus growth years. the drive

Mark Donohue

you over closing final question. for to our your turn to question. it going for Jonathan I'm Thank Gear That's remarks.

Jonathan Gear

excited we're and proof Okay. our enjoyed able commercial we're the call And Great. which everyone, outlook so seeing had morning. the being thank you year. much to this on now We've And to from in points rest of the on investments make. the marketplaces for impact seeing innovation, we've reaction I products the most Thanks, Mark. for of our we're first, to our QX X investments, joining new importantly, results the think and share

So to look have on day. and updating we forward. you progress Thanks forward a as future much, all great of so go

Operator

Thank concludes you That call. conference your participation. for today's

may now your You disconnect lines.

Clarivate (CLVT) 8 May 242024 Q1 Earnings call transcript