Clarivate Reports Fourth Quarter and Full Year 2024 Results

Clarivate Plc England

beginning two hours after the conclusion of the live call and will remain available for one year.

Use of Non-GAAP Financial Measures

Non-GAAP results are financial measures that are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader's understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.

We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations, and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

Definitions and reconciliations of non-GAAP measures, such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted diluted EPS, and Free cash flow to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.

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 can generally be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "seeks," "projects," "intends," "plans," "may," "will," or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts, and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies, and the markets in which we operate. Such forward-looking statements are based on available current market material and management's expectations, beliefs, and forecasts concerning future events impacting us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the caption "Risk Factors" in our annual report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission ("SEC"). Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.

About Clarivate

Clarivate™ is a leading global provider of transformative intelligence. We offer enriched data, insights & analytics, workflow solutions and expert services in the areas of Academia & Government, Intellectual Property and Life Sciences & Healthcare. For more information, please visit www.clarivate.com.

Consolidated Balance Sheets (Unaudited)

As of December 31,

(In millions)

2024

2023

ASSETS

Current assets:

Cash and cash equivalents, including restricted cash

$                295.2

$                370.7

Accounts receivable, net

798.3

908.3

Prepaid expenses

85.9

88.5

Other current assets

65.2

68.0

Assets held for sale

—

26.7

Total current assets

1,244.6

1,462.2

Property and equipment, net

53.5

51.6

Other intangible assets, net

8,441.2

9,006.6

Goodwill

1,566.6

2,023.7

Other non-current assets

82.2

60.8

Deferred income taxes

48.5

46.7

Operating lease right-of-use assets

53.6

55.2

Total assets

$           11,490.2

$           12,706.8

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                124.5

$                144.1

Accrued compensation

119.2

126.5

Accrued expenses and other current liabilities

310.1

315.2

Current portion of deferred revenues

859.1

983.1

Current portion of operating lease liability

20.6

24.4

Liabilities held for sale

—

6.7

Total current liabilities

1,433.5

1,600.0

Long-term debt

4,518.7

4,721.1

Non-current portion of deferred revenues

16.6

38.7

Other non-current liabilities

55.9

41.9

Deferred income taxes

273.3

249.6

Operating lease liabilities

53.2

63.2

Total liabilities

6,351.2

6,714.5

Commitments and contingencies

Shareholders' equity:

Preferred Shares, no par value; 14.4 shares authorized; 5.25% Mandatory Convertible Preferred
Shares, Series A, zero and 14.4 shares issued and outstanding as of December 31, 2024 and
December 31, 2023, respectively

—

1,392.6

Ordinary Shares, no par value; unlimited shares authorized; 691.4 and 666.1 shares issued and
outstanding as of December 31, 2024 and December 31, 2023, respectively

12,978.8

11,740.5

Accumulated other comprehensive loss

(526.3)

(495.3)

Accumulated deficit

(7,313.5)

(6,645.5)

Total shareholders' equity

5,139.0

5,992.3

Total liabilities and shareholders' equity

$           11,490.2

$           12,706.8

 

Consolidated Statements of Operations (Unaudited)

Three Months Ended December 31,

Year Ended December 31,

(In millions, except per share data)

2024

2023

2024

2023

Revenues

$                      663.0

$                      683.7

$                 2,556.7

$                 2,628.8

Operating expenses:

Cost of revenues

227.7

231.6

869.2

906.4

Selling, general and administrative costs

180.8

180.4

727.6

739.7

Depreciation and amortization

186.0

180.8

727.0

708.3

Goodwill and intangible asset impairments

224.1

844.7

540.7

979.9

Restructuring and other impairments

5.4

14.7

19.6

40.0

Other operating expense (income), net

(98.7)

19.7

(51.8)

(10.8)

Total operating expenses

725.3

1,471.9

2,832.3

3,363.5

Income (loss) from operations

(62.3)

(788.2)

(275.6)

(734.7)

Fair value adjustment of warrants

—

(1.5)

(5.2)

(15.9)

Interest expense, net

69.9

75.2

283.4

293.7

Income (loss) before income taxes

(132.2)

(861.9)

(553.8)

(1,012.5)

Provision (benefit) for income taxes

59.6

(18.0)

82.9

(101.3)

Net income (loss)

(191.8)

(843.9)

(636.7)

(911.2)

Dividends on preferred shares

—

19.1

31.3

75.4

Net income (loss) attributable to ordinary shares

$                    (191.8)

$                    (863.0)

$                  (668.0)

$                  (986.6)

Per share:

Basic

$                      (0.27)

$                      (1.30)

$                    (0.96)

$                    (1.47)

Diluted

$                      (0.27)

$                      (1.30)

$                    (0.96)

$                    (1.47)

Weighted average shares used to compute earnings per
share:

Basic

702.8

665.0

693.6

671.6

Diluted

702.8

665.0

693.6

671.6

 

Consolidated Statements of Cash Flows (Unaudited)

Year Ended December 31,

(In millions)

2024

2023

Cash Flows From Operating Activities

  Net income (loss)

$                   (636.7)

$                   (911.2)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

  Depreciation and amortization

727.0

708.3

  Share-based compensation

59.9

109.0

  Restructuring and other impairments, including goodwill

540.3

986.2

  Fair value adjustment of warrants

(5.2)

(15.9)

  Gain on sale from divestitures

(54.7)

—

  Gain on legal settlement

—

(49.4)

  Deferred income taxes

21.2

(78.4)

  Amortization of debt issuance costs

16.4

18.2

  Other operating activities

3.3

37.8

Changes in operating assets and liabilities:

  Accounts receivable

92.6

(25.5)

  Prepaid expenses

1.5

1.7

  Other assets

(0.8)

35.1

  Accounts payable

(15.0)

41.2

  Accrued expenses and other current liabilities

3.8

(44.4)

  Deferred revenues

(106.2)

20.3

  Operating leases, net

(9.6)

(8.0)

  Other liabilities

8.8

(80.8)

Net cash provided by operating activities

646.6

744.2

Cash Flows From Investing Activities

  Capital expenditures

(289.1)

(242.5)

  Payments for acquisitions, net of cash acquired

(32.0)

(5.4)

  Proceeds from divestitures, net of cash divested

84.4

10.5

Net cash provided by (used for) investing activities

(236.7)

(237.4)

Cash Flows From Financing Activities

  Principal payments on term loans

(198.1)

(300.0)

  Repayments of revolving credit facility

—

—

  Payment of debt issuance costs and discounts

(20.1)

0.1

  Repurchases of ordinary shares

(200.0)

(100.0)

  Cash dividends on preferred shares

(37.7)

(75.5)

  Payments related to tax withholding for share-based compensation

(15.6)

(20.6)

  Other financing activities

1.4

(0.5)

Net cash provided by (used for) financing activities

(470.1)

(496.5)

  Effects of exchange rates

(15.3)

3.6

Net change in cash and cash equivalents, including restricted cash

(75.5)

13.9

Cash and cash equivalents, including restricted cash, beginning of period

370.7

356.8

Cash and cash equivalents, including restricted cash, end of period

$                     295.2

$                     370.7

Supplemental Cash Flow Information:

Cash paid for interest

$                     265.3

$                     273.5

Cash paid for income tax

$                       52.9

$                       42.9

Supplemental Revenues Information

Annualized contract value ("ACV"), at any point in time, represents the annualized value of all active customer subscription-based license agreements for the next 12 months, assuming those coming up for renewal during the measurement period are renewed at their current price level. Our organic ACV grew 0.9% in 2024, compared to 2023, primarily driven by price increases. Our total ACV for 2024, compared to 2023, declined 1.1% primarily due to the ScholarOne divestiture in November 2024.

The following tables present our revenues by type and by segment for the periods indicated, as well as the drivers of the variances between periods, including as a percentage of such revenues.

Three Months Ended
December 31,

Change

% of Change

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Subscription

$        407.0

$       410.8

$          (3.8)

(0.9) %

0.2 %

(1.2) %

— %

0.1 %

Re-occurring

112.0

119.1

(7.1)

(6.0) %

— %

— %

(0.6) %

(5.4) %

Recurring revenues

$        519.0

$       529.9

$        (10.9)

(2.1) %

0.1 %

(0.9) %

(0.2) %

(1.1) %

Transactional

144.0

153.8

(9.8)

(6.4) %

0.3 %

(7.3) %

— %

0.6 %

Revenues

$        663.0

$       683.7

$        (20.7)

(3.0) %

0.2 %

(2.4) %

(0.1) %

(0.7) %

Year Ended

December 31,

Change

% of Change

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Subscription

$     1,626.8

$    1,618.1

$           8.7

0.5 %

0.1 %

(0.3) %

(0.2) %

0.9 %

Re-occurring

429.8

444.6

(14.8)

(3.3) %

— %

— %

(0.2) %

(3.1) %

Recurring revenues

$     2,056.6

$    2,062.7

$          (6.1)

(0.3) %

0.1 %

(0.2) %

(0.3) %

0.1 %

Transactional

500.1

566.1

(66.0)

(11.7) %

0.2 %

(5.3) %

— %

(6.6) %

Revenues

$     2,556.7

$    2,628.8

$        (72.1)

(2.7) %

0.1 %

(1.3) %

(0.1) %

(1.4) %

Three Months Ended
December 31,

Change

% of Change

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Academia & Government

$        342.9

$       339.4

$           3.5

1.0 %

— %

(1.4) %

0.1 %

2.3 %

Intellectual Property

209.1

225.6

(16.5)

(7.3) %

0.2 %

(4.5) %

(0.3) %

(2.7) %

Life Sciences & Healthcare

111.0

118.7

(7.7)

(6.5) %

0.7 %

(1.2) %

(0.2) %

(5.8) %

Revenues

$        663.0

$       683.7

$        (20.7)

(3.0) %

0.2 %

(2.4) %

(0.1) %

(0.7) %

Year Ended

December 31,

Change

% of Change

2024

2023

$

%

Acquisitions

Disposals

FX

Organic

Academia & Government

$     1,326.4

$    1,323.3

$           3.1

0.2 %

— %

(0.4) %

(0.1) %

0.7 %

Intellectual Property

811.4

862.7

(51.3)

(5.9) %

0.1 %

(3.1) %

(0.2) %

(2.7) %

Life Sciences & Healthcare

418.9

442.8

(23.9)

(5.4) %

0.6 %

(0.8) %

(0.4) %

(4.8) %

Revenues

$     2,556.7

$    2,628.8

$        (72.1)

(2.7) %

0.1 %

(1.3) %

(0.1) %

(1.4) %

Reconciliations to Certain Non-GAAP Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents Net income (loss) before the Provision (benefit) for income taxes, Depreciation and amortization, and Interest expense, net, adjusted to exclude share-based compensation, impairments, restructuring expenses, the impact of certain non-cash fair value adjustments on financial instruments, acquisition and/or disposal-related transaction costs, unrealized foreign currency gains/losses, legal settlements, and other items that are included in Net income (loss) for the period that we do not consider indicative of our ongoing operating performance. Net income (loss) margin is calculated by dividing Net income (loss) by Revenues. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenues.

The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the fourth quarter and full year of 2024 and 2023, respectively, and reconciles these non-GAAP measures to our Net income (loss) and Net income (loss) margin for the same periods:

Three Months Ended
December 31,

Year Ended

December 31,

(In millions, except percentages); (unaudited)

2024

2023

2024

2023

Net income (loss)

$      (191.8)

$      (843.9)

$      (636.7)

$      (911.2)

Provision (benefit) for income taxes

59.6

(18.0)

82.9

(101.3)

Depreciation and amortization

186.0

180.8

727.0

708.3

Interest expense, net

69.9

75.2

283.4

293.7

Share-based compensation expense

10.9

11.8

60.6

108.9

Goodwill and intangible asset impairments

224.1

844.7

540.7

979.9

Restructuring and other impairments

5.4

14.7

19.6

40.0

Fair value adjustment of warrants

—

(1.5)

(5.2)

(15.9)

Transaction related costs

4.3

3.1

17.9

8.2

Other(1)

(83.1)

31.3

(29.8)

6.6

Adjusted EBITDA

$       285.3

$       298.2

$    1,060.4

$    1,117.2

Net income (loss) margin

(28.9) %

(123.4) %

(24.9) %

(34.7) %

Adjusted EBITDA margin

43.0 %

43.6 %

41.5 %

42.5 %

(1) Includes the net impact of unrealized foreign currency gains and losses and other items that do not reflect our ongoing operating performance. The fourth quarter and full year 2024 amount includes a gain of $69.5 and a net gain of $54.7, respectively, from the divestitures completed in 2024. The full year 2023 amount includes a gain of $49.4 related to a legal settlement.

Adjusted net income and Adjusted diluted EPS

Adjusted net income represents Net income (loss), adjusted to exclude amortization related to acquired intangible assets, share-based compensation, impairments, restructuring expenses, the impact of certain non-cash fair value adjustments on financial instruments, acquisition and/or disposal-related transaction costs, unrealized foreign currency gains/losses, legal settlements, and other items that are included in net income (loss) for the period that we do not consider indicative of our ongoing operating performance and the associated income tax impact of such adjustments.

Adjusted diluted EPS is calculated by dividing Adjusted net income by Adjusted diluted weighted average shares. The Adjusted diluted weighted average shares calculation assumes that all instruments in the calculation are dilutive.

The following tables present our calculation of Adjusted net income and Adjusted diluted EPS for the fourth quarter and full year of 2024 and 2023, respectively, and reconciles these non-GAAP measures to our Net income (loss) and Diluted EPS for the same periods:

Three Months Ended December 31,

2024

2023

(In millions, except per share amounts); (unaudited)

Amount

Per Share

Amount

Per Share

Net income (loss) and Diluted EPS

$             (191.8)

$               (0.27)

$             (843.9)

$               (1.27)

Amortization related to acquired intangible assets

137.2

0.20

134.5

0.20

Share-based compensation expense

10.9

0.02

11.8

0.02

Goodwill and intangible asset impairments

224.1

0.32

844.7

1.27

Restructuring and other impairments

5.4

0.01

14.7

0.02

Fair value adjustment of warrants

—

—

(1.5)

—

Transaction related costs

4.3

0.01

3.1

—

Other(1)

(83.1)

(0.13)

31.3

0.04

Income tax impact of related adjustments

38.5

0.05

(31.3)

(0.05)

Adjusted net income and Adjusted diluted EPS

$              145.5

$                0.21

$              163.4

$                0.23

Adjusted weighted average ordinary shares, diluted

707.7

724.4

(1) Includes the net impact of unrealized foreign currency gains and losses and other items that do not reflect our ongoing operating performance. The fourth quarter 2024 amount includes a gain of $69.5 from the ScholarOne divestiture.

 

Year Ended December 31,

2024

2023

(In millions, except per share amounts); (unaudited)

Amount

Per Share

Amount

Per Share

Net income (loss) and Diluted EPS

$             (636.7)

$               (0.92)

$             (911.2)

$               (1.36)

Amortization related to acquired intangible assets

554.1

0.80

564.3

0.84

Share-based compensation expense

60.6

0.09

108.9

0.16

Goodwill and intangible asset impairments

540.7

0.78

979.9

1.46

Restructuring and other impairments

19.6

0.03

40.0

0.06

Fair value adjustment of warrants

(5.2)

(0.01)

(15.9)

(0.02)

Transaction related costs

17.9

0.03

8.2

0.01

Other(1)

(29.8)

(0.08)

6.6

(0.06)

Income tax impact of related adjustments

4.1

0.01

(181.7)

(0.27)

Adjusted net income and Adjusted diluted EPS

$              525.3

$                0.73

$              599.1

$                0.82

Adjusted weighted average ordinary shares, diluted

721.5

731.3

(1) Includes the net impact of unrealized foreign currency gains and losses and other items that do not reflect our ongoing operating performance. The 2024 amount includes a net gain of $54.7 from divestitures and the 2023 amount includes a gain of $49.4 related to a legal settlement.

Free cash flow

Free cash flow represents Net cash provided by operating activities less Capital expenditures. The following table reconciles this non-GAAP measure to Net cash provided by operating activities for the same periods:

Three Months Ended December 31,

Year Ended December 31,

(In millions); (unaudited)

2024

2023

2024

2023

Net cash provided by operating activities

$                    141.3

$                    190.9

$                    646.6

$                    744.2

  Capital expenditures

(82.2)

(63.9)

(289.1)

(242.5)

Free cash flow

$                      59.1

$                    127.0

$                    357.5

$                    501.7

Reconciliations to Certain Non-GAAP Measures - 2025 Outlook

Adjusted EBITDA and Adjusted EBITDA Margin

The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the 2025 outlook and reconciles these non-GAAP measures to our Net income (loss) and Net income (loss) margin for the same period:

Year Ending December 31, 2025

(Forecasted)

(In millions, except percentages); (unaudited)

Low

High

Net income (loss)

$                  (203)

$                  (127)

Provision (benefit) for income taxes

55

59

Depreciation and amortization

697

687

Interest expense, net

262

252

Share-based compensation expense

84

84

Restructuring and other impairments(1)

30

30

Transaction related costs

10

10

Other

5

5

Adjusted EBITDA

$                   940

$                1,000

Net income (loss) margin

(8.9) %

(5.3) %

Adjusted EBITDA margin

40.5 %

42.5 %

(1) Reflects restructuring costs expected to be incurred in 2025 associated with the Value Creation Plan.

Adjusted diluted EPS

The following table presents our calculation of Adjusted diluted EPS for the 2025 outlook and reconciles this non-GAAP measure to our per share Net income (loss) for the same period:

Year Ending December 31, 2025

(Forecasted)

(Unaudited)

Low

High

Net income (loss)

(0.28)

(0.18)

Amortization related to acquired intangible assets

0.75

0.75

Share-based compensation expense

0.12

0.12

Restructuring and other impairments(1)

0.04

0.04

Transaction related costs

0.01

0.01

Other

0.01

0.01

Income tax impact of related adjustments

(0.05)

(0.05)

Adjusted diluted EPS

$                      0.60

$                      0.70

Adjusted weighted-average ordinary shares (diluted)(2)

696 million

(1) Reflects restructuring costs expected to be incurred in 2025 associated with the Value Creation Plan.

(2) For the purposes of calculating adjusted diluted EPS, we have assumed the "if-converted" method of share dilution on a full year basis.

Free cash flow

The following table presents our calculation of Free cash flow for the 2025 outlook and reconciles this non-GAAP measure to our Net cash provided by operating activities for the same period:

Year Ending December 31, 2025

(Forecasted)

(In millions); (unaudited)

Low

High

Net cash provided by operating activities

$                       555

$                       635

Capital expenditures

(255)

(255)

Free cash flow

$                       300

$                       380

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