— Reaffirms 2022 Outlook —
London, UK — May 9, 2022 – Clarivate Plc (NYSE: CLVT) (the “Company” or “Clarivate”), a global leader in providing trusted information and insights to accelerate the pace of innovation, today reported results for the first quarter ended March 31, 2022.
First Quarter 2022 Financial Highlights
- Revenues of $662.2 million increased 54.6%, and 57.6% at constant currency
- Organic revenues(1) increased 4.4% at constant currency
- Net income(2) attributable to ordinary shares of $50.8 million increased $106.8 million; Net loss per diluted share of $0.06 improved by $0.11
- Adjusted Net Income(1) of $155.1 million increased 75.4%; Adjusted Income per diluted share(1) of $0.21 increased 50.0% or $0.07
- Adjusted EBITDA(1) of $262.3 million increased 59.2% and Adjusted EBITDA Margin(1) of 39.6% increased 140 basis points
“Clarivate had a good start to the year with organic revenue growth of 4.4% and strong profit conversion,” said Jerre Stead, Executive Chair and CEO. “The recent implementation of our ‘One Clarivate’ operating model is showing early signs of success as we delivered some cross-selling wins in the quarter. We also benefited by closing on several transactional deals, which had slipped from last year’s fourth quarter.”
Selected Financial Information
The results for the three months ended March 31, 2022 include contributions from the following 2021 acquisitions 1) Bioinfogate, which was completed in August 2021; and 2) ProQuest, which was completed in December 2021 for which there were no comparable amounts in the three months ended March 31, 2021.
|Three Months Ended March 31,||Change|
|(in millions, except percentages and per share data), (unaudited)||2022||2021||$||%|
|Revenues, net||$ 662.2||$ 428.4||$ 233.8||54.6 %|
|Annualized Contract Value (ACV)||$ 1,606.5||$ 909.4||$ 697.1||76.7 %|
|Net income (loss) attributable to ordinary shareholders||$ 50.8||$ (56.0)||$ 106.8||190.7 %|
|Net income (loss) per share, basic||$ 0.07||$ (0.09)||$ 0.16||177.8 %|
|Net income (loss) per share, diluted||$ (0.06)||$ (0.17)||0.11||64.7 %|
|Weighted-average shares outstanding (diluted)||688.0||612.6||—||12.3 %|
|Adjusted EBITDA(1)||$ 262.3||$ 164.8||$ 97.5||59.2 %|
|Adjusted net income(1)||$ 155.1||$ 88.4||$ 66.7||75.4 %|
|Adjusted diluted EPS(1)||$ 0.21||$ 0.14||$ 0.07||50.0 %|
|Weighted average ordinary shares (diluted)(2)||746.3||623.3||—||19.7 %|
|Net cash provided by operating activities||$ 67.4||$ 174.0||$ (106.6)||(61.3) %|
|Free cash flow(1)||$ 26.0||$ 141.0||$ (115.0)||(81.6) %|
|Adjusted free cash flow(1)||$ 191.3||$ 163.2||$ 28.1||17.2 %|
|(Amounts in tables may not sum due to rounding)|
- Non-GAAP measure. Please see “Reconciliation to Certain Non-GAAP measures” in this earnings release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings release.
- Calculated assuming a net income position compared to a net loss position on the statement of operations for calculating Adjusted net income and Adjusted diluted EPS.
First Quarter 2022 Operating Results
Revenues, net, for the first quarter increased $233.8 million, or 54.6%, to $662.2 million, and increased 57.6% on a constant currency basis. Organic revenues(1) increased $18.7 million or 4.4% on a constant currency basis.
Subscription revenues for the first quarter increased $164.8 million, or 69.0%, to $403.8 million, and increased 71.5% on a constant currency basis, primarily driven by the acquisition of ProQuest in December 2021. Organic subscription revenues(1) increased 2.8% on a constant currency basis, primarily due to price increases, new business and the benefit of net installations in the prior year.
Re-occurring revenues for the first quarter increased $5.0 million, or 4.6% to $114.5 million, and increased 9.3% on a constant currency basis. Organic re-occurring revenues(1) increased 9.3% on a constant currency basis, primarily due to price increases in patent renewal volumes and improvement in yield per case.
Transactional revenues for the first quarter increased $60.8 million, or 73.3%, to $143.7 million, and increased 75.6% on a constant currency basis, primarily due to the acquisition of ProQuest. Organic transactional revenues(1) increased 2.3% on a constant currency basis, primarily due to an increase in custom data sales.
Net income attributable to ordinary shares for the first quarter improved to $50.8 million, compared to Net loss of $56.0 million in the prior-year period, primarily driven by the mark-to-market gain on financial instruments, higher revenues and profits. Net loss per diluted share for the first quarter of $(0.06) improved $0.11, compared to Net loss per diluted share of $(0.17) in the prior-year period.
Adjusted EBITDA for the first quarter was $262.3 million, an increase of $97.5 million or 59.2%. Adjusted net income for the first quarter was $155.1 million, an increase of $66.7 million or 75.4%. The increase in Adjusted EBITDA and Adjusted net income was driven by earnings contributions from acquisitions, organic growth and cost savings from integration programs.
Adjusted diluted earnings per share was $0.21 for the first quarter, compared to $0.14 in the prior-year period, as strong growth in Adjusted net income was offset by a 19.7% increase in weighted average ordinary shares outstanding primarily driven by the acquisition of ProQuest.
Balance Sheet and Cash Flow
As of March 31, 2022, cash and cash equivalents of $500.2 million increased $69.3 million, driven by the growth in revenues and profits. Restricted cash decreased $141.2 million to $15.5 million, compared to December 31, 2021 primarily due to 2022 first quarter employee payroll payments related to the CPA Global Equity Plan. The payments were funded by the sale of shares held in the Employee Benefit Trust established for the CPA Equity Plan in December 2021.
The Company’s total debt outstanding as of March 31, 2022 was $5,559.6 million, a decrease of $7.6 million compared to December 31, 2021.
Net cash provided by operating activities of $67.4 million for the three months ended March 31, 2022, decreased $106.6 million compared to net cash provided by operating activities of $174.0 million for the prior year, primarily due to the payments in the first quarter of 2022 related to the CPA Equity Plan. Adjusted free cash flow for the three months ended March 31, 2022, was $191.3 million, an increase of $28.1 million, compared to the prior year, as a result of growth in revenues and Adjusted EBITDA.
Reaffirmed Outlook for 2022 (forward-looking statement)
Jonathan Collins, Executive Vice President and Chief Financial Officer, said: “With our first quarter results in-line with our expectations, we reaffirm our outlook for 2022. We currently expect progressive improvement in our quarterly organic growth rate as we move through the year. Additionally, the benefit of cost synergies primarily from acquisition integration savings will drive expansion of our Adjusted EBITDA margin and profit growth.”
The full year outlook presented below assumes no further currency movements, acquisitions, divestitures, or unanticipated events.
The below outlook includes Non-GAAP measures. Please see “Reconciliation to Certain Non-GAAP measures” presented below for important disclosure and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings press release.
|Revenues||$2.80B to $2.88B|
|Adjusted EBITDA||$1.16B to $1.22B|
|Adjusted EBITDA margin||41% to 42%|
|Adjusted Diluted EPS(1)||$0.85 to $0.95|
|Adjusted Free Cash Flow||$675M to $725M|
- Adjusted Diluted EPS for 2022 is calculated based on approximately 741.7 million fully diluted weighted average shares outstanding.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the first quarter at 9:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company’s website.
Interested parties may access the live audio broadcast by dialing 1-844-200-6205 in the United States, 1-929-526-1599 for international, and 1-833-950-0062 in Canada. The conference ID number is 430211. An audio replay will be available approximately two hours after the completion of the call at 1-866-813-9403 in the United States, 44-204-525-0658 for international, and 1-266-828-7578 in Canada. The Replay Conference ID number is 060097. The recording will be available for replay through May 23, 2022. The webcast can be accessed at https://services.choruscall.com/mediaframe/webcast.html?webcastid=XSdgZ81U and will be available for replay.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made 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, Free Cash Flow, Adjusted Free Cash Flow, Standalone Adjusted EBITDA, and organic revenue 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.
We calculate constant currency by converting the non-U.S. dollar income statement balances for the most current year to U.S. dollars by applying the average exchange rates of the preceding year.
This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance outlook and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, including the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficiently liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the COVID-19 pandemic and governmental responses thereto, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed 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”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.
Clarivate™ is a global leader in providing solutions to accelerate the lifecycle of innovation. Our bold mission is to help customers solve some of the world’s most complex problems by providing actionable information and insights that reduce the time from new ideas to life-changing inventions in the areas of science and intellectual property. We help customers discover, protect and commercialize their inventions using our trusted subscription and technology-based solutions coupled with deep domain expertise. For more information, please visit clarivate.com.
Tabita Seagrave, Head of Global Corporate Communications
Investor Relations Contact:
Mark Donohue, Head of Global Investor Relations