— Reaffirmed 2023 Outlook —
London, UK — May 9, 2023 Clarivate Plc – (NYSE: CLVT) (the “Company” or “Clarivate”), a global leader in connecting people and organizations to intelligence they can trust to transform their world, today reported results for the first quarter ended March 31, 2023.
First Quarter 2023 Financial Highlights
- Revenues of $629.1 million decreased 5.0%, and 3.1% at constant currency(1), driven primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable amounts in the current year period and year-over-year strengthening of the US dollar
- Organic revenues(1) decreased 0.2% as an increase in subscription revenues of 3.1% was partially offset by a decline in re-occurring revenues of 1.7% and transactional and other revenues of 8.3%
- Net income attributable to ordinary shares of $24.7 million decreased $26.1 million driven by the mark-to-market gain on financial instruments in the prior year quarter and an increase in interest costs, which was partially offset by a tax benefit in the current year quarter; Net income per diluted share of $0.04 increased by $0.10
- Adjusted Net Income(1) of $130.9 million decreased 15.6%; Adjusted Income per diluted share(1) of $0.18 decreased 14.3% or $0.03
- Adjusted EBITDA(1) of $252.7 million decreased 3.7% driven by the divestiture of MarkMonitor, partially offset by cost savings from integration programs; Adjusted EBITDA Margin(1) of 40.2% increased 60 basis points
- Net cash provided by operating activities increased $160.1 million to $227.5 million; Free cash flow(1) increased $142.2 million to $168.2 million, allowing for continued deleveraging through further debt reduction
“Clarivate delivered results in line with our expectations for the first quarter including improved subscription revenue and strong cash flow,” said Jonathan Gear, Chief Executive Officer. “We hit a meaningful milestone with the growth inflection of Web of Science driven by higher renewals and an increase in new subscriptions. We recently completed the hiring of our three Segment Presidents, which will help us continue transforming into an insights-driven strategic partner with a keen focus on great customer experiences.”
Selected Financial Information
The prior year results include MarkMonitor, which was divested on October 31, 2022, for which there are no comparable amounts in the current year period.
|Three Months Ended March 31,||Change|
|(in millions, except percentages and per share data), (unaudited)||2023||2022||$||%|
|Revenues, net||$ 629.1||$ 662.2||$ (33.1)||(5.0) %|
|Net income attributable to ordinary shares||$ 24.7||$ 50.8||$ (26.1)||(51.4) %|
|Net income (loss) per share, diluted||$ 0.04||$ (0.06)||$ 0.10||166.7 %|
|Weighted-average ordinary shares (diluted)||679.3||688.0||—||(1.3) %|
|Adjusted EBITDA(1)||$ 252.7||$ 262.3||$ (9.6)||(3.7) %|
|Adjusted net income(1)||$ 130.9||$ 155.1||$ (24.2)||(15.6) %|
|Adjusted diluted EPS(1)||$ 0.18||$ 0.21||$ (0.03)||(14.3) %|
|Adjusted weighted-average ordinary shares (diluted)(1)||734.7||746.3||—||(1.6) %|
|Net cash provided by operating activities||$ 227.5||$ 67.4||$ 160.1||237.5 %|
|Free cash flow(1)||$ 168.2||$ 26.0||$ 142.2||546.9 %|
(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.
First Quarter 2023 Operating Results
Revenues, net for the first quarter decreased $33.1 million, or 5.0%, to $629.1 million, and decreased 3.1% on a constant currency basis(1), primarily due to the divestiture of MarkMonitor and the strengthening of the U.S. dollar which had a negative foreign exchange impact on revenue for the first quarter of 2023. Organic revenues(1) decreased $1.4 million or 0.2%.
Subscription revenues for the first quarter decreased $10.6 million, or 2.6%, to $393.2 million, and decreased 1.3% on a constant currency basis(1), due to the divestiture of MarkMonitor. Organic subscription revenues(1) increased 3.1%, primarily due to price increases and the benefit of net installations.
Re-occurring revenues for the first quarter decreased $6.8 million, or 5.9% to $107.7 million, and decreased 1.7% on a constant currency basis(1). Organic re-occurring revenues(1) decreased 1.7%, primarily driven by the timing of accelerated patent renewals in the prior year period.
Transactional and other revenues for the first quarter decreased $15.5 million, or 10.8%, to $128.2 million, and decreased 8.9% on a constant currency basis(1). Organic transactional and other revenues(1) decreased 8.3%. primarily due to lower transactional sales in Life Sciences & Healthcare and Intellectual Property.
Balance Sheet and Cash Flow
As of March 31, 2023, cash and cash equivalents of $364.2 million increased $15.4 million compared to December 31, 2022.
The Company’s total debt outstanding as of March 31, 2023 was $4,946.1 million, a decrease of $125.2 million compared to December 31, 2022 due to a $125.0 million accelerated debt repayment on the Term Loan B.
Net cash provided by operating activities of $227.5 million for the three months ended March 31, 2023 increased $160.1 million compared to $67.4 million for the prior year, primarily due to the prior year employee payroll payments related to the CPA Global Equity Plan. Free cash flow(1) for the three months ended March 31, 2023, was $168.2 million, an increase of $142.2 million compared to the prior year period.
Reaffirmed Outlook for 2023 (forward-looking statement)
“We reaffirmed our 2023 outlook and continue to expect an acceleration of our organic growth through the remainder of this year given the strong comparisons in the first half of 2022,” said Jonathan Collins, Executive Vice President and Chief Financial Officer. “We anticipate generating strong cash flows and utilizing the proceeds to invest in product innovation and strengthen our balance sheet.”
The full year outlook presented below assumes no further acquisitions, divestitures, or unanticipated events.
|Revenues||$2.63B to $2.73B|
|Organic Revenue Growth||2.75% to 3.75%|
|Adjusted EBITDA||$1.10B to $1.16B|
|Adjusted EBITDA Margin||42.0% to 42.5%|
|Adjusted Diluted EPS(2)||$0.75 to $0.85|
|Free Cash Flow||$450M to $550M|
- Adjusted Diluted EPS for 2023 is calculated based on approximately 740 million fully diluted weighted average ordinary shares outstanding.
The 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 measures. These terms are defined elsewhere in this earnings release.
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 +1 404-975-4839 or toll-free +1 833-470-1428 (in North America) and 44 208 068 2558 or toll free 44 808 189 6484 (internationally). The conference ID number is 337609. To join the webcast please visit https://events.q4inc.com/attendee/487478929. A replay will also be available on https://ir.clarivate.com.
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, Standalone Adjusted EBITDA, organic revenue, organic subscription revenue, organic re-occurring revenue and organic transactional and other 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 sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the impact of inflation, the impact of foreign currency fluctuations, the COVID-19 pandemic and governmental responses thereto, international hostilities, 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 leading global information services provider. We connect people and organizations to intelligence they can trust to transform their perspective, their work and our world. Our subscription and technology-based solutions are coupled with deep domain expertise and cover the areas of Academia & Government, Intellectual Property and Life Sciences & Healthcare. For more information, please visit clarivate.com.
Amy Bourke-Waite, Senior Director, Corporate Communications
Investor Relations Contact:
Mark Donohue, Vice President, Investor Relations