— Updates 2022 Outlook —
London, UK — August 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 second quarter ended June 30, 2022.
Second Quarter 2022 Financial Highlights
- Revenues of $686.6 million increased 54.0%, and 59.9% at constant currency
- Organic revenues(1) increased 4.8%
- Net income attributable to ordinary shares of $43.7 million increased $175.2 million; Net loss per diluted share of $0.00 improved by $0.22
- Adjusted Net Income(1) of $165.1 million increased 50.1%; Adjusted Income per diluted share(1) of $0.22 increased 29.4% or $0.05
- Adjusted EBITDA(1) of $274.4 million increased 45.2% and Adjusted EBITDA Margin(1) of 39.9% decreased 240 basis points
First Half of 2022 Financial Highlights
- Revenues of $1,348.8 million increased 54.3%, and 58.8% at constant currency
- Organic revenues(1) increased 4.6%
- Net income attributable to ordinary shares of $94.5 million increased $282.0 million; Net loss per diluted share of $0.07 improved by $0.28
- Adjusted Net Income(1) of $320.2 million increased 61.4%; Adjusted Income per diluted share(1) of $0.43 increased 38.7% or $0.12
- Adjusted EBITDA(1) of $536.7 million increased 51.7% and Adjusted EBITDA Margin(1) of 39.8% decreased 50 basis points
- Cash Flow from Operations decreased $97.1 million to $164.6 million; Adjusted Free Cash Flow(1) decreased $0.4 million to $258.1 million
“We delivered a good quarter with organic revenue growth approaching 5% as our One Clarivate strategy is building traction across our global customer base,” said Jerre Stead, Executive Chair and CEO. “In July, we announced that I will retire from the CEO role at the end of August but will continue as non-executive chair. Since assuming the CEO role in May 2019, we have made significant operational improvements and value enhancing acquisitions that position Clarivate for greater success under the leadership of Jonathan Gear. I am very thankful to all my colleagues for their hard work in getting us to where we are today, and to our customers and stakeholders for their continued support.”
Selected Financial Information
The results for the three and six months ended June 30, 2022 include contributions from the following 2021 acquisitions: 1) Bioinfogate, which was completed in August 2021, 2) Patient Connect, which was completed in December 2021, and 3) ProQuest, which was completed in December 2021 for which there were no comparable amounts in the three and six months ended June 30, 2021.
|Three Months Ended June 30,||Change||Six Months Ended June 30,||Change|
|(in millions, except percentages and per share data), (unaudited)||2022||2021||$||%||2022||2021||$||%|
|Revenues, net||$ 686.6||$ 445.7||$ 240.9||54.0 %||$ 1,348.8||$ 874.1||$ 474.7||54.3 %|
|Annualized Contract Value (ACV)||$ 1,625.9||$ 924.4||$ 701.5||75.9 %||$ 1,625.9||$ 924.4||$ 701.5||75.9 %|
|Net income (loss) attributable to ordinary shares||$ 43.7||$ (131.5)||$ 175.2||133.2 %||$ 94.5||$ (187.5)||$ 282.0||150.4 %|
|Net income (loss) per share, diluted||$ 0.00||$ (0.22)||$ 0.22||100.0 %||$ (0.07)||$ (0.35)||$ 0.28||80.0 %|
|Weighted-average shares outstanding (diluted)||678.4||611.1||—||11.0 %||683.2||617.1||—||10.7 %|
|Adjusted EBITDA(1)||$ 274.4||$ 189.0||$ 85.4||45.2 %||$ 536.7||$ 353.8||$ 182.9||51.7 %|
|Adjusted net income (loss)(1)||$ 165.1||$ 110.0||$ 55.1||50.1 %||$ 320.2||$ 198.4||$ 121.8||61.4 %|
|Adjusted diluted EPS(1)||$ 0.22||$ 0.17||$ 0.05||29.4 %||$ 0.43||$ 0.31||$ 0.12||38.7 %|
|Weighted-average ordinary shares (diluted)(2)||736.6||641.4||—||14.8 %||741.6||633.1||—||17.1 %|
|Net cash provided by operating activities||$ 97.2||$ 87.6||$ 9.6||11.0 %||$ 164.6||$ 261.7||$ (97.1)||(37.1) %|
|Free cash flow(1)||$ 49.5||$ 58.6||$ (9.1)||(15.5) %||$ 75.5||$ 199.7||$ (124.2)||(62.2) %|
|Adjusted free cash flow(1)||$ 66.8||$ 95.2||$ (28.4)||(29.8) %||$ 258.1||$ 258.5||$ (0.4)||(0.2) %|
(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.
Second Quarter 2022 Operating Results
Revenues, net, for the second quarter increased $240.9 million, or 54.0%, to $686.6 million, and increased 59.9% on a constant currency basis. The significant strengthening of the U.S. dollar had a negative foreign exchange impact on revenue of 5.8% for the second quarter of 2022. Organic revenues(1) increased $21.4 million or 4.8%, which was partially offset by our decision to cease commercial operations in Russia in March.
Subscription revenues for the second quarter increased $164.0 million, or 67.4%, to $407.4 million, and increased 72.8% on a constant currency basis, primarily driven by the acquisition of ProQuest in December 2021. Organic subscription revenues(1) increased 3.8%, primarily due to price increases and the benefit of net installations in the prior year.
Re-occurring revenues for the second quarter decreased $1.7 million, or (1.5)% to $112.0 million, and increased 6.7% on a constant currency basis. Organic re-occurring revenues(1) increased 6.7%, primarily due to patent renewal volumes and improvements in yield per case.
Transactional and other revenues for the second quarter increased $78.0 million, or 86.7%, to $168.0 million, and increased 90.6% on a constant currency basis, primarily due to the acquisition of ProQuest. Organic transactional and other revenues(1) increased 5.0%, due to an increase in back file and custom data sales.
Net income attributable to ordinary shares for the second quarter improved to $43.7 million, compared to Net loss of $131.5 million in the prior-year period, primarily driven by higher profits and the mark-to-market gain on financial instruments. Net loss per diluted share for the second quarter of $0.00 improved $0.22, compared to Net loss per diluted share of $0.22 in the prior-year period.
Adjusted EBITDA(1) for the second quarter was $274.4 million, an increase of $85.4 million or 45.2%. Adjusted net income(1) for the second quarter was $165.1 million, an increase of $55.1 million or 50.1%. The increase in Adjusted EBITDA(1) and Adjusted net income(1) was driven by earnings contributions from acquisitions, organic growth and cost savings from integration programs.
Adjusted diluted earnings per share(1) was $0.22 for the second quarter, compared to $0.17 in the prior-year period, as strong growth in Adjusted net income(1) was offset by a 14.8% increase in adjusted weighted average ordinary shares outstanding primarily driven by the acquisition of ProQuest.
Balance Sheet and Cash Flow
As of June 30, 2022, cash and cash equivalents of $359.7 million decreased $71.2 million, primarily due to repurchases of ordinary shares, cash dividends on preferred shares and higher capital expenditures, partially offset by the growth in revenues and profits. Restricted cash decreased $143.5 million to $13.2 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 Global Equity Plan in December 2021.
The Company’s total debt outstanding as of June 30, 2022 was $5,551.9 million, a decrease of $15.3 million compared to December 31, 2021.
Net cash provided by operating activities of $164.6 million for the six months ended June 30, 2022, decreased $97.1 million compared to $261.7 million for the prior year period, primarily due to the payments in the first quarter of 2022 related to the CPA Global Equity Plan and the second quarter seasonality of the ProQuest business. Adjusted free cash flow(1) for the six months ended June 30, 2022, was $258.1 million, basically flat, compared to the prior year period, as higher earnings were offset by higher working capital requirements due to the seasonality of the ProQuest business.
Updated Outlook for 2022 (forward-looking statement)
“We updated our 2022 outlook primarily due to significant foreign exchange headwinds as a result of the dramatic strengthening of the U.S. dollar and macro-economic pressure,” said Jonathan Collins, Executive Vice President and Chief Financial Officer. “The integration of ProQuest is ahead of schedule, which will result in additional cost synergies in 2022, helping to partially offset the reduction in this year’s profit.”
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.
|Updated 2022 Outlook||Prior 2022 Outlook|
|Revenues||$2.70B to $2.76B||$2.80B to $2.88B|
|Adjusted EBITDA||$1.12B to $1.16B||$1.16B to $1.22B|
|Adjusted EBITDA margin||41% to 42%||41% to 42%|
|Adjusted Diluted EPS (3)||$0.80 to $0.90||$0.85 to $0.95|
|Adjusted Free Cash Flow||$600M to $650M||$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 second 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 016804. 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 355429. The recording will be available for replay through August 16, 2022. The webcast can be accessed at https://events.q4inc.com/attendee/911488886 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, 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 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 pace 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 Academia & Government, Life Sciences & Healthcare, Professional Services and Consumer Goods, Manufacturing & Technology. 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 Andersson, Head of Global Corporate Communications
Investor Relations Contact:
Mark Donohue, Head of Global Investor Relations