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Press Release: Clarivate [February 28, 2024]

Clarivate Reports Fourth Quarter and Full Year 2023 Results

London, UK -- February 27, 2024. Clarivate Plc (NYSE: CLVT) (the "Company" or "Clarivate"), a leading global provider of transformative intelligence, today reported results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter 2023 Financial Highlights

  • Revenues of $683.7 million increased 1.2%, and decreased 0.6% at constant currency(2)
  • Organic revenues increased 0.1% as increases in subscription revenues of 2.6% and re-occurring revenues of 3.8% were offset by a decline in transactional and other revenues of 8.3%
  • Net loss attributable to ordinary shares of $863.0 million due to the $844.7 non-cash impairment of goodwill and intangible assets; Net loss per diluted share of $1.30
  • Adjusted net income(1) of $163.4 million decreased 0.4%; Adjusted diluted EPS(1) of $0.23 increased 4.5% or $0.01
  • Adjusted EBITDA(1) of $298.2 million decreased 2.0%; Adjusted EBITDA Margin(1) of 43.6% decreased 150 basis points
  • Net cash provided by operating activities increased $54.0 million to $190.9 million; Free cash flow(1) increased $36.5 million to $127.0 million

Full Year 2023 Financial Highlights

  • Revenues of $2,628.8 million decreased 1.2%, and 2.1% at constant currency(2), driven primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable amounts in the current year period
  • Organic revenues increased 0.3% as increases in subscription revenues of 2.4% and re-occurring revenues of 0.2% were offset by a decline in transactional and other revenues of 5.4%
  • Net loss attributable to ordinary shares of $986.6 million improved from a loss of $4,035.6 million for the full year 2022 due to a $3,469.2 million reduction of non-cash impairment charges of goodwill and intangible assets; Net loss per diluted share of $1.47 improved by $4.77
  • Adjusted net income(1) of $599.1 million decreased 4.6%; Adjusted diluted EPS(1) of $0.82 decreased 3.5% or $0.03
  • Adjusted EBITDA(1) of $1,117.2 million increased 0.4% and Adjusted EBITDA Margin(1) of 42.5% increased 70 basis points
  • Net cash provided by operating activities increased $234.9 million to $744.2 million; Free cash flow(1) increased $195.3 million to $501.7 million

"In 2023, we delivered subscription revenue growth and navigated through market headwinds. We achieved cost synergy targets and generated significant cash flow, which allowed us to increase the pay down of debt and repurchase ordinary shares," said Jonathan Gear, Chief Executive Officer. "With organic revenue growth below our expectations, we launched a multi-year transformation plan to return to market growth rates. The plan outlines how we will continue to make strategic investments to accelerate new product development and strengthen our focus by divesting non-core assets. I am confident we are making the right investments that, when combined with our extensive content, solutions and artificial intelligence capabilities, will drive organic growth and create shareholder value."

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 periods.

Three Months Ended
December 31
Change Year Ended
December 31
Change
(in millions, except percentages and per share data), (unaudited) 2023 2022 $ % 2023 2022 $ %
Revenues, net $683.7 $675.3 $8.4 1.2% $2,628.8 $2,659.8 $(31.0) (1.2)%
Net income (loss) attributable to ordinary shares $(863.0) $304.3 $(1,167.3) N/M $(986.6) $(4,035.6) $3,049.0 N/M
Net income (loss) per share, diluted $(1.30) $0.44 $(1.74) N/M $(1.47) $(6.24) $4.77 N/M
Weighted-average ordinary shares (diluted) 665.0 731.0 (66.0) (9.0)% 671.6 678.6 (7.0) (1.0)%
Adjusted EBITDA(1) $298.2 $304.4 $(6.2) (2.0)% $1,117.2 $1,112.7 $4.5 0.4%
Adjusted net income(1) $163.4 $164.0 $(0.6) (0.4)% $599.1 $628.0 $(28.9) (4.6)%
Adjusted diluted EPS(1)(3) $0.23 $0.22 $0.01 4.5% $0.82 $0.85 $(0.03) (3.5)%
Adjusted weighted-average ordinary shares (diluted)(1) 724.4 731.2 (6.8) (0.9)% 731.3 737.1 (5.8) (0.8)%
Net cash provided by operating activities $190.9 $136.9 $54.0 39.4% $744.2 $509.3 $234.9 46.1%
Free cash flow(1) $127.0 $90.5 $36.5 40.3% $501.7 $306.4 $195.3 63.7%

Fourth Quarter 2023 Commentary

Revenues for the fourth quarter increased $8.4 million, or 1.2%, to $683.7 million, and decreased 0.6% on a constant currency basis(2). Organic revenues increased $1.0 million or 0.1%.

Subscription revenues for the fourth quarter increased $11.8 million, or 3.0%, to $410.8 million, and increased 1.1% on a constant currency basis(2). Organic subscription revenues increased 2.6%, driven by growth across all three product segments: Academia & Government (A&G), Intellectual Property (IP) and Life Sciences & Healthcare (LS&H).

Re-occurring revenues for the fourth quarter increased $6.4 million, or 5.7% to $119.1 million, and increased 3.8% on a constant currency basis(2). Organic re-occurring revenues increased 3.8%, primarily due to increases in patent renewal volumes and improvements in yield per case.

Transactional and other revenues for the fourth quarter decreased $9.8 million, or 6.0%, to $153.8 million, and decreased 7.5% on a constant currency basis(2). Organic transactional and other revenues decreased 8.3%, due to lower sales within the A&G books business and LS&H real world data.

Full Year 2023 Commentary

Revenues for the full year 2023 decreased $31.0 million, or 1.2%, to $2,628.8 million, and decreased 2.1% on a constant currency basis(2), primarily due to the divestiture of the MarkMonitor business. Organic revenues increased $6.7 million or 0.3%.

Subscription revenues for the full year 2023 decreased $0.7 million to $1,618.1 million, and decreased 1.3% on a constant currency basis(2), primarily due to the divestiture of the MarkMonitor business partially offset by organic growth driven by price increases, reflecting a trend consistent with the increase in our ACV (annual contract value) between periods, and a foreign exchange benefit . Organic subscription revenues increased 2.4%, primarily due to price increases.

Re-occurring revenues for the full year 2023 increased $2.7 million, or 0.6% to $444.6 million, and increased 0.2% on a constant currency basis(2). Organic re-occurring revenues increased 0.2%.

Transactional and other revenues for the full year 2023 decreased $33.0 million, or 5.5%, to $566.1 million, and decreased 6.1% on a constant currency basis(2). Organic transactional and other revenues decreased 5.4%, primarily due to lower LS&H real world data sales and IP trademarks transactional volumes and patent search & analytics revenue.

Balance Sheet and Cash Flow

As of December 31, 2023, cash and cash equivalents of $370.7 million increased $13.9 million compared to December 31, 2022, driven by an improvement in operating cash flow.

The Company's total debt outstanding as of December 31, 2023 was $4,770.3 million, a decrease of $301.0 million compared to December 31, 2022, as strong free cash flow was principally used for accelerated debt repayment.

Net cash provided by operating activities of $744.2 million for the year ended December 31, 2023 increased $234.9 million compared to $509.3 million for the prior year, primarily due to materially lower one-time costs as acquisition integration is complete, as well as improvements in working capital. Free cash flow(1) for the year ended December 31, 2023, was $501.7 million, an increase of $195.3 million compared to the prior year period.

Outlook for 2024 (forward-looking statement)

"We currently expect improved organic growth in 2024 across subscription and re-occurring revenue, which will be partially offset by soft transactional revenue and a previously disclosed small divestiture in the IP segment," said Jonathan Collins, Executive Vice President and Chief Financial Officer. "With topline growth more than offset by growth investments, net of cost inflation and savings initiatives, we anticipate a modest contraction of our profit margin. Additionally, we are increasing capital spending to approximately 10% of revenues to drive product innovation and intend to utilize our strong cash flow to continue to reduce our debt."

The full year outlook presented below assumes no further acquisitions, divestitures, or unanticipated events.

2024 Outlook
Revenues $2.57B to $2.67B
Organic Revenue Growth 0% to 2%
Adjusted EBITDA(1) $1.055B to $1.115B
Adjusted EBITDA Margin(1) 41% to 42%
Adjusted Diluted EPS(1)(3) $0.70 to $0.80
Free Cash Flow(1) $420M to $500M

Notes to press release

(1) Non-GAAP measure. Please see "Reconciliations 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.

(2) 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.

(3) Adjusted Diluted EPS for 2024 is calculated based on approximately 733 million fully diluted weighted average ordinary shares outstanding.

N/M - Represents a change approximately equal or in excess of 100% or not meaningful.

Conference Call and Webcast

Clarivate will host a conference call and webcast today to review the results for the fourth quarter and full year 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 624867. The webcast can be accessed at https://events.q4inc.com/attendee/970830128 and will be available for replay.

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, Free Cash Flow, and Standalone Adjusted EBITDA 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 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; our belief that we have sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, inflation, foreign currency fluctuations, 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. 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. 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 adversely affect 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, 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.

About Clarivate

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.


Summary: Clarivate reported results for the fourth quarter and full year ended December 31, 2023.
Publication Year:2024
Type of Material:Press Release
LanguageEnglish
Date Issued:February 28, 2024
Publisher:Clarivate
Company:
Company: Clarivate
Permalink: https://librarytechnology.org/pr/29823/clarivate-reports-fourth-quarter-and-full-year-2023-results

DocumentID: 29823 views: 1008 Created: 2024-02-28 07:10:54 Last Modified: 2024-04-13 01:57:27.