— Provides 2024 Outlook —
LONDON, Feb. 27, 2024 /PRNewswire/ -- 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.
Consolidated Balance
Sheets
|
(In
millions)
|
(unaudited)
|
|
|
As of December
31,
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents, including restricted cash
|
$
370.7
|
|
$
356.8
|
Accounts receivable,
net
|
908.3
|
|
872.1
|
Prepaid
expenses
|
88.5
|
|
89.4
|
Other current
assets
|
68.0
|
|
76.9
|
Assets held for
sale
|
26.7
|
|
—
|
Total current
assets
|
1,462.2
|
|
1,395.2
|
Property and equipment,
net
|
51.6
|
|
54.5
|
Other intangible
assets, net
|
9,006.6
|
|
9,437.7
|
Goodwill
|
2,023.7
|
|
2,876.5
|
Other non-current
assets
|
60.8
|
|
97.9
|
Deferred income
taxes
|
46.7
|
|
24.2
|
Operating lease
right-of-use assets
|
55.2
|
|
58.9
|
Total
assets
|
$
12,706.8
|
|
$
13,944.9
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
144.1
|
|
$
101.4
|
Accrued
compensation
|
126.5
|
|
132.1
|
Accrued expenses and
other current liabilities
|
315.2
|
|
353.1
|
Current portion of
deferred revenues
|
983.1
|
|
947.5
|
Current portion of
operating lease liability
|
24.4
|
|
25.7
|
Liabilities held for
sale
|
6.7
|
|
—
|
Total current
liabilities
|
1,600.0
|
|
1,559.8
|
Long-term
debt
|
4,721.1
|
|
5,005.0
|
Non-current portion of
deferred revenues
|
38.7
|
|
38.5
|
Other non-current
liabilities
|
41.9
|
|
140.1
|
Deferred income
taxes
|
249.6
|
|
316.1
|
Operating lease
liabilities
|
63.2
|
|
72.9
|
Total
liabilities
|
6,714.5
|
|
7,132.4
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred Shares, no
par value; 14.4 shares authorized; 5.25% Mandatory Convertible
Preferred Shares, Series A, 14.4 shares issued and outstanding as
of both December 31, 2023 and December 31, 2022
|
1,392.6
|
|
1,392.6
|
Ordinary Shares, no par
value; unlimited shares authorized; 666.1 and 674.4 shares issued
and outstanding as of December 31, 2023 and December 31, 2022,
respectively
|
11,740.5
|
|
11,744.7
|
Accumulated other
comprehensive loss
|
(495.3)
|
|
(665.9)
|
Accumulated
deficit
|
(6,645.5)
|
|
(5,658.9)
|
Total shareholders'
equity
|
5,992.3
|
|
6,812.5
|
Total liabilities
and shareholders' equity
|
$
12,706.8
|
|
$
13,944.9
|
Consolidated
Statement of Operations
|
(In
millions)
|
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
2023
|
|
2022
|
Revenues,
net
|
$
683.7
|
|
$
675.3
|
Operating
expenses:
|
|
|
|
Cost of
revenues
|
231.6
|
|
237.0
|
Selling, general and
administrative costs
|
180.4
|
|
180.6
|
Depreciation and
amortization
|
180.8
|
|
188.8
|
Goodwill and
intangible asset impairments
|
844.7
|
|
0.5
|
Restructuring and
other impairments
|
14.7
|
|
9.8
|
Other operating
expense (income), net
|
19.7
|
|
(259.9)
|
Total operating
expenses
|
1,471.9
|
|
356.8
|
Income (loss) from
operations
|
(788.2)
|
|
318.5
|
Fair value adjustment
of warrants
|
(1.5)
|
|
(4.1)
|
Interest expense,
net
|
75.2
|
|
77.0
|
Income (loss) before
income taxes
|
(861.9)
|
|
245.6
|
Provision (benefit) for
income taxes
|
(18.0)
|
|
(77.8)
|
Net income
(loss)
|
(843.9)
|
|
323.4
|
Dividends on preferred
shares
|
19.1
|
|
19.1
|
Net income (loss)
attributable to ordinary shares
|
$
(863.0)
|
|
$
304.3
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
(1.30)
|
|
$
0.45
|
Diluted
|
$
(1.30)
|
|
$
0.44
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
665.0
|
|
674.2
|
Diluted
|
665.0
|
|
731.0
|
Consolidated
Statement of Operations
|
(In
millions)
|
(unaudited)
|
|
|
Year Ended December
31,
|
|
2023
|
|
2022
|
Revenues,
net
|
$
2,628.8
|
|
$
2,659.8
|
Operating
expenses:
|
|
|
|
Cost of
revenues
|
906.4
|
|
954.0
|
Selling, general and
administrative costs
|
739.7
|
|
729.9
|
Depreciation and
amortization
|
708.3
|
|
710.5
|
Goodwill and
intangible asset impairments
|
979.9
|
|
4,449.1
|
Restructuring and
other impairments
|
40.0
|
|
66.7
|
Other operating
expense (income), net
|
(10.8)
|
|
(324.8)
|
Total operating
expenses
|
3,363.5
|
|
6,585.4
|
Income (loss) from
operations
|
(734.7)
|
|
(3,925.6)
|
Fair value adjustment
of warrants
|
(15.9)
|
|
(206.8)
|
Interest expense,
net
|
293.7
|
|
270.3
|
Income (loss) before
income tax
|
(1,012.5)
|
|
(3,989.1)
|
Provision (benefit) for
income taxes
|
(101.3)
|
|
(28.9)
|
Net income
(loss)
|
(911.2)
|
|
(3,960.2)
|
Dividends on preferred
shares
|
75.4
|
|
75.4
|
Net income (loss)
attributable to ordinary shares
|
$
(986.6)
|
|
$
(4,035.6)
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
(1.47)
|
|
$
(5.97)
|
Diluted
|
$
(1.47)
|
|
$
(6.24)
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
671.6
|
|
676.1
|
Diluted
|
671.6
|
|
678.6
|
Consolidated
Statements of Cash Flows
|
|
|
Year Ended December
31,
|
(In millions);
(unaudited)
|
2023
|
|
2022
|
Cash Flows From
Operating Activities
|
|
|
|
Net income
(loss)
|
$
(911.2)
|
|
$
(3,960.2)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
708.3
|
|
710.5
|
Share-based
compensation
|
109.0
|
|
93.9
|
Restructuring and
other impairments, including goodwill
|
986.2
|
|
4,478.5
|
Fair value adjustment
of warrants
|
(15.9)
|
|
(206.8)
|
Gain on sale from
divestitures
|
—
|
|
(278.5)
|
Gain on legal
settlement
|
(49.4)
|
|
—
|
Deferred income
taxes
|
(78.4)
|
|
(54.3)
|
Amortization of debt
issuance costs
|
18.2
|
|
16.4
|
Other operating
activities
|
37.8
|
|
(18.3)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(25.5)
|
|
(28.3)
|
Prepaid
expenses
|
1.7
|
|
(17.1)
|
Other
assets
|
35.1
|
|
(45.4)
|
Accounts
payable
|
41.2
|
|
(24.0)
|
Accrued expenses and
other current liabilities
|
(44.4)
|
|
(114.4)
|
Deferred
revenues
|
20.3
|
|
(9.3)
|
Operating leases,
net
|
(8.0)
|
|
(9.6)
|
Other
liabilities
|
(80.8)
|
|
(23.8)
|
Net cash provided by
(used for) operating activities
|
744.2
|
|
509.3
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(242.5)
|
|
(202.9)
|
Payments for
acquisitions and cost method investments, net of cash
acquired
|
(5.4)
|
|
(24.8)
|
Proceeds from
divestitures, net of cash divested
|
10.5
|
|
285.0
|
Net cash provided by
(used for) investing activities
|
(237.4)
|
|
57.3
|
Cash Flows From
Financing Activities
|
|
|
|
Principal payments on
term loan
|
(300.0)
|
|
(321.5)
|
Repayments of
revolving credit facility
|
—
|
|
(175.0)
|
Payment of debt
issuance costs and discounts
|
0.1
|
|
(2.1)
|
Proceeds from issuance
of treasury shares
|
—
|
|
5.7
|
Repurchases of
ordinary shares
|
(100.0)
|
|
(175.0)
|
Cash dividends on
preferred shares
|
(75.5)
|
|
(75.4)
|
Proceeds from stock
options exercised
|
0.5
|
|
0.9
|
Payments related to
finance lease
|
(1.0)
|
|
(1.9)
|
Payments related to
tax withholding for stock-based compensation
|
(20.6)
|
|
(14.9)
|
Net cash provided by
(used for) financing activities
|
(496.5)
|
|
(759.2)
|
Effects of exchange
rates
|
3.6
|
|
(38.2)
|
Net change in cash and
cash equivalents, including restricted cash
|
13.9
|
|
(230.8)
|
Cash and cash
equivalents, including restricted cash, beginning of
period
|
356.8
|
|
587.6
|
Cash and cash
equivalents, including restricted cash, end of
period
|
$
370.7
|
|
$
356.8
|
Supplemental Cash
Flow Information:
|
|
|
|
Cash paid for
interest
|
$
273.5
|
|
$
251.5
|
Cash paid for income
tax
|
$
42.9
|
|
$
63.7
|
|
|
|
|
Supplemental Revenues Information
(Amounts in tables
may not sum due to rounding)
Annualized Contract Value ("ACV") represents the annualized
value for the next 12 months of subscription-based client
license agreements, assuming that all expiring license agreements
during that period are renewed at their current price level. The
following table presents our ACV as of the periods indicated.
|
December
31,
|
|
Change(1)
|
(in millions, except
percentages); (unaudited)
|
2023
|
|
2022
|
|
$
|
|
%
|
Annualized Contract
Value
|
$
1,591.9
|
|
$
1,581.9
|
|
$
10.0
|
|
0.6 %
|
(1) The
change in ACV was primarily from organic ACV growth of 2.6%
attributed to the impact of price increases, offset by changes in
FX rates.
|
|
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
|
Percentage of
Change
|
(in millions, except
percentages); (unaudited)
|
2023
|
|
2022
|
|
$
|
%
|
Acquisitions
|
Disposals
|
FX
Impact
|
Organic
|
Subscription
revenues
|
$
410.8
|
|
$ 399.0
|
|
$
11.8
|
3.0 %
|
— %
|
(1.5) %
|
1.9 %
|
2.6 %
|
Re-occurring
revenues
|
119.1
|
|
112.7
|
|
6.4
|
5.7 %
|
— %
|
— %
|
1.9 %
|
3.8 %
|
Transactional and other
revenues
|
153.8
|
|
163.6
|
|
(9.8)
|
(6.0) %
|
— %
|
0.8 %
|
1.5 %
|
(8.3) %
|
Revenues,
net
|
$
683.7
|
|
$ 675.3
|
|
$
8.4
|
1.2 %
|
— %
|
(0.7) %
|
1.8 %
|
0.1 %
|
|
Year Ended
December 31,
|
|
Change
|
Percentage of
Change
|
(in millions, except
percentages); (unaudited)
|
2023
|
|
2022
|
|
$
|
%
|
Acquisitions
|
Disposals
|
FX
Impact
|
Organic
|
Subscription
revenues
|
$ 1,618.1
|
|
$
1,618.8
|
|
$
(0.7)
|
— %
|
— %
|
(3.7) %
|
1.3 %
|
2.4 %
|
Re-occurring
revenues
|
444.6
|
|
441.9
|
|
2.7
|
0.6 %
|
— %
|
— %
|
0.4 %
|
0.2 %
|
Transactional and other
revenues
|
566.1
|
|
599.1
|
|
(33.0)
|
(5.5) %
|
— %
|
(0.7) %
|
0.6 %
|
(5.4) %
|
Revenues,
net
|
$ 2,628.8
|
|
$
2,659.8
|
|
$
(31.0)
|
(1.2) %
|
— %
|
(2.4) %
|
0.9 %
|
0.3 %
|
|
Three Months
Ended
December 31,
|
|
Change
|
Percentage of
Change
|
(in millions, except
percentages); (unaudited)
|
2023
|
|
2022
|
|
$
|
%
|
Acquisitions
|
Disposals
|
FX
Impact
|
Organic
|
Academia and
Government
|
$
339.4
|
|
$ 328.5
|
|
$
10.9
|
3.3 %
|
— %
|
— %
|
1.9 %
|
1.4 %
|
Intellectual
Property
|
225.6
|
|
221.9
|
|
3.7
|
1.7 %
|
— %
|
(2.2) %
|
2.0 %
|
1.9 %
|
Life Sciences and
Healthcare
|
118.7
|
|
124.9
|
|
(6.2)
|
(5.0) %
|
— %
|
— %
|
1.2 %
|
(6.2) %
|
Revenues,
net
|
$
683.7
|
|
$ 675.3
|
|
$
8.4
|
1.2 %
|
— %
|
(0.7) %
|
1.8 %
|
0.1 %
|
|
Year Ended
December 31,
|
|
Change
|
Percentage of
Change
|
(in millions, except
percentages); (unaudited)
|
2023
|
|
2022
|
|
$
|
%
|
Acquisitions
|
Disposals
|
FX
Impact
|
Organic
|
Academia and
Government
|
$ 1,323.3
|
|
$
1,280.1
|
|
$
43.2
|
3.4 %
|
— %
|
— %
|
1.2 %
|
2.2 %
|
Intellectual
Property
|
862.7
|
|
927.1
|
|
(64.4)
|
(6.9) %
|
— %
|
(6.9) %
|
0.7 %
|
(0.7) %
|
Life Sciences and
Healthcare
|
442.8
|
|
452.6
|
|
(9.8)
|
(2.2) %
|
— %
|
— %
|
1.0 %
|
(3.2) %
|
Revenues,
net
|
$ 2,628.8
|
|
$
2,659.8
|
|
$
(31.0)
|
(1.2) %
|
— %
|
(2.4) %
|
0.9 %
|
0.3 %
|
|
Reconciliations to Certain Non-GAAP Measures
(Amounts
in tables may not sum due to rounding)
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
acquisition and/or disposal-related transaction costs, share-based
compensation, mandatory convertible preferred share ("MCPS")
dividend expense, unrealized foreign currency gains/losses,
restructuring expenses, non-operating income and/or expense, the
impact of certain non-cash fair value adjustments on financial
instruments, legal settlements, impairments, and other items that
are included in Net income (loss) for the period that we do not
consider indicative of our ongoing operating performance. Adjusted
EBITDA margin is calculated by dividing Adjusted EBITDA by
Revenues, net.
The following table presents our calculation of Adjusted EBITDA
and Adjusted EBITDA margin for the three months and the years ended
December 31, 2023 and 2022 and
reconciles these measures to our Net income (loss) for the same
periods:
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
(in millions, except
percentages); (unaudited)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income (loss)
attributable to ordinary shares
|
$
(863.0)
|
|
$
304.3
|
|
$
(986.6)
|
|
$ (4,035.6)
|
Dividends on preferred
shares
|
19.1
|
|
19.1
|
|
75.4
|
|
75.4
|
Net income
(loss)
|
(843.9)
|
|
323.4
|
|
(911.2)
|
|
(3,960.2)
|
Provision (benefit) for
income taxes
|
(18.0)
|
|
(77.8)
|
|
(101.3)
|
|
(28.9)
|
Depreciation and
amortization
|
180.8
|
|
188.8
|
|
708.3
|
|
710.5
|
Interest expense,
net
|
75.2
|
|
77.0
|
|
293.7
|
|
270.3
|
Transaction related
costs(1)
|
3.1
|
|
6.1
|
|
8.2
|
|
14.2
|
Share-based
compensation expense
|
11.8
|
|
22.3
|
|
108.9
|
|
102.2
|
Gain on sale from
divestitures
|
—
|
|
(278.5)
|
|
—
|
|
(278.5)
|
Goodwill and intangible
asset impairments
|
844.7
|
|
0.5
|
|
979.9
|
|
4,449.1
|
Restructuring and other
impairments
|
14.7
|
|
9.8
|
|
40.0
|
|
66.7
|
Fair value adjustment
of warrants
|
(1.5)
|
|
(4.1)
|
|
(15.9)
|
|
(206.8)
|
Other(2)
|
31.3
|
|
36.9
|
|
6.6
|
|
(25.9)
|
Adjusted
EBITDA
|
$
298.2
|
|
$
304.4
|
|
$
1,117.2
|
|
$
1,112.7
|
Adjusted EBITDA
margin
|
43.6 %
|
|
45.1 %
|
|
42.5 %
|
|
41.8 %
|
|
(1) Includes costs incurred to
complete business combination transactions, including acquisitions,
dispositions, and capital market activities, and includes advisory,
legal, and other professional and consulting costs.
|
(2)
Primarily reflects the net impact of foreign exchange gains and
losses related to the remeasurement of balances and other items
that do not reflect our ongoing operating performance. 2023 also
includes a $49.4 gain on legal settlement.
|
|
Adjusted Net Income and Adjusted Diluted EPS
Adjusted net income is calculated using Net income (loss),
adjusted to exclude acquisition and/or disposal-related transaction
costs (such costs include net income from continuing operations
before the provision for income taxes, depreciation and
amortization, and interest income and expense from the divested
business), amortization related to acquired intangible assets,
share-based compensation, MCPS dividend expense, unrealized foreign
currency gains/losses, restructuring expenses, the impact of
certain non-cash fair value adjustments on financial instruments,
legal settlements, impairments, 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 income tax
impact of any adjustments.
Adjusted diluted EPS is calculated by dividing Adjusted net
income by Adjusted diluted weighted average shares for the period.
The Adjusted diluted weighted average shares 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 three months and the years
ended December 31, 2023 and 2022 and
reconcile these measures to our Net income (loss) and EPS for the
same periods:
|
Three Months Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
2023
|
|
2022
|
(in millions, except
per share amounts); (unaudited)
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
Net income (loss)
attributable to ordinary shares, diluted
|
$
(863.0)
|
|
$
(1.30)
|
|
$
323.4
|
|
$
0.44
|
Dividends on dilutive
preferred shares(1)
|
—
|
|
—
|
|
(19.1)
|
|
0.01
|
Net income (loss)
attributable to ordinary shares
|
(863.0)
|
|
(1.30)
|
|
304.3
|
|
0.45
|
Dividends on preferred
shares
|
19.1
|
|
0.03
|
|
19.1
|
|
(0.01)
|
Net income (loss) and
EPS
|
(843.9)
|
|
(1.27)
|
|
323.4
|
|
0.44
|
Transaction related
costs(2)
|
3.1
|
|
—
|
|
6.1
|
|
0.01
|
Share-based
compensation expense
|
11.8
|
|
0.02
|
|
22.3
|
|
0.03
|
Amortization related to
acquired intangible assets
|
134.5
|
|
0.20
|
|
142.5
|
|
0.19
|
Goodwill and intangible
asset impairments
|
844.7
|
|
1.27
|
|
0.5
|
|
—
|
Restructuring and other
impairments
|
14.7
|
|
0.02
|
|
9.8
|
|
0.01
|
Fair value adjustment
of warrants
|
(1.5)
|
|
—
|
|
(4.1)
|
|
(0.01)
|
Other(3)
|
31.3
|
|
0.04
|
|
(241.6)
|
|
(0.32)
|
Income tax impact of
related adjustments
|
(31.3)
|
|
(0.05)
|
|
(94.9)
|
|
(0.13)
|
Adjusted net income
and Adjusted diluted EPS
|
$
163.4
|
|
$
0.23
|
|
$
164.0
|
|
$
0.22
|
Adjusted
weighted-average ordinary shares (Diluted)
|
724.4
|
|
731.2
|
|
(1) Reflects
the dilutive impact of mandatory convertible preferred shares under
the "if-converted" method during the period.
|
(2-3) Refer
to associated line item descriptions provided for the Adjusted
EBITDA reconciliation table above. In 2022, the Other line item
also includes the gain on sale from our divestiture of the
MarkMonitor business.
|
|
Year Ended December
31,
|
|
Year Ended December
31,
|
|
2023
|
|
2022
|
(in millions, except
per share amounts); (unaudited)
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
Net income (loss)
attributable to ordinary shares, diluted
|
$
(986.6)
|
|
$
(1.47)
|
|
$
(4,233.2)
|
|
$
(6.24)
|
Change in fair value of
private placement warrants
|
—
|
|
—
|
|
197.6
|
|
0.29
|
Net income (loss)
attributable to ordinary shares
|
(986.6)
|
|
(1.47)
|
|
(4,035.6)
|
|
(5.95)
|
Dividends on preferred
shares
|
75.4
|
|
0.11
|
|
75.4
|
|
0.11
|
Net income (loss) and
EPS
|
(911.2)
|
|
(1.36)
|
|
(3,960.2)
|
|
(5.84)
|
Transaction related
costs(1)
|
8.2
|
|
0.01
|
|
14.2
|
|
0.02
|
Share-based
compensation expense
|
108.9
|
|
0.16
|
|
102.2
|
|
0.15
|
Amortization related to
acquired intangible assets
|
564.3
|
|
0.84
|
|
579.6
|
|
0.85
|
Goodwill and intangible
asset impairments
|
979.9
|
|
1.46
|
|
4,449.1
|
|
6.56
|
Restructuring and other
impairments
|
40.0
|
|
0.06
|
|
66.7
|
|
0.10
|
Fair value adjustment
of warrants
|
(15.9)
|
|
(0.02)
|
|
(206.8)
|
|
(0.30)
|
Other(2)
|
6.6
|
|
(0.06)
|
|
(304.4)
|
|
(0.52)
|
Income tax impact of
related adjustments
|
(181.7)
|
|
(0.27)
|
|
(112.4)
|
|
(0.17)
|
Adjusted net income
and Adjusted diluted EPS
|
$
599.1
|
|
$
0.82
|
|
$
628.0
|
|
$
0.85
|
Adjusted
weighted-average ordinary shares (Diluted)
|
731.3
|
|
737.1
|
|
(1-2) Refer
to associated line item descriptions provided for the Adjusted
EBITDA reconciliation table above. In 2022, the Other line item
also includes the gain on sale from our divestiture of the
MarkMonitor business.
|
|
Free Cash Flow
Free cash flow is calculated using Net cash provided by
operating activities less Capital expenditures. The following table
reconciles our non-GAAP free cash flow measure to Net cash provided
by operating activities:
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
(in millions);
(unaudited)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
190.9
|
|
$
136.9
|
|
$
744.2
|
|
$
509.3
|
Capital
expenditures
|
(63.9)
|
|
(46.4)
|
|
(242.5)
|
|
(202.9)
|
Free Cash
Flow
|
127.0
|
|
90.5
|
|
501.7
|
|
306.4
|
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is
identical to Consolidated EBITDA and EBITDA as such terms are
defined under our credit facilities, dated as of October 31, 2019, and the indentures governing
our secured notes due 2026 issued by Camelot Finance S.A. and
guaranteed by certain of our subsidiaries, and the indentures
governing the secured and unsecured notes issued by Clarivate
Science Holdings Corporation in August
2021, respectively. In addition, the credit facilities and
the indentures contain certain restrictive covenants that govern
debt incurrence and the making of restricted payments, among other
matters. These restrictive covenants utilize Standalone Adjusted
EBITDA as a primary component of the compliance metric governing
our ability to undertake certain actions otherwise proscribed by
such covenants.
Because Standalone Adjusted EBITDA is required pursuant to the
terms of the reporting covenants under the credit facilities and
the indentures and because this metric is relevant to lenders and
noteholders, management considers Standalone Adjusted EBITDA to be
relevant to the operation of its business.
Standalone Adjusted EBITDA is calculated under the credit
facilities and the indentures by using our Consolidated Net income
(loss) for the trailing 12-month period (defined in the credit
facilities and the indentures as our U.S. GAAP net income adjusted
for certain items specified in the credit facilities and the
indentures) adjusted for items including: taxes, interest expense,
depreciation and amortization, non-cash charges, including
impairments, expenses related to capital markets transactions,
acquisitions and dispositions, restructuring and business
optimization charges and expenses, consulting and advisory fees,
run-rate cost savings to be realized as a result of actions taken
or to be taken in connection with an acquisition, disposition,
restructuring or cost savings or similar initiatives, "run rate"
expected cost savings, operating expense reductions, restructuring
charges and expenses and synergies related to the transition
projected by us, costs related to any management or equity stock
plan, other adjustments that were presented in the offering
memorandum used in connection with the issuance of the secured
notes due in 2026, and earnout obligations incurred in connection
with an acquisition or investment.
The following table bridges Net income (loss) to Adjusted EBITDA
to Standalone Adjusted EBITDA, as Adjusted EBITDA reflects a
substantial portion of the adjustments that comprise Standalone
Adjusted EBITDA for the period presented:
(in millions);
(unaudited)
|
Year Ended
December
31, 2023
|
Net income (loss)
attributable to ordinary shares
|
$
(986.6)
|
Dividends on preferred
shares
|
75.4
|
Net income
(loss)
|
(911.2)
|
Provision (benefit) for
income taxes
|
(101.3)
|
Depreciation and
amortization
|
708.3
|
Interest expense,
net
|
293.7
|
Transaction related
costs(1)
|
8.2
|
Share-based
compensation expense
|
108.9
|
Restructuring and other
impairments
|
40.0
|
Goodwill and intangible
asset impairments
|
979.9
|
Fair value adjustment
of warrants
|
(15.9)
|
Other(2)
|
6.6
|
Adjusted
EBITDA
|
$
1,117.2
|
Realized foreign
exchange loss (gain)
|
(9.1)
|
Standalone Adjusted
EBITDA
|
$
1,108.1
|
|
(1-2) Refer
to associated line item descriptions provided for the Adjusted
EBITDA table for the year ended December 31, 2023 above.
|
|
The following table presents our calculation of Adjusted EBITDA
and Adjusted EBITDA margin for the 2024 outlook and reconciles
these measures to our Net income (loss) for the same period:
|
Year Ending December
31, 2024
(Forecasted)
|
(in
millions)
|
Low
|
|
High
|
Net income (loss)
attributable to ordinary shares
|
$
(160)
|
|
$
(100)
|
Dividends on preferred
shares(1)
|
35
|
|
35
|
Net income
(loss)
|
(125)
|
|
(65)
|
Provision (benefit) for
income taxes
|
60
|
|
60
|
Depreciation and
amortization
|
720
|
|
720
|
Interest expense,
net
|
275
|
|
275
|
Restructuring and other
impairments(2)
|
20
|
|
20
|
Transaction related
costs
|
20
|
|
20
|
Share-based
compensation expense
|
85
|
|
85
|
Adjusted
EBITDA
|
$
1,055
|
|
$
1,115
|
Adjusted EBITDA
margin
|
41 %
|
|
42 %
|
|
(1)
Dividends on our MCPS are payable quarterly at an annual rate of
5.25% of the liquidation preference of $100 per share. For the
purposes of calculating net loss attributable to Clarivate, we have
excluded the accrued and anticipated MCPS dividends.
|
(2) Reflects
restructuring costs expected to be incurred in 2024 associated with
the Segment Optimization restructuring program.
|
|
The following table presents our calculation of Adjusted Diluted
EPS for the 2024 outlook and reconciles this measure to our Net
income (loss) per share for the same period:
|
Year Ending December
31, 2024
(Forecasted)
|
|
Low
|
|
High
|
|
Per
Share
|
|
Per
Share
|
Net income (loss)
attributable to ordinary shares
|
$
(0.24)
|
|
$
(0.14)
|
Dividends on preferred
shares(1)
|
0.05
|
|
0.05
|
Net income
(loss)
|
(0.19)
|
|
(0.09)
|
Restructuring and other
impairments(2)
|
0.03
|
|
0.03
|
Transaction related
costs
|
0.03
|
|
0.03
|
Share-based
compensation expense
|
0.12
|
|
0.12
|
Amortization related to
acquired intangible assets
|
0.75
|
|
0.75
|
Income tax impact of
related adjustments
|
(0.04)
|
|
(0.04)
|
Adjusted Diluted
EPS
|
$
0.70
|
|
$
0.80
|
Adjusted
weighted-average ordinary shares
(Diluted)(3)
|
733 million
|
|
(1-2) Refer
to associated line item descriptions provided for the Adjusted
EBITDA outlook reconciliation table above.
|
(3) For the
purposes of calculating adjusted diluted EPS, the Company has
excluded the accrued and anticipated MCPS dividends and assumed the
"if-converted" method of share dilution.
|
|
The following table presents our calculation of Free Cash Flow
for the 2024 outlook and reconciles this measure to our Net cash
provided by operating activities for the same period:
|
Year Ending December
31, 2024
(Forecasted)
|
(in
millions)
|
Low
|
|
High
|
Net cash provided by
(used for) operating activities
|
$
685
|
|
$
765
|
Capital
expenditures
|
(265)
|
|
(265)
|
Free Cash
Flow
|
$
420
|
|
$
500
|
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