CLARIVATE PLC

Previous wording

Our ACV was $1,591.8 and $1,567.2 as of June 30, 2024 and 2023, respectively, which corresponds to an increase of 1.6%. The increase in ACV was primarily due to the impact of price increases.

Current wording

Our ACV was $1,596.4 and $1,579.2 as of September 30, 2024 and 2023, respectively, which corresponds to an increase of 1.1%. The increase in ACV was primarily due to the impact of price increases, partially offset by volume declines.

Previous wording

The impact of upgrades, new subscriptions, and product price increases is reflected in ACV, but not in annual renewal rates. Our annual renewal rate was 92% and 92% for the six months ended June 30, 2024 and 2023.

Current wording

The impact of upgrades, new subscriptions, and product price increases is reflected in ACV, but not in annual renewal rates. Our annual renewal rate was 92% and 92% for the nine months ended September 30, 2024 and 2023.

Previous wording

Adjusted EBITDA is presented because it is a basis upon which our management assesses our performance, and we believe it is useful for investors to understand the underlying trends of our operations. 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, 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.

Current wording

Adjusted EBITDA is presented because it is a basis upon which our management assesses our performance, and we believe it is useful for investors to understand the underlying trends of our operations. 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, restructuring expenses, impairments, the impact of certain non-cash fair value adjustments on financial instruments, unrealized foreign currency gains/losses, legal settlements, 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.

Previous wording

Subscription revenues were flat, but subscription organic revenue growth increased primarily due to price increases. Re-occurring revenues decreased, with the re-occurring organic revenue growth decline primarily due to lower IP patent renewal volumes. Transactional and other revenues decreased primarily due to the IP product group divestiture and due to lower A&G, IP, and LS&H sales.

Current wording

Subscription revenues increased primarily due to organic growth driven by price increases, partially offset by lower net volume in IP and LS&H. Re-occurring revenues were flat, but re-occurring organic revenue declined primarily due to lower IP patent renewal volume. Transactional and other revenues decreased primarily due to lower A&G, IP, and LS&H sales, as well as the IP product group divestiture.

Previous wording

Subscription revenues increased primarily due to organic growth driven by price increases. Re-occurring revenues decreased primarily due to lower IP patent renewal volumes. Transactional and other revenues decreased primarily due to lower A&G, IP, and LS&H sales and due to the IP product group divestiture.

Current wording

Subscription revenues increased primarily due to organic growth driven by price increases, partially offset by lower net volume in IP and LS&H. Re-occurring revenues decreased primarily due to lower IP patent renewal volume. Transactional and other revenues decreased primarily due to lower A&G, IP, and LS&H sales, as well as the IP product group divestiture.

Previous wording

A&G segment revenues increased from organic growth, primarily due to subscription growth driven by price increases, partially offset by a decline in transactional volumes. IP segment revenues decreased primarily due to the transactional product group divestiture and lower subscription revenue and transactional sales. LS&H segment revenues decreased primarily due to lower transactional sales.

Current wording

A&G segment revenues decreased due to a decline in transactional volume, partially offset by subscription growth driven by price increases. IP segment revenues decreased primarily due to the product group divestiture and lower transactional and subscription revenues. LS&H segment revenues decreased primarily due to lower transactional and subscription revenues.

Previous wording

A&G segment revenues increased from organic growth, primarily due to subscription growth driven by price increases, partially offset by a decline in transactional volumes. IP segment revenues decreased primarily due to lower patent renewal volumes and the transactional product group divestiture. LS&H segment revenues decreased primarily due to lower transactional sales.

Current wording

A&G segment revenues were flat, as subscription growth driven by price increases was offset by a decline in transactional volume. IP segment revenues decreased primarily due to lower transactional and subscription revenues, lower IP patent renewal volume, and the product group divestiture. LS&H segment revenues decreased primarily due to lower transactional and subscription revenues.

Previous wording

Americas revenues decreased primarily due to lower A&G transactional volumes and declines in LS&H transactional sales. EMEA (Europe/Middle East/Africa) revenues decreased primarily due to the IP product group divestiture and lower IP re-occurring patent renewal volumes. APAC (Asia Pacific) revenues decreased, but APAC organic revenue growth increased primarily due to A&G subscription growth, partially offset by lower LS&H transactional sales.

Current wording

Americas revenues decreased primarily due to lower contributions from A&G and LS&H. EMEA (Europe/Middle East/Africa) revenues decreased primarily due to the IP product group divestiture and lower IP contribution. APAC (Asia Pacific) revenues decreased primarily due to the IP product group divestiture, partially offset by A&G growth.

Previous wording

Americas revenues decreased primarily due to lower IP re-occurring patent renewal and A&G transactional volumes and declines in LS&H transactional sales. EMEA revenues decreased primarily due to the IP product group divestiture and lower IP re-occurring patent renewal volumes. APAC revenues decreased, but APAC organic revenue growth increased primarily due to A&G subscription growth, partially offset by lower A&G and LS&H transactional sales.

Current wording

Americas revenues decreased primarily due to lower contributions from A&G and LS&H. EMEA revenues decreased primarily due to the IP product group divestiture and lower IP contribution. APAC revenues decreased due to a stronger dollar against APAC currencies and the IP product group divestiture, partially offset by A&G growth.

Previous wording

Cost of revenues consists of costs related to the production, servicing, and maintenance of our products and are composed primarily of related personnel costs, data center services and licensing costs, and costs to acquire or produce content, including royalty fees.

Current wording

Cost of revenues consists of costs related to the production, servicing, and maintenance of our products and are composed primarily of personnel costs, data center services and licensing costs, and costs to acquire or produce content, including royalty fees.

Previous wording

The decrease of 4.7% compared to the three months ended June 30, 2023 was primarily driven by a reduction in product-related royalty fees and content costs, while the decrease of 5.0% compared to the six months ended June 30, 2023 was primarily driven by a reduction in share-based compensation expense and reduced product-related royalty fees and content costs. As a percentage of revenues, cost of revenues decreased by 0.7% and 1.1%, respectively, compared to the three and six months ended June 30, 2023, primarily as a result of lower share-based compensation expense.

Current wording

The decrease of 4.8% and 4.9% compared to the three and nine months ended September 30, 2023, respectively, was primarily driven by a reduction in share-based compensation expense and reduced product-related royalty fees and content costs. As a percentage of revenues, cost of revenues decreased by 0.3% and 0.8%, compared to the three and nine months ended September 30, 2023, respectively, primarily as a result of lower share-based compensation expense.

Previous wording

Selling, general and administrative (“SG&A”) costs include nearly all business costs not directly attributable to the production, servicing, and maintenance of our products and are composed primarily of related personnel costs, third-party professional services fees, facility costs like rent and utilities, technology costs associated with our corporate infrastructure, and transaction expenses associated with acquisitions, divestitures, and capital market activities including advisory, legal, and other professional and consulting costs.

Current wording

Selling, general and administrative (“SG&A”) costs include nearly all business costs not directly attributable to the production, servicing, and maintenance of our products and are composed primarily of personnel costs, third-party professional services fees, facility costs like rent and utilities, technology costs associated with our corporate infrastructure, and transaction expenses associated with acquisitions, divestitures, and capital market activities including advisory, legal, and other professional and consulting costs.

Previous wording

The decrease of 4.0% and 2.7% compared to the three and six months ended June 30, 2023, respectively, was primarily driven by a reduction in share-based compensation expense. As a percentage of revenues, SG&A costs were largely unchanged compared to the respective comparative prior year periods.

Current wording

The decrease of 1.3% and 2.2% compared to the three and nine months ended September 30, 2023, respectively, was primarily driven by a reduction in share-based compensation expense. As a percentage of revenues, SG&A costs were largely unchanged compared to the respective comparative prior year periods.

Previous wording

Depreciation expense relates to our fixed assets, including mainly computer hardware and leasehold improvements, furniture and fixtures. Amortization expense relates to our definite-lived intangible assets, including mainly technology and content, customer relationships, internally developed computer software, and trade names.

Current wording

Depreciation expense relates to our fixed assets, including computer hardware, leasehold improvements, and furniture and fixtures. Amortization expense relates to our definite-lived intangible assets, including customer relationships, technology and content, internally developed computer software, and trade names.

Previous wording

The increase of 3.5% and 3.7% compared to the three and six months ended June 30, 2023, respectively, was primarily driven by increased investment in internally developed software and content assets.

Current wording

The increase of 0.2% and 2.6% compared to the three and nine months ended September 30, 2023, respectively, was primarily driven by increased investment in internally developed software and content assets.

Previous wording

In the second quarter of 2024, primarily due to sustained declines in our share price, we performed an interim quantitative goodwill impairment assessment by comparing the estimated fair value to the carrying value for both of our segment reporting units carrying a goodwill balance. The carrying value of the LS&H segment reporting unit exceeded its fair value, resulting in a goodwill impairment charge of $302.8. For additional information, see Note 4 - Other Intangible Assets, Net and Goodwill included in Part I, Item 1 of this quarterly report.

Current wording

In the second quarter of 2024, primarily due to sustained declines in our share price, we performed an interim quantitative goodwill impairment assessment by comparing the estimated fair value to the carrying value for both of our segment reporting units carrying a goodwill balance. The carrying value of the LS&H segment reporting unit exceeded its fair value, resulting in a goodwill impairment charge of $302.8.

Previous wording

The three and six months ended June 30, 2024 charges were primarily associated with the Segment Optimization Program, which began in the second quarter of 2023 and is expected to continue through the end of 2024. The three and six months ended June 30, 2023 charges were primarily associated with the ProQuest Acquisition Integration Program, which was substantively completed in 2023. For further information regarding each of our restructuring initiatives and impairment impacts, see Note 9 - Restructuring and Other Impairments included in Part I, Item 1 of this quarterly report.

Current wording

The three and nine months ended September 30, 2024 charges were primarily associated with the Segment Optimization Program, which began in the second quarter of 2023 and is expected to continue through the end of 2024. The three and nine months ended September 30, 2023 charges were primarily associated with the ProQuest Acquisition Integration Program, which was substantively completed in 2023. For further information regarding each of our restructuring initiatives and impairment impacts, see Note 9 - Restructuring and Other Impairments included in Part I, Item 1 of this quarterly report.

Previous wording

The change of $10.9 compared to the three months ended June 30, 2023 was driven by the net impact of foreign exchange gains and losses related to the remeasurement of balances, with the largest impacts derived from transactions denominated in GBP.

Current wording

The change of $38.7 compared to the three months ended September 30, 2023 was driven by the net impact of realized and unrealized gains and losses on foreign currency transactions, with the largest impacts derived from transactions denominated in GBP.

Previous wording

The change of $38.7 compared to the six months ended June 30, 2023 was driven by a $(49.4) gain on legal settlement in the comparative prior year period; the net impact of foreign exchange gains and losses related to the remeasurement of balances, with the largest impacts derived from transactions denominated in GBP; and a $14.8 loss on divestiture in the current year period. For further information, see Note 10 - Other Operating Expense (Income), Net included in Part I, Item 1 of this quarterly report.

Current wording

The change of $77.4 compared to the nine months ended September 30, 2023 was driven by a $(49.4) gain on legal settlement in the comparative prior year period; the net impact of realized and unrealized gains and losses on foreign currency transactions, with the largest impacts derived from transactions denominated in GBP; and a $14.8 loss on divestiture in the current year period. For further information, see Note 10 - Other Operating Expense (Income), Net included in Part I, Item 1 of this quarterly report.

Previous wording

The decrease of (2.6)% and (3.6)% compared to the three and six months ended June 30, 2023, respectively, was driven by lower outstanding borrowings on our new term loan facility.

Current wording

Interest expense was largely unchanged compared to the three months ended September 30, 2023. The decrease of (2.3)% compared to the nine months ended September 30, 2023 was driven by lower outstanding borrowings on our new term loan facility.

Previous wording

The income tax provision of $8.2 for the six months ended June 30, 2024 was primarily due to the mix of jurisdictions in which pre-tax profits and losses were recognized, partially offset by a $14.2 tax benefit related to the goodwill impairment. The income tax benefit of $98.9 for the six months ended June 30, 2023 was primarily due to the mix of taxing jurisdictions in which pre-tax profits and losses were recognized, a $70.4 tax benefit recorded on the settlement of an open tax dispute, a $33.0 tax benefit associated with the impairment of intangible assets, and a $17.1 tax benefit relating to the partial release of valuation allowance.

Current wording

The income tax provision of $23.3 for the nine months ended September 30, 2024 was primarily due to the mix of jurisdictions in which pre-tax profits and losses were recognized, partially offset by a $14.2 tax benefit related to the goodwill impairment. The income tax benefit of $83.3 for the nine months ended September 30, 2023 was driven by a $70.4 tax benefit recorded on the settlement of an open tax dispute, a $33.0 tax benefit associated with the impairment of intangible assets, and a $17.1 tax benefit relating to the partial release of valuation allowance, partially offset by the mix of taxing jurisdictions in which pre-tax profits and losses were recognized.

Previous wording

Dividends on our MCPS were calculated and accrued at an annual rate of 5.25% of the liquidation preference of $100.00 per share. In June 2024, all outstanding MCPS automatically converted into 55.3 million ordinary shares at a conversion rate of 3.8462 ordinary shares per MCPS share. All accumulated preferred dividends were paid prior to the conversion, and as a result of the conversion, no further dividends will be accrued or paid.

Current wording

Dividends on our MCPS were calculated and accrued at an annual rate of 5.25% of the liquidation preference of $100.00 per share. In June 2024, all outstanding MCPS automatically converted into 55.3 million ordinary shares at a conversion rate of

Previous wording

The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the three and six months ended June 30, 2024 and 2023, and reconciles these non-GAAP measures to our Net income (loss) and Net income (loss) margin for the same periods:

Current wording

The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the three and nine months ended September 30, 2024 and 2023, and reconciles these non-GAAP measures to our Net income (loss) and Net income (loss) margin for the same periods:

Previous wording

We finance our operations primarily through cash generated by operating activities and through borrowing activities. As of June 30, 2024, we had $376.4 of cash and cash equivalents (including restricted cash of $9.6) and $692.4 of available borrowing capacity under our revolving credit facility.

Current wording

We finance our operations primarily through cash generated by operating activities and through borrowing activities. As of September 30, 2024, we had $388.5 of cash and cash equivalents (including restricted cash of $7.7) and $691.9 of available borrowing capacity under our revolving credit facility.

Previous wording

The decrease in net cash provided by operating activities was primarily driven by lower income from operations.

Current wording

The decrease in net cash provided by operating activities was driven by lower operating results, partially offset by timing of working capital changes.

Previous wording

The increase in net cash used for investing activities was due to increased capital spending to fuel product innovation, as well as increased acquisition and divestiture activity.

Current wording

The increase in net cash used for investing activities was due to increased acquisition and divestiture activity, as well as increased capital spending.

Previous wording

The decrease in net cash used for financing activities was primarily due to lower payments on our term loans, partially offset by payments for fees associated with the refinancing of our existing credit facilities in January 2024. See Borrowings below for further information.

Current wording

The decrease in net cash used for financing activities was due to lower payments on our term loans and MCPS dividends, partially offset by payments for fees associated with the refinancing of our existing credit facilities in January 2024. During both periods presented, we used $100.0 of cash on hand to repurchase our ordinary shares.

Previous wording

The decrease in Free cash flow was driven by the decrease in operating income and increased capital expenditures. Our capital expenditures in both periods presented consisted primarily of capitalized labor, contract services, and other costs associated with product and content development.

Current wording

The decrease in Free cash flow was driven by lower operating results and increased capital expenditures, partially offset by timing of working capital changes. Our capital expenditures in both periods presented consisted primarily of capitalized labor, contract services, and other costs associated with product and content development.

Previous wording

As of June 30, 2024, we had $4,687.2 of outstanding borrowings under our notes and credit facilities. We incurred $141.3 and $146.6 of interest expense associated with our debt obligations during the six months ended June 30, 2024 and 2023, respectively. Our contingent liabilities consist primarily of letters of credit and performance bonds and other similar obligations in the ordinary course of business.

Current wording

As of September 30, 2024, we had $4,681.9 of outstanding borrowings under our notes and credit facilities. We incurred $213.5 and $218.5 of interest expense associated with our debt obligations during the nine months ended September 30, 2024 and 2023, respectively. Our contingent liabilities consist primarily of letters of credit and performance bonds and other similar obligations in the ordinary course of business.

Previous wording

In addition to the scheduled future debt repayments that we will need to make, we also have commitments and plans related to our share repurchase program, capital expenditures, and other commitments in the ordinary course of business, primarily relating to cloud computing services and software license costs. Any amounts for which we are currently liable are reflected in our Condensed Consolidated Balance Sheets as Accounts payable or Accrued expenses and other current liabilities.

Current wording

In addition to the scheduled future debt repayments that we will need to make, we also have commitments and plans related to our share repurchase program, capital expenditures, and other commitments in the ordinary course of business, primarily for cloud computing services and software license costs. Any amounts for which we are currently liable are reflected in our Condensed Consolidated Balance Sheets as Accounts payable or Accrued expenses and other current liabilities.

Previous wording

As of June 30, 2024, we had $400.0 of availability remaining under our share repurchase program. The share repurchase authorization is valid through December 31, 2024.

Current wording

As of September 30, 2024, we had $300.0 of availability remaining under our current share repurchase program, which is valid through December 31, 2024.