Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clarivate PLC (CLVT, Financial) reported an increase in organic revenue for the first time in over a year, with recurring organic revenue growing nearly 1%.
- The company achieved a 200 basis point improvement in the mix of recurring revenue to total revenue, now at 83%.
- Free cash flow remained strong, generating $110 million in the first quarter.
- Clarivate PLC (CLVT) secured significant new deals, including a strategic SaaS agreement with the British Library and a multi-year contract with the Brazilian Academic consortium.
- The company is making progress with its value creation plan, focusing on subscription-centric models and product innovation, including AI-powered features.
Negative Points
- Clarivate PLC (CLVT) experienced a net loss of $104 million in the first quarter, attributed to higher restructuring expenses.
- The company faces potential risks from US government funding cuts, although it believes the impact is contained within its guidance range.
- Transactional revenue is expected to remain down for the full year, with a conservative outlook due to the current macroeconomic environment.
- The company is undergoing strategic disposals, which are expected to lower revenue by approximately $140 million this year.
- Clarivate PLC (CLVT) continues to face foreign exchange translation headwinds, impacting both top and bottom lines.
Q & A Highlights
Q: Can you discuss the impact of US government funding cuts on your business, particularly in the Academic and Government (AG) segment?
A: Matti Shem Tov, CEO, explained that Clarivate has maintained strong relationships with customers and advisory groups, which helped them assess the impact. Despite government actions, the AG segment saw minimal impact in Q1. Jonathan Collins, CFO, added that they analyzed direct and indirect impacts, concluding that any potential risks are contained within their guidance range.
Q: Could you comment on the recent Reuters article about potential private equity interest in the IP segment?
A: Jonathan Collins, CFO, stated that while they are evaluating strategic options with advisors, they have no specific comments on the article at this time. Updates will be provided when appropriate.
Q: What drove the strong IP renewal volumes this quarter, and are there other factors behind the 5.3% increase in organic recurring revenues?
A: Jonathan Collins, CFO, noted that the mid-single-digit growth in recurring revenue was primarily due to improved patent and trademark renewal volumes. While some timing items contributed, the main driver was a return to healthy growth in the market.
Q: How much of Clarivate's revenue is from large universities affected by US government funding freezes or cancellations?
A: Jonathan Collins, CFO, mentioned that less than half of the AG segment's business is in the US, and a significant portion has already renewed this year. They are confident that any potential impact is within their guidance range.
Q: When do you expect transactional revenue to return to positive growth, and what are the catalysts?
A: Jonathan Collins, CFO, indicated that transactional revenues are expected to remain soft due to the macro environment. The focus is on accelerating recurring revenue growth, which showed improvement in Q1. The outlook for transactional revenue remains conservative for the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
