London, UK -- March 1, 2023. Clarivate Plc - (NYSE: CLVT) (the "Company" or "Clarivate"), a global leader in connecting people and organizations to intelligence they can trust, today reported results for the fourth quarter and full year ended December 31, 2022.
Fourth Quarter 2022 Financial Highlights
- Revenues of $675.3 million increased 20.4%, and 25.2% at constant currency(1), driven primarily by the acquisition of ProQuest
- Organic revenues(1) increased 0.5% as increases in subscription revenues of 2.5% and re-occurring revenues of 2.5% were partially offset by a decline in transactional and other revenues of 5.9%
- Net income attributable to ordinary shares was $304.3 million compared to Net loss attributable to ordinary shares of $130.4 million in the prior year quarter driven by the gain from the MarkMonitor divestiture; Net income per diluted share of $0.44 increased by $0.64
- Adjusted Net Income(1) of $164.0 million increased 0.5%; Adjusted Income per diluted share(1) of $0.22 decreased 4.3% or $0.01
- Adjusted EBITDA(1) of $304.4 million increased 18.6% driven by earnings contributions from acquisitions, organic growth and cost savings from integration programs; Adjusted EBITDA Margin(1) of 45.1% decreased 70 basis points
Full Year 2022 Financial Highlights
- Revenues of $2,659.8 million increased 41.7%, and 46.9% at constant currency(1), driven primarily by the acquisition of ProQuest
- Organic revenues(1) increased 2.6% as increases in subscription revenues of 3.4% and re-occurring revenues of 5.2% were partially offset by a decline in transactional and other revenues of 2.7%
- Net loss attributable to ordinary shares of $4,035.6 million increased $3,723.6 million due to the $4,449.1 million non-cash impairment of goodwill; Net loss per diluted share of $6.24 increased by $5.63
- Adjusted Net Income(1) of $628.0 million increased 30.4%; Adjusted Income per diluted share(1) of $0.85 increased 18.1% or $0.13
- Adjusted EBITDA(1) of $1,112.7 million increased 39.0% and Adjusted EBITDA Margin(1) of 41.8% decreased 80 basis points
- Cash Flows from Operations increased $185.5 million to $509.3 million; Adjusted Free Cash Flow(1) increased $62.4 million to $521.8 million
"2022 was a pivotal year for Clarivate as we made progress on many fronts and transitioned the company for future achievements," said Jonathan Gear, Chief Executive Officer. "We aligned our three operating segments to drive stronger performance and unlock value, and we refined our growth acceleration framework in order to capitalize on product and service innovation. Our organic growth plan is now better positioned to capture a larger piece of the $25 billion global market that we service. We look forward to updating you on our progress and long-range plan for growth at our upcoming Investor Day in New York on March 9."
Selected Financial Information
The results for the fourth quarter and full year 2022 include contributions from our 2021 acquisitions of ProQuest, Patient Connect, and Bioinfogate, compared to one month from ProQuest and Patient Connect (December 2021) and four months from Bioinfogate (August 2021) in the respective prior year periods.
|Three Months Ended
|(in millions, except percentages and per share data), (unaudited)||2022||2021||$||%||2022||2021||$||%|
|Revenues, net||$ 675.3||$ 560.7||$ 114.6||20.4%||$ 2,659.8||$ 1,876.9||$ 782.9||1.7%|
|Net income (loss) attributable to ordinary shares||$ 304.3||$ (130.4)||$ 434.7||333.4%||$ (4,035.6)||$ (312.0)||$ (3,723.6)||N/M|
|Net income (loss) per share, diluted||$ 0.44||$ (0.20)||$ 0.64||320.0%||$ (6.24)||$ (0.61)||$ (5.63)||N/M|
|Weighted-average ordinary shares (diluted)||731.0||654.9||—||11.6%||678.6||640.8||—||5.9%|
|Adjusted EBITDA(1)||$ 304.4||$ 256.6||$ 47.8||18.6%||$ 1,112.7||$ 800.4||$ 312.3||39.0%|
|Adjusted net income(1)||$ 164.0||$ 163.2||$ 0.8||0.5%||$ 628.0||$ 481.7||$ 146.3||30.4%|
|Adjusted diluted EPS(1)||$ 0.22||$ 0.23||$ (0.01)||(4.3)%||$ 0.85||$ 0.72||$ 0.13||18.1%|
|Adjusted weighted-average ordinary shares (diluted)(2)||731.2||714.0||—||2.4%||737.1||670.4||—||10.0%|
|Net cash provided by operating activities||$ 136.9||$ 18.3||$ 118.6||648.1%||$ 509.3||$ 323.8||$ 185.5||57.3%|
|Free cash flow(1)||$ 90.5||$ (14.1)||$ 104.6||741.8%||$ 306.4||$ 205.2||$ 101.2||49.3 %|
|Adjusted free cash flow(1)||$ 107.1||$ 143.8||$ (36.7)||(25.5)%||$ 521.8||$ 459.4||$ 62.4||13.6%|
(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 diluted EPS.
Fourth Quarter 2022 Operating Results
Revenues, net for the fourth quarter increased $114.6 million, or 20.4%, to $675.3 million, and increased 25.2% on a constant currency basis(1). The significant strengthening of the U.S. dollar had a negative foreign exchange impact on revenue of 4.7% for the fourth quarter of 2022. Organic revenues(1) increased $2.5 million or 0.5%, which was partially offset by our decision to cease commercial operations in Russia in March.
Subscription revenues for the fourth quarter increased $93.6 million, or 30.6%, to $399.1 million, and increased 35.2% on a constant currency basis(1), primarily driven by the acquisition of ProQuest. Organic subscription revenues(1) increased 2.5%, primarily due to price increases and the benefit of net installations.
Re-occurring revenues for the fourth quarter decreased $6.9 million, or 5.8% to $112.7 million, and increased 2.5% on a constant currency basis(1). Organic re-occurring revenues(1) increased 2.5%, primarily due to increases in patent renewal volumes and improvements in yield per case.
Transactional and other revenues for the fourth quarter increased $28.5 million, or 21.1%, to $163.6 million, and increased 23.1% on a constant currency basis(1), primarily due to the acquisition of ProQuest. Organic transactional and other revenues(1) decreased 5.9%, due to lower transactional sales and consulting services revenue.
Full Year 2022 Operating Results
Revenues, net for the full year 2022 increased $782.9 million, or 41.7%, to $2,659.8 million, and increased 46.9% on a constant currency basis(1). The significant strengthening of the U.S. dollar had a negative foreign exchange impact on revenue of 5.2% for the full year 2022. Organic revenues(1) increased $47.8 million or 2.6%. Organic revenue was slightly impacted by our decision to cease commercial operations in Russia in March 2022.
Subscription revenues for the full year 2022 increased $585.4 million, or 56.6%, to $1,619.8 million, and increased 61.4% on a constant currency basis(1), primarily driven by the acquisition of ProQuest. Organic subscription revenues(1) increased 3.4%, primarily due to price increases and the benefit of net installations.
Re-occurring revenues for the full year 2022 decreased $11.3 million, or 2.5% to $441.9 million, and increased 5.2% on a constant currency basis(1). Organic re-occurring revenues(1) increased 5.2%, primarily due to increases in patent renewal volumes and improvements in yield per case.
Transactional and other revenues for the full year 2022 increased $205.8 million, or 52.3%, to $599.1 million, and increased 55.4% on a constant currency basis(1), primarily due to the acquisition of ProQuest. Organic transactional and other revenues(1) decreased 2.7%, due to lower trademarks transactional volumes and patent filing revenue.
Balance Sheet and Cash Flow
As of December 31, 2022, cash and cash equivalents of $348.8 million decreased $82.1 million compared to December 31, 2021, driven by principal payments on the Term Loan Facility, repurchases of ordinary shares, and higher capital expenditures, partially offset by the proceeds from the MarkMonitor divestiture. Restricted cash decreased $148.7 million to $8.0 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 December 2021 sale of shares held in the Employee Benefit Trust established for the CPA Global Equity Plan.
The Company's total debt outstanding as of December 31, 2022 was $5,071.3 million, a decrease of $495.9 million compared to December 31, 2021.
Net cash provided by operating activities of $509.3 million for the year ended December 31, 2022 increased $185.5 million compared to $323.8 million for the prior year, primarily due to higher earnings excluding the non-cash goodwill impairment charge, as well as working capital timing. Adjusted free cash flow(1) for the year ended December 31, 2022, was $521.8 million, an increase of $62.4 million compared to the prior year period.
Outlook for 2023 (forward-looking statement)
"Our 2023 outlook reflects improved organic growth as we begin to benefit from operational initiatives across the segments, which will be partially offset by the divestiture of MarkMonitor in November 2022," said Jonathan Collins, Executive Vice President and Chief Financial Officer. "We currently expect to generate significantly higher free cash flow as a result of lower one-time costs even with increased capital investments to fuel product innovation."
The full year outlook presented below assumes no further acquisitions, divestitures, or unanticipated events.
|Revenues||$2.63B to $2.73B|
|Organic Revenue Growth||2.75% to 3.75%|
|Adjusted EBITDA||$1.10 B to $1.16B|
|Adjusted EBITDA Margin||42.0% to 42.5%|
|Adjusted Diluted EPS(3)||$0.75 to $0.85|
|Free Cash Flow||$450M to $550M|
(3) Adjusted Diluted EPS for 2023 is calculated based on approximately 740 million fully diluted weighted average shares outstanding.
The 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 measures. These terms are defined elsewhere in this earnings press release.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the fourth 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 217723. The webcast can be accessed at https://events.q4inc.com/attendee/352264749 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 impact of inflation, the impact of foreign currency fluctuations, the COVID-19 pandemic and governmental responses thereto, 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. 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 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, Life Sciences & Healthcare and Intellectual Property. For more information, please visit clarivate.com.