Clarivate Plc Q4 FY2024 earnings call

Pillars of VCP - Revenue optimization: Moving ProQuest to subscription and launching DRG Fusion in life science. - Sales execution: Attracting experienced sales leaders, optimizing reporting structure, realigning account management, and refocusing incentive models. - Product innovation: Leveraging academic AI in various products, enhancing Cortellis R&D platform, and launching AI patent search in IP. - Portfolio rationalization: Working with financial advisors on strategic alternatives, including divestitures, and completing a company-wide review to streamline operations.

In academia and government, Clarivate recently moved to a subscription-only strategy for ProQuest ebooks and digital collections, phasing out one-time transactional sales by end-2025. ProQuest ebooks is the world's largest subscription of academic ebooks with over 700,000 titles. In life science, the company launched DRG Fusion, a modular subscription-based real-world data analytics product, and plans to wind down real-world data direct licenses by Q4 2026. Q4 revenue was $663 million, full year $2.56 billion. Recurring revenue mix was 80% in 2024, with plans to increase to 87% and higher.

2025 Guidance - ACV expected to accelerate by ~60 basis points to 1.5% midpoint. - Recurring organic growth flat midpoint. - Revenue expected ~$2.34B midpoint due to strategic disposals, prior divestitures, and stronger USD. - Adjusted EBITDA range $940M-$1B, profit margin 41.5%. - Diluted adjusted EPS $0.60-$0.70. - Free cash flow ~$340M midpoint.

Risks - Exposure to federal and state government spending cuts, especially in academia and government solutions. - Foreign exchange headwind due to strong USD affecting top and bottom line.

Q: Thoughts on revenue synergy potential between business lines and new products being TAM extension or value-added.

A: Matti said new products are both TAM extensions and value-added, with examples like AI enablement in web of science and new IP products.

Q: Organic ACV inflection in 2025 and strategic review criteria.

A: Jonathan said ACV inflection from combination of new product investments and VCP strategic disposals; strategic review criteria include monetizing valuable assets and considering segment separability.