Clarivate Plc Q4 FY2025 earnings call

• 2025 was a turning point, delivered on initial full year financial guide first since 2019, value creation plan working. - Accelerated organic ACV, organic recurring revenue and enhanced free cash flow conversion. - Launched process to sell Life Sciences & Health business. - AI strategy: leveraging AI to capitalize on strengths, with AI research assistants, workflow agents, and ecosystem access. - Optimized business model, improved sales execution, drove innovation with 12 major products and AI-powered features. - Strong foundation with 97% revenue from proprietary assets, significant moats in business

Academia & Government: 2% organic ACV growth in 2025, 97% of revenue from proprietary solutions, organic recurring revenue mix at 93% with mid-90s retention rates. Intellectual Property: Powered by largest agent network, launched 5 GenAI and AI native products/enhancements in 2025, delivered 270 basis points year-over-year improvement in annuities revenue. Life Science & Health: 11,000 global active users leveraging AI research assistant and workflow agent, 3 major product lines moving in right direction with consistent quarterly ACV growth, expected return to organic revenue growth in 2026

• 2026 guidance: 2% to 3% organic annual contract value growth, 1% to 2% growth in recurring organic revenue, free cash flow expected to grow to about $400 million (approx 10% increase over 2025). - Revenue expected to decline by almost $100 million at midpoint of range to $2.36 billion, organic recurring revenue mix to improve to between 88% and 90%. - Adjusted EBITDA expected to grow modestly, diluted adjusted EPS expected to grow about 9% to $0.75, driven by share repurchases. - Anticipate modest foreign exchange translation benefit to top and bottom lines

• Uncertainty around reaching an agreement on selling Life Sciences & Health business. - Market concern around AI disruption, but Clarivate believes its business is highly proprietary with significant moats

Q: Talk about monetization model for subscriptions and new AI products.

A: Matti and Jonathan discussed pricing based on size of institution, renewal rates, and how AI features drive value.

Q: Explain 97% revenue from proprietary data.

A: Matti and Jonathan gave examples like Web of Science and Cortellis platform showing value of proprietary data.

Q: Key considerations for selling Life Sciences & Healthcare business.

A: Matti said it's part of value creation plan to increase shareholder value, focus on A&G and IP, strengthen balance sheet.

Q: Synergies between IP and Academia & Government.

A: Matti talked about shared content, technology platform, commercial channels, and software expertise collaboration.

Q: Return of IP segment to organic revenue growth.

A: Matti and Jonathan discussed innovation, execution, subscription, reoccurring, and commercialization of new products.

Q: Capital allocation priorities.

A: Jonathan said leaning towards deleveraging this year as judgment for best value creation.

Q: Price realization.

A: Jonathan said improvements in ACV and recurring organic growth from volume, with opportunities to monetize investments through price increases