Clarivate Plc Q1 FY2026 earnings call

• Launched the value creation plan in early 2025 with four core pillars: business model optimization, improved sales execution, accelerated AI innovation using proprietary data assets, and portfolio rationalization. • Academia and government were executing well across the pillars, with strong recurring revenue growth, over 600 new ProQuest subscriptions in 12 months, and a multi - product institutional deal with FIO University in China. • IP segment had improved renewal rates, secured key contracts with national IP offices, and released brand image search with advanced AI capabilities like clustering and multilingual support. • Life science and health were in the process of shifting to subscription, with organic revenue up nearly 1%, secured new customer wins, and integrated Cortelis regulatory intelligence with Anthropic Cloud Enterprise. • Intensified AI investment with internal cost efficiencies in go - to - market, customer support, technology, and corporate functions, and external product innovation in three waves: AI assistant, agentic AI, and ecosystem implementation.

Academia and government: Revenues were supported by subscription growth, with over 600 new ProQuest subscriptions sold in the last 12 months. IP: Renewal rates improved approximately 100 basis points in the first quarter, helping organic HCV trends improve to nearly flat, and secured key contracts with national IP offices. Life science and health: The shift from transactional sales to subscription was on track, with organic revenue up almost 1% in the first quarter. Revenue for the first quarter was $586 million, adjusted EBITDA was $241 million (41% margin), and free cash flow was approximately $79 million.

• Reaffirmed full - year financial guidance unchanged from February. • Anticipated acceleration of organic annual contract value growth to between 2 and 3%, with recurring organic growth of about 1.5% at the midpoint. • Revenue expected to decline by about $100 million at the midpoint due to disposals, and organic recurring revenue mix to improve to between 88% and 90%. • Adjusted EBITDA expected to grow modestly, with margin increasing to nearly 43% at the midpoint. • Adjusted diluted EPS expected to grow about 9% to 75 cents at the midpoint. • Free cash flow expected to grow about 10% to $400 million at the midpoint. • Plan to use free cash flow for debt reduction to lower net leverage from four turns at the end of Q1 to approximately two and a half turns in a few years.

Q: Talk about the traction of new AI products, reception from customers, and efficiency benefits from AI.

A: Intensified AI investment with internal cost efficiencies in various functions and external product innovation in three waves: AI assistant, agentic AI, and ecosystem implementation. Mentioned that in Alma Prime library product, agentic AI capabilities led to a 30 - 60% decrease in manual repetitive work and doubling or even quadrupling throughput. Also mentioned collaboration with Anthropic and the announcement of Nexus Connect.

Q: Update on the competitive environment and AI product adoption.

A: Confident in product innovation, received good feedback from customers across segments, with over 400 institutions using academic AI solution in academia and government, and recent Cloud and Tropic collaboration and IP brand image introduction.

Q: China opportunity in the A&G space.

A: China was a great contributor, with 15 new Web of Science deals sold in China last year, and good momentum in A&G, including Web of Science Research Intelligence.

Q: IP segment performance and growth expectations.

A: IP segment was seeing improved renewal rates, was market leader in IP, with enhanced sales execution and strong AI innovation momentum, and patent renewal business expected to return to growth.

Q: Transactional revenues decline in A&G.

A: Transactional revenues were down in Q1 due to timing of software implementations, and full - year guidance contemplated a slight decline on the transactional side.

Q: ANG growth sub - segments.

A: The bright spot in ANG was research analytics, led by Hueta Science, with adoption of research assistant and great feedback on agents like the literature review agent, and growth driven by Web of Science research intelligence platform.

Q: Life science and health subscription mix and growth.

A: Life science and health had a high proportion of transactional revenue, was in the process of shifting to subscription, with organic revenue up nearly 1%, secured new customer wins, and integrated Cortelis regulatory intelligence with Anthropic Cloud Enterprise.