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CLARIVATE PLC (CLVT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue of $621.4M beat S&P Global consensus of $589.4M*, and adjusted diluted EPS of $0.18 exceeded the $0.174* consensus; management reaffirmed full-year 2025 guidance and indicated revenue should skew toward the top end of the range with adjusted EBITDA margin around ~41% .
  • Organic trends improved: organic revenue grew 0.5% YoY, recurring organic revenue grew 0.8% YoY, and organic ACV rose 1.3% YoY; recurring revenue mix reached 88% in H1, up 800 bps vs FY24, driven by the shift away from transactional sales and improved renewals .
  • Segment highlights: A&G posted H1 2% organic ACV and subscription growth with a 96% renewal rate; IP returned to organic growth in patent annuities; LS&H saw a return to organic ACV growth in H1, aided by Cortellis enhancements and AI features .
  • Capital allocation and balance sheet: Q2 free cash flow was $50.3M; CLVT repurchased 11.5M shares in Q2 (H1 repurchases $100M); company refinanced $500M of 2026 secured notes into a 2031 term loan to extend maturities .

What Went Well and What Went Wrong

  • What Went Well

    • Recurring mix and renewals strengthened: H1 organic recurring mix reached 88% (+800 bps vs FY24) and the overall renewal rate improved to 93%; A&G renewals were 96% with ~75% of 2025 A&G subscriptions renewed by end-July .
    • Segment execution: IP annuities returned to organic growth in H1; LS&H ACV turned positive, helped by AI-enabled Cortellis product improvements and stronger retention; A&G delivered 2% H1 organic ACV and subscription growth .
    • Cost discipline and margins: Adjusted EBITDA margin held at ~42% in Q2 (42.1%) and improved 50 bps YoY in H1 to 40.7% despite revenue headwinds from disposals/divestitures .

  • What Went Wrong

    • Reported revenue declined YoY due to disposals/divestitures; Q2 revenue of $621.4M was down 4.4% YoY on inorganic actions despite modest organic growth .
    • Transactional revenue pressure persisted (down 21.5% YoY in Q2), primarily from product wind-downs in A&G aligned with the subscription-first strategy .
    • Free cash flow conversion moderated in Q2 (19.2%) on lower adjusted EBITDA and higher one-time costs related to the Value Creation Plan; one disposal timing extended by ~6 months at customers’ request .

Financial Results

Headline metrics (GAAP and non-GAAP)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($M)$650.3 $593.7 $621.4
GAAP Diluted EPS ($)$(0.46) $(0.15) $(0.11)
Adjusted Diluted EPS ($)$0.20 $0.14 $0.18
Adjusted EBITDA ($M)$274.4 $233.2 $261.6
Adjusted EBITDA Margin (%)42.2% 39.3% 42.1%
Net Income (Loss) ($M)$(304.3) $(103.9) $(72.0)

Q2 2025 Actual vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($M)$621.4 $589.4*Beat
Primary EPS ($)$0.18 $0.174*Beat

Values marked with * retrieved from S&P Global.

Segment revenue ($M)

SegmentQ2 2024Q1 2025Q2 2025
Academia & Government$344.5 $302.7 $318.5
Intellectual Property$201.6 $192.7 $202.5
Life Sciences & Healthcare$104.2 $98.3 $100.4
Total Revenue$650.3 $593.7 $621.4

KPI snapshot – quarterly cash flow and capital actions

KPIQ1 2025Q2 2025
Operating Cash Flow ($M)$171.2 $116.3
Free Cash Flow ($M)$110.3 $50.3
Share Repurchases$50M in Q1 11.5M shares; ~$50M in Q2; H1 total ~$100M
Cash & Equivalents ($M)$354.0 (3/31) $362.6 (6/30)
Total Debt ($M)$4,570.8 (3/31) $4,570.5 (6/30)

Structural KPIs and mix (H1 2025 unless noted)

KPILatest
Organic ACV Growth (YoY)1.3% (Q2); 1.2% (Q1)
Recurring Organic Revenue Growth (YoY)0.8% in Q2; 0.7% in H1
Renewal Rate (All)93% in H1 (vs 92% prior year H1)
A&G Renewal Rate96% in H1; ~75% of 2025 subs renewed by end-July
Recurring Revenue Mix (H1)88% of total (+800 bps vs FY24 80%)

Guidance Changes

MetricPeriodPrevious Guidance (Apr 29, 2025)Current Guidance (Jul 30, 2025)Change
Organic ACVFY 20251.0%–2.0% 1.0%–2.0% Maintained
Recurring Organic Revenue GrowthFY 2025(1.0)%–1.0% (1.0)%–1.0% Maintained
Revenue ($B)FY 2025$2.28–$2.40 $2.28–$2.40 Maintained
Adjusted EBITDA ($B)FY 2025$0.94–$1.00 $0.94–$1.00 Maintained
Adjusted EBITDA Margin (%)FY 202540.5%–42.5% 40.5%–42.5% Maintained
Adjusted Diluted EPS ($)FY 2025$0.60–$0.70 $0.60–$0.70 Maintained
Free Cash Flow ($M)FY 2025$300–$380 $300–$380 Maintained

Management color: Revenue likely near top end; adjusted EBITDA margin ~41% given mix and FX; recurring mix expected ~84% including disposals; organic recurring mix already at 88% in H1 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI/technology initiativesFY24: launched AI-powered enhancements; subscription products launched (ProQuest e-Books, DRG Fusion) . Q1: continued AI product innovation; accelerated recurring growth .Agentic AI across Web of Science; AI features in Derwent/Cortellis; 4,800+ institutions adopting AI tools .Improving
Sales execution & VCPInitiated VCP to drive recurring growth and cost efficiency .Revised incentives; focus on subs/recurring; stronger renewals and new business; momentum noted by CEO .Improving
A&G budget environmentNoted U.S. pressures; plan to discontinue transactional sales to improve predictability .A&G stable despite funding cuts; 96% renewal; ~75% subs renewed by July; migration to subs (PQ eBooks/Digital Collections) .Stable/Resilient
IP annuity marketFY24 pressured; divestitures completed .IP annuities returned to organic growth; AI patent surge expected to be tailwind over next years .Improving
LS&H end-marketsFY24 softness; outlook cautious . Q1: early progress .LS&H ACV returned to growth; R&D stable; commercialization remains soft; product enhancements driving retention .Mixed (R&D improving; commercial soft)
Strategic alternativesReview initiated, including divestitures .Narrowed scope; plan to communicate outcome with year-end results .Advancing
Capital allocation2024: $200M buybacks; $198M debt prepay . Q1: $50M buybacks .Q2: $50M buybacks (11.5M shares); $100M H1; refinanced $500M 2026 notes into 2031 TLB .Shareholder-friendly/Extended maturities

Management Commentary

  • “We reported solid second quarter performance and delivered growth in our key metrics… There are early indications that our Value Creation Plan is driving improved performance” — CEO Matti Shem Tov .
  • “Looking ahead, we believe that… AI tailwinds benefiting our IP business, will support Clarivate’s profitability and value creation.” — CEO .
  • “Based on our performance in the first half, recurring organic growth will likely be in the upper half of our range… revenue near the top end… profit margin at approximately 41%” — CFO Jonathan Collins .
  • “A&G subscription revenue now constitutes 93%… renewal rate 96%… ~75% of global A&G subscriptions… renewed” — CEO (A&G update) .
  • “Patent renewal business returned to growth… AI-related patent filings are up materially, a favorable tailwind” — CEO .
  • “LS&H subscription ACV returned to growth… investments in Cortellis (AI, workflow) driving retention and usage” — CFO .

Q&A Highlights

  • IP and AI patents: Management sees a global uptick in AI-related patents (especially Asia/China) creating a tailwind for annuity volumes in coming years; renewals typically lag filings by a couple years .
  • USPTO fee structure changes: Too early to assess; company is deeply embedded across the IP ecosystem and positioned to support customers through changes .
  • University funding/renewals: Despite U.S. funding pressure, A&G renewals remain strong (96%); shift from one-time purchases to subscriptions is resonating with customers .
  • Sales incentives and focus: New incentive plan streamlines focus on subscription/recurring; improved morale and execution cited .
  • Disposals timing: One disposal was extended ~6 months at customers’ request to allow time to transition to alternatives .

Estimates Context

  • S&P Global consensus for Q2 2025: Revenue $589.4M (7 estimates); Primary EPS $0.174 (9 estimates). Actuals: Revenue $621.4M; Adjusted/Primary EPS $0.18. Both metrics beat consensus*.
  • Implications: With recurring organic growth tracking upper half of the range and revenue biasing toward the top end of guidance, street models may need to lift FY revenue assumptions toward the high end, while keeping margin near ~41% given mix/FX commentary .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Recurring flywheel turning: Organic ACV and recurring revenue growth accelerated again; H1 recurring mix at 88% reduces volatility and should support multiple expansion if sustained .
  • Clear beat vs consensus in Q2 revenue and EPS; guidance maintained but management bias positive (top-end revenue; ~41% margin), suggesting upward estimate drift is plausible* .
  • A&G resilience offsets macro: Elevated renewal rates and successful shift from transactional to subscriptions mitigate U.S. budget headwinds; watch continued adoption of PQ eBooks/Digital Collections .
  • IP optionality from AI: Rebound in annuities plus secular AI patent surge supports multi-year recovery in IP recurring revenues .
  • LS&H stabilizing in R&D; commercialization still soft: Product/AI upgrades are improving retention/usage; commercial uptick would be an incremental catalyst .
  • Cash generation and capital returns remain active: H1 FCF $160.6M and $100M buybacks; extended maturities via $500M TLB to 2031 reduce near-term refinancing risk .
  • Event path: Strategic alternatives review narrowing; outcome expected with year-end results—potential portfolio actions could be a stock catalyst .

Values marked with * retrieved from S&P Global.

Appendix notes:

  • Non-GAAP: Adjusted EBITDA, Adjusted EPS, Free Cash Flow, and related margins are per company definitions and reconciliations in the press release and 8-K .
  • Segment and revenue-type data (subscription, re-occurring, transactional) and organic change drivers are provided in the company’s supplemental disclosures .