Clarivate Reports Fourth Quarter and Full Year 2023 Results
- Organic revenue growth for Clarivate Plc in Q4 2023 was below expectations, leading to a multi-year transformation plan for returning to market growth rates.
- Net loss attributable to ordinary shares in Q4 2023 was $863.0 million due to non-cash impairment charges, while adjusted net income decreased slightly by 0.4%.
- For the full year 2023, revenues decreased by 1.2%, primarily driven by the divestiture of MarkMonitor in October 2022.
- Adjusted EBITDA for Q4 2023 decreased by 2.0%, but for the full year 2023, it increased by 0.4%.
- Net cash provided by operating activities increased significantly in both Q4 and full year 2023, leading to improved free cash flow.
- Clarivate Plc plans for improved organic growth in 2024, with expectations of increased subscription and re-occurring revenue offset by soft transactional revenue.
- The company aims to reduce debt using strong cash flow while investing in product innovation and maintaining profit margins in 2024.
- None.
Insights
The report from Clarivate Plc highlights a mixed financial performance with revenue growth of 1.2% and a net loss of $863.0 million, primarily due to a non-cash impairment charge. The increase in subscription and re-occurring revenues is a positive indicator, suggesting a stable customer base and potential for predictable future earnings. However, the decline in transactional and other revenues by 8.3% and the overall net loss raise concerns about the company's current business segments and market demand.
Clarivate's strategy to pay down debt and repurchase shares reflects a focus on improving the balance sheet and returning value to shareholders. The free cash flow increase is significant, demonstrating improved liquidity and operational efficiency. However, the outlook for 2024 indicates a modest contraction of profit margins and increased capital spending, which could pressure short-term earnings but potentially enhance long-term growth through product innovation.
Clarivate's performance in the context of the broader industry suggests a challenging environment for companies relying on transactional revenues. The divestiture of MarkMonitor and the focus on organic growth are strategic moves to streamline operations and focus on core competencies. The multi-year transformation plan indicates a proactive approach to adapting to market conditions and pursuing growth.
Investors should note the company's capital allocation strategy, which includes increased capital spending to drive product innovation. This is critical for maintaining competitive advantage in the intelligence and analytics industry. The commitment to debt reduction is also a prudent measure to improve financial health and reduce interest expense, which can enhance long-term shareholder value.
The constant currency adjustment in Clarivate's report reflects the impact of foreign exchange volatility on international operations. The slight decrease in revenues at constant currency indicates that underlying business performance may be more subdued than nominal figures suggest. The company's operations in the Academia & Government, Intellectual Property and Life Sciences & Healthcare segments are subject to macroeconomic factors such as research funding, IP legislation and healthcare spending, which can influence revenue streams.
Clarivate's financial results underscore the importance of adapting to economic headwinds and the potential benefits of strategic investments in innovation. While the near-term outlook suggests a cautious approach to growth, the focus on organic revenue expansion and cost synergies could position the company for improved performance as market conditions evolve.
— Provides 2024 Outlook —
Fourth Quarter 2023 Financial Highlights
- Revenues of
$683.7 million 1.2% , and decreased0.6% at constant currency(2) - Organic revenues increased
0.1% as increases in subscription revenues of2.6% and re-occurring revenues of3.8% were offset by a decline in transactional and other revenues of8.3% - Net loss attributable to ordinary shares of
$863.0 million $844.7 $1.30 - Adjusted net income(1) of
$163.4 million 0.4% ; Adjusted diluted EPS(1) of$0.23 4.5% or$0.01 - Adjusted EBITDA(1) of
$298.2 million 2.0% ; Adjusted EBITDA Margin(1) of43.6% decreased 150 basis points - Net cash provided by operating activities increased
$54.0 million $190.9 million $36.5 million $127.0 million
Full Year 2023 Financial Highlights
- Revenues of
$2,628.8 million 1.2% , and2.1% at constant currency(2), driven primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable amounts in the current year period - Organic revenues increased
0.3% as increases in subscription revenues of2.4% and re-occurring revenues of0.2% were offset by a decline in transactional and other revenues of5.4% - Net loss attributable to ordinary shares of
$986.6 million $4,035.6 million $3,469.2 million $1.47 $4.77 - Adjusted net income(1) of
$599.1 million 4.6% ; Adjusted diluted EPS(1) of$0.82 3.5% or$0.03 - Adjusted EBITDA(1) of
$1,117.2 million 0.4% and Adjusted EBITDA Margin(1) of42.5% increased 70 basis points - Net cash provided by operating activities increased
$234.9 million $744.2 million $195.3 million $501.7 million
"In 2023, we delivered subscription revenue growth and navigated through market headwinds. We achieved cost synergy targets and generated significant cash flow, which allowed us to increase the pay down of debt and repurchase ordinary shares," said Jonathan Gear, Chief Executive Officer. "With organic revenue growth below our expectations, we launched a multi-year transformation plan to return to market growth rates. The plan outlines how we will continue to make strategic investments to accelerate new product development and strengthen our focus by divesting non-core assets. I am confident we are making the right investments that, when combined with our extensive content, solutions and artificial intelligence capabilities, will drive organic growth and create shareholder value."
Selected Financial Information
The prior year results include MarkMonitor, which was divested on October 31, 2022, for which there are no comparable amounts in the current year periods.
Three Months Ended | Change | Year Ended | Change | ||||||||||||
(in millions, except percentages and per share data), (unaudited) | 2023 | 2022 | $ | % | 2023 | 2022 | $ | % | |||||||
Revenues, net | $ 683.7 | $ 675.3 | $ 8.4 | 1.2 % | $ (31.0) | (1.2) % | |||||||||
Net income (loss) attributable to ordinary shares | $ (863.0) | $ 304.3 | $ (1,167.3) | N/M | $ (986.6) | $ (4,035.6) | $ 3,049.0 | N/M | |||||||
Net income (loss) per share, diluted | $ (1.30) | $ 0.44 | $ (1.74) | N/M | $ (1.47) | $ (6.24) | $ 4.77 | N/M | |||||||
Weighted-average ordinary shares (diluted) | 665.0 | 731.0 | (66.0) | (9.0) % | 671.6 | 678.6 | (7.0) | (1.0) % | |||||||
Adjusted EBITDA(1) | $ 298.2 | $ 304.4 | $ (6.2) | (2.0) % | $ 4.5 | 0.4 % | |||||||||
Adjusted net income(1) | $ 163.4 | $ 164.0 | $ (0.6) | (0.4) % | $ 599.1 | $ 628.0 | $ (28.9) | (4.6) % | |||||||
Adjusted diluted EPS(1)(3) | $ 0.23 | $ 0.22 | $ 0.01 | 4.5 % | $ 0.82 | $ 0.85 | $ (0.03) | (3.5) % | |||||||
Adjusted weighted-average ordinary shares (diluted)(1) | 724.4 | 731.2 | (6.8) | (0.9) % | 731.3 | 737.1 | (5.8) | (0.8) % | |||||||
Net cash provided by operating activities | $ 190.9 | $ 136.9 | $ 54.0 | 39.4 % | $ 744.2 | $ 509.3 | $ 234.9 | 46.1 % | |||||||
Free cash flow(1) | $ 127.0 | $ 90.5 | $ 36.5 | 40.3 % | $ 501.7 | $ 306.4 | $ 195.3 | 63.7 % | |||||||
Fourth Quarter 2023 Commentary
Revenues for the fourth quarter increased
Subscription revenues for the fourth quarter increased
Re-occurring revenues for the fourth quarter increased
Transactional and other revenues for the fourth quarter decreased
Full Year 2023 Commentary
Revenues for the full year 2023 decreased
Subscription revenues for the full year 2023 decreased
Re-occurring revenues for the full year 2023 increased
Transactional and other revenues for the full year 2023 decreased
Balance Sheet and Cash Flow
As of December 31, 2023, cash and cash equivalents of
The Company's total debt outstanding as of December 31, 2023 was
Net cash provided by operating activities of
Outlook for 2024 (forward-looking statement)
"We currently expect improved organic growth in 2024 across subscription and re-occurring revenue, which will be partially offset by soft transactional revenue and a previously disclosed small divestiture in the IP segment," said Jonathan Collins, Executive Vice President and Chief Financial Officer. "With topline growth more than offset by growth investments, net of cost inflation and savings initiatives, we anticipate a modest contraction of our profit margin. Additionally, we are increasing capital spending to approximately
The full year outlook presented below assumes no further acquisitions, divestitures, or unanticipated events.
2024 Outlook | |
Revenues | |
Organic Revenue Growth | |
Adjusted EBITDA(1) | |
Adjusted EBITDA Margin(1) | |
Adjusted Diluted EPS(1)(3) | |
Free Cash Flow(1) |
Notes to press release |
(1) Non-GAAP measure. Please see "Reconciliations 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. |
(2) We calculate constant currency by converting the non- |
(3) Adjusted Diluted EPS for 2024 is calculated based on approximately 733 million fully diluted weighted average ordinary shares outstanding. |
N/M - Represents a change approximately equal or in excess of |
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the fourth quarter and full year 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 +1 404-975-4839 or toll-free +1 833-470-1428 (in
Use of Non-GAAP Financial Measures
Non-GAAP results are financial measures that are not prepared in accordance with
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, and Standalone Adjusted EBITDA 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.
Forward-Looking Statements
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; our belief that we have sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, inflation, foreign currency fluctuations, 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. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. 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
About Clarivate
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, Intellectual Property and Life Sciences & Healthcare. For more information, please visit clarivate.com.
Consolidated Balance Sheets | |||
(In millions) | |||
(unaudited) | |||
As of December 31, | |||
2023 | 2022 | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents, including restricted cash | $ 370.7 | $ 356.8 | |
Accounts receivable, net | 908.3 | 872.1 | |
Prepaid expenses | 88.5 | 89.4 | |
Other current assets | 68.0 | 76.9 | |
Assets held for sale | 26.7 | — | |
Total current assets | 1,462.2 | 1,395.2 | |
Property and equipment, net | 51.6 | 54.5 | |
Other intangible assets, net | 9,006.6 | 9,437.7 | |
Goodwill | 2,023.7 | 2,876.5 | |
Other non-current assets | 60.8 | 97.9 | |
Deferred income taxes | 46.7 | 24.2 | |
Operating lease right-of-use assets | 55.2 | 58.9 | |
Total assets | $ 12,706.8 | $ 13,944.9 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 144.1 | $ 101.4 | |
Accrued compensation | 126.5 | 132.1 | |
Accrued expenses and other current liabilities | 315.2 | 353.1 | |
Current portion of deferred revenues | 983.1 | 947.5 | |
Current portion of operating lease liability | 24.4 | 25.7 | |
Liabilities held for sale | 6.7 | — | |
Total current liabilities | 1,600.0 | 1,559.8 | |
Long-term debt | 4,721.1 | 5,005.0 | |
Non-current portion of deferred revenues | 38.7 | 38.5 | |
Other non-current liabilities | 41.9 | 140.1 | |
Deferred income taxes | 249.6 | 316.1 | |
Operating lease liabilities | 63.2 | 72.9 | |
Total liabilities | 6,714.5 | 7,132.4 | |
Commitments and contingencies | |||
Shareholders' equity: | |||
Preferred Shares, no par value; 14.4 shares authorized; | 1,392.6 | 1,392.6 | |
Ordinary Shares, no par value; unlimited shares authorized; 666.1 and 674.4 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | 11,740.5 | 11,744.7 | |
Accumulated other comprehensive loss | (495.3) | (665.9) | |
Accumulated deficit | (6,645.5) | (5,658.9) | |
Total shareholders' equity | 5,992.3 | 6,812.5 | |
Total liabilities and shareholders' equity | $ 12,706.8 | $ 13,944.9 | |
Consolidated Statement of Operations | |||
(In millions) | |||
(unaudited) | |||
Three Months Ended December 31, | |||
2023 | 2022 | ||
Revenues, net | $ 683.7 | $ 675.3 | |
Operating expenses: | |||
Cost of revenues | 231.6 | 237.0 | |
Selling, general and administrative costs | 180.4 | 180.6 | |
Depreciation and amortization | 180.8 | 188.8 | |
Goodwill and intangible asset impairments | 844.7 | 0.5 | |
Restructuring and other impairments | 14.7 | 9.8 | |
Other operating expense (income), net | 19.7 | (259.9) | |
Total operating expenses | 1,471.9 | 356.8 | |
Income (loss) from operations | (788.2) | 318.5 | |
Fair value adjustment of warrants | (1.5) | (4.1) | |
Interest expense, net | 75.2 | 77.0 | |
Income (loss) before income taxes | (861.9) | 245.6 | |
Provision (benefit) for income taxes | (18.0) | (77.8) | |
Net income (loss) | (843.9) | 323.4 | |
Dividends on preferred shares | 19.1 | 19.1 | |
Net income (loss) attributable to ordinary shares | $ (863.0) | $ 304.3 | |
Per share: | |||
Basic | $ (1.30) | $ 0.45 | |
Diluted | $ (1.30) | $ 0.44 | |
Weighted average shares used to compute earnings per share: | |||
Basic | 665.0 | 674.2 | |
Diluted | 665.0 | 731.0 | |
Consolidated Statement of Operations | |||
(In millions) | |||
(unaudited) | |||
Year Ended December 31, | |||
2023 | 2022 | ||
Revenues, net | $ 2,628.8 | $ 2,659.8 | |
Operating expenses: | |||
Cost of revenues | 906.4 | 954.0 | |
Selling, general and administrative costs | 739.7 | 729.9 | |
Depreciation and amortization | 708.3 | 710.5 | |
Goodwill and intangible asset impairments | 979.9 | 4,449.1 | |
Restructuring and other impairments | 40.0 | 66.7 | |
Other operating expense (income), net | (10.8) | (324.8) | |
Total operating expenses | 3,363.5 | 6,585.4 | |
Income (loss) from operations | (734.7) | (3,925.6) | |
Fair value adjustment of warrants | (15.9) | (206.8) | |
Interest expense, net | 293.7 | 270.3 | |
Income (loss) before income tax | (1,012.5) | (3,989.1) | |
Provision (benefit) for income taxes | (101.3) | (28.9) | |
Net income (loss) | (911.2) | (3,960.2) | |
Dividends on preferred shares | 75.4 | 75.4 | |
Net income (loss) attributable to ordinary shares | $ (986.6) | $ (4,035.6) | |
Per share: | |||
Basic | $ (1.47) | $ (5.97) | |
Diluted | $ (1.47) | $ (6.24) | |
Weighted average shares used to compute earnings per share: | |||
Basic | 671.6 | 676.1 | |
Diluted | 671.6 | 678.6 | |
Consolidated Statements of Cash Flows | |||
Year Ended December 31, | |||
(In millions); (unaudited) | 2023 | 2022 | |
Cash Flows From Operating Activities | |||
Net income (loss) | $ (911.2) | $ (3,960.2) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 708.3 | 710.5 | |
Share-based compensation | 109.0 | 93.9 | |
Restructuring and other impairments, including goodwill | 986.2 | 4,478.5 | |
Fair value adjustment of warrants | (15.9) | (206.8) | |
Gain on sale from divestitures | — | (278.5) | |
Gain on legal settlement | (49.4) | — | |
Deferred income taxes | (78.4) | (54.3) | |
Amortization of debt issuance costs | 18.2 | 16.4 | |
Other operating activities | 37.8 | (18.3) | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (25.5) | (28.3) | |
Prepaid expenses | 1.7 | (17.1) | |
Other assets | 35.1 | (45.4) | |
Accounts payable | 41.2 | (24.0) | |
Accrued expenses and other current liabilities | (44.4) | (114.4) | |
Deferred revenues | 20.3 | (9.3) | |
Operating leases, net | (8.0) | (9.6) | |
Other liabilities | (80.8) | (23.8) | |
Net cash provided by (used for) operating activities | 744.2 | 509.3 | |
Cash Flows From Investing Activities | |||
Capital expenditures | (242.5) | (202.9) | |
Payments for acquisitions and cost method investments, net of cash acquired | (5.4) | (24.8) | |
Proceeds from divestitures, net of cash divested | 10.5 | 285.0 | |
Net cash provided by (used for) investing activities | (237.4) | 57.3 | |
Cash Flows From Financing Activities | |||
Principal payments on term loan | (300.0) | (321.5) | |
Repayments of revolving credit facility | — | (175.0) | |
Payment of debt issuance costs and discounts | 0.1 | (2.1) | |
Proceeds from issuance of treasury shares | — | 5.7 | |
Repurchases of ordinary shares | (100.0) | (175.0) | |
Cash dividends on preferred shares | (75.5) | (75.4) | |
Proceeds from stock options exercised | 0.5 | 0.9 | |
Payments related to finance lease | (1.0) | (1.9) | |
Payments related to tax withholding for stock-based compensation | (20.6) | (14.9) | |
Net cash provided by (used for) financing activities | (496.5) | (759.2) | |
Effects of exchange rates | 3.6 | (38.2) | |
Net change in cash and cash equivalents, including restricted cash | 13.9 | (230.8) | |
Cash and cash equivalents, including restricted cash, beginning of period | 356.8 | 587.6 | |
Cash and cash equivalents, including restricted cash, end of period | $ 370.7 | $ 356.8 | |
Supplemental Cash Flow Information: | |||
Cash paid for interest | $ 273.5 | $ 251.5 | |
Cash paid for income tax | $ 42.9 | $ 63.7 | |
Supplemental Revenues Information
(Amounts in tables may not sum due to rounding)
Annualized Contract Value ("ACV") represents the annualized value for the next 12 months of subscription-based client license agreements, assuming that all expiring license agreements during that period are renewed at their current price level. The following table presents our ACV as of the periods indicated.
December 31, | Change(1) | ||||||
(in millions, except percentages); (unaudited) | 2023 | 2022 | $ | % | |||
Annualized Contract Value | $ 1,591.9 | $ 1,581.9 | $ 10.0 | 0.6 % | |||
(1) The change in ACV was primarily from organic ACV growth of | |||||||
The following tables present our revenues by type and by segment for the periods indicated, as well as the drivers of the variances between periods, including as a percentage of such revenues.
Three Months Ended | Change | Percentage of Change | ||||||||
(in millions, except percentages); (unaudited) | 2023 | 2022 | $ | % | Acquisitions | Disposals | FX | Organic | ||
Subscription revenues | $ 410.8 | $ 399.0 | $ 11.8 | 3.0 % | — % | (1.5) % | 1.9 % | 2.6 % | ||
Re-occurring revenues | 119.1 | 112.7 | 6.4 | 5.7 % | — % | — % | 1.9 % | 3.8 % | ||
Transactional and other revenues | 153.8 | 163.6 | (9.8) | (6.0) % | — % | 0.8 % | 1.5 % | (8.3) % | ||
Revenues, net | $ 683.7 | $ 675.3 | $ 8.4 | 1.2 % | — % | (0.7) % | 1.8 % | 0.1 % | ||
Year Ended | Change | Percentage of Change | ||||||||
(in millions, except percentages); (unaudited) | 2023 | 2022 | $ | % | Acquisitions | Disposals | FX | Organic | ||
Subscription revenues | $ 1,618.1 | $ 1,618.8 | $ (0.7) | — % | — % | (3.7) % | 1.3 % | 2.4 % | ||
Re-occurring revenues | 444.6 | 441.9 | 2.7 | 0.6 % | — % | — % | 0.4 % | 0.2 % | ||
Transactional and other revenues | 566.1 | 599.1 | (33.0) | (5.5) % | — % | (0.7) % | 0.6 % | (5.4) % | ||
Revenues, net | $ 2,628.8 | $ 2,659.8 | $ (31.0) | (1.2) % | — % | (2.4) % | 0.9 % | 0.3 % | ||
Three Months Ended | Change | Percentage of Change | ||||||||
(in millions, except percentages); (unaudited) | 2023 | 2022 | $ | % | Acquisitions | Disposals | FX | Organic | ||
Academia and Government | $ 339.4 | $ 328.5 | $ 10.9 | 3.3 % | — % | — % | 1.9 % | 1.4 % | ||
Intellectual Property | 225.6 | 221.9 | 3.7 | 1.7 % | — % | (2.2) % | 2.0 % | 1.9 % | ||
Life Sciences and Healthcare | 118.7 | 124.9 | (6.2) | (5.0) % | — % | — % | 1.2 % | (6.2) % | ||
Revenues, net | $ 683.7 | $ 675.3 | $ 8.4 | 1.2 % | — % | (0.7) % | 1.8 % | 0.1 % | ||
Year Ended | Change | Percentage of Change | ||||||||
(in millions, except percentages); (unaudited) | 2023 | 2022 | $ | % | Acquisitions | Disposals | FX | Organic | ||
Academia and Government | $ 1,323.3 | $ 1,280.1 | $ 43.2 | 3.4 % | — % | — % | 1.2 % | 2.2 % | ||
Intellectual Property | 862.7 | 927.1 | (64.4) | (6.9) % | — % | (6.9) % | 0.7 % | (0.7) % | ||
Life Sciences and Healthcare | 442.8 | 452.6 | (9.8) | (2.2) % | — % | — % | 1.0 % | (3.2) % | ||
Revenues, net | $ 2,628.8 | $ 2,659.8 | $ (31.0) | (1.2) % | — % | (2.4) % | 0.9 % | 0.3 % | ||
Reconciliations to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA represents Net income (loss) before the Provision (benefit) for income taxes, Depreciation and amortization, and Interest expense, net, adjusted to exclude acquisition and/or disposal-related transaction costs, share-based compensation, mandatory convertible preferred share ("MCPS") dividend expense, unrealized foreign currency gains/losses, restructuring expenses, non-operating income and/or expense, the impact of certain non-cash fair value adjustments on financial instruments, legal settlements, impairments, and other items that are included in Net income (loss) for the period that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenues, net.
The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the three months and the years ended December 31, 2023 and 2022 and reconciles these measures to our Net income (loss) for the same periods:
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions, except percentages); (unaudited) | 2023 | 2022 | 2023 | 2022 | |||
Net income (loss) attributable to ordinary shares | $ (863.0) | $ 304.3 | $ (986.6) | $ (4,035.6) | |||
Dividends on preferred shares | 19.1 | 19.1 | 75.4 | 75.4 | |||
Net income (loss) | (843.9) | 323.4 | (911.2) | (3,960.2) | |||
Provision (benefit) for income taxes | (18.0) | (77.8) | (101.3) | (28.9) | |||
Depreciation and amortization | 180.8 | 188.8 | 708.3 | 710.5 | |||
Interest expense, net | 75.2 | 77.0 | 293.7 | 270.3 | |||
Transaction related costs(1) | 3.1 | 6.1 | 8.2 | 14.2 | |||
Share-based compensation expense | 11.8 | 22.3 | 108.9 | 102.2 | |||
Gain on sale from divestitures | — | (278.5) | — | (278.5) | |||
Goodwill and intangible asset impairments | 844.7 | 0.5 | 979.9 | 4,449.1 | |||
Restructuring and other impairments | 14.7 | 9.8 | 40.0 | 66.7 | |||
Fair value adjustment of warrants | (1.5) | (4.1) | (15.9) | (206.8) | |||
Other(2) | 31.3 | 36.9 | 6.6 | (25.9) | |||
Adjusted EBITDA | $ 298.2 | $ 304.4 | $ 1,117.2 | $ 1,112.7 | |||
Adjusted EBITDA margin | 43.6 % | 45.1 % | 42.5 % | 41.8 % | |||
(1) Includes costs incurred to complete business combination transactions, including acquisitions, dispositions, and capital market activities, and includes advisory, legal, and other professional and consulting costs. | |||||||
(2) Primarily reflects the net impact of foreign exchange gains and losses related to the remeasurement of balances and other items that do not reflect our ongoing operating performance. 2023 also includes a | |||||||
Adjusted Net Income and Adjusted Diluted EPS
Adjusted net income is calculated using Net income (loss), adjusted to exclude acquisition and/or disposal-related transaction costs (such costs include net income from continuing operations before the provision for income taxes, depreciation and amortization, and interest income and expense from the divested business), amortization related to acquired intangible assets, share-based compensation, MCPS dividend expense, unrealized foreign currency gains/losses, restructuring expenses, the impact of certain non-cash fair value adjustments on financial instruments, legal settlements, impairments, and other items that are included in net income (loss) for the period that we do not consider indicative of our ongoing operating performance and the income tax impact of any adjustments.
Adjusted diluted EPS is calculated by dividing Adjusted net income by Adjusted diluted weighted average shares for the period. The Adjusted diluted weighted average shares assumes that all instruments in the calculation are dilutive.
The following tables present our calculation of Adjusted net income and Adjusted diluted EPS for the three months and the years ended December 31, 2023 and 2022 and reconcile these measures to our Net income (loss) and EPS for the same periods:
Three Months Ended December 31, | Three Months Ended December 31, | ||||||
2023 | 2022 | ||||||
(in millions, except per share amounts); (unaudited) | Amount | Per Share | Amount | Per Share | |||
Net income (loss) attributable to ordinary shares, diluted | $ (863.0) | $ (1.30) | $ 323.4 | $ 0.44 | |||
Dividends on dilutive preferred shares(1) | — | — | (19.1) | 0.01 | |||
Net income (loss) attributable to ordinary shares | (863.0) | (1.30) | 304.3 | 0.45 | |||
Dividends on preferred shares | 19.1 | 0.03 | 19.1 | (0.01) | |||
Net income (loss) and EPS | (843.9) | (1.27) | 323.4 | 0.44 | |||
Transaction related costs(2) | 3.1 | — | 6.1 | 0.01 | |||
Share-based compensation expense | 11.8 | 0.02 | 22.3 | 0.03 | |||
Amortization related to acquired intangible assets | 134.5 | 0.20 | 142.5 | 0.19 | |||
Goodwill and intangible asset impairments | 844.7 | 1.27 | 0.5 | — | |||
Restructuring and other impairments | 14.7 | 0.02 | 9.8 | 0.01 | |||
Fair value adjustment of warrants | (1.5) | — | (4.1) | (0.01) | |||
Other(3) | 31.3 | 0.04 | (241.6) | (0.32) | |||
Income tax impact of related adjustments | (31.3) | (0.05) | (94.9) | (0.13) | |||
Adjusted net income and Adjusted diluted EPS | $ 163.4 | $ 0.23 | $ 164.0 | $ 0.22 | |||
Adjusted weighted-average ordinary shares (Diluted) | 724.4 | 731.2 | |||||
(1) Reflects the dilutive impact of mandatory convertible preferred shares under the "if-converted" method during the period. | |||||||
(2-3) Refer to associated line item descriptions provided for the Adjusted EBITDA reconciliation table above. In 2022, the Other line item also includes the gain on sale from our divestiture of the MarkMonitor business. |
Year Ended December 31, | Year Ended December 31, | ||||||
2023 | 2022 | ||||||
(in millions, except per share amounts); (unaudited) | Amount | Per Share | Amount | Per Share | |||
Net income (loss) attributable to ordinary shares, diluted | $ (986.6) | $ (1.47) | $ (4,233.2) | $ (6.24) | |||
Change in fair value of private placement warrants | — | — | 197.6 | 0.29 | |||
Net income (loss) attributable to ordinary shares | (986.6) | (1.47) | (4,035.6) | (5.95) | |||
Dividends on preferred shares | 75.4 | 0.11 | 75.4 | 0.11 | |||
Net income (loss) and EPS | (911.2) | (1.36) | (3,960.2) | (5.84) | |||
Transaction related costs(1) | 8.2 | 0.01 | 14.2 | 0.02 | |||
Share-based compensation expense | 108.9 | 0.16 | 102.2 | 0.15 | |||
Amortization related to acquired intangible assets | 564.3 | 0.84 | 579.6 | 0.85 | |||
Goodwill and intangible asset impairments | 979.9 | 1.46 | 4,449.1 | 6.56 | |||
Restructuring and other impairments | 40.0 | 0.06 | 66.7 | 0.10 | |||
Fair value adjustment of warrants | (15.9) | (0.02) | (206.8) | (0.30) | |||
Other(2) | 6.6 | (0.06) | (304.4) | (0.52) | |||
Income tax impact of related adjustments | (181.7) | (0.27) | (112.4) | (0.17) | |||
Adjusted net income and Adjusted diluted EPS | $ 599.1 | $ 0.82 | $ 628.0 | $ 0.85 | |||
Adjusted weighted-average ordinary shares (Diluted) | 731.3 | 737.1 | |||||
(1-2) Refer to associated line item descriptions provided for the Adjusted EBITDA reconciliation table above. In 2022, the Other line item also includes the gain on sale from our divestiture of the MarkMonitor business. | |||||||
Free Cash Flow
Free cash flow is calculated using Net cash provided by operating activities less Capital expenditures. The following table reconciles our non-GAAP free cash flow measure to Net cash provided by operating activities:
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions); (unaudited) | 2023 | 2022 | 2023 | 2022 | |||
Net cash provided by operating activities | $ 190.9 | $ 136.9 | $ 744.2 | $ 509.3 | |||
Capital expenditures | (63.9) | (46.4) | (242.5) | (202.9) | |||
Free Cash Flow | 127.0 | 90.5 | 501.7 | 306.4 | |||
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit facilities, dated as of October 31, 2019, and the indentures governing our secured notes due 2026 issued by Camelot Finance S.A. and guaranteed by certain of our subsidiaries, and the indentures governing the secured and unsecured notes issued by Clarivate Science Holdings Corporation in August 2021, respectively. In addition, the credit facilities and the indentures contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants.
Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the credit facilities and the indentures and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business.
Standalone Adjusted EBITDA is calculated under the credit facilities and the indentures by using our Consolidated Net income (loss) for the trailing 12-month period (defined in the credit facilities and the indentures as our
The following table bridges Net income (loss) to Adjusted EBITDA to Standalone Adjusted EBITDA, as Adjusted EBITDA reflects a substantial portion of the adjustments that comprise Standalone Adjusted EBITDA for the period presented:
(in millions); (unaudited) | Year Ended December |
Net income (loss) attributable to ordinary shares | $ (986.6) |
Dividends on preferred shares | 75.4 |
Net income (loss) | (911.2) |
Provision (benefit) for income taxes | (101.3) |
Depreciation and amortization | 708.3 |
Interest expense, net | 293.7 |
Transaction related costs(1) | 8.2 |
Share-based compensation expense | 108.9 |
Restructuring and other impairments | 40.0 |
Goodwill and intangible asset impairments | 979.9 |
Fair value adjustment of warrants | (15.9) |
Other(2) | 6.6 |
Adjusted EBITDA | $ 1,117.2 |
Realized foreign exchange loss (gain) | (9.1) |
Standalone Adjusted EBITDA | $ 1,108.1 |
(1-2) Refer to associated line item descriptions provided for the Adjusted EBITDA table for the year ended December 31, 2023 above. | |
The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA margin for the 2024 outlook and reconciles these measures to our Net income (loss) for the same period:
Year Ending December 31, 2024 (Forecasted) | |||
(in millions) | Low | High | |
Net income (loss) attributable to ordinary shares | $ (160) | $ (100) | |
Dividends on preferred shares(1) | 35 | 35 | |
Net income (loss) | (125) | (65) | |
Provision (benefit) for income taxes | 60 | 60 | |
Depreciation and amortization | 720 | 720 | |
Interest expense, net | 275 | 275 | |
Restructuring and other impairments(2) | 20 | 20 | |
Transaction related costs | 20 | 20 | |
Share-based compensation expense | 85 | 85 | |
Adjusted EBITDA | $ 1,055 | $ 1,115 | |
Adjusted EBITDA margin | 41 % | 42 % | |
(1) Dividends on our MCPS are payable quarterly at an annual rate of |
(2) Reflects restructuring costs expected to be incurred in 2024 associated with the Segment Optimization restructuring program. |
The following table presents our calculation of Adjusted Diluted EPS for the 2024 outlook and reconciles this measure to our Net income (loss) per share for the same period:
Year Ending December 31, 2024 (Forecasted) | |||
Low | High | ||
Per Share | Per Share | ||
Net income (loss) attributable to ordinary shares | $ (0.24) | $ (0.14) | |
Dividends on preferred shares(1) | 0.05 | 0.05 | |
Net income (loss) | (0.19) | (0.09) | |
Restructuring and other impairments(2) | 0.03 | 0.03 | |
Transaction related costs | 0.03 | 0.03 | |
Share-based compensation expense | 0.12 | 0.12 | |
Amortization related to acquired intangible assets | 0.75 | 0.75 | |
Income tax impact of related adjustments | (0.04) | (0.04) | |
Adjusted Diluted EPS | $ 0.70 | $ 0.80 | |
Adjusted weighted-average ordinary shares (Diluted)(3) | 733 million | ||
(1-2) Refer to associated line item descriptions provided for the Adjusted EBITDA outlook reconciliation table above. |
(3) For the purposes of calculating adjusted diluted EPS, the Company has excluded the accrued and anticipated MCPS dividends and assumed the "if-converted" method of share dilution. |
The following table presents our calculation of Free Cash Flow for the 2024 outlook and reconciles this measure to our Net cash provided by operating activities for the same period:
Year Ending December 31, 2024 (Forecasted) | |||
(in millions) | Low | High | |
Net cash provided by (used for) operating activities | $ 685 | $ 765 | |
Capital expenditures | (265) | (265) | |
Free Cash Flow | $ 420 | $ 500 | |
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SOURCE Clarivate Plc
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