Clarivate Plc

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clarivate Q4 and full year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed with the number one on your telephone keypad. If you would like to draw your question, press star one again. Thank you. I would now like to turn the call over to Mark Donohue, VP of investor relations. Please go ahead.

Thank you and good morning, everyone. Thank you for joining us for the Clarivate fourth quarter and full year 2024 earnings conference call. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Clarivate. And you rebroadcasted this information in all or in part without prior written consent of Clarivate is prohibited. And the company earnings call presentation is available on the investor relations section of the company's website. During our call, we may make certain forward looking statements within the meaning of applicable securities laws. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the business or developments in Clarivate industry to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward looking statements. Information about the factors that could cause the actual results to differ materially from anticipated results or performance can be found in Clarivate's filings with the FTC and on the company's website. Our discussion will include non-GAAP measures or adjusted numbers. Clarivate believe non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but they are supplement to and should not be considered in isolation or substitute for GAAP financial measures. Reconciliation of these measures, these GAAP measures are available in our earnings release and supplemental presentation on our website. With me today are Amadi Shimtov, Chief Executive Officer and Jonathan Collins, Chief Financial Officer. After our prepared remarks, we'll open up the call to your questions. And with that,

it's a pleasure to turn the call over to Amadi. So good morning everyone and thank you for joining us. On this call this morning, we are going to provide additional details of our value creation plan, our 2024 results and our 2025 financial outlook. Our results demonstrate we have a strong foundation of products and assets and workflow solutions. They also show that we have work to do to deliver L.C. organic growth and build for the future. We are underway to return to organic growth. We have already started to implement our VCP which I presented to you in November. Today, I will provide more details on this plan, including some of the things we have already completed and will be doing in 2025. We also announced that we have retained financial advisors to help us in evaluating strategic alternatives to unlock value. This may include divesting business units or an entire segment. There is no guarantees that anything actual will arise from this process. We will provide update when appropriate. I'm confident this is the right plan to deliver shareholder value and return a clarifying to healthy organic growth. Turning to slide seven, let me give you a reminder of our value creation plan. Our VCP is focused on improving execution and accelerating revenue growth. The first three pillars include revenue optimization, improving sales execution, and accelerating innovation. These initiatives will improve our business performance, drive better revenue predictability, and improve financial and operational efficiency. Our fourth pillar, portfolio rationalization addresses opportunities to streamline our solutions portfolio through diversities. Now let's talk about what was accomplished in the last three months in executing our plan and what lies ahead for the remainder of 2025. Improving the predictability of our revenue and driving core subscription and reoccurring sales is key priority of the plan. In academia and government, we recently announced that we are moving to subscription only strategy for ProQuest eBooks and digital collection. This is a meaningful step change in our -to-market strategy for this product line. ProQuest eBooks, it is the world's largest subscription of academic eBooks, including more than 700,000 titles. ProQuest digital collections offer more than 160 million primary source items plus scholarly journals, videos, and audio specs. With the launch of this new product offering, we will phase out one-time transactional sales of eBooks, digital collections, and print books by the end of 2025. The change will allow us to focus our growth on investing in subscription-based solution, which will make up 90% of ANG portfolio. In life science, we launched DLG Fusion, a new modular subscription-based real world data analytics product. This will shift focus from transactional data brokering to new patient insight subscription products. We will dispose the increasingly high-risk data reselling business model. We are positioning ourselves to offer broader set of complimentary healthcare insight product, which increase our value proposition to our life science buyers. We plan to exit real world data direct line system market, winding down by fourth quarter 2026. As Jonathan will discuss, we expect benefit for moving in this strategic direction. It will reduce volatile transaction revenue by approximately $200 million, accelerate organic growth, make it more predictable by increasing our recurring revenue mix from 80 to 87%, and potentially higher over time. Improve our profit margin by approximately 150 basis points, and have a minimal impact on our free cash flow. Now let's discuss what we've done on our sales execution. We have taken steps to improve sales execution in each of the three segments in the area of talent, organization, customer engagement, and sales force incentives. Starting with people, we are attracting and promoting experienced proven sales leader to lead specific functions. Second, we have optimized reporting structure to increase accountability and empower regional sales leader to drive new business. This will strengthen our go-to market capabilities and drive closer alignment with core strategic priorities. We have also realigned account management models around specialist solutions area to capitalize on in-house expertise and more closely align with our customer needs. Third, we are scaling and investing in dedicated customer success team. We are enhancing our resources and tools to improve customer engagement and coverage. Ultimately, this will help us to strengthen and grow retention rates along increasing our upsell and cross-sell opportunities. And lastly, we are refocusing incentive models across the company to reward success for driving subscription and reoccurring revenue growth. This is, there is more work to do in all this area, but we have made substantial progress in a short time. Turning to our third pillar, product innovation. In recent years, we have made a lot of smart investment to harness the power of technology and AI. We are seeing growing adoption and positive usage trends. For example, academic AI platform was introduced and developed in a number of ANG products, including research assistant for wave of science and Primo. It was also introduced in life, it is also introduced with in-live sciences with our new product offering, DRG Fusion, and in IP with AI patent search. We continue to develop an enhanced product across all the three segments, which will drive improved customer adoption and usage. Across academia, we are leveraging academic AI, which includes the use of large language model to drive innovation. ANG is also strengthening the academic AI platform with agenting AI capabilities, and will introduce a powerful AI agent builder and pre-built AI agents in 2025. Within life science, the team is rapidly enhancing the Cortelis R&D platform through integration of scientific AI research assistance by leveraging the ANG AI platform. We also started for implementing implementation of Cortelis regulatory intelligence conversational search. Within IP, we have series of exciting AI product launches in 2025 that will provide solution across the IP lifecycle. This includes enhanced AI patent drafting and new AI patent monitoring product, a long size of series of AI search capabilities trained on the DelWin unique proprietary data. We expect this new product offering is to start to inflect in our ACV this year, and currently expect most of the revenue benefits will come in 2026 and beyond. The fourth pillar of the BCP involves streamlining our solution portfolio to increase execution, optimize capital allocation, and unlock value. Last year, we completed the divestiture of two product lines, ScholarOne and Valleypad. We intend to continue to rationalize our portfolios throughout the year. As I mentioned, we are already working with our financial advisor to help us evaluate strategic alternatives for business unit or an entire segment. Since rolling out our BCP plans last November, we undertook several important actions and achieved several key milestones. We recently completed company-wide review of our teams processes and operations to streamline and improve efficiency. This is an important step in the value creation plan to fund investment and lower cost structure. Looking ahead, slide 12 outlines our expected cadence of new product releases, advancing the disposal and transition certain transactional products to subscription. During the second half of 2025, we expect to complete the disposal of transactional books business and the transition of digital collection from transaction to a subscription model. In summary, the BCP is well underway. We expect to return to business to healthy organic growth and now include a review of strategic alternatives, which will include the sales of a business unit or an entire segment. We are aggressively moving forward to improve operational performance, our financial results and create shareholder value I look forward to sharing more details on future annual goals. And with that, I would like to turn it over to Jonathan Johnson, please. Thank you, Marty.

Slide 14 is an overview of our fourth quarter and full year financial results compared with the same periods from the prior year. Q4 revenue was 663 million, bringing the full year to 2.56 billion. The fourth quarter change was largely inorganic as a result of the ScholarOne and ValleyPAT divestitures as the rate of organic decline improved from .5% September year to date to .7% in the fourth quarter. The fourth quarter net loss was 192 million, an improvement of 671 million compared to the same quarter in 2023. And the full year net loss also improved by 319 million, both due to considerably lower non-cash asset impairment charges related to goodwill and other. Adjusted diluted EPS, which excludes the impact of one-time items like the impairments was 21 cents in Q4, bringing the full year to 73 cents, which was within the original guidance range we provided nearly a year ago. Operating cashflow was 141 million in the quarter, taking the full year to 647 million. The change compared to last year is almost entirely driven by lower adjusted EFDAF and higher working capital. Please turn with me now to page 15 for a closer look at the drivers, the fourth quarter, top and bottom line changes from the prior. At the end of the third quarter, our business had declined organically by .5% year to date. However, we paired the rate of decline by 80 basis points to .7% in the fourth quarter on increased transactional sales, which grew just over half a percent, largely due to improved performance in our A and G segment. The transactional growth was offset by a 1% decline in our recurring revenue types, subscription and reoccurring combined, which was largely driven by timing of year-end patent renewals compared to the prior year. The net effect was a 5 million reduction to organic revenue compared to the same period in the prior year, but careful operating expense management mitigated the revenue decline, resulting in a million dollar increase in adjusted EBITDA on the organic revenue change. We experienced inorganic declines of 15 million on the top line and 8 million on the bottom line due to the Scholar I and Valley Path divestitures, which were nominally offset by the acquisitions of Global Q and Roman. Due to the recovery of the US dollar against a basket of foreign currencies, namely the Euro and the pound, during the fourth quarter, foreign exchange lowered the bottom line by 6 million as we recognize fewer transactional gains compared to the same period last year. Page 16 provides an overview of the drivers of the full year top and bottom line changes compared to 2023. Our fourth quarter results brought our full year organic revenue change to a negative 1.4%, lowering revenue by 35 million. Recurring revenues were essentially flat organically as subscription growth of nearly 1%, which was in line with our ACV growth, was offset by recurring revenues. The entire organic change for 2024 was caused by our transactional lines of business, which declined 6.5%. Operating expenses related to the organic change were down 5 million as cost inflation was more than offset by cost efficiencies. The Valley Path and Scholar I divestitures, none of a small offset by the acquisitions of Motion Hall, Global Q and Roman, caused inorganic declines of 32 million on the top line and 18 million on the bottom line. Foreign exchange lowered revenue by 5 million and profit 9 million compared to 2023 on the translation of foreign denominated subsidiaries and lower transactional gains. Please turn with me now to page 17 to step through the conversion from adjusted EBITDA to free cash flow. Free cash flow is 59 million in the fourth quarter, which brought full year free cash flow, 158 million, a conversion of 34% on adjusted EBITDA. The changes versus prior year were driven largely by the lower adjusted EBITDA, we just covered on the prior page, higher working capital, largely due to timing of payments and higher capital spending to accelerate product innovation. In the fourth quarter, we use the combination of the free cash flow we generated, excess cash on hand and the proceeds from the Scholar I divestiture to prepay 140 million of our term loan and repurchase another 19 million shares of common stock. It brought our full year capital allocation to near symmetry between the leveraging and share repurchases at about 200 million each. Please turn with me now to page 18, where I'll dimension the impact of the strategic disposals relating to the first pillar of the VCP, business model optimization, that Mahdi outlined just a few moments ago, by illustrating the estimated impact these product lines had on our financial performance last year. A central tenet of our value creation plan is to concentrate our focus on recurring revenues, which is the combination of our subscription and reoccurring order types. In order to do this, we've strategically selected three product lines, we are exiting the transactional business model and are introducing new subscription based offerings for select portions of each of these content sets. We anticipate multiple benefits from this strategic decision. We expect the business will grow faster, will become more predictable, we'll have improved profit margins, we'll increase the focus on our core businesses, improving the probability of accelerating their organic growth, and we'll have a negligible impact on our free cashflow. These assumptions are based on our experience with these product lines over the last few years, which is illustrated in the chart on the page. In the last column, we removed the impact estimated this decision would have had on last year's performance. Organic growth would have improved by 70 basis points due to a decline of 0.7%. Transactional revenues would have declined 200 million. Our revenue mix as defined by recurring revenues over total revenues would have improved by a full seven percentage points from 80 to 87%. While our adjusted EBITDA would have been lower by approximately 45 million, our profit margin would have been 150 basis points higher at about 43% and our capital spending would have been lower by 35 million, yielding a reduction in free cashflow of only 10 million with no impact on the conversion, which would have remained at 34%. As Mahdi highlighted earlier in the call, the vast majority of these revenue streams will cease by the end of this year. As a result, the impact I just outlined will phase in over the next couple of years. Let's turn to page 19 for a look at our full year guidance for 2025, and then I'll highlight our assumptions for the impact these strategic disposals will have this year on the following page. Beginning at the top of the page, we expect our annual contract value to accelerate by approximately 60 basis points, the one and a half percent at the midpoint of the range as we begin to recognize the benefits of the investments we've made. Recurring organic growth will likely remain flat this year at the midpoint of the range. The organic growth improvement associated with the strategic disposals will primarily affect the transactional order type, which is excluded from this metric. We anticipate revenue will approximate 2.34 billion at the midpoint of the range due to the strategic disposals, the divestitures last year, and a stronger US dollar. As a result of the strategic disposals, we expect our recurring revenue mix will improve by about 500 basis points from 80 to 85% this year, which will improve predictability and profit margins going forward. Moving down the page, we expect adjusted EBITDA in the range of 940 million to a billion, and to maintain our profit margin of .5% due to aggressive cost management. We anticipate diluted adjusted EPS between 60 and 70 cents, down 8 cents from last year at the midpoint, as the inorganic driven adjusted EBITDA decline, which I'll detail on the next page, will be partially offset by lower interest expense, as well as the benefit of a lower share count resulting from last year's stock repurchases. And finally, at the bottom of the page, we anticipate free cashflow of about 340 million at the midpoint of the range, as the adjusted EBITDA change will be largely offset by improved conversion from lower interest, working capital and capital spending. Please turn with me now to page 20 for a closer look at the full year top and bottom line changes we're expecting compared to last year. The expected changes in revenue and adjusted EBITDA this year compared to last year are largely driven by three inorganic factors and we're aggressively managing our cost structure to maintain our profit margin at about 41.5%. First, the strategic disposals are expected to lower revenue this year by approximately 140 million, but we're implementing 100 million of cost actions, which yield a profit impact of about 40 million. We expect the remaining 60 million revenue reduction will take place next year and we'll have a small impact on profit. Our revenue guidance range is intended to accommodate for the potential variability in the rate of decline of this revenue stream and we will actively manage our cost structure to ensure we deliver the expected profit outcome. Second, the divestitures of both Valley Patents Scholar One last year were lower revenue by 40 million and profit by 20 million. And finally, we anticipate a 25 million foreign exchange translation headwind on the top line and a headwind of about 10 million on the bottom line as the US dollar is expected to remain strong against the basket of foreign currency. These reductions to adjusted EBITDA will be largely mitigated in free cashflow. So let's turn to page 21 to step through the main drivers. One-time costs are expected to remain flat this year as we invest to achieve the cost efficiencies associated with the value creation plan. We do expect cash interest to improve by about 20 million compared to last year as a result of the debt we prepaid in the fourth quarter and the outlook for base rates via the forward curve. Cash taxes are expected to remain in line with last year. We anticipate the change in working capital this year will be negligible, which will represent an improvement over last year of about 20 million. And while we remain committed to investing in product innovation, the strategic disposals and cost efficiencies will improve capital spending by about 35 million. The net impact of these changes is free cashflow of about 340 million at the midpoint of the range and will result in an improvement of the conversion on adjusted EBITDA of about a hundred basis points. From a capital allocation perspective, we continue to have the flexibility between opportunistic share repurchases and deleveraging. In closing, we believe we have a strong foundation to build upon with best in class data and workflow assets that we deliver as a trusted provider from a blue chip customer base, underpinned by a robust financial profile and powered by a talented team of 12,000 colleagues around the world. As Madi outlined, we believe the value creation plan narrows our focus to increase our performance and will return the business to healthy organic growth in the next few years, leading to profit and cashflow accretion. We are committed to providing the near term progress on the leading indicators of success as we move through 2025. We have also acknowledged that there are multiple paths to create value for shareholders and we are actively engaging with our advisors to review and pursue strategic alternatives that could accelerate the value creation by monetizing undervalued assets. I wanna thank all of you for listening in this morning. I'm now going to turn the call back over to Kate to take your questions. And as a reminder, please limit yourself to one question and we'll have you return to the keynote for any additional. Kate, please go ahead.

At this time, I would like to remind everyone in order to ask the question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Manav Patnaik with Barclays, please go ahead.

Yeah, thank you. I guess, I had a broader question just around your overall government exposure, you know, a lot of questions around that. I was hoping you could help us frame what your direct exposures to the federal and state governments. And also, I guess indirectly, if they all get the academic and government solutions, especially if they get their funding cuts in other areas, how you think you can manage that as well?

So, hi, here, Matthew, I'm gonna answer this one. Thank you for the question. So I've been in the academia business for almost, for over 20 years. I've seen the academia business going through a lot of different cycles. And I remain optimistic that academia will prevail and will continue to grow in a certain, although in a low single digit, to meet single digit over time. Yes, we do have a percentage of our income coming from the US government spending. It's pretty small, but we do acknowledge the fact that if the federal fund will go down, we will be exposed to those. If the cuts are significant, we will be exposed. But as I mentioned earlier in my call, I'm optimistic about the trajectory and the future of this industry. I've been there for 20 years, gone through several cycles. I'm optimistic and positive about the future of the business. Thank

you. Next question, please.

Your next question comes from the line of Andrew Nicholas with William Blair. Please go ahead.

Hi, thank you for taking my question. Why don't you focus on the incentive model changes for the sales force? Can you maybe spend some time talking about the evolution of those structures and maybe more specifically how you expect it to change execution and success on that front?

I was out, this is Matthew, without going into too much detail into the score like this. You know, the models were tailored over years with a certain focus on one time versus subscription. They were focused on certain way with certain percentage on one time retention and new business. So in all the three segments, we have used a portion of the salesperson incentive, which goes into one time retention and new business. And we changed the model, we changed a little bit. We kind of fine-tuned this model to, you know, our salespeople with our concept that we go strongly after subscription and reoccurring so that salespeople should be compensated accordingly and incentivize the competency retaining, making sure that we are growing the retention rate and making sure we are selling more subscription as opposed to one time business. That's what we're doing in all three segments.

Thank you, Andrew. Next question, please.

Your next question comes from the line of George Tong with Goldman Sachs. Please go ahead.

Hi, thanks. Good morning. Reoccurring revenue in the quarter, hi. Reoccurring revenue in the quarter fell about 5% because of lower IP patent renewal volumes. You talked a little bit about timing at year end, but can you discuss initiatives under the value plan that can help improve reoccurring patent revenue trends?

Sure, George. Yeah, so the first part of your question, the primary driver of the decline in Q4 on the reoccurring order type were patent renewal volumes. They were lower due to the comparison with the prior year. We expected more of those to be renewed in Q4 earlier in the year, and some of those now are happening in the first quarter. So that's the primary driver of the fourth quarter change. To your point on the go-forward, it piggybacks a little bit on Mati's last comment, which is our sales incentive and focus for 2024 is more geared now towards the recurring order types. So by winding down some of these transactional business and shifting the pay mix towards the recurring revenue types, we expect to help build the book of business, not only in subscriptions, but also on our patent and trademark renewal business within the IP segment.

Got it, Burrow. Thanks for the question.

Again, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Your next question comes from the line of Owen Lau with OpenHimmer. Please go ahead.

Hi, good morning. Thank you for taking my question. So first of all, thank you for the detail on the BCP and 2025 guidance. And I do have a broader question on this. So there's a trade-off for your BCP and 2025 guidance. I think the BCP revenue and free cash flow would be down in 2025 because of inorganic disposal and also divestitures, but you can drive high organic ACV and recurring revenue mix. Why do you think this is the right trade-off and can we turn the company back to revenue growth trajectory in 2026 and beyond? Thanks.

I think this is Matthew, maybe Jonathan can add later. So when I came in, I've done my study, I met a lot of the sales organization, I met the managers, I met customers. And the notion that I go through this and some of my prior knowledge of A&G, I've run Procress before, the amount of energy and effort and attention and the drain we got from those one-time deals. Like this tarls business, and I'm also understand that the real world data is kind of the same. It's a lot of effort to do one-time deal and it's a distraction add to this, the low margin of the eBooks business, very low margin of the eBooks business. It was kind of a very intuitive and decision when we discussed the VCP with the management, this is a drain, this is just taking away time and we have a great engineering and product capabilities within the company. We have some very great product and we were also smart about transitioning the three and maybe we haven't spent enough time on this one, the three businesses we actually winding down, we didn't really want them down, we actually are transitioning them towards subscription. The Procress eBooks offering, which is subscription, there's the largest in the industry, the Procress data collection, we are almost the only vendor that provides those kinds of services. The real world data products offering, this is all we are transitioning the business as opposed to just purely disposing the business. When I came here, there was some mumbling about, maybe we can sell this business, maybe we cannot sell this business, the notion that we actually move those businesses and over time we have a high degree of conviction that we believe where we can transition this one-time business, maybe not -to-one, but over time we will transition into more subscription, re-carrying subscription base. This is what we do, a big portion of our business is going subscription, I mentioned we are moving from 80% to 87% subscription reoccurring after this disposal and I believe we can go even higher. Thank you, next question please.

Your next question comes from the line of Lomo Rosenbaum with Stiefel, please go ahead.

Hi, thank you for taking my question. I have a question in terms of the rate of investment in terms of new product innovation, like the key value driver in the company is really gonna be moving the organic revenue growth up and the capital spending in 25 is going down, you're keeping the margins basically flat despite dropping 200 million out of revenue. I'm just wondering is there enough investment going on into the company to drive a sustainable long-term organic growth rate that is gonna be respectable?

Yeah, thank you for the question, Shlomo, it's Jonathan. Just to point out a couple of items, our ability to maintain our margins and lower our capital expenditures this year in 2025 is directly correlated with the strategic disposals. So the way that we are thinking about this is we are continuing to invest in the core products. If it weren't for this, we would see some margin pressure because as you know, we firmly believe we need to continue to invest in the product innovation and the -to-market motion to return to healthy organic growth. So our ability to maintain margins and the ability to maintain our cashflow are a result of the strategic disposals that Mahdi highlighted that will help us to focus on the core business and have a good execution on those investments. Thank you.

I believe, this is Matthew, we have the right profile of investment into our business and let's not forget, you know, Gere and his team before me, they were focusing on innovation as well and they've introduced some very great products. If you look at the KDEMI-KI, they were introduced in the ANG segment which is empowering most of the ANG products, most of the product lines of Web of Science, Primo, eBooks business, we are repurposing the same framework and technology and one of the other things that I've introduced when coming in, I say, why don't we just take whatever was developed, the infrastructure and technology within ANG and implement it in other segments and what we're doing today is actually implementing the academic AI infrastructure capabilities and know-how in two other segments and the first one is obviously life science and we are gonna implement the academic AI infrastructure and know-how technology into Kortelis trying to expedite on some of the improvement we need to do within Kortelis. We are pretty optimistic about this one and we did sign or we are signing up some development partners for this. Changes that we are doing in Kortelis these days and more to come. Thank you. Thank you, Shlomo.

Your next question comes from the line of Surrender Send with Jeffries, please go ahead.

Thank you. Just following up on the earlier question, why not take margins down further at this point to kind of maybe speed up investment at this point and then as you talk about taking technologies from one segment to another or moving things across, does that make the, what I would call the divestiture process a bit more complex or how do we take those things into consideration as you do some of that stuff?

First of all, maybe to talk a little bit about the divestitures, I think there is a lot of logic to have those three segments together. There's a lot of advantages, synergies, costs, but those three segments can also operate on a standalone basis. Yes, there will be some exercise of separation that the segments if need be. I don't think, and yeah, when we make a decision to implement some of the technologies within Form A and G and others, yeah, we take into consideration that maybe in future, those segments will not be together. I don't think this is a big issue going forward. I think we have the right level of investment. I'm not suggesting we take the margin down. For me, when I came in, there was, I would tend to do less number of project of new product, but be laser focused. And that's my claim to fame, and it's something we've done in previous life. I work with the customers. So we sign up, I mentioned that we are signing up for the development partnership for Kotelis, the implementation of AI with Kotelis. I find that we simply are doing in a company too many small things as opposed to go big or go more aggressive on certain initiatives. And just to where I take in the company, I don't feel I'm pressured by the level of R&D or for innovation investment. I think we are in the right place. Thank you, next question,

please. Okay.

Your next question comes from the line of Peter Christensen with Citi, please go ahead.

Thank you, good morning. Marty, I'm just curious, you've reviewed the business, you've had a lot more time to look at it, and just thinking in the context of keeping all the three business lines together or potentially separating them. How should we think about the revenue synergy potential between these businesses? Are you more confident, less confident in the ability to drive those additions? And then just curious how you think about new products. Are they value added pricing kind of opportunities or a time expansion?

So they are both time expansions and also additional products. And I can talk on the three different segments, but first of all, I feel good about where we are in the pilot creation plan. Winding down those one time is gonna give us a lot of freedom to focus on the new products. So new products are expanding the time in some cases, and some of them are just improving the product. So for example, we take Web of Science. In Web of Science, we do ongoing investment, but we're also introducing, and we haven't talked about it today, it's like the Web of Science Research Intelligence. Web of Science Research Intelligence is like AI enablement. It's an advanced version of Insights, which basically this is after expanding the sound. We're gonna offer new services to our new product to our existing customer base. On IP, for example, we're also doing some new innovation, a product called IPCH, which we are already sitting with a lot of law firm and all of corporate. So we use the new product that we will be working on. We have Nestle as a customer, we wanna expand it and to go to the market aggressively with additional product, one specifically called IPCH, the IP communication hub, more on this area will come. But we are looking into customer base, but also expanding the volunteer within the customers as well. Thank

you. Thanks Pete. Our last question comes from the line of Ashish. So that with RBC Capital Markets, please go ahead.

Thanks for taking my question. So on the organic ACV inflection in 2025, how much of that is really coming from transitioning some of those transaction revenue more to subscription base versus an improved pipeline and demand environment? And so I was wondering if you could comment on the pipeline and the demand environment and what you're seeing on that front. And then if I can just sneak in a question on the strategic review, I was just wondering if you could provide any kind of high level color on what are the key strategic or financial criteria that you will use as part of the strategic review, thanks.

Sure, Ashish, maybe we can start with the latter question. So as we indicated in the script, what we'll explore is the opportunity to unlock value through potentially monetizing more valuable assets that aren't commanding that value based on where the company is valued today. So that's gonna be a key criterion. As Mahdi highlighted, we do believe that there are parts of our business including entire segments that are separable and can survive and thrive separate from Clarivate. So that's how we're thinking about it in the criteria. As it relates to ACV, it's gonna be a combination of factors. As you note, there will be some conversion associated with some of these new products, but the bigger benefit we expect to see are the investments in products that we've made over the last couple of years. So we've talked a lot about in each of our segments, continued investments we've made in the web of science and our research solution products within A&G. We think about the investments we've made in Cortellus and the Life Sciences Group and the investments we've made in Derwent with the new AI powered search just launching here in the last few months. So a combination of those with some potential benefit with the conversion to subscription products related to the VCP strategic disposals. That's what we believe will help to improve us into that one to 2% range on ACV. Thanks for the question Ashish.

Thank you all for joining us today. That will conclude our call. We look forward to updating you in the future on our VCP plans.