Clarivate Plc

time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mark Donahue, Vice President of Investor Relations. Please go ahead.

Thank you, Jordan, and good morning, everyone. Thank you for joining us for the Clarivate second quarter 2025 earnings conference call. As a reminder, this call is being recorded and webcast, and is copyrighted property of Clarivate. Any rebroadcast of this information in whole or in part without prior written consent of Clarivate is prohibited, and the accompanying our news call presentation is available in the Investor Relations section of the company's website. During our call, we may make certain forward-looking statements within the meaning of the applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, and may cause the actual results or achievements of the business or developments in Clarivate's industry that differ materially from the anticipated results, performance, achievements, or developments expressed or implied by such forward-looking statements. Information about the factors that cause actual results that differ materially from anticipated results or performance can be found in Clarivate's filings with the SEC and on the company's website. Our discussion will include non-GAAP measures, For adjusted numbers, ClaraBase leads non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but they are supplements, too, and should not be considered in isolation from or as a substitute for GAAP financial measures. Reconciliation of these measures to GAAP measures are available in our earnings release and supplemental presentation on our website. With me today are Monty Shintaz, Chief Executive Officer, and Jonathan Collins, our Chief Financial Officer. After prepared remarks, we'll open the call to your questions.

And with that, it's a pleasure to turn the call over to Madhu. Good morning, everyone, and thank you for joining us. We reported solid second quarter financials performance and delivered growth in our key metrics. We also made progress on the value creation plan, including AI-led product innovation, improving sales execution, and enhancing operational efficiency. On slide six. In the second quarter, we demonstrated our strategic positioning within the market. Organic ACV grew 1.3% compared to the prior year period and improved 40 basis points from the end of last year. This was driven by an important improvement in the subscription book due to higher renewal rate and new business wins. Total organic revenue in the second quarter grew 50 basis points and recurring organic revenue grew almost 1%. Adjusted EBITDA margin for the first half of the year increased 50 basis points to 41%, driven by internal cost efficiencies. Free cash flow continued to be strong as we generated $50 million in the second quarter. quarter and $161 million for the first six months of this year. I'd like to highlight that all of our segments shown improvement for the first half of the year. Our A&G business delivered 2% organic ACV and subscription revenue growth. IP returned to organic growth in patent annuities and is well positioned to benefit from AI Tailwind and life science, and health return to organic ACV growth. With a solid first half, we are reaffirming our full year to 2025 outlook. Jonathan will cover the financial results in more detail shortly. On slide seven, our value creation plan was launched in the fall of 2024, and it is on track with measurable progress across all key initiatives and KPIs. We have launched all major business optimization program to increase cost subscription and reoccurring revenue, which is enhancing sales predictability. We have completed most of the major operating model changes within our sales organization to improve new business generation, customer engagement, and retention. Since the launch of the VCP plan last October, we have delivered 10 cutting edge product and AI powered capabilities while focusing on developing AI enabled work class subscription based solutions in partnership with customers. And we are undertaking strategic review to assess alternatives across the business. If you turn to slide eight, I'll provide an update on the VCP starting with the AMD segment. Our proactive business model optimization, coupled with decades of experience in delivering data and analytic solutions to our clients, has strategically positioned us to anticipate and adapt to current market dynamics. We are on track to discontinue transactional sales of digital collections and books over the next year. This shift away from transactional sale is increasing recurring revenue growth by transitioning some of the business to the new ProQuest eBooks product and other content solution subscription. We are pleased with early adoption with over 70 wins to date and hundreds of customers currently evaluating this new model. Following this change in strategy, ANG subscription revenue now constitute 93%, 93% of the total segment revenue excluding disposal, up from 79% in the prior year period. In the first half of 2025, we have achieved a 96% renewal rate in ANG This is impressive results considering the backdrop characterized by reduction in the U.S. federal agency contracts, increased constraints on higher education research funding, and potential additional university budget cuts. It is also noteworthy that as at the end of July, 75% of global A&G subscription for the full year has successfully renewed. This is in line with last year's renewal pace. We continue to successfully invest in innovation across the A&G product portfolio with a focus on AI. We are very pleased by our success so far in product launches and customer adoption. More than 4,800 institutions have already adopted our AI tools to strengthen research support increase operational efficiency, and enhance student engagement. On slide nine. Our partnership within ANG continues to grow, including recent multi-year agreements with the Canadian Research Knowledge Network that will provide 55 universities greater access to Web of Science, fostering enhanced research collaboration and impact. We are also accelerating progress with next generation agentic AI solution. AI agents can independently play and execute multi-step processes by interacting with users, data sources, and tools. The expansion of our agentic AI platform marks a significant milestone as we implement responsible agentic AI to accelerate research and learning workflow. Our initial launch of the literature review agent in Web of Science exemplify this pioneering approach. The agent converts with the researchers to understand the research goals, then customize the specific literature review scope and define the proper output. This personal interactive experience keeps the researcher in the center which closely mimic working with human assistance. Finally, we are very pleased that Outsell, a leading research advisory firm in B2B technology, data, and information services, recognized Clarivate AI leadership among major scholarly research organizations, underscoring our position at the forefront of developing user-facing AI agencies. Moving to intellectual property segment on slide 10. After a challenging few years, our patent-renewed business returned to growth this year, with organic reoccurring revenue rising by about 1.5% in the first six months of 2025. The market-wide surge in AI innovation across industry is driving sustained growth in registered IT. We believe this trend will create favorable conditions for our patent renewal business. As an example, in the past year alone, patent filings for AI inventions have grown five-fold compared to pre-jet GPT levels. In addition, AI has the potential to double innovation output and build more defensible IP portfolio for industry power by IP and scientific research. The takeaway is that this strong market tailwind driven by the proliferation of AI innovation and technology adoption are fueling our work with customers, empower them to achieve higher levels of efficiency, and IP creation. Our IP segment is well positioned to capture this role as we continue to lead at the intersection of technology, innovation, and IP. Going to slide 11. During the second quarter, IPfolio, our industry-leading cloud-based IP management platform, designed for corporate intellectual property teams, grew new clients and partnerships over 50% year-over-year across global markets, including South Korea and Japan. We are now broadening and accelerating IP folio adoption across multiple industries, including the pharmaceutical and large law firms. Our expertise and comprehensive solutions have enabled clients such as WindBend to enhance their IP management practices and gain meaningful insights into emerging trends in the IP management. IP management transition. So this morning we have announced that Maroun Murad will join Clarivate as president of the IP segment. September 8, 2025. He joined us from Verisk Analytics, where he is the president for the Claims Solution Division. We are confident that his leadership abilities and expertise will further drive the IP business commitment to fostering innovation and growth. I would like to express my gratitude and appreciation to Gordon Samson for his dedication to the industry and his significant contribution to Clarivate's success. Turning into life science and healthcare segments. In life science, we are encouraged that the VCP effort have resulted in return to organic ACV growth during the first half of this year. We have been expanding our strategic reach, fostering innovation through subscription-based platform designed to support lab science and health customers. Our commitment to develop robust partnership is demonstrated by the recent extension of a long-term multi-million dollar agreement with a top 15 global pharmaceutical company. This achievement validates the importance of our Catalyst and DRG product and services to customers. Additionally, we continue to drive advancement in medtech by introducing next-generation commercial analytics. The launch of DRG Commercial Analytics 360, a dedicated subscription platform, empowers medtech organizations to enhance their commercial strategy and execution capabilities. As commercial budgets improve, we believe we will be in the best position to capitalize on an improving environment. On slide 14, value creation plan, I'm pleased that the VCP plan is on track. The first half of this year was marked by accelerated product innovation and significant number of new product launches and enhancement of the AI capabilities. We anticipate that the momentum of the product release will continue throughout all three segments in the second half of the year. By integrating AI functionalities into our offering, including Web of Science research, Derwent, and Cortellis, we aim to further improve outcome and value for our users. On slide 15, Now that you've heard our VCP sliding results across each of our segments, the fourth pillar of our VCP is evaluating strategic alternatives. Earlier this year, we initiated a formal process to enhance execution focus, optimize capital allocation, support future growth, and increase operational effectiveness. We are making progress and have narrowed the scope of the review. We anticipate communicating the results when we will report our year-end financial performance in February 2026. And lastly, slide 16. In closing, we are pleased to see improvements improved revenue performance for the first six months 2025, driven by organic HCV growth in A&G and life sciences segment, and the return of growth in the patent renewal business. The mix of organic recurring revenue to total revenue for the first half of the year is now 88%. an improvement of 800 basis points compared to last year. Our annual renewal rate across our subscription base improved to 93% during the first half of the year compared to 92% for the same period last year. We are moving in the right direction and seeing early indication that our plan is driving improved performance. It is encouraging to witness the initial sign of success which affirms the effectiveness of our strategies and the dedication of our teams, we remain focused on executing our plan to ensure sustained growth and value creation for all stakeholders. And with that, I would like to turn over to Jonathan. Thank you.