Clarivate Plc

Thank you for standing by. My name is Carly and I will be your conference operator today. At this time, I would like to welcome everyone to the Clarivate fourth quarter and full gear 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would 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, Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us for the Clarivate fourth quarter and full year 2025 earnings conference call. As a reminder, this conference 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 earnings call presentation is available on the Investor Relations section of the company's website. During our call, we may make certain follow-looking statements within the meaning of the applicable securities laws. Such follow-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's 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 actual results to differ materially from anticipated results of performance can be found in Clarivate's filings with the SEC and on the company's website. Our discussion will include non-GAAP measures or adjusted numbers. Clarivate believes non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures. Reconciliation of these measures, the GAAP measures, are available in our earnings release and supplemental presentation on our website. With me today are Mahdi Shemtov, 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 Mahdi.

Good morning, everyone, and thank you for joining us today. We are at a positive inflection point in the Clarivate journey. In 2025, we delivered on our initial full-year financial guide for the first time since 2019. The value creation plan is working as evidenced by improved performance and forward outlook. We have accelerated organic ACV, organic recurring revenue, and enhanced our free cash flow conversion. Looking ahead to 2026, our guidance calls for 10% free cash flow growth and continued improvement in our KPIs. With strong cash generation, stable revenue retention rates of 93%, and a business that generates 97% of its revenue from proprietary solutions enhanced by AI, we see tremendous opportunity in front of us. Last February, We announced a strategic review of our business portfolio, which involved evaluating multiple options. After an in-depth analysis, we have launched a process to sell our life science and health business, which, if the deal is concluded, could accelerate value creation for shareholders. We believe selling this segment will allow further emphasis on the A&G NIP market and strengthen our balance sheet to reduce leverage. We are currently engaged in active discussion with interested parties. There are no guarantees we will reach an agreement. We will update the market when appropriate. While we understand the market's concern around AI disruption for software and information services companies in general, we believe our business is highly proprietary with significant modes. A few weeks ago, We launched a webinar titled Clarivate Intelligence Amplified in the Age of AI. If you have not viewed it yet, I encourage you to do so. For us, AI is not a disruption to our business model. It is an amplifier of what already sets us apart. Today, 97% of Clarivate's revenue comes from proprietary assets, including intelligent solutions, workflow software, and tech-enabled services. This reflects decades of strategic investment in proprietary content, expert enrichment and curation, and the development of software products embedded across customer workflows. This strong and proven foundation provides us with a significant advantage in the age of AI. Our customers operate in high-stake environments such as research, intellectual property, and highly regulated life science industry when provenance, accuracy, and trust are essential and non-negotiable. Let me explain our AI strategy. We are leveraging AI to capitalize on our strengths. By combining our proprietary data and deep domain expertise with cutting-end technology, we are delivering what we call intelligence amplified. This shows up in three ways. First, AI research assistants provide a conversational contextual search and discovery, a front door to our trusted intelligence, where customer can simply ask question in natural language and get precise answer backed by our proprietary data. Second, AI workflow agents are embedded directly into customer workflows, acting as digital analysts that enable execution at speed. Tasks that used to take hours or days can now happen in minutes. Imagine a patent analyst who has an AI agent that can monitor thousands of patents, identify relevant prior arts, and flag potential conflict automatically. That is the power we deliver. And third, through AI ecosystem access, we are extending our gold standard intelligence across the broader AI ecosystem via secured integrations such as MCP servers. By expanding our reach beyond clouded boundaries, We are ensuring our assets remain available to users as they develop new ways of working. For example, we recently introduced Nexus, which exemplifies our ecosystem access strategy. As students increasingly begin their research in general purpose AI tools, Nexus meets them where they are, embedding our gold-studded curated content such as Web of Science directly into public chat tools. This is how we extend the value of our proprietary assets beyond our own platforms, turning AI adoption into a distribution opportunity rather than a displacement risk. We will continue to capitalize on the benefits of AI by enhancing and developing solutions that are trusted by more than 45,000 customers globally We see this new technology as a legitimate accelerant to our organic growth. Now let's stand to 2025 results. I am proud of the results we delivered in 2025, which lay a strong foundation for 2026. We delivered nearly 2% organic HCV growth at the high end of the range. We also improved the mix of organic recurring revenue to 88% clear evidence of continued progress towards a more predictable subscription-based model. We delivered more than $1 billion of adjusted EBITDA and $365 million free cash flow. As Jonathan will cover in more details, we expect approximately 10% free cash flow growth in 2026. Our value creation plan has built strong momentum and better focus across the organization, which has improved our operational and financial performance. We optimized the business model, which has led to an improvement in our recurring revenue mix. We improved our sales execution and, as a result, delivered nearly 2% organic HCV growth representing approximately 90 basis point improvements year over year. We drove innovation forward by introducing 12 major products and AI-powered features, strengthening our unique position in the market. Our strategic review has led to the initiation of a process to sell our life science business. If successful, this will focus our organization and strengthen our balance sheet. Let me take you through each of our business segments where we have made meaningful improvements starting with academia and government. This segment delivered solid performance in 2025, achieving 2% organic ACV growth despite funding headwind in the U.S. academic market. On the innovation front, we launched 10 AI assistants and AI-native agentic solutions, and these are being used by over 4,000 institutions today. And here is the foundation that makes this all possible. 97% of our A&G revenue is generated from proprietary solutions. Last year, we successfully transitioned the business model away from transactional revenues. This increased our organic recurring revenue mix to 93% with mid-90s retention rates. Looking ahead, we expect organic growth acceleration as our AI innovation continues to materialize, supported by improving market dynamics. Now let us talk about the intellectual property business. It is powered by the industry's largest agent network and a comprehensive portfolio of solutions covering the full IP lifecycle. This includes patent and trademark-created proprietary data, decision intelligence, tech-enabled services, IP management software, and the largest annuity book in the market. This gives a scale, reach, and competitive advantage No one else can match. With a new leadership team, including the president, CTO, and the head of software, and clear priorities, we are confident in retaining IP to growth. On the innovation side, we launched five GenAI and AI-native products and enhancements last year. 2026 will bring additional AI product launches across the IP landscape. The changes we have implemented are starting to show up in the results. We delivered 270 basis points of year-over-year improvement in annuities revenue reflecting stronger execution. The outlook for IP is increasingly positive. The fundamentals are there, the theorem is aligned, and the AI-led innovation and products are resonating positively with our customers. Turning to life science and health. Life science and health is anchored in expert curated highly enriched data which is optimized for compliance critical workflows where accuracy, provenance, and trust are essential. We now have 11,000 global active users leveraging our AI research assistants and workflow agents. That is incredible adoption in a market where accuracy and trust are non-negotiable. And we are not slowing down. We are due to release more than 10 additional AI solutions this year. We have reached a clear inflection point. Cotelis, DRG, and Metex our three major product lines are now moving in the right direction with consistent quarterly ACV growth. Based on deals we closed last year and our current pipeline visibility, we expect a return to organic revenue growth in 2026. Now let's talk about where we are headed and why we are confident in the outlook. For 2026, we are guiding to 2% to 3% organic annual contract value growth. That is a meaningful acceleration from where we were just two years ago. On recurring organic revenue, we are targeting 1% to 2% growth for 2026, an improvement of almost 100 basis points compared to last year in the middle of the range. Finally, Free cash flow is expected to grow to about 400 million. That is approximate 10% increase over last year. I am optimistic that we can achieve our target in 2026 because we have built the foundation. We have optimized the business model. We have strengthened sales execution. We are accelerating innovation and we are rationalizing the portfolio. In closing, 2025 was a turning point for Clarivate. In 2026, we expect to continue to improve our key financial metrics. Under my leadership, we have built a more focused, accountable, and performance-driven culture, and we will maximize shareholder value through portfolio simplification and disciplined capital allocation. I will now turn the call over to Jonathan for a view of our financial results and outlook.