Clarivate Plc

Hello everyone, thank you for joining us and welcome to Clarivate's Q2 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Mark Donohue, Head of Investor Relations at Clarivate. Please go ahead.

Thank you and good morning everyone. Thank you for joining us for the Clarivate second quarter of 2026 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 forward-looking statements within the meaning of the 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's business to 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 to differ materially from anticipated results 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 an isolation from or as a substitute for GAAP financial measures. Reconciliation of these measures to get measures are available on earnings release and supplemental presentation on our website. With me today are Mati Shem Tov, Chief Executive Officer, Jonathan Collins, Chief Financial Officer, and Michael Easton, Chief Accounting 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 Mati.

Good morning, everyone, and thank you for joining us. The key messages today are straightforward. We are delivering on our commitment, and now we have a building block in place to accelerate organic growth. During the quarter, we advanced our AI innovation roadmap, grew organic ACV year over year, maintained disciplined cost management, and strengthened our balance sheet through de-levering. These actions will deliver further long-term value to shareholders. In the second quarter, we drove continued progress across the business. Organic ACV growth improved to 1.5% and profit margin has expanded to more than 42%. At the segment level, academia and government and life sciences and health each delivered 2% organic ACV growth. A sign of continued progress here is the shift from transactional to recurring revenue. We expect to see this continue in coming quarter as we focus on subscription revenue. In the intellectual property segment, reoccurring organic revenue improved to flat in the quarter, and we continue to expect a return to growth in the second half. We advanced key innovation milestones, including introducing two new agentic AI products, Nexus Connect and IP1, which I will discuss in greater detail later. and in early July, we announced the agreement to sell life science and health segment, sharpening our focus on AI driven transformative intelligence and enhancing our financial profile. I will also share more here in a minute. These results reflect the steady execution of the value creation plan, which we launched in late 2024. We are moving forward with urgency. Our progress is clear. We are investing wisely, operating with more discipline and directing resources towards the highest value growth opportunities. What differentiates Clarivate in this industry is our ability to apply AI to highly curated proprietary datasets that have been built and refined over decades. As a result, we believe that we are on a path towards accelerating our growth rate over the next couple of years. Turning to ANG segment. Our strategy is to be the trusted layer between AI and research. That means using Clarivate's proprietary data, domain expertise, and workflow solution to help institutions make better decisions with confidence and transparency. This quarter, we launch Web of Science Research Intelligence globally. This is an AI native platform for research strategy, impact, and funding. It is shaped by more than 50 development partners and early adopters across 20 countries. Its insights are grounded in publisher-neutral web of science data, and it provides full editorial provenance. It has already generated a multi-million dollar ACV pipeline, and we have secured 77 paying customers to date. This is a great example of incremental pipeline resulting from new AI-driven products. We also introduced Nexus Connect, an AI-native gateway that provides a single university connector within AI chat agents such as ChatGPT and Cloud. It allows students and researchers to access scholarly resources and services seamlessly integrating with various AI platforms to enhance the research experience. The important point is that we are embedding Clarivate proprietary intelligence into existing research workflow for the academic community. It is leading to new revenue streams. We are applying the same innovation approach to the IP segment. We announced the development of IP1, A unified AI platform that combines purpose-built AI agents with private, trusted proprietary assets and unique expertise. This platform's agentic AI capabilities allow IP professionals to efficiently solve both patent and trademark intelligence questions as well as simplify daily complex workflow across the entire IP lifecycle. IP1 is being developed in close collaboration with leading corporate IP teams and law firms. We look forward to discussing this in coming quarters. We are seeing much market validation for our IP innovation. Recently, RiskMark was named the best AI tool for lawyers at the 2026 CODI Awards. It was recognized for its use of predictive and generative AI to lower trademark risk assessment from hours to minutes. This marks the product's second industry recognition following its 2025 LegalTech Predictive AI Solution of the Year Award. In June, we were pleased to welcome Simon Webster as president of our IP segment. Simon is a proven leader in the global IP ecosystem with more than two decades of experience, including as CEO of CPA Global, which Clivate acquired in late 2020. During his time at CPA, the organization delivered compounded annual organic growth in the mid single digits. Our priorities in IP are to improve customer focus and retention across annuities and software, increase commercial intensity and accelerate AI innovation supported by our proprietary data assets. Importantly, our IP business has meaningful differentiators, scale, trusted relationship with leading law firms and blue-chip corporate IP teams, a strong reoccurring annuity and renewal engine, and differentiated proprietary content. We believe this strength combined with disciplined execution under Simon's guidance position IP to improve its performance over time. As mentioned before, in early July, we announced an agreement to sell our life science and health segment to Alteros. This marked an important step in our portfolio rationalization effort and is a clear example of the BCP in action. This transaction creates a more focused company as a subscription-first provider, simplifying our operating model and allowing us to make more targeted investments in organic growth. It also improves the quality of Clarivate's revenue base. On a pro forma basis, recurring revenue mix increases from 89% to approximately 92%, improving predictability, retention, and cash flow visibility. We plan to use the net proceeds to reduce debt, which extend our average maturity, strengthen our balance sheet, and enhances financial flexibility, enabling further shareholder value creation. Let me bring to your attention slide 12. I will walk you through the progress we have made since launching the value creation plan in late 2024. It starts with business model optimization. We have meaningfully shifted our revenue towards recurring subscription-based model. This gives us greater visibility, greater predictability, and higher quality base to build on. We have also improved our go-to-market. By sharpening how we sell and how we serve customers, we have improved the momentum of our recurring business and set a stronger foundation for future bookings. At the same time, we have accelerated our AI innovation. Across the business, we have a robust and growing portfolio of new AI-powered products, deepening the value we deliver to customers and reinforcing our competitive position. We have rationalized the portfolio. We have taken deliberate action to divest non-core assets, announcing several disposals so that our capital and our attention are concentrated on our two major markets. Which brings me to what is next, accelerating organic growth. With a more focused portfolio, a higher quality recurring revenue base, a stronger go-to-market engine, exciting new product, and a healthier balance sheet, we expect sequential improvement in recurring organic growth in the second half of 2026 and continued momentum into 2027. We are investing in the right opportunities and we are more confident than ever in our ability to execute, accelerate organic growth and deliver long-term value to shareholders. I will turn it over to Jonathan to discuss this quarter results in more detail.