Clarivate Q1 Earnings Call Highlights

Key Points

• Clarivate posted Q1 revenue of $586 million with adjusted EBITDA of $241 million (a 41% margin), generated $79 million of free cash flow, saw adjusted diluted EPS rise to $0.18, and noted its subscription mix has moved to 89% as management credited progress under the Value Creation Plan.
• The company used cash to deleverage and return capital—retiring about $143 million of debt in Q1 (including redeeming the remaining $100 million of 2026 bonds), repurchasing ~$43 million of 2028/2029 bonds and 7 million shares—and expects to reduce net leverage from 4 turns to about 2.5 turns over the next few years.
• Clarivate reaffirmed full-year guidance, targeting organic ACV growth of 2–3%, an adjusted EBITDA margin near 43%, adjusted EPS of $0.75, and roughly $400 million of free cash flow, while accelerating AI product adoption and evaluating a potential sale of its Life Sciences & Healthcare business that could affect guidance if completed.

Clarivate NYSE: CLVT reported first-quarter 2026 results that management said marked a fifth consecutive quarter of improved performance, supported by progress under its Value Creation Plan (VCP) and a continued shift toward subscription-based offerings. CEO Matti Shem Tov told investors the company is “off to a solid start to the year” and said the quarter’s results keep Clarivate “on pace to achieve our full-year guidance.”

First-quarter results: revenue, margin expansion, and cash flow

Clarivate posted Q1 revenue of $586 million. Shem Tov said performance was supported by “continued VCP progress and execution across the portfolio,” with the company emphasizing improving revenue quality through a subscription-first approach.

Organic annual contract value (ACV) growth was 1.6%, and subscription organic revenue growth was 1.7%, which Shem Tov attributed to “increased adoption of subscription-based solution across Clarivate.”

Adjusted EBITDA was $241 million, representing a 41% margin, up “almost 200 basis points year-over-year,” according to Shem Tov. CFO Jonathan Collins said the margin expansion was driven by “disciplined cost management” and was consistent with the company’s full-year outlook.

Clarivate generated about $79 million of free cash flow in the quarter. Shem Tov said the cash flow performance allowed the company to retire $143 million of debt during Q1.

Drivers behind year-over-year changes

Collins said the year-over-year revenue change was shaped by disposals, modest organic growth, and a favorable currency impact. He noted that Q1 revenue changes versus the prior year were “due to the inorganic disposals, partially offset by organic growth and a favorable foreign exchange impact.”

Clarivate reported a net loss of $40 million, which Collins said was a $64 million improvement from the prior year, driven by a foreign exchange benefit and lower restructuring, income tax, and interest expenses.

Adjusted diluted EPS increased nearly 30% year-over-year to $0.18. Collins attributed the improvement to adjusted EBITDA growth, lower interest and tax expense, and a lower share count due to repurchases completed last year.

Operating cash flow was $135 million in Q1, with Collins citing higher working capital usage tied to incentive compensation payments, partially offset by higher adjusted EBITDA.

Capital allocation: debt retirement and share repurchases

Collins said Clarivate used free cash flow and excess cash to take several balance-sheet actions during the quarter:

• Redeemed the remaining $100 million of bonds due later in 2026
• Repurchased $43 million of bonds due in 2028 and 2029 at a blended discount of about 10%
• Repurchased 7 million shares to offset dilution from stock-based compensation

Looking forward, Collins said the company intends to direct free cash flow toward further deleveraging, including early retirement of bonds. He outlined an expectation to retire secured notes before their July 2028 maturity and then begin retiring 2029 notes. Collins also said these actions are expected to reduce net leverage from 4 turns at the end of Q1 to about 2.5 turns “in a few years.”

Value Creation Plan progress: subscriptions, sales execution, AI, and portfolio actions

Shem Tov reiterated that the VCP—launched in early 2025—centers on four pillars: business model optimization, improved sales execution, accelerated AI innovation using proprietary data assets, and portfolio rationalization. He said those priorities are visible in “subscription mix, margin expansion, and debt reduction.” In closing remarks, Shem Tov said the company’s subscription mix has moved to 89%.

In Academia & Government (A&G), Shem Tov described continued strength in recurring revenue and highlighted adoption of ProQuest subscriptions, saying the company sold “over 600 new subscriptions” in the last 12 months. He also cited a multi-product institutional win with Fuyao University of Science and Technology in China.

On AI-enabled customer outcomes, Shem Tov said Clarivate’s academic AI solutions are “optimizing key library workflows,” producing “30%-60% decrease in manual repetitive work” and “doubling or even quadrupling throughput.” In Q&A, he added that agentic AI deployments in the Alma Prime Library product have enabled customers to “quadruple the throughput.”

In Intellectual Property (IP), Shem Tov said Clarivate is seeing “encouraging signs” from greater renewal discipline. He stated renewal rates improved about 100 basis points in Q1, helping organic ACV trends improve to “nearly flat.” Collins added that organic ACV in IP is now “getting pretty close to flat after a few years of decline.” Clarivate also cited wins with national IP offices, including a “major trademark analytics contract and large-scale digitization programs” with the U.S. Patent and Trademark Office. The company also released Brand Image Search, which Shem Tov said adds AI capabilities such as clustering and multilingual support.

In Life Sciences & Healthcare (LS&H), Shem Tov said the shift from transactional sales to subscription is “on track” and that Q1 included an “almost 1% rise in organic revenue.” He highlighted a new top 20 global pharmaceutical customer win for DRG Fusion, described as a real-world data analytics platform, and a six-figure subscription win for a biotech customer for OFF-X, a safety intelligence platform.

Clarivate also emphasized partnerships intended to extend its content into customer AI workflows. Shem Tov said the company integrated Cortellis Regulatory Intelligence with Anthropic Claude, combining Clarivate data with AI reasoning. He further noted that Clarivate announced a new A&G product, Nexus Connect, designed to bring institutional content into tools such as “ChatGPT” and “Copilot,” enabling customers to access content through their preferred large language models.

As part of portfolio rationalization, Shem Tov reiterated that Clarivate announced in February it is “actively pursuing the sales of the life science and healthcare business.” He said the process is ongoing and cautioned there is “no guarantee of the outcome.” Collins noted that full-year guidance assumes Clarivate will own LS&H for the entire year and said guidance may need to be revised later in 2026 if a sale agreement is reached.

Guidance reaffirmed; company discusses seasonality and transactional trends

Collins reaffirmed Clarivate’s full-year guidance, unchanged from February. He said the company expects organic ACV growth of 2% to 3% and recurring organic growth of about 1.5% at the midpoint. Due “entirely to the wind down of the businesses we are disposing,” Clarivate expects revenue to decline by about $100 million at the midpoint to $2.36 billion.

At the midpoint, Clarivate expects adjusted EBITDA margin to rise to nearly 43%, adjusted diluted EPS to reach $0.75, and free cash flow to increase about 10% to $400 million.

In discussion of quarterly dynamics, Collins said recurring organic revenue growth in Q1 of 1% came in higher than expected due to patent renewal timing, and he anticipates “a slight pullback in Q2” from phasing before growth accelerates in the second half. He also noted transactional revenues declined a “couple percent” in Q1, driven primarily by A&G, and said the full-year outlook assumes transactional revenue will be “down slightly” year-over-year. Collins attributed some of the A&G transaction softness to the timing of software implementations, which he said “can be a little lumpy quarter to quarter.”

During Q&A, Shem Tov said Clarivate is seeing AI product adoption across segments, citing “more than 400 institution” using academic AI solutions and “over 10,000 researchers and users” using AI product innovation in life sciences. He also pointed to growth momentum in China, saying Clarivate sold 15 new Web of Science businesses in China last year and is seeing momentum in Web of Science and Web of Science Research Intelligence.

Collins said the company expects to provide more detail later in the year on the size of internal AI efficiency opportunities, but added management is confident that AI-enabled efficiencies can support continued margin expansion and cash flow growth.

About Clarivate NYSE: CLVT

Clarivate plc is a global information and analytics company that provides insights and workflow solutions to accelerate the pace of innovation. The company delivers proprietary data, analytics, and expertise to support research and development in the life sciences, intellectual property management, academic institutions, government agencies, and corporations. Its core offerings include citation and patent databases, drug pipeline analytics, trademark research tools, regulatory compliance solutions, and market intelligence platforms.

Originally part of Thomson Reuters' Intellectual Property & Science division, Clarivate was established as an independent entity in 2016 following a spin-off transaction.

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