Clarivate NYSE: CLVT said during its earnings call that it expects organic recurring revenue and annualized contract value growth to improve in the second half of the year, citing renewal visibility, product momentum and a growing pipeline of AI-enabled offerings.
Management said second-quarter and first-half performance was consistent with its original expectations, despite a pullback in recurring organic growth during the second quarter. The company reported organic ACV growth of approximately 1.5% at the end of June, generally in line with first-half organic growth in subscription revenue of about 1.2%.
Responding to a question from Wolfe Research’s Scott Wurtzel about renewal timing, a Clarivate representative said the company does not view recent timing effects as evidence of longer renewal cycles. “It’s not always going to be linear,” the representative said of ACV progress, while adding that renewal rates remain strong and that the company sees opportunities to convert new products into sales.
Clarivate said it expects ACV and organic recurring revenue growth to “inflect” in the second half. The company noted that its Academic and Government business had secured 75% of its business for the year as of the end of July, a level similar to the prior year. Management said the fall is an important renewal period and that it has good visibility into the remainder of the year.
AI Products and MCP Distribution
In response to Morgan Stanley analyst Toni Kaplan’s question about the company’s Model Context Protocol, or MCP, opportunity, Clarivate said it is pursuing AI innovation through both native products and the incorporation of its proprietary data into customers’ AI environments.
The company said it is working on 19 initiatives involving external and new products. Management described AI enablement of existing products as an opportunity to support new customer wins, retention and AI-specific pricing for new offerings.
Clarivate identified Web of Science Research Intelligence, Harmaspecto and IPOne as potential new revenue streams. It also referenced Nexus Connect in its Academic and Government segment as a product involving MCP.
Management said larger customers may be more likely to seek to embed Clarivate capabilities and proprietary data into their own corporate AI products and infrastructure through MCP. Smaller customers may instead use the company’s products within Clarivate’s own environment, though the company characterized the opportunity as being in its early stages.
Clarivate also said its products and data are being embedded into platforms including Anthropic, ChatGPT and other general-purpose large language models.
IP and Academic & Government Momentum
Management expressed optimism about both its Intellectual Property and Academic & Government businesses. In IP, the company said recurring revenue returned to flat growth in the second quarter and is expected to improve in the second half.
The company said Simon, who has spent 20 years in the industry and recently rejoined Clarivate, will support efforts to accelerate the IP turnaround. Management pointed to its annuity, software and intelligence assets, as well as AI innovation, as factors supporting that effort.
Clarivate highlighted RiskMark, which it said won three awards, and IPOne, which management described as an agentic environment for IP professionals that combines agentic capabilities with proprietary data. The company said it aims to compete in the IP market through those capabilities rather than relying solely on traditional data offerings.
In Academic and Government, management cited Web of Science Research Intelligence, Harmaspecto, Nexus Connect and other product-hub innovations as drivers of building momentum.
Transactional Revenue and Life Sciences Sale
Clarivate said transactional revenue faced pressure in the second quarter, including headwinds in its life sciences business. Management said the life sciences business remained part of the company’s organic results for the quarter because the agreement to sell the business was reached after quarter-end.
The company said it has been working to shift certain transactional offerings toward subscription models. It cited Web of Science backfiles as one example and said this effort should gradually increase subscription rates beyond 92%.
Management also said transaction-based revenue can be uneven from quarter to quarter. In its other two businesses, Clarivate said it had anticipated comparisons against several second-quarter items that would create headwinds, but expects those pressures to ease in the second half.
Clarivate’s full-year guidance assumes transactional revenue will decline slightly year over year, though management expects improvement in the second half. Addressing a question about whether customer losses affected life sciences results, the company said there was no discrete client loss or individual issue to highlight.
Regarding the pending sale of the life sciences division, management said the process is proceeding as expected. It said required approvals are customary, are expected in coming months, and that the transaction is expected to close before year-end.
CEO Matti Shem Tov concluded that Clarivate has “building block[s] in place to accelerate organic growth” and remains focused on driving long-term shareholder value.
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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