What Clarivate (CLVT) Said on Its Q3 Earnings Call

Key Points

• Clarivate completed the sale of its Life Sciences & Healthcare segment ahead of schedule, refocusing on Academia & Government and Intellectual Property. The continuing business has about $2 billion in revenue, with 93% recurring organic revenue.
• Third-quarter recurring organic revenue grew 1.3% and organic ACV grew 1.8%, while adjusted diluted EPS rose to $0.21. Management also reported more than 300 basis points of adjusted EBITDA margin expansion and is targeting about $875 million in debt reduction this year.
• AI products are building commercial momentum: Web of Science Research Intelligence has won more than 100 institutions, and IPOne has a 151-customer sales pipeline ahead of its planned November early-adopter launch. Updated 2026 guidance calls for $1.965 billion–$1.985 billion in revenue and $320 million–$340 million in free cash flow.

Clarivate NYSE: CLVT said it completed the sale of its Life Sciences & Healthcare segment ahead of schedule during the third quarter, leaving the company focused on its Academia & Government and Intellectual Property businesses. Management said the reshaped company has approximately $2 billion in revenue, with recurring organic revenue representing 93% of the total.

Chief Executive Officer Matti Shem Tov said the divestiture is intended to position the company as a more focused recurring-revenue business while supporting organic growth, free-cash-flow expansion and debt reduction. He said both remaining segments are seeing commercial traction for AI-enabled products, including Web of Science Research Intelligence in Academia & Government and IPOne in Intellectual Property.

Third-quarter revenue from continuing operations was $482 million, while the company reported a loss from continuing operations of $26 million, roughly flat from a year earlier. Adjusted diluted earnings per share increased $0.03 year over year to $0.21, and year-to-date adjusted diluted EPS rose 20% to $0.59.

Recurring Revenue and ACV Trends Improve

Clarivate reported organic annualized contract value, or ACV, growth of 1.8% in the third quarter, an increase of 30 basis points from the prior-year period. Recurring organic revenue growth improved 110 basis points year over year to 1.3%.

In the Academia & Government segment, organic ACV and subscription revenue growth were about 2%, according to Shem Tov. The business has approximately $1.2 billion in revenue and a 95% recurring organic revenue mix. Clarivate said 99% of the world’s top 400 universities use its solutions, while its data supports 75% of national and regional research assessments.

Clarivate highlighted a multiyear agreement with France’s Abes to modernize the country’s national academic library system using the company’s Alma cloud-based platform. The company said the deployment will combine AI-powered discovery and library services across thousands of academic libraries and institutions.

Web of Science Research Intelligence, launched in May, has secured more than 100 institutional wins in 25 countries, Shem Tov said. The company has developed an estimated $20 million sales pipeline for 2026 and 2027 related to the offering. Management said the platform uses agentic AI and Clarivate-curated data to help institutions evaluate research strategy, impact and funding.

In Intellectual Property, recurring organic revenue grew nearly 1% and ACV returned to positive growth for the first time in more than three years. The segment generates approximately $800 million in revenue and has a 90% recurring organic revenue mix.

Clarivate also cited its selection by the U.S. Patent and Trademark Office to provide image-search capabilities across the U.S. trademark register. During the question-and-answer session, Shem Tov said the company has stabilized IP management, focused its sales organization and introduced new products as it works to restore growth.

AI Products Build Customer Pipeline

Management said Clarivate now has more than 80 AI agents, assistants and capabilities in the market. Its platform has processed more than 465 million AI application programming interface calls, more than 2.5 times the level from the comparable period last year.

IPOne, the company’s AI-native intelligence layer for the IP lifecycle, is scheduled for an early-adopter launch in November. Clarivate said it is working with more than 40 development partners in 25 countries, including more than 15 Fortune Global 500 companies. The company has an active sales pipeline of 151 customers for the platform.

The initial IPOne release is expected to include five AI agents and workflow skills built on more than 1 billion interconnected data points, according to management. Clarivate said it expects the product to create new revenue streams and help improve subscription retention.

Margins Expand as Company Exits Lower-Margin Operations

Chief Financial Officer Michael Easton said third-quarter recurring organic revenue rose $6 million, or 1.3%, while transactional revenue declined. Total organic revenue grew $2 million, or 0.4%.

Businesses being disposed of reduced quarterly revenue by $48 million, primarily because of the wind-down of the Academia & Government books business. Clarivate also decided to wind down several smaller low-margin transactional products, mainly in IP, representing about 1% of total revenue. That wind-down is expected to occur over the next one to two years.

Despite the impact of disposals, the company expanded adjusted EBITDA margin by more than 300 basis points from the prior-year third quarter. Free cash flow was $110 million, down $5 million year over year, which Easton attributed to higher taxes and working-capital timing, partly offset by lower interest expense and capital spending.

Clarivate used free cash flow to repurchase $75 million of notes due in 2028 at a discount of about 2%, bringing year-to-date debt reduction to $293 million. The company expects to reduce debt by about $875 million this year, using free cash flow and proceeds from the Life Sciences & Healthcare divestiture. Easton said the company plans to use divestiture proceeds to repurchase a portion of notes due in 2028 and 2029.

Updated 2026 Outlook

Following the divestiture, Clarivate updated its 2026 guidance to exclude Life Sciences & Healthcare results, which are now classified as discontinued operations. The company expects:

• Organic ACV growth of 1.75% to 2.25%.
• Recurring organic revenue growth of 1% to 1.5% for the full year, with fourth-quarter growth exceeding 2%.
• Revenue of $1.965 billion to $1.985 billion.
• Adjusted EBITDA of $865 million to $885 million, with a midpoint margin of about 44%.
• Adjusted EPS of about $0.75 at the midpoint, representing roughly 9% growth.
• Free cash flow of $320 million to $340 million.

Management said it expects free cash flow to grow 10% to 15% in 2027 and plans to provide full 2027 guidance in February. Shem Tov said the company’s near-term focus remains executing on sustained organic growth, higher free cash flow and lower leverage.

About Clarivate (NYSE:CLVT)

Clarivate Plc NYSE: CLVT provides analytics, data, and workflow solutions to organizations in academia, government, research, life sciences, and intellectual property. Its offerings are designed to help customers evaluate research, manage information, accelerate innovation, and support strategic decision-making.

The company's products include Web of Science research databases and citation analytics, InCites research evaluation tools, Derwent innovation and patent intelligence services, and Cortellis life sciences and drug-development information.

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