CLARIVATE PLC [CLVT] Filings

10-Q 1 clvt-20240930.htm 10-Q clvt-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _______

Commission File No. 001-38911

CLARIVATE PLC

(Exact name of registrant as specified in its charter)


Jersey, Channel Islands			N/A
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
70 St. Mary Axe London EC3A 8BE United Kingdom (Address of principal executive offices)			Not applicable (Zip Code)

Registrant’s telephone number, including area code: +44 207 4334000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, no par value	CLVT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of ordinary shares of the Company outstanding as of October 31, 2024, was 710,403,567.

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TABLE OF CONTENTS


			Page
Part I. Financial Information			5
Item 1. Financial Statements (Unaudited)			5
Condensed Consolidated Balance Sheets			5
Condensed Consolidated Statements of Operations			6
Condensed Consolidated Statements of Comprehensive Income (Loss)			7
Condensed Consolidated Statements of Changes in Equity			8
Condensed Consolidated Statements of Cash Flows			10
Notes to the Condensed Consolidated Financial Statements			11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			31
Item 4. Controls and Procedures			31

Part II. Other Information			32
Item 1. Legal Proceedings			32
Item 1A. Risk Factors			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 5. Other Information			32
Item 6. Exhibits			33

Signature			33

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Cautionary Note Regarding Forward-Looking Statements

This quarterly report includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the “safe harbor provisions” of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this quarterly report and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies, and the markets in which we operate. Such forward-looking statements are based on available current market material and management’s expectations, beliefs, and forecasts concerning future events impacting us. Factors that may impact such forward-looking statements include:

•our dependence on third parties, including public sources, for data, information, and other services, and our relationships with such third parties;

•increased accessibility to free or relatively inexpensive information sources;

•our ability to compete in the highly competitive industries in which we operate, and potential adverse effects of this competition;

•our ability to maintain high annual renewal rates;

•our ability to leverage artificial intelligence technologies (“AI”) in our products and services, including generative AI, large language models (“LLMs”), machine learning, and other AI tools;

•regulatory and legislative developments affecting our use of AI;

•our ability to obtain, protect, defend, or enforce our intellectual property rights;

•our use of “open source” software in our products and services;

•any significant disruption in or unauthorized access to or breaches of our information technology systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyberattacks;

•our ability to maintain revenues if our products and services do not achieve and maintain broad market acceptance, or if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards, macroeconomic market conditions, and changing regulatory requirements;

•our loss of, or inability to attract and retain, key personnel;

•our ability to comply with applicable data protection and privacy laws;

•the effectiveness of our business continuity plans;

•our ability to derive fully the anticipated benefits from organic growth, existing or future acquisitions, joint ventures, investments, or dispositions;

•the strength of our brand and reputation;

•our exposure to risk from the international scope of our operations, including potentially adverse tax consequences from the international scope of our operations and our corporate and financing structure;

•our level of indebtedness, which could adversely affect our business, financial condition, and results of operations; and

•other factors beyond our control.

The forward-looking statements contained in this quarterly report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in Item 1A. Risk Factors of this quarterly report and Item 1A. Risk Factors in our most recently filed annual report on Form 10-K. Should one or more of these risks or uncertainties

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materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.

Defined Terms and Presentation

We employ a number of defined terms in this quarterly report for clarity and ease of reference, which we have capitalized so that you may recognize them as such. As used throughout this quarterly report, unless otherwise indicated or the context otherwise requires, the terms “Clarivate,” the “Company,” “our,” “us,” and “we” refer to Clarivate Plc and its consolidated subsidiaries.

Unless otherwise indicated, dollar amounts throughout this quarterly report are presented in millions of dollars, except for per share amounts.

Website and Social Media Disclosure

We use our website (www.clarivate.com) and corporate social media accounts on Facebook, X, and LinkedIn (@Clarivate) as routine channels of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, investors should monitor our website and our corporate Facebook, X, and LinkedIn accounts in addition to following press releases, SEC filings, and public conference calls and webcasts. Additionally, we provide notifications of news or announcements as part of our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

None of the information provided on our website, in our press releases, public conference calls, and webcasts, or through social media channels is incorporated into, or deemed to be a part of, this quarterly report or in any other report or document we file with or furnish to the SEC, and any references to our website or our social media channels are intended to be inactive textual references only.

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PART I. Financial Information

Item 1. Financial Statements.

CLARIVATE PLC

Condensed Consolidated Balance Sheets (Unaudited)



(In millions)	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents, including restricted cash	$	388.5	$	370.7

Accounts receivable, net	771.8		908.3
Prepaid expenses	97.7		88.5
Other current assets	81.1		68.0
Assets held for sale	—		26.7
Total current assets	1,339.1		1,462.2
Property and equipment, net	47.3		51.6
Other intangible assets, net	8,726.7		9,006.6
Goodwill	1,736.8		2,023.7
Other non-current assets	71.8		60.8
Deferred income taxes	50.8		46.7
Operating lease right-of-use assets	58.1		55.2
Total assets	$	12,030.6	$	12,706.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	126.5	$	144.1
Accrued compensation	111.7		126.5
Accrued expenses and other current liabilities	375.1		315.2
Current portion of deferred revenues	890.2		983.1
Current portion of operating lease liability	22.1		24.4
Liabilities held for sale	—		6.7
Total current liabilities	1,525.6		1,600.0
Long-term debt	4,632.5		4,721.1

Non-current portion of deferred revenues	21.6		38.7
Other non-current liabilities	52.5		41.9
Deferred income taxes	227.0		249.6
Operating lease liabilities	57.9		63.2
Total liabilities	6,517.1		6,714.5
Commitments and contingencies (Note 14)
Shareholders' equity:
Preferred Shares, no par value; 14.4 shares authorized; 5.25% Mandatory Convertible Preferred Shares, Series A, zero and 14.4 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	—		1,392.6
Ordinary Shares, no par value; unlimited shares authorized; 710.3 and 666.1 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	13,069.0		11,740.5

Accumulated other comprehensive loss	(433.8)		(495.3)
Accumulated deficit	(7,121.7)		(6,645.5)
Total shareholders' equity	5,513.5		5,992.3
Total liabilities and shareholders' equity	$	12,030.6	$	12,706.8

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

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CLARIVATE PLC

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2024		2023		2024		2023
Revenues	$	622.2	$	647.2	$	1,893.7	$	1,945.1
Operating expenses:
Cost of revenues	210.1		220.6		641.5		674.8
Selling, general and administrative costs	169.7		171.9		546.8		559.3
Depreciation and amortization	177.2		176.8		541.0		527.5
Goodwill and intangible asset impairments	13.8		—		316.6		135.2
Restructuring and other impairments	4.0		3.7		14.2		25.3
Other operating expense (income), net	25.7		(13.0)		46.9		(30.5)
Total operating expenses	600.5		560.0		2,107.0		1,891.6
Income (loss) from operations	21.7		87.2		(213.3)		53.5
Fair value adjustment of warrants	—		(12.6)		(5.2)		(14.4)
Interest expense, net	72.2		71.9		213.5		218.5
Income (loss) before income taxes	(50.5)		27.9		(421.6)		(150.6)
Provision (benefit) for income taxes	15.1		15.6		23.3		(83.3)
Net income (loss)	(65.6)		12.3		(444.9)		(67.3)
Dividends on preferred shares	—		18.9		31.3		56.3
Net income (loss) attributable to ordinary shares	$	(65.6)	$	(6.6)	$	(476.2)	$	(123.6)

Per share:
Basic	$	(0.09)	$	(0.01)	$	(0.69)	$	(0.18)
Diluted	$	(0.09)	$	(0.01)	$	(0.69)	$	(0.18)

Weighted average shares used to compute earnings per share:
Basic	718.7		670.9		690.5		673.9
Diluted	718.7		670.9		690.5		673.9

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

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CLARIVATE PLC

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


	Three Months Ended September 30,
(In millions)	2024		2023
Net income (loss)	$	(65.6)	$	12.3
Other comprehensive income (loss), net of tax:
Interest rate swaps, net of tax of $(4.4) and $0.3	(13.0)		(0.4)
Defined benefit pension plans	—		(0.1)
Foreign currency translation adjustment	76.2		(169.7)
Other comprehensive income (loss), net of tax	63.2		(170.2)
Comprehensive income (loss)	$	(2.4)	$	(157.9)


	Nine Months Ended September 30,
(In millions)	2024		2023
Net income (loss)	$	(444.9)	$	(67.3)
Other comprehensive income (loss), net of tax:
Interest rate swaps, net of tax of $(3.7) and $(1.4)	(10.8)		(5.5)
Defined benefit pension plans	—		(0.1)
Foreign currency translation adjustment	72.3		13.7
Other comprehensive income (loss), net of tax	61.5		8.1
Comprehensive income (loss)	$	(383.4)	$	(59.2)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

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CLARIVATE PLC

Condensed Consolidated Statements of Changes in Equity (Unaudited)


	Ordinary Shares			Preferred Shares			Accumulated Other Comprehensive Loss	Accumulated Deficit		Total Shareholders’ Equity
(In millions)	Shares	Amount		Shares	Amount
Balance at December 31, 2023	666.1	$	11,740.5	14.4	$	1,392.6		$	(495.3)	$	(6,645.5)	$	5,992.3
Vesting of restricted stock units	3.3	—		—	—			—		—		—
Share-based award activity	(1.2)	6.9		—	—			—		—		6.9
Dividends to preferred shareholders	—	—		—	—			—		(18.8)		(18.8)
Net income (loss)	—	—		—	—			—		(75.0)		(75.0)
Other comprehensive income (loss)	—	—		—	—			(17.0)		—		(17.0)
Balance at March 31, 2024	668.2	$	11,747.4	14.4	$	1,392.6		$	(512.3)	$	(6,739.3)	$	5,888.4
Vesting of restricted stock units	0.7	—		—	—			—		—		—
Share-based award activity	(0.1)	17.7		—	—			—		—		17.7
Conversion of preferred shares into ordinary shares	55.3	1,392.6		(14.4)	(1,392.6)			—		—		—
Dividends to preferred shareholders	—	—		—	—			—		(12.5)		(12.5)
Net income (loss)	—	—		—	—			—		(304.3)		(304.3)
Other comprehensive income (loss)	—	—		—	—			15.3		—		15.3
Balance at June 30, 2024	724.1	$	13,157.7	—	$	—		$	(497.0)	$	(7,056.1)	$	5,604.6
Vesting of restricted stock units	2.1	—		—	—			—		—		—
Share-based award activity	(0.7)	11.3		—	—			—		—		11.3
Repurchase and retirement of ordinary shares	(15.2)	(100.0)		—	—			—		—		(100.0)
Net income (loss)	—	—		—	—			—		(65.6)		(65.6)
Other comprehensive income (loss)	—	—		—	—			63.2		—		63.2
Balance at September 30, 2024	710.3	$	13,069.0	—	$	—		$	(433.8)	$	(7,121.7)	$	5,513.5

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CLARIVATE PLC

Condensed Consolidated Statements of Changes in Equity (Unaudited)


	Ordinary Shares			Preferred Shares			Accumulated Other Comprehensive Loss	Accumulated Deficit		Total Shareholders’ Equity
(In millions)	Shares	Amount		Shares	Amount
Balance at December 31, 2022	674.4	$	11,744.7	14.4	$	1,392.6		$	(665.9)	$	(5,658.9)	$	6,812.5

Vesting of restricted stock units	1.8	—		—	—			—		—		—
Share-based award activity	(0.6)	33.7		—	—			—		—		33.7
Dividends to preferred shareholders	—	—		—	—			—		(18.8)		(18.8)
Net income (loss)	—	—		—	—			—		43.5		43.5
Other comprehensive income (loss)	—	—		—	—			88.4		—		88.4
Balance at March 31, 2023	675.6	$	11,778.4	14.4	$	1,392.6		$	(577.5)	$	(5,634.2)	$	6,959.3
Vesting of restricted stock units	0.8	—		—	—			—		—		—
Share-based award activity	(0.3)	30.8		—	—			—		—		30.8
Dividends to preferred shareholders	—	—		—	—			—		(18.6)		(18.6)
Net income (loss)	—	—		—	—			—		(123.1)		(123.1)
Other comprehensive income (loss)	—	—		—	—			89.9		—		89.9
Balance at June 30, 2023	676.1	$	11,809.2	14.4	$	1,392.6		$	(487.6)	$	(5,775.9)	$	6,938.3
Vesting of restricted stock units	2.4	—		—	—			—		—		—
Share-based award activity	(0.8)	20.6		—	—			—		—		20.6
Repurchase and retirement of ordinary shares	(13.8)	(100.0)		—	—			—		—		(100.0)


Dividends to preferred shareholders	—	—		—	—			—		(18.9)		(18.9)
Net income (loss)	—	—		—	—			—		12.3		12.3
Other comprehensive income (loss)	—	—		—	—			(170.2)		—		(170.2)
Balance at September 30, 2023	663.9	$	11,729.8	14.4	$	1,392.6		$	(657.8)	$	(5,782.5)	$	6,682.1

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

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CLARIVATE PLC

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
(In millions)	2024		2023
Cash Flows From Operating Activities
Net income (loss)	$	(444.9)	$	(67.3)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	541.0		527.5
Share-based compensation	48.9		97.1
Restructuring and other impairments, including goodwill	314.5		138.9


Gain on legal settlement	—		(49.4)
Deferred income taxes	(28.8)		(51.3)
Amortization of debt issuance costs	11.1		12.9
Other operating activities	36.1		2.4
Changes in operating assets and liabilities:
Accounts receivable	148.2		110.3
Prepaid expenses	(8.5)		(10.6)
Other assets	(9.8)		19.5
Accounts payable	(16.5)		(2.4)
Accrued expenses and other current liabilities	22.1		(33.8)
Deferred revenues	(102.3)		(56.9)
Operating leases, net	(7.8)		(6.2)
Other liabilities	2.0		(77.4)
Net cash provided by operating activities	505.3		553.3
Cash Flows From Investing Activities
Capital expenditures	(206.9)		(178.6)
Payments for acquisitions, net of cash acquired	(32.0)		(2.3)
Proceeds from divestitures, net of cash divested	(19.2)		10.5
Net cash provided by (used for) investing activities	(258.1)		(170.4)
Cash Flows From Financing Activities


Principal payments on term loans	(58.1)		(150.0)

Payment of debt issuance costs and discounts	(20.1)		0.1



Repurchases of ordinary shares	(100.0)		(100.0)
Cash dividends on preferred shares	(37.7)		(56.7)

Payments related to finance lease	(0.7)		(0.8)
Payments related to tax withholding for share-based compensation	(13.9)		(14.8)
Net cash provided by (used for) financing activities	(230.5)		(322.2)
Effects of exchange rates	1.1		(10.3)
Net change in cash and cash equivalents, including restricted cash	17.8		50.4
Cash and cash equivalents, including restricted cash, beginning of period	370.7		356.8
Cash and cash equivalents, including restricted cash, end of period	$	388.5	$	407.2

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Clarivate Plc (“Clarivate,” “us,” “we,” “our,” or the “Company”) is a public limited company incorporated under the laws of Jersey, Channel Islands.

We are a provider of proprietary and comprehensive information, analytics, professional services, and workflow software that enable users across government and academic institutions, life science and healthcare companies, corporations, and law firms to power the entire innovation lifecycle, from cultivating curiosity to protecting the world’s critical intellectual property assets. We have three reportable segments: Academia & Government (“A&G”), Intellectual Property (“IP”), and Life Sciences & Healthcare (“LS&H”). Our segment structure is organized based on the products we offer and the markets they serve. For additional information on our reportable segments, see Note 13 - Segment Information.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include our accounts and the accounts of our wholly owned subsidiaries. In our opinion, these interim statements reflect all adjustments necessary to a fair statement of the results for the periods presented, and such adjustments are of a normal, recurring nature. Results from interim periods should not be considered indicative of results for the full year. The financial statements included herein should be read in conjunction with the financial statements and notes included in our Form 10-K for the year ended December 31, 2023. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. All significant intercompany transactions and balances have been eliminated in consolidation.

Certain reclassifications of prior period amounts have been made to conform to the current period presentation.

Significant Accounting Policies

Our significant accounting policies are those that we believe are important to the portrayal of our financial condition and results of operations, as well as those that involve significant judgments or estimates about matters that are inherently uncertain. There have been no material changes to the significant accounting policies discussed in Note 1 - Nature of Operations and Summary of Significant Accounting Policies included in Part II, Item 8 of our annual report on Form 10-K for the year ended December 31, 2023.

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which is designed to provide greater income tax disclosure transparency by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments in this update are effective for fiscal years beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently assessing the impact of this update on our related disclosures.

Note 2: Acquisitions and Divestitures

During the second quarter of 2023, we entered into a commercial agreement to sell a small product group within our IP segment for approximately $34, payable in annual installments over ten years. The fair value of this contingent consideration receivable is $28.2 as of September 30, 2024, of which almost all is classified as Other non-current assets in the Condensed Consolidated Balance Sheets. We will remeasure the fair value of contingent consideration on a recurring basis and record adjustments, as needed, based on the length of time remaining under the commercial agreement and changes in the amount to be realized each year based on actual financial results. Changes in fair value measurement of the contingent consideration is based on Level 3 inputs. The transaction closed on April 1, 2024 and a loss of $14.8 was recognized in connection with the sale, which is included in Other operating expense (income), net in the Condensed Consolidated Statements of Operations.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

Prior to the held-for-sale determination and accompanying impairment testing as of June 30, 2023, the carrying amount of the expected assets to be disposed of consisted almost entirely of purchase-related identifiable customer relationship intangible assets of approximately $158. These intangible assets were reduced to estimated fair value of $26.1 based on the estimated present value of the consideration to be paid over ten years. The related impairment charge of $132.2 is included in Goodwill and intangible asset impairments in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2023.

On October 25, 2024, in connection with streamlining our A&G portfolio and focusing our efforts around our core A&G business assets, we entered into a commercial agreement to sell our ScholarOne business for $110.0 payable in cash at the closing of the transaction and a potential earnout payable in cash that we estimate may approach $20.0 contingent on the achievement of certain financial metrics through 2030. The sale is expected to close during the fourth quarter of 2024.

Note 3: Revenue

We derive revenue through subscriptions to our product offerings, re-occurring contracts in our IP segment, and transactional sales that are typically quoted on a product, data set, or project basis.

•Subscription-based revenues are recurring revenues that we typically earn under annual contracts, pursuant to which we license the right to use our products to our customers or provide maintenance services over a contractual term. We invoice and collect the subscription fee at the beginning of the subscription period. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. Cash received or receivable in advance of completing the performance obligations is included in deferred revenue. We recognize subscription revenue ratably over the contract term as the access or service is provided.

•Re-occurring revenues are derived solely from the patent and trademark maintenance services provided by our IP segment. Patents and trademarks are renewed regularly, and our services help customers maintain and protect those patents and trademarks in multiple jurisdictions around the world. Because of the re-occurring nature of the patent and trademark lifecycle, our customer base engages us to manage the renewal process on their behalf. These contracts typically include evergreen clauses or are multi-year agreements. We invoice and recognize revenue upon delivery of the service.

•Transactional and other revenues are earned for specific deliverables that are typically quoted on a product, data set, or project basis. Transactional and other revenues include content sales (including single-document and aggregated collection sales), consulting engagements, and other professional services such as software implementation services. We typically invoice and record revenue for this revenue stream upon delivery of the product, data set, or project, although for longer software implementation projects, we will periodically invoice and recognize revenue in connection with the completion of related performance obligations.

The following table presents our revenues disaggregated by transaction type (see Note 13 - Segment Information for our revenues disaggregated by segment):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Subscription revenues	$	411.1	$	408.1	$	1,219.8	$	1,207.3
Re-occurring revenues	106.7		106.8		317.8		325.5
Transactional and other revenues	104.4		132.3		356.1		412.3
Revenues	$	622.2	$	647.2	$	1,893.7	$	1,945.1

The following table presents our contract balances:


	September 30, 2024	December 31, 2023
Accounts receivable, net	771.8	908.3

Current portion of deferred revenues	890.2	983.1
Non-current portion of deferred revenues	21.6	38.7

During the nine months ended September 30, 2024, we recognized revenues of $778.1 attributable to deferred revenues recorded at the beginning of the period, primarily consisting of subscription revenues recognized ratably over the contract term.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

Our remaining performance obligations are included in the current or non-current portion of deferred revenues on the Condensed Consolidated Balance Sheets. The majority of these obligations relate to customer contracts where we license the right to use our products or provide maintenance services over a contractual term, generally one year or less.

Note 4: Other Intangible Assets, Net and Goodwill

Other intangible assets, net

The following table is a summary of the gross carrying amounts and accumulated amortization of our identifiable intangible assets by major class:


	September 30, 2024						December 31, 2023
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Customer relationships	$	7,850.2	$	(1,445.1)	$	6,405.1	$	7,819.9	$	(1,177.2)	$	6,642.7
Technology and content	2,858.8		(1,190.3)		1,668.5		2,798.3		(1,009.1)		1,789.2
Computer software	1,062.6		(598.5)		464.1		897.9		(516.4)		381.5
Trade names and other	89.5		(57.4)		32.1		88.9		(52.6)		36.3
Definite-lived intangible assets	$	11,861.1	$	(3,291.3)	$	8,569.8	$	11,605.0	$	(2,755.3)	$	8,849.7
Indefinite-lived trade names	156.9		—		156.9		156.9		—		156.9
Other intangible assets, net	$	12,018.0	$	(3,291.3)	$	8,726.7	$	11,761.9	$	(2,755.3)	$	9,006.6

During the three months ended September 30, 2024, and 2023, intangible assets amortization expense was $172.8 and $170.9, respectively, and during the nine months ended September 30, 2024, and 2023, intangible assets amortization expense was $527.2 and $510.3, respectively.

Goodwill

The following table is a summary of the change in the carrying amount of goodwill, both in total and as allocated to our reportable segments:


	A&G		IP		LS&H		Total
Balance as of December 31, 2023	$	1,109.8	$	—	$	913.9	$	2,023.7
Acquisition	—		13.8		15.8		29.6

Goodwill impairment	—		(13.8)		(302.8)		(316.6)
Impact of foreign currency fluctuations	0.1		—		—		0.1
Balance as of September 30, 2024	$	1,109.9	$	—	$	626.9	$	1,736.8

In the second quarter of 2024, primarily due to sustained declines in our share price, we determined that it was appropriate to perform an interim quantitative goodwill impairment assessment. We performed the assessment, consistent with our goodwill impairment testing policy and procedures, by comparing the estimated fair value to the carrying value for both of our segment reporting units carrying a goodwill balance. Based on the quantitative assessment performed, we concluded that the estimated fair value of the A&G reporting unit continues to be substantially in excess of its carrying value. For the LS&H reporting unit, we determined the carrying value exceeded its fair value; consequently, we recorded a goodwill impairment charge of $302.8 in the second quarter of 2024.

In the third quarter of 2024, we recorded $13.8 of goodwill associated with a small acquisition within the IP reporting unit. We recorded an impairment to the goodwill because the IP reporting unit’s fair value was significantly below its carrying value based on the results of our most recent interim quantitative impairment assessment described above.

Note 5: Derivative Instruments

We are exposed to various market risks, including foreign currency exchange rate risk and interest rate risk. We use derivative instruments to manage these risk exposures. We enter into foreign currency contracts and cross-currency swaps to help manage our exposure to foreign currency exchange rate risk, and we use interest rate swaps to mitigate interest rate risk. We assess the fair value of these instruments by considering current and anticipated movements in future interest rates and the relevant currency spot and future rates available in the market. Accordingly, these instruments are classified within Level 2 of the fair value hierarchy.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

Interest Rate Swaps

We have interest rate swap arrangements with counterparties to reduce our exposure to variability in cash flows relating to interest payments on our outstanding term loan arrangements. We have designated the interest rate swaps as cash flow hedges of the risk associated with floating interest rates on designated future monthly interest payments. For additional information on our outstanding term loan facility, see Note 6 - Debt. As of September 30, 2024, our outstanding interest rate swaps have an aggregate notional value of $753.7 and mature in October 2026.

The fair value of the interest rate swaps is the estimated amount that we would receive or pay to terminate such agreements, taking into account market interest rates and the remaining time to maturities or using market inputs with mid-market pricing as a practical expedient for bid-ask spread. Changes in fair value are recorded in Accumulated other comprehensive loss (“AOCL”) in the Condensed Consolidated Balance Sheets with a related offset in derivative asset or liability, and the amounts reclassified out of AOCL are recorded to Interest expense, net in the Condensed Consolidated Statements of Operations. Any gain or loss will be subsequently reclassified into net earnings in the same period during which transactions affect earnings, or upon termination of the arrangements. For additional information on changes recorded to AOCL, see Note 7 - Shareholders' Equity. As of September 30, 2024, we estimate that approximately $6.5 of pre-tax gain related to interest rate swaps recorded in AOCL will be reclassified into earnings within the next 12 months.

Cross-Currency Swaps

In July 2023, we entered into a cross-currency swap that matures in 2026 to mitigate foreign currency exposure related to our net investment in various euro-functional-currency consolidated subsidiaries. This swap is designated and qualifies as a net investment hedge. We elected to assess the effectiveness of this net investment hedge based on changes in spot rates and are amortizing the portion of the net investment hedge that was excluded from the assessment of effectiveness over the life of the swap within Interest expense, net in the Condensed Consolidated Statements of Operations. The notional amount of the cross-currency swap associated with euro-denominated subsidiary net investments was €100.0 as of September 30, 2024.

Changes in fair value are recorded in AOCL (as a foreign currency translation adjustment) in the Condensed Consolidated Balance Sheets, with a related offset in derivative asset or liability. Any gain or loss will be subsequently reclassified into net earnings when the hedged net investment is either sold or substantially liquidated. For additional information on changes recorded to AOCL, see Note 7 - Shareholders' Equity.

Foreign Currency Forward Contracts

We periodically enter into foreign currency contracts, which generally do not exceed 180 days in duration, to help manage our exposure to foreign exchange rate risks. We have not designated these contracts as accounting hedges. We initially recognize these contracts at fair value on the execution date and subsequently remeasure the contracts to their fair value at the end of each reporting period. We assess the fair value of these instruments by considering current and anticipated movements in future interest rates and the relevant currency spot and future rates available in the market. We receive third-party valuation reports to corroborate our determination of fair value.

We recognize the associated realized and unrealized gains and losses in Other operating expense (income), net in the Condensed Consolidated Statements of Operations. We recognized a loss (gain) from the fair value adjustment of $(4.2) and $4.0, for the three months ended September 30, 2024 and 2023, respectively, and $(1.9) and $3.7, for the nine months ended September 30, 2024 and 2023, respectively. The notional amount of outstanding foreign currency contracts was $154.0 and $140.5 as of September 30, 2024 and December 31, 2023, respectively.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

The following table provides information on the location and fair value amounts of our derivative instruments as of September 30, 2024 and December 31, 2023:


	Balance Sheet Classification	September 30, 2024		December 31, 2023
Asset Derivatives
Designated as accounting hedges:
Interest rate swaps	Other current assets	$	—	$	4.1
Interest rate swaps	Other non-current assets	7.4		17.7

Not designated as accounting hedges:
Foreign currency forwards	Other current assets	3.1		1.3

Total Asset Derivatives		$	10.5	$	23.1

Liability Derivatives
Designated as accounting hedges:
Cross-currency swaps	Other non-current liabilities	$	2.9	$	2.0
Not designated as accounting hedges:
Foreign currency forwards	Accrued expenses and other current liabilities	—		0.1
Total Liability Derivatives		$	2.9	$	2.1

Note 6: Debt

The following table summarizes our total indebtedness:


		September 30, 2024			December 31, 2023
Type	Maturity	Effective Interest Rate	Carrying Value		Effective Interest Rate	Carrying Value
Senior Notes	2029	4.875%	921.4		4.875%	921.4
Senior Secured Notes	2028	3.875%	921.2		3.875%	921.2
Senior Secured Notes	2026	4.500%	700.0		4.500%	700.0
Revolving Credit Facility	2029	7.595%	—		8.206%	—
Term Loan Facility	2031	7.595%	2,139.3		8.470%	2,197.4
Finance lease	2036	6.936%	29.6		6.936%	30.3
Total debt outstanding			$	4,711.5		$	4,770.3
Debt discounts and issuance costs			(56.2)			(48.0)
Current portion of long-term debt(1)			(22.8)			(1.2)
Long-term debt			$	4,632.5		$	4,721.1
(1) Included in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.

Senior Notes (2029) and Senior Secured Notes (2028)

Interest on the Senior Notes due 2029 and the Senior Secured Notes due 2028 is payable semi-annually to holders of record on June 30 and December 30 of each year. The Senior Secured Notes due 2028 are secured on a first-lien pari passu basis with borrowings under our credit facilities and Senior Secured Notes due 2026. Both of these series of Notes are guaranteed on a joint and several basis by each of our indirect subsidiaries that is an obligor or guarantor under our credit facilities and Senior Secured Notes due 2026.

Senior Secured Notes (2026)

Interest on the Senior Secured Notes due 2026 is payable semi-annually to holders of record on May 1 and November 1 of each year. The Senior Secured Notes due 2026 are secured on a first-lien pari passu basis with borrowings under our credit facilities and Senior Secured Notes due 2028. These Notes are guaranteed on a joint and several basis by each of our indirect subsidiaries that is an obligor or guarantor under our credit facilities and are secured on a first-priority basis by the collateral

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

now owned or hereafter acquired by Camelot Finance S.A. (the issuer) and each of the guarantors that secures the issuer’s and such guarantor’s obligations under our credit facilities (subject to permitted liens and other exceptions).

The Credit Facilities

As further discussed below, in January 2024, we refinanced our existing credit facilities to provide improved financial flexibility, including extending our debt maturities and lowering our annual cash interest costs.

Revolving Credit Facility

Our revolving credit facility provides for revolving loans, same-day borrowings, and letters of credit. Proceeds of loans made under the revolving credit facility may be borrowed, repaid, and reborrowed prior to maturity.

As part of the January 2024 refinancing, we amended our $750.0 revolving credit facility by reducing it to a $700.0 facility (with a letter of credit sublimit of $77.0) and extending the maturity date to January 31, 2029, subject to a “springing” maturity date that is 91 days prior to the maturity date of the Senior Secured Notes due 2026 and the Senior Secured Notes due 2028, but only to the extent that those notes have not been refinanced or extended prior to their original maturity dates. All other terms related to the revolving credit facility were substantively unchanged.

As of September 30, 2024, letters of credit totaling $8.1 were collateralized by the revolving credit facility.

Term Loan Facility

As part of the January 2024 refinancing, we made a prepayment of $47.4 on the existing term loans due in 2026 and then refinanced the remaining term loans with a new $2,150.0 tranche of term loans maturing in 2031. The interest rate margin for the new term loan facility decreased from 300 to 275 basis points per annum in the case of loans bearing interest by reference to term SOFR. The term loans amortize in equal quarterly installments (the first installment was paid on June 28, 2024) equivalent to a rate of 1.00% per annum, with the balance due at maturity.

The carrying value of our variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value due to the short-term nature of the interest rate benchmark rates. The fair value of the fixed rate debt is estimated based on market observable data for debt with similar prepayment features. The fair value of our debt was $4,617.0 and $4,615.3 as of September 30, 2024 and December 31, 2023, respectively, and is considered Level 2 under the fair value hierarchy.

Note 7: Shareholders' Equity

Conversion of Preferred Shares into Ordinary Shares

On June 3, 2024, all 14.4 million outstanding shares of our 5.25% Series A Mandatory Convertible Preferred Shares (“MCPS”) automatically converted into 55.3 million ordinary shares at a conversion rate of 3.8462 ordinary shares per MCPS share. All accumulated preferred dividends were paid prior to the conversion.

Share Repurchase Program

In May 2023, our Board of Directors authorized the purchase of up to $500.0 of our ordinary shares through December 31, 2024. We repurchased approximately 13.8 million ordinary shares for $100.0 at an average price of $7.22 per share during the year ended December 31, 2023 and approximately 15.2 million ordinary shares for $100.0 at an average price of $6.59 per share during the three months ended September 30, 2024. All repurchased shares were immediately retired and restored as authorized but unissued ordinary shares. As of September 30, 2024, we had $300.0 of availability remaining under the share repurchase program.

Accumulated Other Comprehensive Loss (“AOCL”)

The tables below provide information about the changes in AOCL by component and the related amounts reclassified to net earnings during the periods indicated (net of tax). The foreign currency translation adjustment component of AOCL represents the impact of translating foreign subsidiary asset and liability balances from their local currency to USD. The change in both periods below was primarily related to foreign subsidiaries whose local currency is GBP.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)


	Nine Months Ended September 30, 2024
	Interest rate swaps		Defined benefit pension plans		Foreign currency translation adjustment		Total
Balance as of December 31, 2023	$	16.2	$	0.4	$	(511.9)	$	(495.3)
Other comprehensive income (loss) before reclassifications	7.4		—		73.2		80.6
Reclassifications from AOCL to net earnings	(18.2)		—		(0.9)		(19.1)
Net other comprehensive (loss) income	(10.8)		—		72.3		61.5
Balance as of September 30, 2024	$	5.4	$	0.4	$	(439.6)	$	(433.8)


	Nine Months Ended September 30, 2023
	Interest rate swaps		Defined benefit pension plans		Foreign currency translation adjustment		Total
Balance as of December 31, 2022	$	38.1	$	1.5	$	(705.5)	$	(665.9)
Other comprehensive income (loss) before reclassifications	22.2		(0.1)		14.0		36.1
Reclassifications from AOCL to net earnings	(27.7)		—		(0.3)		(28.0)
Net other comprehensive income (loss)	(5.5)		(0.1)		13.7		8.1
Balance as of September 30, 2023	$	32.6	$	1.4	$	(691.8)	$	(657.8)

Note 8: Private Placement Warrants

In May 2024, the remaining 17.8 million private placement warrants expired unexercised. These warrants had an exercise price of $11.50 per share and were valued using a Black-Scholes option valuation model and classified as Level 3 financial instruments within the fair value hierarchy. The warrants were subject to remeasurement at each balance sheet date and represented a liability balance of zero and $5.1 as of September 30, 2024 and December 31, 2023, respectively, classified within Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. The change in fair value was recognized as a fair value adjustment of warrants in the Condensed Consolidated Statements of Operations.

Note 9: Restructuring and Other Impairments

We have engaged in various restructuring programs to strengthen our business and streamline our operations, including taking actions related to the location and use of leased facilities. Our recent restructuring programs include the following:

•Segment Optimization Program - During the second quarter of 2023, we approved a restructuring plan to streamline operations within targeted areas of the Company to reduce operational costs, with the primary cost savings driver being from a reduction in workforce.

•ProQuest Acquisition Integration Program - During the fourth quarter of 2021, we approved a restructuring plan to streamline operations within targeted areas of the Company to reduce operational costs, with the primary cost savings driver being from a reduction in workforce.

As of September 30, 2024, we have incurred $31.4 of cumulative costs associated with the Segment Optimization Program and we expect to incur approximately $4 of additional restructuring costs associated with this program, primarily within 2024.

The following table summarizes the pre-tax charges by activity and program during the periods indicated:

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Severance and related benefit costs:

ProQuest Acquisition Integration Program	$	—	$	(0.2)	$	(0.1)	$	16.7
Segment Optimization Program	4.2		2.6		16.3		4.9

Total Severance and related benefit costs	$	4.2	$	2.4	$	16.2	$	21.6

Exit and disposal costs:

ProQuest Acquisition Integration Program	$	—	$	—	$	—	$	0.1
Segment Optimization Program	0.1		—		0.3		—

Total Exit and disposal costs	$	0.1	$	—	$	0.3	$	0.1

Lease abandonment costs:


Segment Optimization Program	$	(0.3)	$	1.4	$	(2.3)	$	3.7
Other Restructuring Programs	—		(0.1)		—		(0.1)
Total Lease abandonment costs	$	(0.3)	$	1.3	$	(2.3)	$	3.6

Restructuring and other impairments	$	4.0	$	3.7	$	14.2	$	25.3

The following table summarizes the pre-tax charges by program and segment during the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Academia & Government:

ProQuest Acquisition Integration Program	$	—	$	(0.2)	$	(0.1)	$	9.1
Segment Optimization Program	1.7		1.4		5.5		3.0
Other Restructuring Programs	—		(0.1)		—		(0.1)
Total A&G	$	1.7	$	1.1	$	5.4	$	12.0

Intellectual Property:

ProQuest Acquisition Integration Program	$	—	$	—	$	—	$	4.6
Segment Optimization Program	0.2		0.5		3.2		1.9

Total IP	$	0.2	$	0.5	$	3.2	$	6.5

Life Sciences & Healthcare:

ProQuest Acquisition Integration Program	$	—	$	—	$	—	$	3.1
Segment Optimization Program	2.1		2.1		5.6		3.7

Total LS&H	$	2.1	$	2.1	$	5.6	$	6.8

Restructuring and other impairments	$	4.0	$	3.7	$	14.2	$	25.3

The following table summarizes the changes in our restructuring reserves by activity during the periods indicated:


	Severance and related benefit costs		Exit, disposal, and abandonment costs		Total
Reserve Balance as of December 31, 2023	$	5.9	$	1.4	$	7.3
Expenses recorded	16.2		(2.0)		14.2
Payments made	(18.9)		(4.7)		(23.6)
Noncash items	(1.0)		5.3		4.3
Reserve Balance as of September 30, 2024	$	2.2	$	—	$	2.2

Reserve Balance as of December 31, 2022	$	11.5	$	0.1	$	11.6
Expenses recorded	21.6		3.7		25.3
Payments made	(27.7)		(2.4)		(30.1)
Noncash items	(2.9)		—		(2.9)
Reserve Balance as of September 30, 2023	$	2.5	$	1.4	$	3.9

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

Note 10: Other Operating Expense (Income), Net

Other operating expense (income), net, consisted of the following for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Loss on divestiture(1)	$	—	$	—	$	14.8	$	—
Gain on legal settlement(2)	—		—		—		(49.4)
Net foreign exchange loss (gain)(3)	31.5		(17.0)		36.1		15.3
Miscellaneous expense (income), net	(5.8)		4.0		(4.0)		3.6
Other operating expense (income), net	$	25.7	$	(13.0)	$	46.9	$	(30.5)
(1) Refer to Note 2 - Acquisitions and Divestitures for further information.
(2) Refer to Note 14 - Commitments and Contingencies for further information.
(3) Relates to realized and unrealized gains and losses on foreign currency transactions, with the largest impacts derived from transactions denominated in GBP.

Note 11: Income Taxes

We compute our provision (benefit) for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income (loss) and adjust the provision for discrete tax items recorded in the period.

The income tax provision of $15.1 and $15.6 for the three months ended September 30, 2024 and 2023, respectively, was primarily due to the mix of jurisdictions in which pre-tax profits and losses were recognized.

The income tax provision of $23.3 for the nine months ended September 30, 2024 was primarily due to the mix of jurisdictions in which pre-tax profits and losses were recognized, partially offset by a $14.2 tax benefit related to the goodwill impairment. The income tax benefit of $83.3 for the nine months ended September 30, 2023 was driven by a $70.4 tax benefit recorded on the settlement of an open tax dispute, a $33.0 tax benefit associated with the impairment of intangible assets, and a $17.1 tax benefit relating to the partial release of valuation allowance, partially offset by the mix of taxing jurisdictions in which pre-tax profits and losses were recognized.

Note 12: Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing net income (loss) attributable to ordinary shares by the weighted average number of ordinary shares outstanding for the applicable period. Diluted EPS is computed by dividing net income (loss) attributable to ordinary shares, adjusted for the change in fair value of the private placement warrants, by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding for the applicable period. Diluted EPS reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares, as calculated using the treasury stock method.

The basic and diluted EPS computations for our ordinary shares are calculated as follows:

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Basic EPS
Net income (loss)	$	(65.6)	$	12.3	$	(444.9)	$	(67.3)
Dividends on preferred shares	—		18.9		31.3		56.3
Net income (loss) attributable to ordinary shares	$	(65.6)	$	(6.6)	$	(476.2)	$	(123.6)

Weighted average shares, basic	718.7		670.9		690.5		673.9
Basic EPS	$	(0.09)	$	(0.01)	$	(0.69)	$	(0.18)

Diluted EPS
Net income (loss) attributable to ordinary shares	$	(65.6)	$	(6.6)	$	(476.2)	$	(123.6)
Change in fair value of private placement warrants	—		—		—		—
Net income (loss) attributable to ordinary shares, diluted	$	(65.6)	$	(6.6)	$	(476.2)	$	(123.6)


Weighted average shares, basic	718.7		670.9		690.5		673.9
Weighted average effect of potentially dilutive shares	—		—		—		—
Weighted average shares, diluted	718.7		670.9		690.5		673.9
Diluted EPS	$	(0.09)	$	(0.01)	$	(0.69)	$	(0.18)

Potential ordinary shares on a gross basis related to share-based awards and private placement warrants were excluded from diluted EPS in each period presented as their inclusion would have been antidilutive. Potential shares of 14.2 million and 29.4 million were excluded for the three months ended September 30, 2024 and 2023, respectively, and 22.3 million and 30.3 million were excluded for the nine months ended September 30, 2024 and 2023, respectively.

As a result of the MCPS conversion described in Note 7 - Shareholders' Equity, for the three and nine months ended September 30, 2024, the converted MCPS shares were included in basic EPS for the period subsequent to the conversion and were evaluated for inclusion in diluted EPS for the period prior to the conversion using the if-converted method. Because the pre-conversion weighted-average ordinary shares related to our MCPS would have been antidilutive for each period presented, they were excluded from the diluted EPS calculation for the pre-conversion portion within the three and nine months ended September 30, 2024 and the three and nine months ended September 30, 2023.

Note 13: Segment Information

Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. As discussed in Note 1 - Nature of Operations and Summary of Significant Accounting Policies, we have three reportable operating segments: Academia & Government (“A&G”), Intellectual Property (“IP”), and Life Sciences & Healthcare (“LS&H”). An overview of our segment structure, organized based on the products we offer and the markets they serve, is as follows:

•A&G: Trusted content, intelligence, and workflow solutions that help academic and government institutions advance knowledge to transform our world. Within the A&G segment, we provide Research and Analytics, Content Solutions, Books and Marketplaces, and Library Software Solutions.

•IP: Our comprehensive intellectual property data, software, and expertise helps companies drive innovation, law firms achieve practice excellence, and organizations worldwide effectively manage and protect critical IP assets. Within the IP segment, we provide IP Management Software, IP Services, Patent Intelligence, and Brand IP Intelligence.

•LS&H: Empowers customers to advance innovation and accelerate patient outcomes that improve patient lives and create a healthier tomorrow. Our intelligence solutions, transformative data, and technology equip our customers with the insight and foresight needed across the entire healthcare ecosystem. Within the LS&H segment, we provide solutions for Research and Development, Real World Data, MedTech, Market Access, and Commercialization.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

Our Chief Executive Officer is identified as the CODM, who evaluates performance based primarily on segment revenues and Adjusted EBITDA. The CODM does not review assets by segment for the purpose of assessing performance or allocating resources.

Adjusted EBITDA represents Net income (loss) before the Provision (benefit) for income taxes, Depreciation and amortization, and Interest expense, net, adjusted to exclude acquisition and/or disposal-related transaction costs, share-based compensation, restructuring expenses, impairments, the impact of certain non-cash fair value adjustments on financial instruments, unrealized foreign currency gains/losses, legal settlements, and other items that are included in Net income (loss) for the period that we do not consider indicative of our ongoing operating performance.

The following table summarizes revenues by reportable segment for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Academia & Government	$	321.3	$	327.2	$	983.5	$	983.9
Intellectual Property	199.8		211.7		602.3		637.1
Life Sciences & Healthcare	101.1		108.3		307.9		324.1
Total Revenues	$	622.2	$	647.2	$	1,893.7	$	1,945.1

The following table presents segment profitability and a reconciliation to Net income (loss) for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Academia & Government	$	139.8	$	144.0	$	415.4	$	416.2
Intellectual Property	91.0		98.5		263.2		293.2
Life Sciences & Healthcare	33.6		38.9		96.5		109.6
Total Adjusted EBITDA	$	264.4	$	281.4	$	775.1	$	819.0
Provision (benefit) for income taxes	(15.1)		(15.6)		(23.3)		83.3
Depreciation and amortization	(177.2)		(176.8)		(541.0)		(527.5)
Interest expense, net	(72.2)		(71.9)		(213.5)		(218.5)

Transaction related costs	(6.1)		(2.7)		(13.6)		(5.1)
Share-based compensation expense	(15.4)		(25.4)		(49.7)		(97.1)

Goodwill and intangible asset impairments	(13.8)		—		(316.6)		(135.2)
Restructuring and other impairments	(4.0)		(3.7)		(14.2)		(25.3)
Fair value adjustment of warrants	—		12.6		5.2		14.4
Other(1)	(26.2)		14.4		(53.3)		24.7
Net income (loss)	$	(65.6)	$	12.3	$	(444.9)	$	(67.3)


(1) Primarily reflects the net impact of foreign exchange gains and losses related to the remeasurement of balances and other items that do not reflect our ongoing operating performance. In addition to the net unrealized foreign exchange loss, the nine months ended September 30, 2024 also includes a $14.8 loss on the divestiture discussed in Note 2 - Acquisitions and Divestitures and the nine months ended September 30, 2023 includes a $49.4 gain on legal settlement discussed in Note 14 - Commitments and Contingencies.

Note 14: Commitments and Contingencies

Lawsuits and Legal Claims

We are engaged in various legal proceedings, claims, audits, and investigations that have arisen in the ordinary course of business. These matters may include among others, antitrust/competition claims, intellectual property infringement claims, employment matters, and commercial matters. The outcomes of the matters against us are subject to future resolution, including the uncertainties of litigation.

From time to time, we are involved in litigation in the ordinary course of our business, including claims or contingencies that may arise related to matters occurring prior to our acquisition of businesses. At the present time, primarily because the matters are generally in early stages, we can give no assurance as to the outcome of any pending litigation to which we are currently a party, and we are unable to determine the ultimate resolution of these matters or the effect they may have on us.

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CLARIVATE PLC

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(In millions or as otherwise noted)

We have and will continue to vigorously defend ourselves against these claims. We maintain appropriate levels of insurance, which we expect are likely to provide coverage for some of these liabilities or other losses that may arise from these litigation matters.

During the nine months ended September 30, 2023, we reached settlement related to a large legal claim, which was covered by insurance. We recognized a total gain on settlement of $49.4 which is included in Other operating expense (income), net in the Condensed Consolidated Statement of Operations.

Between January and March 2022, three putative securities class action complaints were filed in the United States District Court for the Eastern District of New York against Clarivate and certain of its executives and directors alleging that there were weaknesses in the Company’s internal controls over financial reporting and financial reporting procedures that it failed to disclose in violation of federal securities law. The complaints were consolidated into a single proceeding on May 18, 2022. On August 8, 2022, plaintiffs filed a consolidated amended complaint, seeking damages on behalf of a putative class of shareholders who acquired Clarivate securities between July 30, 2020, and February 2, 2022, and/or acquired Clarivate ordinary or preferred shares in connection with offerings on June 10, 2021, or Clarivate ordinary shares in connection with a September 13, 2021, offering. The amended complaint, like the prior complaints, references an error in the accounting treatment of an equity plan included in the Company’s 2020 business combination with CPA Global that was disclosed on December 27, 2021, and related restatements issued on February 3, 2022, of certain of the Company’s previously issued financial statements. The amended complaint also alleges that the Company and certain of its executives and directors made false or misleading statements relating to the Company’s product quality and expected organic revenues and organic growth rate, and that they failed to disclose significant known changes to the Company’s business model. Defendants moved to dismiss the amended complaint on October 7, 2022. Without deciding the motion, the court entered an order on June 23, 2023, allowing plaintiffs limited leave to amend, and plaintiffs filed an amended complaint on July 14, 2023. On August 10, 2023, the court issued an order deeming defendants’ prior motions and briefs to be directed at the amended complaint and permitting defendants to file supplemental briefs to address the new allegations in the amended complaint. Supplemental briefing on the motions was completed on September 8, 2023. Defendants’ motions to dismiss the amended complaint are currently pending.

In a separate but related litigation, on June 7, 2022, a class action was filed in Pennsylvania state court in the Court of Common Pleas of Philadelphia asserting claims under the Securities Act of 1933, based on substantially similar allegations, with respect to alleged misstatements and omissions in the offering documents for two issuances of Clarivate ordinary shares in June and September 2021. The Company moved to stay this proceeding on August 19, 2022, and filed its preliminary objections to the state court complaint on October 21, 2022. After granting a partial stay on January 4, 2023, the court denied a further stay of the proceedings on April 17, 2023. On April 24, 2024, the court sustained the Company’s preliminary objections, but permitted plaintiff leave to file an amended complaint, which plaintiff filed on May 28, 2024. On August 29, 2024, plaintiff filed a second amended complaint, to which the Company filed preliminary objections on September 30, 2024. Clarivate does not believe that the claims alleged in the complaints have merit and will vigorously defend against them. Given the early stage of the proceedings, we are unable to estimate the reasonably possible loss or range of loss, if any, arising from these matters.

CLARIVATE PLC [CLVT] Filings
10-Q	[2024-11-06]
10-Q	[2024-08-06]
10-Q	[2024-05-08]
10-K	[2024-02-27]
10-Q	[2023-11-07]
10-Q	[2023-08-07]
10-Q	[2023-05-09]
10-K	[2023-03-01]
10-Q	[2022-11-08]
10-Q	[2022-08-09]
10-Q	[2022-05-09]
10-K	[2022-03-10]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-05-10]
10-K	[2021-02-26]
10-Q	[2020-10-29]
10-Q	[2020-07-30]
S-1	[2020-06-01]
10-Q	[2020-05-04]
10-K	[2020-03-02]
F-1	[2020-02-03]
F-1	[2019-12-02]
F-1	[2019-09-03]
20-F	[2019-05-17]