- 4Q’20 Revenues of $456 million and Adjusted Revenues(1) of $471 million increased 79% and 85%, respectively. Adjusted Revenues exclude the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions including CPA Global and DRG
- 4Q’20 Net Income of $6 million increased 108% and Adjusted Net Income(1) of $136 million increased 224%
- 4Q’20 Net Income per diluted share of $0.01 increased 104% and Adjusted Income per diluted share(1) (EPS) of $0.22 increased 69%
- 4Q’20 Adjusted EBITDA(1) of $200 million increased 137% and Adjusted EBITDA Margin(1) increased 920 basis points to 42.4%
- Full Year Revenues of $1.254 billion and Adjusted Revenues(1) of $1.277 billion increased 29% and 31%, respectively. Adjusted Revenues exclude the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions including CPA Global and DRG
- Full Year Net Loss of $106 million improved 50% and Adjusted Net Income(1) of $289 million increased 90%
- Full Year Net Loss per diluted share of $(0.25) improved 68% and Adjusted Income per diluted share(1) (EPS) of $0.64 increased 21%
- Full Year Adjusted EBITDA(1) of $487 million increased 66% and Adjusted EBITDA Margin(1) increased 790 basis points to 38.1%
- Cash Flow from Operations increased $146 million to $264 million; Adjusted Free Cash Flow(1) increased $201 million to $302 million
“We are very proud of what we achieved in 2020 during the challenges of the global pandemic. Our colleagues quickly overcame these challenges by swiftly adapting to a new work environment that served us well and will provide considerable benefits in the years ahead,” said Jerre Stead, Executive Chairman and CEO of Clarivate.
“Throughout the year, we made significant progress across our strategic objectives including improving our colleague engagement and customer delight scores. We completed operational improvements, which helped to drive organic growth, and enhanced our IP and Science businesses with two transformative acquisitions. Our growth in the fourth quarter and full year 2020 reflects the benefits of these actions. The team also made tremendous strides with ESG initiatives and we look forward to publishing our first sustainability report in 2021. Given the strength of our core business and the benefits we expect to realize from recent acquisitions, we reaffirmed our 2021 outlook.”
Selected Financial Information
The results for the three and twelve months ended December 31, 2020 include contributions from the following acquisitions: 1) CPA Global, which was completed in October 2020; 2) Decision Resources Group (“DRG”), which was completed at the end of February 2020; 3) Beijing Incopat Co., Ltd (“IncoPat”), which was completed in October 2020; and 4) Hanlim IPS Co., Ltd (“Hanlim”), which was completed in November 2020, for which there were no comparable amounts in the prior year period. The current year periods exclude the results of the MarkMonitor Brand Protection, Antipiracy, and Antifraud products, which were divested on January 1, 2020. Additionally, the fourth quarter and year ended December 31, 2020 include only 10 months of Techstreet, compared to a full year in 2019 due to its divestiture in November 2020.
|
Three Months Ended
December 31,
|
|
Change
|
|
Year ended
December 31,
|
|
Change
|
|
(in millions, except percentages and per share data)
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
Revenues, net
|
455.6
|
|
|
255.0
|
|
|
200.6
|
|
|
78.7
|
%
|
|
1,254.0
|
|
|
974.3
|
|
|
279.7
|
|
|
28.7
|
%
|
|
Adjusted revenues, net(1)
|
471.3
|
|
|
255.1
|
|
|
216.2
|
|
|
84.8
|
%
|
|
1,277.1
|
|
|
974.7
|
|
|
302.4
|
|
|
31.0
|
%
|
|
Annualized Contract Value (ACV)
|
906.6
|
|
|
793.7
|
|
|
112.9
|
|
|
14.2
|
%
|
|
906.6
|
|
|
793.7
|
|
112.9
|
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
6.4
|
|
|
(84.8)
|
|
|
91.2
|
|
|
107.5
|
%
|
|
(106.3)
|
|
|
(211.0)
|
|
|
104.7
|
|
|
49.6
|
%
|
|
Net income (loss) per share
|
0.01
|
|
|
(0.28)
|
|
|
0.29
|
|
|
103.6
|
%
|
|
(0.25)
|
|
|
(0.77)
|
|
|
0.52
|
|
|
67.5
|
%
|
|
Weighted-average shares outstanding (diluted)
|
606.1
|
|
|
306.4
|
|
|
—
|
|
|
97.8
|
%
|
|
428.6
|
|
|
273.9
|
|
|
—
|
|
|
56.5
|
%
|
|
Adjusted EBITDA(1)
|
200.1
|
|
|
84.6
|
|
|
115.5
|
|
|
136.5
|
%
|
|
486.6
|
|
|
294.0
|
|
|
192.6
|
|
|
65.5
|
%
|
|
Adjusted net income(1)
|
135.6
|
|
|
41.9
|
|
|
93.7
|
|
|
223.6
|
%
|
|
289.1
|
|
|
152.1
|
|
|
137.0
|
|
|
90.1
|
%
|
|
Adjusted diluted EPS(1)
|
0.22
|
|
|
0.13
|
|
|
0.09
|
|
|
69.2
|
%
|
|
0.64
|
|
|
0.53
|
|
|
0.11
|
|
|
20.8
|
%
|
|
Weighted average ordinary shares (diluted)(2)
|
627.1
|
|
|
329.8
|
|
|
—
|
|
|
90.1
|
%
|
|
450.5
|
|
|
287.9
|
|
|
—
|
|
|
56.5
|
%
|
|
Net cash provided by operating activities
|
135.8
|
|
|
5.2
|
|
|
130.6
|
|
|
—
|
%
|
|
263.5
|
|
|
117.6
|
|
|
145.9
|
|
|
124.1
|
%
|
|
Free cash flow(1)
|
106.7
|
|
|
(20.9)
|
|
|
127.6
|
|
|
—
|
%
|
|
155.8
|
|
|
47.8
|
|
|
108.0
|
|
|
225.9
|
%
|
|
Adjusted free cash flow(1)
|
173.5
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
301.7
|
|
|
100.5
|
|
|
201.2
|
|
|
200.2
|
%
|
|
(Amounts in tables may not sum due to rounding)
|
|
|
|
(1)
|
Non-GAAP measure. Please see “Reconciliation to Certain Non-GAAP measures” in this earnings release for important disclosures
and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere
in this earnings press release.
|
|
(2)
|
Calculated assuming a net income position compared to a net loss position on the statement of operations for calculating Adjusted
net income and Adjusted diluted EPS.
|
Fourth Quarter 2020 Operating Results
Revenues, net, for the fourth quarter of 2020 increased $200.6 million, or 78.7%, to $455.6 million, compared to the prior-year period. Adjusted revenues, net, which excludes the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions, increased $216.2 million or 84.8%, to $471.3 million, compared to the fourth quarter of 2019. Excluding the impact of acquisitions and divestitures, organic revenues increased 2.6% on a reported basis, and up 1.0% on a constant currency basis, due to higher transactional and subscription revenues. The increase in organic revenue was partially offset by a one-time $3.5 million deferred revenue adjustment not related to the purchase accounting adjustment, which decreased fourth quarter revenue by 1.4%, for which there was no comparable amount in the prior year period.
Subscription revenues for the fourth quarter of 2020 increased $26.4 million, or 12.6%, to $235.9 million, compared to the prior-year period, primarily driven by the acquisitions of CPA Global and DRG, partially offset by the Techstreet and MarkMonitor disposals. Excluding the impact of acquisitions and divestitures, organic subscription revenues increased $3.7 million or 1.8% on a reported basis, and up 0.3% on a constant currency basis, due to new business and price increases, partially offset by a one-time $2.6 million or 1.2% deferred revenue adjustment for which there was no comparable amount in the prior year period.
Transactional revenues for the fourth quarter of 2020 increased $75.3 million, or 165.0%, to $120.9 million, compared to the prior-year period, primarily driven by acquisitions. Excluding the impact of acquisitions and divestitures, organic transactional revenues increased $2.7 million or 5.9% on a reported basis, and up 4.1% on a constant currency basis, compared to the fourth quarter of 2019. The growth in organic revenues is due to an increase in search volumes and backfile sales, partially offset by a one-time $0.9 million or 2.0% deferred revenue adjustment for which there was no comparable amount in the prior year period.
Re-occurring revenues for the fourth quarter of 2020 were $114.5 million, an increase of 100.0%, primarily from the patent renewals business acquired in the CPA Global acquisition.
Net income for the fourth quarter of 2020 was $6.4 million, or $0.01 per share, compared to Net loss of $84.8 million, or $(0.28) per share, in the prior-year period. The improvement in the fourth quarter of 2020 compared to the prior year period is primarily due to the income contribution from acquired businesses, continued margin improvements in the legacy Clarivate business, a gain on the sale of the Techstreet business and a significant decline in interest expense resulting from lower interest rates as a result of the refinancing of debt in October 2019.
Adjusted EBITDA for the fourth quarter of 2020 increased by 136.5% to $200.1 million, compared to the prior-year period, driven by the earnings contribution from acquisitions.
Adjusted net income for the fourth quarter of 2020 increased by 223.6% to $135.6 million, compared to the prior year period, driven by higher revenues and ongoing cost savings initiatives. Adjusted diluted earnings per share was $0.22 for the fourth quarter of 2020, compared to $0.13 in the prior-year period.
Full Year Operating Results
Revenues, net, for the full year 2020 increased by $279.7 million, or 28.7%, to $1,254.0 million, compared to the prior year. Adjusted revenues, net, which excludes the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions, increased $302.4 million or 31.0%, to $1,277.1 million, compared to the full year 2019. Excluding the impact of acquisitions and divestitures, organic revenues increased 1.6% on a reported basis, and up 1.2% on a constant currency basis, due to higher subscription revenues, partially offset by a decrease in transactional revenues.
Subscription revenues for the full year 2020 increased by 7.7% to $867.7 million, compared to the prior year. On a constant currency basis, Subscription revenues increased by 7.4%, compared to the prior year, primarily due to acquisitions partially offset by divested businesses. Excluding the impact of acquisitions and divestitures, organic subscription revenues increased $24.3 million or 3.0% on a reported basis, and up 2.7% on a constant currency basis, compared to the full year 2019, primarily due to new business and price increases.
Transactional revenues for the full year 2020 increased by 74.2% to $294.9 million, compared to the prior year. On a constant currency basis, Transactional revenues increased by 73.8%, compared to the prior year, primarily due to acquisitions partially offset by divested businesses. Excluding the impact of acquisitions and divestitures, organic transactional revenues decreased $10.3 million or 6.1% on a reported basis, and down 6.5% on a constant currency basis, compared to the full year 2019, due to a decrease in demand primarily driven by economic conditions resulting from the COVID-19 pandemic.
Re-occurring revenues for the fourth quarter of 2020 were $114.5 million, an increase of 100.0%, primarily from the patent renewals business acquired in the CPA Global acquisition.
Net loss for the full year 2020 was $106.3 million, or $(0.25) per share, compared with a net loss of $211.0 million, or $(0.77) per share, for the full year 2019. The year-over-year improvement was driven by higher revenues, a gain on the sale of the Techstreet business and reduced interest expense.
Adjusted EBITDA for the full year 2020 increased by 65.5%, to $486.6 million, compared to the prior year, driven by higher revenues and ongoing cost savings initiatives.
Adjusted net income for the full year 2020 increased by 90.1% to $289.1 million, or $0.64 per diluted share, compared with adjusted net income of $152.1 million, or $0.53 per diluted share for the full year 2019.
Balance Sheet and Cash Flow
At December 31, 2020 cash and cash equivalents of $257.7 million increased $181.6 million, compared to December 31, 2019, primarily due to a $108.8 million increase in free cash flow, proceeds from the sale of ordinary shares of Clarivate in June 2020 and cash received from the voluntary exercise of 24.1 million warrants in exchange for ordinary shares of Clarivate during the first quarter of 2020.
The Company’s total debt outstanding at December 31, 2020 was $3,547.4 million, an increase of $1,882.4 million compared to December 31, 2019 due to a term loan of $1,600 million incurred during the fourth quarter of 2020 with net proceeds used to fund a portion of the CPA Global acquisition, and $360.0 million incurred on the term loan during the first quarter of 2020 with net proceeds used to fund a portion of the DRG acquisition, offset by $65.0 million net borrowing and repayment activity to pay the revolver in full.
Net cash provided by operating activities was $263.5 million for the year ended December 31, 2020 compared to net cash provided by operating activities of $117.6 million for the prior year. Adjusted free cash flow for the year ended December 31, 2020 was $301.7 million, an increase of $201.2 million, compared to the prior year, as a result of growth in revenues and operational efficiencies, and the benefit of a $45.0 million working capital cash benefit in the fourth quarter of 2020 from CPA Global relating to a timing difference between the pre-acquisition third quarter and the post-acquisition fourth quarter.
Reaffirmed Outlook for 2021 (forward-looking statement)
The full year 2021 outlook presented below assumes no further currency movements, acquisitions, divestitures, or unanticipated events.
The below outlook includes Non-GAAP measures. Please see “Reconciliation to Certain Non-GAAP measures” presented below for important disclosure and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings press release.
|
2021 Outlook
|
|
Adjusted Revenues
|
$1.78B to $1.84B
|
|
Adjusted EBITDA
|
$785M to $825M
|
|
Adjusted EBITDA margin
|
44% to 45%
|
|
Adjusted diluted EPS
|
$0.73 to $0.79
|
|
Adjusted Free Cash Flow
|
$450M to $500M
|
Adjusted diluted EPS for 2021 is calculated based on approximately 631.0 million fully diluted weighted average shares outstanding and includes the full year impact of the ordinary shares issued in conjunction with the CPA Global transaction.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the fourth quarter at 8:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company’s website.
Interested parties may access the live audio broadcast by dialing 1-888-317-6003 in the United States, 1-412-317-6061 for international, and 1-866-284-3684 in Canada. The conference ID number is 1969888. An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 in the United States, 1-412-317-0088 for international, and 1-855-669-9658 in Canada. The Replay Conference ID number is 10151089. The recording will be available for replay through March 11, 2021. The webcast can be accessed at https://services.choruscall.com/links/ccc210225.html and will be available for replay.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with U.S. generally accepted accounting principles (“GAAP”) and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Definitions and reconciliations of non-GAAP measures, such as Adjusted Revenues, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, and Standalone Adjusted EBITDA to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.
Forward-Looking Statements
This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance outlook and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, including the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficiently liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the COVID-19 pandemic and governmental responses thereto, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed under the caption “Risk Factors” in our 2019 annual report on Form 10-K, our current report on Form 8-K filed on June 19, 2020, and our quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2020, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.
.
