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    CLVT
    Earnings call· Jun 2026(Q2 FY26)

    CLARIVATE Q2 FY26 earnings call CLVT

    Jul 29, 2026 Source

    Executive summary

    Clarivate Q2 FY26 — Organic ACV Growth Improves, AI Innovation Advances, and LS&H Divestiture Announced

    Clarivate delivered on its value creation plan in Q2 FY26, improving organic ACV growth and expanding profit margins, while advancing AI innovation with new product launches like Web of Science Research Intelligence and IP-One. The company announced the divestiture of its Life Sciences and Health segment to sharpen focus on AI-driven intelligence, simplify its operating model, and strengthen its balance sheet through debt reduction, positioning for accelerated organic growth in the second half of 2026 and into 2027.

    Highlights

    5

    • Organic ACV growth improved to 1.5% year-over-year in Q2 FY26.

    • Profit margin expanded to more than 42% in Q2 FY26.

    • Adjusted diluted EPS increased by $0.01 year-over-year to $0.19 in Q2 FY26, and by 19% to $0.38 for H1 FY26.

    • Debt reduction totaled $218 million in H1 FY26, including $75 million of bonds repurchased in Q2 FY26.

    • Pro forma recurring revenue mix is expected to increase from 89% to approximately 92% after the LS&H divestiture.

    Concerns

    5

    • A net loss of $269 million was reported in Q2 FY26, driven by a noncash impairment charge related to the LS&H divestiture.

    • Organic revenues declined by $9 million in Q2 FY26 due to lower transactional revenues.

    • Adjusted EBITDA faced a $7 million headwind in Q2 FY26 due to foreign currency appreciation.

    • Free cash flow was $44 million in Q2 FY26, $6 million lower than the prior year, primarily due to higher working capital requirements.

    • Full-year free cash flow is expected at the low end of the guidance range due to transaction costs for the LS&H divestiture and additional restructuring costs.

    Guidance & targets

    23
    CategoryTargetConfidence
    Organic Annual Contract Value (ACV) growth
    lower half of the range
    high materiality
    Medium
    Organic Annual Contract Value (ACV) growth
    about 2.25% growth
    high materiality
    Medium
    AMG Organic Annual Contract Value (ACV) growth
    approach 3%
    medium materiality
    Medium
    IP segment growth
    return to growth
    medium materiality
    Medium
    Recurring organic growth
    about 1.5%
    high materiality
    Medium
    Revenue
    $2.35 billion
    high materiality
    High
    Organic recurring revenue mix
    about 92%
    high materiality
    High
    Adjusted EBITDA
    just over $1 billion
    high materiality
    High
    Adjusted EBITDA profit margin
    nearly 43%
    high materiality
    High
    Adjusted diluted EPS
    $0.75
    high materiality
    High
    Free cash flow
    low end of the range
    high materiality
    Medium
    Adjusted EBITDA margin expansion
    about 200 basis points
    high materiality
    High
    Organic growth
    about 1%
    high materiality
    High
    Profit growth from cost efficiencies
    $25 million
    medium materiality
    High
    Revenue reduction from inorganic disposals
    approximately $125 million
    medium materiality
    High
    Operating expense reduction
    about $100 million
    medium materiality
    High
    Profit impact from disposals
    about $25 million
    medium materiality
    High
    Foreign exchange impact
    essentially flat
    low materiality
    High
    Debt reduction
    about $900 million
    high materiality
    High
    Cash interest improvement
    about $20 million
    medium materiality
    High
    Cash taxes increase
    $5 million to $10 million higher
    low materiality
    High
    Working capital change
    use of approximately $25 million
    medium materiality
    High
    Capital spending improvement
    about $20 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Academia and Government (AMG)
    Expected to approach 3% organic ACV growth for FY26. 75% of this year's business was secured by the end of July.
    Organic ACV growth: 2%
    		————
    Life Sciences and Health (LS&H)
    Divestiture agreement announced in early July. Experienced headwinds in transactional revenue in Q2.
    Organic ACV growth: 2%
    		————
    Intellectual Property (IP)
    Expected to return to growth in the second half of the year. Simon Webster appointed as President of the segment.
    Reoccurring organic revenue: flat
    		————

    Operational metrics

    11
    Profit margin
    >42%
    Q2 FY26

    Expanded to more than 42% in the quarter.

    Adjusted diluted EPS
    $0.19up $0.01 YoY
    Q2 FY26

    Up $0.01 over the prior year.

    Adjusted diluted EPS
    $0.3819% increase YoY
    H1 FY26

    19% increase over the same period last year.

    Debt reduction
    $75 million
    Q2 FY26

    Repurchased bonds due in 2028 at a modest discount.

    Debt reduction
    $218 million
    H1 FY26

    Total debt reduction for the first half of the year.

    Organic revenues decline
    $9 million
    Q2 FY26

    Recurring growth of about 0.5% only partially offset lower transactional revenues.

    Adjusted EBITDA headwind
    $7 million
    Q2 FY26

    Due to the appreciation of a basket of foreign currencies compared to the U.S. dollar.

    Adjusted EBITDA margin
    maintainedYoY
    Q2 FY26

    Maintained over the same period last year despite revenue decline, due to disciplined cost management.

    Adjusted EBITDA margin expansion
    nearly 1 percentage point
    H1 FY26

    Driven by strategic disposals and disciplined cost management.

    One-time cost
    nearly $70 million
    FY26

    Vast majority will not recur next year, related to LS&H divestiture transaction costs.

    Working capital benefit
    $10 million
    FY26

    Benefit associated with lower impaired contractual costs.

    Industry KPIs

    2
    MetricValueDetails
    Revenue model mix89%%
    New business bookings growth1.5%%

    Product announcements

    4
    ProductTypeDetails
    Web of Science Research Intelligencelaunch
    Nexus Connectlaunch
    IP-Oneroadmap
    RiskMarkmilestone

    Deals & partnerships

    1
    AltarisAgreement to sell the Life Sciences and Health (LS&H) segment.

    Marks an important step in portfolio rationalization, creating a more focused company and simplifying the operating model.

    Risks & headwinds

    5
    Noncash impairment chargeQ2 FY26

    Net loss of $269 million in Q2 FY26

    Mitigation: Triggered by the definitive agreement to divest the LS&H segment, part of a broader portfolio rationalization effort.

    Lower transactional revenuesQ2 FY26

    Organic revenues declined by $9 million in Q2 FY26

    Mitigation: Company is actively migrating transactional business to subscription models; expected to ameliorate in the second half of the year.

    Foreign exchange impactQ2 FY26

    $7 million adjusted EBITDA headwind in Q2 FY26

    Mitigation: Full-year foreign exchange impact is anticipated to be essentially flat compared to last year.

    Higher working capital requirementsQ2 FY26, FY26

    $6 million lower free cash flow in Q2 FY26; expected use of approximately $25 million for FY26

    Mitigation: Primarily due to timing of collections and payments, and incentive compensation payments. Management expects free cash flow to be flat YoY for FY26 due to these factors.

    Transaction costs for LS&H divestiture and additional restructuring costsFY26

    Free cash flow likely at the low end of the range for FY26; nearly $70 million in one-time costs

    Mitigation: The vast majority of these one-time costs will not recur next year. Restructuring costs are intended to achieve incremental cost savings in the following year.

    What to watch in Q3 FY26

    5

    Organic ACV growth (company-wide)

    H2 FY26
    Current1.5%
    TargetSequential improvement, approaching 2.25% for FY26

    Why it matters

    This is a key indicator of underlying business health and the success of the Value Creation Plan.

    We expect sequential improvement in recurring organic growth in the second half of 2026 and continued momentum into 2027.

    Q&A highlights

    5

    Are renewal timing or longer sales cycles impacting ACV growth, and should this persist in H2?

    Management stated Q2 results were in line with expectations, with ACV progress not always linear. They do not see an elongation of the renewal cycle and expect ACV and recurring organic revenue to inflect in H2, with good line of sight (75% of A&G business in the bag by end of July).

    “No, we don't think it's an elongation of the renewal cycle and the organic ACV growth of about 1.5% in the end of June is generally in line with our first half organic growth versus subscription revenues at about 1.2%.”

    asked by Scott Wurtzel · answered by Jonathan Collins

    2 min read5 chapters

    Detailed Narrative

    01

    AI Innovation & Product Development

    Clarivate is actively advancing its AI innovation roadmap, introducing new agentic AI products such as Nexus Connect and IP-One. Nexus Connect serves as an AI-native gateway for university researchers to access scholarly resources via AI chat agents like ChatGPT and Claude. IP-One is a unified AI platform for IP professionals, combining agentic AI with proprietary data for patent and trademark intelligence. The company also highlighted RiskMark, which received its second industry recognition, being named the best AI tool for lawyers at the 2026 CODiE awards for its use of predictive and generative AI.

    02

    Value Creation Plan (VCP) Progress

    The company reported steady execution of its Value Creation Plan, launched in late 2024. Key achievements include optimizing the business model by shifting revenue towards recurring subscriptions, improving go-to-market strategies, and accelerating AI innovation. This strategic focus has resulted in a higher quality recurring revenue base, which is expected to reach approximately 92% on a pro forma basis, and a stronger foundation for future bookings and organic growth.

    03

    Life Sciences and Health (LS&H) Divestiture

    In early July, Clarivate announced an agreement to sell its Life Sciences and Health segment to Altaris. This divestiture is a significant step in portfolio rationalization, aiming to create a more focused company centered on AI-driven transformative intelligence. The transaction simplifies the operating model, allows for more targeted investments in organic growth, and is expected to strengthen the balance sheet through debt reduction using the net proceeds, enhancing financial flexibility.

    04

    Organic Growth Acceleration Outlook

    Management expressed confidence in accelerating organic growth, anticipating sequential improvement in recurring organic growth in the second half of 2026 and continued momentum into 2027. This acceleration is attributed to a more focused portfolio, a higher quality recurring revenue base, an enhanced go-to-market engine, exciting new product offerings, and a healthier balance sheet, all contributing to the company's ability to execute its growth strategy.

    05

    CFO Transition

    Clarivate announced the appointment of Michael Easton as the new Chief Financial Officer, effective August 8. Michael Easton, currently the Chief Accounting Officer, brings over 25 years of finance and leadership experience and has been instrumental in strengthening financial discipline. Outgoing CFO Jonathan Collins was acknowledged for his significant contributions, including overseeing the integration of three acquisitions and advancing the Value Creation Plan.

    AI-generated summary of the company’s earnings call. Not investment advice.