Clarivate Analytics Plc (NYSE: CCC, CCC.WS), a global leader in providing trusted insights and analytics to accelerate the pace of innovation, today reported results for the third quarter ended September 30, 2019.

"We accomplished a tremendous amount this quarter and also delivered strong financial results," said Jerre Stead, Executive Chairman and CEO of Clarivate. "We continue to make progress on our strategic initiatives to drive revenue growth and improve profitability, and are executing on the changes that make us more efficient and effective. In terms of performance, increases in subscription and transactional revenues, as well as continued growth in Annual Contract Value (ACV), combined with steady revenue renewal rates all contributed to the growth this quarter. I am very grateful for the team's hard work and look forward to updating you at our upcoming Investor Day in New York on November 12th."

Third Quarter 2019 Operating Results

Revenues, net remained consistent, $243.0 million for the three months ended September 30, 2019, increasing by $0.1 million, or 0.0%, from $242.9 million for the three months ended September 30, 2018. On a constant currency basis, revenues, net increased $1.0 million, or 0.4% for the three months ended September 30, 2019.

Adjusted Revenues, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line prior to its date of divestiture, increased $7.5 million, 3.2%, to $243.1 million in the third quarter of 2019 from $235.6 million in the third quarter of 2018. On a constant currency basis, Adjusted Revenues increased $8.4 million, or 3.6% in the third quarter of 2019.

Subscription revenues decreased by $3.5 million, or 1.7% for the three months ended September 30, 2019 and on a constant currency basis, decreased by $2.8 million, or 1.4%. Adjusted subscription revenues, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line prior to its date of divestiture, increased by 1.7% for the three months ended September 30, 2019 and on a constant currency basis, increased by 2.0%. The increase in adjusted subscription revenues is primarily due to price increases and new business within both the Science Product Group and IP Product Group.

Transactional revenues increased by $3.2 million, or 8.2% for the third quarter and, on a constant currency basis, increased by $3.4 million or 8.6%. Adjusted transactional revenues, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line prior to its date of divestiture, increased by 11.0% for the three months ended September 30, 2019 and on a constant currency basis, increased by 11.6%. The increase reflects our timing and our strategy, driven by increased backfile sales in both our Science and IP Product Groups, along with the sales of the biannually published BPVC standards.

Net income of $10.8 million, or $0.04 per share, for the third quarter 2019, compared with net loss of $54.7 million, or $(0.25) per share, in the prior-year period.

Adjusted EBITDA increased by 16.1% to $77.0 million for the three months ended September 30, 2019.

Adjusted net income of $47.5 million, or $0.14 per share, for the third quarter 2019, compared with $26.5 million, or $0.12 per share, in the prior-year period.

Nine Months Ended September 30, 2019 Operating Results

Revenues, net decreased by $3.9 million, or 0.5%, to $719.3 million for the nine months ended September 30, 2019 from $723.2 million for the nine months ended September 30, 2018 . On a constant currency basis, Revenues, net increased $1.7 million, or 0.2% for the nine months ended September 30, 2019.

Adjusted Revenues increased $13.9 million, or 2.0%, to $719.7 million for the nine months ended September 30, 2019, from $705.8 million for prior-year period. On a constant currency basis, Adjusted Revenues increased $19.5 million, or 2.8% for the nine months ended September 30, 2019.

Subscription revenues declined slightly by 0.1% for the nine months ended September 30, 2019 and on a constant currency basis increased 0.7%. Adjusted subscription revenues, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line prior to its date of divestiture, increased by 3.0% for the nine months ended September 30, 2019 and, on a constant currency basis, increased by 3.7%. Adjusted subscription revenues from ongoing business increased primarily due to price increases and new business within the Science Product Group and IP Product Group.

Transactional revenues decreased by 4.7% for the nine months ended September 30, 2019, and on a constant currency basis decreased by 3.7%. Adjusted transactional revenues, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line prior to its date of divestiture, decreased by 2.6% for the nine months ended September 30, 2019. On a constant currency basis, adjusted transactional revenues decreased by 1.6%. The decrease in adjusted transactional revenues reflect timing and the conversion of Patent Search services contracts to subscriptions.

Net loss of $126.2 million, or $(0.48) per share for the nine months ended September 30, 2019, compared with a net loss of $198.7 million, or $(0.91), in the prior-year period.

Adjusted EBITDA increased 6.3%, to $209.6 million for the nine months ended September 30, 2019.

Adjusted net income of $100.6 million, or $0.37 per share for the nine months ended September 30, 2019, compared with adjusted net income of $94.3 million, or $0.43 per share in the prior-year period.

Balance Sheet and Cash Flow

At September 30, 2019 cash and cash equivalents were $88.8 million and total debt outstanding was $1,342.5 million, resulting in net debt of $1,253.7 million. Net cash provided by operating activities was $112.4 million for the nine months ended September 30, 2019, compared to $25.0 million for the prior year period. The increase in net cash provided by operating activities was driven principally by a lower operating loss, which included the impact of a $39.4 million gain on a legal settlement and a decrease in transition, integration and other related expenses of $41.5 million. Net cash used in investing activities was $46.3 million for the nine months ended September 30, 2019, compared to $39.7 million for the prior year period. Net cash used in financing activities was $4.1 million for the nine months ended September 30, 2019, compared to $7.5 million for the prior year period. Free cash flow was $68.7 million for the nine months ended September 30, 2019, compared to $(11.2) million for the prior-year period. The increase in free cash flow was primarily due to higher net cash provided by operating activities. The current period also includes $31.0 million of merger-related expenses recognized in the second-quarter and a further $1.2 million of expenses related to the Secondary Offering in the third quarter.

Reaffirm Outlook for 2019 (forward-looking statement)

For the year ending December 31, 2019, Clarivate expects:

• Adjusted Revenues in a range of $962 million to $995 million
• Adjusted EBITDA in a range of $290 million to $310 million
• Adjusted EBITDA margins of approximately 30%

We expect that annualized run-rate cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during 2019 (exclusive of any cost reductions in our estimated standalone operating costs) will approximate $12 million.

Additionally, we expect the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone operating costs for 2019 to approximate $31 million.

The above outlook assumes no further currency movements, acquisitions, divestitures, or unanticipated events. See discussion of non-GAAP financial measures at the end of this release.

Financing Transactions

On October 31, 2019, the Company closed its previously announced private offering of $700 million in aggregate principal amount of 4.50% Senior Secured Notes due 2026 (the "Notes") and its new $1.15 billion senior secured credit facility (the "Credit Facility"). The Credit Facility consists of a $900 million term loan, fully drawn at closing, and a $250 million revolving credit facility, which was undrawn at closing. Clarivate used the net proceeds from the offering of Notes, together with proceeds from the Credit Facility, to refinance all amounts outstanding under its existing credit facility, to redeem its 7.875% Senior Notes due 2024, and pay fees and expenses related to the foregoing. In addition, the Company intends to fully fund its $200 million payment obligations under the agreement terminating its tax receivable agreement, as previously announced on August 22, 2019. Any remaining proceeds will be used for general corporate purposes.

About Clarivate Analytics

Clarivate Analytics™ is a global leader in providing trusted insights and analytics to accelerate the pace of innovation. We have built some of the most trusted brands across the innovation lifecycle, including Web of Science™, Cortellis™, Derwent™, CompuMark™, MarkMonitor™ and Techstreet™. Today, Clarivate Analytics is on a bold entrepreneurial mission to help our clients reduce the time from new ideas to life-changing innovations. For more information, please visit clarivate.com.