Clarivate (NYSE:CLVT) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Clarivate completed the strategic sale of its Life Sciences and Healthcare segment, focusing on Academia & Government and IP segments and enhancing recurring revenue business.
Third-quarter results show organic ACV growth of 1.8% and recurring organic revenue growth of 1.3%, with improved profitability and cash generation.
The company anticipates higher organic ACV and recurring revenue growth in 2027, with plans to expand free cash flow and reduce leverage.
Clarivate’s AI-led innovations are gaining traction, evidenced by agreements with ABES in France and the USPTO, highlighting the strength of its AI capabilities and proprietary data.
Clarivate has repurchased $293 million of debt year-to-date and plans further debt reduction using proceeds from the LS&H divestiture.
Full Transcript
OPERATOR (Moderator)
The Clarivate third quarter 2026 earnings conference call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Mark Donahue, Vice President, Investor Relations. Mark, please go ahead.
Mark Donahue (Vice President, Investor Relations)
Thank you, and good morning, everyone. Thank you for joining us for the Clarivate third quarter 2026 earnings conference call. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Clarivate. Any rebroadcast of this information, in whole or in part without prior written consent of Clarivate is prohibited. The accompanying earnings call presentation is available on the Investor Relations section of the company’s website.
During our call we may make certain forward-looking statements within the meaning of applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the business or developments in Clarivate’s business to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.
Information about the factors that could cause actual results to differ materially from anticipated results or performance can be found in Clarivate’s filings with the SEC and on the company’s website. Our discussion will include non-GAAP measures or adjusted numbers. Clarivate believes non-GAAP results are useful in order to enhance the understanding of our ongoing operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures. Reconciliations of these measures to GAAP measures are available in our earnings release and supplemental presentation on our website.
With me today are Matti Shem Tov, Chief Executive Officer, and Michael Easton, Chief Financial Officer. After our prepared remarks we’ll open up the call to your questions, and with that it’s a pleasure to turn the call over to Matti.
Matti Shem Tov (Chief Executive Officer)
Thank you, Mark, and thank you, everyone, for joining us. The third quarter marks a major milestone in Clarivate’s continued transformation. We completed the strategic sale of the Life Sciences and Healthcare segment ahead of schedule. This positions Clarivate as a more focused, higher-quality recurring business centered on two scaled, market-leading segments: Academia & Government and IP. Both segments are driving commercial traction and customer validation from our AI-led innovation.
Web of Science, Research Intelligence and IP1 are strong examples of that innovation in practice. I will discuss this in more detail later. In Q2 we said that we had the building blocks in place to accelerate organic growth. The progress we made this quarter is proof that we delivered on our commitments. Today’s message is straightforward. We have a clear path to accelerating sustained organic growth, expanding free cash flow and reducing leverage, all of which will continue to create long-term value for shareholders. Q3 results reflect improving recurring revenue, strong profitability and cash generation, continued debt reduction and meaningful customer validation of our technology and AI capabilities.
Organic ACV growth was 1.8%, up 30 basis points year over year. As a reminder, this KPI is our leading indicator for future organic revenue growth. Recurring organic revenue improved to 1.3%, an increase of 110 basis points year over year. Within A&G, organic ACV and subscription revenue growth was approximately 2%. We are excited that in France, ABES selected Clarivate to modernize its national academic library system. This multi-year agreement will replace legacy systems with a unified Alma cloud-based platform that combines AI-powered discovery and library services across thousands of academic libraries and institutions. This is a powerful validation of both the scale of our platform and the critical role Clarivate plays in the global research ecosystem.
In IP, recurring organic revenue grew nearly 1%, and ACV returned to positive growth for the first time in over three years. In terms of IP wins, the USPTO selected Clarivate to power image search across the U.S. trademark register, placing our image recognition capabilities within a core trademark workflow. This reinforces the value of combining trusted proprietary data, deeply embedded workflow solutions and AI to solve the mission-critical needs of our customers.
Clarivate is now a scaled, focused and highly recurring business with $2 billion of revenue and a 93% recurring organic revenue mix. Our solutions span three complementary models: intelligence solutions representing 50% of revenue, workflow solutions representing 25% and technology-enabled services representing 25%. This combination provides trusted decision support, embedded software and expert-led services that customers rely on to execute critical work globally.
AI is enhancing the value across these offerings. We now have more than 80 in-market AI agents, assistants and capabilities supporting our customers at an increasing pace. Our platform has handled more than 465 million AI API calls, which is more than two and a half times the volume compared to this time last year. This demonstrates the scale at which AI is already deployed across Clarivate. But scale of deployment is only part of the story. Clarivate’s ability to apply AI to trusted content and established workflows while still maintaining trust, governance and quality is what matters to customers.
This is further evidence of why we believe AI is strongly positive for our business. Let me turn to our two segments, starting with Academia & Government and the strength of our position across the global research ecosystem. A&G is approximately a $1.2 billion franchise with 95% recurring organic revenue and a deeply embedded position across the global research ecosystem. Our reach is significant: 99% of the world’s top 400 universities use our solutions. More than 120 million students and researchers rely on our products to enhance their outcomes, and our data powers 75% of national and regional research assessments.
Our solutions are deeply embedded across research, teaching and learning, funding decisions and library operations. Our advantage comes from bringing together scholarly content and institutional workflows as well as research intelligence in a proprietary ecosystem. This asset supports a resilient recurring revenue stream and creates the opportunity to build new AI-enabled products. Web of Science Research Intelligence is a good example of what I just outlined. Following its launch in May, the platform has now secured more than 100 institutional wins across 25 countries. Importantly, we have developed an active sales pipeline for 2026 through 2027 of approximately $20 million, which we expect to continue to grow. The platform uses agentic AI to help institutions address complex questions around research strategy, impact and funding, with output grounded in Clarivate-created authoritative data.
This matters because the decisions being made using our platform require the highest level of provenance, explainability and trust. Early global customer traction supports our confidence in market adoption, so the next step is clear: convert that customer interest and pipeline into recurring revenue at scale. We believe these revenue opportunities are both incremental and support even stronger retention for Web of Science. Turning to Intellectual Property (IP), IP is our other scaled segment with $800 million of revenues and 90% recurring organic revenues supporting the global IP ecosystem. Ninety percent of the top 100 R&D investors use our solutions. More than 15,000 IP customers rely on Clarivate to manage and protect their portfolios, and 40 patent and trademark offices, including the five largest in the world, use our solutions. The work we support is nondiscretionary and nondeferrable.
Customers depend on Clarivate to create, protect, manage and commercialize intellectual property globally and to safeguard billions of dollars of intangible value with certainty and continuity. Importantly, the fundamentals of this business are improving. Recurring organic revenue grew nearly 1% in Q3 and ACV returned to positive growth. This represents continued progress and proves that we are delivering on our commitments. Our competitive advantage comes from the combination of our IP management software, curated patent and trademark data, lifecycle services and one of the largest teams of IP specialists in the industry. It also gives us a stronger foundation to introduce the next generation of AI agentic platform. IP1 brings that strategy to life. IP1 is becoming an AI-native intelligence layer across the IP lifecycle, combining specialized agents, cloud, proprietary data and trusted intelligence.
It is grounded in customers’ proprietary IP data held within Clarivate software and inaccessible to general-purpose AI. We believe that IP1 can become the intelligence agentic foundation across the IP lifecycle. Ahead of the November early-adopter launch, we are working with more than 40 development partners across 25 countries, including more than 15 Fortune Global 500 companies. We have established an active sales pipeline of 151 customers, which we expect to increase in the coming months.
The initial release is expected to include five purpose-built AI agents and a growing library of agentic workflow skills. They are grounded in more than 1 billion interconnected data points that Clarivate has developed and enriched over decades. Supported by our IP domain experts. Through the IP1 introduction, we expect to create new revenue streams and improve subscription retention. Let me bring this together. We have taken deliberate actions to improve the quality and performance of Clarivate. Our strategy is working. We have increased the recurring revenue mix of the business, improved our commercial execution, accelerated product innovation, simplified the portfolio and reduced debt, and increasingly we are seeing these actions reflected in our KPIs. Recurring revenue growth is improving, IP ACV has returned to growth and our new AI-led platforms are attracting customers and building commercial pipelines.
Given the sale of Life Sciences and Healthcare, we wanted to provide an early look at 2027. The current target is to achieve higher organic ACV and recurring revenue growth alongside increasing free cash flow and lowering net leverage. We look forward to providing full 2027 guidance in February. I want to leave you with one point: Clarivate today is a different company from the one that began this transformation when I joined as CEO two years ago.
With that, Michael will review our financial results in more detail.
OPERATOR (Moderator)
We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Manav Patnaik with Barclays. Your line is open. Manav, please go ahead.
Brandon Cohen (Analyst)
Good morning, this is Brandon Cohen on for Manav Patnaik. Thanks for taking my question on ACV. You’ve called out pricing as a primary driver of the 1.8% growth this quarter. Would you be able to please unpack the price versus volume dynamic a bit, and what exactly needs to happen for retention and new subscription sales to become a bigger driver of the acceleration into 4Q and into 2027? Thank you.
OPERATOR (Moderator)
Thank you. Next question please. Your next question comes from the line of George Tong with Goldman Sachs. Your line is open, George. Please go ahead.
Alex Lacker (Analyst)
Hi, this is Alex Lacker, on for George Tong. Thanks for taking my question. IP ACV returned to positive growth for the first time in more than three years, while total segment organic revenue declined 0.4%. Can you discuss what’s driving the ACV improvement and how you see that translating into organic revenue growth from here?
Matti Shem Tov (Chief Executive Officer)
Yes. So first of all, just remind ourselves about the strength of the IP business. We are supporting non-discretionary, non-deferable work. We are part of the larger IP ecosystem. We’ve gone through a lot in IP. We now have stabilized the management. We have a much more focused sales organization, team recurring revenue growth at 1%. We returned to ACV positive growth. We have Simon, which is now running the business in a tighter way. And we are very, very pleased also with our positioning around IP1.
We’re very confident that IP1 is the right new, you know, layer, agentic AI layer that will help us not only, you know, converging—having new ACV—but also helping us to, you know, on the retention side for the recurring revenue side. So we’ve done a lot in IP. We’ve gone through transition of the management. We’re introducing new product, entire sales organization. We’re very positive to believe IP is coming there. Thank you.
OPERATOR (Moderator)
As a reminder, if you would like to ask a question, please press star-1 to raise your hand. To withdraw your question, press star-1 again. We have now reached the end of the Q&A session. I will turn the call back to Matti Shem Tov, CEO, for closing remarks. Oh, we do have one more question from Abe with Bank of America. I will take this question now. Your line is open, Abe. Please go ahead.
Abe (Analyst)
Thank you for fitting in my question. You kind of mentioned that you were going to use the LS&H proceeds to repay the ’28s and ’29s at a discount. Could you maybe describe how you’re going to go about doing that? I guess, how do you weigh buying back the ’28s versus the ’29s, just given the timing difference of when they come due? And maybe how do you think about longer term your capital structure? Thank you.
OPERATOR (Moderator)
We have now reached the end of the Q&A session. I will now turn the call back to Matti Shem Tov, CEO, for closing remarks.
Matti Shem Tov (Chief Executive Officer)
Let me just close by saying that we are proud of the progress and the confidence in the future. Our focus is now execution, translating that foundation into accelerating, sustaining organic growth, expanding free cash flow and reducing our leverage. And thank you for joining us today.
OPERATOR (Moderator)
This concludes today’s call. Thank you for attending. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.