Clarivate Reports 2Q results - Back on Track?

Clarivate, the information services firm, reported second-quarter results that, while not dazzling, suggest a business regaining its footing. Revenues reached $621 million, and the adjusted EBITDA margin rose to a respectable 41% for the first half—up 500 basis points year-on-year. Organic annual contract value edged up by 1.3%, and recurring organic revenue grew by nearly 1%, buoyed by robust subscription renewals and the rollout of new offerings.

The headline net loss of $72 million was largely the result of non-cash impairment charges, and on an adjusted basis, net income stood at $123 million. The firm announced they will seek to return up to $100 million to shareholders via buybacks and reiterated its full-year free cash flow guidance of $340 million.

Strategically, Clarivate is leaning into its strengths. Its Academic & Government and Life Sciences & Healthcare segments showed momentum, aided by AI-driven innovation and fresh partnerships. The Intellectual Property division, long a laggard, returned to growth—thanks in part to a surge in AI-related patent filings, especially from China.

Challenges remain. Divestitures and a sluggish commercialization market continue to weigh but management remains positive, touting its Value Creation Plan and a revamped sales model. The company reaffirmed its 2025 outlook, projecting revenues between $2.28 billion and $2.40 billion, and adjusted EBITDA between $940 million and $1 billion.

In short, Clarivate is not yet sprinting—but it is walking with purpose.

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The following are some comments from the investor call transcript. These comments are about the previously announced switch from a book purchase to book subscription model which generated a lot of push back from librarians (and other business initiatives):

“If you turn to Slide 8, I'll provide an update on the VCP starting with the A&G segment. Our proactive business model optimization, coupled with decades of experience in delivering data and analytics solution to our clients has strategically positioned us to anticipate and adapt to current market dynamics. We are on track to discontinue transactional sales of digital collections and books over the next year. This shift away from transactional sale is increasing recurring revenue growth by transitioning some of the business to the new progress e-Books product and other content solution subscription. We are pleased with the early adoption with over 70 wins to date and hundreds of customers currently evaluating this new model.”

“Following this A&G strategy, A&G subscription revenue now constitutes 93% of the total segment revenue, excluding disposals, up from 79% in the prior year period. In the first half of 2025, we have achieved a 96% renewal rate in A&G. This is impressive results considering the macro backdrop characterized by a reduction in the U.S. federal agency contracts, increased constraints on higher education research funding and potential additional university budget cuts. It is also noteworthy that as at the end of July, 75% of global A&G subscription for the full year has successfully renewed. This is in line with last year -- last year's renewal pace. We continue to successfully invest in innovation across the A&G product portfolio with a focus on AI. We are very pleased by our success so far in product launches and customer adoption. More than 4,800 institutions have already adopted our AI tools to strengthen research support, increase operational efficiency and enhance student engagement.”

“We are also accelerating progress with next-generation Agentic AI solution. AI agents can independently play and execute multistep processes by interacting with user with users, data sources and tools. The expansion of our Agentic AI platform marks a significant milestone as we implement responsible Agentic AI to accelerate research and learning workflow. Our initial launch of the literature review agent in Web of Science exemplify this pioneering approach. The agent converse with researchers to understand their research goals, then customize a specific literature review scope and define the proper output. This personal interactive experience keeps the researcher in the center, which closely mimic working with human assistant.”

“With regards to the content, as I mentioned in my discussion, we were forward looking, taking away the discretionary onetime expenditure, and this served us very, very well these days, and we see the uptake of customers who were initially complaining about taking away the onetime purchases are now buying more and more of our subscription businesses, the PQ ebook, the PQ Digital Collection, which actually serves them very, very well in this in this kind of economic climate. So we are pretty confident that going ahead, we will continue to see a good and decent renewal rates and uptake of the different A&G offering.”