Good afternoon, everyone. I'm George Tong, and I'm very pleased to be joined by Jonathan Collins, CFO of Clarivate. Jonathan, thank you for being here with us today. Thank you for having me. Of course. Okay, let's start high level. Last year at the Investor Day, or earlier this year, Clarivate announced medium-term targets for organic revenue growth of 6%. There's been a lot of change in the business since. How comfortable or confident are you in achieving your medium-term target of 6% organic growth by 2025, especially according to that timeline, given everything you know now about the business? Yeah, thanks for that, George. So as a reminder to everyone, as George indicated, back in March, we outlined the path for our business to accelerate our organic growth from what was about 3%, or a three-year average from 2019- 2022, to about 6%, which is where we believe the markets we serve are growing. As a reminder, about half of our business serves the academic and government markets. That business, over that period, had grown about 2%, and we think the components of that market that we serve grew at about 4%. So we saw a couple of hundred basis points of opportunity to expand to catch the market. The second area, our life science business, which is our smallest segment, life science and healthcare, was growing at mid-single digits, about 5% or more, and we think that market is a double-digit grower over the same period. Then our third segment, intellectual property, was a market that we believe was growing about 5%-6%, and we had grown about 3% over that period. Each of our segments had some improvement to catch the market rate. What we highlighted at that Investor Day is that each of those segments had one sub-segment that was underperforming the market. When you look at our academic and government business, it's really three components. We provide digital content, we provide software, and we provide research and analytics tool. And it's that last one, research and analytics, was a business that had essentially been flat for a few years, and we think that market was a mid-single digit grower. So we started to make some investments in that. We saw some really nice traction this year, particularly in our Web of Science products. So this is the gold standard for research evaluation. Our Journal Impact Factor is widely known as the best way to put the seal of approval on a publication, and we needed to make some investment there, particularly in the UI, which we did late in 2021, which helped that business to drive high monthly active usage in 2022. So we saw almost an 80% increase in usage there. We were able to monetize that in the renewal cycle. This year, in 2023, our renewal rates improved by over 3%, and our new business subscriptions grew double digits in the first part of this year. We're making really good progress in the A&G segment, in the area that needed to be improved. I think we'll get some continued traction there in the balance this year. We've got some great new features coming out in the product. We had the Journal Citation Reports this year came out with 9,000 new high-quality publications that are covered with an impact factor. We also integrated our ProQuest Dissertations and Theses products with Web of Science so that that content is discoverable in both. We're seeing nice usage there. And then finally, we integrated the InCites analytics package with our Alma analytics package. That's our integrated library system that helps to manage the collection in a library, and that was integrated with the Web of Science research package. So great progress there, and I think that one remains on track. Highly confident that we're going to get to the 4% we outlined in the timeline that we suggested. In the second segment, life sciences, we talked about the different components of the business being research and development, regulatory and safety, and commercialization. And those first two were growing at market rates, but we believe we were underperforming the market in commercialization. And the area that we need to focus on here is really within our real-world evidence. So over the last few years, we've largely been a broker or a seller of enriched data. We see an opportunity to invest in an analytics platform that supports our customers in using that data, to improve the commercialization of their products. We started that investment, late last year, early this year. We're making really good progress, and we're going to have the first module in market by the end of this year, and the second will follow in the first quarter of next year. So by making that investment and improving the growth in that product, we think that's going to help us become a double-digit growth, in that segment. The final area was within intellectual property. So we outlined the three areas of that business being patent intelligence, patent maintenance, and of the first of those on the patent intelligence side, that's really where we were underperforming the market. So this is the product, Derwent. This is a product that has a great source of content for discovering where you can get a patent. We have very high retention from a customer perspective, but we've seen some attrition there in the value being spent because we didn't make the investment we needed in that user interface. So we started that. We're going to tailor the new applications that will sit on this content to the personas within the organization that are now using that data. And really improving that category and that product investment is what will help to lift the business within IP to get to that market growth rate of mid-single digits. So those are really the three areas of focus that we outlined, and our view on each of those is, we continue to prosecute against that. No change to guide. We still think we can get to 6% in a couple of years, and we continue to work on those three areas, one within each of the segments, to really close that gap. That's great color. And related to that, the organic growth guidance for this year was trimmed from 3.25% - 1% at the midpoint. How does the updated guidance for this year affect the timeline or the potential timing of whether you can achieve that inflection in 1-2 years? Sure. So just as a reminder, we started this year, we figured that organic growth would be about 3%. Our current look is it's gonna be closer to 1%. That 2 percentage point decrease is really driven by two factors, and in our judgment, it's largely macro that's affecting both of those. So the first is within our life sciences business, that commercialization area that I talked about, where we need to make some investment. We are seeing softer spending in that area this year. So it's pretty well understood by now that drug approvals were lower last year. That's driving lower commercialization demand this year. There tends to be a lag in that, and it's certainly having a bit of a bigger impact on our business than we were expecting in both our products, whether that's selling data or analytics or insights, but also our services. So we provide specialized consulting services to a lot of these companies to help in that process, and that's been softer as well, too. So that made up about two-thirds of the decline that we were expecting in organic growth. And again, most of that we believe is external. The other third was within our IP space. So those segments I mentioned a few moments ago, the patent maintenance, as we will call it, you'll hear us refer to it as patent renewals. This is an area where companies and companies via law firms will outsource to us the maintenance of their patents, making sure that they're renewed around the world. So we started to see some softness in that book late in the second quarter, and we have projected that softness to remain for the balance of the year. And it was really driven by a handful of macro factors that we talked about at Q2 earnings. For example, in Europe, we started to see a little bit of an earlier impact due to the Unitary Patent that was just passed, than we were expecting, so we saw a little bit of a degradation there. And then we also saw some softer demand coming out of Asia. We saw some pressures on spending outside of the country, in Japan. So some of the renewals that we usually would process around the world for Japanese companies were lower, and then we saw some subsidies or some incentives pulled back in a couple of other countries. We mentioned both China and Australia as contributing to that. So this has been within the law firm channel. So we serve corporates directly. Those are usually large corporations that come to us directly via their law departments. And then we also have law firms that bring to us more small and medium-sized businesses. So it's in that law firm channel where we saw some of the softness. The upshot here is, in both of these cases, in life sciences and IP, the macro factors that we're seeing this year, we believe, are relatively unique. It's not something that changes our view on the longer term. Mm-hmm. Growth potential of these markets or the product improvements that we're making in those three areas to help us close that gap. We will, of course, have our two new division presidents, Bar in A&G, and Henry in Life Sciences and Healthcare, looking at their plans and tweaking those. And probably early next year, when we provide our guide, we'll give an even more specific timeline associated with the, the trajectory towards achieving the market growth rate. That's great. Sticking with high level, generative AI, a popular topic, and it's certainly something that Clarivate is leaning into. Can you provide an update on your highest priority generative AI initiatives, and when you might expect to see revenue and margin benefits from the technology? Absolutely. So we spent a little bit of time on this at our Q2 earnings call. We drew attention to a use case in each of our segments that we're investing behind, and we talked about some of those partnerships, so I'll remind a few of those. So I would say broadly across all three of our segments, one of the first places that we're gonna see AI manifested is through what we would refer to as Conversational Discovery. So this is rather than just putting in search terms and getting back links of results, you can ask a question, you get some potential answers, where that may have come from, and across all three of our segments, we have products that start with a single search box. So within A&G, we have web scale discovery for academic research libraries. We offer both Summon and Primo services there. Our ProQuest Central platform, with digital content from journals and newspapers, conference proceedings, and even video, you start with a search experience. That's also true when you move into the life sciences business. Cortellis customers start with a search, and it's also true in intellectual property. Derwent, IncoPat, and Innography, all these great patent intelligence tools start that way. So AI is gonna give us the ability to have a search experience, where you can start with a query and get some potential answers. So that's one way to think about an early way that we're going to invest behind and bring this technology into our products. But to be a bit more specific, within our A&G segment, we've partnered with a company out of Israel called AI21. They're gonna be helping us. We announced this partnership over a month ago, and we talked about it at earnings. Great opportunity to help us build in some of that conversational discovery capabilities into those products, leverage some of the LLMs that they have developed and can be tailored towards our products. So we'll have some really exciting things to come in the A&G space through that partnership. Within the life sciences space, we talked about something that's a little bit has some similarities, but also some uniqueness. So in Cortellis, conversational discovery is gonna be a great way to enhance the experience, but we're also gonna use AI to bring both structured and unstructured data into the responses. So we've got great structured taxonomies in Cortellis, but we also have great data within our legacy DRG business, where we provide insights and reporting around new developments in therapeutics. That's generally unstructured content that can be brought into the search experience, and help to enhance those results and provide answers and potential answers of areas to research. So that's what's happening on the life sciences front. Probably the most advanced example of AI in our customer products is within our intellectual property business, where we highlighted earlier this year, we've launched a project called the Brand Landscape Analyzer, or BLA. We debuted this at a big industry event earlier this year, and this is using AI to provide monitoring capabilities. Where we've typically done it via people or via searches, we can now automate this to look for potential areas where new trademarks can be opened. It's got great reviews, getting great feedback from customers, and that's come from a lot of our own internal development that we're really excited about. So to your point, this is a big area of focus for us over the course of the next couple of years, and when we talk about investing in product innovation, we think there'll be a meaningful component of that that's enabled by AI. Right. Now, Generative AI not only has the potential to be beneficial to Clarivate, it also has the potential to be disruptive from a competitive perspective. How would you assess the risk that a startup that's well-funded by venture capital comes into your sector and starts deploying Generative AI to basically go head-to-head with what you're doing? Yeah. Potentially at a lower price point. Sure. That could cause share shift. This is a question we were getting quite a bit, a few months ago, and certainly we're still getting some, some questions about it. In principle, what we shared early on when this started to get really popular, I would say in the last 3-6 months, is that in the markets we serve, there are some really critical components that we have that will help GenAI or AI be an enabler rather than a threat, and the first is our proprietary data. So we have content, that you can't get anywhere else, so it's not freely available. You know, the models can't scrape it, out on the open web. It's behind our paywall. So that's going to help the analytics that we provide be more transparent and more accurate. So really, analytical transparency is so important in the markets that we serve. Most of our use cases will not accept a black box answer, where you just ask a question, the answer comes out. We're dealing with researchers, we're dealing with scientists, we're dealing with legal professionals. They need to be able to trace. Mm-hmm. How we got to that outcome. So it's really important that the workflows we build enable the ability to see how that answer or suggestion was derived. And then finally, because we serve such high-stakes use cases, the intelligence that comes out of these situations or out of these queries or out of AI has to be accurate. So hallucinations are certainly a problem. If you have incomplete data and you're making a conclusion, you can get it wrong, and in our markets, you know, that is going to be unacceptable. We're dealing with people's health and with massive. Mm-hmm Investments that companies are making. So in our view, we do believe this is gonna be a great tool. To your point, it's gonna be really important to invest behind it, to enhance the service, but we think with that, those capabilities that we have in the types of markets we serve, we think it's much more likely that it will help us and established competitors continue to improve our capabilities and the value we offer our customers. Right. Makes sense. Let's dive a little bit deeper into some of the revenue trends. So on a full year basis, Clarivate reduced its organic revenue guidance by $60 million. With that reduction, how de-risked would you say the full year guide is? And what are some of the tail risks that could cause downside risk to the guide? Sure. So the short answer here is, we certainly think the outlook for the full year is heavily de-risked. So as a reminder, in the first half of the year, our business was essentially flat on an organic basis. Our subscription file grew just over 3%, and both our recurring and transactional order types, non-subscription businesses, were down. The former was down a couple percentage points, and the latter was down about 8%. So we were about flat in the first half of the year. Our outlook for the second half of the year, at the midpoint of our guidance, is about 2% growth, and most of that improvement from 0% - 2% is driven by comps and the fact that we had some patent accelerations last year that we didn't do this year that unwind in the second half of the year. So for the most part, there really isn't run rate improvement embedded in those numbers. As a reminder, when we changed our guide, our expectations in Q2 were light in those two areas that I highlighted within commercialization, in life sciences and within patent renewals within IP, and we took the view that those were gonna persist through the end of the year. Took a pretty conservative view. So we believe, and even particularly with the range that we've provided, at the very low end, you know, we'd be flat in the second half. Mm-hmm. We think that's an unlikely outcome, and we believe the most likely outcome is something closer to the midpoint of the range, about 1%, and we think there's a lot lower risk profile in that compared to where we started the year. Right. Now, of the $60 million reduction in the guide, you mentioned this earlier, two-thirds or $40 million of that is attributable to the life sciences and healthcare business. And you had mentioned that part of the incremental headwind was lower biotech funding, lower drug approval pipelines. What are you seeing there? Do you expect the trends to improve heading into next year, and what's the visibility into that improvement? Sure. So for both of those, and as just a little bit of color on the first, we talked about the impact that we're seeing due to drug approval and the pipeline there. But in addition to that, we also saw some of the people that we sell our data to, who are aggregators in the space, saw some of an impact from people that they were selling to or companies they were selling to that had some dependence on biotech funding. That's not an area we're typically selling to them, but through that channel, there was some impact there. Smaller proportionally, certainly the bigger impact is the drug approval. The good news on that is we see a much stronger approval pipeline this year, and that data is available, it's doing much better. So that bodes well when you think about that from a couple quarter lag from a timing standpoint. Our anticipation is that next year we'll have some wind in our sails in that area of the business. Given biotech is smaller, I think we're still watching that one carefully. But generally speaking, without a formal or specific guide out for next year, I'd indicate that I think in that part of the business, we should start to see some tailwinds in 2024. Right. Now, another contributor to some of the incremental impact revenues is Clarivate's intentional pivot to the platform strategy with its Real-World Data, and more selectively selling to data aggregators. Can you talk a little bit more about this strategy, why you're pursuing this strategy, and when you would expect that transition to be complete? Absolutely. So this is an area where for the past few years, we've been very open with people that we'll sell the data to. We've got a great new division president in our life sciences segment, Henry Levy. So excited to have him on board. I'll just echo those comments we made in Q2. And one of his early assessments is there are some therapeutic areas that we really want to focus in on our platform in 2024, so he wants to be a bit more selective here. This is an area where we want to give him the room to do that, so we'll certainly continue to sell to others. There'll be a lot of partnerships that we have, but we're gonna be a bit more selective based on areas that we want to invest behind. Just as a reminder, with this Real-World Data product and the impact it's had on our business, we're typically selling historical content in the form of a transaction. Then on a go-forward basis, we sell a subscription to update that data. Mm. This is one of the drivers, first half versus second half. We indicated we expect sub-growth for the business to be lower in Q3. The second half, you know, be a little bit lower than the first half. We're lapping about four quarters of softer real-world data transactional sales, so there's gonna be growth that we had seen in the subscription file that's not gonna be there starting in the third quarter. A bit of a headwind there. Our general view on this is, the right decision is to make the long-term investment in the product, make sure that we build those analytical capabilities, and it will be appropriate for us to, to make sure that we're a bit more selective with, you know, how we participate in this part of the market. Right. We touched on this a little bit earlier, but around the patent renewal business, that's where the transaction revenue saw a bit of headwind as some companies chose not to renew their patents. Typically, patents are the lifeblood of companies. Sure. Can you talk about why companies are choosing not to renew, and if there are potential changes in the business that could help mitigate some of this volatility that wasn't anticipated before? Yeah. This one has been an area of the business that has very durably grown, kind of in the 3%-5% range. Last year, it grew about 5%. The year before was pretty close to 4. Year before that was pretty close to 3. When we go back and, you know, we have people that were in the business for years before, indicated this has been a product category that's almost always grown. Mm-hmm. So this is the first year in quite some time where the business is flat. And I think our judgment is, each of the issues that we're hearing from our law firm partners seem to be temporary things. I think it's likely we'll have them persist for a while, but we'll lap the comps early next year. So I think this is one of those situations where we think a year where this business is flat is gonna be a once in a decade type event. It's more common that it's gonna grow in that 3%-5% range. I will highlight, we are helping ourselves out a little bit within this part of the business. One of the largest law firm wins that we can recall in recent history, we just secured. It's a large firm that's gonna come on board with us early next year. They'll be ramping up in the first quarter, but this will be a bit of a share gain that we think will help to offset some of those tougher comps in the first half of next year. And we believe this is a business where we're serving the customers well, and it's gonna have a pretty solid growth rate for years to come. Mm-hmm. You mentioned seeing very good product improvement within Web of Science and Academia and Government integration with ProQuest, better user interface. What are some of the things that are remaining? What are the next milestones, or would you say most of the heavy lifting is done with improving Web of Science? Yeah, we're so happy with the new interface. We're not resting on our laurels. That's why I'm so excited about the expansion of the Journal Impact Factor to the 9,000 journals, the integration we've done with ProQuest products. That's the type of innovation that we need to continue to bring into the product every year. We've got such great data available to researchers that are helping to drive great impact throughout the research community. Helping them get access to that and find these great sources of data is going to be really critical. So continuing to integrate our content assets and our software tools with research and analytics just makes a better experience for researchers, for faculties, for learners, for librarians. So that's gonna be important. We'll continue to make those enhancements every year, and that'll help to drive that stable, mid-single-digit growth that we're looking for this category. Right. On the topic of ProQuest, you've done a pretty good job integrating that business, achieving the cost synergy targets, $40 million, and then from a product perspective, really coupling it nicely with Web of Science. Same question, what's remaining? Sure. What's on the roadmap, and how much incremental financial benefit do you see from the ProQuest integration process? Yeah. So as a reminder, as you indicated, this year, we've effectively finished the integration. Mm-hmm. So we'll see the remaining $40 million flow through the P&L this year. That alone is the driver of the margin expansion this year. Without it, without, let's say 3%-4% growth, getting closer to 4%, it's tough to lift margins in our business because we're already into the 40s. So this year's margin expansion on 1% organic growth is coming from the ProQuest cost synergies. So effectively completed, really pleased with that, leveraged some of the tools and the geographic capabilities that existed in ProQuest to take out a lot of that cost, integrated the sales force that's going to market in the academic and the government markets. So we've done a really nice job and then leveraging the broader infrastructure of Clarivate to make ProQuest a more profitable business. So I'd say we're done with that one. It's flowing through the P&L now. The focus for Bar and his team and all of our A&G folks is really now around the product innovation. Mm-hmm. W ithin our workflow group or our software, what we can drive there. Great opportunities to take leading products like Alma, Sierra, Vega, continue to drive great features and expand those within the markets. And then there's great opportunities in content. We have our ProQuest One collections, where we combine our great book content with the journals and the paper, the conference proceedings and videos, to bring a great subject matter collection to our customers, and help in the learning process. So these are the types of things that we'll continue to focus on as we, integrate the products that we take to market as well. Right. You mentioned that this year, the margin expansion is being substantially or fully driven by the cost synergies. Are there internal initiatives to drive underlying cost efficiencies besides getting the organic revenue growth to be 3%-4%? Sure. Do you get the natural operating leverage, or are there internal, cost reduction initiatives at play? There, there certainly are. The one that I would highlight that shows the most promise or potential in the next few years is leveraging AI. Mm-hmm In our development processes. So, our development leads in each of the segments and our central team are focused on opportunities to adapt these tools. We're starting to see some early benefits, and there's some potential here to help free up resources. Could expand margins, or we may use some of that capacity to continue to invest in the products. I mean, for the next couple of years, the Clarivate story is not going to be about meaningful expansions to margins. Mm-hmm. We have good margins. We're in the 40s%. The real focus is going to be around making the investments in innovation to drive the organic growth in these categories. So yes, we're always looking for opportunities to be more efficient. I think AI is going to be a great way to help us be more efficient, particularly in technology development. But we are going to remain committed in the next couple of years to making the investments we need in content and in platforms to drive growth in these parts of the market where we've fallen a bit behind. Right. That's actually a great segue into investment spend and your philosophy around reinvestments back into the business. Have you internally earmarked a number for investments into specific buckets, like generative AI or like product innovation, and how would you expect those investment dollars to change? Sure. So we expect, and we talked about this back in March, to spend this year, next year, and the following, about $100 million-$150 million in increment to what we've spent over the last few years. Mm-hmm To drive product innovation. That's going to come in the form of more CapEx, and it's also going to come in the form of higher operating expenses. Within that amount, we have some buckets. We're not tied to those. There is some flexibility, but I would certainly indicate that enhancing the Real-World Data platform, building out the new Derwent experience from a user perspective, those are going to be buckets within that. And then AI, across a lot of our products, the example I gave today was Conversational Discovery. Mm. That's definitely going to be a category that we spend in. So we have. It's fungible. We can move things around as we see opportunities arise, but we are committed to spending that money over the next few years to help to drive the organic growth. Got it. At the analyst day earlier, on the topic of margins, you had initiated a target of 43.3% EBITDA margins by 2025. How confident are you in hitting that exact margin? And what do you see as the major levers? No, you're right. The exit year in the long-term plan we provided was the 43.25%. That was about 50 basis points of expansion each year. Yeah. This year's 50 basis points of expansion will come from the ProQuest cost synergies. The model we outlined for next year had our growth somewhere in the 4s, and at that level, we should be able to expand by about 50 basis points, give or take, even with the investments that we're making. Certainly, as we get closer to that 6% growth, even with some of the investment that we make, we should be able to deliver another 50 basis points. I think we're going to be pretty close to that, but we really are going to be committed to making those investments to drive the innovation. From our perspective, that top-line growth is what's most important. Mm-hmm A nd critical is getting these products to the levels they need to be at in those key parts of our business to drive that growth in the mid-single-digit range. Right. I'm going to pause there to see if there are any questions from the audience. No? Okay. Sure. So, we indicated at Q2 earnings that we were going to be in a position to be a bit more balanced with our capital allocation. We started this year with the view that we were going to use virtually all of our cash flow to deleverage. I'll remind everyone, back in March, we indicated that we had leverage of a little over 4x turns at the beginning of the year. We wanted to get under 4x this year, into the mid-3xs next year, and under 3x by 2025. So that's still our general trajectory, but given where the stock price is today, we said we were going to be more balanced. I would highlight, we bought back about $100 million of stock in August. Mm-hmm. So we started to do that in the third quarter. That's going to be the major use of cash for the third quarter, and then as we turn into the fourth quarter, we'll have the opportunity to be a bit more balanced. But we did indicate that we would start to buy back some stock, and we've actually done that since earnings. In the month of August, we acquired about $100 million at about an average price of just over $7. On the earnings call, you did mention you would strike a more balanced approach with buybacks and debt pay down in the second half of the year. Do you expect that philosophy to change beyond this year, or is it really just sort of this back half where you're adopting a more flexible approach? No, when we laid out our targets over the next couple of years, our EPS guide and our leverage targets contemplated balanced capital allocation. Mm-hmm I n 2024 and 2025. So I think that, likely will remain true. We will also likely use some small portion of our cash flow for smaller M&A. Mm-hmm. As our teams look at ways to build out a great real-world data platform to enhance Derwent, there may be opportunities for us to buy some small things that accelerate that. So we'll set aside a little bit for that, but I think the point will be next year and the following; we'll see some balance. We'll remain committed to bringing the leverage below 3x, but given the cash flow profile of the business, there'll be an ample amount available to buy back some stock and also do some small M&A. Right. And I guess maybe last question, around on the topic of M&A, you mentioned Derwent, you mentioned Real-World Data. Are there specific examples or areas within the product that you see opportunity for inorganic plugins that can enhance what you already have? Sure. I mean, I don't have a specific target, but in principle, what I would highlight is, as our teams build out these capabilities, they may find some things in the marketplace that could bolt in- Mm-hmm ... or accelerate that. Generally, it'd be a technology play or someone that's developed something that will help to accelerate the development of the platform. Mm-hmm. I would say that's generally where we are spending our time, and there could be some small opportunities for that within A&G. Certainly, we'll look for some within Life Sciences to help the Real-World Data platform. And then finally, within Derwent, there may be some small things that could help as we build out that Patent Intelligence. So again, think relatively small, but these are things that we could buy versus taking the time to build, that could help us get to market faster with a better solution. Fantastic. Jonathan, thank you so much. Please join me in thanking Jonathan for participating at our conference. Yeah. Thanks for having me, George.