Good morning. Thank you for joining today's Clarivate Q3 2022 Earnings Release Call. My name is Forum, and I will be your moderator. It is now my pleasure to hand over the conference to our host, Mark Donohue, Head of Investor Relations. Mr. Donohue, please go ahead.

Thank you, and good morning, everyone. Thank you for joining us for the Clarivate Third Quarter 2022 Earnings Conference Call. With me today are Jonathan Gear, Chief Executive Officer; Jonathan Collins, Chief Financial Officer; Gordon Samson, Chief Product Officer; and Steen Lomholt-Thomsen, Chief Revenue Officer. All will be available to take your questions at the conclusion of prepared remarks. 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. An accompanying earnings call presentation is available on the Investor Relations section of the company's website, clarivate.com. 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 actual results, performance or achievements of the business or developments in Clarivate's industry 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, including organic revenue and adjusted EBITDA. Clarivate believes non-GAAP results are useful in order to enhance an 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. Reconciliation of these measures to GAAP measures are available in our earnings release, supplemental presentation on our website. After our prepared remarks, we'll open the call for your questions. With that, it's a pleasure to turn the call over to Jonathan.

Great. Thank you, Mark. It's great to join my first call as CEO of Clarivate. I could not be more excited to be here. Since joining the company in early July, I spent much of my time traveling around the world, meeting with thousands of my colleagues. The time I've spent with them has reinforced my view of the strengths of our people, of the resilience and growth potential of our products and the power of our customer relationships. There are many great things taking place at Clarivate, but we also have work to do to realize our full potential. While I look forward to covering this in great depth at our Investor Day in March 2023, I will touch upon some of my initial impressions and areas of focus in the next few minutes. First, I want to start with our third quarter financial highlights. It was a mixed quarter with both areas of great strength and pockets that did not perform as we had expected. Our key financial metrics of revenue, EBITDA and EPS were all up year-over-year as we continue to grow and expand the business even in these challenging economic times. This growth speaks to the resiliency and criticality of our solutions. Focusing on revenue, we came in at $636 million, an increase of $5 million on an organic basis over the prior year period. However, this was $4 million below the bottom end of the range we provided, and I will spend some time focused on this metric. Peeling back these numbers, well over 95% of our business, including our Academia & Government business, our IP business and the subscription portion of our Life Sciences & Healthcare business delivered as expected. In total, organic subscription revenues increased 4.3% in the quarter, which is our best quarterly subscription performance this year. We are pleased with the trajectory of these businesses and the early progress we are seeing on sales initiatives we have put in place. While we delivered positive gains in the quarter in the vast majority of our business, our transactional revenues, specifically in Life Sciences & Healthcare one-time transactions, came in light. This was primarily driven by a low conversion of our real-world data sales pipeline late in the quarter. Jonathan Collins will provide some additional context here, but I would like to share my view on this business. First, our Life Sciences & Healthcare real-world data is a great business. We have critical assets with strong growth potential. We have seen some quarters with strong performance. For example, the first two quarters this year, our real-world data nearly doubled over the prior year. Similarly, the first half of 2021 experienced similar growth. So when this business performs well, the results are exceptional. But we have also had a couple of weak quarters, including last year's fourth quarter and now this year's third quarter, both of which were down significantly compared to the prior year. As I have dug into our performance closing out Q3, I've come to realize that it is a very difficult business to predict for a few reasons. First, there are a small number of very large deals that can have a material impact on a quarter. So the organic growth number can swing on less than half a dozen deals. Second, there is little we can do to speed up a close of these deals. It is all based on customer needs and the timing of those needs, which can move beyond our control. Additionally, we're often selling to data aggregators who are themselves dependent on end customers' decisions and the timing of those decisions. As a result, we are doing the following: first, we are addressing the structural volatility of this business by investing in new solutions designed to move our real-world data products up the value chain and provide greater predictability. I will cover details on these investments shortly. Second, for the foreseeable future, we will remove many of these larger binary deals from our guidance, which may result in better-than-expected performance in this area in certain quarters. On our operational highlights, there are six key areas that I would like to expand on, which I'll cover in the next few slides, starting with the leadership transition. I want to thank Jerre for the leadership and support he provided in creating the Clarivate of today. None of us would be here were it not for his leadership and foresight. As he moves into the role of Chair Emeritus, we wish him and Mary Joy all the best in the next chapter of their lives as they focus on their family and philanthropic efforts. Through my travels, I've had the opportunity to meet with thousands of our colleagues. The care and dedication they have to our customers and to the growth of Clarivate is inspirational. Our assets are mission-critical to our more than 45,000 global customers. This leads to long-term strong customer relationships with 90%-plus retention rates. I had a chance to visit one of our IP customers a month ago and hearing of the partnership in their own words was equally inspirational. These types of partnerships lead to a resilient business model and open opportunities for innovation-driven growth. We have work to do that I will touch on, but our starting foundation is strong. My key priority remains focused on unlocking our growth potential. We will do this by continuing to drive scale internally, unlocking efficiencies in investment dollars, and driving a culture of innovation across all areas of Clarivate. During the third quarter, we announced the divestiture of the MarkMonitor business, which we completed on October 31. This business was not a core offering of ours, and we can now allocate investments into our key product offerings with higher growth potential. We used the net proceeds to pay down some of the term loan, which helped to reduce our leverage. Jonathan Collins will speak on this subject in a few minutes. I would now like to share with you a new lens on how I look at the business. On the lower right side of Slide 8, I think about our solution sets, building from left to right, as first, enriched data. This is our starting point and our key right to play in our markets. We aggregate enhanced public and private data to create proprietary, enriched data sets. Analytics and insights. This is putting intelligence on top of our data. An example is our Brand Landscape Analyzer, a tool which helps professionals assess the viability of new brands. Analytics and insights are further enhanced by driving workflow solutions. This is where we embed our software solutions into the daily workflow of our customers. For example, our Alma library management solution is a critical tool used by librarians to serve their communities. Finally, we wrap these with expert services, including consulting and software implementation services. Our goal is to continually develop new solutions that move us from left to right, creating more value, expanding our playing field and driving loyalty into our customers. Second, on the top right, our regional presence with growth opportunities across all three regions. And finally and critically, our segments. Starting this quarter, we will be reporting along three distinct segments. There is overlap and value shared between segments, including content, technology, and commercial channels. These segments are the prime way in which I look at our business and will be driving Clarivate going forward. With this set of lens, let me share my view on how we are doing. This is an important slide for us, both internally and externally and will form a key foundation for our Investor Day in March. I'd like to draw your attention to a few key takeaways. Today, we deliver approximately $2.6 billion of revenue in a serviceable, addressable market approaching $25 billion. In the past, we have emphasized the total addressable market of more than $100 billion. However, in the near term, I will focus on how we are performing in the markets we serve. Currently, we are underperforming our market opportunities. This is driven by a small number of products. Much of these are from the legacy Thomson solutions, which were all strong and often the gold standard, but we're underinvested in for years. We are now pivoting and investing behind these and other opportunities. By making focused improvements through product, go-to-market, and a relentless focus on customer delight, we see a new baseline and clear path to market growth. This will be our main topic of the Investor Day, as we share both the path and timing to a 6% organic growth baseline and beyond. All future initiatives will align to an expanded strategy based on strong business fundamentals. This expanded strategy is built on five priority pillars that underpin all our organic growth initiatives. As we have discussed previously, our first pillar is the execution of our industry-focused, customer-centric go-to-market model. Our second pillar is focused on bringing different content sets together. As an example, we combined our CompuMark and Darts-ip to create a new solution for performing trademark litigation analysis. Within pillar three, we have insights and predictive analytics on top of our core content. For example, we recently launched a proprietary United Nations SDG module on top of Web of Science. This allows universities to analyze and track their research with their sustainability goals. Moving to pillar four, we enable customers, business processes, and decision support with our workflow solutions. For example, Rialto is our industry-leading library marketplace. It is critical as libraries build and enhance their content collections. We wrap all the prior four pillars together in pillar five as we serve as a trusted partner by providing value-add services and strategic guidance to help our customers realize their full potential. I would like to share two new investments that will also address the volatility in our Life Sciences & Healthcare transaction revenue. Our real-world data solutions, despite quarterly volatility, are among our fastest-growing products and are positioned in a serviceable market of over $2 billion, growing annually in the low to mid-teens. Our life science customers already trust us to provide high-quality data. However, today, we provide this in data feeds that our customers must then integrate and analyze themselves. We are now investing in a web-based platform and a set of intuitive self-service analytics to convert our data into insights to drive decisions and actions faster. This new platform will provide the following benefits: first, it will move us up the value chain with our clients; second, as it is productized, it will provide higher levels of recurring revenue; third, it will expand our market reach with both existing customers and new logos; and finally, it serves as a scaled platform to drive additional, use case-driven innovation and growth. Second, we have invested in a new pharmacovigilance platform to create a new enhanced regulatory compliance workflow solution. Our life sciences customers are struggling to manage both rising regulatory compliance mandates and an ever-growing volume of data on potential drug safety events. This new solution will further automate these resource-intensive activities. This will reduce costs and drive deeper insights into drug safety by leveraging our scientific content and real-world data. We plan to launch our first two products in the second half of 2023. We believe these two investments alone have the potential to increase our revenue growth rates by well over 100 basis points in the medium term. I look forward to sharing more on these and the other elements of our roadmap to growth at Investor Day. Before I turn it over to Jonathan, I want to reiterate once again how excited I am to be at Clarivate and leading this great company. It starts with our dedicated global team who go above and beyond every day. I truly believe our future is bright and the best is ahead of us. I will now turn the call over to Jonathan Collins.

Thank you, Jonathan. Good morning, everyone. Slide 13 shows our 2022 third quarter and year-to-date results compared to the same period in 2021. We generated third quarter revenue of $636 million, an increase of $194 million from last year, primarily due to inorganic growth from the ProQuest acquisition and 1.2% organic growth, despite being partially affected by a significant foreign exchange headwind as the U.S. dollar strengthened against the pound sterling and euro. Year-to-date revenue is nearly $2 billion, with an increase of $668 million, translating to over 50% growth. The third quarter operating and net loss of $4.4 billion is solely linked to noncash goodwill impairment charges from the CPA Global and ProQuest acquisitions, driven by worsening macroeconomic factors such as inflation and rising interest rates, along with a recent decline in our share price. Adjusted diluted EPS for Q3, which excludes the impairment impact, was $0.20, reflecting a $0.04 increase from last year’s Q3, bringing the year-to-date figure to $0.63, which is a $0.14 increase from the first nine months of last year. Operating cash flow for the quarter reached $208 million, an increase of $164 million from Q3 last year, totaling $372 million for the first nine months, up $66 million compared to the same period last year. Please turn to Page 14 for a detailed view of the drivers behind our third quarter growth compared to the same period last year. When we revised our expectations for the third quarter in early September, we anticipated revenue to be between $640 million and $650 million due to the strong U.S. dollar, expecting organic growth of about 3%. However, our Life Sciences & Healthcare business experienced a shortfall in transactional sales in September, leading to organic growth falling around 180 basis points below expectations, falling about $4 million short of our minimum revenue target. Our recurring business, including subscriptions and recurring revenues, met our expectations with over 4% and 2% organic growth, respectively. The shortfall was entirely attributed to transactional products and services, which decreased by more than 9% instead of remaining stable. Focusing on the third quarter’s growth drivers, four key factors emerged. First, organic growth of 1.2% contributed $5 million to the top line and $4 million to the bottom line, achieving a profit conversion of over 75%. Second, inorganic growth added $220 million to top line and $68 million to bottom line, reflecting a profit conversion of over 30% before cost synergies, mainly due to the ProQuest acquisition. Third, cost synergies net of certain operating expenses provided an additional $17 million in profit from carryover savings related to ProQuest cost actions. Lastly, foreign currency translations impacted quarter performance significantly, decreasing revenue by $31 million and profit by $8 million; however, the adverse effects were somewhat offset by transaction gains. Page 15 details the consolidated results for the three segments over the past seven quarters as previously outlined by Jonathan. This historical information was included in an 8-K filed this morning. The segment we formerly called Science has now been split into Academia & Government and Life Sciences & Healthcare. The A&G segment includes traditional Thomson products like Web of Science, InCites, EndNote, and ScholarOne, along with the ProQuest acquisition. The LS&H segment now encompasses the Thomson product, Cortellis, alongside the DRG acquisition, while the Intellectual Property segment remains unchanged, including the Derwent product and CPA Global acquisition. On the left side of the page, you can see that LS&H products led organic growth at around 6% last year and in the current year, although this business experiences more volatility with some quarters showing double-digit growth and others being nearly flat, like the last quarter. We are investing to transition this business towards a more stable recurring revenue model. The IP segment has delivered consistent organic growth of about 3%, and A&G, excluding ProQuest, has seen organic growth in the 2% to 4% range. While there is seasonality in transactional sales for both segments, they are significantly more stable than LS&H, and we expect A&G’s organic growth to stabilize further as ProQuest becomes part of the metric next year. On the right side of the page, you will observe that A&G, prior to the ProQuest acquisition, yielded the highest profit margins, which we expect to enhance towards the 40s as we realize cost synergies in 2023. The IP segment has gradually improved margins over the past two years, benefitting from the CPA Global acquisition’s cost synergies. The LS&H segment, being the smallest, has margins that reflect its size. We believe these changes in segment reporting will offer better transparency into our operations moving forward. Please turn to Page 16 to see how our third quarter profit translated into cash flow. Free cash flow for the third quarter was $140 million, up $120 million from last year’s third quarter, and $216 million for the first nine months, relatively consistent with last year. Adjusted free cash flow, excluding one-time costs, was up $100 million for the quarter and the first nine months, as increases in adjusted EBITDA were mostly offset by higher interest, taxes, and capital expenditures, largely linked to the ProQuest acquisition. Moving to Slide 17, you'll see our revised guidance for the full year. Due to the strengthened U.S. dollar, the divestiture of our MarkMonitor business completed last week, and the volatility in our LS&H transactional business, we have adjusted our outlook for the remainder of the year. The midpoint of our revenue guidance is now reduced by $100 million, with nearly half of that, approximately $45 million, attributed to foreign exchange. We anticipate a further 5% strengthening of the dollar against the pound and euro in the fourth quarter. The sale of MarkMonitor will result in a revenue reduction of about $15 million since this business will be excluded from November and December figures. We are also lowering our anticipated organic growth rate by approximately 200 basis points, equating to about $40 million, with a third of that occurring in the third quarter and the remaining expected in the fourth quarter. As Jonathan pointed out, virtually all of this variance lies within the transactional products and services of our Life Sciences & Healthcare segment. Given recent volatility, we have adopted a conservative outlook for this segment in the fourth quarter, now expecting an organic growth rate of around 2.5% and revenue of $2.63 billion at the midpoint. With stringent cost management, we aim to maintain profit margins at the low end of our previous guidance, around 41%, leading to an adjusted EBITDA of approximately $1.075 billion at the midpoint. Adjusted free cash flow is now projected at $525 million at the midpoint, yielding a conversion rate of close to 50%. The $100 million reduction from prior guidance is due to lower profit and slightly elevated capital needs. Adjusted diluted earnings per share are now anticipated to be $0.80 at the midpoint. Please refer to Page 18 for the anticipated drivers of revenue and profit growth for the full year compared to last year. Just like the comparisons made earlier for the third quarter, we foresee the full year growth influenced by the same four factors. First, organic growth is expected to yield about $45 million in revenue and $20 million in added profit, achieving a conversion rate of around 45%. Second, inorganic growth should contribute around $830 million in sales and $250 million in profit at actual exchange rates, resulting in a profit conversion of roughly 30% linked to the ProQuest acquisition before cost synergies. Third, cost synergies from the CPA and ProQuest transactions are projected to add $70 million in profit, while, as mentioned earlier, anticipated dollar strengthening in the fourth quarter is expected to create a $120 million revenue headwind and a $70 million flow-through to profit, resulting in a conversion of about 55%. Moving to Page 19, you will find details about how we expect our nearly $1.075 billion full year adjusted EBITDA to transform into free cash flow. We now expect adjusted free cash flow for the entire year to be $525 million at the midpoint, marking an increase of $65 million compared to last year. We believe the profit growth of approximately $275 million will be partially counterbalanced by higher interest costs related to debt from the ProQuest acquisition, increased cash taxes on profit growth, and heightened capital needs, although greater capital expenditures may be offset by a reduction in working capital. This outlook anticipates that nearly $0.50 of every dollar of profit will convert to adjusted free cash flow. Please advance to Page 20 to see how we intend to utilize this cash and the proceeds from the MarkMonitor sale to strengthen our balance sheet. The upper left section of the page illustrates how we plan to combine over $0.5 billion of adjusted free cash flow, more than $0.25 billion of proceeds from the MarkMonitor sale, and about $100 million of cash on hand to pay down approximately $0.5 billion of debt across term loans and our revolving credit facility, repurchase $175 million of our stock, integrate the ProQuest acquisition, service our preferred stock dividends, and meet other minimal obligations. The upper right indicates that we will conclude the year with $5 billion in debt, and we intend to use a significant portion of next year's free cash flow to continue reducing debt in our effort to lower our leverage to below four turns. In the lower left, we completed an interest rate swap on roughly $0.75 billion of our floating rate term loan during the quarter. This, in combination with the anticipated reduction in leverage in the fourth quarter, will decrease our floating rate debt from 45% to 25% of our annual coupon. Lastly, the lower right features two key points about our debt structure. First, based on current interest rate forecasts via the forward curve, where base rates peak around 5%, our total weighted average cost of debt will peak at approximately 5.5%, which remains low relative to historical norms. Secondly, we have no debt maturities or mandatory prepayments for the next four years. Please proceed to Page 21 for some high-level insights into the main drivers of our top and bottom line trajectory as we move into 2023. In a few months, we will offer specific guidance for next year and the timeline for increasing our organic growth to match market growth rates. However, we want to emphasize a few major factors that have emerged in the latter half of this year that will significantly influence our outlook for next year. First, if the dollar remains strong as it is today, we anticipate a substantial top line headwind due to FX translation, particularly in the first half of 2023. Second, the sale of our MarkMonitor business will reduce our revenue in the first three quarters of next year. Importantly, these factors should not affect our organic growth. Furthermore, we foresee improvements in organic growth next year as we implement the strategies outlined earlier. However, we do not expect the dollar's FX and divestiture implications to negate the benefits of organic growth, leaving our revenues relatively stable next year. Thus, we predict modest profit margin expansion next year, complemented by the completion of ProQuest cost synergies, resulting in relatively flat EPS. Additionally, we anticipate our free cash flow conversion to nearly double in 2023, as we move beyond one-time cash outflows associated with the CPA Equity Plan and the ProQuest integration costs. Please proceed to Page 22, where we outline why we believe this is a robust business capable of generating shareholder value even in times of economic uncertainty. I share Jonathan's enthusiasm for our business prospects, and this page highlights several reasons for our positive outlook. Our three segments—A&G, LS&H, and IP—are full of mission-critical products enriched with data, fostering analytics and insights for a growing number of user personas. We facilitate our customers' workflows and serve as a trusted partner, delivering value-added services across various global industries. Moreover, these offerings are highly recurring. Thus far, 78% of our revenue comes from subscriptions and recurring sales, achieving an organic growth rate of 4.5%. While our transactional business has been more inconsistent recently, our investments in new product innovation within LS&H will shift a greater portion of our revenues to recurring sources, enhancing stability and predictability. Given that our products are essential, our subscription retention this year has stood at 92%, despite the challenges posed by our decision to suspend operations in Russia, showcasing the resilience of our subscription offerings. These commercial characteristics provide a robust base for significant operating leverage, as seen in our profit margins exceeding 40% year-to-date. Additionally, the content, technology, and commercial channels our three segments share have resulted in $250 million in cost synergies over recent years from integrating DRG, CPA, and ProQuest acquisitions, greatly contributing to the impressive profit margins we are achieving. The one-time costs associated with integrating these businesses have temporarily impacted our free cash flow conversion, but those challenges are now largely behind us. As I mentioned earlier, we expect our free cash flow conversion to double next year, reaching about 50% of our adjusted EBITDA. All these factors underline that our firm is a scaled information services compounder set to accelerate organic growth through our refined strategies and yield substantial returns for our shareholders going forward. Thank you all for joining us today. I’ll now hand the call back to Forum for questions.

Our first question comes from Manav Patnaik with Barclays.

I just wanted to mention, Jonathan Gear, you pointed out your growth compared to the market growth and the gaps. I know you will provide more details during the Investor Day. Looking at your implied organic growth for 2023, it has improved but is still in that 3% range for next year. I was hoping for more insight on how much effort is required to penetrate that untapped market. It seems that 2023 may not reflect that.

Sure, Manav. Thanks for the question. So a couple of comments to your question. First, I mean, we certainly expect and will make progress on our organic growth in 2023, and we'll come out with a very precise number at our guidance call at the end of Q4. I think your second part of your question is really the timing, if you will, to the market rates of 6% overall. The way we're thinking about it, and again, I will have much more precise views on the timing of this, Manav, and also importantly, the path so that you can best assess your assumptions there. But I think that will be measured in, I would call it, a few years. And a few could be measured in a couple of type years, think of it in terms of that being the timing. But again, let me come back to you, Manav, at Investor Day with some more precise timing on this.

Our next question comes from the line of Toni Kaplan with Morgan Stanley.

So I wanted to sort of go back to September, it seemed like you had some idea that the quarter wasn't going well since you lowered the guide. I know transactional has less visibility, but I guess, down 9% is sort of a big delta versus flat. So like, I guess, are you able to monitor the transaction intra-quarter? Or was September really a lot worse than July and August? And just how should we think about Q4 and next year for the transactional business? Like how do you get that to recover, basically?

Sure. I'll share my thoughts, and Jon, feel free to add anything I might overlook. Firstly, it really came down to a handful of very large deals. Our Life Sciences & Healthcare sales team, led by Tom, has been heavily involved, with myself, Steen, and Jonathan closely monitoring these deals on a daily basis due to their significance. This has highlighted a key insight for me in my first quarter in this role: these deals are very hard to predict. Interestingly, we didn't lose these deals to competitors; the decisions were simply delayed or postponed. I've come to understand that this is the nature of the product, where there are only a few large deals that seem promising, yet they often don't close. This experience is relatively new for me, but it is crucial for our strategy moving forward. As we plan for next year, as I mentioned and Jon noted, we need to make structural changes. I'm very excited about the investments we approved before the end of the quarter, which I believe will enhance our value to clients and improve the predictability of this vital revenue stream. Additionally, given the current volatility, I think it's wise to remove some of these large deals from our forecasts. This approach may lead to a few quarters where we exceed expectations, and if that happens, we will ensure you are informed about the details. Jonathan, do you have anything to add?

No, that's great.

Our next question comes from the line of Andrew Nicholas with William Blair.

I wanted to ask on profit margins for next year. I think on Slide 21 and in your prepared remarks, you talked about modest expansion, primarily on ProQuest cost synergies. So I just wanted to clarify, is the intention or the messaging here that you're planning to reinvest the organic kind of margin expansion that you expect from this business back into LS&H or other growth initiatives? Is that how we should think about next year?

Andrew, it's Jonathan Collins. As we think about next year, the big things we wanted to highlight were the top line, just to be clear that the FX headwind we're going to see in the divestiture of MarkMonitor will offset even the improved organic growth on a dollar basis. To your point, when we think about the profit margins, we do believe we'll have some margin expansion. As Jonathan said, when we're out in February with our year-end results, we will give more specifics around that. With organic growth in the range that it has been, the margin expansion, as a result of that, is not going to be significant, but we will have the ProQuest cost synergies next year that we'll complete, which will help to bolster the margins. So those are the big pieces that we wanted to point to and highlight for next year as we think about the bottom line.

Our next question comes from the line of Shlomo Rosenbaum with Stifel.

I'm trying to understand the impact of excluding large deals from your guidance on real-world data. Specifically, when I compare 2023 to 2022 and note that you're anticipating a flat performance, how much revenue are you leaving out from these big deals that could represent potential upside? I'm looking to establish a baseline for organic growth, as it seems like you're taking a conservative approach, but it's challenging for us to gauge the extent of the revenue we're discussing.

I will provide a thematic overview and have Jonathan provide specifics. We will, of course, return with more details at the end of the Q4 call. A couple of things to highlight include the significant impacts of MarkMonitor, FX, and others on our total revenue numbers. It’s important to note that over 95% of our business performed as expected, indicating that the vast majority of this business is quite predictable. However, we do have one aspect of our business that can experience strong quarters or weaker ones. Looking ahead to next year, I expect no drastic changes in our real-world data business line. Jonathan, would you like to add anything?

Yes, that description seems accurate. Since we haven't provided a specific number for next year, I can't give a detailed answer. However, I would highlight our guidance for the fourth quarter, which indicates that Q4 will be flat organically. There are significant discounts in these deals, which will greatly affect the fourth quarter, typically our largest quarter for such transactions. As Jonathan mentioned, if we can close some of these deals during the quarter, it could bring some upside. That's our approach for the fourth quarter, and we'll share more details about 2023 when we update our guidance early next year.

Our next question comes from the line of George Tong with Goldman Sachs.

I wanted to stick with the Life Sciences & Healthcare transaction revenue performance. You mentioned that you didn't lose any of the deals, the decisions were delayed and postponed. So can you talk a little bit more about the dynamics of what happened there? Are these truly delays? And were they due to macro factors or other factors that caused the deals not to go through? And then separately, what are you doing to improve the predictability in terms of translating these revenues into recurring revenue streams? Are you looking to restructure contracts and how you go to market? Any color there would be helpful.

Sure. Let me elaborate on that. Throughout the first quarter, I've gained valuable insights into this segment of the business. First, I want to describe the nature of some of the larger deals. Alongside our significant deals, we have a range of smaller agreements in the real-world data sector. What we experienced was a series of larger deals that did not close. One key takeaway is that while we're sometimes selling directly to the end-user, many of these larger transactions involve data aggregators who bring in additional datasets and content to create comprehensive solutions for the final end-user. These deals are complex and heavily depend on the timing and specific needs of the end customer, which can change frequently. Regarding any economic pressures, I don't believe these deals were significantly affected by the current economic slowdown. There might be more oversight from boards of smaller companies, leading them to scrutinize decisions more closely. However, when they need the data, they will pursue it, and if they delay decisions, it merely postpones their needs. Overall, I did not observe any macroeconomic pressure affecting our business; it remains robust as it has historically proven to be. Now, addressing your second question about our strategy moving forward, we are developing a real-world data platform that represents the future of our data usage. There will always be a demand for data in its raw form from specific users and customers, but we're now shifting towards building a platform that enables use case-specific analytics. This shift offers several advantages: it makes our data easier to consume, allows end-users to combine our data with their proprietary information for enhanced solutions, and crucially, it creates more predictable recurring revenue streams. This transition elevates us in the value chain. In my experience, successful information businesses start with core data and enhance it with analytics to provide higher value, more predictable, and sticky content. That is our strategy for evolving and improving this business. Fundamentally, our underlying business remains strong; the data is essential. The challenge with real-world data currently is its unpredictability. The investments we are making in productizing it will help resolve these issues.

Our next question comes from the line of Seth Weber with Wells Fargo.

Could you provide some insights on the pricing environment you've observed in the latter half of this year and your expectations for 2023? The company had mentioned a mid-single-digit growth from pricing previously. Is that still an accurate perspective? Additionally, do you have any early insights into discussions for the upcoming year?

Yes. Seth, it's Jonathan Collins. On the pricing front, that's one area that continues to perform as we expected. It's been a bright spot for us in the first nine months. It is one of the key contributors towards the strong subscription growth that's been improving as we've moved through the year. So those conversations have gone well. We've talked quite a bit about the fact that this is really about an exchange of incremental value. So we've made meaningful investments in the products over the course of the past couple of years, and now we're able to recognize an economic benefit associated with that. As we look to next year, we're cognizant of the overall environment. We'll be very thoughtful and careful as we move forward in all of these product categories, but we think this will continue to be an area that helps to bolster the strength of our recurring business, which as Jonathan highlighted earlier, has been a real bright spot for us so far this year.

Our next question comes from the line of Peter Christiansen with Citi.

I want to go back to the transactional revenue retooling. I appreciate the comments there. But I was wondering, have you investigated whether there's parts of that business, particularly the data sales, where you may have the opportunity to repackage the product, maybe introduce it into subscription, maybe at a new tier level or something of that nature? How should we think about product repackaging as a potential means of smoothing out some of the volatility from the transactional business?

Sure. Yes, let me dive in with that. I think it's a great, great opportunity. And I'll highlight a couple of things. Firstly, the end market in this area is a high-growth market. It's a market that grows on average, 7% to 10%. And so it's the right neighborhood to be in and is the right area to be playing in. And we've had, as I mentioned in my remarks, some quarters of incredible performance in that real-world data business. The first half of this year was great. The first half of last year, it was also great, but it's the unpredictability which is painful. I mean it pains me that we had 95% of our business perform great and as expected, yet we're having this volatility caused by this one piece. So to address that, we're doing exactly as you suggested. The prioritization of our real-world data, and I'd call attention to those two investments that we called out, which we do believe will have a significant impact on our total company organic growth rate once it's rolled out, will do just as you suggest. They're taking the platform, packaging it, creating more use case-based products, and insight-based products, which has the benefit of: a, being more predictable; b, being stickier; and c, being frankly easier to use, and we frankly control the channel with the end user quite a bit better with that. So we do think it will help with that significantly. There will always be some ongoing demand for data in its native form, and that's just the nature of the business and the nature of the consumption. But by productizing and adding insight and analytics on top of the data to create these new products, it will smooth out the revenue and the growth in the Life Sciences & Healthcare division significantly.

Our next question comes from the line of Hans Hoffman with Jefferies.

This is Hans Hoffman on for Stephanie. Can you just talk a little bit about the ProQuest integration, kind of a little more specifically, kind of what you're seeing within the Web of Science product and how that's performing relative to your expectations? And then just sort of on divestitures now, kind of MarkMonitor, have you guys sort of pruned on non-core assets? Or is there maybe more left to go there?

Okay. Sure. So I'll make a comment and then have Jonathan Collins add some additional context. First, regarding the ProQuest acquisition integration, it has gone exceptionally well. It's always challenging, and one thing that struck me when I joined this company a few months back was the rapid pace of change and growth driven by acquisitions over the past 30 months, particularly during COVID. The successful integration of ProQuest is a significant achievement for Clarivate, thanks to the teams from both ProQuest and the legacy Clarivate who contributed to this success. The ProQuest acquisition has performed well, and we're very satisfied with it in terms of revenue and efficiencies. The combination of Web of Science from the legacy Thomson business with ProQuest feels very natural. The content and products align well for our go-to-market strategy. However, when considering our growth path to reach a market growth rate of 6%, there are several legacy Thomson products, particularly Web of Science, that require improvement. We have previously announced investments aimed at enhancing our Journal Impact Factor as one example. We are actively investing in Web of Science and other products to make advancements in these areas. Overall, we are very optimistic about our progress. Jonathan, would you like to provide additional comments on this or discuss other divestitures?

Yes. And as it relates to the ProQuest, the cost synergies continue to run ahead of schedule. So we bumped up the outlook for cost synergies in our full year range that we provided. So continue to do better there and are encouraged by the cost synergies. On the revenue opportunity side or integrating the products better, as Jonathan highlighted, one of the key product integrations that we've pointed out before is the inclusion of the Web of Science bibliometric data index content into our web-scale discovery solutions that ProQuest has, both Primo and Summon. Great opportunity. This is driving additional usage and a better value proposition of the product for many of our customers around the world that use those services. So that's a great example of where we're continuing to integrate not only the back office and achieve cost synergies, but create better value for our customers. As it relates to the portfolio pruning, we've mentioned before, we started with the most obvious. So the work that we did on MarkMonitor, as Jonathan highlighted earlier, this was not the best strategic that we wanted to free up some opportunity. We'll continue to be careful stewards of the business and look for opportunities to make sure we free up capital to invest as everyone would expect.

Our final question comes from Ashish Sabadra with RBC Capital Markets.

This is John filling in for Ashish. It looks like you're expecting an incremental $15 million in CapEx largely focused on organic growth investments. You've talked about them a little bit, the legacy products. But maybe could you just give us some more color on the expected benefits and time line? Is this more of a back half '23 or potentially a longer term?

Yes. You got it. The incremental CapEx that we put in for this year is largely to begin the investments that Jonathan highlighted. So most of those are concentrated in the LS&H business. So we want to get those off and running in the second half of the year this year. So we've greenlighted both of those projects. We added some additional content licensing that we wanted to bring in that's included there as well to help drive better sales. So I would expect to start to see a benefit from those next year. And then we'll be able to provide some more color, as I mentioned, a bit more specifically when we provide our guide for next year in the first quarter.

Thank you. That concludes our call for today. We appreciate you all joining us. If you have any follow-up questions, please reach out to Investor Relations. Available always to help you. Thank you.

Thanks, everyone.

This concludes today's Clarivate Q3 2022 Earnings Release Call. Thank you for your participation. You may now disconnect your lines.