Hello, everyone, and welcome to Clarivate's Fourth Quarter and Full Year 2023 Earnings Call. My name is Lydia, and I will be your operator today. I will now pass it over to Mark Donohue, Head of Investor Relations, to get started.

Thank you, Lydia. Good morning, everyone. Thank you for joining us for the Clarivate fourth quarter and full year 2023 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. 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 the 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. Clarivate believes non-GAAP results are useful in order to enhance an understanding of our ongoing operating performance. But they are supplemental 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 Jonathan Gear, Chief Executive Officer; and Jonathan Collins, Chief Financial Officer. Both will be available to take your questions at the conclusion of the prepared remarks. After prepared remarks, we'll open the call up. With that, it's a pleasure to turn the call over to Jonathan Gear.

Thank you, Mark. Good morning, everyone, and thanks for joining us today. As I begin my second full financial year as CEO of Clarivate, I want to update you on our turnaround journey, including the timing and actions we need to take in the coming years. 2023 was a pivotal year for Clarivate as we implemented significant changes that laid the groundwork for future growth. I will go over some of these changes shortly. This year also brought macro pressures that affected each of our segments and resulted in lower organic growth than we initially anticipated. However, these changes were essential for positioning Clarivate for the next phase, where we focus on innovation for growth. Building on our past investments and adjustments, we expect to see continued progress in Academia & Government, along with new successes in Intellectual Property and Life Sciences & Healthcare, accelerating from 2024 into 2025. We anticipate that new product introductions will lead to higher renewal rates, increased sales, improved pricing capture, and revenue growth. I fully expect us to enter 2025 ready to create value, coupling mid-single digit organic growth with our scalable business model to enhance cash generation for investors. I must note that this revised outlook extends by a year compared to the plan I shared at Investor Day last year, as the macro environment impacted us in 2023 and we adapted our strategy in Life Sciences & Healthcare with new leadership. Nevertheless, having completed these changes, I am more confident than ever in Clarivate's potential for success and growth. 2023 was foundational for Clarivate, where we implemented significant changes in three areas to prepare for growth. Before this year, our operating model was mainly functionally aligned, enabling us to quickly realize cost synergies from the three major acquisitions made in recent years. However, this came at the cost of accountability and a fragmented key account management strategy. I recognized the need for greater accountability and a more effective approach to operating closer to our customers. To address this, we created our segment operating model to enhance customer focus, expedite decision-making, and bring innovations to market more rapidly. This resulted in an organizational alignment into three segments: Academia & Government, Intellectual Property, and Life Sciences & Healthcare. In May 2023, I appointed Presidents to lead each segment. I brought in two external leaders, Bar Veinstein for Academia & Government and Henry Levy for Life Sciences & Healthcare. Gordon Samson transitioned from Chief Product Officer to head the IP segment, where he has nearly a decade of experience. With each leader accountable for their segment's P&Ls, including sales, go-to-market strategies, product leadership, technology, and operations, we are better positioned for improved organizational performance. At our Investor Day, we highlighted the lack of investment in our flagship products and innovation over the years, which we needed to address. We initiated significant investments and executed a roadmap to reinvigorate our portfolio, which includes developing new products, enhancing existing solutions, and leveraging artificial intelligence for faster, more agile market solutions. Starting in 2023, we boosted our annual capital investment by about $40 million, marking a 20% increase to support product innovation across all segments. Early indications show that these investments are yielding results. The revitalization of Web of Science, where we invested first, is a prime example of this, as that platform has returned to growth with further acceleration anticipated. In the IP segment, we hired a new product team in late 2022, which engaged deeply with our customers in early 2023 and began executing a roadmap for platform reinvigoration. We plan to take this to market in the first half of 2024 and look forward to reporting key performance indicators in future calls. In Life Sciences & Healthcare, we made significant adjustments to our real-world data platform under Henry Levy, pivoting to a focused strategy in the latter part of 2023, with initial customer successes expected later this year. Additionally, we renewed our commitment to aligning closely with our customers and supporting their success. I hosted nearly 100 customer meetings in 2023 and gained insights into what we do well and areas for improvement. Consequently, we realigned our customer-facing teams—sales, marketing, customer care—along with product teams to ensure our industry expertise is evident in all customer interactions. With this foundation set, over the next two years, we will focus on specific organizational and segment priorities to elevate organic growth to a low single-digit range. First, our organization-wide priorities will leverage our segment model established last year, better equipping us to pursue excellence across Clarivate by fostering a winning culture centered around innovation, customer focus, and accountability. We will continually seek operational efficiencies, including the use of AI to enhance productivity, which will help us maintain and improve operating margins while still investing in innovation, resulting in stronger cash flow that will reduce our leverage to the low 3 times range. We will also consider opportunities to prune our portfolio of smaller diluted products to sharpen our focus on core growth markets and generate cash for reinvestment and debt reduction. Turning to our segment priorities, our investments in Web of Science have led to better usage and renewal rates. With further product innovation, we aim to enhance content aggregation in the Academia & Government segment. We are also pursuing advancements in AI and business development opportunities, such as our acquisition of Alethea, an AI student engagement solution. In 2023, our IP segment faced considerable economic and budget pressures, which have since stabilized, and we expect improvements in the second half of 2024 as we compare against last year’s figures. We launched two new AI-powered workflow solutions last year, the Brand Landscape Analyzer and an IP forecast tool, and we are excited to introduce our new IP intelligence platform this year while enhancing our current IP management system's win rates through service integration with AI-driven workflows. Our Life Sciences & Healthcare segment, which has the greatest growth potential, has shown the most volatility over the past two years. Although it also faced macro challenges last year, we believe its growth potential significantly exceeds that of our other segments. With new leadership and strategy adjustments, we are better positioned to ensure the long-term success of the analytics platform. We have previously discussed our investments to drive innovation in our real-world data platform, supported by generative AI functionalities. The increase in capital spending in 2024 will primarily focus on accelerating innovation within this high-growth segment. Each of our Presidents is eager to share more details on these growth strategies in a series of upcoming investor webinars, with timing details to follow soon. As we conclude this year, we will be on track in our transformational journey. Based on our updated outlook, we believe we can reach our mid-single digit organic growth goal by 2026, which is about a year longer than the targets communicated last March. Of course, we will look for opportunities to expedite this timeline. I am confident that we possess the right people, customer relationships, products, and solutions to thrive. Achieving a mid-single digit growth rate will position us well to increase margins, enhance cash flows, provide capital allocation flexibility, and generate significant value for our shareholders. I will now briefly discuss our financial results for 2023. Despite a challenging growth environment, we have strengthened our underlying financial position. Organic subscription revenue grew by over 2% in 2023, and we achieved record renewal rates of 92%. We generated our highest free cash flow yet, exceeding $500 million, with $300 million allocated for accelerated debt repayment, bringing our leverage ratios below four times. We also repurchased $100 million of our ordinary shares. With a stronger balance sheet and robust cash generation, we continue investing in capital expenditures to drive additional product innovation, maintaining disciplined capital allocation with an expectation of using approximately $400 million mainly for deleveraging in 2024. I want to express my gratitude to all my colleagues for their commitment to helping Clarivate reach its full potential. I am confident that the substantial structural and operational changes we implemented last year have paved the way for sustained organic revenue growth. I look forward to updating you on our progress in the upcoming quarters. I will now hand the call over to Jonathan Collins to review our financials.

Thank you, Jonathan. Good morning, everyone. Slide 12 is an overview of last year's fourth quarter and full year financial results compared with the same periods from the prior year. Q4 revenue was $684 million, an increase of $9 million versus 2022, bringing the full year to $2.629 billion, a decrease of $31 million compared to the prior year. The decline was entirely due to the MarkMonitor divestiture and was partially offset by favorable foreign exchange. The fourth quarter net loss was $863 million due to the non-cash goodwill impairment charge related to the legacy businesses in the IP and LS&H segments. This was also the primary driver of the full year net loss of $987 million, which was an improvement of $3 billion over 2022, as this year's non-cash goodwill impairment charge was lower than the one recorded in the prior year. Adjusted diluted EPS, which excludes the impact of one-time items like the impairment, was $0.23 in Q4, a $0.01 improvement over the same period last year. The full year result was $0.82, $0.03 lower than 2022, stemming from the MarkMonitor divestiture. Operating cash flow was $191 million in the quarter, an increase of $54 million over the prior year's fourth quarter as the working capital timing issue from the third quarter unwound. Full year operating cash flow improved $235 million, or 46% over 2022, to nearly $0.75 billion on lower one-time cost and working capital requirements. Please turn with me now to Page 13 for a closer look at the drivers of the full year top- and bottom-line changes from the prior year. On our Q3 earnings call, we indicated Q4 organic growth was expected to approach 1%. However, it came in slightly below those expectations, closer to flat. Q4 has historically been the largest transactional sales quarter of the year for our A&G segment, and the outcome for this area was modestly lower than not only our expectations, but also the prior year's results. Adjusted EBITDA was right in line with our expectations despite the modestly lower revenue. The full year changes to the top- and bottom-line were driven by the four key factors highlighted on this chart. First, revenue was up $7 million on organic growth of 0.3%. Despite the softer year-end transactional sales, A&G accelerated growth on the back of the research and analytics subsegment as we reap the benefits of the investments in the Web of Science product. Our LS&H segment declined, led by a double-digit drop in transactional revenues due to the challenges with our legacy strategy of selling our real-world data that we discussed in prior calls and is in the process of being addressed. Finally, our IP business was down slightly in our Patent Intelligence solutions, which is also being reinvigorated in 2024, as well as previously discussed macro-related softness in our patent renewals and trademark services' offerings. The adjusted EBITDA impact was negligible as we were able to achieve efficiencies that offset most cost inflation. Second, inorganic impacts, namely the divestiture of the MarkMonitor business in 2022, lowered revenue $63 million and profit $32 million last year. Third, cost synergies from the ProQuest acquisition contributed $40 million of incremental profit and not only buoyed profit margins but were completely responsible for the expansion over the prior year. And, finally, the foreign exchange translation impact of non-US dollar denominated subsidiaries increased revenue by $25 million compared to 2022. The profit increase was negligible as transaction gains were lower than the prior year. Please turn with me now to Page 14 to step through the conversion from adjusted EBITDA to free cash flow at the highest rate we've seen since the IPO in 2019. Free cash flow was $127 million in the fourth quarter, an increase of $36 million over the same period the prior year, bringing the full year amount to more than $0.5 billion, growth of nearly $200 million over 2022, which represented an 18 percentage point improvement in the conversion on adjusted EBITDA. The majority of the improvement, $155 million, was caused by lower one-time cost as we completed the integration of the acquisitions. Interest payments were up $22 million over the prior year as the impact of base rate increases was partially offset by the lower debt quantum due to the deleveraging in Q4 of 2022 and H1 of 2023. Cash taxes were $21 million lower than the prior year as we recognized the benefit of planning initiatives, jurisdictional mix and the timing of payments. Working capital was a $5 million source of cash compared to a $73 million use the prior year. The timing of payments within our patent renewal business in our IP segment was a meaningful contributor to the year-over-year improvement. Capital expenditures rose $40 million to nearly $0.25 billion, or 9% of revenue, as we ramped up our investment in product innovation. We used our free cash flow to service our preferred stock with a dividend, prepay $300 million of term debt, and repurchased 14 million shares of our common stock. This balanced capital allocation brought our net leverage ratio to our year-end target of less than 4 turns. Please move with me now to Slide 15 as we turn the page on 2023 and provide our guidance for 2024. Beginning at the top of the page, we expect organic growth to improve over last year to about 1% at the midpoint of our range. From a segment perspective, we anticipate A&G's growth will continue to improve modestly, LS&H to improve to about flat, and IP to return to low growth. In terms of revenue types, we expect the subscription file will grow between 2% and 3%, in line with last year, reoccurring to grow about 1%, and transactional to decline about 2%. It's worth noting that we expect to be off to a slower start in Q1 with a decline of more than 2%. While we anticipate the subscription file will continue to grow, we're likely to see high-single-digit declines in both the reoccurring and transactional order types, driven by tougher comps in our IP segment, namely patent renewal and trademark servicing volumes. We expect organic growth to be modestly positive, excluding these product areas, and our full year guidance predicts positive organic growth for each of the remaining quarters of this year. 1% organic growth for the full year would yield revenue of about $2.62 billion at the midpoint of the range. Moving down the page, we expect adjusted EBITDA in the range of $1.055 billion to $1.115 billion, resulting in a profit margin of about 41.5% at the midpoint of the range. We anticipate diluted adjusted EPS between $0.70 and $0.80, down $0.07 from last year at the midpoint. The adjusted EBITDA decline, which I'll detail on the next page, will account for about $0.04 and higher D&A from increased capital spending to drive growth will cause $0.03. And, finally, at the bottom of the page, we anticipate free cash flow between $420 million and $500 million. Please turn with me now to Page 16 for a closer look at the full year top- and bottom-line changes we're expecting compared to last year. Since the benefit of the cost synergies from the ProQuest acquisition are completely embedded in last year's results, the full year change to revenue and adjusted EBITDA of this year is driven by three key factors. First, organic growth at the midpoint of our guidance range will add about $30 million to the top-line, but will have no impact on the bottom-line, leading to a modestly lower profit margin as we remain committed to investing in product innovation that we believe will accelerate organic growth in the coming years. Second, the inorganic impact from selling a small business line in the IP segment will remove some revenue this year compared to last year. We expect the transaction will close this quarter and will deduct about $30 million of revenue and about $15 million of profit this year. As Jonathan highlighted earlier, pruning the portfolio of small growth dilutive products to improve execution is a priority to accelerating our organic growth, and this is another step in this direction. And, finally, we anticipate a $10 million in foreign exchange translation headwind on the top-line and a slightly higher headwind of $15 million on the bottom-line as last year's transaction gains are not expected to recur this year. These changes to adjusted EBITDA account for three-quarters of the change in free cash flow compared to last year. But let's turn to Page 17 to step through some of the other items. One-time costs are expected to continue to decline this year to $40 million, an improvement of $20 million over last year, as the ProQuest integration is completely behind us. We do expect cash interest to decrease by about $15 million caused in part by the debt we prepaid in Q4, the rate benefit from refinancing our Term Loan B earlier this month, and the expectation that base rates will fall later this year. Taxes will increase by approximately $15 million due to timing of payments and jurisdictional mix. We expect the change in working capital this year will be negligible, just as it was last year, and we remain committed to investing in product innovation and plan to raise capital spending by about $20 million, taking it to about 10% of revenue. The net impact of these changes is free cash flow of $460 million at the midpoint of the range. From a capital allocation perspective, the free cash flow reduction of $40 million will be largely offset by lower dividend payments on our preferred stock. We have two more coupon payments to make before they convert to common shares in the second quarter, freeing up an additional $35 million of cash in the second half of the year. As a result, we expect to have $400 million available to prepay debt or repurchase shares, just as we did last year. We intend to use most of this to prepay debt and close in in our long-term net leverage target of about 3 turns. Please turn with me now to Slide 18 for a look at how last year's results and this year's guidance affect the trajectory of our organic growth acceleration in the form of our revised long-term targets. As Jonathan acknowledged at the onset of the call, it's going to take us longer to reach our mid-single-digit organic growth target with a lower starting point than originally anticipated. When we outlined our recovery path at the Investor Day last March, we expected to reach about 6% in 2025, and we now believe it will take us another year to touch this level of growth. We now anticipate making steady progress towards the range of 4% to 6% in 2026. A key driver of this progression includes modestly pruning small, lower-growth assets that are distracting our team's focus on core product innovation. As a reminder to reach our market potential in each segment, we must modernize platforms and enhance our solutions in one key subsegment in each. First, we expect to build on last year's momentum in research and analytics within A&G, lifting growth to mid-single digits in this category through expanding platform capabilities and breadth of content. Second, within LS&H, we plan to launch our new pharma-grade real-world data product in H1 and two specific therapy area aligned products in H2. Combined with AI-enhanced capabilities in our commercialization products, these investments will drive the growth acceleration in the highest potential business in our portfolio. And, third, we're targeting to deliver four enhanced solutions this year in our Patent Intelligence subsegment within IP built on our unparalleled data that we expect will lead to double-digit monthly active usage growth by the end of this year, setting us up for a meaningful improvement in organic growth in this subsegment next year. As our organic growth accelerates, we expect profit margins will return to last year's levels over the next few years and will compound to accrete $0.15 of EPS from this year's expectation, lifting free cash flow conversion to 50% over the same time horizon. Please move with me now to Page 19 to put these long-term targets in the context of the financial objectives that we outlined last year. Our primary aim is to accelerate our organic growth, lifting us from last year's level of essentially flat to mid-single digit growth in a few years. Our second goal is to maintain durable profit margins as we make the investment to achieve the primary goal. We are committed to providing the resources to drive product innovation in all our businesses, and are finding operating efficiencies to fund some of these, but are also willing to modestly lower our profit margins in the near term to benefit the long-term health of the enterprise. The third objective we outlined was to significantly improve our free cash flow, which we've done by reaching a $0.5 billion last year, but we see room to continue to expand our cash flow conversion to 50% as we improve our top-line growth. And finally, we remain committed to allocate our capital in a disciplined manner. We've demonstrated balance in this area by using about three-quarter of last year's available free cash flow to prepay debt, bringing our net leverage below 4 turns, and also used about a quarter of it to repurchase stock. We see a clear path to bringing leverage below 3 turns in the next few years maintaining a similar balance. I'd like to use this opportunity to thank my more than 12,000 teammates here at Clarivate for your tireless work to get us to this point and your commitment to executing our plan to help us achieve these objectives. I want to thank all of you for listening in this morning. I'm now going to turn the call back over to Lydia to take your questions. And, as a reminder, please limit yourself to one question and then return to the queue for any additional. Lydia, please go ahead.

Thank you. Our first question today comes from Owen Lau of Oppenheimer. Your line is open. Please go ahead.

Good morning, and thank you for taking my question. Jonathan, you mentioned some investments for future growth in 2025 and 2026. Could you provide more details on what type of product you plan to invest in, when you expect to launch this new product, and the anticipated return on these investments? Thank you.

Sure, it's Jonathan Gear. I'll start by providing an overview of each segment. In A&G, we've made early innovation investments in Web of Science, and we're beginning to see returns. As discussed last year, we experienced an increase in renewal rates, driven by a complete platform refresh. This marks the start of our journey, and we continue to invest in Web of Science by developing additional analytical tools to enhance value and improve researchers' workflows. This will increase usage, help us capture value, and enable differential pricing. We're also exploring ways to expand our pricing model to reach new market segments that we've previously been unable to access. Overall, A&G is the segment where we've seen the most advanced innovation and results. In IP, our main focus is on our Patent Intelligence and Search Analytics platforms, which include Derwent, Innography, IncoPat, and related patent search services. Although we have underperformed in this area, the team has excelled at engaging with customers to drive innovation. We plan to launch the first two of several new modules in this area in the first half of this year. Given our revenue model, these will be subscription products, with sales expected to pick up in the second half of the year and revenue to materialize next year. We are optimistic about this path. In Life Sciences & Healthcare, I want to highlight two main areas. First, we have the real-world data analytics platform, where we made significant changes last year by shifting our strategy away from selling our data to competitors. It was a flawed approach, and we are actively exiting that channel. With Henry's experience, we've refocused our investments to generate pharma-ready data, which we have mostly accomplished. We plan to roll out some therapeutic areas in the first half of this year. The second area is around R&D within our Life Sciences & Healthcare offerings. While we have excellent content, we had weak data platforms. We've been investing in upgrading these platforms and adding more analytics to unlock the value of our data. Overall, we have launched the initial phase of Web of Science, and we will continue to enhance it. We also anticipate significant product launches in both IP and Life Sciences & Healthcare this year. Thank you.

Our next question comes from Manav Patnaik of Barclays. Your line is open.

Good morning, gentlemen. My question is the pruning of the portfolio that you talked about. Can you just help us size how much of the portfolio is up for pruning? And also just what is the Board's aversion to doing something bigger? It sounds like you have three disconnected segments, Life Sciences is the smallest and the most volatile, so why not do something bigger?

Yeah. Thanks for the question, Manav. This is Jonathan Collins. I'll touch on the portfolio pruning and let Jonathan take the second part. So, the small business that we are exiting in the IP segment that I mentioned in the prepared remarks that we will likely close on in Q1 and it'll affect Qs two through four, that's about the size that we're looking at. So, the focus here is identifying areas that are growth dilutive and distractive to the teams to help improve the probability of success in execution and product innovation by focusing the team. So, that is about the size. They could be slightly larger, slightly smaller, but there are opportunities in all three of our segments to winnow down the areas that we are really focusing on and investing in to drive the organic growth acceleration.

Great. This is Jonathan Gear. I will address your second question regarding a larger strategic shift. The Board and I are fully committed to creating value for shareholders. As I've mentioned before, we recognize the benefits of having these segments work together. This value comes from shared content and technologies, particularly in IP and Life Science & Healthcare, along with shared customers, and significant cost synergies we've achieved by integrating these four major platforms. That said, we will always strive to optimize the best outcomes for our shareholders and customers. Currently, my focus, along with the Board's, is on enhancing and improving every segment as we've outlined. Thank you.

Next question, please. Lydia? Please standby, I think we're experiencing technical difficulty.

Thank you. Our next question comes from Heather Balsky of Bank of America.

Hi, this is Heather Balsky. Thank you for the opportunity to ask my question. I would like to know more about the increase in capital expenditures and the investments being made. Can you help us understand how much of this is related to GenAI initiatives and how much is allocated to other business investments? You've mentioned investing to drive growth, so how should we view spending over the next few years? Additionally, how are you balancing incremental investment opportunities with margin and cash flow growth? Thank you.

Yeah. Thank you for the question, Heather. So, with respect to our CapEx increase, most of that is adding development capacity, which we capitalize at a relatively high rate when we're enhancing and improving products. So, maybe, I'll just touch on a couple of the areas that Jonathan mentioned a bit ago. In the A&G segment, we continue to ramp up the investment in the Web of Science to stay ahead of adding features to the platform and ingesting new mediums of content to make it a great experience. And there certainly is an AI overlay there. All of our businesses are starting to move towards conversational discovery, which is an example of embedding AI in the products, and it certainly comes with development effort in all of those areas. Web of Science certainly doing that as well. As we move into Life Sciences, it's a combination of development capacity and some content or data for the real-world data offering. As Jonathan highlighted, we spent a lot of effort in the past couple of quarters building out pharma-grade data and the technology investment there. And then the next step for us is start to build these therapy area platforms or offerings that will take meaningful development efforts. So, that's really how we're spending within the Life Sciences segment. And then, on the IP side, the four new platforms or modules that will be put on top of the Derwent data set for search, for watch, for strategy, and for R&D, those applications have pretty meaningful technology developments that will happen over the course of this year and into next year. Just in terms of the time horizon, we indicated last year and the cash flow guidance that we highlighted today, getting to that greater than or about 50% conversion in a couple of years does contemplate CapEx being at a reasonably steady dollar level over the next few years. As revenue grows, that margin on CapEx should drop a bit, but we do expect that we'll need to continue to make that investment over the next few years. Thanks for the question.

Next question, please.

Our next question comes from Toni Kaplan of Morgan Stanley. Your line is open.

Hey, good morning. This is Greg Parrish on for Toni. Thanks for taking our question. I just want to dig into the change since Investor Day in March. I mean, what really drove the difference in the turnaround trajectory that you were targeting? You're ramping up investment here. So, is more investment required than you thought back then, or they really just macro, or is the end market more challenged maybe than you thought? If you can kind of help bridge the gap there? Thanks.

Certainly, Greg. I view this issue as two distinct factors. Firstly, the macro environment significantly impacted us in 2023, more than we had expected, particularly in IP, as we mentioned in our Q2 call, and also in Life Sciences & Healthcare within the commercial markets. These sectors were the hardest hit, while to a lesser extent, there were some marginal impacts in A&G due to discretionary transactional items. Overall, the macro factors influenced our initial outlook for the three-year plan. The second factor involves the reintroduction of industry expertise into our business as we reformed some of our previous teams. This led us to adjust our go-to-market strategies, especially for Life Sciences & Healthcare. With Henry joining us in the middle of last year, we decided to change our strategy regarding the Life Sciences & Healthcare RWD platform. I believe this was the right decision and it boosts my confidence for the future, but it did set us back a year in terms of the platform's timeline. Those are the two main areas I wanted to highlight. Thank you.

Great. Thank you. Next question, please.

Next question is from George Tong of Goldman Sachs. Please go ahead.

Hi. Thanks. Good morning. It looks like in your guide you're expecting improved organic growth this year in subscription and reoccurring. It's really the transactional piece that's going to be the offset. So, can you talk a little bit more about how much of the transactional revenue headwinds are cyclical versus structural, and steps that you're taking internally to drive improved performance here?

Sure, George. Yeah. Just to reiterate what this year's guidance range contemplates on organic growth. So, we do believe that the subscription business will be relatively consistent with last year. We grew about 2.5% last year. I think we'll be in that 2% to 3% range. As Jonathan highlighted, those investments that we are making this year in Life Sciences and in Patent Intelligence within IP should start to improve usage in the second half of this year and help the lift subscription growth next year. And we should continue to see some traction in A&G as the Web of Science product continues to improve. Most of the impact in reoccurring, which we think will grow modestly this year, is going to come from a modest improvement in the second half of the year on volumes within that market. We'll have tough comps early in the year, which is why I indicated growth will be lower, particularly in Q1. But to your point on transactional, we continue to expect and are conservative around commercialization budgets in 2024. We do think there is some opportunity in the second half for things to improve modestly, but we've been pretty conservative on the rate of improvement in that market. On the IP side, from a transactional search and watch, we've been relatively consistent there. It's been lower than in the past couple of years. And then, on the A&G side, which is the only place that we were a bit softer in the fourth quarter, we've been a bit conservative about the expectation there. So, that's what's leading to the anticipation that transaction will be down a couple of percent. In terms of what we are doing about it and the things that we can control, the primary area to focus on is within Life Sciences. So, the investment that we are making in these therapy area focused offerings for our real-world evidence and the pharma-grade data will lead to opportunities to sell this in a subscription model. So, that's a place where the headwinds we've seen in transactional the last couple of years we expect to see come back to us in the form of subscription growth. So, that's a little bit more color on how we're seeing 2024's growth expectations by order type.

Next question, please.

The next question comes from Seth Weber of Wells Fargo. Please go ahead.

Good morning, everyone. Could you discuss the current pricing environment and your thoughts on pricing as you move towards 2026? How significant do you believe pricing will be as you expand your product offerings and improve cross-selling? I would appreciate your insights on the current pricing situation and your projections for the next few years. Thank you.

Sure, Seth. I'll provide some insights on that and see if JC has anything to add. Overall, pricing has positively impacted all three of our product lines, particularly our subscription products. If we break that down by specific products, we've been able to command higher prices in areas where we've innovated and introduced new updates, whereas in areas where we've done less, like with Derwent, we haven't been able to capture as much price. There’s a clear connection between our capacity to innovate, influence customer workflows, and our ability to capture pricing. Looking ahead to our plans for this year, we've been conservative in our expectations for improving price capture for 2024. However, we are increasing our innovation efforts. Henry Levy has announced that all products will receive updates this year, which should help with price capture. But we’ll need to wait and see when those effects will fully materialize. JC, do you have anything to add?

Yeah. I think the indication we would expect 2024 to be pretty consistent, as Jonathan highlighted. In 2025 and 2026, as we launch these new offerings, we certainly think that this will be an area that will help contribute towards the growth acceleration as we move up a bit in those key product areas that we haven't been able to price meaningfully in the last few years. Thanks for your question, Seth.

Thanks, Seth. Next question, please.

The next question comes from Ashish Sabadra of RBC Capital Markets. Please go ahead.

Thank you for taking my question. I would like to follow up on a previous inquiry about the revenue growth trajectory for 2024. Historically, the visibility has been quite limited. Therefore, I am curious about what instills confidence in the acceleration we expect in the second half of 2024. Additionally, what factors could lead to either upside or downside risks? Is it primarily driven by macroeconomic conditions, or are there specific client wins that could enhance our confidence in this growth improvement? Thank you.

Yeah. Thanks for the question, Ashish. This is Jonathan. On the expectations and the cadence for this year, it's mostly driven by the comps from the prior year. So, we have not built in to your point because of visibility challenges for the last couple of years, a meaningful improvement in the markets in the second half of the year. But you'll recall, for example, in our patent renewal business, we started to see the softening in the second quarter, late in the second quarter. So, we have tougher comps in the first part of the year. That's also true with the trademark business within IP. So, that's the reason we expect that growth will be slightly negative in the first quarter. We'll return to growth in the second quarter and have better growth in the second half of the year. It's less to do with the run rate improving and more about the comps. And we have expected the transactional business to decline by a couple of percent, as I indicated. So, we think we've been a bit more conservative with our outlook on those sales that have been a bit more challenging to predict over the last couple of years. Thanks for the question.

Thank you. Our next question comes from Shlomo Rosenbaum of Stifel. Please go ahead.

Hi. Thank you very much. Some companies in life sciences, like IQVIA and Veeva, are expressing increased optimism among their clients and suggesting that we might see improvements in the second half of the year. Do you share that expectation in your projections? Are your views different? Also, Jonathan, I want to mention that during the Analyst Day, the target for 2025 was set at 6% growth, but now you are indicating a range of 4% to 6% for 2026. Can you clarify if this means you are lowering the growth expectations even for the next year?

Sure, Shlomo. This is Jonathan Gear. I'll address the first question, and then JC can tackle the second. Regarding life sciences, we are observing renewed optimism among our life sciences customers. Commercialization budgets seem to be on the rise, and this trend is evident across the board, including large pharma, large biotech, and even small biotech. However, we need to see how quickly this translates into increased demand for our products, services, and consulting. While the macro environment shows promise, we remain cautious about incorporating that optimism into our guidance for the second half. JC, would you like to respond to Shlomo's other question?

Yes. And that conservativism around the macro, Shlomo, is the other factor that's really driving the change in the last year of the guide we gave. So, to your point, we had previously indicated in the 5.5% to 6.5%, or 6% at the midpoint, we're now in the 4% to 6% range, so we'd have to get to the higher end of that to touch the prior midpoint. That is primarily due to our conservatism around the rate of improvement in the end markets. What could cause us to be to the higher end is faster acceleration, for example, in the commercialization market that, Jonathan, just highlight, a better outlook on the patent renewal front would be another example. So, that is the primary difference in the change between the two outlooks. Thank you.

Thank you. Next question, please.

Our next question comes from Andrew Nicholas of William Blair. Please go ahead. Your line is open.

Thanks, and good morning. I have a quick question regarding A&G. Jonathan Collins mentioned that it’s the largest transactional quarter, which I believe is primarily due to back file sales within Web of Science. Can you please confirm if that’s where the weakness lies? Additionally, could you provide some insight into the factors contributing to this? Is it related to budgetary cyclical pressures, or is it simply a timing issue that you anticipate will improve next year? Thank you.

Yeah. Thank you for the question, Andrew. So, as a reminder, we have multiple types of transactional sales within the A&G segment. You touched on one of them where we're selling the back file of Web of Science, which makes the analytics of the platform much more valuable to the users. Other examples are digital collections, historical collections that we've digitized and preserved, and also our books business. So, it's a combination of those. Q4 usually is the largest quarter for us. What we saw a bit later in the quarter is our customers in that space pausing a bit. What we heard from them is that they want to wait and see on some other spending factors. Most of our customer base is in North America within that part of the business, and their budget years run similar to the school year. So, their budget year will end in the second quarter. So, we'll see how that plays out in the coming quarters. But that's most of the feedback that we heard from that market, and those were the sales that were affected. Thanks, Andrew.

Thanks, Andrew. Great, I think that was our last question. Just as I wrap, just want to thank everyone for joining our call today and listening with our remarks, engaging with us. As we look forward to next year, again, as we said in the call, 2023 was a foundational year for us as we made the changes that we needed to make to really propel Clarivate. And I look forward to sharing with you over the ensuing quarters coming up of the results of the investments we're making, innovation as we drive this company to grow. Thank you very much, everyone. Goodbye.

This concludes today's call. Thank you for joining. You may now disconnect your line.