8-K
Clarivate PLC (CLVT)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
February 25, 2021
Date of Report (date of earliest event reported)
CLARIVATE PLC
(Exact name of registrant as specified in its charter)
Jersey, Channel Islands
(State or other jurisdiction of incorporation or organization)
001-38911
(Commission File Number)
N/A
(I.R.S. Employer Identification No.)
| Friars House <br>160 Blackfriars Road | |
|---|---|
| London | SE1 8EZ |
| United Kingdom | |
| (Address of Principal Executive Offices) |
(44) 207-433-4000
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Ordinary shares | CLVT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02. Results of Operations and Financial Condition.
On February 25, 2021, Clarivate Plc (the “Company”) issued a press release announcing earnings for the fourth quarter and year-ended December 31, 2020. In addition, the Company posted to its website supplemental information related to revenue, earnings and guidance. The press release and supplemental information have been furnished with this Form 8-K as exhibits and are posted on the investor relations section of the Company’s website (http://ir.clarivate.com/).
The information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| No. | Description |
|---|---|
| 99.1 | Press release issued by Clarivate Plc dated February 25, 2021 |
| 99.2 | Supplemental Information dated February 25, 2021 |
| 104 | The cover page from the Company's Current Report on Form 8-K dated February 25, 2021, formatted in Inline XBRL |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CLARIVATE ANALYTICS PLC | |
|---|---|
| Date: February 25, 2021 | By: /s/ Richard Hanks |
| Name: Richard Hanks | |
| Chief Financial Officer |
Document
Clarivate Reports Fourth Quarter and Full Year 2020 Results
— Reaffirms 2021 Outlook —
London, UK -- February 25, 2021 - Clarivate Plc (NYSE: CLVT) (the “Company” or “Clarivate”), a global leader in providing trusted information and insights to accelerate the pace of innovation, today reported results for the fourth quarter and year ended December 31, 2020.
Fourth Quarter and Full Year 2020 Financial Highlights
•4Q'20 Revenues of $456 million and Adjusted Revenues(1) of $471 million increased 79% and 85%, respectively. Adjusted Revenues exclude the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions including CPA Global and DRG
•4Q'20 Net Income of $6 million increased 108% and Adjusted Net Income(1) of $136 million increased 224%
•4Q'20 Net Income per diluted share of $0.01 increased 104% and Adjusted Income per diluted share(1) (EPS) of $0.22 increased 69%
•4Q'20 Adjusted EBITDA(1) of $200 million increased 137% and Adjusted EBITDA Margin(1) increased 920 basis points to 42.4%
•Full Year Revenues of $1.254 billion and Adjusted Revenues(1) of $1.277 billion increased 29% and 31%, respectively. Adjusted Revenues exclude the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions including CPA Global and DRG
•Full Year Net Loss of $106 million improved 50% and Adjusted Net Income(1) of $289 million increased 90%
•Full Year Net Loss per diluted share of $(0.25) improved 68% and Adjusted Income per diluted share(1) (EPS) of $0.64 increased 21%
•Full Year Adjusted EBITDA(1) of $487 million increased 66% and Adjusted EBITDA Margin(1) increased 790 basis points to 38.1%
•Cash Flow from Operations increased $146 million to $264 million; Adjusted Free Cash Flow(1) increased $201 million to $302 million
“We are very proud of what we achieved in 2020 during the challenges of the global pandemic. Our colleagues quickly overcame these challenges by swiftly adapting to a new work environment that served us well and will provide considerable benefits in the years ahead," said Jerre Stead, Executive Chairman and CEO of Clarivate.
"Throughout the year, we made significant progress across our strategic objectives including improving our colleague engagement and customer delight scores. We completed operational improvements, which helped to drive organic growth, and enhanced our IP and Science businesses with two transformative acquisitions. Our growth in the fourth quarter and full year 2020 reflects the benefits of these actions. The team also made tremendous strides with ESG initiatives and we look forward to publishing our first sustainability report in 2021. Given the strength of our core business and the benefits we expect to realize from recent acquisitions, we reaffirmed our 2021 outlook."
Selected Financial Information
The results for the three and twelve months ended December 31, 2020 include contributions from the following acquisitions: 1) CPA Global, which was completed in October 2020; 2) Decision Resources Group ("DRG"), which was completed at the end of February 2020; 3) Beijing Incopat Co., Ltd ("IncoPat"), which was completed in October 2020; and 4) Hanlim IPS Co., Ltd ("Hanlim"), which was completed in November 2020, for which there were no comparable amounts in the prior year period. The current year periods exclude the results of the MarkMonitor Brand Protection, Antipiracy, and Antifraud products, which were divested on January 1, 2020. Additionally, the fourth quarter and year ended December 31, 2020 include only 10 months of Techstreet, compared to a full year in 2019 due to its divestiture in November 2020.
| Three Months Ended December 31, | Change | Year ended December 31, | Change | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except percentages and per share data) | 2020 | 2019 | $ | % | 2020 | 2019 | $ | % | ||
| Revenues, net | 455.6 | 255.0 | 200.6 | 78.7 | % | 1,254.0 | 974.3 | 279.7 | 28.7 | % |
| Adjusted revenues, net(1) | 471.3 | 255.1 | 216.2 | 84.8 | % | 1,277.1 | 974.7 | 302.4 | 31.0 | % |
| Annualized Contract Value (ACV) | 906.6 | 793.7 | 112.9 | 14.2 | % | 906.6 | 793.7 | 112.9 | 14.2 | % |
| Net income (loss) | 6.4 | (84.8) | 91.2 | 107.5 | % | (106.3) | (211.0) | 104.7 | 49.6 | % |
| Net income (loss) per share | 0.01 | (0.28) | 0.29 | 103.6 | % | (0.25) | (0.77) | 0.52 | 67.5 | % |
| Weighted-average shares outstanding (diluted) | 606.1 | 306.4 | — | 97.8 | % | 428.6 | 273.9 | — | 56.5 | % |
| Adjusted EBITDA(1) | 200.1 | 84.6 | 115.5 | 136.5 | % | 486.6 | 294.0 | 192.6 | 65.5 | % |
| Adjusted net income(1) | 135.6 | 41.9 | 93.7 | 223.6 | % | 289.1 | 152.1 | 137.0 | 90.1 | % |
| Adjusted diluted EPS(1) | 0.22 | 0.13 | 0.09 | 69.2 | % | 0.64 | 0.53 | 0.11 | 20.8 | % |
| Weighted average ordinary shares (diluted)(2) | 627.1 | 329.8 | — | 90.1 | % | 450.5 | 287.9 | — | 56.5 | % |
| Net cash provided by operating activities | 135.8 | 5.2 | 130.6 | — | % | 263.5 | 117.6 | 145.9 | 124.1 | % |
| Free cash flow(1) | 106.7 | (20.9) | 127.6 | — | % | 155.8 | 47.8 | 108.0 | 225.9 | % |
| Adjusted free cash flow(1) | 173.5 | N/A | N/A | N/A | 301.7 | 100.5 | 201.2 | 200.2 | % |
(Amounts in tables may not sum due to rounding)
(1)Non-GAAP measure. Please see “Reconciliation to Certain Non-GAAP measures” in this earnings release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings press release.
(2)Calculated assuming a net income position compared to a net loss position on the statement of operations for calculating Adjusted net income and Adjusted diluted EPS.
Fourth Quarter 2020 Operating Results
Revenues, net, for the fourth quarter of 2020 increased $200.6 million, or 78.7%, to $455.6 million, compared to the prior-year period. Adjusted revenues, net, which excludes the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions, increased $216.2 million or 84.8%, to $471.3 million, compared to the fourth quarter of 2019. Excluding the impact of acquisitions and divestitures, organic revenues increased 2.6% on a reported basis, and up 1.0% on a constant currency basis, due to higher transactional and subscription revenues. The increase in organic revenue was partially offset by a one-time $3.5 million deferred revenue adjustment not related to the purchase accounting adjustment, which decreased fourth quarter revenue by 1.4%, for which there was no comparable amount in the prior year period.
Subscription revenues for the fourth quarter of 2020 increased $26.4 million, or 12.6%, to $235.9 million, compared to the prior-year period, primarily driven by the acquisitions of CPA Global and DRG, partially offset by the Techstreet and MarkMonitor disposals. Excluding the impact of acquisitions and divestitures, organic subscription revenues increased $3.7 million or 1.8% on a reported basis, and up 0.3% on a constant currency basis, due to new business and price increases, partially offset by a one-time $2.6 million or 1.2% deferred revenue adjustment for which there was no comparable amount in the prior year period.
Transactional revenues for the fourth quarter of 2020 increased $75.3 million, or 165.0%, to $120.9 million, compared to the prior-year period, primarily driven by acquisitions. Excluding the impact of acquisitions and divestitures, organic transactional revenues increased $2.7 million or 5.9% on a reported basis, and up 4.1% on a constant currency basis, compared to the fourth quarter of 2019. The growth in organic revenues is due to an increase in search volumes and backfile sales, partially offset by a one-time $0.9 million or 2.0% deferred revenue adjustment for which there was no comparable amount in the prior year period.
Re-occurring revenues for the fourth quarter of 2020 were $114.5 million, an increase of 100.0%, primarily from the patent renewals business acquired in the CPA Global acquisition.
Net income for the fourth quarter of 2020 was $6.4 million, or $0.01 per share, compared to Net loss of $84.8 million, or $(0.28) per share, in the prior-year period. The improvement in the fourth quarter of 2020 compared to the prior year period is primarily due to the income contribution from acquired businesses, continued margin improvements in the legacy Clarivate business, a gain on the sale of the Techstreet business and a significant decline in interest expense resulting from lower interest rates as a result of the refinancing of debt in October 2019.
Adjusted EBITDA for the fourth quarter of 2020 increased by 136.5% to $200.1 million, compared to the prior-year period, driven by the earnings contribution from acquisitions.
Adjusted net income for the fourth quarter of 2020 increased by 223.6% to $135.6 million, compared to the prior year period, driven by higher revenues and ongoing cost savings initiatives. Adjusted diluted earnings per share was $0.22 for the fourth quarter of 2020, compared to $0.13 in the prior-year period.
Full Year Operating Results
Revenues, net, for the full year 2020 increased by $279.7 million, or 28.7%, to $1,254.0 million, compared to the prior year. Adjusted revenues, net, which excludes the impact of deferred revenues resulting from purchase accounting adjustments primarily related to acquisitions, increased $302.4 million or 31.0%, to $1,277.1 million, compared to the full year 2019. Excluding the impact of acquisitions and divestitures, organic revenues increased 1.6% on a reported basis, and up 1.2% on a constant currency basis, due to higher subscription revenues, partially offset by a decrease in transactional revenues.
Subscription revenues for the full year 2020 increased by 7.7% to $867.7 million, compared to the prior year. On a constant currency basis, Subscription revenues increased by 7.4%, compared to the prior year, primarily due to acquisitions partially offset by divested businesses. Excluding the impact of acquisitions and divestitures, organic subscription revenues increased $24.3 million or 3.0% on a reported basis, and up 2.7% on a constant currency basis, compared to the full year 2019, primarily due to new business and price increases.
Transactional revenues for the full year 2020 increased by 74.2% to $294.9 million, compared to the prior year. On a constant currency basis, Transactional revenues increased by 73.8%, compared to the prior year, primarily due to acquisitions partially offset by divested businesses. Excluding the impact of acquisitions and divestitures, organic transactional revenues decreased $10.3 million or 6.1% on a reported basis, and down 6.5% on a constant currency basis, compared to the full year 2019, due to a decrease in demand primarily driven by economic conditions resulting from the COVID-19 pandemic.
Re-occurring revenues for the fourth quarter of 2020 were $114.5 million, an increase of 100.0%, primarily from the patent renewals business acquired in the CPA Global acquisition.
Net loss for the full year 2020 was $106.3 million, or $(0.25) per share, compared with a net loss of $211.0 million, or $(0.77) per share, for the full year 2019. The year-over-year improvement was driven by higher revenues, a gain on the sale of the Techstreet business and reduced interest expense.
Adjusted EBITDA for the full year 2020 increased by 65.5%, to $486.6 million, compared to the prior year, driven by higher revenues and ongoing cost savings initiatives.
Adjusted net income for the full year 2020 increased by 90.1% to $289.1 million, or $0.64 per diluted share, compared with adjusted net income of $152.1 million, or $0.53 per diluted share for the full year 2019.
Balance Sheet and Cash Flow
At December 31, 2020 cash and cash equivalents of $257.7 million increased $181.6 million, compared to December 31, 2019, primarily due to a $108.8 million increase in free cash flow, proceeds from the sale of ordinary shares of Clarivate in June 2020 and cash received from the voluntary exercise of 24.1 million warrants in exchange for ordinary shares of Clarivate during the first quarter of 2020.
The Company's total debt outstanding at December 31, 2020 was $3,547.4 million, an increase of $1,882.4 million compared to December 31, 2019 due to a term loan of $1,600 million incurred during the fourth quarter of 2020 with net proceeds used to fund a portion of the CPA Global acquisition, and $360.0 million incurred on the term loan during the first quarter of 2020 with net proceeds used to fund a portion of the DRG acquisition, offset by $65.0 million net borrowing and repayment activity to pay the revolver in full.
Net cash provided by operating activities was $263.5 million for the year ended December 31, 2020 compared to net cash provided by operating activities of $117.6 million for the prior year. Adjusted free cash flow for the year ended December 31, 2020 was $301.7 million, an increase of $201.2 million, compared to the prior year, as a result of growth in revenues and operational efficiencies, and the benefit of a $45.0 million working capital cash benefit in the fourth quarter of 2020 from CPA Global relating to a timing difference between the pre-acquisition third quarter and the post-acquisition fourth quarter.
Reaffirmed Outlook for 2021 (forward-looking statement)
The full year 2021 outlook presented below assumes no further currency movements, acquisitions, divestitures, or unanticipated events.
The below outlook includes Non-GAAP measures. Please see "Reconciliation to Certain Non-GAAP measures" presented below for important disclosure and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings press release.
| 2021 Outlook | |
|---|---|
| Adjusted Revenues | $1.78B to $1.84B |
| Adjusted EBITDA | $785M to $825M |
| Adjusted EBITDA margin | 44% to 45% |
| Adjusted diluted EPS | $0.73 to $0.79 |
| Adjusted Free Cash Flow | $450M to $500M |
Adjusted diluted EPS for 2021 is calculated based on approximately 631.0 million fully diluted weighted average shares outstanding and includes the full year impact of the ordinary shares issued in conjunction with the CPA Global transaction.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the fourth quarter at 8:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company’s website.
Interested parties may access the live audio broadcast by dialing 1-888-317-6003 in the United States, 1-412-317-6061 for international, and 1-866-284-3684 in Canada. The conference ID number is 1969888. An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 in the United States, 1-412-317-0088 for international, and 1-855-669-9658 in Canada. The Replay Conference ID number is 10151089. The recording will be available for replay through March 11, 2021. The webcast can be accessed at https://services.choruscall.com/links/ccc210225.html and will be available for replay.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with U.S. generally accepted accounting principles ("GAAP") and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Definitions and reconciliations of non-GAAP measures, such as Adjusted Revenues, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, and Standalone Adjusted EBITDA to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.
Forward-Looking Statements
This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance outlook and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, including the anticipated benefits therefrom, and our success in integrating acquired businesses;
anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficiently liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the COVID-19 pandemic and governmental responses thereto, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed under the caption “Risk Factors” in our 2019 annual report on Form 10-K, our current report on Form 8-K filed on June 19, 2020, and our quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2020, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.
About Clarivate
Clarivate™ is a global leader in providing solutions to accelerate the lifecycle of innovation. Our bold mission is to help customers solve some of the world’s most complex problems by providing actionable information and insights that reduce the time from new ideas to life-changing inventions. Covering scientific and academic research, pharmaceutical, biotech and healthcare intelligence and intellectual property services, we help customers discover, protect and commercialize their inventions using our trusted subscription and technology-based solutions coupled with deep domain expertise. For more information, please visit clarivate.com.
Consolidated Balance Sheets
(in thousands)
| December 31,<br>2020 | December 31,<br>2019 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 257,730 | $ | 76,130 |
| Restricted cash | 11,278 | 9 | ||
| Accounts receivable, net of allowance of $8,745 and $16,511 at December 31, 2020 and December 31, 2019, respectively | 751,446 | 333,858 | ||
| Prepaid expenses | 58,770 | 40,710 | ||
| Other current assets | 248,781 | 11,750 | ||
| Assets held for sale | — | 30,619 | ||
| Total current assets | 1,328,005 | 493,076 | ||
| Computer hardware and other property, net | 36,267 | 18,042 | ||
| Other intangible assets, net | 7,370,350 | 1,828,640 | ||
| Goodwill | 6,252,636 | 1,328,045 | ||
| Other non-current assets | 47,944 | 18,632 | ||
| Deferred income taxes | 29,786 | 19,488 | ||
| Operating lease right-of-use assets | 132,356 | 85,448 | ||
| Total Assets | $ | 15,197,344 | $ | 3,791,371 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 82,038 | $ | 26,458 |
| Accrued expenses and other current liabilities | 716,356 | 159,217 | ||
| Current portion of deferred revenues | 707,318 | 407,325 | ||
| Current portion of operating lease liabilities | 35,455 | 22,130 | ||
| Current portion of long-term debt | 28,600 | 9,000 | ||
| Liabilities held for sale | — | 26,868 | ||
| Total current liabilities | 1,569,767 | 650,998 | ||
| Long-term debt | 3,457,900 | 1,628,611 | ||
| Non-current portion of deferred revenues | 41,399 | 19,723 | ||
| Other non-current liabilities | 67,722 | 18,891 | ||
| Deferred income taxes | 362,261 | 48,547 | ||
| Operating lease liabilities | 104,324 | 64,189 | ||
| Total liabilities | 5,603,373 | 2,430,959 | ||
| Commitments and Contingencies | ||||
| Shareholders’ equity: | ||||
| Ordinary Shares, no par value; unlimited shares authorized at December 31, 2020 and December 31, 2019; 606,329,598 and 306,874,115 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 10,049,317 | 2,208,529 | ||
| Accumulated other comprehensive loss | 503,521 | (4,879) | ||
| Accumulated deficit | (958,867) | (843,238) | ||
| Total shareholders’ equity | 9,593,971 | 1,360,412 | ||
| Total Liabilities and Shareholders’ Equity | $ | 15,197,344 | $ | 3,791,371 |
Consolidated Statement of Operations (Unaudited)
(in thousands, except share and per share data)
| Three Months Ended December 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Revenues, net | $ | 455,595 | $ | 255,013 |
| Operating costs and expenses: | ||||
| Cost of revenues | (130,508) | (85,334) | ||
| Selling, general and administrative costs | (185,509) | (98,402) | ||
| Depreciation | (4,558) | (2,718) | ||
| Amortization | (122,392) | (52,667) | ||
| Impairment on assets held for sale | — | (18,431) | ||
| Restructuring and impairment | (20,803) | (15,670) | ||
| Other operating income, net | 37,706 | 1,779 | ||
| Total operating expenses | (426,064) | (271,443) | ||
| Income (loss) from operations | 29,531 | (16,430) | ||
| Legal settlement | — | — | ||
| Income (loss) before interest expense and income tax | 29,531 | (16,430) | ||
| Interest expense and amortization of debt discount, net | (39,608) | (63,751) | ||
| Loss before income tax | (10,077) | (80,181) | ||
| Benefit (provision) for income taxes | 16,492 | (4,605) | ||
| Net income (loss) | $ | 6,415 | $ | (84,786) |
| Per Share | ||||
| Basic | $ | 0.01 | $ | (0.28) |
| Diluted | $ | 0.01 | $ | (0.28) |
| Weighted-average shares outstanding | ||||
| Basic | 606,094,505 | 306,484,116 | ||
| Diluted | 606,094,505 | 306,484,116 |
Consolidated Statement of Operations
(in thousands, except share and per share data)
| Year ended December 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Revenues, net | $ | 1,254,047 | $ | 974,345 |
| Operating costs and expenses: | ||||
| Cost of revenues | (399,122) | (352,000) | ||
| Selling, general and administrative costs | (553,756) | (475,014) | ||
| Depreciation | (12,709) | (9,181) | ||
| Amortization | (290,441) | (191,361) | ||
| Impairment on assets held for sale | — | (18,431) | ||
| Restructuring and impairment | (47,595) | (15,670) | ||
| Other operating income, net | 52,381 | 4,826 | ||
| Total operating expenses | (1,251,242) | (1,056,831) | ||
| Income (loss) from operations | 2,805 | (82,486) | ||
| Legal settlement | — | 39,399 | ||
| Income (loss) before interest expense and income tax | 2,805 | (43,087) | ||
| Interest expense and amortization of debt discount, net | (111,914) | (157,689) | ||
| Income (loss) before interest expense and income tax | (109,109) | (200,776) | ||
| Benefit (provision) for income taxes | 2,799 | (10,201) | ||
| Net loss | $ | (106,310) | $ | (210,977) |
| Per Share: | ||||
| Basic and diluted | $ | (0.25) | $ | (0.77) |
| Weighted-average shares outstanding | ||||
| Basic and diluted | 428,600,690 | 273,883,342 |
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Cash Flows From Operating Activities | ||||
| Net loss | $ | (106,310) | $ | (210,977) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation and amortization | 303,150 | 200,542 | ||
| Bad debt expense | 3,332 | 1,331 | ||
| Deferred income tax benefit | (45,105) | 357 | ||
| Share-based compensation | 35,422 | 51,383 | ||
| Restructuring and impairment | 5,288 | — | ||
| Gain on foreign currency forward contracts | (2,903) | — | ||
| Mark to market adjustment on contingent and phantom shares | 24,218 | — | ||
| Loss on extinguishment of debt | — | 50,676 | ||
| Gain on disposal of business | (29,192) | — | ||
| Impairment on assets held for sale | — | 18,431 | ||
| Deferred finance charges | 5,752 | 2,496 | ||
| Other operating activities | 2,611 | (374) | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 16,234 | (593) | ||
| Prepaid expenses | 5,245 | (10,224) | ||
| Other assets | 56,771 | (975) | ||
| Accounts payable | (2,851) | (13,838) | ||
| Accrued expenses and other current liabilities | (90,568) | 1,095 | ||
| Deferred revenues | 80,683 | 33,480 | ||
| Operating lease right of use assets | 5,329 | 11,365 | ||
| Operating lease liabilities | (6,064) | (11,251) | ||
| Other liabilities | 2,458 | (5,344) | ||
| Net cash provided by operating activities | 263,500 | 117,580 | ||
| Cash Flows From Investing Activities | ||||
| Capital expenditures | (107,713) | (69,836) | ||
| Acquisitions, net of cash acquired | (2,919,871) | (68,424) | ||
| Acquisition of intangible assets | (5,982) | (2,625) | ||
| Proceeds from sale of product line, net of restricted cash | 41,398 | — | ||
| Net cash used in investing activities | (2,992,168) | (140,885) | ||
| Cash Flows From Financing Activities | ||||
| Proceeds from revolving credit facility | 60,000 | 70,000 | ||
| Principal payments on term loan | (12,600) | (641,509) | ||
| Repayments of revolving credit facility | (125,000) | (50,000) | ||
| Payment of debt issuance costs | (38,340) | (41,923) | ||
| Contingent purchase price payment | (7,816) | (2,371) | ||
| Proceeds from reverse recapitalization | — | 682,087 | ||
| Proceeds from issuance of debt | 1,960,000 | 1,600,000 | ||
| Extinguishment of debt | — | (1,342,651) | ||
| Tax receivable agreement payout | — | (200,000) | ||
| Proceeds from issuance of ordinary shares | 843,744 | — | ||
| Proceeds from warrant exercises | 277,526 | — | ||
| Proceeds from stock options exercised | 2,122 | 1,582 | ||
| --- | --- | --- | --- | --- |
| Payments related to tax withholding for stock-based compensation | (33,056) | — | ||
| Net cash provided by financing activities | 2,926,580 | 75,215 | ||
| Effects of exchange rates | (5,043) | (971) | ||
| Net increase in cash and cash equivalents, and restricted cash | 192,869 | 50,939 | ||
| Beginning of period: | ||||
| Cash and cash equivalents | 76,130 | 25,575 | ||
| Restricted cash | 9 | 9 | ||
| Total cash and cash equivalents, and restricted cash, beginning of period | 76,139 | 25,584 | ||
| Less: Cash included in assets held for sale, end of period | — | (384) | ||
| Cash and cash equivalents, and restricted cash, end of period | 269,008 | 76,139 | ||
| End of period: | ||||
| Cash and cash equivalents | 257,730 | 76,130 | ||
| Restricted cash | 11,278 | 9 | ||
| Total cash and cash equivalents, and restricted cash, end of period | $ | 269,008 | $ | 76,139 |
| Supplemental Cash Flow Information | ||||
| Cash paid for interest | 97,510 | 101,164 | ||
| Cash paid for income tax | 27,621 | 29,204 | ||
| Capital expenditures included in accounts payable | 7,783 | 8,762 | ||
| Assets received as reverse recapitalization capital | — | 1,877 | ||
| Liabilities assumed as reduction of reverse recapitalization capital | — | 5,910 |
Reconciliation to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted Revenues
Adjusted Revenues excludes the impact of the deferred revenues purchase accounting adjustment (primarily recorded in connection with recent acquisitions).
The following table presents our calculation of Adjusted Revenues for the three and twelve months ended December 31, 2020 and 2019 and a reconciliation of this measure to our Revenues, net for the same periods:
| Three Months Ended December 31, | Variance | ||||||
|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | 2020 | 2019 | % | ||||
| Revenues, net | $ | 455.6 | $ | 255.0 | 78.7 | % | |
| Deferred revenues adjustment(1) | (15.7) | (0.1) | (15.6) | NM | |||
| Adjusted revenues, net | $ | 471.3 | $ | 255.1 | 84.8 | % |
All values are in US Dollars.
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
| Twelve Months Ended December 31, | Variance | ||||||
|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | 2020 | 2019 | % | ||||
| Revenues, net | $ | 1,254.0 | $ | 974.3 | 28.7 | % | |
| Deferred revenues adjustment(1) | (23.1) | (0.4) | (22.7) | NM | |||
| Adjusted revenues, net | $ | 1,277.1 | $ | 974.7 | 31.0 | % |
All values are in US Dollars.
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
Adjusted EBITDA
Adjusted EBITDA is calculated using net (loss) income before provision for income taxes, depreciation and amortization and interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income), share-based compensation, unrealized foreign currency gains/(losses), transition services agreement costs entered into with Thomson Reuters in 2016 ("Transition Services Agreement"), separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, and certain unusual items impacting results in a particular period.
The following table presents our calculation of Adjusted EBITDA for the three months and year ended December 31, 2020 and 2019 and reconciles these measures to our Net loss for the same periods:
| Three Months Ended December 31, | Year ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Net income (loss) | $ | 6.4 | $ | (84.8) | $ | (106.3) | $ | (211.0) | ||||
| Provision for income taxes | (16.5) | 4.6 | (2.8) | 10.2 | ||||||||
| Depreciation and amortization | 127.0 | 55.4 | 303.2 | 200.5 | ||||||||
| Interest, net | 39.6 | 63.8 | 111.9 | 157.7 | ||||||||
| Transition services agreement costs(1) | — | — | 0.6 | 10.5 | ||||||||
| Transition, transformation and integration expense(2) | (0.3) | (0.9) | 3.4 | 24.4 | ||||||||
| Deferred revenues adjustment(3) | 15.7 | 0.1 | 23.1 | 0.4 | ||||||||
| Transaction related costs(4) | 27.3 | 4.1 | 97.5 | 46.2 | ||||||||
| Share-based compensation expense | 10.5 | 4.7 | 41.7 | 51.4 | ||||||||
| Sale of Techstreet | (28.1) | — | (28.1) | — | ||||||||
| Restructuring(5) | 20.8 | 15.7 | 47.6 | 15.7 | ||||||||
| Legal settlement | — | — | — | (39.4) | ||||||||
| Impairment on assets held for sale | — | 18.4 | — | 18.4 | ||||||||
| Other (6) | (2.3) | 3.5 | (5.2) | 9.0 | ||||||||
| Adjusted EBITDA | $ | 200.1 | $ | 84.6 | $ | 486.6 | $ | 294.0 | ||||
| Adjusted EBITDA Margin | 42.4 | % | 33.2 | % | 38.1 | % | 30.2 | % |
(1)In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement.
(2)Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016, mainly related to the integration of separate business units into one functional organization and enhancements in our technology.
(3)Reflects the deferred revenues adjustment as a result of purchase accounting.
(4)Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.
(5)Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG in 2020.
(6)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance.
Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income is calculated using net income (loss), adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from the divested business), amortization related to acquired intangible assets, share-based compensation, unrealized foreign currency gains/(losses), Transition Services Agreement costs, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, debt extinguishment costs and refinancing related costs, non-cash income (loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, certain unusual items impacting results in a particular period, and the income tax impact of any adjustments. We calculate Adjusted Diluted EPS by using Adjusted Net Income divided by diluted weighted average shares for the period.
The following table presents our calculation of Adjusted Net Income and Adjusted Diluted EPS for the three months and year ended December 31, 2020 and 2019 and reconciles these measures to our Net loss and EPS for the same periods:
| Three months ended December 31, | Three months ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||||||
| (in millions, except per share amounts) | Amount | Per Share | Amount | Per Share | ||||||
| Net income (loss) | $ | 6.4 | 0.01 | $ | (84.8) | $ | (0.28) | |||
| Dilutive impact of potential common shares | — | — | — | 0.02 | ||||||
| Net income (loss) | 6.4 | 0.01 | (84.8) | (0.26) | ||||||
| Transition services agreement costs(1) | — | — | — | — | ||||||
| Transition, transformation and integration expense(2) | (0.3) | — | (0.9) | — | ||||||
| Deferred revenues adjustment(3) | 15.7 | 0.03 | 0.1 | — | ||||||
| Transaction related costs(4) | 27.3 | 0.04 | 4.1 | 0.01 | ||||||
| Share-based compensation expense | 10.5 | 0.02 | 4.7 | 0.01 | ||||||
| Amortization related to acquired intangible assets | 100.2 | 0.16 | 39.9 | 0.12 | ||||||
| Restructuring and impairment(5) | 20.8 | 0.03 | 15.7 | 0.05 | ||||||
| Debt extinguishment costs and refinancing related costs | — | — | 42.2 | 0.13 | ||||||
| Impairment on assets held for sale | — | — | 18.4 | 0.06 | ||||||
| Gain on Sale of Techstreet | (28.1) | (0.04) | — | — | ||||||
| Other(6) | (2.3) | — | 3.5 | 0.01 | ||||||
| Income tax impact of related adjustments | (14.6) | (0.02) | (1.0) | — | ||||||
| Adjusted net income and Adjusted Diluted EPS | $ | 135.6 | $ | 0.22 | $ | 41.9 | $ | 0.13 | ||
| Weighted average ordinary shares (Diluted) | 627,080,856 | 329,824,753 | ||||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| 2020 | 2019 | |||||||||
| (in millions, except per share amounts) | Amount | Per Share | Amount | Per Share | ||||||
| Net loss | (106.3) | (0.24) | (211.0) | (0.77) | ||||||
| Dilutive impact of potential common shares | — | — | — | 0.04 | ||||||
| Net loss | (106.3) | (0.24) | (211.0) | (0.73) | ||||||
| Transition services agreement costs(1) | 0.6 | — | 10.5 | 0.04 | ||||||
| Transition, transformation and integration expense(2) | 3.4 | 0.01 | 24.4 | 0.08 | ||||||
| Deferred revenues adjustment(3) | 23.1 | 0.05 | 0.4 | — | ||||||
| Transaction related costs(4) | 97.5 | 0.22 | 46.2 | 0.16 | ||||||
| Share-based compensation expense | 41.7 | 0.09 | 51.4 | 0.18 | ||||||
| Legal settlement | — | — | (39.4) | (0.14) | ||||||
| Amortization related to acquired intangible assets | 237.0 | 0.53 | 169.0 | 0.59 | ||||||
| Restructuring and impairment( 5) | 47.6 | 0.11 | 15.7 | 0.05 | ||||||
| Debt issuance and hedge accounting related costs | 8.6 | 0.02 | — | — | ||||||
| Debt extinguishment costs and refinancing related costs | — | — | 51.3 | 0.18 | ||||||
| Impairment on assets held for sale | — | — | 18.4 | 0.06 | ||||||
| Gain on Sale of Techstreet | (28.1) | (0.06) | ||||||||
| Other(6) | (5.2) | (0.01) | 9.0 | 0.04 | ||||||
| Income tax impact of related adjustments | (30.8) | (0.07) | 6.2 | 0.02 | ||||||
| Adjusted net income and Adjusted Diluted EPS | $ | 289.1 | $ | 0.64 | 152.1 | $ | 0.53 | |||
| Weighted average ordinary shares (Diluted) | 450,452,184 | 287,871,870 |
(1)In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement.
(2)Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups.
(3)Reflects the deferred revenues adjustment as a result of purchase accounting.
(4)Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.
(5)Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020.
(6)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance.
Free Cash Flow and Adjusted Free Cash Flow
Free cash flow is calculated using net cash provided by operating activities less capital expenditures. Adjusted free cash flow is calculated as free cash flow, less cash paid for transition services agreement, transition, transformation and integration expenses, transaction related costs and debt issuance costs offset by cash received for hedge accounting transactions. The following table reconciles our non-GAAP free cash flow and Adjusted free cash flow measure to net cash provided by operating activities:
| Year Ended December 31, | ||||
|---|---|---|---|---|
| (in millions) | 2020 | 2019 | ||
| Net cash provided by operating activities | $ | 263.5 | $ | 117.6 |
| Capital expenditures | (107.7) | (69.8) | ||
| Free cash flow | 155.8 | 47.8 | ||
| Cash paid for transition services agreement(1) | (2.2) | 12.0 | ||
| Cash paid for transition, transformation and integration expense(2) | 46.3 | 40.9 | ||
| Cash paid for transaction related costs(3) | 95.8 | 45.1 | ||
| Cash paid for debt issuance costs | 7.7 | — | ||
| Cash received for hedge accounting transactions | (1.7) | — | ||
| Cash received for legal settlement | — | (45.3) | ||
| Adjusted free cash flow | $ | 301.7 | $ | 100.5 |
(1)Includes cash payments to Thomson Reuters under the Transition Services Agreement. These costs decreased substantially in 2019, as we were in the final stages of implementing our standalone company infrastructure. In 2019, the Transition Services Agreement cash paid is offset by cash receipts from the IPM Product Line divestiture.
(2)Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related payments following the acquisition of DRG and CPA Global in 2020.
(3) Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit facilities, dated as of October 31, 2019 and the indenture governing our secured notes due 2026 issued by Camelot Finance S.A. and guaranteed by certain of our subsidiaries, respectively. In addition, the credit facilities and the indenture contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants. Standalone Adjusted EBITDA reflects further adjustments to Adjusted EBITDA for cost savings already implemented and excess standalone costs.
Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the credit facilities and the indenture and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business. It is also utilized by management and the compensation committee of the Board as an input for determining incentive payments to employees.
Excess standalone costs are the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone infrastructure costs. We make an adjustment for the difference because we have had to incur costs under the transition services agreement, with Thomson Reuters after we had implemented the infrastructure to replace the services provided pursuant to the transition services agreement, thereby incurring dual running costs. Furthermore, there has been a ramp up period for establishing and optimizing the necessary standalone infrastructure. Since our separation from Thomson Reuters, we have had to transition quickly to replace services provided under the transition services agreement, with optimization of the relevant standalone functions typically following thereafter. Cost savings reflect the annualized “run rate” expected cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the relevant period.
Standalone Adjusted EBITDA is calculated under the credit facilities and the indenture by using our Consolidated Net Loss for the trailing 12-month period (defined in the credit facilities and the indenture as our U.S. GAAP net income adjusted for certain items specified in the credit facilities and the indenture) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, expenses related to capital markets transactions, acquisitions and dispositions, restructuring and business optimization charges and expenses, consulting and advisory fees, run-rate cost savings to be realized as a result of actions taken or to be taken in connection with an acquisition, disposition, restructuring or cost savings or similar initiatives, “run rate” expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to the transition projected by us, costs related to any management or equity stock plan, other adjustments that were presented in the offering memorandum used in connection with the issuance of the secured notes due 2026 and earnout obligations incurred in connection with an acquisition or investment.
The following table bridges Net Loss to Adjusted EBITDA to Standalone Adjusted EBITDA, as Adjusted EBITDA reflects all but three of the adjustments that comprise Standalone Adjusted EBITDA for the periods presented:
| Year Ended December 31, | ||
|---|---|---|
| (in millions) | 2020 | |
| Net loss | $ | (106.3) |
| Provision for income taxes | (2.8) | |
| Depreciation and amortization | 303.2 | |
| Interest, net | 111.9 | |
| Transition services agreement costs(1) | 0.6 | |
| Transition, transformation and integration expense(2) | 3.4 | |
| Deferred revenues adjustment(3) | 23.1 | |
| Transaction related costs(4) | 97.5 | |
| Share-based compensation expense | 41.7 | |
| Gain on sale of Techstreet | (28.1) | |
| Restructuring and impairment(5) | 47.6 | |
| Other(6) | (5.2) | |
| Adjusted EBITDA | 486.6 | |
| Realized foreign exchange gain | (2.4) | |
| DRG Adjusted EBITDA impact(7) | (2.7) | |
| CPA Global Adjusted EBITDA impact(7) | 193.9 | |
| IncoPat Adjusted EBITDA impact(7) | (0.5) | |
| Hanlim Adjusted EBITDA impact(7) | 0.5 | |
| Cost savings(8) | 86.7 | |
| Standalone Adjusted EBITDA | 762.1 |
(1)In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement.
(2)Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in selling, general, and administrative line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology.
(3) Reflects the deferred revenues adjustment as a result of purchase accounting.
(4) Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.
(5) Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two segments. This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020.
(6) Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance.
(7) Represents the acquisition Adjusted EBITDA for the period beginning January 1, 2020 through the respective acquisition date of each acquired business to reflect the company's Standalone EBITDA as though material acquisitions occurred at the beginning of the presented period.
(8) Reflects the estimated annualized run-rate cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the period (exclusive of any cost reductions in our estimated standalone operating costs), including synergies related to acquisitions.
The foregoing adjustments (8) are estimates and are not intended to represent pro forma adjustments presented within the guidance of Article 11 of Regulation S-X. Although we believe these estimates are reasonable, actual results may differ from these estimates, and any difference may be material. See “Cautionary Note Regarding Forward-Looking Statements” in the annual report.
The following tables present the amounts of our subscription, transactional and re-occurring revenues, including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods.
| Variance Increase/(Decrease) | Percentage of Factors Increase/(Decrease) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Total Variance<br><br>(Dollars) | Total Variance<br><br>(Percentage) | Acquisitive | Disposal | FX Impact | Organic | ||||||||||
| (in millions, except percentages) | 2020 | 2019 | ||||||||||||||
| Subscription revenues | $ | 235.9 | $ | 209.5 | $ | 26.4 | 12.6 | % | 19.7 | % | (8.8) | % | 1.5 | % | 0.3 | % |
| Transactional revenues | 120.9 | 45.6 | 75.3 | 165.0 | % | 167.8 | % | (8.8) | % | 1.9 | % | 4.1 | % | |||
| Re-occurring revenues | 114.5 | — | 114.5 | 100.0 | % | |||||||||||
| Deferred revenues adjustment(1) | (15.7) | (0.1) | (15.6) | NM | NM | — | % | — | % | — | % | |||||
| Revenues, net | $ | 455.6 | $ | 255.0 | $ | 200.6 | 78.7 | % | 85.0 | % | (8.8) | % | 1.6 | % | 1.0 | % |
| Deferred revenues adjustment(1) | 15.7 | 0.1 | 15.6 | NM | NM | — | % | — | % | — | % | |||||
| Adjusted revenues, net | $ | 471.3 | $ | 255.1 | $ | 216.2 | 84.8 | % | 91.1 | % | (8.8) | % | 1.6 | % | 1.0 | % |
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting.
| Variance Increase/(Decrease) | Percentage of Factors Increase/(Decrease) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year Ended December 31, | Total Variance<br><br>(Dollars) | Total Variance<br><br>(Percentage) | Acquisitive | Disposal | FX Impact | Organic | ||||||||||
| (in millions, except percentages) | 2020 | 2019 | ||||||||||||||
| Subscription revenues | $ | 867.7 | $ | 805.5 | $ | 62.2 | 7.7 | % | 12.1 | % | (7.4) | % | 0.3 | % | 2.7 | % |
| Transactional revenues | 294.9 | 169.3 | 125.6 | 74.2 | % | 83.3 | % | (3.0) | % | 0.4 | % | (6.5) | % | |||
| Re-occurring revenues | 114.5 | — | 114.5 | 100.0 | % | 100.0 | % | — | % | — | % | — | % | |||
| Deferred revenues adjustment(1) | (23.1) | (0.4) | (22.7) | NM | N/M | — | % | — | % | 69.2 | % | |||||
| Revenues, net | $ | 1,254.0 | $ | 974.3 | $ | 279.7 | 28.7 | % | 33.9 | % | (6.7) | % | 0.4 | % | 1.1 | % |
| Deferred revenues adjustment(1) | 23.1 | 0.4 | 22.7 | NM | N/M | — | % | — | % | 69.2 | % | |||||
| Adjusted revenues, net | $ | 1,277.1 | $ | 974.7 | $ | 302.4 | 31.0 | % | 36.2 | % | (6.7) | % | 0.4 | % | 1.2 | % |
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
The following tables and the discussion that follows presents our revenues by Product Segment for the periods indicated, as well as the drivers of the variances between periods, including as a percentage of such revenues.
| Variance Increase/(Decrease) | Percentage of Factors Increase/(Decrease) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues by Product Segment | Three Months Ended December 31, | Total Variance (Dollars) | Total Variance (Percentage) | Acquisitive | Disposal | FX Impact | Organic | |||||||||
| (in millions, except percentages) | 2020 | 2019 | ||||||||||||||
| Science Product Segment | $ | 222.0 | $ | 146.5 | $ | 75.5 | 51.5 | % | 50.0 | % | — | % | 1.4 | % | 0.1 | % |
| IP Product Segment | 249.3 | 108.6 | 140.7 | 129.6 | % | 146.5 | % | (20.7) | % | 1.6 | % | 2.2 | % | |||
| Deferred revenues adjustment (1) | (15.7) | (0.1) | (15.6) | NM | NM | — | % | — | % | — | % | |||||
| Revenues, net | $ | 455.6 | $ | 255.0 | $ | 200.6 | 78.7 | % | 85.0 | % | (8.8) | % | 1.6 | % | 1.0 | % |
| Deferred revenues adjustment (1) | 15.7 | 0.1 | 15.6 | NM | NM | — | % | — | % | — | % | |||||
| Adjusted revenues, net | $ | 471.3 | $ | 255.1 | $ | 216.2 | 84.8 | % | 91.1 | % | (8.8) | % | 1.6 | % | 1.0 | % |
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
| Variance Increase/(Decrease) | Percentage of Factors Increase/(Decrease) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues by Product Segment | Year Ended December 31, | Total Variance (Dollars) | Total Variance (Percentage) | Acquisitive | Disposal | FX Impact | Organic | |||||||||
| (in millions, except percentages) | 2020 | 2019 | ||||||||||||||
| Science Product Segment | 743.6 | $ | 547.5 | $ | 196.1 | 35.8 | % | 34.0 | % | — | % | 0.3 | % | 1.5 | % | |
| IP Product Segment | 533.5 | 427.2 | 106.3 | 24.9 | % | 39.0 | % | (15.2) | % | 0.4 | % | 0.6 | % | |||
| Deferred revenues adjustment (1) | (23.1) | (0.4) | (22.7) | NM | NM | — | % | — | % | 69.2 | % | |||||
| Revenues, net | $ | 1,254.0 | $ | 974.3 | $ | 279.7 | 28.7 | % | 33.9 | % | (6.7) | % | 0.4 | % | 1.1 | % |
| Deferred revenues adjustment (1) | 23.1 | 0.4 | 22.7 | NM | NM | — | % | — | % | 69.2 | % | |||||
| Adjusted revenues, net | $ | 1,277.1 | $ | 974.7 | $ | 302.4 | 31.0 | % | 36.2 | % | (6.7) | % | 0.4 | % | 1.2 | % |
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting.
The following table presents our calculation of Adjusted EBITDA for the Outlook for 2021 and reconciles this measure to our Net loss for the same period:
| Year Ending December 31, 2021<br>(Forecasted) | ||||||
|---|---|---|---|---|---|---|
| (in millions) | Low | High | ||||
| Net loss | $ | (7.5) | $ | 32.5 | ||
| Provision for income taxes | 29.4 | 29.4 | ||||
| Depreciation and amortization | 545.8 | 545.8 | ||||
| Interest, net | 151.3 | 151.3 | ||||
| Transition, transition services agreement, and integration expense(1) | 40.3 | 40.3 | ||||
| Share-based compensation expense | 26.0 | 26.0 | ||||
| Other | (0.3) | (0.3) | ||||
| Adjusted EBITDA | $ | 785.0 | $ | 825.0 | ||
| Adjusted EBITDA margin | 44 | % | 45 | % |
(1)Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements.
The following table presents our calculation of Adjusted Diluted EPS for the Outlook for 2021 and reconciles these measures to our Net loss for the same period:
| Year Ending December 31, 2021<br>(Forecasted) | ||||
|---|---|---|---|---|
| Low | High | |||
| Per Share | Per Share | |||
| Net loss | $ | (0.01) | $ | 0.05 |
| Transition, transition services agreement, and integration expense(1) | 0.07 | 0.07 | ||
| Share-based compensation expense | 0.04 | 0.04 | ||
| Amortization related to acquired intangible assets | 0.68 | 0.68 | ||
| Income tax impact of related adjustments | (0.05) | (0.05) | ||
| Adjusted Diluted EPS | $ | 0.73 | $ | 0.79 |
| Weighted average ordinary shares (Diluted) | 631,043,005 |
(1)Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements.
The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2021 and reconciles this measure to our Net cash provided by operating activities for the same period:
| Year Ending December 31, 2021<br>(Forecasted) | ||||
|---|---|---|---|---|
| (in millions) | Low | High | ||
| Net cash provided by operating activities | $ | 559.7 | $ | 609.7 |
| Capital expenditures | (151.7) | (151.7) | ||
| Free Cash Flow | 408.0 | 458.0 | ||
| Transition, transition services agreement, and integration expense(1) | 42.0 | 42.0 | ||
| Adjusted Free Cash Flow | $ | 450.0 | $ | 500.0 |
(1)Includes cash payments related to restructuring and other cost optimization activities.
Media Contact:
Tabita Seagrave, Head of Global Corporate Communications
tabita.seagrave@clarivate.com
Investor Relations Contact:
Mark Donohue, Head of Global Investor Relations
mark.donohue@clarivate.com
215-243-2202
21
clarivate_q4x2020xsupple
Q4 and Full Year 2020 Earnings Supplemental Materials February 25, 2021
2 Forward-Looking Statements These materials contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, outlook, anticipated cost savings, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict, and many are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed under the caption “Risk Factors” in our 2019 annual report on Form 10-K, our current report on Form 8-K filed on June 19, 2020, and our quarterly report on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2020, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this press release. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com. Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with United States generally accepted accounting principles (“GAAP”), including Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Standalone Adjusted EBITDA, and net debt because they are a basis upon which our management assesses our performance and we believe they reflect the underlying trends and indicators of our business. Although we believe these measures may be useful for investors for the same reasons, these financial measures should not be considered as an alternative to GAAP financial measures as a measure of the Company’s financial condition, profitability and performance or liquidity. In addition, these financial measures may not be comparable to similar measures used by other companies. At the Appendix to this presentation, we provide further descriptions of these non-GAAP measures and reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measures. Results excluding divestitures in this presentation exclude the previously announced November 6, 2020 divestiture of Techstreet and the January 1, 2020 divestiture of the MarkMonitor brand protection, antipiracy and antifraud product. Clarivate retained the MarkMonitor Domain Management business. Required Reported Data We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit agreement, and the indenture governing our senior secured notes due 2026, respectively, pursuant to the reporting covenants contained in such agreements. In addition, management of the Company uses Standalone Adjusted EBITDA to assess compliance with various incurrence-based covenants in these agreements.
Strategic Acquisitions + Operational Improvements Drove Growth in 2020 Strategic Acquisitions Operational Improvements Financial Highlights 29% $280M 31% $302M 50% $105M 38% +790bps 66% $193M ✓ Launched 19 new products and implemented numerous product enhancements ✓ 3% adjusted organic subscription growth during COVID pandemic ✓ Realigned commercial infrastructure by establishing 3 Global Business Centers ✓ Delivered significant cost savings and acquisition synergy capture ✓ Divested non-core Techstreet ✓ Insourcing application development ✓ Rationalizing facilities; reducing footprint by more than 50% ✓ Transforming to a digital workplace ✓ Lowered average cost of debt to 4.2% from 6.0% Revenue growth Adjusted Revenue(1) growth GAAP Net Loss improvement Adjusted EBITDA Margin(1) (2) Adjusted EBITDA(1) growth 124% $146M Net Cash Operating Activities growth (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. 90% $137M 200% $201M Adjusted Free Cash Flow(1) growth Adjusted Net Income(1) growth
Significant Progress Across Four Strategic Goals in 2020 Provide superior investor returns $450M free cash flow(1) exiting 2023 Further increase customer delight score Goal 82+ (best practice 82) Continue to improve colleague engagement score Goal 80+ (benchmark 74) Sustainability Focus on strong top and bottom-line growth $1.5B revenue - $650M EBITDA(1) exiting 2023 DJSI-listed world leader by 2023 Increased engagement score to 77 from 69 Increased customer delight score to 79 from 76 Delivered $302M adjusted free cash flow(1) (2021 outlook = $450-$500M) Delivered $1.3B adjusted revenue and $487M adjusted EBITDA(1) in 2020 (2021 outlook = Adjusted revenue $1.78B-$1.84B and Adjusted EBITDA $785M-$825M) (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures.
5 Sustainability at the Heart of Our Business • Launched new colleague resource group (CRG) dedicated to race and ethnicity • Completed unconscious bias training (96% completion) • Funded CEO Action Fellowship for racial equality • Increased global participation in colleague resource group to 9% • Issued new annual report card for colleague resource group • Completed new supplier code of ethics • Implemented supplier ESG screening • Launched new public privacy center • Completed cybersecurity training (95% completion) • Completed code of conduct training (100% completion) • Completed ESG questionnaires for 40 customers • Achieved bronze Ecovadis and gold P&G rating • Relaunched volunteerism worldwide • Signatory to UN Women’s Empowerment Principles • Signatory to CEO Action for Diversity & Inclusion • Signatory to Stonewall Transgender Rights are Human Rights • Launched Domains for Good (non-profit support program) • Launched new environmental metrics reporting system • Launched global e-waste recycling program • Implemented sustainable merchandising guidelines Community Governance Environment Colleagues Significant progress on initiatives in 2020
6 Efficiently Managing Cost Structure and Freeing up Resources Total Savings Permanent Savings Completed Through 2020 Timing 2019 cost savings program $75 million $75 million $73 million $75 million run-rate exiting Q1 2021 COVID related $30 million At least $5 million $5 million Q1-Q4 2020 DRG synergies $30 million $30 million $20 million $30 million run-rate exiting 2021 CPA Global Savings $75 million $75 million $20 million $75 million run-rate exiting 2021 Total Cost Savings $210 million $185 million $118 million Approximately $185 million in permanent cost reductions
7 Reaffirmed 2021 Outlook* ($ in millions, except per share information) Low High Adjusted Revenue $1,780 $1,840 Adjusted EBITDA $785 $825 Adjusted EBITDA margin % 44% 45% Adjusted Diluted EPS(1) $0.73 $0.79 Adjusted Free Cash Flow $450 $500 *See Appendix for reconciliation of GAAP to Non-GAAP measures. (1) Adjusted diluted EPS for 2020 is calculated based on approximately 631.0 million fully diluted weighted average shares outstanding.
8 $85 $200(2) Q4'19 Q4'20 Q4 Results ($ in millions, actual f/x) Adjusted Revenue(1) $115 $46 $121 $209 $236 Q4'19 Q4'20 +85% actual f/x +83% constant f/x $255 $471(2) Subscription +13% Transactional +165% Adjusted EBITDA(1) Adjusted EBITDA Margin(3) 42% up 920 basis points +137% Revenue growth driven by acquisitions including DRG and CPA Global and recovery in transactional revenue, combined with cost savings, drove significant Adjusted EBITDA growth and Margin expansion (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) Includes $6.0 million of revenue and $1.5 million of EBITDA for Techstreet, which was divested on November 6, 2020. (3) Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (4) Includes $16M deferred revenue adjustment a result of purchase accounting primarily related to the acquisition of CPA Global. (5) One-time $3.5M deferred revenue adjustment which lowered reported Q4’20 revenues; $2.6M subscription and $0.9M transactional. (not related to the $16M purchase accounting adjustment). Re-occurring +100% Reported Revenue +79% actual f/x +77% constant f/x $255 $456(4) Q4'19 Q4'20 Organic Revenue Growth Organic (as reported) Impact of $3.5M One- time Deferred Revenue Adjustment(5) F/X Impact (as reported) Adjusted Subscription 0.3% 1.2% 1.5% 3.0% Transactional 4.1% 2.0% 1.9% 8.0% Re-occurring --- --- --- --- Adjusted Revenue 1.0% 1.4% 1.6% 3.9%
9 Q4 Financial Highlights ($ in millions except per share data) 2020 2019 % Change(2) Organic(2) Adjusted to Exclude One-time $3.5M Deferred Revenue Adjustment(3) Commentary Subscription revenue(1) $236 $209 13% 2% 3% Acquisitions, new business and price increases, partially offset by divested products and a one-time $2.6M deferred revenue adjustment not related to the purchase accounting deferred revenue adjustment Transactional revenue(1) 121 46 165% 6% 8% Acquisitions, partially offset by divested businesses. Organic growth driven by backfile sales and search volumes - reversing decline in Q2’20 and Q3’20 due to the impact of the COVID pandemic - partially offset by one-time $0.9M deferred revenue adjustment not related to the purchase accounting deferred revenue adjustment Re-occurring revenue(1) 115 0 100% --- --- A component of revenue from the acquisition of CPA Global Adjusted total revenues, net(1) 471 255 85% 3% 4% Organic subscription revenue growth and recovery in transactional revenue, partially offset by one-time $3.5M deferred revenue adjustment as noted above Annual Contract Value (“ACV”) 907 794 14% 3% --- Acquisitions, organic growth (+3.4%) and annual price increases Adjusted EBITDA(1) 200 85 137% --- --- Revenue growth with strong flow-through and benefit of cost savings/synergies Adjusted EBITDA margin(1) 42% 33% 920bps --- --- Combination of acquisitions and underlying growth and efficiencies within the core business Other income, net 38 2 >1,000% --- --- Gain on sale of Techstreet and positive impact of foreign currency exchange Interest expense (40) (64) (38%) --- --- Lower interest payments as a result of refinancing in Oct. 2019 Benefit (provision) for income taxes 16 (5) (458%) --- --- Decrease due to release of valuation allowance in certain jurisdictions Cash taxes 7 8 (7%) --- --- $ change not material Net income (loss) 6 (85) 108% --- --- Growth in operations, gain on sale of Techstreet, lower interest expense and tax benefit in Q4’20 versus expense in same period prior year Adjusted net income(1) 136 42 224% --- --- Acquisitions. organic growth, benefit of operational efficiencies and improved tax benefit vs. prior year Basic & diluted income (loss) per share 0.01 (0.28) 104% Adjusted diluted EPS(1) $0.22 $0.13 69% --- --- (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) Includes the impact of foreign exchange (3) Adjusted to exclude one-time $3.5M deferred revenue adjustment which lowered reported Q4’20 revenues; $2.6M subscription and $0.9M transactional. At actual FX. Three Months Ended December 31,
10 $294 $487(2) 2019 2020 Full Year Results Reported Revenue ($ in millions, actual f/x) Adjusted Revenue(1) +29% actual f/x +28% constant f/x $115$169 $295 $806 $868 2019 2020 +31% actual f/x +31% constant f/x $975 $1,277(2) Subscription +8% Transactional +74% Adjusted EBITDA(1) Adjusted EBITDA Margin(3) 38% up 790 basis points +66% Revenue growth driven by acquisitions including DRG and CPA Global, new business and pricing, combined with operational improvements, drove significant Adjusted EBITDA growth and Margin expansion Re-occurring +100% (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) Includes $49.3 million of revenue and $9.1 million of EBITDA for Techstreet, which was divested on November 6, 2020. (3) Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (4) Includes deferred revenue adjustment a result of purchase accounting primarily related to the acquisition of CPA Global and DRG. $974 $1,254(4) 2019 2020
11 Full Year Financial Highlights Twelve Months Ended December 31, ($ in millions except per share data) 2020 2019 % Change(2) Organic(2)(3) Commentary Subscription revenue(1) $868 $806 8% 3% Acquisitions including DRG, CPA Global and Darts-ip, organic growth due to new business and price increases, partially offset by divested products Transactional revenue(1) 295 169 74% (7%) Acquisitions partially offset by disposals, organic decrease in revenues due to lower demand in Q2’20 and Q3’20 driven by economic conditions resulting from the COVID-19 pandemic – recovered in Q4’20 Re-occurring revenue(1) 115 0 100% --- A component of revenue from the acquisition of CPA Global Adjusted total revenues, net(1) 1,277 975 31% 2% Annual Contract Value (“ACV”) 907 794 14% 3.4% Acquisitions, organic growth and annual price increases Adjusted EBITDA(1) 487 294 66% --- Revenue growth with strong flow-through and benefit of cost savings/synergies Adjusted EBITDA margin(1) 38% 30% 790bps --- Combination of acquisitions and underlying growth and efficiencies within the core business Other income, net 52 5 >1,000% --- Gain on sale of Techstreet and positive impact of foreign currency exchange Interest expense (112) (158) (29%) --- Lower interest payments as a result of refinancing in Oct. 2019 and the write down of deferred financing charges and original issuance discount on prior term loan facility Benefit (provision) for income taxes 3 (10) (70%) --- Decrease primarily due to release of valuation allowance in certain jurisdictions and benefit of share-based compensation Cash taxes 28 29 (5%) --- $ change not material Net loss (106) (211) 50% --- Growth in operations, gain on sale of asset and lower interest expense resulting from the refinancing of debt and improved tax expense Adjusted net income(1) 289 152 90% --- Acquisitions. organic growth and benefit of operational efficiencies Basic and diluted loss per share (0.25) (0.77) 68% --- Adjusted diluted EPS(1) $0.64 $0.53 21% --- (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) Includes the impact of foreign exchange. (3) Not adjusted to reflect the one-time $3.5M deferred revenue adjustment which lowered reported Q4’20 revenues; $2.6M subscription and $0.9M transactional.
12 Selected Balance Sheet and Cash Flow Information ($ in millions) December 31, 2020 December 31, 2019 $ Change Commentary on Change Cash and cash equivalents $258 $76 $182 Higher cash flows and proceeds from the sale of ordinary shares in June ’20 and voluntary exercise of warrants for ordinary shares during Q1 ‘20 Total debt outstanding $3,547 $1,665 $1,882 Funding to finance acquisitions of CPA Global ($1.6B) and DRG ($360M), partially offset by $65M repayment of revolver Net debt(1) $3,289 $1,589 $1,676 Higher debt due to acquisitions partially offset by increase in cash and cash equivalents Gross leverage ratio(1) 4.6x 5.0x (0.4x) Improvement driven by increase in LTM Standalone EBITDA; calculation based on LTM Standalone Adjusted EBITDA including full year impact of DRG (acquired February ’20) and CPA Global (October ’20) Net leverage ratio(1) 4.3x 4.7x (0.4x) Improvement driven by increase in cash and LTM Standalone EBITDA; calculation based on LTM Standalone Adjusted EBITDA including full year impact of DRG and CPA Global Capital expenditures $108 $70 $38 Addition of DRG and CPA Global, acceleration of product development with significant cadence of new releases for renovated product Cash flow from operations $264 $118 $146 Driven by increased revenues and lower GAAP operating losses Free cash flow(1) $156 $48 $108 Higher operating cash flow partially offset by increased capital expenditures Adjusted free cash flow(1) $302 $101 $201 Driven by improvement in cash flow from operations and operational improvement initiatives which streamlined operations by simplifying the organization; 2020 also includes $45M cash benefit from CPA Global working capital timing difference between pre-acquisition and post-acquisition period Strong cash flow will allow for debt reduction to continue to invest in strategic growth opportunities (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures.
13 Results Excluding Divested Techstreet and MarkMonitor Businesses (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) Results are not adjusted to exclude the one-time $3.5M deferred revenue adjustment ($2.6M subscription revenue and $0.9M transactional revenue) as noted on slide 8. Divestitures excluded from both periods ($ in millions) Q4 ’20 Q4 ’19 YOY % Change Actual F/X Actual F/X Actual F/X Constant F/X Adjusted revenue(1)(2) $465 $227 104% 103% Adjusted subscription revenue(1)(2) $232 $188 23% 21% Adjusted transactional revenue(1)(2) $119 $39 203% 201% Adjusted re-occurring revenue(1)(2) $115 N/A No prior year amounts Adjusted EBITDA(1) $199 $81 146% --- ($ in millions) FY 2020 FY 2019 YOY % Change Actual F/X Actual F/X Actual F/X Constant F/X Adjusted revenue(1)(2) $1,228 $866 42% 41% Adjusted subscription revenue(1)(2) $836 $721 16% 16% Adjusted transactional revenue(1)(2) $277 $145 90% 90% Adjusted re-occurring revenue(1)(2) $115 N/A No prior year amounts Adjusted EBITDA(1) $478 $282 70% ---
14 $696 $712 $720 $727 $786 $817 $823 $907 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Annualized Contract Value (ACV)(1) ($ in millions) (1) Annualized Contract Value refers to the annualized value for a 12-month period following a given date of all subscription-based client license agreements, assuming that all license agreements that come up for renewal during that period are renewed at their current prices. • Quarters include acquisitions as of the period acquired; DRG completed February 2020 and CPA Global completed October 2020 • All prior periods exclude divested Techstreet and MarkMonitor products at actual F/X $794 $907 Q4 '19 Q4 '20 As Reported Adjusted for Acquisitions and Divestitures +14% Organic ACV Growth of 3.4% as of Year-End 2020
APPENDIX
16 Presentation of Certain Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with GAAP, including Adjusted Revenues and Adjusted EBITDA, because they are a basis upon which our management assesses our performance and we believe they reflect the underlining trends and indicators of our business. Adjusted Revenues Adjusted Revenues excludes the impact of the deferred revenues purchase accounting adjustment (primarily recorded in connection with recent acquisitions). Our presentation of Adjusted Revenues is presented for informational purposes only and is not necessarily indicative of our future results. You should compensate for these limitations by relying primarily on our GAAP results and only using Adjusted Revenues for supplementary analysis. Adjusted EBITDA Adjusted EBITDA is calculated using net (loss) income before provision for income taxes, depreciation and amortization and interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income), stock-based compensation, unrealized foreign currency gains/(losses), transition services agreement costs entered into with Thomson Reuters in 2016 ("Transition Services Agreement"), separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, and certain unusual items impacting results in a particular period. In future periods, the Company will need to make additional capital expenditures in order to replicate capital expenditures associated with previously shared services on a stand-alone basis. You are encouraged to evaluate these adjustments and the reasons the Company considers them appropriate for supplemental analysis. These measures are not measurements of the Company’s financial performance under GAAP and should not be considered in isolation or as alternatives to net income, net cash flows provided by operating activities, total net cash flows or any other performance measures derived in accordance with GAAP or as alternatives to net cash flows from operating activities or total net cash flows as measures of the Company’s liquidity. Reduction of ongoing standalone and Transition Services Agreement costs have been, and are expected to continue to be, a component of the Company’s strategy as it finalizes its transition to a standalone company following the 2016 Transaction. Certain of the adjustments included to arrive at Adjusted EBITDA are related to the Company’s transition to an independent company. In evaluating Adjusted EBITDA you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the included adjustments. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company’s future results will be unaffected by any of the adjusted items, or that the Company’s projections and estimates will be realized in their entirety or at all.
17 Presentation of Certain Non-GAAP Financial Measures The use of Adjusted EBITDA instead of GAAP measures has limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results of operations and operating cash flows as reported under GAAP. For example, Adjusted EBITDA does not reflect: – the Company’s cash expenditures or future requirements for capital expenditures – changes in, or cash requirements for, the Company’s working capital needs – interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt – any cash income taxes that the Company may be required to pay – any cash requirements for replacements of assets that are depreciated or amortized over their estimated useful lives and may have to be replaced in the future – all non-cash income or expense items that are reflected in the Company’s statements of cash flows The Company’s definition of and method of calculating Adjusted EBITDA may vary from the definitions and methods used by other companies when calculating adjusted EBITDA, which may limit their usefulness as comparative measures. The Company prepared the information included in this presentation based upon available information and assumptions and estimates that it believes are reasonable. The Company cannot assure you that its estimates and assumptions will prove to be accurate. Because the Company incurred transaction, transition, integration, transformation, restructuring, and Transition Services Agreement costs in connection with the 2016 Transaction and the transition, borrowed money in order to finance its operations, and used capital and intangible assets in its business, and because the payment of income taxes is necessary if the Company generates taxable income after the utilization of its net operating loss carryforwards, any measure that excludes these items has material limitations. As a result of these limitations, these measures should not be considered as a measure of discretionary cash available to the Company to invest in the growth of its business or as a measure of its liquidity. Adjusted EBITDA Margin Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Adjusted Revenues.
18 Presentation of Certain Non-GAAP Financial Measures Adjusted Net Income and Adjusted Diluted EPS We have begun to use Adjusted Net Income and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") in our analysis of the financial performance of the Company. We believe Adjusted Net Income and Adjusted Diluted EPS are meaningful measures of the performance of the Company because they adjust for items that do not directly affect our ongoing operating performance in the period. Adjusted Net Income is calculated using net income (loss), adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from the divested business), amortization related to acquired intangible assets, stock-based compensation, unrealized foreign currency gains/(losses), Transition Services Agreement costs, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income (loss) on equity and cost method investments, non- operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, certain unusual items impacting results in a particular period, and the income tax impact of any adjustments. We calculate Adjusted Diluted EPS by using Adjusted Net Income divided by diluted weighted average shares for the period. Standalone Adjusted EBITDA We are required to report Standalone Adjusted EBITDA pursuant to the reporting covenants contained in the Credit Agreement and the Indenture. Standalone Adjusted EBITDA is identical to Consolidated EBITDA and EBITDA as such terms are defined under the Credit Agreement and the Indenture, respectively. In addition, the Credit Agreement and the Indenture contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants. Standalone Adjusted EBITDA reflects further adjustments to Adjusted EBITDA for cost savings already implemented and excess standalone costs. Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the Credit Agreement and the Indenture and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business. It is also utilized by management and the compensation committee of the Board as an input for determining incentive payments to employees. Excess standalone costs are the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone infrastructure costs. We make an adjustment for the difference because we have had to incur costs under the Transition Services Agreement after we had implemented the infrastructure to replace the services provided pursuant to the Transition Services Agreement, after we had implemented the infrastructure to replace the services provided pursuant to the Transition Services Agreement, thereby incurring dual running costs. Furthermore, there has been a ramp up period for establishing and optimizing the necessary standalone infrastructure. Since our separation from Thomson Reuters, we have had to transition quickly to replace services provided under the Transition Services Agreement, with optimization of the relevant standalone functions typically following thereafter. Cost savings reflect the annualized “run rate” expected cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the relevant period. Standalone Adjusted EBITDA is calculated under the Credit Agreement and the Indenture by using our Net Income for the trailing twelve month period (defined in the Credit Agreement and the Indenture as our GAAP net income adjusted for certain items specified in the Credit Agreement and the Indenture) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, expenses related to capital markets transactions, acquisitions and dispositions, restructuring and business optimization charges and expenses, consulting and advisory fees, run-rate cost savings to be realized as a result of actions taken or to be taken in connection with an acquisition, disposition, restructuring or cost savings or similar initiatives, “run rate” expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to the transition following the separation of the Company’s business from Thomson Reuters (the “2016 Transaction”) projected by us, costs related to any management or equity stock plan, other adjustments that were presented in the offering memorandum used in connection with the issuance of the Notes and earnout obligations incurred in connection with an acquisition or investment. Free Cash Flow and Adjusted Free Cash Flow We use free cash flow and adjusted free cash flow in our operational and financial decision-making and believe free cash flow and adjusted free cash is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure the ability of companies to service their debt. Free cash flow is calculated using net cash provided by operating activities less capital expenditures. Adjusted free cash flow is calculated as free cash flow, less cash paid for transition services agreement, transition, transformation and integration expenses, transaction related costs and debt issuance costs offset by cash received for hedge accounting transactions.
19 Quarterly Financial Summary 1. Adjusted Revenue adds back the deferred revenue purchase accounting adjustment. 2. See the Appendix for a reconciliation of GAAP to non-GAAP financial measures. ($ in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Revenues, net $234.0 $242.3 $243.0 $255.0 $240.6 $273.5 $284.4 $455.6 Deferred revenue adjustment $0.2 $0.1 $0.1 $0.1 $1.9 $3.4 $2.1 $15.7 Adjusted Revenue(1)(2) $234.2 $242.4 $243.1 $255.1 $242.5 $276.9 $286.5 $471.3 Adj. Subscription Revenue(1)(2) $192.5 $202.7 $200.8 $209.5 $193.2 $216.5 $222.1 $235.9 Adj. Transactional Revenue(1)(2) $41.7 $39.7 $42.3 $45.6 $49.2 $60.4 $64.4 $120.9 Adj. Re-occurring Revenue(1)(2) --- --- --- --- --- --- --- $114.5 Net Income (Loss) ($59.3) ($77.8) $10.8 ($84.8) ($74.0) ($1.5) ($37.2) $6.4 Adjusted EBITDA(2) $59.2 $73.2 $77.0 $84.6 $78.2 $100.1 $108.2 $200.1 Adjusted EBITDA margin %(2) 25.3% 30.2% 31.7% 33.2% 32.2% 36.2% 37.8% 42.4%
20 Diluted Share Count 1 2 3 3 4 5 6 7 Note: the analysis is not intended to replace the Treasury Stock Method as required under ASC 260, Earnings per Share 1. Inconsistent with the requirements of ASC 260, but for illustrative purposes, this analysis uses hypothetical shares prices and not the actual average share price for the period as required under US GAAP. 2. Debt and cash amounts reflect 12/31/20 balances. 3. Per the requirements of the Treasury Stock Method this excludes all management options that are antidilutive at the assumed share prices in this analysis and includes consideration of unrecognized compensation costs. 4. Consists of actual 2019 and 2020, as well as forecasted 2021 RSUs and their related activity. This includes forecasted issuances of 1.8M RSUs in 2021. 5. Consistent with the requirements of ASC 260, performance conditions for 0.6M of the PSUs granted in 2020 are not likely to be achieved as of this time, and therefore are excluded from this dilution analysis. Market conditions for 0.3M of the PSUS granted in 2020 are likely to be achieve based on the stock price's performance in the past year, and therefore are included in this dilution analysis. This figure does not include forecasted PSU grants for 2021 since the probability of achieving related performance obligations is unable to be measured at this time. 6. Consistent with the requirement of ASC 260, the impact of 2.9M estimated shares to be issued on the one year anniversary of acquisition of DRG (February 28, 2021) is included within this dilution analysis. 7. Consistent with the requirement of ASC 260, the impact of 1.5M estimated shares to be issued 90 days after closing of the CPA Global acquisition plus an additional 20 days (January 19, 2021) is included within this dilution analysis. Comments 2
21 Reconciliation of Non-GAAP Financial Measures and Required Reported Data The following tables present the amounts of our subscription, transactional, and re-occurring revenues including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods. (1) Reflects the deferred revenues adjustment made as a result of purchase accounting. 1 1 Variance Increase/(Decrease) Percentage of Factors Increase/(Decrease) Three Months Ended December 31, Total Variance (Dollars) Total Variance (Percentage) Acquisitive Disposal FX Impact Organic (in millions, except percentages) 2020 2019 Subscription revenues $ 235.9 $ 209.5 $ 26.4 12.6% 19.7% (8.8)% 1.5% 0.3% Transactional revenues 120.9 45.6 75.3 165.0% 167.8% (8.8)% 1.9% 4.1% Re-occurring revenues 114.5 - 114.5 100.0 % 100.0% —% —% —% Deferred revenues adjustment (15.7) (0.1) (15.6) NM NM — % — % —% Revenues, net $ 455.6 $ 255.0 $ 200.6 78.7% 85.0% (8.8)% 1.6 % 1.0 % Deferred revenues adjustment (15.7) 0.1 15.6 NM NM — % — % —% Adjusted revenues, net $ 471.3 $ 255.1 $ 216.2 84.8% 91.1 % (8.8)% 1.6% 1.0%
22 Reconciliation of Non-GAAP Financial Measures and Required Reported Data The following tables present the amounts of our subscription, transactional, and re-occurring revenues including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods. (1) Reflects the deferred revenues adjustment made as a result of purchase accounting. 1 1 Variance Increase/(Decrease) Percentage of Factors Increase/(Decrease) Twelve Months Ended December 31, Total Variance (Dollars) Total Variance (Percentage) Acquisitive Disposal FX Impact Organic (in millions, except percentages) 2020 2019 Subscription revenues $ 867.7 $ 805.5 $ 62.2 7.7% 12.1% (7.4)% 0.3% 2.7% Transactional revenues 120.9 45.6 125.6 74.2% 83.3% (3.0)% 0.4% (6.5)% Re-occurring revenues 114.5 - 114.5 100.0 % 100.0% —% —% —% Deferred revenues adjustment (23.1) (0.4) (22.7) NM NM — % — % 69.2% Revenues, net $ 1,254.0 $ 974.3 $ 279.7 28.7% 33.9% (6.7)% 0.4 % 1.1 % Deferred revenues adjustment 23.1 0.4 22.7 NM NM — % — % 69.2% Adjusted revenues, net $ 1,277.1 $ 974.7 $ 302.4 31.0% 36.2% (6.7)% 0.4% 1.2%
23 Reconciliation of Non-GAAP Financial Measures and Required Reported Data Descriptions Adjusted EBITDA adjustments 1. In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. 2. Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016, mainly related to the integration of separate business units into one functional organization and enhancements in our technology. 3. Reflects the deferred revenues adjustment as a result of purchase accounting. 4. Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs. 5. Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG in 2020. 6. Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. 1 2 3 4 6 5 Three Months Ended December 31, Twelve Months Ended December 31, (in millions) 2020 2019 2020 2019 Net income (loss) $ 6.4 $ (84.8) $ (106.3) $ (211.0) Benefit (provision) for income taxes (16.5) 4.6 (2.8) 10.2 Depreciation and amortization 127.0 55.4 303.2 200.5 Interest, net 39.6 63.8 111.9 157.7 Transition services agreement costs — — 0.6 10.5 Transition, transformation and integration expense (0.3) (0.9) 3.4 24.4 Deferred revenues adjustment 15.7 0.1 23.1 0.4 Transaction related costs 27.3 4.1 97.5 46.2 Share-based compensation expense 10.5 4.7 41.7 51.4 Sale of Techstreet (28.1) — (28.1) — Restructuring and impairment 20.8 15.7 47.6 15.7 Legal settlement — — — (39.4) Impairment on assets held for sale — 18.4 — 18.4 Other (2.3) 3.5 (5.2) 9.0 Adjusted EBITDA $ 200.1 $ 84.6 $ 486.6 $ 294.0 Adjusted EBITDA Margin 42.4% 33.2% 38.1% 30.2%
24 Reconciliation of Non-GAAP Financial Measures and Required Reported Data Descriptions Adjusted EBITDA adjustments 1. In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. 2. Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in selling, general, and administrative line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. 3. Reflects the deferred revenues adjustment as a result of purchase accounting. 4. Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs. 5. Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two segments. This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020. 6. Includes primarily the net impact of foreign exchange gains and losses related to the re- measurement of balances and other items that do not reflect our ongoing operating performance. 7. Represents the acquisition Adjusted EBITDA for the period beginning January 1, 2020 through the respective acquisition date of each acquired business to reflect the company's Standalone EBITDA as though material acquisitions occurred at the beginning of the presented period. 8. Reflects the estimated annualized run-rate cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the period (exclusive of any cost reductions in our estimated standalone operating costs), including synergies related to acquisitions. 2 3 4 5 1 6 8 7 Twelve Months Ended December 31, (in millions) 2020 Net loss $ (106.3) (Benefit) provision for income taxes (2.8) Depreciation and amortization 303.2 Interest, net 111.9 Transition Services Agreement costs 0.6 Transition, transformation and integration expense 3.4 Deferred revenues adjustment 23.1 Transaction related costs 97.5 Share-based compensation expense 41.7 Gain on sale of Techstreet (28.1) Restructuring and impairment 47.6 Other (5.2) Adjusted EBITDA 486.6 Realized foreign exchange gain (2.4) DRG Adjusted EBITDA Impact (2.7) CPA Global Adjusted EBITDA impact 193.9 IncoPat Adjusted EBITDA impact (0.5) Hanlim Adjusted EBITDA impact 0.5 Cost savings 86.7 Standalone Adjusted EBITDA $ 762.1 7 7 7
25 Reconciliation of Non-GAAP Financial Measures and Required Reported Data Descriptions Adjusted Net Income and Adjusted Diluted EPS adjustments 1. In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. 2. Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. 3. Reflects the deferred revenues adjustment as a result of purchase accounting. 4. Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs. 5. Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020. 6. Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. 1 3 4 5 2 6 Three Months Ended December 31, Twelve Months Ended December 31, 2020 2020 (in millions, except per share amounts) Amount Per Share Amount Per Share Net income (loss) $ 6.4 0.01 $ (106.3) (0.24) Dilutive impact of potential common shares — — — — Net income (loss) 6.4 0.01 (106.3) (0.24) Transition services agreement costs — — 0.6 — Transition, transformation and integration expense (0.3) — 3.4 0.01 Deferred revenues adjustment 15.7 0.03 23.1 0.05 Transaction related costs 27.3 0.04 97.5 0.22 Share-based compensation expense 10.5 0.02 41.7 0.09 Amortization related to acquired intangible assets 100.2 0.16 237.0 0.53 Restructuring and impariment 20.8 0.03 47.6 0.11 Debt issuance and hedge accounting costs — — 8.6 0.02 Gain on sale of Techstreet (28.1) (0.04) (28.1) (0.06) Other (2.3) — (5.2) (0.01) Income tax impact of related adjustments (14.6) (0.02) (30.8) (0.07) Adjusted net income and Adjusted Diluted EPS $ 135.6 $ 0.22 $ 289.1 $ 0.64 Weighted average ordinary shares (Diluted) 627,080,856 450,452,184
26 Non GAAP Reconciliation – Net Cash Provided By (Used In) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow Descriptions Free Cash Flow and Adjusted Free Cash Flow Adjustments 1. Includes cash payments to Thomson Reuters under the Transition Services Agreement. These costs decreased substantially in 2019, as we were in the final stages of implementing our standalone company infrastructure. In 2019, the Transition Services Agreement cash paid is offset by cash receipts from the IPM Product Line divestiture. 2. Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related payments following the acquisition of DRG and CPA Global in 2020. 3. Includes costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs. 1 2 3 Twelve Months Ended December 31, (in millions) 2020 2019 Net cash provided by operating activities $ 263.5 $ 117.6 Capital expenditures (107.7) (69.8) Free cash flow 155.8 47.8 Cash paid for transition services agreement (2.2) 12.0 Cash paid for transition, transformation and integration expense 46.3 40.9 Cash paid for transaction related costs 95.8 45.1 Cash paid for debt issuance costs 7.7 — Cash received for hedge accounting transactions (1.7) — Cash received for legal settlement — (45.3) Adjusted free cash flow $ 301.7 $ 100.5 Non GAAP Reconciliation – Debt to Net debt December 31, 2020 December 31, 2019(in millions) Total debt outstanding $ 3,547.4 $ 1,665.0 Cash and cash equivalents 257.7 76.1 Total net debt outstanding $ 3,289.7 $ 1,588.9
27 Non GAAP Reconciliation – Revenues, Net to Adjusted Revenues Reconciliation Year Ending December 31, 2021 (Forecasted) Low High ($ in millions) Net (loss) income $(7.5) $32.5 Provision for income taxes 29.4 29.4 Depreciation and amortization 545.8 545.8 Interest, net 151.3 151.3 Transition, TSA and integration expenses 40.3 40.3 Transaction related costs - - Share-based compensation expense 26.0 26.0 Other (0.3) (0.3) Adjusted EBITDA $785.0 $825.0 Non GAAP Reconciliation – Net Income to Adjusted EBITDA Reconciliation Year Ending December 31, 2021 (Forecasted) ($ in millions) Low High Revenues, net $1,780.0 $1,840.0 Adjusted EBITDA $785.0 $825.0 Adjusted EBITDA Margin 44% 45% Non GAAP Reconciliation –Adjusted EBITDA Margin Descriptions Adjusted EBITDA Adjustments 1. Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements. 2. Includes cost associated with merger and acquisition related activities. 1 2 Year Ending December 31, 2021 (Forecasted) (in millions) Low High Revenues, net $ 1,780.0 $ 1,840.0 Adjusted revenues, net $ 1,780.0 $ 1,840.0
28 Non GAAP Reconciliation – Net Loss Per Fully Diluted Weighted Shares Outstanding to Adjusted Diluted EPS Reconciliation Year Ending December 31, 2021 (Forecasted) Low High (in millions) Net cash provided by operating activities $ 559.7 $ 609.7 Capital expenditures $ (151.7) $ (151.7) Free Cash Flow $ 408.0 $ 458.0 Transition, transformation and integration expense $ 42.0 $ 42.0 Transaction related costs $ - $ - Adjusted Free Cash Flow $ 450.0 $ 500.0 Descriptions Adjusted Free Cash Flow Adjustments 1. Includes cash payments related to restructuring and other cost optimization activities. 2. Includes cash payments related to merger and acquisition related activities. 1 2 Non GAAP Reconciliation – Free Cash Flow and Adjusted Free Cash Flow Reconciliation Year Ending December 31, 2021 (Forecasted) (in millions, except per share amounts) Low High Per Share Per Share Net Loss $(0.01) $0.05 Transition, TSA and integration expenses 0.07 0.07 Transaction related costs - - Share-based compensation 0.04 0.04 Amortization related to acquired intangible assets 0.68 0.68 Income tax impact of related adjustments (0.05) (0.05) Adjusted Diluted EPS $0.73 $0.79 Weighted average common shares (diluted) 631,043,005 1 2 Descriptions Adjusted Diluted EPS Adjustments 1. Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements. 2. Includes cost associated with merger and acquisition related activities.