Q4 2023 Clarivate PLC Earnings Call

Operator: and InSchool. My name is Lydia, and I'll be your operator today. If you'd like to ask a question during the Q&A session, you can do so by pressing star followed by 1 on your telephone keypad. We kindly ask you to ask one question and return to the queue if you have any follow-up questions. I'll now hand you over to Mark Donohue, Head of Investor Relations, to begin. Thank you

My name is lithia and I'll be your operator today.

If you'd like to ask a question during the Q&A session. You can do side by pressing star followed by one on your telephone keypad.

Lithia: Because he asked me to ask one question and return speaking if you have any follow up.

Lithia: I'll now hand, you over to Mark Donohue head of Investor relations to begin.

Mark Donohue: Good morning, everyone. Thank you for joining us for the Clarivate fourth quarter and full year 2023 earnings conference call. As a reminder, this conference call is being recorded and webcast and is the copyrighted property of Clarivate. Any rebroadcast of this information in whole or in part without prior written consent of Clarivate is prohibited.

Mark Donohue: Thank you Larry and good morning, everyone. Thank you for joining us for declared a fourth quarter and full year 2023 earnings conference call.

Mark Donohue: As a reminder, this conference call is being recorded and webcast and the copyrighted property of clarity.

Mark Donohue: Any rebroadcast of this information in whole or in part without prior written consent of prior base prohibited and accompanying earnings call presentation is available on the Investor Relations section of the company's website clarity dot com.

Mark Donohue: An accompanying earnings call presentation is available on the investor relations section of the company's website, clarivate.com. During our call, we may make certain forward-looking statements within the meaning of applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the business or developments in Clarivate's industry to differ materially from the anticipated results, performance, achievements, or developments expressed or implied by such forward-looking statements. Information about the factors that could cause actual results to differ materially from anticipated results of performance can be found in Clarivate's findings at the FCC and on the company Clarivate believes non-GAAP results are useful in order to enhance an understanding of our ongoing operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures.

Mark Donohue: During our call we may make certain forward looking statements within the meaning of applicable securities laws such forward looking statements, Bob known and unknown risks uncertainties and other factors that may cause the actual results performance or achievements of the business or developments in glad its industry to differ materially from the anticipated results performance achievements or developments expressed or implied.

Mark Donohue: Such forward looking statements.

Mark Donohue: Information about the factors that could cause actual results to differ materially from anticipated results or performance can be found in clarity its filings with the SEC and on the company's website.

Mark Donohue: Our discussion will include non-GAAP measures or adjusted numbers collaborate believes non-GAAP results are useful in order to enhance the understanding of our ongoing operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures reconcile.

Mark Donohue: Reconciliations of these measures to gap measures are available in our earnings release and supplementum presentation on our website. With me today are Jonathan Gear, Chief Executive Officer, and Jonathan Collins, Chief Financial Officer. Both will be available to take your questions at the conclusion of the prepared remarks.

Mark Donohue: Reconciliations of these measures to GAAP measures are available in our earnings release and supplemental presentation on our website.

Mark Donohue: With me today are Jonathan gear, Chief Executive Officer, and Jonathan Collins, Chief Financial Officer, both will be available to take your questions at the conclusion of the prepared remarks.

Mark Donohue: After a couple of remarks, we'll open the call up. With that, it's a pleasure to turn the call over to Jonathan Gear. Okay.

Speaker Change: After prepared remarks, we'll open the call up.

Speaker Change: It's a pleasure to turn the call over to Jonathan gear.

Jonathan Gear: Thank you, Mark. Good morning, everyone, and thanks for joining us today. As I begin my second full financial year as CEO of Clarivate, I would like to provide an update on our turnaround journey, including the timing and actions required in the years ahead. 2023 was a critical year for Clarivate as we executed significant changes. These changes allowed us to set the foundation for future growth. I will cover some of these changes on the next slide. It also was a year where we were impacted by macro pressures that, to varying levels, affected each of our segments and contributed to lower organic growth than originally expected.

Jonathan Gear: Great. Thank you Mark good morning, everyone and thanks for joining us today.

Jonathan Gear: As I begin my second full financial year as CEO of clearer of eight I would like to provide an update on our turnaround journey, including the timing and actions required in the years ahead.

Jonathan Gear: <unk> was a critical year for <unk> as.

Jonathan Gear: As we executed significant changes these changes allowed us to set the foundation for future growth.

Jonathan Gear: I will cover some of these changes on the next slide. It also was a year, where we were impacted by macro pressures desk to varying levels impacted each of our segments and contributed to lower organic growth than originally expected.

Jonathan Gear: Nonetheless, these changes were required to set us up for the next phase of Clarivate where we innovate for growth. Beginning with prior investments and changes, we expect to see continued progress in academia and government and new success in our focus areas in intellectual property and life sciences and healthcare. This will accelerate in 2024 and 2025.

Jonathan Gear: Nonetheless, these changes were required to set us up for the next stage, a fair base, where we innovate for growth.

Jonathan Gear: Beginning on prior investments and changes we expect to see continued progress in academia and government and new success in our focus areas in intellectual property and life Sciences and healthcare.

Jonathan Gear: This will accelerate in 2024 into 2025, we expect new product introduction to lead to increased renewal rates, new sales better ability to capture pricing and drive revenue growth.

Jonathan Gear: We expect new product introductions to lead to increased renewal rates, new sales, and a better ability to capture pricing and drive revenue growth. I now fully expect us to exit 2025 positioned to drive value as we couple mid-single-digit organic growth with our scaled business model to accelerate our ability to be a cash-generation machine for investors. I should acknowledge that this revised outlook is a year longer than the plan I set forth at Investor Day last year. However, the macroenvironment hampered us in 2023, and we pivoted our strategy in life science and health care under a new leader. Nonetheless, with one year under my belt and the changes complete, I am more confident than ever in the potential for Clarivate's success and growth. 2023 was a foundational year for Clarivate.

Jonathan Gear: Now fully expect us to exit 2025 positioned to drive value as we couple mid single digit organic growth with our scaled business model to accelerate our ability to be a cash generation machine for investors.

Jonathan Gear: I should acknowledge that this revised outlook is a year longer than plan as set forth at Investor day last year.

Jonathan Gear: The macro environment hampered us in 'twenty to 'twenty, three and we pivoted our strategy in life science and healthcare under a new leader.

Jonathan Gear: Nonetheless, with one year under my belt, and the changes complete I am more confident than ever in the potential for Clara based success and growth.

Jonathan Gear: 2023 was a foundational year for <unk>. It was a year, where we drove significant changes in three areas to position us for growth.

Jonathan Gear: It was a year where we drove significant changes in three areas to position us for growth. Prior to 2023, our operating model was primarily aligned by function, and this allowed us to rapidly realize cost synergies from the three large acquisitions completed over the prior few years. However, there were tradeoffs, namely less accountability and a fragmented key account management strategy.

Jonathan Gear: Prior to 2023, our operating model was primarily aligned by function and this allowed us to rapidly realized cost synergies from the three large acquisitions completed over the prior few years.

Jonathan Gear: However, there were trade offs, namely less accountability and a fragmented key account management strategy.

Jonathan Gear: I recognize that we needed to drive more accountability and build a more effective way of operating closer to our customers. From this, we created our segment operating model to tighten our customer focus, accelerate decision making, and bring innovations to market faster. The result was an organizational alignment into three segments: academia and government, intellectual property and life sciences, and healthcare. In May 2023, I appointed presidents to lead each segment.

Jonathan Gear: Recognize that we needed to drive more accountability and build a more effective way of operating closer to our customers from this view be created our segment operating model to tightened our customer focus accelerate decision, making and bring innovations to market faster. The result wasn't organizational alignment into three.

Jonathan Gear: Segments, Academia government intellectual property and life Sciences and healthcare.

Jonathan Gear: In May 2023, I appointed presidents to lead each segment I hired to external industry leaders Barb Weinstein to Ron Academia and government and Henry Let me to run life Science and healthcare.

Jonathan Gear: I hired two external industry leaders, Barb Einstein to run academia government, and Henry Levy to run life science and health care. I reassigned Gordon Sampson from his role as Chief Product Officer to run the IP segment, an industry in which he's had nearly a decade of experience. With new experienced leadership in place that has full accountability for their respective segment P&Ls, including sales, go-to-market, product leadership, technology, and operations, we are in a better position to drive improved performance across the organization. At our investor day, we highlighted the lack of investment in flagship products and innovation over several years, which we needed to reverse. We have commenced a significant level of investment and executed against a roadmap to reinvigorate our portfolio. This includes creating new products, enhancing existing solutions, and accelerating the use of artificial intelligence to move faster, be more agile, and bring solutions to market more quickly.

Jonathan Gear: I reassigned Gordon Samson from his role as Chief product officer to run the IP segment and industry unless she's had nearly a decade of experience.

Jonathan Gear: With new experienced leadership in place that has full accountability for their respective segment P&L, including sales go to market product leadership technology and operations. We are in a better position to drive improved performance across the organization.

Jonathan Gear: At our Investor day, we highlighted the lack of investment in flagship products and innovation over several years, which we needed to reverse we commenced a significant level of investments and executed against our roadmap to reinvigorate our portfolio.

Jonathan Gear: This includes creating new products enhancing existing solutions and accelerating the use of artificial intelligence to move faster be more agile and bring solutions to market more quickly.

Jonathan Gear: Starting in 2023, we increased our annual capital investment by around $40 million, an increase of around 20%, to propel product innovation across all segments. We are seeing early evidence that these investments are paying off. The reinvigoration of Web of Science, where we made the earliest investments, is our first example, as that platform has returned to growth with further growth acceleration expected. Packet Intelligence Services and IP are our second example.

Jonathan Gear: Starting in 2023, we increased our annual capital investment by around $40 million, an increase of around 20% to propel product innovation across all segments. We are seeing early evidence that these investments are paying off.

Jonathan Gear: The reinvigoration of web of Science, where we made the earliest investments as our first example, as App platform has returned to growth with further growth acceleration expected.

Jonathan Gear: Packet intelligence services and IP as a second example, we hired a new product team in late 2022, they engaged deeply with our customers in the first half of 2023 and began executing against a roadmap to reinvigorate this platform we.

Jonathan Gear: We hired a new product team in late 2022. They engaged deeply with our customers in the first half of 2023 and began executing against a roadmap to reinvigorate this platform. We plan to take it to market in the first half of 2024 and look forward to sharing KPIs with you in future calls. In life science and health care, we made a major pivot on our real-world data platform after the arrival of Henry Levy.

Jonathan Gear: Plan to take it to market in the first half of 2024 and look forward to sharing kpis with you in future calls.

Jonathan Gear: In life Sciences, and healthcare, we made a major pivot on our real world data platform. After the arrival of Henry Levy, we invested in a new focus strategy in the second half of 2023 and expect to share initial customer wins later in the year.

Jonathan Gear: We invested in a new focused strategy for the second half of 2023 and expect to share initial customer wins later in the year. Finally, and related to our new work structure, we renewed a focus on aligning with our customers and supporting their success. I myself hosted nearly 100 customer meetings in 2023 and learned what we were doing well and what we could do better. As a result, we realigned our customer-facing teams, including sales, marketing, and customer care, with the product teams, ensuring our differentiated industry expertise is front and center in every customer interaction.

Jonathan Gear: Finally and related to our new work structure, we renewed our focus on aligning with our customers and supporting their success.

Jonathan Gear: I myself hosted nearly 100 customer meetings in 2023 and learn what we are doing well and what we can do better.

Jonathan Gear: As a result, we realigned our customer facing teams, including sales marketing customer care with the product teams and sharing our differentiated industry expertise is front and center in every customer interaction.

Jonathan Gear: With the foundation now built, over the next two years, we will focus on specific organizational and segment priorities to improve organic growth to a low single-digit range. First, with our organizational-wide priorities and our segment model now in place for a year, we are better equipped to drive excellence across Clarivate, build a winning culture, focus on innovation, customer centricity, and accountability. We will continue to pursue operational efficiencies, including utilizing AI and its many benefits to further enhance productivity. This will help us maintain and improve our operating margins while still investing in innovation. It will also help us generate even stronger cash flow to reduce our leverage to the low three times range. Finally, we are actively evaluating opportunities to prune the portfolio of smaller diluted products.

Jonathan Gear: With the foundation now built over the next two years, we will focus on specific organizational segment priorities to improve organic growth to a low single digit range.

Jonathan Gear: First with our organizational wide priorities with our segment model now in place for a year, we are better equipped to drive excellence across clarified to build a winning culture focused on innovation customer Centricity and accountability.

Jonathan Gear: We will continue to pursue operational efficiencies, including utilizing AI and its many benefits that further enhanced productivity. This will help us maintain and improve our operating margins, while still investing in innovation.

Jonathan Gear: It will also help us generate even stronger cash flow to reduce our leverage to the low three times range.

Jonathan Gear: Finally, we are actively evaluating opportunities to prune the portfolio of smaller dilutive products.

Jonathan Gear: This will sharpen our focus on core growth markets and generate cash to reinvest in our business and reduce our debt. Moving on to our segment priorities, our prior year investments in the web of science have delivered improved usage and renewal rates. With additional product innovation, we are targeting enhanced performance across content aggregation within the A&G segment. In addition, we continue to pursue advancements in AI, as well as business development opportunities, such as our acquisition of Aletheia, an AI student engagement solution. In 2023, our IP segment experienced some of the most challenging economic and budget pressures in years. However, this has now stabilized.

Jonathan Gear: This will sharpen our focus on core growth markets and generate cash to reinvest in our business and reduce our debt.

Jonathan Gear: Moving on to our segments priorities, our prior year investments in the web of science have delivered improved usage and renewal rates with additional product innovation, we are targeting enhanced performance across content aggregation within the AG segment. In addition, we continue to pursue advancements in AI as well as in business development opportunities.

Jonathan Gear: <unk>, such as acquisition or acquisition, I believe <unk> and AI student engagement solution.

Jonathan Gear: In 2023, our IP segment experienced some of the most challenging economic and budget pressures in years. This housing out. This has now stabilized and we expect improvements in second half of 2024 as we lap the prior year comps.

Jonathan Gear: And we expect improvements in the second half of 2024 as we lap the prior year comp. Last year, we launched two new AI-powered workflow solutions, the Brand Landscape Analyzer, and an IP Forecast tool. We look forward to launching our new IP Intelligence platform this year and extending our current IP management system win rates through service integration with AI-enabled workflows. Our life sciences and healthcare segment, which has the greatest upside potential, has been our most volatile business over the last two years. While this segment also experienced macro headwinds last year, we believe the growth potential far exceeds our other two segments. With a change in leadership and a change in our go-to-market strategy it has brought, we are now better positioned to optimize the long-term success of the analytics platform.

Jonathan Gear: Last year, we launched two new AI powered workflow solutions.

Jonathan Gear: <unk> landscape analyzer, and an IP forecast tool, we look forward to launching our new IP intelligence platform. This year and extend our current IP management system win rates to service integration with AI enabled workflows.

Jonathan Gear: Our life Sciences healthcare segment, which has the greatest upside potential has been our most volatile business over the last two years.

Jonathan Gear: While this segment also experienced macro headwinds last year, we believe the growth potential far exceeds our other two segments.

Jonathan Gear: With a change in leadership and the change in our go to market strategy. It has it has brought we are now better positioned to optimize the long term success of the analytics platform.

Jonathan Gear: In addition, on prior earnings calls, we discussed the investments we're making to drive innovation across our real-world data platform, supported by generative AI functionality. The increase in capital spending in 2024 is primarily targeted to accelerate innovation within this very important, high-growth segment. Each of our presidents looks forward to sharing more details on these growth strategies during a series of upcoming investor webinars. We will be sharing more details of the timing of these events soon.

Jonathan Gear: In addition on prior earnings calls we discussed the investments, we're making to drive innovation across our variable data platform supported by generative AI functionality. The increase in capital spending in 2024 is primarily targeted to accelerate innovation within this very important high growth segment.

Each of our presidents looks forward to sharing more details on these growth strategies over series of upcoming Investor Webinars, we will be sharing more details or timing of these events soon.

Jonathan Gear: As we exit this year, we will be well on our way to our transformational journey. Under our updated outlook, we believe we can achieve our mid-single-digit organic growth target in 2026. This is approximately one year longer compared to the target we provided last March. We, of course, will continue to look at every opportunity to accelerate this timeline. I'm confident that we have the people.

Jonathan Gear: As we exit next year, we will be well on our way in our transformational journey.

Jonathan Gear: Under our updated outlook, we believe we can achieve our mid single digit organic growth target. In 2026. This is approximately one year longer compared to targets. We provided last March.

Jonathan Gear: We of course will continue to look at every opportunity to accelerate this timeline I am confident that we have the people customer.

Jonathan Gear: Customer Relationships, Products, and Solutions to Succeed. By achieving a mid-single-digit growth rate, we will be well-positioned to deliver margin accretion, stronger cash flows, capital allocation optionality, and deliver significant value for our shareholders. I now want to briefly discuss our 2023 financial results. Even in a challenging growth year, we improved on our underlying financial position. Organic subscription revenue grew more than 2% in 2023, and we achieved record renewal rates of 92%. We generated our highest free cash flow ever at more than $500 million, of which $300 million was allocated towards accelerated debt repayment, dropping our leverage ratios below four times. We also repurchased $100 million of our ordinary shares.

Jonathan Gear: Customer relationships products and solutions to succeed by achieving a mid single digit growth rate, we will be well positioned to deliver market margin accretion stronger cash flows capital allocation optionality and deliver significant value for our shareholders.

Jonathan Gear: And I wanted to briefly discuss our 2023 financial results even in a challenging growth year, we improved on our underlying financial position.

Jonathan Gear: Organic subscription revenue grew more than 2% in 2023, and we achieved record renewal rates of 92%.

Jonathan Gear: We generated our highest free cash flow ever at more than $500 million.

Jonathan Gear: Of which 300 million was allocated towards accelerated debt repayment ramping our leverage ratio is below four times.

Jonathan Gear: We also repurchased 100 million of our ordinary shares.

Jonathan Gear: With an improving balance sheet and strong cash generation, we continue to invest in CapEx spending to drive additional product innovation. We will continue to be disciplined in capital allocation and currently expect to use approximately $400 million, primarily for deleveraging, in 2024. I want to thank all of my colleagues for their ongoing dedication in helping Clarivate achieve its full potential.

Jonathan Gear: With an improving balance sheet and strong cash generation, we continue to invest in capex spending to drive additional product innovation we have.

Jonathan Gear: We'll continue to be disciplined in capital allocation and currently expect to use approximately $400 million primarily for deleveraging in 2024.

Jonathan Gear: I want to thank all of my colleagues for their ongoing dedication and helping <unk> achieve its full potential I am confident that the significant structural and operational changes. We made last year have created the path to accelerate and sustain organic revenue growth I look forward to updating you on our progress in the quarters at with that let me now.

Jonathan Gear: I'm confident that the significant structural and operational changes we made last year have created the path to accelerate and sustain organic revenue growth. I look forward to updating you on the progress in the quarters ahead. With that, I now turn the call over to Jonathan Collins to walk you through our finances. Thank you, Jonathan. Good morning, everyone.

I'll turn the call over to Jonathan Collins to walk you through our financials.

Jonathan M. Collins: Thank you Jonathan.

Jonathan M. Collins: Morning, everyone. Slide 12 is an overview of last year's fourth quarter and full year financial results compared with the same periods from the prior year.

Jonathan M. Collins: Slide 12 is an overview of last year's fourth quarter and full year financial results compared with the same periods from the prior year. Q4 revenue was $684 million, an increase of $9 million versus 2022, bringing the full year to $2,629,000, a decrease of $31 million compared to the prior year. The decline was entirely due to the mark monitor divestiture and was partially offset by favorable foreign exchange.

Jonathan M. Collins: Q4 revenue was $684 million, an increase of $9 million versus 2022, bringing the full year to $2 $629 million, a decrease of $31 million compared to the prior year.

Jonathan M. Collins: The decline was entirely due to the Mark monitor divestiture and was partially offset by favorable foreign exchange.

Jonathan M. Collins: The fourth-quarter net loss was $863 million due to the non-cash goodwill impairment charge related to the legacy businesses in the IP and LS&H sectors. This was also the primary driver of the full-year net loss of $987 million, which was an improvement of $3 billion over 2022, as this year's non-cash goodwill impairment charge was lower than the one recorded in the prior year. Adjusted diluted EPS, which excludes the impact of one-time items like impairment, was 23 cents in Q4, a one-cent improvement over the same period last year. The full-year result was $0.82, $0.03 lower than 2022, stemming from the Mark monitored Mark. Operating cash flow was $191 million in the quarter, an increase of $54 million over the prior year's fourth quarter, as the working capital timing issue from the third quarter unwound.

The fourth quarter net loss was $863 million due to the noncash goodwill impairment charge related to the legacy businesses in the IP and L. S and H segments. This was also the primary driver of the full year net loss of $987 million, which was an improvement of $3 billion over 2022 as this year's non.

Cash goodwill impairment charge was lower than the one recorded in the prior year.

Jonathan M. Collins: Adjusted diluted EPS, which excludes the impact of one time items like the impairment was 23 <unk> in Q4 of <unk> improvement over the same period last year. The full year result was 80, <unk> <unk> lower than 2022 stemming from the Mark monitor divestiture.

Jonathan M. Collins: Operating cash flow was $191 million in the quarter, an increase of $54 million over the prior year's fourth quarter as the working capital timing issue from the third quarter unwound.

Jonathan M. Collins: Full-year operating cash flow improved $235 million, or 46% over 2022, to nearly three-quarters of a billion dollars on lower one-time costs and working capital requirements. Please turn with me now to page 13 for a closer look at the drivers of the full year top and bottom line changes from the prior year. On our Q3 earnings call, we indicated that Q4 organic growth was expected to approach 1%. However, it came in slightly below those expectations, closer to flat.

Jonathan M. Collins: Full year operating cash flow improved 235 million or 46% over 2022, and nearly three quarters of $1 billion on lower onetime cost and working capital requirements. Please.

Jonathan M. Collins: Please turn with me now to page 13 for a closer look at the drivers of the full year top and bottom line changes from the prior year.

Jonathan M. Collins: On our Q3 earnings call. We indicated Q4 organic growth was expected to approach, 1%. However, it came in slightly below those expectations closer to flat.

Jonathan M. Collins: Q4 has historically been the largest transactional sales quarter of the year for our A&G segment, and the outcome for this area was modestly lower than not only our expectations but also the prior years. However, adjusted EBITDA was right in line with our expectations despite the modestly lower revenue. The full year changes to the top and bottom line were driven by the four key factors highlighted in this chart. First, revenue was up $7 million on organic growth of 0.3%. Despite the softer year-end transactional sales, A&G accelerated growth on the back of the research and analytics sub-segment as we reap the benefits of the investments in the web of science products. Our LS&H segment declined by a double-digit drop in transactional revenues due to the challenges with our legacy strategy of selling our real-world data that we discussed in prior calls and is in the process of being, Finally, our IP business was The adjusted EBITDA impact was negligible as we were able to achieve efficiencies that offset most costs.

Jonathan M. Collins: Q4 has historically been the largest transactional sales quarter of the year for our <unk> segment and the outcome for this area was modestly lower than not only our expectations, but also the prior year's results adjusted EBITDA was right in line with our expectations. Despite the modestly lower revenue the.

Jonathan M. Collins: Full year changes to the top and bottom line were driven by the four key factors highlighted on this chart.

Jonathan M. Collins: <unk> revenue was up $7 million on organic growth of 3%.

Jonathan M. Collins: Despite the softer year end transactional sales AMG accelerated growth on the back of the research and analytics sub segment as we reap the benefits of the investments in the web of science product.

Jonathan M. Collins: <unk> in each segment declined led by a double digit drop in transactional revenues due to the challenges with our legacy strategy of selling our real world data that we discussed in prior calls and is in the process of being addressed.

Jonathan M. Collins: Our IP business was down slightly in our patent intelligence solutions, which has also been reinvigorated in 2024 as well as previously discussed macro related softness in our patent renewals and trademark services offerings. The adjusted EBITDA impact was negligible as we were able to achieve efficiencies that.

Jonathan M. Collins: <unk> offset most cost inflation.

Jonathan M. Collins: Second, inorganic impacts, namely the divestiture of the Mark Monitor business in 2022, lowered revenue $63 million and profit $32 million last year. Third, cost synergies from the ProQuest acquisition contributed $40 million of incremental profit and not only buoyed profit margins but were completely responsible for the expansion over the prior year. And finally, the foreign exchange translation impact of non-US dollar denominated subsidiaries increased revenue by $25 million compared to 2022. However, the profit increase was negligible as transaction gains were lower than the prior year.

Jonathan M. Collins: Second inorganic impacts, namely the divestiture of the monitor business in 2022 lowered revenue $63 million in profit $32 million last year.

Jonathan M. Collins: Third cost synergies from the pro Quest acquisition contributed $40 million of incremental profit and not only buoyed profit margins, but we're completely responsible for the expansion over the prior year and finally, the foreign exchange translation impact of non U S. Dollar denominated subsidiaries increased revenue by $25 million compare.

Jonathan M. Collins: To 2022.

Jonathan M. Collins: The profit increase was negligible as transaction gains were lower than the prior year.

Jonathan M. Collins: Please turn with me now to page 14 to step through the conversion from adjusted EBITDA to free cash flow at the highest rate we've seen since the IPO in 2019. Free cash flow was $127 million in the fourth quarter, an increase of $36 million over the same period the prior year, bringing the full year amount to more than half a billion, growth of nearly $200 million over 2022, which represented an 18 percentage point improvement in the conversion of adjusted EBITDA. The majority of the improvement, $155 million, was caused by lower one-time costs as we completed the integration of the acquisition. Interest payments were up $22 million over the prior year, as the impact of base rate increases was partially offset by the lower debt quantum due to the deleveraging in Q4 of 2022 and H1 of 2021. Cash taxes were $21 million lower than the prior year as we recognize the benefit of planning initiatives, jurisdictional mix, and the timing of... Working capital was a $5 million source of cash compared to a $73 million use the prior year.

Jonathan M. Collins: Please turn with me now to page 14 to step through a conversion from adjusted EBITDA to free cash flow at the highest rate we've seen since the IPO in 2019.

Jonathan M. Collins: Free cash flow was $127 million in the fourth quarter, an increase of $36 million over the same period. The prior year, bringing the full year amount to more than a half a billion growth of nearly 200 million over 2022, which represented an 18 percentage point improvement in the conversion on adjusted EBITDA. The.

Jonathan M. Collins: Any of the improvement of $155 million was caused by lower onetime cost as we completed the integration of the acquisitions.

Jonathan M. Collins: Interest payments were up $22 million over the prior year as the impact of base rate increases was partially offset by the lower debt quantum due to the deleveraging in Q4 of 2022 and H one of 2023.

Jonathan M. Collins: Cash taxes were $21 million lower than the prior year as we recognize the benefit of planning initiatives jurisdictional mix and the timing of payments.

Jonathan M. Collins: Working capital was a $5 million source of cash compared to a $73 million use the prior year the timing of payments within our patent renewal business in our IP segment was a meaningful contributor to the year over year improvement.

Jonathan M. Collins: The timing of payments within our patent renewal business in our IP segment was a meaningful contributor to the year-over-year impact. Capital expenditures rose $40 million to nearly a quarter billion, or 9% of revenue, as we ramped up our investment in product innovation. We used our free cash flow to service our preferred stock with a dividend, prepay $300 million of term debt, and repurchase 14 million shares of our Commons.

Jonathan M. Collins: Capital expenditures rose 40 million to nearly a quarter billion dollars or 9% of revenue as we ramped up our investment in product innovation.

Jonathan M. Collins: We used our free cash flow to service, our preferred stock with a dividend prepaid $300 million of term debt and repurchased 14 million shares of our common stock.

Jonathan M. Collins: This balanced capital allocation brought our net leverage ratio to our year-end target of less than 40. Please move with me now to slide 15 as we turn the page on 2023 and provide our guidance for 2021. Beginning at the top of the page, we expect organic growth to improve over the last year to about 1% at the midpoint of our range. From a segment perspective, we anticipate A&G's growth will continue to improve modestly, LS&H to improve to about flat, and IP to return to low growth. In terms of revenue types, we expect the subscription file to grow between 2 and 3% in line with last year, recurring revenue to grow about 1%, and transactional revenue to decline about 2%. It's worth noting that we expect to be off to a slower start in Q1, with a decline of more than 2%. While we anticipate the subscription file will continue to grow, we're likely to see high single-digit declines in both the reoccurring and transactional order types driven by tougher comps in our IT segment, namely patent renewal and trademark servicing bonds. We expect organic growth to be modestly positive, excluding these product areas.

This balanced capital allocation brought our net leverage ratio to our year end target of less than four turns. Please move with me now to slide 15, as we turned the page on 2023 and provide our guidance for 2024.

Jonathan M. Collins: Beginning at the top of the page, we expect organic growth to improve over last year to about 1% at the midpoint of our range from a segment perspective, we anticipate amg's growth will continue to improve modestly.

Jonathan M. Collins: And H to improve to about flat and IP to return to low growth in terms of revenue types. We expect the subscription file will grow between two and 3% in line with last year reoccurring to grow about 1% and transactional to decline about 2%.

It's worth noting that we expect to be off to a slower start in Q1 with a decline of more than 2%. While we anticipate the subscription file will continue to grow we're likely to see high single digit declines in both the reoccurring and transactional order types driven by tougher comps in our IP segment, namely.

Jonathan M. Collins: Patent renewal and trademark servicing volumes, we expect organic growth to be modestly positive. Excluding these product areas and our full year guidance predict positive organic growth for each of the remaining quarters of this year.

Jonathan M. Collins: And our full-year guidance predicts positive organic growth for each of the remaining quarters of this year. 1% organic growth for the full year would yield revenue of about $2.62 billion at the midpoint of the range. Moving down the page, we expect adjusted EBITDA in the range of $1,055,000,000 to $1,115,000,000, resulting in a profit margin of about 41.5% at the midpoint of the range. We anticipate diluted adjusted EPS between $0.70 and $0.80, down $0.07 from last year at the mid... The adjusted EBITDA decline, which I'll detail on the next page, will account for about four cents, and higher DNA from increased capital spending to drive growth will cause. And, finally, at the bottom of the page, we anticipate free cash flow between $420 million and a half a billion.

Jonathan M. Collins: 1% organic growth for the full year would yield revenue of about $2 62 billion at the midpoint of the range moving down the page, we expect adjusted EBITDA in the range of $1 $55 million to $1 billion $115 million, resulting in a profit margin of about 41, 5% at the midpoint of the range we.

Jonathan M. Collins: Anticipate diluted adjusted EPS between 70 and 80.

Jonathan M. Collins: Down seven from last year at the midpoint.

Jonathan M. Collins: The adjusted EBITDA decline, which I'll detail on the next page will account for about <unk>.

Jonathan M. Collins: And higher DNA from increased capital spending to drive growth will cause <unk> and.

Jonathan M. Collins: And finally at the bottom of the page, we anticipate free cash flow between $420 million and to have $1 billion.

Jonathan M. Collins: Please turn with me now to page 16 for a closer look at the full year top and bottom line changes we're expecting compared to last year. Since the benefit of the cost synergies from the ProQuest acquisition is completely embedded in last year's results, the full year change in revenue and adjusted EBITDA this year is driven by three key factors. First, organic growth at the midpoint of our guidance range will add about $30 million to the top line but will have no impact on the bottom line, leading to a modestly lower profit margin. We remain committed to investing in product innovation that we believe will accelerate organic growth in the coming year. Second, the inorganic impact from selling a small business line in the IP segment will remove some revenue this year compared to last year.

Please turn with me now to page 16 for a closer look at the full year top and bottom line changes were expecting compared to last year.

Jonathan M. Collins: Since the benefit of the cost synergies from the pro Quest acquisition are completely embedded in last year's results. The full year change to revenue and adjusted EBITDA. This year is driven by three key factors.

Jonathan M. Collins: First organic growth at the midpoint of our guidance range will add about $30 million to the top line, but we will have no impact on the bottom line, leading to a modestly lower profit margins as we remain committed to investing in product innovation that we believe will accelerate organic growth in the coming years.

Jonathan M. Collins: The inorganic impact from selling a small business line in the IP segment will remove some revenue this year compared to last year. We expect the transaction will close this quarter and we will deduct about $30 million of revenue and about $15 million of profit. This year as Jonathan highlighted earlier pruning the portfolio of small growth dilutive products.

Jonathan M. Collins: We expect the transaction to close this quarter, and we'll deduct about $30 million of revenue and about $15 million of profit this year. As Jonathan highlighted earlier, pruning the portfolio of small growth-deleted products to improve execution is a priority to accelerating our organic growth, and this is another step in that direction. And finally, we anticipate a $10 million foreign exchange translation headwind on the top line and a slightly higher headwind of $15 million on the bottom line, as last year's transaction gains are not expected to recur. These changes to adjusted EBITDA account for three quarters of the change in free cash flow compared to last year, but let's turn to page 17 to step through some of the other items. One-time costs are expected to continue to decline this year to $40 million, an improvement of $20 million over last year, as the ProQuest integration is completely behind.

Jonathan M. Collins: To improve execution is our priority to accelerating our organic growth and this is another step in this direction and.

Jonathan M. Collins: And finally, we anticipate a $10 million foreign exchange translation headwind on the top line and a slightly higher headwind of $15 million on the bottom line as last year's transaction gains are not expected to recur this year.

Jonathan M. Collins: These changes to adjusted EBITDA account for three quarters of the change in free cash flow compared to last year now, let's turn to page 17 to step through some of the other items.

Jonathan M. Collins: Onetime costs are expected to continue to decline this year to $40 million, an improvement of $20 million over last year as the pro quest integration is completely behind us we.

Jonathan M. Collins: We do expect cash interest to decrease by about $15 million, caused in part by the debt we prepaid in Q4, the rate benefit from refinancing our Term Loan B earlier this month, and the expectation that base rates will fall later this year. Taxes will increase by approximately $15 million due to the timing of payments and jurisdictional differences. We expect the change in working capital this year will be negligible, just as it was last year.

Jonathan M. Collins: We do expect cash interest to decrease by about 15 million caused in part by the debt we prepaid in Q4 the rate benefit from refinancing our term loan B earlier this month and the expectation that base rates will fall later this year.

Jonathan M. Collins: Taxes will increase by approximately $15 million due to timing of payments and jurisdictional mix.

Jonathan M. Collins: We expect the change in working capital this year will be negligible just as it was last year and we remain committed to investing in product innovation and plan to raise capital spending by about $20 million, taking it to about 10% of revenue.

Jonathan M. Collins: And we remain committed to investing in product innovation and plan to raise capital spending by about $20 million, taking it to about 10% of revenue. The net impact of these changes will be free cash flow of $460 million at the midpoint. From a capital allocation perspective, the free cash flow reduction of $40 million will be largely offset by lower dividend payments on our preferred stock. We have two more coupon payments to make before they convert to common shares in the second quarter, freeing up an additional $35 million of cash in the second quarter.

Jonathan M. Collins: The net impact of these changes is free cash flow of $460 million at the midpoint of the range.

Jonathan M. Collins: From a capital allocation perspective, the free cash flow reduction of $40 million will be largely offset by lower dividend payments on our preferred stock we have two more coupon payments to make before they convert the common shares in the second quarter freeing up an additional $35 million of cash in the second half of the year.

Jonathan M. Collins: As a result, we expect to have $400 million available to prepay debt or repurchase shares, just as we did last year. We intend to use most of this to prepay debt and close in on our long-term net leverage target of about. Please turn with me now to page 18 for a look at how last year's results and this year's guidance affect the trajectory of our organic growth acceleration in the form of our revised long-term target. As Jonathan acknowledged at the onset of the call, it's going to take us longer to reach our mid-single-digit organic growth target with a lower starting point than originally anticipated. When we outlined our recovery path at Investor Day last March, we expected to reach about 6% in 2025, and we now believe it will take us another year to touch this level of growth.

Jonathan M. Collins: As a result, we expect to have $400 million available to prepay debt or repurchase shares just as we did last year.

Jonathan M. Collins: We intend to use most of this to prepay debt and closing and our long term net leverage target of about three turns.

Jonathan M. Collins: Please turn with me now to page 18 for a look at how last year's results and this year's guidance affect the trajectory of our organic growth acceleration in the form of our revised long term targets.

Jonathan M. Collins: As Jonathan acknowledged at the onset of the call, it's going to take us longer to reach our mid single digit organic growth target with a lower starting point than originally anticipated when we outlined our recovery path at the Investor Day last March we expected to reach about 6% in 2025, and we now believe it will take us another year to touch this level of growth.

Jonathan M. Collins: We now anticipate making steady progress towards a range of 4-6% in 2026. A key driver of this progression includes modestly pruning small, lower growth assets that are distracting our team's focus on core product innovation. As a reminder, to reach our market potential in each segment, we must modernize platforms and enhance our solutions in one key subsegment. First, we expect to build on last year's momentum in research and analytics within A&G, lifting growth to mid-single digits in this category through expanding platform capabilities and breadth. Second, within LS&H, we plan to launch our new pharma-grade real-world data product in H1 and two specific therapy area-aligned products in H2.

Jonathan M. Collins: We now anticipate making steady progress towards the range of 4% to 6% in 2026, a key driver of this progression includes modestly pruning small lower growth assets that are distracting. Our teams focused on core product innovation as a reminder to reach our market potential in each segment, we must modernize platforms.

Jonathan M. Collins: Enhance our solutions in one key sub segment in each first we expect to build on last year's momentum in research and analytics within AMG lifting growth to mid single digits in this category through expanding platform capabilities and breadth of content.

Jonathan M. Collins: Second within <unk>, we plan to launch our new pharma grade real world data product and H one.

Jonathan M. Collins: And two specific therapy area align products and <unk> combined with AI enhanced capabilities in our commercialization products. These investments will drive the growth acceleration in our highest potential business in our portfolio.

Jonathan M. Collins: Combined with AI-enhanced capabilities in our commercialization products, these investments will drive growth acceleration for the highest potential businesses in our portfolio. And third, we're targeting to deliver four enhanced solutions this year in our patent intelligence subsegment with NIP, built on our unparalleled data that we expect will lead to double-digit monthly active usage growth by the end of this year, setting us up for meaningful improvement in organic growth in this subsegment next year. As our organic growth accelerates, we expect profit margins will return to last year's levels over the next few years and will compound to accrete 15 cents of EPS from this year's expectations, lifting free cash flow conversion to 50% over the same time. Please move me now to page 19 to put these long-term targets in the context of the financial objectives that we outlined last year.

Jonathan M. Collins: And third we're targeting to deliver four enhanced solutions. This year in our patent intelligence sub segment within IP built on our unparalleled data that we expect will lead to double digit in monthly active usage growth by the end of this year setting us up for a meaningful improvement in organic growth in this sub segment next year.

Jonathan M. Collins: As our organic growth accelerates, we expect profit margins will return to last year's levels over the next few years and we will compound to <unk> 15 of EPS from this year's expectation lifting free cash flow conversion to 50% over the same time horizon.

Jonathan M. Collins: Please moving now to page 19 to put these long term targets in the context of the financial objectives that we outlined last year.

Jonathan M. Collins: Our primary aim is to accelerate our organic growth, lifting us from last year's level of essentially flat to mid-single-digit growth in a few years. Our second goal is to maintain durable profit margins as we make the investment to achieve the primary goal. We are committed to providing the resources to drive product innovation in all our businesses and are finding operating efficiencies to fund some of these, but are also willing to modestly lower our profit margins in the near term to benefit the long-term health of the, The third objective we outlined was to significantly improve our free cash flow, which we've done by reaching a half a billion last year, but we see room to continue to expand our cash flow conversion to 50% as we improve our top line growth.

Jonathan M. Collins: Our primary aim is to accelerate our organic growth lifting us from last year's level of essentially flat to mid single digit growth in a few years.

Our second goal is to maintain durable profit margins as we make the investment to achieve the primary goal. We are committed to providing the resources to drive product innovation in all our businesses and are finding operating efficiencies to fund. Some of these but are also willing to modestly lower our profit margins in the near term to benefit the long term health.

Jonathan M. Collins: The enterprise the third objective, we outlined was to significantly improve our free cash flow, which we've done by reaching a $5 billion last year, but we see room to continue to expand our cash flow conversion to 50% as we improve our top line growth and finally, we remain committed to allocate our capital in a disciplined manner, we have them.

Jonathan M. Collins: And finally, we remain committed to allocating our capital in a disciplined manner. We've demonstrated balance in this area by using about three-quarters of last year's available free cash flow to prepaid debt, bringing our net leverage below four terms and also using about a quarter of it to repurchase. We see a clear path to bringing leverage below three terms in the next few years while maintaining a similar. I'd like to use this opportunity to thank my more than 12,000 teammates here at Clarivate for your tireless work to get us to this point and your commitment to executing our plan to help us achieve these objectives. I want to thank all of you for listening in this morning. I'm now going to turn the call back over to Lydia to take your questions. And, as a reminder, please limit yourself to one question and then return to the queue for any others. Lydia, please go ahead.

Jonathan M. Collins: Construction balance in this area by using about three quarter of last year is available free cash flow to prepay debt, bringing our net leverage below four times and also used about a quarter of it to repurchase stock, we see a clear path to bringing leverage below three turns in the next few years, maintaining a similar balance.

Jonathan M. Collins: I would like to use this opportunity to thank my more than 12000 teammates here at <unk> for your tireless work to get us to this point and your commitment to executing our plan to help us achieve these objectives I want to thank all of you for listening in this morning, I will now going to turn the call back over to Lydia to take your questions and as a reminder, please limit yourself to one.

Lydia: <unk> and then return to the queue for any additional.

Lydia: Lydia Please go ahead.

Operator: Thank you. Please press star followed by the number one if you'd like to ask a question and ensure your device is unmuted locally when it's your turn. Our first question today comes from Owen Lau of Oppenheimer. Your line is open, please go ahead. Morning, and thank you for taking my question. So both Jonathan, you talk about some of the investments for future growth in 2025. Could you please add more color on the kind of like which, what kind of product you expect to invest in, when do we expect to launch this new product, and the return on these investments? Thanks a lot. We'll do this. I'll go ahead and go first.

Lydia: Thank you. Please press star followed by the number one if you'd like to ask a question and ensure your devices on needed likely when it's your attentiveness.

Lydia: Our first question today comes from <unk> Lau of Oppenheimer. Your line is open. Please go ahead.

Lydia: Good morning, and thank you for taking my question. So both Jonathan can you talk about some of the investments for future growth in 2025, and 2026 could you. Please add more color on kind of like what kind of product do you expect to invest into when do you expect to launch this new product and to return.

Speaker Change: These investments thanks a lot.

Speaker Change: We'll do this is John I think Youre, all going to go first and I'll, maybe I'll walk around just through each of the segments to give a complete picture. So as I mentioned my remarks, Owen and AMG. That's a segment. We made the earliest innovation investments around web of science and Thats, where we see the initial.

Jonathan Gear: And maybe I'll walk you through just each of the segments to give a complete picture. So, as I mentioned in my remarks, Owen, in A&G, that's the segment where we made the earliest innovation investments around the Web of Science, and that's where we've seen the initial returns from that. As we discussed in Q1 of last year, we saw the uptake of RenewalRace, and that really was on the back of a complete refresh of that platform. Now, that was the beginning of that journey.

Speaker Change: Returns from that as we discussed in Q1 of last year, we saw the uptake of renewal rates and that really was on the back of a complete refresh of that platform now that was the beginning of that journey. We continued to invest in web of science, primarily by by creating additional analytic tools to drive value and an increase in the workflow of our research.

Jonathan Gear: We continue to invest in Web of Science primarily by creating additional analytic tools to drive value and increase the workflow of our researchers there. That will drive usage, allow us to capture price, and allow us to price differentially. We're also seeking ways to expand our pricing model to move into different segments of the market that we typically haven't been able to address with our existing pricing model. All that is to say, within A&G, I think the path is the most advanced of the three segments in terms of the innovation and the results we're seeing from that. In IT, the biggest area of focus is around our patent, intelligence, and search analytics platforms, and that is the group that includes Derwent, ethnography, INCOPAT, and related services around patent search. This is an area, Owen, I think, as you know, that we've been underperforming in the past.

Speaker Change: Is there that will drive usage allows us to capture price and now it's a price differentially. We're also seeking ways to expand our pricing model to move into different segments of the market that we typically haven't been able to address with our existing pricing model. All of that is to say with an <unk> because the path is the most.

Speaker Change: Most advanced of the three segments in terms of the innovation and the results we're seeing from that and IP is the biggest area of focus is around our patent intelligence with search analytics platforms and that is the group that includes Darwin and nagra fee anchor pad and related services around.

Speaker Change: Patent search this is an area I think as you know we've been underperforming that pass.

Jonathan Gear: The team has done a phenomenal job of getting close to the customers, having customer user groups drive this innovation, and we expect to launch the first two of a series of additional new modules in this area in the first half of this year. We expect that to launch, and then, as you know, given our revenue model, these would be subscription products. We launched it then, with sales happening more in the second half of the year. The revenue will appear more next year, but we feel very good about the path there. Then, in life science and healthcare, I would call out two areas.

Speaker Change: <unk>.

Speaker Change: The team has done a phenomenal job of getting close to the customers having customer user groups drive this innovation and we expect to launch the first to have a series of additional new modules in this area in the first half of this year. So expect that to launch and then as you know that given our revenue model. This would be subscription products. If we launched.

Speaker Change: Advanced sales happening more in second half of the year.

Speaker Change: The revenue will appear more next year.

Speaker Change: We feel very good about the path there than in life Science and health care as I've called out two areas. One is the variable data and will this platform and this is the area, which as you know we pivoted substantially middle of last year will be pulled back on the previous strategy of selling our data to two competitors as I've shared at <unk>.

Jonathan Gear: One is the real-world data analytics platform, and this is the area which, as you know, we pivoted substantially in the middle of last year, where we pulled back on the previous strategy of selling our data to competitors. We have shared ad nauseum in the past about this flawed strategy, and we continue to accelerate that as a channel. At the same time, with Henry's arrival and his industry experience, we've really refocused the investments in that product to create pharma-ready data, which we have largely achieved at this point, so that's largely done. Then we're going to be rolling out some therapeutic areas in the first half of this year, so that's one big area. We also have other areas around R&D, which is kind of the second element or the second portion of our life science and healthcare offerings, and there we've had incredible content but very, very dated platforms, and we've been investing in and refreshing those platforms and adding more analytics to really unlock the value of our underlying data. So all of those are, again, the web of science, I would say, we kind of launched the first phase of it, and we continue to improve on it.

Speaker Change: <unk> in the past is a flawed strategy and we continue to accelerate that as a as a channel and at the same time with Henry's arrival in his industry experience, we've really refocused the investments on that product to create pharma and ready data, which we have largely achieved to this point so thats largely done.

Speaker Change: And then we're going to be rolling out some therapeutic areas in the first half of this year. So that's one big area and then we also the other areas around R&D, which is kind of a second element toward the second portion of our life science and healthcare offerings and they are we've had incredible content, but very very data platforms and we've been investing in refresh.

Speaker Change: <unk> those platforms and adding more analytics to really unlock the value of our underlying data. So all of those are again web of science I would say as we kind of launched the first phase of it and we continue to improve against that that will be ongoing improvement. The other two areas in both IP and life science and healthcare expects a major.

Jonathan Gear: That will be an ongoing improvement. The other two areas in both IP and life science and healthcare expect some major product launches this year. Thank you. Our next question comes from Manav Patnaik of Bucks. You're lying there, Dave.

Speaker Change: Launches this year. Thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from Manav Patnaik.

Manav Shiv Patnaik: Please your line is open.

Jonathan M. Collins: Good morning, gentlemen. My question is, you know, the pruning of the portfolio that you talked about. Can you just help us size how much of the portfolio is up for pruning? And also, you know, just what is the board's aversion to doing something bigger? You know, it sounds like you have three disconnected segments; life science is the smallest and the most volatile.

Manav Shiv Patnaik: Hey, good morning, gentlemen.

Manav Shiv Patnaik: My question is the pruning of the portfolio that you talked about can you just help us size how much of the portfolio is up for pruning and also just what is the board's aversion to doing something bigger it sounds like you have key disconnecting.

Manav Shiv Patnaik: Disconnected segments life Sciences, the smallest and most volatile so why not do something bigger.

Jonathan M. Collins: So why not do something bigger? Yeah, thanks for the question, Manav. This is Jonathan Collins.

Manav Shiv Patnaik: Yes. Thanks for the question Manav. This is Jonathan Collins I'll touch on.

Jonathan M. Collins: I'll touch on the portfolio pruning and let Jonathan take the second part. So, the small business that we are exiting in the IP segment that I mentioned in the prepared remarks that we will likely close on in Q1, and then we'll infect Qs 2 through 4, that's about the size that we're looking at. So, the focus here is identifying areas that are growth dilutive and distractive to the teams to help improve the probability of success in execution and product innovation by focusing the team. So, that is about the size.

Jonathan M. Collins: The portfolio pruning and let Jonathan to take the second part so.

Jonathan M. Collins: The small business that we are exiting in the IP segment that I mentioned in the prepared remarks that we will.

Jonathan M. Collins: Likely close on in Q1, and then will it affect Qs two through four that's about the size that we're looking at so the focus here is identifying areas that are growth dilutive and distractive to the teams to help improve the probability of success and execution and product innovation.

Jonathan M. Collins: By focusing the team so that is about the size of it could be slightly larger slightly smaller, but there are opportunities in all three of our segments to winnow down the areas that we are really focusing on and investing in to drive the organic growth acceleration great.

Jonathan M. Collins: It could be slightly larger, slightly smaller, but there are opportunities in all three of our segments to winnow down the areas that we are really focusing on and investing in to drive organic growth. Great, and I'll just, on opposite Jonathan Gear, touch on your second question about kind of a larger move. I mean, certainly, the board and myself are completely aligned that we are here to drive value for shareholders. As I've described in the past with you and others, we certainly see value in these segments being together, and the value has been driven by shared content, shared technologies, in particular around IP and life science and healthcare, some shared customers, and certainly the significance of cost synergies.

Jonathan M. Collins: Great analysis Manav. This is Jonathan gear I'll touch on your second question on a kind of a larger move I mean, certainly the board and myself are completely aligned that we are here to drive value for shareholders. As I've described in the past with you and others. We certainly see value at these segments being together and the value has been driven by by shared content shared <unk>.

Jonathan: <unk> in particular around IP and life science and healthcare some shared customers and certainly on a significant cost synergies we have been able to drive over the last few years as we brought these four large platforms together.

Jonathan M. Collins: We have been able to do so over the last few years as we brought these four large platforms together. That being said, we will always optimize what's in the best situation for our shareholders and for our customers, and to do that right now, where the board has me focused, and what I have the team focused on, is operating and improving every single segment as we've described. Thank you. Next question, please. Please stand by, as I think we're experiencing technical difficulties. Our next question comes from Heather Roboski of Bank of America. Hi, this is Heather Belsky.

Speaker Change: That being said, we will always to optimize what's in the best best.

Speaker Change: That situation for our shareholders and for our customers and.

Speaker Change: To do that right now with the Board has me focus on what I had the team focuses on operating and improving every single segment as we've described thank you.

Speaker Change: Okay.

Okay.

Speaker Change: Next question please.

Okay.

Speaker Change: William.

Speaker Change: Please standby work.

Speaker Change: Some technical difficulty.

William: Thank you.

William: Our next question comes from Heather Rubarski of Bank of America.

Heather Rubarski: Hi, <unk>. Thanks for taking my question I was hoping you could talk a little bit more about the increase in capex spend and the investments that youre doing and just help us understand how much of it is is Jan AI initiatives, how much of it is other investments in the business.

Jonathan M. Collins: Thanks for taking my question. I was hoping you could talk a little bit more about the increase in CapEx spend and the investment spend you're doing and just help us understand how much of it is Gen AI initiatives, how much of it is other investments in the business, and how, you know, you talked about investing to drive growth, just how we should think about, you know, spending, you know, over the next few years and how you're thinking about, you know, if there' Yeah, thank you for the question, Heather.

Heather Rubarski: And how you talked about investing to drive growth.

Heather Rubarski: How we should think about spend.

Heather Rubarski: Over that.

Heather Rubarski: Next few years, and how youre thinking about it.

Heather Rubarski: If there are incremental opportunities to invest just balancing that with the margin growth and cash flow growth.

Speaker Change: Yes. Thank you for the question Heather So with respect to our Capex increase most of that is adding development capacity, which we capitalize it at a relatively high rate when we're enhancing and improving products. So maybe I'll just touch on a couple of the areas.

Jonathan M. Collins: So with respect to our CapEx increase, most of that is adding development capacity, which we utilize at a relatively high rate when we're enhancing and improving products. So maybe I'll just touch on a couple of the areas that Jonathan mentioned a bit ago in the A&G segment. We continue to ramp up the investment in the web of science to stay ahead of adding features to the platform and ingesting new mediums of content to make it a great experience. And there certainly is an AI overlay there.

Speaker Change: Is that Jonathan mentioned, a bit ago, and the AMG segment, we continue to ramp up the investment in the web of science to stay ahead of.

Speaker Change: Adding features to the platform and ingesting new mediums of content to make it a great experience and there certainly is an AI overlay there all of our businesses are starting to move towards a conversational discovery, which is an example of embedding AI and the products and it certainly comes with <unk>.

Jonathan M. Collins: All of our businesses are starting to move towards conversational discovery, which is an example of embedding AI in products. And it certainly comes with a development effort in all those areas. Web of Science is certainly doing that as well.

Speaker Change: Effort and all of those areas, where the science certainly doing that as well as we move into life Sciences. It's a combination of development capacity and some content or data for the real world data offering as Jonathan highlighted we've spent a lot of effort in the past couple of quarters building out pharma grade data and the tech.

Jonathan M. Collins: As we move into life sciences, it's a combination of development capacity and some content or data for the real world data offering. As Jonathan highlighted, we spent a lot of effort in the past couple of quarters building out pharma grade data and the technology investment there. And then the next step for us is to start to build these therapy area platforms or offerings that will take meaningful development efforts. So that's really how we spend our resources within the life sciences segment.

Speaker Change: <unk> investment there and then the next step for US is start to build these therapy area platforms are offerings that will take meaningful development efforts. So that's really how we're spending within our life Sciences segment, and then on the IP side.

Jonathan M. Collins: And then on the IP side, the four new platforms or modules that will be put on top of the Derwent data set for search, for watch, for strategy, and for R&D. Those applications have pretty meaningful technological developments that will happen over the course of this year and into next year. Just in terms of the time horizon, we indicated last year and the cash flow guidance that we highlighted today, getting to that greater than or about 50% conversion in a couple of years does contemplate CapEx being at a reasonably steady dollar level over the next few years. However, as revenue grows, that margin on CapEx should drop a bit. But we do expect that we'll need to continue to make that investment over time. Thanks for the question. Our next question comes from Tony Kaplan of Morgan Stanley. Your line is open. Hey, good morning. This is Greg Parrish. I'm for Tony.

Speaker Change: For new platforms or modules that will be put on top of the <unk> data set for our search for watch for strategy and for R&D those applications have pretty meaningful technology developments that will happen over the course of this year.

Speaker Change: And into next year, just in terms of the time horizon, we indicated last year and the cash flow guidance that we highlighted today getting to that greater than they are at about 50% conversion in a couple of years does contemplate capex being at a reasonably steady dollar level over the next few years as <unk>.

Speaker Change: Revenue grows that margin on Capex should drop a bit but we do expect that we will need to continue to make that investment over the next few years. Thanks for the question.

Speaker Change: Next question. Please next question comes from Toni Kaplan of Morgan Stanley. Your line is open.

Toni Kaplan: Hey, Good morning. This is Greg bearish on for Tony Thanks for taking my question.

Jonathan M. Collins: Thanks for taking our, I just wanted to dig into the change since investor day in March. I mean, what really drove the difference in the turnaround trajectory that you were targeting? You're ramping up investment here, so is more investment required than you thought back then? Or is it really just macro, or is the end market more of a challenge maybe than you thought? If you can kind of help, I would appreciate it.

Greg: I just wanted to dig into the change in <unk>.

Greg: Yesterday March or what really drove the difference in the turnaround trajectory that you were targeting.

Greg: Youre ramping up investment here, so as more investment required than you thought back then are they really just macro or is the end market more challenge maybe than you thought and if you can kind of help bridge the gap there.

Jonathan Gear: Sure, Greg. And the way I think about it, and I encourage you to think about it, is really two different things. First, macros certainly impacted us far more than we were anticipating in 2023, primarily in IP, and we talked about that in our Q2 call. Also, in life science and healthcare, with commercial markets there, those are the most impacted. And to a lesser degree with some on the margin within A&G with some discretionary transactional items. But primarily, again, in life science and healthcare and intellectual property.

Speaker Change: Sure, Greg and the way I'd think about it and then encourage you to think about is really two different things versus macro certainly impacted us far more than we were anticipating in 2023, primarily and in IP and we talked about that in our in our Q2 call also in life science and healthcare with commercial markets. There those are the most.

Speaker Change: Impacted and to a lesser degree with some on the margin within AMG with some discretionary transactional items, but primarily again in life science and healthcare and IP. So macro is part of it. So it ended up impacting kind of our starting point. If you will on the three year plan and the other element of it really really was around.

Jonathan Gear: So macro was part of it, so it ended up impacting kind of our starting point, if you will, on the three-year plan. And the other element of it really was around, as we brought in more and more industry expertise back into the business, as we reestablished some of the teams that we'd had before, we began to slightly modify and change some of our go-to-market product strategies, particularly around life science and healthcare. And with Henry coming on board in the middle of last year, spending time with him again, we really made a decision to change our life science and healthcare RWD platform strategy. It was absolutely the right thing to do, and it makes me even more confident in the future.

Speaker Change: As we brought in more brought back in more industry expertise back into the business as we reestablish some of the teams that we'd had before we began to slightly modify and change some of our go to market product strategies, particularly around life science, and healthcare and with Henry coming onboard middle of last year spending time with him again.

Speaker Change: Really made a decision to change our life science and healthcare Orange RWD platform strategy, absolutely the right thing to do and as it makes me even more confident of the future, but that did pull us back a year in terms of the timing around that around that platform. So those are really the two kind of key areas I would call out. Thank you.

Jonathan Gear: But that did pull us back a year in terms of the timing around that platform. So those were really the two key areas I would call out. Thank you. Great, thank you.

Speaker Change: Great. Thank you next question please.

Jonathan Gear: Next question, please. The next question is from George Tong of Goldman Sachs; please go ahead. Hi, thanks. Good morning.

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

George Tong: Alright, Thanks, good morning, it looks like in your guide you're expecting.

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

George Tong: Or any growth this year in subscription and reoccurring its really the transactional piece.

George Tong: That's going to be the offset so can you talk a little bit more about how much of the transactional revenue headwinds are cyclical versus structural and steps that you're taking internally to drive improved performance here.

Jonathan M. Collins: Yeah, just to reiterate what this year's guidance range contemplates in terms of organic growth. So we do believe that the subscription business will be relatively consistent with last year. We grew about two and a half percent last year. I think we'll be in that two to three percent range.

Speaker Change: Sure George Yeah, just to reiterate what this year's guidance range contemplates on organic growth. So we do believe that the subscription business will be relatively consistent with last year. We grew about two 5% last year I think we'll be in that 2% to 3% range as Jonathan highlighted those investments that.

Jonathan M. Collins: As Jonathan highlighted, those investments that we are making this year in life sciences and in patent intelligence within IP should start to improve usage in the second half of this year and help to lift subscription growth next year. And we should continue to see some traction in A&G as the Web of Science product continues to improve. Most of the impact on recurring, which we think will grow modestly this year, is going to come from a modest improvement in the second half of the year on volumes within that market. We'll have tough comps early in the year, which is why I indicated growth would be lower, particularly in Q1. But to your point on transactional, we continue to expect and be conservative around commercialization budgets in 2024. We do think there is some opportunity in the second half for things to improve modestly, but we've been pretty conservative on the rate of improvement in that market. On the IP side, from a transactional search and watch perspective, we've been relatively consistent there, although it's been lower than in the past couple of years.

We are making this year in life Sciences and in patent intelligence within IP should start to improve usage in the second half of this year and helped to lift subscription growth next year and we should continue to see some traction in AMG as the web of science product continues to improve.

Speaker Change: Most of the impact in our reoccurring, which we think will grow modestly. This year is going to come from a modest improvement in the second half of the year on volumes within that market will have tough comps early in the year, which is why I indicated growth will be lower particularly in Q1, but to your point on transaction.

Speaker Change: <unk>.

Speaker Change: We continue to expect and our conservative around commercialization budgets in 2024, we do think there is some opportunity in the second half for things to improve modestly, but we've been pretty conservative on the rate of improvement in that market on the IP side from a transactional.

Speaker Change: Search and watch we've been relatively consistent there it's been lower than in the past couple of years.

Jonathan M. Collins: And then on the A&G side, which is the only place that we were a bit softer in the fourth quarter, we've been a bit conservative about the expectation there. So that's what's leading to the anticipation that transactions will be down a couple of percent. In terms of what we are doing about it and the things that we can control, the primary area to focus on is within life sciences.

Speaker Change: And then on the A&D side, which is the only place that we were a bit softer in the fourth quarter.

Speaker Change: Been a bit conservative about the expectation there so thats whats leading to the anticipation that transaction will be down a couple of percent in terms of what we are doing about it and the things that we can control. The primary area to focus on is within life Sciences. So the investment that we're making in these therapy area.

Jonathan M. Collins: So the investment that we are making in these therapy area focused offerings for our real world evidence and pharma grade data will lead to opportunities to sell this in a subscription model. So that's a place where the headwinds we've seen in transactional revenue over the last couple of years, we expect to see come back to us in the form of subscription growth. So that's a little bit more color on how we're seeing 2024's growth expectations. Next question, please. The next question comes from Seth Weber of Wells Fargo. Go ahead. Hey guys, good morning. I was wondering if you could just touch on the pricing environment, where it sits today, and kind of what you're contemplating for pricing as you ramp into 2026. How much better do you think it is, or how much of a bigger... DeGioia, If you could just sort of talk through where pricing is today and how you see that trending over the next couple years. Sure, Seth.

Speaker Change: Focused offerings for our real world evidence and the pharma grade data will lead to opportunities to sell this in a subscription model. So that's a place where the headwinds we've seen in transactions over the last couple of years, we expect to see come back to us in the form of subscription growth. So that's a little bit more color on how we're seeing 2000.

Speaker Change: <unk> 24 is growth expectations by order type.

Speaker Change: Next question please.

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

Speaker Change: Yes.

Seth Weber: Hey, guys good morning.

Seth Weber: I was wondering if you could just touch on the pricing environment, where it sits today and kind of what youre contemplating for.

Seth Weber: For pricing as you ramp into 2026.

Seth Weber: How much better do you think or how much of a bigger.

Seth Weber: Contributor or do you think pricing will be as you get further down the road with more products.

Seth Weber: Better.

Seth Weber: More cross selling things like that if you could just sort of talk through where pricing is today and how you see that trending over the next couple of years. Thank you.

Jonathan Gear: Yeah, I'm going to go ahead and comment on that and see if JC has any additions. I mean, in general, pricing has been a net contributor for us across all three product lines with our subscription products. Now, certainly, if you unpack that and look at specific products where we have innovated in the past, where we are creating new updates to the products, that's where we're able to capture more price. In areas where we've done less so, and I will call out Durban, for example, we are not able to capture price.

Speaker Change: Sure Seth, yes, im not going to comment on that and see if jcs any additions I mean in general pricing has been a net contributor for us across all three product lines with our subscription products now certainly if you unpack that and look on specific products, where we have innovated in the past, where we are creating new.

Speaker Change: Updates to the products that we were able to capture more price in areas, where we have done less so what I would call out Durbin for example, not able to capture price. There's a direct correlation between our ability to innovate drive innovation to impact customer workflows, and our ability to capture price when I look forward to the plan. This year, we have been fairly.

Jonathan Gear: There's a direct correlation between our ability to innovate, drive that innovation to impact customer workflows, and our ability to capture price. When I look forward to the plan this year, we've been fairly modest in terms of assuming any improvement in price capture for our plans for 2024. That being said, we are amping up our rate of innovation. Henry Levy has announced that every product is going to have an update this year in terms of its portfolio. And that will be able to capture price. But I think we're going to have to wait and see in terms of when we actually see that coming through. JC, anything you want to add to that?

Speaker Change: Modest in terms of assuming any improvement on price capture for our plans for 2020 for.

Speaker Change: That being said, we are amping up our rate of innovation Henri Levy has announced that he is going to be every product is going to have an update this year in terms of its portfolio and that will be able to capture price, but I think we're going to take a wait and see in terms of when we actually see that coming through Jason anything you want to add to that yes, I think the indication we would expect 2000.

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

Jason: 24 to be pretty consistent as Jonathan highlighted in 2025 and 2026 as we launch these new offerings. We certainly think that this will be an area that will help contribute towards the growth acceleration as we move up a bit in those key product areas that we haven't been able to price meaningfully in the last few years.

Speaker Change: Thanks for the question Seth Thanks, Ed.

Speaker Change: Next question please.

Jonathan Gear: Next question, please. The next question comes from Ashish Sadabra of RBC Capital Markets. Please go ahead.

Speaker Change: The next question comes from Ashish <unk>.

ashish: RBC capital markets. Please go ahead.

Jonathan M. Collins: Thanks for taking my question. Maybe just following up on an earlier question around the revenue growth trajectory in 2024, the visibility historically has been pretty low. So I was just wondering what gives the confidence in that a back half acceleration in second half 24 and, in order, what could drive upside or downside risk there?

ashish: Hi, Thanks for taking my question.

ashish: Just following up on the earlier question around the revenue growth trajectory in 2024.

The visibility historically has been pretty low. So I was just wondering what gives the confidence in that back half acceleration in second half 'twenty four and.

Speaker Change: Like what could drive upside or downside there is it mostly macro or are there certain client wins, which are ramping up to that can provide further confidence on that good luck improvement. Thanks.

Jonathan M. Collins: Is it mostly macro, or are there certain client wins that are ramping up that can provide further confidence in that growth? Hey, thanks for the question, Ashish. This is Jonathan.

Speaker Change: Hey, Thanks for the question Ashish This is Jonathan on the expectations and the cadence for this year, it's mostly driven by the comps from the prior year. So we have not built in to your point because of visibility challenges. The last couple of years a meaningful improvement.

Jonathan M. Collins: On the expectations and the gains for this year, they're mostly driven by the comps from the prior year. So we have not built in, to your point, because of visibility challenges in the last couple of years, a meaningful improvement in the markets in the second half of the year. But you'll recall, for example, in our patent renewal business, we started to see a softening in the second quarter, late in the second quarter. So we have tougher comps in the first part of the year. That's also true with the trademark business within intellectual property.

Jonathan: In the markets in the second half of the year, but Youll recall for example in our patent renewal business, we started to see the softening in the second quarter late in the second quarter. So we have tougher comps in the first part of the year. That's also true with the trademark business within IP. So that's the reason we expect that.

Jonathan M. Collins: So that's the reason we expect growth to be slightly negative in the first quarter. We'll return to growth in the second quarter and have better growth in the second half of the year. It has less to do with the run rate improving and more to do with comps.

Jonathan: Growth will be slightly negative in the first quarter will return to growth in the second quarter and have better growth in the second half of the year has less to do with the run rate improving and more about the comps and we would expect that the transactional business to decline by a couple of percent as I indicated. So we think we've been a bit more can.

Jonathan M. Collins: And we have expected the transactional business to decline by a couple of percent, as I indicated. So we think we've been a bit more conservative with our outlook on those, which have been a bit more challenging to predict over the last couple of years. Thanks for the question. As a reminder, if you'd like to ask a question or register a follow-up, please press star followed by 1 on your telephone keypad. Our next question comes from Shlomo Rosenbaum of Stiefel. Please go ahead.

Jonathan: <unk> with our outlook on those.

Jonathan: <unk> that have been a bit more challenging to predict over the last couple of years.

Speaker Change: Thanks for the question.

Speaker Change: As a reminder, if you'd like to ask a question or register with follow up. Please question followed by one on your telephone keypad.

Speaker Change: Our next question comes from Shlomo Rosenbaum of Stifel. Please go ahead.

Jonathan Gear: Hi, thank you very much. Some of the players in life sciences, like Acuvia and Viva, are talking about improved optimism amongst the client base, and they're thinking that we should see a second half improvement. Is that square with what you guys are expecting in your numbers? Are you not seeing that? Are you not expecting that?

Shlomo Rosenbaum: Hi, Thank you very much.

Shlomo Rosenbaum: Some of the players.

Shlomo Rosenbaum: Players in the life Sciences, like <unk> and <unk> are talking about improved.

Shlomo Rosenbaum: Optimism amongst the client base and they are thinking that we should see a second half improvement is that square with what you guys are expecting in your numbers or you are not.

Speaker Change: Seeing that or Youre, not expecting that and then just Jonathan I wanted to touch on one thing that at the analyst day. The 2025 target was 6% growth and you're now pointing to 26 at four to six can.

Jonathan Gear: And then just Jonathan, I want to touch on one thing that at analyst day, the 2025 target was 6% growth, and you're now pointing to 26 at 4 to 6. Can you just address that, you know, lowering the growth expectation even in the next year? First of all, this is Jonathan Gear.

Speaker Change: Can you just address is that lowering the growth expectation even into next year.

Jonathan Gear: I'll go ahead and address the first question and let J.C. address the second. So on life sciences, I think what others are seeing; we are seeing renewed optimism within our life science customers. The commercialization budgets appear to be higher, and we're seeing it kind of across the board, both on large pharma, large biotech, and even small biotech.

Speaker Change: Sure Shlomo this is Jonathan ill go and address the first question to have JC address the second so on life Sciences, I think what as others are seeing we are seeing renewed optimism within our within our life science customers the commercialization budgets appear to be higher.

Speaker Change: We're seeing kind of across the board both on on large pharma.

Speaker Change: Large biotech and even small biotech so there is renewed optimism coming back into it.

Jonathan Gear: So there is renewed optimism coming back into it. That being said, we're going to want to wait and see in terms of how quickly that converts into really increased demand for our products and services and consulting. So while we are seeing that certainly in the macro environment, we've been cautious about putting that optimism into our guidance for the second half. J.C., do you want to address Shlomo's other question? Yes, and that conservatism around the macro, Shlomo is the other factor that's really driving the change in the last year of the guide we gave. So to your point, we had previously indicated in the 5.5% to 6.5% range, or 6% at the midpoint. We're now in the 4% to 6% range, so we'd have to get to the higher end of that to touch the prior midpoint.

JC: That being said, we're going to want to wait and see in terms of how quickly that converts into really increased demand for our products and services and consulting. So we while we are seeing that certainly in the macro environment, we've been cautious about putting that optimism into our guidance and second half JC.

JC: Yes, some of the other question, yes, and that conservativism around the macro Shlomo is the other factor that's really driving the change in the last year of the guide we gave so to your point, we had previously indicated in the five 5% to six 5% range of six at the midpoint. We're now in the 4% to six range. So we'd have to get to the higher end of that to touch the <unk>.

JC: Fire midpoint that is primarily due to our conservatism around the rate of improvement in the end markets what could cause us to be to the higher end is.

Jonathan Gear: That is primarily due to our conservatism around the rate of improvement in the end markets. What could cause us to be on the higher end is faster acceleration, for example, in the commercialization market that Jonathan just highlighted; a better outlook on the patent renewal front would be another example. So that is the primary difference in the change between the two.

JC: Faster acceleration for example in the commercialization market that Jonathan just highlight a better outlook on the patents renewal front would be. Another example, so that is the primary difference in the change between the two.

Jonathan M. Collins: Hi. Thank you. Next question, please. The next question comes from Andrew Nicholas of William Blair. Please go ahead, your line is open.

JC: Outlooks.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Next question please.

Speaker Change: Next question comes from Andrew Nicholas of William Blair. Please go ahead. Your line is open.

Jonathan M. Collins: Thanks, and good morning. Jonathan Collins, I think you mentioned it's the largest transactional quarter. I think that's mostly backfile sales within Web of Science, but just if you could confirm that's where the weakness was, and then just any color on the drivers of that. Is that also budget-related, typical pressures, or is there a timing issue, and you'd expect some of that to come.

Andrew Owen Nicholas: Thanks, and good morning.

Andrew Owen Nicholas: Ted.

Andrew Owen Nicholas: Small question on AMG.

Andrew Owen Nicholas: Jonathan Count I think you mentioned.

Andrew Owen Nicholas: Thanks, a largest transactional quarter I think thats, mostly backfile sales within web of science, but just if you could confirm that is where the weakness was and then just any color on the drivers of that is that also budget related cyclical pressures or is there is it just a timing issue.

Andrew Owen Nicholas: And you would expect some of that to come back next year. Thank you.

Jonathan M. Collins: Yeah, thank you for the question, Andrew. So as a reminder, we have multiple types of transactional sales within the A&G segment. You touched on one of them where we're selling the back file of Web of Science, which makes the analytics of the platform much more valuable to the users. Other examples are digital collections, historical collections that we've digitized and preserved, and also our books business. So it's a combination of those.

Speaker Change: Yes. Thank you for the question Andrew So as a reminder, we have multiple types of transactional sales within the AMG segment, you touched on one of them, where we're selling the backfile of web of science, which makes the analytics of the platform much more valuable to the users. Other examples of our digital collections historical collections.

Speaker Change: And then we've digitized and preserved.

And also our books business. So it's a combination of those Q4, usually is the largest quarter for us what we saw a bit later in the quarter as our customers in that space pausing a bit what we heard from them is that they want to wait and see on some other spending factors most of our customer base is in.

Jonathan M. Collins: Q4 usually is the largest quarter for us, but what we saw a bit later in the quarter was our customers in that space pausing a bit. What we heard from them is that they want to wait and see on some other spending factors. Most of our customer base is in North America within that part of the business, and their budget years run similar to the school year.

Speaker Change: North America within that part of the business and their budget years run.

Jonathan M. Collins: So their budget year will end in the second quarter, and we'll see how that plays out in the coming quarters. But that's most of the feedback that we heard from them. Thank you. Thank you. Thank you, Andrew. Great. Thank you, Andrew. I think that was our last question. Just as I wrap up, I just want to thank everyone for joining our call today and listening to our remarks, and engaging with us. As we look forward to next year, again, as we said in the call, 2023 was a foundational year for us as we made the changes that we needed to make to really propel Clarivate. And I look forward to sharing with you over the coming quarters the results of the investments we're making in innovation as we drive this company to grow. Thank you very much, everyone. This concludes today's call. Thank you for joining. You may now disconnect your line.

Speaker Change: Similar to the school year. So their budget here will end in the second quarter. So we'll see how that plays out in the coming quarters, but that's most of the feedback that we heard from that market and those were the sales that were affected.

Speaker Change: Andrew.

Andrew Owen Nicholas: Andrew Great taking it I think that was our last question is just on as I wrap us want to thank everyone for joining our call today and listening in with our marks engaging with us.

Andrew: As we look toward next year again, as we said in the call. It 2023 was a foundational year for us as we made the changes that we needed to make to really propel pervade and I look forward to sharing with you over the on suing quarters coming up are the results of the investments, we're making innovation as we drive this company to growth. Thank you very much everyone Goodbye.

Andrew: Yeah.

Speaker Change: This concludes today's call. Thank you for joining.

Speaker Change: Now disconnect your lines.

Speaker Change: Okay.

Speaker Change: Yeah.