Q1 2025 Clarivate PLC Earnings Call

Yeah.

Karen: Thank you for joining. Ladies and gentlemen, my name is Karen. I'll be your conference operator at this time.

Karen: Thank you for joining us ladies and gentlemen, my name is Karen and I'll be your conference operator at this time I'd like to welcome you to the Q1 'twenty 25 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you'd like to ask a question. During this time simply press star.

Karen: I'd like to welcome you to the Clarivate Q1 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Karen: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, follow the number 1 on your telephone key. If you'd like to withdraw your question, press star once again. Thank you.

Karen: Oh, the number one on your telephone keypad.

Karen: If you'd like to withdraw your question push star once again, thank you.

Mark Donohue: I would like to now turn the call over to Mark Donohue, VP, Investor Relations. Thank you, Karen. Good morning, everyone. And thank you for joining us for Clarivate's first quarter 2025 earnings conference call. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Clarivate. Any rebroadcast of this information in whole or in part without prior consent of Clarivate is prohibited.

Speaker Change: I would like to now turn the call over to Mark Donohue VP Investor Relations.

Karen: Okay.

Speaker Change: Thank you Karen and good morning, everyone.

Speaker Change: Thank you for joining US declared its first quarter 2025 earnings conference call. As a reminder, this conference call is being recorded and webcast and is copyrighted property of clarity any rebroadcast of this information in whole or in part without prior written consent of survey is prohibited.

Mark Donohue: Company earnings call presentation is available on the investment relations section of the company's website.

Speaker Change: The earnings call presentation is available on the Investor Relations section of the company's website.

Mark Donohue: During our call, we may make certain forward-looking statements within the meaning of the 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 factors that cause actual results to differ materially from anticipated results of performance can be found in Clarivate's filings with the SEC and on the company's website.

Speaker Change: During our call we may make certain forward looking statements within the meaning of the applicable securities laws such forward looking statements involve known and unknown risks uncertainties and other factors that may cause the actual results performance or the business or developments in clarity industry to differ materially from the anticipated results performance achievements or developments.

Speaker Change: Expressed or implied by such forward looking statements.

Speaker Change: Information about factors that cause actual results to differ materially from anticipated results.

Speaker Change: <unk> filings with the SEC and on the.

Speaker Change: The company's website.

Mark Donohue: Our discussion will include non-GAAP measures or adjusted numbers. Clarivate believes non-GAAP results are useful in order to enhance understanding of wrong-bearing operating performance, but they are supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures. Reconciliations of these measures to GAAP measures are available in our earnings release and supplemental presentation on our website.

Speaker Change: Scott you also have non-GAAP measures or adjusted numbers clarity. These non-GAAP results are useful in order to enhance understanding of our.

Speaker Change: Ron Berry operating performance, but they are a supplement to and should not be considered from or as a substitute for GAAP financial measures. Reconciliations of these measures to GAAP measures are available in our earnings release and supplemental presentation on our website.

Mark Donohue: With me today are Mahdi Shemtab, Chief Executive Officer, and Jonathan Collins, Chief Financial Officer. After our prepared remarks, we'll open up the call to your questions.

Mike: With me today are Mike <unk>, Chief Executive Officer, and Jonathan Collins, Chief Financial Officer.

Speaker Change: After our prepared remarks.

Mike: The call to your questions.

Matti Tov: And with that, it's a pleasure to turn the call over to Matti. So, good morning, everyone, and thank you for joining us. I'd like to thank, I'd like to start by thanking our colleagues around the world. Over the past six months, Clarivate has been undergoing transformation to optimize revenue, improve sales execution, and accelerate innovation. I am proud and impressed by the dedication of our global team members as they rise to the occasion. Since implementing our value creation plan and shifting to more subscription-centric model, we are moving faster to deliver product innovation and sales execution. This is evidenced by our improved Q1 performance.

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

Speaker Change: Yeah.

Mark Donohue: So good morning, everyone and thank you for joining us.

Mark Donohue: I'd like to thank I'd like to start by thanking our colleagues around the world.

Mark Donohue: For the past six months.

Speaker Change: Hello, everybody has been undergoing transformation to optimize revenue improve execution and accelerate innovation.

Speaker Change: I'm proud and impressed by the dedication of our global team members as they rise to the occasion.

Speaker Change: Since implementing our value creation plan and shifting to more substantive subscription centric model, we are moving faster to deliver product innovation and sales execution.

Speaker Change: This is evidenced by our improved Q1 performance.

Matti Tov: Organic ACV grew sequentially from last year fourth quarter driven by an improvement in the subscription book due to higher renewal rate and new business wins. Total organic revenue in the first quarter grew for the first time in more than a year, and recurring organic revenue grew nearly 1%. Renewal rates across our subscription base also improved over the last year first quarter by a percentage point. The mix of recurring revenue to total revenue is now 83%, an improvement of 200 basis points compared to last year first quarter. Adjusted EBITDA margin increased more than a percentage point due to internal cost efficiency.

Speaker Change: Organic ACD grew sequentially from last year's fourth quarter, driven by an improvement in the subscription book due to higher renewal rates and new business wins.

Speaker Change: Total organic revenue is in the first quarter grew for the first time.

Speaker Change: In more than a year and recurring organic revenue grew nearly 1%.

Speaker Change: When your rates across our subscription base also improved over the last year first quarter by a percentage point.

Speaker Change: The mix of recurring revenue to total revenue is now 83%.

Speaker Change: An improvement of 200 basis points compared to last year first quarter adjusted.

Speaker Change: Adjusted EBITDA margin increased more than a percentage point due to internal cost efficiencies.

Matti Tov: Free cash flow continues to be strong as we generated $110 million. We performed well in the first quarter and we are reaffirming our full year.

Speaker Change: Free cash flow continues to be strong as we generated $110 million.

Speaker Change: We performed well in the first quarter and we are re affirming our full year.

Matti Tov: 2025 Outlook. Today, I'd like to highlight three takeaways from the quarter. One, our offering continues to be mission critical for our customers around the world and an integrated part of research needs and workflow for users. Two, our solutions are competitive advantage and are translating into new logo wins and expansion within our existing customer base. Three, our value creation plan is on track, despite the volatile macro environment, as we continue to effectively execute our long-term strategy. On this, on the call today, today I will expand on each of these takeaways and Jonathan will take, will then cover the financial results in more detail.

Speaker Change: 2025 outlook.

Speaker Change: Today I'd like to highlight three takeaways from the quarter one hour offering continued to be mission critical for our customers around the world and an integrated part of research needs and workflow for users.

Speaker Change: Two our solutions, our competitive advantage and are translating into new logo wins and expansion within our existing customer base.

Speaker Change: Three our value creation plan is on track despite the volatile macro environment as we continued to effectively execute our long term strategy.

Speaker Change: On this on the call today today I will expand on each of these takeaways and Jonathan will take will then cover the financial results in more detail.

Speaker Change: Okay.

Matti Tov: Across our segments, we are seeing some favorable trends, including sequential acceleration in ATV growth and improving renewal rates and new AI features utilization in key products. Over 3,000 customers across more than 90 countries are actively using Clarivate's AI-powered research assistant to enhance their research, learning, and library management. In A&G, we are seeing early success in our new wave of science commercial model, which has led to customers extending annual renewals into multi-year deals, totaling over $80 million. Our sales team is also making progress with new wins in developing markets in Asia and Latin America.

Speaker Change: Across our segments, we are seeing some favorable trends, including sequential acceleration in ACB growth.

Speaker Change: The improvement in renewal rates and new AI features utilization in key products.

Speaker Change: Over 3000 customers across more than 90 countries are actively using cloud based AI powered research assistant to enhance our research learning a library management.

Speaker Change: In LNG, we are seeing early success in our new web of science commercial model.

Speaker Change: Which has led to customers extending annual renewals into multi year deals.

Speaker Change: Selling over $80 million.

Speaker Change: Our sales team is also making progress with new wins in developing markets in Asia and Latin America.

Matti Tov: I want to address the recent events involving the U.S. government funding. We mentioned on the February earning calls that these sales represent a small portion of our total revenues. Specifically, less than 3% of our revenue is directly from the U.S. federal government. We also note that some portion of A&G's segment revenue flow indirectly from the U.S. government funding. We have completed a review, we have completed a revenue risk analysis for all U.S. government accounts, as well as indirect risk through universities and state systems that might be impacted by future funding decisions. This includes speaking to our customer advisory groups.

Speaker Change: I want to address the recent events involving the U S government funding.

Speaker Change: We mentioned on the February earning calls the T cells represent a small portion of our total revenues specifically less than 3% of our revenue is directly from the U S Federal government.

Speaker Change: We also note that some portion of AMG segment revenue flow indirectly from the U S government funding.

Speaker Change: We have completed our review we have completed a revenue risk analysis for all U S government accounts as well as indirect risk so with universities and state systems that might be impacted by future funding decision. This includes speaking to our customers advisory.

Speaker Change: Groups.

Matti Tov: Based on this analysis, we believe the current risk is contained within our guidance range. In our IP patent annuity business, we are pleased to see a return to growth. As organic reoccurring revenue grew 5% in the first quarter, primarily due to higher volumes. We are also pleased that the improvement made to Derwent Innovation Platform, including AI-powered search, show early sign of strong user adoption with excellent customer feedback. In the first quarter, the launch of the new search capabilities within Derwent has driven a double-digit increase in search volume for the alpha cohort compared to the same period for the prior year.

Speaker Change: Based on this analysis, we believe the current risk is contained.

Speaker Change: The old guidelines guidance range.

Speaker Change: Okay.

Speaker Change: In our IP in our IP patent annuity business. We are pleased to see a return to growth as organic reoccurring revenue grew 5% in the first five in the first quarter, primarily due to higher volumes. We are also pleased that the improvement made to Derwent innovation.

Speaker Change: Platform, including AI powered third show early signs of strong user adoption with excellent customer feedback.

Speaker Change: In the first quarter.

Speaker Change: The launch of the new sales capabilities within Derwent has driven a double digit increase in search volume for the alpha cohort compared to the same period.

Speaker Change: For the prior year.

Matti Tov: Finally, during the first quarter, the life science and health segment secured a cross-segment multi-million dollar renewal and expansion with a Brazilian academic consortium. This was an exciting win that underscores the opportunities to expand our relationship with customers by collaborating across segments. I'll touch more on this win in a moment. Additionally, subscription renewal rates in life science and health improved to 90 percent in the fourth quarter, an increase of C percentage point over prior year. Next, I'd like to highlight key wins from The quarter across our segments that speaks to our progress, executing our subscription first strategy, strengthening our customer success, and sales execution.

Speaker Change: Finally during the first quarter, the life science and health segments secured across segment multimillion dollar renewal and expansion.

Speaker Change: With the Brazilian academic consortium.

Speaker Change: This was an exciting win that's undisclosed underscores the opportunities to expand our relationship with cost with customer by collaborating across segments and touch more on this win in a moment.

Speaker Change: Additionally, subscription renewal rates in life science and has improved to 90% in the fourth quarter, an increase of three percentage points over prior year.

Speaker Change: Next I'd like to highlight key wins from.

Speaker Change: For the quarter across our segments that speaks to our progress executing our subscription first strategy strengthening our customer success and sales execution.

Matti Tov: First, we signed a new strategic software-as-a-service deal with the British Library. one of the largest, most prestigious libraries in the world, which features more than 170 million printed books, manuscripts, sound recording, maps, and digital archives. We have enjoyed a decades-long partnership with the British Library, and this award reflects our success in building deep relationships and expanding them over time by delivering solutions that libraries achieve their goals. We will be working closely with the British Library to implement Alma and Primo as a next-generation service platform and patron interface. This is effectively an ERP system for the library, which will be used by hundreds of end users on a daily basis, and a search system used by hundreds of thousands of patrons.

Speaker Change: First we signed a new strategic software as a service deal with the British Library.

Speaker Change: One of the largest most prestigious libraries in the world, which features more than 170 million printed books manuscript sounds recording Mips and digital archives.

Speaker Change: We have enjoyed a decade long decade long partnership with the British Library and these awards reflect our success in building deep relationships and expanding them over time by delivering solutions that help lobbies achieves the goals.

Speaker Change: We will be working closely with the British library to remit to implement iron Mountain and Primo as the next generation service platform and popcorn interface. This is effectively an ERP system for the lobby, which will be used by hundreds of end user on a daily basis and a third.

Speaker Change: System used by hundreds of thousands of platforms. The British library will be the 43rd National and state Library in the world to adopt honor our flagship <unk> manage management system.

Matti Tov: The British Library will be the 43rd national and state library in the to adopt Alma, our flagship library management system.

Speaker Change: Okay.

Matti Tov: This quarter, we also secured a significant expansion of long-term customer relationship with CAPES, the Brazilian Foundation for Coordination and Improvement of Higher Education. CAPES serves over 400 higher education research institutions across Brazil. This multi-year agreement is one of the largest subscription contracts we have signed in years. It's evidence that our Subscription First strategy is working. In addition, this contract is cross-segment. This contract is cross-segment evidence of opportunities available to us to cross-sell across the business unit. The consortia has continued to invest in more A&G life science and IT solutions including Cortalis, Derwent, and Journal Citation Reports.

Speaker Change: This quarter, we also secured a significant expansion of a long term customer relationship with cafes, the Brazilian foundation for coordination and improvement, Ohio location.

Speaker Change: Copper has served over 400 higher education research institution across Brazil.

Speaker Change: This multiyear agreement is one of the largest subscription contract. We have signed in years is evidence that our subscription first strategy is key. In addition, this contract is cross segments. This contract is cross segment evidenced of opportunities available to.

Speaker Change: US to cross sell across the business units.

<unk> continued to invest in more LNG life science, and IP solution, including Koteles tailwind and Journal Citation reports.

Matti Tov: Turning to slide 9, the strength of the first quarter is due to continued execution of our value creation plan. As a reminder, our first pillar focuses on business model optimization and increasing the subscription and reoccurring revenue mix. As part of business model optimization, we launched an e-book subscription platform, our new DRG Fusion real-world data subscription offering. While still early, there has been a positive interest in this platform, and we have signed the first handful of contracts for both of these new offerings. And as I mentioned earlier in my remarks, we have started to see an increase in recurring revenue mix, which grew to 83% in the first quarter, compared to 81% last year.

Speaker Change: Turning to slide nine the strength of the first quarter is due to continued execution of our value creation plan. As a reminder, our first pillar focuses on business model optimization increasingly subscription and reoccurring revenue.

Speaker Change: Mix.

Speaker Change: As part of business model optimization, we launched an E book subscription platform, our new DRG fusion real world data subscription offering while it's still early there has been a positive interest in this platform and we have signed signed the first handful of contract for both.

Speaker Change: This new offering.

Speaker Change: And as I mentioned earlier in my remarks, we have started to see an increase in recurring revenue mix, which grew to 83% in the first quarter compared to 81% last year. We expect this mix to continue to improve as we focus on our subscription first model model.

Matti Tov: We expect this mix to continue to improve as we focus on our subscription-first model. Based on customer feedback, we have extended the time frame of the book's transition by six months.

Speaker Change: Based on customer feedback, we have extended the timeframe of the books transition by six months.

Matti Tov: Our second pillar focuses on sales execution. The wins we talked about earlier with the British libraries and Brazil are terrific proof points of the actions to improve our sales and leadership, sales leadership and processes. This action has also led to improvement in our organic ACV and retention rate.

Speaker Change: Our second pillar focused on sales execution the wins, we talked about earlier with the British library in Brazil are terrific proof point of the actions to improve our sales leadership sales leadership and processes.

Speaker Change: This action has also led to improvements in our organic ACB and retention rates.

Speaker Change: Sure.

Matti Tov: The third pillar involves accelerated product innovation. On page 10, you can see we have achieved several recent milestones with more to come in 2025. Over the past six months, We have launched AI-powered features encompassing patent search for Derwent and new subscription-based platform, including ProQuest eBooks, ProQuest Digital Collections, and DRG Fusion. We have a few upcoming product launch milestones in the second quarter with a focus on leveraging AI to deliver enhanced user experiences. This includes the release of e-book central AI-powered research assistant and enhanced AI-powered search functionality in Cortelis. This innovation enhanced our competitive advantage. There is a significant excitement in the industry around the deployment of AI-enabled agents to enhance value for customer.

Speaker Change: The third pillar involves accelerated product innovation on page 10, you can see we have achieved several recent milestone with more to come in 2025.

Speaker Change: Over the past six months.

Speaker Change: We have launched AI powered features in.

Speaker Change: Encompassing patent search for the island and new subscription based platform, including <unk> E books talk with legal digital collections and DRG fusion.

Speaker Change: We have a few upcoming product launch milestones in the second quarter.

Speaker Change: With a focus on leveraging AI to deliver enhanced user experiences. This include the release of E books Central AI powered research assistant and an enhanced AI powered search functionality and Catellus. This innovation enhance our competitive advantage.

Speaker Change: There is a significant excitement in the industry around the deployment of AI enabled agents to enhance value for customer.

Matti Tov: I am pleased to share that in the second half of this year, we will be incorporating agentic AI into solutions across our segments. For example, in Q2, we are introducing AI agents in Web of Science for literature review capabilities, which helps simplify what is often a labor incentive and time-consuming process.

Speaker Change: I am pleased to share that in the second half of this year.

Speaker Change: We'll be incorporating <unk>.

Speaker Change: <unk> AI into solutions across our segments. For example in Q2, we are introducing AI agents in web of science for literature review capabilities, which adds simplify what is open labor incentive and time consuming process.

Matti Tov: Importantly, we are continuing to evaluate strategic alternatives to unlock value. We have engaged with our advisors to analyze options to maximize shareholder value.

Speaker Change: Importantly, we are continuing to evaluate strategic alternatives to unlock value we.

Speaker Change: We are engaged with our advisors to analyze options to maximize shareholder value.

Matti Tov: We will provide updates on this when appropriate.

Speaker Change: We'll provide updates on this when appropriate.

Matti Tov: I'm very pleased with the first quarter result and. the progress we are making in implementing the VCP.

Speaker Change: I am very pleased with our first quarter results and.

Speaker Change: The progress we are making in implementing with ECP.

Matti Tov: I look forward to updating you on future calls.

Speaker Change: Look forward to updating you on future calls.

Jonathan Collins: And with that, I will turn it over to Jonathan. Jonathan, please. Thank you, Matti. Slide 12 is an overview of our first quarter financial results compared with the same period from the prior year. Q1 revenue was $594 million. The first quarter change was largely inorganic as a result of the Scholar One and Valley Pat divestitures, the book's business disposal, and a stronger U.S. dollar as the business returned to growth organically. The first quarter net loss was $104 million. The change compared to the prior year was largely attributed to higher restructuring expense associated with the implementation of the value creation model.

Speaker Change: And with that I will turn it over to Jonathan Johnson. Please.

Jonathan Johnson: Thank you Marty Slide 12 is an overview of our first quarter financial results compared with the same period from the prior year.

Jonathan Johnson: Q1 revenue was $594 million the first quarter change was largely inorganic as a result of the scholar one in valley Pat divestitures, the books business disposal and a stronger U S dollar as the business returned to growth organically.

Jonathan Johnson: The first quarter net loss was $104 million the change compared to the prior year was largely attributed to higher restructuring expense associated with the implementation of the value creation plan adjusted.

Jonathan Collins: Adjusted Diluted EPS, which excludes items like restructuring, was $0.14, flat versus the same period last year. Operating cash flow is $171 million in the quarter. The change compared to last year is almost entirely driven by slightly higher one-time cost associated with the value creation.

Jonathan Johnson: Diluted EPS, which excludes items like restructuring was <unk> 14.

Jonathan Johnson: <unk> flat versus the same period last year.

Jonathan Johnson: Operating cash flow was $171 million in the quarter the change compared to last year is almost entirely driven by slightly higher one time cost associated with the value creation plan.

Jonathan Collins: Please turn with me now to page 13 for a closer look at the drivers of the first quarter top and bottom line changes from the prior year. I'm pleased to share this morning that we accelerated our profit margins by more than a percentage point in the first quarter as the business returned to organic growth, and we managed our cost structure. This was driven by four primary factors. First, while last year, our recurring organic growth was essentially flat, in the first quarter of this year, it accelerated to nearly 1% as our patent renewal business, the primary component of our reoccurring revenue type, returned to healthy volume growth.

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

Jonathan Johnson: I am pleased to share this morning that we accelerated our profit margins by more than a percentage point in the first quarter has the business returned to organic growth and we managed our cost structure. This was driven by four primary factors.

Jonathan Johnson: While last year, our recurring organic growth was essentially flat in the first quarter of this year it accelerated to nearly 1% as our patent renewal business. The primary component of our reoccurring revenue type returned to healthy volume growth.

Jonathan Collins: Careful Operating Expense Management amplified the $2 million of total organic growth, which includes the transactional revenue type, resulting in a $4 million increase in adjusted For more information visit www.fema.gov Second, during the first quarter, we began to experience the inorganic impact of the businesses we are disposing as a part of the value creation. The top-line change of $7 million was almost entirely attributed to the books business as there was a negligible impact in the digital collections and real-world data products. We're actively managing our cost structure, and as a result, the profit impact was insignificant. Third, similar to the fourth quarter of last year, we continue to see the inter-clinic impact of the Scholar One and ValleyPAT development.

Jonathan Johnson: Careful operating expense management amplified the $2 million of total organic growth, which includes the transactional revenue type, resulting in a $4 million increase in adjusted EBITDA.

Jonathan Johnson: Second during the first quarter, we began to experience the inorganic impact of the businesses. We are disposing as a part of the value creation plan the.

Jonathan Johnson: The topline change of $7 million was almost entirely attributed to the books business is there was a negligible impact in the digital collections and real world data product lines, we're actively managing our cost structure and as a result, the profit impact was insignificant.

Jonathan Johnson: Third similar to the fourth quarter of last year, we continued to see the inorganic impact of the scholar one and valley, Pat divestitures and fourth while for most of the first quarter of the US dollar was stronger against the basket of foreign currencies, namely the euro and pound, which caused a foreign exchange translation headwind on the top line late in the quarter the.

Jonathan Collins: And fourth, while for most of the first quarter, the U.S. dollar was stronger against a basket of foreign currencies, namely the euro and pound, which caused the foreign exchange translation headwind on the top line, late in the quarter, the dollar weakened, driving transactional gains, resulting in a slight benefit to the bottom.

Jonathan Johnson: Dollar weakened driving transactional gains, resulting in a slight benefit to the bottom line.

Jonathan Collins: Please turn with me now to page 14 to step through the conversion from adjusted EBITDA to free cash. Free cash flow was $110 million in the first quarter, essentially unchanged compared to the same period last year. We incurred $23 million of one-time costs, which were largely restructuring-related outflows associated with the implementation of the Value Creation Plan, and were slightly higher than the same period last year. Cash interest was $33 million and was slightly lower than Q1 of last year as we recognized the benefit associated with the $200 million of debt we repaid last year. These outflows from Adjusted EBITDA yielded operating cash flow of $171 million in the first quarter and after capital spending of $61 million, which was slightly lower than last year, delivered free cash flow of $110 million at a conversion of 47% on Adjusted EBITDA, which is in line with Q1 of 2024.

Jonathan Johnson: Please turn with me now to page 14 to step through the conversion from adjusted EBITDA to free cash flow.

Jonathan Johnson: Free cash flow was $110 million in the first quarter essentially unchanged compared to the same period last year.

Jonathan Johnson: We incurred $23 million of one time cost, which were largely restructuring related outflows associated with the implementation of the value creation plan and were slightly higher than the same period last year cash interest was $33 million was slightly lower than Q1 of last year as we recognize the benefit associated with the $200 million of debt, we repaid last.

Jonathan Johnson: Year.

Jonathan Johnson: These outflows from adjusted EBITDA yielded operating cash flow of $171 million in the first quarter and after capital spending of $61 million, which was slightly lower than last year delivered free cash flow of $110 million at a conversion of 47% adjusted EBITDA, which is in line with Q1 of 2024.

Jonathan Collins: In the first quarter, we used nearly half of the free cash flow we generated, $50 million, to repurchase another 11.7 million shares of common stock.

Jonathan Johnson: In the first quarter, we used nearly half of the free cash flow, we generated $50 million to repurchase another 11 7 million shares of common stock.

Jonathan Collins: Please turn with me now to page 15 for a reminder of our full year financial outlook for this year, which remains entirely unchanged from our last earnings call in February. This morning, we are reiterating the guidance ranges for all financial measures. Beginning at the top of the page, we expect our annual contract value to accelerate by approximately 60 basis points to one and a half percent at the midpoint of the range as we begin to recognize the benefits of our investments in product innovation. We've made good progress on this in the first quarter, where we delivered half of this acceleration, about 30 bases per minute.

Jonathan Johnson: Please turn with me now to page 15 for a reminder of our full year financial outlook for this year, which remains entirely unchanged from our last earnings call in February.

Jonathan Johnson: This morning, we are reiterating the guidance ranges for all financial metrics.

Jonathan Johnson: Beginning at the top of the page, we expect our annual contract value to accelerate by approximately 60 basis points to one 5% at the midpoint of the range as we begin to recognize the benefits of our investments in product innovation.

Jonathan Johnson: We've made good progress on this in the first quarter, where we deliver half of this acceleration about 30 basis points.

Jonathan Collins: Recurring organic growth will likely remain flat this year at the midpoint of our range. As a reminder, the organic growth improvement associated with the strategic disposals will affect the transactional order type, which is excluded from this. We anticipate revenue will approximate $2.34 billion at the midpoint of the range due to the strategic disposals, the divestitures last year, and a stronger U.S. dollar, which has weakened recently, but given the volatility, we've maintained our outlook, which remains conservative in this respect. As a result of the strategic disposals, we expect our recurring revenue mix will improve by about five percentage points from 80 to 85% this year, which will improve predictability and profit margins going forward.

Jonathan Johnson: Recurring organic growth will likely remain flat this year at the midpoint of our range.

Jonathan Johnson: As a reminder, the organic growth improvement associated with the strategic disposals will affect the transactional order type which is excluded from this metric.

Jonathan Johnson: We anticipate revenue will approximate 234 billion at the midpoint of the range due to the strategic disposals, the divestitures last year and a stronger U S dollar, which has weakened recently, but given the volatility we've maintained our outlook, which remains conservative in this respect.

Jonathan Johnson: As a result of the strategic disposals, we expect our recurring revenue mix will improve by about five percentage points from 80% to 85% this year, which will improve predictability and profit margins going forward move.

Jonathan Collins: Moving down the page, we expect adjusted EBITDA on the range of $940 million to $1 billion and to maintain our profit margin of 41.5% due to aggressive cost action. We anticipate diluted adjusted EPS between $0.60 and $0.70 as the inorganic driven change in adjusted EBITDA, which I'll detail on the next page, will be partially offset by lower interest expense as well as the benefit of a lower share count resulting from last year's and the first quarter's stock repurchase.

Jonathan Johnson: Moving down the page, we expect adjusted EBITDA in the range of $940 million to $1 billion and to maintain our profit margin of 41, 5% due to aggressive cost actions, we anticipate diluted adjusted EPS between <unk> 60 and 70.

Jonathan Johnson: As the inorganic driven change in adjusted EBITDA, which I'll detail on the next page will be partially offset by lower interest expense as well as the benefit of a lower share count, resulting from last year's and the first quarter's stock repurchases and finally at the bottom of the page, we anticipate free cash flow of about $340 million at the midpoint of the range.

Jonathan Collins: And finally, at the bottom of the page, we anticipate free cash flow of about $340 million at the midpoint of the range, as the adjusted EBITDA change will be largely offset by improved conversion from lower interest, working capital, and capital spending.

Jonathan Johnson: As the adjusted EBITDA change will be largely offset by improved conversion from lower interest working capital and capital spending.

Jonathan Collins: Please turn with me now to page 16 for a reminder of the full year top and bottom line changes we are expecting compared to last year. The expected changes in revenue and adjusted EBITDA this year compared to last year are largely driven by three inorganic factors, and we're aggressively managing our cost structure to maintain our profit margin at about 41.5%. First, the strategic disposals are expected to lower revenue this year by approximately $140 million, but we're implementing $100 million of operating cost actions, which yield a profit impact of about $40 million. We expect the remaining $60 million revenue reduction will take place next year, and will have a small impact on profit.

Jonathan Johnson: Please turn with me now to page 16 for a reminder of the full year top and bottom line changes were expecting compared to last year.

Jonathan Johnson: The expected changes in revenue and adjusted EBITDA. This year compared to last year are largely driven by three inorganic factors and we're aggressively managing our cost structure to maintain our profit margin at about 41, 5%.

Jonathan Johnson: First the strategic disposals are expected to lower revenue this year by approximately $140 million, but we're implementing $100 million of operating cost actions, which yield a profit impact of about $40 million. We expect the remaining 60 million revenue reduction will take place next year, and we'll have a small impact on profit or revenue.

Jonathan Collins: Our revenue guidance range is intended to accommodate for the potential variability in the rate of decline of this revenue. Second, the divestitures of both ValleyPAT and ScholarOne last year will lower revenue by $40 million and profit by $20 million. And finally, we conservatively anticipate a $25 million foreign exchange translation headwind on the top line and a headwind of $10 million on the bottom line, given the recent volatility of the U.S. dollar against other foreign currencies. These reductions to adjusted EBITDA will be largely mitigated in free cash flow.

Jonathan Johnson: Guidance ranges intended to accommodate for the potential variability in the rate of decline of this revenue stream second.

Jonathan Johnson: Second the divestitures of both valley, Pat and scholar one last year will lower revenue by $40 million in profit by $20 million and.

Jonathan Johnson: And finally, we conservatively anticipate a $25 million foreign exchange translation headwind on the top line and a headwind of $10 million on the bottom line given the recent volatility of the U S dollar against other foreign currencies. These.

Jonathan Johnson: These reductions to adjusted EBITDA will be largely mitigated and free cash flow. So, let's turn to page 17 to step through the main drivers.

Jonathan Collins: So let's turn to page 17 to step through the main drivers. One time costs are expected to remain flat this year as we invest to achieve the cost efficiencies associated with the. We do expect cash interest to improve by about $20 million compared to last year, caused by the debt we prepaid in the fourth quarter and the outlook for base rates via the forward curve. Cash taxes are expected to remain in line with last year. We anticipate the change in working capital this year will be negligible, which will represent an improvement over last year of about $20 million.

Jonathan Johnson: One time costs are expected to remain flat this year as we invest to achieve the cost efficiencies associated with the VIX.

Jonathan Johnson: We do expect cash interest to improve by about $20 million compared to last year caused by the debt we have prepaid in the fourth quarter and the outlook for base rates via the forward curve.

Jonathan Johnson: Cash taxes are expected to remain in line with last year, we anticipate the change in working capital. This year will be negligible, which will represent an improvement over last year of about $20 million.

Jonathan Collins: And while we remain committed to investing in product innovation, the strategic disposals and cost efficiencies will improve capital spending by about $35 million. The net impact of these changes is free cashflow of $340 million at the midpoint of the range and will result in an improvement in the conversion on adjusted EBITDA of about 1%.

Jonathan Johnson: And while we remain committed to investing in product innovation, the strategic disposals and cost efficiencies will improve capital spending by about $35 million.

Jonathan Johnson: The net impact of these changes is free cash flow of $340 million at the midpoint of the range and will result in an improvement in the conversion on adjusted EBITDA of about 1%.

Jonathan Collins: From a capital allocation perspective, we continue to have the flexibility between share repurchases and de-leverage. In closing, we continue to believe we have a strong foundation to build upon with best-in-class data and workflow assets that we deliver as a trusted provider to a blue-chip customer base, underpinned by robust free cash flow, and powered by a talented team of 12,000 colleagues around the world. As Matti highlighted at the outset of the call, we're off to a solid start in executing against the VCP based on our first quarter results, but we remain cautious against the backdrop of a challenging and volatile macroeconomic environment, which we're monitoring carefully.

Jonathan Johnson: From a capital allocation perspective, we continue to have the flexibility between share repurchases and deleveraging.

Jonathan Johnson: In closing we continue to believe we have a strong foundation to build upon with best in class data and workflow assets that we deliver as a trusted provider to a blue chip customer base underpinned by robust free cash flow and powered by a talented team of 12000 colleagues around the world.

Jonathan Johnson: As Marty highlighted at the outset of the call we're off to a solid start in executing against the BCP based on our first quarter results, but we remain cautious against the backdrop of a challenging and volatile macroeconomic environment, which we're monitoring carefully it's worth noting that the recurring and mission critical nature of our products and services positions us well.

Jonathan Collins: It's worth noting that the recurring and mission-critical nature of our products and services positions us well on a relative basis in periods of uncertainty.

Jonathan Johnson: Well on a relative basis in periods of uncertainty.

Jonathan Collins: I'd like to finish by thanking all of you for listening in this morning.

Speaker Change: I'd like to finish by thanking all of you for listening in this morning, and now going to call. The turn the call back over to Karen to take your questions and as a reminder, please limit yourself to one question and then return to the queue for any additional.

Karen: I'm now going to call turn the call back over to Karen to take your questions. And as a reminder, please limit yourself to one question and then return to the queue for any addition.

Karen: Karen, please go ahead. Thank you. I'd just like to remind everyone to ask a question, press star, then the number one on your telephone keypad. We'll pause just for a moment to compile the Q&A.

Karen: Karen Please go ahead.

Karen: Thank you I'd just like to remind everyone to ask a question Press Star then the number one on your telephone keypad will pause just for a moment to compile the Q&A.

Greg Parish: And your first question comes from the line of Tori Kaplan of Morgan Stanley. Please go ahead. Hey, thanks.

And your first question comes from the line of Torrey Kaplan of Morgan Stanley. Please go ahead.

Greg: Hey, Thanks. This is Greg bearish on for Toni Kaplan.

Greg Parish: This is Greg Parish on for Toni Kaplan. Thanks for taking our question and congrats on a very strong. I'm here to start with maybe double-clicking on ANG. I appreciate the color you gave on the government funding exposure. You said you talked to some customer advisory groups on the indirect impact from funding cuts and some of the pressure there. Can you talk about some of those conversations? Do they expect... to tighten their budget, how cautious are they at the moment, and then you mentioned risk being contained there within the guidance range, but do you expect to see further deceleration in ANG?

Speaker Change: Thanks for taking my question and congrats on a very strong quarter.

Speaker Change: To start with maybe double clicking on AMG.

Speaker Change: The color you gave on the government funding exposure.

Speaker Change: You said you talked to some customer advisory groups on that indirect impact from funding cuts and some of the pressure. There maybe can you talk about some of those conversations do they expect.

Speaker Change: To tighten their budget and how cautious are they at the moment and then you mentioned risk being contained there within the guidance range, but do you expect to see further deceleration in angi. Thanks.

Unknown Executive: Thanks. Great, thank you.

Speaker Change: Maybe I'll start and then I'll ask Jonathan are complete first of all.

Speaker Change: We've always been enjoying a very collaborative discussion and relationship with our customers worldwide.

Speaker Change: We have an advisory group in each and every region, we've been talking to them and talking to them in detail about what they expect and what the market is going through our business in Q1.

Speaker Change: In AMG, we hardly had any impact from the ongoing government.

Speaker Change: Actions, so we feel good about it.

Speaker Change: There is a minimal impact on the business. So far we have also managed to.

Speaker Change: Extend.

Speaker Change: About half of the government contracts.

Speaker Change: We believe that we are monitoring the risk.

Speaker Change: We have been and just to remind myself I've been in in the academic.

Speaker Change: Environment for over 20 years, I've seen ups and downs, we managed to go through those those changes are pretty optimistic about the future of our research and academia, maybe Jonathan I'm going to talk further about the analysis we've done.

Yes, we really looked at this on a few levels as Marty mentioned in covered very specifically the direct contracts, we have with the federal government. We've quantified what we think the potential impact there is with nearly half of the business already renewing so far this year, we looked at on two additional levels. The next level as we looked at <unk>.

Speaker Change: Working with customers impacts they could see based on funding they received from specific federal agencies.

Speaker Change: So we've walked through and identified what we think the potential impacts could be for that and then finally.

Speaker Change: Third layer, we looked at is the overall impact of the.

Speaker Change: The grant funding environment, and how that trickles down to academic research institutions and talking with customers first we've looked at the estimated impact of what that could be and when we aggregate the direct and the indirect on both of those levels as Marty indicated we believe any potential impact is reflected in the guidance.

Speaker Change: Range.

Speaker Change: But we're off to a very good start in A&D very strong renewal rate in the mid ninety's comparable with where we started last year.

Speaker Change: And a good line of sight with the renewals that are starting to renewal notices for the summer have already gone out and we're already working with customers and seeing some of those come back so.

Speaker Change: How we've completed the analysis and our sense of what the impact will be.

Speaker Change: Great. Thank you.

David Page: The next question comes from the line of Ashish Sabadra of RBC Capital Markets. Please go ahead. Hi, good morning.

ashish: The next question comes from the line of Ashish <unk> of RBC capital markets.

Speaker Change: Please go ahead.

Unknown Executive: This is David Page on for taking our questions and congrats on a really nice quarter here. I was wondering if you could comment... If you had any comments there, that would be helpful. Thank you. Thanks for the question. We don't have any specific comments on on that. As Matti indicated in the prepared remarks, we have continued to make progress on evaluating the strategic options, working very closely with our advisors. And once we start to get some clarity or have an update to provide, we'll be we'll be sure to share that. So not a lot additional to provide on that at this point, but appreciate the question.

Speaker Change: Hi, Good morning. This is.

ashish: John.

Speaker Change: Thanks for taking our questions and congrats on a really nice quarter here I was wondering if you could comment on that.

ashish: <unk>.

ashish: <unk> article.

ashish: Some pay interest or VIP segment.

ashish: Have you had any comments there that would be helpful. Thank you.

ashish: Yes. Thanks for the question, we don't have any specific comments on that as Marty indicated in the prepared remarks, we have continued to make progress on evaluating our strategic options working very closely with our advisors and once we start to get some clarity on.

ashish: Have an update to provide it will be we'll be sure to share that so not a lot of additional to provide on that at this point I. Appreciate the question. Thank.

ashish: Thank you.

Karen: Just a reminder to ask a question, please press star followed by the number one on your telephone keypad.

Speaker Change: Just a reminder to ask a question. Please press star followed by the number one on your telephone keypad. The next question comes from Owen Lau of Oppenheimer.

Owen Lau: The next question comes from Owen Lau of Oppenheimer.

ashish: You May ask your question.

ashish: Yes.

Guru: Hi, this is Guru on their own. And thanks a lot for taking our questions. I want to go back to the IP renewal volumes, which were kind of strong this quarter. Can you maybe walk us through the drivers behind you know, the higher than expected renewal volumes? Also, other than just the volumes, are there any other drivers behind the 5.3% increase in the organic reoccurring revenue?

Drew: Hi, This is drew on for one and thanks, a lot for taking our questions.

Drew: I'd go back to the IP renewal volumes, which were kind of strongest quarter can you maybe walk us through the drivers behind the higher than expected renewal volumes and.

Drew: Also other than just the volumes are there any other drivers behind the five 3% increase in the organic recurring revenues. Thanks.

Guru: Yeah, thank you for the question, Guru. So as you indicated, we saw mid-single-digit growth in the reoccurring revenue type. The vast majority of those more than $100 million of revenues in the quarter are associated with patent and trademark renewals. We did see a nice improvement in underlying volume in the quarter that drove most of the improvement. There were a couple of timing items that pushed that up just a little bit, but most of the improvement that we saw during the quarter was related to volumes. We indicated on the last call that based on patent-enforced data and the lag that that takes to get through to renewals, that we're hopeful that we'd start to see some recovery in that market, and we're encouraged by the volume increase that we saw in the first quarter.

Speaker Change: Yes. Thank you for the question Gurus. So as you indicated we saw mid single digit growth in the reoccurring revenue type the vast majority of those more than $100 million of revenues in the quarter are associated with the patent and trademark renewals, we did see a nice improvement in underlying.

Drew: <unk> in.

Speaker Change: In the quarter that drove most of the improvement there.

Speaker Change: There were a couple of timing items that pushed that up just a little bit but most of the improvement that we saw during the quarter was related to volumes. We indicated on the last call that based on patent enforce data and the lag that that takes to get through to renewals.

Speaker Change: But we're hopeful that we'd start to see some recovery in that market and we are we're encouraged by the volume increase that we saw in the first quarter. So primary driver is.

Guru: So primary driver is a reasonable return to healthy growth. It was aided a little bit by some timing items, but positive signs there on the IP renewal business. Thank you.

Speaker Change: Rob reasonable return to healthy growth it was aided a little bit by some timing items, but.

Speaker Change: Positive signs there on the on the IP renewal business.

Speaker Change: Thank you.

Speaker Change: Sure.

Adama: Great, our next question comes from a line of Shlomo Rosenbaum from Strasbourg. You may begin.

Speaker Change: Great. Our next question comes from the line of Shlomo Rosenbaum from Stifel. You may begin.

Unknown Executive: Hi, this is Adama for Shlomo. How much of Clarivate's revenue came from large universities where the U.S. government has frozen or canceled some funding? Yeah, so with respect to the business, obviously, A&G is our largest segment. And the majority of the business that we do in that segment is with higher education or academic institutions. As we touched on earlier, and we've indicated before, it's less than half of our business in the A&G segment that is here in the US, to give some additional dimensioning. And within that, we've already seen a meaningful portion of that renew this year.

Speaker Change: Is that all for sure how much of <unk> revenue came from large universities, where the U S government is frozen or canceled some funding.

Speaker Change: Yes so.

Speaker Change: With respect to the business, obviously <unk> is our largest segment in the majority of the business that we do in that segment is with higher education or Axa academic institutions.

Speaker Change: As we touched on earlier.

Speaker Change: And we've indicated before.

Speaker Change: It's less than half of our business in the AMG segment that is here in the U S to give some additional dimension ing and within that we've already seen a meaningful portion of that renew this year. So that risk analysis that Marty referenced in his prepared remarks, and we just gave some additional color on focus is on the balance of what we have.

Unknown Executive: So that risk analysis that Matti referenced in his prepared remarks, and we just gave some additional color on focuses on the balance of what we expect to see in to come in through this year. And we went through that process with customers. And that's what's giving us the confidence that any potential impact that we'll see in the balance of the year will be contained within the within the guidance range. Thank you for the question.

Speaker Change: To see and to come in through this year.

Speaker Change: And we went through that process with customers and that's what's giving us the confidence that any potential impact that we'll see in the balance of the year will be contained within the within the guidance range.

Speaker Change: Thank you for your question.

George Tong: Our next question comes from the line of George Tong of Goldman Sachs. You may ask your question. Hi, thanks. Good morning. You continue to expect transactional revenue to be down.

Speaker Change: Our next question comes from the line of George Tong of Goldman Sachs. You May ask your question.

Speaker Change: Hi, Thanks. Good morning, you continue to expect transactional revenue to be down on a full year basis can you talk a little bit more about what you expect transactional revenue to inflect to positive growth and what the catalyst distribute.

George Tong: Talk a little bit more about when you expect transactional revenue to inflect a positive growth and what the catalysts. Yeah, thank you for the question, George. So as you highlighted, we saw transactional revenues on an organic basis down a couple percentage points. So that excludes the businesses that we are disposing of that ultimately will go to zero. You're right, we are de-emphasizing that part of the business. We improved the revenue mix, the recurring over the total revenues by two percentage points. It's our view that that is a part of the business that will continue to be a bit softer, particularly in the current macro environment.

Speaker Change: Yes. Thank you for the question George So as you highlighted we saw a transactional revenues on an organic basis down a couple percentage points of that excludes the businesses that we are disposing of it ultimately will go to zero you are right. We are deemphasizing that part of the business we improved the <unk>.

Speaker Change: Revenue mix the recurring over the total revenues by two percentage points.

Speaker Change: It's our view that that is a part of the business that will continue to be a bit softer, particularly in the current macro environment. So we are heavily focused on accelerating the ACB growth. We're encouraged by the progress we've made on the reoccurring order type, which is leading to that improved performance in recurring.

George Tong: So we are heavily focused on accelerating the ACV growth. We're encouraged by the progress we've made on the the reoccurring order type, which is leading to that improved performance in recurring organic growth in Q1. So our expectations for the transactional business remain, you know, relatively conservative for the balance of this year, as we continue to focus on what's really going to drive performance, the recurring revenues.

Speaker Change: Organic growth in Q1, so our expectations for the transactional business remain.

Speaker Change: Relatively conservative for the balance of this year as we continue to focus on what's really going to drive performance the recurring revenues.

Unknown Executive: Very helpful, thank you.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thanks.

Surinder Thind: And our final question comes from the line of Surinder Thind of Jeffreys. You may ask your question. Thank you.

Speaker Change: And our final question comes from the line of surrender signs of Jefferies. You May ask your question.

Matti Tov: Matti, could you perhaps talk about... The changes that you've made to the sales incentive model and how quickly. And if there's any kind of a reset there in how big. So, thank you for the questions. I am very proud of the changes and I'm pleased with the changes we've done so far to the sales organization. I'll talk about a few of them. First of all, we've upgraded our leadership in three different segments. We've implemented a new senior vice president for sales in IP. We've done some changes, including a production new vice president in the A&G, and we've also done some changes in lifetimes as well, so changes across the three segments of the sales organization.

Speaker Change: Thank you Matt.

Speaker Change: Could you perhaps talk about.

Speaker Change: The changes that you've made to the sales incentive model and how quickly.

Speaker Change: And if there is any kind of a reset there and how big those changes already yes.

Speaker Change: So thank you for the question.

Speaker Change: Part of the changes.

Speaker Change: I am pleased with the changes we've done so far with.

Speaker Change: The sales organization.

Speaker Change: Talk about few of them first of all we've upgraded our leadership.

Speaker Change: In the three different.

Speaker Change: The segments, we've done we've implemented a new.

<unk> senior Vice President for sales and IP, we've done some changes including production new Vice presidents in the A&D and we've also done some chip.

Speaker Change: In.

Speaker Change: In life science as well so changes across the three segments.

Speaker Change: This organization.

Matti Tov: We also empowered and enlarged and changed the customer success organization, and this has been reflected by the improved renewal rate, going by one percentage point, but we pay extra attention to the customer success organization. We also, part of the value creation plan, the AI enhancement that we're doing is helping us both on the retention and also in new customer wins, so the acceleration in innovation is helping us a lot to push our product and to return our product into a customer base. And lastly, we looked at incentive plans models across the company, just in making sure that we are rewarding the sales organization for success, rewarding them more on the subscription we are carrying, revenue growth, and also some rebalancing between retaining the customers and winning new logos and new products.

Speaker Change: We also.

Speaker Change: Empowered and enlarged and change the customer success organization.

Speaker Change: This has been reflected by the improved renewal rate going by one percentage point.

Speaker Change: Pay extra attention to the success the success to customer success organization. We also part of the other question plan. The AI enhancement that we're doing is helping us both on the retention.

Speaker Change: And also in customer and new customer wins, so the acceleration in innovation is helping us a lot to push our products into retail products into our customer base and lastly, we looked at incentive plans models across the company just making sure that we are rewarding.

Speaker Change: The sales organization for success.

Speaker Change: Things are more on the subscription reoccurring revenue growth and also some rebalancing between.

Speaker Change: Retaining the customers and winning new logos and new products. So all in all I'm.

Unknown Executive: So, all in all, I'm very pleased with the changes we've done so far in the sales organization. Great, thank you. I think we have one more question. We do.

Speaker Change: Im very pleased with the changes we've done so far.

Speaker Change: Sales organization.

Speaker Change: Great. Thank you and I think we have one more question.

Tong: We do charge Tong from Goldman Sachs.

George Tong: George Tong from Goldman Sachs. Hi, thanks. Just a quick follow-up. You saw a healthy rebound to positive growth and reoccurring revenue because of patent. Can you talk about how cyclical patent renewals are and if a macro slowdown could dampen patent volume?

Tong: Hi, Thanks, just a quick follow up question you saw a healthy rebound of positive growth in reoccurring revenue because of renewals can you talk about how cyclical pattern renewals are and if a macro slowdown could dampen Ken volumes.

Unknown Executive: Yeah, thanks for the question, George. We certainly have seen over the course of the past few years that the rate at which customers choose to renew IP over longer periods of time has been quite durable, but we can see some movements quarter to quarter and from year to year. So there's certainly some impact there that we'll continue to watch carefully. And it's part of the reason that we remain cautious on the balance of the year. So to your point, we could see some movement from quarter to quarter and from year to year, but over the long term, we think that the trend is likely headed back in a healthy direction.

Speaker Change: Yes, thanks for the question George.

Speaker Change: We certainly have seen over the course of the past few years that the rate at which customers choose to renew IP over longer periods of time has been quite durable, but we can see some movements quarter to quarter.

Speaker Change: And from year to year, So theres certainly some impact there that will continue to watch carefully.

Speaker Change: And it's part of the reason that we remain cautious on the balance of the year.

Speaker Change: To your point, we could see some movement from quarter to quarter and from year to year, but over the long term, we think that the trend is likely headed back in a healthy direction.

Speaker Change: Got it very helpful. Thank you.

Unknown Executive: Thanks, George.

George Tong: Thanks George.

Unknown Executive: So that concludes our call. I want to thank everyone for joining us today, and we look forward to speaking to you again soon. Thank you.

Speaker Change: So that concludes our call I want to thank everyone for joining us today, and we look forward to speaking to you again soon.

George Tong: Thank you.

George Tong: Okay.

George Tong: [music].