Q2 2025 Clarivate PLC Earnings Call

Jordan: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the CLARIVATE second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. 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 followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mark Donohue, Vice President of Investor Relations. Please go ahead.

Jonathan Collins: Thank you, Jordan, and good morning, everyone. Thank you for joining us for the CLARIVATE second quarter 2025 earnings conference call. As a reminder, this call is being recorded and webcast, and is copyright property of CLARIVATE. Any rebroadcast of this information in whole or in part without prior written consent of CLARIVATE is prohibited. The accompanying earnings call presentation is available on the Investor Relations section of the company's website. 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.

Thank you for standing by. My name is Jordan and I'll be your conference operator. Today at this time, I'd like to welcome everyone to the Clare vit, second quarter 2025 earnings conference. Call all lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, press star 1 again, thank you. I would now like to turn the call over to Mark Donahue vice president of investor relations. Please go ahead.

Thank you, Joe, Jordan and good morning everyone. Thank you for joining us for the clarivate second quarter of 2025 or at least conference call.

As a reminder, this call is being recorded and webcast and is copyrighted property. And you rebroadcast of this information in whole or in part. Without prior written consent of clarivate is prohibited and the accompanying. Earnings call, presentation is available on the investor relations section of the company's website.

During our call, we may make certain forward-looking statements within the meaning of the applicable Securities laws, such forward-looking statements about known and unknown risks, uncertainties and other factors that may cause the actual results performance or achievement to the business or developments in clarifying industry.

The different materially from the anticipated results performance achievements or developments expressed.

Or implied by such power looking statements.

Jonathan Collins: Information about the factors that cause actual results to differ materially from anticipated results or performance can be found in CLARIVATE's filings with the SEC and on the company's website. Our discussion will include non-GAAP measures or adjusted numbers. CLARIVATE believes non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but they are supplemented to and should not be considered in isolation from or as a substitute for GAAP financial measures. Reconciliation of these GAAP measures are available in our earnings release and supplemental presentation on our website. With me today are Matti Tov, Chief Executive Officer, and Jonathan Collins, our Chief Financial Officer. After a pair of remarks, we will open the call to your questions. With that, it is a pleasure to turn the call over to Matti.

Information about the factors that cause actual results of different material from anticipated results, or performance can be found in clarifying with the SEC and on the company's website.

Our discussion will include non-GAAP measures or adjusted numbers. Basically, lead non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but there are supplements too. These should not be considered in isolation from, or as a substitute for, GAAP financial measures.

Reconciliation of these measures of gaap measures are available in our earnings release and supplemental presentation on our website.

With me today are Modi, Shinto's Chief Executive Officer, and Jonathan Collins, our Chief Financial Officer.

After repair remarks, we'll open the call to your questions. And with that, it's a pleasure to turn the call over to mod.

Matti Tov: Good morning, everyone, and thank you for joining us. We reported solid second quarter financial performance and delivered growth in our key metrics. We also made progress on the value creation plan, including AI-led product innovation, improving sales execution, and enhancing operational efficiency. On slide six, in the second quarter, we demonstrated our strategic positioning within the market. Organic ACV grew 1.3% compared to the prior year period and improved 40 basis points from the end of last year. This was driven by an important improvement in the subscription book due to higher renewal rates and new business wins. Total organic revenue in the second quarter grew 50 basis points, and recurring organic revenue grew almost 1%. Adjusted EBITDA margin for the first half of the year increased 50 basis points to 41%, driven by internal cost efficiencies.

Good morning everyone and thank you for joining us.

We reported solid second quarter, financials performance and deliver growth in our key metrics.

We also made progress on the value creation plan, including the AI LED product innovation.

Improving sales execution and enhancing operational efficiency.

On slide 6.

In the second quarter, we demonstrated our strategic positioning within the market.

Organic ACV grew 1% and 1.3% compared to the prior year period and improved 40 basis points from the end of last year. This was driven by an important improvement in the subscription book due to a higher renewal rate and new business wins.

Total organic Revenue in the second. Quarter grew, 50 basis points and recurring organic Revenue. Grew almost 1%.

Matti Tov: Free cash flow continued to be strong as we generated $50 million in the second quarter and $161 million for the first six months of this year. I would like to highlight that all of our segments showed improvement for the first half of the year. Our ANG business delivered 2% organic ACV and subscription revenue growth. IP returned to organic growth in patent annuities and is well positioned to benefit from AI tailwind. Life science and health returned to organic ACV growth. With a solid first half, we are reaffirming our full year 2025 outlook. Jonathan will cover the financial results in more detail shortly. On slide seven, our value creation plan was launched in the fall of 2024, and it is on track with measurable progress across all key initiatives and KPIs.

41% driven by internal cost efficiencies.

Free cash flow continued to be strong. As we generated fifty million dollar in the second quarter and 161 million for the first 6 months of this year.

I'd like to highlight that all of our segments shown Improvement for the first half of the year.

Our AMG business delivered, 2% organic ACV, and subscription, Revenue growth.

IP returned to organic growth in patent. Annuities and is well, positioned to benefit from AI, tailwind and life, science, and health return to organic, ACV growth.

With a solid first half. We are reaffirming our full year to 2025 Outlook.

Matti Tov: We have launched all major business optimization programs to increase core subscription and recurring revenue, which is enhancing sales predictability. We have completed most of the major operating model changes within our sales organization to improve new business generation, customer engagement, and retention. Since the launch of the VCP plan last October, we have delivered 10 cutting-edge product and AI-powered capabilities while focusing on developing AI-enabled work-life subscription-based solutions in partnership with customers. We are undertaking strategic review to assess alternatives across the business. If you turn to slide eight, I will provide an update on the VCP, starting with the AND segment. Our proactive business model optimization, coupled with decades of experience in delivering data and analytics solutions to our clients, has strategically positioned us to anticipate and adapt to current market dynamics.

Jonathan will cover the financial results in more detailed show shortly on slide 7. Our value creation plan was launched in the fall of 2024 and it is on track with a measurable progress across all key initiatives. And kpis, we have launched all major business optimization program to increase core subscription and reoccurring Revenue, which is enhancing sales predictability.

We have completed most of the major operating model changes, within our sales, organization, to improve new business, operate, new business generation, customer engagement, and retention.

Since the launch of the vcp plan, last October we have delivered 10 Cutting Edge product and AI powered capabilities. While focusing on developing AI enabled workload, subscription based Solutions in partnership with customers

and we are undertaking strategic review to assess Alternatives across the business.

If you turn to slide 8, I'll provide an update on the vcp starting with the AMD segment.

Matti Tov: We are on track to discontinue transactional sales of digital collections and books over the next year. This shift away from transactional sales is increasing recurring revenue growth by transitioning some of the business to the new ProQuest One Ebook Central product and other content solutions subscriptions. We are pleased with the early adoption, with over 70 wins to date and hundreds of customers currently evaluating this new model. Following this change in strategy, ANG subscription revenue now constitutes 93% of the total segment revenue, excluding disposal, up from 79% in the prior year period. In the first half of 2025, we have achieved a 96% renewal rate in ANG. This is an impressive result considering the macro backdrop characterized by reduction in the U.S. federal agency contract, increased constraints on higher education research funding, and potential additional university budget cuts.

Our proactive business model optimization, coupled with decades of experience in delivering data and analytics solutions to our clients, has strategically positioned us to anticipate and adapt to current market dynamics.

We are on track to discontinue transactional sales of digital Collections and books over the next year. This shift away from transactional sales is increasing recurring Revenue growth by trance by transitioning. Some of the business to the new process ebooks products and other content Solutions subscription

We are pleased with the early adoption with over, 70 wins to date and hundreds of customers currently evaluating this new model.

Following this change in strategy, AMG subscription revenue now constitutes 93% of the total segment revenue, excluding disposals, up from 79% in the prior year period.

In the first half of 2025, we have achieved.

A 96% renewal rate in NG; this is an impressive result. Considering the macro backdrop, characterized by a reduction in U.S. Federal agency contracts, increased constraints on higher education, research funding, and potential additional university budget cuts.

Matti Tov: It is also noteworthy that, as at the end of July, 75% of global ANG subscription for the full year is successfully renewed. This is in line with last year's renewal pace. We continue to successfully invest in innovation across the ANG product portfolio with a focus on AI. We are very pleased by our success so far in product launches and customer adoption. More than 4,800 institutions have already adopted our AI tools to strengthen research support, increase operational efficiency, and enhance student engagement. On slide nine, our partnership within ANG continues to grow, including recent multi-year agreement with the Canadian Research Knowledge Network that will provide 55 universities greater access to the Web of Science, fostering enhanced research collaboration and impact. We are also accelerating progress with next-generation agentic AI solutions. AI agents can independently play and execute multi-step processes by interacting with users, data sources, and tools.

It is also not worthy that.

As at the end of July 75% of global A&D subscription for the full year as successfully renewed. This is in line with last year, last last years, renewal pace.

We continue to successfully invest in innovation across the AMG product portfolio, with a focus on AI. We are very pleased with our success so far in product launches and customer adoption. More than 4,800 institutions have already adopted our AI tools to strengthen research support, increase operational efficiency, and enhance student engagement on slide 9.

Our Partnerships within AMG continue to grow including recent multi-year agreement with the Canadian research knowledge.

Network that will provide 55 University, greater access.

To web of science, fostering, enhanced research, collaboration and impact.

Accelerating progress with Next Generation, identical AI solution.

Matti Tov: The expansion of our agentic AI platform marks a significant milestone as we implement responsible agentic AI to accelerate research and learning workflow. Our initial launch of the literature review agent in the Web of Science exemplifies this pioneering approach. The agent converts with the researchers to understand the research goals, then customizes a specific literature review scope, and defines the proper output. This personalized interactive experience keeps the researcher in the center, which closely mimics working with a human assistant. Finally, we are very pleased that Outsell, a leading research advisory firm in B2B technology, data, and information services, recognizes CLARIVATE AI leadership among major scholarly research organizations, underscoring our position at the forefront of developing user-facing AI agentic tools.

AI agents can independently play and execute multi-step processes by interacting with user with users data sources and tools.

The expansion of our agentic, AI platform marks a significant Milestone as we Implement responsible identity AI to accelerate research and learning workflow.

Our initial launch of the literature review agent in web of science exemplify this pioneering approach.

The agent converse with the researchers to understand the research goals, then customize, the specific little literature review, scope and Define the proper output. This person that I interactive experience, keep the researcher in the center which closely mimic walking with human assistant.

Finally we are very pleased that our outsell a leading research advisory firm in B2B technology data and information Services recognized clarivate, AI leadership. Among major, scholarly research organization and discovering our position at the Forefront of developing user-facing, AI agent, things tool,

Matti Tov: Moving to the intellectual property segment on slide 10, after a challenging few years, our patent renewal business returned to growth this year, with organic recurring revenue rising by about 1.5% in the first six months of 2025. The market-wide surge in AI innovation across industries is driving sustained growth in registered IT. We believe this trend will create favorable conditions for our patent renewal business. As an example, in the past year alone, patent filings for AI inventions have grown five-fold compared to pre-ChatGPT levels. In addition, AI has the potential to double innovation output and build more defensible IP portfolios for industry powered by IP and scientific research. The takeaway is that this strong market tailwind, driven by the proliferation of AI innovation and technology adoption, is fueling our work with customers, empowering them to achieve higher levels of efficiency and IP creation.

Moving to the intellectual property segment on slide 10.

After a challenging few years, our patent renewal business returned to growth this year.

With organic recurring revenue rising by about 1.5% in the first quarter.

6 months of 2025, the market wise, surge in AI Innovation across industry is to is driving sustained growth. In registered it, we believe this trend will create favorable condition for our patents renewal business. As an example, in the first year alone,

But it's filing for AI invention. Have grown 5-fold. 5-fold compared to pre-check GPT levels in addition,

AI is as a potential to double inovation output and build more defensible IP portfolio for industry Power by IP and scientific research.

A takeaway is that this strong Market. Tailwind driven by the proliferation of AI Innovation and Technology. Adoption of fueling, our work with customers, empowers them to achieve higher level

Matti Tov: Our IP segment is well positioned to capture this growth as we continue to lead at the intersection of technology, innovation, and IP. Going to slide 11, during the second quarter, IPFolio, our industry-leading cloud-based IP management platform designed for corporate intellectual property teams, grew new customers, new clients, and partnerships over 50% year-over-year across the global markets, including South Korea and Japan. We are now broadening and accelerating IPFolio adoption across multiple industries, including the pharmaceutical and large law firms. Our expertise and comprehensive solutions have enabled clients such as WindBen to enhance their IP management practices and gain meaningful insights into emerging trends in the IP management. IP management transition. This morning, we have announced that Maroon Murad will join CLARIVATE as President of the IP segment effective September 8, 2025. He will join us from Verisk Analytics, where he is the President for the Claim Solution Divisions.

Of efficiency and IP creation. Our IP segment is well positioned to capture this globe as we continue to lead in at the intersection of Technology Innovation and IP.

Going to slide 11. Uh, during the second quarter IP portfolio, our industry-leading cloud-based IP management platform designed for corporate intellectual. Property teams grew, new customer new clients and partnership over 50% year-over-year across Global markets including

South Korea and Japan. We are now broadening and accelerating our IP portfolio adoption across multiple industries, including the pharmaceutical sector and large law firms. Our expertise and comprehensive solutions have enabled clients, such as Wyndbend, to enhance their IP management practices and gain meaningful insight into emerging trends in IP management.

IP management transition.

Matti Tov: We are confident that his leadership abilities and expertise will further drive the IP business commitment to fostering innovation and growth. I would like to express my gratitude and appreciation to Gordon Sampson for his dedication to the industry and his significant contribution to Clarivate's success. Turning into life science and healthcare segment. In life science, we are encouraged that the VCP efforts have resulted in a return to organic ACV growth during the first half of this year. We have been expanding our strategic reach, fostering innovation through a subscription-based platform designed to support life science and health customers. Our commitment to develop robust partnerships is demonstrated by the recent extension of a long-term multimillion-dollar agreement with a top 15 global pharmaceutical company. This achievement validates the importance of our Cortellis and DRG products and services to customers.

So this morning, we have announced that maroon Murad will join clarivate as president of of the IP segment effective, September 8th, 2025. He joined us from various analytics where he is the president for for The Claim Solution divisions.

We are confident that his leadership abilities and expertise, will further Drive the IP business commitment to fostering Innovation and growth. I would like to express my gratitude and appreciation to God on Samson for his dedication, to the industry and his significant contribution to clarivate success.

Turning into life science.

To organic ACV growth. During the first half of this year, we have been expending our strategic reach, fostering Innovation to subscription based platform designed to support life science, and has uh, customers our commitment to develop robust partnership is demonstrated.

By the recent extension of a long-term multi-million dollar agreement with a top.

Matti Tov: Additionally, we continue to drive advancement in med tech by introducing next-generation commercial analytics. The launch of DRG Commercial Analytics 360, a dedicated subscription platform, empowers the med tech organization to enhance their commercial strategy and execution capabilities. As commercial budgets improve, we believe we will be best positioned to capitalize on an improving environment. On slide 14, value creation plan, I am pleased that the VCP plan is on track. The first half of this year was marked by accelerated product innovation and a significant number of new product launches and enhancement in the AI capabilities. We anticipate that the momentum of the product release will continue throughout all three segments in the second half of the year. By integrating AI functionalities into our offering, including Web of Science research, tailwind, and Cortellis, we aim to further improve outcomes and value for our users.

15 Global pharmaceutical company. This achievement validates, the importance of our Catalyst and the LG product and services to customers. Additionally, we continue to drive advancement in Medtech by introducing. The next generation commercial analytics, the launch of DG commercial analytics 360.

A dedicated subscription of platforms. Empowers, the Met Tech organization to enhance the commercial strategy and execution capabilities.

As commercial budget improve, We believe We will be the best position to cover to capitalize on and improving environment.

On slide 14.

Value creation plan. Uh, I'm pleased that that the vcp plan is on track.

The first half of this year was marked by accelerated product, Innovation and significant number of new product, launches and enhancement in the AI capabilities. We anticipate that the momentum of the product release will continue throughout all 3 segments in the second half of the Year by integrating AI, functionalities into our offering including web of science, research, Darwin and celes. We aim to further improve outcome and value for our users.

Matti Tov: On slide 15, now that you have heard our VCP is driving results across each of our segments, the fourth pillar of our VCP is evaluating strategic alternatives. Earlier this year, we initiated a formal process to enhance execution focus, optimize capital allocation, support future growth, and increase operational effectiveness. We are making progress and have narrowed the scope of the review. We anticipate communicating the results when we will report our year-end financial performance in February 2026. Lastly, slide 16. In closing, we are pleased to see improved revenue performance for the first six months of 2025, driven by organic ACV growth in ANG and life sciences segments, and the return of growth in the patent renewal business. The mix of organic recurring revenue to total revenue for the first half of the year is now 88%, an improvement of 800 basis points compared to last year.

On slide, 15.

Now that you've heard our VCP is driving the result across each of our segments, the force pillar.

Of the of our vcp is evaluating strategic alternatives.

Earlier this year, we initiate a formal process to enhance execution, Focus optimize Capital, allocation support future growth and increase operational. Effectiveness, we are making progress and have narrowed the scope of the review. We anticipate communication communicating the results, when we will report our year, end financial performance in February 2026.

And lastly, slide 15.

In closing, we are pleased to see improvements to improved Revenue performance. For the first 6 months, 2025 driven by organic ACV growth in AMG and life, science and segment and the return of growth.

Matti Tov: Our annual renewal rate across our subscription base improved to 93% during the first half of the year compared to 92% for the same period last year. We are moving in the right direction and seeing early indications that our plan is driving improved performance. It is encouraging to witness the initial sign of success, which affirms the effectiveness of our strategies and the dedication of our teams. We remain focused on executing our plan to ensure sustained growth and value creation for all stakeholders. With that, I would like to turn it over to Jonathan. Thank you.

In the patent renewal business, the mix of organic recurring revenue to total revenue for the first half of the year is now 88%, an improvement of 800 basis points compared to last year. Our annual renewal rate across our subscription base improved to 93% during the first half of the year, compared to 92% for the same period last year. We are moving in the right direction and seeing early indications that our plan is driving improved performance.

It is encouraging for us to witness the initial signs of success, which affirm the effectiveness of our strategies and the dedication of our teams. We remain focused on executing our plan to ensure sustained growth and value creation for all stakeholders.

Jonathan Collins: Thank you, Matti. Slide 18 is an overview of our second quarter and first half financial results compared with the same periods from the prior year. Q2 revenue was $621 million, bringing the first half to $1.2 billion. The second quarter change from last year was entirely inorganic as a result of the Scholar I divestiture and the ANG and LS&H business disposals, partially offset by organic growth and foreign exchange. The second quarter net loss was $72 million. The improvement over Q2 of the prior year is driven by the non-cash impairment charge recorded last year that did not recur this year. Adjusted diluted EPS, which excludes items like the impairment, was $0.18. The change over last year is entirely attributed to the divestiture and disposals. Operating cash flow was $116 million in the quarter.

And with that, I would like to turn over to Jonathan. Thank you.

Thank you, Marty slide. 18 is an overview of our second quarter and first half an inch of results. Compared with the same periods from the prior year.

22, Revenue was 621 million, bringing the first half the 1.2 billion.

The second quarter change from last year was entirely inorganic as a result of the scholar 1 deer and the AMG and LS. And H business disposals, partially offset by organic growth and foreign exchange.

The second quarter, net loss was 72 million, the improvement, over Q2 of the prior year is driven by the non-cash impairment charge recorded. Last year, that did not recur this year.

Adjusted diluted EPS which excludes items like the impairment was 18, cents. The change over last year is entirely attributed to the Devastator and disposals.

Jonathan Collins: The change compared to last year is entirely driven by adjusted EBITDA, as an improvement in working capital was offset by higher payments of one-time costs associated with implementing the value creation plan. Please turn with me now to page 19 for a closer look at the drivers of the second quarter top and bottom line changes from the prior year. I am pleased to share this morning that the business grew organically for the second quarter in a row, and margins remained at approximately 42%. This was driven by four primary factors. First, our recurring organic growth increased 20 basis points sequentially in the second quarter to nearly 1%, as our subscription business returned to growth following the inflection in our ACV in the first half of this year.

The change compared to last year's results is entirely driven by adjusted EBITDA. An improvement in working capital was offset by higher payments of one-time costs associated with implementing the value creation plan.

Please turn with me now to page 19 for a closer. Look at the drivers of the second quarter. Top and bottom line changes from the prior year.

Jonathan Collins: Careful operating expense amplified the $3 million of total organic growth, which includes the transactional revenue type, resulting in a $6 million increase in adjusted EBITDA. Second, during Q2, we continued to experience the inorganic impact of the businesses we are disposing of as a part of the value creation plan. The top and bottom line changes of $32 million and $17 million, respectively, impacted both the ANG and LS&H segments. Third, as we have seen in the last couple of quarters, we continue to experience the inorganic impact of the Scholar I divestiture, lowering revenue by $9 million and adjusted EBITDA by $4 million. Fourth, the U.S. dollar weakened against a basket of foreign currencies, which caused a foreign exchange translation tailwind on the top and bottom lines.

I'm pleased to share this morning that the business grew organically for the second quarter in a row, and margins remained at approximately 42%. This was driven by four primary factors. First, our recurring organic growth increased 20 basis points sequentially in the second quarter to nearly 1%. Our subscription business returned to growth following the inflection in our ACV in the first half of this year.

Careful operating expense management. Amplified the 3 million of total organic growth which includes the transactional revenue type resulting in a 6 million increase in adjusted Ava.

Second, during Q2, we continue to experience the inorganic impact of the businesses. We are disposing of assets as part of the value creation plan.

The top and bottom line changes of $32 million and $17 million, respectively, impacted both the A and G and L S and H segments.

Third. As we've seen in the last couple of quarters, we continue to experience the inorganic impact of the scholar 1, Devastator, lowering Revenue by 9 million and adjusted by 4.

Jonathan Collins: Please turn with me now to page 20 to review how these same drivers impacted the top and bottom line changes for the first half of this year. As Matti Tov noted just a few moments ago, organic growth for H1 has improved by 180 basis points over where we ended last year. This modest growth compared to last year's decline yielded $5 million of total organic growth and $10 million of incremental adjusted EBITDA in the first half. The combined impact of the disposals and divestitures lowered revenue by $64 million and adjusted EBITDA by $30 million over the same period last year. Both the top and bottom lines benefited from foreign exchange in the first half, as the U.S. dollar weakened towards the end of the first quarter.

And forth. The US dollar weakened against the basket of foreign currencies, which caused a foreign exchange translation Tailwind on the top and bottom lines.

Please turn to page 20 to review how these same drivers impacted the top and bottom line changes for the first half of this year.

As me noted just a few moments ago organic growth for H1 has improved by 180 basis points over where we ended last year.

This modest growth compared to last year's decline, yielded 5 million of total organic growth and 10 million of incremental adjusted ibida. In the first half.

The combined impact of the disposals into vestures lowered, Revenue by 64 million and adjusted ibida, by 30 million over the same period last year.

Jonathan Collins: The net impact of these changes led to a 50 basis point profit margin expansion for the year-to-date results compared to the same period last year. Please turn with me now to page 21 for a look at how the Q2 and H1 adjusted EBITDA converted to free cash flow and how we allocated the capital in a shareholder-friendly manner. Free cash flow was $50 million in the second quarter, bringing the first half to $161 million. The change in the quarter and the half are driven entirely by the adjusted EBITDA impact outlined on the last two pages, as lower working capital requirements were offset by higher one-time costs. We incurred $18 million of one-time costs in Q2 and $42 million in H1, both of which were largely restructuring-related outflows associated with the implementation of the value creation plan.

Both the top and bottom lines benefited from foreign exchange in the first half as the U.S. dollar weakened towards the end of Q1.

The net impact of these changes led to a 50 basis point profit margin expansion for the year-to-date results, compared to the same period last year.

Please turn with me now to page 21 for a. Look at how the Q2 and H1 adjusted ibida, converted to free. Cash flow and how we allocated the capital in a shareholder friendly man.

Free cash flow is 50 million in the second quarter, bringing the first half to 161 million. The change in the quarter, and the half are driven entirely by the adjusted ibida impact outlined on the last 2 Pages as lower working. Capital requirements were offset by higher 1-time costs.

Jonathan Collins: Cash interest was $92 million and was slightly lower than Q2 of last year, as we continue to recognize the benefit associated with the $200 million of debt we repaid last year. Working capital requirements improved by $15 million in the second quarter and a comparable amount for the first half, and we expect this trend to continue in the second half of the year, as implied in our full year guidance. Cash taxes, capital spending, and other operating outflows were essentially flat compared to the same periods last year. We used the $50 million of free cash flow we generated in the second quarter to repurchase another 11.5 million shares of common stock, bringing the first half buybacks to $100 million, which is about 60% of the capital we had available to allocate. The remaining 40% increased our cash balance, lowering our net debt.

We incurred 18 million 1-time cost in Q2 and 422 million in H1. Both of which were largely restructuring related. Outflows associated with the implementation of the value creation plan. Cash, interest was 92 million and was slightly lower than Q2, of last year as we continue to recognize the benefit associated, with the 200 million of debt, we repaid.

Working capital requirements, improved by 15 million in the second quarter and a comparable amount for the first half and we expect this trend to continue in the second half of the year as implied in our full year guidance.

Jonathan Collins: We also took the opportunity during the second quarter to extend a portion of our debt maturity by five years through refinancing a half a billion of our 2026 bonds with a new tranche on our existing Term Loan B facility, which matures in 2031. Shortly after we completed the refinancing, we swapped about 80% of the new tranche from dollars to euros and from a floating to a fixed interest rate. The net impact of the refinancing and swaps is an annual cash interest increase of about $7 million, a favorable outcome in this higher rate environment. Please turn with me now to page 22 for a reminder of our full year financial guidance ranges for this year, which remain entirely unchanged from the initial guidance we provided in February and affirmed in April.

Cash taxes, Capital, spending and other operating outflows for essentially, flat compared to the same periods. Last year, we used the 50 million of free cash flow. We generated in the second quarter to repurchase another 11 and a half million shares of common stock, bringing the first half BuyBacks to a 100 million which is about 60% of the capital. We had available to allocate the remaining 40% increased. Our cash balance lowering our net debt.

We also took the opportunity during the second quarter to extend a portion of our debt maturity by five years, through refinancing a half a billion dollars of our 2026 bonds with a neutron on our existing Term Loan B facility, which matures in 2031.

shortly after we completed the refinancing, we swapped about 80% of the neutrons from dollars to euros, and from a floating to a fixed interest rate. The net impact of the refinancing and swaps is an annual cash interest increase of about 7 million, a favorable outcome in this higher rate environment.

Jonathan Collins: Beginning at the top of the page, we continue to expect our organic annual contract value to accelerate by approximately 60 basis points to 1.5% 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 half, where we've delivered more than half of the acceleration, about 40 basis points. Based on our performance in the first half, recurring organic growth will likely be in the upper half of our range. The improved organic performance, combined with a weaker U.S. dollar and slower than anticipated attrition in the business disposals, will likely yield revenue near the top end of the range. As a result of the strategic disposals, we expect our recurring revenue mix will improve by about 400 basis points from 80% to about 84% this year.

Please turn with me now to page 22 for a reminder of our full year Financial guidance ranges for this year, which remain entire entirely unchanged from the initial guidance. We provided in February and a uh affirmed in April.

We've made good progress on this in the first half, where we've delivered more than half of the acceleration—about 40 basis points.

Based on our performance, in the first half, recurring organic growth will likely be in the upper half of our range.

The improved organic performance combined with a weaker US dollar and slower than anticipated attrition. In the business disposals will likely yield Revenue near the top, end of the range,

Jonathan Collins: It's worth reiterating what Matti Tov indicated earlier in the call. Our organic recurring revenue mix, which excludes the disposals, is already at 88% in the first half of the year. Moving down the page, we expect adjusted EBITDA slightly above the midpoint of the range and our profit margin at approximately 41% due to higher revenues from the disposals and FX, which have lower profit conversions. We continue to 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 half's stock repurchases.

As a result of the strategic disposals, we expect our recurring revenue mix will improve by about 400 basis points from 80% to about 84% this year.

It's worth reiterating what my indicated earlier in the call our organic recurring Revenue mix which excludes the disposals is already at 88% in the first half of the year.

Moving down the page, we expect adjusted EBITDA to be slightly above the midpoint of the range, and our profit margin to be approximately 41% due to higher revenues from the disposals and foreign exchange (FX), which have lower profit conversions.

Jonathan Collins: At the bottom of the page, we anticipate free cash flow at about $340 million at the midpoint of the range as the adjusted EBITDA change will largely be offset by lower interest, working capital, and capital spending. Please turn with me now to page 23 for more details on the full year top and bottom line changes we are expecting compared to last year. The expected changes in revenue and, to a large extent, adjusted EBITDA this year compared to last year are largely driven by the disposals targeted at optimizing our business model and the divestitures of non-core products and services. We now expect organic growth will be essentially flat as the growth in the recurring revenue types, both subscription and reoccurring, will offset the originally anticipated decline in our remaining transactional business.

We continue to anticipate diluted adjusted, EPS between 60 and 70 cents. As the inorganic driven change in adjusted ibida, 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 half's stock repurchases.

And finally, at the bottom of the page, we anticipate free cash flow at about 340 million at the midpoint of the range as the adjusted ibida change, will largely be offset by lower interest?

Working capital and capital spending.

Please turn with me now to page 23 for more details on the full-year top and bottom line changes we're expecting compared to last year.

The expected changes in revenue and, to a large extent, adjusted EBITDA this year, compared to last year, are largely driven by the disposals targeted at optimizing our business model and the divestiture of non-core products and services.

We now expect organic growth will be essentially flat.

Jonathan Collins: This represents about $10 million improvement over our initial indication at the midpoint of the guidance range. We continue to expect a profit headwind in this area of about $20 million as cost efficiencies will not fully offset inflation and higher incentive compensation expense. The strategic disposals are now expected to lower revenue this year by approximately $125 million, and we are implementing $85 million of operating cost actions, which yield a profit impact of about $40 million. We expect most of the remaining $75 million revenue reduction will take place next year and will have a small profit impact. The top line change for the disposals represents a $15 million improvement over our initial indication. The divestitures of both Foundation IP and OFF-X last year will lower revenue by about $40 million and profit by $3 million.

As the growth in the recurring Revenue types, both subscription and reoccurring will offset the originally anticipated decline in our remaining transactional business.

This represents about 10 million improvement, over our initial indication at the midpoint of the guidance range.

We continue to expect a profit headwind in this area of about $20 million, as cost efficiencies will not fully offset inflation and higher incentive compensation expenses.

The Strategic disposals are now expected to lower Revenue this year by approximately 125 million.

And we're implementing 85 million of operating cost actions which yield a profit impact of about 40 million. We expect most of the remaining 75 million Revenue reduction will take place next year and will have a small profit impact.

The top line changed for the disposals represents a $15 million improvement over our initial indication.

That a vast EES of both Valley patent scholar 1 last year will lower Revenue by about 40 million and profit by

Jonathan Collins: Finally, we now anticipate foreign exchange translation will have a negligible impact as the U.S. dollar has remained weak against other foreign currencies. This represents a $25 million improvement from our initial indication for full year revenue. Please turn with me now to page 24 to step through the components that will lead to more than a third of the adjusted EBITDA converting to free cash flow. Our outlook for free cash flow remains unchanged at the midpoint of our range. One-time costs are expected to be slightly elevated over last year as we invest to execute the VCP. We expect cash interest to improve by about $10 million over last year as a result of the debt we prepaid. Cash taxes are expected to remain in line with 2024.

And finally, we now anticipate foreign exchange translation will have a negligible impact as the US dollar has remained weak against other foreign currencies. This represents a 25 million improvement from our initial indication for full year Revenue.

Please bear with me now, to page 24, to step through the components that will lead to more than a third of the adjusted ibido converting to free cash flow.

Our outlook for the ecash flow remains unchanged, at the midpoint of our range. 1-time costs are expected to be slightly elevated over last year, as we invest to execute the vcp.

We expect cash interest to improve by about 10 million over last year as a result of the debt, we prepaid.

Jonathan Collins: We anticipate the change in working capital this year will be negligible, which represents an improvement over last year of about $25 million. 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 cash flow of $340 million at the midpoint of the range and will result in an improvement on the conversion of adjusted EBITDA of about a percentage point. From a capital allocation perspective, we continue to have the flexibility between share repurchases and deleveraging as we move through the second half of the year. In closing, we believe our first half results indicate strong momentum as the value creation plan is taking hold, as evidenced by a few key elements. First, Q2 represents the second quarter of sequential organic ACV and recurring revenue growth acceleration.

Cash, taxes are expected to remain in line with 2024.

We anticipate the change in working capital this year will be negligible, which represents an improvement over last year of about 25.

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 cash flow of $340 million at the midpoint of the range and will result in an improvement in the conversion.

Of adjusted evadav about a percentage point.

From a capital allocation perspective. We continue to have the flexibility between share repurchases and deleveraging, as we move through the second half of the year.

In closing, we believe our first half results, indicates, strong momentum. As the value creation plan is taking hold as evidenced by a few key elements.

Jonathan Collins: Optimizing our business model by disposing of non-core transactional businesses is creating a laser focus on our core recurring products and services, and we now have tangible evidence of the upward trajectory. Second, each of our segments made meaningful progress in the first half of the year and have a solid outlook for the second half. In ANG, both organic ACV and subscription revenue growth are stable at about 2%, and we have good line of sight to a stable second half despite funding pressure in the U.S. market. In IP, we have seen a clear rebound in the annuity market, our recurring revenue stream, as it returned to growth in the first half after declines in the prior year.

First Q2 represents the second quarter of sequential organic ACV and recurring Revenue growth acceleration.

Optimizing. Our business model by disposing of non-core transactional. Businesses is creating a laser focus on our core recurring, products and services. And we now have tangible evidence of the upward trajectory second each of our segments, made meaningful progress in the first half of the Year and have a solid outlook for the second half.

And subscription Revenue growth are stable at about 2%. And we have good line of sight to a stable second half despite funding pressure in the US market.

Jonathan Collins: In LS&H, our subscription revenue leading indicator, ACV, returned to organic growth as the investments in Cortellis are paying off in the R&D market with higher retention and strong new subsidies. Third, we made significant progress on the strategic review in the first half by narrowing the focus to a core option and expect to complete this work in the second half and provide the conclusion with our year-end results. I would like to finish by thanking all of you for listening in this morning. I am now going to turn the call back over to Jordan to take your questions. As a reminder, please limit yourself to a question and then return to the queue for any additional. Jordan, please go ahead.

In IP we've seen a clear Rebound. In the annuity Market are reoccurring Revenue stream as it returned to growth in the first half after declines in the prior year.

In LS and H our subscription Revenue leading indicator. ACV returned to organic growth as the investments in cortellis are paying off in the R&D Market with higher attention and strong Subs.

And third we made significant progress on the Strategic review in the first half by narrowing, the focus to a core option and expect to complete this work in the second half and provide the conclusion with our year-end results.

I'd like to finish by thanking all of you for listening in this morning. I'm now going to call to turn the call back over to Jordan, to take your questions. And as a reminder, please limit yourself to 8 question and then return to the queue for any additional.

Jordan, please go ahead.

Jordan: Thank you. As a reminder, at this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Manav Patnaik from Barclays. Your line is live.

Thank you.

As a reminder, at this time, I would like to...

Remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of manav Patnick from Barclays, your line is live.

Mark Donohue: Thank you. I had a question on the IP business. I know you talked about the rebound in the IP and annuity market, and you also talked about being excited about the AI opportunities there. Just a few parts of that. The timing of that rebound, how you can capitalize on that AI opportunity. I think I read somewhere that a lot of the, at least, GenAI, new patents, all that kind of activity seems to be more weighted towards China. Just wondering your exposure and capabilities there as well.

Thank you. Um,

This, I need to talk to about the rebound in the IP and Market. I think you also talked about uh, being excited about the AI opportunities that, uh, so it just a few parts of that, just just, you know, the timing of that rebound. You know how you can anticipate, uh, capitalize on that AI opportunity. And I think I read somewhere that, you know, a lot of the at least geni, new patterns, all that kind of activity, seems to be more weighted towards China, so just, uh, wondering your exposure and capabilities there as well.

Jonathan Collins: Yeah, sure, Manav. Thanks for the question. In principle, as new filings and new patents are awarded, on average, it takes a couple or a few years to work its way into the renewals. It varies by jurisdictions, but on average, it's a couple to a few years. This is a trend that we've started to see over the last year or two and think that it's something that could help put some wind into our sales as we move into next year and the following year. Certainly, there's a clear trend that more patents are being filed related to AI. Overall, this is a good thing for our business. That's what we wanted to highlight and note. To your point, the quantity of patents that have been filed related to AI are a bit disproportionate.

Yeah, sure, Mono. Thanks for the question. So, uh, in principle, uh, as new filings, uh, and new patents are awarded, on average, uh, it takes a couple or a few years to work its way, uh, into the renewals. It varies by jurisdictions, uh, but on average, it's a couple to a few years. So, uh, this is a trend that we've started to see, uh, over the last year or two, uh, and think that it's something that could, uh, help put some wind into our sails as we move into next year and the following year. So certainly, there's a clear trend, uh, that more patents are being filed related to AI. Uh, overall, this is a good thing for our business. That's what we wanted to highlight and note, uh, to your point, the quantity of patents.

Jonathan Collins: Our IP Center for Innovation Research noted that in some of its recent reportings, and we've seen more of it in Asia and particularly in China, but we've certainly seen an uptick in most of the major regions. We think we'll start to see that benefit around the globe over the course of the next few years.

Uh, that have been filed related to AI are a bit disproportionate, uh, our uh, IP Center for, uh, Innovation research noted that in some of its re recent reportings. Uh, and you know, we've seen more of it, uh, in Asia and particularly in China. But we've certainly seen an uptick uh in uh, in most of the major regions. Uh, so we think we'll start to see that benefit uh, around the globe. Uh, over the course of the next few years.

Mark Donohue: Thanks, Manav. Next question, please.

Thanks manov. Next question, please Jordan.

Jordan: Your next question comes from the line of Toni Kaplan from Morgan Stanley. Your line is live.

Your next question comes from the line of Tony Kaplan from Morgan Stanley. Your line is live.

Matti Tov: Thank you so much. I think earlier this week, we saw a headline that the Department of Commerce is considering changes to the fee structure and filing patents in the U.S. I know there's a lot of moving parts, and it's not totally settled yet, but just wanted to understand maybe the potential impacts to your business from the potential change in fee structure and how that plays out. Thanks.

Thank you so much. I think earlier this week, we saw a headline that the Department of Commerce is considering changes, uh, to the fee structure and filing patents in the US. And I know there's a lot of moving parts and you know, it's not totally settled yet, but just wanted to understand, you know, maybe the potential impacts to your business um, from sort of the potential change in, in fee structure and how that plays out thanks.

Matti Tov: First of all, we have seen this as well. It is very early days, and obviously, there is no definite decision and no definite view on the outside. Let us just remind ourselves that we have been in the IP ecosystem for more than two or three decades. We are an integral part of the ecosystem, including collaborating with patent offices worldwide, collaboration with law firms and with corporates. In a way, we are sitting in the intersection and supporting those institutions. Any change that will be, we are very well positioned to support this change and somehow even take advantage of this change. Yes, this market may be changing and may be not changing, but we have been there for the last 20, 30 years, and even more. We are very well positioned close to our customers.

So specifically we've seen this as well, it's very early days and obviously um there's no definite um decision and no definite view on our side but let's just remind ourselves that we've been in the IP ecosystem.

Matti Tov: We will track it. We will continue to, as it continues to evolve, then we will be collaborating with our customers and partners on this transition.

Wealth position to support this change and somehow even take advantage of this of this year. Yes, this Market may be changing and may be not changing, but we've been there for the last 20, 30 years, and even more. And we are very well positioned close to our customers. So we'll track it. We will continue to uh, as it continued to involve, then we will be collaborating uh, with our customers and partners on this transition.

Matti Tov: Thank you.

Mark Donohue: Thank you, Toni. Next question, Jordan.

Thank you. Thank you. Thank you, Tony.

Jordan: Your next question comes from the line of Owen Lau from Oppenheimer. Your line is live.

Analyst (various): Hi, good morning. Thank you for taking my question. For university funding cut, which is still a hot topic, I saw that 75% of your 2025 subscriptions have already been renewed in July, which is good. Could you please give us more color on your conversation with your clients about the current situation so far and the outlook for renewal in the second half and going into 2026? Thanks a lot.

Matti Tov: I will start, and then Jonathan may continue. We are looking good on ANG despite all the concerns that we collectively have. 93% of the ANG revenue is recurring. We have 96% renewal rates. As you mentioned, 75% of the books are already in-house. We do not have anything out of the ordinary with our customers, but let us just remind ourselves of a few things. Our ANG products are central and mission-critical to its organization. I cannot imagine a decent university today without the Web of Science and some of the surrounding problems. Any university will need to have an Alma-type solution. We are in a pretty good shape on the Web of Science and the ERP Alma things. With regards to the content, as I mentioned in my discussion, we were forward-looking, taking away the discretionary one-time expenditure, and this serves us very, very well these days.

Hi, good morning. Thank you for taking my question. So for University funding cut, which is still a Hot Topic. Um, I saw that 75% of your 2025 subscriptions have already been renewed in July which is good, but could you please give us more color on your conversation with uh your clients about the current situation so far, and the outlook for renewal in the second half and going into 2026. Thanks a lot. Can I start? And then Jonathan make you, you know, may continue. So we are looking good on AMG, despite of all the concerns that we collectively have. So 93% of the things is of the energy revenue is now recurring, we have 96 96%, renewal rates as you mentioned 75%, of the books is already in house.

We don't have anything out of the ordinarys wi with our customers but let's just remind ourselves of few things 1.

You know, our AMG products are Central and Mission critical tools organization. I can only imagine a decent University today without web of Science. And some of the surrounding problem, any University will need to have an alma type Solutions. So we are in a pretty good shape on the web of Science and, and the Erp Alma things.

With regards to the content, as I mentioned in my discussion, we will be forward-looking, taking away the discretionary one-time expenditure.

Matti Tov: We see the uptick of customers who were initially complaining about taking away their one-time purchases. We are now buying more and more of our subscription businesses, the PQ eBooks, the PQ digital collections, which actually serves them very, very well in this current economic climate. We are pretty confident that going ahead, we will continue to see good and decent renewal rates and uptake of the different ANG offerings. Thank you.

and this service very, very well these days and we see the uptake,

Of customers who will initially complaining about taking away the, the, you know, the 1 time purchases, we are now buying more and more of our subscription businesses. The pqe books, the PQ, these are collections, which actually serves them very very well in this um, you know, in this kind, uh, economic climate. So we are pretty confident that going ahead will continue to see a good and decent renewal rates and uptake of the different AMG offering.

Thank you.

Mark Donohue: Thank you, Gordon. Jordan, next question, please.

Thank you Gordon. Jordan next question please.

Jordan: Your next question comes from the line of Ashish Sabadra. Your line is live.

Your next question comes from the line of Ashes. Sabadra, your line is live.

Analyst (various): Hi. Hey, good morning, guys. This is Will Chee for Ashish Sabadra. Congrats on the quarter. I appreciate you guys taking our question. Last quarter, you guys initiated a new sales incentive plan with a refocus on subscription and recurring revenue. It has been great to kind of see that progress with the renewals tick up. I am curious to know if you could provide any updates, how that sales momentum has been continuing and any outlook from here. Thank you.

Hi 8. Good morning, guys. This is Will chi on first use of padra. Uh, congrats on the court and appreciate you guys taking that question. Um, last guys, last quarter you guys initiated on a new sales, incentive plan, uh, with a refocus on on subscription and recurring Revenue at, it's been great to kind of see that progress, uh, with with renewals tick up.

Matti Tov: Well, I think we've taken away a lot of hassle from the sales organization. We are very, very focused these days. Subscription, reoccurring, renewal, price, bringing back new business. Customers, like I've just attended a sales meeting last week in London, and people are very excited. They're very focused. They just do subscription and reoccurring as opposed to do subscription, one-time, one-time eBooks. It's just complicated. The focus, we're taking away, we took away a lot of complexity out of the organization and focusing on the sales organization. We have a great sales organization. We've done some changes which I've spoken about, a very upbeat about going forward for the rest of the year and for next year as well.

Curious, you know, if you could provide any updates, you know how that salesman momentum has been continuing and and and and the Outlook from here, thank you.

But I think we've taken away a lot of hassle from the sales organization. We are very, very focused, this days, subscription reoccurring, renewal price.

Bring it back new business. So customer like the the the I've just attended the sales meeting last week in in London and people are very excited, they are very focused, they just do subscription and reoccurring as opposed to do subscription 1 Time 1 time e-books. It's just complicated the focus. We're taking it. What we took away, a lot of complexity, out of the organization in focusing, the sales organization, we have a great sales organization. We've done some changes which has spoken about a very upbeat about about going forward for the rest of the year and for next year as well. So yeah.

Mark Donohue: Thank you.

Thank you.

Jordan: Just as a reminder, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of George Tong from Goldman Sachs. Your line is live.

This is a reminder, if you'd like to ask a question.

Press star 1 on your telephone keypad.

Your next question comes from the line of George Tong from Goldman Sachs. Your line is live.

Analyst (various): Hi, thanks. Good morning. Your clients in the healthcare business saw organic revenue growth positively inflect. Can you give a little bit more color around end market dynamics that you are seeing and how conversations with pharma and biotech companies have evolved?

And biotech companies have evolved.

Jonathan Collins: Yeah, thanks for the question, George. To be clear, what we saw in the second quarter is the subscription business within life sciences and healthcare return to positive organic ACV growth, which is a really good leading indicator for where we would expect subscription revenue for that business to be in the second half of the year. To your point, just a little color on the market. We primarily serve R&D and then the commercialization efforts of our life sciences customers. On the R&D side, that market continues to be stable. Spending on our types of solutions has been solid. We attribute the improvement largely to the investments that we have made, primarily in the Cortellis suite of products. Over the course of the last 6 to 12 months, we've made some really nice strides. Matti touched on a couple of those new capabilities that have gone into the products.

Yeah, thanks for the question, George. And, and, to be clear, uh, what we saw in the second quarter is the subscription business within life, sciences and Healthcare return, to positive organic ACV growth, uh, which is a really good leading indicator for where we would expect subscription Revenue, uh, for that business to be in the second half of the year, uh, to your point, just a little color on the market. You know, we primarily serve R&D. Uh, and then the commercialization efforts of uh, of our life sciences customers on the R&D side

Jonathan Collins: We've embedded AI, made investments in the workflow capabilities of those solutions, and we've seen nice usage and nice retention improvements on those products. We attribute that to the improvement that we've seen in this area. The commercialization part of that market continues to be relatively soft, and that's reflected in the results of our commercialization business. Certainly, stable in R&D, that's where we're really starting to see the traction based on the investments that we've made. Thanks for the question, George.

That market continues to, to be stable, uh, spending on our types of solutions has been solid. We attribute the Improvement. Uh, largely to the Investments that we have made, uh, primarily in the cortellis suite of products. So over the course of the last 6 to 12 months, uh, We've made some really nice strides me touched on a couple of those new capabilities that have gone into the products. We've embedded AI, um made investments in the in the workflow capabilities of those Solutions and we've seen uh nice usage and nice retention improvements uh on those products and we attribute that to the Improvement that we've seen in this area. Um the the commercialization part of that market continues to to be relatively soft

Uh, and that's reflected in the results of our commercialization business. Uh, but certainly stable in R&D, that's where we really starting to see the traction, uh, based on the Investments that we've made.

Analyst (various): Very helpful. Thank you.

Thanks for the question, George.

Very helpful. Thank you.

Jordan: Your final question comes from the line of Shlomo Rosenbaum from Stifel. Your line is live.

Analyst (various): Hi, this is Adam over Shlomo Rosenbaum. Why are disposals taking longer than expected? Is this a customer service focus, a shift towards trying to sell some of the assets, or something else? Thanks.

Your final question comes from the line of slow-mo. Rosen, bomb from stifel your line is live.

Matti Tov: It is pretty straightforward. It is one out of the three disposals. One is taking longer because we simply had some interaction with our customers, and they asked us to extend because it took them longer than we expected to get settled with alternative offerings. We just extended it by six months, and it reflects on the sellings. That is specifically on the one-time Ebooks. They asked for more time to get organized, and that is the reason. There is nothing behind this.

Hi. This is Adamo. Um why are disposals taking longer than expected? Is this a customer service Focus Shift towards trying to sell some of the assets or something else? Thanks.

All right it's pretty straightforward. I mean there's 1 out of the 3 disposable because we simply had some interaction with our customers and they asked us to extend because it took them longer than we expected to get settled with the alternative offering. So we just extended by 6 months and it's reflects on the settings that specifically on the 1 time ebooks uh they ask for more time to get organized. And that's that's the reason.

Nothing behind this.

Mark Donohue: Well, thank you very much. That concludes our call for today. If you have any follow-up questions, you can reach out to Investor Relations. Thank you very much.

Matti Tov: Thank you.

Thank you very much that concludes our call for today. If you have any follow-up questions, you can reach out to investor relations. Thank you very much. Thank you.

Jordan: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect