Q3 2025 Clarivate PLC Earnings Call

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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 one on your telephone keypad once again star one and if you'd like to withdraw your question simply press Star one again. Thank you.

I would now like to turn the call over to Mark Donohue head of Investor Relations.

Mark.

Thank you Greg Good morning, everyone. Thank you for joining us for declared a third quarter of 2025 earnings conference call as.

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 clarity is prohibited in 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 clarets industry.

Speaker #3: Thank you for standing by . At this time , I would like to welcome everyone to today's Clarivate Q3 2025 Earnings Conference call .

Mark Donohue: Thank you for standing by. At this time, I would like to welcome everyone to today's Clarivate Q3 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. Once again, star one. If you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Mark Donohue, Head of Investor Relations. Mark.

Differ materially from the anticipated results performance achievements or developments expressed or implied by such forward looking statements.

Speaker #3: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a question and answer session .

Information about the factors that cause actual results to differ materially from anticipated results or performance can be found in clarity as filed with the SEC and on the company's website.

Our discussion will include non-GAAP measures or adjusted numbers go higher.

<unk> believes non-GAAP results are useful in order to enhance understanding of our ongoing operation operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures.

Mark Donohue: Thank you, Greg. Good morning, everyone. Thank you for joining us for the Clarivate third quarter of 2025 earnings conference call. As a reminder, this conference call is being recorded and webcast and is copyrighted property of Clarivate, and the 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 in 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.

Conciliation of these measures to GAAP measures are available on our earnings release.

Supplemental presentation on our website.

With me today are <unk>, Chief Executive Officer, Jonathan <unk>, Chief Financial Officer. After our prepared remarks, we'll open the call for your questions and with that with the pleasure to turn the call over to Marty.

Good morning, everyone. Thank.

Thank you for joining us today as we review <unk> performance.

For the third quarter 2025.

On slide six.

I am pleased to share that our results this quarter reflect continued progress in our value creation plan.

Prove operational and financial results and strong commitment to deliver value for <unk> shareholders.

Mark Donohue: 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 a 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 on our earnings release and supplement our presentation on our website. With me today are Matti Shem Tov, Chief Executive Officer, and Jonathan Collins, Chief Financial Officer. After our prepared remarks, we'll open the call to your questions. With that, it's a pleasure to turn the call over to Matti.

Our forward looking metrics such as annual contract value continued to improve to one 6%.

Making a 30 basis point sequential improvement.

Driven by 2% ACB growth across academia and government.

Science and half hour.

Our renewal rate of 93% an improvement an important indicator was up 100 basis points year over year.

Our free cash flow generation continue to support our balanced capital allocation, including $150 million of opportunistic share repurchases.

Year to date as well as 100 million of debt Paydown.

Matti Shem Tov: Good morning, everyone. Thank you for joining us today as we review Clarivate's performance for the third quarter 2025. On slide six, I'm pleased to share that our results this quarter reflect continued progress in our Value Creation Plan, improved operational and financial results, and strong commitment to deliver value for our shareholders. Our forward-looking metrics, such as annual contract value, continued to improve to 1.6%, making a 30 basis point sequential improvement driven by 2% ACV growth across academia and government and life science and health. Our renewal rate of 93%, an important indicator, was up 100 basis points year over year. Our free cash flow generation continued to support our balanced capital allocation, including $150 million of opportunistic share repurchases year to date, as well as $100 million of debt paid down.

These results are testament to our team's dedication and the ongoing progress of our value creation plan.

Jonathan will cover the quarterly results in more detail shortly.

Our BCP on the slide seven of Ecp's, driving improved focused growth and innovation across the business.

We are accelerating product NII development by investing in proprietary asset and collaborating very closely with our customers.

Over the past year, we have launched 12 products and AI powered capabilities across our segments.

We expect this R&D investment to result in higher organic growth and the improved renewal rates in the future.

Our sales execution has improved support a stronger customer engagement and revenue retention and in helping us achieve our organic growth outlook through the first nine months of 2025.

We remain committed to optimizing our business model with a focus on increasing our core subscription and reoccurring mix to improve predictability.

Matti Shem Tov: These results are a testament to our team's dedication and the ongoing progress of our Value Creation Plan. Jonathan will cover the quarterly result in more detail shortly. On slide seven, our VCP is driving improved focus, growth, and innovation across the business. We are accelerating product and AI development by investing in proprietary assets and collaborating very closely with our customers. Over the past year, we have launched 12 products and AI-powered capabilities across our segments. We expect this R&D investment to result in higher organic growth and improved renewal rates in the future. Our sales execution has improved, supported stronger customer engagement and revenue retention, and helping us achieve our organic growth outlook through the first nine months of 2025.

Evidence by the 8% improvement this year compared to last year.

And our portfolio rationalization is enhancing our execution focus and capital allocation, which is expected to unlock greater value.

Turning to <unk> segment.

Positive sales performance included 2% ACB growth is contributor to predictable topline results.

Driven by our transition from transactional sales of data collection and looks to subscription based revenue streams.

This transaction. This transition has resulted in our AMG subscription mix now.

93% compared to 81% last year.

I believe this was clearly as the rider.

And I want to knowledge our teams for their great work in assisting our customer so this transition.

Matti Shem Tov: We remain committed to optimizing our business model with a focus on increasing our core subscription and recurring mix to improve predictability, as evidenced by the 8% improvement this year compared to last year. Our portfolio rationalization is enhancing our execution focus and capital allocation, which is expected to unlock greater value. Turning to the A&G segment, positive sales performance, including 2% ACV growth, is a contributor to predictable top-line results driven by our transition from transactional sales of digital collection and books to subscription-based revenue streams. This transition has resulted in our A&G subscription mix now at 93% compared to 81% last year. I believe that this was clearly the right decision, and I want to acknowledge our teams for the great work in assisting our customers through this transition.

We are pleased with our progress to date as we have secured more than 100 contract for our new content subscription framework driven by the new offerings, such as Barack with data collection and progressed ebooks.

We continue to see strong renewal patterns with 90%.

Both global A&D subscription for the full year successfully renewed through October 27.

We are also pleased to share with you that our complete we have completed.

A multimillion dollar renewals of web of science with the largest library consortium in the United States.

Considering the increase constrained on higher education, and research funding, especially in the U S. This renewed underscores the continued value that our solutions deliver two major research institutions nationwide.

Okay.

Our global reach is unmatched as evidenced by just some of the large international deals. We have shared with you this year, including the British Library Canadian Research knowledge network and Capex in Brazil.

Matti Shem Tov: We are pleased with the progress to date as we have secured more than 100 contracts for our new content subscription framework driven by the new offerings such as ProQuest data collections and ProQuest e-books. We continue to see strong renewal patterns with 90% of global A&G subscription for the full year successfully renewed through October 27. We are also pleased to share with you that we have completed a multimillion-dollar renewal of Web of Science with the largest library consortium in the U.S. Considering the increased constraint on higher education research funding, especially in the U.S., this renewal underscores the continued value that our solutions deliver to major research institutions nationwide. Our global reach is unmatched, as evidenced by just some of the large international deals we have shared with you this year, including the British Library, Canadian Research Knowledge Network, and CAPES in Brazil.

Recently, we finalized an agreement with University of Melbourne, Australia's Premier University. The deployment include library workflow solution, which provides comprehensive support for elaborating management resource discovery resource sharing and reading list creation.

Okay.

Moving to the intellectual property segments.

For the first nine months, the patent and trademark maintenance services reoccurring revenue was flat compared to the same period last year.

We are encouraged by this as it represents 3% improvement in the organic growth rate relatively relative to the full year of 2024.

Whereas this results show improvement we are committing to returning the segment to sustainable growth with maroon Maraud Maroon maraud as our new President of IP. We are confident we will drive continued progress across the business by increasing.

<unk> and streamline our processes as well as market recovery.

Matti Shem Tov: Recently, we finalized an agreement with the University of Melbourne, Australia's premier university, that deployment includes a library workflow solution which provides comprehensive support for library management, resource discovery, resource sharing, and reading list creation. Moving to the Intellectual Property segment, for the first nine months, the patent and trademark maintenance services recurring revenue was flat compared to the same period last year. We are encouraged by this as it represents 3% improvement in the organic growth rate relative to the full year of 2024. Where these results show improvement, we are committed to returning the segment to sustainable growth. With Maroun Mourad as our new President of IP, we are confident we will drive continued progress across the business by increasing agility and streamlining processes, as well as market recovery.

We continue to invest in AI based product and service innovation, while maintaining leadership.

Our leadership position in the global IP ecosystem for.

For instance, IP folio introduced an AI powered product taxonomy that automate product patent netting.

It has enabled companies to better identify which product correspond to the patent.

Variable tool for launch patent holders.

<unk> strategic portfolio decisions.

We continue to make improvement to the debit platform with cutting edge AI innovation, which is being integrated throughout the patent management workflow and.

And exciting addition in this.

In addition is that Derwent patent monotone and AI threat rating feature empowering clients to identify potentially high risk competitor filings.

These achievements allow users to proactively safeguards the intellectual property portfolio and help mitigate risks.

Matti Shem Tov: We continue to invest in AI-powered products and service innovation while maintaining a leadership position in the global IP ecosystem. For instance, IPFolio introduced an AI-powered product taxonomy that automates product patent mapping. It enables companies to better identify which products correspond to their patent, a valuable tool for large patent holders making strategic portfolio decisions. We continue to make improvements to the Derwent platform with cutting-edge AI innovation, which is being integrated throughout the patent management workflow. An exciting addition in this is the Derwent Patent Monitor, an AI threat rating feature, empowering clients to identify potentially high-risk competitor filings. This achievement allows users to proactively safeguard their intellectual property portfolio and help mitigate risks. During the third quarter, we were chosen to supply China Petrochemical Corporation, mainly China's largest oil and petrochemical supplier, with intellectual property solutions and the Web of Science platform.

Okay.

During the third quarter, we were chosen to supply China petrochemical cooperation mainland China mainland China's largest oil and petrochemical supplier with intellectual property solution and the web of science platform. This cross sell collaboration is a testament to our ability.

To leverage expertise and provide customers with solutions that meet all IP and research needs.

Moving to life science and health segments.

I am personally excited it has returned to 2% ACB growth this year.

The business has demonstrated strong performance by introducing new products and advancing AI integration, so improved offering and specialized expertise within our life science platform.

We recently launched DRG commercial analytics through 60, a data analytics.

Six tool aimed specifically at the metal at the Med Tech sector we.

We were pleased to partner with <unk>, a global ultra biologics leader to leverage this new offering this comprehensive analytics platform will assist <unk> in making more informed decision to enhance product adoption improved patient outcomes and strengthened its position as a global leader.

<unk>.

Matti Shem Tov: This cross-sell collaboration is a testament to our ability to leverage expertise and provide customers with solutions that meet all IP and research needs. Moving to the life science and health segment, I am personally excited it has returned to 2% ACV growth this year. The business has demonstrated strong performance by introducing new products and advancing AI integration through improved offerings and specialized expertise within our life science platform. We recently launched DRG Commercial Analytics 360, a data analytics tool aimed specifically at the medtech sector. We were pleased to partner with BioVentus, a global orthobiologics leader, to leverage this new offering. This comprehensive analytics platform will assist BioVentus in making more informed decisions to enhance product adoption, improve patient outcomes, and strengthen its position as a global leader. In September, we introduced our AI-powered regulatory assistant in Cortellis Regulatory Intelligence to help professionals manage global requirements more efficiently.

In September we introduced our AI powered our regulatory assistant in Qatar is regulatory intelligence to help professionals manage manage global requirements more efficiently develop with customer feedback and decile of our industry partner it meets their needs.

Of Biopharma metric and clinical research organization.

With new features such as conversational AI with referenced answered answers and multilingual capabilities. It allows users to search and interact and preferred languages.

We also embedded additional we're also embedding additional AI agent across key existing life science offering as well as launching new AI native products. We expect this offering to help us expand ACB.

Going forward.

Okay.

On the next slide I am pleased with the significant progress we have made by executing our value creation plan across all three segments. We're.

We introduced AI powered solutions, including web of Science Research intelligence.

Agent.

Hey, Mark a physician assistant risk Mark.

Search and regulatory functionality within <unk>, we have also driven internal cost efficiency scaled our customer success teams and improved sales execution.

Matti Shem Tov: Developed with customer feedback and tested by industry partners, it meets the needs of biopharma, medtech, and clinical research organizations. With new features such as conversational AI with reference answers and multilingual capabilities, it allows users to search and interact in preferred languages. We are also embedding additional AI agents across key existing life science offerings, as well as launching new AI-native products. We expect this offering to help us expand ACV going forward. On the next slide, I'm pleased with the significant progress we have made by executing our Value Creation Plan across all three segments. We introduced AI-powered solutions, including Web of Science Research Intelligence, AI Agent, Trademark Opposition Assistant, RiskMark, and search and regulatory functionality within Cortellis. We have also driven internal cost efficiency, scaled our customer success teams, and improved sales execution. These actions have optimized our business model and accelerated innovation across our portfolio.

This action has optimized our business model and accelerated innovation across our portfolio.

As we look ahead to 2026, our focus remains on executing executing our robust a value creation plan, while driving innovation and operational excellence across our client base.

We will continue the rapid deployment of identikit AI embedding it across customer workflows and segment.

Building on our momentum, we will release, new AI native solutions, and extending AI powered capabilities across our flagship portfolio accelerating AI innovation at scale is a top priority as we driving organic ACB and.

Recurring revenue growth through focused.

Execution.

We will aim to continue to boost sales productivity by focusing on our people.

Assesses and tools, leveraging AI insights engaging customer to support ongoing account growth and improving commercial execution.

We believe our operational efficiency and margin expansion will be achieved by utilizing adjourn PKI in embedding over in addition wide AI adoption for cost efficiencies.

Matti Shem Tov: As we look ahead to 2026, our focus remains on executing our robust Value Creation Plan while driving innovation and operational excellence across Clarivate. We will continue the rapid deployment of agentic AI, embedding it across customer workflows and segments. Building on our momentum, we will release new AI-native solutions and extend AI-powered capabilities across our flagship portfolio. Accelerating AI innovation at scale is a top priority as we're driving organic ACV and recurring revenue growth through focused sales execution. We will aim to continue to boost sales productivity by focusing on our people, processes, and tools, leveraging AI insights, engaging customers to support ongoing account growth, and improving commercial execution. We believe operational efficiency and margin expansion will be achieved by utilizing agentic AI and embedding organization-wide AI adoption for cost efficiency.

Finally, we are strengthening our business model and making focus.

And market focus by completing our exit from Andy transactional books sales and the life Science mutable data resale market.

Resetting market.

Hum.

Okay.

Strategic alternatives earlier early this year, we have highlighted we are actively progressing through a comprehensive review and assessment of strategic alternatives.

As we communicated to you in July we are making good progress and expect to share more details with you.

When we report our fourth quarter results in February 2026.

Yes.

Yes.

In closing.

Our performance this year.

Starting to demonstrate clear and positive momentum across our core financial metrics.

<unk> on track to deliver our 2025 financial guidance.

We have achieved sequential and year over year improvement in organic HCV to one six.

Matti Shem Tov: Finally, we are streamlining our business model and making market focus by completing our exit from A&G transactional books sales and the life science renewal data reselling market. Earlier this year, we have highlighted that we are actively progressing through a comprehensive review and assessment of strategic alternatives. As we communicated to you in July, we are making good progress and expect to share more details with you when we report our fourth quarter result in February 2026. In closing, our performance this year is starting to demonstrate clear and positive momentum across our core financial metrics. We remain on track to deliver our 2025 financial guidance. We have achieved sequential and year-over-year improvement in organic ACV to 1.6% and renewal rates to 93%.

6% and renewal rates to 93%.

Recurring organic revenue growth has improved to 6% for the first nine months of 2025 compared to 1% last year and organic revenue mix has risen to 88% up from 80% in 2024. These results reflect our.

Commitment to driving sustained sustainable growth and operational excellence as we look forward. We are confident that our strong foundation and ongoing momentum position.

Ongoing momentum position us.

For this as well to create shareholder value. Thank you for your continued support and interest in clarity.

We look forward to updating you on our progress in the quarters to come and I would like to now to turn the call over to Jonathan for.

For a review of our financial results. Thank you.

Thank you Marty and good morning, everyone. Slide 16 is an overview of our third quarter and year to date financial results compared with the same periods from the prior year.

Q3 revenue was $623 million essentially flat over the same period in the prior year, bringing the year to date to 184 billion. The third quarter net loss was $28 million the improvement over Q3 of the prior year is driven by higher foreign exchange gains and the noncash impairment charge recorded last year that did not recur this year.

Matti Shem Tov: Recurring organic revenue growth has improved to 0.6% for the first nine months of 2025 compared to 0.1% last year, and organic revenue mix has risen to 88%, up from 80% in 2024. These results reflect our commitment to driving sustainable growth and operational excellence as we look forward. We are confident that our strong foundation and ongoing momentum position us well to create shareholder value. Thank you for your continued support and interest in Clarivate. We look forward to updating you on our progress in the quarters to come. I'd like to now turn the call over to Jonathan for a review of our financial results. Thank you.

Adjusted diluted EPS, which excludes items like the impairment was flat sequentially at 18.

The change over last year is entirely attributed to the divestiture of scholar one.

Operating cash flow was $181 million in the quarter the change compared to last year is driven by adjusted EBITDA and working capital.

Please turn with me now to page 17 for a closer look at the drivers of the third quarter top and bottom line changes from the prior year.

The top line was essentially flat in the third quarter, yet margins were lower as expected as we continue to invest for future growth and remain on track to deliver our full year guidance.

The changes were driven by four primary factors first while organic subscription revenues continued to grow at more than 1%. Following the continued acceleration in our HCV total organic revenue was essentially flat as the subs growth was offset by modest reoccurring and transactional declines.

Jonathan Collins: Thank you, Matti, and good morning, everyone. Slide 16 is an overview of our third quarter and year-to-date financial results compared with the same periods from the prior year. Q3 revenue was $623 million, essentially flat over the same period in the prior year, bringing the year-to-date to $1.84 billion. The third quarter net loss was $28 million. The improvement over Q3 of the prior year is driven by higher foreign exchange gains and the non-cash impairment charge recorded last year that did not recur this year. Adjusted diluted EPS, which excludes items like the impairment, was flat sequentially at $0.18. The change over last year is entirely attributed to the divestiture of Scholar One. Operating cash flow was $181 million in the quarter. The change compared to last year is driven by adjusted EBITDA and working capital.

Operating expenses were higher in the third quarter as we continue to invest to drive growth and incurred higher incentive compensation expense as we remain on track to deliver our full year guidance.

During Q3 the businesses, we are disposing actually increased slightly over the prior year due to multiple large one time, yet low margin E book sales, which more than offset continued declines in the other products. This is a meaningful contributor to the raising of our full year guidance range on revenue, which I'll come to in just a.

Third.

Jonathan Collins: Please turn with me now to page 17 for a closer look at the drivers of the third quarter top and bottom line changes from the prior year. The top line was essentially flat in the third quarter, yet margins were lower as expected, as we continue to invest for future growth and remain on track to deliver our full-year guidance. The changes were driven by four primary factors. First, while organic subscription revenues continued to grow at more than 1% following the continued acceleration in our ACV, total organic revenue was essentially flat as the subs growth was offset by modest recurring and transactional declines. Operating expenses were higher in the third quarter as we continued to invest to drive growth and incurred higher incentive compensation expense as we remain on track to deliver our full-year guidance.

Third as we've seen in the last couple of quarters, we continued to experience the inorganic impact of the scholar one divestiture and four U S. Dollar remained relatively weaker against the basket of foreign currencies, which caused a foreign exchange tailwind on the top and bottom lines. Please turn with me now to page 18 to review how these same drivers impacted the top and bottom line.

Changes on a year to date basis compared to the same period in the prior year.

Year to date revenues have declined by more than 50 million. However margins are within 30 bps of the same period in the prior year, let's step through the major drivers of this change as Marty noted in his remarks year to date organic growth has improved by 160 basis points over where we ended last year.

This modest top line growth over last year is offset by higher operating cost as we continue to invest to grow the business, while offsetting some of the cost inflation with efficiencies and the.

Jonathan Collins: Second, during Q3, the businesses we are disposing actually increased slightly over the prior year due to multiple large, one-time yet low-margin e-book sales, which more than offset continued declines in the other products. This is a meaningful contributor to the raising of our full-year guidance range on revenue, which I'll come to in just a few moments. Third, as we've seen in the last couple of quarters, we continue to experience the inorganic impact of the Scholar One divestiture. Fourth, the U.S. dollar remained relatively weaker against the basket of foreign currencies, which caused a foreign exchange tailwind on the top and bottom lines. Please turn with me now to page 18 to review how these same drivers impacted the top and bottom line changes on a year-to-date basis compared to the same period in the prior year. Year-to-date, revenues have declined by more than $50 million.

The combined impact of the disposals and divestitures lowered revenue by nearly $70 million and adjusted EBITDA by just over $30 million compared to the same period last year.

Both the top and bottom lines benefited from foreign exchange translations. So far this year as the U S. Dollar remains weaker than a basket of foreign currencies and the profit conversion on the change is high as a result of transactional gains.

Please turn with me now to page 19 for a look at how the Q3 and year to date adjusted EBITDA converting to free cash flow and how we allocated the capital.

Free cash flow was $115 million in the third quarter, bringing the year to date to $276 million.

The change so far this year over the prior year is driven entirely by the adjusted EBITDA impact outlined on the last two pages as higher onetime costs are offset by lower capital spending.

Jonathan Collins: However, margins are within 30 bps of the same period in the prior year. Let's step through the major drivers of this change. As Matti noted in his remarks, year-to-date, organic growth has improved by 160 bps over where we ended last year. This modest top-line growth over last year is offset by higher operating costs as we continue to invest to grow the business while offsetting some of the cost inflation with efficiencies. The combined impact of the disposals and divestitures lowered revenue by nearly $70 million and adjusted EBITDA by just over $30 million compared to the same period last year. Both the top and bottom lines benefited from foreign exchange translations so far this year, as the U.S. dollar remains weaker than a basket of foreign currencies, and the profit conversion on the change is high as a result of transactional gains.

We incurred $13 million of one time cost in Q3, and 55 million. So far this year largely driven by restructuring related outflows associated with the implementation of the value creation plan.

<unk> spending was $11 million lower than last year in Q3, as we begin to recognize the savings associated with the disposals.

We used a combination of free cash flow, we generated in the third quarter and cash on hand to repurchase another 11 7 million shares, bringing the year to date buybacks to $150 million and we call the $100 million of the bonds that are due next year.

The balanced capital deployment. This year has allowed us to maintain net leverage of about four turns while retiring nearly $35 million or about 5% of our outstanding shares.

Jonathan Collins: Please turn with me now to page 19 for a look at how the Q3 and year-to-date adjusted EBITDA converted to free cash flow and how we allocated the capital. Free cash flow was $115 million in the third quarter, bringing the year-to-date to $276 million. The change so far this year over the prior year is driven entirely by the adjusted EBITDA impact outlined on the last two pages, as higher one-time costs are offset by lower capital spending. We incurred $13 million of one-time costs in Q3 and $55 million so far this year, largely driven by restructuring-related outflows associated with the implementation of the Value Creation Plan. Capital spending was $11 million lower than last year in Q3, as we begin to recognize the savings associated with the disposals.

We also took the opportunity during the third quarter to extend our interest rate protection on our floating rate debt by four years by entering into $500 million of interest rate swaps through 2000.

Please turn with me now to page 20 for a look at our full year financial guidance ranges for this year.

Beginning at the top of the page based on the continued acceleration of our organic annual contract value in the third quarter, we are raising the indication from the midpoint towards the higher end of our range as we expect continued acceleration in the fourth quarter.

We continue to anticipate recurring organic growth in the upper half of our range as.

As a result of the better than planned organic performance combined with a weaker U S dollar and slower than anticipated attrition in the business disposals, we are raising our revenue guidance by $50 million from our last indication near the upper end of the previous range to 244 billion at the midpoint of our new range.

Jonathan Collins: We used a combination of free cash flow we generated in the third quarter and cash on hand to repurchase another 11.7 million shares, bringing the year-to-date buybacks to $150 million, and we called $100 million of the bonds that are due next year. The balanced capital deployment this year has allowed us to maintain net leverage of about four turns while retiring nearly 35 million or about 5% of our outstanding shares. We also took the opportunity during the third quarter to extend our interest rate protection on our floating rate debt by four years by entering into $500 million of interest rate swaps through 2023. Please turn with me now to page 20 for a look at our full-year financial guidance ranges for this year.

Due to the slower than expected decline in our revenue of the businesses. We're disposing. We now anticipate recurring revenue mix will likely be towards the low end of the range. It's worth reiterating what Marty indicated earlier, our organic recurring revenue mix, which excludes the disposals is already at 88% year to date and we expect more.

At this level through the end of the year.

Moving down the page, we now expect adjusted EBITDA at the high end 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 and free cash flow near the midpoint of the ranges.

Jonathan Collins: Beginning at the top of the page, based on the continued acceleration of our organic annual contract value in the third quarter, we are raising the indication from the midpoint towards the higher end of our range as we expect continued acceleration in the fourth quarter. We continue to anticipate recurring organic growth in the upper half of our range. As a result of the better-than-planned organic performance combined with a weaker U.S. dollar and slower-than-anticipated attrition in the business disposals, we are raising our revenue guidance by $50 million from our last indication near the upper end of the previous range to $2.44 billion at the midpoint of our new range. Due to the slower-than-expected decline in our revenue of the businesses we're disposing, we now anticipate recurring revenue mix will likely be towards the low end of the range. It's worth reiterating what Matti indicated earlier.

Please turn with me now to page 21 for more details on the full year top and bottom line changes were expecting compared to last year.

The full year guidance for the top and bottom lines is based on our expectation that Q4 revenue and adjusted EBITDA will be about $600 million and approached $250 million respectively.

The anticipated changes in revenue and to a large extent adjusted EBITDA for the full 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 continue to expect organic growth will be essentially flat as the growth in recurring revenues will also.

The originally anticipated decline in our remaining transactional business.

Jonathan Collins: Our organic recurring revenue mix, which excludes the disposals, is already at 88% year-to-date, and we expect we'll remain at this level through the end of the year. Moving down the page, we now expect adjusted EBITDA at the high end 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 and free cash flow near the midpoint of the ranges. Please turn with me now to page 21 for more details on the full-year top and bottom line changes we're expecting compared to last year. The full-year guidance for the top and bottom lines is based on our expectation that Q4 revenue and adjusted EBITDA will be about $600 million and approach $250 million, respectively.

This represents about a $10 million improvement over our initial indication at the midpoint of the original revenue 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 $90 million and we are reducing operating expenses by $60 million, which yields a profit impact of about $30 million. We expect most of the remaining more than $100 million revenue reduction will take place next year.

The divestitures above valley patent scholar, one last year will lower revenue by about $40 million in profit by about $20 million.

We continue to anticipate a modest foreign exchange translation benefit to the top and bottom lines of $10 million and $5 million respectively. As the U S. Dollar has remained slightly weaker against other foreign currencies compared to the prior year.

Jonathan Collins: The anticipated changes in revenue and, to a large extent, adjusted EBITDA for the full 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 continue to expect organic growth will be essentially flat as the growth in recurring revenues will offset the originally anticipated decline in our remaining transactional business. This represents about a $10 million improvement over our initial indication at the midpoint of the original revenue 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 $90 million, and we are reducing operating expenses by $60 million, which yields a profit impact of about $30 million.

Turning now to page 22 to step through the components that will lead to more than a third of the adjusted EBITDA converting to free cash flow.

As I mentioned, we continue to expect free cash flow near the midpoint of our range onetime costs are expected to be elevated over last year as we invest to execute the value creation plan, we expect cash interest to improve by about $10 million over the prior year as a result of the debt we prepaid last year.

Cash taxes are expected to be in line with 2024, we.

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

And while we remain committed to investing in product innovation, the strategic disposals and cost efficiencies will improve capital spending by about $30 million.

Jonathan Collins: We expect most of the remaining more than $100 million revenue reduction will take place next year. The divestitures of both Valley Pat and Scholar One last year will lower revenue by about $40 million and profit by about $20 million. We continue to anticipate a modest foreign exchange translation benefit to the top and bottom lines of $10 million and $5 million, respectively, as the U.S. dollar has remained slightly weaker against other foreign currencies compared to the prior year. Please turn with me now to page 22 to step through the components that will lead to more than a third of the adjusted EBITDA converting to free cash flow. As I mentioned, we continue to expect free cash flow near the midpoint of our range. One-time costs are expected to be elevated over last year as we invest to execute the Value Creation Plan.

The net impact of these changes is free cash flow of $340 million at the midpoint of the range and will result in the same conversion on adjusted EBITDA last year at about 34%.

From a capital allocation perspective, we continue to have the flexibility between share repurchases and deleveraging as we move into the fourth quarter.

In closing on page 23, I'd like to draw your attention to the consistent free cash flow we've generated over the past four years deliver.

Delivering free cash flow at the midpoint of this year's guidance range will result in a four year cumulative average growth rate of 4%.

During the same period, our free cash flow conversion on adjusted EBITDA will be about 35%.

At the end of Q3, our stock was yielding a double digit free cash flow return of 13%.

Jonathan Collins: We expect cash interest to improve by about $10 million over the prior year as a result of the debt we prepaid last year. Cash access is expected to be in line with 2024. We anticipate the change in working capital this year will be negligible, which will represent 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 $30 million. The net impact of these changes is free cash flow of $340 million at the midpoint of the range and will result in the same conversion on adjusted EBITDA of last year at about 34%. From a capital allocation perspective, we continue to have the flexibility between share repurchases and deleveraging as we move into the fourth quarter.

By the end of the year, we will have generated $1 5 billion of free cash flow over the past four years, which we've used to repay over $1 billion of debt lowering our net and ravaged by a turn and to repurchase more than <unk> 5 billion of stock lowering our share count by 10%, we believe that executing the value creation plan will.

Lead to healthy sustainable organic revenue growth and further improve free cash flow delivering meaningful value for shareholders moving forward.

I'd like to finish by thanking all of you for listening in this morning, and I'm now going to turn the call back over to Greg. So that we can take your questions Greg.

Greg. Please go ahead.

Great. Thanks, Jonathan at this time I would like to remind everyone in order to ask a question press star and the number one on your telephone keypad. Once again star one and we will pause just a moment to compile the Q&A roster.

Jonathan Collins: In closing, on page 23, I'd like to draw your attention to the consistent free cash flow we've generated over the past four years. Delivering free cash flow at the midpoint of this year's guidance range will result in a four-year cumulative average growth rate of 4%. During the same period, our free cash flow conversion on adjusted EBITDA will be about 35%. At the end of Q3, our stock was yielding a double-digit free cash flow return of 13%. By the end of the year, we'll have generated $1.5 billion of free cash flow over the past four years, which we've used to repay over $1 billion of debt, lowering our net leverage by a turn, and to repurchase more than half a billion of stock, lowering our share count by 10%.

Alright, it looks like our first question today comes from the line of Toni Kaplan with Morgan Stanley Tony. Please go ahead.

Hey, Good morning. This is Greg bearish on for Tony Thanks for taking our question.

Maybe we could dive into the patent renewal business there.

Been under a little bit of pressure over the last couple of years due to market volume headwinds.

Hoping you could provide some color on the competitive landscape and where your product stacks up with some other products in the market like in Aqua and how Youre positioned and then some of the more recent pressures.

Jonathan Collins: We believe that executing the Value Creation Plan will lead to healthy, sustainable organic revenue growth and further improve free cash flow, delivering meaningful value for shareholders moving forward. I'd like to finish by thanking all of you for listening in this morning, and I'm now going to turn the call back over to Greg so that we can take your questions. Greg, please go ahead.

Year to date, how would you characterize that in terms of market headwinds versus competitive headwinds.

Yes. Thank you for the question, Greg I'll touch on the numbers a bit and then Marty will probably want to add some color on the on the market positioning so just as a highlight the reoccurring order type for us is predominantly or almost entirely our patents and trademark renewal service that you highlight.

Mark Donohue: Great. Thanks, Jonathan. At this time, I would like to remind everyone in order to ask a question, press star and the number one on your telephone keypad. Once again, star one. We will pause just a moment to compile the Q&A roster. All right. Looks like our first question today comes from the line of Tony Kaplan with Morgan Stanley. Tony, please go ahead.

Last year that part of our business declined by about 3% and on a year to date basis were about flat. So the trajectory is headed in the right direction.

And we believe in the coming years under <unk> leadership and with the rest of the team. We can return that business to healthy organic growth and it's really a combination of two factors.

Greg Parrish: Hey, good morning. This is Greg Parrish on for Tony. Thanks for taking our question. Thought maybe we could dive into the patent renewal business there. Obviously, it's been under a little bit of pressure over the last couple of years due to market volume headwinds. Hoping you could provide some color on the competitive landscape and where your product stacks up with some other products in the market like an Aqua and how you're positioned. Some of the more recent pressure, say, you know, year to date, you know, how would you characterize that in terms of market headwinds versus competitive headwinds? Thanks.

The improvement of our competitive position, we continue to make meaningful investments in our.

Workflow software that we deliver to the market, which is an important tool in driving this part of the business, but in addition to that we expect the market to continue to recover and move in the right direction. So I think the message for US is we're moving in the right direction improved year over year change compared to what we saw last year.

But theres still room to improve here as we move into 2026, maybe climbing back on the value creation plan. I mean, we are we have developed great you've been in place.

Jonathan Collins: Thank you for the question, Greg. I'll touch on the numbers a bit, and then Matti will probably want to add some color on the market positioning. Just as a highlight, the recurring order type for us is predominantly or almost entirely our Patent and Trademark Renewals service that you highlight. Last year, that part of our business declined by about 3%. On a year-to-date basis, we're about flat. The trajectory is headed in the right direction. We believe in the coming years, under Maroun's leadership and with the rest of the team, we can return that business to healthy organic growth. It's really a combination of two factors. It's the improvement of our competitive position. We continue to make meaningful investments in our workflow software that we deliver to the market, which is an important tool in driving this part of the business.

So just about a year, we're making headway and progress on the A&D side on the life Science side, we are introducing also some changes into.

IP segment was.

Renewed sales structure and processes with some upcoming new products.

The product that we have launched already like.

Trademarked risk mark dealt with by the monitor.

Before your law and were.

I'm very confident that the thing where we've improved performance with lifetime.

<unk> was marooned coming on modeling the one coming on I think we have all the confidence of all of the confidence we will return.

IP into a growing segment as well.

Jonathan Collins: In addition to that, we expect the market to continue to recover and move in the right direction. I think the message for us is we're moving in the right direction, improved year-over-year change compared to what we saw last year, but there's still room to improve here as we move into 2026.

Okay. Thank you Greg.

Yeah.

Alright, Thanks, Greg.

And our next question comes from the line of Scott Wurtzel with Wolfe Research Scott. Please go ahead.

Hey, good morning, guys and thank you for taking my questions just on the value creation plan and some of the updates there I noticed that you added a couple of new innovations, whether it's on the spectrum or the Opex AI research assistant.

Matti Shem Tov: Maybe coming back on the Value Creation Plan, I mean, we have the Value Creation Plan in place for just about a year. We're making headway and progress on the A&G side and Life Science side. We are introducing also some changes into our IP segment with renewed sales structure and processes with some upcoming new products, people, products that we have launched already, like trademark RiskMark, Derwent Patent Monitor, IPFolio. We are very confident that the same way we've improved performance with Life Science and A&G with Maroun Mourad coming on, I think we have all the confidence that we will turn IP into a growing segment as well.

Wondering if you can talk a little bit about those products that you sort of added to your roadmap here and you know what.

You sort of see those kind of creating for the business as a whole.

Overall.

I'll just refer to my background I'm a product person bye bye.

This is me I am very very upbeat about introducing product. So we have.

When I joined them part of a fundamental piece of our value question. Then is is product innovation. So we were in two ways into three product <unk> AI enablement of the existing product portfolio, both to protect the retention rate and to be more competitive in the market and this is evidenced by.

Growing ACB and by buying a better retention rate at the same time, we're also implementing changes saw introducing product, which well native.

Jonathan Collins: Okay. Thank you, Greg.

Mark Donohue: All right. Thanks, Greg. Our next question comes from the line of Scott Wertzel with Wolfe Research. Scott, please go ahead.

Like AI bone <unk> bonds. One example is the risk more product from trademark on the IP segment.

[Analyst]: Hey, good morning, guys, and thank you for taking my questions. Just on the Value Creation Plan and some of the updates there, noticed that, you know, you added a couple of new innovations, whether it's on the Specto or the OFF-X AI research assistant. Just wondering if you can talk a little bit about, you know, those products that you've sort of added to your roadmap here and, you know, what you sort of see those, you know, kind of creating for the business as a whole. Thanks.

Product is the web of Science research intelligence, which is an up and coming product. We have already closed about 20 contracts and their product was only going to be launched in the first quarter 2000, 22026 2026, there is a lot of energy focus going into AI innovation.

Matti Shem Tov: Yeah, overall, to refer to my background, I'm a product person by, by this is, this is me. I am very, very upbeat about introducing product. We have, when I joined, and part of a fundamental piece of our Value Creation Plan is product innovation. We went two ways in the three products. One is AI enablement of the existing product portfolio, both to protect the retention rate and to be more competitive in the market. This is evidenced by that growing ACV and by a better retention rate. At the same time, we are also implementing changes or introducing products which were native for, like, AI-born, native AI-born. One example is a RiskMark product from trademarks on the IP segment. Another product is Web of Science Research Intelligence, which is an up-and-coming product.

Both existing and new.

<unk>.

AI native product.

Product, we're utilizing some of the processes that we have developed in the A&D being.

My background being with some brokers a lot of collaboration with our customer base, which will help boost drug working very well for us. So there are a lot of <unk>.

Recent product innovation, all over the segments renewed energy around product.

This is the way we will continue to do to conduct their business.

To come thank you for the question.

Alright, Thanks, guys. Thanks, Scott.

Thank you Scott.

And our next question comes from the line of Shlomo Rosenbaum with Stifel. Shlomo. Please go ahead.

Hi, Thank you.

Quick one for Jonathan and then wanted to ask you something Marty Jonathan It looks like there were some multiple large bulk transactions that occurred in advance of the companies shutting down that area could you quantify for us the impact of those transactions versus what you were expecting both for revenue and EBITDA and then.

Matti Shem Tov: We have already closed about 20 contracts, and the product is only going to be launched in the first quarter of 2026. There's a lot of energy focus going into AI innovation, both existing and new AI-native products. We're utilizing some of the processes that we have developed in the A&G, being, in my background being CEO of Exhibits and ProQuest, a lot of collaboration with our customer base, which will help, which are working well for us. There's a lot of different product innovation all over the segments, renewed energy around product. This is the way we will continue to do to conduct our business in years to come. Thank you for the question.

After that Marty maybe after a year on the job over here could you just give us an idea as to.

What you think the potential of this business is.

Sure.

Working on edge of trying to put in your new plan, making some.

A lot of strategic changes in it.

What do you think the potential is versus when you joined over here and if you could just give us some thoughts about how we should think about this business longer term.

Yes happy to take the first part Shlomo so.

In the quarter, we had multiple larger EBIT type transactions without those in the quarter, we would've seen disposals be down over $20 million. So the impact was material in the quarter. We didn't have anything like that in Q3 of the prior year.

Greg Parrish: Of course. Thanks, guys.

Jonathan Collins: Thanks, Scott.

Mark Donohue: Thank you, Scott. Our next question comes from the line of Shlomo Rosenbaum with Stifel. Shlomo, please go ahead.

Shlomo Rosenbaum: Hi. Thank you. One quick one for Jonathan, then I want to ask you something, Matti. Jonathan, it looks like there were some multiple large book transactions that occurred in advance of the company shutting down that area. Could you quantify for us the impact of those transactions versus what you were expecting both for revenue and EBITDA? After that, Matti, maybe after a year on the job over here, could you just give us an idea as to what you think the potential of this business is, after working on it, trying to put in your new plan, making some strategic changes in it? What do you think the potential is versus when you joined over here? If you could just give us some thoughts about how we should think about this business longer term.

We did have a pretty sizable deal in Q4 of last year that will lap.

Which is why when we indicated revenue in Q4 should be around $600 million.

It'll be down versus prior year. So these are these are ones that from a top line standpoint, our material margin is not very high on those given the nature of the transaction, but that's a little bit of color on that.

Disposals. So thank you. Thank you for the question Shlomo again.

Really enjoying the journey here there is a lot to do as you can imagine this company has gone through a lot and I think we've got it now all focused in the right direction. The more I learn about the company as a more and meet customers now are people, we have some very great fundamentals, including the amazing assets we have.

In the different product lines on the different segment as well as great customer base very supportive and great talent.

Jonathan Collins: Yeah, happy to take the first part, Shlomo. In the quarter, we've had multiple larger e-book type transactions. Without those in the quarter, we would have seen disposals be down over $20 million. The impact was material in the quarter. We didn't have anything like that in Q3 of the prior year. We did have a pretty sizable deal in Q4 of last year that will lap, which is why when we indicated revenue in Q4 should be around $600 million, that'll be down versus prior year. These are ones that from a top-line standpoint are material. Margin's not very high on those, given the nature of the transaction, but that's a little bit of color on the disposals.

As opposed to where we are taking as a company.

I believe.

Over time, we can take the company back to growth rates back to market growth rate. If you asked me and three 4% over time. This is the market growth that we believe is in IP four 5%. This is the growth rate and I think we should baeza and in life science is slightly high.

But definitely I believe we will be taking the company. Although she is.

<unk>.

<unk> into market into market, we have the people we have the product and we have the customer base. So no reason why not to be too.

Matti Shem Tov: Thank you for the question, Shlomo. I'm really enjoying the journey here. There's a lot to do, as you can imagine. This company has gone through a lot. I think we got it now all focused in the right direction. The more I learn about the company, the more I meet customers and know our people. We have some very great fundamentals, including the amazing assets we have in the different product lines and the different segments, as well as a great customer base, very supportive, and great talent in-house. As opposed to where we are taking the company, I believe over time we can take the company back to growth rate, back to market growth rate. If you ask me, A&G 3%, 4% over time, this is the market growth rate that we believe is. In IP, 4%, 5%, this is the growth rate.

To take the company to where it belongs in terms of drawing the business overtime.

Yeah.

Thank you Eddie any specifics we can.

Thank you Soma next question please.

Okay.

Yes before our next question just one more reminder, star one on your telephone keypad to ask a question once again star one and our next question comes from the line of Ashish <unk> with RBC capital markets. Ashish. Please go ahead.

Hey, Good morning, guys. This is will chi on for <unk> I. Appreciate you guys taking my question.

When you guys think about the ECB acceleration to four Q could you give us a little bit of context, maybe on which segments you guys would call out as the primary drivers.

Matti Shem Tov: I think we should be there. In life science, it's slightly higher. I believe we will be taking the company over a few years into market rate. We have the people, we have the product, and we have the customer base. There is no reason why not to be, to be, you know, to take the company to where it's belonging in terms of growing the business over time.

And also maybe just any commentary around where you think that that kind of largest room for improvement might be as well.

Yes. Thanks for the for the question will I think the encouraging sign for us as we progress through this year, we started the year at ACD less than 1%, we're now up over <unk>.

Percent and a half we've seen improvement in all of our segments. So each segment has made a contribution in the most notable improvement.

Jonathan Collins: Thank you.

Matti Shem Tov: Any specifics we can?

Has been with the life Sciences business.

Mark Donohue: Thank you, Shlomo. Next question, please. Yes, before our next question, just one more reminder: star one on your telephone keypad to ask a question. Once again, star one. Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Ashish, please go ahead.

We saw a nice improvement in retention as we moved into this year and traction on new sales as we invest.

And those products.

I think as we move into Q4 I think we think there is continued room there in life Sciences.

And in the IP segment, which is where there's the most headroom. So we indicated we're growing at about 2% ACB in AMG and in life Sciences, both at about that level.

[Analyst]: Hey, good morning, guys. This is Will Chee on for Ashish Sabadra. I appreciate you guys taking our question. When you guys think about the ACV acceleration to Q4, could you give a little bit of context maybe on which segments you guys would call out as the primary drivers? Also, maybe just any commentary around where you think that that kind of largest room for improvement might be as well.

Which means that our IP business is closer to flat and we have made some meaningful investments over the past couple of years that we expect to start to benefit the IP business as we move forward, we launched the Derwent patent search this year in general release with AI powered search and new functionality on our very strong.

Jonathan Collins: Yeah, thanks for the question, Will. I think the encouraging sign for us as we've progressed through this year, we started the year at ACV less than 1%. We're now up over 1.5%. We've seen improvement in all of our segments. Each segment has made a contribution. The most notable improvement has been with the life sciences business, where we saw a nice improvement in retention as we moved into this year and traction on new sales as we invest in those products. I think as we move into Q4, we think there's continued room there in life sciences and in the IP segment, which is where there's the most headroom. We indicated we're growing at about 2% ACV in A&G and in life sciences, both at about that level, which means that our IP business is closer to flat.

Data base of the Donlin oral patent index.

The Derwent patent monitor tool that will be coming into market later this year and as Marty mentioned in his comments our continued investment in our Ibm's software and IP folio.

Namely IP folio loss. So we think those investments in those products that are subscription products will help to drive.

<unk> from about flat to being a growing business as we move forward.

Thank you guys and congrats on quarter.

Thanks Bill.

Thanks Luke.

And our next question comes from the line of George Tong with Goldman Sachs. George. Please go ahead.

Alright, thanks, good morning.

You mentioned, you expect the IP market to recover and move in the right direction can you talk more about underlying trends youre seeing with the new patents and trademarks and catalyst for a recovery in volumes.

Jonathan Collins: We have made some meaningful investments over the past couple of years that we expect to start to benefit the IP business as we move forward. We launched the Derwent patent search this year in general release with AI-powered search and new functionality on our very strong database of the Derwent World Patent Index. We have the Derwent Patent Monitor tool that'll be coming into market later this year. As Matti Shem Tov mentioned in his comments, continued investment in our IPMS software and IPFolio, namely IPFolio Law. We think those investments in those products that are subscription products will help to drive ACV from about flat to being a growing business as we move forward.

Yes, thanks for the question George.

Similar to what we had talked about last quarter.

We believe that the overall patents in force in our core markets continue to tick up for a few years coming out of Covid.

They were essentially flat in 'twenty three we started to see growth. We believe we saw growth last year as well too and it takes a couple of years for that patent in force growth to make its way into our renewal book because in some jurisdictions you initial patents good for a few years before it needs to be renewed so that's one leading indicator.

We continue to watch them and we are seeing a little bit of help on the volume side. There's work that we've done in our own business from a competitive standpoint to see some modest improvements so.

[Analyst]: Thank you, guys, and congrats on the quarter.

Jonathan Collins: Thanks, Will.

Mark Donohue: Thanks, Will. Our next question comes from the line of George Tong with Goldman Sachs. George, please go ahead.

Those things are moving in the right direction and we also drew attention to the fact as we look out.

Coming years.

Shlomo Rosenbaum: Hi, thanks. Good morning. You mentioned you expect the IP market to recover and move in the right direction. Can you talk more about underlying trends you're seeing with new patents and trademarks, and catalysts for recovery in volumes?

We do believe we are in a bit of a innovation upswing with the advent of AI and we think that's going to help lift patents enforced in the next couple of years and put some wind in our sales a few years out in our renewal business. So we think the market trends are good there can be some lumpiness quarter to quarter in our <unk>.

Jonathan Collins: Yeah, thanks for the question, George. Similar to what we had talked about last quarter, we believe that the overall patents in force in our core markets continue to tick up. For a few years coming out of COVID, they were essentially flat. In 2023, we started to see growth. We believe we saw growth last year as well too. It takes a couple of years for that patent in force growth to make its way into our renewal book because in some jurisdictions, your initial patent's good for a few years before it needs to be renewed. That's one leading indicator that we continue to watch. We are seeing a little bit of help on the volume side. There's work that we've done in our own business from a competitive standpoint to see some modest improvements. Those things are moving in the right direction.

<unk>, depending on the customer base in the regions, but in principle being flat this year compared to a 3% decline in.

That reoccurring.

Renewals services businesses is a step in the right direction and we're.

We're encouraged by that trajectory.

Very helpful. Thank you.

Thanks, Great. Thanks George.

And our next question comes from the line of Manav Patnaik with Barclays. Please go ahead.

I just had a question broadly on.

I guess.

I think most of your initiatives that you've talked about have been more on the workflow side of the accretion where I guess I think people have a view that there's going to be a lot more competition, there, but but my question was more on the content side can you help us.

Jonathan Collins: We also drew attention to the fact as we look out, you know, in the coming years, we do believe we are in a bit of an innovation upswing with the advent of AI. We think that's going to help lift patents in force in the next couple of years and put some wind in our sails a few years out in our renewal business. We think the market trends are good. There can be some lumpiness quarter to quarter in our business depending on the customer base and the regions. In principle, being flat this year compared to a 3% decline in that recurring renewal services business is a step in the right direction. We're encouraged by that trajectory.

<unk> Division just help us appreciate the content you have behind those workflows and how much of that is actually proprietary.

No I am not sure. Thank you for the question I think in many a lot of our.

Innovation has to go through our information services piece I mean, the wearable signs.

<unk>.

One academic pre mall.

Sure.

Devon innovation, so a lot of it is actually supporting the information services. The discovery piece of it and yes, we do have quite a lot of.

Shlomo Rosenbaum: Very helpful. Thank you.

Sort of proprietary data that we collect from different sources that we acquire lease from a lot of different people and we massaged them, we put them together with <unk>, we kind of put them in front of our customer our customer base a lot of our AI innovations go to this product we do have some.

Jonathan Collins: Thanks, George.

Mark Donohue: Great, thanks, George. Our next question comes from the line of Manav Patnaik with Barclays. Manav, please go ahead.

[Analyst]: I just had a question broadly on, you know, AI, I guess. I think most of your initiatives that you've talked about have been more on the workflow side of the equation where I guess, you know, I think people have a view that there's going to be a lot more competition there. My question was more on the content side. Can you help us, you know, by a division, just help us appreciate the content you have behind those workflows and how much of that is actually proprietary?

Automation around around workflow solution is web indeed, but the majority goes to the information services offering that we have.

Alright, Thank you manav.

And our final question today comes from the line of surrender then with Jefferies. Please go ahead.

Matti Shem Tov: No, I'm not sure. Thank you for the question. I think many, a lot of our AI-powered innovations go to our information services piece. I mean, the Web of Science, you know, ProQuest One Academic, Primo, Derwent Innovation. A lot of it is actually supporting the information services, the discovery piece of it. Yes, we do have quite a lot of sort of proprietary data that we collect from different sources that we acquire or lease from a lot of different people. We massage them, we put them together, we index them, and we kind of put them in front of our customer base. A lot of our AI-powered innovations go through to this product. We do have some AI automation around workflow solutions as well, indeed, but the majority goes through the information and services offerings that we have.

Hey, this is <unk> on for surrender.

My question is kind of similar to Shlomo is earlier, just kind of a round transactional revenues and obviously there were a bit better on the quarter or just kind of a question around.

Improvement looks like and the guide from last quarter. This quarter in terms of the inorganic disposals not headwinds.

The business broadly like how that's kind of impacting results.

And the Guy that you guys have got it after this year and also I think you talked about some of like a slower roll off of the transactional.

Both of those as well so just kind of wanted again updated our July timeline expectations of like next year, how much of a headwind that might be.

If there was a bit of a benefit this quarter or how much of a headwind for next year.

That's all for me.

Yes, you got a call I'll, just kind of refer back to page 21 in the remarks, there. So we have improved.

Our top line outlook from our last indication of our current indication by about $50 million. The majority of that is the disposals are trading at a slower rate than we expected and those couple of large transactions in Q3 that I mentioned.

Mark Donohue: All right. Thank you, Manav. Our final question today comes from the line of Surinder Thind with Jefferies. Surinder, please go ahead.

[Analyst]: Hey, this is Kulnaan for Surinder. My question is kind of similar to Shlomo's earlier, just kind of around transactional revenues. Obviously, they were a bit better in the quarter. Just a question around the improvement it looks like in the guide from last quarter to this quarter in terms of the inorganic disposals and that headwind to the business, broadly, like how that's kind of impacting results in the guide that you guys have for this year. I think you talked about some of like a slower roll-off of those transactional disposals as well. Just wanted to get an update in terms of timeline expectations of, you know, next year, how much of a headwind that might be. If there was a bit of a benefit this quarter, how much of a headwind that is for next year. That's all for me.

A contributor to that that business will go to zero.

And now where I would have expected out of that $200 million going away. Most of it would go away this year.

Is going to be closer to balanced so we've got about $90 million. This year, and then probably a little over $100 million next year that will go away. So just the timing of that business and how it's.

Leaving is the primary impact there the other factor I would point to is just on the FX side. So we were a bit cautious on where the dollar had been it's continued to.

To stay a bit weaker compared to other currencies, so thats going to lift the top line.

A bit compared to what we were originally expecting so the combination of those two are the primary drivers and then of course the.

Jonathan Collins: Yeah, you got it, Kul. I'll just kind of refer back to page 21 in the remarks there. We have improved our top-line outlook from our last indication to our current indication by about $50 million. The majority of that is the disposals attriting at a slower rate than we expected. Those couple of large transactions in Q3 that I mentioned were a contributor to that. That business will go to zero. Where I would have expected that of that $200 million going away, most of it would go away this year, it's going to be closer to balanced. We've got about $90 million this year, and then probably a little over $100 million next year that will go away. The timing of that business and how it's leaving is the primary impact there. The other factor I'll point to is just on the FX side.

Organic recurring organic growth at the higher end of the range.

In the upper half compared to where we were at the midpoint is also helping to lift that revenue number. So combination of all of those are.

Or what's baked into our raised full year guidance.

Great. Thank you thanks for the question Paul.

Thank you very much so that concludes our call for today. Thank you all for joining us and we look forward to speaking to you soon thank you.

Yes.

And ladies and gentlemen, again that concludes the call you may now disconnect.

Jonathan Collins: We were a bit cautious on where the dollar had been. It's continued to stay a bit weaker compared to other currencies. That's going to lift the top line a bit compared to what we were originally expecting. The combination of those two are the primary drivers. Of course, the recurring organic growth at the higher end of the range in the upper half compared to where we were at the midpoint is also helping to lift that revenue number. A combination of all of those are what's baked into our raised full-year guidance.

[Analyst]: Great. Thank you.

Jonathan Collins: Thanks for the question, Kul.

Mark Donohue: Thank you very much. That concludes our call for today. I want to thank you all for joining us. We look forward to speaking to you soon.

Matti Shem Tov: Thank you.

Mark Donohue: Ladies and gentlemen, that concludes the call. You may now disconnect.