Clarivate (16A) Q3 2026 Earnings Report

The call was predominantly positive, with management highlighting improving recurring organic revenue growth, IP's return to positive ACV growth, strong AI customer traction, margin expansion, debt reduction and expectations for further improvement in 2027. The main challenges were revenue declines caused by disposals, a continuing operating loss, Q3 free cash flow pressure, foreign exchange headwinds and the loss of the seasonal LS&H contribution. Highlights significantly outweighed the lowlights.

For full year 2026, Clarivate expects organic ACV to range from 1.75% to 2.25%, recurring organic revenue growth to range from 1% to 1.5%, Q4 recurring organic revenue growth to exceed 2%, revenue to be $1.965 billion to $1.985 billion, recurring revenue mix to be in the range of 92% to 94%, adjusted EBITDA to show positive growth in the range of $865 million to $885 million, adjusted EBITDA margin to be about 44% at the midpoint of the range, adjusted EPS to grow about 9% at the midpoint of the range to $0.75, and free cash flow to be $320 million to $340 million, or approximate $330 million; Q4 adjusted EBITDA margin is expected to be above 45%, total organic revenue growth is expected to be about 50 basis points, adjusted EBITDA margin is expected to expand over 250 basis points, debt reduction is planned at about $875 million, cash interest is expected to be lower by about $25 million, working capital is expected to be a use of approximately $35 million, capital spending is expected to improve by about $35 million, and the 2027 perspective on free cash flow anticipates growth of 10% to 15%, with the current target for 2027 being higher organic ACV and recurring revenue growth alongside increasing free cash flow and lowering net leverage.