Blockchain Press Releases
Clarivate Reports Second Quarter 2023 Results
— Updates 2023 Outlook —
LONDON, Aug. 3, 2023 /PRNewswire/ — Clarivate Plc – (NYSE: CLVT) (the “Company” or “Clarivate”), a global leader in connecting people and organizations to intelligence they can trust, today reported results for the second quarter.
Second Quarter 2023 Financial Highlights
- Revenues of $668.8 million decreased 2.6%, and 3.5% at constant currency(1), driven primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable amounts in the current year period
- Organic revenues(1) decreased 0.4% as an increase in subscription revenues of 2.9% was offset by a decline in re-occurring revenues of 1.6% and transactional and other revenues of 7.5%
- Net loss attributable to ordinary shares of $141.7 million increased $185.4 million driven primarily by the impairment charge in the current year period; Net loss per diluted share of $0.21 decreased by $0.21
- Adjusted Net Income(1) of $152.2 million decreased 7.8%; Adjusted Income per diluted share(1) of $0.21 decreased 4.5% or $0.01
- Adjusted EBITDA(1) of $284.9 million increased 3.8% driven by cost savings from integration programs; Adjusted EBITDA Margin(1) of 42.6% increased 270 basis points
- Net cash provided by operating activities increased $65.2 million to $162.4 million; Free cash flow(1) increased $55.3 million to $104.8 million, allowing for continued deleveraging through further debt reduction and share repurchases
First Half of 2023 Financial Highlights
- Revenues of $1,297.9 million decreased 3.8%, and 3.3% at constant currency(1), driven primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable amounts in the current year period
- Organic revenues(1) decreased 0.3% as an increase in subscription revenues of 2.9% was offset by a decline in re-occurring revenues of 1.7% and transactional and other revenues of 7.9%
- Net loss attributable to ordinary shares of $117.0 million decreased $211.5 million driven primarily by the impairment charge in the current year period and lower mark-to-market gain on financial instruments; Net loss per diluted share of $0.17 decreased by $0.10
- Adjusted Net Income(1) of $283.1 million decreased 11.6%; Adjusted Income per diluted share(1) of $0.39 decreased 9.3% or $0.04
- Adjusted EBITDA(1) of $537.6 million increased 0.2% driven by cost savings from integration programs; Adjusted EBITDA Margin(1) of 41.4% increased 160 basis points
- Net cash provided by operating activities increased $225.3 million to $389.9 million; Free cash flow(1) increased $197.5 million to $273.0 million
“Clarivate continued to deliver on operational progress during the quarter, reinforcing the value proposition of our mission critical solutions across key sectors. The Academia & Government segment delivered improved results following the successful integration of ProQuest and recent product enhancements, which are driving new business, increased usage and higher retention rates,” said Jonathan Gear, Chief Executive Officer. “We are taking steps to leverage the power of our portfolio, particularly in the Intellectual Property and Life Sciences & Healthcare segments, which fell short of expectations this quarter. With an established, resilient business model, and a new organizational structure and leadership well in place to enhance accountability, we remain confident in our strategy to deliver accelerating organic growth and margin expansion, as highlighted in our March Investor Day. We remain focused on creating value for our customers, colleagues, and shareholders.”
Selected Financial Information
The prior year results include MarkMonitor, which was divested on October 31, 2022, for which there are no comparable amounts in the current year periods.
|
Three Months Ended June 30, |
Change |
Six Months Ended June 30, |
Change |
||||||||||||
|
(in millions, except percentages and per share data), (unaudited) |
2023 |
2022 |
$ |
% |
2023 |
2022 |
$ |
% |
|||||||
|
Revenues, net |
$ 668.8 |
$ 686.6 |
$ (17.8) |
(2.6) % |
$ 1,297.9 |
$ 1,348.8 |
$ (50.9) |
(3.8) % |
|||||||
|
Net (loss) income attributable to ordinary shares |
$ (141.7) |
$ 43.7 |
$ (185.4) |
(424.3) % |
$ (117.0) |
$ 94.5 |
$ (211.5) |
(223.8) % |
|||||||
|
Net loss per share, diluted |
$ (0.21) |
$ — |
$ (0.21) |
(100.0) % |
$ (0.17) |
$ (0.07) |
$ (0.10) |
(142.9) % |
|||||||
|
Weighted-average ordinary shares (diluted) |
675.9 |
678.4 |
— |
(0.4) % |
675.4 |
683.2 |
— |
(1.1) % |
|||||||
|
Adjusted EBITDA(1) |
$ 284.9 |
$ 274.4 |
$ 10.5 |
3.8 % |
$ 537.6 |
$ 536.7 |
$ 0.9 |
0.2 % |
|||||||
|
Adjusted net income(1) |
$ 152.2 |
$ 165.1 |
$ (12.9) |
(7.8) % |
$ 283.1 |
$ 320.2 |
$ (37.1) |
(11.6) % |
|||||||
|
Adjusted diluted EPS(1) |
$ 0.21 |
$ 0.22 |
$ (0.01) |
(4.5) % |
$ 0.39 |
$ 0.43 |
$ (0.04) |
(9.3) % |
|||||||
|
Adjusted weighted-average ordinary shares (diluted)(1) |
734.9 |
736.6 |
— |
(0.2) % |
734.8 |
741.6 |
— |
(0.9) % |
|||||||
|
Net cash provided by operating activities |
$ 162.4 |
$ 97.2 |
$ 65.2 |
67.0 % |
$ 389.9 |
$ 164.6 |
$ 225.3 |
136.9 % |
|||||||
|
Free cash flow(1) |
$ 104.8 |
$ 49.5 |
$ 55.3 |
111.6 % |
$ 273.0 |
$ 75.5 |
$ 197.5 |
261.5 % |
|||||||
|
(Amounts in tables may not sum due to rounding) |
|||||||||||||||
|
(1) Non-GAAP measure. Please see “Reconciliation to Certain Non-GAAP measures” in this earnings release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings release. |
Second Quarter 2023 Commentary
Subscription revenues for the second quarter decreased $1.4 million, or 0.3%, to $406.0 million, and decreased 1.6% on a constant currency basis(1), due to the divestiture of MarkMonitor. Organic subscription revenues(1) increased 2.9%, primarily due to price increases and the benefit of net installations.
Re-occurring revenues for the second quarter decreased $1.0 million, or 0.9% to $111.0 million, and decreased 1.6% on a constant currency basis(1). Organic re-occurring revenues(1) decreased 1.6%, primarily driven by the timing of accelerated patent renewals in the prior year period.
Transactional and other revenues for the second quarter decreased $16.2 million, or 9.6%, to $151.8 million, and decreased 9.8% on a constant currency basis(1). Organic transactional and other revenues(1) decreased 7.5%. primarily due to lower transactional sales in Life Sciences & Healthcare and Intellectual Property segments.
Balance Sheet and Cash Flow
As of June 30, 2023, cash and cash equivalents of $436.1 million increased $87.3 million compared to December 31, 2022 due to working capital improvements.
The Company’s total debt outstanding as of June 30, 2023 was $4,920.8 million, a decrease of $150.5 million compared to December 31, 2022 due to $150.0 million accelerated debt prepayments on our Term Loan.
Net cash provided by operating activities of $389.9 million for the six months ended June 30, 2023 increased $225.3 million compared to $164.6 million for the prior year, primarily due to the prior year employee payroll payments related to the CPA Global Equity Plan and working capital improvements. Free cash flow(1) for the six months ended June 30, 2023, was $273.0 million, an increase of $197.5 million compared to the prior year period.
Updated Outlook for 2023 (forward-looking statement)
“We revised our 2023 outlook due to lower than expected transactional sales of Life Sciences and Healthcare products and consulting services, and lower recurring sales of patent renewals,” said Jonathan Collins, Executive Vice President and Chief Financial Officer. “However, we reaffirmed our Adjusted EBITDA Margin outlook, and still expect our revenues, Adjusted EBITDA, Adjusted Diluted EPS and Free Cash Flow to be within our original ranges. We continue to anticipate generating strong cash flow, which we currently expect to allocate between debt repayment to achieve our target of below four-times net leverage by the end of the year and share repurchases.”
The full year outlook presented below assumes no further acquisitions, divestitures, or unanticipated events.
|
Updated 2023 Outlook |
Prior 2023 Outlook |
|
|
Revenues |
$2.60B to $2.67B |
$2.63B to $2.73B |
|
Organic Revenue Growth |
0.00% to 2.00% |
2.75% to 3.75% |
|
Adjusted EBITDA |
$1.09B to $1.14B |
$1.10B to $1.16B |
|
Adjusted EBITDA Margin |
No change |
42.0% to 42.5% |
|
Adjusted Diluted EPS(2) |
$0.77 to $0.83 |
$0.75 to $0.85 |
|
Free Cash Flow |
$450M to $500M |
$450M to $550M |
|
(2) Adjusted Diluted EPS for 2023 is calculated based on approximately 738 million fully diluted weighted average ordinary shares outstanding. |
The outlook includes Non-GAAP measures. Please see “Reconciliation to Certain Non-GAAP measures” presented below for important disclosure and reconciliations of these financial measures to the most directly comparable GAAP measures. These terms are defined elsewhere in this earnings release.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the second quarter at 9:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the Company’s website.
Interested parties may access the live audio broadcast by dialing +1 404-975-4839 or toll-free +1 833-470-1428 (in North America) and 44 208 068 2558 or toll free 44 808 189 6484 (internationally). The conference ID number is 677201. To join the webcast please visit https://events.q4inc.com/attendee/182614049. A replay will also be available on https://ir.clarivate.com.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with U.S. generally accepted accounting principles (“GAAP”) and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations, and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Definitions and reconciliations of non-GAAP measures, such as Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Standalone Adjusted EBITDA, organic revenue, organic subscription revenue, organic re-occurring revenue, and organic transactional and other revenue to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.
We calculate constant currency by converting the non-U.S. dollar income statement balances for the most current year to U.S. dollars by applying the average exchange rates of the preceding year.
Forward-Looking Statements
This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance outlook and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, including the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the impact of inflation, the impact of foreign currency fluctuations, the COVID-19 pandemic and governmental responses thereto, international hostilities, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed under the caption “Risk Factors” in our annual report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.
About Clarivate
Clarivate™ is a leading global information services provider. We connect people and organizations to intelligence they can trust to transform their perspective, their work and our world. Our subscription and technology-based solutions are coupled with deep domain expertise and cover the areas of Academia & Government, Intellectual Property and Life Sciences & Healthcare. For more information, please visit clarivate.com.
|
Condensed Consolidated Balance Sheets |
|||
|
(In millions) |
|||
|
(unaudited) |
|||
|
June 30, 2023 |
December 31, |
||
|
Assets |
|||
|
Current assets: |
|||
|
Cash and cash equivalents |
$ 436.1 |
$ 348.8 |
|
|
Restricted cash |
7.0 |
8.0 |
|
|
Accounts receivable, net |
769.7 |
872.1 |
|
|
Prepaid expenses |
101.9 |
89.4 |
|
|
Other current assets |
76.8 |
76.9 |
|
|
Assets held for sale |
26.1 |
0.0 |
|
|
Total current assets |
1,417.6 |
1,395.2 |
|
|
Property and equipment, net |
50.7 |
54.5 |
|
|
Other intangible assets, net |
9,186.4 |
9,437.7 |
|
|
Goodwill |
2,895.5 |
2,876.5 |
|
|
Other non-current assets |
76.0 |
97.9 |
|
|
Deferred income taxes |
26.5 |
24.2 |
|
|
Operating lease right-of-use assets |
52.9 |
58.9 |
|
|
Total Assets |
$ 13,705.6 |
$ 13,944.9 |
|
|
Liabilities and Shareholders’ Equity |
|||
|
Current liabilities: |
|||
|
Accounts payable |
$ 108.2 |
$ 101.4 |
|
|
Accrued compensation |
101.2 |
132.1 |
|
|
Accrued expenses and other current liabilities |
317.1 |
352.1 |
|
|
Current portion of deferred revenues |
939.6 |
947.5 |
|
|
Current portion of operating lease liability |
24.2 |
25.7 |
|
|
Current portion of long-term debt |
1.1 |
1.0 |
|
|
Liabilities held for sale |
6.5 |
0.0 |
|
|
Total current liabilities |
1,497.9 |
1,559.8 |
|
|
Long-term debt |
4,863.2 |
5,005.0 |
|
|
Non-current portion of deferred revenues |
37.9 |
38.5 |
|
|
Other non-current liabilities |
41.4 |
140.1 |
|
|
Deferred income taxes |
262.1 |
316.1 |
|
|
Operating lease liabilities |
64.8 |
72.9 |
|
|
Total liabilities |
6,767.3 |
7,132.4 |
|
|
Commitments and contingencies |
|||
|
Shareholders’ equity: |
|||
|
Preferred Shares, no par value; 14.4 shares authorized; 5.25% Mandatory Convertible Preferred Shares, Series A, 14.4 shares issued and outstanding as of both June 30, 2023 and December 31, 2022 |
1,392.6 |
1,392.6 |
|
|
Ordinary Shares, no par value; unlimited shares authorized as of June 30, 2023 and December 31, 2022; 676.1 and 674.4 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively |
11,809.2 |
11,744.7 |
|
|
Accumulated other comprehensive loss |
(487.6) |
(665.9) |
|
|
Accumulated deficit |
(5,775.9) |
(5,658.9) |
|
|
Total shareholders’ equity |
6,938.3 |
6,812.5 |
|
|
Total Liabilities and Shareholders’ Equity |
$ 13,705.6 |
$ 13,944.9 |
|
|
Condensed Consolidated Statement of Operations |
|||
|
(In millions) |
|||
|
(unaudited) |
|||
|
Three Months Ended June 30, |
|||
|
2023 |
2022 |
||
|
Revenues, net |
$ 668.8 |
$ 686.6 |
|
|
Operating expenses: |
|||
|
Cost of revenues |
224.2 |
244.1 |
|
|
Selling, general and administrative costs |
192.9 |
186.1 |
|
|
Depreciation and amortization |
178.1 |
175.6 |
|
|
Restructuring and lease impairments |
12.2 |
19.2 |
|
|
Goodwill and intangible asset impairments |
135.2 |
— |
|
|
Other operating expense (income), net |
14.5 |
(24.6) |
|
|
Total operating expenses |
757.1 |
600.4 |
|
|
(Loss) income from operations |
(88.3) |
86.2 |
|
|
Mark to market gain on financial instruments |
(2.9) |
(49.0) |
|
|
Interest expense and amortization of debt discount, net |
73.0 |
62.3 |
|
|
(Loss) income before income taxes |
(158.4) |
72.9 |
|
|
(Benefit) provision for income taxes |
(35.3) |
10.5 |
|
|
Net (loss) income |
(123.1) |
62.4 |
|
|
Dividends on preferred shares |
18.6 |
18.7 |
|
|
Net (loss) income attributable to ordinary shares |
$ (141.7) |
$ 43.7 |
|
|
Per share: |
|||
|
Basic |
$ (0.21) |
$ 0.06 |
|
|
Diluted |
$ (0.21) |
$ 0.00 |
|
|
Weighted average shares used to compute earnings per share: |
|||
|
Basic |
675.9 |
674.3 |
|
|
Diluted |
675.9 |
678.4 |
|
|
Condensed Consolidated Statement of Operations |
|||
|
(In millions) |
|||
|
(unaudited) |
|||
|
Six Months Ended June 30, |
|||
|
2023 |
2022 |
||
|
Revenues, net |
$ 1,297.9 |
$ 1,348.8 |
|
|
Operating expenses: |
|||
|
Cost of revenues |
453.9 |
493.3 |
|
|
Selling, general and administrative costs |
387.7 |
379.8 |
|
|
Depreciation and amortization |
350.7 |
352.0 |
|
|
Restructuring and lease impairments |
21.6 |
30.9 |
|
|
Goodwill and intangible asset impairments |
135.2 |
— |
|
|
Other operating income, net |
(17.5) |
(38.3) |
|
|
Total operating expenses |
1,331.6 |
1,217.7 |
|
|
(Loss) income from operations |
(33.7) |
131.1 |
|
|
Mark to market gain on financial instruments |
(1.8) |
(149.4) |
|
|
Interest expense and amortization of debt discount, net |
146.6 |
121.8 |
|
|
(Loss) income before income taxes |
(178.5) |
158.7 |
|
|
(Benefit) provision for income taxes |
(98.9) |
26.8 |
|
|
Net (loss) income |
(79.6) |
131.9 |
|
|
Dividends on preferred shares |
37.4 |
37.4 |
|
|
Net (loss) income attributable to ordinary shares |
$ (117.0) |
$ 94.5 |
|
|
Per share: |
|||
|
Basic |
$ (0.17) |
$ 0.14 |
|
|
Diluted |
$ (0.17) |
$ (0.07) |
|
|
Weighted average shares used to compute earnings per share: |
|||
|
Basic |
675.4 |
678.3 |
|
|
Diluted |
675.4 |
683.2 |
|
|
Condensed Consolidated Statements of Cash Flows |
|||
|
(In millions) |
|||
|
(unaudited) |
|||
|
Six Months Ended June 30, |
|||
|
2023 |
2022 |
||
|
Cash Flows From Operating Activities |
|||
|
Net (loss) income |
$ (79.6) |
$ 131.9 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
|
Depreciation and amortization |
350.7 |
352.0 |
|
|
Share-based compensation |
71.6 |
47.2 |
|
|
Restructuring and impairments |
138.7 |
(1.0) |
|
|
Mark to market gain on financial instruments |
(1.8) |
(149.4) |
|
|
Amortization of debt issuance costs |
9.1 |
7.6 |
|
|
Gain on legal settlement |
(49.4) |
— |
|
|
Deferred income taxes |
(47.8) |
(0.9) |
|
|
Other operating activities |
18.8 |
(33.6) |
|
|
Changes in operating assets and liabilities: |
|||
|
Accounts receivable |
121.7 |
53.8 |
|
|
Prepaid expenses |
(11.9) |
(26.9) |
|
|
Other assets |
38.6 |
(24.8) |
|
|
Accounts payable |
6.2 |
(8.8) |
|
|
Accrued expenses and other current liabilities |
(74.2) |
(150.3) |
|
|
Deferred revenues |
(18.4) |
(29.5) |
|
|
Operating leases, net |
(4.5) |
3.4 |
|
|
Other liabilities |
(77.9) |
(6.1) |
|
|
Net cash provided by operating activities |
389.9 |
164.6 |
|
|
Cash Flows From Investing Activities |
|||
|
Capital expenditures |
(116.9) |
(89.1) |
|
|
Payments for acquisitions and cost method investments, net of cash acquired |
(1.1) |
(14.3) |
|
|
Proceeds from divestitures, net of cash and restricted cash |
10.5 |
— |
|
|
Net cash used in investing activities |
(107.5) |
(103.4) |
|
|
Cash Flows From Financing Activities |
|||
|
Principal payments on term loan |
(150.0) |
(14.3) |
|
|
Payment of debt issuance costs and discounts |
0.1 |
(2.1) |
|
|
Proceeds from issuance of treasury shares |
— |
0.9 |
|
|
Repurchases of ordinary shares |
— |
(175.0) |
|
|
Cash dividends on preferred shares |
(37.7) |
(37.7) |
|
|
Proceeds from stock options exercised |
— |
0.5 |
|
|
Payments related to finance lease |
(0.5) |
(1.0) |
|
|
Payments related to tax withholding for stock-based compensation |
(9.7) |
(10.7) |
|
|
Net cash used in financing activities |
(197.8) |
(239.4) |
|
|
Effects of exchange rates |
1.7 |
(36.5) |
|
|
Net increase (decrease) in cash and cash equivalents |
$ 87.3 |
$ (71.2) |
|
|
Net decrease in restricted cash |
(1.0) |
(143.5) |
|
|
Net increase (decrease) in cash and cash equivalents, and restricted cash |
86.3 |
(214.7) |
|
|
Beginning of period: |
|||
|
Cash and cash equivalents |
$ 348.8 |
$ 430.9 |
|
|
Restricted cash |
8.0 |
156.7 |
|
|
Total cash and cash equivalents, and restricted cash, beginning of period |
356.8 |
587.6 |
|
|
End of period: |
|||
|
Cash and cash equivalents |
436.1 |
359.7 |
|
|
Restricted cash |
7.0 |
13.2 |
|
|
Total cash and cash equivalents, and restricted cash, end of period |
$ 443.1 |
$ 372.9 |
|
|
Supplemental Cash Flow Information: |
|||
|
Cash paid for interest |
$ 136.4 |
$ 113.4 |
|
|
Cash paid for income tax |
$ 22.5 |
$ 23.7 |
|
|
Capital expenditures included in accounts payable |
$ 10.3 |
$ 23.8 |
|
|
Non-Cash Financing Activities: |
|||
|
Retirement of treasury shares |
— |
(175.0) |
|
|
Dividends accrued on our 5.25% Series A Mandatory Convertible Preferred Shares |
6.2 |
6.2 |
|
|
Total Non-Cash Financing Activities |
$ 6.2 |
$ (168.8) |
|
Reconciliations to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA represents Net income (loss) before the provision for income taxes, depreciation and amortization, and interest expense adjusted to exclude acquisition and disposal-related transaction costs, losses on extinguishment of debt, share-based compensation, unrealized foreign currency remeasurement, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues prior to the adoption of FASB ASU No. 2021-08 in 2021, non-operating income or expense, the impact of certain non-cash mark-to-market adjustments on financial instruments, legal settlements, impairments, and other items that are included in net income (loss) for the period that the Company does not consider indicative of its ongoing operating performance and certain unusual items impacting results in a particular period. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenues, net plus the impact of the deferred revenue purchase accounting adjustments relating to acquisitions prior to 2021.
The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the three and six months ended June 30, 2023 and 2022 and reconciles these measures to our Net income (loss) for the same periods:
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
|
(in millions, except percentages); (unaudited) |
2023 |
2022 |
2023 |
2022 |
|||
|
Net (loss) income attributable to ordinary shares |
$ (141.7) |
$ 43.7 |
$ (117.0) |
$ 94.5 |
|||
|
Dividends on preferred shares |
18.6 |
18.7 |
37.4 |
37.4 |
|||
|
Net (loss) income |
$ (123.1) |
$ 62.4 |
$ (79.6) |
$ 131.9 |
|||
|
(Benefit) provision for income taxes |
(35.3) |
10.5 |
(98.9) |
26.8 |
|||
|
Depreciation and amortization |
178.1 |
175.6 |
350.7 |
352.0 |
|||
|
Interest expense and amortization of debt discount, net |
73.0 |
62.3 |
146.6 |
121.8 |
|||
|
Deferred revenues adjustment |
— |
0.8 |
— |
0.6 |
|||
|
Transaction related costs(1) |
0.7 |
5.1 |
2.4 |
11.8 |
|||
|
Share-based compensation expense |
30.5 |
22.1 |
71.7 |
59.1 |
|||
|
Restructuring and lease impairments(2) |
12.2 |
19.2 |
21.6 |
30.9 |
|||
|
Goodwill and intangible asset impairments(3) |
135.2 |
— |
135.2 |
— |
|||
|
Mark-to-market gain on financial instruments(4) |
(2.9) |
(49.0) |
(1.8) |
(149.4) |
|||
|
Other(5) |
16.5 |
(34.6) |
(10.3) |
(48.8) |
|||
|
Adjusted EBITDA |
$ 284.9 |
$ 274.4 |
$ 537.6 |
$ 536.7 |
|||
|
Adjusted EBITDA Margin |
42.6 % |
39.9 % |
41.4 % |
39.8 % |
|||
|
(1) Includes costs incurred to complete business combination transactions, including acquisitions, dispositions, and capital market activities and include advisory, legal, and other professional and consulting costs. |
|||||||
|
(2) Primarily reflects severance and related benefit costs related to approved restructuring programs. |
|||||||
|
(3) Primarily includes the intangible assets impairment recorded during the three months ended June 30, 2023 related to Assets Held for Sale and Divested Operations. |
|||||||
|
(4) Reflects mark-to-market adjustments on financial instruments under ASC 815, Derivatives and Hedging. |
|||||||
|
(5) The current year periods primarily include net losses on foreign exchange re-measurement and other individually insignificant items that do not reflect our ongoing operating performance. The current year-to-date period was offset by a gain on legal settlement. The prior year periods include net gains on foreign exchange re-measurement and other individually insignificant items that do not reflect our ongoing operating performance. |
Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income is calculated using Net income (loss), adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before the provision for income taxes, depreciation and amortization, and interest income and expense from the divested business), amortization related to acquired intangible assets, share-based compensation, mandatory convertible preferred share dividend expense, unrealized foreign currency remeasurement, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues prior to the adoption of FASB ASU No. 2021-08 in 2021, the impact of certain non-cash mark-to-market adjustments on financial instruments, legal settlements, impairments, and other items that are included in net income (loss) for the period that the Company does not consider indicative of its ongoing operating performance and certain unusual items impacting results in a particular period, and the income tax impact of any adjustments.
We calculate Adjusted Diluted EPS by using Adjusted Net Income divided by Adjusted diluted weighted average shares for the period. The Adjusted diluted weighted average shares assumes that all instruments in the calculation are dilutive.
The following table presents our calculation of Adjusted Net Income and Adjusted Diluted EPS for the three and six months ended June 30, 2023 and 2022 and reconciles these measures to our Net income (loss) and EPS for the same periods:
|
Three Months Ended June 30, |
|||||||
|
2023 |
2022 |
||||||
|
(in millions, except per share amounts); (unaudited) |
Amount |
Per Share |
Amount |
Per Share |
|||
|
Net loss attributable to ordinary shares, diluted |
$ (141.7) |
$ (0.21) |
$ (3.1) |
$ — |
|||
|
Change in fair value of private placement warrants |
— |
— |
46.8 |
0.07 |
|||
|
Net (loss) income attributable to ordinary shares |
$ (141.7) |
$ (0.21) |
$ 43.7 |
$ 0.06 |
|||
|
Dividends on preferred shares |
18.6 |
0.03 |
18.7 |
0.03 |
|||
|
Net (loss) income |
$ (123.1) |
$ (0.18) |
$ 62.4 |
$ 0.09 |
|||
|
Deferred revenues adjustment |
— |
— |
0.8 |
— |
|||
|
Transaction related costs(1) |
0.7 |
— |
5.1 |
0.01 |
|||
|
Share-based compensation expense |
30.5 |
0.05 |
22.1 |
0.03 |
|||
|
Amortization related to acquired intangible assets |
143.5 |
0.21 |
146.1 |
0.22 |
|||
|
Restructuring and lease impairments(2) |
12.2 |
0.02 |
19.2 |
0.03 |
|||
|
Goodwill and intangible asset impairments(3) |
135.2 |
0.20 |
— |
— |
|||
|
Mark-to-market gain on financial instruments(4) |
(2.9) |
— |
(49.0) |
(0.07) |
|||
|
Other(5) |
16.5 |
— |
(34.6) |
(0.08) |
|||
|
Income tax impact of related adjustments |
(60.4) |
(0.09) |
(7.0) |
(0.01) |
|||
|
Adjusted net income and Adjusted diluted EPS |
$ 152.2 |
$ 0.21 |
$ 165.1 |
$ 0.22 |
|||
|
Adjusted weighted-average ordinary shares (Diluted) |
734.9 |
736.6 |
|||||
|
(1-5) Refer to associated line item descriptions provided for the Adjusted EBITDA reconciliation table above. |
|
Six Months Ended June 30, |
|||||||
|
2023 |
2022 |
||||||
|
(in millions, except per share amounts); (unaudited) |
Amount |
Per Share |
Amount |
Per Share |
|||
|
Net loss attributable to ordinary shares, diluted |
$ (117.0) |
$ (0.17) |
$ (47.2) |
$ (0.07) |
|||
|
Change in fair value of private placement warrants |
— |
— |
141.7 |
0.21 |
|||
|
Net (loss) income attributable to ordinary shares |
$ (117.0) |
$ (0.17) |
$ 94.5 |
$ 0.14 |
|||
|
Dividends on preferred shares |
37.4 |
0.06 |
37.4 |
0.05 |
|||
|
Net (loss) income |
$ (79.6) |
$ (0.12) |
$ 131.9 |
$ 0.19 |
|||
|
Deferred revenues adjustment |
— |
— |
0.6 |
— |
|||
|
Transaction related costs(1) |
2.4 |
— |
11.8 |
0.02 |
|||
|
Share-based compensation expense |
71.7 |
0.11 |
59.1 |
0.09 |
|||
|
Amortization related to acquired intangible assets |
287.9 |
0.43 |
295.8 |
0.43 |
|||
|
Restructuring and lease impairments(2) |
21.6 |
0.03 |
30.9 |
0.05 |
|||
|
Goodwill and intangible asset impairments(3) |
135.2 |
0.20 |
— |
— |
|||
|
Mark-to-market gain on financial instruments(4) |
(1.8) |
— |
(149.4) |
(0.22) |
|||
|
Other(5) |
(10.3) |
(0.05) |
(48.8) |
(0.11) |
|||
|
Income tax impact of related adjustments |
(144.0) |
(0.21) |
(11.7) |
(0.02) |
|||
|
Adjusted net income and Adjusted diluted EPS |
$ 283.1 |
$ 0.39 |
$ 320.2 |
$ 0.43 |
|||
|
Adjusted weighted-average ordinary shares (Diluted) |
734.8 |
741.6 |
|||||
|
(1-5) Refer to associated line item descriptions provided for the Adjusted EBITDA reconciliation table above. |
Free Cash Flow
Free cash flow is calculated using net cash provided by operating activities less capital expenditures. The following table reconciles our non-GAAP free cash flow measure to Net cash provided by operating activities:
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
|
(in millions); (unaudited) |
2023 |
2022 |
2023 |
2022 |
|||
|
Net cash provided by operating activities |
$ 162.4 |
$ 97.2 |
$ 389.9 |
$ 164.6 |
|||
|
Capital expenditures |
(57.6) |
(47.7) |
(116.9) |
(89.1) |
|||
|
Free cash flow |
$ 104.8 |
$ 49.5 |
$ 273.0 |
$ 75.5 |
|||
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit facilities, dated as of October 31, 2019, and the indentures governing our secured notes due 2026 issued by Camelot Finance S.A. and guaranteed by certain of our subsidiaries, and the indentures governing the secured and unsecured notes issued by Clarivate Science Holdings Corporation in August 2021, respectively. In addition, the credit facilities and the indentures contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants. Standalone Adjusted EBITDA reflects further adjustments to Adjusted EBITDA for cost savings already implemented.
Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the credit facilities and the indentures and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business.
Standalone Adjusted EBITDA is calculated under the credit facilities and the indentures by using our Consolidated Net income (loss) for the trailing 12-month period (defined in the credit facilities and the indentures as our U.S. GAAP net income adjusted for certain items specified in the credit facilities and the indentures) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, including impairments, expenses related to capital markets transactions, acquisitions and dispositions, restructuring and business optimization charges and expenses, consulting and advisory fees, run-rate cost savings to be realized as a result of actions taken or to be taken in connection with an acquisition, disposition, restructuring or cost savings or similar initiatives, “run rate” expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to the transition projected by us, costs related to any management or equity stock plan, other adjustments that were presented in the offering memorandum used in connection with the issuance of the secured notes due in 2026, and earnout obligations incurred in connection with an acquisition or investment.
The following table bridges Net loss to Adjusted EBITDA to Standalone Adjusted EBITDA, as Adjusted EBITDA reflects a substantial portion of the adjustments that comprise Standalone Adjusted EBITDA for the period presented:
|
(in millions); (unaudited) |
Twelve months |
|
Net loss attributable to ordinary shares |
$ (4,247.1) |
|
Dividends on preferred shares |
75.4 |
|
Net loss |
$ (4,171.7) |
|
(Benefit) provision for income taxes |
(154.6) |
|
Depreciation and amortization |
709.2 |
|
Interest expense and amortization of debt discount, net |
295.1 |
|
Deferred revenues adjustment |
0.4 |
|
Transaction related costs |
4.8 |
|
Share-based compensation expense |
114.8 |
|
Gain on sale from divestitures(1) |
(278.5) |
|
Restructuring and lease impairments(2) |
57.4 |
|
Goodwill and intangible asset impairments(3) |
4,584.3 |
|
Mark-to-market gain on financial instruments(4) |
(59.2) |
|
Other |
11.6 |
|
Adjusted EBITDA |
$ 1,113.6 |
|
Realized foreign exchange gain |
(23.1) |
|
Cost savings(5) |
13.2 |
|
Standalone Adjusted EBITDA |
$ 1,103.7 |
|
(1) Represents the net gain from the sale of the MarkMonitor Domain Management business during the three months ended December 31, 2022. |
|
|
(2) Primarily reflects severance and related benefit costs related to approved restructuring programs. |
|
|
(3) Primarily includes the intangible assets impairment recorded during the three months ended June 30, 2023 related to Assets Held for Sale and Divested Operations. |
|
|
(4) Reflects mark-to-market adjustments on financial instruments under ASC 815, Derivatives and Hedging. |
|
|
(5) Reflects the estimated annualized run-rate cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the period (exclusive of any cost reductions in our estimated standalone operating costs), including synergies related to acquisitions. |
The foregoing adjustment (5) is an estimate and is not intended to represent a pro forma adjustment presented within the guidance of Article 11 of Regulation S-X. Although we believe the estimate is reasonable, actual results may differ from the estimate, and any difference may be material. See “Forward-Looking Statements.”
Annualized Contract Value (“ACV”) represents the annualized value for the next 12 months of subscription-based client license agreements, assuming that all expiring license agreements during that period are renewed at their current price level. We calculate ACV on a constant currency basis to exclude the effect of foreign currency fluctuations. The following table presents our Annualized Contract Value (“ACV”) as of the periods indicated.
|
June 30, |
Change |
||||||
|
(in millions, except percentages); (unaudited) |
2023 |
2022 |
2023 vs. 2022(1) |
||||
|
Annualized Contract Value |
$ 1,567.2 |
$ 1,625.9 |
$ (58.7) |
(3.6) % |
|||
|
(1) The change in ACV is primarily due to the divestiture of MarkMonitor in October 2022 and changes in foreign exchange rates, supplemented by organic ACV growth of 2.8% largely attributed to the impact of price increases. |
The following table presents the amounts of our subscription, re-occurring and transactional and other revenues, including as a percentage of our total revenues, for the periods indicated, as well as the drivers of the variances between periods.
|
Variance |
Percentage of Factors Increase/(Decrease) |
|||||||||
|
Three Months Ended |
Total Variance (Dollars) |
Total Variance (Percentage) |
Acquisitions |
Disposals(1) |
FX Impact |
Organic |
||||
|
(in millions, except percentages); (unaudited) |
2023 |
2022 |
||||||||
|
Subscription revenues |
$ 406.0 |
$ 407.4 |
$ (1.4) |
(0.3) % |
— % |
(4.4) % |
1.2 % |
2.9 % |
||
|
Re-occurring revenues |
111.0 |
112.0 |
(1.0) |
(0.9) % |
— % |
— % |
0.7 % |
(1.6) % |
||
|
Transactional and other revenues |
151.8 |
168.0 |
(16.2) |
(9.6) % |
— % |
(2.3) % |
0.2 % |
(7.5) % |
||
|
Deferred revenues adjustment |
— |
(0.8) |
0.8 |
100.0 % |
100.0 % |
— % |
— % |
— % |
||
|
Revenues, net |
$ 668.8 |
$ 686.6 |
$ (17.8) |
(2.6) % |
0.1 % |
(3.2) % |
0.9 % |
(0.4) % |
||
|
(1) Represents revenues from the MarkMonitor divestiture completed in October 2022 and from the assets held-for-sale disposal group. |
||||||||||
|
Variance |
Percentage of Factors Increase/(Decrease) |
|||||||||
|
Six Months Ended |
Total Variance (Dollars) |
Total Variance (Percentage) |
Acquisitions |
Disposals(1) |
FX Impact |
Organic |
||||
|
(in millions, except percentages); (unaudited) |
2023 |
2022 |
||||||||
|
Subscription revenues |
$ 799.2 |
$ 811.2 |
$ (12.0) |
(1.5) % |
— % |
(4.4) % |
— % |
2.9 % |
||
|
Re-occurring revenues |
218.7 |
226.5 |
(7.8) |
(3.4) % |
— % |
— % |
(1.8) % |
(1.7) % |
||
|
Transactional and other revenues |
280.0 |
311.7 |
(31.7) |
(10.2) % |
— % |
(1.5) % |
(0.8) % |
(7.9) % |
||
|
Deferred revenues adjustment |
— |
(0.6) |
0.6 |
100.0 % |
100.0 % |
— % |
— % |
— % |
||
|
Revenues, net |
$ 1,297.9 |
$ 1,348.8 |
$ (50.9) |
(3.8) % |
— % |
(3.0) % |
(0.5) % |
(0.3) % |
||
|
(1) Represents revenues from the MarkMonitor divestiture completed in October 2022 and from the assets held-for-sale disposal group. |
||||||||||
The following table presents our revenues by Segment for the periods indicated, as well as the drivers of the variances between periods, including as a percentage of such revenues.
|
Variance |
Percentage of Factors Increase/(Decrease) |
|||||||||
|
Three Months Ended |
Total Variance (Dollars) |
Total Variance (Percentage) |
Acquisitions |
Disposals(1) |
FX Impact |
Organic |
||||
|
(in millions, except percentages); (unaudited) |
2023 |
2022 |
||||||||
|
Academia & Government |
$ 342.0 |
$ 332.7 |
$ 9.3 |
2.8 % |
— % |
— % |
1.0 % |
1.8 % |
||
|
Intellectual Property |
216.3 |
239.2 |
(22.9) |
(9.6) % |
— % |
(9.1) % |
0.6 % |
(1.1) % |
||
|
Life Sciences & Healthcare |
110.5 |
115.5 |
(5.0) |
(4.3) % |
— % |
— % |
1.0 % |
(5.4) % |
||
|
Deferred revenues adjustment |
— |
(0.8) |
0.8 |
100.0 % |
100.0 % |
— % |
— % |
— % |
||
|
Revenues, net |
$ 668.8 |
$ 686.6 |
$ (17.8) |
(2.6) % |
0.1 % |
(3.2) % |
0.9 % |
(0.4) % |
||
|
(1) Represents revenues from the MarkMonitor divestiture completed in October 2022 and from the assets held-for-sale disposal group. |
||||||||||
|
Variance |
Percentage of Factors Increase/(Decrease) |
|||||||||
|
Six Months Ended |
Total Variance (Dollars) |
Total Variance (Percentage) |
Acquisitions |
Disposals(1) |
FX Impact |
Organic |
||||
|
(in millions, except percentages); (unaudited) |
2023 |
2022 |
||||||||
|
Academia & Government |
$ 656.7 |
$ 644.5 |
$ 12.2 |
1.9 % |
— % |
— % |
— % |
1.9 % |
||
|
Intellectual Property |
425.4 |
480.8 |
(55.4) |
(11.5) % |
— % |
(8.4) % |
(1.4) % |
(1.7) % |
||
|
Life Sciences & Healthcare |
215.8 |
224.1 |
(8.3) |
(3.7) % |
— % |
— % |
— % |
(3.7) % |
||
|
Deferred revenues adjustment |
— |
(0.6) |
0.6 |
100.0 % |
100.0 % |
— % |
— % |
— % |
||
|
Revenues, net |
$ 1,297.9 |
$ 1,348.8 |
$ (50.9) |
(3.8) % |
— % |
(3.0) % |
(0.5) % |
(0.3) % |
||
|
(1) Represents revenues from the MarkMonitor divestiture completed in October 2022 and from the assets held-for-sale disposal group. |
||||||||||
The following table presents our calculation of Revenues, net for the 2023 outlook:
|
Variance |
Percentage of Factors Increase / (Decrease) |
|||||||||
|
Year Ending December 31, |
Total Variance (Dollars) |
Total Variance (Percentage) |
Acquisitions |
Disposals |
FX Impact |
Organic |
||||
|
(in millions, except percentages) |
2023 Outlook mid-point |
2022 |
||||||||
|
Revenues, net |
$ 2,635 |
$ 2,660 |
$ (25) |
(0.9) % |
— % |
(2.6) % |
0.7 % |
1.0 % |
||
The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the 2023 outlook and reconciles these measures to our Net loss for the same period:
|
Year Ending December 31, 2023 (Forecasted) |
|||
|
(in millions, except percentages) |
Low |
High |
|
|
Net loss attributable to ordinary shares |
$ (217) |
$ (167) |
|
|
Dividends on preferred shares(1) |
75 |
75 |
|
|
Net loss |
$ (142) |
$ (92) |
|
|
(Benefit) provision for income taxes |
(55) |
(55) |
|
|
Depreciation and amortization |
709 |
709 |
|
|
Interest expense and amortization of debt discount, net |
288 |
288 |
|
|
Restructuring and lease impairments(2) |
33 |
33 |
|
|
Goodwill and intangible asset impairments(3) |
135 |
135 |
|
|
Transaction related costs |
2 |
2 |
|
|
Mark to market adjustment on financial instruments |
(2) |
(2) |
|
|
Share-based compensation expense |
131 |
131 |
|
|
Other(4) |
(10) |
(10) |
|
|
Adjusted EBITDA |
$ 1,090 |
$ 1,140 |
|
|
Adjusted EBITDA margin |
42.0 % |
42.5 % |
|
|
(1) Dividends on our mandatory convertible preferred shares (“MCPS”) are payable quarterly at an annual rate of 5.25% of the liquidation preference of $100 per share. For the purposes of calculating net loss attributable to Clarivate, we have excluded the accrued and anticipated MCPS dividends. |
|||
|
(2) Reflects restructuring costs expected to be incurred in 2023 associated with the ProQuest acquisition and Segment Optimization restructuring programs. |
|||
|
(3) Primarily includes the intangible assets impairment recorded during the three months ended June 30, 2023 related to Assets Held for Sale and Divested Operations |
|||
|
(4) Primarily includes the gain on legal settlement partially offset by a net loss on foreign exchange re-measurement. |
The following table presents our calculation of Adjusted Diluted EPS for the 2023 outlook and reconciles this measure to our Net loss per share for the same period:
|
Year Ending December 31, 2023 (Forecasted) |
|||
|
Low |
High |
||
|
(in millions) |
Per Share |
Per Share |
|
|
Net loss attributable to ordinary shares |
$ (0.29) |
$ (0.23) |
|
|
Dividends on preferred shares(1) |
0.10 |
0.10 |
|
|
Net loss |
$ (0.19) |
$ (0.13) |
|
|
Restructuring and lease impairments(2) |
0.04 |
0.04 |
|
|
Goodwill and intangible asset impairments(3) |
0.18 |
0.18 |
|
|
Share-based compensation expense |
0.18 |
0.18 |
|
|
Amortization related to acquired intangible assets |
0.78 |
0.78 |
|
|
Other(4) |
(0.01) |
(0.01) |
|
|
Income tax impact of related adjustments |
(0.21) |
(0.21) |
|
|
Adjusted Diluted EPS |
$ 0.77 |
$ 0.83 |
|
|
Adjusted weighted-average ordinary shares (Diluted)(5) |
738 million |
||
|
(1-4) Refer to associated line item descriptions provided for the Adjusted EBITDA outlook reconciliation table above. |
|||
|
(5) For the purposes of calculating adjusted earnings per share, the Company has excluded the accrued and anticipated MCPS dividends and assumed the “if-converted” method of share dilution. |
The following table presents our calculation of Free cash flow for the 2023 outlook and reconciles this measure to our Net cash provided by operating activities for the same period:
|
Year Ending December 31, 2023 (Forecasted) |
|||
|
(in millions) |
Low |
High |
|
|
Net cash provided by operating activities |
$ 695 |
$ 745 |
|
|
Capital expenditures |
(245) |
(245) |
|
|
Free cash flow |
$ 450 |
$ 500 |
|
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Blockchain
Blocks & Headlines: Today in Blockchain – May 12, 2025 | Rootstock, Zimbabwe Carbon Registry, Fastex, 21Shares, The Blockchain Group
Welcome to Blocks & Headlines, your daily op-ed style deep dive into the most pivotal blockchain and crypto stories shaping today’s market. In this edition—May 12, 2025—we cover:
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Bitcoin DeFi Security Strengthens as Rootstock garners 81% of Bitcoin’s hashrate
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Zimbabwe’s Blockchain Carbon Credit Registry aims to restore investor trust
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Token2049 Dubai Highlights spotlight Fastex’s Web3 innovations
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21Shares’ New ETP for Cronos (CRO) bridges traditional finance and DeFi
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The Blockchain Group’s €9.9 M Capital Raise fuels its Bitcoin treasury strategy
Below, each story is summarized with key takeaways and opinion-driven context.
Introduction
Today’s blockchain landscape is defined by two contrasting forces: institutional maturation—as legacy players and governments adopt tokenized assets and infrastructure—and startup-driven innovation—where Web3 pioneers push boundaries in DeFi, NFTs, and on-chain governance. Major trends include:
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Security & Scalability: Layer-2 solutions and cross-chain bridges are gaining traction to secure and scale Bitcoin and Ethereum ecosystems.
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Transparency & Trust: From carbon credits to capital markets, blockchain is repeatedly chosen to enhance auditability and investor confidence.
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Mainstream Access: Crypto ETPs and regulated token offerings are lowering barriers for retail and institutional investors.
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Treasury Management: Public companies are increasingly using Bitcoin and token holdings as strategic assets to hedge against macro volatility.
Let’s unpack today’s five developments and their broader implications.
1. Bitcoin DeFi Security Strengthens with Rootstock’s Hashrate Share
What happened: A new Messari report finds that Rootstock (RSK), Bitcoin’s oldest layer-2 smart-contract platform, now commands 81% of Bitcoin’s total hashrate, up from 56% before major mining pools Foundry and SpiderPool onboarded in February. Transactions on Rootstock are 95% cheaper than on-chain Bitcoin and 55% cheaper than Ethereum, positioning RSK for sustained DeFi growth in 2025.
Source: CoinDesk
Analysis & commentary:
Rootstock’s dominant hashrate share underscores two key shifts:
-
Security by Convergence: By leveraging Bitcoin’s massive mining network, RSK mitigates the common 51% risk faced by smaller chains.
-
Cost-Efficiency for DeFi: Lower fees make RSK an attractive alternative to Ethereum for yield protocols, lending markets, and decentralized exchanges.
However, challenges remain. Smart-contract developers must integrate robust cross-chain bridges—Rootstock’s partnership with LayerZero is a start—to attract liquidity. Moreover, regulatory scrutiny of DeFi is rising; RSK’s governance will need transparent on-chain dispute resolution and compliance tooling to win institutional adoption.
2. Zimbabwe’s Blockchain Carbon Credit Registry to Revive Investor Confidence
What happened: In Harare on May 9, the Zimbabwean government launched the world’s first blockchain-enabled carbon credit registry, developed by Dubai’s A6 Labs. The immutable ledger will record issuance, trading, and retirement of credits, addressing the fallout from 2023’s abrupt project cancellations and a 50% revenue levy that spooked developers. The new Zimbabwe Carbon Markets Authority (ZCMA) will oversee licensing via the zicma.org.zw portal.
Source: Bloomberg
Analysis & commentary:
Zimbabwe’s registry is an instructive case study in how blockchain can restore transparency and rebuild market trust:
-
Immutable Audits: Every credit’s provenance is verifiable on-chain, deterring double-counting and fraud.
-
Regulatory Framework: A dedicated authority streamlines approvals, balancing market access with environmental integrity.
-
Investor Reassurance: By codifying rules in smart contracts, Zimbabwe signals that future policy shifts will be governed by code, not sudden ministerial edict.
Nonetheless, blockchain is not a panacea. Effective enforcement still depends on reliable on-the-ground measurement and reporting. The real test will be whether smaller African producers—Kenya, Zambia—adopt interoperable registries, creating a pan-continental carbon marketplace.
3. Web3 Innovation Takes Center Stage at Token2049 Dubai
What happened: Between April 30 and May 1, Token2049 Dubai convened industry leaders in the Emirates. Fastex, a platinum sponsor, showcased its Bahamut blockchain (PoSA consensus), the YoWallet custodial solution, and a wave of new apps—YoHealth, YoPhone/YoSIM, YoBlog—all designed to expand Web3 use cases beyond finance. Fastex also co-hosted regulatory forums with Solidus Labs and launched the Bahamut Grants program to seed developer innovation.
Source: Cointelegraph
Analysis & commentary:
Token2049’s Dubai edition highlights an ecosystem maturation where:
-
Compliance & Growth Coexist: Legal breakfasts signaled that self-regulation and layered oversight can lower entry barriers without stifling ingenuity.
-
Beyond Finance: By unveiling telecom and health apps, Fastex challenges the notion that blockchain is niche—real-world use cases can drive mainstream adoption.
-
Brand Ambassadors: Football legend Patrice Evra’s presence at YoHealth’s booth illustrates how cultural icons can amplify blockchain’s reach.
Moving forward, projects must demonstrate measurable end-user utility and scalable infrastructure to avoid the “pilot-only” trap. Dubai’s supportive regulatory sandbox remains an ideal proving ground.
4. 21Shares Launches ETP for Cronos (CRO) – Bridging TradFi and DeFi
What happened: Swiss issuer 21Shares listed a new ETP (CRON) on May 12, offering direct exposure to CRO, the native token of Cronos—a Layer 1 chain built for DeFi, NFTs, and cross-chain interoperability with Ethereum and Cosmos. Investors can now trade CRO through regular brokerages without managing private keys or wallets.
Source: The Paypers
Analysis & commentary:
Tokenizing blockchain assets into regulated ETPs remains one of the most powerful drivers of institutional capital inflows:
-
Familiar Interfaces: By packaging CRO as a ticker, 21Shares lowers the learning curve for asset managers and pension funds.
-
Regulatory Alignment: ETPs fall under securities law, offering clear governance compared to unregulated spot tokens.
-
Ecosystem Growth: Cronos stands to benefit from increased liquidity and brand recognition, which in turn fuels DeFi activity on its network.
ETPs also invite scrutiny: fees, redemption mechanics, and underlying custodial risks must be transparent to preserve investor trust. As competition heats up—with products for BTC, ETH, SOL, and more—issuers will vie on pricing, ease of access, and institutional credibility.
5. The Blockchain Group’s €9.9 M Capital Raise Advances Bitcoin Treasury Strategy
What happened: Europe’s first Bitcoin Treasury Company, The Blockchain Group (ALTBG), completed a €9.888 million capital increase at €1.0932 per share on May 7, 2025. Proceeds will bolster its strategy to accumulate Bitcoin per fully diluted share while expanding consulting and AI-driven blockchain services.
Source: ActusNews via MarketScreener
Analysis & commentary:
The Blockchain Group’s financing round underscores a new corporate paradigm where holding BTC is core to the business model:
-
Shareholder Alignment: By tethering equity value to Bitcoin accumulation, management and investors share upside in crypto markets.
-
Operational Synergies: Subsidiaries in data intelligence and decentralized consulting can monetize both service fees and on-balance-sheet Bitcoin appreciation.
-
Regulatory Compliance: As a publicly listed entity on Euronext Growth Paris, ALTBG navigates EU financial rules, offering a transparent vehicle for crypto exposure.
Yet this approach carries volatility risk: sudden BTC price swings can compress earnings per share and spur shareholder activism. Mitigation strategies—such as hedged derivatives and staggered BTC purchases—will be critical to sustain growth without alarming investors.
Conclusion
Today’s highlights reveal a blockchain industry at once foundational and frontier:
-
Security & Scale: Rootstock’s hashrate gains fortify Bitcoin DeFi’s underpinnings.
-
Transparent Markets: Zimbabwe’s carbon registry sets a template for blockchain-backed commodity markets.
-
Web3 Diversification: Token2049 Dubai shows that true mass adoption demands real-world applications in health, telecom, and beyond.
-
Institutional Access: ETPs like CRON democratize token ownership for mainstream investors.
-
On-Balance-Sheet Crypto: The Blockchain Group exemplifies the rising class of publicly traded crypto-native firms.
As blockchain extends into supply chains, tokenized securities, and identity, the winners will be those who blend innovative protocol design with pragmatic regulatory alignment. Keep tuning into Blocks & Headlines for tomorrow’s top stories.
The post Blocks & Headlines: Today in Blockchain – May 12, 2025 | Rootstock, Zimbabwe Carbon Registry, Fastex, 21Shares, The Blockchain Group appeared first on News, Events, Advertising Options.
Once live, the Input | Output (IO) led integration will bring full Cardano support to Brave Wallet, including Cardano native assets, as well as send, receive, swap, and signing capabilities- all natively embedded within Brave’s best-in-class browser wallet. This establishes Brave as a key partner to the Cardano community in the age of Voltaire.
SAN FRANCISCO and LONDON, May 12, 2025 /PRNewswire/ — Input | Output (IO), the preeminent Web3 blockchain infrastructure and engineering firm, today announced a strategic partnership with Brave Software, the creator of the leading privacy-first browser and integrated multi-chain Brave Wallet. Together, they will integrate Cardano into the Brave Wallet, enabling Cardano blockchain access and token management from within the Brave wallet.
“Our partnership with IO reflects Brave’s commitment to building a Web3 that maximizes interoperation for user choice, while giving them better tools to engage with decentralized ecosystems,” said Brendan Eich, CEO and co-founder of Brave and the Basic Attention Token (BAT). “Integrating Cardano into Brave Wallet not only expands multi-chain access, but also enhances security, governance participation, and the overall user experience.”
Through this integration, Brave users and the broader Cardano community will gain direct access to Cardano’s blockchain for activities such as governance participation and native asset management, all within the privacy-focused Brave Wallet. Additionally, Brave Wallet will support the execution of swaps with Cardano native tokens and other on-chain transactions. This major milestone enhances Brave’s multi-chain capabilities, adding to its existing support for networks like Ethereum and Solana. Cardano users will now be able to manage native assets like NIGHT, engage in governance, and seamlessly swap tokens—securely and privately—through Brave’s in-browser wallet.
“This collaboration with Brave is a natural fit,” said Charles Hoskinson, CEO of IO. “We share a vision for a more secure, accessible, and user-respecting Web3. By bringing Cardano into Brave Wallet, we are not only expanding functionality for Cardano users in the age of on-chain governance, but also advancing a new standard for how blockchain networks should empower individuals—protecting privacy while enabling active, on-chain participation.”
The partnership also sets the stage for future innovation around engagement with Cardano’s governance and Midnight, a blockchain developed by Shielded Technologies, an Input | Output spinout focused on confidential smart contracts and data protection.
Media Contacts:
Georgia Hanias
Input | Output (IO)
[email protected]
Catherine Corre
Brave Software
[email protected]
About Input | Output (IO)
Input |Output (IO) is a world-leading blockchain infrastructure and research engineering firm dedicated to building a sustainable Web3 ecosystem. IO is committed to advancing the next generation of blockchain innovation, focusing on scalability, security, and real-world adoption through pioneering research and cutting-edge engineering.
About Brave Wallet and Brave
Brave Wallet is the secure, multi-chain crypto wallet built directly into the Brave privacy browser—no extensions required. With Brave Wallet, users can manage tokens and NFTs; connect to DApps and onramp to Web3; and explore decentralized finance, social media, gaming, and more. Brave Wallet users can connect other “cold” wallets like Ledger & Trezor. They can buy, store, send, and connect to DApps on Solana, Ethereum and EVM chains, Zcash, and Filecoin.
Brave Wallet is available on desktop, Android, and iOS, and is free to use. To get started on desktop, Brave browser users can click the wallet icon near the address bar. On mobile, users can tap “⋮” (Android) or “…” (iOS), then tap the wallet icon.
Brave is a driving force leading the way for Web3 adoption, directly supporting Web3 into the broader Web through its privacy browser, independent search engine, and browser-native, multi-chain crypto wallet. Brave currently has over 85 million monthly active users. Learn more at brave.com.
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Blockchain Press Releases
Bybit Introduces BOB to P2P: Bolivian Traders Can Now Buy, Sell in Local Currency and Earn Commissions
DUBAI, UAE, May 12, 2025 /PRNewswire/ — Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has expanded its peer-to-peer (P2P) platform to support the Bolivian Bolíviano (BOB), enabling users in Bolivia to buy and sell crypto with their national currency for the first time on the platform.
In addition to enhancing local access to digital assets, Bybit is launching a new merchant program that invites users to list BOB trading ads and earn generous bi-weekly commissions. High-performing merchants can earn up to 400 USDT every two weeks, with added incentives for those listing in multiple fiat currencies.
“Expanding our P2P platform to include BOB is a reflection of our dedication to financial inclusion and local empowerment,” said Mazurka Zeng, Head of Fiat at Bybit. “We’re proud to offer Bolivian users more ways to access crypto markets while also opening the door to new opportunities”.
Bybit P2P merchants receive tailored support, including 1-to-1 customer service and faster appeal resolutions. To qualify for rewards, merchants must maintain active listings for a specified number of hours each week and meet trading volume and order count targets. Performance is reviewed every two weeks, and rewards are distributed through the Rewards Hub.
This launch represents another step in Bybit’s ongoing commitment to bring crypto access and earning potential to communities around the world through localized, user-friendly P2P services.
Bybit is actively expanding in the LATAM market and has seen a consistent rise in user requests from Bolivia to support the Boliviano (BOB) on its P2P platform. As crypto adoption continues to grow across the region, adding BOB would enhance accessibility for local users and empower them to engage more easily with the digital asset economy.
#Bybit / #TheCryptoArk
About Bybit
Bybit is the world’s second-largest cryptocurrency exchange by trading volume, serving a global community of over 70 million users. Founded in 2018, Bybit is redefining openness in the decentralized world by creating a simpler, open and equal ecosystem for everyone. With a strong focus on Web3, Bybit partners strategically with leading blockchain protocols to provide robust infrastructure and drive on-chain innovation. Renowned for its secure custody, diverse marketplaces, intuitive user experience, and advanced blockchain tools, Bybit bridges the gap between TradFi and DeFi, empowering builders, creators, and enthusiasts to unlock the full potential of Web3. Discover the future of decentralized finance at Bybit.com.
For more details about Bybit, please visit Bybit Press
For media inquiries, please contact: [email protected]
For updates, please follow: Bybit’s Communities and Social Media
Discord | Facebook | Instagram | LinkedIn | Reddit | Telegram | TikTok | X | Youtube
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