# CLARIVATE PLC (CLVT) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from CLARIVATE PLC's 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1764046/000176404622000064/clvt-20211231.htm
Accession: 0001764046-22-000064
Filing date: 2022-03-10
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/CLVT/
All MD&A years: /company/CLVT/mda/
Next year: /company/CLVT/mda/fy2022/ (FY 2022)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, included elsewhere in this annual report. Certain statements in this section are forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe under Item 1A. Risk Factors. Certain income statement amounts discussed herein are presented on an actual and on a constant currency basis. 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. Certain amounts that appear in this section may not sum due to rounding.

Overview

We offer a collection of high quality, market leading information and analytic products and solutions through our Science segment and Intellectual Property (“IP”) segment, which are also our reportable segments. Our Science segment consists of our Academic and Government Product Line (“AGPL”) and Life Sciences Product Lines, and our IP segment consists of our Patent, Trademark, Domain, and IP Management Product Lines. Our highly curated Web of Science products are offered primarily to universities, helping them navigate scientific literature, facilitate research and evaluate and measure the quality of researchers, institutions and scientific journals across various academic disciplines. Our Life Sciences Product Line offerings serve the content and analytical needs of pharmaceutical and biotechnology companies across the drug development lifecycle, including content on discovery and preclinical research, competitive intelligence, regulatory information and clinical trials. Our Patent Product Line offerings help patent and legal professionals in R&D intensive businesses evaluate the novelty and patentability of new ideas and products to help protect and research patents. Our Trademark Product Line allow businesses and legal professionals to access our comprehensive trademark database. Our Domain Product Line offerings include enterprise web domain portfolio management products and services. Finally, our IP Management Product Line provides technology solutions and legal support services across the IP lifecycle, including renewal and validation of IP rights on behalf of customers and the development and provision of IP management software, as well as other patent activities including patent searching, IP filing, prosecution support and trademark watching.

For further information regarding an overview of our business and certain related trends and uncertainties, refer to Part I - Item 1. Business.

Objective

The objective of the Management Discussion and Analysis is to detail material information, events, uncertainties and factors impacting the Company and provide investors an understanding from "Management's perspective". Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Management highlights the critical areas for evaluating the Company's performance which includes a discussion of reportable segment information. In addition, refer to Item 1. Business for Management's discussion of forward looking transformational strategy and initiatives including operational improvements, revenue growth and pursuit of acquisition opportunities.

Factors Affecting the Comparability of Our Results of Operations

The following factors have affected the comparability of our results of operations between the periods presented in this annual report and may affect the comparability of our results of operations in future periods.

Strategic Acquisitions

Acquisition of ProQuest

32

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

On December 1, 2021, we acquired 100% of ProQuest, a leading global software, data and analytics provider to academic, research and national institutions, and its subsidiaries from the Seller Group. The aggregate consideration in connection with the closing of the ProQuest acquisition was $4,994,334, net of $52,514 cash acquired. The aggregate consideration was composed of (i) $1,094,901 from the issuance of up to 46,910,923 ordinary shares to the Seller Group, representing approximately 7% pro forma fully diluted ownership of Clarivate and (ii) approximately $3,951,947 in cash, including approximately $917,491 to fund the repayment of ProQuest debt. We funded the cash purchase price through a combination of cash on hand, new debt financing related to the Senior Unsecured Notes and Senior Secured Notes (see Note 14 of the Notes to Consolidated Financial Statements) and the June 2021 Ordinary Share Offering and 5.25% Series A Mandatory Convertible Preferred Shares Offering (see Note 16 of the Notes to Consolidated Financial Statements).

Acquisition of CPA Global

On October 1, 2020, we acquired 100% of the assets, liabilities and equity interests of CPA Global, a global leader in intellectual property software and tech-enabled services. Clarivate acquired all of the outstanding shares of CPA Global in a cash and stock transaction. The aggregate consideration in connection with the closing of the CPA Global acquisition was $8,540,886, net of $102,675 cash acquired, including an equity hold-back consideration of $46,485. The aggregate consideration was composed of (i) $6,565,477 from the issuance of up to 218,183,778 ordinary shares to Redtop Holdings Limited, a portfolio company of Leonard Green & Partners, L.P., representing approximately 35% pro forma fully diluted ownership of Clarivate and (ii) approximately $2,078,084 in cash to fund the repayment of CPA Global's parent company outstanding debt of $2,055,822 and related interest swap termination fee of $22,262. Of the 218,306,663 ordinary shares issuable in the acquisition, Clarivate issued 210,357,918 ordinary shares on October 1, 2020. There were 6,325,860 shares that were transferred to Clarivate to fund an Employee Benefit Trust established for the CPA Global Equity Plan. Accordingly, these shares were excluded from purchase price consideration.

In conjunction with the closing of the transaction, the Company incurred an incremental $1,600,000 of term loans under our term loan facility and used the net proceeds from such borrowings, together with cash on hand, to fund the transaction.

Acquisition of Decision Resources Group

On February 28, 2020, we acquired 100% of the assets, liabilities and equity interests of Decision Resources Group ("DRG"), a premier provider of high-value data, analytics and insights products and services to the healthcare industry, from Piramal Enterprises Limited ("PEL"), which is a part of global business conglomerate Piramal Group. The acquisition helps us expand our core businesses and provides us with the potential to grow in the Life Sciences Product Line.

The aggregate consideration paid in connection with the closing of the DRG acquisition was $964,997, composed of $900,000 of base cash plus $6,100 of adjusted closing cash paid on the closing date and 2,895,638 of the Company's ordinary shares issued to PEL in March 2021. The contingent stock consideration was valued at $58,897 on the closing date and was revalued at each period end until its issuance date and was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Dispositions

Disposition of Techstreet

On November 6, 2020, the Company completed the sale of certain assets and liabilities of certain non-core assets and liabilities within the IP segment for a total purchase price of $42,832. A gain of $28,140 was recognized in the Consolidated Statements of Operations within Other operating (expense) income, net during the year ended December 31, 2020.

Public Ordinary and Mandatory Convertible Preferred Share Offerings

In February 2020, we completed an underwritten public offering of 27,600,000 of our ordinary shares, generating proceeds of $540,736, which we used to fund a portion of the cash consideration for the DRG acquisition.

In June 2020, we completed an underwritten public offering of 50,400,000 of our ordinary shares (including 2,400,000 ordinary shares pursuant to the underwriters' option to purchase up to an additional 7,200,000 ordinary shares from certain selling shareholders) at a share price of $22.50.

33

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares). The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders.

See Note 1 - Background and Nature of Operations for further details on the public ordinary share offerings.

In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25% Series A Mandatory Convertible Preferred Shares (which included 1,875,000 of our MCPS that the underwriters purchased pursuant to their option to purchase additional shares). See Note 16 - Shareholders’ Equity for further details on the MCPS offering.

Private Placement Notes Offering

2021 Senior Secured Notes and Senior Notes Offering

In June 2021, we issued $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 (the "Old Secured Notes") and $1,000,000 in aggregate principal amount of Senior Notes due June 30, 2029 (the "Old Unsecured Notes" and, together with the Old Secured Notes, the "Old Notes") bearing interest at a rate of 3.875% and 4.875% per annum, respectively. The interest was payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021. The Old Secured Notes and the Old Unsecured Notes were issued by Clarivate Science Holdings Corporation (the "Issuer"), an indirect wholly-owned subsidiary of Clarivate.

In August 2021, we (i) exchanged all of the outstanding, validly tendered and not withdrawn 3.875% Senior Secured Notes due 2028 (the “Old Secured Notes”) for the newly-issued 3.875% Senior Secured Notes due 2028 (the “New Secured Notes”), and (ii) exchanged all of the outstanding, validly tendered and not withdrawn 4.875% Senior Unsecured Notes due 2029 (the “Old Unsecured Notes” and, together with the Old Secured Notes, the “Old Notes”) for the Issuer’s newly-issued 4.875% Senior Notes due 2029 (the “New Unsecured Notes” and, together with the New Secured Notes, the “New Notes”). The initial aggregate principal amount of New Notes is equal to the aggregate principal amount of Old Notes that were validly tendered and not validly withdrawn for exchange, and that were accepted by the Issuer. The offers to exchange are referred to herein as the “Exchange Offers.” Pursuant to the Exchange Offers, the aggregate principal amounts of the Old Notes set forth as follows were validly tendered and not validly withdrawn, and were accepted by the Issuer and subsequently cancelled: (i) $921,177 aggregate principal amount of Old Secured Notes; and (ii) $921,399 aggregate principal amount of Old Unsecured Notes. Following such cancellation, (i) $78,823 aggregate principal amount of Old Secured Notes remained outstanding; and (ii) $78,601 aggregate principal amount of Old Unsecured Notes remained outstanding. The Issuer redeemed such remaining outstanding Old Secured Notes and Old Unsecured Notes at 100% of the principal amount thereof plus accrued and unpaid interest from June 24, 2021 to the redemption date in August 2021. In connection with the settlement of the Exchange Offers, the Issuer (i) issued $921,177 aggregate principal amount of its New Secured Notes; and (ii) issued $921,399 aggregate principal amount of its New Unsecured Notes. The interest is payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021. The exchange was treated as a debt modification in accordance with Accounting Standards Codification 470, Debt ("ASC 470").

Concurrently with the settlement of the Exchange Offers, the Issuer deposited (or caused to be deposited) an amount in cash equal to the aggregate principal amount of the New Notes of each series into segregated escrow accounts until the date that certain escrow release conditions (the “Escrow Release Conditions”) including the consummation of the ProQuest acquisition, were satisfied. On December 1, 2021 the Escrow Release Conditions were satisfied, and the escrow proceeds were released from the escrow accounts and used to fund a portion of the purchase price of the ProQuest acquisition and to pay related fees and expenses.

In connection with the closing of the ProQuest acquisition on December 1, 2021, the New Notes are guaranteed on a joint and several basis by each of Clarivate’s indirect subsidiaries that is an obligor or guarantor under Clarivate’s existing credit facilities and senior secured notes due 2026. The New Secured Notes are secured on a first-lien pari passu basis with borrowings under the existing credit facilities and senior secured notes, and the New Unsecured Notes are the Issuer’s and such guarantors’ unsecured obligations.

Restructuring

During 2020 and 2019, we engaged a strategic consulting firm to assist us in optimizing our structure and cost base. As a result, we have implemented several cost-saving and margin improvement programs designed to generate substantial

34

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

incremental cash flow including the Operation Simplification and Optimization Program, the DRG Acquisition Integration Program and the CPA Global Acquisition Integration and Optimization Program. During 2021, we approved the One Clarivate restructuring plan, which streamlines operations within targeted areas of the Company and the ProQuest Acquisition Integration Program. The programs are expected to result in a reduction in operational costs, with the primary driver of the cost saving being from a reduction in workforce.

Operation Simplification and Optimization Program

During the fourth quarter of 2019, the Company approved restructuring actions designed to streamline our operations by simplifying our organization and focusing on two segments in planned phases. Approximately $44,538 costs have been incurred to date under the program which was substantially complete as of December 31, 2021.

During the year ended December 31, 2021, 2020, and 2019, the Company recorded pre-tax charges of $2,221, $26,647, and $15,670 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $2,063, $16,069 and $15,424 of severance and related benefit costs, $30, $4,567 and $246 of contract exit costs and legal and advisory fees, and $128, $6,011 and $0 of lease impairment and location exit costs.

DRG Acquisition Integration Program

During the second quarter of 2020, the Company approved restructuring actions designed to eliminate duplicative costs in planned phases following the acquisition of DRG. Approximately $6,792 of costs have been incurred to date under the program which was substantially complete as of December 31, 2021.

During the year ended December 31, 2021 and 2020, the Company recorded pre-tax charges of $195 and $6,597 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $120 and $5,133 of severance and related benefit costs, $75 and $487 of contract exit costs and legal and advisory fees, and $0 and $977 of lease impairment and location exit costs.

CPA Global Acquisition Integration and Optimization Program

During the fourth quarter of 2020, the Company approved restructuring actions designed to eliminate duplicative costs following the acquisition of CPA Global and to streamline our operations simplifying our organization and reducing our leasing portfolio. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately $128,017 for all phases of the program. Approximately $128,113 of costs have been incurred to date under the program which was substantially complete as of December 31, 2021.

During the year ended December 31, 2021 and 2020, the Company recorded pre-tax charges of $105,122 and $22,895 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $35,882 and $18,715 of severance and related benefit costs, $8,303 and $3,472 of contract exit costs and legal and advisory fees, and $60,937 and $707 of lease impairment and location exit costs.

One Clarivate Program

During the second quarter of 2021, the Company approved restructuring actions to streamline operations within targeted areas of the Company. The program will result in a reduction in operational costs, with the primary driver of the cost saving being from a reduction in workforce. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately $39,981 for all approved phases of the program. Approximately $19,981 of costs have been incurred to date under the program and $20,000 are expected to be incurred in a future period, all related to severance charges.

During the year ended December 31, 2021, the Company recorded pre-tax charges of $19,981 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were composed of $17,275 of severance and related benefit costs and $2,707 of contract exit costs and legal and advisory fees.

ProQuest Acquisition Integration Program

During the fourth quarter of 2021, the Company approved restructuring actions designed to eliminate duplicative costs following the acquisition of ProQuest and to streamline our operations simplifying our organization and continuing to

35

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

reduce our lease portfolio. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately $69,939 for all phases of the program. Approximately $1,939 of costs have been incurred to date under the program and $68,000 are expected to be incurred in a future period, related to severance, lease impairments and other exit costs, such as legal and advisory fees.

During the year ended December 31, 2021, the Company recorded pre-tax charges of $1,939 recognized within Restructuring and impairment in the Consolidated Statements of Operations. These charges were all related to severance and related benefit costs.

Effect of Currency Fluctuations

As a result of our geographic reach and operations across regions, we are exposed to currency transaction and currency translation impacts. Currency transaction exposure results when we generate revenues in one currency and incur expenses in another. While we seek to limit our currency transaction exposure by matching revenues and expenses, we are not always able to do so. For example, our revenues and direct expenses before depreciation and amortization, tax and interest were denominated in the following currencies:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2021","","2020","","2019"],["Revenues"],["USD","66","%","","74","%","","81","%"],["Euros","16","%","","11","%","","9","%"],["British pounds","12","%","","8","%","","3","%"],["Other currencies","6","%","","6","%","","7","%"],["Direct expenses"],["USD","57","%","","69","%","","70","%"],["Euros","10","%","","9","%","","9","%"],["British pounds","20","%","","13","%","","13","%"],["Other currencies","13","%","","9","%","","8","%"]]
[[/GREPCENT_TABLE]]

The financial statements of our subsidiaries outside the U.S. and the UK are typically measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the balance sheet date exchange rates, while income and expense items are translated at the average monthly exchange rates. Resulting translation adjustments are recorded in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

Subsidiary monetary assets and liabilities that are denominated in currencies other than the functional currency are remeasured using the month-end exchange rate in effect during each month, with any related gain or loss recorded in Other operating expense, net within the Consolidated Statements of Operations.

In September 2020, the Company entered into two foreign exchange forward contracts to reduce its exposure to variability in cash flows relating to funding of the repayment of CPA Global's parent company outstanding debt on October 1, 2020. The Company recognized a gain from the mark to market adjustment of $0 and $2,903, in Other operating income, net on the Consolidated Statements of Operations for the year ended December 31, 2021 and 2020, respectively. The nominal amount of outstanding foreign currency contracts was $0 as of December 31, 2021 and December 31, 2020.

Additionally, the Company periodically enters into foreign currency contracts. The purpose of these derivative instruments is to help manage the Company’s exposure to foreign exchange rate risks within the acquired CPA Global business. These contracts generally do not exceed 180 days in duration. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk and Item 8. Financial Statements and Supplementary Data - Note 10 to the Consolidated Financial Statements - Derivative Instruments, for additional information.

36

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Key Performance Indicators

We regularly monitor the following key performance indicators to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions.

Adjusted Revenues

We present Adjusted Revenues, which excludes the impact of the deferred revenue purchase accounting adjustments relating to acquisitions prior to 2021 (see Note 3 - Summary of Significant Accounting Policies for further detail), which is allowable under the Company's debt covenant calculation. We present these measures because we believe it is useful to readers to better understand the underlying trends in our operations. Due to the adoption of ASU 2021-08, this performance indicator will not be used going forward. See - Certain Non-GAAP Measures - Adjusted Revenues below for important information on the limitations of Adjusted Revenues and their reconciliation to the respective revenues measures under U.S. GAAP.

Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA is presented because it is a basis upon which our management assesses our performance, and we believe it is useful for investors to understand the underlying trends of our operations. See Certain Non-GAAP Measures - Adjusted EBITDA and Adjusted EBITDA margin for important information on the limitations of Adjusted EBITDA and its reconciliation to our Net loss under U.S. GAAP. Adjusted EBITDA represents net loss before provision for income taxes, depreciation and amortization, interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from divestitures), share-based compensation, mandatory convertible preferred share dividend expense, unrealized foreign currency gains/(losses), costs associated with the transition services agreement with Thomson Reuters, which we entered into in connection with our separation from Thomson Reuters in 2016, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, costs related to our merger with Churchill Capital Corp in 2019, non-operating income or expense, the impact of certain non-cash, mark to market adjustments on financial instruments and other items that are included in net income 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. Per Clarivate’s Non-GAAP policy effective January 1, 2021, we have ceased use of adjustments for costs in connection with our separation from Thomson Reuters including costs related to the transition services agreement and separation, integration, and transformational expenses, as well as costs related to our merger with Churchill Capital Corp in 2019. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.

Annualized Contract Value

Annualized Contract Value (“ACV”), at a given point in time, 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. License agreements may cover more than one product and the standard subscription period for each license agreement typically runs for no less than 12 months. The renewal period for our subscriptions starts 90 days before the end of the current subscription period, during which customers must provide notice of whether they intend to renew or cancel the license agreement.

An initial subscription period for new customers may be for a term of less than 12 months, in certain circumstances. Most of our customers, however, opt to enter into a full 12-month initial subscription period, resulting in renewal periods spread throughout the calendar year. Customers that license more than one subscription-based product may, at any point during the renewal period, provide notice of their intent to renew only certain subscriptions within the license agreement and cancel other subscriptions, which we typically refer to as a downgrade. In other instances, customers may upgrade their license agreements by adding additional subscription-based products to the original agreement. Our calculation of ACV includes the impact of downgrades, upgrades, price increases, and cancellations that have occurred as of the reporting period. For avoidance of doubt, ACV does not include fees associated with transactional and re-occurring revenues.

We monitor ACV because it represents a leading indicator of the potential subscription revenues that may be generated from our existing customer base over the upcoming 12-month period. Measurement of subscription revenues as a key operating metric is particularly relevant because a majority of our revenues are generated through subscription-based and re-occurring

37

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

revenues, which accounted for 79.1%, 76.9% and 82.6% of our total revenues for the years ended December 31, 2021, 2020 and 2019, respectively. We calculate and monitor ACV for each of our segments, and use the metric as part of our evaluation of our business and trends.

The amount of actual subscription revenues that we earn over any 12-month period are likely to differ from ACV at the beginning of that period, sometimes significantly. This may occur for numerous reasons, including subsequent changes in annual revenue renewal rates, impact of price increases (or decreases), cancellations, upgrades and downgrades, and acquisitions and divestitures.

We calculate the ACV on a constant currency basis to exclude the effect of foreign currency fluctuations.

The following table presents ACV as of the dates indicated:

[[GREPCENT_TABLE]]
[["","December 31,","","Change"],["(dollars in thousands)","2021","","2020","","2019","","2021 vs. 2020","","2020 vs. 2019"],["Annualized Contract Value","$","1,611,837","","","$","906,554","","","$","793,727","","","77.8","%","","14.2","%"]]
[[/GREPCENT_TABLE]]

Annual Revenue Renewal Rates

Our revenues are primarily subscription based, which leads to high revenue predictability. Our ability to retain existing subscription customers is a key performance indicator that helps explain the evolution of our historical results and is a leading indicator of our revenues and cash flows for the subsequent reporting period.

“Annual revenue renewal rate” is the metric we use to determine renewal levels by existing customers across all of our Segments, and is a leading indicator of renewal trends, which impact the evolution of our ACV and results of operations. We calculate the annual revenue renewal rate for a given period by dividing (a) the annualized dollar value of existing subscription product license agreements that are renewed during that period, including the value of any product downgrades, by (b) the annualized dollar value of existing subscription product license agreements that come up for renewal in that period. “Open renewals,” which we define as existing subscription product license agreements that come up for renewal, but are neither renewed nor canceled by customers during the applicable reposting period, are excluded from both the numerator and denominator of the calculation. We calculate the annual revenue renewal rate to reflect the value of product downgrades but not the value of product upgrades upon renewal, because upgrades reflect the purchase of additional services.

The impact of upgrades, new subscriptions and product price increases is reflected in ACV, but not in annual revenue renewal rates. Our annual revenue renewal rates were 90.6%, 91.2% and 90.1% for the years ended December 31, 2021, 2020 and 2019, respectively.

Key Components of Our Results of Operations

Revenues, net

The Company disaggregates revenue based on revenue recognition pattern. Subscription based revenues recognize revenue over time, whereas our re-occurring, transactional and other revenues typically recognize revenue at a point in time with professional services revenue recognized over time. The Company believes subscription, re-occurring, transactional and other is reflective of how the Company manages the business.

Subscription-based revenues are recurring revenues that are earned under annual, multi-year, or evergreen contracts, pursuant to which we license the right to use our products to our customers or provide maintenance services over a contractual term. Revenues from the sale of subscription data, maintenance services, continuing service fees related to our perpetual access license ("PALs"), and analytics solutions are recognized ratably over the contractual term as revenues are earned. Subscription revenues are driven by annual revenue renewal rates, new subscription business, price increases on existing subscription business and subscription upgrades and downgrades from recurring customers. Substantially all of our historical deferred revenues purchase accounting adjustments are related to subscription revenues.

Re-occurring revenues are earned under contracts for specific deliverables that are typically quoted on a product, data set, or project basis and often derived from repeat customers purchasing cyclical products. These contracts include either evergreen clauses, in which at least six month advance notice is required prior to cancellation, or terms of multiple years. Due to the cyclical nature of the Company’s re-occurring products, and there typically being upfront setup time with the customer, the

38

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

re-occurring revenue stream benefits from an established customer base, with minimal customer attrition. A primary driver of the re-occurring revenue stream is the ‘renewal’ business obtained from the CPA global acquisition. Revenue from this revenue stream is typically recognized point in time.

Transactional and other revenues include "clearance searching" and "backfiles" products as well as professional services such as implementation. Clearance searching products relate to preparing detailed, custom reports post screening that uncover potential risks related to a proposed trademark. Backfiles represent an archive of historical data content. Transactional revenues are earned under contracts for specific deliverables that are typically quoted on a product, data set or project basis and often derived from repeat customers, including customers that also generate subscription-based revenues. Transactional content revenues are usually delivered to the customer instantly or in a short period of time, at which time revenues are recognized. Transactional revenues may involve sales to the same customer on multiple occasions but with different products or services comprising the order. Other revenues relate to professional services including implementation services for software and software as a service ("SaaS") subscriptions. These contracts vary in length from several months to years for multi-year projects. Revenue is recognized over time utilizing a reasonable measure of progress depicting the satisfaction of the related performance obligation.

Cost of Revenues

Cost of revenues consists of costs related to the production, servicing and maintenance of our products and are composed primarily of related personnel costs, such as salaries, benefits and bonuses for employees, fees for contracted labor, and data center services and licensing costs. Cost of revenues also includes the costs to acquire or produce content, royalties payable and non-capitalized R&D expenses. Cost of revenues does not include production costs related to internally generated software, which are capitalized.

Selling, General and Administrative

Selling, general and administrative costs consist primarily of salaries, benefits, commission and bonuses for the executive, finance and accounting, human resources, administrative, sales and marketing personnel, third-party professional services fees, such as legal and accounting expenses, facilities rent and utilities and technology costs associated with our corporate infrastructure. Also included within these costs are transaction expenses including costs incurred to complete business combination transactions, including acquisitions, dispositions and capital market activities and include advisory, legal, and other professional and consulting costs.

Depreciation

Depreciation expense relates to our fixed assets, including mainly computer hardware and leasehold improvements, furniture and fixtures. These assets are depreciated over their expected useful lives, and in the case of leasehold improvements over the shorter of their useful life or the duration of the related lease.

Amortization

Amortization expense relates to our finite-lived intangible assets, including mainly databases and content, customer relationships, internally generated computer software and trade names. These assets are amortized over periods of between two and twenty-three years. Definite-lived intangible assets are tested for impairment when indicators are present, and, if impaired, are written down to fair value based on discounted cash flows.

Impairment on Assets Held for Sale

Impairment on assets held for sale represents an impairment charge recorded for certain assets classified as assets held for sale.

Restructuring and Impairment

Restructuring and impairment expense includes costs associated with involuntary termination benefits provided to employees under the terms of a one-time benefit arrangement, ongoing benefit arrangements, certain contract termination costs, other costs associated with an exit or disposal activity and impairment charges associated with right of use assets in which the Company has ceased the use of during the period.

Other Operating Income (Expense), Net

39

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Other operating income (expense), net consists of gains or losses related to the disposal of our assets, asset impairments or write-downs and the consolidated impact of re-measurement of the assets and liabilities of our company, sublease income, gain recognized on foreign exchange contract settlement and our subsidiaries that are denominated in currencies other than each relevant entity's functional currency.

Mark to Market Adjustment on Financial Instruments

Mark to market adjustment on financial instruments consists of the mark to market accounting adjustments related to certain of the Company's warrants issued to the founders of Churchill Capital Corp, a special purpose acquisition company or “SPAC” with which the Company consummated a business combination transaction in May 2019.

Legal Settlement

Legal settlement represents a net gain recorded in 2019 for cash received in relation to closure of a confidential legal matter.

Interest Expense and Amortization of Debt Discount, Net

Interest expense and amortization of debt discount, net consists of expense related to interest on our borrowings under our term loan facility and our secured notes due 2026, senior unsecured notes due in 2029 and senior secured notes due in 2028, the amortization and write off of debt issuance costs and original discount, and interest related to certain derivative instruments.

Provision for Income Taxes

A provision for income tax is calculated for each of the jurisdictions in which we operate. The benefit or provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The benefit or provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the book and tax bases of assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Interest accrued related to unrecognized tax benefits and income tax related penalties are included in the provision for income taxes.

Dividends on Preferred Shares

Dividends on our convertible preferred shares are calculated at an annual rate of 5.25% of the liquidation preference of $100.00 per share. We may pay declared dividends on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2021 and ending on, and including, June 1, 2024.

Critical Accounting Policies, Estimates and Assumptions

The preparation of the consolidated financial statements in accordance with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the consolidated financial statements. On an ongoing basis, we evaluate estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We consider the following accounting policies to be critical to understanding our financial statements because the application of these policies requires significant judgment on the part of management, which could have a material impact on our financial statements if actual performance should differ from historical experience or if our assumptions were to change. The following accounting policies include estimates that require management’s subjective or complex judgments about the effects of matters that are inherently uncertain. For information on our significant accounting policies, including the policies discussed below, see Item 8. Financial Statements and Supplementary Data - Notes to the Consolidated Financial Statements - Note 3 - Summary of Significant Accounting Policies.

Revenue Recognition

We derive revenues from contracts with customers by selling information on a subscription and single transaction basis as well as performing professional services. Our subscription contract agreements contain standard terms and conditions, and most contracts include a one-year subscription, although we may provide a multi-year subscription in certain instances. In

40

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

some cases, contracts provide for variable consideration that is contingent upon the occurrence of uncertain future events, such as retroactive discounts provided to the customers, indexed or volume based discounts, and revenues between contract expiration and renewal. We estimate the amount of the variable consideration at the expected value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur when the uncertainty associated with the variable consideration is resolved. The estimate of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

Most of our revenues are derived from subscription contract arrangements, which may contain multiple performance obligations. For these arrangements, the transaction price is allocated to the identified performance obligations based on their relative standalone selling prices. We utilize standard price lists, together with consideration of market conditions, customer demographics, and geographic location, to determine the standalone selling price for most of our products and services, however certain products may not have a standalone selling price that is directly observable, which requires judgment.

Business Combinations

In a business combination, substantially all identifiable assets, liabilities and contingent liabilities acquired are accounted for using the acquisition method at the acquisition date and are recorded at their respective fair values. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. The determination of the fair values is based on estimates and judgments made by management. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. The fair value of the customer relationships intangible assets acquired was estimated by management through a discounted cash flow model using the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to projected revenue growth rates, operating margins, projected cash flows, royalty rates, tax rates, discount rates, tax amortization benefits, and customer attrition rates, among other items. The fair value of the technology and databases and trade names intangible assets acquired was estimated by management through a discounted cash flow model using the relief from royalty method, which involved the use of significant estimates and assumptions related to projected revenue growth rates, royalty rates, tax rates, discount rates, tax amortization benefits, and obsolescence rates. The significant estimates and assumptions used in determining their fair value may change during the finalization of the purchase price allocation. As a result, the Company may make adjustments to the provisional amounts recorded for certain items as part of the purchase price allocation subsequent to the acquisition, not to exceed one year after the acquisition date, until the purchase accounting allocation is finalized.

When a business combination involves contingent consideration, we record a liability for the estimated cost of such contingencies when expenditures are probable and reasonably estimable. A significant amount of judgment is required to estimate and quantify the potential liability in these matters. We engage outside experts as deemed necessary or appropriate to assist in the calculation of the liability; however, management is responsible for evaluating the estimate. We reassess the estimated fair value of the contingent consideration each financial reporting period over the term of the arrangement. Any resulting changes identified subsequent to the measurement period are recognized in earnings and could have a material effect on our results of operations.

Reviews of the tax balances associated with the opening balance sheet of acquired entities is a critical step of the acquisition accounting and throughout the measurement period.

Long-Lived Assets (including Other Intangible Assets)

Residual values and useful lives are reviewed at the end of each reporting period and adjusted if appropriate. We evaluate long-lived assets, including computer hardware and other property, computer software, and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to current forecasts of undiscounted future net cash flows expected to be generated by the asset over its remaining life. An asset is assessed for impairment at the lowest level that the asset generates cash inflows that are largely independent of cash inflows from other assets. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized equal to the amount by which the carrying amount of the asset exceeds the fair value of the

41

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

asset. Any such impairment would be recognized in full in the reporting period in which it has been identified, which could have a material adverse effect on our financial condition or results of operations.

Goodwill and Indefinite-Lived Intangible Assets Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill and indefinite-lived intangible assets are not amortized, but instead are tested for impairment annually during the fourth quarter each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill

The Company performs goodwill impairment testing at the reporting unit level which is defined as the operating segment or one level below the operating segment. As of October 1, 2021, our most recent annual goodwill impairment testing date, the Company identified five reporting units. As part of our annual goodwill impairment testing, the Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. The Company estimates the fair value of a reporting unit using the income approach. Under the income approach, a discounted cash flow ("DCF") model is used to determine fair value based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates. Significant judgments inherent in these analyses include, but are not limited to, estimating the amount and timing of future cash flows and the selection of appropriate discount rates, tax rates and long-term growth rate assumptions. Changes in these estimates and assumptions could materially affect the determination of estimated fair value. Any such impairment charge would be recognized in full in the reporting period in which it has been identified, which could have a material adverse effect on our financial condition or results of operations.

In the fourth quarter of 2021, the Company performed its annual goodwill impairment testing by applying the qualitative assessment to three of its reporting units and the quantitative assessment to two of its reporting units. For the reporting units tested under the qualitative assessment, the Company considered various qualitative factors, including those described above, that would have affected the estimated fair value of the reporting units, as well as the historical significant level of headroom, and the results of the qualitative assessments indicated that it is not more likely than not that the fair values of the reporting units were less than their carrying values. For the reporting units tested under the quantitative assessment, the results indicated that, the estimated fair values of the reporting units exceeded their carrying values. As such, as of October 1, 2021, our most recent annual goodwill impairment testing date, goodwill was not impaired.

Of the five reporting units identified and tested for goodwill impairment as of October 1, 2021, the IP Management reporting unit within our Intellectual Property segment, for which a quantitative assessment was performed, indicated an estimated fair value that was not substantially in excess of its carrying value. The Company notes the following with respect to the IP Management reporting unit as of our most recent annual goodwill impairment testing date:

•The percentage by which the estimated fair value exceeded the carrying value was 7%;

•The amount of goodwill assigned to the reporting unit as of December 31, 2021 was $3,046,906, representing the goodwill acquired in Q4 2020 from the CPA Global and Hanlim IPS acquisitions;

•The Company estimated the fair value of the reporting unit using the income approach, and more specifically, the DCF model. The significant assumptions used in the DCF model included projected revenue growth rates and operating margins, tax rates, terminal values, and discount rates, among others, all of which require significant judgments by management;

◦The Company used its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views of the long-term outlook for the reporting unit. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates.

◦The discount rate was derived using a capital asset pricing model and analyzing published rates for industries relevant to the reporting unit to estimate the cost of equity financing. The Company used a

42

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

discount rate of 7.0%, which we believe to be commensurate with the risks and uncertainty inherent in the respective reporting unit and in its internally developed forecast.

•Certain future events and circumstances, including deterioration of market conditions, higher cost of capital or a decline in demand for IP Management's product offerings, could result in changes to these assumptions and judgements. A downward revision in the present value of future cash flow could result in impairment, and a non-cash charge would be recorded. Such a charge could have a material effect on our financial position and results of operations.

Indefinite-Lived Intangible Assets

The Company has indefinite-lived intangible assets related to trade names. As part of our annual indefinite-lived intangible asset impairment testing, the Company has the option to first perform qualitative testing by evaluating whether any events and circumstances occurred that provide evidence that it is more likely than not (a likelihood of more than 50 percent) that the indefinite-lived assets are impaired. If, based on our evaluation of the events and circumstances that occurred during the year we do not believe that it is more likely than not that the indefinite-lived assets are impaired, no quantitative impairment test is required. If the Company chooses not to complete a qualitative assessment, or if the initial assessment indicates that it is more likely than not that the carrying value exceeds the estimated fair value, additional quantitative testing is performed.

The quantitative test for impairment is performed using the relief-from-royalty method under the income approach to determine the fair value based on the present value of estimated future cash flows that the indefinite-lived intangible asset can be expected to generate in the future. Significant judgments inherent in the analysis include estimating the amount and timing of future cash flows and the selection of appropriate discount rates, royalty rates and long-term growth rate assumptions. Changes in these estimates and assumptions could materially affect the determination of estimated fair value and could result in an impairment charge. Any such impairment charge would be recognized in full in the reporting period in which it has been identified, which could have a material adverse effect on our financial condition or results of operations.

In the fourth quarter of 2021, the Company elected to forego the qualitative assessment and performed the quantitative impairment evaluation to determine the estimated fair value of the indefinite-lived intangible assets. The results indicated that the estimated fair value substantially exceeded its carrying value, and the indefinite-lived intangible assets were not impaired.

Share-Based Compensation

Share-based compensation expense includes cost associated with stock options, restricted stock units (“RSUs”) and Performance stock units ("PSUs") granted to certain key members of management.

The stock option fair value is estimated at the date of grant using the Black-Scholes option pricing model, which requires management to make certain assumptions of future expectations based on historical and current data. The assumptions include the expected term of the stock option, expected volatility, dividend yield, and risk-free interest rate. The expected term represents the amount of time that options granted are expected to be outstanding, based on forecasted exercise behavior. The risk-free rate is based on the rate at grant date of zero-coupon U.S. Treasury Notes with a term comparable to the expected term of the option. Expected volatility is estimated based on the historical volatility of comparable public entities’ stock price from the same industry. Our dividend yield is based on forecasted expected payments, which are expected to be zero for the immediate future. We recognize compensation expense over the vesting period of the award on a graded-scale basis, and we recognize forfeitures as they occur.

The stock-based compensation cost of time-based RSU and PSU grants is calculated by multiplying the grant date fair value by the number of shares granted. We recognize compensation expense over the vesting period of the award on a graded-scale basis, and we recognize forfeitures as they occur. Each quarter, we evaluate the probability of the number of shares that are expected to vest and adjust our expense accordingly.

Equity compensation plans of the acquired CPA Global business are accounted for as a liability as they will be paid in cash. Changes in the fair value of these awards are recorded at the end of each reporting period.

Warrant Liabilities

43

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

The Company accounts for Private Placement Warrants for shares of the Company's ordinary stock that are not indexed to its own stock as liabilities at fair value on the balance sheet. The Private Placement Warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of Mark to market adjustment on financial instruments on the Consolidated Statements of Operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the ordinary stock warrants. At that time, the portion of the warrant liabilities related to the ordinary stock warrants will be reclassified to additional paid-in capital.

We used a third-party specialist to fair value the awards using the Monte Carlo simulation approach. The assumptions included in the model include, but are not limited to, risk-free interest rate, expected volatility of stock prices for the Company and its peer group, and dividend yield. A discount for the lack of marketability ("DLOM") is applied to shares that are subject to remaining post vesting lock up restrictions.

Recently Issued and Adopted Accounting Pronouncements

For recently issued and adopted accounting pronouncements, see Item 8. Financial Statements and Supplementary Data - Notes to the Consolidated Financial Statements - Note 3 - Summary of Significant Accounting Policies.

Results of Operations

The following table presents the results of operations for the years ended December 31, 2021, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","","Change 2021 vs. 2020","","Change 2020 vs. 2019"],["(in thousands, except percentages)","2021","","2020","","2019","","","","%","","%"],["Revenues, net","$","1,876,894","","","$","1,254,047","","","$","974,345","","","","","49.7","%","","28.7","%"],["Operating expenses:"],["Cost of revenues","(626,104)","","","(438,787)","","","(352,000)","","","","","42.7","%","","24.7","%"],["Selling, general and administrative costs","(642,989)","","","(544,700)","","","(475,014)","","","","","18.0","%","","14.7","%"],["Depreciation","(13,996)","","","(12,709)","","","(9,181)","","","","","10.1","%","","38.4","%"],["Amortization","(523,819)","","","(290,441)","","","(191,361)","","","","","80.4","%","","51.8","%"],["Impairment on assets held for sale","\u2014","","","\u2014","","","(18,431)","","","","","0.0","%","","(100.0)","%"],["Restructuring and impairment","(129,459)","","","(56,138)","","","(15,670)","","","","","130.6","%","","258.3","%"],["Other operating (expense) income, net","(27,507)","","","52,381","","","4,826","","","","","(152.5)","%","","985.4","%"],["Total operating expenses","(1,963,874)","","","(1,290,394)","","","(1,056,831)","","","","","52.2","%","","22.1","%"],["Loss from operations","(86,980)","","","(36,347)","","","(82,486)","","","","","139.3","%","","(55.9)","%"],["Mark to market adjustment on financial instruments","81,320","","","(205,062)","","","(47,656)","","","","","(139.7)","%","","330.3","%"],["Legal settlement","\u2014","","","\u2014","","","39,399","","","","","0.0","%","","(100.0)","%"],["Loss before interest expense and income tax","(5,660)","","","(241,409)","","","(90,743)","","","","","(97.7)","%","","166.0","%"],["Interest expense and amortization of debt discount, net","(252,490)","","","(111,914)","","","(157,689)","","","","","125.6","%","","(29.0)","%"],["Loss before income tax","(258,150)","","","(353,323)","","","(248,432)","","","","","(26.9)","%","","42.2","%"],["(Provision) benefit for income taxes","(12,298)","","","2,698","","","(10,201)","","","","","(555.8)","%","","126.4","%"],["Net loss","(270,448)","","","(350,625)","","","(258,633)","","","","","(22.9)","%","","35.6","%"],["Dividends on preferred shares","(41,508)","","","\u2014","","","\u2014","","","","","100.0","%","","0.0","%"],["Net loss attributable to ordinary shares","$","(311,956)","","","$","(350,625)","","","$","(258,633)","","","","","(11.0)","%","","35.6","%"]]
[[/GREPCENT_TABLE]]

44

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Revenues, net

Total Revenue

Revenues, net of $1,876,894 in 2021, increased by $622,847, or 49.7%, from $1,254,047 in 2020. On a constant currency basis, Revenues, net increased by $606,296, or 48.3%.

Adjusted Revenues of $1,880,845, which excludes the impact of the deferred revenue adjustment relating to acquisitions prior to 2021 (see Note 3 - Summary of Significant Accounting Policies for further detail), in 2021 increased by $603,697, or 47.3%, from $1,277,148 in 2020. On a constant currency basis, Adjusted Revenues increased by $587,110, or 46.0%.

Revenues, net of $1,254,047 in 2020 increased by $279,702, or 28.7%, from $974,345 in 2019. On a constant currency basis, Revenues, net increased by $276,176, or 28.3%.

Adjusted Revenues of $1,277,148, which excludes the impact of the deferred revenues adjustment, in 2020 increased by $302,365, or 31.0%, from $974,783 in 2019. On a constant currency basis, Adjusted Revenues increased by $298,839, or 30.7%.

The comparability of our Revenues, net between periods was impacted by several factors described under “Factors Affecting the Comparability of Our Results of Operations” above. The tables below presents the items that impacted the change in our revenues, net between periods.

[[GREPCENT_TABLE]]
[["","Variance 2021 vs. 2020"],["(in thousands, except percentages)","$","","%"],["Revenue change driver"],["Increase due to a reduction in deferred revenues adjustment","$","19,150","","","1.5","%"],["Decrease due to disposals","(49,296)","","","(3.9)","%"],["Increase from acquisitions","579,159","","","46.2","%"],["Foreign currency translation","16,587","","","1.3","%"],["Revenue increase from organic business","57,247","","","4.6","%"],["Revenues, net (total change)","$","622,847","","","49.7","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Variance 2020 vs. 2019"],["(in thousands, except percentages)","$","","%"],["Revenue change driver"],["Decrease due to deferred revenues adjustment","$","(22,663)","","","(2.3)","%"],["Decrease due to disposals","(64,815)","","","(6.7)","%"],["Increase from acquisitions","353,195","","","36.2","%"],["Foreign currency translation","3,526","","","0.4","%"],["Revenue increase from organic business","10,459","","","1.1","%"],["Revenues, net (total change)","$","279,702","","","28.7","%"]]
[[/GREPCENT_TABLE]]

Revenues, net from our ongoing business improved for both of our segments, led by Science, reflecting a trend consistent with the increase in our ACV between periods, mainly due to product price increases and new business. The evolution of our recurring business is discussed further below.

Revenue by Transaction Type

The following tables present the amounts of our subscription, re-occurring, and transactional and other revenues for the periods indicated, as well the drivers of the variances between periods, including as a percentage of such revenues.

45

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

[[GREPCENT_TABLE]]
[["","","","","","Variance Increase/(Decrease)","","Percentage of Factors Increase/(Decrease)"],["","Year Ended December 31,","","Total Variance (Dollars)","Total Variance (Percentage)","","Acquisitions","Disposals","FX Impact","","Organic"],["(in thousands, except percentages)","2021","","2020"],["Subscription revenues","$","1,034,356","","","$","877,659","","","$","156,697","","17.9","%","","16.1","%","(3.6)","%","1.9","%","","3.5","%"],["Re-occurring revenues","453,242","","","111,929","","","341,313","","304.9","%","","298.3","%","\u2014","%","(1.8)","%","","8.4","%"],["Transactional and other revenues","393,247","","","287,560","","","105,687","","36.8","%","","36.2","%","(6.2)","%","0.8","%","","5.9","%"],["Deferred revenues adjustment (1)","(3,951)","","","(23,101)","","","19,150","","82.9","%","","(19.0)","%","\u2014","%","(0.2)","%","","102.1","%"],["Revenues, net","$","1,876,894","","","$","1,254,047","","","$","622,847","","49.7","%","","45.8","%","(3.9)","%","1.3","%","","6.4","%"],["Deferred revenues adjustment (1)","3,951","","","23,101","","","(19,150)","","(82.9)","%","","19.0","%","\u2014","%","0.2","%","","(102.1)","%"],["Adjusted revenues, net","$","1,880,845","","","$","1,277,148","","","$","603,697","","47.3","%","","45.3","%","(3.9)","%","1.3","%","","4.5","%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". In the fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which allows an acquirer to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance was applied retrospectively to all business combinations for which the acquisition date occurs during or subsequent to the fiscal year 2021.

Subscription revenues of $1,034,356 in 2021, increased by $156,697, or 17.9% from $877,659 in 2020. On a constant currency basis, subscription revenues increased by $140,426, or 16.0%. Acquisitive subscription growth was primarily generated from the DRG Transaction, CPA Global Transaction and the ProQuest Transaction. Disposal subscription revenues reduction was derived from the Techstreet Transaction. Organic subscription revenues increased primarily due to price increases, new business and the benefit of net installations in prior year.

Re-occurring revenues of $453,242 in 2021, increased by $341,313, or 304.9% from $111,929 in 2020 due to nine months of acquisitive growth generated from the CPA Global Transaction, which was acquired on October 1, 2020. Organic re-occurring revenues increased primarily due to increases in patent renewal volumes and improvements in yield per case.

Transactional and other revenues of $393,247 in 2021, increased by $105,687, or 36.8% from $287,560 in 2020. On a constant currency basis, transactional revenues increased by $103,360, or 35.9%. Acquisitive transactional growth was primarily generated from the DRG Transaction, the CPA Global Transaction and the ProQuest Transaction. Disposal transactional revenue reduction was derived from the Techstreet Transaction. Organic transactional revenues increased due to an increase in trademark search volumes, stronger back file and custom data sales and strength in our professional services business lines.

[[GREPCENT_TABLE]]
[["","","","","","Variance Increase/(Decrease)","","Percentage of Factors Increase/(Decrease)"],["","Year Ended December 31,","","Total Variance (Dollars)","Total Variance (Percentage)","","Acquisitions","Disposals","FX Impact","Organic"],["(in thousands, except percentages)","2020","","2019"],["Subscription revenues","$","877,659","","","$","805,518","","","$","72,141","","9.0","%","","13.4","%","(7.4)","%","0.3","%","2.7","%"],["Re-occurring revenues","111,929","","","\u2014","","","111,929","","100.0","%","","100.0","%","\u2014","%","\u2014","%","\u2014","%"],["Transactional and other revenues","287,560","","","169,265","","","118,295","","69.9","%","","79.0","%","(3.0)","%","0.4","%","(6.5)","%"],["Deferred revenues adjustment (1)","(23,101)","","","(438)","","","(22,663)","","(5,174.2)","%","","(5,243.4)","%","\u2014","%","\u2014","%","69.2","%"],["Revenues, net","$","1,254,047","","","$","974,345","","","$","279,702","","28.7","%","","33.9","%","(6.7)","%","0.4","%","1.1","%"],["Deferred revenues adjustment (1)","23,101","","","438","","","22,663","","5,174.2","%","","5,243.4","%","\u2014","%","\u2014","%","(69.2)","%"],["Adjusted revenues, net","$","1,277,148","","","$","974,783","","","$","302,365","","31.0","%","","36.2","%","(6.7)","%","0.4","%","1.2","%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

46

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Subscription revenues of $877,659 in 2020 increased by $72,141, or 9.0% from $805,518 in 2019. On a constant currency basis, subscription revenues increased by $63,339, or 8.6%. Acquisitive subscription growth was generated from the Darts-ip Transaction, DRG Transaction, and CPA Global Transaction. Disposal subscription revenues reduction was derived from the MarkMonitor Transaction and Techstreet Transaction. Organic subscription revenues increased primarily due to price increases and new business.

Re-occurring revenues of $111,929 in 2020 increased by $111,929, or 100.0% from 2019 due to acquisitive growth generated from the CPA Global Transaction.

Transactional and other revenues of $287,560 increased by $118,295, or 69.9% from $169,265 in 2019. On a constant currency basis, transactional revenues increased by $117,571, or 69.5%. Acquisitive transactional growth was generated from the DRG Transaction and CPA Global Transaction. Disposal transactional reduction was derived from the MarkMonitor Transaction and Techstreet Transaction. Organic transactional revenues decreased due to an overall decrease in demand primarily driven by economic conditions resulting from the COVID-19 pandemic.

Revenue by Geography

The below tables present our revenues split by geographic region, separating the impacts of the deferred revenues adjustment:

[[GREPCENT_TABLE]]
[["","","","","Variance Increase/(Decrease)","","Percentage of Factors Increase/(Decrease)"],["","Year Ended December 31,","","Total Variance (Dollars)","Total Variance (Percentage)","","Acquisitions","Disposals","FX Impact","Organic"],["(in thousands, except percentages)","2021","","2020"],["Americas","$","928,690","","","$","631,222","","","$","297,468","","47.1","%","","45.8","%","(5.8)","%","0.1","%","7.0","%"],["Europe/Middle East/Africa","555,804","","","365,599","","","190,205","","52.0","%","","50.5","%","(1.9)","%","3.0","%","0.4","%"],["Asia Pacific","396,351","","","280,327","","","116,024","","41.4","%","","37.5","%","(2.0)","%","1.8","%","4.0","%"],["Deferred revenues adjustment (1)","(3,951)","","","(23,101)","","","19,150","","82.9","%","","(19.0)","%","\u2014","%","(0.2)","%","102.1","%"],["Revenues, net","$","1,876,894","","","$","1,254,047","","","$","622,847","","49.7","%","","45.8","%","(3.9)","%","1.3","%","6.4","%"],["Deferred revenues adjustment (1)","3,951","","","23,101","","","(19,150)","","(82.9)","%","","19.0","%","\u2014","%","0.2","%","(102.1)","%"],["Adjusted revenues, net","$","1,880,845","","","$","1,277,148","","","$","603,697","","47.3","%","","45.3","%","(3.9)","%","1.3","%","4.5","%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". In the fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which allows an acquirer to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance was applied retrospectively to all business combinations for which the acquisition date occurs during or subsequent to the fiscal year 2021.

Acquisitive growth for all regions was primarily related to the DRG Transaction, the CPA Global Transaction and the ProQuest Transaction. Disposal revenue reduction for all regions was derived from the Techstreet Transaction. On a constant currency basis, Americas revenues increased by $296,784, or 47.0%, with organic growth due to improved subscription and transactional revenues. Transactional revenue increased primarily due to improved trademark search volumes, stronger back file sales, and custom data sales and strength in our professional services business lines. On a constant currency basis, Europe/Middle East/Africa revenues increased by $179,357, or 49.1%, primarily due to acquisitive growth and improved subscription revenues. Subscription revenue growth reflects the benefit of price increases, new products coming into market and net installations in prior year. On a constant currency basis, Asia Pacific revenues increased by $110,969, or 39.6%, primarily due to acquisitive growth and improved subscription and transactional revenues.

47

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

[[GREPCENT_TABLE]]
[["","","","","Variance Increase/(Decrease)","","Percentage of Factors Increase/(Decrease)"],["","Year Ended December 31,","","Total Variance (Dollars)","Total Variance (Percentage)","","Acquisitions","Disposals","FX Impact","Organic"],["(in thousands, except percentages)","2020","","2019"],["Americas","$","631,222","","","$","463,041","","","$","168,181","","36.3","%","","46.4","%","(9.4)","%","\u2014","%","(0.7)","%"],["Europe/Middle East/Africa","365,599","","","278,738","","","86,861","","31.2","%","","35.3","%","(5.9)","%","0.7","%","1.0","%"],["Asia Pacific","280,327","","","233,004","","","47,323","","20.3","%","","17.2","%","(2.1)","%","0.6","%","4.6","%"],["Deferred revenues adjustment (1)","(23,101)","","","(438)","","","(22,663)","","N/M","","N/M","\u2014","%","\u2014","%","69.2","%"],["Revenues, net","$","1,254,047","","","$","974,345","","","$","279,702","","28.7","%","","33.9","%","(6.7)","%","0.4","%","1.1","%"],["Deferred revenues adjustment (1)","23,101","","","438","","","22,663","","\u2014","%","","N/M","\u2014","%","\u2014","%","(69.2)","%"],["Adjusted revenues, net","$","1,277,148","","","$","974,783","","","$","302,365","","31.0","%","","36.2","%","(6.7)","%","0.4","%","1.2","%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

Acquisitive growth for all regions was related to the Darts-ip Transaction, DRG Transaction, and CPA Global Transaction. Disposal reduction for all regions was derived from the MarkMonitor Transaction and Techstreet Transaction. On a constant currency basis, Americas revenues increased by $167,982, or 36.3%, with an organic decline due to lower transactional revenues due to an overall decrease in demand primarily driven by economic conditions resulting from the COVID-19 pandemic, partially offset by improved subscription revenues. On a constant currency basis, Europe/Middle East/Africa revenues increased by $84,955, or 30.5%, primarily due to acquisitive growth and improved subscription revenues partially offset by a decline in transactional revenues. On a constant currency basis, Asia Pacific revenues increased $45,902, or 19.7%, primarily due to acquisitive growth and improved subscription revenues partially offset by a decline in transactional revenues driven by economic conditions resulting from the COVID-19 pandemic.

Revenue by Segment

The following tables, and the discussions that follow, present our revenues by segment for the periods indicated.

[[GREPCENT_TABLE]]
[["","","","","","Variance Increase/(Decrease)","","Percentage of Factors Increase/(Decrease)"],["","Year Ended December 31,","","Total Variance (Dollars)","Total Variance (Percentage)","","Acquisitions","Disposals","FX Impact","Organic"],["(in thousands, except percentages)","2021","","2020"],["Science Segment","$","902,712","","","$","743,641","","","$","159,071","","21.4","%","","14.1","%","\u2014","%","2.0","%","5.4","%"],["IP Segment","978,133","","","533,507","","","444,626","","83.3","%","","89.0","%","(9.2)","%","0.4","%","3.3","%"],["Deferred revenues adjustment (1)","(3,951)","","","(23,101)","","","19,150","","82.9","%","","(19.0)","%","\u2014","%","(0.2)","%","102.1","%"],["Revenues, net","$","1,876,894","","","$","1,254,047","","","$","622,847","","49.7","%","","45.8","%","(3.9)","%","1.3","%","6.4","%"],["Deferred revenues adjustment (1)","3,951","","","23,101","","","(19,150)","","(82.9)","%","","19.0","%","\u2014","%","0.2","%","(102.1)","%"],["Adjusted revenues, net","$","1,880,845","","","$","1,277,148","","","$","603,697","","47.3","%","","45.3","%","(3.9)","%","1.3","%","4.5","%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". In the fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which allows an acquirer to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance was applied retrospectively to all business combinations for which the acquisition date occurs during or subsequent to the fiscal year 2021.

Science Segment: Revenues of $902,712 in 2021 increased by $159,071, or 21.4%, from $743,641 in 2020. On a constant currency basis, revenues increased by $144,441, or 19.4%, primarily due to acquisitive growth and organic subscription and transactional revenue growth. Acquisitive growth was generated from the DRG Transaction, including two months of acquisitions revenue in 2021 compared to ten months in 2020, the ProQuest Transaction and the Bioinfogate Transaction. Organic revenues increased due to growth resulting from custom data sales and stronger back file sales and strength in our professional services business lines.

Intellectual Property Segment: Revenues of $978,133 in 2021 increased by $444,626, or 83.3%, from $533,507 in 2020. On a constant currency basis, revenues decreased by $442,669, or 83.0%. Acquisitive growth was generated from the CPA Global Transaction, including nine months of acquisitions revenue in 2021 compared to three months in 2020, the IncoPat

48

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Transaction and the Hanlim Transaction. Disposal revenue reduction was derived from the Techstreet Transaction. Organic revenues, on a constant currency basis, increased primarily due to growth in re-occurring revenues from patent renewal volumes and yield and transactional revenues on improved trademark search transactional volumes and strength in our professional services business lines.

[[GREPCENT_TABLE]]
[["","","","","","Variance Increase/(Decrease)","","Percentage of Factors Increase/(Decrease)"],["","Year Ended December 31,","","Total Variance (Dollars)","Total Variance (Percentage)","","Acquisitions","Disposals","FX Impact","Organic"],["(in thousands, except percentages)","2020","","2019"],["Science Segment","$","743,641","","","$","547,542","","","$","196,099","","35.8","%","","34.0","%","\u2014","%","0.3","%","1.5","%"],["IP Segment","533,507","","","427,241","","","106,266","","24.9","%","","39.0","%","(15.2)","%","0.4","%","0.6","%"],["Deferred revenues adjustment(1)","(23,101)","","","(438)","","","(22,663)","","(5,174.2)","%","","N/M","\u2014","%","\u2014","%","69.2","%"],["Revenues, net","$","1,254,047","","","$","974,345","","","$","279,702","","28.7","%","","33.9","%","(6.7)","%","0.4","%","1.1","%"],["Deferred revenues adjustment (1)","23,101","","","438","","","22,663","","\u2014","%","","N/M","\u2014","%","\u2014","%","(69.2)","%"],["Adjusted revenues, net","$","1,277,148","","","$","974,783","","","$","302,365","","31.0","%","","36.2","%","6.7","%","(0.4)","%","1.2","%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting

Science Segment: Revenues of $743,641 in 2020 increased by $196,099, or 35.8%, from $547,542 in 2019. On a constant currency basis, revenues increased by $194,385, or 35.6%, primarily due to acquisitive growth and organic subscription revenue growth. Acquisitive growth was generated from the DRG Transaction. Organic revenues increased due to price increases and new business in subscription revenues, partially offset by lower transactional revenues due to a decline in demand primarily driven by economic conditions resulting from the COVID-19 pandemic.

Intellectual Property Segment: Revenues of $533,507 in 2020, increased by $106,266, or 24.9%, from $427,241 in 2019. On a constant currency basis, revenues increased by $104,454, or 24.4%. Acquisitive growth was generated from the Darts-IP Transaction and CPA Global Transaction. Disposal reductions were derived from the MarkMonitor Transaction and Techstreet Transaction. Organic revenues remained consistent due to an increase in subscription revenue driven by content upgrades, offset by lower transactional revenues due to a decline in demand primarily driven by economic conditions resulting from the COVID-19 pandemic.

Cost of Revenues

Cost of revenues of $626,104 in 2021, increased by $187,317, or 42.7%, from $438,787 in 2020. On a constant currency basis, cost of revenues increased by $182,902, or 41.7%, for the year ended December 31, 2021. The increase for the year ended December 31, 2021 was primarily due to an increase from acquisitions primarily driven by nine additional months of CPA Global expenses, which was acquired in October 2020, two additional months of DRG expenses, which was acquired in February 2020, and one month of ProQuest expenses, which was acquired in December 2021 The increase was also attributed to increased share-based compensation expenses, inclusive of expenses related to phantom equity awards under the CPA Global Equity Plan, as well as increased product expenses, which are attributed to the increase in revenues. The increase in cost of revenues was partially offset by a reduction in cost of revenues for the Techstreet divestiture in Q4 2020 and reduced people costs primarily driven by the Company's cost-saving and margin improvement programs. Cost of revenues as a percentage of revenues, net decreased by 1.6% to 33.4% for the year ended December 31, 2021 compared to 35.0% for the year ended December 31, 2020 primarily driven by the cost-saving and margin improvement programs designed to generate substantial incremental cash flow including the Operation Simplification and Optimization Program, the DRG Acquisition Integration Program, CPA Global Acquisition Integration and Optimization Program.

Cost of revenues of $438,787 in 2020, increased by $86,787, or 24.7%, from $352,000 in 2019. On a constant currency basis, cost of revenues increased by $85,383, or 24.3%, primarily due to additional costs related to CPA Global and DRG, which were acquired in October and February 2020, offset by a decrease in costs associated with the transition service agreement, employee related costs and outside services including consulting fees, as well as the Techstreet and MarkMonitor transactions in November and January 2020, respectively.

Selling, General and Administrative

49

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Selling, general and administrative expense of $642,989 in 2021, increased by $98,289, or 18.0%, from $544,700 in 2020. On a constant currency basis, selling, general and administrative expense increased by $93,400, or 17.1%, for the year ended December 31, 2021. The increase for the year ended December 31, 2021 was primarily due to an increase from acquisitions primarily driven by nine additional months of CPA Global expenses, which was acquired in October 2020, two additional months of DRG expenses, which was acquired in February 2020, and one month of ProQuest expenses, which was acquired in December 2021. The increase was also attributed to an increase in share-based compensation expenses, inclusive of expenses related to phantom equity awards under the CPA Global Equity Plan. The increase was partially offset by the Techstreet divestiture in Q4 2020, a gain associated with the mark to market adjustment on contingent shares and reduced transaction costs, which were driven by expenses related to the DRG Transaction and CPA Global Transaction in 2020 that did not re-occur in 2021, partially offset by increased costs in 2021 related to the ProQuest transaction. Selling, general and administrative costs as a percentage of revenues, net decreased by 9.1% to 34.3% for the year ended December 31, 2021 compared to 43.4% for the year ended December 31, 2020 primarily driven by the reductions highlighted above, as well as cost-saving and margin improvement programs designed to generate substantial incremental cash flow including the Operation Simplification and Optimization Program, the DRG Acquisition Integration Program, CPA Global Acquisition Integration and Optimization Program, as well as the One Clarivate restructuring plan, which streamlines operations within targeted areas of the Company. The program is expected to result in a reduction in operational costs, with the primary driver of the cost saving being from a reduction in workforce.

Selling, general and administrative expense of $544,700 in 2020, increased by $69,686, or 14.7%, from $475,014 in 2019. On a constant currency basis, selling, general and administrative expense increased by $67,837, or 14.3% primarily due to additional costs related to CPA Global and DRG, which were acquired in October and February 2020, increased transaction expenses associated with the DRG acquisition, the CPA Global acquisition, the MarkMonitor divestiture, the Techstreet divestiture and other finance merger and acquisition related activities during 2020, offset by costs incurred in association with our merger with Churchill Capital Corp in 2019, and a decrease in costs associated with transition service agreement, employee related costs, outside services including consulting fees and marketing costs.

Depreciation

Depreciation expense of $13,996 in 2021, increased by $1,287, or 10.1%, from $12,709 in 2020. The increase for the year ended December 31, 2021 was driven by the additional depreciation on assets acquired through the DRG Transaction, CPA Global Transaction and ProQuest Transaction. This increase was offset by run-off of previously purchased capital assets.

Depreciation expense of $12,709 in 2020, increased by $3,528, or 38.4%, from $9,181 in 2019, driven by the additional depreciation on assets acquired through the Darts Transaction, DRG Transaction, and CPA Global Transaction. This increase was offset by run-off of previously purchased capital assets.

Amortization

Amortization expense of $523,819 in 2021, increased by $233,378, or 80.4%, from $290,441 in 2020. The increase for the year ended December 31, 2021 was driven by an increase in the amortization of intangible assets acquired through the DRG Transaction, CPA Global Transaction, ProQuest Transaction, IncoPat Transaction, BioInfogate Transaction and Hanlim Transaction. This increase was offset by a decrease in amortization related to the Techstreet divestiture in Q4 2020.

Amortization expense of $290,441 in 2020, increased by $99,080, or 51.8%, from $191,361 in 2019, driven by an increase in the amortization of intangible assets acquired through the Darts-ip Transaction, DRG Transaction, and CPA Global Transaction. This increase was offset by a decrease in amortization related to intangible assets acquired in connection with our separation from Thomson Reuters in 2016 that are now fully amortized and reduction of amortization from the Techstreet Transaction and MarkMonitor Transaction.

Impairment on Assets Held for Sale

The year ended December 31, 2019 includes an impairment on assets held for sale of $18,431. On November 3, 2019, the Company entered into an agreement with OpSec Security for the sale of certain assets and liabilities of its MarkMonitor Product Line within its IP Group. At December 31, 2019, an impairment charge of $18,431 was recognized in the Statement of Operations during the fourth quarter to reduce the Assets Held for Sale to their fair value. There were no impairment on assets held for sale during the years ended December 31, 2021 and 2020.

Restructuring and Impairment

50

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Restructuring and impairment charges of $129,459 in 2021, increased by $73,321, or 130.6%, from $56,138 in 2020. The increase for the year ended December 31, 2021 was primarily driven by cost-saving and margin improvement programs designed to generate substantial incremental cash flow including the CPA Global Acquisition Integration and Optimization Program implemented in Q4 2020, as well as the One Clarivate restructuring plan, which streamlines operations within targeted areas of the Company implemented in Q2 2021. The increase was partially offset by the wind down of costs associated with the Operation Simplification and Optimization Program and the DRG Acquisition Integration Program.

Restructuring and impairment charges of $56,138 in 2020, increased by $40,468, from $15,670 in 2019. The increase is related to initiatives, following our merger with Churchill Capital Corp in 2019 and, acquisitions of DRG in February 2020 and CPA Global in October 2020, to streamline our operations by simplifying our organization and focusing on two segments.

Legal Settlement

The year ended December 31, 2019 includes a gain for a confidential legal settlement of $39,399. There were no legal settlements during the years ended December 31, 2021 and 2020.

Other Operating Income (Expense), Net

Other operating expense of $27,507 in 2021, decreased by $79,888, or 152.5%, from other operating income of $52,381 in 2020. The fluctuations were primarily driven by the consolidated impact of the remeasurement of the assets and liabilities of our Company that are denominated in currencies other than each relevant entity’s functional currency.

Other operating income (expense), net of $52,381 in 2020, increased by $47,555 from $4,826 in 2019. The increase is primarily driven by the gain on the sale of certain assets and liabilities of the Techstreet business, along with the consolidated impact of the remeasurement of the assets and liabilities of our Company that are denominated in currencies other than each relevant entity’s functional currency.

Mark to Market Adjustment on Financial Instruments

The mark to market adjustment on financial instruments resulted in a gain of $81,320 in 2021, a change of $286,382, or 139.7%, compared to a loss of $205,062 in 2020. The fluctuations were primarily driven by the Black-Scholes option valuation model and change in the Company's share price for the year ended December 31, 2021 compared to the year ended December 31, 2020.

The mark to market adjustment on financial instruments resulted in a loss of $205,062 in 2020, a change of $157,406, or 330.3%, compared to a loss of $47,656 in 2019. The fluctuations were primarily driven by the Black-Scholes option valuation model and change in the Company's share price for the year ended December 31, 2020 compared to the year ended December 31, 2019.

Interest Expense and amortization of debt discount, Net

Interest expense and amortization of debt discount, net of $252,490 in 2021, increased by $140,576, from $111,914 in 2020. The increase was primarily attributed to the private placement offerings and subsequent exchange offers of our New Senior Secured Notes due 2028 and Senior Notes due 2029, the $1,600,000 incremental term loan borrowing in connection with the CPA Global Transaction in October 2020 and the additional $360,000 incremental term loan borrowing in connection with the DRG Transaction in February 2020. The increase was also attributable to the $50,000 bridge commitment and structuring fees that were paid in connection with the closing of the ProQuest Transaction on December 1, 2021.

Interest expense and amortization of debt discount, net of $111,914 in 2020, decreased by $45,775, or 29.0%, from $157,689 in 2019. The change was due to lower interest payments resulting from lower interest rates on the Company's borrowings as the result of the refinancing transaction in October 2019. In addition, the decrease is attributed to the write down of deferred financing charges and original issuance discount on our prior term loan facility in proportion to the principal paydown in 2019 that did not reoccur in 2020, which was partially offset by the additional $1,960,000 incremental term loan borrowings in connection with the CPA Global and DRG acquisitions.

Provision (benefit) for Income Taxes

51

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Provision for income taxes of $12,298 on a pre-tax book loss of $258,150 in 2021, increased by $14,996 from a benefit of $2,698 on a pre-tax book loss of $353,323 in 2020. The effective tax rate being (4.8)% in 2021, compared to 0.8% in 2020. The overall increase in tax expense is due to the recording valuation allowances against losses in certain jurisdictions where it has been deemed the losses are not recognizable. The current year effective tax rate may not be indicative of our effective tax rates for future periods.

Benefit (provision) for income taxes of $2,698 on a pre-tax book loss of $(353,323) in 2020, increased by $12,899 from a provision of $10,201 on a pre-tax book loss of $(248,432) in 2019. The effective tax rate being 0.8% in 2020 compared to (4.1)% in 2019. The overall decrease in tax expense is due to the increased benefit of share-based compensation, offset by recording valuation allowances against losses in certain jurisdictions where it has been deemed the losses are not recognizable and an increase in the Base Erosion Anti-Abuse Tax ("BEAT"). The current year effective tax rate may not be indicative of our effective tax rates for future periods.

Dividends on Preferred Shares

Dividends on preferred shares of $41,508 for the year ended December 31, 2021 increased 100% compared to the year ended December 31, 2020. In July 2021, The Company's Board of Directors declared a quarterly dividend of approximately $1.12 per share on its 5.25% Series A Mandatory Convertible Preferred Shares, payable in ordinary shares on September 1, 2021 to shareholders of record at the close of business on August 15, 2021. As permitted by the Statement of Rights governing its 5.25% Series A Mandatory Convertible Preferred Shares, such dividend was paid by delivery of ordinary shares (other than $1 paid in cash in lieu of any fractional ordinary share). The number of ordinary shares deliverable in respect of such dividend was 664,730, which was determined based on the average volume-weighted average price per ordinary shares over the five consecutive trading day period ending on, and including, the trading day prior to September 1, 2021, which had a value of $16,141. In October 2021, the Company's Board of Directors declared a quarterly dividend of approximately $1.3125 per share on its 5.25% Series A Mandatory Convertible Preferred Shares, payable in cash on December 1, 2021 to shareholders of record at the close of business on November 15, 2021. In February 2022, the Company's Board of Directors declared a quarterly dividend of $1.3125 per share on its 5.25% Series A Mandatory Convertible Preferred Shares, payable in cash on March 1, 2022 to shareholders of record at the close of business on February 15, 2022. As of December 31, 2021, we recognized an additional $6,499 of accrued preferred share dividends. While the dividends on the MCPS are cumulative, they will not be paid until declared by the Company’s Board of Directors. If no dividends are declared and paid, they will continue to accumulate as the agreement contains a backstop to it being paid even if never declared by the board.

52

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Certain Non-GAAP Measures

We include non-GAAP measures in this annual report, including Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow because they are a basis upon which our management assesses our performance and we believe they reflect the underlying trends and indicators of our business by allowing management to focus on the most meaningful indicators of our continuous operational performance.

Although we believe these measures are useful for investors for the same reasons, we recommend users of the financial statements to note these measures are not a substitute for GAAP financial measures or disclosures. We provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure.

Adjusted Revenues

We present Adjusted Revenues, which excludes the impact of the deferred revenues purchase accounting adjustments relating to acquisitions prior to 2021 (see Note 3 - Summary of Significant Accounting Policies for further detail) as a result of businesses that we have acquired. We present this measure because we believe it is useful to readers to better understand the underlying trends in our operations. Due to the adoption of ASU 2021-08, this performance indicator will not be used going forward. Our presentation of Adjusted Revenues is for informational purposes only and is not necessarily indicative of our future results.

The following table presents our calculation of Adjusted Revenues for the years ended December 31, 2021, 2020 and 2019, and a reconciliation of this measure to our Revenues, net for the same periods:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","Change 2021 vs. 2020","","Change 2020 vs. 2019"],["(in thousands, except percentages)","2021","","2020","","2019","","%","","%"],["Revenues, net","$","1,876,894","","","$","1,254,047","","","$","974,345","","","49.7","%","","28.7","%"],["Deferred revenues adjustment(1)","3,951","","","23,101","","","438","","","(82.9)","%","","5174.2","%"],["Adjusted revenues, net","$","1,880,845","","","$","1,277,148","","","$","974,783","","","47.3","%","","31.0","%"]]
[[/GREPCENT_TABLE]]

(1) Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". In the fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which allows an acquirer to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance was applied retrospectively to all business combinations for which the acquisition date occurs during or subsequent to the fiscal year 2021.

Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA is presented because it is a basis upon which our management assesses our performance, and we believe it is useful for investors to understand the underlying trends of our operations. See Certain Non-GAAP Measures - Adjusted EBITDA and Adjusted EBITDA margin for important information on the limitations of Adjusted EBITDA and its reconciliation to our Net loss under GAAP. Adjusted EBITDA represents net loss before provision for income taxes, depreciation and amortization, interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from divestitures), share-based compensation, mandatory convertible preferred share dividend expense, unrealized foreign currency gains/(losses), costs associated with the transition services agreement with Thomson Reuters, which we entered into in connection with our separation from Thomson Reuters in 2016, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, costs related to our merger with Churchill Capital Corp in 2019, non-operating income or expense, the impact of certain non-cash, mark to market adjustments on financial instruments and other items that are included in net income 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. Per Clarivate’s Non-GAAP policy effective January 1, 2021, we have ceased use of adjustments for costs in connection with our separation from Thomson Reuters including costs related to the transition services agreement and separation, integration, and transformational expenses, as well as costs related to our merger with Churchill Capital Corp in 2019. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.

53

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that our projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, Adjusted EBITDA should not be considered as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations.

The following table presents our calculation of Adjusted EBITDA for the years ended December 31, 2021, 2020 and 2019, and reconciles these measures to our Net loss for the same periods:

[[GREPCENT_TABLE]]
[["","","","Year Ended December 31,"],["(in thousands, except percentages)","","","","","2021","","2020","","2019"],["Net loss attributable to ordinary shares","","","","","$","(311,956)","","$","(350,625)","","$","(258,633)"],["Dividends on preferred shares","","","","","41,508","","\u2014","","\u2014"],["Net loss","","","","","(270,448)","","(350,625)","","(258,633)"],["Provision (benefit) for income taxes","","","","","12,298","","(2,698)","","10,201"],["Depreciation and amortization","","","","","537,815","","303,150","","200,542"],["Interest expense and amortization of debt discount, net","","","","","252,490","","111,914","","157,689"],["Deferred revenues adjustment (1)","","","","","3,951","","23,101","","438"],["Transaction related costs (2)","","","","","46,216","","99,286","","46,214"],["Share-based compensation expense","","","","","139,571","","70,472","","51,383"],["Gain on sale of Techstreet","","","","","\u2014","","(28,140)","","\u2014"],["Restructuring and impairment (3)","","","","","129,459","","56,138","","15,670"],["Legal settlement","","","","","\u2014","","\u2014","","(39,399)"],["Impairment on assets held for sale","","","","","\u2014","","\u2014","","18,431"],["Mark to market adjustment on financial instruments (4)","","","","","(81,320)","","205,062","","47,656"],["Other (5)","","","","","30,372","","(1,060)","","43,874"],["Adjusted EBITDA","","","","","$","800,404","","$","486,600","","$","294,066"],["Adjusted EBITDA margin","","","","","42.6%","","38.1%","","30.2%"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". In the fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which allows an acquirer to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance was applied retrospectively to all business combinations for which the acquisition date occurs during or subsequent to the fiscal year 2021.

(2)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. This also includes the mark to market adjustments on the contingent stock consideration associated with the CPA Global and DRG acquisitions.

(3)Reflects costs related to restructuring and impairment associated with the acquisition of primarily DRG and CPA Global in 2020. This also includes costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two segments. During 2021, the CPA Global plan continued as well as the addition of the One Clarivate and ProQuest Programs, which were approved restructuring actions to streamline operations within targeted areas of the Company. Additionally, during the year ended December 31, 2021, 2020 and 2019, we incurred impairment charges taken on right-of-use assets of $57,305, $4,771 and $0 respectively, relating to the exit and ceased use of leased properties.

(4)Reflects mark to market adjustments on financial instruments under Accounting Standards Codification 815, Derivatives and Hedging, ("ASC 815"). Warrant instruments that do not meet the criteria to be considered indexed to an entity's own stock shall be initially classified as a liability at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. In periods subsequent to issuance, changes in the estimated fair value of the liabilities are reported through earnings.

(5)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. The 2021 detail also includes an accrual of $8,000 for a legal case. The 2020 detail also includes costs related to a transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. For both 2020 and 2019, this also includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in selling, general and administrative costs in our income statement, as well as expenses related to the

54

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. These costs were largely wound down by the end of 2020.

Free Cash Flow

We use free cash flow in our operational and financial decision-making and believe free cash flow is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure the ability of companies to service their debt. Our presentation of free cash flow should not be construed as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations.

We define free cash flow as net cash provided by operating activities less capital expenditures. For further discussion on free cash flow, including a reconciliation to cash flows provided by operating activities, refer to Liquidity and Capital Resources - Cash Flows below.

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service, acquisitions, other commitments and contractual obligations. Our principal sources of liquidity include cash from operating activities, cash and cash equivalents on our Consolidated Balance Sheets and amounts available under our revolving credit facility. We consider liquidity in terms of the sufficiency of these resources to fund our operating, investing and financing activities for a period of 12 months after the financial statement issuance date.

Our cash flows from operations are generated primarily from payments from our subscription and re-occurring transaction customers. As described above, the standard term of a subscription is typically 12 months. When a customer enters into a new subscription agreement, or submits a notice to renew their subscription, we typically invoice for the full amount of the subscription period, record the balance to deferred revenues, and ratably recognize the deferral throughout the subscription period. As a result, we experience cash flow seasonality throughout the year, with a heavier weighting of operating cash inflows occurring during the first half, and particularly first quarter, of the year, when most subscription invoices are sent, as compared to the second half of the year.

We require and will continue to need significant cash resources to, among other things, meet our debt service requirements under our credit facilities, the new unsecured notes due 2029, the new secured notes due 2028, the secured notes due 2026, and any future indebtedness, fund our working capital requirements, make capital expenditures (including related to product development), and expand our business through acquisitions. Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our revolving credit facility will be adequate to service debt, meet liquidity needs and fund necessary capital expenditures for at least the next 12 months. Our future capital requirements will depend on many factors, including the number of future acquisitions and the timing and extent of spending to support product development efforts. We could be required, or could elect, to seek additional funding through public or private equity or debt financings; however, additional funds may not be available on terms acceptable to us.

The below table summarizes our total liquidity for the periods presented:

[[GREPCENT_TABLE]]
[["Total Liquidity","Year Ended December 31,"],["(in thousands)","2021","","2020"],["Cash and cash equivalents","$","430,879","","","$","257,730"],["Additional availability under revolving credit facility","168,920","","","244,738"],["","599,799","","","502,468"]]
[[/GREPCENT_TABLE]]

Unrestricted cash and cash equivalents was $430,879, $257,730 and $76,130 as of December 31, 2021, December 31, 2020 and December 31, 2019, respectively. Restricted cash increased from $14,678 as of December 31, 2020 to $156,734 as of December 31, 2021 due to the cash received from the sale of treasury shares from the Employee Benefit Trust established for the CPA Equity Plan in December 2021 and the holdback consideration as part of the Patient Connect acquisition, partially offset by the consideration related to the IncoPat transaction held in escrow that was paid in the fourth quarter of 2021. The cash received from the Employee Benefit Trust established for the CPA Equity Plan in December 2021 was

55

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

subsequently paid to the respective employees via payroll in the first quarter of 2022. As of December 31, 2021, we had approximately $5,567,211 of debt, consisting primarily of $2,818,800 in borrowings under our term loan facility, $921,399 in outstanding principal of our new senior notes due 2029, $921,177 in outstanding principal of our new senior secured notes due 2028, $700,000 in outstanding principal of senior secured notes due 2026, $175,000 of borrowings under our revolving credit facility, and $30,835 related to a financing lease. Refer to Note 14 - Debt in Item 8, Financial Statements and Supplementary Data, for a summary of amounts due under all of the outstanding borrowings as of December 31, 2021.

As of December 31, 2021 and December 31, 2020, we had $175,000 and $0 outstanding on the revolving credit facility, respectively. Additional availability under the revolving credit facility as of December 31, 2021 and December 30, 2020 was $168,920 and $244,738, respectively, which is net of a letter of credit utilization of $6,080 and $5,262. Refer to Note 14 - Debt in Item 8, Financial Statements and Supplementary Data, for additional information.

On June 24, 2021, we issued $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 and $1,000,000 in aggregate principal amount of Senior Notes due June 30, 2029 bearing interest at a rate of 3.875% and 4.875% per annum, respectively. In August 2021, we exchanged all of the outstanding, validly tendered and not withdrawn Old Secured Notes for the newly-issued 3.875% Senior Secured Notes due 2028, and exchanged all of the outstanding, validly tendered and not withdrawn Old Unsecured Notes for the Issuer’s newly-issued 4.875% Senior Notes due 2029. The exchange was treated as a debt modification in accordance with ASC 470. See Note 14 - Debt for further details.

We used the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which was completed on December 1, 2021.

On October 1, 2020, in connection with the CPA Global acquisition, the Company incurred an incremental $1,600,000 of borrowings under our term loan facility and used the net proceeds from such borrowings to fund a portion of the repayment of CPA Global's outstanding debt.

On February 28, 2020, we incurred an incremental $360,000 of term loans under our term loan facility and used the net proceeds from such borrowings, together with cash on hand, to fund the remainder of the cash consideration for the DRG acquisition and to pay related fees and expenses.

As a result of additional term loans associated with the ProQuest, CPA Global and DRG acquisitions, we had $2,818,800 outstanding on our term loan facility at December 31, 2021. See Debt Profile below.

In August 2021, the Company's Board of Directors authorized a share repurchase program allowing the Company to purchase up to $250,000 of its outstanding ordinary shares, subject to market conditions. During the year ended December 31, 2021, the Company purchased 6,575,500 shares for a total of $159,356. As of December 31, 2021, the Company had approximately $90,644 of availability remaining under this program. In February 2022, the Company's Board of Directors approved the purchase of up to $1,000,000 of the Company's ordinary shares through open-market purchases, to be executed through December 31, 2023. The repurchase program replaces the repurchase program previously announced in August 2021.

Our capital expenditures in 2021, 2020 and 2019 consisted primarily of capitalized labor, consulting and other costs associated with product development. We estimate capital expenditures in 2022 associated with product development to be approximately $195,000. As of December 31, 2021, we had purchase obligations of approximately $199,944 primarily for cloud computing services and software licenses, pursuant to agreements to purchase goods and services that are enforceable, legally binding, and specify significant terms, including fixed or minimum quantities to be purchased, fixed minimum or variable pricing provisions, and the approximate timing of the transactions. Any amounts for which we are liable are reflected in our Consolidated Balance Sheets as Accounts payable or Accrued expenses and other current liabilities and $103,602 of this amount is expected to be paid within the next 12 months. For additional information related to contractual obligations, such as debt, leases, and commitments and contingencies, Refer to Note 7 - Leases, Note 14 - Debt and Note 23 - Commitments and Contingencies in Item 8, Financial Statements and Supplementary Data.

Cash Flows

56

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

The following table discloses our consolidated cash flows provided by (used in) operating, investing and financing activities for the periods presented:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Net cash provided by operating activities","$","323,767","","","$","263,500","","","$","117,580"],["Net cash used in investing activities","(4,044,460)","","","(2,988,768)","","","(140,885)"],["Net cash provided by financing activities","4,032,160","","","2,926,580","","","75,215"],["Effect of exchange rates","3,738","","","(5,043)","","","(971)"],["Increase in cash and cash equivalents","315,205","","","196,269","","","50,939"],["Net increase in cash and cash equivalents","173,149","","","181,600","","","50,555"],["Net increase in restricted cash","142,056","","","14,669","","","\u2014"],["Net increase in cash held for sale","\u2014","","","\u2014","","","384"],["Increase in cash and cash equivalents","315,205","","","196,269","","","50,939"],["Cash and cash equivalents, and restricted cash beginning of the year","272,408","","","76,139","","","25,584"],["Less: Cash included in assets held for sale, end of period","\u2014","","","\u2014","","","(384)"],["Cash and cash equivalents, and restricted cash end of the year","$","587,613","","","$","272,408","","","$","76,139"]]
[[/GREPCENT_TABLE]]

Cash Flows Provided by Operating Activities

Net cash provided by operating activities consists of net loss adjusted for non-cash items, such as: depreciation and amortization of property and equipment and intangible assets, deferred income taxes, share-based compensation, mark to market adjustments on financial instruments, mark to market adjustment on contingent and phantom shares, deferred finance charges and for changes in net working capital assets and liabilities.

Net cash provided by operating activities was $323,767 and $263,500 for the years ended December 31, 2021 and 2020, respectively. The increase of $60,267 in net cash provided by operating activities was primarily due to higher results from operations in 2021, which was attributed to increased revenues and a reduction in costs as a percentage of revenues driven by the cost-saving and margin improvement programs designed to generate substantial incremental cash flow including the Operation Simplification and Optimization Program, the DRG Acquisition Integration Program, CPA Global Acquisition Integration and Optimization Program.

Net cash provided by operating activities was $263,500 and $117,580 for the years ended December 31, 2020 and 2019, respectively. The increase of $145,920 in net cash provided by operating activities was primarily due to higher results from operations in 2020, improved cash collections on accounts receivable, and increased working capital from acquired businesses.

[[GREPCENT_TABLE]]
[["Net Working Capital"],["(in thousands, except ratio)","December 31, 2021","","December 31, 2020","","","","December 31, 2019"],["Current assets","$","1,637,238","","","$","1,147,564","","","","","$","493,076"],["Current liabilities","1,901,974","","","1,423,093","","","","","650,998"],["Net Working Capital","$","(264,736)","","","$","(275,529)","","","","","$","(157,922)"]]
[[/GREPCENT_TABLE]]

Cash Flows Used in Investing Activities

Cash used in investing activities are primarily for acquisitions and capital expenditures, while cash inflows are primarily proceeds from divestitures.

57

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Net cash used in investing activities was $4,044,460 and $2,988,768 for the years ended December 31, 2021 and 2020, respectively. The $1,055,692 increase in cash used in investing activities was primarily due to cash paid for acquisitions, net of cash acquired for ProQuest in December 2021, Patient Connect in December 2021, Bioinfogate in August 2021 and the consideration related to the IncoPat transaction held in escrow that was paid in the fourth quarter of 2021, partially offset by the acquisitions of DRG in February 2020, CPA Global in October 2020, IncoPat in October 2020 and Hanlim in November 2020, as well as the acquisition of intangible assets due to key business intangible assets acquired from CustomersFirst Now in June 2020. The increase in cash used in investing activities was also attributed to an increase in capital expenditures primarily associated with product development from acquired businesses, as well as cash flows provided by the divestiture related to the sale of Techstreet in 2020 and MarkMonitor AntiFraud, Antipiracy, and Brand Protection Products in January 2020.

Net cash used in investing activities was $2,988,768 and $140,885 for the years ended December 31, 2020 and 2019. The $2,851,283 increase in cash used in investing activities was primarily due to an increase in cash paid related to acquisitions, net of cash acquired due to the acquisitions of DRG in February 2020, CPA Global in October 2020, IncoPat in October 2020 and Hanlim in November 2020, as well as the acquisition of intangible assets due to key business intangible assets acquired from CustomersFirst Now in June 2020, partially offset by the acquisitions of Darts-ip in 2019 and the acquisition of intangible assets due to key business intangible assets acquired from SequenceBase in 2019. The increase was also attributed to an increase in capital expenditures primarily associated with product development from acquired businesses. The increase in cash used in investing activities was partially offset by cash flows provided by the divestiture related to the sale of Techstreet in November 2020 and MarkMonitor AntiFraud, Antipiracy, and Brand Protection Products in January 2020.

Our capital expenditures in 2021, 2020 and 2019 consisted primarily of capitalized labor, consulting and other costs associated with product development.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities was $4,032,160 and $2,926,580 for the years ended December 31, 2021 and 2020, respectively. The 1,105,580 increase in cash provided by financing activities was primarily due to the: (i) increase in proceeds of $1,392,616 from the issuance of our 5.25% Series A MCPS in June 2021; (ii) increase in borrowings under the revolving credit facility; (iii) decrease in repayment of borrowings under the revolving credit facility; (iv) increase in restricted cash proceeds from the sale of treasury shares from the Employee Benefit Trust established for the CPA Equity Plan (v) increase in proceeds from the issuance of debt due to the private placement offering and subsequent exchange offers of $1,000,000 in aggregate principal amount of Old Senior Secured Notes due 2028 and $1,000,000 in aggregate principal amount of Old Senior Notes due 2029 in June 2021 compared to the $1,960,000 of borrowings under our term loan facility in February 2020 and October 2020; (vi) increase in proceeds from the issuance of stock options; (vii) decrease in payments related to tax withholdings for share-based compensation; (viii) decrease in contingent purchase price payments related to the TradeMark Vision contingent earn out in the first quarter of 2020; and (ix) decrease in payment of debt issuance costs compared to the prior period. The increase in cash provided by financing activities was offset by the: (i) decrease in proceeds from the exercise of the Company's outstanding public warrants in the first quarter of 2020; (ii) repayment due to the redemption on the remaining outstanding $78,823 of Old Secured Notes and $78,601 of Old Unsecured Notes in August 2021; (iii) use of proceeds to repurchase 6,575,500 of the Company's ordinary shares for a total of $159,356     in 2021; (iv) decrease in proceeds from the issuance of ordinary shares driven by the Company's public offerings of 27,600,000 ordinary shares at $20.25 per share in February 2020 and 50,400,000 of our ordinary shares at a share price of $22.50 per share, of which 14,000,000 were ordinary shares offered by Clarivate and 36,400,000 were ordinary shares offered by selling shareholders in June 2020 compared to the public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders in June 2021; (v) increase in principal payments on the term loan; and (vi) cash payment of dividends associated with our MCPS in 2021.

Net cash provided by financing activities was $2,926,580 and $75,215 for the year ended December 31, 2020 and 2019, respectively. The $2,851,365 increase in cash provided by financing activities was driven by: (i) the extinguishment debt related to October 2019 refinancing of our prior credit facilities and notes; (ii) reduced principal payments on term loans primarily driven by the repayment on our prior term loan facility upon consummation of the transaction with Churchill in 2019; (iii) payment related to the tax receivable agreement in 2019; (iv) increase in proceeds from the issuance of ordinary shares driven by the Company's public offerings of 27,600,000 ordinary shares at $20.25 per share in February 2020 and 50,400,000 of our ordinary shares at a share price of $22.50 per share, of which 14,000,000 were ordinary shares offered by

58

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Clarivate and 36,400,000 were ordinary shares offered by selling shareholders in June 2020; (v) increase in proceeds from the exercise of the Company's outstanding public warrants in the first quarter of 2020; (vi) $1,960,000 of borrowings under our term loan facility in February 2020 and October 2020, partially offset by proceeds related to the refinancing of debt in 2019; (vii) decrease in the payment of debt issuance costs compared to the prior period; (vii) increase in proceeds from the issuance of stock options; and (vii) a reduction in the payment of debt issuance costs compared to the prior period. The increase in cash provided by financing activities was offset by: (i) proceeds from our merger with Churchill Capital Corp in 2019; (ii) increased repayments repayment of borrowings under the revolving credit facility; (iii) increase in payments related to tax withholdings for share-based compensation; (iv) decrease in borrowings under the revolving credit facility; and (v) increase in contingent purchase price payments primarily related to the TradeMark Vision contingent earn out in the first quarter of 2020.

In February 2020, we completed an underwritten public offering of 27,600,000 of our ordinary shares, generating net proceeds of $540,736, which we used to fund a portion of the cash consideration for the DRG acquisition. In addition, we incurred an incremental $360,000 of term loans under our term loan facility and used the net proceeds from such borrowings, together with cash on hand, to fund the remainder of the cash consideration for the DRG acquisition and to pay related fees and expenses.

In June 2020, we completed an underwritten public offering of 50,400,000 of our ordinary shares at a share price of $22.50. Of the 50,400,000 ordinary shares, 14,000,000 were primary ordinary shares offered by Clarivate and 36,400,000 were secondary ordinary shares offered by selling shareholders including 20,821,765 ordinary shares from Onex, 8,097,354 ordinary shares from Baring and 7,480,881 ordinary shares from Directors, Executive Officers and other shareholders. The Company did not receive any proceeds from the sale of secondary ordinary shares by the selling shareholders. The Company received approximately $304,030 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We used the net proceeds, in conjunction with the new $1,600,000 incremental term loan facility available to Clarivate on October 1, 2020, to fund the repayment of CPA Global parent company's $2,052,926 of outstanding debt.

In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares). The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders. The Company received approximately $728,080 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We used the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which was completed on December 1, 2021. The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.

In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25% Series A MCPS (which included 1,875,000 of our MCPS that the underwriters purchased pursuant to their option to purchase additional shares). The Company received approximately $1,392,671 in net proceeds from the sale of our MCPS offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. We used the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which was completed on December 1, 2021.

Dividends on the MCPS are payable on a cumulative basis when declared by Clarivate’s Board of Directors, or an authorized committee of Clarivate’s Board of Directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. Clarivate may pay declared dividends in cash or, subject to certain limitations, in Clarivate ordinary shares, or in any combination of cash and ordinary shares, on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2021 and ending on June 1, 2024.

59

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

In July 2021, the Company's Board of Directors declared a quarterly dividend of approximately $1.12 per share on its 5.25% Series A Mandatory Convertible Preferred Shares, payable on September 1, 2021 to shareholders of record at the close of business on August 15, 2021. As permitted by the Statement of Rights governing its 5.25% Series A Mandatory Convertible Preferred Shares, such dividend was paid by delivery of ordinary shares (other than $1 paid in cash in lieu of any fractional ordinary share). The number of ordinary shares deliverable in respect of such dividend was 664,730, which was determined based on the average volume-weighted average price per ordinary shares over the five consecutive trading day period ending on, and including, the trading day prior to September 1, 2021, which had a value of $16,141. In October 2021, the Company's Board of Directors declared a quarterly dividend of approximately $1.3125 per share on its 5.25% Series A MCPS, paid in cash on December 1, 2021 to shareholders of record at the close of business on November 15, 2021. As of December 31, 2021, we recognized $6,499 of accrued preferred share dividends within accrued expenses and other current liabilities. While the dividends on the MCPS are cumulative, they will not be paid until declared by the Company’s Board of Directors. If no dividends are declared and paid, they will continue to accumulate as the agreement contains a backstop to it being paid even if never declared by the board. In February 2022, the Company's Board of Directors declared a quarterly dividend of $1.3125 per share on its 5.25% Series A Mandatory Convertible Preferred Shares, payable in cash on March 1, 2022 to shareholders of record at the close of business on February 15, 2022.

During the period January 1, 2020 through February 21, 2020, 24,132,666 of the Company’s outstanding warrants were exercised for one ordinary share per whole warrant at a price of $11.50 per share. On February 20, 2020, we announced the redemption of all of our outstanding public warrants to purchase our ordinary shares that were issued as part of the units sold in the Churchill Capital Corp initial public offering that remained outstanding at 5:00 p.m. New York City time on March 23, 2020, for a redemption price of $0.01 per public warrant. In addition, our Board of Directors elected that, upon delivery of the notice of the redemption on February 20, 2020, all public warrants were to be exercised only on a “cashless basis.” Accordingly, by virtue of the cashless exercise of public warrants, exercising public warrant holders received 0.4626 of an ordinary share for each public warrant, and 4,747,432 ordinary shares were issued for public warrants exercised on a cashless basis and 4,649 public warrants were redeemed for $0.01 per public warrant. As of December 31, 2021, no public warrants were outstanding.

Free Cash Flow (non-GAAP measure)

The following table reconciles free cash flow measure, which is a non-GAAP measure, to net cash provided by operating activities:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2021","","2020","","2019"],["Net cash provided by operating activities","$","323,767","","","$","263,500","","","$","117,580"],["Capital expenditures","(118,543)","","","(107,713)","","","(69,836)"],["Free cash flow","$","205,224","","","$","155,787","","","$","47,744"]]
[[/GREPCENT_TABLE]]

Free cash flow was $205,224 for the year ended December 31, 2021, compared to $155,787 for the year ended December 31, 2020 and $47,744 for the year ended December 31, 2019. The increase in free cash flow was primarily due to higher net cash provided by operating activities due to an increase in the source of cash for improved results from operations, partially offset by an increase in capital expenditures primarily driven by product development from acquired businesses.

Required Reported Data - Standalone Adjusted EBITDA (non-GAAP measure)

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, 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 New Notes issued by the Issuer 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 and excess standalone costs.

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

60

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Adjusted EBITDA to be relevant to the operation of its business. It is also utilized by management and the compensation committee of the Board as an input for determining incentive payments to employees.

Excess standalone costs are the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone infrastructure costs. We make an adjustment for the difference because we have had to incur costs under the transition services agreement with Thomson Reuters after we had implemented the infrastructure to replace the services provided pursuant to the transition services agreement, thereby incurring dual running costs. Furthermore, there has been a ramp up period for establishing and optimizing the necessary standalone infrastructure. Since our separation from Thomson Reuters, we have had to transition quickly to replace services provided under the transition services agreement, with optimization of the relevant standalone functions typically following thereafter. Cost savings reflect the annualized “run rate” expected cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the relevant period. These costs wound down at the end of December 31, 2020.

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 indenture as our U.S. GAAP net income adjusted for certain items specified in the credit facilities and the indenture) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, 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 of the type that were presented in the offering memorandum used in connection with the issuance of the secured notes due 2026 and earn-out obligations incurred in connection with an acquisition or investment.

61

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

The following table reconciles Standalone Adjusted EBITDA to our Net loss for the periods presented:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2021","","2020","","2019"],["(in thousands)"],["Net loss attributable to ordinary shares","$","(311,956)","","","$","(350,625)","","","$","(258,633)"],["Dividends on preferred shares","41,508","","","\u2014","","","\u2014"],["Net loss","(270,448)","","","(350,625)","","","(258,633)"],["Provision (benefit) for income taxes","12,298","","","(2,698)","","","10,201"],["Depreciation and amortization","537,815","","","303,150","","","200,542"],["Interest, net","252,490","","","111,914","","","157,689"],["Deferred revenues adjustment(1)","3,951","","","23,101","","","438"],["Transaction related costs(2)","46,216","","","99,286","","","46,214"],["Share-based compensation expense","139,571","","","70,472","","","51,383"],["Gain on sale of Techstreet","\u2014","","","(28,140)","","","\u2014"],["Restructuring and impairment(3)","129,459","","","56,138","","","15,670"],["Legal Settlement","\u2014","","","\u2014","","","(39,399)"],["Impairment on assets held for sale","\u2014","","","\u2014","","","18,431"],["Mark to market adjustment on financial instruments(4)","(81,320)","","","205,062","","","47,656"],["Other(5)","30,372","","","(1,060)","","","43,874"],["Adjusted EBITDA","800,404","","","486,600","","","294,066"],["Realized foreign exchange gain","7,244","","","(2,431)","","","(3,500)"],["ProQuest Adjusted EBITDA impact(6)","255,525","","","\u2014","","","\u2014"],["DRG Adjusted EBITDA impact(6)","\u2014","","","(2,668)","","","\u2014"],["CPA Adjusted EBITDA impact(6)","\u2014","","","193,930","","","\u2014"],["Bioinfogate Adjusted EBITDA impact(6)","305","","","\u2014","","","\u2014"],["IncoPat Adjusted EBITDA impact(6)","\u2014","","","(459)","","","\u2014"],["Hanlim Adjusted EBITDA impact(6)","\u2014","","","479","","","\u2014"],["Patient Connect Adjusted EBITDA impact(6)","(1,073)","","","\u2014","","","\u2014"],["Cost savings(7)","130,281","","","86,659","","","15,500"],["Excess standalone costs(8)","\u2014","","","\u2014","","","30,000"],["Standalone Adjusted EBITDA","$","1,192,686","","","$","762,110","","","$","336,066"]]
[[/GREPCENT_TABLE]]

(1)Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". In the fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which allows an acquirer to account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance was applied retrospectively to all business combinations for which the acquisition date occurs during or subsequent to the fiscal year 2021.

(2)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. This also includes the mark to market adjustments on the contingent stock consideration associated with the CPA Global and DRG acquisitions.

(3)Reflects costs related to restructuring and impairment associated with the acquisition of primarily DRG and CPA Global in 2020. This also includes costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two segments. During 2021, the CPA Global plan continued as well as the addition of the One Clarivate and ProQuest Programs, which were approved restructuring actions to streamline operations within targeted areas of the Company. Additionally, during the year ended December 31, 2021, 2020 and 2019, we incurred impairment charges taken on right-of-use assets of $57,305, $4,771 and $0 respectively, relating to the exit and ceased use of leased properties.

(4)Reflects mark to market adjustments on financial instruments recorded under Accounting Standards Codification 815, Derivatives and Hedging, ("ASC 815"). Warrant instruments that do not meet the criteria to be considered indexed to an entity's own stock shall be initially classified as a liability at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. In periods subsequent to issuance, changes in the estimated fair value of the liabilities are reported through earnings.

62

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

(5)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. The 2021 detail also includes an accrual of $8,000 for a legal case. The 2020 detail also includes costs related to a transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. For both 2020 and 2019, this also includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in selling, general and administrative costs in our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. These costs were largely wound down by the end of 2020.

(6)Represents the acquisition Adjusted EBITDA for the period beginning January 1 of the year of the acquisition through the respective acquisition date of each acquired business to reflect the company's Standalone EBITDA as though material acquisitions occurred at the beginning of the presented period.

(7)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.

(8)Reflects the difference between our actual standalone company infrastructure costs, and our estimated steady operating costs, which are summarized in the below table.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Actual standalone company infrastructure costs","$","\u2014","","","$","\u2014","","","$","162,000"],["Steady state standalone cost estimate","\u2014","","","\u2014","","","(132,000)"],["Excess standalone costs","$","\u2014","","","$","\u2014","","","$","30,000"]]
[[/GREPCENT_TABLE]]

The foregoing adjustments (6) , (7) and (8) are estimates and are not intended to represent pro forma adjustments presented within the guidance of Article 11 of Regulation S-X. Although we believe these estimates are reasonable, actual results may differ from these estimates, and any difference may be material. See Cautionary Statement Regarding Forward-Looking Statements.

Debt Profile

Senior Secured Notes due 2028 and Senior Notes due 2029

In June 2021, we issued $1,000,000 in aggregate principal amount of Senior Secured Notes due June 30, 2028 and $1,000,000 in aggregate principal amount of Senior Notes due June 30, 2029 bearing interest at a rate of 3.875% and 4.875% per annum, respectively. The interest is payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021. The Old Secured Notes and the Old Unsecured Notes were issued by Clarivate Science Holdings Corporation (the "Issuer"), an indirect wholly-owned subsidiary of Clarivate.

In August 2021, we (i) exchanged all of the outstanding, validly tendered and not withdrawn 3.875% Senior Secured Notes due 2028 for the newly-issued 3.875% Senior Secured Notes due 2028, and (ii) exchanged all of the outstanding, validly tendered and not withdrawn 4.875% Unsecured Senior Notes due 2029 for the Issuer’s newly-issued 4.875% Senior Notes due 2029. The initial aggregate principal amount of New Notes is equal to the aggregate principal amount of Old Notes that were validly tendered and not validly withdrawn for exchange, and that were accepted by the Issuer. The offers to exchange are referred to herein as the “Exchange Offers.” Pursuant to the Exchange Offers, the aggregate principal amounts of the Old Notes set forth as follows were validly tendered and not validly withdrawn, and were accepted by the Issuer and subsequently cancelled: (i) $921,177 aggregate principal amount of Old Secured Notes; and (ii) $921,399 aggregate principal amount of Old Unsecured Notes. Following such cancellation, (i) $78,823 aggregate principal amount of Old Secured Notes remained outstanding; and (ii) $78,601 aggregate principal amount of Old Unsecured Notes remained outstanding. The Issuer redeemed such remaining outstanding Old Secured Notes and Old Unsecured Notes at 100% of the principal amount thereof plus accrued and unpaid interest from June 24, 2021 to the redemption date in August 2021. In connection with the settlement of the Exchange Offers, the Issuer (i) issued $921,177 aggregate principal amount of its New Secured Notes; and (ii) issued $921,399 aggregate principal amount of its New Unsecured Notes. The interest is payable semi-annually to holders of record on June 30 and December 30 of each year, commencing on December 30, 2021. The exchange was treated as a debt modification in accordance with Accounting Standards Codification 470, Debt ("ASC 470").

63

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

Concurrently with the settlement of the Exchange Offers, the Issuer deposited (or caused to be deposited) an amount in cash equal to the aggregate principal amount of the New Notes of each series into segregated escrow accounts until the date that certain escrow release conditions (the “Escrow Release Conditions”) including the consummation of the ProQuest acquisition, were satisfied. On December 1, 2021 the Escrow Release Conditions were satisfied, and the escrow proceeds were released from the escrow accounts and used to fund a portion of the purchase price of the ProQuest acquisition and to pay related fees and expenses.

In connection with the closing of the ProQuest acquisition on December 1, 2021, the New Notes are guaranteed on a joint and several basis by each of Clarivate’s indirect subsidiaries that is an obligor or guarantor under Clarivate’s existing credit facilities and senior secured notes due 2026. The New Secured Notes will be secured on a first-lien pari passu basis with borrowings under the existing credit facilities and senior secured notes, and the New Unsecured Notes will be the Issuer’s and such guarantors’ unsecured obligations. As of the date of this annual report, we believe we were in compliance with the indentures' covenants.

Secured Notes Due 2026

On October 31, 2019, we closed a private offering of $700,000 in aggregate principal amount of secured notes due 2026 bearing interest at 4.50% per annum. The secured notes due 2026 were issued by Camelot Finance S.A., an indirect wholly-owned subsidiary of Clarivate, are secured on a first-lien pari passu basis with borrowings under the credit facilities, and are guaranteed on a joint and several basis by certain of Clarivate’s subsidiaries. We used the net proceeds from the offering of secured notes due 2026, together with proceeds from the credit facilities discussed below to, among other things, redeem in full our secured notes due 2026, refinance all amounts terminating under the tax receivable agreement and under the prior credit facilities, fund in full the $200,000 payment pursuant to the agreement, and pay fees and expenses related to the foregoing.

The indenture governing the secured notes due 2026 contains covenants which, among other things, limit the occurrence of additional indebtedness (including acquired indebtedness), issuance of certain preferred stock, the payment of dividends, making restricted payments and investments, the purchase or acquisition or retirement for value of any equity interests, the provision of loans or advances to restricted subsidiaries, the sale or lease or transfer of any properties to any restricted subsidiaries, the transfer or sale of assets, and the creation of certain liens. As of the date of this annual report, we believe we were in compliance with the indenture covenants.

Credit Facilities

On October 31, 2019, we entered into a $900,000 term loan facility, which was fully drawn at closing. On February 28, 2020, we incurred an incremental $360,000 of term loans under our term loan facility and used the net proceeds from such borrowings to fund a portion of the cash consideration for the DRG acquisition. On October 1, 2020, in connection with the CPA Global acquisition, the Company incurred an incremental $1,600,000 of borrowings under our term loan facility and used the net proceeds from such borrowings to fund the repayment of CPA Global's parent company outstanding debt. As of December 31, 2021, we had $2,818,800 outstanding on the term loan facility. The term loan facility matures on October 31, 2026.

On October 31, 2019, we entered into $250,000 revolving credit facility. In November 2021, we increased the capacity of the revolving credit facility by $100,000 to $350,000, of which $175,000 remained undrawn as of December 31, 2021. In November 2021, the Company borrowed $175,000 on the existing Revolving Credit Facility and used the net proceeds from such borrowings for general corporate purposes

Borrowings under the credit facilities bear interest at a floating rate which can be, at our option, either (i) a Eurocurrency rate plus an applicable margin or (ii) an alternate base rate (equal to the highest of  (i) the rate which Bank of America, N.A. announces as its prime lending rate, (ii) the Federal Funds Effective Rate plus one-half of 1.00% and (iii) the Eurocurrency rate for an interest period of one month for loans denominated in dollars plus 1.00%) plus an applicable margin, in either case, subject to a Eurocurrency rate floor of 0.00%. Commencing March 31, 2020, the term loan facility will amortize in equal quarterly installments in an amount equal to 1.00% per annum of the original par principal amount thereof, with the remaining balance due at final maturity.

The credit facilities are secured by substantially all of our assets and the assets of all of our U.S. restricted subsidiaries and certain of our non-U.S. subsidiaries, including those that are or may be borrowers or guarantors under the Credit Facilities,

64

Table of Contents

CLARIVATE PLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(In thousands, except share and per share data, option prices, ratios or as noted)

subject to customary exceptions. The credit facilities contain customary events of default and restrictive covenants that limit us from, among other things, incurring certain additional indebtedness, issuing preferred stock, making certain restricted payments and investments, certain transfers or sales of assets, entering into certain affiliate transactions or incurring certain liens. These credit facilities limitations are subject to customary baskets, including certain limitations on debt incurrence and issuance of preferred stock, subject to compliance with a consolidated coverage ratio of Consolidated EBITDA (as defined in the credit facilities), a measure identical to our Standalone Adjusted EBITDA disclosed above under - Required Reported Data - Standalone Adjusted EBITDA, to interest and other fixed charges on certain debt (as defined in the credit facilities) of 2.00 to 1.00. In addition, the credit facilities require us to comply with a springing financial covenant pursuant to which, as of the third quarter of 2019, we must not exceed a total first lien net leverage ratio (as defined under the credit facilities) of 7.25 to 1.00, to be tested on the last day of any quarter only when more than 35% of the revolving credit facility (excluding (i) non-cash collateralized, issued and undrawn letters of credit in an amount up to $20,000 and (ii) any cash collateralized letters of credit) is utilized at such date. As of December 31, 2021, our consolidated coverage ratio was 6.58 to 1.00 and our consolidated leverage ratio was 4.30 to 1.00. As of the date of this Report, we are in compliance with the covenants in the credit facilities. As of the date of this form 10-K, we are in compliance with the covenants in the credit facilities.

The credit facilities provide that, upon the occurrence of certain events of default, our obligations thereunder may be accelerated and the lending commitments terminated. Such events of default include payment defaults to the lenders, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness (including the secured notes due 2026), voluntary and involuntary bankruptcy proceedings, material money judgments, loss of perfection over a material portion of collateral, material ERISA/pension plan events, certain change of control events and other customary events of default, in each case subject to threshold, notice and grace period provisions.

Commitments and Contingencies

Our contingent liabilities consist primarily of letters of credit and performance bonds and other similar obligations in the ordinary course of business.

The Company maintained a contingent stock liability based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020. The amount was settled on January 21, 2021 through the issuance of ordinary shares. The contingent stock liability was $0 and $44,565 as of December 31, 2021 and December 31, 2020, recorded in Accrued expenses and other current liabilities on the Consolidated Balance Sheet. The Company recognized a gain related to the changes in the contingent stock liability of $675 and $1,920 for the years ended December 31, 2021 and 2020, respectively, recorded within Selling, general and administrative costs on the Consolidated Statement of Operations.

The Company maintained a contingent stock liability based on observable market data relating to the DRG acquisition that occurred on February 28, 2020. The amount was settled on March 5, 2021 through the issuance of ordinary shares. The contingent stock liability was $0 and $86,029 as of December 31, 2021 and December 31, 2020, recorded in Accrued expenses and other current liabilities on the Consolidated Balance Sheet. The Company recognized (income) expense related to the changes in the contingent stock liability of $(24,410) and $27,132 for the years ended December 31, 2021 and 2020, respectively, recorded within Selling, general and administrative costs on the Consolidated Statement of Operations.

Dividends on our convertible preferred shares are payable, as and if declared by our Board of Directors, at an annual rate of 5.25% of the liquidation preference of $100.00 per share. We may pay declared dividends in cash or, subject to certain limitations, in our ordinary shares, or in any combination of cash and ordinary shares, on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2021 and ending on, and including, June 1, 2024. See Note 23 - Commitments and Contingencies in Item 8, Financial Statements and Supplementary Data, for additional information.

The Company is engaged in various legal proceedings and claims that have arisen in the ordinary course of business. We have taken what we believe to be adequate reserves related to the litigation and threatened claims. We maintain appropriate insurance policies in place, which are likely to provide some coverage for these liabilities or other losses that may arise from these litigation matters. See Note 23 - Commitments and Contingencies in Item 8, Financial Statements and Supplementary Data, for additional information.

65

Table of Contents