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Item 7. Management’s Discussion and Analysis

2022-03-10 compared with 2021-02-26 · 720 added, 437 removed, 445 unchanged (72% of the section changed)

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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 Life Science Product Lines, and our IP segment consists of our Patents, Trademarks, Domains and IP Management Product Lines.

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 pre-clinical research, competitive intelligence, regulatory information and clinical trials.

Our Derwent 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 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 Domains Product Line offerings include enterprise web domain portfolio management products and services.

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.

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".

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Strategic Acquisitions

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 up to 2,895,638 of the Company's ordinary shares to be issued to PEL following the one-year anniversary of closing.

The contingent stock consideration was valued at $58,897 on the closing date and will be revalued at each period end and included in the Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Acquisition of ProQuest

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

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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.

As a result of the additional term loan and the additional term loan associated with the DRG acquisition, we had $2,847,400 outstanding on our term loan facility at December 31, 2020.

Acquisition of Beijing IncoPat Technology Co, Ltd.

On October 26, 2020, we acquired 100% of the assets, liabilities and equity interests of Beijing IncoPat Technology Co., Ltd.

(“IncoPat”), a leading patent information service provider in China via cash on hand for $52,133.

IncoPat is complementary to Clarivate’s intellectual property portfolio.

Acquisition of Hanlim IPS.

On November 23, 2020, we acquired 100% of the assets, liabilities and equity interests of Hanlim IPS.

("Hanlim"), a leading patent renewal and information service provider in South Korea via cash on hand for $9,254.

Hanlim is complementary to Clarivate’s intellectual property portfolio.

MarkMonitor Brand Protection, Antipiracy and Antifraud Disposition

In November 2019, we entered into an agreement with an unrelated third-party for the sale of certain assets and liabilities of our MarkMonitor Product Line within the IP Group.

The divestment closed in January 2020 for a consideration of approximately $3,751.

An impairment charge of $18,431 was recognized in the Statement of Operations during the fourth quarter of 2019 to reduce the Assets Held for Sale to their fair value.

Accordingly, we recorded an immaterial loss on the divestiture during the year ended December 31, 2020.

Acquisition of Decision Resources 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.

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 income, net during the year ended December 31, 2020.

Public Ordinary Share Offerings

During 2020, the Company completed two underwritten public offerings of ordinary shares and used the proceeds it received to fund, in part, the acquisitions of the DRG and CPA Global businesses.

February 2020 Ordinary Share Offering

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 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.

June 2020 Ordinary Share Offering

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.

Of the 50,400,000 ordinary shares, 14,000,000 ordinary shares were offered by Clarivate and 36,400,000 ordinary shares were 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 underwriters' option to purchase the remaining 4,800,000 ordinary shares from certain selling shareholders expired on July 3, 2020.

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.

The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.

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 both 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 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 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

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

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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, 2020, the Company recorded pre-tax charges of $26,647, recognized within Restructuring and impairment in the Consolidated Statements of Operations.

These charges were composed of $6,011 of lease impairment and location exit costs, $4,567 of contract exit costs and legal and advisory fees, and $16,069 of severance and related benefit costs, respectively.

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

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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, 2020, the Company recorded pre-tax charges of $6,597 recognized in Restructuring and impairment in the Consolidated Statements of Operations composed of $977 of lease impairment and location exit costs, $487 of contract exit costs and legal and advisory fees and $5,133 of severance and related benefit costs, respectively.

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

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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 $14,352 of costs have been incurred to date under the program and $82,415 are expected to be incurred in a future period.

This estimate includes approximately $21,827 for severance related charges, approximately $54,060 of estimated maximum lease exit costs, assuming no sublease agreements are entered into, and $6,528 of other exit costs.

During the year ended December 31, 2020, the Company recorded pre-tax charges of $14,352, respectively, recognized in Restructuring and impairment in the Consolidated Statements of Operations comprised of $707 of lease impairment and location exit costs, $3,472 of contract exit costs and legal and advisory fees and $10,173 of severance and related benefit costs, respectively.

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

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

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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 were denominated approximately 74% in U.S.

dollars, 11% in euros, 8% in British pounds and 6% in other currencies for the year ended December 31, 2020, 81% in U.S.

dollars, 9% in euros, 3% in British pounds and 7% in other currencies for the year ended December 31, 2019 and 79% in U.S.

dollars, 7% in euros, 7% in British pounds and 7% in other currencies for the year ended December 31, 2018, while our direct expenses before depreciation and amortization, tax and interest in 2020, 2019 and 2018, were denominated approximately 69%, 70%, and 70%% in U.S.

dollars, 9%, 9%, and 9% in euros, 13%, 13%, and 11% in British pounds and 9%, 8%, and 10% in various other currencies, respectively.

For example, our revenues and direct expenses before depreciation and amortization, tax and interest were denominated in the following currencies:

Year Ended December 31,

2021 2020 2019

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 %

The financial statements of our subsidiaries outside the U.S.

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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 $2,903, in Other operating income, net on the Consolidated Statements of Operations for the year ended December 31, 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.

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Financial Statements and Supplementary Data - Note 10 to the Consolidated Financial Statements - Derivative Instruments, for additional information.

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

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Adjusted Revenues

We present Adjusted Revenues, which excludes the impact of the deferred revenue purchase accounting adjustments, which is allowable under the Company's debt covenant calculation, and revenues from divestitures.

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.

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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.

related to our merger with Churchill Capital Corp in 2019, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash, legal settlements 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.

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.

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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 revenues.

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 revenues, which accounted for 76.9%, 82.6%, and 81.7% of our total revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

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

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.

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The following table presents ACV as of the dates indicated:

December 31, Change Change

December 31, Change

(dollars in thousands) 2021 2020 2019 2021 vs.

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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 91.2%, 90.1% and 91.7% (which for the avoidance of doubt, does not reflect the impact of upgrades, new subscriptions or product price increases) for the years ended December 31, 2020, 2019 and 2018, respectively.

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

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The Company disaggregates revenue based on revenue recognition pattern.

Subscription based revenues recognize revenue over time, whereas our transactional and re-occurring revenues recognize revenue at a point in time.

The Company believes subscription, transaction and re-occurring 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.

Revenues from the sale of subscription data and analytics solutions are typically invoiced annually in advance and recognized ratably over the year as revenues are earned.

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

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 products and services are invoiced according to the terms of the contract, typically in arrears.

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 also include, to a lesser extent, professional services, which are typically performed under contracts that vary in length from several months to years for multi-year projects and are typically invoiced based on the achievement of milestones.

The most significant components of our transactional revenues include our “clearance searching” and “backfiles” products.

Recurring 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.

These contracts include either evergreen clauses, in which at least six month advance notice is required prior to cancellation, or the contract is for multiple years.

Re-occurring revenues are usually delivered to the customer instantly or in a short period of time, at which time revenues are recognized.

These contracts include either evergreen clauses, in which at least six month advance notice is required prior to cancellation, or the contract is for multiple years.

The most significant components of our re-occurring revenues is our 'renewal' business within CPA Global.

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

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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:

1) 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;

and 2) transition, integration and other related expenses, including transformation expenses, mainly reflect the costs of transitioning certain activities performed under the transition services agreement by Thomson Reuters and certain consulting costs related to standing up our back-office systems to enable our operation on a stand-alone basis.

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 expense relates to our fixed assets, including mainly computer hardware and leasehold improvements, furniture and fixtures.

6 unchanged sentences

Restructuring and Impairment

Other Operating Income, Net

Other operating income, 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.

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

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 for cash received in relation to closure of a confidential legal matter.

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

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

6 unchanged sentences

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.

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

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)

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.

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

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.

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

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

8 unchanged sentences

Amortization (523,819) (290,441) (191,361) 80.4 % 51.8 %

Impairment on assets held for sale — (18,431) — N/M 100%

Restructuring and impairment (47,595) (15,670) — N/M 100%

Other operating income, net 52,381 4,826 6,379 N/M (24.3) %

Impairment on assets held for sale — — (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 %

Income (loss) from operations 2,805 (82,486) (105,708) N/M (22.0) %

Legal settlement — 39,399 — N/M 100%

Income (loss) before interest expense and income tax 2,805 (43,087) (105,708) N/M 59.2 %

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 — — 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 %

Benefit (provision) for income taxes 2,799 (10,201) (5,649) N/M 80.6 %

(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) — — 100.0 % 0.0 %

Net loss attributable to ordinary shares $ (311,956) $ (350,625) $ (258,633) (11.0) % 35.6 %

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

2 unchanged sentences

On a constant currency basis, Revenues, net increased by $606,296, or 48.3%.

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.

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%.

8 unchanged sentences

Revenue change driver

Decrease due to deferred revenues adjustment $ (22,663) (2.3) %

Increase due to a reduction in deferred revenues adjustment $ 19,150 1.5 %

Decrease due to disposals (49,296) (3.9) %

6 unchanged sentences

Revenue change driver

Increase due to deferred revenues adjustment $ 2,714 0.3 %

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 %

1 unchanged sentence

Revenues, net (total change) $ 279,702 28.7 %

Revenues, net from our ongoing business improved for both 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.

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, transactional and re-occurring revenues for the periods indicated.

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.

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)

Variance Increase/(Decrease)

5 unchanged sentences

Subscription revenues $ 1,034,356 $ 877,659 $ 156,697 17.9 % 16.1 % (3.6) % 1.9 % 3.5 %

Transactional revenues 294,889 169,265 125,624 74.2 % 83.3 % (3.0) % 0.4 % (6.5) %

Re-occurring revenues 114,528 — 114,528 N/M 100.0 % — % — % — %

Re-occurring revenues 453,242 111,929 341,313 304.9 % 298.3 % — % (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)

(23,101) (438) (22,663) N/M N/M — % — % 69.2 %

(3,951) (23,101) 19,150 82.9 % (19.0) % — % (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)

23,101 438 22,663 N/M N/M — % — % (69.2) %

3,951 23,101 (19,150) (82.9) % 19.0 % — % 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 %

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

(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 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.

Transactional revenues of $294,889 increased by $125,624, or 74.2% from $169,265 in 2019.

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 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.

Re-occurring revenues of $114,528 in 2020 increased by $114,528, or 100.0% from 2019 due to acquisitive growth generated from the CPA Global Transaction.

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.

Variance Increase/(Decrease)

5 unchanged sentences

Subscription revenues $ 877,659 $ 805,518 $ 72,141 9.0 % 13.4 % (7.4) % 0.3 % 2.7 %

Transactional revenues 169,265 177,523 (8,258) (4.7) % — % (1.6) % (0.8) % (2.3) %

Re-occurring revenues 111,929 — 111,929 100.0 % 100.0 % — % — % — %

Transactional and other revenues 287,560 169,265 118,295 69.9 % 79.0 % (3.0) % 0.4 % (6.5) %

Deferred revenues adjustment (1)

3 unchanged sentences

23,101 438 22,663 5,174.2 % 5,243.4 % — % — % (69.2) %

IPM Product Line (2)

— (20,450) 20,450 (100) % — % (100.0) % — % — %

Adjusted revenues, net $ 1,277,148 $ 974,783 $ 302,365 31.0 % 36.2 % (6.7) % 0.4 % 1.2 %

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

(2) Reflects the revenue generated by the IPM Product Line for the year ended December 31, 2018.

We sold the IPM Product Line in October 2018.

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 decreased by $15,959, or 2.0%.

Subscription revenues from ongoing business increased primarily due to price increases and new business within the Science Product Group, consistent with the growth in the annualized contract value and revenue increases related to upgrade of the Techstreet product offerings.

This revenue growth was offset by a decrease due to the IPM Product Line divestiture.

Transactional revenues of $169,265 in 2019 decreased by $8,258, or 4.7% from $177,523 in 2018.

On a constant currency basis, transactional revenues decreased by $6,867, or 3.9%.

The decline in transactional revenues is due to the loss of income related to the IPM Product Line divestiture, demand for patent services in the period and reflected timing and product offerings within the IP segment.

The revenues decline was offset partially by increased revenues related to the upgrades of the Techstreet product offerings.

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

2 unchanged sentences

Percentage of Factors Increase/(Decrease)

Total Variance (Dollars)

December 31, Total Variance (Dollars)

Total Variance (Percentage)

9 unchanged sentences

Deferred revenues adjustment (1)

(23,101) (438) (22,663) (5,174.2) % N/M — % — % 69.2 %

(3,951) (23,101) 19,150 82.9 % (19.0) % — % (0.2) % 102.1 %

Revenues, net

1 unchanged sentence

Deferred revenues adjustment (1)

23,101 438 22,663 — N/M — % — % (69.2) %

3,951 23,101 (19,150) (82.9) % 19.0 % — % 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 %

(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.

(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.

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)

Variance Increase/(Decrease)

Percentage of Factors Increase/(Decrease)

December 31, Total Variance (Dollars)

Total Variance (Dollars)

Total Variance (Percentage)

9 unchanged sentences

Deferred revenues adjustment (1)

(438) (3,152) 2,714 86.1 % — % — % — % 86.1 %

IPM Product Line (2)

— 20,450 (20,450) (100.0) % — % — % — % — %

(23,101) (438) (22,663) N/M N/M — % — % 69.2 %

Revenues, net

1 unchanged sentence

Deferred revenues adjustment (1)

438 3,152 (2,714) (86.1) % — % — % — % (86.1) %

IPM Product Line (2)

— (20,450) 20,450 (100) % — % (100.0) % — % — %

23,101 438 22,663 — % N/M — % — % (69.2) %

Adjusted revenues, net $ 1,277,148 $ 974,783 $ 302,365 31.0 % 36.2 % (6.7) % 0.4 % 1.2 %

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

(2) Reflects the revenue generated by the IPM Product Line for the year ended December 31, 2018.

We sold the IPM Product Line in October 2018

On a constant currency basis, Americas revenues increased by $7,205, or 1.6%, primarily due to improved subscription revenues partially offset by a decline in transactional revenues, consistent with the explanations above.

On a constant currency basis, Europe/Middle East/Africa revenues increased by $11,396, or 4.1%, primarily due to improved subscription revenues and an increase in transactional revenues as the result of increased demand and product offerings.

On a constant currency basis, Asia Pacific revenues increased $10,941, or 4.9%, primarily due to improved subscription revenues partially offset by a decline in transactional revenues.

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.

Revenue by Segment

2 unchanged sentences

Percentage of Factors Increase/(Decrease)

Total Variance (Dollars)

Year Ended December 31, Total Variance (Dollars)

Total Variance (Percentage)

4 unchanged sentences

Deferred revenues adjustment (1)

(23,101) (438) (22,663) (5,174.2) % NM — % — % 69.2 %

(3,951) (23,101) 19,150 82.9 % (19.0) % — % (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)

23,101 438 22,663 — NM — % — % (69.2) %

3,951 23,101 (19,150) (82.9) % 19.0 % — % 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 %

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

(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 $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.

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 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.

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

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.

Variance Increase/(Decrease)

Percentage of Factors Increase/(Decrease)

Year Ended December 31,

Total Variance (Dollars)

5 unchanged sentences

Deferred revenues adjustment (1)

(438) (3,152) 2,714 86.1 % — % — % — % 86.1 %

IPM Product Line (2)

— 20,450 (20,450) (100.0) % — % — % — % — %

(23,101) (438) (22,663) (5,174.2) % N/M — % — % 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)

438 3,152 (2,714) (86.1) % — % — % — % (86.1) %

IPM Product Line (2)

— (20,450) 20,450 (100) % — % (100.0) % — % — %

23,101 438 22,663 — % N/M — % — % (69.2) %

Adjusted revenues, net $ 1,277,148 $ 974,783 $ 302,365 31.0 % 36.2 % 6.7 % (0.4) % 1.2 %

(1) Reflects the deferred revenues adjustment made as a result of purchase accounting related to our separation from Thomson Reuters in 2016

(2) Reflects the revenue generated by the IPM Product Line for the year ended December 31, 2018.

We sold the IPM Product Line in October 2018

(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 $21,671, or 4.1%, driven by organic subscription revenue growth, primarily due to price increases and new business across the product offerings, consistent with the growth in the ACV.

Additionally transactional revenues increased slightly due to increased demand and timing of the product offerings.

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.

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 $7,868, or 1.9%, driven by revenues related to the Techstreet product upgrades.

This increase was offset by a decrease from the transactional revenues due to a demand for patent services in the period, and timing and product offerings.

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.

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.

Cost of revenues of $352,000 in 2019, decreased by $78,326, or 18.2%, from $430,326 in 2018.

On a constant currency basis, cost of revenues decreased by $73,295, or 17.0%.

The decrease is primarily due to a decrease in transition services agreement data center costs, and a decrease in costs associated with the divestiture of the IPM Product Line.

Selling, General and Administrative

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 $76,893, or 16.2% 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.

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 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 $67,196, or 16.3%.

The increase is primarily driven by transaction expenses related to costs incurred in association with our merger with Churchill Capital Corp in 2019 coupled with costs related to the debt refinancing, secondary offerings, contingent payment earn out adjustments and divestitures and acquisitions.

The increase is also attributed to accelerated vesting and expense related to our merger with Churchill Capital Corp in 2019 and higher people-related costs which is due to the increase in headcount for the stand-alone transition.

The increase was partially offset by a decrease in transition, integration, and other expenses due to the slowing pace of costs incurred in connection with establishing our standalone company infrastructure following our separation from Thomson Reuters in 2016, as well as decreased contract labor, transition services agreement fees and costs related to the divestiture of the IPM product line.

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 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.

Depreciation expense of $9,181 in 2019, decreased by $241, or 2.6%, from $9,422 in 2018, driven by the run-off of previously purchased capital expenditures.

This decrease was partially offset by new purchases of fixed assets.

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.

Amortization expense of $191,361 in 2019, decreased by $36,442, or 16.0%, from $227,803 in 2018, primarily related to intangible assets acquired in connection with our separation from Thomson Reuters in 2016 that are now fully amortized, coupled with the divestiture of the IPM Product Line and related assets.

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

2 unchanged sentences

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 year ended December 31, 2020.

There were no impairment on assets held for sale during the years ended December 31, 2021 and 2020.

Restructuring and Impairment

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.

Restructuring and impairment charges of $15,670 in 2019, increased by $15,670, from $0 in 2018.

The increase is related to an initiative, following our merger with Churchill Capital Corp in 2019, 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 year ended December 31, 2020.

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.

Other operating income (expense), net of $4,826 in 2019, decreased by $1,553, or 24.3% from $6,379 in 2018, attributable to 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.

Interest Expense, Net

Interest expense, net of $111,914 in 2020, decreased by $45,775, or 29.0%, from $157,689 in 2019.

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.

Interest expense, net of $157,689 in 2019, increased by $26,884, or 20.6%, from $130,805 in 2018.

The increase was attributable 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 addition to debt extinguishment and refinancing related costs on the October 2019 refinancing of our prior credit facilities and notes.

This was offset by lower interest payments due to lower interest and LIBOR rates as a result of the refinancing and the voluntary prepayment of our prior term loan in connection with the closing of our merger with Churchill Capital Corp in 2019.

Benefit (Provision) for Income Taxes

Provision (benefit) for Income Taxes

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.

2 unchanged sentences

The current year effective tax rate may not be indicative of our effective tax rates for future periods.

Provision for income tax of $10,201 in 2019, increased by $4,552, or 80.6%, from $5,649 in 2018.

The increase in tax expense is due to the base erosion and anti-abuse (BEAT) tax and tax on mergers, offset by deferred tax movements.

Our effective tax rate is (5.1)% in 2019 and was (2.4)% in 2018.

Differences in effective tax rates for the reported periods are attributable to changes in valuation allowance, BEAT tax, non-deductible capitalization costs and changes in income/losses for the different rates in various jurisdictions.

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.

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 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.

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.

1 unchanged sentence

Adjusted Revenues

We present Adjusted Revenues, which excludes the impact of the deferred revenues purchase accounting adjustments.

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.

You should compensate for these limitations by relying primarily on our GAAP results and only using non-GAAP measures for supplementary analysis.

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:

3 unchanged sentences

Revenues, net $ 1,876,894 $ 1,254,047 $ 974,345 49.7 % 28.7 %

Deferred revenues adjustment 23,101 438 3,152 N/M (86.1) %

Revenue attributable to IPM Product Line — — (20,450) — (100.0) %

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 %

(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

1 unchanged sentence

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) income 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), losses on extinguishment of debt, stock-based

compensation, 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-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash, legal settlements 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.

Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenues.

Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.

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.

You should compensate for these limitations by relying primarily on our U.S.

GAAP results and only use Adjusted EBITDA and Adjusted EBITDA margin for supplementary analysis.

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:

1 unchanged sentence

(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 — —

Net loss (270,448) (350,625) (258,633)

Provision for income taxes (2,799) 10,201 5,649

Provision (benefit) for income taxes 12,298 (2,698) 10,201

Depreciation and amortization 537,815 303,150 200,542

Interest, net 111,914 157,689 130,805

Transition services agreement costs (1)

650 10,481 55,764

Transition, transformation and integration expense (2)

3,440 24,372 69,185

Interest expense and amortization of debt discount, net 252,490 111,914 157,689

Deferred revenues adjustment (1)

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Share-based compensation expense 139,571 70,472 51,383

Gain on sale of IPM Product Line — — (36,072)

IPM adjusted operating margin (5)

Gain on sale of Techstreet — (28,140) —

Tax indemnity asset (6)

Restructuring and impairment (3)

2 unchanged sentences

Impairment on assets held for sale — — 18,431

Mark to market adjustment on financial instruments (4)

(81,320) 205,062 47,656

30,372 (1,060) 43,874

Adjusted EBITDA $ 800,404 $ 486,600 $ 294,066

Adjusted EBITDA margin 42.6% 38.1% 30.2%

(1) In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets.

In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement.

(2) 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 transition, integration, and other line-items of 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.

(3) Reflects the deferred revenues adjustment as a result of purchase accounting.

(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.

(5) Reflects the IPM Product Line ’ s operating margin, excluding amortization and depreciation, prior to its divestiture in October 2018.

(6) Reflects the write down of a tax indemnity asset.

(7) Reflects 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.

This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020.

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.

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

1 unchanged sentence

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.

You should compensate for these limitations by relying primarily on our U.S.

GAAP results.

We define free cash flow as net cash provided by operating activities less capital expenditures.

4 unchanged sentences

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 recurring transaction customers.

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.

1 unchanged sentence

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 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.

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.

2 unchanged sentences

however, additional funds may not be available on terms acceptable to us.

Unrestricted cash and cash equivalents were $257,730, $76,130, and $25,575 as of December 31, 2020, December 31, 2019 and December 31, 2018, respectively.

As of December 31, 2020, we had approximately $3,547,400 of debt, consisting primarily of $2,847,400 in borrowings under our term loan facility, $700,000 in outstanding principal of senior secured notes due 2026 and $0 of borrowings under our revolving credit facility.

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 a portion of the cash consideration for the DRG acquisition and to pay related fees and expenses.

On October 1, 2020, in connection with the CPA Global acquisition, the Company incurred an incrementa l $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.

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

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

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

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.

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:

3 unchanged sentences

Net cash used in investing activities (4,044,460) (2,988,768) (140,885)

Net cash provided by (used in) financing activities 2,926,580 75,215 (32,605)

Net cash provided by financing activities 4,032,160 2,926,580 75,215

Effect of exchange rates

(5,043) (971)

Increase (Decrease) in cash and cash equivalents

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 —

Net increase in cash held for sale — — 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

3 unchanged sentences

$ 272,408 $ 76,139

Cash Flows Provided by (Used in) Operating Activities

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, deferred finance charges and for changes in net working capital assets and liabilities.

Net cash provided by operating activities was $263,500 for the year ended December 31, 2020 compared to net cash provided by operating activities of $117,580 for the year ended December 31, 2019.

The $263,500 of net cash provided by operating activities for the year ended December 31, 2020 includes net loss of $106,310 offset with $302,573 of non-cash adjustments and changes in operating assets and liabilities of $67,237.

The increase in operating cash flows was driven by year over year increases in earnings driven by increases in revenue, lower operating expenses and cash provided by acquired businesses related to DRG and CPA Global in 2020.

Net cash provided by operating activities was $117,580 for the year ended December 31, 2019 compared to net cash used in operating activities of $26,100 for the year ended December 31, 2018.

The $117,580 of net cash provided by operating activities for the year ended December 31, 2019 includes net loss of $210,977 offset with $324,842 of non-cash adjustments and changes in operating assets and liabilities of $3,715.

The improvement in operating cash flows was driven by:

(1) continual increase in deferred revenue illustrating an increase in sales year over year;

(2) lower operating loss, which included the impact of a $39,399 gain on legal settlement and (3) a decrease of $47,043 in Transition, integration and other related expenses as a result of establishing a standalone company infrastructure.

Net cash used in operating activities was $26,100 for the year ended December 31, 2018 compared to net cash provided by operating activities of $6,667 for the year ended December 31, 2017.

The $32,767 negative change in 2018 was primarily due to a $27,200 change in operating working capital.

Accounts receivable increased due to price increases across our Product Lines along with a slight increase in the aging of the accounts, compared to the prior year change, reflecting strong collections efforts.

Deferred revenues increased in both 2018 and 2017 reflecting continued increases in sales year over year.

Accounts payable continues to decrease, reflecting the shortening of our accounts payable outstanding period to a normalized level, compared to the prior year backlog in payments.

Excluding the reduction in Accrued expenses for the IPM Product Line Divesture, the activity in both years was consistent.

While the current year change was minimal, the 2017 change in Other assets is a result of sales commission capitalization in connection with the adoption of ASC 606.

Cash Flows Provided by (Used in) Investing Activities

Net cash used in investing activities was $2,992,168 for the year ended December 31, 2020.

Cash flows used in investing is attributable to:

(1) $2,919,871 used to acquire key business intangible assets from CPA Global, DRG, IncoPat, and Hanlim, (2) $107,713 in capital expenditures and (3) $5,982 of key business intangible assets acquired from CustomersFirst Now.

This activity was offset by cash flows provided by investing related to $41,398 of divestitures related to the sale of Techstreet and the MarkMonitor AntiFraud, Antipiracy, and Brand Protection products.

Net cash used in investing activities was $140,885 for the year ended December 31, 2019.

Cash flows used in investing reflects the following activity:

(1) $69,836 in capital expenditures;

(2) $68,424 for the acquisition of Darts-ip, a provider of global IP case law data and analytics headquartered in Brussels, Belgium;

(3) $2,625 for the acquisition of key business assets of SequenceBase.

Net cash provided by investing activities was $11,934 for the year ended December 31, 2018.

Cash flows used in investing reflects the following activity:

(1) $80,883 in net proceeds from the IPM Product Line divestiture (net of restricted cash and cash included in normalized working capital, as well as a working capital adjustment of $6,135), partially offset by (2) $45,410 in capital expenditures and (3) $23,539 in acquisitions, mainly TradeMarkVision and Kopernio.

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.

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)

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.

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 (Used in) Financing Activities

Net cash provided by financing activities was $2,926,580 for the year ended December 31, 2020.

Key drivers of cash flows provided by financing include:

(1) $1,960,000 from the issuance of incremental term loans associated with the CPA Global and DRG acquisitions;

(2) proceeds of $843,744 from the issuance of ordinary shares related to our public offerings;

(3) $277,526 and $2,122 from the exercise of warrants and employee share options, respectively;

and (4) $60,000 borrowed on the existing Revolving Credit Facility to fund the debt extinguishment costs in connection with funding of the repayment of CPA Global's outstanding debt.

This activity was offset by cash flows used in financing related to:

(1) $125,000 repayment of borrowings under the revolving credit facility;

(2) $38,340 payment of debt issuance costs related to the issuance of the incremental term loan (3) $33,056 of payments related to tax withholdings for stock-based compensation;

(4) $12,600 principle payment on the term loan facility;

and (5) $7,816 payment related to the TradeMark Vision and Publons contingent earn-outs, and

Net cash provided by financing activities was $75,215 for the year ended December 31, 2019.

Key drivers of the cash flows provided by financing include:

(1) $1,600,000 of proceeds related to the refinance of debt as described in Note 14 - Debt;

(2) $682,087 of proceeds from our merger with Churchill Capital Corp in 2019, net of cash acquired;

(3) $200,000 related to the tax receivable agreement ( See Item 8.

Financial Statements and Supplementary Data - Notes to the Consolidated Financial Statements - Note 21 - Tax Receivable Agreement for additional detail);

(4) $70,000 in proceeds from our revolving credit facility;

(5) $1,582 for the exercise of warrants and employee share options.

This activity was offset by cash flows used in financing due to:

(1) $1,342,651 due to the extinguishment of old debt;

(2) payment of $641,509 on our prior term loan facility upon consummation of the transaction with Churchill (includes $11,509 of recurring term loan principal repayments);

(3) $50,000 repayment of borrowings under our prior revolving credit facility, and (4) $41,923 of debt issuance costs pursuant to the new debt.

Net cash used in financing activities was $32,605 for the year ended December 31, 2018.

Key drivers of the cash flows used in financing include:

(1) $46,709 in net repayments of debt under our term loan facility, mainly driven by an excess cash repayment of $31,378 following the IPM Product Line divestiture and standard recurring principle repayments of $15,000;

(2) $30,000 repayment of borrowings under our revolving credit facility and (3) $2,470 contingent purchase price paid as a result of Publons achieving the first tier of milestones and performance metrics.

This activity was offset by cash flows provided by financing due to:

(1) $45,000 draw on our revolving credit facility in the second half of 2018, and (2) 1,574 for the exercise of warrants and employee share options.

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

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.

1 unchanged sentence

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, for general corporate purposes.

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.

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.

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.

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.

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.

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Year Ended December 31,

(in thousands) 2020 2019 2018

2021 2020 2019

Net cash provided by operating activities $ 323,767 $ 263,500 $ 117,580

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Free cash flow $ 205,224 $ 155,787 $ 47,744

Free cash flow was $155,787 for the year ended December 31, 2020, compared to $47,744 for the year ended December 31, 2019 and a use of $71,510 for the year ended December 31, 2018.

The increase in free cash flow was primarily due to higher net cash provided by operating activities, partially offset by an increase in capital expenditures.

Required Reported Data - Standalone Adjusted EBITDA

We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit facilities, dated as of October 31, 2019 and the indenture governing our secured notes due 2026 issued by Camelot Finance S.A.

and guaranteed by certain of our subsidiaries, respectively.

In addition, the credit facilities and the indenture contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters.

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 indenture and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business.

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

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.

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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.

Standalone Adjusted EBITDA is calculated under the credit facilities and the indenture 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.

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 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.

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.

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:

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(in thousands)

Net loss attributable to ordinary shares $ (311,956) $ (350,625) $ (258,633)

Dividends on preferred shares 41,508 — —

Net loss (270,448) (350,625) (258,633)

Provision for income taxes (2,799) 10,201 5,649

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

Transition services agreement costs (1)

650 10,481 55,764

Transition, transformation and integration expense (2)

3,440 24,372 69,185

Deferred revenues adjustment (1)

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Share-based compensation expense 139,571 70,472 51,383

Gain on sale of IPM Product Line — — (36,072)

IPM adjusted operating margin (5)

Gain on sale of Techstreet — (28,140) —

Tax indemnity asset (6)

Restructuring and impairment (3)

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Impairment on assets held for sale — — 18,431

Mark to market adjustment on financial instruments (4)

(81,320) 205,062 47,656

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)

DRG Adjusted EBITDA impact (6)

CPA Adjusted EBITDA impact (6)

Bioinfogate Adjusted EBITDA impact (6)

IncoPat Adjusted EBITDA impact (6)

Hanlim Adjusted EBITDA impact (6)

Patient Connect Adjusted EBITDA impact (6)

Cost savings (7)

1 unchanged sentence

Excess standalone costs (8)

— 30,000 25,407

Standalone Adjusted EBITDA $ 1,192,686 $ 762,110 $ 336,066

(1) In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets.

In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement.

These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other line-item of 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.

(3) Reflects the deferred revenues adjustment as a result of purchase accounting.

(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.

(5) Reflects the IPM Product Line ’ s operating margin, excluding amortization and depreciation, prior to its divestiture in October 2018.

(6) Reflects the write down of a tax indemnity asset.

This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020.

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.

(4) Reflects mark to market adjustments on financial instruments recorded under Accounting Standards Codification 815, Derivatives and Hedging, ("ASC 815").

In periods subsequent to issuance, changes in the estimated fair value of the liabilities are reported through earnings.

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.

(9) Represents the acquisition Adjusted EBITDA for the period beginning January 1, 2020 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.

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.

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.

(11) Reflects the difference between our actual standalone company infrastructure costs, and our estimated steady operating costs, which were as follows:

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

Year Ended December 31,

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See Cautionary Statement Regarding Forward-Looking Statements.

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.