Product and Geographic Sales Information

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Product and Geographic Sales Information

Segment Information

The Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”). The CODM evaluates segment performance based primarily on revenue and segment Adjusted EBITDA, as described below. The CODM does not review assets by operating segment for the purposes of assessing performance or allocated resources.

Science: The Science segment consists of our Academia and Government Product Line, which includes ProQuest, and our Life Sciences Product Line. Both Product Lines provide curated, high-value, structured information and consulting services that is delivered and embedded into the workflows of our customers, which include research-intensive corporations, life science organizations and universities world-wide.

Intellectual Property: The Intellectual Property segment consists of our Patent, Trademark, Domain and IP Management Product Lines. These Product Lines help manage customer’s end-to-end portfolio of intellectual property from patents to trademarks to corporate website domains.

Each of the two operating segments represent the segments for which discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The CODM evaluates performance based primarily on revenue and segment Adjusted EBITDA. 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, share-based compensation, unrealized foreign currency gains/(losses), transformational and restructuring expenses, acquisition-related adjustments to deferred revenues prior to the adoption of FASB ASU No. 2021-08 in 2021, non-operating income or expense, the impact of certain non-cash mark-to-market adjustments on financial instruments, legal settlements 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.

Revenues, net by segment

The following table summarizes revenue by reportable segment for the periods indicated:

	Three Months Ended March 31,
	2022		2021
Science Segment	$	420.4	$	191.3
Intellectual Property Segment	241.8		237.1
Total Revenues, net	$	662.2	$	428.4

Adjusted EBITDA by segment

The following table presents segment profitability and a reconciliation to net income for the periods indicated:

	Three Months Ended March 31,
	2022		2021
Science Segment Adjusted EBITDA	$	151.2	$	90.6
Intellectual Property Segment Adjusted EBITDA	111.1		74.2
Total Adjusted EBITDA	$	262.3	$	164.8
Provision for income taxes	(16.3)		(0.3)
Depreciation and amortization	(176.4)		(131.6)
Interest expense and amortization of debt discount, net	(59.5)		(37.4)
Mark to market gain on financial instruments(1)	100.4		51.2
Deferred revenues adjustment(2)	0.2		(3.0)
Transaction related costs(3)	(6.7)		22.9
Share-based compensation expense	(37.0)		(39.0)
Restructuring and impairment(4)	(11.7)		(67.9)
Other(5)	14.2		(15.7)
Net income (loss)	$	69.5	$	(56.0)
Dividends on preferred shares	(18.7)		—
Net income (loss) attributable to ordinary shares	$	50.8	$	(56.0)
(1) Reflects mark-to-market adjustments on financial instruments under ASC 815, Derivatives and Hedging. 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.
(2) Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of 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 ASC 606, Revenue from Contracts with Customers, 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 2021.
(3) 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. During the three months ended March, 31, 2021, this also includes the mark-to-market adjustments on the contingent stock consideration associated with the CPA Global and DRG acquisitions.
(4) Primarily reflects costs related to restructuring and impairment associated with One Clarivate, ProQuest and CPA Global Programs. Refer to Note 21 - Restructuring and Impairment for further information.
(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.