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Date

Wednesday, July 30, 2025 at 9 a.m. ET

Call participants

  • Chief Executive Officer — Matitiahu Shem Tov
  • Chief Financial Officer — Jonathan M. Collins
  • Head of Investor Relations — Mark J. Donohue

Takeaways

  • Revenue -- $621 million for the quarter and $1.2 billion for the first half, with the quarterly change entirely inorganic, reflecting divestitures and disposals, partially offset by organic growth and FX.
  • Organic ACV Growth -- 1.3% increase compared to the prior year, with a 40 basis point improvement from the end of last year, attributed to higher renewal rates and new business.
  • Total Organic Revenue -- Grew by 50 basis points during the quarter; recurring organic revenue increased by almost 1%.
  • Adjusted EBITDA Margin -- Increased by 50 basis points to 41% for the first half, reflecting cost efficiencies.
  • Net Loss -- $72 million for the quarter, improved from the prior year due to a nonrecurring impairment charge last year.
  • Adjusted Diluted EPS -- $0.18 for the quarter, with the change fully attributed to completed divestitures and disposals.
  • Free Cash Flow -- $50 million in the quarter and $161 million for the first half, driven by adjusted EBITDA, offset by higher onetime costs.
  • Annual Renewal Rate -- 93% across the subscription base in the first half, up from 92% in the prior year period.
  • A&G Segment Subscription Revenue -- Now 93% of total segment revenue, up from 79%, with a 96% renewal rate and early adoption of the new e-Books subscription model.
  • IP Segment Recurring Revenue -- Organic recurring revenue rose by about 1.5% in the first half, marking a return to growth in patent annuities.
  • IPfolio Platform -- Achieved over 50% growth in new clients and partnerships year over year, especially across South Korea and Japan.
  • Life Sciences & Health ACV -- Returned to organic growth during the first half, supported by extensions of long-term multimillion dollar agreements and ongoing product innovation.
  • AI Product Launches -- Delivered 10 new AI-powered capabilities since October and over 4,800 institutions adopted AI tools to enhance research and operational efficiency.
  • Recurring Revenue Mix -- Reached 88% of total revenue for the first half, an improvement of 800 basis points over last year, with full-year mix expected at approximately 84% post-disposals.
  • Share Repurchases -- $50 million allocated in the second quarter to repurchase 11.5 million common shares, totaling $100 million in buybacks for the first half and representing about 60% of available capital.
  • Debt Refinancing -- Refinanced $0.5 billion of 2026 bonds to extend maturity to 2031, swapped 80% of the new tranche to euros and fixed rate, resulting in a $7 million annual cash interest increase.
  • Full-Year Outlook -- Guidance reaffirmed for 2025, including expected organic ACV acceleration of about 60 basis points to a midpoint of 1.5%, adjusted EBITDA margin at approximately 41%, diluted adjusted EPS between $0.60 and $0.70, and free cash flow of about $340 million.
  • Onetime Restructuring Costs -- $18 million in the quarter and $42 million for the first half, related to Value Creation Plan (VCP) implementation.
  • Strategic Review Status -- Management narrowed the scope of alternatives and expects to communicate outcomes with year-end results in February 2026.
  • A&G Renewals -- 75% of global A&G subscriptions for the year renewed by July, matching last year’s pace despite U.S. federal contract and higher education funding pressures.

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Risks

  • Chief Executive Officer Matitiahu Shem Tov said, "macro backdrop characterized by a reduction in the U.S. federal agency contracts, increased constraints on higher education research funding and potential additional university budget cuts" may impact future A&G segment performance.
  • Chief Financial Officer Jonathan M. Collins disclosed that "cost efficiencies will not fully offset inflation and higher incentive compensation expense," indicating ongoing profit headwinds of about $20 million.
  • Jonathan M. Collins warned of continued "profit headwind" related to business disposals that are expected to lower revenue by $125 million this year, with most of the remaining $75 million reduction to occur next year.
  • Matitiahu Shem Tov explained delays in one major business disposal are due to customer transition needs, potentially slowing planned optimization initiatives.

Summary

Clarivate Plc (CLVT 0.36%) reported modest organic growth in annual contract value and recurring revenue, supported by higher subscription renewal rates and focused cost control. AI-led product innovation and business model optimization led to measurable progress in the Value Creation Plan, with a significant uplift in recurring revenue as a share of total revenue. Segment performance saw the IP unit return to annuities-driven growth, Life Sciences & Health achieve renewed ACV expansion, and A&G demonstrate resilience despite macro pressures. Management reaffirmed financial guidance for 2025, reported continued capital returns through share repurchases, and detailed steady progress on a strategic review, with outcomes expected by early 2026. Debt refinancing extended maturities and provided some interest cost benefits, though restructuring outflows influenced net results.

  • Chief Financial Officer Jonathan M. Collins said, "organic growth for H1 has improved by 180 basis points over where we ended last year," underscoring positive inflection compared to earlier performance.
  • The mix of cost discipline and slower-than-anticipated attrition in business disposals drove revenue and margin trends closer to the top end of the company's guidance ranges.
  • Clarivate introduced agentic AI solutions, including the literature review agent for Web of Science, designed to directly engage with researchers for tailored outputs.
  • Strategic divestments and disposals combined to reduce revenue by $64 million in the first half, with a $30 million adjusted EBITDA impact, aligning with ongoing portfolio realignment.
  • Clarivate reported, "recurring revenue mix will improve by about 400 basis points from 80% to about 84% this year," representing a notable shift versus historical levels.

Industry glossary

  • ACV (Annual Contract Value): Value of contracted recurring revenue normalized to a one-year period, a key subscription business metric.
  • IP Annuities: Recurring payments associated with maintaining patent or intellectual property rights in force.
  • Agentic AI: Artificial intelligence agents capable of autonomously executing and managing multi-step workflows through interactive engagement with users and datasets.
  • VCP (Value Creation Plan): Clarivate’s multi-pronged operational strategy focused on product innovation, recurring revenue optimization, cost efficiencies, and strategic business reviews.

Full Conference Call Transcript

With me today are Matitiahu Shem Tov, Chief Executive Officer; and Jonathan Collins, our Chief Financial Officer. After prepared remarks, we'll open the call up to your questions. And with that, it's a pleasure to turn the call over to Matitiahu.

Matitiahu Shem Tov: Good morning, everyone, and thank you for joining us. We reported solid second quarter financial performance and delivered growth in our key metrics. We also made progress on the Value Creation Plan, including the AI-led product innovation improving sales execution and enhancing operational efficiency. On Slide 6. In the second quarter, we demonstrated our strategic positioning within the market. Organic ACV grew 1.3% compared to the prior year period and improved 40 basis points from the end of last year. This was driven by an important improvement in the subscription book due to higher renewal rates and new business wins. Total organic revenue in the second quarter grew 50 basis points, and recurring organic revenue grew almost 1%.

Adjusted EBITDA margin for the first half of the year increased 50 basis points to 41%, driven by internal cost efficiencies. Free cash flow continued to be strong as we generated $50 million in the second quarter and $161 million for the first 6 months of this year. I'd like to highlight that all of our segments shown improvement for the first half of the year. Our A&G business delivered 2% organic ACV and subscription revenue growth. IP returned to organic growth in patent annuities and is well positioned to benefit from AI tailwind and Life Science and Health returned to organic ACV growth. With a solid first half, we are reaffirming our full year 2025 outlook.

Jonathan will cover the financial results in more detail shortly. On Slide 7. Our Value Creation Plan was launched in the fall of 2024, and it is on track with measurable progress across all key initiatives and KPIs. We have launched all major business optimization program to increase core subscription and reoccurring revenue, which is enhancing sales predictability. We have completed most of the major operating model changes within our sales organization to improve new business generation, customer engagement and retention.

Since the launch of the VCP plan last October, we have delivered 10 cutting-edge product and AI-powered capabilities while focusing on developing AI-enabled world-class subscription-based solution in partnership with customers, and we are undertaking strategic review to assess alternatives across the business. If you turn to Slide 8, I'll provide an update on the VCP starting with the A&G segment. Our proactive business model optimization, coupled with decades of experience in delivering data and analytics solution to our clients has strategically positioned us to anticipate and adapt to current market dynamics. We are on track to discontinue transactional sales of digital collections and books over the next year.

This shift away from transactional sale is increasing recurring revenue growth by transitioning some of the business to the new progress e-Books product and other content solution subscription. We are pleased with the early adoption with over 70 wins to date and hundreds of customers currently evaluating this new model. Following this A&G strategy, A&G subscription revenue now constitutes 93% of the total segment revenue, excluding disposals, up from 79% in the prior year period. In the first half of 2025, we have achieved a 96% renewal rate in A&G.

This is impressive results considering the macro backdrop characterized by a reduction in the U.S. federal agency contracts, increased constraints on higher education research funding and potential additional university budget cuts. It is also noteworthy that as at the end of July, 75% of global A&G subscription for the full year has successfully renewed. This is in line with last year -- last year's renewal pace. We continue to successfully invest in innovation across the A&G product portfolio with a focus on AI. We are very pleased by our success so far in product launches and customer adoption. More than 4,800 institutions have already adopted our AI tools to strengthen research support, increase operational efficiency and enhance student engagement.

On Slide 9. Our partnership within A&G continued to grow, including recent multiyear agreement with the Canadian Research Knowledge Network that will provide 55 university greater access to Web of Science, fostering enhanced research collaboration, and impact. We are also accelerating progress with next-generation Agentic AI solution. AI agents can independently play and execute multistep processes by interacting with user with users, data sources and tools. The expansion of our Agentic AI platform marks a significant milestone as we implement responsible Agentic AI to accelerate research and learning workflow. Our initial launch of the literature review agent in Web of Science exemplify this pioneering approach.

The agent converse with researchers to understand their research goals, then customize a specific literature review scope and define the proper output. This personal interactive experience keeps the researcher in the center, which closely mimic working with human assistant. Finally, we are very pleased that Outsell, a leading research advisory firm in B2B technology, data and information services recognized Clarivate AI leadership among major scholarly research organization underscoring our position at the forefront of developing user-facing AI Agentic tool. Moving to Intellectual Property segment on Slide 10. After a challenging few years, our patent renewal business returned to growth this year, with organic recurring revenue rising by about 1.5% in the first 6 months of 2025.

The market-wise surge in AI innovation across industry is driving sustained growth in registered IT. We believe this trend will create favorable conditions for our patent renewal business. As an example, in the past year alone, patent filing for AI invention has grown fivefold compared to pre-ChatGPT levels. In addition, AI has the potential to double innovation output and build more defensible IP portfolio for industry power by IP and scientific research. The takeaway is that this strong market tailwind driven by the proliferation of AI innovation and technology adoption are fueling our work with customers empower them to achieve higher levels of efficiency and IP creation.

Our IP segment is well positioned to capture this growth as we continue to lead at the intersection of technology, innovation and IP. Going to Slide 11. During the second quarter, IPfolio, our industry-leading cloud-based IP management platform designed for corporate intellectual property teams grew new clients and partnerships over 50% year-over-year across global markets, including South Korea and Japan. We're now broadening and accelerating our portfolio adoption across multiple industries, including the pharmaceutical and large law firms. Our expertise and comprehensive solutions have enabled clients such as Winbond to enhance the IP management practices and gain meaningful insights into emerging trends in the IP management. IP management transition.

So this morning, we have announced that Maroun Mourad will join Clarivate as President of the IP segment, effective September 8, 2025. He joins us from Verisk Analytics, where he is the present for the Claims Solution division. We are confident that his leadership abilities and expertise will further drive the IP business commitment to fostering innovation and growth. I would like to express my gratitude and appreciation to Gordon Thomson for his dedication to the industry and his significant contribution to Clarivate success. Turning into Life Sciences & Healthcare segment. In Life Science, we are encouraged that the VCP efforts have resulted in a return to organic ACV growth during the first half of this year.

We have been expanding our strategic reach fostering innovation through subscription-based platform designed to support Life Science & Health customers. Our commitment to develop robust partnership is demonstrated by the recent extension of a long-term multimillion dollar agreement with across 15 global pharmaceutical company. This achievement validates the importance of our Cortellis and DRG product services and to customers. Additionally, we continue to drive advancements in MedTech by introducing next-generation commercial Analytics, the launch of DRG Commercial Analytics 360, a dedicated subscription platforms empower MedTech organization to enhance their commercial strategy and execution capabilities. As commercial budget improve, we believe we will be best positioned to capitalize on an improving environment.

On Slide 14, Value Creation Plan I'm pleased that the VCP plan is on track. The first half of this year was marked by accelerated product innovation and significant number of new product launches and enhancements in the AI capabilities. We anticipate that the momentum of the product release will continue throughout all three segments in the second half of the year by integrating AI functionalities into our offering, including Web of Science Research, Derwent and Cortellis, we aim to further improve outcomes and value for our users. On Slide 15. Now that you've heard our VCP is driving results across each of our segments. The fourth pillar of our VCP is evaluating strategic alternatives.

Earlier this year, we initiated a formal process to enhance execution focus, optimize capital allocation, support future growth and increase operational effectiveness. We are making progress and have narrowed the scope of their review. We anticipate communication -- communicating the results when we will report our year-end financial performance in February 2026. And lastly, Slide 16. In closing, we are pleased to see improvements improved revenue performance for the first 6 months 2025, driven by organic ACV growth in A&G and Life Sciences segment and the return of growth in the patent renewals -- in the patent renewal business.

The mix of organic recurring revenue to total revenue for the first half of the year is now 88%, an improvement of 800 basis points compared to last year. Our annual renewal rate across our subscription base improved to 93% during the first half of this year compared to 92% for the same period last year. We are moving in the right direction and seeing early indication that our plan is driving improved performance. It is encouraging to witness the initial sign of trust, which affirms the effectiveness of our strategies and the dedication of our teams. We remain focused on executing our plan to ensure sustained growth and value creation for all stakeholders.

And with that, I would like to turn over to Jonathan. Thank you.

Jonathan M. Collins: Thank you, Matti. Slide 18 is an overview of our second quarter and first half financial results compared with the same periods from the prior year. Q2 revenue was $621 million, bringing the first half to $1.2 billion. Second quarter change from last year was entirely inorganic as a result of the ScholarOne divestiture and the A&G and LS&H business disposals, partially offset by organic growth in foreign exchange. The second quarter net loss was $72 million. The improvement over Q2 of the prior year is driven by the noncash impairment charge recorded last year that did not recur this year. Adjusted diluted EPS, which excludes items like the impairment, was $0.18.

The change over last year is entirely attributed to the divestiture and disposals. Operating cash flow was $116 million in the quarter, the change compared to last year is entirely driven by adjusted EBITDA as an improvement in working capital was offset by higher payments of onetime costs associated with implementing the value creation plan. Please turn with me now to Page 19 for a closer look at the drivers of the second quarter top and bottom line changes from the prior year. I'm pleased to share this morning that the business grew organically for the second quarter in a row and margins remained at approximately 42%.

This was driven by four primary factors: First, our recurring organic growth increased 20 basis points sequentially in the second quarter to nearly 1% as our subscription business returned to growth following the inflection in our ACV in the first half of this year. Careful operating expense management amplified the $3 million of total organic growth, which includes the transactional revenue type, resulting in a $6 million increase in adjusted EBITDA. Second, during Q2, we continue to experience the inorganic impact of the businesses we are disposing as a part of the Value Creation Plan. The top and bottom line changes of $32 million and $17 million, respectively, impacted both the A&G and LS&H segments.

Third, as we've seen in the last couple of quarters, we continue to experience the inorganic impact of the ScholarOne divestiture, lowering revenue by $9 million in adjusted EBITDA by $4 million. And fourth, the U.S. dollar weakened against the basket of foreign currencies, which caused a foreign exchange translation tailwind on the top and bottom lines. Please turn with me now to Page 20 to review how these same drivers impacted the top and bottom line changes for the first half of this year. As Matti noted just a few moments ago, organic growth for H1 has improved by 180 basis points over where we ended last year.

This modest growth compared to last year's decline yielded $5 million of total organic growth and $10 million of incremental adjusted EBITDA in the first half. The combined impact of the disposals and divestitures lowered revenue by $64 million and adjusted EBITDA by $30 million over the same period last year. Both the top and bottom lines benefited from foreign exchange in the first half as the U.S. dollar weakened towards the end of the first quarter. The net impact of these changes led to a 50 basis point profit margin expansion for the year-to-date results compared to the same period last year.

Please turn with me now to Page 21 for a look at how the Q2 and H1 adjusted EBITDA converted to free cash flow and how we allocated the capital in a shareholder-friendly manner. Free cash flow was $50 million in the second quarter, bringing the first half to $161 million. The change in the quarter and the half are driven entirely by the adjusted EBITDA impact outlined on the last two pages as lower working capital requirements were offset by higher onetime costs. We incurred $18 million of onetime cost in Q2 and $42 million in H1, both of which were largely restructuring-related outflows associated with the implementation of the Value Creation Plan.

Cash interest was $92 million and was slightly lower than Q2 of last year as we continue to recognize the benefit associated with the $200 million of debt we repaid. Working capital requirements improved by $15 million in the second quarter and a comparable amount for the first half, and we expect this trend to continue in the second half of the year as implied in our full year guidance. Cash taxes, capital spending and other operating outflows were essentially flat compared to the same periods last year.

We used the $50 million of free cash flow we generated in the second quarter to repurchase another 11.5 million shares of common stock, bringing the first half buybacks to $100 million, which is about 60% of the capital we had available to allocate. The remaining 40% increased our cash balance, lowering our net debt. We also took the opportunity during the second quarter to extend a portion of our debt maturity by 5 years through refinancing $0.5 billion of our 2026 bonds with a new tranche on our existing Term Loan B facility, which matures in 2031.

Shortly after we completed the refinancing, we swapped at 80% of the new tranche from dollars to euros and from a floating to a fixed interest rate. The net impact of the refinancing and swaps is an annual cash interest increase of about $7 million, a favorable outcome in this higher rate environment. Please turn with me now to Page 22 for a reminder of our full year financial guidance ranges for this year, which remain entirely unchanged from the initial guidance we provided in February, and affirmed in April.

Beginning at the top of the page, we continue to expect our organic annual contract value to accelerate by approximately 60 basis points to 1.5% at the midpoint of the range as we begin to recognize the benefits of our investments in product innovation. We've made good progress on this in the first half, where we've delivered more than half of the acceleration, about 40 basis points. Based on our performance in the first half, recurring organic growth will likely be in the upper half of our range. The improved organic performance, combined with a weaker U.S. dollar and slower-than-anticipated attrition in the business disposals will likely yield revenue near the top end of the range.

As a result of the strategic disposals, we expect our recurring revenue mix will improve by about 400 basis points from 80% to about 84% this year. It's worth reiterating what Matti indicated earlier in the call. Our organic recurring revenue mix, which excludes the disposals, is already at 88% in the first half of the year. Moving down the page, we expect adjusted EBITDA slightly above the midpoint of the range and our profit margin at approximately 41% due to higher revenues from the disposals and FX, which have lower profit conversions.

We continue to anticipate diluted adjusted EPS between $0.60 and $0.70 as the inorganic driven change in adjusted EBITDA, which I'll detail on the next page will be partially offset by lower interest expense as well as the benefit of a lower share count resulting from last year's and the first half's stock repurchases. And finally, at the bottom of the page, we anticipate free cash flow of about $340 million at the midpoint of the range as the adjusted EBITDA change will largely be offset by lower interest working capital and capital spending. Please turn with me now to Page 23 for more details on the full year top and bottom line changes we're expecting compared to last year.

The expected changes in revenue and to a large extent, adjusted EBITDA this year compared to last year are largely driven by the disposals targeted at optimizing our business model and the divestitures of noncore products and services. We now expect organic growth will be essentially flat as the growth in the recurring revenue types, both subscription and reoccurring will offset the originally anticipated decline in our remaining transactional business. This represents about $10 million improvement over our initial indication at the midpoint of the guidance range. We continue to expect a profit headwind in this area of about $20 million as cost efficiencies will not fully offset inflation and higher incentive compensation expense.

The strategic disposals are now expected to lower revenue this year by approximately $125 million, and we're implementing $85 million of operating cost actions, which yield a profit impact of about $40 million. We expect most of the remaining $75 million revenue reduction will take place next year and will have a small profit impact. The top line change for the disposals represents a $15 million improvement over our initial indication. The divestitures of both Valipat and ScholarOne last year will lower revenue by about $40 million and profit [indiscernible]. And finally, we now anticipate foreign exchange translation will have a negligible impact as the U.S. dollar has remained weak against other foreign currencies.

This represents a $25 million improvement from our initial indication for full year revenue. Please turn me now to Page 24 to step through the components that will lead to more than 1/3 of the adjusted EBITDA converting to free cash flow. Our outlook for free cash flow remains unchanged at the midpoint of our range. Onetime costs are expected to be slightly elevated over last year as we invest to execute the VCP. We expect cash interest to improve by about $10 million over last year as a result of the debt we prepaid. Cash taxes are expected to remain in line with 2024.

We anticipate the change in working capital this year will be negligible, which represents an improvement over last year of about $25 million. And while we remain committed to investing in product innovation, the strategic disposals and cost efficiencies will improve capital spending by about $35 million. The net impact of these changes is free cash flow of $340 million at the midpoint of the range and will result in an improvement on the conversion of adjusted EBITDA of about 1 percentage point. From a capital allocation perspective, we continue to have the flexibility between share repurchases and deleveraging as we move through the second half of the year.

In closing, we believe our first half results indicate strong momentum as the value creation plan is taking hold as evidenced by a few key elements. First, Q2 represents the second quarter of sequential organic ACV and recurring revenue growth acceleration. Optimizing our business model by disposing of noncore transactional businesses is creating a laser focus on our core recurring products and services, and we now have tangible evidence of the upward trajectory. Second, each of our segments made meaningful progress in the first half of the year and have a solid outlook for the second half.

In A&G, both organic ACV and subscription revenue growth are stable at about 2%, and we have good line of sight to a stable second half despite funding pressure in the U.S. market. In IP, we've seen a clear rebound in the annuity market, our reoccurring revenue stream as it returned to growth in the first half after declines in the prior year. In LS&H, our subscription revenue-leading indicator, ACV returned to organic growth as the investments in Cortellis are paying off in the R&D market with higher retention and strong [indiscernible].

And third, we made significant progress on the strategic review in the first half by narrowing the focus to a core option and expect to complete this work in the second half and provide the conclusion with our year-end results. I'd like to finish by thanking all of you for listening in this morning. I'm now going to turn the call back over to Jordan to take your questions. [Operator Instructions] Jordan, please go ahead.

Operator: [Operator Instructions] Your first question comes from the line of Manav Patnaik from Barclays.

Manav Shiv Patnaik: I had a question on the IP business. I know you talked about a rebound in the IP and annuity market. I think you also talked about being excited about the AI opportunities there. So just a few parts to that, just the timing of that rebound how you can capitalize on that AI opportunity? And I think I read somewhere that a lot of the, at least GenAI and new patents, all that kind of activity seems to be more weighted towards China. So just wondering your exposure and capabilities there as well?

Jonathan M. Collins: Sure, Manav. Thanks for the question. So in principle, as new filings and new patents are awarded, on average, it takes a couple or a few years to work its way into the renewals. It varies by jurisdictions but on average, it's a couple to a few years. So this is a trend that we've started to see over the last year or two and think that it's something that could help put some wind into our sales as we move into next year and the following year. So certainly, there's a clear trend that more patents are being filed related to AI. Overall, this is a good thing for our business. That's what we wanted to highlight and note.

To your point, the quantity of patents that have been filed related to AI are a bit disproportionate. Our IP center for innovation research, noted that in some of its recent reportings and we've seen more of it in Asia and particularly in China, but we've certainly seen an uptick in most of the major regions. So we think we'll start to see that benefit around the globe over the course of the next few years.

Operator: Your next question comes from the line of Toni Kaplan from Morgan Stanley.

Toni Michele Kaplan: I think earlier this week, we saw a headline that the Department of Commerce is considering changes to the fee structure and filing patents in the U.S. And I know there's a lot of moving parts, and it's not totally settled yet, but I just wanted to understand maybe the potential impacts to your business from sort of the potential change in fee structure and how that plays out?

Matitiahu Shem Tov: So first, we've seen this as well. It's very early days. And obviously, there's no definite decision and no definite view on our side. But let's just remind ourselves that we've been in the IP ecosystem for more than 2 or 3 decades. So we are an integral part of the ecosystem, including collaborating with patent offices worldwide, collaboration with law firm and with corporate. In a way, we are sitting in the intersection and supporting those institutions. So any change that will be we are very well positioned to support this change and somehow even take advantage of this changes.

This market may be changing and maybe not changing, but we've been there for the last 20, 30 years and even more. And we are very well positioned and close to our customers. So we'll track it, we will continue to -- as it continues to evolve, and we will be collaborating with our customers and partners on this transition.

Operator: Next question comes from the line of Owen Lau from Oppenheimer.

Owen Lau: So for university funding cuts, which is still a hot topic, I saw that 75% of your 2025 subscriptions have already been renewed in July, which is good. But could you please give us more color on your conversation with your clients about the current situation so far and the outlook for renewal in the second half and going into 2026.

Matitiahu Shem Tov: I'll start and then Jonathan may continue. So we are looking good on A&G despite of all the concerns that we collectively have. So 93% of the thing of A&G revenue is now recurring. We have 96% renewal rate. As you mentioned, 75% of the book is already in- house. We don't have anything out of the ordinaries with our customers, but let's just remind ourselves a few things. One, our A&G products are central and mission-critical to the organization. I cannot imagine a decent university today without Web of Science and some of the surrounding problem.

Any university will need to have an Alma-type solutions, so we're in a pretty good shape on the Web of Science and the ERP Alma things. With regards to the content, as I mentioned in my discussion, we were forward looking, taking away the discretionary onetime expenditure, and this served us very, very well these days, and we see the uptake of customers who were initially complaining about taking away the onetime purchases are now buying more and more of our subscription businesses, the PQ ebook, the PQ Digital Collection, which actually serves them very, very well in this in this kind of economic climate.

So we are pretty confident that going ahead, we will continue to see a good and decent renewal rates and uptake of the different A&G offering. Thank you.

Operator: Your next question comes from the line of Ashish Sabadra.

William Qi: This is Will Qi on for Ashish Sabadra. Congrats on the quarter. Last quarter you guys initiated a new sales incentive plan with a refocus on subscription and recurring revenue. It's been great to kind of see that progress with the real tick up. Curious if you could provide any updates on how that sales momentum has been continuing and any outlook from here?

Matitiahu Shem Tov: I think we've taken away a lot of hassle from the sales organization. We are very, very focused these day, subscription, reoccurring renewal price, bringing back new business. So customer -- I've just attended a sales meeting last week in London, and people are very excited. They are very focused at just two subscription reoccurring as opposed to do subscription, onetime, onetime eBooks, it's just complicated. The focus we're taking -- we took away a lot of complexity out of the organization and focusing the sales organization. We have a great sales organization. We have done some changes which I have spoken about. Very upbeat about going forward for the rest of the year and for next year as well.

So yes.

Operator: [Operator Instructions] Your next question comes from the line of George Tong from Goldman Sachs.

Keen Fai Tong: Your Life Sciences & Healthcare business saw organic revenue growth positively inflect. Can you give a little bit more color around end market dynamics that you're seeing and how conversations with pharma and biotech companies have evolved?

Jonathan M. Collins: Yes. Thanks for the question, George. And to be clear, what we saw in the second quarter is the subscription business within Life Sciences & Healthcare, return to positive organic ACV growth, which is a really good leading indicator for where we would expect subscription revenue for that business to be in the second half of the year. To your point, just a little color on the market. We primarily serve R&D and then the commercialization efforts of our life sciences customers. On the R&D side, that market continues to be stable. Spending on our types of solutions has been solid. We attribute the improvement largely to the investments that we have made, primarily in the Cortellis suite of products.

So over the course of the last 6 to 12 months, we've made some really nice strides. Matti touched on a couple of those new capabilities that have gone into the products. We've embedded AI, made investments in the workflow capabilities of those solutions, and we've seen nice usage and nice retention improvements on those products, and we attribute that to the improvement that we've seen in this area. The commercialization part of that market continues to be relatively soft, and that's reflected in the results of our commercialization business. But certainly, stable in R&D. That's where we're really starting to see the traction based on the investments that we've made. So thanks for the question, George.

Operator: Your final question comes from the line of Shlomo Rosenbaum from Stifel.

Adam Parrington: This is Adam on for Shlomo. Why are disposals taking longer than expected? Is this a customer service focus, shift towards trying to sell some of the assets or something else?

Matitiahu Shem Tov: It's pretty straightforward. I mean there's 1 out of the 3 disposals. One is taking longer because we simply had some interaction with our customers and they ask us to extend because it took them longer than we expected to get settled with alternative offering. So we just extended by 6 months and it reflects on the selling that specifically on the onetime e-Books, they ask for more time to get organized, and that's the reason. Nothing behind this.

Mark J. Donohue: Thank you very much. That concludes our call for today. If you have any follow-up questions, you can reach out to Investor Relations. Thank you very much.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.