Group 1: Earnings Performance - Certara, Inc. reported quarterly earnings of $0.07 per share, missing the Zacks Consensus Estimate of $0.10 per share, representing an earnings surprise of -30.00% [1] - The company posted revenues of $104.57 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.98% and showing an increase from $93.31 million year-over-year [2] - Over the last four quarters, Certara has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Certara shares have lost about 7.4% since the beginning of the year, while the S&P 500 has gained 7.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.10 on revenues of $103.29 million, and for the current fiscal year, it is $0.45 on revenues of $420.92 million [7] Group 3: Industry Context - The Medical - Biomedical and Genetics industry, to which Certara belongs, is currently in the bottom 42% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Certara's stock performance [5] - The unfavorable trend in estimate revisions prior to the earnings release has resulted in a Zacks Rank 4 (Sell) for Certara, suggesting expected underperformance in the near future [6]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $104.6 million, representing a 12% year-over-year growth on a reported basis and 10% on a constant currency basis [22] - Total bookings in Q2 were $112 million, an increase of 13% from the prior year period [22] - Adjusted EBITDA for Q2 was $31.9 million, up from $26.3 million in Q2 2024, with an adjusted EBITDA margin of 31% [26][27] - Net loss for Q2 2025 was $2 million, compared to a net loss of $12.6 million in Q2 2024 [27][28] Business Line Data and Key Metrics Changes - Software revenue was $46.7 million in Q2, a 22% increase over the prior year, with organic growth of 9% [23][24] - Services revenue was $57.9 million, up 5% year-over-year, with strong performance in QSP and SIMP businesses [25] - Software bookings were $46.6 million, an 11% increase from the prior year, while services bookings were $65.4 million, a 15% increase [24][25] Market Data and Key Metrics Changes - Large pharma companies are cautious due to geopolitical and macroeconomic factors, affecting decision-making timelines [8] - The biotech funding environment has slightly improved but remains below historical trends [8] - Approximately 50% of new QSP projects this year have been for monoclonal antibody therapies, indicating a shift towards non-animal testing methodologies [15] Company Strategy and Development Direction - The company is focusing on expanding its AI-enabled MIDD platform, with plans to launch Certara IQ in Q4 2025 [12][13] - Continued investment in R&D is a priority, with a focus on integrating AI with existing modeling technologies [11][12] - The company aims to solidify its leading position in model-informed drug development through strategic acquisitions and product launches [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial outlook for the remainder of the year, supported by solid bookings trends and high visibility into renewal dynamics [20] - The company is optimistic about the growing interest in model-informed drug development, which is expected to drive future growth [20] - Management acknowledged the mixed spending environment but noted persistent customer interest in biosimulation technology [8] Other Important Information - The company received EMA qualification for its SimChip modeling platform, marking a significant regulatory milestone [10][61] - A $100 million share repurchase program was authorized, with $25 million already purchased [29] Q&A Session Summary Question: Is the multibillion dollar addressable market opportunity incremental to the low single digit billion TAM for biosimulation software? - Yes, it is considered an additional opportunity [32] Question: What is the interpretation of the QSP responses in the recent webinar? - QSP is a growing area, and the company expects the ratio of users to increase over time [35][36] Question: Can you provide insights on the demand drivers for software versus services bookings? - Demand for software is driven by R&D infrastructure needs, while services have seen a resurgence due to high demand for QSP services [39][41] Question: What are the dynamics across customer tiers, particularly between tier one and tiers two and three? - Tier one experienced timing-related slowness, but there is confidence in achieving renewals in the second half of the year [42][43] Question: How should customers think about adopting the new AI MIDD platform? - The platform aims to unite various software solutions, enhancing decision-making in drug development [47][49] Question: How does the EMA qualification for SimChip differentiate the product? - It provides prequalification, enhancing consistency and reducing uncertainty in the review process [60][62] Question: What is the expected impact of FDA guidance on animal testing on new customer inquiries? - There has been an uptick in interest, particularly in QSP and CIMSIP, but it is expected to be a long-term conversion [73][74] Question: What are the factors leading to a step down in margins in the second half of the year? - Increased hiring and investments are expected to impact margins, with Q2 margins serving as a good proxy for future performance [87][90]

Financial Performance - Revenue reached $104.6 million[22], reflecting a 12% year-over-year increase[23] - Constant Currency revenue growth was 10%[23] - Net loss was ($2.0 million)[22] - Adjusted EBITDA was $31.9 million[22], a 21% increase compared to the prior year[39] - Adjusted diluted EPS was $0.07[22] Bookings and Retention - Net bookings for the quarter were $112.0 million[29] - Trailing twelve months (TTM) bookings reached $470.8 million[29] - Software Net Retention Rate (NRR) was 107.6%[35] Guidance - The company reiterated its FY 2025 revenue guidance of $415-$425 million[48] - Adjusted EBITDA margin is expected to be 30-32%[48] - Adjusted diluted EPS is projected to be $0.42-$0.46[48]

[PART I – FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The company's H1 2025 financial statements reflect a significant turnaround to net income and increased operating cash flow, despite minor balance sheet adjustments Condensed Consolidated Balance Sheet (Unaudited) | (IN THOUSANDS) | JUNE 30, 2025 | DECEMBER 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $281,393 | $310,852 | | **Total assets** | **$1,543,446** | **$1,575,104** | | **Total current liabilities** | $130,436 | $146,088 | | **Total liabilities** | **$472,867** | **$516,448** | | **Total stockholders' equity** | **$1,070,579** | **$1,058,656** | Condensed Consolidated Statements of Operations (Unaudited) | (IN THOUSANDS) | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | | **Revenues** | $210,574 | $189,967 | | **Income (loss) from operations** | $17,175 | $(10,328) | | **Net income (loss)** | **$2,775** | **$(17,257)** | | **Diluted EPS** | **$0.02** | **$(0.11)** | Condensed Consolidated Statements of Cash Flows (Unaudited) | (IN THOUSANDS) | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $35,194 | $14,110 | | **Net cash used in investing activities** | $(12,735) | $(9,697) | | **Net cash used in financing activities** | $(44,690) | $(14,102) | | **Net decrease in cash and cash equivalents** | **$(16,917)** | **$(10,352)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company delivers biosimulation software products and technology-driven services for drug discovery, research, regulatory submissions, and market access, operating globally in numerous countries including the US, UK, Japan, and China[30](index=30&type=chunk)[31](index=31&type=chunk) - On October 1, 2024, the Company acquired Chemaxon, a cheminformatics company, for an estimated consideration of **$96.4 million**, strengthening its position in the drug discovery biosimulation market, with goodwill from the acquisition not expected to be tax-deductible[83](index=83&type=chunk)[84](index=84&type=chunk) - On June 26, 2024, the Company amended its Credit Agreement, setting the term loan principal at **$300 million** with maturity in June 2031 and extending the **$100 million** revolving credit facility to June 2029[88](index=88&type=chunk) Equity-Based Compensation Expense | (In thousands) | THREE MONTHS ENDED JUNE 30, 2025 | THREE MONTHS ENDED JUNE 30, 2024 | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total** | **$8,245** | **$9,783** | **$15,315** | **$18,856** | - The company operates as a single reportable segment, with the CEO acting as the Chief Operating Decision Maker (CODM)[120](index=120&type=chunk) Revenue by Geographic Area | (In thousands) | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | | **Americas** | $144,948 | $138,784 | | **EMEA** | $49,152 | $38,088 | | **Asia Pacific** | $16,474 | $13,095 | | **Total** | **$210,574** | **$189,967** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports strong H1 2025 revenue growth, driven by software and acquisitions, leading to a net income turnaround and robust operating cash flow [Key Factors Affecting Our Performance](index=35&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Quarterly Bookings and Net Software Retention Rate | (in millions except percentage) | Q2 2025 | Q1 2025 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Bookings** | $112.0 | $118.2 | $98.9 | $105.8 | | **Net Retention Rates** | 107.6% | 102.4% | 108.0% | 114.1% | - The company continues to invest in scientific talent, sales and marketing, R&D, and complementary business acquisitions to drive growth[150](index=150&type=chunk) - Regulatory acceptance of model-informed drug development (MIDD) is critical for demand, and the company is conducting a strategic review of its regulatory services business, which could significantly impact operations[151](index=151&type=chunk)[153](index=153&type=chunk) [Non-GAAP Measures](index=37&type=section&id=Non-GAAP%20Measures) Reconciliation of Net Income (Loss) to Adjusted EBITDA | (in thousands) | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | | **Net income (loss)** | $2,775 | $(17,257) | | **Adjustments** | $63,003 | $72,718 | | **Adjusted EBITDA** | **$66,778** | **$55,461** | Reconciliation of Net Income (Loss) to Adjusted Net Income | (in thousands) | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | | **Net income (loss)** | $2,775 | $(17,257) | | **Adjustments** | $31,031 | $45,198 | | **Adjusted net income** | **$33,806** | **$27,941** | Reconciliation of Diluted EPS to Adjusted Diluted EPS | | SIX MONTHS ENDED JUNE 30, 2025 | SIX MONTHS ENDED JUNE 30, 2024 | | :--- | :--- | :--- | | **Diluted EPS** | $0.02 | $(0.11) | | **Adjustments** | $0.19 | $0.28 | | **Adjusted diluted EPS** | **$0.21** | **$0.17** | [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Revenue Comparison (Q2 2025 vs Q2 2024) | (in thousands) | Q2 2025 | Q2 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | **Software** | $46,695 | $38,207 | $8,488 | 22% | | **Services** | $57,875 | $55,106 | $2,769 | 5% | | **Total revenues** | **$104,570** | **$93,313** | **$11,257** | **12%** | - Q2 2025 General and Administrative expenses decreased by **$10.9 million (39%)** YoY, primarily due to an **$8.5 million** reduction from remeasurement changes in the fair value of contingent consideration[192](index=192&type=chunk) - For Q2 2025, the company reported a net loss of **$2.0 million**, a significant improvement from a net loss of **$12.6 million** in Q2 2024, driven by higher revenue and lower operating expenses[199](index=199&type=chunk) Revenue Comparison (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | **Software** | $93,064 | $77,514 | $15,550 | 20% | | **Services** | $117,510 | $112,453 | $5,057 | 4% | | **Total revenues** | **$210,574** | **$189,967** | **$20,607** | **11%** | - For the six months ended June 30, 2025, the company reported net income of **$2.8 million**, compared to a net loss of **$17.3 million** in the prior year period, with the **$20.0 million** improvement driven by a **$20.6 million** increase in revenue and a **$10.1 million** decrease in operating expenses[212](index=212&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) - The company generated **$35.2 million** in cash from operations in the first six months of 2025, a significant increase from **$14.1 million** in the same period of 2024[214](index=214&type=chunk)[222](index=222&type=chunk) - On April 11, 2025, the Board approved a **$100.0 million** stock repurchase program, and as of June 30, 2025, the company had repurchased **$25.0 million** worth of common stock, with **$75.0 million** remaining available[217](index=217&type=chunk) Cash Flow Summary (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $35,194 | $14,110 | | **Net cash used in investing activities** | $(12,735) | $(9,697) | | **Net cash used in financing activities** | $(44,690) | $(14,102) | | **Net (decrease) in cash** | **$(16,917)** | **$(10,352)** | - As of June 30, 2025, the company had **$297.0 million** of outstanding borrowings on its term loan and **$100.0 million** of availability under its revolving credit facility[229](index=229&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes to its market risk exposure during the six months ended June 30, 2025, as compared to the disclosures in its 2024 Annual Report - There were no material changes to the Company's market risk exposure during the six months ended June 30, 2025[243](index=243&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[245](index=245&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[246](index=246&type=chunk) [PART II – OTHER INFORMATION](index=56&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) There have been no material changes to the company's legal proceedings as disclosed in the 2024 Annual Report - No material changes to legal proceedings have occurred since the 2024 Annual Report[248](index=248&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) There are no material changes from the risk factors previously disclosed in the company's 2024 Annual Report - No material changes to risk factors have occurred since the 2024 Annual Report[249](index=249&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased a significant number of shares under its **$100 million** stock repurchase program, with substantial funds remaining Equity Security Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | **Total Q2 2025** | **2,290,209** | **$13.06** | **1,793,279** | **$75 Million** | - The Board of Directors approved a **$100 million** stock repurchase program on April 11, 2025, and during Q2 2025, **1,793,279 shares** were repurchased at an average price of **$13.92 per share**[254](index=254&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) On August 5, 2025, the Board approved amended bylaws to incorporate Universal Proxy Rule requirements and align with recent Delaware law developments - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the three months ended June 30, 2025[256](index=256&type=chunk) - On August 5, 2025, the Board of Directors approved amended and restated bylaws to incorporate requirements for the Universal Proxy Rule and align with recent Delaware law changes[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)

[Certara Second Quarter 2025 Earnings Release](index=1&type=section&id=Certara%20Reports%20Second%20Quarter%202025%20Financial%20Results) [Second Quarter 2025 Highlights & Management Commentary](index=1&type=section&id=Second%20Quarter%20Highlights) Management highlights strong Q2 commercial execution and sustained demand for model-informed drug development solutions - The CEO noted significant customer interest in expanding model-informed drug development, anticipating new product enhancements to drive long-term growth[5](index=5&type=chunk) - The CFO attributed strong Q2 performance to robust commercial execution in a mixed operating environment, affirming full-year financial plan confidence[5](index=5&type=chunk) [Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Results) Certara's Q2 2025 revenue grew **12%** to **$104.6 million**, with net loss significantly narrowed and Adjusted EBITDA up **21%** Q2 2025 vs. Q2 2024 Financial Summary | Metric | Q2 2025 ($M) | Q2 2024 ($M) | Growth (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | $104.6 | $93.3 | 12% | | Software Revenue | $46.7 | $38.2 | 22% | | Service Revenue | $57.9 | $55.1 | 5% | | **Net Loss** | $(2.0) | $(12.6) | 84% (Improvement) | | **Adjusted EBITDA** | $31.9 | $26.3 | 21% | | **Diluted EPS** | $(0.01) | $(0.08) | N/A | - On a constant currency basis, total revenue grew by **10%** year-over-year, with software revenue growing **20%** and services revenue **4%**[6](index=6&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) - Total bookings increased **13%** year-over-year to **$112.0 million**, with software bookings up **11%** and services bookings up **15%**, driven by biosimulation demand[8](index=8&type=chunk)[9](index=9&type=chunk) - Operating expenses decreased by **$8.2 million**, primarily due to an **$8.5 million** decrease in contingent consideration fair value change and a **$2.6 million** reduction in prior-year refinancing transaction costs[11](index=11&type=chunk) - Adjusted diluted earnings per share was **$0.07**, flat compared to the second quarter of 2024[14](index=14&type=chunk) [Full Year 2025 Financial Outlook](index=4&type=section&id=2025%20Financial%20Outlook) Certara reiterates full-year 2025 guidance, projecting total revenue of **$415-425 million** and an Adjusted EBITDA margin of **30-32%** Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | **Revenue** | $415 million - $425 million | | **Adjusted EBITDA Margin** | 30% - 32% | | **Adjusted Diluted EPS** | $0.42 - $0.46 | | **Fully Diluted Shares** | 162 million - 164 million | - The company has not reconciled forward-looking non-GAAP guidance to GAAP measures due to the unreasonable effort required to predict variability in certain costs[16](index=16&type=chunk) [Consolidated Financial Statements (Unaudited)](index=10&type=section&id=CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Consolidated Statements of Operations](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, revenue was **$104.6 million** with a net loss of **$2.0 million**, a significant improvement from prior year Statement of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $104,570 | $93,313 | $210,574 | $189,967 | | **Income (Loss) from Operations** | $9,552 | $(9,041) | $17,175 | $(10,328) | | **Net Income (Loss)** | $(1,968) | $(12,574) | $2,775 | $(17,257) | | **Diluted EPS** | $(0.01) | $(0.08) | $0.02 | $(0.11) | [Consolidated Balance Sheets](index=11&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, Certara's total assets were **$1.54 billion**, with liabilities decreasing to **$472.9 million** and equity increasing Balance Sheet Summary (in thousands) | Item | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $162,266 | $179,183 | | **Total Assets** | $1,543,446 | $1,575,104 | | **Total Liabilities** | $472,867 | $516,448 | | **Total Stockholders' Equity** | $1,070,579 | $1,058,656 | [Consolidated Statements of Cash Flows](index=13&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For H1 2025, operating cash flow was **$35.2 million**, with financing activities using **$44.7 million**, resulting in a **$16.9 million** net cash decrease Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 ($ thousands) | 2024 ($ thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $35,194 | $14,110 | | **Net cash used in investing activities** | $(12,735) | $(9,697) | | **Net cash used in financing activities** | $(44,690) | $(14,102) | | **Net decrease in cash** | $(16,917) | $(10,352) | - Key uses of cash in financing activities for H1 2025 included a **$25.0 million** common stock repurchase and **$13.2 million** in contingent consideration payments[39](index=39&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=8&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) [Explanation of Non-GAAP Measures](index=8&type=section&id=A%20Note%20on%20Non-GAAP%20Financial%20Measures) Certara uses non-GAAP measures like Adjusted EBITDA and Constant Currency Revenue to provide a consistent view of operational performance - Non-GAAP measures are utilized by management for budgeting, compensation decisions, and peer comparison[26](index=26&type=chunk) - Adjusted EBITDA excludes items such as interest, taxes, depreciation, amortization, equity-based compensation, and acquisition-related expenses[30](index=30&type=chunk) - Constant Currency (CC) revenue assesses business performance by excluding foreign currency exchange rate fluctuations[28](index=28&type=chunk)[29](index=29&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=15&type=section&id=Reconciliation%20of%20Net%20income%20%28loss%29%20to%20Adjusted%20EBITDA) Certara's Q2 2025 Adjusted EBITDA was **$31.9 million**, reconciled from a **$2.0 million** net loss with key adjustments for non-cash items Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Description | Three Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | | :--- | :--- | :--- | | **Net income (loss)** | **$(1,968)** | **$2,775** | | Depreciation and amortization | $18,818 | $37,432 | | Equity-based compensation expense | $8,245 | $15,315 | | Change in fair value of contingent consideration | $(5,722) | $(5,901) | | Provision for income taxes | $8,219 | $8,018 | | Interest expense | $4,802 | $9,608 | | **Adjusted EBITDA** | **$31,935** | **$66,778** | [Reconciliation of Net Income to Adjusted Net Income](index=17&type=section&id=Reconciliation%20of%20net%20income%20%28loss%29%20to%20adjusted%20net%20income) Adjusted net income for Q2 2025 was **$11.6 million**, reconciled from a GAAP net loss of **$2.0 million** by adjusting for non-cash items Reconciliation of Net Income (Loss) to Adjusted Net Income (in thousands) | Description | Three Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | | :--- | :--- | :--- | | **Net income (loss)** | **$(1,968)** | **$2,775** | | Amortization of acquisition-related intangible assets | $14,018 | $28,070 | | Equity-based compensation expense | $8,245 | $15,315 | | Change in fair value of contingent consideration | $(5,722) | $(5,901) | | Income tax expense impact of adjustments | $(3,799) | $(8,869) | | **Adjusted net income** | **$11,558** | **$33,806** | [Reconciliation of Diluted EPS to Adjusted Diluted EPS](index=18&type=section&id=Reconciliation%20of%20diluted%20earnings%20per%20share%20to%20adjusted%20diluted%20earnings%20per%20share) Adjusted diluted EPS for Q2 2025 was **$0.07**, flat year-over-year, reconciled from GAAP diluted loss per share by adjusting for non-cash items Reconciliation of Diluted EPS to Adjusted Diluted EPS | Description | Three Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2025 ($) | | :--- | :--- | :--- | | **Diluted earnings per share** | **$(0.01)** | **$0.02** | | Amortization of acquisition-related intangible assets | $0.08 | $0.17 | | Equity-based compensation expense | $0.05 | $0.09 | | Change in fair value of contingent consideration | $(0.04) | $(0.04) | | Income tax expense impact of adjustments | $(0.02) | $(0.05) | | **Adjusted Diluted Earnings Per Share** | **$0.07** | **$0.21** | [Reconciliation of Revenue to Constant Currency Revenue](index=19&type=section&id=Reconciliation%20of%20revenues%20to%20the%20revenues%20adjusted%20for%20constant%20currency) Q2 2025 reported revenue growth was **12%**, with constant currency growth at **10%**, indicating a positive foreign currency impact Q2 2025 Revenue Growth: Actual vs. Constant Currency (CC) | Revenue Stream | Actual Growth (%) | CC Growth (%) | | :--- | :--- | :--- | | Software | 22% | 20% | | Services | 5% | 4% | | **Total Revenue** | **12%** | **10%** |

Core Insights - Certara, Inc. reported strong financial results for Q2 2025, with total revenue of $104.6 million, reflecting a year-over-year growth of 12% on a reported basis and 10% on a constant currency basis [4][8] - The company continues to see significant interest in model-informed drug development, with expectations for sustainable long-term growth driven by software enhancements and new product introductions [3][4] - Certara's adjusted EBITDA for Q2 2025 was $31.9 million, an increase of 21% compared to the same period in 2024, indicating improved operational efficiency [9][11] Financial Performance - Total revenue for Q2 2025 was $104.6 million, up from $93.3 million in Q2 2024, marking a 12% increase [4][8] - Software revenue reached $46.7 million, a 22% increase year-over-year, while services revenue was $57.9 million, growing by 5% [5][8] - Total bookings for Q2 2025 were $112.0 million, representing a 13% increase from the previous year, with software bookings at $46.6 million (11% growth) and services bookings at $65.4 million (15% growth) [6][7] Cost and Expenses - Total cost of revenues for Q2 2025 was $40.7 million, slightly up from $39.8 million in Q2 2024 [7][8] - Total operating expenses decreased to $54.3 million from $62.5 million in the same quarter last year, primarily due to a reduction in contingent consideration and transaction costs [8][10] - The net loss for Q2 2025 was $2.0 million, significantly improved from a net loss of $12.6 million in Q2 2024 [10][11] Outlook - Certara expects full-year 2025 revenue to be in the range of $415 million to $425 million, with an adjusted EBITDA margin of 30-32% and adjusted diluted earnings per share projected between $0.42 and $0.46 [15][13] - The company is confident in its full-year plan, supported by growing commercial momentum and sustained demand for its solutions [3][4]

Core Insights - Certara, Inc. has appointed Christopher Bouton, Ph.D., as Chief Technology Officer to lead the development of a next-generation integrated model-informed drug development platform utilizing generative AI and advancements in biosimulation technology [1][4] Company Overview - Certara is a global leader in model-informed drug development, providing biosimulation software, technology, and services to enhance traditional drug discovery and development processes [5] - The company serves over 2,400 clients, including biopharmaceutical companies, academic institutions, and regulatory agencies across 70 countries [5] Leadership and Innovation - Dr. Bouton, previously the founder and CEO of Vyasa Analytics, has a strong background in AI and drug development, having led the creation of several AI-based products at Certara [2][3] - His leadership is expected to enhance the adoption of AI-powered biosimulation and virtual trials, improving the efficiency of bringing new medicines to market [3][5] Technological Advancements - The integration of biosimulation with generative AI and machine learning is transforming the drug discovery and development landscape, leading to faster timelines, reduced costs, and improved success rates [5]

Core Insights - Certara, Inc. is positioned to potentially continue its earnings-beat streak in the upcoming report, having surpassed earnings estimates by an average of 11.54% in the last two quarters [1][2]. Earnings Performance - In the last reported quarter, Certara achieved earnings of $0.14 per share, exceeding the Zacks Consensus Estimate of $0.13 per share, resulting in a surprise of 7.69% [2]. - In the previous quarter, the company was expected to post earnings of $0.13 per share but delivered $0.15 per share, leading to a surprise of 15.38% [2]. Earnings Estimates and Predictions - Recent estimates for Certara have been trending upward, with a positive Earnings ESP of +2.44%, indicating increased analyst optimism regarding the company's earnings prospects [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data showing that stocks with this combination beat estimates nearly 70% of the time [6][8]. Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions, which may be more accurate [7]. - A negative Earnings ESP can reduce the predictive power of the metric, but it does not necessarily indicate an earnings miss [9]. Importance of Earnings ESP - Many companies beat consensus EPS estimates, but this is not the sole reason for share price gains; thus, checking a company's Earnings ESP before quarterly releases is crucial for investment decisions [10].

Group 1 - The high cost of drug development, estimated at $1 billion from preclinical research to commercialization, remains a significant burden in the life sciences industry [1] - Model-Informed Drug Development (MIDD) is identified as a potential solution to reduce drug development costs [1] - The company ELAM1 provides financial professionals and investors with the necessary scientific and clinical expertise to navigate the complexities of the healthcare sector [1] Group 2 - ELAM1 aims to bridge the gap between advanced scientific research and financial strategy, helping clients uncover hidden value and assess risks more accurately [1]

Core Viewpoint - Certara, Inc. will release its financial results for Q2 2025 on August 6, 2025, after market close, followed by a conference call at 5:00 PM ET to discuss the results [1]. Company Overview - Certara is a global leader in model-informed drug development, utilizing biosimulation software, technology, and services to enhance traditional drug discovery and development [3]. - The company serves over 2,400 clients, including biopharmaceutical companies, academic institutions, and regulatory agencies across 70 countries [3]. Investor Information - Investors interested in the conference call must register online, with a recommendation to do so at least one day in advance [1]. - A live and archived webcast of the conference call will be available on the "Investors" section of Certara's website [2]. Contact Information - Investor Relations contact is David Deuchler from Gilmartin Group [4]. - Media contact is Alyssa Horowitz [4].