Group 1: Collaboration and Expansion - Certara has announced a new collaboration with Merck to expand the use of the Certara Pinnacle 21 software platform, which now includes a metadata repository and data standards workflow management [1][3] - This agreement builds upon an existing technology collaboration aimed at aiding Merck in regulatory submissions [1] Group 2: Data Management Challenges - The complexity of reducing the time from data collection to validated, analysis-ready datasets has increased, with Phase III clinical trials now averaging 3.6 million datapoints, a threefold increase over the last decade [2] - The Certara Pinnacle 21 platform is designed to address the data standardization challenges associated with modern digital trials at scale [2] Group 3: Company Overview - Certara accelerates medicine development using biosimulation software, technology, and services, serving over 2,400 biopharmaceutical companies, academic institutions, and regulatory agencies across 66 countries [4]

Core Viewpoint - The healthcare sector is highlighted as a critical area in the stock market, driven by the need for innovative therapies and medical technologies to address an aging population and rising chronic diseases. There are ten under-the-radar healthcare stocks identified as potential investment opportunities. Group 1: Company Highlights - **Certara**: Positioned to benefit from AI-driven transformations in medicine, providing bio-simulation software that accelerates drug development, with over 90% of novel drugs approved by the FDA since 2014 utilizing its technology [3][4]. - **Beam Therapeutics**: A clinical-stage biotech focusing on precision gene editing therapies for genetic diseases, with its lead candidate in phase 1/2 trials for sickle cell disease, showing promise for long-term growth [5][6]. - **Inspire Medical Systems**: Develops implantable devices for obstructive sleep apnea, reporting a 23% year-over-year revenue increase to $201 million, indicating strong market demand [8]. - **Insulet**: Specializes in tubeless insulin pump technology, targeting a revenue growth of 19% to 22% by 2025, with significant expansion opportunities in international markets [9]. - **Krystal Biotech**: Focuses on rare skin diseases, with its gene therapy expected to generate approximately $400 million in revenue this year, reinforcing its market position [10]. - **LifeMD**: Operates a telehealth platform with a 49% year-over-year revenue increase, driven by a partnership with Novo Nordisk, indicating potential for further growth [11]. - **Option Care Health**: Leading provider of home infusion services, positioned to benefit from the shift towards personalized healthcare [12]. - **Tempus AI**: Utilizes AI for precision medicine, projecting over 80% revenue growth this year to about $1.3 billion, highlighting its expansive data ecosystem [13]. - **TransMedics Group**: Innovates in organ transplantation with its FDA-approved Organ Care System, projecting a 30% revenue growth this year [14][15]. - **Veeva Systems**: Offers cloud-based software for life sciences, serving over 1,000 customers and positioned to capitalize on the industry's digital transformation [16].

Certara's Business and Market Position - Certara is a leader in biosimulation, using AI-enabled platforms, data, and scientific expertise to transform drug development and accelerate new medicines to patients[16, 76] - The company serves over 2,400 customers across 70 countries, including 30 of the top 30 biopharma companies[16] - Over 90% of novel drugs approved by the US FDA since 2014 were supported by Certara solutions[16] - The in silico drug development total addressable market (TAM) is $4.1 billion, representing 1.5% of the total R&D industry spend[27] Financial Performance and Growth - Certara's adjusted EBITDA margin in FY 2024 was 32%[17] - Software growth in FY 2024 was 18%[17] - The company's revenue mix is shifting towards software, with software accounting for 42% of revenue in 2024 (including pro-forma Chemaxon revenue of $22.9 million), a 1300 basis point shift since 2021[69, 70] - Certara is investing in its software business to drive sustainable growth, with continued R&D investment to support software innovation and AI integration[71, 74] Biosimulation and its Impact - Biosimulation can save approximately 10 months and $5 million per program[21] - Over 120 novel drugs and 325 label claims were approved by global regulators using Certara technology in lieu of clinical studies[17] - A 3% increase in process efficiency through biosimulation could potentially save approximately $300 million per drug[14]

Summary of Certara (CERT) FY Conference Call - June 04, 2025 Company Overview - **Company**: Certara (CERT) - **Industry**: Pharmaceutical Drug Development - **Focus**: Model-informed drug development and biosimulation to improve drug development efficiency and success rates Key Points and Arguments 1. **Drug Development Challenges**: Nearly 90% of new medicines entering clinical trials fail, with development costs ranging from $2 to $3 billion, primarily due to unsuccessful trials [3][4] 2. **Impact of Improvements**: A mere 3% improvement in drug development success rates could save approximately $300 million per approved drug [5] 3. **Biosimulation Platform**: Certara's biosimulation platform allows for modeling disease and drug interactions, helping clients save time and costs while enhancing scientific understanding [6] 4. **Client Base**: Certara serves around 2,400 customers, including all major pharmaceutical companies, with over 90% of FDA-approved drugs in the last decade utilizing their technology [7] 5. **Financial Performance**: The company operates with an EBITDA margin in the low 30s and is profitable, with ongoing investments in software growth [8] 6. **Market Potential**: Certara estimates a total addressable market (TAM) of approximately $4 billion for biosimulation services, with significant growth opportunities [16] 7. **Regulatory Support**: The FDA has increasingly recognized and approved the use of biosimulation in drug development, with a rise in guidance documents over the years [15] 8. **Shift from Animal Testing**: Recent FDA announcements to phase out animal testing, particularly for monoclonal antibodies, present a favorable environment for Certara's biosimulation models [17][19] 9. **Product Suite**: Certara's offerings include: - **SimShip Simulator**: Models drug kinetics across diverse human populations [22] - **Phoenix**: An analytics tool for fitting clinical trial data to models [28] - **Pinnacle 21**: A data standardization tool used by the FDA for clinical trial submissions [30] - **ChemAxon**: A chemical informatics platform acquired to enhance drug discovery processes [31] 10. **AI Integration**: Certara is incorporating AI into its biosimulation products, enhancing usability and productivity, with AI-related revenue already in the millions [32][33] 11. **Acquisition Strategy**: The company has made strategic acquisitions to bolster its capabilities, including Pinnacle 21, Applied Biomath, and ChemAxon [35] 12. **Growth Strategy**: Certara is focusing on increasing its software revenue, which has a high barrier to entry, while reviewing its services segment for potential restructuring [40][41] Additional Important Insights - **Clinical Trial Efficiency**: Certara's technology has enabled clients to avoid numerous costly clinical trials, demonstrating significant cost savings [26] - **Market Trends**: The increasing adoption of biosimulation in the pharmaceutical industry is reflected in the exponential growth of related publications over the past 25 years [14] - **Regulatory Landscape**: The FDA's evolving stance on biosimulation and data standardization is crucial for the future of drug development and Certara's business model [15][30] This summary encapsulates the critical insights from the conference call, highlighting Certara's role in transforming drug development through innovative technologies and strategic growth initiatives.

Summary of Certara (CERT) 2025 Conference Call Company Overview - Certara is a software and services company specializing in biosimulation and model-informed drug development, with approximately 45% of its business derived from software and the remaining from services [3][4] Key Financial Performance - The company performed in line with expectations in Q1, with software aided by the acquisition of Chemaxon in Q4 of the previous year [3][4] - The services business also met expectations, showing mid-single-digit growth, supported by a return to growth in regulatory services [3][4] Industry Dynamics - The FDA's recent announcement to reduce animal testing requirements positions Certara favorably, as it aligns with their existing products and services [5][6] - The directive is expected to drive incremental revenue, particularly in their SIMSIP and QSP product areas [6][22] Customer Engagement - Certara maintains a strong relationship with the FDA, which is a significant user of their software, and they continue to engage in constructive dialogue [8][9] - The company aims to deepen penetration within large pharmaceutical companies, focusing on expanding their footprint into the preclinical stage of drug development [10][11] Challenges and Opportunities - Tier three customers (biotechs) are facing a challenging funding environment, which could impact growth despite strong Q1 performance [13][14] - Certara is investing in R&D and enhancing AI capabilities to improve their software offerings, including the recent launch of Co Author for regulatory writing [16][19] Product Development - The Non-Animal Navigator was launched in response to the FDA's directive, aimed at helping customers transition away from animal testing [21][23] - The integration of Chemaxon is expected to expand Certara's capabilities into the discovery phase of drug development, enhancing their overall service offerings [27][28] Market Outlook - The company anticipates continued challenges in the end market environment, particularly with tier one customers, but remains optimistic about growth opportunities stemming from the FDA directive [52][53] - Certara's capital allocation strategy includes a focus on M&A to enhance their software capabilities, with a goal to increase the software revenue mix from 45% to 50% by year-end [48][49] Conclusion - Certara is well-positioned to capitalize on regulatory changes and expand its market presence through strategic investments and product development, despite facing headwinds in the biotech funding environment [52][53]

Financial Performance - Q1 2025 - Revenue reached $106 million, a 10% increase year-over-year on a constant currency basis[22, 26] - Net income was $4.7 million[22] - Adjusted EBITDA was $34.8 million, representing a 20% increase compared to the prior year period[22, 39] - Diluted EPS stood at $0.03, while adjusted diluted EPS reached $0.14[22] Bookings and Retention - Q1 Reported Net Bookings totaled $118.2 million[29] - Trailing twelve months (TTM) Reported Net Bookings reached $457.7 million[29] - The book-to-bill ratio was 1.16x[32] - The software net retention rate (NRR) was 102.4%[35] Growth Drivers - Organic software revenue grew by 4%, with Chemaxon contributing approximately 1410 basis points[40] - Organic services revenue grew by 3%, with Chemaxon contributing approximately 50 basis points[41] - Organic total revenue grew by 4%, with Chemaxon contributing approximately 610 basis points[42] - Organic software bookings grew by 9%, with Chemaxon contributing approximately 1340 basis points[40] - Organic services bookings grew by 6%, with Chemaxon contributing approximately 60 basis points[41] - Organic total bookings grew by 7%, with Chemaxon contributing approximately 460 basis points[42] 2025 Outlook - The company reiterated its full-year 2025 revenue guidance of $415-$425 million, representing an 8-10% growth[48] - Adjusted EBITDA margin is expected to be 30-32%[48] - Adjusted diluted EPS is projected to be $0.42-$0.46[48] - Chemaxon revenue is expected to be $23-$25 million[51]

Core Insights - Certara, Inc. reported quarterly earnings of $0.14 per share, exceeding the Zacks Consensus Estimate of $0.13 per share, and up from $0.10 per share a year ago, representing an earnings surprise of 7.69% [1] - The company posted revenues of $106 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.01%, and an increase from $96.65 million year-over-year [2] - Certara shares have increased approximately 22% since the beginning of the year, contrasting with a -3.3% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.11 on revenues of $103.7 million, and for the current fiscal year, it is $0.45 on revenues of $421.17 million [7] - The estimate revisions trend for Certara is mixed, leading to a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical - Biomedical and Genetics industry, to which Certara belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $106 million, representing a 10% year-over-year growth [19] - Total bookings for the first quarter were $118.2 million, which is a 12% increase from the prior year [19] - Adjusted EBITDA for Q1 2025 was $34.8 million, up from $29.1 million in Q1 2024, with an adjusted EBITDA margin of 33% [24][25] - Net income for Q1 2025 was $4.7 million, compared to a net loss of $4.7 million in Q1 2024 [25][26] Business Line Data and Key Metrics Changes - Software revenue was $46.4 million in Q1 2025, an 18% increase year-over-year, driven by biosimulation software and Pinnacle 21 [20] - Services revenue was $59.6 million in Q1 2025, up 4% compared to the prior year [22] - Software bookings were $40.8 million, a 23% increase from the prior year, including $4.9 million from Chemaxon [21] - Regulatory services showed strong performance with double-digit growth in bookings year-over-year [22] Market Data and Key Metrics Changes - The current market has headwinds such as IRA price controls and a challenging capital raising environment for biotechs, but also tailwinds from FDA announcements regarding animal testing [8][9] - There is significant inbound interest from customers regarding the non-animal navigator product, indicating a broad market engagement [48] Company Strategy and Development Direction - The company is focusing on integrating AI into software solutions, expanding biosimulation model development, and enhancing drug development processes [9][10] - Certara aims to capitalize on the FDA's plan to phase out animal testing, which is expected to drive demand for their modeling and simulation tools [11][14] - The company is actively pursuing M&A opportunities and organic investments to drive long-term growth [16][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting commercial goals despite a muted end market environment [12][17] - The FDA's recent announcements are seen as long-term tailwinds for the adoption of modeling and simulation tools [11][14] - The company anticipates continued growth in revenue and adjusted EBITDA margins, with guidance for total revenue in the range of $415 million to $425 million for 2025 [27][28] Other Important Information - The company announced a $100 million share repurchase authorization, with $25 million already repurchased [26][27] - New leadership was welcomed in the services group, indicating a focus on enhancing capabilities [15] Q&A Session Summary Question: What common themes are seen in the inbound interest for the non-animal navigator? - Management noted that companies are eager to understand FDA expectations and the potential for reduced animal usage in drug development [33] Question: What is the expected net retention ratio (NRR) for Certara? - The current NRR is 102%, which is lower than historical averages, but expected to improve as software revenue increases [34][36] Question: What is the scope of commercial engagement regarding the non-animal navigator? - Customers are inquiring about what can be replaced today and the potential for future applications [40] Question: How are potential pharma tariffs impacting customer behavior? - Management indicated that while there is slowness in decision-making, Certara is insulated from direct tariff impacts [49] Question: What is the key to moving pharma off its current practices? - The FDA's clear signals and potential discouragement of animal model usage are crucial for industry adoption [55] Question: How does the FDA's recent announcement compare to previous regulatory changes? - The current FDA announcements have generated more industry interest compared to the past, where the FDA was less proactive [66] Question: What is the timeline for the financial impact of the non-animal navigator product? - It is too early to determine specific timelines for financial impact, but interest is building [70] Question: How is the company leveraging AI in its products? - The company has launched AI products that enhance regulatory reporting and attract customer interest [72][74]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $106 million, representing a 10% year-over-year growth [19] - Total bookings for the first quarter were $118.2 million, an increase of 12% from the prior year [19] - Adjusted EBITDA for Q1 2025 was $34.8 million, up from $29.1 million in Q1 2024, with an adjusted EBITDA margin of 33% [23][24] - Net income for Q1 2025 was $4.7 million, compared to a net loss of $4.7 million in Q1 2024 [25] Business Line Data and Key Metrics Changes - Software revenue was $46.4 million, an 18% increase year-over-year, driven by biosimulation software and Pinnacle 21 [20] - Services revenue was $59.6 million, up 4% year-over-year, with strong performance in regulatory services [22] - Software bookings were $40.8 million, a 23% increase from the prior year, including $4.9 million from Chemaxon [21] Market Data and Key Metrics Changes - Chemaxon contributed $5.9 million in revenue and $4.9 million in bookings during the quarter [7] - The company experienced stable demand across biosimulation services, with growth in Tiers two and three offsetting softness in Tier one [22] Company Strategy and Development Direction - The company is focusing on integrating AI into software solutions, expanding biosimulation model development, and enhancing solutions for earlier stages of drug development [8] - Certara aims to capitalize on the FDA's announcement to phase out animal testing, which is expected to drive demand for modeling and simulation tools [10][17] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing headwinds from IRA price controls and a challenging capital raising environment for biotechs, but also highlighted new tailwinds from regulatory changes and increased AI spending [7][8] - The company is optimistic about meeting commercial goals and sees strong underlying demand from customers [11] Other Important Information - The Board authorized a $100 million share repurchase program, with approximately $25 million repurchased to date [26] - The company is actively reviewing its regulatory business and has received interest from external parties [17] Q&A Session Summary Question: Interest in Non-Animal Navigator - The company has received significant interest from various tiers of customers regarding the Non-Animal Navigator, with inquiries focused on FDA expectations and technology capabilities [30][31] Question: Net Retention Ratio (NRR) - The NRR for the quarter was 102%, lower than historical averages, attributed to timing in organic software revenue achievement [33][34] Question: Commercial Engagement Scope - Customers are interested in understanding what can be replaced with non-animal models and the potential for QSP modeling [38][39] Question: Impact of FDA Announcement - The FDA's recent announcements are expected to positively influence growth rates, but it is too early to quantify the impact [42][43] Question: Regulatory Services Performance - Regulatory services have shown strong performance due to a fully built-out commercial team and easier year-over-year comparisons [62] Question: Certara Cloud Update - The take rate on Certara Cloud is strong, with customers accessing a broader product portfolio during license renewals [87][88] Question: Preclinical Applications Penetration - The company has not disclosed specific revenue proportions from preclinical versus clinical applications but is expanding its footprint in preclinical offerings [78] Question: Future Software Additions - The company is considering additional software investments to enhance the Non-Animal Navigator product but has not made specific announcements yet [98]

PART I – FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2025 financial statements reflect a significant turnaround with net income, increased operating cash flow, and improved stockholders' equity [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets slightly decreased, liabilities reduced, and stockholders' equity increased to $1.08 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $300,175 | $310,852 | | Goodwill | $764,338 | $757,038 | | Intangible assets, net | $475,405 | $485,214 | | **Total Assets** | **$1,561,011** | **$1,575,104** | | **Total Current Liabilities** | $108,079 | $146,088 | | Long-term debt, net | $291,798 | $292,425 | | **Total Liabilities** | **$476,732** | **$516,448** | | **Total Stockholders' Equity** | **$1,084,279** | **$1,058,656** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Q1 2025 revenues increased 9.7% to $106.0 million, resulting in $7.6 million income from operations and $4.7 million net income Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | **$106,004** | **$96,654** | | Cost of revenues | $41,521 | $39,255 | | Total operating expenses | $56,860 | $58,686 | | **Income (loss) from operations** | **$7,623** | **($1,287)** | | **Net income (loss)** | **$4,743** | **($4,683)** | | Diluted EPS | $0.03 | ($0.03) | [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased to $1.084 billion, driven by net income and positive foreign currency translation adjustments - Total stockholders' equity grew from **$1,058.7 million** at Dec 31, 2024, to **$1,084.3 million** at March 31, 2025[26](index=26&type=chunk) - Key drivers for the equity increase in Q1 2025 were net income of **$4.7 million** and a positive foreign currency translation adjustment of **$8.7 million**[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly increased to $17.4 million in Q1 2025, while investing and financing cash outflows also rose Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$17,352** | **$4,296** | | Net cash used in investing activities | ($5,774) | ($3,578) | | Net cash used in financing activities | ($13,996) | ($10,347) | | **Net decrease in cash and cash equivalents** | **($97)** | **($10,175)** | | Cash and cash equivalents at end of period | $179,086 | $224,776 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the Chemaxon acquisition, revenue obligations, debt structure, and a $100 million share repurchase program - The company acquired Chemaxon on October 1, 2024, for **$96.4 million**; in Q1 2025, a **$2.9 million** adjustment was made to goodwill and deferred taxes related to the purchase price allocation[83](index=83&type=chunk)[84](index=84&type=chunk) - As of March 31, 2025, total unsatisfied performance obligations were **$139.2 million**, with **82.8% ($115.3 million)** expected to be recognized as revenue over the next 12 months[72](index=72&type=chunk) - On April 14, 2025, the Board of Directors approved a **$100 million** share repurchase program for the company's common stock[130](index=130&type=chunk) Revenue by Geographic Area (in thousands) | Region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Americas | $71,953 | $69,165 | | EMEA | $25,790 | $20,843 | | Asia Pacific | $8,261 | $6,646 | | **Total** | **$106,004** | **$96,654** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 10% revenue growth to strong software and services performance, with Adjusted EBITDA increasing and strong liquidity [Executive Overview](index=33&type=section&id=Executive%20Overview) Certara is a global leader in biosimulation and Model-Informed Drug Development, integrating AI to enhance predictive models for life sciences - Certara is a global leader in biosimulation and Model-Informed Drug Development (MIDD), aiming to improve drug development productivity and reduce costs[135](index=135&type=chunk) - The company is incorporating AI and machine learning to automate biosimulation and aid in drafting regulatory documents[140](index=140&type=chunk) - Customers leveraging Certara's solutions have received **90% or more** of all new drug approvals by the FDA since 2014[142](index=142&type=chunk) [Key Factors Affecting Our Performance](index=34&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Performance is driven by customer retention and bookings, influenced by growth investments, regulatory environment, competition, and a strategic review of regulatory services Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Bookings (in millions) | $118.2 | $105.8 | | Net Retention Rates | 102.4% | 114.1% | - The company plans to continue investing in scientific talent, sales and marketing, R&D, and complementary businesses to support growth[148](index=148&type=chunk) - In 2024, the company began a strategic review of its regulatory services business, which could significantly impact operations[151](index=151&type=chunk) [Non-GAAP Measures](index=36&type=section&id=Non-GAAP%20Measures) Certara uses non-GAAP metrics, reporting Q1 2025 Adjusted EBITDA of $34.8 million, Adjusted Net Income of $22.2 million, and Adjusted Diluted EPS of $0.14 Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) | $4,743 | ($4,683) | | Adjustments... | ... | ... | | **Adjusted EBITDA** | **$34,843** | **$29,143** | Reconciliation of Net Income (Loss) to Adjusted Net Income (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) | $4,743 | ($4,683) | | Adjustments... | ... | ... | | **Adjusted net income** | **$22,247** | **$16,548** | Reconciliation of Diluted EPS to Adjusted Diluted EPS | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Diluted earnings per share | $0.03 | ($0.03) | | Adjustments... | ... | ... | | **Adjusted diluted earnings per share** | **$0.14** | **$0.10** | [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Q1 2025 total revenues increased 10% to $106.0 million, driven by software and services growth, leading to a net income of $4.7 million Revenue Breakdown (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Software | $46,369 | $39,307 | $7,062 | 18% | | Services | $59,635 | $57,347 | $2,288 | 4% | | **Total revenues** | **$106,004** | **$96,654** | **$9,350** | **10%** | - The overall revenue growth of **$9.4 million** was driven by a **$5.9 million** increase from business acquisitions, strong demand from existing customers, and new customer acquisition[176](index=176&type=chunk) - General and Administrative expenses decreased by **$3.3 million (14%)**, primarily due to a **$3.1 million** decrease related to remeasurement changes in the fair value of contingent consideration[183](index=183&type=chunk) - The company shifted from a net loss of **$4.7 million** in Q1 2024 to a net income of **$4.7 million** in Q1 2025, an increase of **$9.4 million**[189](index=189&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Certara maintains strong liquidity with $179.1 million cash, $100 million revolving credit, and increased operating cash flow of $17.4 million - The company generated **$17.4 million** in cash from operations in Q1 2025, a significant increase from **$4.3 million** in Q1 2024[191](index=191&type=chunk)[199](index=199&type=chunk) Liquidity Summary (as of March 31, 2025, in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $179,086 | | Term loan credit facilities | $297,750 | | Gross revolving line of credit | $100,000 | - As of March 31, 2025, the company had **$297.8 million** of outstanding borrowings on its term loan and **$100.0 million** of availability under its revolving credit facility[205](index=205&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risk exposure occurred during Q1 2025 compared to the 2024 Annual Report - There were no material changes to the Company's market risk exposure during the first quarter of 2025[219](index=219&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[221](index=221&type=chunk) - There were no material changes in the company's internal control over financial reporting during the first quarter of 2025[222](index=222&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) No material changes to the company's legal proceedings were reported since the 2024 Annual Report - There have been no material changes to the company's legal proceedings since the 2024 Annual Report[225](index=225&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes from the risk factors previously disclosed in the 2024 Annual Report were reported - There are no material changes from the risk factors previously disclosed in the 2024 Annual Report[226](index=226&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased 1,493 shares at $11.04 each, primarily for employee tax obligations on RSU vesting Equity Security Repurchases (Q1 2025) | Period | Total Shares Purchased | Weighted Average Price Paid per Share | | :--- | :--- | :--- | | 1/1/2025 to 1/31/2025 | — | $ — | | 2/1/2025 to 2/28/2025 | — | $ — | | 3/1/2025 to 3/31/2025 | 1,493 | $11.04 | | **Total** | **1,493** | **$11.04** | - The shares were purchased from employees to cover tax liabilities from the vesting of RSUs, not under a formal repurchase program[228](index=228&type=chunk) [Other Information](index=50&type=section&id=Item%205.%20Other%20Information) On March 5, 2025, the President and CCO adopted a Rule 10b5-1 trading plan for potential sale of up to 51,224 shares - On March 5, 2025, Leif Pedersen, President and Chief Commercial Officer, adopted a Rule 10b5-1 trading plan for the potential sale of up to **51,224 shares** of common stock in September 2025[232](index=232&type=chunk)