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)

Revenue Projections - Preliminary revenue for Q1 2025 is expected to be $106.0 million, a 10% increase from $96.7 million in Q1 2024[5] - Software revenue for Q1 2025 is projected at $46.4 million, reflecting an 18% growth compared to $39.3 million in Q1 2024[5] - Services revenue for Q1 2025 is anticipated to be $59.6 million, representing a 4% increase from $57.3 million in Q1 2024[5] - Full-year 2025 revenue guidance is reiterated to be between $415 million and $425 million[12] Bookings and Growth - Bookings for Q1 2025 are expected to reach $118.0 million, a 12% growth from $105.8 million in Q1 2024[5] - Adjusted EBITDA for Q1 2025 is projected to be in the range of $33-$35 million, indicating a growth of 13-20% from $29.1 million in Q1 2024[5] - Full-year adjusted EBITDA margin is expected to be in the range of 30-32%[12] Earnings and Shareholder Returns - Full-year adjusted diluted earnings per share is anticipated to be between $0.42 and $0.46[12] - The company has authorized a stock repurchase program of up to $100 million[2] Shareholder Agreements - Arsenal Capital Partners has agreed to a one-year lock-up on shares acquired in a December 2022 transaction[3]

Core Insights - Certara, Inc. reported strong financial performance in Q1 2025, with total revenue of $106.0 million, reflecting a year-over-year growth of 10% [4][8] - The company is well-positioned to capitalize on the growing adoption of biosimulation in drug development, supported by recent FDA initiatives to reduce animal testing [3][4] - Certara reiterated its full-year 2025 financial guidance, expecting revenue between $415 million and $425 million, with an adjusted EBITDA margin of 30-32% [15][20] Financial Performance - Total revenue for Q1 2025 was $106.0 million, up from $96.7 million in Q1 2024, marking a 10% increase [4][8] - Software revenue reached $46.4 million, an 18% increase year-over-year, while services revenue was $59.6 million, growing 4% [5][8] - Total bookings for Q1 2025 were $118.2 million, a 12% increase from the previous year, with software bookings growing by 23% [6][13] Profitability Metrics - Net income for Q1 2025 was $4.7 million, a significant turnaround from a net loss of $4.7 million in Q1 2024 [11][12] - Adjusted EBITDA for the quarter was $34.8 million, representing a 20% increase from $29.1 million in Q1 2024 [10][12] - Adjusted diluted earnings per share were $0.14, compared to $0.10 in the same quarter last year [12][13] Cost and Expense Management - Total operating expenses decreased to $56.9 million in Q1 2025 from $58.7 million in Q1 2024, primarily due to a reduction in contingent consideration expenses [9][11] - The cost of revenue for the quarter was $41.5 million, up from $39.3 million in the previous year, driven by increased software amortization [7][8] Market Position and Outlook - Certara's leadership in biosimulation technology positions it favorably in the biopharma industry, with over 2,400 clients globally [18] - The company continues to focus on enhancing its software and service offerings to improve drug development efficiency [3][4] - Certara's financial outlook for 2025 remains optimistic, with expectations for continued growth in both revenue and profitability metrics [15][20]

Core Viewpoint - Certara, Inc. is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended March 2025, with earnings expected at $0.13 per share, reflecting a 30% increase, and revenues projected at $106 million, a 9.7% rise from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is scheduled for May 5, and the stock may experience upward movement if the reported figures exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised 2.63% higher in the last 30 days, indicating a positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [10][11]. - Certara's Zacks Rank is currently 3 (Hold), which does not strongly indicate a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Certara exceeded the expected earnings of $0.13 per share by delivering $0.15, resulting in a surprise of +15.38% [12]. - Over the past four quarters, Certara has beaten consensus EPS estimates two times [13]. Industry Context - Exact Sciences, a peer in the Zacks Medical - Biomedical and Genetics industry, is expected to report earnings of $0.37 per share, reflecting a 26% year-over-year increase, with revenues projected at $689.35 million, an 8.1% increase [17]. - Exact Sciences has an Earnings ESP of 61.75% and a Zacks Rank of 3, indicating a higher likelihood of surpassing the consensus EPS estimate [18].

Core Insights - The market has experienced volatility due to unexpected tariff policy changes, leading to uneven recovery among firms, with some stocks emerging as high-momentum plays [1][2] Group 1: Software-Based Drug Development - Certara Inc. has seen a 30% year-to-date increase in stock price, driven by strong outlook and a $100 million share buyback program [3][6] - Certara's revenue guidance for 2025 is projected between $415 million and $425 million, with adjusted earnings per share expected to be between 42 cents and 46 cents [4] - Schrödinger Inc. has also experienced a 25% year-to-date increase, attributed to FDA policy shifts favoring human-relevant testing and a legal settlement [9][10] Group 2: Modular Furniture Industry - The Lovesac Co. reported a 23% increase in stock price following an earnings beat and the launch of new product platforms, with EPS exceeding expectations by 33 cents [12][14] - Lovesac's modular design allows for increased supply chain flexibility, enabling the company to adapt to geopolitical changes [14] - Analysts project a 57.86% upside for Lovesac's stock, with a current price of $20.06 and a 12-month forecast of $31.67 [13][14]