Certara(CERT) - 2024 Q4 - Annual Report

Financial Performance - Certara Inc. reported total bookings of $445.3 million for the full year 2024, an increase from$402.3 million in 2023[302]. - The company achieved total revenues of $385,148,000 in 2024, representing a 9$357,738,000[321]. - Adjusted EBITDA for 2024 was $122,046,000, slightly down from$123,108,000 in 2023 and up from $120,174,000 in 2022[315]. - Adjusted net income for 2024 was$72,871,000, an increase from $69,021,000 in 2023, but a decrease from$73,390,000 in 2022[316]. - The company reported a net loss of $12,051,000 for the year ended December 31, 2024, an improvement of$43.3 million compared to a net loss of $55.4 million in 2023[366]. - Basic net income (loss) per share for 2024 was$(0.08), compared to $(0.35) in 2023, showing improvement[457]. - Operating cash flow for 2024 was$80,466 thousand, slightly down from $82,755 thousand in 2023, and significantly lower than$92,543 thousand in 2022[463]. - Cash and cash equivalents decreased to $179,183,000 in 2024 from$234,951,000 in 2023, a decline of 23.6%[455]. Customer Retention and Growth - The net retention rate for 2024 was 108.8%, compared to 108.4% in 2023, indicating strong customer retention and expansion[303]. - Certara's solutions have contributed to 90% or more of all new drug approvals by the FDA since 2014, showcasing the effectiveness of its biosimulation technology[296]. - The acceptance of model-informed drug development by regulatory authorities is critical for increasing demand for Certara's products and services[305]. Investments and Acquisitions - Certara plans to continue investing in scientific talent, sales and marketing, and research and development to support growth and innovation[304]. - The company has successfully acquired 21 companies since 2013, with significant acquisitions in 2024 including DIDB for $8.3 million[330][335]. - The company completed the acquisition of Chemaxon, Kft. for$96.4 million, resulting in $50.2 million of intangible assets being recorded[440]. Revenue Breakdown - Revenues for the year ended December 31, 2024, increased by$30.8 million, or 9%, to $385.1 million compared to 2023, driven by technology-enabled services and software product offerings[352]. - Software revenue increased by$24.0 million, or 18%, to $155.7 million for the year ended December 31, 2024, primarily due to strong demand from existing customers and business acquisitions[353]. - Services revenue increased by$6.8 million, or 3%, to $229.5 million for the year ended December 31, 2024, attributed to growth from business acquisitions and technology-enabled services[354]. Operating Expenses - Certara's operating expenses are expected to increase over time as the company expands its solutions and workforce[304]. - Sales and marketing expenses rose by$15.4 million, or 48%, to $47.4 million for the year ended December 31, 2024, driven by headcount growth and increased commission expenses[357]. - Research and development expenses increased by$2.9 million, or 9%, to $37.1 million for the year ended December 31, 2024, primarily due to headcount growth associated with software development investments[358]. - General and administrative expenses decreased by$1.2 million, or 1%, to $94.2 million for the year ended December 31, 2024, mainly due to a decrease in contingent consideration fair value[359]. Tax and Deferred Assets - The company expects income tax expense to increase over time as it continues to grow more profitable[329]. - The company has federal and state net operating losses (NOLs) of approximately$6.2 million and $4.9 million, respectively, which are available to reduce future taxable income[386]. - A valuation allowance of$24 million was recorded as of December 31, 2024, indicating that it is more likely than not that the company will not realize the benefits of certain deferred tax assets[387]. Cash Flow and Financing - Net cash provided by operating activities was $80.5 million for the year ended December 31, 2024, a decrease from$82.8 million in 2023[370]. - Net cash used in investing activities increased to approximately $112.4 million for the year ended December 31, 2024, primarily due to higher cash payments for business acquisitions[377]. - As of December 31, 2024, the company had$298.5 million of outstanding borrowings on the term loan and $100.0 million available under the revolving credit facility[380]. International Operations - 28% of the company's revenue for the year ended December 31, 2024, was derived from international operations[415]. - The company operates in multiple countries, including the United States, Canada, and several European nations, enhancing its global market presence[465].