Certara(CERT) - 2025 Q2 - Quarterly Results

Certara Second Quarter 2025 Earnings Release Second Quarter 2025 Highlights & Management Commentary 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] - The CFO attributed strong Q2 performance to robust commercial execution in a mixed operating environment, affirming full-year financial plan confidence[5] Second Quarter 2025 Financial Performance 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][7][8] - 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][9] - 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] - Adjusted diluted earnings per share was $0.07, flat compared to the second quarter of 2024[14] Full Year 2025 Financial Outlook 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] Consolidated Financial Statements (Unaudited) Consolidated Statements of Operations 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 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 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] Non-GAAP Financial Measures & Reconciliations Explanation of Non-GAAP Measures 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] - Adjusted EBITDA excludes items such as interest, taxes, depreciation, amortization, equity-based compensation, and acquisition-related expenses[30] - Constant Currency (CC) revenue assesses business performance by excluding foreign currency exchange rate fluctuations[28][29] Reconciliation of Net Income to Adjusted EBITDA 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 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 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 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% |