Certara(US:CERT)2025-11-06 21:31Financial Performance - Revenues for Q3 2025 reached $104.6 million, a 10.5% increase from $94.8 million in Q3 2024[24] - Net income attributable to common stockholders for Q3 2025 was $1.5 million, compared to a net loss of $1.4 million in Q3 2024[24] - The company reported a comprehensive loss of $1.5 million for Q3 2025, compared to a comprehensive income of $1.9 million in Q3 2024[24] - Basic net income per share for Q3 2025 was $0.01, compared to a loss of $0.01 per share in Q3 2024[24] - Net income for the nine months ended September 30, 2025, was $4,300,000, a significant improvement from a net loss of $18,628,000 in the same period of 2024[29] - Total revenue for the nine months ended September 30, 2025, was $315,190,000, an increase from $284,787,000 for the same period in 2024[80] - Adjusted net income for the nine months ended September 30, 2025, was $56.05 million, up from $48.19 million in 2024[166] - Net income increased by $2.9 million to $1.5 million for the three months ended September 30, 2025, compared to a net loss of $1.4 million for the same period in 2024[202]. Assets and Liabilities - Total assets as of September 30, 2025, were $1.54 billion, a decrease from $1.58 billion as of December 31, 2024[21] - Total liabilities decreased to $471.0 million as of September 30, 2025, from $516.4 million as of December 31, 2024[21] - Cash and cash equivalents as of September 30, 2025, were $172.7 million, down from $179.2 million as of December 31, 2024[21] - The company’s total stockholders' equity as of September 30, 2025, was $1.06 billion, slightly up from $1.06 billion as of December 31, 2024[21] - Long-term debt as of September 30, 2025, was $293,541,000, down from $295,425,000 as of December 31, 2024[95] - Total liabilities were reported at $24,494,000, including contingent liabilities of $21,900,000 and interest rate swap liabilities of $2,594,000[50] Revenue Breakdown - Software revenues increased by $7.9 million, or 22%, to $43.8 million for the three months ended September 30, 2025, primarily driven by a business acquisition[191] - Services revenues increased by $1.9 million, or 3%, to $60.8 million for the three months ended September 30, 2025, attributed to growth in technology-enabled services[192] - Software revenues rose by $23.5 million, or 21%, to $136.9 million for the nine months ended September 30, 2025, primarily due to a business acquisition and strong demand from existing customers[204] - Services revenues increased by $6.9 million, or 4%, to $178.3 million for the nine months ended September 30, 2025, attributed to growth in technology-enabled services[205] Expenses - Operating expenses for Q3 2025 were $61.9 million, up from $55.0 million in Q3 2024, reflecting a 12.5% increase[24] - Sales and marketing expenses increased by $1.7 million, or 15%, to $13.0 million for the three months ended September 30, 2025, mainly due to headcount growth from acquisitions[194] - Research and development expenses increased by $2.0 million, or 24%, to $10.3 million for the three months ended September 30, 2025, driven by employee-related costs associated with software development investments[195] - General and administrative expenses increased by $2.6 million, or 12%, to $24.6 million for the three months ended September 30, 2025, primarily due to increased stock-based compensation costs[196] - Interest expense decreased by $0.2 million, or 3%, to $5.0 million for the three months ended September 30, 2025, primarily due to a decline in market interest rates[199] Shareholder Information - Common shares issued for employee share-based compensation totaled 1,459,757 shares, resulting in an increase of $15,000 in common stock[26] - The total number of common shares outstanding increased from 163,856,290 as of June 30, 2025, to 163,873,911 as of September 30, 2025[25] - The company repurchased 1,230,398 shares, resulting in a treasury stock amount of $(13,810,000) as of September 30, 2025[25] Strategic Initiatives - The company plans to continue investing in scientific talent, sales and marketing, and research and development to support growth[152] - AI and machine learning technologies are being integrated into the company's software and services to enhance drug development processes[144] - The company is undergoing a strategic review of its regulatory services business, which may lead to significant operational changes[157] Market and Economic Conditions - Competition in the biosimulation market is high, with key factors including model quality, regulatory acceptance, and integration capabilities[158] - Macroeconomic conditions, including inflation and interest rates, pose challenges to the business environment[159] Tax and Regulatory Environment - The global effective tax rate (ETR) for the three months ended September 30, 2025, was 671%, significantly higher than 17% for the same period in 2024[130] - The effective income tax rate for the nine months ended September 30, 2025, was 59%, compared to 4% for the same period in 2024, with tax expense increasing by $7.0 million[214] - The company is evaluating the impact of the One Big Beautiful Bill Act (OBBBA) on its operations following significant changes to U.S. tax law[131] Cash Flow and Capital Management - Net cash provided by operating activities increased to $67,508,000, compared to $31,097,000 in the prior year, reflecting a growth of approximately 116%[29] - Cash flow from operations for the nine months ended September 30, 2025, was $67.5 million, up from $31.1 million for the same period in 2024[217] - Cash balances included $71.7 million held outside of the United States as of September 30, 2025, compared to $45.8 million as of December 31, 2024[219]