Certara Details 2026 Outlook at Leerink Conference as Software Bookings Slow, AI Push Builds

Core Insights - Certara's software bookings have shown a deceleration, with a 6% year-over-year decline in Q4, impacting the company's revenue growth outlook for 2026, which is projected to be flat to 4% [2][6][4] - The company reported that organic software revenue growth for 2025 was 7%, aligning with internal expectations, while EBITDA margin reached 32%, at the high end of guidance [3][4] - Certara's growth initiatives focus on biosimulation, particularly in quantitative systems pharmacology (QSP), Simcyp, and PBPK services, alongside AI and cloud offerings [5][11][12] Software Bookings and Revenue Outlook - The decline in software bookings is attributed to customer reprioritization and lagging study counts from slower clinical trial starts, which are expected to pressure future bookings [6][4] - Certara's organic trailing-twelve-month software bookings growth rate was approximately 1% for the previous year, indicating a need for improvement in this area [2][6] Services Performance - Certara's services segment has shown low-single-digit growth, averaging around 3% over the last three years, with a strong performance in December suggesting market stability [8][6] - The company noted that services bookings can be volatile, with significant fluctuations observed between quarters [8] Customer Segments and Market Dynamics - Tier-three customers, including biotechs, performed well, benefiting from an easing funding environment, while tier-one customers are expected to show stability despite past volatility [9] - The company anticipates that the reprioritization and headcount reductions affecting tier-one customers are largely behind them, although they may still impact near-term revenue [9] Growth Areas and AI Integration - Demand for model-informed drug development (MIDD) and biosimulation remains strong, with QSP and AI-enabled offerings being key growth areas [11][12] - Certara's acquisition of Vyasa in 2022 has allowed the integration of AI technology into its products, enhancing capabilities and customer value [12][13] Operational Priorities and Capital Allocation - Under new leadership, Certara aims to align its software and services offerings more closely, adopting a customer-centric approach [14] - The company plans to maintain an EBITDA margin of 30% to 32% while investing in R&D, particularly in MIDD and biosimulation, and has identified $10 million in cost avoidance for 2026 [15][16] Industry Trends and Opportunities - The industry is gradually shifting towards alternatives to animal model studies, presenting a significant opportunity for Certara in biosimulation, although adoption may take time due to risk aversion in pharma [17]