Certara (NasdaqGS:CERT) 2025 Conference November 18, 2025 05:30 AM ET Company ParticipantsDave Windley - Managing DirectorWilliam Feehery - CEODave WindleyOkay. Good morning, everybody. Thank you for being here. I'm Dave Windley with Jefferies Healthcare Equity Research in the States. Cover the pharmaceutical services supply chain, and I like to think of it as services, technology, manufacturing, you know, kind of if you sell to pharma R&D, I'm interested. So we have here with us Certara and William Feehery ...

Third Quarter 2025 Financial Results November 6, 2025 Disclaimer Numerical figures in the presentation have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. In addition, unless otherwise indicated, references to the "Company," "Certara," "we," "us," and "our" refer to Certara, Inc. and its consolidated subsidiaries. Trademarks and Service Marks The Certara design logo, "Certara," and ou ...

Core Insights - Certara, Inc. reported a total revenue of $104.6 million for Q3 2025, reflecting a year-over-year growth of 10% [4][8] - The company has raised its profitability targets for 2025 and narrowed its revenue guidance to a range of $415 million to $420 million [3][15] - The CEO emphasized the launch of new software products, particularly CertaraIQ for QSP modeling, aimed at enhancing biosimulation technology in drug development [3] Financial Performance - Total revenue for Q3 2025 was $104.6 million, with software revenue at $43.8 million (22% growth) and services revenue at $60.8 million (3% growth) [4][5][8] - Total bookings reached $96.6 million, a 1% increase year-over-year, with software bookings growing by 17% [6][8] - Net income for Q3 2025 was $1.5 million, a significant improvement from a net loss of $1.4 million in Q3 2024, marking a 211% increase [12][8] Cost and Expenses - Total operating expenses for Q3 2025 were $61.9 million, up from $55.0 million in Q3 2024, primarily due to increased employee-related costs and stock-based compensation [10][8] - The cost of revenues was $39.7 million, an increase from $37.2 million in the same quarter last year [7][8] Adjusted Metrics - Adjusted EBITDA for Q3 2025 was $35.2 million, a 7% increase from $33.1 million in Q3 2024 [11][8] - Adjusted net income for Q3 2025 was $22.2 million, compared to $20.3 million in Q3 2024 [13][8] - Adjusted diluted earnings per share for Q3 2025 was $0.14, slightly up from $0.13 in Q3 2024 [13][8] Guidance and Outlook - The company expects full-year adjusted EBITDA margin to be approximately 32% and adjusted diluted earnings per share in the range of $0.45 to $0.47 [15] - Certara aims to continue investing in R&D and commercial efforts to ensure sustainable long-term growth [3]

Core Insights - Certara, Inc. has published over 200 papers in the past year and has 11 scientists listed among the top 2% most cited researchers globally according to the 2025 Stanford/Elsevier ranking, highlighting its significant impact in pharmaceutical research [1][2][3] Company Achievements - The company has maintained its leadership in pharmacology and pharmacokinetics, with its scientists recognized for their contributions either in the calendar year 2024 or throughout their careers [3] - Amin Rostami-Hodjegan, a key figure at Certara, received the 2025 Lewis B. Sheiner Lecturer Award for his lifetime achievements in pharmacometric research [4] Technological Innovations - The Simcyp Simulator®, co-founded by Rostami-Hodjegan, is utilized by over 11 global regulatory agencies and has supported more than 120 FDA-approved drugs, demonstrating its effectiveness in drug development [4] - The Simcyp Consortium, consisting of 35 leading biopharmaceutical companies, is recognized as a global authority on mechanistic PBPK modeling and simulation [4] Industry Trends - New methodologies like the Simcyp Simulator are crucial as the biopharma industry shifts away from animal testing, a transition supported by the FDA and NIH [5] - Certara has been at the forefront of reducing animal use in pre-clinical research for the past 25 years, aligning with industry trends towards more ethical research practices [5]

Core Viewpoint - Certara, Inc. will release its financial results for Q3 2025 on November 6, 2025, after market close, followed by a conference call to discuss the results [1]. Company Overview - Certara is a global leader in biosimulation, utilizing software, technology, and services to enhance drug discovery and development [3]. - The company serves over 2,400 clients, including biopharmaceutical companies, academic institutions, and regulatory agencies across 70 countries [3]. Event Details - A conference call will be held at 5:00 PM ET on the same day as the financial results release, and investors must register online to participate [1]. - It is recommended that investors register at least one day in advance [1]. - A live and archived webcast of the event will be available on Certara's website [2].

Company Overview - Simulations Plus is celebrating its 30th anniversary, indicating a long-standing presence in the biosimulation market [2] - The company specializes in biosimulation, which supports drug development through the integration of technology, science, mathematics, and various biological disciplines [3] Product and Services - The platform offers a comprehensive range of solutions that cover the entire drug development process, from early-stage discovery to clinical studies and post-approval applications [4] - Biosimulation is utilized to enhance efficiency and accelerate timelines in drug development, including applications in animal testing and clinical trials [4][5] Industry Context - The acceptance of biosimulation has grown over the years, gaining recognition from both scientific communities and drug sponsors [5]

Core Insights - Simulations Plus is celebrating its 30th anniversary, indicating its established presence in the biosimulation market [2] - The company utilizes a combination of technology, science, mathematics, and various disciplines to develop in silico models that enhance drug development efficiency [3] Company Overview - Simulations Plus offers a comprehensive platform that supports various stages of drug development, from early discovery to clinical studies and post-approval applications [4] - The platform includes applications for lead optimization, preclinical translational impact, and modeling that supports bioequivalence waivers [4] Industry Context - Biosimulation has gained acceptance over the years from scientific and drug sponsor perspectives, highlighting its importance in the drug development process [5]

Summary of Simulation Plus Conference Call Company Overview - Simulation Plus is celebrating its 30th anniversary, indicating a long-standing presence in the bio simulation market [2] - The company specializes in software licensing and scientific consulting services to support drug development [4] Industry Insights - Bio simulation combines technology, science, and regulatory support to enhance drug development efficiency [3] - The FDA has shown increasing support for bio simulation, particularly in reducing animal testing requirements [3][22] Core Business and Services - The company provides tools for various stages of drug development, including discovery, preclinical, and clinical phases [5][6] - Key products include: - **Admet Predictor**: Focused on early-stage applications, representing 15% of client support [6][7] - **GastroPlus**: A PBPK modeling tool used extensively in translational medicine and clinical trial design [7][8] - **PKPD Modeling**: Used for profiling drugs and patient stratification, crucial for personalized medicine [8] AI and Drug Development - AI has been integrated into the company's products for decades, enhancing data analysis and candidate identification [9][10] - The use of AI is seen as a revolutionary tool in drug development, improving efficiency and success rates [10][12] - Challenges include ensuring data quality and managing large datasets effectively [11][13] Regulatory Environment - The FDA's roadmap to reduce animal testing presents opportunities for Simulation Plus, as biosimulation can potentially replace some traditional methods [22][23] - The adoption of biosimulation is expected to grow, but the process will take time due to regulatory scrutiny [24][25] Market Challenges - The biopharma and biotech sectors are currently facing a challenging demand environment, with cost constraints and low funding impacting client investments [31][32] - Despite these challenges, there is a strong need for improved ROI in drug development, which bio simulation can address [33][34] Strategic Realignment - The company has undergone a reorganization to create a more functional organization, enhancing collaboration across different scientific domains [35][36] - The integration of products and development of cloud technology aims to accelerate the company's roadmap and improve client offerings [37] Future Opportunities - The company is focused on staying current with advancements in science and regulatory guidance, particularly in oncology and other therapeutic areas [39][41] - There is a long runway for biosimulation value in drug development, with ongoing opportunities for innovation and market solutions [41][42]

Core Insights - Certara, Inc. has launched Pinnacle 21 Enterprise Plus, a solution designed to enhance the efficiency of clinical and statistical programmers in creating and managing data specifications for CDISC SDTM and ADaM datasets, achieving a 50% reduction in time spent on drafting mapping specifications [1][2]. Company Overview - Certara is a global leader in biosimulation, providing software and services that accelerate drug discovery and development, with a client base of over 2,400 biopharmaceutical companies, academic institutions, and regulatory agencies across 70 countries [7]. Product Features - Pinnacle 21 Enterprise Plus offers a unified, collaborative workspace that addresses the limitations of traditional spreadsheet-based methods, such as errors and lack of version control [2]. - The solution is purpose-built for clinical and statistical programmers, allowing most teams to go live in less than a month [4]. - The platform supports compliance with both CDISC and company-specific standards through configurable columns, ensuring maximum flexibility [8]. - It facilitates seamless integration with downstream programming tools like SAS and R via application programming interfaces (APIs) [8]. Strategic Importance - The launch of Pinnacle 21 Enterprise Plus is seen as a significant milestone in Certara's roadmap, aimed at building a future-proof platform for end-to-end data standardization and validation [5]. - The innovations introduced are expected to shorten cycle times and accelerate regulatory submissions of new therapies, benefiting patients [3]. Market Position - Certara's Pinnacle 21 solutions are trusted by over 130 organizations globally, including leading biopharmaceutical companies and regulatory agencies like the US FDA and Japan's PMDA, reinforcing its leadership in clinical data standardization and validation [5].

Financial Data and Key Metrics Changes - The biosimulation market has historically grown at a 15% CAGR but has fallen below that over the last couple of years, with the company achieving 10% organic growth during this period [15][18] - The company's revenue guidance was adjusted due to project cancellations and delays, impacting the expected growth trajectory [16][18] Business Line Data and Key Metrics Changes - The business is composed of approximately 60% software licensing and 40% consulting services, with the software side remaining relatively unaffected by recent market challenges [17][20] - Renewal rates for software licenses remain consistent at over 90%, with fluctuations primarily due to client bankruptcies and consolidations [20][21] Market Data and Key Metrics Changes - The drug development industry is facing cost constraints and reduced funding, leading to tighter budgets among clients [14][15] - The FDA's recent announcements regarding the reduction of animal testing requirements are seen as a potential tailwind for the biosimulation market, which could enhance growth opportunities [23][24] Company Strategy and Development Direction - The acquisition of Proficiency has expanded the company's total addressable market (TAM) from $4 billion to $8 billion, allowing for increased opportunities in clinical operations [5][6] - The company is focusing on integrating various modeling and simulation techniques to enhance product offerings and cross-selling opportunities [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that the drug development industry does not respond well to surprises, which has led to a slowdown in project approvals and contract negotiations [16][18] - The company anticipates a return to a more steady flow of project requests in fiscal year 2026, with expectations of regaining a growth rate closer to 15% [18][19] Other Important Information - The company is launching a cloud-based platform, Astra Plus, which is expected to enhance functionality and accessibility for clients [33][34] - The integration of AI technology into the company's products is a key focus for future development [31][34] Q&A Session Summary Question: What are the expectations for renewal rates and future fiscal year performance? - Renewal rates are expected to remain stable at over 90%, with the service side impacted by client cancellations but the software side performing well [20][21] Question: How is the FDA's movement away from animal models affecting the company? - The FDA's announcements regarding biosimulation and animal testing are seen as positive developments that could lead to increased adoption of the company's tools [23][24] Question: What is the company's growth formula regarding new and existing clients? - Software revenue typically comes from 80% renewals, 10% upsells, and 10% new clients, with a focus on cross-selling opportunities [29][30]