Financial Performance - Revenue reached $104.6 million[22], reflecting a 12% year-over-year increase[23] - Constant Currency revenue growth was 10%[23] - Net loss was ($2.0 million)[22] - Adjusted EBITDA was $31.9 million[22], a 21% increase compared to the prior year[39] - Adjusted diluted EPS was $0.07[22] Bookings and Retention - Net bookings for the quarter were $112.0 million[29] - Trailing twelve months (TTM) bookings reached $470.8 million[29] - Software Net Retention Rate (NRR) was 107.6%[35] Guidance - The company reiterated its FY 2025 revenue guidance of $415-$425 million[48] - Adjusted EBITDA margin is expected to be 30-32%[48] - Adjusted diluted EPS is projected to be $0.42-$0.46[48]

Core Insights - Certara, Inc. has appointed Christopher Bouton, Ph.D., as Chief Technology Officer to lead the development of a next-generation integrated model-informed drug development platform utilizing generative AI and advancements in biosimulation technology [1][4] Company Overview - Certara is a global leader in model-informed drug development, providing biosimulation software, technology, and services to enhance traditional drug discovery and development processes [5] - The company serves over 2,400 clients, including biopharmaceutical companies, academic institutions, and regulatory agencies across 70 countries [5] Leadership and Innovation - Dr. Bouton, previously the founder and CEO of Vyasa Analytics, has a strong background in AI and drug development, having led the creation of several AI-based products at Certara [2][3] - His leadership is expected to enhance the adoption of AI-powered biosimulation and virtual trials, improving the efficiency of bringing new medicines to market [3][5] Technological Advancements - The integration of biosimulation with generative AI and machine learning is transforming the drug discovery and development landscape, leading to faster timelines, reduced costs, and improved success rates [5]

Certara's Business and Market Position - Certara is a leader in biosimulation, using AI-enabled platforms, data, and scientific expertise to transform drug development and accelerate new medicines to patients[16, 76] - The company serves over 2,400 customers across 70 countries, including 30 of the top 30 biopharma companies[16] - Over 90% of novel drugs approved by the US FDA since 2014 were supported by Certara solutions[16] - The in silico drug development total addressable market (TAM) is $4.1 billion, representing 1.5% of the total R&D industry spend[27] Financial Performance and Growth - Certara's adjusted EBITDA margin in FY 2024 was 32%[17] - Software growth in FY 2024 was 18%[17] - The company's revenue mix is shifting towards software, with software accounting for 42% of revenue in 2024 (including pro-forma Chemaxon revenue of $22.9 million), a 1300 basis point shift since 2021[69, 70] - Certara is investing in its software business to drive sustainable growth, with continued R&D investment to support software innovation and AI integration[71, 74] Biosimulation and its Impact - Biosimulation can save approximately 10 months and $5 million per program[21] - Over 120 novel drugs and 325 label claims were approved by global regulators using Certara technology in lieu of clinical studies[17] - A 3% increase in process efficiency through biosimulation could potentially save approximately $300 million per drug[14]

Summary of Certara (CERT) FY Conference Call - June 04, 2025 Company Overview - **Company**: Certara (CERT) - **Industry**: Pharmaceutical Drug Development - **Focus**: Model-informed drug development and biosimulation to improve drug development efficiency and success rates Key Points and Arguments 1. **Drug Development Challenges**: Nearly 90% of new medicines entering clinical trials fail, with development costs ranging from $2 to $3 billion, primarily due to unsuccessful trials [3][4] 2. **Impact of Improvements**: A mere 3% improvement in drug development success rates could save approximately $300 million per approved drug [5] 3. **Biosimulation Platform**: Certara's biosimulation platform allows for modeling disease and drug interactions, helping clients save time and costs while enhancing scientific understanding [6] 4. **Client Base**: Certara serves around 2,400 customers, including all major pharmaceutical companies, with over 90% of FDA-approved drugs in the last decade utilizing their technology [7] 5. **Financial Performance**: The company operates with an EBITDA margin in the low 30s and is profitable, with ongoing investments in software growth [8] 6. **Market Potential**: Certara estimates a total addressable market (TAM) of approximately $4 billion for biosimulation services, with significant growth opportunities [16] 7. **Regulatory Support**: The FDA has increasingly recognized and approved the use of biosimulation in drug development, with a rise in guidance documents over the years [15] 8. **Shift from Animal Testing**: Recent FDA announcements to phase out animal testing, particularly for monoclonal antibodies, present a favorable environment for Certara's biosimulation models [17][19] 9. **Product Suite**: Certara's offerings include: - **SimShip Simulator**: Models drug kinetics across diverse human populations [22] - **Phoenix**: An analytics tool for fitting clinical trial data to models [28] - **Pinnacle 21**: A data standardization tool used by the FDA for clinical trial submissions [30] - **ChemAxon**: A chemical informatics platform acquired to enhance drug discovery processes [31] 10. **AI Integration**: Certara is incorporating AI into its biosimulation products, enhancing usability and productivity, with AI-related revenue already in the millions [32][33] 11. **Acquisition Strategy**: The company has made strategic acquisitions to bolster its capabilities, including Pinnacle 21, Applied Biomath, and ChemAxon [35] 12. **Growth Strategy**: Certara is focusing on increasing its software revenue, which has a high barrier to entry, while reviewing its services segment for potential restructuring [40][41] Additional Important Insights - **Clinical Trial Efficiency**: Certara's technology has enabled clients to avoid numerous costly clinical trials, demonstrating significant cost savings [26] - **Market Trends**: The increasing adoption of biosimulation in the pharmaceutical industry is reflected in the exponential growth of related publications over the past 25 years [14] - **Regulatory Landscape**: The FDA's evolving stance on biosimulation and data standardization is crucial for the future of drug development and Certara's business model [15][30] This summary encapsulates the critical insights from the conference call, highlighting Certara's role in transforming drug development through innovative technologies and strategic growth initiatives.

Core Insights - Simulations Plus, Inc. has launched DILIsym 11, enhancing its quantitative systems toxicology platform for improved drug-induced liver injury prediction, particularly with pediatric representation and an advanced T-cell model [1][2][3] Group 1: Product Enhancements - DILIsym 11 introduces significant enhancements, including pediatric modeling to assess liver toxicity risk in children, which is a notable advancement in predictive toxicology [3][5] - The new T-cell module offers deeper insights into CD8+ T-cell-mediated liver damage, alongside improved simulations for bile acid-related and cholestatic liver injuries [5][6] - The platform is recognized as a regulatory-grade simulation tool, having been reviewed by the FDA's DILI team, which underscores its clinical relevance [4][6] Group 2: Financial Performance - Simulations Plus reported a 23% year-over-year revenue increase to $22.4 million, driven by demand for its software and services, with contributions from the recently acquired Pro-ficiency business units [7][9] - The company anticipates revenues between $90 million and $93 million for fiscal 2025, reflecting a 28-33% increase from fiscal 2024, with Pro-ficiency expected to add $15-$18 million [9] Group 3: Market Context - Despite the positive performance of Simulations Plus, the broader biopharmaceutical sector faces financial challenges, impacting research and development investments [8] - The company is positioned to gain traction in the market as it continues to innovate in biosimulation and predictive modeling, which is critical for improving drug safety [6][8]

Summary of Certara (CERT) 2025 Conference Call Company Overview - Certara is a software and services company specializing in biosimulation and model-informed drug development, with approximately 45% of its business derived from software and the remaining from services [3][4] Key Financial Performance - The company performed in line with expectations in Q1, with software aided by the acquisition of Chemaxon in Q4 of the previous year [3][4] - The services business also met expectations, showing mid-single-digit growth, supported by a return to growth in regulatory services [3][4] Industry Dynamics - The FDA's recent announcement to reduce animal testing requirements positions Certara favorably, as it aligns with their existing products and services [5][6] - The directive is expected to drive incremental revenue, particularly in their SIMSIP and QSP product areas [6][22] Customer Engagement - Certara maintains a strong relationship with the FDA, which is a significant user of their software, and they continue to engage in constructive dialogue [8][9] - The company aims to deepen penetration within large pharmaceutical companies, focusing on expanding their footprint into the preclinical stage of drug development [10][11] Challenges and Opportunities - Tier three customers (biotechs) are facing a challenging funding environment, which could impact growth despite strong Q1 performance [13][14] - Certara is investing in R&D and enhancing AI capabilities to improve their software offerings, including the recent launch of Co Author for regulatory writing [16][19] Product Development - The Non-Animal Navigator was launched in response to the FDA's directive, aimed at helping customers transition away from animal testing [21][23] - The integration of Chemaxon is expected to expand Certara's capabilities into the discovery phase of drug development, enhancing their overall service offerings [27][28] Market Outlook - The company anticipates continued challenges in the end market environment, particularly with tier one customers, but remains optimistic about growth opportunities stemming from the FDA directive [52][53] - Certara's capital allocation strategy includes a focus on M&A to enhance their software capabilities, with a goal to increase the software revenue mix from 45% to 50% by year-end [48][49] Conclusion - Certara is well-positioned to capitalize on regulatory changes and expand its market presence through strategic investments and product development, despite facing headwinds in the biotech funding environment [52][53]

Financial Performance - Q1 2025 - Revenue reached $106 million, a 10% increase year-over-year on a constant currency basis[22, 26] - Net income was $4.7 million[22] - Adjusted EBITDA was $34.8 million, representing a 20% increase compared to the prior year period[22, 39] - Diluted EPS stood at $0.03, while adjusted diluted EPS reached $0.14[22] Bookings and Retention - Q1 Reported Net Bookings totaled $118.2 million[29] - Trailing twelve months (TTM) Reported Net Bookings reached $457.7 million[29] - The book-to-bill ratio was 1.16x[32] - The software net retention rate (NRR) was 102.4%[35] Growth Drivers - Organic software revenue grew by 4%, with Chemaxon contributing approximately 1410 basis points[40] - Organic services revenue grew by 3%, with Chemaxon contributing approximately 50 basis points[41] - Organic total revenue grew by 4%, with Chemaxon contributing approximately 610 basis points[42] - Organic software bookings grew by 9%, with Chemaxon contributing approximately 1340 basis points[40] - Organic services bookings grew by 6%, with Chemaxon contributing approximately 60 basis points[41] - Organic total bookings grew by 7%, with Chemaxon contributing approximately 460 basis points[42] 2025 Outlook - The company reiterated its full-year 2025 revenue guidance of $415-$425 million, representing an 8-10% growth[48] - Adjusted EBITDA margin is expected to be 30-32%[48] - Adjusted diluted EPS is projected to be $0.42-$0.46[48] - Chemaxon revenue is expected to be $23-$25 million[51]

Financial Data and Key Metrics Changes - Certara reported total revenue of $385.1 million for the full year 2024, representing a 9% increase compared to 2023 [8][30] - Fourth quarter revenue was $100.4 million, reflecting a 14% year-over-year growth [30] - Adjusted EBITDA for the fourth quarter was $33.5 million, up from $29.6 million in the same quarter of 2023, with an adjusted EBITDA margin of 33% [41][42] Business Line Data and Key Metrics Changes - Software revenue for the fourth quarter was $42.3 million, a 26% increase year-over-year, driven by biosimulation software and Pinnacle 21 [32] - Services revenue in the fourth quarter was $58.1 million, up 7% compared to the prior year [36] - Regulatory writing revenue for 2024 was $54.7 million, down from $60.5 million in 2023, indicating a decline in this segment [36] Market Data and Key Metrics Changes - Fourth quarter bookings totaled $144.5 million, a 22% increase from the previous year, with software bookings growing by 38% [9][31] - The software net retention rate was 106% for the fourth quarter and 108% for the full year, consistent with long-term growth profiles [35] Company Strategy and Development Direction - Certara is focused on enabling Model-Informed Drug Development (MIDD) in the biopharmaceutical industry, emphasizing the integration of generative artificial intelligence into existing products [10][14] - The company plans to invest further in software development, particularly for the discovery and lead optimization phases, leveraging Chemaxon's capabilities [21][22] - Certara aims to build an integrated software platform to enhance its competitive positioning in the market [20][22] Management's Comments on Operating Environment and Future Outlook - Management noted that customer sentiment remains cautious due to funding constraints and geopolitical uncertainties, with expectations for 2025 to mirror 2024 in terms of clinical R&D spending [12][13] - The company anticipates total revenue for 2025 to be in the range of $415 million to $425 million, representing growth of 8% to 10% compared to 2024 [46] Other Important Information - Certara expanded its customer base to over 2,400 life sciences companies by the end of 2024, with 431 customers having an annual contract value exceeding $100,000 [18][19] - The company completed the acquisition of Chemaxon in October 2024, which is expected to enhance its capabilities in the discovery biosimulation market [17][26] Q&A Session Summary Question: What drives the 2025 revenue guidance? - Management indicated that the guidance is influenced by spending patterns among Tier 1 and Tier 3 customers, with potential improvements in end markets pushing towards the higher end of the range [55] Question: What are the incremental R&D investments planned for 2025? - The company plans to invest in R&D to maintain momentum in its software portfolio and integrate Chemaxon, which is expected to impact margins [57][58] Question: How is the CoAuthor product performing? - CoAuthor has multiple paying customers and is expected to significantly reduce the time required to create regulatory documents, with revenue expectations in the millions for the year [110][112] Question: What is the outlook for regulatory services? - Regulatory services returned to growth in the fourth quarter, primarily driven by Tier 1 customers, which is expected to positively impact revenue moving into 2025 [106] Question: How does the company view the competitive landscape for Chemaxon? - Chemaxon operates in a fragmented discovery space with unique tools, and the company believes it has a strong competitive position in this area [87]