Core Insights - Certara reported strong revenue and profitability for 2025, with organic software revenue growth of 7% and an adjusted EBITDA margin of 32%, exceeding expectations despite mixed bookings trends [4][5][3] Financial Performance - Full-year organic software revenue growth was 7%, aligning with the company's guidance of 6% to 8% [3][5] - Adjusted EBITDA margin finished at 32%, at the high end of the 30% to 32% target [5][4] - Trailing 12-month organic software bookings growth was 1%, with a year-over-year decline in software bookings in Q4 impacting this figure [6][5] Bookings Trends - Fourth-quarter bookings were characterized as mixed, with a notable rebound in December where services bookings increased by 17% [2][4] - Software bookings softened in Q4, leading to a 2026 outlook of "flat to up 4%" [5][6] - Specific customer dynamics, particularly among Tier 1 customers, affected software bookings, including reductions in Phoenix seat licenses due to customer reprioritization [6][7] Product Launches and Strategy - Three new software offerings were launched in Q4: Certara IQ for QSP, Phoenix Cloud, and a Pinnacle enhancement [5][9] - The transition to Phoenix Cloud changes revenue recognition from upfront to ratable, potentially impacting revenue growth in 2026 and 2027 [9][5] - Certara views AI as a competitive advantage, integrating AI across its platforms and products [10][11] Regulatory Services and Portfolio Focus - The regulatory services business is under evaluation by new CEO Jon Resnick, with considerations for keeping or selling the segment [12] - Certara's core focus remains on model-informed drug development (MIDD) and biosimulation, aiming to unify point solutions into broader offerings [13][14] Future Outlook - The company expects the first quarter of 2026 to be at the lower end of its guidance range, with opportunities to accelerate software revenue growth throughout the year [8][5] - Certara aims to maintain spending discipline while identifying cost avoidance measures to support its financial targets [15]

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]

Summary of Certara FY Conference Call (March 10, 2026) Company Overview - **Company**: Certara (NasdaqGS:CERT) - **Industry**: Life Science Tools and Diagnostics Key Financial Performance - **Revenue**: Organic software revenue for FY 2025 was 7%, within the guidance range of 6%-8% [5] - **EBITDA Margin**: Achieved 32%, exceeding the guidance of 30%-32% [5] - **Bookings**: Mixed performance in Q4; December saw a strong 17% increase in services bookings [6][7] - **Software Bookings**: Trailing twelve-month organic software bookings were only 1%, indicating a decline year-on-year in Q4 [7][8] Market Dynamics - **Customer Behavior**: Notable reduction in seat licenses from tier one customers due to headcount reductions in Big Pharma [14][15] - **Study Counts**: Decreased clinical trial starts 18-24 months prior affected software bookings, particularly for the Pinnacle 21 platform [15][16] - **Seasonality**: Q4 showed strong discretionary spending, but services bookings remain lumpy historically [6][7] 2026 Guidance and Expectations - **Revenue Growth**: Expected to be flat to up 4% for 2026, with Q1 anticipated to be on the lower end of the guidance range [8][20] - **New Product Launches**: Three new software products launched in Q4, including Certara IQ for QSP and Phoenix Cloud, expected to drive growth [22][30] Product Development and AI Integration - **Certara IQ**: AI-enabled software for quantitative systems pharmacology (QSP), aimed at enhancing internal project throughput and customer sales [28][30] - **Phoenix Cloud**: Cloud version of the Phoenix platform, designed to transition customers from desktop to cloud, with positive initial reception [32][35] - **AI as Competitive Advantage**: Integration of AI technology from Vyasa is seen as a unique opportunity to enhance software offerings and maintain customer reliance [42][44] Regulatory Services and Strategic Evaluation - **Regulatory Writing Business**: High profit margins (20%-30%) but facing revenue declines; under evaluation for potential sale or retention [58][61] - **CEO's Focus**: New CEO Jon Resnick is assessing the regulatory business's status and its impact on shareholder value [55][57] Investment and Growth Strategy - **Customer-Centric Approach**: Emphasis on unifying software and services to better meet customer needs and enhance value proposition [72][73] - **Rule of Forty**: Company aims to align with the rule of forty, currently slightly below due to investments impacting margins [79][80] - **Cost Management**: Identified $10 million in cost avoidance opportunities while maintaining disciplined spending [83][85] Conclusion - Certara is navigating a transitional phase with mixed financial performance, focusing on new product launches and AI integration to drive future growth while evaluating its regulatory services segment for strategic decisions.

Summary of Certara Conference Call Company Overview - **Company**: Certara - **Industry**: Healthcare technology and distribution, specifically focusing on biosimulation and Model-Informed Drug Development (MIDD) Key Points and Arguments Financial Performance - **Q4 Performance**: Revenue and EBITDA were in line with expectations, with organic software revenue growth for 2025 at 7% [3][4] - **EBITDA Margin**: Achieved a high end of the original guidance at 32% [3][4] - **2026 Revenue Guidance**: Projected growth is flat to 4%, influenced by a deceleration in software bookings [4][7] - **Bookings Decline**: Q4 software bookings decreased by 6% year-over-year, attributed to customer dynamics and reduced seat licenses in the Phoenix product [4][5] Market Dynamics - **Customer Behavior**: Noted a shift in customer dynamics, particularly among large pharma clients, impacting software bookings [4][5] - **Services Revenue**: Services revenue has grown at a low single-digit rate (approximately 3%) over the last three years, with a strong December performance [6][7] - **End Market Outlook**: Anticipated stable market conditions with potential tailwinds, particularly in services [9][43] Leadership and Strategy - **New CEO**: Jon Resnick has been appointed, bringing a fresh perspective and a focus on customer-centricity [10][15] - **Operational Changes**: Emphasis on aligning software and services offerings to better meet customer needs [15][16] - **Incentive Structure**: Plans to unify incentives across the organization to enhance collaboration between software and services [17] Product Development and AI Integration - **AI Strategy**: Certara has integrated AI technology from the acquisition of Vyasa, launching Certara IQ for Quantitative Systems Pharmacology (QSP) [22][23] - **Growth Areas**: QSP, Simcyp, and PBPK services are identified as fast-growing segments within the organization [12][30] - **Human in the Loop**: Certara's model requires scientific expertise alongside software, creating a competitive advantage [34] Regulatory and Market Evolution - **Biosimulation Role**: Certara is positioned to lead in biosimulation as the industry shifts away from animal model studies, which are seen as less effective [35][36] - **Market Adaptation**: The company is adapting to changes in disease focus areas among biopharma clients, maintaining flexibility to meet evolving demands [40][41] M&A and Capital Allocation - **M&A Appetite**: Certara is open to pursuing tuck-in acquisitions, supported by a strong balance sheet and cash position [44][45] - **Share Repurchase Program**: The company has initiated a share repurchase program as part of its capital allocation strategy [46] Overall Sentiment - **Optimism for 2026**: Certara expresses excitement about internal changes and operational initiatives that could lead to improved performance [47][48] - **Conservatism in Guidance**: The company has set conservative guidance to build a solid foundation for future growth, reflecting a cautious but optimistic outlook [47][48]

Summary of Certara's Conference Call Company Overview - **Company**: Certara - **Industry**: Healthcare technology and distribution, specifically focusing on biosimulation and drug development Key Financial Highlights - **Q4 Performance**: Revenue and EBITDA were in line with expectations, with organic software revenue growth of 7% for 2025, and EBITDA margin at 32%, which was at the high end of guidance [3][4] - **2026 Revenue Guidance**: Projected revenue growth is flat to 4%, influenced by a 1% organic TTM software bookings and a -6% year-on-year decline in Q4 software bookings [4][5] - **Services Revenue**: Low single-digit growth of about 3% over the last three years, with a strong December in services bookings indicating potential stability in the market [6][7] Market Dynamics - **Customer Dynamics**: Notable deceleration in software bookings attributed to macro customer reprioritization and a decrease in study counts on Pinnacle 21 [4][5] - **End Market Outlook**: Despite challenges, there is an expectation of a stable market with potential tailwinds, particularly in services [7][8] Product and Service Insights - **Software and Services**: Strong demand for Model-Informed Drug Development (MIDD) and biosimulation services, particularly in QSP, Simcyp, and PBPK services [12][13] - **AI Integration**: Certara is integrating AI capabilities into its products, with the launch of Certara IQ for QSP and enhanced functionalities in Phoenix Cloud [26][27] Leadership and Strategic Changes - **New CEO**: Jon Resnick's appointment is expected to bring a customer-centric approach and improve commercial execution [9][15] - **Operational Changes**: Focus on aligning incentives across software and services to enhance customer engagement and operational efficiency [16][17] Research and Development - **Investment in R&D**: Continued investment in R&D is planned, particularly in MIDD and biosimulation, while maintaining EBITDA margins between 30%-32% [19][20] - **Cost Management**: Identified $10 million in cost avoidance to support investments while maintaining financial discipline [21] Future Opportunities - **Biosimulation's Role**: Certara is positioned to lead in the shift towards biosimulation as a replacement for traditional animal model studies, aiming to help biopharma companies reduce R&D costs and time [38][39] - **M&A Potential**: Certara has a strong balance sheet and is open to tuck-in acquisitions while also considering share repurchase as a capital allocation strategy [48][49] Conclusion - Certara is navigating a challenging market environment with a focus on operational improvements, strategic investments in AI and R&D, and leveraging its leadership position in biosimulation to drive future growth. The company is optimistic about stabilizing market conditions and the potential for increased demand in its services and software offerings [50][51]

Core Insights - Certara's tools and scientific teams are well-positioned to benefit from market trends, with a strong foundation of 430 PhDs and MDs, over 2,600 customers, and 23 agencies utilizing its technologies. However, the company has not yet translated its credibility into growth that matches the market opportunity, facing challenges such as market acceptance and internal execution issues [1][2][3] Financial Performance - In Q4 2025, Certara reported revenue of $103.6 million, a 3% increase year-over-year, while full-year revenue reached $418.8 million, up 9%. Software revenue for the year was $183.3 million, reflecting an 18% increase, although Q4 software bookings fell 6% to $56.1 million due to customer reprioritizations and execution challenges [5][10][11][12] - Adjusted EBITDA for Q4 was $32.5 million, with a margin of 31%. For the full year, adjusted EBITDA totaled $134.5 million, maintaining a margin of 32% [15][16] 2026 Guidance - For 2026, Certara anticipates revenue growth to be flat to up 4%, with an adjusted EBITDA margin of 30% to 32%. The company expects weaker margins in the first half due to ongoing R&D investments, with improvements anticipated later in the year [4][17][18] - The company is focusing on a narrower product portfolio, deeper customer engagement, and cost discipline, identifying approximately $10 million in cost avoidance relative to the initial 2026 plan [6][8][21] Strategic Initiatives - New CEO Jon Resnick is implementing an operational reset that includes a more focused corporate strategy, enhanced customer engagement, and leveraging AI for efficiency improvements [6][7][21] - Certara is conducting a strategic review of its regulatory writing and operations business, with plans to provide updates soon [21][22] Market Environment - The market is increasingly receptive to computational and model-informed approaches, with drug developers looking to reduce costs and timelines while meeting evolving regulatory requirements [2][22]

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 was $103.6 million, representing a year-over-year growth of 3% on a reported basis and 2% on a constant currency basis [18] - For the full year 2025, total revenue was $418.8 million, reflecting a year-over-year growth of 9% on a reported basis and 8% on a constant currency basis [18] - Adjusted EBITDA for Q4 2025 was $32.5 million, a decrease from $33.5 million in Q4 2024, with an adjusted EBITDA margin of 31% [23] - Net loss for Q4 2025 was $5.9 million, compared to net income of $6.6 million in Q4 2024 [24] - Adjusted diluted earnings per share for Q4 2025 was $0.09, down from $0.15 in the same quarter last year [25] Business Line Data and Key Metrics Changes - Software revenue in Q4 2025 was $46.4 million, up 10% year-over-year, driven by MIDD software and Pinnacle 21 [19] - Services revenue for Q4 2025 was $57.3 million, down 1% year-over-year [21] - Software bookings in Q4 2025 were $56.1 million, down 6% from the prior year period [20] - MIDD services bookings saw double-digit growth in Q4, led by Tiers 2 and 3 [22] Market Data and Key Metrics Changes - The pharmaceutical industry is spending over $200 billion annually on drug development, with timelines extending to 10-15 years [7] - Certara has over 2,600 customers and 23 regulatory agencies using its technologies [9] Company Strategy and Development Direction - The company aims to sharpen operations, focus investments, and execute with greater discipline to capture market opportunities [6] - Certara plans to enhance AI integration and focus on core R&D technologies and model-informed drug development (MIDD) [15] - The company is undergoing a strategic review of its regulatory writing and operations business to maximize long-term shareholder value [13] Management's Comments on Operating Environment and Future Outlook - Management expects flat to low single-digit revenue growth for 2026, reflecting market conditions and planned operational improvements [16] - The company believes it can achieve double-digit growth over time, contingent on improved execution and market acceptance of its technologies [9][31] - Management is optimistic about the strengthening market and better-than-expected spending commitments from customers [46] Other Important Information - Certara repurchased approximately 3.3 million shares for $43 million during 2025 [25] - The company has identified approximately $10 million in cost avoidance for 2026 compared to prior planning [23] Q&A Session Summary Question: What attracted you to Certara and how do you view its differentiation? - The new CEO sees Certara as an undervalued gem with significant growth potential, given its strong market position and regulatory relationships [31][33] Question: How does the platform approach factor into the customer-centric strategy? - The CEO emphasized the importance of serving existing users while also enhancing engagement at senior levels to drive innovation [35] Question: Can you break down the revenue guidance for 2026? - The guidance reflects low single-digit growth due to stable end markets and a deceleration in software bookings [42] Question: What are the opportunities for AI enablement? - AI is being actively embedded into core assets, with a focus on enhancing both product offerings and operational efficiency [54][56] Question: What are the lowest hanging fruit in revamping the commercial organization? - Immediate focus areas include pricing, customer centricity, and optimizing relationships with clients [60]

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 was $103.6 million, representing a year-over-year growth of 3% on a reported basis and 2% on a constant currency basis [18] - For the full year 2025, total revenue was $418.8 million, reflecting a year-over-year growth of 9% on a reported basis and 8% on a constant currency basis [18] - Adjusted EBITDA for Q4 2025 was $32.5 million, a decrease from $33.5 million in Q4 2024, with an adjusted EBITDA margin of 31% [23] - Net loss for Q4 2025 was $5.9 million, compared to net income of $6.6 million in Q4 2024 [24] - Adjusted diluted earnings per share for Q4 2025 was $0.09, down from $0.15 in the same period last year [25] Business Line Data and Key Metrics Changes - Software revenue in Q4 2025 was $46.4 million, up 10% year-over-year, driven by MIDD software and Pinnacle 21 [19] - Services revenue for Q4 2025 was $57.3 million, down 1% year-over-year [21] - Software bookings in Q4 2025 were $56.1 million, down 6% from the prior year period [20] - MIDD services bookings saw double-digit growth in Q4, led by Tiers 2 and 3 [22] Market Data and Key Metrics Changes - The pharmaceutical industry is spending over $200 billion annually on drug development, with timelines extending to 10-15 years [7] - Certara has over 2,600 customers and 23 regulatory agencies using its technologies [9] Company Strategy and Development Direction - The company aims to sharpen operations, focus investments, and execute with greater discipline to capture market opportunities [6] - Certara plans to enhance AI integration and focus on core R&D technologies and model-informed drug development (MIDD) [15] - The company is undergoing a strategic review of its regulatory writing and operations business to maximize long-term shareholder value [13] Management's Comments on Operating Environment and Future Outlook - Management expressed that 2026 will be a transition year with guidance for flat to low single-digit revenue growth, reflecting market conditions and planned operational improvements [16] - The company believes it can achieve double-digit growth over time, although current guidance reflects a cautious outlook due to market dynamics [9][87] Other Important Information - Certara repurchased approximately 3.3 million shares for $43 million during 2025 [25] - The company has identified approximately $10 million in cost avoidance for 2026 compared to prior planning [23] Q&A Session Summary Question: What attracted you to Certara and how do you view its differentiation? - The new CEO highlighted the significant market opportunity and the company's strong track record, viewing it as an undervalued gem with potential for growth [31] Question: How does the platform approach factor into the customer-centric strategy? - The CEO emphasized that the strategy remains focused on serving existing users while enhancing engagement at senior levels to drive innovation [36] Question: Can you break down the revenue guidance for 2026? - Management indicated that the guidance reflects low single-digit growth due to services performance and software bookings deceleration [42] Question: What are the opportunities for AI enablement? - The CEO noted that AI is being embedded into core assets and is seen as a major change agent for both product and operational efficiency [54] Question: What is the outlook for the regulatory writing business? - The CEO mentioned that a strategic review is underway, with a resolution expected soon, as the business has been compressing year-over-year [68]

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 was $103.6 million, representing a year-over-year growth of 3% on a reported basis and 2% on a constant currency basis [19] - For the full year 2025, total revenue was $418.8 million, reflecting a year-over-year growth of 9% on a reported basis and 8% on a constant currency basis [19] - Adjusted EBITDA for Q4 2025 was $32.5 million, a decrease from $33.5 million in Q4 2024, with an adjusted EBITDA margin of 31% [24] - Net loss for Q4 2025 was $5.9 million, compared to net income of $6.6 million in Q4 2024 [25] - Adjusted diluted earnings per share for Q4 2025 was $0.09, down from $0.15 in the same quarter last year [26] Business Line Data and Key Metrics Changes - Software revenue in Q4 2025 was $46.4 million, up 10% year-over-year, driven by MIDD software and Pinnacle 21 [20] - Services revenue for Q4 2025 was $57.3 million, down 1% year-over-year [22] - Software bookings in Q4 2025 were $56.1 million, down 6% from the prior year period [21] - MIDD services bookings saw double-digit growth in Q4, with growth led by Tiers 2 and 3 [23] Market Data and Key Metrics Changes - The pharmaceutical industry is spending over $200 billion annually on drug development, with timelines extending to 10-15 years [6] - Certara has over 2,600 customers and 23 regulatory agencies using its technologies [9] Company Strategy and Development Direction - The company aims to sharpen operations, focus investments, and execute with greater discipline to capture market opportunities [5] - Certara plans to enhance AI integration and focus on core R&D technologies and model-informed drug development (MIDD) [16] - The company is undergoing a strategic review of its regulatory writing and operations business to maximize long-term shareholder value [13] Management's Comments on Operating Environment and Future Outlook - Management expressed that 2026 will be a transition year with guidance for flat to low single-digit revenue growth, reflecting market conditions and planned operational improvements [17] - The company believes it can achieve double-digit growth over time, although it did not provide a specific timeline [90] Other Important Information - Certara repurchased approximately 3.3 million shares for $43 million during 2025 [26] - The company has identified approximately $10 million in cost avoidance for 2026 compared to prior planning [24] Q&A Session Questions and Answers Question: What attracted you to Certara and how do you view the differentiation of its software products? - The new CEO highlighted the compelling market opportunity and the strong track record of Certara's software products being deeply embedded in customer workflows [32][34] Question: How does the platform approach and cross-selling factor into the customer-centric strategy? - The CEO emphasized that the strategy remains focused on serving existing users while enhancing engagement at senior levels to drive innovation [38] Question: Can you break down the revenue guidance for 2026? - Management indicated that the guidance reflects low single-digit growth due to stable end markets and a deceleration in software bookings [43] Question: What are the opportunities for AI enablement? - AI is being actively embedded into core assets, with a focus on enhancing product functionality and improving operational efficiency [54][58] Question: What are the lowest hanging fruit in revamping the commercial organization? - The CEO mentioned optimizing customer relationships, pricing, and operational elements as immediate areas of focus [62]

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 ...