Certara(US:CERT)2024-03-01 02:33Financial Data and Key Metrics Changes - Total revenue for Q4 2023 was $88 million, representing a year-over-year growth of 2% on a reported basis and 1% on a constant currency basis [13] - For the full year 2023, total revenue was $354.3 million, which represents a 6% growth on a reported basis and on a constant currency basis [13] - Bookings for the trailing 12-month period ended December 31, 2023, were $402.3 million, down 2% year-over-year [14] - Adjusted EBITDA margin was 33.6% for Q4 2023 and 34.7% for the full year 2023 [36] Business Line Data and Key Metrics Changes - Software revenue in Q4 was $33.6 million, up 15% year-over-year, driven by biosimulation software and Pinnacle 21 [15] - For the full year, software revenue was $131.7 million, up 14% on a reported basis [15] - Services revenue in Q4 was $54.4 million, down 5% year-over-year, while for the full year, services revenue was $222.7 million, up 1% [22] Market Data and Key Metrics Changes - The customer base expanded to 2,395, with 389 customers having an annual contract value of more than $100,000, representing a 5% growth year-over-year [62] - The company saw a pickup in new business activity across its technology-enabled services group, leading to sequential bookings growth in Q4 [8] Company Strategy and Development Direction - The company plans to invest in new models for biosimulation, new products, and additional integration of AI across its platform [7] - A focus on expanding the software capabilities, particularly in clinical data strategy, is emphasized, with the acquisition of Formedix to enhance clinical trial data management [45] - The company aims to broaden its offerings to support additional use cases in therapeutic areas as biosimulation becomes more widespread [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth opportunities in biosimulation as drug developers seek to maximize capital efficiencies and reduce pipeline risk [11] - The company anticipates total revenue in the range of $385 million to $400 million for 2024, representing growth of 9% to 13% compared to 2023 [38] - Management noted that while the biotech market is stabilizing, they have not yet seen significant improvements in bookings but expect a healthier market segment in the second half of 2024 [94] Other Important Information - The company ended Q4 2023 with $235 million in cash and cash equivalents and $288.2 million in outstanding borrowings on its term loan [37] - The net retention rate for software was 109% for both Q4 and the full year 2023, consistent with the company's long-term growth algorithm [20] Q&A Session Summary Question: What helped the bookings to pick up in Q4? - Management highlighted investments in training the sales force and uniting the sales approach to offer clients a full suite of products [43] Question: How does the company expect to generate growth from a trailing bookings number that did not grow? - Management indicated confidence in organic growth driven by new products and improved execution in the services business [89] Question: Can you provide insights on the performance of regulatory services within the broader services bucket? - Regulatory services represented 19% of total revenue in Q4, and the company anticipates this segment returning to growth over the coming quarters [130] Question: What is the outlook for the biotech market and its impact on guidance? - Management noted stability in the biotech market and built guidance around this stability, expecting potential recovery in the second half of 2024 [137]