Certara(CERT)2022-08-09 23:30Financial Data and Key Metrics Changes - The company reported second quarter revenue of 28 million, compared to 0.6 million compared to a net loss of 28.7 million, growing 48% year-over-year on a constant currency basis, with a 92% aggregate renewal rate [11][25] - Technology-driven services revenue was 393.5 million, up approximately 25% year-over-year on a reported basis [24] - The company experienced a slowdown in regulatory services due to delays in projects and recent regulatory decisions affecting Chinese customers [18][19] - The biosimulation services revenue continues to show robust growth in the high teens on a constant currency basis [16][29] Company Strategy and Development Direction - The company is committed to expanding the role of biosimulation to meet the needs of researchers, with new product launches such as the Simcyp Discovery Simulator [12][21] - There is a focus on investing in the team to expand existing customer relationships and establish new ones, particularly in biosimulation [17][21] - The company is adjusting its revenue guidance for the full year to 335 million, reflecting a reduction due to foreign exchange and regulatory services performance [19][40] Management's Comments on Operating Environment and Future Outlook - Management noted that the regulatory services business has experienced more volatility than planned, and they are taking a more conservative outlook for the remainder of the year [18][19] - The company remains optimistic about the growth in biosimulation and Pinnacle 21, with opportunities to expand offerings throughout the drug development cycle [21][39] - Management expressed confidence in the company's ability to capitalize on opportunities despite challenges in the regulatory services segment [21][78] Other Important Information - The company ended the quarter with 299 million of outstanding borrowings under its term loan [38] - Adjusted diluted earnings per share for the second quarter of 2022 was 0.07 for the second quarter of 2021 [37] Q&A Session Summary Question: Visibility on Regulatory Services - Management indicated that visibility varies by client, with about 60% visibility on project start dates [46][47] Question: Update on Biologics Simulator and Pinnacle 21 - The biologics simulator is growing, and Pinnacle 21 is tracking well with early sales from new product launches [50][52] Question: Headwinds from Chinese Customers - The headwind is specific to the regulatory business, but there are opportunities for biosimulation to address concerns about diversity in submissions [54] Question: Length of Sales Cycle - The sales cycle typically runs a couple of quarters, with strong bookings on the biosimulation side despite challenges in regulatory [62][65] Question: Adjusted EBITDA Margin - The adjusted EBITDA margin was impacted by lower revenues and investments in corporate functions, with expectations for a more even margin through the back half of the year [71][73]