Certara (NasdaqGS:CERT) FY Conference Transcript

Summary of Certara FY Conference Call - September 10, 2025 Company Overview - Company: Certara (NasdaqGS:CERT) - Industry: Health Technology and Biosimulation Key Points and Arguments Growth Strategy - Certara is focused on accelerating organic growth despite a subdued market environment, targeting mid-single-digit growth rates [4][5] - Investments in sales, marketing, and R&D are being made to enhance the commercial organization and software platforms [4][5] - New software enhancements, including Certara IQ (AI-enabled software for Quantitative Systems Pharmacology, QSP), are expected to drive growth [5][10] R&D and Product Development - Certara is addressing critical pain points in drug development, particularly the high failure rates of drug trials, by enhancing software capabilities [7] - The company has launched Certara Cloud, which has seen rapid adoption, particularly among large biopharma customers [11][12] - The tiered customer structure includes: - Tier 1: Large biopharma (50% of revenue) - Tier 2: Mid-sized companies (20% of revenue) - Tier 3: Biotechs (30% of revenue) [14][15] Market Dynamics - The funding environment for tier three customers remains challenging, but Certara has successfully targeted biotechs with funding potential [13][15] - The FDA's directive to shift away from animal testing is seen as a tailwind for Certara, enhancing customer discussions and driving demand for SIMCYP and QSP [24][34] Financial Performance - Certara expects an adjusted EBITDA margin of 30-32% for the year, consistent with previous performance [20] - The company is on track to meet its full-year plan despite some timing issues in software bookings for tier one customers [16][17] AI and Technology Integration - The acquisition of Vyasa has enabled Certara to integrate AI technology into its workflow and product offerings [25][26] - The co-author tool for regulatory writing has demonstrated a 40% efficiency improvement, appealing to regulatory customers [27] M&A and Strategic Review - Certara is actively engaged in a strategic review of its regulatory business, which has returned to growth with a 20-30% adjusted EBITDA margin [43][44] - The company is focused on software acquisitions to shift its revenue mix from services to software, aiming for a balanced profitability profile [45][46] Capital Allocation - Certara prioritizes R&D investments while also considering M&A opportunities and share buybacks, having authorized a $100 million share repurchase program [47][48] Additional Important Insights - Certara's longstanding relationship with the FDA provides a competitive advantage, as many FDA users are familiar with Certara's software [32][33] - The company is well-positioned to help biopharma clients find efficiencies across the drug development cycle, from discovery to submission [30][31] - The integration of Camaxon, a chem-informatics software company, is progressing well, with expectations to enhance margins and product offerings [40][41]