Certara(US:CERT)2023-11-09 03:41Financial Data and Key Metrics Changes - Total company revenue for Q3 2023 was $85.6 million, representing a year-over-year growth of 1% on a reported basis and flat on a constant currency basis [4][25] - Software revenue was $31.3 million, increasing by 10% compared to the prior year, while services revenue was $54.2 million, declining by 4% year-over-year [4][25] - Adjusted EBITDA for Q3 2023 was $28.8 million, a decrease of 12% from $32.7 million in Q3 2022, with an adjusted EBITDA margin of 34% [31] - Net loss for Q3 2023 was $49 million, compared to a net income of $3.9 million in Q3 2022 [30] Business Line Data and Key Metrics Changes - Software bookings for Q3 2023 were $27.2 million, reflecting a 7% growth year-over-year, with trailing 12-month software bookings at $133.1 million, up 13% [17][26] - Services bookings in Q3 totaled $57.6 million, representing a 6% increase compared to the same period last year, while trailing 12-month services bookings decreased by 4% [48] - The software aggregate renewal rate was 86% in Q3, with a net retention rate of 107% [27][55] Market Data and Key Metrics Changes - The company observed stabilization in customer spending, particularly in the biopharma sector, with improved activity noted in Q3 compared to Q2 [15][44] - There were indications of increased demand for biosimulation software and services across all customer tiers, with a return to growth among smaller biopharma companies [16][18] Company Strategy and Development Direction - The company is focused on enhancing its software capabilities, particularly through the integration of artificial intelligence, with the launch of Certara AI and the acquisition of Vyasa [20][21] - Certara aims to drive long-term growth in biosimulation, emphasizing the value of its platform in reducing costs and accelerating drug project timelines [24][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its plans and drive growth, despite some near-term uncertainties in certain business areas [16][22] - The company reiterated its 2023 guidance, expecting total revenue between $345 million and $360 million, representing year-over-year growth of 3% to 7% [33][99] Other Important Information - Total operating expenses for Q3 2023 were $102.5 million, including a $47 million goodwill impairment expense, an increase from $41 million in Q3 2022 [29] - The company ended the quarter with $272.3 million in cash and cash equivalents, alongside $292.2 million in outstanding borrowings [32] Q&A Session Summary Question: Can you elaborate on the software renewal rate and its context? - The aggregate renewal rate was 86% for the quarter, influenced by timing issues, with expectations for a return to the 90% range in Q4 [55] Question: What are the expectations for services bookings in Q4? - Services bookings are expected to continue along the guidance pathway provided earlier, with positive momentum observed [73] Question: Can you confirm the guidance for year-over-year bookings? - The company expects bookings to decline in the low single digits compared to 2022, consistent with previous commentary [51][58] Question: How is the hiring outlook and utilization levels? - Utilization levels are consistent with expectations, and hiring continues in billable areas, though some non-billable hiring has slowed [78][59] Question: What factors could affect the year-end guidance? - To reach the lower end of guidance, a reversal of momentum in services and deceleration in software would be needed, which is not currently anticipated [99]