CERT — Certara, Inc.

Certara Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenue: $106.9 million, up 1% year-over-year.
• Total Bookings: $115.3 million, down 2% from the prior year.
• Software Revenue: $49.7 million, up 7% year-over-year, driven by Simcyp, Phoenix, and Chemaxon.
• Services Revenue: $57.2 million, down 4% year-over-year, reflecting mixed results in MIDD services.
• Adjusted EBITDA: $31.7 million, down from $34.8 million year-over-year; adjusted EBITDA margin at 30%.
• Net Loss: $8.8 million compared to net income of $4.7 million in Q1 2025; adjusted diluted EPS at $0.09, down from $0.14.
• Cash Position: $149.5 million in cash and cash equivalents; $294.8 million in outstanding borrowings.

2. Strategic Updates and Business Highlights

• Leadership Transition: Jon Resnick has completed over 100 days as CEO, focusing on reshaping business strategy and operational rigor.
• AI Integration: Certara is developing a next-generation AI platform to enhance drug development processes, leveraging existing scientific expertise and technology.
• Divestiture: The company completed the divestiture of its regulatory and medical writing services, expected to unlock approximately 150 basis points of incremental growth in 2027 and beyond.
• Reorganization: Certara is restructuring into two distinct growth areas: Model-Informed Drug Development (MID3) and Accelerated Clinical Evidence (ACE).
• Partnerships: New collaborations with NVIDIA and Altasciences aim to enhance computational capabilities and streamline drug development processes.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected to be between $395 million and $405 million, reflecting 0% to 4% growth, excluding the divested business.
• Software Growth: Anticipated to be at or above the high end of the 0% to 4% range, with stronger performance expected in the second half.
• Services Growth: Expected to be towards the low end of the 0% to 4% range, with improvement anticipated in the second half.
• Adjusted EBITDA Margin: Expected to remain in the 30% to 32% range for the full year.

4. Bad News, Challenges, or Points of Concern

• Mixed Performance: Services revenue declined, particularly in regulatory services, leading to a mixed overall performance compared to a strong Q4 2025.
• Bookings Decline: Total bookings decreased 2%, and services bookings fell 14% year-over-year, indicating potential challenges in customer engagement.
• Execution Challenges: The company acknowledged go-to-market challenges and execution dynamics that impacted performance in Q1.
• Net Loss: Transitioning from net income to a loss raises concerns about profitability amidst ongoing investments.

5. Notable Q&A Insights

• AI Platform Monetization: Management discussed the potential for the new AI platform to drive engagement and utilization of existing software, with more guidance expected later in 2026.
• Customer Mix Trends: Strong demand was noted across all customer tiers, particularly from Tier 2 and Tier 3 customers, while Tier 1 showed some softness.
• Operational Efficiencies: The company is focusing on improving operational efficiencies and aligning sales teams with new structures to enhance predictability in revenue.
• Competitive Landscape: Certara sees potential competition from large pharma developing internal solutions but believes its established expertise and data capabilities create a significant barrier to entry for competitors.

This summary encapsulates the key takeaways from Certara's Q1 2026 earnings call, highlighting financial performance, strategic initiatives, and future outlook while addressing challenges and competitive dynamics.