CERT — Certara, Inc.

Summary of Certara Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $93.3 million, up 1% year-over-year.
• Software Revenue: $48.8 million, a 4% increase; now comprises 53% of total revenue.
• Service Revenue: $44.5 million, down 3%.
• Total Bookings: $98.3 million, up 1% year-over-year; trailing 12-month bookings at $405.4 million, a 3% increase.
• Adjusted EBITDA: $26.2 million, with a margin of 28.1%, down from 30.2% in the prior year due to stranded costs from a recent divestiture.
• Net Loss: $6.1 million, compared to a net income of $1.5 million in Q2 2025.
• Adjusted Diluted EPS: $0.08, unchanged from the prior year.

2. Strategic Updates and Business Highlights

• Leadership Changes: Appointment of Julien Perrier as Chief Commercial Officer to enhance go-to-market strategy.
• Divestiture: Completed the carve-out of the regulatory and medical writing business, impacting revenue and EBITDA.
• AI Integration: Significant focus on embedding AI across product development and operations, with 85% of new code being AI-assisted.
• Pipeline Growth: Increased by 27% year-over-year, indicating positive momentum in client engagement.
• Global Expansion: Notable wins in China and increased engagement in the Middle East and Japan.

3. Forward Guidance and Outlook

• Revenue Growth Guidance: Reaffirmed at 0% to 4% for full-year 2026, translating to $367 million to $382 million in revenue.
• Software Revenue Outlook: Expected to be at or above the high end of the growth range.
• Service Revenue Outlook: Anticipated to be at or below the low end of the growth range.
• Adjusted EBITDA Margin: Expected to be in the range of 29% to 31%, reflecting the impact of the divestiture.

4. Bad News, Challenges, or Points of Concern

• Service Revenue Decline: Services bookings down 6% year-over-year, indicating challenges in that segment.
• Net Retention Rate: Slight decline noted, though management indicated no significant issues.
• Stranded Costs: Ongoing impact from the divestiture affecting margins.
• Execution Risks: Transitioning to a new go-to-market strategy and integrating AI may pose operational risks.

5. Notable Q&A Insights

• Pipeline and Demand: Management emphasized a strong pipeline and the importance of execution over reliance on biotech funding.
• NVIDIA Partnership: Seen as a strategic enabler for new use cases and product integration, though specific timelines for returns were not provided.
• Customer Engagement: Focus on getting scientists back in front of clients to enhance service offerings and drive growth.
• Market Conditions: Management believes the current regulatory environment presents more opportunities than challenges, with increased inquiries from clients about new regulatory frameworks.

Overall, Certara is navigating a transitional phase with a focus on AI integration and strategic leadership changes while facing challenges in service revenue and execution risks. The company maintains a cautious yet optimistic outlook for the remainder of 2026.