Strong Revenue Growth Amid Booking Challenges

This article first appeared on GuruFocus.

Gain: $104.6 million, 10% year-over-year growth.
Adjusted EBITDA: $35.2 million, 34% margin.
R&D expenses: Increase of 24%, now 10% of turnover.
Bookings: $96.6 million, 1% growth.
Software revenue: $43.8 million, 22% growth.
Services income: $60.8 million, 3% growth.
Net income: $1.5 million, compared to a net loss of $1.4 million last year.
Adjusted Net Income: $22.2 million, up from $20.3 million.
Diluted EPS: $0.01, compared to a loss of $0.01 per share last year.
Custom diluted EPS: $0.14, up from $0.13.
Cash and cash equivalents: $172.7 million.
Outstanding loans: $293.1 million on term loan.
Share buybacks: $41 million repurchased in 2025.
Revenue Guidance 2025: $415 million to $420 million, 8% to 9% growth.
Adjusted EBITDA margin guidance: About 32%.
Custom EPS guidance: $0.45 to $0.47 per share.

Release date: November 6, 2025

For the full earnings call transcript, please refer to the full earnings call transcript.

Certara Inc (NASDAQ:CERT) reported third-quarter revenue of $104.6 million, representing 10% year-over-year growth.
The company achieved adjusted EBITDA of $35.2 million, with a margin of 34%, exceeding internal profitability expectations.
Certara Inc (NASDAQ:CERT) has seen strong growth in its Simcyp PBPK software and QSP services, indicating outperformance.
The company has successfully integrated AI into its development processes and products, launching several major products such as Pinnacle 21 Enterprise and Phoenix Cloud.
Certara Inc (NASDAQ:CERT) has raised its adjusted EBITDA margin guidance to the high end of its previous range, reflecting continued outperformance against profitability targets.

Third quarter bookings of $96.6 million fell short of expectations, with just 1% growth, indicating cautious spending behavior among Tier 1 customers.
There has been a slowdown in deal completion timelines, particularly in regulatory and biostatistics areas, which is contrary to historical seasonal trends.
Certara Inc (NASDAQ:CERT) saw a 9% decline in service bookings on a reported basis, due to the sluggishness of its Tier 1 customer base.
The company saw hesitation and slowness in decision-making among large pharmaceutical customers, which impacted bookings for Tier 1 services.
Organic bookings, excluding Chemaxon, decreased 4% compared to the third quarter of last year, indicating challenges in organic growth.

Q: Can you provide more details on the delay in booking Tier 1 services and how you expect this to impact the fourth quarter and 2026? A: John Gallagher, CFO: The delay in booking Tier 1 services is due to hesitation and slowness in decision-making among our larger customers. This trend continued in October and we expect it to continue in the fourth quarter. We expect some deals to close in the fourth quarter, while others will extend into 2026.

Q: Can you tell us more about the gross profit outperformance and the factors contributing to it? A: John Gallagher, CFO: The higher gross profit is due to productivity improvements and a favorable mix shift towards software, which has higher margins than services. We have also seen benefits from previous cost reductions in services.

Q: How does the adoption of AI and new products like Certara IQ impact your business, especially QSP? A: William Feehery, CEO: Certara IQ, our AI-enabled QSP platform, is designed to standardize QSP modeling across the industry. There is significant demand for QSP, driven by regulatory changes and growth in biotechnology. We expect this platform to improve efficiency and create new revenue streams as it gains popularity.

Q: Have you observed changes in customer behavior due to recent macroeconomic developments, such as clarity on rates and prices? A: William Feehery, CEO: We are cautiously optimistic about recent macroeconomic developments. While it is still early, any signs of stability in prices and rates could have a positive impact on our Tier 1 customers and improve the business environment as we move into 2026.

Q: How do you balance investments in innovation with margin expansion, especially given the current macro environment? A: John Gallagher, CFO: We are not pulling back on investments, especially in R&D, which grew 24% year-on-year. We maintain discipline within the profit and loss statement, while continuing to invest in software development. This approach allows us to support innovation while maintaining margins.

For the full earnings call transcript, please refer to the full earnings call transcript.