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CI

Certara, Inc. (CERT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $104.6M (+12% YoY) with adjusted EPS $0.07; GAAP diluted EPS was $(0.01). Revenue modestly beat consensus by ~$0.49M while adjusted EPS missed by ~$0.03; full-year 2025 guidance was reiterated across revenue, margins, and EPS . Revenue Consensus Mean*: $104.08M vs actual $104.57M; EPS Consensus Mean*: $0.0996 vs actual $0.07. Values retrieved from S&P Global.
  • Software revenue grew 22% YoY to $46.7M and Services grew 5% YoY to $57.9M; total bookings rose 13% YoY to $112.0M, underpinned by biosimulation demand and contribution from Chemaxon .
  • Management emphasized momentum in core biosimulation, strong QSP services demand, and upcoming AI-enabled QSP software (“Certara IQ”) while maintaining FY2025 guidance (revenue $415–$425M; adj. EBITDA margin 30–32%; adj. EPS $0.42–$0.46) .
  • Strategic/regulatory catalysts include EMA’s formal qualification of Simcyp® Simulator (first and only PBPK platform with EMA qualification), which may accelerate adoption and commercial momentum for biosimulation solutions .

What Went Well and What Went Wrong

What Went Well

  • Core biosimulation software strength drove 22% YoY software revenue growth to $46.7M; services bookings up 15% YoY, reflecting demand for biosimulation and regulatory services .
  • Bookings growth (+13% YoY to $112.0M) and operating expense reductions (-$8.2M YoY) improved operating leverage; adjusted EBITDA rose 21% YoY to $31.9M .
  • Management reiterated FY2025 guidance and highlighted customer interest in expanding model‑informed drug development: “significant interest…expand their use of model‑informed drug development” — CEO; confidence in full-year plan — CFO .

What Went Wrong

  • Adjusted EPS of $0.07 missed Wall Street consensus*, while GAAP diluted EPS came in at $(0.01) due to higher tax expense and other GAAP items despite stronger operating performance . Primary EPS Consensus Mean*: $0.0996 vs actual $0.07. Values retrieved from S&P Global.
  • Cost of revenues increased modestly (+$0.9M YoY) largely on higher software amortization; GAAP net loss of $2.0M vs $(12.6)M YoY improved, but tax expense weighed on GAAP results .
  • EBITDA consensus comparison suggests a shortfall vs S&P Global’s EBITDA Consensus Mean* for Q2, indicating potential mix/gearing differences vs analyst models. Values retrieved from S&P Global.

Financial Results

Quarterly Performance vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$100.4 $106.0 $104.57
Cost of Revenues ($USD Millions)$38.3 $41.52 $40.72
Income from Operations ($USD Millions)$6.00 $7.62 $9.55
Net Income (Loss) ($USD Millions)$6.58 $4.74 $(1.97)
Diluted EPS ($USD)$0.04 $0.03 $(0.01)
Adjusted EBITDA ($USD Millions)$33.5 $34.8 $31.94
Adjusted Diluted EPS ($USD)$0.15 $0.14 $0.07

YoY Comparison (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025YoY Change
Revenue ($USD Millions)$93.31 $104.57 +12%
Software Revenue ($USD Millions)$38.21 $46.70 +22%
Services Revenue ($USD Millions)$55.11 $57.88 +5%
Adjusted EBITDA ($USD Millions)$26.32 $31.94 +21%
Diluted EPS ($USD)$(0.08) $(0.01) Improvement
Adjusted Diluted EPS ($USD)$0.07 $0.07 Flat

Segment and KPI Details

MetricQ4 2024Q1 2025Q2 2025
Software Revenue ($USD Millions)$42.3 $46.37 $46.70
Services Revenue ($USD Millions)$58.1 $59.64 $57.88
Total Bookings ($USD Millions)$144.5 $118.2 $112.0
Software Bookings ($USD Millions)$59.7 $40.8 $46.6
Services Bookings ($USD Millions)$84.8 $77.4 $65.4
Total Revenue CC Growth (%)+14% +10% +10%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$415–$425 $415–$425 Maintained
Adjusted EBITDA Margin (%)FY 202530–32% 30–32% Maintained
Adjusted Diluted EPS ($USD)FY 2025$0.42–$0.46 $0.42–$0.46 Maintained
Fully Diluted Shares (Millions)FY 2025162–164 162–164 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesFocus on investing in software and AI; building end-to-end biosimulation offering .Introduction of “Certara IQ,” AI-enabled QSP software expected this fall; integrating AI with modeling/data via the Vyasa technology stack .Increasing emphasis; productization of AI in QSP.
QSP services demandGrowing QSP market; strong bookings and market-leading position .Strong QSP demand; CFO clarifies QSP currently services with software launch to follow (Certara IQ) .Sustained growth; mix shift toward software ahead.
Regulatory milestonesChemaxon contribution; positioning in regulatory services .EMA qualification of Simcyp® (PBPK) for EU submissions, first and only platform with this designation .Positive regulatory tailwind.
Macro/tariffs/supply chainMixed operating environment; expectation similar to 2024 .“Mixed operating environment” continues; execution offsetting macro .Stable macro narrative; execution focus.
R&D executionContinued investment in R&D and integration of Chemaxon .Ongoing R&D; AI-enabled platform development highlighted .Continuing build-out; leverage in 2H.

Management Commentary

  • CEO: “Our commercial team has continued to field significant interest from customers seeking to expand their use of model‑informed drug development…excited about software product enhancements and new product introductions…that will…deliver sustainable long‑term growth.”
  • CFO: “We are pleased with our second quarter performance, led by strength in our core biosimulation software and QSP services…confident in our full year plan, supported by growing commercial momentum and sustained demand for model‑informed drug development solutions.”
  • On platform strategy: Management described the AI-enabled next‑gen MIDD platform and announced “Certara IQ” for QSP, integrating AI with modeling and data fabric capabilities derived from Vyasa, with release targeted for fall 2025 .
  • Regulatory milestone: EMA formal qualification of Simcyp® Simulator (PBPK), enabling broader use in EU regulatory submissions and reducing the need for certain clinical DDI studies .

Q&A Highlights

  • QSP profitability and mix: CFO noted QSP is currently a services offering with profitability as expected for services; software monetization to begin with “Certara IQ” later this year .
  • Product roadmap detail: CEO highlighted the fall release of “Certara IQ,” an AI-enabled QSP solution with pre‑validated models and intuitive model-building to unify QSP collaboration among clients and regulators .
  • Guidance stance: Management reaffirmed FY2025 guidance and emphasized strong core execution despite a mixed environment .

Estimates Context

MetricConsensus*Actual
Revenue (Q2 2025, $USD Millions)104.08104.57
Primary EPS (Q2 2025, $USD)0.09960.07
Revenue (FY 2025, $USD Millions)418.42N/A
Primary EPS (FY 2025, $USD)0.4440N/A
  • Q2 revenue beat consensus by ~$0.49M; adjusted EPS missed by ~$0.03. Values retrieved from S&P Global.
  • Implication: Models may need to reflect stronger software/services revenue trajectory but slightly lower margin translation at the EPS line due to taxes/GAAP adjustments; FY consensus aligns with reiterated guidance range . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue resilience with bookings growth: Double‑digit revenue growth (+12% YoY) and +13% bookings YoY indicate solid demand in biosimulation and regulatory services; supports reiterated FY revenue $415–$425M .
  • Mix favoring software: 22% YoY software revenue growth reflects product strength and M&A contribution; sustained services demand supports pipeline and future cross‑sell .
  • Margin dynamics: Adjusted EBITDA +21% YoY to $31.9M, but EPS miss vs consensus suggests GAAP items (tax, amortization) offsetting margin flow‑through at the EPS line; monitor tax cadence and amortization trends . Values retrieved from S&P Global.
  • Regulatory tailwind: EMA Simcyp® qualification is a differentiated moat that can accelerate adoption and reduce clinical burden for EU submissions, potentially improving sales cycle conversion and pricing power .
  • AI productization: “Certara IQ” launch in fall 2025 can shift QSP from services‑only to a hybrid software+services model, improving scalability and margins over time .
  • Guidance credibility: Reiterated FY2025 targets across revenue, adjusted margin, and EPS anchor expectations; supports stability amid a mixed macro backdrop .
  • Trading setup: Near term, watch for investor reaction to the EPS miss vs revenue beat and validation from EMA qualification; medium term, the “Certara IQ” release and continued bookings momentum are potential positive catalysts .

Notes: All consensus/target values marked with an asterisk (*) are Values retrieved from S&P Global.