Executive Summary

Q3 results were broadly in line on revenue with a modest beat on adjusted EPS versus S&P Global consensus; revenue was $104.6M (+10% y/y) and adjusted diluted EPS was $0.14, while bookings slowed to $96.6M (+1% y/y) amid Tier 1 services hesitancy . Consensus for Q3 was $104.6M revenue and $0.11 Primary EPS; actuals were $104.6M and $0.14 adjusted EPS, respectively (consensus from S&P Global)*.
Profitability improved: adjusted EBITDA was $35.2M (34% margin), above internal expectations, supported by software mix and productivity; GAAP diluted EPS was $0.01 versus $(0.01) a year ago .
Guidance raised/tightened: FY25 revenue narrowed to $415–$420M (from $415–$425M), adjusted EBITDA margin ~32% (high end of prior 30–32%), and adjusted EPS raised to $0.45–$0.47 (from $0.42–$0.46); fully diluted shares lowered to 160–162M (from 162–164M) .
Product catalysts: launch of AI-driven QSP platform Certara IQ and Phoenix Cloud/TFL Studio; management expects these to expand biosimulation adoption and support 2026 growth, though Tier 1 services caution persisted into October and is muting Q4 seasonality .

What Went Well and What Went Wrong

What Went Well

Software momentum and mix: software revenue grew 22% y/y to $43.8M (organic +6%), led by Simcyp and contribution from Chemaxon; adjusted EBITDA margin reached 34% in Q3 .
Innovation cadence: launches of Certara IQ (AI-powered QSP) and Phoenix Cloud/TFL Studio aim to standardize and accelerate modeling workflows; early feedback positive and expected to expand use cases into discovery and preclinical .
Profitability execution: adjusted EBITDA rose to $35.2M (+7% y/y); management cited software mix and services productivity as key drivers. CFO: “the mix shift towards software is also a tailwind to the gross profit” .

What Went Wrong

Services bookings softness: services bookings fell 9% y/y to $55.8M, driven by Tier 1 spending hesitancy (especially Regulatory services); management said the slowdown continued into October and is pressuring typical Q4 seasonality .
Bookings deceleration: total bookings were $96.6M (+1% y/y), down sequentially from $112.0M in Q2 and $118.2M in Q1; organic total bookings declined 4% y/y excluding Chemaxon .
Ratable mix dilution in software: ratable/subscription was 65% of Q3 software revenue (71% ex-Chemaxon), slightly below last year due to more license-based ChemAxon mix .

Financial Results

Headline results vs prior periods and consensus

Metric	Q3 2024	Q2 2025	Q3 2025	Q3 2025 Consensus*
Revenue ($M)	$94.8	$104.6	$104.6	$104.6*
GAAP Diluted EPS	$(0.01)	$(0.01)	$0.01	n/a
Adjusted Diluted EPS	$0.13	$0.07	$0.14	$0.11*
Adjusted EBITDA ($M)	$33.1	$31.9	$35.2	n/a
Adjusted EBITDA Margin (%)	35%	31%	34%	n/a
Total Bookings ($M)	$96.1	$112.0	$96.6	n/a

Notes: Consensus values marked with an asterisk are from S&P Global and may reflect adjusted/normalized definitions; Values retrieved from S&P Global.*

Segment revenue

Segment Revenue ($M)	Q1 2025	Q2 2025	Q3 2025
Software	$46.4	$46.7	$43.8
Services	$59.6	$57.9	$60.8
Total	$106.0	$104.6	$104.6

KPIs and bookings

KPI	Q1 2025	Q2 2025	Q3 2025
Total Bookings ($M)	$118.2	$112.0	$96.6
Software Bookings ($M)	$40.8	$46.6	$40.8
Services Bookings ($M)	$77.4	$65.4	$55.8
Software NRR (%)	102.4%	107.6%	103.9%
TTM Book-to-Bill (x)	1.16x (Q1)	1.16x (Q2)	1.13x (Q3)

Additional items:

Cash & equivalents: $172.7M at 9/30/25 .
Term loan outstanding ~$293.1M; repriced post-quarter to save ~$0.7M annually from 2026 .
YTD buybacks ~$41M in 2025 .
Q3 included Chemaxon revenue of $5.8M and bookings of $4.5M .

Guidance Changes

Metric	Period	Previous Guidance (Q2’25 PR)	Current Guidance (Q3’25)	Change
Revenue ($M)	FY 2025	$415–$425	$415–$420	Narrowed (lowered top end)
Adjusted EBITDA Margin (%)	FY 2025	30–32	~32	Raised to high end
Adjusted Diluted EPS	FY 2025	$0.42–$0.46	$0.45–$0.47	Raised
Fully Diluted Shares (M)	FY 2025	162–164	160–162	Lowered
Tax Rate (%)	FY 2025	n/a	25–30 (assumption)	New disclosure

Notes: Company provides adjusted (non-GAAP) guidance and does not reconcile forward-looking non-GAAP measures due to variability of certain items .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
AI/QSP initiatives	Confidence in product enhancements and new introductions to drive growth; FDA roadmap on reducing animal testing supports biosimulation demand .	Launched Certara IQ (AI-powered QSP) and Phoenix Cloud/TFL Studio; QSP fastest-growing area YTD and expected to scale in 2026; aim to standardize platform across clients and consultants .	Positive acceleration (productization of QSP; embedded AI)
Tier 1 services demand	Mixed environment but strong execution; biosimulation services demand steady .	Tier 1 hesitancy in services bookings persisted into October; expecting lower-than-usual Q4 seasonality .	Negative near-term pressure
Software mix/ratable	Strong software growth; not detailed mix .	Ratable/subscription 65% (71% ex-Chemaxon); license-heavy Chemaxon reduced ratable proportion; gross profit benefited from software mix .	Mixed (ratable slightly diluted by M&A)
Regulatory services review	n/a	Strategic review in final stages; outcome expected before year-end 2025; regulatory writing performance “inconsistent” but cash-generative .	Pending potential portfolio action
Macro/regulatory backdrop	FDA roadmap reduces animal testing; supports biosimulation adoption .	FDA steps (NAMs; FIH dosing) supporting modeling; management cautiously optimistic on macro stability into 2026 .	Gradual improvement signals
Bookings trajectory	Q1: Total bookings $118.2M; Q2: $112.0M .	Q3: $96.6M (+1% y/y), organic total bookings −4% y/y; Q4 seasonality below historical .	Softening sequentially

Management Commentary

CEO on execution and innovation: “Q3 revenue of $104.6 million was in line with our expectations… We outperformed internal profitability expectations… We launched several major products this quarter… Certara IQ… Phoenix Cloud… Early customer feedback… has been excellent” .
CFO on services softness: “We observed cautious decision-making among large pharma customers into the Q4… Tier 1 services customers where we saw delays… we continued to see some deceleration in October” .
CFO on margins and mix: “Productivity… and the mix shift towards software is also a tailwind to the gross profit” .
Product launches: Certara announced Certara IQ (AI-powered QSP platform) and Phoenix Cloud/TFL Studio to speed PK/PD workflows; management positions these as key growth engines into 2026 .

Q&A Highlights

Tier 1 services timing: Hesitancy continued into October; some deals pushed to Q4 and 2026; expect Q4 book-to-bill below historical 1.3–1.4x .
Gross margin drivers: Services productivity from prior cost actions and mix shift to software supported gross profit .
AI/QSP strategy: Certara IQ targets standardization and reuse; aims to make consultants and customers more efficient and build reusable foundational models .
2026 outlook: Stabilization expected with software performing to plan and services as the swing factor; Tier 3 services showing double-digit growth in biosimulation, partially offsetting Tier 1 softness .
Capital allocation and financing: Term loan repriced post-Q3, saving ~$0.7M annually from 2026; ~$41M shares repurchased YTD .

Estimates Context

Q3 2025 vs S&P Global consensus: Revenue $104.6M vs $104.6M*; adjusted EPS $0.14 vs Primary EPS consensus $0.11*; indicates a modest top-line in-line and an EPS beat (note S&P “Primary EPS” often reflects adjusted/normalized EPS methodology)* .
Forward consensus (quarterly): Q4 2025 revenue $103.7M*, EPS $0.10*; Q1 2026 revenue $110.9M*, EPS $0.14*. Coverage count: Rev ests (11 Q4, 8 Q1’26); EPS ests (12 Q4, 9 Q1’26).
Notes: Asterisked values are from S&P Global; Values retrieved from S&P Global.

Metric	Q3 2025 Actual	Q3 2025 Consensus*	Q4 2025 Consensus*	Q1 2026 Consensus*
Revenue ($M)	$104.6	$104.6*	$103.7*	$110.9*
Primary/Adjusted EPS ($)	$0.14 (Adj)	$0.11*	$0.10*	$0.14*
# of Estimates (Rev / EPS)	—	9 / 10*	11 / 12*	8 / 9*

Key Takeaways for Investors

Software-led model delivering profitability leverage: software growth (+22% y/y) and mix helped lift adjusted EBITDA margin to 34% even as services bookings softened .
Near-term bookings risk in Tier 1 services: continued hesitancy is muting Q4 seasonality; watch services book-to-bill and regulatory services trajectory into Q4/early 2026 .
Guidance quality improved: narrowed revenue range and higher profitability guidance (margin and EPS) signal cost/mix discipline despite macro softness .
New product catalysts into 2026: Certara IQ and Phoenix Cloud/TFL Studio can broaden adoption (including discovery/preclinical) and standardize QSP workflows; monitor early adoption and conversion to subscription/ratable mix .
Capital allocation supportive: term loan repricing and buybacks (~$41M YTD) support EPS; lower share guidance (160–162M) reflects repurchases .
Segment mix matters: license-heavy Chemaxon dilutes ratable mix near term but adds growth; organic software +6% y/y and services growth led by QSP remain core to the thesis .

Appendix: Source references

Q3’25 8-K and press release: detailed financials, guidance, bookings, non-GAAP reconciliations .
Q3’25 earnings slides: margins time series, KPIs, outlook assumptions .
Q3’25 call transcript: Tier 1 commentary, 2026 tone, mix, repricing, buybacks .
Prior quarters’ press releases for trends: Q2’25 and Q1’25 results and guidance .

Notes: Consensus estimates are from S&P Global and are marked with an asterisk; Values retrieved from S&P Global.*

Certara, Inc. (CERT)·Q3 2025 Earnings Summary