Executive Summary

Q4 2024 was solid: revenue $100.4M (+14% y/y), adjusted EBITDA $33.5M (+13% y/y, 33% margin), and GAAP diluted EPS $0.04, aided by strong software growth and Chemaxon contribution; bookings were robust at $144.5M (+22% y/y) .
Software revenue rose 26% y/y to $42.3M (software bookings +38% y/y), while services revenue grew 7% y/y to $58.1M (services bookings +12% y/y) .
FY25 guidance introduced: revenue $415–$425M, adjusted EBITDA margin 30–32%, adjusted diluted EPS $0.42–$0.46; Chemaxon expected to contribute $23–$25M, with ~100 bps margin step-down vs FY24 about half due to Chemaxon and half due to incremental investments .
Management remains cautious on end markets (elongated decision cycles at Tier 1; slower pull-through at Tier 3) but sees share gains from product investments (AI, Cloud, Simcyp/Pinnacle21) and wallet-share expansion as catalysts .

What Went Well and What Went Wrong

What Went Well

Strong software execution: Q4 software revenue +26% y/y to $42.3M and software bookings +38% y/y to $59.7M, with Chemaxon ahead of expectations; “solid performance in our core biosimulation business” and contributions “ahead of our expectations” .
Bookings strength: Total bookings $144.5M (+22% y/y); services bookings +12% y/y; regulatory services bookings returned to growth in Q4 (mid-single digits at Tier 1) supporting 2025 revenue .
AI/regulatory-writing traction: CoAuthor launched, multiple paying customers, expected to reduce drafting time materially (first-draft reduction “north of 60%”) and generate “millions of dollars” of revenue in 2025 .

What Went Wrong

Tier 1 caution and elongated deal cycles pressured renewals and services; software net retention rate dipped to 106% in Q4 (vs 108% FY), driven by Tier 1 spending patterns affecting Phoenix and, to a lesser extent, Pinnacle 21 .
Mix shift and margin optics: Subscription mix fell to 63% in Q4 from 68% y/y due to Chemaxon’s higher term-license mix; FY25 adjusted EBITDA margin guided down to 30–32% (~100 bps below FY24), half from Chemaxon, half from incremental R&D/AI investment .
Regulatory services trajectory: FY24 regulatory bookings declined double digits despite a Q4 rebound; management continues strategic review of the regulatory writing business (limited commentary until decision) .

Financial Results

Income Statement and Profitability

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$88.0	$93.3	$94.8	$100.4
GAAP Diluted EPS ($)	($0.08)	($0.08)	($0.01)	$0.04
Adjusted Diluted EPS ($)	$0.09	$0.07	$0.13	$0.15
Adjusted EBITDA ($USD Millions)	$29.6	$26.3	$33.1	$33.5
Adjusted EBITDA Margin (%)	—	28.2%	35%	33%

Notes: Adjusted EBITDA margin not disclosed for Q4 2023; Q4 2024 margin provided in remarks .

Segment Revenue

Segment	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Software Revenue ($USD Millions)	$33.6	$38.2	$35.9	$42.3
Services Revenue ($USD Millions)	$54.4	$55.1	$58.9	$58.1

Bookings

Bookings	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Bookings ($USD Millions)	$118.9	$98.9	$96.1	$144.5
Software Bookings ($USD Millions)	$43.3	$41.8	$34.8	$59.7
Services Bookings ($USD Millions)	$75.6	$57.1	$61.3	$84.8

KPIs

KPI	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Software Subscription/Ratable Mix (%)	68%	65%	72%	63%
Software Net Retention Rate (%)	—	108%	108%	106%

Selected customer metrics at FY-end: 2,400+ life sciences customers; 431 customers with ACV >$100K; 67 customers with ACV >$1M (as of Dec 31, 2024) .

Guidance Changes

FY25 Guidance Introduced

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2025	—	$415–$425	New
Adjusted EBITDA Margin (%)	FY 2025	—	30–32	New
Adjusted Diluted EPS ($)	FY 2025	—	$0.42–$0.46	New
Fully Diluted Shares (Millions)	FY 2025	—	162–164	New
Tax Rate (%)	FY 2025	—	25–30	New
Chemaxon Revenue ($USD Millions)	FY 2025	—	$23–$25	New

FY24 Actuals vs Q3 Updated Guidance

Metric	Q3 2024 Guidance	FY24 Actual	Outcome
Revenue ($USD Millions)	$380–$385	$385.1	High end achieved
Adjusted EBITDA ($USD Millions)	$120–$124	$122.0	In range
Adjusted Diluted EPS ($)	$0.41–$0.44	$0.45	Beat
Fully Diluted Shares (Millions)	160–162	160.4 avg	In range
Tax Rate (%)	25–30	Not explicitly disclosed	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
AI/technology initiatives	CoAuthor launch; Simcyp v23 with AI features; Certara Cloud early rollout	Expanded AI capability; >100 publications; Cloud integration strategy	CoAuthor traction (paying customers; 60%+ first-draft time reduction); continued AI investment	Strengthening adoption and monetization
End-market caution (Tier 1/3)	Tier 1 cautious; Tier 3 “green shoots”	Stability vs Q2; elongated decision cycles; removed some Q4 seasonality	Tier 1 layoffs/prioritization; Tier 3 slower pull-through; guide assumes similar environment to 2024	Persistent caution; cautious FY25 posture
Software momentum	Software revenue +13% y/y; bookings +17%	Software revenue +15% y/y; bookings +28%	Software revenue +26% y/y; bookings +38%; Chemaxon ahead of expectations	Accelerating growth with M&A tailwind
Services trajectory	Services −3% y/y; bookings +14%	Services +9% y/y; bookings +6%; regulatory weaker	Services +7% y/y; bookings +12%; regulatory bookings returned to growth in Q4	Recovering, helped by Tier 1 regulatory
Regulatory writing strategy	Business integrated with CoAuthor; pricing modest	Strategic review commenced; bookings under pressure	Review ongoing; limited comments until decision; Q4 regulatory bookings returned to growth	Decision pending; mixed fundamentals
Chemaxon integration	Acquisition announced; margin below CERT average, roadmap to improve	Closed; ~$5M Q4 rev expected; margin improvement plan	$6.6M Q4 rev delivered; FY25 $23–$25M; ~50% of ~100bps margin step-down	Ahead of plan; integrating into platform
Platform and Cloud	Early Cloud rollout to reduce IT/security friction	Cloud acts as platform glue; aids upgrades and cross-sell	Continued platform vision to integrate across discovery→clinic	Platform narrative gaining traction

Management Commentary

“We are pleased with our fourth quarter results, which reflect solid performance in our core biosimulation business and contribution from Chemaxon that was ahead of our expectations.” — CEO William F. Feehery .
“We expect adjusted EBITDA margins will remain in the low thirties in 2025, as we continue to invest in R&D and integrate Chemaxon.” — CFO John Gallagher .
“The software net retention rate was 106% in the quarter and 108% on the year… consistent with our long-term growth profile.” — CFO John Gallagher .
“You can reduce the amount of time to create a new document by a lot, maybe north of 60%… we have multiple paying customers [for CoAuthor].” — CEO William F. Feehery .
“There’s a significant opportunity for growth here… good opportunity to put some of those profits back into growing the software… with a pipeline of products starting basically now.” — CEO William F. Feehery .

Q&A Highlights

Guidance drivers and end-market sensitivity: High end vs low end hinges on Tier 1 layoffs/prioritization and Tier 3 pull-through speed; improved environment pushes to high end, deterioration to low end .
Margin outlook: FY25 margin down ~100 bps vs FY24; ~50 bps due to Chemaxon, ~50 bps due to incremental R&D/AI investment; Chemaxon targeted to corporate margins exiting FY25 .
Wallet share and product investments: Management sees share gains via AI features, Simcyp/Pinnacle21 enhancements, and integrated platform (Cloud) discussions with senior pharma stakeholders .
Net retention and renewals: Q4 software NRR 106% (vs 108% FY) pressured by Tier 1 renewals (Phoenix, Pinnacle); Tier 3 performance strong across software and biosim services .
Segment organic growth context: FY25 organic growth guided 4–6% overall; services low-single digits (2–4%), software organic 6–8% (reported 16–19% including Chemaxon) .

Estimates Context

Wall Street consensus estimates from S&P Global were unavailable at the time of analysis due to a data access limitation; therefore, comparisons to consensus EPS and revenue for Q4 2024 could not be provided (SPGI request limit exceeded). If needed, we can attempt retrieval again later to add this comparison [GetEstimates error].

Key Takeaways for Investors

Momentum shifting to software: double-digit y/y growth and outsized bookings suggest sustained demand for biosimulation tools; Chemaxon adds discovery-scale reach and near-term revenue tailwind .
FY25 posture is prudent but invest-to-grow: margins guided to 30–32% reflecting disciplined R&D/AI investment; organic growth targeted at 4–6% with Chemaxon adding 23–25M .
Tier dynamics matter: Tier 1 caution elongates cycles and affects renewals; Tier 3 strength supports biosim services; watch for improving decision velocity as a catalyst for guidance upshift .
Regulatory services is a swing factor: Q4 bookings rebound is positive, but strategic review outcome could reshape segment mix and capital allocation priorities .
Platform narrative gaining traction: integration of Simcyp, Pinnacle21, Chemaxon, and Cloud positions CERT to expand wallet share and senior-level engagement at pharma, a potential multiple driver .
Near-term trading implications: Strong bookings and software growth vs cautious macro implies balanced risk-reward into FY25 prints; catalysts include CoAuthor traction, Chemaxon integration milestones, and clarity on regulatory writing strategy .
Medium-term thesis: CERT is building an end-to-end biosimulation platform with AI augmentation; if investments convert to higher organic software growth and margin normalization post-integration, earnings power and valuation could expand .

Other Relevant Press Releases (Q4 2024 context)

Certara completed the Chemaxon acquisition on Oct 2, 2024; near-term priorities include integrating cheminformatics into D360 and Simcyp, and leveraging Certara.AI across discovery workflows; Chemaxon expected to generate >$20M software revenue in 2024 .
Preliminary Q4/FY24 results and reporting schedules were communicated in January 2025; final Q4/FY24 press release (Feb 26, 2025) carries full GAAP/non-GAAP reconciliations and FY25 guidance .

Certara, Inc. (CERT)·Q4 2024 Earnings Summary