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Image source: The Motley Fool. Tuesday, Aug. 4, 2026, at 8:30 a.m. ET Chief Executive Officer - Jon Resnick Interim Chief Financial Officer - Faiz Mohammed Investor Relations - Jay Liu Operator: Good day, and thank you for standing by. Welcome to the Certara Second Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jay Liu, Investor Relations at LifeSci. Please go ahead. Jay Liu: Good morning, everyone. Thank you all for participating in today's conference call. On the call from Certara, we have Jon Resnick, Chief Executive Officer; and Faiz Mohammed, Interim Chief Financial Officer. Earlier today, Certara released financial results for the quarter ended June 30, 2026. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements, and actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to Slide 2 in the accompanying presentation titled Second Quarter 2026 Financial Results for additional information, which you can find on the company's Investor Relations website. In their remarks or responses to questions, management may mention some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in the recent earnings press release available on the company's website. Please refer to the reconciliation tables in the accompanying materials for additional information. This conference call contains time-sensitive information and is accurate only as of today, August 4, 2026. Certara disclaims any obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I will turn the call over to Jon. Jon Resnick: Thank you for joining today's call. Before I get into our results, I want to highlight the appointment of our new Chief Commercial Officer, which we announced earlier this morning. This reflects our commitment to a new, more impactful go-to-market approach, which I'll cover in more detail shortly. The second quarter was about executing on our commitments. Overall, we are pleased with our progress. We are transforming Certara into a company we believe is capable of delivering sustainable double-digit growth. We still have work to do, but we are on the right path. We are executing against our plan. Our foundation is strengthening and the macro market conditions, biopharma spending, clinical trial starts and new regulatory guidance continue to be in our favor. I'll start with our top line financials, then move to our strategic and operational priorities, our client impact and finally, how we are leveraging AI. Top line results in the quarter were in line with expectations and guidance. Overall, revenue growth was modest at 1% with software revenue growing 4% and service revenue declining 3%. On software, our renewed focus on driving new growth is building momentum. Normalizing for the Chemaxon acquisition, trailing 12-month bookings grew 7% exiting the first half, up sharply from 0.8% exiting 2025. Overall, software revenue now represents 53% of our business versus 40% just 2 years ago. Service bookings lagged in the quarter with a book-to-bill of 1.07. Services bookings were impacted in part by the carve-out of our regulatory and medical writing business. In the quarter, we also began implementing several changes to the broader services go-to-market model, which we will continue to refine. Leading indicators are positive. Our pipeline grew 27% year-on-year exiting the quarter, which we anticipate translating into revenue growth in the back half of 2026. Today, we are reaffirming our guidance range of 0% to 4% for full year revenue growth. Shifting to the key actions we have taken to improve our ability to drive growth. In February, we outlined bold initiatives to more sharply focus the organization on its ability to deliver. And in Q2, we continued implementing them. Maybe divestiture was our first step in sharpening our strategy, rebalancing Certara while improving our overall financial predictability and strengthening our software services flywheel. We have reprioritized our product portfolio to focus on key growth areas and adjusted our road maps to accelerate AI. Our reorganization around 2 business units, Model Informed Discovery and Drug Development, or MID3, and Accelerated Clinical evidence or ACE, is expected to better align our business to how customers consume our products and our services. We have taken steps to streamline our cost base. In May, we executed a reduction in force focused predominantly on overhead, impacting approximately 5% of our global employee base. This action, combined with other steps towards operational excellence is expected to result in a run rate savings of approximately $13 million. These reductions allow us to address some of the stranded costs from the divestiture and accelerate our investments in innovation. We're also redesigning our commercial go-to-market engine to tightly integrate sales and marketing in support of the business units. This is expected to activate growth across all segments, extend our partnership models and drive adoption of new customer use cases. As part of that, I'm excited to announce Julien Perrier as our new Chief Commercial Officer, effective August 1. Julien brings nearly 2 decades of international commercial leadership across global biopharma, technology-enabled scientific services and AI-driven biotechnology. Most recently, he was CEO of an AI-powered diagnostic company. I'm also pleased to announce that Eric Jahn has been promoted to CIO. Eric will be critical in enabling our global scalability and optimizing internal AI systems to drive growth. Now turning to our unique value proposition and how it translates to customer impact. Certara sits at a rare intersection, regulatory and scientific leadership, proprietary software and AI. We serve more than 2,600 customers in over 70 countries with nearly 160,000 daily users of our software. The ecosystem we sit in amplifies our positioning. Regulators are accelerating model-informed approaches into policy. This quarter, HHS launched Operation TrialBlazer to speed up early-stage clinical trials and the FDA issued new guidance backing quantitative systems pharmacology or QSP modeling for first-in-human dosing. In July, ICH M15 took effect at EMA, giving U.S. and Europe a shared standard for model-informed drug development for the first time. Certara is at the forefront of helping shape these policies. Our scientists are in direct dialogue with agencies on how modeling can optimize trial design and strengthen evidence. Their leadership is evident in the numbers, 62 peer-reviewed publications this quarter alone, spanning AI and machine learning, rare populations and the cutting edge of science. That science shows up directly in the products and services our customers buy. In the quarter, every one of the 13 novel therapies the FDA approved came from a Certara client. One was for Eli Lilly's orforglipron, the first once-daily non-peptide oral GLP-1 therapy for obesity. Certara's Simcyp Simulator supported the drug-to-drug interaction labeling and helped characterize how slower gastric emptying affects dosing. For patients, this means a therapy that can be taken any time of day and no longer requires the inconvenience of self-injection. This product was approved in just 50 days, the fastest new molecular entity approval since 2002. We saw the same pattern in rare disease where our clinical pharmacology and pharmacometrics teams partnered with a biopharma company on the evidence package behind the FDA's approval of a new therapy for rare autoimmune condition with historically few treatment. And in oncology, Certara Scientists partnered with Memorial Sloan Kettering to build a virtual patient model on our QXP platform for CAR-T therapy in multiple myeloma, individualizing treatment and optimizing trials of novel combination therapies. Our software business is seeing strong momentum from AI and the movement to the cloud. Phoenix, our pharmacometrics modeling platform has won 30 cloud implementations this year across client segments. Phoenix is one of our core launch points for integrated AI capabilities. Additionally, we grew our footprint globally this quarter. Our first major Simcyp win in China, expanding engagement across the Middle East and in Japan, a full modeling collaboration, delivering a first-in-human dose estimate through Certara IQ, our AI-powered QSP platform. Speaking about AI, we believe AI accelerates how we deliver customer value. With 25 years of accumulated scientific and operational data, deep scientific judgment, proven algorithms and software embedded in the workflows of both clients and regulators. Certara has exactly what it takes to optimize how AI benefits the regulated environments we serve. Generic AI tools don't have the same level of specialization and cannot provide the accountability l that Certara can. Let me highlight 3 examples from the quarter to illustrate how AI is helping us drive revenue growth and margin efficiencies. First, we are embedding AI across our product development and operations teams to drive speed and efficiency. Up to 85% of our new code is now AI-assisted. And we are seeing a 65% year-on-year increase in the rate of development per software engineer. We are connecting our internal systems and automating workflows across our functions. Agents are cutting cycle times by as much as 90% in areas like legal and IT. And our sales teams now get daily automated signals from our AI platform to drive prospecting and pipeline. Second, AI is enabling new customer use cases, powering new workflows and enhancing our existing software products. The integration of D360 and Chemaxon Design Hub will enable scientists to connect experimental data, scientific hypotheses and candidate compound design into a single workflow. Our next-generation platform will allow customers to leverage our software products alongside Frontier AI models, including NVIDIA's BioNeMo agent toolkit. We are enhancing functionality across several products, including Phoenix Cloud, Pinnacle, CertaraIQ, D360 and CoAuthor. As an example, CoAuthor, which has been used in more than 400 regulatory submissions, now provides nearly 600 AI agents, driving 40% productivity increase in drafting quality control documents and over 90% accuracy summarizing complex databases. And third, AI agents are now making our scientific services more productive. Proprietary scientific Agentic workflow is accelerating delivery steps by up to 80% for certain tasks. This allows our scientists to spend more time on activities that require human judgment. Importantly, our scientists remain at the center of every decision, creating an accountability layer that AI alone cannot provide. This protects the trust, reproducibility and auditability our customers and regulators depend on. In closing, today, we are focused on growth and instilling operational discipline into our business. We are aligning the organization behind our strategy, resetting our operational model and rightsizing our cost base. Our sights are also set on the future. Certara is well positioned to drive transformative growth, defining the science needed to accelerate drug development. With a broad customer base, deeply embedded software, we believe we are uniquely situated to lead MIDD adoption and growth that will meaningfully impact our customers and the patients they serve. With that, I'll turn the call over to Faiz, who will go over the financials. Faiz? Faiz Mohammed: Thank you, Jon. Before I review the quarter, my comments on continuing operations include final adjustments relating to the divestiture of the regulatory and medical writing business. Our bookings discussion also excludes this divestiture. Through the close on May 8, that business contributed $19.2 million of revenue and $7.5 million of adjusted EBITDA, both in discontinued operations. Turning to the income statement. Total revenue for the 3 months ending June 30, 2026, was $93.3 million, representing year-over-year growth of 1% on a reported basis. Total bookings in the second quarter were $98.3 million, which increased 1% from the prior year. Trailing 12-month bookings were $405.4 million, increasing 3%. Software revenue was $48.8 million in the second quarter, which increased 4% over the prior year on a reported basis. Growth in the quarter was driven by strength in Simcyp, Phoenix and Pinnacle 21. Software bookings were $50.7 million in the second quarter, which increased 9% from the prior year period. Trailing 12-month software bookings were $196.4 million, up 8% year-over-year. Services revenue was $44.5 million in the second quarter, down 3% versus the prior year period on a reported basis. Services bookings in the second quarter were $47.6 million, which declined 6% from the prior year period. Trailing 12-month services bookings were $209 million, down 1% compared to the prior period. Total cost of revenue for the second quarter of 2026 was $35.1 million compared to $34.3 million in the second quarter of 2025. Total operating expenses for the second quarter of 2026 were $58.3 million compared to $50.4 million in the second quarter of 2025, an increase of $7.9 million. This increase was primarily driven by the absence of a $5.7 million favorable contingent consideration adjustment in the prior year period. Adjusted EBITDA for the second quarter of 2026 was $26.2 million compared to $27 million in the second quarter of 2025. Adjusted EBITDA margin in the quarter was 28.1%. This decline is largely attributed to stranded costs related to the divestiture, which I will discuss in a moment. Wrapping up the income statement. Note that GAAP net income and EPS are both impacted by nonrecurring items. Net loss from continuing operations for the second quarter of 2026 was $6.1 million compared to net income from continuing operations of $1.5 million in the second quarter of 2025. The change primarily reflects the absence of a $5.7 million favorable contingent consideration adjustment recorded in the prior year period, a $2.9 million unfavorable swing in currency expense and a $2.2 million increase in reorganization costs, partially offset by a lower income tax expense. Adjusted net income for the second quarter of 2026 was $12.5 million compared to $12.7 million in the second quarter of 2025. Diluted loss per share for the second quarter of 2026 was $0.04 compared to diluted earnings per share of $0.01 in the second quarter of 2025. Adjusted diluted earnings per share for the second quarter of 2026 were $0.08 compared to $0.08 per share in the second quarter of 2025. Moving to the balance sheet. We finished the quarter with $184.1 million in cash and cash equivalents. As of June 30, 2026, we had $294 million of outstanding borrowings on our term loan and $100 million availability under our revolving credit facility. In the second quarter, we repurchased $17.4 million in shares, which completed a $100 million share repurchase program previously authorized by the Board. In the third quarter, our Board approved a new $50 million share repurchase program, reflecting our continued confidence in the business and our disciplined approach to capital allocation. Turning to our outlook for the remainder of the year. We continue to expect 2026 revenue growth in the range of 0% to 4%, which translates into full year revenue of $367 million to $382 million on a comparable continuing operations basis. This reflects the impact of the divestiture of our regulatory and medical writing business we announced on May 8. We anticipate full year software revenue to be at or above the high end of the 0% to 4% range for the year. We have greater visibility into the software business than we did last quarter as we continue to see a shift from desktop to cloud-based product mix. In services, we expect full year to be at or below the low end of 0% to 4% range. As Jon mentioned, we remain focused on improving performance in this part of our business. Turning to margins. We expect full year 2026 adjusted EBITDA margin in the range of 29% to 31% compared to 30% to 32% range we provided in May. This change reflects the impact of the divestiture of our regulatory and medical writing business and is not related to the underlying performance of our remaining business. As we noted last quarter, the divestiture generated approximately $17 million of adjusted EBITDA in 2025, excluding unallocated overhead costs. A portion of that shared infrastructure remains with us, while the associated revenue does not. The reduction in force we completed at the start of the third quarter offset a meaningful portion of that impact, and we expect margins to improve through the second half as those savings are realized. Factoring in the divestiture, we now expect full year adjusted diluted EPS from continuing operations to be in the range of $0.31 to $0.36 per share. Fully diluted shares are expected to be in the range of 155 million to 157 million, and we are modeling an effective tax rate of approximately 30%. With that, we will open up the call for Q&A. Operator, can you please open the line? Operator: [Operator Instructions]. Our first question is from Craig Hettenbach with Morgan Stanley. Craig Hettenbach: So Jon, it's now been kind of a couple of quarters since you realigned kind of the sales and go-to-market strategy. Just would love an update on kind of what's working to date and then just some of the milestones or things to watch out for to execute on that. Jon Resnick: Great. Thanks, Craig. So yes, it's been a couple of quarters. I joined in January. The changes that we've made to the go-to-market model really have come into effect in Q2 and beginning and have fully been rolled out in July, obviously, with the announcement of the new Chief Commercial Officer today. So we're still, I'd say, in kind of early innings in terms of rotating the model itself. I've talked a lot about some of the kind of leading indicators I pay attention to on the software side of the business, we shed a lot of light on things like ARR and kind of future revenue. We're seeing really good kind of future indicators around that with revenue accumulation. That's been a focus from a go-to-market standpoint on net new sales in addition to renewals. The services side has been a little bit different. It's been a focus on getting our specialists and our experts back out into market and changing -- making some of the changes to the model that was put into place in '24 and 2025. That is early change days, but is yielding positive indicator. I look at things like pipeline creation, which I highlighted in the earlier remarks, which are up, what, 28%, 29% year-on-year, which is a positive indicator around it. So still have work to do. The end market, we believe, is incredibly strong. We've made changes both to the software and to the service side and to the overall kind of engagement model that we have. We've got Julien announced today and tracking where I think you'd expect to be on the positive leading indicators. Craig Hettenbach: Got it. And then just a follow-up. You had announced a partnership with NVIDIA a few weeks ago. Considering they've been very active with many life science companies in terms of various partnerships. Is there anything you would call out that's most unique for Certara in terms of what you're looking to do with NVIDIA and how you think about the business implications? Jon Resnick: Yes. So there are a couple of dimensions to the partnership. We talked a little bit about it earlier this morning. First of all, we've been talking increasingly about what we call kind of next-generation platform. Our next-generation platform is how the software offerings that we have within this business will interface with some of the frontier models and some of the existing more generic kind of AI models that exist out in the market. The NVIDIA partnership in part is around that point, allowing the NVIDIA agents to be an interface with our software system. The second area that we've been focused on and we've communicated externally over the last few months is really around new use cases like things like discovery, where some of the high throughput potential will allow us to accelerate time lines and turn through more data to provide, more data to get earlier indicators to help support earlier decision-making. So those are the 2 dimensions I'd point to. You'll certainly hear a lot more for us -- from us in the time coming. NVIDIA partnership, obviously, is great. I think the biggest thing for a company like Certara, I think it's a signal of a different type of partnering relationship and a different type of role in the ecosystem. to my knowledge, it's the first major kind of technology partnership, and there are several other discussions as well as we kind of look to take the next step with how we're used broadly by our customers. Operator: One moment for our next question that comes from Brendan Smith with TD Cowen. Brendan Smith: Actually, I just wanted to ask quickly about net retention rate. I think we noticed in the filing, it looks just down a bit sequentially and maybe year-over-year. So I'm wondering if there's any nuance there in the quarter we should be aware of or any kind of customer feedback you've been hearing just in Q2? And then I guess, you mentioned, Jon, in your prepared remarks, you kind of rightsizing the company to get to that sustainable double-digit growth. I guess, do you have a time frame in mind over which you hope to kind of hit that? And I guess just from a go-to-market strategy, like what do you see as kind of the most important inflections to really supercharge that? Is it like new product rollouts the cloud-based monetization? Just kind of any thoughts on that would be great. Jon Resnick: Yes. Thanks, Bernie, and thanks for the question. So on NRR, I don't -- no, I don't think there's any particular issue with NRR. Absolute renewal rates of the organization were up in the quarter, actually slightly ahead of our expectation. There's a little bit of kind of time effect that goes in. There's a little bit of a mix effect between kind of ratable and on-prem work that happens that has some changes in the timing of different things that they're hitting. But there's nothing that I'd speak to that is unusual or out of expectation. I think on the whole on software, we're pretty happy with where we sit and pipeline looks good. So it's a focus on continuing to execute, continuing to get the that renewal business through and continuing to get net new sales. That's what the team is incentivized and what the team is focused on. In terms of -- and your second question, look, I continue to say what I've said pretty consistently since I joined, which is the end market is strong. Our products are exceptional. We have market-leading products across multiple dimensions. What we historically have done less well is execution around it. We're in the process of making significant changes to way this organization works, lining up places in the right direction. I'm taking a very midterm view in terms of that -- when that inflection point will fully be able to be realized. We're doing the things that we need to do in terms of setting the portfolio for long-term growth, making the investments, changing the P&L models and the operating models, changing the go-to-market incentives and the go-to-market model, changing the CCO to ensure that we're positioned to be sustainable and to have the structured platform to grow off. So I don't think there's any one thing that needs to happen. I think we've taken the hard steps over the last 6 months to put those building blocks in the right places. I'm pretty pleased with the progress we're making. Obviously, today, with the announcement of the new CCO and the new go-to-market model, we talked about the leading indicators around ARR and pipeline creation on the services side, we need execution against that. And I think that will be the thing that will be the early sign for you in terms of inflection. Operator: One moment for our next question that comes from Luke Sergott with Barclays. Jacob Putman: This is Jake on for Luke. You mentioned breaking into China for the first time. I was wondering if you could talk about the significance of that, maybe your exposure in the region and the broader opportunity that you see there. Jon Resnick: Okay. Thanks, Jake. So yes, so I think one of the things we would like to emphasize in -- yes, one of the things that we'd like to emphasize as we think about this business is it's truly a global business. It's truly an international business. When we talk about regulatory trends, I think there's a bias and a tendency to focus on the FDA. But things like ICH M15, if you look at the standards that are happening, these are really global effects. And a big percentage of the pharmaceutical population biopharma world is obviously here. But we are quite bullish on the opportunities in both Europe and Asia. If we look at those 2 geographies, those are both attractive growth opportunities for us. And as I kind of sat down and started to do some new planning with our new CCO, those are clear growth options and priorities for us. We have a foundation. We've built businesses out there over the last few months platforms for teams out there. We see a lot of potential -- growth potential. I think what you're seeing there in China, Japan, the Middle East is these are not huge contributors to our overall business, but we think on the whole, these are going to be outsized growth potential for us as we continue to focus on international opportunities. Operator: Our next question comes from the line of Michael Cherny with Leerink Partners. Michael Cherny: Maybe if I can tie back to the question regarding the NVIDIA partnership. As you think about this partnership maybe in construct of the broader offering, how are you measuring timing on returns? And how are you measuring your broader partnership functionality capabilities as you also work to reposition the go-to-market strategy? Jon Resnick: Okay. Thanks for the question. So NVIDIA partnership is obviously an important enabler. I think, as I said, as I mentioned before, I think you'll be hearing other things from us in the coming weeks and months in terms of other partnerships. Look, I think we all recognize that this is a fast-moving ecosystem that we all need to -- that we need to play in multiple dimensions. And I think what you're seeing from us is a modernization of the way we're thinking about this, a relevance of the way that we're thinking about the way our software and our systems can be consumed by clients based on where they sit in a really kind of client-centric way. We haven't put any time line out against the individual products. We talked a little bit about the next-generation AI platform and the functionality and capability that builds, but we haven't yet provided any guidance in terms of timing for impact. But we certainly look at that as an opportunity to -- as we start to look out over the near to midterm as an opportunity to continue to build, continue to find new ways to serve our clients to figure out new ways for them to do new types of science and to consume our software in new and more innovative ways. Michael Cherny: Got it. And just one more follow-up regarding the divestiture. Obviously, capital available. You did some buybacks. I apologize if I missed this. Within the guidance, is there an assumption on any incremental share repurchases and/or plans for capital deployment with the capital cash balance available to you? Jon Resnick: There is no outlined plan of execution. We did highlight the Board has authorized an incremental $50 million in potential buybacks. Our stance on capital allocation hasn't changed. We are incredibly disciplined in terms of what we do. We focus on a combination of long-term strategic opportunity and what the best use of that cash and capital is. But I think you can take the signal of the incremental authorization in terms of where we see some attractiveness here. But there's no time line against it, and there's no outline execution path, just clearly that there's an intent to continue along that path of some buyback. Operator: Our next question is from Jared Haase with William Blair. Christine Rains: This is Christine Rains on for Jared. Hoping you can speak to your expected back half cadence for revenue overall and for software versus services and overall EBITDA given the moving pieces here. Jon Resnick: Thanks, Christine. So look, I think the key thing is our guidance is unchanged. We're continuing to call out the exact same range that we highlighted we were going to call out at the beginning of the year. In terms of second half cadence, I think although we don't guide on sub offerings anyway, I think the pattern that we've seen over the first half of the year with software outperforming services is certainly a pattern we expect to continue into Q3 and Q4. The big factor for us as we start to move into Q3, I talked a little bit about some of the leading indicators. The software indicators on the ARR side are very positive and give us a high degree of confidence on that side. Services, if you go back to kind of basics first principles on this, build up the pipeline, convert that pipeline, move to backlog into revenue burn. Our leading indicators on this are that pipeline creation. And so we're feeling good with the changes that we made. The rate and pace at which that converts, obviously, will drive potential upside on that services line. But our fundamental guidance hasn't -- has not moved, hasn't wavered at all from the range that we put out. And we expect a pattern that we saw in the first half of the year to continue in the second half. Christine Rains: Great. That makes sense. And just double clicking on the EBITDA margin puts and takes for the rest of the year, specifically asking given the risk in 2Q, but lower margin guidance at the midpoint. And also if we should think about margin ending this year as a good jumping off point for next year? Jon Resnick: Yes. So firstly, on margin, let me just clarify. I think what you see is not a lowering the midpoint, but a change to reflect the new composition of the business. The business last year, if you look at excluding the regulatory carve-out that we did, the regulatory medical rating carve-out was a 30% margin business, 30.2% margin business. So coming out of the divestiture and kind of repositioning for the rest of the year, the change is in line with the math of that new business, also factoring in some of the stranded costs that we signaled in the last call that exists. So it's not, I would say, a change in guidance more just a reflection of the discontinued ops new profile of the business. I would point as you move forward, obviously, the stranded cost component is something that we're actively working on within out of the cost structure. We're also trying to free up capital to focus in on AI and some of the new offerings that we're intent on pushing into market. The operational excellence activities that we highlighted, the $13 million in run rate and the RIF, which is mainly focused on overhead were to really address both those points. Obviously, the run rate won't impact fully in the second half of the year. That run rate by definition will be into out years. But the intent of that is to protect and to highlight margins and ensure that we're in a good position to hold within the margin and to achieve the margins that we're outlining today. Operator: Our next question from Sean Dodge with BMO Capital Markets. Thomas Kelliher: This is Tom Kelliher on for Sean. Jon, can you talk about the lag between an improving biotech funding backdrop and when that typically starts to translate into demand on both the software and the services side? Jon Resnick: So the majority of our impact tends to have a slight lag. We're not doing a lot of work in the earlier stage discovery. Our stuff starts to click in as that discovery starts to translate to development and the early stage development work moving towards first in human. So there tends to be a lag. As I've said pretty consistently, and I'll say it again, I think we're not dependent on biotech funding or market health at this point. This is an execution component, getting our teams out in front of -- there's plenty of market for us to go out and get. And our focus has been on making the changes that we need to make to our engagement model and to our commercial model to fully capture that opportunity. So yes, like technically speaking, there's a little bit of gap between when things get funded in terms of where they are in the stage of development, and you can see where we kind of click in. But for Certara's recovery story and Certara's inflection story, this is much more about execution, getting out in front of the existing clients, getting out in front of new clients and not dependent on biotech funding in the near term. Thomas Kelliher: Okay. That's helpful. And then just a clarification on the cost savings. Is some or all of that $13 million incremental to the $10 million? I know you had like a cost avoidance plan you talked about before. Is this completely separate... Jon Resnick: Yes, it's the latest update. Yes, we signaled that we would be putting this in place as we kind of look to address the stranded costs in the second half of the year and to obviously change the cost base, so we continue the path of investment and disciplined operating management. So the $13 million is an increase over the former identified plan. So the $13 million is the latest view of run rate savings. We continue to push and continue to do it and we'll continue to -- we'll look to optimize to free up capital to spend on things that are going to drive a return for investors. Operator: Our next question is from Matthew Hewitt with Craig-Hallum Capital Group. Matthew Hewitt: I'm curious if with -- there's been a fair amount of consolidation, both in pharma and biotech as well as one of your peers is getting acquired. And I'm curious if there's any type of disruption that, that creates from a customer perspective, if there's a merger or acquisition occurring, does that kind of slow time lines to getting deals done with the competitor getting taken out? Does that create an opportunity for you? Maybe while they're distracted, you're able to get in and maybe win some new business? Jon Resnick: Thanks, Matthew. There's -- look, I don't -- again, there's plenty of market for Certara. There's no -- we're not going to point to acquisitions of small biotech companies. Obviously, I saw the same FT article you did this week around potential mega mergers, those are a long ways away. There's plenty of market for us. We're -- our focus is execution. Our focus is on commercial operations and getting out in front of our customers. So I'm not going to worry too much about that trend. I understand the rationale for the question, but there's plenty of opportunity for us to continue to grow and accelerate our footprint. In terms of competition, I'm probably not going to comment on that. Look, I think our job is to serve our clients with excellent work, is to lead with science. It's to put the best proposals and the best delivery and the best software in front of our clients, and that's where we're going to focus. So look, this is within our control, not within someone else's acquisition control. This is fully within our ability to execute. Operator: Our next question comes from Scott Schoenhaus with KeyBanc. Scott Schoenhaus: Jon, I wanted to focus on your pipeline commentary up 25%. Can you give us some more color there on what's driving that more services versus software? Is it more smaller SMB or biotech or larger pharma? And then with the new commercial -- Chief Commercial Officer, how are you thinking about executing on this pipeline? Is there a mandate to get this converted more quickly? Any color would be appreciated. Jon Resnick: So look, I focus internally on kind of 2 or 3 metrics. I focus on ARR accumulation on the software side, which continues to build and continues to be very positive. So our software business, we believe, continues to be healthy with a focus on new software continues to be a significant piece of that pipeline. The biggest single change, though, is on the service side. I have been vocal about the -- my difference of opinion on the way that you should be moving this business forward. I believe the market that we roll -- the go-to-market model that was rolled out within Certara 2 years ago, which focused on more of a generalist model was not the right model that we need to focus more on kind of specialist scientific engagement. We need to get our scientists out in front of the market more directly. They're the lifeblood of this business. And so we've done a series of things internally to rotate and get the scientists back out in front to hire more of the PhD-led sales teams for -- to get those folks back out in customers. And that's really where you're seeing the biggest spike in pipeline. You're seeing a rejuvenation of that model of that model of engagement leading to a much higher percentage of scientific service in the business, which is exactly what we're positioned to do. So that's the big kind of change that we've seen year-on-year and as for the disproportionate chair. The rate and pace of burn, the time in which we call that inflection point in terms of moving from low single-digit growth into something stronger, obviously, is the rate and pace of that burn. And so that's what we're focused on in the rest of 2026. Yes, obviously, with Julien coming in and a new integrated sales and marketing effort, this is going to be a very different approach, much more data-driven, much more segment-driven, much more targeted. We've built a bunch of AI to help enable our sales teams in a different way. We've got a much different view about getting our scientists out in front of customers in front of conferences, et cetera. So look, we're optimistic about it. With change, obviously, you always have to signal a little bit of caution. You don't want to get too far over your skis in terms of your ski tips in terms of when you make the call. But yes, this is going to be more focused on operations and implementation of the go-to-market model that we've been changing over the last 6 months. Operator: One moment for our last question that comes from Joe Vruwink with Baird. Joseph Vruwink: I wanted to ask about the updated guidance for the year. And sorry if I'm missing something obvious here, but I understand regulatory is now in discontinued ops and that ended up being $19 million. I think the guidance range moved down by about $26 million. What's just the delta between those 2 numbers? Jon Resnick: I'd have to -- so I don't think that's the case. We'd have to go back and walk through your math. The only change that you saw to our top line guidance range, we've said pretty consistently that the business will grow in the 0% to 4% range over the course of 2026. The discontinued operations from the carve-out of the regulatory business, that profile of business in 2025 was $367 million. So if you put the 0% to 4% on top of that, you get to the $367 million to $382 million. So I think it probably is the timing in which you're taking in -- we are reporting out completely without regulatory medical writing where we're moving the Q1 and the first half of Q2 numbers from our ongoing compares. So I think that's probably the math issue, but we can work through it with you offline. Joseph Vruwink: Okay. And then obviously, there's a lot of just draft guidance and discussion on what's going to be the right approach to models and what's going to be the right approach to data and what the regulators accept. Does that create any hesitancy on the part of customers for maybe how they want to engage with Certara, where they engage with Certara? Jon Resnick: I kind of see it as the opposite. Look, there's a handful of very established use cases, and Certara is the go-to player for those are very established use cases, where the things that we've talked about in the last couple of calls is the acceleration of all the new regulatory use cases that are coming out, the maturity of regulators worldwide in terms of not just taking the standard use cases on MIDD, but really trying to transform, whether it's NMEs or QSP or some of the other kind of international standardization that's coming. What we believe -- and by the way, we're actively involved in discussions with regulators worldwide, scientists within Certara are journal editors for the major publications on this front. What we believe is that there's a time lag between when regulators establish a framework and when these start to get built into regular practice. You're seeing that. The number of questions that we are getting is going up exponentially in terms of how do you manage through this. It takes a little bit of time, particularly for the newer use cases to translate from, hey, there's scientific methods to now there's regulatory pathway, regulatory acceptance to it until when the adoption occurs, that's the rationale for us getting our scientists back out there. That's what they're more science-led is to help drive that transformation and the adoption. So I don't see it as a point of distraction for our clients at all. In fact, I think it's a huge opportunity as they start to adopt this into their practice, and we're going to help be partners with them and guiding them in that direction. Operator: All right. This will conclude our Q&A session. I will pass it back to Jon Resnick for final comments. Jon Resnick: Thanks, everyone, for joining. Look forward to some of the subsequent follow-up phone calls over the next couple of hours. Thanks, everyone. Operator: Thank you for participating in today's conference, and you may now disconnect. Before you buy stock in Certara, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Certara wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $395,463!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,268,290!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 4, 2026. This article is a transcript of this conference call produced for The Motley Fool. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is pivoting from a generalist sales model to a specialist, scientist-led engagement approach to better capture market demand for complex modeling services. The divestiture of the regulatory and medical writing business was a strategic move to sharpen focus on the core software-services flywheel and improve financial predictability. Software revenue now constitutes 53% of the business, up from 40% two years ago, reflecting a deliberate shift toward a more scalable, high-margin product mix. A 5% global workforce reduction was executed to eliminate stranded costs from the recent divestiture and redirect capital toward high-growth innovation and AI initiatives. Performance in the quarter was bolstered by global regulatory shifts, such as the ICH M15 standard, which harmonizes model-informed drug development across the U.S. and Europe. The company is leveraging its 25-year proprietary dataset to create an 'accountability layer' for AI, distinguishing its specialized tools from generic AI models in regulated environments. Full-year revenue guidance of 0% to 4% is reaffirmed, with software expected to perform at or above the high end while services may lag at or below the low end. A 27% year-over-year increase in the pipeline exiting Q2 is expected to translate into improved revenue growth during the second half of 2026. Management anticipates that the $13 million in run-rate savings from operational excellence initiatives will fully materialize in future periods to support margin expansion. The transition from desktop to cloud-based software is providing greater visibility into future revenue streams and driving momentum for the Phoenix platform. Strategic focus is shifting toward international expansion in Europe and Asia, specifically targeting outsized growth potential in China, Japan, and the Middle East. The divestiture of the regulatory business resulted in 'stranded costs' where shared infrastructure remains despite the loss of associated revenue, impacting near-term margins. Adjusted EBITDA margin guidance was revised to 29% to 31% solely to reflect the new business composition following the divestiture, not underlying performance issues. A new $50 million share repurchase program was authorized following the completion of a previous $100 million program, signaling confidence in the current valuation. The company reported a net loss from continuing operations of $6.1 million, primarily due to the absence of a prior-year contingent consideration adjustment and currency headwinds. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The partnership enables NVIDIA agents to interface with Certara software and accelerates high-throughput data processing for earlier drug discovery indicators. Management declined to provide specific timelines for financial impact but views it as a modernization of how their software is consumed by clients. The previous generalist sales model was identified as a mistake; the company is now hiring PhD-led sales teams to drive scientific engagement. While pipeline creation is up nearly 29%, management is maintaining a cautious outlook on the 'rate and pace' at which this converts to burned revenue. Certara's performance is not currently dependent on biotech funding cycles because their work typically begins as discovery translates into development. Management emphasized that current growth is an 'execution story' focused on capturing existing market share rather than waiting for macro improvements.

Certara, Inc. (CERT) came out with quarterly earnings of $0.08 per share, missing the Zacks Consensus Estimate of $0.1 per share. This compares to earnings of $0.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -20.00%. A quarter ago, it was expected that this company would post earnings of $0.11 per share when it actually produced earnings of $0.09, delivering a surprise of -18.18%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Certara, which belongs to the Zacks Medical - Biomedical and Genetics industry, posted revenues of $93.27 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 5.71%. This compares to year-ago revenues of $104.57 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Certara shares have lost about 7.2% since the beginning of the year versus the S&P 500's gain of 11%. While Certara has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Certara was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.10 on $95.44 million in revenues for the coming quarter and $0.38 on $399.62 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Biomedical and Genetics is currently in the top 42% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, InflaRx N.V. (IFRX), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This company is expected to post quarterly loss of $0.08 per share in its upcoming report, which represents a year-over-year change of +66.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. InflaRx N.V.'s revenues are expected to be $0.01 million, down 80% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Certara, Inc. (CERT) : Free Stock Analysis Report InflaRx N.V. (IFRX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Certara, Inc.? Here are five stocks we like better. Q2 revenue rose 1% to $93.3 million, as 4% software growth and stronger bookings offset a 3% decline in services revenue. Software now represents 53% of the business, while services bookings were pressured partly by the Regulatory and Medical Writing divestiture. Certara reaffirmed its 2026 revenue outlook of $367 million to $382 million, but lowered its adjusted EBITDA margin forecast to 29%–31% from 30%–32% because of divestiture-related stranded costs and business-mix changes. The company is pursuing significant operational and commercial changes, including a workforce reduction expected to deliver about $13 million in annualized savings, a new commercial organization and expanded AI initiatives. Certara also completed a $100 million stock-repurchase program and authorized an additional $50 million. 3 Momentum Stocks That Could Soar Post-Market Volatility Certara (NASDAQ:CERT) reported second-quarter 2026 revenue of $93.3 million, up 1% year over year, as software growth offset a decline in services revenue. Management reaffirmed its full-year revenue outlook while outlining further changes to its commercial organization, cost structure and artificial intelligence strategy. Chief Executive Officer Jon Resnick said the quarter was focused on executing the company’s plan to build a business capable of sustainable double-digit growth. He said Certara’s market backdrop remains favorable, citing biopharma spending, clinical trial starts and regulatory guidance supporting model-informed drug development. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Simulations Plus Stock Drops 15% Despite EPS Beat Software revenue rose 4% year over year to $48.8 million, driven by Simcyp, Phoenix and Pinnacle 21. Software bookings increased 9% to $50.7 million, while trailing 12-month software bookings rose 8% to $196.4 million. Resnick said that, excluding the Chemaxon acquisition, trailing 12-month software bookings growth reached 7% exiting the first half, compared with 0.8% exiting 2025. Software represented 53% of Certara’s business during the quarter, compared with 40% two years earlier, according to Resnick. The company also reported 30 Phoenix cloud implementations so far this year and cited international expansion, including its first major Simcyp win in China, broader activity in the Middle East and a modeling collaboration in Japan. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Are These 3 Small Momentum Stocks Setting Up Big Gains? Services revenue declined 3% to $44.5 million, while services bookings fell 6% to $47.6 million. The services business recorded a book-to-bill ratio of 1.07. Resnick said bookings were affected partly by the carve-out of the Regulatory and Medical Writing business, while Certara also began revising its broader services go-to-market approach. Management pointed to a 27% year-over-year increase in the services pipeline exiting the quarter as a positive leading indicator. During the question-and-answer session, Resnick said the largest improvement in pipeline has come from services after the company moved away from a more generalist sales model and placed greater emphasis on specialist scientific engagements and PhD-led commercial teams. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Interim Chief Financial Officer Faiz Mohammed said Certara’s continuing-operations results include final adjustments related to the divestiture of its Regulatory and Medical Writing business. Through the May 8 closing date, that business contributed $19.2 million in revenue and $7.5 million in adjusted EBITDA, both reported as discontinued operations. Certara implemented a reduction in force in May that primarily affected overhead positions and represented about 5% of its global workforce. Resnick said the action, along with other operational-excellence measures, is expected to generate approximately $13 million in run-rate savings. The company said the savings are intended to address stranded costs following the divestiture and support investments in innovation. The company also reorganized around two business units: Model Informed Discovery and Drug Development, or MID3, and Accelerated Clinical Evidence, or ACE. Resnick said the structure is designed to align the organization with how clients consume Certara’s products and services. Certara appointed Julien Perrier as chief commercial officer effective Aug. 1. Perrier previously led an AI-powered diagnostic company and has nearly two decades of international commercial leadership experience in biopharma, technology-enabled scientific services and AI-driven biotechnology, Resnick said. The company also promoted Eric Jahn to chief information officer. Resnick described the commercial transformation as still being in its early stages. He said changes to the model began taking effect in the second quarter and were fully rolled out in July. The company is integrating sales and marketing around its business units, with an emphasis on data-driven and segment-focused commercial activity. Second-quarter adjusted EBITDA was $26.2 million, down from $27 million a year earlier, and adjusted EBITDA margin was 28.1%. Mohammed attributed the margin decline largely to stranded costs associated with the divestiture. Certara recorded a net loss from continuing operations of $6.1 million, compared with income from continuing operations of $1.5 million in the prior-year quarter. Mohammed said the change reflected the absence of a $5.7 million favorable contingent-consideration adjustment recorded a year earlier, a $2.9 million unfavorable change in currency expense and a $2.2 million increase in reorganization costs, partly offset by lower income tax expense. Adjusted net income was $12.5 million, compared with $12.7 million a year earlier. Adjusted diluted earnings per share was $0.08, unchanged from the prior-year period. Cash and cash equivalents totaled $184.1 million at June 30. Outstanding term-loan borrowings were $294 million, and the company had $100 million available under its revolving credit facility. During the second quarter, Certara repurchased $17.4 million of stock, completing its previously authorized $100 million repurchase program. The board subsequently approved a new $50 million repurchase authorization. Resnick said the company had not established a timeline or specific execution plan for the new authorization. Certara reaffirmed its outlook for 2026 revenue growth of 0% to 4%, representing revenue of $367 million to $382 million on a comparable continuing-operations basis. Management expects software revenue growth to be at or above the high end of that range, while services growth is expected to be at or below the low end. The company now expects adjusted EBITDA margin of 29% to 31% for the year, compared with its prior 30% to 32% range. Mohammed said the revision reflects the divestiture’s effect on business mix and remaining shared infrastructure costs rather than underlying performance in the continuing business. Certara expects adjusted diluted EPS from continuing operations of $0.31 to $0.36, based on 155 million to 157 million fully diluted shares and an effective tax rate of about 30%. Management also highlighted AI-related product and operational efforts. Resnick said up to 85% of newly developed code is AI-assisted, while the rate of development per software engineer has increased 65% year over year. He said internal AI agents have reduced cycle times by as much as 90% in some legal and IT workflows. On the customer side, Certara is integrating D360 and Chemaxon Design Hub and plans for its next-generation platform to work alongside frontier AI models, including NVIDIA’s BioNeMo agent toolkit. Resnick said CoAuthor now includes nearly 600 AI agents and has delivered a 40% productivity increase in drafting quality-control documents, with more than 90% accuracy in summarizing complex data tables. Resnick said Certara views its scientific expertise as an accountability layer for AI use in regulated settings, with scientists remaining responsible for decisions made in scientific-services workflows. Certara is a biosimulation software and services company that partners with pharmaceutical, biotechnology and medical device developers to accelerate drug discovery, development and regulatory approval. The company's platform integrates quantitative pharmacology, real-world evidence, artificial intelligence and machine learning to model and simulate drug behavior across a range of therapeutic areas and patient populations. By applying these mechanistic and data-driven approaches, Certara helps its clients predict clinical outcomes, optimize dosing strategies and streamline decision-making throughout the product lifecycle. The company's offerings are divided into software tools and consulting services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Certara Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Appoints Julien Perrier Chief Commercial Officer Completes previously authorized $100 million share repurchase program; Board authorizes additional $50 million under repurchase program Reaffirms 2026 revenue guidance RADNOR, Pa., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Certara, Inc. (Nasdaq: CERT), a global leader in model-informed drug development, today reported its second quarter 2026 financial results. Second Quarter Highlights from Continuing Operations: Financial results of the Regulatory and Medical Writing business are reported as discontinued operations. The discussion in this earnings release presents the results of continuing operations and excludes amounts related to discontinued operations for all periods presented, unless otherwise noted. Revenue was $93.3 million, compared to $92.4 million in the second quarter of 2025, representing growth of 1%. Net loss was $6.1 million, compared to a net income of $1.5 million in the second quarter of 2025. Adjusted EBITDA was $26.2 million, compared to $27.0 million in the second quarter of 2025, representing a decrease of 3%. “This second quarter was about continuing to execute on our commitments. Overall, we are pleased with our ongoing progress transforming Certara into a company we believe can deliver sustainable double-digit growth,” said Jon Resnick, Chief Executive Officer. “We completed the divestiture of our Regulatory and Medical Writing business, implemented our two new business units, and taken necessary actions to strengthen our leadership team and our commercial model. Our focus in the second half of the year is customer impact and speed of execution.” “Our second quarter results were in line with our expectations, and we remain focused on executing against our full-year plan,” said Faiz Mohammed, Interim Chief Financial Officer. “We continue to expect full-year revenue growth of 0% to 4% on a comparable continuing operations basis, supported by continued strength in software and improving services performance as we move through the second half of the year.” Second Quarter 2026 and Recent Corporate Updates In May, Certara closed the divestiture of its global medical writing and related regulatory services business (“the Regulatory and Medical Writing business”) and announced the reorganization of its company around two business units, Model Informed Discovery and Drug Development (MID3) and Accelerated Clinical Evidence (ACE). In parallel with the reorganization, during the second quarter, Certara executed a reduction in force, focusing predominantly on overhead, impacting approximately 5% of its global employee base. This action, combined with other steps towards operational excellence, is expected to result in a run-rate savings of approximately $13 million. These reductions allow the Company to accelerate innovation and growth and streamline the Company’s cost base, including stranded costs from the divestiture. Certara has appointed Julien Perrier Chief Commercial Officer, effective August 1, 2026. Mr. Perrier brings nearly two decades of international commercial leadership in the life sciences. Most recently, he served as Chief Executive Officer of Ziwig, where he led the commercial development of the AI-powered diagnostic EndoTest. Prior to Ziwig, Mr. Perrier served as a Vice President at IQVIA, Head of the Immunology division, France at AbbVie, and Head of Office Specialty Care Division at Sanofi. As part of Certara’s move to align sales and marketing under a unified commercial leadership model in support of the business units, Mr. Perrier will focus on deepening customer engagement, sharpening go-to-market execution, and ensuring Certara’s products and services deliver clear, demonstrable value to customers worldwide. Certara has appointed Eric Jahn as Chief Information Officer. Mr. Jahn previously served as Senior Vice President, IT. He joined Certara in 2022 and has helped scale the business globally by partnering with all functions as a strategic business partner. Prior to Certara, Mr. Jahn served as Vice President, IT Infrastructure at TIBCO Software and spent seven years at Rocket Software in various IT leadership roles. Second Quarter 2026 Results from Continuing Operations Financial results of the Regulatory and Medical Writing business are reported as discontinued operations. The discussion in this earnings release presents the results of continuing operations and excludes amounts related to discontinued operations for all periods presented, unless otherwise noted. Refer to Note 4 "Divestiture and Discontinued Operation" in our Form 10-Q for the quarter ended June 30, 2026 for further details. Total revenue for the second quarter of 2026 was $93.3 million, representing year-over-year growth of 1%  on a reported basis. Software revenue for the second quarter of 2026 was $48.8 million, representing year-over-year growth of 4% on a reported basis. Services revenue for the second quarter of 2026 was $44.5 million, representing a year-over-year decrease of 3% on a reported basis. Total Bookings for the second quarter of 2026 were $98.3 million, representing a year-over-year increase of 1%. Software Bookings for the second quarter of 2026 were $50.7 million, representing a year-over-year increase of 9%. Services Bookings for the second quarter of 2026 were $47.6 million, representing a year-over-year decrease of 6%. Total cost of revenues for the second quarter of 2026 was $35.1 million, an increase of $0.8 million from $34.3 million in the second quarter of 2025. The increase in cost of revenues was primarily due to a $1.0 million increase in employee-related costs and a $0.9 million increase in professional and consulting expenses, partially offset by a decrease in equity-based compensation expense and other miscellaneous expenses. Total operating expenses for the second quarter of 2026 were $58.3 million, which increased by $7.9 million from $50.4 million in the second quarter of 2025. Higher operating expenses were primarily attributable to a $5.7 million increase related to the remeasurement of the fair value of business acquisition contingent consideration, primarily due to the absence of a non-recurring favorable change recognized in the prior year that reduced expenses in that period, a $1.1 million increase in professional and consulting expenses, a $1.0 million increase in employee-related costs, a $0.8 million increase in depreciation expense, and a $0.6 million increase in executive recruiting expenses, partially offset by a decrease in equity-based compensation expense. Net loss for the second quarter of 2026 was $6.1 million, compared to net income of $1.5 million in the second quarter of 2025. The $7.6 million increase in loss was primarily driven by higher operating expenses, including a $5.7 million increase related to the remeasurement of the fair value of acquisition-related contingent consideration, $1.1 million aggregate increase in executive recruiting and lease abandonment charges, increased total other expenses, and a higher cost of revenue, partially offset by lower tax expense and higher revenue. Diluted loss per share for the second quarter of 2026 was $(0.04), as compared to diluted earnings per share of  $0.01 for the second quarter of 2025. Adjusted EBITDA for the second quarter of 2026 was $26.2 million compared to $27.0 million for the second quarter of 2025, a decrease of $0.8 million. See note (1) in the section titled “A Note on Non-GAAP Financial Measures” below for more information on adjusted EBITDA. Adjusted net income for the second quarter of 2026 was $12.5 million compared to $12.7 million for the second quarter of 2025, a decrease of $0.2 million. Adjusted diluted earnings per share for the second quarter of 2026 was $0.08, compared to $0.08 for the second quarter of 2025. See note (2) in the section titled “A Note on Non-GAAP Financial Measures” below for more information on adjusted net income and adjusted diluted earnings per share. 2026 Financial Outlook Certara is reaffirming its revenue growth and updating its adjusted EBITDA margin, adjusted diluted earnings per share, and fully diluted share guidance for the full year 2026, to reflect the divestiture of the Regulatory and Medical Writing business and Continuing Operations reporting: Revenue growth for Continuing Operations, excluding the Regulatory and Medical Writing business, is expected to be 0% to 4%, or revenue of $367 million to $382 million. Full year 2026 adjusted EBITDA margin for Continuing Operations, excluding the Regulatory and Medical writing business, is expected to be approximately 29% to 31%. Full year adjusted diluted earnings per share for Continuing Operations, excluding the Regulatory and Medical Writing business is expected to be in the range of $0.31 to $0.36. Fully diluted shares are expected to be in the range of 155 million to 157 million. Financial results of the Regulatory and Medical Writing business will be reported as discontinued operations for 2026. Through the transaction closing on May 8, 2026, the year-to-date discontinued operations Revenue was $19.2 million. In the second quarter, the Company repurchased $17.4 million in shares, which completed a $100 million share repurchase program under terms previously authorized by the Board. In the third quarter, the Board approved an additional $50 million under the share repurchase program, reflecting the Company’s continued confidence in the business and its disciplined approach to capital allocation. The program does not have an express expiration date, and all repurchase plans must be brought in advance to the Board. Please note that the Company has not reconciled adjusted EBITDA, adjusted EBITDA margin or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. The Company expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results. Webcast and Conference Call Details Certara will host a conference call today, August 4, 2026, at 8:30 a.m. ET to discuss its second quarter 2026 financial results. Investors interested in listening to the conference call are required to register online in advance of the call. A live and archived webcast of the event will be available on the “Investors” section of the Certara website at https://ir.certara.com. About Certara Certara accelerates medicines using biosimulation software, technology and services to transform traditional drug discovery and development. Its clients include more than 2,600 biopharmaceutical companies, academic institutions, and regulatory agencies across 70 countries. Please visit our website at www.certara.com. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.certara.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. Forward-Looking Statements This press release contains certain statements that constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, with respect to the Company’s full-year guidance. These statements typically contain words such as “believe,” “may,” “potential,” “will,” “plan,” “could,” “estimate,” “expects” and “anticipates” or the negative of these words or other similar terms or expressions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement and involves significant risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct. You should not rely upon forward-looking statements as predictions of future events and actual results, events, or circumstances. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control, including our ability to realize the expected benefits of the divestiture of our regulatory and medical writing business; any deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery and development; our ability to compete within our market; changes or delays in government regulation relating to the biopharmaceutical industry; trends in research and development spending; operational disruptions, funding constraints and policy changes at the Food and Drug Administration and other government agencies; consolidation within the biopharmaceutical industry; our ability to increase successfully our customer base, expand relationships and the products and services we provide and enter new markets; our ability to retain key personnel or recruit additional qualified personnel; risks related to the mischaracterization of our independent contractors; any delays or defects in our release of new or enhanced software or other biosimulation tools; issues relating to implementation, use and development of artificial intelligence and machine learning in our products and services; failure of our existing customers to renew their software licenses or any delays or terminations of contracts or reductions in scope of work by our existing customers; risks related to our contracts with government customers and receipt of government grants; risks related to any future acquisitions and other strategic transactions; the accuracy of our addressable market estimates; our ability to operate successfully a global business and adverse global economic conditions; our ability to comply with applicable trade compliance and economic sanctions laws and regulations; the impact of litigation; the sufficiency of our insurance coverage; our ability to perform our services in accordance with contractual requirements, regulatory standards and ethical considerations; the loss of more than one of our major customers; our ability to raise capital or generate sufficient cash flows; the ability or inability of our bookings to accurately predict our future revenue and our ability to realize the anticipated revenue reflected in our bookings; our ability to comply with anti-corruption laws; risks related to catastrophic events; the application of evolving corporate governance and public disclosure requirements; disruptions in the operations of the third-party providers who host our software solutions or any limitations on their capacity or interference with our use; any unauthorized access to or use of customer or other proprietary or confidential data or other breach of our cybersecurity measures, compliance with privacy and cybersecurity laws and related contractual requirements; our ability to reliably meet our data storage and management requirements, or the experience of any failures or interruptions in the delivery of our services over the internet; our ability to comply with the terms of any licenses governing our use of third-party open source software; our ability to adequately enforce or defend our ownership and use of our intellectual property and other proprietary rights; any allegations that we are infringing, misappropriating or otherwise violating a third party’s intellectual property rights; our ability to comply with healthcare laws; risks related to our indebtedness; any additional impairment of goodwill or other intangible assets; our ability to use net operating losses; the volatility of the market price of our common stock; future sales of our common stock by existing stockholders; the substantial holdings of our largest stockholder; and the other factors detailed under the captions “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, and reports, including the Form 10-K filed by the Company with the Securities and Exchange Commission on February 26, 2026, and subsequent reports filed with the SEC. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, we expressly disclaim any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. A Note on Non-GAAP Financial Measures This press release contains “non-GAAP measures” which are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the Company makes use of the non-GAAP financial measures adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss) and adjusted diluted earnings per share which are not recognized terms under GAAP.  These measures should not be considered as alternatives to net income (loss), net income (loss) margin, or GAAP diluted earnings per share or revenue as measures of financial performance or any other performance measure derived in accordance with GAAP and should not be considered a measure of discretionary cash available to the Company to invest in the growth of its business. The presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the Company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. You should refer to the footnotes below as well as the “Reconciliation of Non-GAAP Financial Measures” section in this press release below for a further explanation of these measures and reconciliations of these non-GAAP measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods. Management uses various financial metrics, including total revenues, income (loss) from operations, net income (loss), and certain non-GAAP measures, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss) and adjusted diluted earnings per share, to make budgeting decisions, to make certain compensation decisions, and to compare the Company’s performance against that of other peer companies using similar measures. In addition, management believes these metrics provide useful measures for period-to-period comparisons of the Company’s business, as they remove the effect of certain non-cash expenses and other items not indicative of its ongoing operating performance. Management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss) and adjusted diluted earnings per share are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical periods.  In addition, these non-GAAP measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance. (1)   Adjusted EBITDA represents net income (loss) excluding interest expense, provision for (benefit from) for income taxes, depreciation and amortization expense, intangible asset amortization, equity-based compensation expense, goodwill impairment, change in fair value of contingent consideration, acquisition and integration expense and other items not indicative of our ongoing operating performance. Adjusted EBITDA margin represents adjusted EBITDA divided by revenue. (2)   Adjusted net income and adjusted diluted earnings per share exclude the effect of equity-based compensation expense, amortization of acquisition-related intangible assets, goodwill impairment, change in fair value of contingent consideration, acquisition and integration expense, and other items not indicative of our ongoing operating performance as well as income tax provision adjustment for such charges. In evaluating adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted earnings per share, you should be aware that in the future the Company may incur expenses similar to those eliminated in this presentation and this presentation should not be construed as an inference that future results will be unaffected by unusual items. Investor Relations and Media Contact: Jeff Warren and Jay [email protected] NON-GAAP FINANCIAL MEASURES The following table reconciles net income (loss) from continuing operations to Adjusted EBITDA: The following table reconciles net income (loss) from continuing operations to adjusted net income: The following tables reconciles diluted earnings per share from continuing operations to adjusted diluted earnings per share: (a)   Represents a measure determined under GAAP. (b)   Represents expense related to equity-based compensation. Equity-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy. (c)   Represents amortization costs associated with acquired intangible assets in connection with business acquisitions. (d)   Represents expense associated with fair value adjustment or adjustment of contingent consideration of business acquisition. (e)   Represents costs associated with mergers and acquisitions and any retention bonuses pursuant to the acquisitions. (f)   Represents expenses related to reorganization, including legal entity reorganization and lease abandonment costs associated with the evaluation of our office space footprint. (g)   Represents the gain/loss related to disposal of fixed assets. (h)   Represents recruiting, relocation expenses, and retention costs related to senior executives. (i)   Represents the income tax effect of the non-GAAP adjustments calculated using the applicable statutory rate by jurisdiction. (j)   Represents potentially dilutive shares that were included from our GAAP diluted weighted average common shares outstanding.

Image source: The Motley Fool. Monday, May 11, 2026 at 8:30 a.m. ET Chief Executive Officer — Jon Resnick Chief Financial Officer — John Gallagher Operator Jon Resnick: Good morning. Thank you all for joining today's call. Since we last spoke, I have crossed over the 100-day mark at Certara, and I continue to be incredibly impressed by many things within the company. We are differentiated by our world-leading scientists, institutional knowledge, regulatory leadership and our fit-for-purpose technology that is embedded in customer and regulators' workflows. Our clinical intelligence capability is the logic built into our technology, mining the latest science and drawing on what our experts know, our interactions with regulators over decades and what thousands of drug development successes and failures have taught us. Certara products and services are integral to the drug development process and increasingly scalable through the use of AI technologies. Having exited the listening and learning phase, my attention has transitioned to helping Certara reach its full potential. First quarter performance was in line with our expectations, but does not reflect the company's potential. I am focused on driving long-term durable growth across the organization by reshaping our business and portfolio strategy while instilling increased organizational and operational rigor. Today, we will discuss our markets and outline the steps we are taking to position the company for long-term success before wrapping up with our first quarter performance. Let me start by updating you on our end markets. Across the board, customers are increasing investment in AI and tech-enabled drug discovery capabilities. Today, there are over 200 AI designed molecules in clinical development, up from just a few 10 years ago. Eli Lilly has partnered with NVIDIA to build a dedicated AI lab, and Roche Genentech is launching a hybrid cloud AI factory to scale their discovery and development efforts. Amazon has also announced the Bio Discovery product through AWS. Additionally, OpenAI and Anthropic have announced LLMs for life science. The expansion of the use case in AI is consistent with Certara's approach using analytical techniques embedded in customers' workflow to accelerate the drug discovery and development processes while reducing the reliance on living subjects. As AI-driven drug development helps the industry deliver more molecules and innovation, demand will increase for Certara's core business, Model-informed drug development, or MIDD, as customers race to turn drug candidates into approved treatments for patients. Accelerating data analytics processes becomes more important than ever as the decades-long goal of reducing drug application timeline comes within reach. In February, the ICH released ICH M15, providing guidance of the general principles for model-informed drug development which establishes an overarching set of principles for the acceptance of MIDD applications by regulators globally. In March, the FDA published guidance on the general consideration for the use of new approach methodologies or NAMs in drug development. And more recently, in April, the FDA announced a major initiative to implement real-time clinical trials, a shift to eliminate the delays that have historically slowed regulatory decisions. As FDA leadership has said, the agency has been conducting clinical trials the same way for decades, where key data signals and lag time have delayed regulatory decisions unnecessarily, which has slowed down drug development time lines. These tailwinds present a clear opportunity for Certara to tackle historically arduous drug development processes. Certara has an incredible legacy. We believe we are unrivaled in MIDD today because of what was required to build it. We have more than 2 decades of published scientific literature, 2,600 customers around the world, have run over 10,000 projects and have more than 160,000 users of our technology, including the FDA and Japan's Pharmaceutical and Medical Devices Agency. Pinnacle 21 has been used to validate more than 36 trillion data points in support of over 500 approved treatments. And we are a team of world-class scientists and are proud to have 10 scientists recognized in Elsevier's top 2% of the world's most cited scientists. This is not a position that can be replicated overnight. It is the product of decades of scientific rigor, regulatory trust and deep customer partnership that many underestimate. For example, the qualification of our Simcyp software for the prediction of drug-to-drug interactions in the EMA required 2 years of engagement with participants representing all 27 member states. Our most experienced scientists work directly with EMA reviewers to evaluate 25 years' worth of data, code and process documentation to gain approval from the EMA. To our knowledge, Simcyp is the only mechanistic modeling software qualified in Europe at this critical level. Building on this legacy, we have developed and continue to invest in category-leading products that are truly distinguished in the market. Chemaxon, Simcyp, Pinnacle 21 and Phoenix are purpose-built, validated and deeply embedded in the workflows of the world's leading drug developers and regulators. What makes these valuable to our customers is the cutting-edge science, proprietary data, intellectual property, thousands of validated biological parameters, unmatched computational precision and auditable transparency that regulated science demands. As we move the company forward, there is a window of opportunity for us to drive value from connectivity across our clinical intelligence capabilities. We are building an AI integrated platform that sits on top of and complements our existing portfolio. This next-generation platform will give researchers the ability to interrogate Certara's full body of knowledge across products, data sets and scientific expertise to get accurate, trusted answers to increasingly complex questions. We have created an AI native team, allocated the investment resources needed for this effort and are engaging lighthouse customers. Our annual Certainty Conference in Boston illustrated our scientific and technological leadership and provided clear evidence that our customers are looking for us to innovate. In front of more than 400 attendees, we showcased the latest in MIDD and AI-enabled technology capabilities for more than a dozen products, leveraging demos and user groups to collect valuable feedback. Moving to delivery. Let me share a few highlights from the quarter. Our technology and scientific experts supported numerous drug approvals. One notable example was a complex generic of tazarotene, a dermal product used in the treatment of acne and psoriasis. Certara's PBPK in silico modeling data was accepted in lieu of a clinical endpoint bioequivalent study. This is only the second time ever that PBPK modeling has been used to enable approval of a generic drug in lieu of running clinical trials. In another example, Certara also demonstrated the real-world impact of MIDD and regulatory success for the leukemia therapy, asciminib. Simcyp supported the evidence generation journey and approval with the FDA accepting the PBPK modeling results in lieu of clinical studies for at least 10 human trials, significantly reducing development time and cost. Certara Scientists published nearly 100 peer-review papers this year spanning dose optimization, pediatric development, virtual bioequivalence and next-generation MIDD frameworks, which align with the recently published ICH M15 guidance focused on the multidisciplinary principles of MIDD. Among these, a publication co-authored with the FDA and MHRA scientists highlighted the expanding role of MIDD in pediatric drug development, showing PBPK as potential to reduce time lines and costs for pediatric trials by informing dosing, study design, extrapolation and label extension while reducing unnecessary studies in children. In addition, one of Certara's leading scientists serves as the Editor-in-Chief Clinical Pharmacology and Therapeutics journal, a position she took over from another leading Certara scientist. We had several technology advancements in the quarter with AI increasing the productivity of our developers and the value of our technology. There were multiple new releases of our software, including a new version of D360 to help discovery scientists accelerate therapeutic peptide design and optimization, new functionality in Pinnacle 21 to accelerate clinical study start-up and extended reporting functionality in Phoenix Cloud and the release of Simcyp with expanded simulation and virtual bioequivalence capabilities. To capitalize on these opportunities and prepare to scale, we are taking several decisive actions. First, we're focusing our business and accelerating long-term growth by exiting medical writing. Second, we're reorganizing and aligning the company around 2 distinct growth areas: MIDD and Discovery, which we call MID3 and Accelerated Clinical Evidence, which we call ACE. Third, we are creating a stronger center of gravity for AI across the company, formalizing leadership with the Chief AI Officer and increasing investment in our next-generation Certara platform. Fourth, we're extending our capabilities and reach with strategic collaborations and partnerships highlighted by NVIDIA and Altasciences. Fifth, we're reviewing opportunities to leverage our existing clinical intelligence capabilities into new use cases; and sixth, improving execution and efficiency. Focusing on the first action, on Friday, we closed the divestiture of the regulatory writing and medical writing business to Veristat. This transaction allows us to sharpen our focus in areas we have defined competitive and scientific advantage, results in a nearly one-to-one alignment between our expert services and our technology, where our value proposition is the strongest, improves the predictability of our revenue and unlocks approximately 150 basis points of incremental growth in 2027 and beyond. Second, we are reorganizing the company into 2 groups to accelerate growth and better service our customers. MID3 and ACE. Within MID3, we have merged our technology and expert services into one organization, creating a flywheel for technology innovation and customer engagement. ACE's mission is to reduce data time lines along the full life cycle from design through and beyond submission while maintaining or improving quality at every step in the process. Both groups will be supported by a Chief Product Officer reporting to me, who will oversee product development across the organization. We are engaged in an active search for this position. Third, we have appointed Dr. Chris Bouton as our Chief AI Officer. Further evidence of our commitment to drive innovative solutions that turn decades of cross-program scientific and regulatory intelligence in market-leading AI integrated capabilities. Chris also serves as our Chief Technology Officer and led Certara's AI implementation efforts. In his expanded role, Chris will drive the acceleration of Certara's next-generation platform. Fourth, we are taking a new approach to partnerships. In April, we entered into a strategic collaboration with NVIDIA to apply accelerated computing and AI to Certara's next-generation platform. This partnership will reduce manual, time-intensive steps and shift biosimulation from sequential processes to parallel iterative workflows. This is particularly important for Certara's computationally intensive applications. We've been hard at work at this collaboration and we'll communicate more details soon. We've also expanded our commercial collaboration, most notably through a new relationship with Altasciences, a forward-thinking integrated CRO CDMO. Together, we are advancing a model-first fully integrated and resource-efficient approach to early drug development that accelerates the path to proof of concept for biotech innovators, investors and pharmaceutical companies across the globe. These collaborations will strengthen Certara's underlying technology and enable us to bring value to new customers. Fifth, after completing a review of our portfolio and market opportunities, we've identified several new potential use cases that build off our clinical intelligence capabilities. For example, clinical trial simulation and asset evaluation to name just 2. We are actively evaluating investment opportunities in these areas. There is excitement across the organization about these opportunities. Finally, we are taking decisive steps on the operational side of the business to drive efficiency, accountability and growth. We have deployed focused [ SWAT ] teams to address needed cultural shifts, simplify processes, accelerate technology development and improve execution. We are aligning sales and marketing to our new structure to clarify accountability and drive customer centricity. We are taking a data-driven approach to leveraging AI to better target and identify opportunities. Multiple efforts are underway to both review and optimize pricing, but also to explore more structural changes to how clients consume our solutions. We are also updating incentives to drive the right behaviors and encourage cross-functional collaboration. And we're also rationalizing internal spend to shore up our cost base and maximize investment efficiency. Let me turn to the first quarter results. The team's focus on technology resulted in improved performance over the second half of 2025, particularly in MIDD. This is a good start for the year, but we need to see consistent performance. Services performance in the quarter was mixed after an extremely strong Q4. The operational and commercial changes I outlined earlier are designed to address these gaps. It will take time to achieve our long-term operating goals and it's important that we make the right decision for Certara's long-term growth and success now. With that, I will turn the call over to John Gallagher to walk you through our first quarter results and guidance. John Gallagher: Thank you, Jon, and hello, everyone. Total revenue for the 3 months ended March 31, 2026, was $106.9 million, representing year-over-year growth of 1% on a reported basis. Total bookings in the first quarter were $115.3 million, which declined 2% from the prior year period. Trailing 12-month bookings were $479.2 million, increasing 5%. Software revenue was $49.7 million in the first quarter, which increased 7% over the prior year period on a reported basis. Growth in the quarter was driven by Simcyp, Phoenix and Chemaxon. Ratable and subscription revenue accounted for 57% of first quarter software revenues, consistent with the prior year period. Software bookings were $48.7 million in the first quarter, which increased 20% from the prior year period. Trailing 12-month software bookings were $192.2 million (sic) [ 192.3 million ], up 8% year-on-year. The software net retention rate was 106% in the quarter. Looking at our software bookings performance by tier, we saw performance at or above plan across all 3 customer tiers, which was nice to see following a mixed fourth quarter performance. Now turning to services revenue, which was $57.2 million in the first quarter, down 4% versus the prior year period on a reported basis. We saw mixed results in our MIDD services business in the quarter, reflecting the operational dynamics John mentioned earlier, which was compounded by softness in regulatory services. Services bookings in the first quarter were $66.6 million, which declined 14% from the prior year period. TTM services bookings were $286.9 million, up 2% compared to the prior year. After a strong fourth quarter, we saw softer performance from Tier 1 customers in MIDD services during the first quarter. Total cost of revenue for the first quarter of 2026 was $41.6 million, a slight increase from $41.5 million in the first quarter of 2025. Total operating expenses for the first quarter of 2026 were $111.2 million, an increase from $98.4 million in the first quarter of 2025, primarily due to a $7.4 million increase in the change in fair value of a contingent consideration related to the Vyasa acquisition. Adjusted EBITDA for the first quarter of 2026 was $31.7 million, a decrease from $34.8 million in the first quarter of 2025. Adjusted EBITDA margin in the quarter was 30%. Wrapping up the income statement. Note that GAAP net income and EPS are both impacted by nonrecurring items. Net loss for the first quarter of 2026 was $8.8 million compared to net income of $4.7 million in the first quarter of 2025. Reported adjusted net income for the first quarter of 2026 was $14.5 million compared to $22.2 million for the first quarter of 2025. Diluted loss per share for the first quarter of 2026 was $0.06 compared to earnings of $0.03 per share in the first quarter of 2025. Adjusted diluted earnings per share for the first quarter of 2026 were $0.09 compared to $0.14 per share in the first quarter of last year. Moving to the balance sheet. We finished the quarter with $149.5 million in cash and cash equivalents. As of March 31, 2026, we had $294.8 million of outstanding borrowings on our term loan and full availability under our revolving credit facility. Last year, our Board authorized a $100 million share repurchase program. We have repurchased approximately $82.6 million of stock since that authorization, including $40 million during the first quarter of 2026. Today, we announced the closing of the regulatory Writing and Medical Writing Services divestiture. As a reminder, in 2025, these businesses generated $50 million of revenue and approximately $17 million of adjusted EBITDA, excluding unallocated overhead expenses. During the first quarter of 2026, they contributed approximately $13 million in revenue, and we expect to recognize approximately $5 million from them in the second quarter. Going forward, we anticipate our revenue mix to be approximately 50% software and 50% services. With that in mind, we are updating our full year 2026 guidance to reflect the divestiture as follows. We now expect 2026 reported full year revenue to be in the range of $395 million to $405 million, including the $18 million I just referenced related to the divested business. This outlook reflects full year growth of 0% to 4%, excluding the divested business in both periods and is consistent with our prior growth expectations from the call in February. We expect first half revenue growth to be closer to the low end of the 0% to 4% range, while the second half is expected to be at or above the high end of the range. We anticipate full year software growth to be at or above the high end of the 0% to 4% range for the year, with first half closer to the midpoint and second half above the high end of the range. The software outlook contemplates higher visibility compared with last year, and we are optimistic about opportunities for newly introduced products. In Services, we expect full year growth to be towards the low end of the 0% to 4% range, with first half at or below the low end of the range, improving to the high end during the second half of the year. We see the Tier 2 and 3 end markets improving through the course of the year following a strong capital raising environment through April. Generally, compared to the guidance provided in late February, this more detailed revenue outlook reflects modestly improved software performance and modestly lower services outlook, which we attribute to some of the execution dynamics Jon referenced in his remarks. We anticipate full year 2026 adjusted EBITDA margin to continue to be 30% to 32% range, including contribution from the regulatory writing and medical writing business. First half margins will be modestly below this range and second half margins will be closer to the higher end of the range. Margin performance through the year reflects higher revenue growth in the second half of the year as well as improved operating discipline across the organization following the divestiture. We expect adjusted EPS in the range of $0.35 to $0.41 per share for the full year. Fully diluted shares are expected to be in the range of 157 million to 159 million, and we are modeling an effective tax rate of about 30%. With that, we will open up the call for Q&A. Operator, can you please open the line? Operator: [Operator Instructions] Our first question comes from Scott Schoenhaus with KeyBanc. Scott Schoenhaus: So Jon, you mentioned this next-generation AI platform that you guys are developing. Maybe walk us through the opportunity here, the monetization. Is it more a function of it drives engagement utilization on the software piece? Are you taking ASP up? Maybe walk us through the dynamics here to bridge us to this opportunity. Jon Resnick: Thanks, Scott, for the question. Yes, we're extremely excited about what's ahead of us there. First of all, before I get into the detail on the platform itself, I mean, AI more broadly, we've taken a step change in terms of our readiness. We're focused on things like product development, which is the platform, scaling capabilities across the organization, people and talent, you saw the announcement about Chris and overall kind of corporate governance of it. Obviously, we talked historically about the great position we believe we have. And in my comments a few minutes ago, I think you heard that foundation, those capabilities that we have over decades has created a real exciting position in terms of embeddedness in client workflow, codification of science, validation, auditability, transparency. In essence, closing that kind of last mile in a regulatory sciences market, our view and our expectation is that there's a spot and a place where Certara's capabilities, know-how and expertise will fit in very well as a complement to what's out there today. So the platform -- and I don't want to go into too much detail on exactly what we're doing because I do know that there are others who listen to this call as well. But it's, in essence, building on these exact capabilities. It is an effort for us to unify many of our products and our know-how under a single environment. It will allow us to take all the kind of independent know-how and the independent applications we have and answer questions across the life cycle. And it's going to create unique business models for us as we move forward. In terms of your question around kind of guidance and how should you think about it, I think for 2026, as we indicated, we're out talking to lighthouse clients. We're out engaging in this. This is a thing that's now in active discussion. So I wouldn't think too much about near-term modeling. I think what we'll do is provide more guidance towards the end of this year about how you should think about this relative to our conventional software portfolio as we think more on the platform into '27 and beyond. Scott Schoenhaus: And then my follow-up is the strong software bookings you have this quarter. You mentioned a lot of new product releases. Maybe help us parse out where you're seeing the strongest demand into that bookings strength this quarter on the software side? Jon Resnick: So I think software was strong pretty much across the board this quarter. We're obviously off a soft trailing 12-month number that we saw at the end of last year. We put a lot of focus on it, really got underneath it with our sales teams and looked at incentives and products and plans and have done a lot of work in Q1 really to get ready. But it's pretty consistent and Phoenix Cloud had a good quarter, a very good pipeline. We're extremely excited about the transition there and the growth. Simcyp had a good quarter as well, core kind of PBPK offerings. Pinnacle, which is, as we said before, has ebbs and flows a little bit with new trial starts and it's going to be a little bit slower than it has been in past years, actually slightly outperformed expectations in the quarter. So I think just about everything performed at or above expectation. Operator: Our next question comes from Brendan Smith with TD Cowen. Brendan Smith: Congrats on all the progress. Maybe just a bit of a follow-up on one of the previous questions. But I guess, can you speak a bit more specifically to the new customer mix you're seeing year-to-date? I know you mentioned pharma really leaning more into AI, which we continue to see kind of across the board, but also maybe some impact on Tier 1 customers. So I guess first just wondering how the new software adds within pharma compare to maybe new customer adds within smaller emerging biotech. Just any trends to call out in those relative buckets? John Gallagher: Yes. Brendan, we were pleased, obviously, with the rebound that we saw with software on the quarter. So to your point, across all customer tiers, 1, 2 and 3 we saw a pretty significant acceleration in the bookings. We saw a good achievement on the revenue with 7% software revenue growth on the quarter. I'd say as it relates to specific within the tiers, we saw Tier 3 customers and Tier 2 customers leaning in on -- as John mentioned before on -- we saw strong performance in Phoenix as well as in Chemaxon. I'd say in the Tier 1 category, we had another good quarter on Simcyp. So that's the overall highlights of the customer tiers in the quarters. But they came above expectations on the quarter, which was good on the heels of some choppiness we saw in Q4. Brendan Smith: Okay. Got it. And then maybe just a quick follow-up. Just kind of talking about the operational efficiencies you mentioned, I know as being an internal target for kind of helping drive margins. But can you maybe help us understand kind of through that lens, the structure even of the NVIDIA collaboration, really what that looks like and how we should think about the impact over the next couple of quarters there? Jon Resnick: So you mentioned execution first. Look, there's a range of initiatives in play. And obviously, today, we're announcing some reorganization work we have done, there's a divestiture. There's also been some -- a lot of broader work on operational cadence and execution and cost base. So we're moving incredibly quickly, certainly at a rate and pace, which I'd expect to set up the business for long-term. So we can go through some of those mechanics, if you want later. But NVIDIA partnership, I think our general mindset on these things is let's not throw out splashy press releases and other things, let's talk from a point of substance. We've been working with NVIDIA for the last couple of months through an MOU and through a signed partnership agreement really to define ways of scaling the speed at which you can execute on particularly some of the more complicated simulations, allowing more democratization. We believe if we can speed some of the core QSP and PBPK offerings, we can allow for much broader use within organization so you can get quicker reads on what's going on earlier and kind of meet the expectation of early discovery of preclinical users of the applications. So we're excited about it. We'll come back with more details on how to think about it exactly in terms of product development, how to think about it in terms of kind of joint efforts here and its impact in terms of our thinking about overall operational efficiencies. Operator: Our next question comes from Luke Sergott with Barclays. Luke Sergott: I just want to talk about the reorg there that you guys are talking about across the 2 segments. And it's more about just the consistency or stability that we could see from software versus services because it seems like one quarter, one of the segments is really strong and then at the expense of the other and then vice versa. And just what you guys are doing to build in some consistency and more sustainability here going forward between the 2? John Gallagher: Yes. I've had the same observation. There's been a lot of inconsistency and back and forth over the last few quarters. We clearly put a lot of focus on software this quarter. We had a strong software result. So I think our approach moving forward is obviously to try to get that balance right. So there's a number of things. First of all, the exiting of the regulatory and medical writing business will help. That's been an extremely lumpy business on the service side. Our resultant mix of business will be much more mixed between services and software on an ongoing basis, which will give much more predictability into what we do. The exit of the regulatory business, which wasn't really tied to our core software business. As I said last quarter, we do best when our technology and services are integrated. And what we've effectively done on the MIDD business here, MID3 is we brought together all of our kind of expert services and our technology to carry that flywheel effect. So there should be more stability when those 2 businesses able to wrap around it. We're also taking some steps with our sales teams and our commercial organization to better align specialty engagement on that side that should drive more predictability. I wouldn't say we've completely solved the riddle, but we see the same pattern. And obviously, we're focused also on creating the incentives in the organization that will get both of those segments moving at the same rate and pace. Luke Sergott: Great. And then I guess with regards to that kind of the -- when you think about the guidance and the back half step-up here, you had a really big bookings have improved very good on the services side. So like when is the timing of there when we see that flow through? And if you could just help us out with the pacing on that services ramp through the year? John Gallagher: Yes. So services bookings take a couple of quarters to pull through. One of the focus areas that we've had over the last quarter has been on backlog conversion. And we saw good -- despite the choppiness and softness we saw on the booking side for services, we did see very good backlog conversion, and we expect to be able to continue that through the course of the year. So backlog is going to help support the revenue achievement, especially in the back half of the year here with the bookings that we posted in Q4, along with the bookings that we're posting now. What we're seeking to do is drive an inflection point through the execution on ensuring we're filling up that backlog, and that's some of the focus area that we have right now. Operator: Our next question comes from David Windley with Jefferies. David Windley: I wanted to ask on the references to execution and go-to-market challenges that impacted the first quarter. I think you -- Jon, you touched on those at kind of a high level, but I wanted to understand better, was that caused by a lot of the realignment that you talked about and just kind of the intensity of that during the quarter? Or what -- in more detail, would you use to describe those execution and go-to-market challenges that impacted the first quarter? Jon Resnick: First of all, I'd say, David, there's a legacy model that was in place. So a lot of the changes that we're making, I think, are meant to enhance it. I'm pleased by the progress we made on the software side. There was a real focus there, and you can see the results of that focus on that side of things. I think overall, what we're looking to is just more consistency across the teams. And we're focused in a few areas. One, how can we make sure we're optimizing expert-to-expert engagement across the business. A lot of these -- a lot of this -- a lot of the engagement that happens here is scientists to scientists. We want to make sure we're putting that foot forward. Second area that we're focused in on is expanding partnerships. We mentioned the Altasciences relationship. That really, I hope, signals and reflects a different approach to -- partnering a different approach to going to market in different ways. Our offerings are incredibly strong in terms of being complementary to what a number of players have out in the market. So there are a number of at-scale players, whether they're venture capital players or whether they're CROs that we are very good potential partners for. So a renewed focus on partnership and how we can drive through. We've leaned in much heavier on a targeting approach, continuing to focus on Tier 1. There's a number of clients in the Tier 2 space that we're working on building out new relationships and extending where the overall integrated tech service proposition fits very well. We've layered in a number of kind of AI initiatives to help drum up more opportunities to drive more growth across the business. So look, we're doing a number of things. I don't necessarily -- change always creates some churn, as you'd expect, and we got Reg business in and Reg business out. Those things do have an impact, but our goal here is to set up a business that's going to be growing in line with your expectations and our shareholders' expectations over time. And that's going to be taking some short-term tougher decisions that are going to lead to that longer-term growth. David Windley: Got it. Appreciate that. My follow-up is around biologics in particular. I think there's been some effort over multiple years to refine or augment some of the software platforms, maybe in particular, Simcyp to be amenable to or to better address the large molecule market. I wondered if you could comment on the progress there and what specific client traction the software in general, but again, thinking primarily Simcyp might be getting on the biologics side. Jon Resnick: Yes, it's a great question. I don't have the data points in front of me, and I can provide them in a subsequent discussion. There's obviously been a lot of focus on that point internally as I've gotten ramped up. We are -- we do see not only in Simcyp, but QSP, which is kind of the extension beyond that, which brings in more the biological components. We do see a growing percentage of our business on -- outside of the oral components, which you get into peptides and a whole range of other things. There's a range of other things. There's a ton of need for both of these. I don't -- I was actually asking over the weekend, a quantification of percentage of each of them. I don't have it to hand right now, but we're looking. There is strong growth. As you look at the net new offerings that we're building, they are equally as relevant to the chemical and to the large molecule side. So I can provide follow-up when we speak next a little bit more color on it. But we are focused on extending the applications into that large molecule space. Operator: Our next question comes from Michael Cherny with Leerink Partners. Michael Cherny: Maybe if I can just circle back on the strategic AI expansion that you noted earlier. John -- John, as you think about the investments you're making, the reorg you're doing internally, how are you balancing the need to ensure appropriate returns versus the spend levels? We hear so many stories about AI spending at [ FINIUM ]. What is the risk -- the up-down dynamics that you're pursuing to make sure that the investments you're making are the right ones? John Gallagher: Yes, good question, Mike. We -- well, what we've undertaken this year, you've seen R&D spend in the quarter continue to increase. And we've said that we're deliberately making investments. What -- with Jon's onboarding, one approach that we've changed to ensure that we're getting the return on that capital invested is starting to look at -- we call it a portfolio view or looking at business cases around what we're investing in and when the revenue is going to come on that. So Jon talked about some changes to the organization. Jon talked about some of the platform investments that we're making. And what I'd tell you is that we're taking a disciplined approach toward the investments that we're making this year in R&D and looking at when the return is going to come, i.e., when is the revenue going to start to show up for that, which, as you understand, many of the investments that we'd be making in 2026 will start to show up in 2027. Jon Resnick: And I'd add just a little bit -- the good news about this portfolio is that it's built on what I described as kind of clinical and scientific intelligence already. If you think about the fundamental business, 10,000 projects, thousands of published articles, the regulatory know-how, the entrenched workflow, 160,000 users. I mean there's a lot of -- I think we said at 36 trillion data points, in Pinnacle and Simcyp record. There's a lot of know-how and unique data and unique applications that exist within our 4 walls. So the investment itself doesn't have to be in building up that capability and the ability to create the infrastructure. The investment is on top of it in terms of turning that unique capability and that unique insight we have into something that's going to be broadly available on a more systematic basis to work within a client's ecosystem. So that's one. Two, I'd also say that I think we'd signal that I think we understand where our fit will be in here relative to some of the other model providers and other work on agent providers in market. And so we're very comfortable with our perspective in terms of being able to partner within this ecosystem. So NVIDIA is one good example of kind of where we're going with some of this. We also have a number of other discussions going on around how can we be as effective as possible and as targeted as possible and do some of this in a stepwise fashion so that we can get the return that we're expecting. Michael Cherny: And just one quick additional question. I apologize if I missed this. With the divestiture now completed, what's the plans for use of capital raise? John Gallagher: Yes. So on capital allocation, I mentioned in the prepared remarks, we bought $40 million of shares against our authorization in Q1. So share buyback continues to be a focus and a capital allocation vector for us. What I'd also say, though, is we've got a good track record of tuck-in M&A and looking at the pipeline there is also something that we're evaluating. So we didn't specifically highlight, Mike, that we would do one or the other. But both of those are now areas where we've been deploying capital successfully over the course of the last year. Operator: Our next question comes from Jeff Garro with Stephens. Jeffrey Garro: I wanted to ask about the new MID3 and ACE categories. And just to start, if you could spell out in a little more detail the products that fit in each area and what we should expect in terms of metrics or commentary on those categories going forward? Jon Resnick: Sure, absolutely. So MID3 is going to be our core model-informed drug development and discovery applications that will house not only the technology assets, things like Simcyp and Certara IQ, but also the full range of expert-based service capabilities that we have, the [ QS ], QSP, PBPK. So it will be kind of a one touch up. They're accountable and responsible for building up the regulatory footprint and scientific footprint. And on offering development on that side, a good mix between that flywheel effect between technology and expert-based services. The other side ACE. ACE is going to be focused on solving a lot of the data problems that exist within -- which is probably underlined best by some of the recent FDA trial acceleration commentary. That will include things like Phoenix and Pinnacle and CoAuthor and GlobalSubmit and some other things that we have within our 4 walls, which are really focused in on kind of solving the data and workflow problems and helping to accelerate the rate and pace at which data can be turned into evidence for submission. Jeffrey Garro: Excellent. I appreciate that. And the follow-up on that topic. Curious about how the go-to-market evolves with these categories. Any way you can frame kind of how big of a change is this going to be for your go-to-market teams? And then how should we think about the timeline of making those operational changes? And finally, any expectation you would set on expected impact from these go-to-market changes? Jon Resnick: So I've mentioned a couple of times. I think the predominant focus here from the management team is how are we going to build this business to get to that double-digit growth that everyone externally is expecting and that we believe is 100% possible. So as you kind of make of all of these changes, you may have a little bit of churn in the near-term, but these are being set up for long-term opportunity maximization and long-term growth. What -- the changes that we're making that we've announced today and that we're moving forward are really what I would characterize as more alignment-based changes than kind of fundamental restructuring of our commercial organization. We've taken -- we had historically had -- the last couple of years, it's been a centralized sales organization that operated independently from the businesses. One of the changes that we've made is basically to align the portfolio teams that are selling the products within MID3 or ACE with the actual businesses. This will shorten feedback loops from clients. It will create more accountability within the business. It will help us with the product innovation and ensure that we have focused hubs for sales and product execution. So look, I don't think we're -- we've quantified near-term versus long-term churn attached to this. But again, our expectation is that this will set up this business to have the type of growth that you want over the midterm, and that's the goal of these changes, and it's the goal of the strategic moves that we're making. Operator: Our next question comes from Craig Hettenbach with Morgan Stanley. Craig Hettenbach: Can you touch on just the visibility in the software business, the expectation for a stronger second half, including any differences you see by customer tier over the course of the year? John Gallagher: Yes. Craig, the visibility -- so we mentioned the visibility on software for a stronger second half is better this year than what we saw last year. The main reason for that is if you look at the deferred revenue, the deferred revenue balance is higher, meaning the ratable software business that we've sold is in hand and it's going to start to build as we move through the course of the year. The other thing I'd point out on certainty for a second half ramp is it's more of a ramp in growth rate than it is in dollars. If you look at the actual dollars and if you were to look at that at the top end of the range, then it's a pretty modest increase in the amount of revenue dollars, but the comps ease as we get into the second half of the year, and therefore, the growth rate itself will be reflected higher. Those are a couple of the key reasons why the first half, second half story on software. And of course, the performance in the quarter gave us some confidence as we move through the year. Craig Hettenbach: And customer tier, you said was kind of broad-based in Q1. Is that the expectation as you move through the year? Is there anything you would call out by customer tier? John Gallagher: Yes. I mean across the good growth, exceeded our plan expectations across the customer categories. I'd say that was most pronounced in Tier 2 and Tier 3. That outperformance Tier 1 was a strong contributor for sure. But we've got some tailwind from funding environment at this point. And we think that as we move through the year, that's going to help us in the Tier 2 and 3. Craig Hettenbach: Great. And then just my follow-up question on kind of the AI dedicated team. Just as you're thinking about allocating capital in the business. Are there parts of the organization where you're finding efficiencies in terms of where you're shifting spending? Can you give any color around that? John Gallagher: Yes. Yes, we are. You probably remember on the prior call, we mentioned cost avoidance. We're still working through that. And our margin guidance that we gave here today would be reflective of improvement as we move through the course of the year. So the answer is yes, we are reallocating. We are making trade-off decisions, and that's happening on the operating side as well as in R&D investments. Jon Resnick: And I think unsurprisingly, similar to others, we're seeing massive acceleration improvements as well. Productivity is way up. The amount of code our teams are able to generate the productivity of what we're doing is dramatically increased. So quite pleased with the acceleration of road maps and the acceleration of capabilities that comes along. Operator: Our next question comes from Sean Dodge with BMO Capital Markets. Sean Dodge: Maybe just the partnership you mentioned with Altasciences. Just anything more you can share on how that works, what the opportunity is there? Anything about the economics of it? And then just -- is it just software you're providing there? Or is there going to be services that are part of the Altasciences partnership, too? Jon Resnick: Yes. We're excited about this. So I mentioned before, I think as a company, our portfolio lends itself very well to a range of partnerships. We're highly complementary to a number of at-scale market players here, and I think this is something we'll continue to push on. This relationship is brand new obviously just announced this past week. There is genuine alignment between the teams around acceleration of trials, opportunities to completely rethink early-stage execution in different ways. Altasciences is a unique 1 or 2 who has a set of integrated lab, animal, human CDMO capabilities. So they have the opportunity from an early stage to really kind of connect a lot of the things that we do on the modeling side. By working together, we'll also be able to do some disruptive things with data and help close some of the loops on data and accelerate data flows. So we'll be working with them over the next couple of weeks and months in terms of defining not only kind of joint opportunities to engage customers with very high customer overlap already, which is the starting spot, but identifying opportunities to better integrate technology and service workflow across the 2 organizations to the benefit of our clients. Sean Dodge: Okay. And then on the software side and more specifically on the upsells you referenced in the quarter, can you give us an example or 2 around like what is an upsell? Would have been kind of some of the more common ones lately? And have those been pretty consistent across all client tiers? Or are you seeing kind of more one or the other? John Gallagher: Yes. Effectively, that's reflected in the net retention rate. So we did 106% on the quarter, which was an inflect higher than where we've been over the last few quarters, which is good. What does that mean? I mean in the Tier 1 customer category, those are all already our customers. So an upsell would basically be some kind of expansion. We're taking more seats. We're selling more functionality. In the Tier 2 and Tier 3 and particularly in the Tier 3 category, then that's the opportunity to add some new names or some new logos. But we also have a huge 2,400 total customers customer base. So any kind of upsell is that land and expand strategy that you've heard us talk about in the past, which is really working the existing customer base and making sure they're aware of the breadth of product offerings that we have and that would fall into that upsell category. Jon Resnick: Yes. If you recall, in the last call, we talked a lot about price as particularly pricing discipline as a lever. And we've looked at this on 2 or 3 dimensions. We've looked at this on an operational lever, which John just referred to, look at our net contract values look at our existing upgrade path and potential, which is a tactical plan we have in place, and we've got a [ SWAT ] team who's looking at that. We've also looked more broadly a suite of strategic initiatives. One of the pieces of feedback that I've received from some of our enterprise clients is that they're looking to consume more of our software, consume more of our technology in an integrated way and sometimes the pricing structures are inhibiting to doing that. So how can we develop more enterprise-based pricing approaches that will be consistent with our push more into platform engagement is another big initiative that we have as well. We think both of these will be net beneficial to our growth rates over the coming months. Operator: Our next question comes from Matt Hewitt with Craig-Hallum Capital Group. Matthew Hewitt: Just one for me. So Jon, you spoke about your partnerships, and there's been consortiums announced over the past few quarters. And you've got these relationships with NVIDIA and the new one with Altasciences. I'm curious, as you look at the news flow regarding these partnerships, whether it's yours or others in the market, is the ultimate goal here to drive either adoption of simulation and modeling to accelerate that, which obviously would benefit you? Is it to create a wider moat allowing you to not only retain but maybe grow that business even further? What is the ultimate goal? And when do you expect to see some benefits from these types of partnerships? Jon Resnick: Good question, and maybe I can say yes and yes. I mean, I think those are both -- look, this -- we know success in this market is not one-offs. We live in a very connected ecosystem. There are a range of capabilities it's going to take to be successful. and to grow at the rate and pace at which we believe we can. And so we are being focused in terms of what we think we're very, very good at, and we're doubling down and tripling down in what we're very good at, and we'll look for partnerships to fill in some of those gaps, partnerships with technology suppliers and with modeling. Those things are complete accelerants to what we do. Commercial partnerships with at-scale players like early-stage CROs or in fact, perhaps others as you go along who at scale have large books of business as well and are working with in the core kind of clinical side, which we don't have capabilities, we're not CRO per se. is another -- we can integrate that on behalf of our clients. It's a win-win. It's a win-win-win. It's win for us. It's a win for an Altasciences type partner and it's a win for clients who we will be working with because we can accelerate timelines and drive cost down for them and help disrupt conventional growth. So look, I think it's a realization that it will help accelerate the market. It's also a realization that we know what we do very well and that we're comfortable in partnering with others and what they do well to help create a win scenario for our clients. Operator: Our next question comes from Max Smock with William Blair. Max Smock: At the end. Maybe just one for us quickly. You talked a lot about just interest and impact of AI on drug development. I'm curious to get your thoughts on how much interest is out there on the large pharma side for building out internal solutions. Obviously, it seems like there's been a lot of focus on discovery. So do you expect these investments to result in solutions that are going to be competitive with your offerings in that space? And then in clinical, how should we think about the risk that large pharma builds solutions that compete with your MIDD solutions here going forward? Jon Resnick: Max, I just want to make sure I understand the second question. Can you just repeat that one more time? Max Smock: Yes. Just around large pharma and their willingness and ability to build out solutions that compete with your offerings, whether that's in discovery or the clinical space? Jon Resnick: Yes. Look, I genuinely think in the near-term, where most of the productivity is happening and where most of the big splash press releases are is on the earlier-stage discovery. And I think as we mentioned, we see this as kind of a net positive to the market. More compounds means more demand for MIDD services. And so look, I know there's a lot of press releases, a lot of uncertainty out there around how some of these things go. What we're hearing on the other side of it is phone calls from a lot of these players and providers about how do we tap your capabilities into what we're building and doing. I started in the opening statements, and I think I reiterated again and we told the story about what it took to get Simcyp approved in the EMA, and we've been working with the 25 (sic) [ 27 ] member companies in 2 years and the importance of transparency and the importance of auditability in that. We talked about the mechanics around Pinnacle and the 36 trillion data points and the mechanics of it, we talked about the legacy of the historical data and also kind of unique IP that we have. It's pretty tough to replicate. I mean this is not easy, easy stuff. So I would see it as hugely inefficient for others to be building their own capabilities. I think it's incumbent upon us to democratize it to the extent that we can make it broadly available within their 4 walls and partner with them in different ways that the companies are getting broad application, the benefit of the capabilities that we bring. Operator: Thank you. I'm not showing any further questions at this time. And as such, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day. Before you buy stock in Certara, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Certara wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!* Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Certara (CERT) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Total Revenue: $106.9 million for Q1 2026, a 1% year-over-year increase. Total Bookings: $115.3 million in Q1 2026, a 2% decline from the prior-year period. Software Revenue: $49.7 million in Q1 2026, a 7% increase year-over-year. Software Bookings: $48.7 million in Q1 2026, a 20% increase from the prior-year period. Services Revenue: $57.2 million in Q1 2026, a 4% decrease year-over-year. Adjusted EBITDA: $31.7 million in Q1 2026, down from $34.8 million in Q1 2025. Adjusted EBITDA Margin: 30% for Q1 2026. Net Loss: $8.8 million for Q1 2026, compared to net income of $4.7 million in Q1 2025. Adjusted Net Income: $14.5 million for Q1 2026, compared to $22.2 million in Q1 2025. Adjusted Diluted EPS: $0.09 for Q1 2026, compared to $0.14 in Q1 2025. Cash and Cash Equivalents: $149.5 million as of March 31, 2026. Outstanding Borrowings: $294.8 million on the term loan as of March 31, 2026. Share Repurchase: $40 million repurchased in Q1 2026, totaling $82.6 million since authorization. 2026 Revenue Guidance: $395 million to $405 million, reflecting 0% to 4% growth excluding divested business. Adjusted EPS Guidance for 2026: $0.35 to $0.41 per share. Warning! GuruFocus has detected 1 Warning Sign with CERT. Is CERT fairly valued? Test your thesis with our free DCF calculator. Release Date: May 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Certara Inc (NASDAQ:CERT) is leveraging AI technologies to enhance its Model-Informed Drug Development (MIDD) capabilities, aligning with industry trends towards AI-driven drug discovery. The company has a strong legacy with over two decades of scientific literature, 2,600 customers, and more than 160,000 users, including regulatory agencies like the FDA. Certara Inc (NASDAQ:CERT) has divested its regulatory and medical writing business to focus on core areas with competitive and scientific advantages, improving revenue predictability. The company is reorganizing into two growth areas, MID3 and ACE, to better align technology and services, aiming for long-term growth. Certara Inc (NASDAQ:CERT) has formed strategic collaborations with NVIDIA and Altasciences to enhance its technology and expand its market reach. First quarter revenue growth was modest at 1% year-over-year, with a decline in total bookings by 2% compared to the prior-year period. Services revenue decreased by 4% year-over-year, with mixed results in the MIDD services business and softness in regulatory services. Adjusted EBITDA for the first quarter decreased from $34.8 million in 2025 to $31.7 million in 2026, with a margin of 30%. Certara Inc (NASDAQ:CERT) reported a net loss of $8.8 million for the first quarter of 2026, compared to a net income of $4.7 million in the first quarter of 2025. The company faces challenges in achieving consistent performance across its software and services segments, with ongoing efforts to improve execution and efficiency. Q: Can you elaborate on the next-generation AI platform and its potential impact on Certara's business? A: Jon Resnick, CEO, explained that the AI platform aims to unify Certara's products and expertise under a single environment, enhancing the ability to answer complex questions across the drug development lifecycle. While the platform is still in development, it is expected to create new business models and opportunities for Certara. Detailed guidance on its impact will be provided later in the year, with significant contributions anticipated in 2027 and beyond. Q: What drove the strong software bookings this quarter, and where is the demand coming from? A: Jon Resnick, CEO, noted that software performance was strong across the board, with significant contributions from Phoenix Cloud and Simcyp. The company focused on aligning sales teams and improving incentives, which helped drive the strong performance. Demand was consistent across all customer tiers, with Phoenix Cloud showing a robust pipeline and Simcyp performing well. Q: How is Certara addressing operational efficiencies and the NVIDIA collaboration's impact? A: Jon Resnick, CEO, highlighted several initiatives, including reorganization, divestiture, and operational cadence improvements. The NVIDIA partnership aims to accelerate complex simulations and democratize biosimulation, enhancing Certara's computational capabilities. More details on the collaboration's impact will be shared in future updates. Q: Can you discuss the reorganization into MID3 and ACE segments and its expected impact? A: Jon Resnick, CEO, explained that MID3 will focus on model-informed drug development and discovery, integrating technology and expert services. ACE will address data challenges in drug development, including products like Phoenix and Pinnacle. The reorganization aims to enhance accountability, improve product innovation, and drive long-term growth, although some short-term churn may occur. Q: What is the outlook for software growth in the second half of the year, and how does it vary by customer tier? A: John Gallagher, CFO, stated that software growth visibility is better this year due to higher deferred revenue and a strong first-quarter performance. Growth is expected to be broad-based across customer tiers, with Tier 2 and Tier 3 benefiting from a favorable funding environment. The second half will see a ramp in growth rates, supported by easing comps. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Certara, Inc.? Here are five stocks we like better. Certara reported Q1 2026 revenue of $106.9 million, up 1% year over year, with stronger software sales offsetting weaker services. Adjusted diluted EPS came in at $0.09, down from $0.14 a year ago. The company completed the divestiture of its regulatory and medical writing business to Veristat and is reorganizing around two priorities: MID3 and ACE. Management said the reset is meant to sharpen focus, improve predictability, and align the business more closely with its core technology strengths. Certara is leaning into AI and strategic partnerships, including collaboration with NVIDIA and a new relationship with Altasciences, as it builds an AI-integrated platform. The company also updated full-year 2026 guidance to $395 million to $405 million in revenue and an adjusted EBITDA margin of 30% to 32%. 3 Momentum Stocks That Could Soar Post-Market Volatility Certara (NASDAQ:CERT) reported first-quarter 2026 revenue of $106.9 million, up 1% from the prior-year period, as stronger software performance offset softer services results and the company outlined a strategic reset under Chief Executive Officer Jon Resnick. Resnick, who said he has passed the 100-day mark as CEO, told investors that the quarter was “in line with our expectations” but “does not reflect the company’s potential.” He said Certara is focused on driving “long-term durable growth” by reshaping its business and portfolio strategy and adding more operational rigor. → Beyond NVIDIA: Picks-and-Shovels AI Plays with Strong Momentum Simulations Plus Stock Drops 15% Despite EPS Beat Chief Financial Officer John Gallagher said software revenue rose 7% year over year to $49.7 million, driven by Simcyp, Phoenix and Chemaxon. Services revenue fell 4% to $57.2 million, reflecting mixed results in model-informed drug development services and softness in regulatory services. Total bookings for the quarter were $115.3 million, down 2% from a year earlier, while trailing 12-month bookings rose 5% to $479.2 million. → 3 Ways to Target the Resources Powering AI and Data Centers Are These 3 Small Momentum Stocks Setting Up Big Gains? Software bookings increased 20% year over year to $48.7 million, and trailing 12-month software bookings rose 8% to $192.2 million. Gallagher said software performance was at or above plan across all three customer tiers. Certara’s software net retention rate was 106 in the quarter. Services bookings declined 14% to $66.6 million in the quarter, though trailing 12-month services bookings increased 2% to $286.9 million. Gallagher said Certara saw softer performance from tier 1 customers in model-informed drug development services after a strong fourth quarter. → Quantum Earnings Season Is Ramping Up—What to Watch From 2 Major Players Adjusted EBITDA was $31.7 million, down from $34.8 million a year earlier, with an adjusted EBITDA margin of 30%. Certara reported a net loss of $8.8 million, compared with net income of $4.7 million in the first quarter of 2025. Adjusted net income was $14.5 million, compared with $22.2 million a year earlier. Adjusted diluted earnings per share were $0.09, down from $0.14 in the prior-year quarter. Resnick said Certara closed the divestiture of its regulatory writing and medical writing business to Veristat. He said the move sharpens Certara’s focus on areas where it has “defined competitive and scientific advantage,” improves revenue predictability and creates closer alignment between expert services and technology. Gallagher said the divested businesses generated $50 million of revenue and approximately $17 million of adjusted EBITDA in 2025, excluding unallocated overhead expenses. In the first quarter of 2026, they contributed approximately $13 million in revenue, and Certara expects to recognize approximately $5 million from them in the second quarter. Following the divestiture, Gallagher said Certara expects its revenue mix to be approximately 50% software and 50% services. Resnick said Certara is reorganizing into two growth areas: model-informed drug development and discovery, which the company calls MID3, and accelerated clinical evidence, or ACE. In response to an analyst question, Resnick said MID3 will include the company’s core model-informed drug development and discovery applications, including Simcyp and Certara IQ, along with expert service capabilities such as quantitative systems pharmacology, quantitative systems toxicology and physiologically based pharmacokinetic modeling. ACE, he said, will focus on data and workflow challenges, including products such as Phoenix, Clinical, CoAuthor and GlobalSubmit. Resnick said the goal is to accelerate how data is turned into evidence for submission. The company is also searching for a chief product officer who will report to Resnick and oversee product development across the organization. Resnick framed Certara’s strategy around the growing use of artificial intelligence in drug discovery and development. He cited industrywide investments from companies including Eli Lilly, Roche Genentech, Amazon, OpenAI and Anthropic as evidence that customers are increasing spending on AI and technology-enabled capabilities. Certara is building what Resnick described as an AI-integrated platform on top of its existing portfolio. He said the platform is intended to allow researchers to interrogate Certara’s knowledge across products, datasets and scientific expertise to get “accurate, trusted answers” to complex questions. The company has formed an AI-native team, allocated investment resources and is engaging “lighthouse customers,” he said. Certara appointed Dr. Chris Bouton as chief AI officer. Bouton also serves as chief technology officer and has led Certara’s AI implementation efforts. Resnick also highlighted a strategic collaboration with NVIDIA to apply accelerated computing and AI to Certara’s next-generation platform. He said the collaboration is intended to reduce manual, time-intensive steps and shift biosimulation from sequential processes to parallel iterative workflows. In the Q&A session, he said the companies are working to speed complex simulations and make certain modeling capabilities more broadly usable within customer organizations. Certara also expanded its commercial collaboration through a new relationship with Altasciences, an integrated CRO/CDMO. Resnick said the two companies are working on a “model-first” approach to early drug development intended to accelerate the path to proof of concept. Certara updated its 2026 outlook to reflect the divestiture. The company now expects full-year reported revenue of $395 million to $405 million, including $18 million related to the divested business. Excluding the divested business in both periods, Gallagher said the outlook implies full-year growth of 0% to 4%, consistent with the company’s prior expectations. Revenue: $395 million to $405 million for 2026. Adjusted EBITDA margin: 30% to 32% for the full year. Adjusted EPS: $0.35 to $0.41 per share. Fully diluted shares: Expected in the range of 157 million to 159 million. Effective tax rate: About 30%. Gallagher said first-half revenue growth is expected to be closer to the low end of the 0% to 4% range, while second-half growth is expected to be at or above the high end. Software growth is expected to be at or above the high end of that range for the year, while services growth is expected to be toward the low end, with improvement in the second half. Certara ended the quarter with $149.5 million in cash and cash equivalents and $294.8 million of outstanding borrowings on its term loan. Gallagher said the company repurchased approximately $82.6 million of stock under its $100 million authorization, including $40 million in the first quarter. Asked about capital allocation, Gallagher said share repurchases remain a focus, while Certara is also evaluating tuck-in acquisitions. Certara is a biosimulation software and services company that partners with pharmaceutical, biotechnology and medical device developers to accelerate drug discovery, development and regulatory approval. The company's platform integrates quantitative pharmacology, real-world evidence, artificial intelligence and machine learning to model and simulate drug behavior across a range of therapeutic areas and patient populations. By applying these mechanistic and data-driven approaches, Certara helps its clients predict clinical outcomes, optimize dosing strategies and streamline decision-making throughout the product lifecycle. The company's offerings are divided into software tools and consulting services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Certara Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

Certara, Inc. (CERT) came out with quarterly earnings of $0.09 per share, missing the Zacks Consensus Estimate of $0.11 per share. This compares to earnings of $0.14 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -20.57%. A quarter ago, it was expected that this company would post earnings of $0.11 per share when it actually produced earnings of $0.09, delivering a surprise of -18.18%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Certara, which belongs to the Zacks Medical - Biomedical and Genetics industry, posted revenues of $106.92 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 1.22%. This compares to year-ago revenues of $106 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Certara shares have lost about 28.4% since the beginning of the year versus the S&P 500's gain of 8.1%. While Certara has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Certara was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.12 on $106.24 million in revenues for the coming quarter and $0.45 on $427.74 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Biomedical and Genetics is currently in the bottom 42% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Opus Genetics, Inc. (IRD), has yet to report results for the quarter ended March 2026. This company is expected to post quarterly loss of $0.16 per share in its upcoming report, which represents a year-over-year change of +50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Opus Genetics, Inc.'s revenues are expected to be $2.81 million, down 35.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Certara, Inc. (CERT) : Free Stock Analysis Report Opus Genetics, Inc. (IRD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research