Certara Q2 Earnings Call Highlights

Key Points

• 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.

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.

Software Growth Offsets Services Decline

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.

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.

Divestiture, Cost Actions and Commercial Changes

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.

Profitability, Cash and Capital Allocation

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.

Outlook and AI Initiatives

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.

About Certara (NASDAQ:CERT)

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.

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