Certara NASDAQ: CERT reported 4% revenue growth in the third quarter of 2026 as double-digit software growth offset a decline in services, while cost reductions and a favorable sales mix helped lift profitability.
Revenue from continuing operations rose to $94.9 million for the quarter ended Sept. 30, the drug-development software and services company said on its earnings call. Adjusted EBITDA increased 6% to $30.2 million, with the margin expanding to 31.8% from 31.5% a year earlier and 28.1% in the second quarter.
CEO Jon Resnick said the results showed signs of strengthening after a series of operational changes, including the divestiture of the Regulatory and Medical Writing business, a reorganization around customer buying patterns and new commercial and product leadership.
Software Growth Outpaces Services
Software revenue increased 11% year over year to $48.8 million, marking Certara’s first quarter of double-digit organic software growth in two years, according to Resnick. Software bookings rose 15% to $46.9 million, and trailing 12-month software bookings increased 8% to $202.4 million.
Resnick said software performance was strong across customer tiers and products, making it difficult to isolate a single source of growth. He described the improvement as durable but cautioned that results could fluctuate from quarter to quarter because of differences in software products and revenue timing.
Services revenue fell 2% year over year to $46.1 million, though it grew 3.5% from the second quarter. Services bookings were $45.6 million, while the trailing 12-month services book-to-bill ratio was 1.15.
Resnick attributed the services performance to earlier changes in Certara’s sales and operating model rather than a structural difference in customer demand. The company has returned to a specialist-led approach and changed its incentives, but management said those moves will take time to translate into bookings and revenue.
Total third-quarter bookings rose 4% to $92.5 million. Certara’s reported results and bookings exclude the Regulatory and Medical Writing business, which was sold on May 8 and is reported as discontinued operations, interim CFO Faiz Mohammed said.
Cloud Conversion and AI Plans
Resnick said nearly 10% of Phoenix accounts have moved to the cloud, slightly ahead of the company’s first-year expectations. He said Certara plans to accelerate conversions next year, though the shift creates a near-term revenue headwind as customers move from on-premise products to cloud subscriptions.
Certara is also developing an integrated artificial intelligence approach intended to make its software and proprietary data accessible within customer workflows. Resnick said the company is working with early customers on broader AI initiatives and expects new capabilities to contribute to growth and positioning in 2027.
The company announced the appointment of Grant Peterson as chief product officer. Peterson previously served as chief product officer at Conga and chief technology officer at DocuSign. Resnick said his responsibilities include improving the existing portfolio and helping Certara develop new products.
Management also sees an opportunity to expand in Asia, where Certara has begun roadshows in China, Japan and Korea. Resnick said the initiatives are already underway but are expected to have a growth impact in 2027 rather than the fourth quarter of 2026.
Profitability and Outlook
Certara reported a third-quarter net loss from continuing operations of $3.6 million, or $0.02 per diluted share, compared with a loss of $4.8 million, or $0.03 per share, a year earlier. Adjusted diluted earnings were $0.09 per share, unchanged from the prior-year period.
Operating expenses rose to $61.1 million from $58.1 million, primarily reflecting reorganization, severance and executive recruiting costs. Mohammed said the sequential improvement in adjusted EBITDA margin reflected earlier operating actions and continued expense discipline.
The company ended September with $214.9 million in cash and cash equivalents, approximately $293 million outstanding on its term loan and $100 million available under its revolving credit facility.
Certara narrowed its full-year 2026 revenue growth outlook to 2%–3%, with software expected to grow faster than that range and services at or below its low end. It updated its adjusted earnings outlook to $0.31–$0.34 per share.
Mohammed said the company’s previously communicated full-year adjusted EBITDA margin range of 29%–31% remained an appropriate range for the fourth quarter. Resnick declined to provide 2027 guidance, saying the company would hold off on an outlook until later.
About Certara (NASDAQ:CERT)
Certara is a global provider of software and services that support drug development and regulatory approval. The company helps biopharmaceutical and pharmaceutical organizations use quantitative methods, modeling and simulation, and regulatory science to improve decisions throughout the development process.
Its software portfolio includes platforms for pharmacometric modeling and simulation, clinical trial design and analysis, pharmacology and safety assessment, data visualization, and regulatory submission management.
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