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Introduction & Market Context
Certara Inc . (NASDAQ:CERT), a leading provider of biosimulation software and services, presented its first quarter 2025 financial results on May 5, 2025, showcasing strong performance that exceeded analyst expectations. The company, which supports over 90% of novel drugs approved by the US FDA since 2014, reported significant improvements in revenue and profitability while maintaining its strategic focus on expanding biosimulation capabilities.
The biosimulation technology provider serves over 2,400 customers across 70 countries, including all of the top 30 biopharma companies, and has positioned itself as a critical partner in accelerating drug development. With a global team of more than 1,540 employees, including 400+ PhDs, Certara continues to leverage its scientific expertise to address the pharmaceutical industry’s need for more efficient drug development processes.
As shown in the following presentation slide highlighting the company’s mission and scale:
Quarterly Performance Highlights
Certara reported robust financial results for Q1 2025, with total revenue reaching $106.0 million, representing a 10% year-over-year increase on both a GAAP and constant currency basis. The company achieved a net income of $4.7 million, a significant improvement from a net loss of $4.7 million in the same period last year. Adjusted EBITDA grew by 20% to $34.8 million, with a margin of 33%.
The following slide summarizes Certara’s key financial metrics for the first quarter:
Breaking down the revenue performance, software revenue increased by 18% to $59.6 million, while services revenue grew by 4% to $46.4 million. This balanced growth across both segments demonstrates the company’s ability to expand its core offerings while maintaining strong customer relationships.
The detailed revenue breakdown is illustrated in this chart:
Net bookings, an important indicator of future revenue potential, grew by 12% year-over-year to $118.2 million. Software (ETR:SOWGn) bookings increased by 7% to $77.4 million, while services bookings showed stronger growth of 23% to $40.8 million. The trailing twelve months (TTM) bookings reached $457.7 million, a 16% increase from the previous year.
Detailed Financial Analysis
Certara’s book-to-bill ratio remained strong at 1.16x, consistent with the previous quarter and up from 1.10x a year ago. This metric provides visibility into future revenue growth and indicates a healthy pipeline of business. The company’s software net retention rate (NRR) was 102.4% in Q1 2025, showing continued ability to retain and expand relationships with existing customers, though this represents a decline from 105.5% in the previous quarter.
The trend in software net retention rate is shown in the following chart:
Adjusted EBITDA performance has shown consistent improvement over the past five quarters, with Q1 2025 reaching $34.8 million, a 20% increase compared to Q1 2024. The adjusted EBITDA margin has remained stable at 33%, demonstrating the company’s ability to grow while maintaining profitability.
As illustrated in this chart of quarterly adjusted EBITDA:
The company’s performance across customer tiers showed some variation. Tier 1 customers demonstrated strong bookings growth in software but experienced softness in biosimulation services. Meanwhile, Tier 2 and Tier 3 customers showed strength across both biosimulation and regulatory services, offsetting the weakness in Tier 1 services.
Strategic Initiatives
Certara highlighted several strategic initiatives during its presentation, including its focus on the evolving opportunity in preclinical drug development. The FDA’s plan to phase out animal testing requirements for monoclonal antibodies (mAbs) and other drugs presents a significant opportunity for Certara’s physiologically-based pharmacokinetic (PBPK) and quantitative systems pharmacology (QSP) modeling solutions.
In response to this market shift, the company recently launched its Non-animal Navigator (ELI:NVGR), a hybrid software and services solution designed to help customers understand alternatives to animal testing. This initiative aligns with Certara’s mission to transform drug development and accelerate medicines to patients through advanced biosimulation technologies.
The company also announced a $100 million share repurchase authorization, reflecting the board of directors’ confidence in Certara’s long-term growth prospects and providing additional capital allocation flexibility. This move comes as the company continues to focus on both internal investment in biosimulation capabilities and strategic mergers and acquisitions to drive future growth.
Forward-Looking Statements
Certara maintained its previous guidance for 2025, projecting revenue in the range of $415-$425 million, representing 8-10% growth. The company expects an adjusted EBITDA margin of 30-32% and adjusted diluted EPS of $0.42-$0.46. Key assumptions include the Chemaxon acquisition contributing $23-$25 million in revenue and fully diluted shares in the range of 162-164 million.
The company’s 2025 outlook is summarized in the following slide:
Management expressed confidence in the company’s strategic direction, emphasizing its continued focus on expanding biosimulation capabilities and leveraging artificial intelligence to enhance its existing technologies. The company remains well-positioned to capitalize on the growing demand for more efficient drug development processes, particularly as regulatory agencies move away from traditional animal testing requirements.
Following the earnings announcement, Certara’s stock saw a modest increase of 0.31% in after-hours trading, reflecting investor confidence in the company’s performance and outlook. With a current market capitalization of approximately $2.06 billion and trading at $11.98 per share, Certara continues to demonstrate its value proposition in the life sciences technology sector.
Full presentation:
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