Certara, Inc. ((CERT)) has held its Q4 earnings call. Read on for the main highlights of the call.
Certara’s recent earnings call painted a picture of a company experiencing robust growth tempered by market challenges. The sentiment was largely positive, with significant achievements in software bookings and strategic acquisitions. However, the company acknowledged hurdles such as cautious customer spending and elongated decision-making timelines, which have affected the overall outlook. Certara’s commitment to strategic investments, particularly in AI and software development, is expected to drive future growth.
Strong Revenue Growth
Certara concluded 2024 with impressive revenue figures, reaching $385.1 million, marking a 9% increase compared to 2023. This growth underscores the company’s ability to expand its market presence and capitalize on its strategic initiatives.
Software Bookings Growth
The fourth quarter of 2024 saw a remarkable surge in software bookings, which climbed to $59.7 million, reflecting a 38% increase from the same period in the previous year. This growth highlights Certara’s successful expansion in the software sector, a key area of focus for the company.
Successful Acquisitions
Certara’s strategic acquisitions, including Chemaxon, Formedix, and Applied Biomass, have been successfully integrated, contributing positively to the company’s performance. Notably, Chemaxon alone generated $6.6 million in revenue during Q4, showcasing the value of these acquisitions.
Expansion of Customer Base
The company expanded its customer base to over 2,400 life sciences companies, with 431 customers having annual contract values exceeding $100,000. This expansion reflects Certara’s growing influence and appeal within the life sciences sector.
Adjusted EBITDA Increase
Certara reported an increase in adjusted EBITDA for Q4 2024, reaching $33.5 million, up from $29.6 million in Q4 2023. The company maintained a healthy margin of 33%, demonstrating strong financial management.
Regulatory Writing Revenue Decline
Despite overall growth, Certara experienced a decline in regulatory writing revenue, which fell to $54.7 million in 2024 from $60.5 million in 2023. This decrease highlights a challenge within this segment of the business.
Cautious Customer Spending
Certara noted a trend of cautious spending behavior among customers, influenced by funding constraints, drug price negotiations, and geopolitical uncertainties. This caution has impacted the company’s service demand predictability.
Elongated Decision-Making Timelines
The company observed extended decision-making timelines among its customers, which has affected the predictability of service demand and posed challenges to the company’s operational planning.
Lower Software Net Retention Rate
The software net retention rate was reported at 106% in Q4, slightly down from the full-year rate of 108%. This slight decline indicates a minor challenge in maintaining customer retention levels.
Forward-Looking Guidance
Looking ahead to 2025, Certara projects total revenue between $415 million and $425 million, representing an 8% to 10% growth over 2024. The company anticipates adjusted EBITDA margins to range from 30% to 32%, with adjusted earnings per share expected between $0.42 and $0.46. Certara is optimistic about continued software expansion, particularly from the Chemaxon acquisition, which is expected to contribute significantly to revenue. Despite market challenges, the company remains confident in its strategic investments in AI and software development.
In summary, Certara’s earnings call conveyed a positive sentiment with strong growth in key areas, despite some market challenges. The company’s strategic focus on software development and AI integration is expected to drive future success. Investors and stakeholders can look forward to Certara’s continued expansion and innovation in the life sciences sector.