Education
About Us
Working with TipRanks
Follow Us
Certara (CERT)
NASDAQ:CERT
Top Page
Certara
(NASDAQ:CERT)
67Neutral
Positive Factors
R&D Investment and Cost Management
Certara's initial 2025 guide underscores the continuation of positive dynamics such as prudent R&D investment and focus on cost-cutting.
Software Performance
Management noted that software bookings for tier 1 and tier 3 customers were fairly strong in the quarter, with tier 3 biosimulation growth in the low-twenties range.
Negative Factors
Margin Expectations
The margin outlook was lighter-than-expected, falling short of the Street’s expectations.
Regulatory Services Business Performance
Shares of CERT underperformed in 2024 largely due to lagging growth of its lower-margin regulatory services business.
Spending Environment
Large customer spend is still varied due to IRA/patent cliff impacts, while smaller customers remained more reticent to deploy capital even following successful fundraising efforts.
Certara (CERT) vs. S&P 500 (SPY)
Market Cap
$1.60B
Dividend YieldN/A
Average Volume (3M)1.38M
Price to Earnings (P/E)―
Beta (1Y)1.28
Revenue Growth8.70%
EPS Growth78.31%
CountryUS
Employees1,487
SectorHealthcare
Sector Strength72
IndustryMedical - Healthcare Information Services
Share Statistics
EPS (TTM)-0.07
Shares Outstanding161,017,780
10 Day Avg. Volume1,158,800
30 Day Avg. Volume1,380,538
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.49
Price to Cash Flow (P/CF)8.80
P/FCF Ratio9.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$14.92Price Target Upside50.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Certara Business Overview & Revenue Model
Company DescriptionCertara (CERT) is a global leader in biosimulation, offering software and consulting services to accelerate drug discovery and development. The company operates in the life sciences sector, providing a suite of products that enable pharmaceutical companies to predict the safety, efficacy, and pharmacokinetics of drugs. Certara's core offerings include its proprietary software platforms and expert consulting services that are utilized by researchers and regulatory agencies worldwide to streamline the drug development process.
How the Company Makes MoneyCertara generates revenue through the sale of its biosimulation software licenses, which are used by pharmaceutical and biotechnology companies to enhance drug development processes. The company also earns income from consulting services, where its team of experts provide strategic insights and technical support to optimize drug discovery and regulatory submissions. Additionally, Certara benefits from partnerships and collaborations with leading life sciences companies and regulatory agencies, which further bolster its revenue streams. The combination of software licensing, consulting services, and strategic partnerships forms the backbone of Certara's revenue model.
Certara Financial Statement Overview
Summary
Certara exhibits strong revenue growth and a stable balance sheet with minimal debt. While cash flow is positive and improving, the company's profitability remains a significant concern with continued net losses impacting overall financial health. Operational efficiency improvements are essential for achieving sustainable profitability.Income Statement
Certara has shown consistent revenue growth with a 8.7% increase from 2023 to 2024, and a gross profit margin remaining strong at approximately 59.9%. However, the company struggles with profitability, reflected in a negative net profit margin of -3.1% owing to persistent net losses. Despite improvements, negative EBIT and EBITDA margins highlight ongoing operational challenges.72
Positive
Balance Sheet
The company's balance sheet is robust with a low debt-to-equity ratio of 0.01, indicating minimal reliance on debt financing. The equity ratio stands at 67.2%, showcasing strong financial stability. However, return on equity remains negative due to net losses, which is a concern for long-term profitability.78
Positive
Cash Flow
Certara's cash flow is healthy, with a positive operating cash flow higher than net income, indicating good cash generation. Free cash flow growth is strong at 16.9% from 2023 to 2024, demonstrating efficient capital expenditure management. However, the free cash flow to net income ratio is skewed due to negative net income.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 385.15M | 354.34M | 335.64M | 286.10M | 243.53M | Gross Profit |
| 230.63M | 213.31M | 203.07M | 174.49M | 142.76M | EBIT |
| -1.73M | -40.77M | 32.52M | 13.58M | -24.89M | EBITDA |
| -36.71M | 23.84M | 89.00M | 58.58M | 17.87M | Net Income Common Stockholders |
| -12.05M | -55.36M | 14.73M | -13.27M | -49.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 179.18M | 234.95M | 236.59M | 185.80M | 271.38M | Total Assets |
| 1.58B | 1.56B | 1.57B | 1.51B | 1.27B | Total Debt |
| 14.17M | 302.57M | 308.11M | 303.02M | 299.37M | Net Debt |
| -165.02M | 67.62M | 71.52M | 117.22M | 27.99M | Total Liabilities |
| 516.45M | 516.30M | 493.26M | 469.88M | 447.27M | Stockholders Equity |
| 1.06B | 1.05B | 1.08B | 1.04B | 822.13M |
| Cash Flow | Free Cash Flow | |||
| 78.84M | 67.43M | 80.01M | 51.49M | 36.87M | Operating Cash Flow |
| 80.47M | 82.75M | 92.54M | 60.39M | 44.81M | Investing Cash Flow |
| -112.37M | -79.55M | -27.84M | -269.92M | -8.61M | Financing Cash Flow |
| -21.01M | -9.45M | -7.36M | 123.39M | 208.21M |
Certara Technical Analysis
Negative
9.91
Price Trends
12.35
Negative
11.61
Negative
12.18
Negative
Market Momentum
-0.63
Positive
26.61
Positive
17.65
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CERT, the sentiment is Negative. The current price of 9.91 is below the 20-day moving average (MA) of 10.83, below the 50-day MA of 12.35, and below the 200-day MA of 12.18, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 26.61 is Positive, neither overbought nor oversold. The STOCH value of 17.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CERT.
Certara Risk Analysis
Certara disclosed 42 risk factors in its most recent earnings report. Certara reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Certara Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $38.11B | 54.09 | 13.63% | ― | 16.20% | 34.71% | |
70 Outperform | $31.28B | 23.66 | 22.55% | ― | 2.95% | 2.46% | |
67 Neutral | $1.60B | ― | -1.14% | ― | 8.70% | 78.31% | |
66 Neutral | $11.73B | 223.45 | 0.76% | ― | 14.76% | -88.32% | |
60 Neutral | $7.96B | 586.82 | 0.45% | ― | -1.92% | -96.95% | |
49 Neutral | $6.82B | ― | -24.09% | ― | -3.92% | -202.80% | |
48 Neutral | $6.85B | 1.03 | -53.01% | 2.50% | 16.84% | 0.96% |
* Healthcare Sector Average
Performance Comparison
CERT
Certara
9.90
-8.10
-45.00%
BIO
Bio-Rad Laboratories
243.56
-95.42
-28.15%
CRL
Charles River Labs
150.52
-118.21
-43.99%
INCY
Incyte
60.55
3.91
6.90%
IQV
IQVIA Holdings
176.30
-72.57
-29.16%
VEEV
Veeva Systems
231.63
1.24
0.54%
Certara Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -19.63% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
Certara's earnings call reflected a strong finish to 2024 with significant growth in software bookings and successful integration of strategic acquisitions. However, challenges such as cautious customer spending and elongated decision-making timelines dampened the overall outlook. The company's strategic investments in AI and software development are poised to drive future growth.Highlights
Strong Revenue Growth
Certara finished 2024 with revenue of $385.1 million, representing 9% reported growth versus 2023.
Software Bookings Growth
Fourth quarter software bookings reached $59.7 million, which increased 38% from the prior year period.
Successful Acquisitions
The integration of Chemaxon, Formedix, and Applied Biomass contributed positively, with Chemaxon generating $6.6 million revenue in Q4.
Expansion of Customer Base
Certara expanded its customer base to over 2,400 life sciences companies, with 431 customers having annual contract values exceeding $100,000.
Adjusted EBITDA Increase
Adjusted EBITDA in Q4 2024 was $33.5 million, up from $29.6 million in Q4 2023, maintaining a margin of 33%.
Lowlights
Regulatory Writing Revenue Decline
Regulatory writing revenue was $54.7 million in 2024, a decrease from $60.5 million in 2023.
Cautious Customer Spending
Customers exhibited cautious spending behavior due to funding constraints, drug price negotiations, and geopolitical uncertainty.
Elongated Decision-Making Timelines
Decision-making timelines were extended among customers, impacting the predictability of service demand.
Lower Software Net Retention Rate
The software net retention rate was 106% in Q4, slightly down from the full-year rate of 108%.
Company Guidance
During the Certara Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025, projecting total revenue between $415 million and $425 million, which represents a growth of 8% to 10% over 2024. The company expects adjusted EBITDA margins to be in the range of 30% to 32%, with adjusted earnings per share anticipated to fall between $0.42 and $0.46. Certara's revenue growth is anticipated to be driven by continued software expansion, including contributions from the recent Chemaxon acquisition, expected to add between $23 million and $25 million in 2025. The company noted the challenging market environment, highlighting cautious spending behavior among customers and the impact of funding constraints, Medicare drug price negotiations, and geopolitical uncertainties. Despite these challenges, Certara is optimistic about its strategic investments in software development, particularly in integrating generative artificial intelligence and expanding its product offerings across the drug discovery and development phases.Certara Corporate Events
Executive/Board Changes
Certara Announces Leadership Change with Dr. Smith’s Departure
Neutral
Mar 5, 2025
On March 5, 2025, Certara, Inc. announced that Dr. Patrick F. Smith, who served as President of Certara Drug Development Solutions, stepped down from his role on March 3, 2025. Despite this change, Dr. Smith will continue to contribute to the company in a senior advisory and scientific capacity, indicating a strategic shift in his responsibilities while maintaining his involvement with Certara.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.