CERT - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Certara Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would not like to turn the conference over to your speaker today, David Deuchler, Investor Relations. sir. ahead, go Please

David Deuchler

Thank participating everyone. call. today's you afternoon, in for conference Good

today, results website. the have ended press Schemick, along the and Earlier we from December on Chief is available with released Feehery, Officer. On copy Certara, release Officer XXst, William XXXX. call of and the for quarter Chief A Executive Financial the IR Certara year presentation financial the company's Andrew supplementary

results, this of Safe are management Before performance statements. call that provisions we the to XXXX. like statements make the relate are Any include call Litigation begin, contained the to Harbor events, during Reform within that Act remind you forward-looking predictions of or will Private Securities or Federal statements to that forward-looking Securities this made in I'd meaning the of expectations statements Laws, future of pursuant which

Actual are factors. from You only guarantee forward-looking of should statements in of implied to considered be statements performance. be may that the aware due and a a not expressed should or results variety differ estimates these future those materially

the as questions, earnings comparable may directly contains today's such as net information website. were live XXXX. posted today, certain EBITDA, at adjusted mentioned This March disclaims or available EPS and most measures, of is management For appendix refer to this conference and of the call Factor December the XXXX. of are to on I to which by and only And intention of uncertainties financial the the adjusted to responses law and section to William. turn company's with non-GAAP any perspectives and supporting revise Also of our the the events Certara filed Xth, broadcast Risk information, their Exchange financial accurate statements, Certara's business, Reconciliations or projections GAAP both IR non-GAAP time-sensitive call measures. Commission forward-looking risks remarks release or required in any associated over whether Securities and will income with obligation description otherwise. measures with or on update in that, financial new to please because XX, the future as except presentation, or adjusted

William Feehery

afternoon, David. quarter joining including to Andrew with everyone prepared for XX, XXXX, Certara's completed I was listed net and Good and will proceeds, On our thank fourth will Behalf you, and NASDAQ. We $XXX.X earnings take December and involved you gross remarks who call. IPO proceeds then the successfully raised we we of the Thank questions. thank the $XXX.X everyone million with IPO. in like would on I in for company. million IPO Certara, start

also very XX. the services. community record to Certara grew the support, our accelerate are effective Certara with also enabled note deliver year. biosimulation drug in We year now that our In software mission We're profitability. our and the pleased same of we With in including March tech in which with development the revenue to quarter the revenue on were year-over-year pleased financial the XX% to be quarter, will better XXXX, had XX% strong fourth over index growth, joining with XXXX process investment previous positioned another growth performance, Russell

virtual leader a bookings use and and uses challenging body grew grew that worldwide and our XX% Our drug And affects the Certara's and how computer for this, bookings the while using efficacy. by powerful trials by base we quarter and predict software models they questions the advancing and and it save XXXX full answer fourth XXXX and also year during XX% critical a simulate can the By while XXXX. safety Certara in money, drug. quarter. pandemic, doing adjusted a in EBITDA XXX a year our the body was is that customers solid to in expertise increased Full drug fourth time XX% how X%, recruit global conduct surpassing growth. to Biosimulation biosimulation. computer-based affects employees the in employee biosimulation is technology XX% proven patients. significant by with we to the had

or industry Additionally, by of they software was of of for global We not evaluate with offers global without prouder worked biosimulation's many have in effort COVID-XX, XXXX, possible programs. technology Certara therapeutics used the including chose then FDA. in be of It's this is impact against rare contributing many In important that biosimulation. partner note biosimulation pace and COVID Certara of pivoted about one areas that programs would of though, regulatory XXXX, with more the better couldn't to And XX areas vaccines by services. a to on development of was powered to is platform, agencies than end-to-end regulatory and COVID-XX XX that XX therapeutic to biopharmaceutical the develop we Certara's example effort submissions, in biosimulation differentiated When global and to many COVID-XX. there the to which us, diseases. believe divisions the no significant passionate like only oncology integrate the pandemic. enabled more fighting amounts use the work

biotechnology support the biosimulation our technology one-third market that to a increase grows advance biosimulation. the discovery global customers, leading only access. partner contributions not scientists adoption biotech the provide to in employees, biosimulation are hire and from in science of entire capability the because these field. Certara technology of significantly to for the larger to of incorporating have is than the regulatory XXX published important our have services and XXX as they with industry drug work also and deliver of to our to the scientists science number advancing Certara's but R&D so doctorate degrees, advance companies Key XXXX, course the submissions, who due expertise. always results collectively experts Of our the need companies often technology and enabled regulatory on. In of make help platform stands not than Furthermore, platform our more and closely analysis. we Our does The to continuum ability our largest fact the science, likely projects manuscripts more the with than biosimulation or group biosimulation the the and customers' enabled year rapidly, operation regulatory scientists from at extensive biosimulation our even pharma demand writing may services, scientific

access, experts technology the and analytics. real-world advanced and impact have understand and help our customers payers best-in-class are which global pathways. market solutions, effectively market therapies navigate We by communicate of this health access regulatory improve quality to provide expertly Furthermore, underpinned we efficiency and and regulatory to we In authorities.

past biologics year, the have are to enabled that software drugs approvals used services XXXX FDA. to since We new and biosimulation say received more have by of customers tech and this Certara's than proud XX%

the more known are the standard worldwide. and we at the X,XXX than gain we be to customers. innovation, We As industry year biosimulation ended of forefront to customers with for new continue

year-over-year. an greater our also we solutions. than adoption selling We In $X growing Certara's and XX% customer more value introducing customers customers' XX cross-selling expanded of XXXX, licenses with annual by end-to-end had by by million, new platform

our Additionally, At was $XXX,XXX, growth needs we for XX% of greater XXX which an a customer passion customers than year-over-year. innovation. the of had annual customers drive Certara, value with our

as the our such introduce new virtual partnered global As leading safer We biopharmaceutical in companies of complex advance pregnant version we developed simulator to efficient in patients with of to a populations, and testing an clinical many additional with models Simcyp more for studies. example, XXXX drugs women.

also We in delivery new invested formulation. to improve drug features and drug

the Simcyp XXXX, than label has the claims As approved simulator approximately XXX drugs. of of XX for FDA end more informed novel

opened office R&D. quarter, Shanghai, XXXX, than epicenter in we As the focused new for In expands, markets. are In revenue our penetrating our Certara doubled. China new biopharmaceutical on from China's more fourth we

Peking excellence Union selective renewed the our We one China. College Phoenix train colleges our scientists. to Medical of of their medical also most emerging center use Hospital, recently They with in platform partnership

about our growing can our in China, fully base direct we are that presence enthusiastic there. so support rapidly customer We

simulation technology, increase Silico depth breadth growth, diseases for XXXX, actively platform. and Biosciences organic modeling the to to and of people In addition acquisition the the XXXX. of we're Certara and for looking neurodegenerative end-to-end completed our right In capabilities platform In in

Our to reflect important is firm regulatory Europe. a AUTHOR!, bio demonstrated in statistics a strategy, and Certara's M&A just acquisition based services of ago it's recent acquisition our on few executing process. days When most disciplined history we discuss a

turn and our Andrew prospects will about enthusiastic we're year provide and priority at technology Schemick, over I capabilities be value and summary, beyond. help on Certara, XXXX discuss the In focus exciting solid it deliberate. over and results was the Certara. financial Our now for for and creation to guidance our XXXX. CFO, top been another customers continue coming to has company's will Shareholder year the to to our

Andrew Schemick

everyone. Hello, William. Thanks,

will will finish go results, remarks XXXX. full the I followed fourth the by through of the and the guidance prepared quarter year with for year the we First, results full

of was XXXX XXst, million, quarter earlier, was for year-over-year As $XX.X fourth William mentioned December record for three Certara. ended Total the a XX%. months the revenue representing quarter growth

increased year I XX% X% services prior prior maintenance repeat from consistent new offset software from of historical and logos. adoption over our but from certain Services in license revenue was the growth platform reflects net customers XX% $XX.X grew software maintenance subscription Notwithstanding, rate services end-to-end revenue growth level. revenue software later software Certara Software timing was our which on revenues revenue year software, in migrate of the was period. the trend over discussion. recognition. revenue full million, by license $XX.X million, which The growth the installed subscription. in products This the to of increased base of increased provide revenue and year with and saw will We lower period. the timing, both

revenue, retention rates. new renewal indicators aggregate to two monitor to also addition In bookings evaluate key and performance and we expansion,

I'll which from of large renewal booked period bookings million, the during mention due to signing vary from year larger decreased dependent timing part contracts. $XX Software can renewals quarter. the that on several were quarter-to-quarter the early third bookings prior in here X%

in to area Software due $XX.X quarter subscription basis categorize revenue quarter base, compared that fourth was but increased was based it's which of negatively revenues. were XXXX. XX% the aggregate renewal rate, mix particularly of an important is from of increase the solutions. The million, bookings to note approximately XXXX. rate strong as demand this points was broad of Services the growth biosimulation XXX XX% for the impacted fourth XX% in renewal as I by the to

fourth stock-based was operating XXXX, the discuss of million for Before make increase which headcount $XX $X.X The the I'd components the in increased the I incurred as like we of expenses. quarter, of accounts based as fourth costs. million a expense details increase as expenses with quarter for increase IPO increase R&D that compensation operating the million to follows: of increase primarily million down point from stock-based increase in million was result was compared proceeds of the increase of in The $X the stock-based expense fourth compared were and Operating million increase million due compensation, compensation. to term primarily in a for in due the of G&A were in from $X.X The expenses, million an general fourth and we primarily cost quarter late Intangible $X.X loan, XXXX. Total P&L, stock-based a in entirety stock-based quarter compensation and of quarter in due expenses. to and to $XX were of year. in fourth was Holdco were quarter primarily million million, related compared expenses. repaid for a during XXXX. $XX.X the well in depreciation for due of expenses. to $XX.X to interest million amortization The was $XX.X increase was million $XX.X million million to were expenses $X.X quarter a compensation from the million Total billable and are and to increase expenses revenues about to a fourth majority million asset $XX.X during which and the due $X.X from $X.X the amortization $X.X increase XXXX. The in quarter. of expense our expenses compensation to quarter million expenses marketing million million $XX.X the included related primarily increase the IPO. our also compensation $XX.X XXXX. the transaction Sales $XX.X of the expenses the million increase expenses during for performance which its $XX.X reflects as stock-based was $X.X fourth fourth December Continuing $X.X quarter million

fourth quarter. the rate X.X% Our was effective tax for

compared Given Adjusted discussion here, EBITDA net rate. $XX.X on in will quarter fourth fourth and our with during cash million was $XX.X the complexity to million to to of the a the was XXXX. income Net for increase performance the the in company's year-over-year loss of a by per a we're EPS $XX.X income was the million of net $X.XX result full $X.XX I for improved $X.X results, of XXXX. quarter share an the compared fourth XXXX. was revisit fourth offset discussion loss the million the XXXX. of million was compared for basis. tax to as of in year $X.XX tax quarter from $X.XX pleased later fourth loss adjusted of level this profitability increase a $X an was and Overall, Adjusted $X.X The million the compensation for stock-based of increase $XX.X Adjusted quarter benefit of quarter XXXX. of compared loss expense $XX.X of million. million including Net

full Turning the for over to results. XXXX, XXst, million, Total XXXX. the full year XX% ended growth revenue representing was $XXX.X year December

was year due prior in the period decline offset revenue $XX.X subscription in and maintenance revenue, X% and revenue. software a X% growth partially which growth revenue XX% license by software over in Software increased million, to

the known a $XXX.X period. the are XXX% that comparison repeat expired contract logos. pleased acquisition William revenue increased growth prior out in was contracts. was in and factoring well the our expansion existing new growth that revenue earlier, to base the million, impact in both as of ACV Services rate Overall, previously net and within discussed the given the which for when year this XXXX, the organic to of performance, XX% XXXX the runoff affecting new addition, XX% And expansion customers in is attributable against rate runoff as with over In was The metrics an XXXX. we evident year. relating clients

were bookings which increased software from X% metrics, performance XXXX. the On $XX.X million,

XXXX. was Software for rate XXXX for XX% as contracts. aggregate XXX%. aggregate XX% rates compared $XXX was from achieved goal year despite full rate XXXX XXXX. previously mentioned our software We retention The increase for for Services the were net runoff of XX% renewal full of year the of million, XX%-plus an renewal to bookings

visibility we million within year-over-year. The large impacts level quarter have result second million due bookings in increased strong full $XX.X of years a of both million cost to in XX-month $X.X and comparison the late for year million stock-based in G&A revenues were to $X.X primarily a its we expense supports guidance, $XX.X stock-based increase going in our and that XXXX. overall bookings interest the the to reflects XXXX, $X.X be As XXXX, the in due $XX.X $XXX.X our and for prior repaid performance Total XXXX. in down recorded shortly. our expenses. consistent Holdco during to primarily was reminder, period. increase again, visibility financial expense, high then for million about expense. an million a the a related multiyear the Sales million, software entirety was million costs. using compensation million that and at of compensation compensation P&L, for The increase year. expenses will was a in we from million $X.X asset majority compared transaction XXXX, compensation $XXX.X stock-based $XXX.X The $XX.X And of due expenses. IPO. related due compared was increase stock-based increase increase was which services result due with Continuing expenses expenses is which depreciation were follows: which proceeds expenses. Intangible in primarily to into of compared expense revenues is expenses operating and and forward the that the will million from marketing recognized million $X employee-related booking of of to were are the expenses December stock-based increase of as our increases $X.X I were million million costs million million $XX.X a loan, term increase for from primarily amortization year The $XX.X compensation operating discuss in of headcount $XX.X and in increased to $XX.X and million to primarily Total $X.X million million of were million R&D $XX.X The $XX billable $XX.X components XXXX, to XXXX. million for was

tax was X.X% benefit rate of effective Our for XXXX. a

is components of excluded share million in Adjusted calculation compared cash $X.XX XXXX full increase compared compared was Net million the Adjusted effective to credit was and from Net tax difference XX% million for tax are rates of full other of million Adjusted was driven year XXXX, was loss million carryforwards, XX% $X.X the full of deferred rate compared Our XXXX. income driven XXXX. the from was and of $XX.X XXXX. tax for to by impact and $XX to the operating XXXX. cash expense the for year allowance, $XX.X for of for by the the The representing was tax loss XXXX, stock-based $X.XX compensation expense. loss between for $X.XX the $X.XX year valuation net increase EBITDA million EPS net $XX.X and that full taxes. per XXXX in year primarily $X.X for growth. to cash

We sheet. million the ended with year $XXX.X equivalent. balance cash the and to moving Now of cash

from proceeds until XXXX. our any current was of after structure the voluntary of of a include repayment in not significant debt long-term the million outstanding IPO. quarter, debt does fourth $XXX.X $XX the debt our maturity total million portion Our with The

are $X.XX in our year be adjusted million; be fully XXX be the to to XX% Thank $XXX you. million $X.XX to the per to tax to million outlook of in Now our and in EBITDA EPS rate million following between to to effective range and rate range XX%; to to at shares and of of $XXX the share; Revenue XX% growth; XXX The million expectations. range be be turning million, to representing range for between the in $XXX range full adjusted XX% XXXX. $XX of diluted to XX%; the finally, tax cash the XX% year-end. to

to back Feehery. it Now, I'll Officer, William Chief Executive turn our

William Feehery

Thank you, a Certara strong challenging year in Andrew. environment. a In for summary, XXXX was very

our for focus continues despite platform Our end-to-end pandemic. deliver to shareholders, Certara commitments our is to market team and on trends. COVID-XX well-positioned customers to from solid the strong believe growth our We that benefiting

R&D At expect biopharmaceutical we we capture line? this can innovate, Operator, open platform. to a open larger call will for the of new to questions. continue our and to add up overall end-to-end spend, We you up share as solutions acquire, the please point,

Operator

Vikram Thank Purohit you. Our first Stanley. Morgan [Operator with from comes Instructions] question

question. proceed may You with your

Vikram Purohit

Great. Thanks for my taking question.

bit the of the quarter how for First of to we going on software both buying one think And forward? should you revenues business for quarter of year, services topic seasonality. kind the patterns how is talk the about a trend from me possible and business? Could about throughout a lumpiness little on any basis

Andrew Schemick

Vikram. Hi,

William Feehery

Thanks. Go ahead, Andrew.

Andrew Schemick

William. Thanks,

Okay.

be It's The at I more behavior. a three seasonality, really at dependent less of seasonal regarding on client tends So, bookings, pattern. that levels. to look it

second the second that first to you half, one was XX% in large had at the look quarter. of in we bookings in related half we multiyear XX% the our If booking XXXX, had

revenues, in by for half. look of a and the We a early of of for to in in And heavy have timing full we're is particularly QX There had stages renewal grow can We in enabled up given of we in of business. entirely split momentum where lack compensation driven the quarter. have the our If the the offset had second uncertainty be XX% at half, services XXXX, EBITDA that XXXX, first fourth on tends in strong half, bookings year second the half, some the half. XX% company. caught visibility with The you third That the been XX% very tech follow software, the around was revenues. and XX% revenues percentage and we to first second growing quarter-over-quarter. lack the in growing previous years Historically, seasonality by the a the QX, accruals, generally in the two season. the seasonality a half. regards accruals quarter We COVID. performance about of those year, lower second the EBITDA the

second quarter, same those revenue put back the seasonality exactly is you and If trend. into the the follows first

Vikram Purohit

of it. Thank both terms talk just a you. a how you little follow-up That's could I software of, if could. And to in see XXXX Got COVID I bit wanted much fluid and about again, understanding forward if to revenues contributed helpful. bit for throughout be it's how services you'd thoughts business? expect a and just would And much the there, situation, COVID have beyond, you of but would contribution helpful. XXXX going any a

Andrew Schemick

Sure.

saw an statements definitely impact acceleration COVID. we So, financial from for necessarily COVID, on overall not specifically the

the to industry. revenues work tend that's in Our track ongoing the

a priority So, and was our follow in William, it quarter of was second a stages it in COVID, kind We but of the biopharmaceutical anything major going did a of R&D industry. see for of the impact surge investment in some don't to at the trend if expect forward early we the expect us. clients, for work priority that?

William Feehery

Yeah.

less way us the a standpoint, an we to So, working But wash. COVID -- important rolled the COVID of work other that pharmaceutical did. at we're were moves. of industry best as moved work Teams to on it's look as I they think back that more proud for this things or a and that as very financial the on then from over

few a then lot projects projects we So, and we in later the of a in the and back came year. few those second a lost then projects COVID gained quarter probably

there. on a certainly for impact it and particularly -- big a in the other the little one I or mix So, really although XXXX, don't way was think financially we affect projects worked bit us did that the

Vikram Purohit

Understood. you. Okay. Thank

Andrew Schemick

Thank you.

Operator

you. Thank

Bank with from America. Ryskin Our Michael of next question comes

You may question. proceed your with

Michael Ryskin

that taking quarter with nice for and and an the sort [indiscernible]? start how want in of progressed on to XXXX, that fourth and quarter, question. thoughts opportunity course something you've particularly Is between over and in your Thanks meaningful that the give a of XXXX how of Could seen you could update I it in outlook. the cross-selling accelerate focusing services. software on sort Appreciate biosimulation congrats guys. any on on us Hi, XXXX?

William Feehery

Yeah. Thanks, Michael. Appreciate question. the

look, from So, our do to XXXX, more two-thirds percentage up customers our that increased are Certara accelerating XX%. solution of to XXX roughly -- than been we've cross-selling. by about one efforts we In buying our customers if from at moved top you that about look

increase. two a there's go forward. have more Certara, than So couple points Obviously, we in as opportunities we solutions more so

into say that tapping we the also Certara. we've don't It's think year, a we been the an strategy So, are growing reached that opportunity think for quite but end important certainly there. I'd through we

been the So, of data development there's ourselves And that move other a from right pipeline. through customers right able lots and the the internal solutions our that the right we've systems certainly their lot to tapping -- to time. drugs bring as we we would to so benefit we're drugs solution at into have organizing believe customer track

Michael Ryskin

sort what your you I of of how sort renewal throughout the potentially parts of doing of you back mean, there, COVID more a any adapt in out approach, discussed you on outside Okay. ways and the the XXXX little observed of to was and your but revenues, we about there? how How I a XXXX? potential business I follow-up. able were impact to would was curious headwinds marketing think year, especially customers, with business, think about Salesforce with of you new going to should that more the of the And in, of visits sort bit can sales able terms customers the there COVID do in in being impact the were prior ask

William Feehery

marketing It's virtual Thanks. conferences -- and past the large marketing the company really of lot we've question. Yeah. look, adjust. of tools. In number a and And around adaptations them world, And a to events not we went same. Good like had make to as a every used like although, format. the

migrating, much the obviously digital just learn not customer made at us us meetings. the -- customers are saw over also success about of past in how and same marketing it's a we sell, market buy they digital So and they time. it's not solutions the that. how we we we investment and migrating in just had bigger migrating, a and we Then It's how lot how

of into So, we're and we're what think well XXXX, a increased be I in We've in investment into think how -- trend we've happened. continuing into we are continuing about in tapped in make this and the when industry as to will commercial and in little development we're accelerate We that we hiring, because And business particularly a it good we XXXX second of half, to second to that as, a started year. bit marketing, COVID expanding slowdown hit, do we think, as our go of the this in all industries. half particular. -- investments the in expand the in think I that in was But in teams go footprint software globally. sales, to some also I our XXXX through we opportunities see lots that in Europe, in continuing what -- did particularly in of China

Michael Ryskin

much. so Thanks

William Feehery

you. Thank

Operator

Thank you.

question Jefferies. comes next with from Windley Our David

your question. may proceed with You

David Windley

for Thanks I my lot. got a few. Thanks taking question. Hi. a

of are some through talked On your some least all at being maybe about those, the year. those consortium the models this that I believe in of -- development QSP model. progressed of and you've

was immediately to to understand cadence And the sell vetted, just limited commercial fully while? to now update able kind the wondering, an of to just so, outside a they the those fully it ready? of Are of And here for on is I or kind are consortium that. want the progress consortium I those. of kind of you clients

William Feehery

Okay.

There varies. number are it a is answer of models. the QSP So,

David Windley

Okay.

William Feehery

we -- without in the in And the of long when technology. they're terms ready. lead to getting to advantage accessing members in specifics, outside do the sell provide have run, of and general, ability an the we do them. terms consortium the But The in consortium some all into we certainly the

So, is put become get a then, on the customers, those consortium we consortium gone, then generally, just they models work the available. is those couple and when early together, access. down it line the years And with of

the So, terms. go on occasionally of for multiple some consortiums

finding don't renewal our depending different And early example. of we're the might some in it with area. of for or give to some QSP our products -- neurodegenerative modeling simply And stages. do we on right interest immuno-oncology customer, that. do then, investment might you We others consortium for is is, it in putting in done now, And idea our a the own with are some on do diseases that consortium our consortium create we in We own of the and it investment. stages one

David Windley

Got it.

thinking as in prepared your kind well? of strategy there, about the also and you And biosim. a products and of to fashion, of access or a -- to predominantly you regulatory are last one remarks clients. of pretty kind follow-up and market I land Andy's selling expand noted on balanced uptake seeing multiple Okay. questions in seen and Are emphasis uptake

William Feehery

well access the broad uptake growth strong particularly both based. biosimulation. saw So XXXX a They regulatory It our But market in quite and was as and in particularly in fourth well. do included we pretty quarter. the quarter, then fourth in

the it's is, in I answer strong both of guess, So, them.

David Windley

is pass is, increasingly bookings I'll it your toward enabled shifting I -- balance question, services. your note that last on then, noted I tech And Okay.

the to market little to that I that that for so you how pharmaconutritions thought you service may than -- more the Do bit pharmacologists mix to in mix what a we've is fairly XX/XX And consistent recent hire and shift with past. you be seen that the services labor clinical the XXXX that support continue? expect in think that's provision?

William Feehery

Great.

question. you the the for I'll thanks the So, market. and about to want Maybe first part take talk Andy, then labor

Andrew Schemick

Sure. Happy to.

a software, So, higher relative is growth we slightly to causing the rate do shift. services a see mix in which the

with We look service. on related to numbers consistent that, expect our they're enabled or our that the you terms The if are to the in software year is provide at are projections. services our a more though software of cases, mix based the in mix leveraging in effect little a -- to services customizations of our bit be our implementations. year, detail, They net tech next this many

We also have technology fees. other

while revenue, non-cash you -- in compensation, and of a did a decline in cost exclude we year booking shift shift have mix had the the mixed So, also modest we once in stock-based this revenues.

had efficiency, to headcount increase I revenue we that So, a you per more if look on at will. basis.

with we're with helpful? So, forward that comfortable Is our that respect. guidance

David Windley

Yes, Thank you. it is.

William Feehery

pretty on look, just fairly a bit hire a extra labor we people have comment standards. then, and group to And of little high we the market,

never it's market. certainly, easy an in the So, situation

ability it's ability what However, through gotten We confidence increased The we or is virtually have that pandemic in well. us. of to post-pandemic, helping I do global in learned room last We're there year. the ways growth. We and some have from. of believe that, we over we find point all a done world, we've of model, And expanded out lot recruit company. number to the new -- better our sort work is quite a the over for the and people the it's can places

always to to to So, model. this to -- they've think, continue they like feels going we have It's grow feel everybody I -- like about be that, company going we're our we on but working want. never always feeling think, we're are confident I ever no hired ability

David Windley

Thank good. Very you. it. Got

William Feehery

it. you. David. Thank you, Thank Appreciate

Andrew Schemick

you. Thank

Operator

Thank with you. next from Erin And Wright question our Credit Suisse. comes

question. You may proceed with your

Erin Wright

you the any anticipate about clinical dynamics shift all be there? you on largely Or in terms strategy stage? sort mix Thanks. thanks. going of guess, the Or term? longer in side, primarily, various it models terms There's biosimulation. thinking to Hey, drug obviously of are overweight long-term do of development I in how is

William Feehery

were Thanks in And roots most question. the that's original the in I as of out, really were of Look, for are -- clinical Certara the Yeah. the was we started. pointed spent idea phase, where pharmaceutical the that's dollars where in you think development.

we to But pharmaceutical opportunity But So, have fill solutions -- to say we're -- that kind additional choice. all market part a development. not certainly made not of expand have it -- do makes discovery we end-to-end and access. there's of and certainly between that solution think We throughout an regretting of out. our as strategy across we sense,

over of business, solutions to add certainly going our the as we're stage and going a clinical bit we forward. So, mix but additional in the investing time part keep development maybe shift will

Erin Wright

note, from you Okay. here of know be about it targeting I of bit Great. anything any M&A priorities, and fill or portfolio of or this And little point, perspective, holes kind kind Thanks. on that would you deployment that but a capital that'd prepared remarks, great. discussed be during kind particular the that at that in

William Feehery

Yeah.

half terms gets fairly that acquisitions as at discipline drug financial expand that corporate in M&A And a look year, move from looking Certara strategy. effectively that. our doing perspective. record a the business their strategic development I to and of active solution know track a a back, We as things. does market of to as relevant knowledge, you successful more in of our -- think, very a team So, we but my IPO, they from our our were -- lens long very through we've monitoring development In both last acquisition customers we from has the history had this second end-to-end of of was on still out our focused

And else biostatistics interesting quite the back happily opportunities think report have one Europe. fourth number to And was of could we something we'll we we acquisition company is It made technologies which regulatory We'd a when go tracking as AUTHOR!, are in quarter. -- we a a our something of firm in called new report so, offering. and expand that forward.

Erin Wright

Great. Thank Okay. you.

Operator

Thank you.

William question next Blair. comes John from with Our Kreger

proceed may your question. with You

John Kreger

more revenue Should few the Bill, any could elaborate I give you could on or a closed perhaps kinds Hey, of that little much. just the price, and contribution. us a of ago. for, just looking a template as said days a input bit AUTHOR! of think you view very you if we sort on thanks it Hi, you're deal? things

William Feehery

the in transformative we interested that We very we are numbers. didn't can say AUTHOR! at larger attractive We more them as typically well deal, as prices, reveal find deals. deal those small -- a so was small bolt-ons we where

got statistics business, this help think is accomplished fit will which regulatory the of priorities. expand people basically of We former us smart, European our very that bio one So, would a group category. in our we've

John Kreger

XX% the And you. Thank I fourth acquisition reported benefit did that of of in it. the organic, revenue growth Got quarter, then, you that or Andy, that all was an you in think have sort number? any

Andrew Schemick

organic. was That all

John Kreger

And follow-ups Thanks. maybe then, just couple a guidance. on Great. the of

services are you're the we software around of think XX%, -- top tool it to kind guiding and you line growth. comparable XX% your sounds at that do Should services assume faster? I expect midpoint, or grow

Andrew Schemick

on, -- period our on looking prior mean, kind based and Based I trends. Yeah. forecast at of visibility

when seen, organic So then and and rate, we've software we've talked looking and we've I to this, about the services in runoff low exclude, contract looking the in example, for the think the high-teens. -- growth the mid-teens, at back, the to I mid low-teens,

John Kreger

Okay.

expectation So, XXXX that's for as well? your

Andrew Schemick

Yeah.

John Kreger

we to Great. buckets last you access one, similar, similar? would and bit And assume then or if those -- you grow should three than market regulatory in one little expect biosimulation are faster a XXXX,

Andrew Schemick

has it performing been growth biosimulation, The higher a rate. at

of level presold work higher area. a have in that We

John Kreger

Okay.

Great. So, Thank you. that'll fast. be

William Feehery

Thank you.

Operator

Barclays. Instructions] next with Our [Operator question you. Sergott Luke comes Thank from

with proceed may your question. You

Luke Sergott

question. Thanks for the guys. Hey,

EBITDA in OpEx step take your on what's So, a more there going just the down give us bit that a kind step on then you margins the it of Can color a looks throughout XXXX. up? like pacing -- year and little the

Andrew Schemick

has range. fit as we Bill and target the was margin of R&D that mid impact in for discussed investments, to We earlier one XX% we margin our factor EBITDA see approach areas ability can to of The the kind also -- a make Yes. sales year, EBITDA marketing, EBITDA in investments next margin additional bit.

being in seeing company. a year public some increase costs this are also an We to as relates

D&O change. big insurance So, was example, a for

mix cost in of revenue terms So expecting earlier discussed the mirror kind I to that seasonality. of the

So, we is business a -- -- cost the as grows phasing have year. throughout cost some do up

Luke Sergott

West, different then, helpful. in or there build services? mirror have as out in mix not discrepancies, right. and as in All the -- China, any there's software That's the guys And differences the what discrepancies guys demand you but is here among you business or

William Feehery

Yeah. we that Well, ultimately Luke, will thanks question. this. for mirror the think it

different stage is a China slightly in industry of development. in the However,

partly seeing, pharmaceutical companies I think, -- So, a do there, to building a function demand side we tech lot -- there's build tech of and investment going more There's lot western there on the those well. services are that the as in. of believe we're to significant up but companies a a services side, initially do growing we still of -- amount have are and capability software we of that's

see those see that think we -- the in the ultimately from to needs companies we as going of So, same pharmaceutical we're parts from world. companies, other

Luke Sergott

sense. makes me. Got lastly That for And guess, it. I then,

two-plus customers the XX% put grown? You Can us you on guys those stat give -- just on nice XXX you up are of ACV how a of your Or that there. has direction customers those some a buying top somehow -- solutions? ACV solutions. of sense two

William Feehery

to one you that Do or? take Andy, want

Andrew Schemick

Yeah.

hundred thousand the over category. of in think, I a top XXX the ACV majority captured are the

Luke Sergott

Okay.

Andrew Schemick

XXX of the XXX.

Luke Sergott

Yeah. It helps.

Okay.

Andrew Schemick

XX% growth in the count.

Luke Sergott

Okay.

Andrew Schemick

See can if I up. Yeah. that pull

answer. that's the I think

So.

William Feehery

Luke. you, Thank

Luke Sergott

Thank you. Sure. Yeah.

Operator

time. over now back remarks. not for any this the would call to any at I questions Thank William like showing to I'm you. And further turn further

William Feehery

Really that, with close Certara's you And would everybody this dialing thank I will evening. say to and Thank call. appreciate earnings for like Well, good you. in. first joining all we

Andrew Schemick

you. Thank

Operator

you Thank you. participating. Ladies concludes and for gentlemen, today's this Thank conference call.

disconnect. now may You

Certara (CERT) 5 Mar 212020 Q4 Earnings call transcript