Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Certara Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Deuchler. conference like speaker to now David today, would hand over the your I ahead. go Please

David Deuchler

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

Chief XXXX. Gallagher on call Officer; results today, is for the from available ended we the of financial William On June the quarter XX, release Certara, Certara released website. and copy Financial Chief Ferry, John the Officer. A Earlier company's have Executive press

call will I from begin, remind like include the make actual statements and would additional Investor this implied those in materially management website. we Before the Please you results during on in X company's Relations information. forward-looking materials to Slide the that or differ for statements, you forward-looking which statements. find that may to accompanying refer expressed can

responses non-GAAP in In financial non-GAAP measures available earnings to may questions, to Reconciliations on measures. the of are management remarks recent GAAP financial comparable these mention and release available most directly measures press the some

website. company's the

For update of additional as of materials. disclaims except events financial new information by only the accurate XXXX. in information, August date, and or is X, whether any to contains as tables to conference statements, today, obligation, call This otherwise. law, because Satara please live time-sensitive or broadcast refer the revise or any the company projections required reconciliation forward-looking future information,

will call to over I William. the that, turn with And

William Feehery

joining start XXXX Certara questions. we Thank you, with take then quarter David. and I everyone, Good remarks, will second afternoon, for call. you prepared John thank earnings and and will your

million, representing compared results and Total growing software services $XX.X were versus last revenue year. year year. XX% with quarter last quarter, $XX.X representing second delivered growth we million, the of last second growth million, X% In revenue the X% of $XX.X company versus revenue

buy resulted as as and smaller recovery primarily million a $XX.X customers biotech in our were disappointing our primarily who and services The well quarter $XX.X bookings million. bookings services cautious software quarter spending regulatory business. from results this were were Second among slow

have health led XXXX current provide development of we with While to invest of fundamental not acceptance the technology restate opportunity for an satisfied market increasing continue are to on believe for excellent us results and us the growth dynamics, the biosimulation we the pharmaceutical in our they and market Certara. outlook this to of quarter's based

we During the deep as relationships second quarter, new to customers introductions. well expand and with software continued perform our business product drove our

include approved XXX the products, Customer Simcyp claims and passed high biosimulation Pinnacle the in directly drugs of Our a net rate referenced Simcyp. retention customer modules. and generating strong a with with milestone new And renewals, our Discovery, software Explorer remains demand newer SEND to of label ARR during are XX% strong. that base continues renew XX rate, a at quarter, an we we On top with XXX%. interest of which

During our an QX, which it AI we intelligence capabilities products. given several software existing certara.ai. extend artificial opportunity call We has the of across acquired to company Vyasa, us

is certara.ai with for have We traction. new beginning many already the our capability of software generate and enhanced AI products rapidly plan to development this customer

a biotech business And anticipated. quarter slowdown their handful who than longer saw services an customers during situation pharma smaller portfolios. the services are have we business in large but unexpected the during clients, primarily was also regulatory persisted of reevaluating Challenges bookings The our different. growing we our from our quarter, in very in including

has their funding several As biosimulation situation services, supported over become biotech them years, of tight. last the many companies more much but we successfully with expanded

strength Although our of slowed services revenue based services quarter on rapidly, the continued bookings our during grow the backlog. to

drug on services development so we footprint month, XXX typically broad have that we projects in are actively the mind a given Keep working any across X,XXX to market. in

but bookings, we We based have services seen these in disruptions. remain improvements our near-term on outlook cautious recent market month-over-month in

in pharma better. interest can We long-term satisfied during quarter. I our indicates believe of health that the and the we performance in industry do services Certara's are with the not biosimulation technology

review we help Certara our market are performance internal current next changes and to some situation, Following the making the level. of grow an to

first single our services take we effectively offer people, customers' we this, combining X scale business by over both group operational of The XXX X of our full having advantage can including development we our our and services the projects. Dr. that array team Certara and capabilities groups, major regulatory By unified change is led can Smith. organization doing to benefits services more synergies with and into a drug of Patrick integrated with are groups management

will The force all that announcing the report sales I in a we specialized creating several change integrated Leif are currently that we is will Pedersen and sales are have single Certara. become him. and groups second Officer software major services, Chief the asked including across to sales both to Commercial Certara, combine we resources

right our efficient our incorporate new accounts. transformation The we with the focus to our are the offer the to remains technology time at for to and addition enable offering in portfolio our existing underlying confidence health resources benefit to market. will to race in and to of and the further more this change products. as bring to become of market on software has long-term demand the Because right customers in product plans of a into technology which projects This Certara key AI services can of we our our in biosimulation of deployment led right combined products, the continuing high, many very investments strategic provide our

which of of The feedback. fiction product in already and discovery drug has is first and new analysis customers was the for targets. DXXX AI product provided have hands This models positive we now who that enhanced

clinical outcomes a Another new state-of-the-art performing early drugs. and now analysis example meta comparison is includes interface our CODEx database AI-powered trial for which on

to to as product transformational launch and moving are new Certara's More upgrades. existing have technology and and upgrades with quickly features of versions plans We incorporate very review we full come across a our AI generative conducted platform.

proceed the X focus the we of to As year, on is remainder our priorities.

were We further of existing customers. delayed our projects to are opportunities accelerate previously those and that to to serve actively identify assessing backlog projects

We to our that are in increase new organization X important are new to we accelerate products continue industry making force invest will into sales the impact in bookings. And the and investing uniting biosimulation in continues marketing our development. investments pharma to of as

continue evaluated team led some excellent the softness committed who position has by important our continue in an future bright to people more this opportunity revised is an will have worldwide. the market the we are have biosimulation situation invest quarter, are use and our make ability also and execute of on to accordingly. see development excited to commitment our I'm of company. confident adopted and to to Certara expand important reacting to drug very in industry technology a plan and that today. an to pharmaceutical impressive our it But to long-term dynamics than and with even biosimulation grow be the Unpredictable we about

I the to results. call will John go Gallagher turn now With over over to that, our financial

John Gallagher

William. basis. was and million, you, on the growth everyone. $XX.X XX% X of reported XXXX, ended June XX, constant on months Thank basis for year-over-year currency X% representing a a Hello, revenue Total

basis. period over revenue the software year driven $XX.X XX% Growth second the Software and and was Pinnacle basis which in biosimulation million was XX% a in increased reported on constant XX. prior the on quarter quarter, currency a

second XX% revenues. revenue accounted Ratable for and subscription software of quarter

We pleased which performance are growing year-to-date with expected. software, in as is the

as increased $XX.X bookings $XXX.X XX% quarter, software XX-month the Software prior million, year were which second the were million prior XX% from in year. the compared bookings increased which Trailing period. to

$XX.X the in on $XXX.X the $XX.X year X% by period second the challenged a Services software second the historical earlier, on quarter increased was at basis. aggregate William spending. Services quarter, renewal prior The dynamics As million services in quarter bookings which bookings customer prior second which Certara revenue which said, versus strength of ahead the million, mentioned basis million, XX% software rate total in as XX% were were and that maintained evolving and decreased X% plan. reported grown our bookings Trailing to constant were from period. line With is which XX-month in with decreased have in levels. the quarter, year surrounding bookings currency the year. or was compared a prior

looking by the impacted earlier. William significantly service for described dynamic Our is

The the of our regulatory trends reviewing source the performance, services revenue full elongated of conversion lower growth drivers year. are predict. of revenue for bookings remains to a of expect has in bookings business also underlying on see in customers Regulatory In as we outlook. historical headwind active, XXXX, the revenue the had primary bookings decline been regulatory to has as continued and projects. been previously the we we to and booked our outlook, We timing a continue now delayed in in opportunities hard low year to very weakness single-digit of growth has but versus so remainder the looking at revenue far and execution which regulatory previously a pipeline anticipated

as customers, Bookings were more revenue efforts. of and as regulatory, having year in to result conservation concerns temporary Tier we among X $XXX be challenging of macro-related which services Outside companies. to been related weak could million a nonrevenue-generating booking define up this has seen acquisition includes and potentially in cash

and urgent. immune Our services their with not as above appears uncertainty $X bookings, and from billion less from customers bookings those revenue been are which Tier well have conservative spend X macroeconomic

team commercial customers with remain as engaged engaged highly remains our our highly Certara and Our customers, well. with

R&D of for operating XXXX. million, million, sales stock-based This and primarily amortization asset $XX.X expanding for Sales quarter The the $XX.X second cost Total were $XX.X prior to services primarily is quarter $X.X employee expenses expenses to count second the the due in were follows: up for decrease second compared XXXX billable million second for related R&D compared costs Depreciation to million flat million $XX.X to to expense million quarter increase and million from primarily XXXX. to to were year. employee in $XX.X were Total the components quarter $X.X The due $XX.X software expenses employee-related second of the is the 'XX. quarter development. G&A quarter revenue was related compared compensation. of million quarter $X.X an due biosim of to $XX.X for costs Intangible of of marketing $X.X primarily costs up of XXXX. second was were The in the a XXXX. from quarter operating due 'XX in expenses $XXX,XXX, lower 'XX. million to to the compared The marketing of million expenses teams. as amortization million increase which of second head expenses was $XX.X and decrease the was million to second to of growth.

million for XXXX $X.X Interest second Continuing of term P&L. interest to higher floating relating expense quarter a down interest the expense of the our million compared $X.X to was expense rate loan. to

Net was XX% roughly As a second X.XX% debt $X.X quarter 'XX. we in XX% million our Income to XXX. $XXX,XXX quarter quarter at the compared $X.X million for of second was compared compared income 'XX have reminder, loss million a to floating the second and for million $X.X of expense of $X.X of the XXXX. tax the Miscellaneous of LIBOR for was second $X million XXXX. to income of plus about at quarter fixed

the million, $X.XX earnings of of of per was $X.XX EBITDA share for million Reported quarter XXXX the $XX.X income second year. $X.XX as was quarter in was adjusted XXXX, margin million to Diluted net XXXX $XX.X second second XXXX. $XX for compared the quarter XXXX. the for compared in second of quarter quarter XXXX. adjusted EBITDA for to per second Adjusted in of representing the to was growth. compared quarter Adjusted XX% $XX.X share $X.XX earnings XX.X% of million the in second quarter the quarter the Reported compared second diluted to second was last

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

credit and we availability had June As facility. on of under our million of $XXX.X revolving our XX, full loan XXXX, outstanding term borrowings

Turning the full year. for to guidance

this far million, adjusting representing our the of reflect total to so $XXX X% booking are year-over-year guidance expect We We million evolving revenues now year. growth between to $XXX X%. to XXXX acquisitions

revenue services software expected low revenue to simulation expect while regulatory to Biosimulation services at expected the decline the We grow rate the XXXX. grow in year, our from revenue of digits is for double is to historical targets.

adjusted maintaining EBITDA to committed performance revenue. range are We of $XXX EBITDA million. expect We for margin mid-XXs expectations lower the adjusted to million now despite our in $XXX

the million, $X.XX range to We of rate $XXX range $X.XX the adjusted in and expect diluted EPS million $XXX shares XX%. Fully the of range of per tax to XX% a in in share. to

compared We low of expect expectations remainder bookings single also our now to some down on XXXX XXXX. XXXX. performance digits We as wanted be bookings the context for for to

highlighted, for implementing continue will to bookings William biosimulation on we remains pipeline on and our biosimulation about customers revenue with improve focus pace customers As Certara's conversion we commercial as work integrated a a conversations more at performance. with strong to execute our strategy look a priority and our customers and

back the closing over will to Feehery remarks. I turn for call now William

William Feehery

coming of a Thank from encouraged our summarize high today, a year. are by has out transitory XXXX. you, message the To view the we balanced of and in environment the We to our more team half of and operating believe throughout innovation of is that experience John. Certara. evolved I'm are taking this challenging performance second level be the that continued

changes organization. a tricky in about timing to making such with we have the are But changes to We is be commercial forecast. reasons the optimistic little

long-term end-to-end remains view biosimulation. biosimulation compelling ever. over and industry Certara's to and services for global confident growth as well time products leader on in of and We're Satara as the profitability medium is positioned as a our and the value Our customers that

the open line now will questions. We for

line? you can open please Operator, the

Operator

David Instructions] of question Please Jefferies. ahead. go Windley comes Your [Operator from first

David Windley

bookings to just from about or think to time [indiscernible] should maybe your updated you bookings the about of to how wanted should next but cycle over booking the start two first even I revenue guidance us the I tethering on we kind about thinking cycle. mean revenue revenue Could typical giving you're lower admittedly, -- talk how

John Gallagher

David, John. it's

and far as bookings then here in the into And given look we're ultimately in as funding that at into moment. pipeline you'd As that case some our is the customers, conversion expect and way of bookings we to revenue. bookings and we're the then you'd the our you've at the as Tier expect, mentioned, you reguided kind what of we've the seen X at environment slowness that be the and coming -- looking pipeline, as conversion in biotech here

slowing the Tier is And But slow, we're both that's conversion seeing that well revenue. pipeline to with i.e., so so what that that's as our is doing that's X some the bookings pharmas. the customers, as compounding large

delayed like taken have -- this not to some of even projects, side slowness more a you, administrative mind contract but some not seeing We're and as services on slowness tax cancellations the projects, environment. getting they've in taking sign time, longer

both our And forecast in slowness updated guidance going what reflects we've to QX and forward we seen so what the related there.

visibility software, the The the for -- as it timing then relates bookings to what software that you saw XX%. and growing revenue, our strength is both and and the of of business

point software to pleased we're visibility key ratable that in The and So the then in a adoption use with both the case with And good very it for is renewal as visibility business. licenses, the strength proof is that's addition good. in continues. biosimulation revenue SaaS annual

bit that think backlog strong bookings, is time do shorter very converting half we on to your going. was then this in a is All question relates the second it being side of which a we're the have said, cycle previous where there, of As backlog business, from the to services revenues focused year. and the that I

David Windley

of quarter to so to little year bookings the third more because half for the drops then just pin is to or maybe is for implied that second quarter higher and about still you off living it fourth to quarter you last be John, thinking Do quarter third level fairly still more. fourth try expect bit a from year. a down the little in guidance

cadence. Just try on to tabulate

John Gallagher

Yes.

many where seen having the and that Tier driver if we the large the the bookings really look for of there haven't is that regulatory at year. have half you we've in the on the second in as weakness X the So in decelerate business, primary then half year, come deals historically second this seen

to of relates different second it's of cadence on it the sort X As and the half it, bookings. really stories

bookings, we're at we are, we line August. it's saw of to QX sort bookings, QX. what be with here expect QX We in expecting

There's as on And the to As business see that we QX. QX, strength. -- an historically. we've are continuing at expecting in seen we it -- we software look uptick

what historically, the see We reg in services during being And then some from deals make in saw we come business, improvements we in able have seen QX. to QX. biosim larger importantly,

bookings we then for and same QX so in sort And an of that in reason, the see QX. about uptick

As it of revenue, revenue to the quarters similar relates we to of expect the in half be year. the back

David Windley

if from on passing really. kind And inflation then demand wondering a More puts pricing the that of price the from environment, pressure price environment pricing some more a wondering later is little And side, point hiring settled has inflationary not but increases? put on if through the as for down maybe labor that flip through need I'm cautious on cost moment, much normal -- the where at don't that you vis-a-vis increase? a environment to you're standpoint, much, to

John Gallagher

those Yes. On have deals competitive a focus on bookings those services, seeking in pricing, want it be here. seek to have to to And are We revenue. obviously, we do have competitive we And as and to we keen visibility relates pipeline. the win that ultimately we deals. converting we and very large have to -- be to to

I that question. to bit think a goes So price on that

Operator

Luke of comes Please next ahead. Barclays. go from Your Sergott question

Unidentified Analyst

[Solim] Luke. is This for on

so having level the long you are that of just between on start of communication is to to a confidence with And process speak? that how So what's business kind to then versus booking? eventually lost us macro, to come And these with customer and that them what's pushouts then off, your customers? giving the speaking

past the for quarters. been has few the then lastly, about And biotech environment funding obviously talked

see you're rest and base. why kind this now within why about the I'm In is wondering starting is versus fact, now few up the for of you coming shoots a green that to of with what industry. up thinking customer quarters guys this just some coming other companies ago are

John Gallagher

first. the take Maybe I'll last one

as some funding point. drug that So to why surprising and increased with on weakness think have think on us the might hit those bit projects, not about way And Tier we of that are has it generally is certainly we they time. biotechs is Tier the I your the X seeing we it them pressure? therefore, customer as at later-stage X and development far over mean X later. work to them pressure I way little look the a of is

what's more in there's is some compounded the those no it's X of at importantly, that's about though, think of compounding and X the offset there, together, X. things results I some in I I happening Tier weakness saw effect by you talked think in what take And when weakness QX. Tier really that the you

conversations varies time cycle that but in is the the what tell contract, And those. actually big cycle the a a with services our business. customers, large before, small of a for into sort projects really I total you as as biosim bit it's time the and good both The in think I quite the the convert in visibility sales is pipeline to for or we need software. based whether I shorter but as on some well reg can services transactions than mentioned time? is

William Feehery

XX% not and year-over-year, biotechs, of saw just why public based segment the Luke, on this through question stages is that in down we an of stage other that's some not that say, others but have later funding than customers quarter. about once the published reported, data, I'd later the early behavior it fact come XX%, that And gone but has Bill, into our interesting it's the

Unidentified Analyst

worsen? X be things now around this What would any helpful. guide Is of low right a where color that just And the last your contemplating Or at Awesome. other helpful. kind scenario one. That's then is end?

John Gallagher

couple you The a saw that be low we guide of it your to we on in to as is, that contract Yes. point, the business, we the at which of would services saw biosim to to would end expect do things if if the weakness the have business and is that worsen regulatory -- happen decline would remarks, But end. was lower basis. put And a said year-over-year also additional more. that

about So think the way that's to it.

Operator

question Your Stanley. Morgan of Vikram next comes go from Purohit Please ahead.

Vikram Purohit

bit your those do impacted the that end talked to and impact likely how So are impact and X, expectations relative of would we provide color simply on XXXX? each two sets a of on wanted XXXX projects being So have any of X or quite category clients the the out as well. X, contribution one. pushing question business, clients either that's services Tier just Tier you into about But from you X in on clients had client canceling projects they can

of more just a could And the secondly, you about you on a talk then if business force that point-of-sale consolidation and might sales how bit overall wanted see to think basis. help kind

John Gallagher

Yes, sure.

not side So the how looking I on -- that, X at the as surprising. you I Tier services said, mentioned totally and is we're which

in think Tier was the during QX. I and that X really compounding space, creeping what that's in

as Tier our of the size of revenue. it, far Xs As half more than representative are of

XX%, think maybe to like guess larger than have the I than sizing more about small business. Tier business is, Tier you can in that the because timing a small said, delay what or some a I the X Tier are perspective, Xs is X expect impact are Tier XX% would way from a Xs, So dollar about of

similar could we have more aggregate impact. a of to so And those

timing projects, As flipping on don't the really not far here. XXXX. into timing see timing -- That's as issue we the

X- X-quarter pipeline we're want to to exercise. to we that is seeing and that say especially signed even the of them administrative what our on kind into bookings, and think upside. getting delays bookings, I delays get some Once the deals revenue side, have typically is in just them turning services a finding become

suggesting So project into thinking timing moment that this at not flipping we of or are XXXX.

William Feehery

This second is Bill. take I'll the Vik, And Yes. question.

asked about consolidation. You salesforce

I involve clients software can mean, price and our cases, better, in our in that its software of they services and offerings company. our software a I from basically customers. past. gain synergies bring We Certara, we're beginning, with both don't are, of it's in service or And operational a our we taken advantage So the also lot of believe a fact, tied service package, a We could fully like lot feel our together. become that salesforce together.

go more I to there's think there.

that customers better having to serve a in ability think just of we those key we'll we our bringing this and treat by company-wide accounts. like So example, efficiency sales better and terms together force, how have for

Operator

Our next question Garro Please Stephens go comes of Jeff from Inc. ahead.

Jeff Garro

Yes. to underway and to health bit work ask ability you projects see that that referenced after you've a I want versus looking backlog influence about on come cancellations contract, little the of the ROI given you've assessment revenue are analyzing of to into not where delays. on the that more curious several under your comments behavior what clear kind yet. client on generating a just but But you

John Gallagher

quarters. Yes, to over the significant seen had of historically good. of quite previous we with bookings Jeff. conversion up the reference then Yes, is our backlog the the what as the backlog, far we've has And as put piece business been services

achieve see bookings lot help biosim we services, the us weakness us, as actionable for utilization at we going that's out. particular, although guidance discussing is that like. just that of what and more laid something for than that spent backlog a especially The so here, something to so in looks that's And large looking the by time regulatory and our it's we've

to the wanted able make something in we're we that that organization. are is to we're through something something that we pipeline to So do an It's previous sure is that brought and -- work up noted that generating bookings. addition we on, why focused the still the reason bookings we as that

Jeff Garro

on dive little pressures deeper the some and regulatory And then of a to bit another question business maybe the there.

of think a I a different are regulatory within product described there but that. as lines few kind You category,

could versus extent regulatory course regular writing market as helpful. medical work and you the might the more access larger versus be of So to of that distinguish be biosimulation some generic more as business, between your would the piece closer well work projects

CROs to for in where work your to you environment comment on bit regulatory with ability seems an softer? if little could be And a demand compete

John Gallagher

in we you that a any competitive know, I'll that. historically several able given have seeing large been saying by more call year, large of Yes, we're This get, in Jeff, deals million. done we is or I challenges the mean, basically as one year a And seen it's space, than business market. in it, haven't large, bookings we're $X that to

the as do mentioned visibility some in I those. earlier, to pipeline of have Although we

So that the we've a of got those historically, turned that of to heaviest business. bookings competitive. got some QX, focus, gives larger in us been those quarter terms of encouragement historically we our be deals we've in some for And has have which into reg

William Feehery

Yes. And this or I competitive reason CROs be is would writing. say also to business not the we medical have on

work the segment. our key we're full Salesforce why we So opportunities tech-enabled believe that a the business after certain been that to those we their have the one of we combine because go business of here point to to taking is business. that price we want to we or advantage of that a high-end And onshore biosimulation all appeals reasons get We of so that's can competitively when need But to. extent.

Operator

Crews Kyle from Services. Suisse comes of go question ahead. Please next Financial Your Credit

Kyle Crews

When prior at Looking the would worth within that in XX-month growth full trailing software, acquisition. bookings current at bookings look bookings Pinnacle which like compared growth. of year year, specifically appears you year year the bookings without XX software bookings XX% full that to them it X the would trailing quarter from acquisition have as the bookings XX-month have

having at quarter growth? to software bookings Pinnacle the look XX-month trailing XX impact explain X bookings growth please going you additional color how forward? of year-over-year bookings on And how XX% impacts of some Could the maybe broader provide

John Gallagher

question. for your Yes. Thanks

with business. XX% grew also about then services But and the pleased we software. XX-month here and we've then you good out, XX%, yes, as very the for for been bookings quarter, XX% We've trailing So, of revenue lot talked software And pointed a respectively, for strength both grew reason. the also.

It's acquisition So you to to XX in XXXX, and if we and continued business was the and strength look that's pleased the a to The good back ahead well. of its at has a an there. did our continued. expectations, it great transaction and you portfolio with business, mentioned and add that's perform -- it, been really Pinnacle we're -- has growth that

As rate, far XX. as impact on the we Pinnacle growth annualized

as the of So is trailing at performance months, I you we the look in continue. on of ratable well looking and about bookings think on point both question your current renewals. as sight a as I'd was well there both good do part software forward, and key the as software in quarter annual expect I as think as the think got business XX what And the last year, software. to the a of And indicator we revenue both for license current line forward? how type going And the SaaS or on strength we remainder we've toward

again, biosimulation that's around the a think firmly that And indicator value key remains intact. we proposition

both frame at services a it our for with the So the we despite indicator the reg what have lowering in customers for drug to cost go be near-term some would the that centered shortening good look as development. fact that that remain sort a we mainly and item biosimulation is the products time in key our consider business to and of disruptions do transitory services, in software and

Operator

comes from question next Please William Smock go Blair. ahead. of Max Your

Max Smock

in here Just half the the bookings on following of up back year.

each us basis, bookings what that just low for single You consolidated year. help this bookings digits segment? down be to Can through a within incorporates you mentioned think on expected

then importantly, single for little know target year, what as step be revenue low digits outlined actually more range of may low single this down important next Should you maybe being back but bookings more low does we year? digits up moving or year I that growth see next And for the you've early expect kind a the to forward? could teens it that

John Gallagher

to way some for The see Max. experiencing. Thanks, bookings bookings lower second business is mainly on we're the Yes. half regulatory and think is you about the that centered that there, the do and deceleration

we're and where as would got we some to on performance the We recovery into So business I anticipate that we that some just the we've do moving expecting moving And should QX. on mentioned, think, into -- services, to to half. continue begin there business pace. softness, continue back biosim software is the get

to mean what guide for we're XXXX. able as does far XXXX that As not

we about But would and business that for is will to anticipate way it software the is strength the what in think continue, to that's expect continue. we

growth environment. where be want to for then a some Tier to spending. slowness on growth help from the we we up and end there. of some in scenario alleviate think get Tier back higher higher you we the what spend on biotech XXXX, that the in mentioned funding in return in to to And need the Xs I Xs to to need a spot We R&D then

opportunity. runway with because we're that One The so the and mention for certainly think that we it, had over that earlier and is that's long adoption of biosimulation the believe and thing the the is what the the that and -- term, and and around grower would not XXXX. over that biosimulation long the we products market believe I'd of to associated comment do term, But for the services process we there. a return adoption -- on mid-teens a Certara saying that

to market ability leader a intact. that in are our within that market remains grow and certainly We

Max Smock

X Maybe just cleanup final a X. quick before my

split update regulatory, you if the about perspective just about between services the of the as in as well would the segment I terms to how mix mix said any to be XX% past, helpful. think I biosimulation individual versus each services really within from there's On software in biosimulation. wonder think the and

John Gallagher

Yes.

in or about historically the And we and said that It services, history, been it XXXX, in at revenue So XX%, a of of be mix range. that has that what end the software on XXX actually, on expect basis mix we've least guidance. recent to be XX% towards software. range. it said still about even XX% a in the bit lower in this software achievement services of so current of basis, between might range -- And that Think at the the and business shift based XX%, points we business. reg is

Max Smock

just quick And then maybe for a me. X

regulatory. regulatory you about this your actually up like type kind that business. lot that's shift play Just We've around heard into And the anything of trials. quarter a it would of provide held being in a towards can work seems later-stage

the struggling on understand are help anything programs you off decision? can I'm So regulatory I understand just like and thought process help in small for provide those particular, maybe us biotech for -- moving hold why rationale understand could to to forward. just you approval just guess a us the not I like guess that filing again actual behind

John Gallagher

too. it's mean, a I Yes. space, competitive

are be But customers We And for management doing competitive So what reg. larger there. the is larger-sized team space. mentioned and converting bookings. some pipeline we see And a the of is do on whether or the it it what deals -- is pipeline. biotechs is that I some those we're in visibility to think small focused the

to track those had a of have we but record of able haven't that in, in yet being XXXX. seen deals some larger get We

So on now. we we're very, right the focused it were see very pipeline as

think and yes, it's in has we not we're slowed, So think and for point, like point business, the of But it's kind of the a think lack business whole a that's to competing your your I as yes, do not business, it. complete that's I to the case.

Operator

next Gaurav from Goparaju comes go Berenberg question Markets. of ahead. Capital Your Please

Gaurav Goparaju

software being Just are from driven additions year-over-year? software new ones And customers is quarter larger X me. those for looking this software Tier largely two How users expanding use? quick by biopharma

John Gallagher

it, It's point big mean, driven new piece to I not entirely you -- pharma is by a entirely, not of I'd but logos.

a our way of centered overall, on new and a top the metric were X that in think see logos quarter said business sequentially is we're before. we software X Tier good our we've think in seeing But about talk XXX, a is is bit Tier the spot. which sometimes that it I that's as a is we strength customers, So on for to about there. slowness on lot But little overall, biosimulation of in the

Gaurav Goparaju

me. in you're And have then customers seen larger trends expanding there software you in? more Are their What software existing solutions particular that seeing just any typically X into? for

John Gallagher

additions particular. there's XX, in Simcyp, as well. good some biosimulation still very well. seen We've We're also expansion in having Pinnacle in Yes. been uptake suite the in as core And Phoenix our

Those we company. So have kind a core it that in of healthy was are product the lines as pretty biggest offerings.

we And them. of saw X expansions so in all

Gaurav Goparaju

seen Discovery, that X Tier been Sens'it in upticks recently relatively pickup? any is impacting Simcyp you released? that have of on Or weakness And kind

William Feehery

recent. we seen Well, relatively yes, it's have --

been more, we some off I have pickup seen it's probably seen the also And We it's that. that there'll It audience, different by is start. affected a think the go be nice to to think the to but reach in more couple we quarters. see would of But terms hard estimate be probably forward in it's important. Tier which of, Sens'it X good weakness next come to a of I to expands more as to have

Operator

Your Baird. last Please of Joe from question Vruwink comes ahead. go

Joe Vruwink

Certara, start And given elements integration foundational a have be standpoint, in seem you industry of the offering and to the of topic some data is from need. model just unique to what position not would to maybe of on also would application a different of AI. a wanted just an on going the and data commercialize opportunity, sources. Just the data It like data wondering the but

gates road you the look of AI as to wonder what you how opportunity. kind I the think be might map first the out of address and product about

William Feehery

You're right.

we've got AI layer asset were product. the we lot We good exactly been fortunate a a of in like So in right But their we we the rapidly do. assessing it team what can time. acquired companies, that got

exactly interesting what very We opportunity talking have integration a like data about. for you're

in keep them for just months. few just owned we've mind, a So

portfolio. to And product go so opportunity we've the through our had

really First we've in a indication, full pipeline. our step the products, product And what added not certainly got our codecs can database. we in to look to our in at and add DXXX That's we've good portfolio. a a was existing our few of what couple months, but early ambition or

there's exactly not proprietary the look As you their our and but have across though, only exist it clients what or train products. integrate many use to data opportunity it's and AI talked either in that publicly, about, an about you look databases models them best that the of internally forward, that

more at on really forward, So you'll see and figuring of our products. we're out. And forefront development team It's the our is we we're and software very in go as quite think in of that much about energized focused talk here I what more you that. as this

Joe Vruwink

different is software And then question on ever services a point? more services changes you a or indicator changing there the the the a software, between at seeing the Tier software spin your the in precursor X to can I this and in and is But where leading biosim a for two, a connection get guess question, on is of saw some segment. and directed utilization kind just there between adjustments demand maybe of downward customer

and invested the self-serve making user-friendly can interface things user so you've obviously, need And it get ultimately for in ever services that maybe more is lesser?

William Feehery

base, we that want good of can But use ideas think its extend is we situation you're it the is is software we is people. People software software, in of the the like we lot other what so as out terms of I change the want the number that way but models many goes easier question, expands a that to lot projects Great Yes. services user they expand it to pretty Obviously, as us extend make see questions. actually interfaces we the a more used talking complex. about there want give answer that services projects different of features software. to to gets to it times, the well for back kick

mean, sort got two. altogether. no we could interesting this so the software great there's pharma, be if be would our of eliminate that just services between we So I ecosystem wouldn't it -- for good would and It say

numerous the different there working that so And sites value but pharma to services. in on not there's terms a seeing I software impressive got pretty successful drugs we're complexities really and clients on Certara opportunities projects always development to providers, many every in, but they drug so we've add of -- that's under who is think came of their of before is drugs hundreds people have much month. they're Certara drug with reality just going at just that development group our belt the But

to as bring in. And our clients as well our so that's services they valuable

going people alarmed that can more with we've more funding amount go Services spending a how as would how development. saw have of but base that be we based the got quarter down good probably I the in are shift pharma what up software in of are, grow is how a the long little Services on to indicate there, in software continue permanent the bit well. drop into and would cautious money think they distracted a to I So and as and opportunity comes as because we Group

Operator

to Feehery over I you. like would closing it for to turn William Thank now remarks.

William Feehery

Thank you everybody. much, very

feel So to pharmaceutical lot we of there's into that on data we biosimulation Certara performance the second still We happy turned obviously quarter industry. growth bring more for plenty ahead the a the with to bookings. with are not

are because at We investing our heavily, down all this in not slowing of software. of further development the

will potential expand. AI the come itself. reverse about quarters, excited the going to as And to we incorporate in and that's believe of that we to the very service do couple biosimulation softness We're in out what next over

the and stand in giving bookings. better I So talking update in a look you hopefully you to of forward of to quarter we in terms where terms next

very good Thank evening. much, and you

Operator

program. in today's does participation your conclude conference. for This you Thank the

disconnect. now may You

Certara (CERT) 9 Aug 232023 Q2 Earnings call transcript