PRINCETON, N.J., May 07, 2024 (GLOBE NEWSWIRE) -- Certara, Inc. (NASDAQ:CERT), a global leader in biosimulation, today reported its financial results for the first quarter of fiscal year 2024. First Quarter Highlights: Revenue was $96.7 million, compared to $90.3 million in the first quarter of 2023, representing growth of 7%.  Software revenue was $39.3 million, compared to $33.0 million in the first quarter of 2023, representing growth of 19%. Services revenue was $57.3 million, flat compared to $57.3 million in the first quarter of 2023. Net loss was $4.7 million, compared to a net income of $1.4 million in the first quarter of 2023. Adjusted EBITDA was $29.1 million, compared to $32.3 million in the first quarter of 2023. "I am pleased with our first quarter financial results, steered by solid execution across both software and services," said William F. Feehery, Chief Executive Officer. "To date, the strategic investments in additional software capabilities and commercial expansion have progressed on plan, and customer interest for Certara's products and services remains high. Certara is well positioned to grow in 2024 as biosimulation becomes more widely used across the drug development industry." "We began 2024 with strong financial performance in software, driven by an impressive Net Retention Ratio of 114%, while our services business performed in line with our expectations. As we work towards achieving our 2024 financial targets, we remain focused on demonstrating the value proposition of Certara's offering for new and existing customers." said John Gallagher, Chief Financial Officer. First Quarter 2024 Results Total revenue for the first quarter of 2024 was $96.7 million, representing year-over-year growth of 7% on a reported basis and, 6% on a constant currency basis. The overall increase in revenue was primarily due to growth in our biosimulation software portfolio. Please see note (1) in the section A Note on Non-GAAP Financial Measures below for more information on constant currency revenue. Software revenue for the first quarter of 2024 was $39.3 million, representing year-over-year growth of 19% on a reported basis and 18% on a constant currency basis. Services revenue for the first quarter of 2024 was $57.3 million, representing flat growth on a reported basis and constant currency basis. Total Bookings for the first quarter of 2024 were $105.8 million, representing a year-over-year decline of (6%) on a reported basis. The decline in bookings was primarily due to a difficult year-over-year comparison in the Services segment, offset by strong performance in the Software segment. Software Bookings for the first quarter of 2024 were $33.1 million, representing a year-over-year growth of 8%. The increase in software bookings was primarily due to strength in Certara's core biosimulation software and Pinnacle21. Services Bookings for the first quarter of 2024 were $72.7 million, representing a year-over-year decline of (11%) on a reported basis. The decline in services bookings was related to due to a difficult year-over-year comparison across the Services businesses. Total cost of revenue for the first quarter of 2024 was $39.3 million, an increase of $4.4 million from $34.9 million in the first quarter of 2023, primarily due to an increase in employee-related expenses. Total operating expenses for the first quarter of 2024 were $58.7 million, which increased by $10.7 million from $48.0 million in the first quarter of 2023. Increased operating expenses were primarily due to planned investments to support innovation and growth, resulting in higher employee-related expenses. Net loss for the first quarter of 2024 was $4.7 million, compared to a net income of $1.4 million in the first quarter of 2023. The $6.0 million decrease in net income was primarily due to increased operating expenses. Diluted loss per share for the first quarter 2024 was $0.03, as compared to diluted earnings of $0.01 in the first quarter of 2023. Adjusted EBITDA for the first quarter of 2024 was $29.1 million compared to $32.3 million for the first quarter of 2023, a decrease of $3.2 million. See note (2) in the section A Note on Non-GAAP Financial Measures below for more information on adjusted EBITDA. Adjusted net income for the first quarter of 2024 was $16.5 million compared to $19.3 million for the first quarter of 2023, a decrease of $2.8 million. Adjusted diluted earnings per share for the first quarter 2024 was $0.10 compared to $0.12 for the first quarter of 2023. See note (3) in the section A Note on Non-GAAP Financial Measures below for more information on adjusted net income and adjusted diluted earnings per share.               THREE MONTHS ENDED MARCH 31,       2024       2023   Key Financials   (in millions, except per share data) Revenue   $ 96.7     $ 90.3   Software revenue   $ 39.3     $ 33.0   Service revenue   $ 57.3     $ 57.3   Total bookings   $ 105.8     $ 112.7   Software bookings   $ 33.1     $ 30.7   Service bookings   $ 72.7     $ 82.0   Net income (loss)   $ (4.7 )   $ 1.4   Diluted earnings per share   $ (0.03 )   $ 0.01   Adjusted EBITDA   $ 29.1     $ 32.3   Adjusted net income   $ 16.5     $ 19.3   Adjusted diluted earnings per share   $ 0.10     $ 0.12   Cash and cash equivalents   $ 224.8     $ 244.1                     2024 Financial Outlook Certara is reiterating its 2024 outlook, and expects the following: Full year 2024 revenue to be in the range of $385 million to $400 million. Full year adjusted EBITDA is expected to grow with expected margin to be in the range of 31-33%. Full year adjusted diluted earnings per share is expected to be in the range of $0.41-$0.46. Fully diluted shares are expected to be in the range of 160 million to 162 million. Webcast and Conference Call Details Certara will host a conference call today, May 7, 2024, at 5:00 p.m. ET to discuss its first quarter 2024 financial results. Investors interested in listening to the conference call are required to register online in advance of the call. A live and archived webcast of the event will be available on the "Investors" section of the Certara website at https://ir.certara.com. About Certara Certara accelerates medicines using proprietary biosimulation software, technology and services to transform traditional drug discovery and development. Its clients include nearly 2,400 biopharmaceutical companies, academic institutions, and regulatory agencies across 66 countries. Please visit our website at www.certara.com. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.certara.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. Forward-Looking Statements This press release contains certain statements that constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, with respect to the Company's full-year guidance and other statements about the Company's future business and financial performance, revenue, margin, and bookings. These statements typically contain words such as "believe," "may," "potential," "will," "plan," "could," "estimate," "expects" and "anticipates" or the negative of these words or other similar terms or expressions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement and involves significant risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct. You should not rely upon forward-looking statements as predictions of future events and actual results, events, or circumstances. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control, including the Company's ability to compete within its market; any deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery; changes or delays in relevant government regulation; increasing competition, regulation and other cost pressures within the pharmaceutical and biotechnology industries; economic conditions, including inflation, recession, currency exchange fluctuation and adverse developments in the financial services industry; trends in research and development (R&D) spending; delays or cancellations in projects due to supply chain interruptions or disruptions or delays to pipeline development and clinical trials experienced by our customers; consolidation within the biopharmaceutical industry; reduction in the use of the Company's products by academic institutions; pricing pressures; the Company's ability to successfully enter new markets, increase its customer base and expand its relationships with existing customers; the impact of acquisitions and our ability to successfully integrate such acquisitions; the occurrence of natural disasters and epidemic diseases; any delays or defects in the release of new or enhanced software or other biosimulation tools; failure of our existing customers to renew their software licenses or any delays or terminations of contracts or reductions in scope of work by its existing customers; our ability to accurately estimate costs associated with its fixed-fee contracts; our ability to retain key personnel or recruit additional qualified personnel; risks related to the mischaracterization of our independent contractors; lower utilization rates by our employees as a result of natural disasters and epidemic diseases; risks related to our contracts with government customers; our ability to sustain recent growth rates; our ability to successfully operate a global business; our ability to comply with applicable laws and regulations; risks related to litigation; the adequacy of its insurance coverage and ability to obtain adequate insurance coverage in the future; our ability to perform in accordance with contractual requirements, regulatory standards and ethical considerations; the loss of more than one of our major customers; future capital needs; the ability of our bookings to accurately predict future revenue and our ability to realize revenue on bookings; disruptions in the operations of the third-party providers who host our software solutions or any limitations on their capacity; our ability to reliably meet data storage and management requirements, or the experience of any failures or interruptions in the delivery of our services over the internet; our ability to comply with the terms of any licenses governing use of third-party open source software; any breach of its security measures or unauthorized access to customer data; risks relating to the use of artificial intelligence and machine learning in our products and services; our ability to adequately enforce or defend ownership and use of our intellectual property and other proprietary rights; any allegations of infringement, misappropriation or violations of a third party's intellectual property rights; our ability to meet obligations under indebtedness and have sufficient capital to operate our business; any limitations on our ability to pursue business strategies due to restrictions under our current or future indebtedness; any additional impairment of goodwill or other intangible assets; our ability to use our net operating losses and R&D tax credit carryforwards; the accuracy of management's estimates and judgments relating to critical accounting policies and changes in financial reporting standards or interpretations; any inability to design, implement, and maintain effective internal controls or inability to remediate any internal controls deemed ineffective; the costs and management time associated with operating as a publicly traded company; and the other factors detailed under the captions "Risk Factors" and "Special Note Regarding Forward-Looking Statements" and elsewhere in our Securities and Exchange Commission ("SEC") filings, and reports, including the Form 10-K filed by the Company with the Securities and Exchange Commission on on February 29, 2024, and subsequent reports filed with the SEC. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, we expressly disclaim any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. Factors that may materially affect our results and those risks listed in filings with the SEC. A Note on Non-GAAP Financial Measures This press release contains "non-GAAP measures" which are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Specifically, the Company makes use of the non-GAAP financial measures adjusted EBITDA, adjusted net income (loss), adjusted diluted earnings per share, and constant currency ("CC") revenue, which are not recognized terms under GAAP. These measures should not be considered as alternatives to net income (loss) or GAAP diluted earnings per share or revenue as measures of financial performance or any other performance measure derived in accordance with GAAP and should not be considered a measure of discretionary cash available to the Company to invest in the growth of its business. The presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the Company's results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. You should refer to the footnotes below as well as the "Non-GAAP Financial Measures" section in this press release below for a further explanation of these measures and reconciliations of these non-GAAP measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods. Management uses various financial metrics, including total revenues, income (loss) from operations, net income (loss), and certain non-GAAP measures, including those discussed above, to measure and assess the performance of the Company's business, to evaluate the effectiveness of its business strategies, to make budgeting decisions, to make certain compensation decisions, and to compare the Company's performance against that of other peer companies using similar measures. In addition, management believes these metrics provide useful measures for period-to-period comparisons of the Company's business, as they remove the effect of certain non-cash expenses and other items not indicative of its ongoing operating performance. Management believes that adjusted EBITDA, adjusted net income (loss), adjusted diluted earnings per share, and CC revenue are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical periods. In addition, each of these measures is frequently used by analysts, investors, and other interested parties to evaluate and assess performance. Furthermore, our business has operations outside the United States that are conducted in local currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. We adjust revenues for constant currency to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations and we believe it is helpful for investors to present operating results on a comparable basis period over period to evaluate its underlying performance. Please note that the Company has not reconciled the adjusted EBITDA or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results. (1) CC revenue excludes the effects of foreign currency exchange rate fluctuations by assuming constant foreign currency exchange rates used for translation. Current periods revenue reported in currencies other than U.S. Dollars are converted into U.S. Dollars at the average exchange rates in effect for the comparable prior periods. (2) Adjusted EBITDA represents net income excluding interest expense, provision (benefit) for income taxes, depreciation and amortization expense, intangible asset amortization, equity-based compensation expense, goodwill impairment, change in fair value of contingent consideration, acquisition and integration expense and other items not indicative of our ongoing operating performance. (3) Adjusted net income and adjusted diluted earnings per share exclude the effect of equity-based compensation expense, amortization of acquisition-related intangible assets, goodwill impairment, change in fair value of contingent consideration, acquisition and integration expense, and other items not indicative of our ongoing operating performance as well as income tax provision adjustment for such charges. In evaluating adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, you should be aware that in the future the Company may incur expenses similar to those eliminated in this presentation and this presentation should not be construed as an inference that future results will be unaffected by unusual items. Contacts: Investor Relations Contact: David DeuchlerGilmartin Media Contact: Alyssa HorowitzPan CERTARA, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)       THREE MONTHS ENDED MARCH 31, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)     2024       2023   Total revenues   $ 96,654     $ 90,301   Cost of revenues     39,255       34,856   Operating expenses:         Sales and marketing     10,687       8,002   Research and development     11,995       9,287   General and administrative     22,979       19,772   Intangible asset amortization     12,593       10,535   Depreciation and amortization expense     432       411   Total operating expenses     58,686       48,007   Income (loss) from operations     (1,287 )     7,438   Other income (expenses):         Interest expense     (5,751 )     (5,475 ) Net other income     1,604       506   Total other expenses     (4,147 )     (4,969 ) Income (loss) before income taxes     (5,434 )     2,469   Provision (benefit) for income taxes     (751 )     1,111   Net income (loss)   $ (4,683 )   $ 1,358             Net income per share attributable to common stockholders:         Basic   $ (0.03 )   $ 0.01   Diluted   $ (0.03 )   $