2025 revenue gets guidance, EBITDA margin tops as Q4 software booking slips

• Certara closed 2025 with organic software revenue growth 7% (within it 6–8% guide) and adjusted EBITDA margin of 32%at its end 30–32% target.

• Software bookings softened in Q4, leaving software bookings for organics trailing 12 months 1% and informing the 2026 vision of “up to 4%,” while services reappeared in December with reservations. 17% but always described as a “bump.”

• Management introduced three software programs for Q4—Certara IQ for QSP, Phoenix Cloudand a The Pinnacle improved—and warned that Phoenix’s cloud transformation is shifting recognition from upside to marketable, which may shift some of its revenue impact to 2027.

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Certara (NASDAQ:CERT) closed 2025 with results that Chief Financial Officer John Gallagher described as strong in revenue and profitability, while acknowledging mixed booking trends and continued growth in demand for services. Speaking with analyst Luke Sergott at the company’s event, Gallagher said the year ended in line with the company’s expectations for organic software revenue and above expectations for adjusted EBITDA margins, as software bookings declined in the fourth quarter.

Gallagher said year-over-year organic software revenue growth came in 7%it comes “in the middle” of the company’s identity 6% to 8% range of guidance. Regarding profit, Certara directed a 30% to 32% adjusted EBITDA margin and finished in 2025 32%.

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He said the company was able to increase R&D spending through 2025 while meeting the high end of margin guidance by consistently “disciplining” elsewhere in the P&L and removing some of the increased capital.

Gallagher characterized fourth-quarter bookings as mixed. He highlighted the increase in service bookings, including what he called an unexpectedly strong December. He said that the booking of services for December is over 17%and attributed the strength in part to seasonality and “some budget fluctuations.” Outperformance was described as being widespread across customer segments and in both biosimulation services and regulatory services.

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At the same time, Gallagher cautioned that utilities remain “bumpy,” citing weak service bookings in the third quarter followed by a strong fourth quarter.

On the software side, Gallagher said 12-month organic software bookings (TTM) were up. 1% year, with a year-over-year decline in software bookings in the fourth quarter that lowered the TTM figure. He said the booking trend helped inform the company’s vision for 2026 which calls for the organization to “reach 4%.”

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Gallagher pointed to some customer turnover that affected fourth-quarter software bookings, particularly among Tier 1 customers. He said Certara saw a reduction in Phoenix seat licenses associated with customer prioritization and a reduction in the number of buyers at large pharmaceutical customers, which could reduce seat license capacity.

He also discussed the impact of learning statistics on the company’s Pinnacle 21 platform. Gallagher said Pinnacle’s performance is more tied to research volume than annual seat licensing, and that weaknesses in a clinical trial starting 18 to 24 months in advance can hinder deployment later due to a lack of time. While he emphasized Pinnacle’s commitment and high renewal rate, he said it could be affected by changes in enrollment over time.

Looking ahead, Gallagher said Certara expects the first quarter of 2026 to come in at the lower end of its guidance range, citing “forward momentum” from the strength seen in Q4 and tough year-over-year comparisons. He added that the company sees an opportunity to accelerate software revenue growth through 2026 and expects a sequential increase throughout the year.

Gallagher also discussed three software launches in the fourth quarter that management believes could impact earnings in 2026:

• Certara IQ for QSPan AI-enabled product for quantitative systems pharmacology (QSP), which Gallagher described as the company’s fastest-growing area and one of the fastest-growing areas in biosimulation overall. He said QSP has historically been completely service-based and described this as the first software offering in that space.

• Phoenix Clouda cloud version of the Phoenix platform designed to move clients away from the desktop and into on-premise deployments. Gallagher said Certara has added AI features and enhancements and is seeing good adoption, including from Tier 1 customers, and 2026 is expected to be the year of increased conversion.

• Pinnacle product developmentGallagher said it is growing and “will grow into a year.”

Gallagher noted that moving customers from desktop Phoenix to the cloud version also changes revenue recognition, from upfront recognition to variable recognition. Because of this, he said some of the impact of revenue growth from the Phoenix cloud transformation in 2026 could be seen more in 2027, and suggested that Certara may introduce annual recurring revenue (ARR) as an additional metric to track progress.

Regarding artificial intelligence, Gallagher said Certara views AI as a competitive advantage, highlighting the company’s acquisitions. Visa in 2022 and the next integration work on all platforms. He pointed out that customers buy Certara’s software models based on their performance, longevity, and data base, and said the combination of AI-enabled products, Certara’s scientific expertise—including “400 thought-leading PhD scientists”—and regulatory approval (including the long-term use of products like Simcyp and Phoenix by FDA agencies).

When asked about areas at risk of disruption, Gallagher commented regulatory writing as an area where productive AI can drive “world change,” while noting Certara didn’t see disruption happening on a wholesale basis. He pointed to the company’s CoAuthor product, launched at the end of 2024 to produce AI with regulatory writing, which he said continues to rise.

Gallagher also addressed the regulatory services business, saying new CEO Jon Resnick is evaluating the segment and weighing the pros and cons of keeping it versus selling it. Gallagher described the business as “highly profitable” despite the year-on-year decline in revenue, citing earlier disclosures that regulatory filings are profitable. 20% to 30% profit and generate cash that can be reinvested. He also suggested a possible collaboration between CoAuthor and the wider organization.

Regarding Certara’s long-term portfolio direction, Gallagher said the core is still focused on it model-informed drug development (MIDD) and biosimulationintegrating software and services. He said the guiding principle integrates point solutions into comprehensive offerings that meet customer needs and increases collaboration across customer organizations, with the goal of saving time and money in drug development.

As for the “customer-focused” investment, Gallagher said the company sees no increase beyond sales and marketing expenses. Instead, he highlighted applications such as re-prioritizing, aligning incentives, improving detail in discounting, and ensuring overall pricing performance.

Gallagher said Certara considers himself a Rule 40 company, although he acknowledged that the business is currently just short of that benchmark due to low growth and investments that have reduced margins from historic mid-30% levels to the low 30% range. He also said that the direction of 2026 takes about 100 base points of margin reduction driven by investment, while noting that the company has already been identified $10 million of avoiding costs in its program and aims to maintain spending discipline through 2026.

Certara is a biosimulation software and services company that partners with pharmaceutical, biotechnology and medical device developers to accelerate drug discovery, development and regulatory approval. The company’s platform combines quantitative pharmacology, real-world evidence, artificial intelligence and machine learning to model and simulate drug behavior across multiple therapeutic areas and patient populations. Using these automated and data-driven approaches, Certara helps its customers predict clinical outcomes, improve dosing strategies and simplify decision-making throughout the product lifecycle.

The company’s offerings are divided into software tools and consulting services.

The article “Certara Conference: 2025 revenue hits, EBITDA top margin range as Q4 software booking slip” was originally published by MarketBeat.