Certara, Inc.

Hello, and thank you for standing by. Welcome to SATAR fourth quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. I would now like to hand the conference over to David Daigler, Head of Investor Relations. Sir, you may begin.

Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from Sertara, we have William Ferry, Chief Executive Officer, and John Gallagher, Chief Financial Officer. Earlier today, Sertara released financial results for the quarter ended December 31st, 2023. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements, and actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to slide two in the accompanying materials for additional information, which you can find on the company's investor relations site. In their remarks or response to questions, management may mention some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in the recent earnings press release available on the company's website. Please refer to the reconciliation tables and the accompanying materials for additional information. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 29th, 2024. CTAR disclaims any obligation except as required by law to update or revise any financial projections or forward-looking statements, whether it be against new information, future events, or otherwise. And with that, I will turn the call over to William.

Thank you, David. Good afternoon, everyone. Thank you for joining CTAR's fourth quarter and full-year earnings call. John and I will start with prepared remarks, and then we will take your questions. We are pleased to finish the year with a solid fourth quarter performance in both software and in technology-enabled services. 2023 presented our industry with many challenges, as pharmaceutical and biotech customers were conservative in their spending amidst macroeconomic and geopolitical pressures. Our full year reported revenue growth was 6%. in line with the guidance we gave in August. This revenue growth included 14% growth in software and 1% in technology-enabled services. We had record software sales in the fourth quarter, and we were encouraged to see our technology-enabled services bookings pick up in the second half of 2023. Tatara's goal is to enable model-informed drug development, or MIDD, in the global biopharmaceutical industry. MIDD is an approach that utilizes biological and statistical models derived from preclinical and clinical data to inform decision-making in drug development and commercialization. Biosimulation is a critical component of MIDD that uses computer-aided mathematical simulation of biological processes and systems to understand the action of a drug in a human body or in a population of humans. Tatara enables our customers to use biosimulation and MIDD to increase the probability of success in bringing a new drug to market and to decrease the cost of drug development. We have an extensive and expanding list of customers within the biopharmaceutical industry, which expanded in 2023 to a count of 2,395. Within this customer base as of December 31st, 2023, we had 389 customers with an annual contract value of more than $100,000, representing growth of 5% year over year. We also had 63 customers with an annual contract value of more than $1 million, up 11% from 2022. During the second half of 2023, we reorganized our commercial infrastructure to better sell our end-to-end solutions, and the team delivered improved results in both software and services throughout the second half. With our new enterprise sales approach, we have effectively captured cross-selling opportunities, leading to expanded relationships with some of our top customers. I am very happy with the progress our team has made so far, and I'm confident that these improvements will support our commercial initiatives in the coming years. Our software business growth of 14% in 2023 was driven by our SimSip, Phoenix, and Pinnacle 21 platforms. We have been investing in these products to add new features, a number of which launched during 2023 and will continue to increase traction as we move into 2024. Some of the highlights in 2023 included the 22nd version of our SimSip PVPK simulator, which included several upgrades to our modeling and simulation capabilities. We also launched SimCit Biopharmaceuticals, a new module designed to aid drug formulation and expand our presence in the early stages of drug development. Following the acquisition of Viasa last January, we began to integrate AI and machine learning across our portfolio. An early example was the release of an updated version of D360, which featured deep learning models for novel chemical structure generation and automated property predictions. We also launched CoAuthor, a new regulatory writing tool that uses generative AI to aid in the drafting of regulatory submissions. Customer feedback on our AI products has been encouraging and drove customer interest in the second half of the year. Looking ahead to 2024, we will continue to invest in our software platform. One key area of focus is our clinical data strategy. Last fall, we augmented the Pinnacle 21 data exchange with the acquisition of Formetics, a provider of data standardization and automation software. With Formetics, Sitara will bring increased efficiency to clinical trial data management via an end-to-end solution. In addition to Pinnacle 21, we also plan to invest in other areas, such as new models for biosimulation, new products and product features, and additional integration of AI across the platform. As biostimulation becomes more widespread, we are broadening the range of our offerings to support additional use cases in therapeutic areas. I am confident that these investments will create new opportunities to grow our platform on a global scale and penetrate deeper into our customers' R&D organizations. Our technology-enabled services business overcame market headwinds to deliver solid performance in the second half of 2023. In August, we announced the consolidation of our biosimulation services and regulatory services teams in order to better deliver all of Sertara's capabilities to our customers' projects. Thus far, we are pleased with the improved execution in the services business, which is performing better as a combined organization. Across our technology-enabled services group, We saw a pickup in new business activity, which led to sequential bookings growth in the fourth quarter. Customers of all sizes continue to recognize the value that Sitara services can add to their modeling, simulation, and regulatory projects. We look forward to building on this momentum in 2024. As a leader of biosimulation, expanding into emerging methods of modeling and simulation is a key component of our business strategy. In December, we announced the acquisition of Applied Biomath, a leading provider of QSP services. QSP, or Quantitative Systems Pharmacology, combines computationally modeling and experimental data to simulate how the body will respond to a drug. QSP is at the cutting edge of biosimulation approaches and has vast potential to improve the biopharmaceutical R&D and inform decision-making across the drug development process. Along with proprietary software, Applied Biomath brings a complimentary customer base, which includes clients in the discovery and preclinical stages of development. By combining the Applied Biomath and Sertara QSP teams, we are proud to have the largest QSP services group in the drug development industry. In 2023, we continue to invest in our business and expand our team worldwide. We prioritized hiring leading scientists and subject matter experts to support our growth. As of the end of 2023, we had about 1,400 employees, including more than 400 employees with doctorate degrees. We believe we are the employee of choice in the biosimulation industry, and we offer a strong culture and commitment to innovation. We believe there's an opportunity for us to accelerate some investments in 2024 across our organization. In particular, we intend to invest in the development of software capabilities, including AI, as well as expand our commercial organization, including key account management positions. These investments will start to yield minor benefits in 2024, but will be most impactful in 2025 and 2026. In closing, we are pleased with our 2023 results. The growth opportunity in biosimulation continues to strengthen as drug developers look to maximize capital efficiency and reduce pipeline risk. I am confident that the secular adoption of biosimulation, our improved commercial execution, and the investments we are making in our products and our team will support strong growth in 2024 and beyond. I will now turn it over to our CFO, John Gallagher, to discuss our fourth quarter and full year financial results in more detail.