Certara, Inc.

Good day and thank you for standing by. Welcome to the Sitara Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Deigler of Investor Relations. Please go ahead.

Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from Sartar, we have William Ferry, Chief Executive Officer, and John Gallagher, Chief Financial Officer. Earlier today, Sartar released financial results for the full year ended December 31st, 2024. 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 includes 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 website. In their remarks or responses 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 in the accompanying materials for additional information. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 26, 2025. Sartara disclaims any obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of 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 Certara's fourth quarter and full year 2024 earnings call. John and I will begin with prepared remarks, and then we will take your questions. We were pleased to finish the year with strong commercial execution across both software and services as we deliver financial results consistent with the expectations we outlined in November. We finished 2024 with revenue of $385.1 million, representing 9% reported growth versus 2023. Sitara's fourth quarter bookings of $144.5 million represented 22% growth versus the prior year, driven by software bookings growth of 38% and services bookings growth of 12%. During the fourth quarter, we saw healthy software and biosimulation services bookings performance from our Tier 1 and Tier 3 customers, as drug developers around the world continue to use biosimulation to optimize their development processes. Additionally, our regulatory services business had a good quarter, delivering solid bookings, which represented a return to growth. We are encouraged by our strong finish to the year and are now squarely focused on executing our 2025 goals. At Sertara, we are enabling model-informed drug development, or MIDD, in the global biopharmaceutical industry. MIDD is an approach that uses biological and statistical models derived from preclinical and clinical data to inform decision-making in drug discovery, 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. MIDD and biosimulation can increase the probability of success in bringing a new drug to market while also decreasing development costs. We accomplished this through our software platform, which includes four key pillars, our SimCit PVPK software, Phoenix PKPD software, Pinnacle 21, which is a data standardization tool, and ChemAxon, our most recent acquisition, which brings chemical property insights to the discovery phase of drug development. In 2024, our customers continued to exhibit cautious spending behavior as they grappled with funding constraints, Medicare drug price negotiations, and geopolitical uncertainty. Our software business continued to grow through the challenging environment, while demand for our services was less predictable, particularly in our regulatory services. Decision-making timelines were and continue to be elongated due to internal discussions at customers. During the fourth quarter, our team executed well despite end market uncertainties driving software and services bookings that were slightly ahead of our expectations. While we are pleased with our performance, we did not see any change in customer sentiment that suggests to us that our end markets are materially different heading into 2025. As such, our guidance ranges assume that 2025 will be a similar year to 2024 for clinical R&D spending. I'd like to take some time to discuss our progress over the past year and our vision for Sertara in 2025. Throughout 2024, we took steps to enhance Sertara's strategic position as a preferred partner to the global biopharmaceutical industry. In software, we made investments in our R&D infrastructure with three goals in mind. To expand the integration of generative artificial intelligence into existing products. To accelerate the development of new products and product updates. and to begin the process of integrating Sitara software into a unified platform. Another focus area was our commercial team, where we added senior level talent, such as key account managers, as we seek to strengthen strategic relationships among our top customers. One successful example from this investment was the launch of our co-author regulatory writing product. We began marketing co-author during the second quarter of 2024 and received positive initial feedback from early users. Our regulatory services team also uses co-author to increase efficiency in their regulatory writing projects. We attribute the successful launch to our product development team and a calibrated sales and marketing effort. Beyond internal investments, we focused on successfully integrating Formetics and applied biomass, or ABM, into the organization, and we completed the acquisition of ChemAxon in October of 2024. During their first year under the Sitara umbrella, ABM's team seamlessly integrated with the Sitara QSP team, leading to a successful 2024, which included a project that was published in Nature Cancer. Formetics brought complimentary software products that were quickly combined with our Pinnacle 21 offering, receiving positive user feedback and bringing additional efficiencies to our customers. And more recently, ChemAxon has allowed us to enter the discovery bias simulation market at scale. ChemAxon brings a highly synergistic suite of software products which can be leveraged alongside existing Sitara software to bring cutting-edge insights to drug discovery, candidate selection, and lead optimization. We began to see the impact of these investments throughout the year. as we expanded our customer base to over 2,400 life sciences companies as of December 31st. Among these customers, we had 431 customers with an annual contract value of more than $100,000, representing 11% growth over 2023. We also had 67 customers with an annual contract value of more than $1 million, which grew versus 63 customers in 2023. Our growth strategy is working, Despite a turbulent market backdrop, biopharma companies around the world are expanding their use of biosimulation, which can be attributed to the investments and strategic initiatives at Sertara. Looking ahead to 2025, there's even more that can be done to best position Sertara for future growth. This year, we plan to make further investments in software to accelerate our product development initiatives. Our main priority will be the development of software products for the discovery and lead optimization phases leveraging ChemAxon's existing capabilities alongside Sertara technologies and artificial intelligence. Drug discovery represents a large addressable market for MIDD, whereas Sertara's products have historically been focused on the clinical stages. We believe that with our technology, we can develop products that will bring predictive analysis and insights to the discovery phase that will be unique and differentiated with the potential to significantly impact the success rate and associated costs of drug development. In addition to discovery, we will continue to invest in the cutting-edge areas of biosimulation software, including new models and features, QSP, and ADME property prediction. Outside of new product development, we will continue to focus on building an integrated software platform by elevating new products to the CITAR cloud. We are confident in our ability to execute our R&D and commercial goals because of our tremendous team. In 2024, we continue to prioritize hiring leading software developers, scientific subject matter experts, and senior commercial talent. We ended the year with over 1500 employees, including more than 400 with advanced degrees. An example of our team's expertise was the recent inclusion of several esteemed colleagues in Stanford, Elsevier's top 2% scientist ranking list. Twelve members of our team were named the list in 2024, which includes the top and most cited researchers globally. Sartar's researchers contributed to over 100 publications during the past year, showcasing the impact of biosimulation strategies and execution of drug development, and outlining the different application of technologies to streamline drug submission and approval processes. I am proud of the accomplishments of our team, and I'm looking forward to the continued success in 2025. Before wrapping up, I wanted to provide a brief update on the strategic review of our regulatory writing business. Our internal review process has progressed nicely, and we are continuing to evaluate potential outcomes and their impact on our go-forward strategy. We have not made any decisions, and we'll be not making any further comments regarding the review on this call. We expect to reach a decision in the near term and we'll plan to share additional details as soon as we have them. In summary, we had solid commercial execution across software and services driving successful performance in the fourth quarter. Progress CERTAR has made over the past year was very important as we leveraged organic investment and strategic transactions to enhance our competitive positioning. While our end markets remain subdued on a historical basis, the adoption of biosimulation remains strong, which has been exemplified by the performance of our software business and the increasing number of customers using our technology at scale. In 2025, we will continue to invest in software to expand the breadth of our offering. I'm excited to continue to advance biosimulation forward, unlocking greater commercial opportunities and leaving us well positioned for growth in 2025 and beyond. With that, I will hand things over to John to discuss our financial results in more detail.