Certara, Inc.

Good day and thank you for standing by. Welcome to the Certara Second Quarter 2025 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Deckler, 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, Sertara released financial results for the quarter ended June 30th, 2025. 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 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 most recent earnings press release available on the company's website. Please refer to the reconciliation tables in the accompanying materials for additional information. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 6, 2025. Sertara 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, and good afternoon, everyone. Thank you for joining Sartara's second quarter earnings call. John and I will begin with prepared remarks, and then we will take your questions. Sartara's second quarter performance reflected continued strength across the organization as we achieved results that were consistent with our full-year outlook in both software and services. Second quarter revenue of $104.6 million, represented 12% year-over-year growth, while second quarter bookings of $112 million reflected 13% year-over-year growth. Relative to internal expectations, we are pleased with the state of our financial performance and sales funnel as we head into the second half of the year. Across the portfolio, we continue to see strength in high-growth areas such as QSP services and our SIMSIP software. We have a high degree of visibility into second half software performance based on the mix of renewals in our pipeline, which gives us additional confidence in our full year growth expectations. In services, our commercial team continues to execute inline or ahead of our expectations, delivering 15% bookings growth in 2Q and 10% bookings growth on a trailing 12-month basis, which supports the revenue outlook through the rest of the year. As a result of our strong year-to-date execution, we are reiterating our full year guidance. Across a variety of customer groups, our conversations continue to reflect a mixed spending environment in our various end markets. Large pharma companies remain cautious, driven by a rapidly changing geopolitical and macroeconomic environment. Decision-making timelines for our customers have been affected by proposed pharmaceutical tariffs, and the potential introduction of a most favored nation pricing algorithm. Among smaller customers, the biotech funding environment has slightly improved, but it remains below trend on a historical basis. Despite these headwinds, we have been encouraged by persistent interest from customers seeking to expand their use of biosimulation technology, incorporating additional Sitara products and services into their development workflows. Throughout the second quarter, our team did an excellent job of remaining in front of key stakeholders and facilitating discussions about how we can further expand existing relationships. Now turning to our second quarter commercial performance. In software, we saw strong bookings performance across tiers two and three, offset by timing-related softness in tier one, which remains in line with plan on a year-to-date basis. Software revenue of $46.7 million grew 22% on a reported basis of 9% organically, led by strong growth from SIMSIP, in addition to $5.1 million of contribution from ChemAxon. In services, we saw bookings growth across all three of our customer tiers, led by strength in Tier 1 across both biosimulation and regulatory services. Strength in biosimulation services bookings was driven by QSP and SIMSIP services, while total regulatory bookings also grew nicely during the quarter. Services revenue of $57.9 million grew 5% on a reported basis. Sitara's SIMSIP reached a significant regulatory milestone earlier this week. We're happy to share that Sitara is the first and only company to receive European Medicines Agency, EMA, qualification for a PVPK modeling platform and CIMSIP is the only software to hold this designation. The recognition follows a rigorous multi-year collaborative engagement between Sertara scientists, technologists, and the EMA. The qualification is a significant milestone for biosimulation, demonstrating the value that regulators place on evidence generated through modeling and simulation approaches, and it will continue to encourage the usage of CIMSIP by companies globally. Sotara is continuing to increase investment in R&D to create our next generation AI-enabled MIDD platform. This investment started in 2022 before the breakthroughs in GPT-AIs were announced when Sotara acquired Viasa. Viasa brought to Sotara the foundational distributed data fabric technology, which has become the underpinning of our ability to integrate AI with our modeling technology and data sets. Since then, we have utilized this technology in a number of new AI features in our products and also some new important AI products like co-author. Last week, I was pleased to announce the promotion of Dr. Christopher Bhutan, founder of Vyasa, as Sertara's CTO. Chris is leading the integration of Sertara's key MIDD modeling tools into our next generation AI MIDD platform, which we'll be launching over the next year. We believe that Sertara can solidify our leading position in MIDD with this platform, which will fuse both AI and biosimulation technology to enable our customers to reduce the risk and cost of drug development. The next step in the creation of this platform will be the release this fall of Sertara IQ, an AI-enabled QSP software solution that includes an intuitive model-building interface and several pre-validated QSP models. As you will recall, QSP is one of the fastest-growing markets within model-informed drug development, and we have the largest group globally serving these customers. Our services team will adopt Sertara IQ as their preferred platform for executing QSP products, leveraging cutting-edge features and modeling capabilities. With Certara IQ, customers will have one unified QSP platform to reference in collaboration with peers, Certara, and regulators. The product will be based in the cloud, allowing for high performance simulation and analysis work at faster speeds. We believe this product launch is a critical step in growing the market for QSP solutions by democratizing access to modeling capabilities across our customers which should ultimately lead to more QSP use in clinical development. The product is currently in an early access phase with several customers, and we expect to announce a full commercial launch at some point in the fourth quarter. While we are on the subject of QSP, we received an update on our QSP collaboration with IGI, which was published in Nature Cancer last fall. Our QSP team worked with IGI to optimize the first in human dose of ISB2001, resulting in a clinical starting dose that was 50 to 100 fold over the conventional starting dose, and that reduced the need for animal testing. These predictions were validated by first in human trial results that were presented at AACR this year. And ISB 2001 was granted a fast track designation for the treatment of relapsed refractory myeloma patients in May. We are thrilled by the work of our QSP team and the outcome of these studies for all key stakeholders, showcasing the impact that QSP can have in accelerating trial timelines and accelerating the delivery of treatments to patients in need. In addition, Excitement about new approach methodologies, and particularly model-informed drug development, has grown in the wake of the FDA's guidance to phase out animal testing for monoclonal antibodies. While it's still too early to provide a precise estimate of the broader opportunity, we do view it as a multibillion-dollar addressable market over the next 10 years. We're excited to share that our QSP and broader SimCit businesses have begun to recognize bookings and revenue associated with the replacement of animal testing. Roughly 50% of our new QSP projects this year have been for monoclonal antibody therapies, which is a testament to CITAR's competitive positioning as the leader in QSP and services, as well as the growing momentum of NAM use in clinical development processes. Our acquisition of applied biomass in late 2003 and the subsequent combination of our two QSP teams has proven timely, and it's becoming an increasingly important component of our overall growth. Now shifting towards some other product-related updates. During the quarter, we released version 8.6 of our Phoenix PK PD platform, following months of development and incorporating feedback from key stakeholders. New enhancements included in the update for improved speed and efficiency of NCA setup, data preparation, and the speed of nonlinear mixed effect algorithms for population pharmacokinetics. As we have discussed in the past, this product has been made available through the Sitara Cloud, offering faster performance with lower backend IT costs for our customers. Initial feedback from our users has been positive, and we look forward to collaborating with them to drive further improvements to the Phoenix platform. Another key focus area for investment over the past several quarters was our Pinnacle 21 product suite, which is core to the data component of the software business. Following the acquisition of Formetics in late 2023, our team began to integrate Pinnacle 21 and Formetics data standardization capabilities, seeking to improve our customers' clinical data workflows and timelines. In early July, we were pleased to announce a new collaboration with Merck, expanding their use of Pinnacle 21 and broadly incorporating new integrated data standardization capabilities. This collaboration helped us build upon our longstanding relationship with Merck, which is an example of the type of engagement that Sitara is striving to build across our customer base. Our commercial team remains focused on identifying opportunities to form stronger partnerships with customers. both through the expansion of existing capabilities to more seats and expansion of new products and services. As we add to our portfolio organically and inorganically, our land and expand commercial strategy remains top of mind. Now, before handing things over to John, I wanted to provide an update on the strategic review of our regulatory business. Regulatory bookings have continued to grow nicely through the quarter, and we continue to value the business given the profitability and cash flows that it generates. Over the past several months, we have continued to make good progress in our review. However, this process has taken longer than we expected, which we attribute in part to the unprecedented nature of geopolitical and macroeconomic uncertainty that has taken place since the beginning of the year. With that said, we have maintained an active dialogue with several interested external parties, with discussions progressing beyond the initial phases of diligence. We hope to be able to provide a more substantive update before the end of 2025. To close, we are pleased with our second quarter performance and we are confident in our financial outlook for the remainder of the year. Our guidance is supported by solid bookings trends in services and high visibility in the second half renewal dynamics and software. Customer interest in model-informed drug development continues to grow stronger each quarter, supporting our growth strategy and validating the investments we are making in our business. We look forward to continued success and momentum during the second half of 2025. With that, I will hand things over to John Gallagher to discuss our financial results in more detail.