Certara, Inc.

Good day and thank you for standing by. Welcome to the Sartara second quarter 2026 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jay Liu, Investor Relations at LifeSci. Please go ahead.

Good morning, everyone. Thank you all for participating in today's conference call. On the call from Sitara, we have John Resnick, Chief Executive Officer, and Saeed Muhammad, Interim Chief Financial Officer. Earlier today, Sitara released financial results for the quarter ended June 30th, 2026. 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 National results may differ materially from those expressed or implied in the forward-looking statement. Please refer to slide 2 in the accompanying presentation titled Second Quarter 2026 Financial Results 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. Reconcilations 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 today, August 4, 2026. Sitara 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 John.

Thank you for joining today's call. Before I get into our results, I want to highlight the appointment of our new chief commercial officer, which we announced earlier this morning. This reflects our commitment to a new, more impactful go-to-market approach, which I'll cover in more detail shortly. The second quarter was about executing on our commitment. Overall, we are pleased with our progress. We are transforming Sertara into a company we believe is capable of delivering sustainable double-digit growth. We still have work to do, but we are on the right path. We are executing against our plan. Our foundation is strengthening in the macro market condition. Biopharma spending, clinical trial starts, and new regulatory guidance continue to be in our favor. I'll start with our top-line financials, then move to our strategic and operational priorities, our client impact, and finally, how we are leveraging AI. Top-line results in the quarter were in line with expectations and guidance. Overall, revenue growth was modest at 1%, with software revenue growing 4% and service revenue declining 3%. On software, a renewed focus on driving new growth is building momentum. Normalizing for the Comaxone acquisition, trailing 12-month bookings grew 7% exiting the first half, up sharply from 0.8% exiting 2025. Overall, software revenue now represents 53% of our business versus 40% just two years ago. Service bookings lagged in the quarter with a book-to-bill of 1.07. Services bookings were impacted in part by the carve-out of our regulatory and medical writing business. In the quarter, we also began implementing several changes to the broader services go-to-market model, which we will continue to refine. Leading indicators are positive. Our pipeline grew 27% year-on-year exiting the quarter, which we anticipate translating into revenue growth in the back half of 2026. Today, we are reaffirming our guidance range of 0% to 4% for full-year revenue growth. Shifting to the key actions we have taken to improve our ability to drive growth. In February, we outlined bold initiatives to more sharply focus the organization on its ability to deliver. And in Q2, we continued implementing them. May's divestiture was our first step in sharpening our strategy, rebalancing Certara about improving our overall financial predictability and strengthening our software services flywheel. We have reprioritized our product portfolio to focus on key growth areas and adjusted our roadmaps to accelerate AI. Our reorganization around two business units, Model 1 formed Discovery and Drug Development, or MID3, and Accelerated Clinical Evidence, or ACE, is expected to better align our business to how customers consume our products and our services. We have taken steps to streamline our cost base. In May, we executed a reduction in force focused predominantly on overhead, impacting approximately 5% of our global employee base. This action, combined with other steps towards operational excellence, is expected to result in a run rate savings of approximately $13 million. These reductions allow us to address some of the stranded costs from the divestiture and accelerate our investments in innovation. We're also redesigning our commercial go-to-market engine to tightly integrate sales and marketing in support of the business units. This is expected to activate growth across all segments, extend our partnership model, and drive adoption of new customer use cases. As part of that, I'm excited to announce Julian Perrier as our new Chief Commercial Officer