Certara (NASDAQ:CERT) closed 2025 with results that Chief Financial Officer John Gallagher described as strong on revenue and profitability, while acknowledging mixed bookings trends and continued lumpiness in services demand. Speaking with analyst Luke Sergott at a company event, Gallagher said the year ended in line with the company’s expectations on organic software revenue and above expectations on adjusted EBITDA margin, even as software bookings decelerated in the fourth quarter.
2025 performance: organic software revenue in range, margins at the high end
Gallagher said full-year organic software revenue growth came in at 7%, landing “right in the middle” of the company’s original 6% to 8% guidance range. On profitability, Certara guided a 30% to 32% adjusted EBITDA margin and finished 2025 at 32%.
Bookings: services rebounded in December, software softened in Q4
Gallagher characterized fourth-quarter bookings as mixed. He highlighted a rebound in services bookings, including what he called an unexpectedly strong December. He said December services bookings were up 17%, and attributed the strength in part to seasonality and “some budget flush.” The outperformance was described as broad-based across customer tiers and across both biosimulation services and regulatory services.
At the same time, Gallagher cautioned that services remains “lumpy,” citing weaker services bookings in the third quarter followed by a stronger fourth quarter.
On the software side, Gallagher said trailing 12-month (TTM) organic software bookings growth was 1% for the year, with a year-over-year decline in software bookings in the fourth quarter that pulled down the TTM figure. He said the bookings trend helped inform the company’s 2026 outlook calling for the organization to be “flat to up 4%.”
Drivers behind the Q4 software bookings step-down
Gallagher pointed to specific customer dynamics that affected fourth-quarter software bookings, particularly among Tier 1 customers. He said Certara saw reductions in Phoenix seat licenses tied to customer reprioritization and headcount reductions among large pharmaceutical customers, which can reduce the volume of seat licenses.
He also discussed the impact of study counts on the company’s Pinnacle 21 platform. Gallagher said Pinnacle’s performance is tied more to study volume than to annual seat licensing, and that weakness in clinical trial starts 18 to 24 months earlier can affect submissions later due to a time lag. While he emphasized Pinnacle’s stickiness and high renewal rate, he said it can still be impacted by study count changes over time.
2026 cadence and new software launches
Looking ahead, Gallagher said Certara expects the first quarter of 2026 to come in at the lower end of its guidance range, citing some “trickle-through” from the dynamics seen in Q4 and a tough year-over-year comparison. He added that the company sees an opportunity to accelerate software revenue growth over the course of 2026 and expects sequential increases through the year.
Gallagher also discussed three software launches in the fourth quarter that management believes can contribute to traction in 2026:
- Certara IQ for QSP, an AI-enabled product for quantitative systems pharmacology (QSP), which Gallagher described as the company’s fastest-growing area and one of the faster-growing areas in biosimulation overall. He said QSP has historically been entirely services-based and described this as the first software offering in that space.
- Phoenix Cloud, a cloud version of the Phoenix platform designed to move customers off desktop and on-premise deployments. Gallagher said Certara added features and AI enhancements and is seeing good receptivity, including from Tier 1 customers, with 2026 expected to be a year of increased conversion.
- A Pinnacle product enhancement, which Gallagher said is gaining traction and “will grow into the year.”
Gallagher noted that moving customers from desktop Phoenix to the cloud version also changes revenue recognition, shifting from upfront recognition to ratable recognition. As a result, he said some of the revenue growth impact from Phoenix cloud conversions in 2026 may show up more in 2027, and he suggested Certara may introduce annual recurring revenue (ARR) as an additional metric for tracking progress.
AI strategy, regulatory writing, and portfolio focus
On artificial intelligence, Gallagher said Certara views AI as a competitive advantage, highlighting the company’s acquisition of Vyasa in 2022 and subsequent integration work across platforms. He argued that customers buy Certara’s software models based on their viability, longevity, and data foundation, and said the combination of AI-enabled products, Certara’s scientific expertise—including “400 PhD thought-leading scientists”—and regulatory acceptance (including long-standing use of products like Simcyp and Phoenix by agencies such as the FDA) supports adoption rather than displacement.
When asked about areas vulnerable to disruption, Gallagher singled out regulatory writing as a segment where generative AI could drive “secular change,” while noting Certara has not seen that disruption occur on a wholesale basis. He pointed to the company’s CoAuthor product, launched at the end of 2024 for generative AI in regulatory writing, which he said is continuing to ramp.
Gallagher also addressed the regulatory services business, saying new CEO Jon Resnick is evaluating the segment and considering the pros and cons of keeping it versus selling it. Gallagher described the business as “highly profitable” despite year-over-year revenue declines, citing prior disclosures that regulatory writing carries a 20% to 30% profit margin and generates cash that can be reinvested. He also suggested potential synergies between CoAuthor and the broader organization.
On Certara’s longer-term portfolio direction, Gallagher said the core focus remains model-informed drug development (MIDD) and biosimulation, combining software and services. He said a guiding principle is unifying point solutions into broader offerings that align with customer needs and expand engagement across customer organizations, with the goal of saving time and money in drug development.
Regarding “customer-centric” investments, Gallagher said the company does not envision an outsized increase in sales and marketing spend. Instead, he highlighted operational initiatives such as reprioritization, incentive alignment, improving insights into discounting, and ensuring net pricing performance.
Gallagher said Certara views itself as a Rule of 40 company, though he acknowledged the business is currently just short of that benchmark due to lower growth and investments that have reduced margins from historical mid-30% levels to the low-30% range. He also said 2026 guidance assumes about 100 basis points of margin contraction driven by investment, while noting the company has already identified $10 million of cost avoidance in its plan and intends to maintain spending discipline during 2026.
About Certara (NASDAQ:CERT)
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 integrates quantitative pharmacology, real-world evidence, artificial intelligence and machine learning to model and simulate drug behavior across a range of therapeutic areas and patient populations. By applying these mechanistic and data-driven approaches, Certara helps its clients predict clinical outcomes, optimize dosing strategies and streamline decision-making throughout the product lifecycle.
The company’s offerings are divided into software tools and consulting services.
