Summary
Certara posted first quarter fiscal 2022 revenue of $81.6 million, up 22% from $66.7 million in the prior-year quarter. Net income was $2.2 million, up 110% from $1.1 million. Diluted EPS was $0.01, flat with the prior-year quarter. Operating income was $6.1 million, up 9.1% from $5.6 million, while operating margin was 7.5%, down from 8.4%. The GAAP results include significant amortization and stock-based compensation, so management also highlighted non-GAAP measures. Adjusted EBITDA was $27.7 million, up 16% from $23.9 million. Adjusted net income was $16.9 million, compared with $14.4 million. Adjusted diluted EPS was $0.11, compared with $0.09.
Operational momentum remained visible in bookings. New bookings were $108.5 million, compared with $81.9 million in the prior-year quarter. The renewal rate was 92%, unchanged from the prior-year quarter. Certara says its platform is used by more than 2,000 biopharmaceutical companies, academic institutions, and regulatory agencies across 62 countries, including 38 of the top 40 biopharmaceutical companies by R&D spend in 2020. Since 2014, customers who use its biosimulation software and technology-driven services have received 90% of all new drug approvals by the FDA. The Pinnacle 21 acquisition, completed in late 2021, added to revenue and expanded the software portfolio. On January 3, 2022, Certara completed the acquisition of Integrated Nonclinical Development Solutions, Inc. Management expects to keep investing in scientific talent, sales and marketing, research and development, and administrative functions, with total operating expenses growing at a rate lower than revenue growth.
Cash generation improved. Operating cash flow was $9.8 million, up 98.7% from $4.9 million. Capital expenditures were $0.5 million, up 127.9% from $0.2 million. Current deferred revenue was $48.2 million, up 61.6% from $29.8 million. Remaining performance obligations were $81.6 million, up 22.2% from $66.7 million. Management said existing sources of liquidity should cover working capital, capital expenditures, and contractual obligations for the foreseeable future.
For full year 2022, Certara reiterated revenue guidance of $350 million to $360 million, adjusted EBITDA guidance of $127 million to $131 million, and adjusted diluted EPS guidance of $0.48 to $0.53. The company also guided fully diluted shares to 159 million to 161 million, a GAAP tax rate of 40% to 45%, and a cash tax rate of 20% to 25%. Management said the company remains positioned to deliver on its 2022 outlook and has made investments to drive sustainable mid-teens revenue growth. The first quarter included some COVID-related delays in activity, and the company still delivered double-digit revenue growth.
Risks center on the pandemic, competition, regulatory shifts, and integration. The Omicron variant caused a slowdown in closing out clinical trials and delays in regulatory services projects. It also led to temporary reductions in employee utilization rates because of illness. Management called these impacts transitory and immaterial as of March 31, 2022, but the extent of future COVID-19 effects remains uncertain. Certara faces competition from scientific software providers, technology companies, in-house development by biopharmaceutical companies, open source initiatives such as R and PK-Sim, and contract research organizations. Regulatory changes could reduce demand if authorities relax requirements or if new rules make its regulatory services less competitive. Other risks include customer renewal and retention, delays or cancellations of projects, pricing pressure, acquisition integration, reliance on third-party hosting providers, data security, and global conflicts such as the conflict between Russia and Ukraine.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $81.6M | $75.3M | +8.2% | $66.7M | +22.2% |
| Gross profit | $48.8M | $46.1M | +5.9% | $40.7M | +19.8% |
| Gross margin | 59.8% | 61.1% | -1.3 pp | 61.0% | -1.2 pp |
| Research & development | $7.5M | $6.5M | +15.8% | $4.7M | +60.4% |
| Sales & marketing | $6.1M | $6.7M | -9.0% | $3.8M | +62.9% |
| General & administrative | $18.3M | $18.7M | -2.2% | $16.6M | +10.7% |
| Total operating expenses | $42.6M | $42.6M | +0.0% | $35.1M | +21.5% |
| Operating income (loss) | $6.1M | $3.4M | +78.2% | $5.6M | +9.1% |
| Operating margin | 7.5% | 4.6% | +2.9 pp | 8.4% | -0.9 pp |
| Net income (loss) | $2.2M | -$9.7M | +122.8% | $1.1M | +110.1% |
| Net margin | 2.7% | -12.9% | +15.6 pp | 1.6% | +1.1 pp |
| Diluted EPS | $0.01 | -$0.06 | +$0.07 | $0.01 | ±$0.00 |
| Customers | 2,014 | 2,014 | ±0.0% | 2,014 | ±0.0% |
Risks
MD&A states that acceptance of model-informed biopharmaceutical discovery by regulatory authorities affects demand, and changes in government or regulatory policy or a reversal in the trend toward increasing acceptance of in silico data could decrease demand for products and services. The company notes FDA and EMA support has been critical to rapid adoption.
MD&A describes the biosimulation market as competitive and highly fragmented, with competition from scientific software providers, technology companies, in-house development, open source solutions such as R and PK-Sim, CROs, and academic institutions. Some competitors have greater financial, technical, marketing, and R&D resources.
MD&A states that new bookings vary significantly from quarter to quarter and year to year depending on biopharmaceutical industry health, regulatory developments, industry consolidation, and sales performance. Q1 2022 bookings were $108.5 million compared to $81.9 million in Q1 2021, while renewal rate was 92% in both periods.
The company completed multiple acquisitions, including Pinnacle 21 in October 2021 for $339.1 million and Integrated Nonclinical Development Solutions in January 2022. Q1 2022 intangible asset amortization was $10.1 million, or 12% of total revenues, and acquisition-related expenses continue to impact results.
As of March 31, 2022, the company had $299.7 million outstanding on its term loan and $100.0 million available under its revolving credit facility. Q1 2022 interest expense was $3.2 million, and the Credit Agreement contains financial and nonfinancial covenants.
The company recorded an $18.2 million valuation allowance at December 31, 2021, unchanged at March 31, 2022, primarily for foreign tax credit carryforwards and certain foreign NOLs. Q1 2022 effective income tax rate was 41%, up from 33% in Q1 2021.
MD&A states the company intends to continue investing in scientific talent, sales and marketing, R&D, and operational functions, and expects headcount and total operating expenses to increase over time. Q1 2022 sales and marketing expenses increased 63% and R&D expenses increased 60% year over year.
MD&A reports that the Omicron variant caused a slowdown in closing out clinical trials and delays in regulatory services projects, and impacted workforce resulting in temporary reductions in employee utilization rates due to illness. The company believes these are transitory impacts.
SaaS KPIs
All quarters →Renewal Rate
Bookings
Summary, forecast, risks and KPIs are extracted from Certara, Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.