Summary
Certara's fiscal 2024 second quarter, which ended June 30, 2024, told a split story. Revenue rose 3.2% to $93.3 million from $90.5 million a year earlier. For the six months ended June 30, 2024, revenue reached $190.0 million, up 5.1% from $180.8 million. The quarterly gain came from software, which grew 13%, while services revenue declined 3% as large biopharma customers slowed their spending. Bookings held up better than revenue did. Total bookings of $98.9 million rose 15% year over year, with software bookings of $41.8 million up 17% and services bookings of $57.1 million up 14%.
Profitability broke down. Operating income swung to an operating loss of $9.04 million from income of $13.04 million in the prior-year quarter, and operating margin fell to -9.7% from 14.4%. Net loss was $12.6 million against net income of $4.7 million a year earlier. Diluted loss per share was $0.08 compared with diluted earnings of $0.03. Non-GAAP results weakened too, although they stayed positive. Adjusted EBITDA of $26.3 million fell from $32.4 million, and adjusted diluted earnings per share of $0.07 fell from $0.12. Higher operating expenses, including stock-based compensation and transaction costs tied to a debt refinancing, drove the swing.
Cash generation cooled. Operating cash flow was $9.81 million for the quarter, down from $18.06 million in the prior-year quarter, and $14.11 million for the six months ended June 30, 2024 versus $28.02 million a year earlier. Capital expenditures of $0.43 million for the quarter rose from $0.27 million, and hit $1.05 million for the first half against $0.59 million. Management tied the softer operating cash flow to lower cash-adjusted net income and a build in accounts receivable. Contract indicators were more encouraging. Deferred revenue of $62.18 million was up 13.4% from $54.84 million a year earlier, and remaining performance obligations stood at $120.44 million.
Software retention softened. The net retention rate was 108%, down from 111.3% in the prior-year quarter. That metric matters because the recurring software base is what offsets the choppier services work. Certara reiterated its full-year 2024 outlook, and every target covers the full fiscal year rather than the next quarter: an adjusted EBITDA margin in a range of 31 to 33%, adjusted diluted earnings per share of $0.41 to $0.46, and 160 million to 162 million fully diluted shares.
Certara sells biosimulation software and technology-enabled services into a market it calls competitive and fragmented. It works with nearly 2,400 biopharmaceutical companies, academic institutions, and regulatory agencies. Its software is licensed by more than 57,000 users and is used by 23 global drug regulatory agencies. More than 90% of new drug approvals by the FDA since 2014 went to customers that rely on its solutions. Software carries the growth, so management is pointing investment there, including artificial intelligence woven across the portfolio.
Services remain the weak spot. Chief Financial Officer John Gallagher said software kept up its strong run while services lagged, and cautious spending among large biopharma customers was the main drag. Chief Executive Officer William F. Feehery highlighted improving biotech customer activity as an offset. In July, the company announced its intention to acquire Chemaxon, a move that would extend its biosimulation portfolio into drug discovery. The risk list is long and familiar: regulations that could reduce demand for modeling work, competition in a fragmented market, consolidation among biopharmaceutical customers, macroeconomic pressure from inflation and rising interest rates, and the uneven reliability of bookings as a predictor of future revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $93.3M | $96.7M | -3.5% | $90.5M | +3.2% |
| Research & development | $9.1M | $12.0M | -24.4% | $7.9M | +14.9% |
| Sales & marketing | $12.2M | $10.7M | +14.3% | $8.1M | +50.6% |
| General & administrative | $28.1M | $23.0M | +22.2% | $14.2M | +97.1% |
| Total operating expenses | $62.5M | $58.7M | +6.6% | $41.2M | +51.9% |
| Operating income (loss) | -$9.0M | -$1.3M | -602.5% | $13.0M | -169.3% |
| Operating margin | -9.7% | -1.3% | -8.4 pp | 14.4% | -24.1 pp |
| Net income (loss) | -$12.6M | -$4.7M | -168.5% | $4.7M | -367.2% |
| Net margin | -13.5% | -4.8% | -8.6 pp | 5.2% | -18.7 pp |
| Diluted EPS | -$0.08 | -$0.03 | -$0.05 | $0.03 | -$0.11 |
| Customers | 2,014 | 2,014 | ±0.0% | 2,014 | ±0.0% |
Risks
Operating income swung to a loss of $9.0 million in FY2024 Q2 from income of $13.0 million in FY2023 Q2, and operating margin fell to -9.7% from 14.4%. Net income also swung to a loss of $12.6 million in FY2024 Q2 from net income of $4.7 million in FY2023 Q2.
General and administrative expenses increased 97% to $28.1 million in FY2024 Q2 and 50% to $51.1 million for the six months ended June 30, 2024, driven by stock-based compensation, transaction expense, reorganization expense, and contingent consideration remeasurement. Sales and marketing expenses rose 51% in FY2024 Q2, and MD&A expects total operating expenses to continue to increase over time.
MD&A states that demand depends on regulatory acceptance of biosimulation and Model-Informed Drug Development, and changes in government or regulatory policy, or a reversal in the trend toward reliance on in silico data, could decrease demand for the company's products and services.
Net retention rate declined to 108% in FY2024 Q2 from 111.3% in FY2023 Q2. Q2 2024 bookings were $98.9 million, up from $85.9 million in FY2023 Q2 but down from $105.8 million in FY2024 Q1, and MD&A states bookings will continue to vary significantly.
Services revenue decreased 3% to $55.1 million in FY2024 Q2 and 1% to $112.5 million for the six months ended June 30, 2024, while software revenue grew 13% in the quarter and 16% year to date. Continued services weakness could offset software growth.
The company had $300.0 million outstanding on a floating-rate term loan as of June 30, 2024. Year-to-date interest expense increased 2% to $11.3 million due to higher market interest rates on the floating-rate debt, partly offset by interest swap hedge gains.
As of June 30, 2024, the company had completed 20 acquisitions, and the purchase price allocations for Formedix and ABM remained preliminary. Contingent consideration remeasurements and acquisition-related expenses contributed to higher general and administrative expenses in FY2024 Q2 and the six months ended June 30, 2024.
Operating cash flow decreased 49.6% to $14.1 million for the six months ended June 30, 2024 and 45.7% to $9.8 million in FY2024 Q2, with MD&A citing lower cash-adjusted net income, higher accounts receivable, and increased prepaid assets, partly offset by higher deferred revenue.
SaaS KPIs
All quarters →Services Bookings
Software Bookings
Total Bookings
Total customers
Net Revenue Retention
Summary, forecast, risks and KPIs are extracted from Certara, Inc.'s SEC filings for Q2 FY2024 (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.