Summary
Certara's FY2021 third quarter combined solid top-line growth with a GAAP loss. Revenue was $73.9 million, up 22.6% from $60.3 million in the prior-year quarter. Year to date revenue reached $210.8 million, a 17.8% increase from $178.9 million. Growth came from technology-enabled biosimulation and regulatory services, strong renewal rates and new customers. Management said it saw double-digit growth in all regions and a record number of new customers. The company serves more than 1,650 biopharmaceutical companies and academic institutions across 61 countries.
Profitability went the other way. Operating income for the quarter swung to a loss of $0.8 million, down from income of $7.5 million a year earlier. Operating margin fell to negative 1.0% from 12.4%, a drop of 13.5 percentage points. The net loss was $1.8 million, down from net income of $1.2 million, and diluted EPS was ($0.01), down from $0.01. Year to date, operating income was $10.1 million, down 65.2% from $29.1 million, and the net loss was $3.6 million, down from net income of $5.1 million. Year-to-date operating margin was 4.8%, down 11.5 percentage points from 16.3%. Diluted EPS year to date was ($0.02), down from $0.04.
The GAAP swing reflects costs tied to growth and to the Pinnacle 21 deal. Management attributed the quarterly loss mainly to a $7.0 million increase in stock-based compensation expense, a $7.5 million increase in acquisition cost, and other employee-related costs, partly offset by higher revenue and lower interest expense. On a non-GAAP basis the results look different. Adjusted EBITDA was $26.1 million, up 28% from $20.5 million in the prior-year quarter. Adjusted net income was $10.8 million against $3.3 million, and adjusted diluted earnings per share was $0.07 versus $0.02. For the nine months, adjusted EBITDA was $75.5 million versus $65.7 million, adjusted net income was $24.4 million versus $9.0 million, and adjusted diluted earnings per share was $0.16 versus $0.06.
Cash generation held up. Operating cash flow for the nine months was $39.6 million, up 23.1% from $32.1 million. In the quarter, operating cash flow was $20.0 million, up 29.1% from $15.5 million. Capital expenditures were $0.5 million in the quarter, up 236.1% from $0.1 million, and $1.0 million for the nine months, up 27.2% from $0.8 million. Deferred revenue, current portion, stood at $28.0 million. Cash and cash equivalents were $416.9 million, helped by a September public offering that raised $133 million for the company.
On October 1, 2021, Certara closed its acquisition of Pinnacle 21 for $250 million in cash and 2,239,717 shares of restricted common stock. Management said integration is going smoothly. Full-year 2021 guidance was raised on the expected impact of Pinnacle 21 in the fourth quarter. The company now expects adjusted revenue of $292 million to $295 million, adjusted EBITDA of $106 million to $108 million, and adjusted diluted earnings per share of $0.22 to $0.26 for the full year. It also guided fully diluted shares of 155 million to 156 million and an effective annual tax rate of 40% to 45%.
Operational metrics were mixed. Bookings for the quarter were $72.3 million, compared with $72.9 million a year earlier, while the renewal rate was 87%, against 84%. Risks include competition from other scientific software providers, contract research organizations, open source tools and in-house teams, regulatory shifts that could reduce demand, and the work of integrating Pinnacle 21. Customer retention and biopharmaceutical R&D spending trends stay in focus. As of September 30, 2021, the company reported no material adverse impact from COVID-19 on its financial condition, results of operations or cash flows.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $73.9M | $70.1M | +5.5% | — | — |
| Gross profit | $45.2M | $42.6M | +6.2% | — | — |
| Gross margin | 61.1% | 60.7% | +0.4 pp | — | — |
| Research & development | $4.5M | $4.6M | -2.1% | — | — |
| Sales & marketing | $5.1M | $4.6M | +10.7% | — | — |
| General & administrative | $26.2M | $18.0M | +45.3% | — | — |
| Total operating expenses | $45.9M | $37.3M | +23.2% | — | — |
| Operating income (loss) | -$761.0K | $5.3M | -114.4% | — | — |
| Operating margin | -1.0% | 7.5% | -8.5 pp | — | — |
| Net income (loss) | -$1.8M | -$2.9M | +38.3% | — | — |
| Net margin | -2.4% | -4.1% | +1.7 pp | — | — |
| Diluted EPS | -$0.01 | -$0.02 | +$0.01 | — | — |
| Customers | 2,014 | 2,014 | ±0.0% | — | — |
Risks
In October 2021 the company acquired Pinnacle 21, LLC for $250.0 million cash and 2,239,717 restricted shares, creating integration, dilution, management distraction, and cash-use risks. The filing warns that acquired businesses may not achieve expected synergies and may change or increase the risks to which the company is exposed.
Operating income swung to a loss of $0.76 million in FY2021 Q3 from income of $7.50 million in FY2020 Q3, and operating margin declined to -1.0% from 12.4%. Net income swung to a loss of $1.76 million in FY2021 Q3 from income of $1.23 million in FY2020 Q3, which MD&A attributes in part to higher stock-based compensation and acquisition costs.
Pinnacle's software is used by the U.S. Food & Drug Administration and Japan's Pharmaceuticals and Medical Devices Agency to validate compliance with Clinical Data Interchange Standards Consortium standards, increasing exposure to changes in FDA or PMDA regulatory standards and to government customers.
MD&A states new bookings were $72.3 million in Q3 2021, compared with $75.1 million in Q2 2021 and $72.9 million in Q3 2020, and renewal rate was 87% in Q3 2021, compared with 90% in Q2 2021. Bookings vary with biopharmaceutical industry health, regulatory developments, industry consolidation, and sales performance.
SaaS KPIs
All quarters →Renewal Rate
Bookings
Total customers
Summary, forecast, risks and KPIs are extracted from Certara, Inc.'s SEC filings for Q3 FY2021 (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.