Certara's Q2 2025 Earnings Call: Contradictory Signals on Market Potential, Demand Dynamics, and Retention Rates

Market opportunity and addressable market size, demand and supply constraints, demand environment and customer stability, software net retention rate are the key contradictions discussed in Certara's latest 2025Q2 earnings call.



Revenue and Bookings Growth:
- Certara reported second quarter revenue of $104.6 million, reflecting 12% year-over-year growth, while second quarter bookings reached $112 million, indicating a 13% year-over-year increase.
- The growth was supported by strong performance in software and services, particularly in QSP services and Simcyp software.

Software and Services Performance:
- Software revenue increased by 22% on a reported basis and 9% organically, led by Simcyp and Phoenix PK/PD.
- Services revenue grew by 5% year-over-year, with notable strength in QSP and Simcyp services.
- The increase in bookings across all customer tiers was influenced by high demand for biosimulation and regulatory services.

Investment in R&D and Product Development:
- Certara is investing in R&D to create an AI-enabled MIDD platform, aiming to fuse AI and biosimulation technologies.
- The upcoming product launch, CertaraIQ, an AI-enabled QSP software solution, is expected to enhance market penetration and customer adoption.

Regulatory Milestones and Market Opportunities:
- Certara Simcyp received European Medicines Agency (EMA) qualification for PBPK Modeling Platform, becoming the first and only company to achieve this.
- The company is leveraging the potential multibillion-dollar market opportunity created by the FDA's guidance to phase out animal testing, particularly for monoclonal antibodies.