Certara (CERT) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Business evolution and revenue mix

• Shifted from primarily services to a 59% services and 41% software revenue mix, driven by software growth and acquisitions since the 2020 IPO.

• Investments in software and AI are central to expanding biosimulation capabilities and market reach.

• Services remain profitable and essential, especially for smaller clients lacking internal resources.

• Revenue composition: 50% from Tier 1 (large pharma), 30% from Tier 3 (biotech), 20% from Tier 2 customers.

Recent performance and outlook

• Tier 3 customers outperformed expectations due to strong biotech funding, while Tier 1 showed spending caution and delays.

• Software revenue has shown consistent mid-teens growth, expected to continue.

• Services expected to remain stable in Q3 with typical Q4 seasonal uptick.

• Revenue guidance for the year is $385M–$400M, with current trends pointing to the lower half due to Tier 1 softness.

Market opportunity and industry trends

• Biosimulation market has significant untapped potential, with regulatory acceptance and scientific advances driving expansion.

• Adoption is growing, but modeling is still used in only a fraction of possible applications.

• Investments in new modalities (e.g., ADCs, CAR T) and quantitative systems pharmacology are expanding the addressable market.