Certara (CERT) Q2 2025: SIMSIP EMA Milestone and 50% QSP Biologics Mix Signal Expanding Biosimulation Demand

August 6, 2025 | By EarningsIQ Research

Certara’s Q2 2025 results highlight accelerating adoption of biosimulation, with SIMSIP achieving exclusive EMA qualification and QSP services driving half of new projects in biologics. Management’s confidence in full-year guidance is grounded in robust bookings and a growing pipeline for AI-enabled model-informed drug development, despite macro headwinds and Tier 1 renewal timing. Investors should watch for the fall launch of Certara IQ and continued regulatory shifts favoring non-animal testing as catalysts for future growth.

Summary

  • Regulatory Validation: SIMSIP became the only PVPK platform qualified by the European Medicines Agency, reinforcing Certara’s leadership in biosimulation.
  • Biologics Momentum: Half of new QSP projects are now tied to monoclonal antibody therapies, reflecting rapid adoption after FDA guidance on animal testing.
  • AI Platform Launch: Certara IQ, an AI-enabled QSP solution, is set for commercial debut in Q4, expanding the company’s next-gen MIDD portfolio.

Performance Analysis

Certara posted solid double-digit top-line growth, with total revenue up 12% and bookings up 13% year-over-year, reflecting balanced execution across both software and services. Software revenue rose 22% on a reported basis, supported by strong adoption of SIMSIP and a $5.1 million contribution from ChemAxon, while services revenue increased 5%—with QSP and SIMSIP services offsetting regulatory softness. Bookings strength was broad-based, with services bookings up 15% and software bookings up 11%, underpinned by robust demand from Tiers 2 and 3 customers even as Tier 1 software bookings were impacted by renewal timing, a dynamic management expects to normalize in the second half.

Adjusted EBITDA margin reached 31%, as higher software amortization costs were offset by disciplined operating expense management and lower stock-based compensation. The company continues to invest in R&D, adding software development talent to drive next-generation platform launches. Net loss narrowed sharply, and adjusted EPS was flat year-over-year, demonstrating underlying earnings stability despite ongoing investment. The balance sheet remains healthy, with $162 million in cash and $25 million of share repurchases executed in Q2, supporting both growth and capital return.

  • Services Bookings Acceleration: Technology-driven services bookings rose 15%, with QSP and SIMSIP services outperforming expectations and driving future revenue visibility.
  • Tier Mix Dynamics: Tier 2 and 3 customers delivered strong software and services growth, while Tier 1 software softness was attributed to renewal timing, not demand loss.
  • Margin Management: Operating expenses fell year-over-year, as lower contingent consideration and cost discipline offset higher sales and R&D investment.

Certara’s commercial momentum is increasingly tied to regulatory trends and adoption of non-animal testing methods, with management identifying a multi-billion dollar incremental market opportunity over the next decade.

Executive Commentary

"Certara is the first and only company to receive European Medicines Agency, EMA, qualification for a PVPK modeling platform and SIMSIP is the only software to hold this designation. The qualification is a significant milestone for biosimulation, demonstrating the value that regulators place on evidence generated through modeling and simulation approaches, and it will continue to encourage the usage of SIMSIP by companies globally."

William Ferry, Chief Executive Officer

"We are executing on our investment plans this year and have begun hiring additional software developers in the second quarter, which will continue through the second half of the year. Total expenditure on R&D during 2Q, including capitalized spend, is growing year on year as a result of these investments."

John Gallagher, Chief Financial Officer

Strategic Positioning

1. Regulatory Endorsement and Competitive Moat

The EMA’s exclusive qualification of SIMSIP, population-based pharmacokinetic (PVPK) modeling software, establishes a unique regulatory moat for Certara. This recognition standardizes the use of SIMSIP across 27 European countries, reducing review friction and uncertainty for customers. The milestone not only validates Certara’s scientific rigor but also boosts customer confidence and streamlines adoption in drug applications, making SIMSIP a default choice in Europe for biosimulation workflows.

2. AI-Enabled Platform Expansion

Certara is accelerating investment in AI-driven model-informed drug development (MIDD), integrating distributed data fabric technology from its Vyasa acquisition. The upcoming Certara IQ platform will unify QSP modeling tools, provide pre-validated models, and leverage cloud-based simulation, democratizing access for both large pharma and emerging biotech. Early customer pilots are underway, with commercial launch set for Q4. This “platformization” is expected to expand Certara’s addressable market and reinforce its leadership as AI reshapes drug development.

3. Biosimulation and NAMs Adoption Curve

Momentum in non-animal testing (NAMs) is translating into real bookings, with 50% of new QSP projects in 2025 tied to monoclonal antibody therapies. Certara is already recognizing revenue from customers seeking to replace animal studies following recent FDA guidance. The company’s leadership in QSP, bolstered by the Applied Biomath acquisition, positions it as a first-mover in this emerging space, with the long-term market opportunity seen as incremental to traditional biosimulation software.

4. Customer Tier Diversification

Tier 2 and 3 customers are driving outperformance, particularly in services and software, even as Tier 1 (large pharma) remains cautious amid macro uncertainty and tariff concerns. Certara’s “land and expand” strategy, expanding both seats and product breadth, is helping offset any single-customer risk and smoothing out lumpiness in Tier 1 renewal cycles.

5. R&D Investment and Margin Flexibility

Certara is balancing growth and profitability, with R&D spend ramping in the second half to support new product launches. Management signaled that EBITDA margin will flex within guidance depending on revenue outcomes and timing of discretionary investment, with Q2 margin serving as a baseline for modeling future quarters. This approach provides downside protection while enabling continued innovation.

Key Considerations

This quarter’s results underscore Certara’s strategic pivot toward AI integration, regulatory partnership, and biologics-driven biosimulation, all while maintaining operational discipline. The company’s ability to convert regulatory shifts and scientific advances into commercial bookings will be critical as the industry transitions away from animal testing and toward digital modeling.

Key Considerations:

  • EMA Qualification Impact: SIMSIP’s exclusive regulatory endorsement is likely to accelerate adoption in Europe and serve as a template for other regions.
  • AI Platform Commercialization: Certara IQ’s fall launch will be a key test of the company’s ability to monetize next-gen MIDD solutions and expand its user base.
  • Macro and Tariff Headwinds: Large pharma remains cautious, with some decision-making delayed by tariff and pricing policy uncertainty, but Certara’s pipeline is diversified across customer tiers.
  • R&D Spend Ramp: Continued hiring and product development investment will pressure margins in the near term but are essential for long-term leadership.
  • Regulatory Market Expansion: FDA and EMA moves to encourage modeling over animal testing are creating new multi-billion dollar market opportunities for Certara’s core offerings.

Risks

Certara faces ongoing macro and geopolitical uncertainty, particularly around pharmaceutical tariffs and potential reductions in large pharma R&D spend. Timing of Tier 1 renewals and the pace of NAMs adoption remain variable, and increased R&D investment could pressure margins if revenue growth slows. Regulatory acceptance of AI-enabled platforms, while promising, is still evolving and could introduce new compliance hurdles or adoption lags.

Forward Outlook

For Q3 2025, Certara guided to:

  • Continued revenue growth in line with the $415 to $425 million full-year range
  • Adjusted EBITDA margin between 30 and 32%

For full-year 2025, management reiterated guidance:

  • Revenue growth of 8 to 10% (including $23 to $25 million from ChemAxon)
  • Adjusted EPS of $0.42 to $0.46 per share
  • R&D investment to ramp in the second half, with Q2 margin as a baseline for modeling

Management emphasized high visibility into second-half software renewals and a robust bookings pipeline, with new product launches and regulatory trends supporting growth. They reiterated that macro improvement is not required for Certara to meet its growth targets.

  • Certara IQ launch expected in Q4 with early customer pilots underway
  • Regulatory business strategic review ongoing, with updates expected by year end

Takeaways

Certara’s Q2 results confirm its strategic position as the regulatory and technology leader in model-informed drug development, with exclusive EMA validation and rapid biologics adoption offsetting macro headwinds and Tier 1 renewal timing. The company’s disciplined investment in AI and cloud platforms, coupled with a diversified customer base, supports its long-term growth thesis.

  • Regulatory Leverage: SIMSIP’s EMA qualification and FDA guidance on NAMs are accelerating adoption and expanding Certara’s addressable market, driving both bookings and revenue visibility into 2026.
  • AI Platform Execution: The upcoming Certara IQ launch will be a key inflection point, with early pilots and customer interest validating the company’s technology roadmap and investment strategy.
  • Margin and Investment Balance: Investors should monitor the interplay between R&D spend and margin trajectory, particularly as Certara ramps hiring and launches new products in the back half of the year.

Conclusion

Certara’s Q2 2025 performance demonstrates the company’s ability to convert regulatory tailwinds and scientific advances into commercial momentum. Exclusive EMA validation, rapid uptake of biosimulation in biologics, and disciplined execution on AI-enabled platforms position Certara for continued leadership as the industry pivots to digital drug development.

Industry Read-Through

Certara’s results signal a structural shift in biopharma R&D, with regulatory agencies increasingly endorsing digital modeling over animal testing. The EMA’s SIMSIP qualification raises the bar for biosimulation vendors, while FDA guidance is catalyzing a wave of QSP and PVPK adoption in biologics. As AI becomes integrated into core modeling platforms, competitors will be pressed to match Certara’s pace of innovation and regulatory engagement. The evolving landscape favors those who can combine scientific rigor, regulatory compliance, and scalable technology to enable faster, lower-risk drug development. Expect continued consolidation and investment in AI-enabled biosimulation across the sector.

CERT Healthcare Life sciences Biosimulation AI Software Regulatory