Certara Q2 2026 earnings: Software growth offsets weaker services

Certara (Nasdaq: CERT) reported second-quarter 2026 continuing-operations revenue of $93.3 million, up 1% from $92.4 million, while diluted EPS swung to a $0.04 loss from earnings of $0.01 a year earlier. Software growth kept total revenue positive, but weaker services, higher operating expenses and unfavorable currency movements pressured GAAP profitability; adjusted EPS remained unchanged at $0.08.

Core financial results

The following quarterly figures exclude the Regulatory and Medical Writing business, which is classified as a discontinued operation. Gross profit was approximately unchanged, but gross margin narrowed as cost of revenue increased faster than sales, while operating expenses rose by $7.9 million.

Adjusted net income was $12.5 million, compared with $12.7 million a year earlier. The smaller decline in adjusted results reflects exclusions including amortization, equity-based compensation, currency losses, reorganization costs and other items.

Software growth offset weaker services

Software was the source of Certara’s revenue growth, while services remained a drag. The same divergence appeared in bookings, with software bookings increasing faster than software revenue and services bookings falling more sharply than services revenue.

Management expects software strength to continue supporting the business and said services performance should improve during the second half. That recovery is important because services represented nearly half of quarterly revenue but contracted in both revenue and bookings.

Modest revenue growth was outweighed by expense and currency pressure

Cost of revenue increased by $0.8 million to $35.1 million, mainly because of a $1.0 million increase in employee-related costs and $0.9 million of additional professional and consulting expenses. These increases were partly offset by lower equity-based compensation and other expenses.

Operating expenses rose to $58.3 million from $50.4 million. The largest comparison factor was a $5.7 million year-over-year increase associated with contingent consideration, primarily because the prior-year quarter included a favorable adjustment that reduced expenses. Professional and consulting costs, employee expenses, depreciation and executive recruiting costs also increased.

The move from a $1.5 million continuing-operations profit to a $6.1 million loss also reflected a $2.9 million unfavorable swing in currency expense and a $2.2 million increase in reorganization costs. Lower income tax expense and modest revenue growth provided only partial offsets.

Certara’s adjusted EBITDA margin was approximately 28.1%, down from about 29.2%. The gap between GAAP and adjusted results remained material: the adjusted EBITDA reconciliation included $16.3 million of amortization and depreciation, $6.1 million of equity-based compensation, $3.2 million of reorganization expense and $2.4 million of currency loss.

Reorganization costs precede targeted savings

Certara completed the divestiture of its Regulatory and Medical Writing business in May and reorganized around two business units: Model Informed Discovery and Drug Development and Accelerated Clinical Evidence. It also reduced its global workforce by approximately 5%, predominantly in overhead roles.

The company expects the workforce reduction and other operational measures to generate approximately $13 million of run-rate savings, including the elimination of stranded costs associated with the divestiture. However, second-quarter reorganization expense increased to $3.2 million from $0.9 million, meaning the transition added near-term costs before the targeted savings were fully reflected in results. Certara did not quantify savings already realized during the quarter.

Including discontinued operations, the net loss attributable to common stockholders was $55.3 million, largely reflecting a $49.2 million discontinued-operations loss. Through the May 8 transaction closing, year-to-date revenue from the discontinued business was $19.2 million.

Cash flow, balance sheet and capital allocation

Certara reported cash and cash equivalents of $184.1 million at June 30, down from $189.4 million at the end of 2025. Current and long-term debt totaled approximately $291.8 million.

Cash flow information was provided for the first six months rather than the quarter alone. Continuing operations generated $15.6 million of operating cash flow, down from $23.3 million in the first half of 2025. Including discontinued operations, total operating cash flow was $21.7 million.

Certara spent $57.4 million on share repurchases during the first half, including $17.4 million in the second quarter. That completed the previously authorized $100 million program, after which the board authorized an additional $50 million. The new authorization has no stated expiration date and does not require the company to repurchase a specific amount.

2026 guidance

Certara reaffirmed its comparable continuing-operations revenue outlook and updated its other guidance to reflect the divestiture and discontinued-operations reporting. Previous numerical ranges for the updated non-revenue metrics were not included, so the size of those changes cannot be determined from the release.

Management said the revenue outlook depends on continued software strength and improved services performance during the second half. The company did not reconcile its forward-looking adjusted EBITDA margin or adjusted EPS guidance to GAAP measures because of uncertainty surrounding potential adjustments.

Risks investors should monitor

• Services recovery: Services revenue declined 3% and bookings fell 6%. Failure to improve this business during the second half would make the reaffirmed revenue range more difficult to achieve.
• Execution of restructuring savings: Certara is targeting $13 million in run-rate savings, but reorganization expenses increased during the quarter. The timing and amount of savings already realized were not disclosed.
• Continued pressure on GAAP profitability: Currency losses, restructuring costs and the absence of a favorable prior-year contingent consideration adjustment contributed to the quarterly loss. Several adjustments also created a substantial gap between GAAP and non-GAAP results.
• Lower operating cash generation: First-half operating cash flow from continuing operations declined from the prior year while the company continued allocating cash to repurchases and acquisition-related contingent consideration payments.

Summary

Certara’s second-quarter results showed a stable adjusted earnings profile but weaker GAAP profitability. Software growth offset declining services revenue, while higher expenses, currency pressure and restructuring costs produced a continuing-operations loss. The main issues for the second half are whether services performance improves, whether the reorganization begins delivering the targeted savings, and whether Certara can achieve its reaffirmed revenue range while moving adjusted EBITDA margin toward its full-year target.