Certara (CERT) 2026年第三季度业绩电话会：软件业务增长达11%

核心要点

• Certara (CERT) 公布2026年第三季度持续经营业务营收为9490万美元，同比增长4%。总预订额增长4%至9250万美元。
• 软件业务营收同比增长11%至4880万美元，创下该公司两年来首次实现软件业务内生性双位数增长的季度。软件预订额增长15%至4690万美元。
• 服务业务营收同比下降2%至4610万美元，但环比改善3.5%。过去12个月服务业务的订单出货比为1.15。
• 调整后EBITDA增长6%至3020万美元。调整后EBITDA利润率达到31.8%，上年同期为31.5%，2026年第二季度为28.1%。
• 管理层将2026年全年营收增长指引收窄至2%-3%，并将调整后摊薄每股收益指引更新为0.31-0.34美元。
• 管理层预计，Phoenix Cloud迁移转化、新增AI能力以及亚太地区扩张将在2027年为增长做出更有意义的贡献，同时提醒称云迁移在短期内会对收入确认带来逆风。

核心财务数据

在5月8日剥离Certara的监管与医学撰写业务后，相关业绩均按持续经营业务基准列报。

业务与运营表现

软件业务贡献了超过一半的季度营收。管理层表示，增长广泛分布于各个客户层级和核心产品，而非集中于单一细分领域。

Phoenix Cloud在客户账户中的渗透率接近10%，略快于公司第一年的预期进度。Certara计划在2027年加速云迁移。管理层估计，目前整体产品组合中略多于一半已基于云端，而非本地部署。

Pinnacle 21扩大了与一家战略合作伙伴数百万美元的合作规模，包括MDR、Data Exchange和CRF Creator等高级模块。Simcyp继续保持高客户参与度及处于历史高位的续约率。

Certara正在开发一个支持MCP数据集成的一体化AI平台，允许客户通过其偏好的模型和智能体访问其软件及专有数据。管理层预计AI将提升产品可访问性、数据流转与工作流集成，并在未来18至24个月内对更广泛的产品组合产生影响。

服务业务仍是相对疲软的业务线。营收同比下降2%，过去12个月服务预订额下降2%至2.068亿美元。管理层将这一表现主要归因于早期的市场拓展及运营调整，而非底层需求减弱。公司已恢复由专家主导的合作模式，修订了激励机制并加大了客户触达力度。

Certara还在向生物科技公司、中型制药企业、CRO以及亚太地区配置更多商业资源。管理层表示，中国、日本和韩国代表着长期增长机会，预计主要影响将在2027年显现，而非2026年第四季度。

监管合作关系仍是公司业务的战略组成部分。美国食品药品监督管理局（FDA）向Certara授予了CDER DataFit项目和CBER CASA-CV临床数据验证项目的合同。FDA还与Simcyp团队签订了一项为期三年的研究合同，重点针对经皮产品的生物模拟。

管理层业绩指引

管理层未提供2027年业绩指引。其指出软件业绩改善、产品开发、AI项目推进以及亚太扩张是潜在增长引擎，但未量化其预期的财务贡献。

风险与关注重点

• 服务业务执行仍是关键制约因素。管理层表示，重回专家主导模式需要一定时间才能充分转化为预订额和营收。
• 软件业务营收在不同季度间可能出现波动，因为Certara的产品组合同时包含按期分摊确认和本地部署这两种收入确认时点不同的模式。
• 从长期来看，向Phoenix Cloud迁移有助于支撑预订额和经常性收入，但在短期内会对收入确认构成不利影响。
• 第三季度营业费用增加310万美元至6110万美元，主要由于产生480万美元重组、遣散及高管招聘费用。
• 新替代方法（NAMs）的更广泛采用取决于各监管机构的时间表、药物形式和治疗应用场景。

分析师问答亮点

管理层称第三季度软件增长在各产品、客户层级和终端市场上分布广泛。尽管管理层认为这一增长趋势具有持续性，但受产品结构和收入确认时点影响，季度业绩可能仍会呈现不均衡。

在成本节约方面，管理层表示年化节约运营率已超过此前讨论的1200万至1300万美元水平，且仍在持续增长。Certara计划将成本结构优化带来的部分资金重新投资于AI、云解决方案和新产品。

管理层表示，软件与服务业务具有互补性。预计软件仍将是增速较快的板块，而“软件+服务”的一体化合作模式可深化Certara在客户整个药物研发决策中的参与度。

公司的定价审查重点在于提升产品可及性、鼓励多产品协同采用并简化合同结构，而非推行具体的全面价格调整。

业绩电话会完整纪要

完整财报电话会议逐字稿

管理层陈述

Operator

Good day, and thank you for standing by. Welcome to the Certara Third Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jay Liu, Investor Relations at LifeSci. Please go ahead.

Jay Liu

Good morning, everyone. Thank you all for participating in today's conference call. On the call from Certara, we have Jon Resnick, Chief Executive Officer; and Faiz Mohammed, Interim Chief Financial Officer. Earlier today, Certara released financial results for the quarter ending September 30, 2026. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements, and actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to Slide 2 in the accompanying presentation titled Third Quarter 2026 Financial Results for additional information, which you can find on the company's Investor Relations website. In the remarks or responses to questions, management may mention some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in the recent earnings press release available on the company's website. Please refer to the reconciliation tables in the accompanying materials for additional information. This conference call contains time-sensitive information and is accurate only as of today, November 5, 2026. Certara disclaims any obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I will turn the call over to Jon.

Jon Resnick

Thank you, Jay. Thank you all for joining today. When I hosted my first earnings call in February, I shared with you my initial impressions of Certara that we have an extraordinary business, one that is strategically critical to the future of drug development. On that February call, I also shared that 2026 will be about improving the ways we operate, reinvigorating growth and setting the business up to realize its full potential. What followed was attention to a focused strategy and targeted portfolio of businesses, placing customers at the center of everything we do and a dedication to execution and operations. Over the past 3 quarters, we have completed the divestiture of the regulatory medical writing business, reorganized our business around how customers buy our software and services and brought in key talent to strengthen our commercial and product leadership teams.

We have also moved quickly to embed AI across our offerings and our operations and to define a multipronged strategy to accelerate growth. There's more work to do, but we are executing against that plan. Turning to Q3. I am pleased to say the business is showing signs of strengthening. Revenue for the quarter was $94.9 million, up 4% year-over-year on a continuing operations basis. Adjusted EBITDA was $30.2 million, up 6% from the prior year with a 31.8% margin, consistent with the operational actions that we have started to implement. Today, we announced the appointment of Grant Peterson as Chief Product Officer.

Grant previously served as CPO at Conga and before that, the CTO at DocuSign. Grant's mandate is to focus our portfolio investments on accelerating growth in both existing and new products, guided by customer input and the broader technology ecosystem. Turning to software. In Q3, software revenue grew 11% to $48.8 million, our first double-digit organic software growth quarter in 2 years. Software bookings were $46.9 million, up 15% year-over-year. Software now represents more than half of our revenue. Notably, we are seeing growth across all of our core products with momentum and opportunity for continued expansion. For Phoenix Cloud, we have now moved nearly 10% of all accounts to the cloud. We expect future growth to be fueled by additional cloud conversion of our strong pipeline and adoption of our new AI offerings. For Pinnacle 21, we recently expanded a multimillion-dollar relationship with a strategic partner. This is a good example of the adoption path for advanced tier modules of P21, MDR, Data Exchange and CRF creator.

For Simcyp, we continue to see a high level of engagement from our customers and the scientific community as well as historically strong renewal rates. Our annual Simcyp consortium meeting brought together our major customers in London to share insights, advanced modeling techniques and shape the future of Simcyp software. We have previously shared the product and operational benefits powered by AI. We are also leveraging our AI expertise in drug development to deliver an integrated AI platform that works across the drug development cycle. We believe our AI platform approach and direction will have the potential to fundamentally change how our clients can adopt the breadth of Certara solutions. Our early AI focus is to deliver our products as agentic component that can be integrated into customer workflows.

Our AI path includes an MCP-enabled data integration platform that allows customers to access Certara's software and proprietary data. We will continue to expand how we use AI to accelerate and broaden the delivery of our scientific content and applications. In 2027, we expect these new capabilities to further contribute to the growth and positioning of Certara. These transformations have the potential to drive increased adoption, integration and sales of our existing technology in 3 ways: by deepening software value to our customers and the connected development cycle, by creating new opportunities to engage with executive level decision-makers and ultimately, by introducing software plus services as integrated solutions to accelerate better decisions, whether dosing, trial design or go/no-go determinations.

Now moving to services. Service revenue was $46.1 million, down 2% year-over-year. Service bookings were $45.6 million in the quarter with a trailing 12-month services book-to-bill of 1.15. Over the past 2 quarters, we have divested noncore offerings, aligned software and services to take advantage of the flywheel, rebalanced our engagement model back towards specialists and greatly expanded our customer outreach. The potential impact of these steps will take time to show in our numbers. Still, we have seen some incremental improvement. Services revenue grew sequentially in Q3 by 3.5%. Certara's scientific talent runs deep with over 400 scientists holding advanced degrees, many of whom are recognized leaders in their fields with extensive peer-reviewed publications. Our experts play a critical role in shaping innovation and making biosimulation accessible to our customers in drug discovery and development. Our leadership position is evidenced by the work we do for our customers. Most recently, we supported a top 10 European pharmaceutical client with a model-based meta-analysis applied to obesity treatment trials. This novel quantitative approach allows the client to optimally position the Phase III asset in a crowded field across different mechanisms and endpoints. We worked with a U.S.-based biotechnology company to predict the first-in-human starting dose for its in vivo CAR-T candidate using our QSP CAR-T model, optimizing safety and efficacy for the asset. We partnered with a U.S.-based company that is licensing a novel compound from China. We are building models that connect early and late phase studies to enable a Phase III FDA submission using Chinese and U.S. data aimed at reducing redundant studies and accelerating the U.S. filing path.

Finally, we are supporting a U.S. biotechnology company that is advancing the assets other developers set aside for rare pediatric cancers. Our teams use modeling and simulation to bridge existing clinical and nonclinical data to pediatric populations, allowing sponsors to make critical path decisions with more precision. At Certara, we are strongest when we bring together all of our assets. In Q3, one of our major partners benefited from this approach, which contributed to their achieving a major milestone. In this example, a biotech partner developing a novel oncology agent received approval under priority review for cancer with historically few treatment options. This partnership spanned 4 years in more than 2 dozen Certara software and service solutions. We began working with this team pre-IND and supported their clinical pharmacology organization all the way through a successful NDA, including drug interaction modeling, Phase I and Phase II PK analysis and cardiac safety strategy. This exemplifies what differentiates Certara. When our software, science and regulatory expertise are integrated across the development path, partners get continuity and confidence, and we become embedded in how they make decisions. We see significant opportunities to replicate this model in the wider customer base, and we are organizing our strategies and our resources behind this approach. To capture opportunities like this, we are reimagining Certara's commercial organization.

Our new CCO is moving quickly to transform our customer engagement. This transformation isn't just about selling with greater intensity. It's also about changing who we sell to and how we sell to them, leading with our science and innovation as we bring the full suite of our capabilities to our customers. We are putting greater sales and marketing resources against segments like biotech, midsized pharma, CROs and expanding our commercial footprint globally. To better reach midsized and biotech customers, we have developed outreach that leverages refined criteria, such as therapeutic areas or modalities where our proven case studies are directly and immediately applicable. For example, our success using modeling to support regulatory filings for GLP-1 therapies has resulted in increased outreach to other customers working in that therapeutic area. We're engaging in emerging biotech early before they scale. In September, our Boston Biotech Forum drew 90 attendees from more than 70 companies. This programming is part of a larger campaign to deepen our relationships in this important sector. APAC is relatively small for us today, but we see outsized growth potential. With this in mind, we have begun expanding in Asia with roadshows in China, Japan and Korea. This approach has quickly brought us into contact with potential stakeholders in the region, notably including a delegation from the Korean government. We've also accelerated several operational improvements, including pricing reviews, incentives alignment, integrating our scientific experts into the sales process, a dedicated customer service function and enhanced product training.

We have a distinguished history of sustained global regulatory relationships. We also continue to be at the forefront of certain important advances adopted by regulators. This quarter, the FDA competitively awarded Certara contracts at CDER for its DataFit program and CBER for its CASA-CV clinical data validation programs. The FDA has relied on Pinnacle 21 since 2011, and these awards extend that relationship at both centers. The FDA also engaged our Simcyp team on a 3-year research contract to advance biosimulation of dermal products. Certara is helping new approach methodologies or NAMs move from concept to routine use. Our scientists work with global regulators and industry consortia to define what credible NAM evidence looks like. We advance our modeling technologies and work with customers on early use cases that test where these approaches can support regulatory decisions now and in the future. The regulatory environment continues to evolve to favor MIDD adoption. In September, the FDA issued a direct final rule replacing the term animal test with nonclinical tests across its regulations. Operation TrailBlazer is moving to execution with the FDA's expedited IND pilot now open. ARPA-H launched its SURPASS program on September 30 to fund simulation-driven adaptive trials and the trend is global. ICH M15, the first harmonized guideline for MIDD, is now effective. Collectively, these recent regulatory developments point towards greater use of modeling and simulation across the development life cycle, which is where our platforms, including Certara iQ and Simcyp are focused. In closing, 2026 is playing out in line with expectations. We are making progress against our priorities. There is more work to do, and we remain focused. With that, I'll turn the call over to Faiz. Faiz?

Faiz Mohammed

Thank you, Jon. Before I review the quarter, a reminder that my comments are on a continuing operations basis. Results from the regulatory and medical writing business, which we divested on May 8, are reported in discontinued operations and our bookings results also exclude that business. As Jon said, the third quarter demonstrated meaningful progress against the priorities we set earlier this year. Revenue increased 4%, led by 11% growth in software and adjusted EBITDA margin improved to 31.8%, up more than 370 basis points from the second quarter. The quarter reflects continuing momentum and the initial benefits of the operating actions we implemented in the first half. Turning to the income statement. Total revenue for the 3 months ended September 30, 2026, was $94.9 million, an increase of 4% year-over-year. Total bookings in the third quarter were $92.5 million, an increase of 4% from the prior year. Trailing 12-month bookings were $409.2 million, an increase of 2%. Software revenue was $48.8 million in the third quarter, an increase of 11% year-over-year, driven by strong retention and continued growth across our major portfolios. Trailing 12-month software bookings were $202.4 million, up 8% year-over-year. The results reinforce the underlying demand for our software portfolios. Services revenue was $46.1 million in the third quarter, a decrease of 2% year-over-year. Trailing 12-month services bookings were $206.8 million, a decrease of 2% compared to the prior year, with a trailing 12-month book-to-bill of 1.15. As Jon discussed, the transition to our specialist-led services model will take time to translate fully into bookings and revenue. Our focus remains on strengthening commercial execution and converting the pipeline. Turning to profitability. The third quarter cost of revenues were $31.4 million, down 6% from $33.4 million in the third quarter of 2025 despite revenue growth of 4%. The decrease in cost of revenues were primarily due to a $1.6 million decrease in equity-based compensation expense, a $0.4 million decrease in professional and consulting expense and a $0.3 million decrease in equipment and software expense, partially offset by a $0.5 million increase in employee-related costs. Operating expenses for the third quarter of 2026 were $61.1 million compared to $58.1 million in the prior year period, an increase of $3.1 million. The increase was primarily driven by a $4.8 million reorganization, severance and executive recruiting costs. Adjusted EBITDA for the third quarter of 2026 increased 6% to $30.2 million compared to $28.6 million in the prior year period. Adjusted EBITDA margin for the quarter was 31.8%, up from 31.5% in the prior year period and from 28.1% in the second quarter. The sequential improvement in margin reflects the operating actions we took early this year as well as continued discipline across the business. The improved cost structure provides additional flexibility to invest in AI, cloud solutions and new product offerings while maintaining our focus on profitability.

Turning to earnings. GAAP net income and earnings per share are both impacted by nonrecurring items. The third quarter net loss from continuing operations was $3.6 million compared to a net loss from continuing operations of $4.8 million in the prior year period. Income before income taxes improved by $2.7 million year-over-year. That improvement was partially offset by a $1.4 million change in income tax expense. We recorded a $2.4 million tax provision this quarter compared to a $1 million tax provision in the third quarter of 2025. Adjusted net income for the third quarter of 2026 was $13.5 million compared to $13.8 million in the prior year period. Diluted loss per share from continuing operations was $0.02 compared to a loss of $0.03 in the third quarter of 2025. Adjusted diluted earnings per share for the third quarter of 2026 were $0.09 compared to $0.09 in the third quarter of 2025. Moving to the balance sheet. We ended the quarter with $214.9 million in cash and cash equivalents, up from $184.1 million at the end of the second quarter. The increase in cash primarily reflects $30.7 million of cash from continuing operations, supported by strong collections and working capital timing and approximately $9 million of proceeds related to the divestiture. As of September 30, 2026, we had approximately $293 million outstanding on our term loan and $100 million available under our revolving credit facility. Our liquidity remains strong and provides flexibility to support our strategic and capital allocation priorities.

Turning to our revenue outlook. We are narrowing our 2026 full year revenue growth range to 2% to 3%. We continue to expect software revenue growth to be above this range. For services, we continue to expect it to be at or below the low end of that range as we work to convert our pipeline into bookings and revenue. Turning to our margin outlook. Our previously communicated full year adjusted EBITDA margin outlook was 29% to 31%. Based on our performance through the first 9 months of the year, we believe this remains an appropriate margin range for the fourth quarter. Our third quarter adjusted EBITDA margin of 31.8% reflects favorable software mix, continued expense discipline and the savings now running through our cost base. We expect these benefits to support profitability in the fourth quarter, while recognizing that quarterly margins may vary based on revenue mix and timing. Finally, we are updating our full year 2026 adjusted EPS to $0.31 to $0.34, reflecting greater visibility into our full year performance. Fully diluted weighted average shares are expected to be in the range of $155 million to $157 million. And we are modeling an effective tax rate in the range of 25% to 30%. Overall, the third quarter represented an important step forward. Software growth remained strong, adjusted EBITDA margin improved meaningfully and the actions taken early this year are beginning to produce a more efficient operating model. We remain focused on maintaining operating discipline, improving services execution, investing in our highest priority initiatives and delivering value to our shareholders. With that, we will open up the call for questions. Operator, can you please open the line?

Operator

[Operator Instructions]

Your first question comes from the line of Kevin Caliendo with UBS.

分析师问答

Tucker Remmers

This is Tucker Remmers on for Kevin. Can I first ask about just can you parse out the improvement in software revenue and bookings between just demand environment improving and then the steps you've taken to enhance Certara's offering? And was it the larger Tier 1 and 2 customers responsible for the software growth? Or is it really the Tier 3 customers that have benefited from stronger biotech funding of late?

Jon Resnick

Tucker, thanks for the question. So I think to start with, I think like others, I think the end market looks strong. There's -- I think seen across the industry, I think we're seeing the same thing here. From a software standpoint, we saw a strong performance across customers, across tiers and across products. So it's tough to discern a specific trend in one way or another. So I think execution certainly is part of the story. And if we look across businesses and across layers, I think we executed pretty well.

Tucker Remmers

Yes. And then if I could follow up quickly. I think you previously targeted $10 million of cost savings. Can you talk about where Certara stands on that? And have you identified any further cost-saving opportunities?

Jon Resnick

Yes. We didn't give specific numbers this quarter. I think last quarter, we talked about exceeding $12 million or $13 million of run rate cost savings. I think that has continued to grow. So we've done some of the margin improvement that you saw in Q3 is directly -- a direct result of some of the actions that were taken, particularly in May and June last year. I'd say just as a management philosophy and as an approach to this, this is not a one-off. We're continuously looking at the organization for opportunities to do things smarter, to do things simpler, to do things more efficiently as we invest in areas of higher growth. So it's a continued and always an area of focus.

Operator

Next question comes from the line of Michael Cherny with Leerink Partners.

Dylan Finley

This is Dylan Finley on for Mike. Congrats on the quarter and really around the software growth inflection. You called out 11% organic growth. Maybe if you could give us some context behind the inflection here, drivers to the upside. How ultimately do you see the sustainability of this type of double-digit growth?

Jon Resnick

So thanks for the question, Dylan. There's -- the nature of our business happens to be a little bit diverse. We have different types of software and different types of things. Some of them are ratable, some of them are on-prem. So there's always a little bit of bumpiness quarter-to-quarter in terms of timing of different elements. It's never going to be kind of one-for-one smooth just given the mechanics that exist. We do believe, and I think we went to lens in the opening statement to talk through what we saw as some of the expansion path and growth on our existing products. We also increasingly, as we move into next year, we'll also see opportunities for new products for growth. So we think that this is pretty durable. It may bounce around from quarter-to-quarter. It may move just based on timing of some of these elements. I'm very focused on trends like trailing 12 months. You referenced the 11% bookings number. I think I've historically cited also the 0.8% trailing 12-month number that was at Q4 versus where we sit today. So I think those trends are good. It will bounce a little bit quarter-to-quarter, just depending on the mix of assets and other things. But we're seeing good execution. We believe we've got good path to move things forward across the portfolio.

Dylan Finley

And then I just wanted to quickly hit on your APAC comments. Last quarter, you talked to your first Simcyp win in China. This quarter, you called out APAC again more broadly as an appealing opportunity. Is this taking the same toolkit and offerings you have here domestically and in EMEA, importing it over there? Is this a near-term opportunity that you think you can capitalize on? Or is this more of a longer duration?

Jon Resnick

Yes. No, it's a good question. Look, if you look across our revenue mix, you can see that Asia Pac footprint is not as large as the rest of the business, which is a little bit disconnected to some of the larger trends we see in R&D where we see a large amount of total spend shifting to the region. We believe there's a number of our offerings, which are incredibly relevant for both -- for Japanese, Chinese and Korean companies who are looking to move into the United States. We also think locally within markets, there's unique opportunities for our software and services. Some of it will be very consistent with things that we do today, depending on the nature of the request. Some of it will be slightly more tailored to local opportunities or meeting local budgets. So there's a mix between the 2. This is not a 2026 Q4 thing. The initiatives have already started. The teams are already out in Tokyo and Seoul and across China, we're also ramping the team. It's really going to be a '27 growth impact.

Operator

Next question comes from the line of Dave Windley with Jefferies.

David Windley

Jon, in the years before you joined, the company made several acquisitions that skewed the mix a little bit more toward software. In the prepared remarks, I thought you made a comment that was very definitively integrating software and services and going to market with that combination. I wondered if we could kind of zoom out a little bit and hear your philosophical view about the relative importance of software and services in the portfolio and how you're going to market with those 2?

Jon Resnick

Yes. Dave, nice to hear from you. So look, I see the 2 as we think about our future, incredibly complementary to what we do. I see opportunities for us to grow on both sides of the business, both improving and enhancing our existing products through new product launches through that connection layer that you referenced. I also spent some time today outlining some of the work that we do on the service side. We do phenomenal work, and we have phenomenal people within this organization. who help to really support clients in unique ways. So through a better execution model, I think there's a lot more growth on that side of the business. Look, you'll see this business kind of meet its customer where it needs. A customer has sophisticated clin pharm groups and is able to execute and wants to license our software, we'll be there to meet and match that with top-notch products that are used by power users and others within the organization to execute studies. For other customers who need support through incremental experts or program management, we're also there to match them and work with them. This business, I think the case studies that we referenced in here today really show that we're at our best when the 2 come together, and we're able to work with our technology and partnership to solve those strategic issues. My expectation, as I signaled though, would be if you -- as long as you think of the business in those 2 segments, software will continue to outpace services as a growth player, but there is a very nice flywheel effect and complementary elements to the way we can support clients across the 2.

David Windley

That's helpful. My second question, follow-up question gets into your Chief Product Officer hire announcement and the attempts to or the goals to move clients toward a portal engagement experience, ratable software, kind of all the things that go along with that and what kind of a picture of the journey on that? How much have you gotten clients to move toward more of a cloud-based product engagement experience and then the CPO's job to accelerate that?

Jon Resnick

So super excited to have Grant as part of the team. He's got a very distinguished background. Really, I'd say he's the right person at the right time given his unique experience, operational discipline and his ability really to move quickly. What we've asked him to do really is twofold. One, help us optimize our existing portfolio, help us with our in-line products, our current products, help get the most optimize our road maps to optimize performance, really bring the customer voice deeply into it so that we can satisfy the unique needs and the expansion paths that are within that. And two, we'd like to be best -- you mentioned inorganic path historically. We'd like to be a best-in-class product developer on our own with new products and other things. And so we have a number of plans that we're looking at into '27 and things under development. The ask for Grant is really to help the execution of that in the most impactful way we possibly can in the most cost efficient and return on investment way that we possibly can. So that's Grant's role.

I think as we look across the business, and I'm always reticent to get a number of the number, in my mind, something a little bit north of 50% of our product portfolio is cloud versus on-prem today. It's maybe slightly more than that. We obviously laid out a migration path for Phoenix, which will be -- which will take that number up pretty consistently over the next few years. And we also talked today about the integrated AI platform, which we've kind of talked about in the past a little bit, but we give a little bit more specificity about how that will work in a complementary way with our current data and products. But this will allow clients to do from their own frontier model with their preferred agents will be able to tap into our software and data in a consistent way. We view that in the near term less as a stand-alone platform or portal where they have to buy an incremental assets or integrate into a particular product. But as a lift to all of our products where they become more accessible, you can move data around in a more consistent way and you can get more power out of what you're doing. So we're pretty measured in terms of what you can do today in the near term, in the midterm against that, and our plans are getting clearer and clearer in terms of growth opportunities.

Operator

Next question comes from the line of Brendan Smith with TD Cowen.

Brendan Smith

Congrats on the quarter. Maybe one more kind of on the revenue mix here. I know you mentioned some of the work you guys are doing kind of internally on your go-to-market strategy for services. But I think especially this quarter, we've been seeing some evidence across the sector of pharma and biotech spending starting to recover pretty meaningfully, which seems like you're seeing pretty clearly in software. So I guess, is there anything you're hearing even qualitatively in conversations with customers to help us just understand the gap in their interest in software versus services right now? Is any of that maybe being driven in one way or another by kind of the customer adoption of AI/ML on their side? Or just anything else that we should be aware of potentially kind of driving their relationship with the Certara platform?

Jon Resnick

Thanks, Brendan. No, look, I don't think there's any end market distinction. I mean I've said it before, and I'm very solution-oriented moving forward on this. I think this is -- our service performance is really a result of changes we made from a go-to-market standpoint and from an operational standpoint a couple of years ago. We've rectified and changed a number of those. We put the specialists back into market. We've changed our focus. We've changed our incentive. That's going to be the thing that's going to drive this. The work that we do is outstanding. The demand for our work is incredibly high. We just need to have our teams out in front of the right people, having the right conversations in the right ways. That business will continue to progress and get stronger as we move forward. So I don't see I don't see a structural difference between the demand between the 2. It's really our ability to go out and execute and our ability to go out and talk to the right clients about the right issues. So no, I think that as these changes kind of bed in, we're now in -- have completed or now in the second quarter of making those changes, we'll start to see that translate into revenue growth on the service side as well.

Brendan Smith

Got it. Okay. And then maybe one actually on the NAMS work. I know you gave some good color there, Jon, on some of you guys have been doing there. Can you maybe just expand a bit more on some of the work you've been involved with regulators? I think you mentioned the pilot study now being live with FDA. I guess is Certara involved with that pilot NAMS study? And maybe even bigger picture, I guess, if that's successful, how do you guys think about the potential incremental opportunity there just from a commercial revenue standpoint? Any color on how we should be thinking about that?

Jon Resnick

Yes. Look, I think one of the points we wanted to emphasize today was we're actively involved around the world with regulators, both as kind of thought partners and its clients. And there's been a lot of fantastic movement, as we've talked about before, in regulations helping to expressing an interest in a number of NAM fronts and experimental and more diverse approaches. So we are working formally and informally with regulators and with clients directly on exploring how these use cases will be received by the regulators, how they interpreted. And there's kind of what I define or describe as a diffusion curve where you initially kind of see the science exists where you can start to develop new methods to do something, you get regulations out. You get a couple of innovators who are trying to get proof of concept on that once those use cases get worked out and accepted by regulators, then you have the ability to drive greater acceptance and greater awareness across the industry. I'd say we're kind of between Phase II and Phase III for a lot of those NAMs where regulations are out, clients are starting to experiment. We're partnering with them on those innovative use cases. And when you start to get the impact of those use cases and the regulators around the world accepting that, then you're going to start to see greater diffusion. So that's where we are. Yes, we're an active player on all fronts there.

Operator

Next question comes from the line of Craig Hettenbach with Morgan Stanley.

Katherine Bennorth

Katie Bennorth on for Craig. Just to double-click on AI, what tangible proof points can you point to on how it's impacting your business today? And what does the road map look like?

Jon Resnick

Sure. Thanks, Katie, for the question. So a few fronts. Look, as we kind of think about it as I think about it multidimensionally. If I go back to kind of the January, February, March time frame, the suite of initial questions that we got were really focused in on how does AI change your kind of competitive positioning. I think we've worked carefully with you and with the market and understanding that both our software that's kind of deeply embedded on the regulator side, the scientific judgment, the regulatory use cases really creates a nice position for us to continue to grow and be sound as you kind of think about the underlying proposition of the position. We've talked a lot around some of the operational acceleration we've got internally in terms of ability to drive processes more efficiently to start to streamline some of the work steps for our service execution, the acceleration of our development time lines in terms of increasing functionality and increasing product value that we're creating. We've seen pretty dramatic increases. I've shared a lot of those percentages and actual impact statements in the last earnings call. Where we're also talking today is about a go-forward strategy, where we're working hand-in-hand with clients early on from a Lighthouse standpoint around some of these kind of broader AI initiatives that we think will be a lift to the overall portfolio in the next 18 to 24 months, we see progress against all dimensions.

Katherine Bennorth

Great. That's helpful. And when you look at the 2 business unit segments, MID3 and ACE, what area are you seeing the strongest momentum today? And where do you see the greatest long-term upside?

Jon Resnick

Look, I think the rationale behind cutting the business in the 2 ones, they're both very strategic client issues. One, how do you run trials differently? How do you adopt modeling, how do you bring it throughout your entire life cycle? Huge TAM, huge opportunity for us, one Certara is known extraordinarily well for where we feel very good about opportunities long term. That organizational construct has really brought a lot of our resources together and it has us thinking much more strategically about external engagement, driving awareness, innovation. So it's been super helpful construct. On the ACE side, it's really around acceleration of data and acceleration of evidence. Again, another priority of regulators around the world and clients, how do you kind of streamline those processes to help move from data to evidence in a much quicker way. Another place that we're naturally positioned. We have a number of products that are playing across that kind of data management and evidence continuum. In terms of growth in the quarter, I think we are seeing growth pretty fundamentally across all of them. As I mentioned on the software side and even true on the service side, all of our businesses are kind of moving forward at pretty consistently at a good pace. So hard to choose between the 2 of them. One is probably a larger addressable market than the other, but I think we're on the right track strategically and operationally on both.

Operator

Next question comes from the line of Matthew Hewitt with Craig-Hallum.

Matthew Hewitt

Maybe first off, just to follow up on Brendan's question earlier. Regarding the advances on the regulatory side of things, do you see that as becoming maybe a '27 tailwind? It sounds like customers are looking at use cases now, but do you see that becoming more of a driver next year? Or do you think that it might take a little bit longer given that we're still kind of working through some of the details?

Jon Resnick

When you think of NAMs, it's not one. There's lots of different things that are happening in the market and different regulators are working at different paces on this and international bodies. So it's kind of tough to answer. And it's not just regulations, it's also -- there are different rate and pace for different modalities and different approaches. So the overall diffusion curve will vary based on a number of factors. We do already see in '26, a lot of work where clients are experimenting with different approaches and we're leading on use cases. As you start to think about that a bunch of these getting mature, it will take time. But we're working on things in '26. We'll continue to work on things in '27 and moving forward from there. Trying to characterize -- I mean, this is -- there are dozens of different approaches with very different answers across modalities and therapeutic areas and questions, and they're all kind of moving at their own pace. I think it's all net beneficial to us. We're well positioned to sit at that intersect between what regulators are looking for and how clients are trying to adapt to some of those things. But it's hard to give a general answer to it. They're all going to kind of move at their own speed and pace.

Matthew Hewitt

Understood. And then maybe a second question regarding the Phoenix Cloud conversion. Where are you with that? And how much of a headwind is it? Obviously, when you go from on-prem to hosted, you go to this ratable model, it creates a bit of a near-term rev rec headwind. And I'm just curious how much of an impact you're seeing there? And when do we kind of cross over and start to see the benefits of this?

Jon Resnick

Thanks for the question. I think we outlined today that we've now crossed -- approaching the 10% range for total customers, which was a little bit ahead of where we were expecting to get in the first year. Pleased with that progress. I think we have ambitious plans for next year for accelerating that. You're exactly right. It's great for -- it helps to accelerate bookings. It's the right thing for us long term to be able to modernize the offering and to bring more value through the AI modules that we have. There is going to be -- there is a little bit of a revenue headwind that exists with it as you kind of start to do some of those conversions. I don't have the exact number, but it's -- but you're right, the actual revenue growth is a little bit story. We're doing probably slightly better if you take into consideration the impact of the cloud conversion.

Operator

Next question comes from the line of Jared Haase with William Blair.

Christine Rains

It's Christine on for Jared. You mentioned you've been implementing a pricing review as part of your strategic actions. Can you talk a bit more about this in terms of where you're seeing potential pricing misalignment prior? And any changes to your contracting structure you contemplate?

Jon Resnick

Sure. Thanks for the question. Look, I think price is something that we're spending a lot of time considering. We haven't really done a lot to change anything on our pricing approach. As a company, we have multiple different approaches in market today. So the work we're doing is really trying to understand how do we make our assets accessible, how do we try to make our -- how do we try to make the value propositions clear to the extent that over time, we'll be migrating to multiple products being used, how do we help incentivize and encourage clients to use our software together and also to move it earlier into the life cycle and across the entire life cycle. So when we say we're strategically reviewing things, we're really looking at this from a more client-centric way in terms of how do we optimize its use on that side of things. Our focus on contracting has really been for simplification, how do we kind of standardize terms, how do we standardize contracts across our clients, really improving operational effect and is making it easier to do business with us.

Christine Rains

Got it. Makes sense. And while you're not giving 2027 guidance, hoping you can help us think through the puts and takes for next year. Currently, the Street is forecasting around a similar growth rate next year as your updated 2026 guidance. But wondering if based on your backlog and visibility, if we should be more thinking of an acceleration and maybe if mid-single digits is in reach.

Jon Resnick

We're going to hold off in terms of providing guidance until later in the year at this point. So I got no incremental updates to provide. I think you can draw conclusions from some of the improving software performance and other things of what we're looking at. But I'm not, at this point, going to provide any further guidance.

Operator

Next question comes from the line of Luke Sergott with Barclays.

Luke Sergott

Great. I just kind of wanted to dig in on the full year guide, and you guys had such a big step-up here in 3Q and then the guide implies kind of a step down there and from 4Q. Just wanted to see if there's any pull forwards or any reason for the decel that's implied in guide from a top line perspective?

Jon Resnick

Yes. Look, I think we were just honestly being consistent. I think we've said the same thing all year, and we're staying within that same range in the quarter. let's see where things kind of net out. We're doing an awful lot operationally to change the company. We're doing an awful lot of new leaders and new approaches to do things. We're just being measured in our approach to providing this. There's no new news in that, except for kind of raising the lower end of what we're doing here. So there should be no news. And we're going to keep working hard to keep performing. But there's nothing -- there's no one-timers. There's nothing exceptional. We're just being really consistent with what we said quarter-to-quarter-to-quarter.

Luke Sergott

Okay. And then from a follow-up, a lot of noise, I guess, like a lot of noise there from the medical writing takeout. But as we look at the gross margin improvement you guys have done, even ex that, we kind of calculate maybe like 150-plus basis points benefit from getting rid of the medical writing, but like still a really significant step-up there. If you guys can just talk about what you've been doing there to improve that side of the equation?

Jon Resnick

From a -- yes, I'm trying to -- I'm not sure 100% how to back into the analysis that you did. I was just asking. Look, I think there's a couple of things on margin we're doing. One, I think in the quarter, obviously, software at 11% is going to provide a better overall gross margin. Margins across the 2 are healthy, but software margins are even healthier. So to the extent that, that's running at 11%, you're going to see some contributions there on the GM side. And then if you go down -- you drop down a line below that, we did do a major shift in employees in RIF in May and June, which went to work -- sorry, went into place in July. I think you're starting to see some of the contributions from that playing out as well into EBITDA.

Operator

Final question comes from the line of Sean Dodge with BMO.

Christopher Charlton

This is Chris Charlton on for Sean here. Maybe going back to Jon's comments on the targeted outreach approach with small and midsized biotechs and the therapeutic or modality component of this. Can you just share some more detail on how the commercial approach differs between large pharma versus small biotechs and how this fits into the broader go-to-market realignment?

Jon Resnick

Yes, sure. So as part of our new commercial model, we've really rethought both who we're selling to and how we're selling. We have tremendous opportunity in market. We know that. We're not a huge company. How do you allocate your resources in the most effective way to have the best conversations. What's essential to us is really kind of finding those companies that are going to benefit the most from our offices -- our offerings and our capabilities. So what you'll see us doing is focusing a little bit more on that mid-segment and a little bit more on biotech segment. They're good clients with high need, need both our services and software offerings. We can be incredibly targeted. We know which products -- which modalities are going to benefit most from mechanistic modeling. So we can be incredibly focused on those companies and have our scientific teams and our teams out engaging those groups. We still are working very closely with Tier 1 clients. They're the bedrock and foundation of our business. We have great existing relationships with them. We're helping just to diversify in terms of building into those other -- that other segment. And we can be, as we outlined, incredibly targeted in how we pursue this, and we can build kind of differentiated relationships like the one that we talked about. The other thing we talked about on the commercial side was geography. We do see a lot of upside putting more weighting on our team into Asia, Japan, Korea and China specifically, where if you look at our overall revenue, it's a relatively small percentage relative to the market.

So those customers -- we also do see very good partnering relationships on the CDMO and CRO side. So we're also dedicating teams on that. So our go-to-market model, you asked the question, how does the go-to-market model change? It's a different touch on each of those different groups. Their needs are a little bit different. We're building teams internally that are capable of kind of handling those relationships and engaging it essential for us that everybody on our team is out. We've leaned out a lot of sales management and overhead from our organization, and we're really focused on content-based engagement across all the different segments.

Operator

This will conclude our Q&A session. I will pass it back to Jon Resnick for final comments.

Jon Resnick

Thanks, everyone, for joining today. I appreciate the opportunity.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.