10-Q · May 11, 2026
Certara reported Q1 2026 results with total revenues of $106.9 million, up 1% from $106.0 million a year ago, driven primarily by a 7% increase in software revenues. However, the company incurred a net loss of $8.8…
Earnings analysis · 10-Q
CERT earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Certara's continuing-operations revenue grew 1% year over year to $93.271 million in Q2, driven by 4% software growth and improved 107.6% net software retention, but services declined 3%. Gross margin held at…
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Certara's continuing-operations revenue grew 1% year over year to $93.271 million in Q2, driven by 4% software growth and improved 107.6% net software retention, but services declined 3%. Gross margin held at approximately 62.3%, yet sharply higher G&A and other costs moved the company to a $6.081 million continuing-operations loss, or $(0.04) diluted EPS, versus $1.496 million of income a year ago. Liquidity remains meaningful at $184.138 million of cash plus a fully available $100.0 million revolver, but operating cash flow fell to $15.584 million for the first half and the company retains $294.028 million of term debt.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $-0.04
What stood out
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Software supported 1% revenue growth
Continuing-operations revenue increased $0.915 million, or 1%, year over year to $93.271 million. Software revenue rose $2.101 million (4%) to $48.796 million, offsetting a $1.186 million (3%) services decline to $44.475 million.
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Gross margin held near 62%
Gross profit was $58.149 million on $93.271 million of revenue, implying a 62.3% gross margin. This was broadly stable versus the prior-year gross margin implied by $58.071 million of gross profit on $92.356 million of revenue.
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Software retention accelerated
Net software retention improved to 107.6% from 101.5%, while bookings were $97.4 million versus $98.3 million in the comparable prior-year quarter.
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Cash conversion remained positive but weakened
Operating cash flow from continuing operations remained positive at $15.584 million for the first six months of 2026, although down from $23.329 million a year earlier. Investing cash use was $14.475 million, leaving only about $1.109 million before financing activities; the filing does not separately report free cash flow.
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Divestiture added liquidity optionality
The company completed the Regulatory and Medical Writing divestiture on May 8, 2026, receiving $69.4 million of cash consideration, with $15.0 million in escrow and potential earn-out proceeds of up to $35.0 million.
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Buyback materially reduced share count
The company repurchased 9,009,459 shares for $57.4 million during the first six months of 2026, and the $100.0 million authorization had no remaining funds as of June 30, 2026.
What to watch
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Profitability reversed despite revenue growth
GAAP continuing-operations results swung to a $6.081 million net loss, or $(0.04) diluted EPS, from $1.496 million of income, or $0.01 diluted EPS, a year earlier. Operating margin fell to approximately (0.2%) from approximately 8.3%.
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Expense growth exceeded revenue growth
General and administrative expense rose $5.233 million, or 31%, to $21.933 million, including a $5.7 million unfavorable contingent-consideration comparison, while sales and marketing rose $1.320 million (10%) and R&D increased $0.733 million (8%).
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Divestiture created a large reported loss
The divestiture generated an estimated $65.481 million pretax loss on disposal and a $49.189 million after-tax quarterly discontinued-operations loss. The final recognized loss may change based on the ultimate escrow realization and earn-out settlement.
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Leverage and interest burden remain material
Cash and cash equivalents declined to $184.138 million at June 30, 2026 from $189.392 million at December 31, 2025, while term-loan borrowings remained substantial at $294.028 million. Interest expense was $4.987 million in Q2, up 4% year over year.
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Services demand remained soft
Services revenue declined $1.186 million, or 3%, to $44.475 million in Q2, and six-month services revenue declined $2.550 million, or 3%, to $88.841 million.
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No material risk-factor updates
Item 1A states there were no material changes to the risk factors disclosed in the 2025 Annual Report; consequently, the filing identifies no newly added or materially revised risk factor for the quarter ended June 30, 2026.
Management's outlook
The 10-Q MD&A contains no quantitative revenue, EPS, EBITDA, or capital-spending outlook; numeric guidance appears to have been deferred to the earnings release/call.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.