Certara, Inc. (Nasdaq: CERT), a global leader in biosimulation,
today reported its financial results for the first quarter of
fiscal year 2023.
First Quarter Highlights:
- Revenue was $90.3 million, compared
to $81.6 million in the first quarter of 2022, representing growth
of 11% over the first quarter of 2022 on a reported basis and 13%
at constant currency.
- Net income was $1.4 million,
compared to $2.2 million in the first quarter of 2022, representing
a decrease of 39% over the first quarter of 2022.
- Adjusted EBITDA was $32.3 million,
compared to $27.7million in the first quarter of 2022, representing
growth of 17% over the first quarter of 2022.
- Certara was added to the S&P
SmallCap 600 Index effective March 22, 2023.
“We are pleased with our first quarter financial
results and performance in software and biosimulation services”
said William F. Feehery, chief executive officer. “We continue to
innovate and maintain strong relationships with our customers in
support of our long-term initiatives and execution on our growth
targets for software and services.”
First Quarter 2023 Results
“We saw solid business momentum and executed
commercially in the first quarter of 2023. Our bookings remain
healthy, and we have a strong balance sheet. We remain well
positioned to achieve our financial and strategic objectives and
look forward to continued success in 2023,” said John Gallagher,
Chief Financial Officer.
Total revenue for the first quarter of 2023 was
$90.3 million, representing growth of 11% over the first quarter of
2022. The overall increase in revenue was primarily due to growth
in our technology-driven services and software product offerings
from client expansion and new customer acquisitions. The increase
was partially offset by the negative impact on our revenues from
fluctuations foreign currency exchange rates.
On a constant currency basis, total revenue for
the first quarter of 2023 was $91.9 million, representing growth of
13% over the first quarter of 2022. Please see note (1) in the
section A Note on Non-GAAP Financial Measures below for more
information on constant currency revenue.
Total cost of revenue for the first quarter of
2023 was $34.9 million, an increase of $2.1 million from $32.8
million in the first quarter of 2022, primarily due to a $1.3
million increase in employee-related costs resulting from billable
head count growth, a $0.3 million increase in stock-based
compensation costs, a $0.3 million increase in intangible assets
amortization, and a $0.3 million increase in travel expense.
Total operating expenses for the first quarter
of 2023 were $48.0 million, which increased by $5.4 million from
$42.6 million in the first quarter of 2022, primarily due to a $3.2
million increase in employee-related costs, a $1.3 million increase
in expense from remeasuring fair value of contingent consideration
related to the Vyasa business acquisition, a $0.7 million increase
in stock-based compensation cost, a $0.6 million increase in travel
expenses, a $0.4 million increase in intangible asset amortization,
and a $0.3 million increase in professional and consulting cost,
partially offset by a $0.7 million decrease in Sarbanes-Oxley
implementation costs, and a $0.4 million decrease in insurance
cost.
Net income for the first quarter of 2023 was
$1.4 million, compared to a net income of $2.2 million in the first
quarter of 2022, representing a 39% decrease. The $0.9 million
decrease in net income was primarily due to a $5.4 million increase
in operating expenses, a $2.2 million increase in interest expense,
a $2.1 million increase in cost of revenues, and a $1.6 million
currency remeasurement loss, partially offset by a $8.8 million
increase in revenue, a $1.3 million increase in interest income,
and a $0.4 million decrease in tax expense.
Diluted earnings per share for the first quarter
2023 was $0.01, as compared to $0.01 in the first quarter of
2022.
Adjusted EBITDA for the first quarter of 2023
was $32.3 million compared to $27.7 million for the first quarter
of 2022, representing 17% growth. See note (2) in the section A
Note on Non-GAAP Financial Measures below for more information on
adjusted EBITDA.
Adjusted net income for the first quarter of
2023 was $19.3 million compared to $16.9 million for the first
quarter of 2022, representing 14% growth. Adjusted diluted earnings
per share for the first quarter 2023 was $0.12 compared to $0.11
for the first quarter of 2022. See note (3) in the section A Note
on Non-GAAP Financial Measures below for more information on
adjusted net income and adjusted diluted earnings per
share.
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Three Months Ended March 310, |
|
|
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2023 |
|
2022 |
|
Key Financials (in millions,
except per share data) |
|
|
|
|
|
|
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Revenue |
|
$ |
90.3 |
|
$ |
81.6 |
|
Net income |
|
$ |
1.4 |
|
$ |
2.2 |
|
Diluted earnings per
share |
|
$ |
0.01 |
|
$ |
0.01 |
|
Adjusted EBITDA |
|
$ |
32.3 |
|
$ |
27.7 |
|
Adjusted net income |
|
$ |
19.3 |
|
$ |
16.9 |
|
Adjusted diluted earnings per
share |
|
$ |
0.12 |
|
$ |
0.11 |
|
Cash and cash equivalents |
|
$ |
244.1 |
|
$ |
184.3 |
|
Reiterating 2023 Financial Outlook
Certara continues to expect the following:
Full year 2023 revenue to be in the range of
$370 million to $385 million.
Full year 2023 adjusted EBITDA to be in the
range of $131 million to $137 million.
Full year adjusted diluted earnings per share to
be in the range of $0.50 - $0.55.
Fully diluted shares to be in the range of 159
million to 162 million.
Webcast and Conference Call Details
Certara will host a conference call today, May
08, 2023, at 5:00 p.m. ET to discuss its first quarter 2023
financial results. Investors interested in listening to the
conference call are required to register online in advance of the
call. A live and archived webcast of the event will be available on
the “Investors” section of the Certara website at
https://ir.certara.com/.
About Certara
Certara accelerates medicines using proprietary
biosimulation software, technology and services to transform
traditional drug discovery and development. Its clients include
more than 2,300 biopharmaceutical companies, academic institutions,
and regulatory agencies across 70 countries.
Please visit our website at www.certara.com. We
intend to use our website as a means of disclosing material,
non-public information and for complying with our disclosure
obligations under Regulation FD.
Such disclosures will be included in the
Investor Relations section of our website at
https://ir.certara.com. Accordingly, investors should monitor such
portion of our website, in addition to following our press
releases, Securities and Exchange Commission filings and public
conference calls and webcasts.
Forward-Looking Statements
This press release contains certain statements
that constitute forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, with respect to the Company’s future business
and financial performance, revenue, margin, and bookings. These
statements typically contain words such as “believe,” “may,”
“potential,” “will,” “plan,” “could,” “estimate,” “expects” and
“anticipates” or the negative of these words or other similar terms
or expressions. Any statement in this press release that is not a
statement of historical fact is a forward-looking statement and
involves significant risks and uncertainties. Although we believe
that the expectations reflected in these forward-looking statements
are reasonable, we cannot provide any assurance that these
expectations will prove to be correct. You should not rely upon
forward-looking statements as predictions of future events and
actual results, events, or circumstances. Actual results may differ
materially from those described in the forward-looking statements
and are subject to a variety of assumptions, uncertainties, risks
and factors that are beyond our control, including the Company’s
ability to compete within its market; any deceleration in, or
resistance to, the acceptance of model-informed biopharmaceutical
discovery; changes or delays in relevant government regulation;
increasing competition, regulation and other cost pressures within
the pharmaceutical and biotechnology industries; economic
conditions, including inflation, recession, currency exchange
fluctuation and adverse developments in the financial services
industry; trends in research and development (R&D) spending;
delays or cancellations in projects due to supply chain
interruptions or disruptions or delays to pipeline development and
clinical trials experienced by our customers due to COVID-19 or
other external factors; consolidation within the biopharmaceutical
industry; reduction in the use of the Company’s products by
academic institutions; pricing pressures; the Company’s ability to
successfully enter new markets, increase its customer base and
expand its relationships with existing customers; the impact of
acquisitions and our ability to successfully integrate such
acquisitions; the occurrence of natural disasters and epidemic
diseases; the occurrence of global conflicts, such as the conflict
between Russian and Ukraine; any delays or defects in the release
of new or enhanced software or other biosimulation tools; failure
of our existing customers to renew their software licenses or any
delays or terminations of contracts or reductions in scope of work
by its existing customers; our ability to accurately estimate costs
associated with its fixed-fee contracts; our ability to retain key
personnel or recruit additional qualified personnel; lower
utilization rates by our employees as a result of natural disasters
and epidemic diseases; risks related to our contracts with
government customers; our ability to sustain recent growth rates;
our ability to successfully operate a global business; our ability
to comply with applicable laws and regulations; risks related to
litigation; the adequacy of its insurance coverage and ability to
obtain adequate insurance coverage in the future; our ability to
perform in accordance with contractual requirements, regulatory
standards and ethical considerations; the loss of more than one of
our major customers; future capital needs; the ability of our
bookings to accurately predict future revenue and our ability to
realize revenue on bookings; disruptions in the operations of the
third-party providers who host our software solutions or any
limitations on their capacity; our ability to reliably meet data
storage and management requirements, or the experience of any
failures or interruptions in the delivery of our services over the
internet; our ability to comply with the terms of any licenses
governing use of third-party open source software; any breach of
its security measures or unauthorized access to customer data; our
ability to adequately enforce or defend ownership and use of our
intellectual property and other proprietary rights; any allegations
of infringement, misappropriation or violations of a third party’s
intellectual property rights; our ability to meet obligations under
indebtedness and have sufficient capital to operate our business;
any limitations on our ability to pursue business strategies due to
restrictions under our current or future indebtedness; any
impairment of goodwill or other intangible assets; our ability to
use our net operating losses and R&D tax credit carryforwards;
the accuracy of management’s estimates and judgments relating to
critical accounting policies and changes in financial reporting
standards or interpretations; any inability to design, implement,
and maintain effective internal controls or inability to remediate
any internal controls deemed ineffective; the costs and management
time associated with operating as a publicly traded company; and
the other factors detailed under the captions “Risk Factors” and
“Special Note Regarding Forward-Looking Statements” and elsewhere
in our Securities and Exchange Commission (“SEC”) filings, and
reports, including the Form 10-K filed by the Company with the
Securities and Exchange Commission on March 1, 2023, and subsequent
reports filed with the SEC. Any forward-looking statements speak
only as of the date of this release and, except to the extent
required by applicable securities laws, we expressly disclaim any
obligation to update or revise any of them to reflect actual
results, any changes in expectations or any change in events.
Factors that may materially affect our results and those risks
listed in filings with the SEC.
A Note on Non-GAAP Financial Measures
This press release contains “non-GAAP measures”
that are financial measures that either exclude or include amounts
that are not excluded or included in the most directly comparable
measures calculated and presented in accordance with U.S. generally
accepted accounting principles (“GAAP”). Specifically, the Company
makes use of the non-GAAP financial measures adjusted EBITDA,
adjusted net income (loss), adjusted diluted earnings per share,
and constant currency (“CC”) revenue, which are not recognized
terms under GAAP. These measures should not be considered as
alternatives to net income (loss) or GAAP diluted earnings per
share or revenue as measures of financial performance or any other
performance measure derived in accordance with GAAP and should not
be considered a measure of discretionary cash available to the
Company to invest in the growth of its business. The presentation
of these measures has limitations as an analytical tool and should
not be considered in isolation, or as a substitute for the
Company’s results as reported under GAAP. Because not all companies
use identical calculations, the presentations of these measures may
not be comparable to other similarly titled measures of other
companies and can differ significantly from company to company.
You should refer to the footnotes below as well
as the “Non-GAAP Financial Measures” section in this press release
below for a further explanation of these measures and
reconciliations of these non-GAAP measures in specific periods to
their most directly comparable financial measure calculated and
presented in accordance with GAAP for those periods.
Management uses various financial metrics,
including total revenues, income (loss) from operations, net income
(loss), and certain non-GAAP measures, including those discussed
above, to measure and assess the performance of the Company’s
business, to evaluate the effectiveness of its business strategies,
to make budgeting decisions, to make certain compensation
decisions, and to compare the Company’s performance against that of
other peer companies using similar measures. In addition,
management believes these metrics provide useful measures for
period-to-period comparisons of the Company’s business, as they
remove the effect of certain non-cash expenses and other items not
indicative of its ongoing operating performance.
Management believes that adjusted EBITDA,
adjusted net income (loss), adjusted diluted earnings per share,
and CC revenue are helpful to investors, analysts, and other
interested parties because they can assist in providing a more
consistent and comparable overview of our operations across our
historical periods. In addition, each of these measures is
frequently used by analysts, investors, and other interested
parties to evaluate and assess performance. Furthermore, our
business has operations outside the United States that are
conducted in local currencies. As a result, the comparability of
the financial results reported in U.S. dollars is affected by
changes in foreign currency exchange rates. We adjust revenues for
constant currency to provide a framework for assessing how our
business performed excluding the effect of foreign currency rate
fluctuations and we believe it is helpful for investors to present
operating results on a comparable basis period over period to
evaluate its underlying performance.
Please note that the Company has not reconciled
the adjusted EBITDA or adjusted diluted earnings per share
forward-looking guidance included in this press release to the most
directly comparable GAAP measures because this cannot be done
without unreasonable effort due to the variability and low
visibility with respect to costs related to acquisitions,
financings, and employee stock compensation programs, which are
potential adjustments to future earnings. We expect the variability
of these items to have a potentially unpredictable, and a
potentially significant, impact on our future GAAP financial
results.
(1) |
|
CC
revenue excludes the effects of foreign currency exchange rate
fluctuations by assuming constant foreign currency exchange rates
used for translation. Current periods revenue reported in
currencies other than U.S. Dollars are converted into U.S. Dollars
at the average exchange rates in effect for the comparable prior
periods. |
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(2) |
|
Adjusted
EBITDA represents net income excluding interest expense, provision
(benefit) for income taxes, depreciation and amortization expense,
intangible asset amortization, equity-based compensation expense,
change in fair value of contingent consideration, acquisition and
integration expense and other items not indicative of our ongoing
operating performance. |
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(3) |
|
Adjusted
net income and adjusted diluted earnings per share exclude the
effect of equity-based compensation expense, amortization of
acquisition-related intangible assets, change in fair value of
contingent consideration, acquisition and integration expense, and
other items not indicative of our ongoing operating performance as
well as income tax provision adjustment for such charges. |
In evaluating adjusted EBITDA, adjusted net
income, and adjusted diluted earnings per share, you should be
aware that in the future the Company may incur expenses similar to
those eliminated in this presentation and this presentation should
not be construed as an inference that future results will be
unaffected by unusual items.
Contacts:
Investor Relations Contact: David
DeuchlerGilmartin Groupir@certara.com
Media Contact:Daniel YungerKekst
CNCdaniel.yunger@kekstcnc.com
CERTARA, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
MARCH 31, |
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE
DATA) |
|
2023 |
|
2022 |
Revenues |
|
$ |
90,301 |
|
|
$ |
81,551 |
|
Cost of revenues |
|
|
34,856 |
|
|
|
32,789 |
|
Operating expenses: |
|
|
|
|
|
|
Sales and marketing |
|
|
8,002 |
|
|
|
6,111 |
|
Research and development |
|
|
9,287 |
|
|
|
7,548 |
|
General and administrative |
|
|
19,772 |
|
|
|
18,339 |
|
Intangible asset amortization |
|
|
10,535 |
|
|
|
10,149 |
|
Depreciation and amortization expense |
|
|
411 |
|
|
|
482 |
|
Total operating expenses |
|
|
48,007 |
|
|
|
42,629 |
|
Income from operations |
|
|
7,438 |
|
|
|
6,133 |
|
Other income (expenses): |
|
|
|
|
|
|
Interest expense |
|
|
(5,475 |
) |
|
|
(3,228 |
) |
Net other income |
|
|
506 |
|
|
|
841 |
|
Total other expenses |
|
|
(4,969 |
) |
|
|
(2,387 |
) |
Income before income taxes |
|
|
2,469 |
|
|
|
3,746 |
|
Provision of income taxes |
|
|
1,111 |
|
|
|
1,536 |
|
Net Income |
|
|
1,358 |
|
|
|
2,210 |
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
Diluted |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
Basic |
|
|
158,177,025 |
|
|
|
155,936,953 |
|
Diluted |
|
|
159,727,412 |
|
|
|
159,160,321 |
|
|
|
|
|
|
|
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|
CERTARA, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
MARCH 31, |
|
DECEMBER 31, |
(IN THOUSANDS, EXCEPT
PER SHARE AND SHARE DATA) |
|
2023 |
|
2022 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
244,135 |
|
|
$ |
236,586 |
|
Accounts receivable, net of allowances for credit losses of $736
and $1,250, respectively |
|
|
82,404 |
|
|
|
82,584 |
|
Restricted cash |
|
|
3,103 |
|
|
|
3,102 |
|
Prepaid expenses and other current assets |
|
|
18,612 |
|
|
|
19,980 |
|
Total current assets |
|
|
348,254 |
|
|
|
342,252 |
|
Other assets: |
|
|
|
|
|
|
Property and equipment, net |
|
|
2,317 |
|
|
|
2,400 |
|
Operating lease right-of-use assets |
|
|
13,405 |
|
|
|
14,427 |
|
Goodwill |
|
|
718,841 |
|
|
|
717,743 |
|
Intangible assets, net of $231,384 and $217,705, respectively |
|
|
476,554 |
|
|
|
486,782 |
|
Deferred income taxes |
|
|
3,703 |
|
|
|
3,703 |
|
Other long-term assets |
|
|
3,683 |
|
|
|
5,615 |
|
Total assets |
|
$ |
1,566,757 |
|
|
$ |
1,572,922 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
4,326 |
|
|
$ |
7,533 |
|
Accrued expenses |
|
|
30,008 |
|
|
|
35,403 |
|
Current portion of deferred revenue |
|
|
51,654 |
|
|
|
52,209 |
|
Current portion of long-term debt |
|
|
3,020 |
|
|
|
3,020 |
|
Current operating lease liabilities |
|
|
4,808 |
|
|
|
4,968 |
|
Other current liabilities |
|
|
— |
|
|
|
25 |
|
Total current liabilities |
|
|
93,816 |
|
|
|
103,158 |
|
Long-term liabilities: |
|
|
|
|
|
|
Deferred revenue, net of current portion |
|
|
2,780 |
|
|
|
2,815 |
|
Deferred income taxes |
|
|
62,920 |
|
|
|
65,046 |
|
Operating lease liabilities, net of current portion |
|
|
9,244 |
|
|
|
10,133 |
|
Long-term debt, net of current portion and debt discount |
|
|
289,546 |
|
|
|
289,988 |
|
Other long-term liabilities |
|
|
23,396 |
|
|
|
22,121 |
|
Total liabilities |
|
|
481,702 |
|
|
|
493,261 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred shares, $0.01 par value, 50,000,000 shares authorized, no
shares issued and outstanding as of March 31, 2023 and December 31,
2022, respectively |
|
|
— |
|
|
|
— |
|
Common shares, $0.01 par value, 600,000,000 shares authorized,
160,218,109 and 159,676,150 shares issued as of
March 31 ,2023 and December 31, 2022,
respectively; 159,839,743 and 159,525,943
shares outstanding as of March 31, 2023 and December 31, 2022,
respectively |
|
|
1,601 |
|
|
|
1,596 |
|
Additional paid-in capital |
|
|
1,158,708 |
|
|
|
1,150,168 |
|
Accumulated deficit |
|
|
(59,515 |
) |
|
|
(60,873 |
) |
Accumulated other comprehensive loss |
|
|
(7,320 |
) |
|
|
(8,230 |
) |
Treasury stock at cost, 378,366 and 150,207 shares at March 31,
2023 and December 31, 2022, respectively |
|
|
(8,419 |
) |
|
|
(3,000 |
) |
Total stockholders’ equity |
|
|
1,085,055 |
|
|
|
1,079,661 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,566,757 |
|
|
$ |
1,572,922 |
|
|
CERTARA, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
THREE MONTHS ENDED MARCH 31, |
(IN THOUSANDS) |
|
2023 |
|
2022 |
Cash flows from
operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
1,358 |
|
|
$ |
2,210 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization of property and equipment |
|
|
411 |
|
|
|
482 |
|
Amortization of intangible assets |
|
|
13,113 |
|
|
|
12,450 |
|
Amortization of debt issuance costs |
|
|
383 |
|
|
|
386 |
|
(Recovery of) provision for credit losses |
|
|
(168 |
) |
|
|
34 |
|
Loss on retirement of assets |
|
|
4 |
|
|
|
5 |
|
Change in fair value of contingent consideration |
|
|
1,261 |
|
|
|
— |
|
Equity-based compensation expense |
|
|
8,543 |
|
|
|
7,513 |
|
Deferred income taxes |
|
|
(1,524 |
) |
|
|
(715 |
) |
Changes in assets and liabilities |
|
|
|
|
|
|
Accounts receivable |
|
|
647 |
|
|
|
(3,244 |
) |
Prepaid and other assets |
|
|
559 |
|
|
|
653 |
|
Accounts payable and accrued expenses |
|
|
(14,196 |
) |
|
|
(11,830 |
) |
Deferred revenue |
|
|
(1,034 |
) |
|
|
2,556 |
|
Change in other liabilities |
|
|
600 |
|
|
|
(697 |
) |
Net cash provided by operating activities |
|
|
9,957 |
|
|
|
9,803 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(317 |
) |
|
|
(506 |
) |
Capitalized development
costs |
|
|
(2,360 |
) |
|
|
(2,187 |
) |
Investment in intangible
assets |
|
|
(54 |
) |
|
|
— |
|
Business acquisitions, net of
cash acquired |
|
|
— |
|
|
|
(5,983 |
) |
Net cash used in investing activities |
|
|
(2,731 |
) |
|
|
(8,676 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
Payments on long-term debt and
finance lease obligations |
|
|
(780 |
) |
|
|
(826 |
) |
Payments on financing
component of interest rate swap |
|
|
— |
|
|
|
(646 |
) |
Payment of taxes on shares and
units withheld for employee taxes |
|
|
(70 |
) |
|
|
(48 |
) |
Net cash used in financing activities |
|
|
(850 |
) |
|
|
(1,520 |
) |
Effect of foreign exchange
rate changes on cash and cash equivalents, and restricted cash |
|
|
1,174 |
|
|
|
(1,171 |
) |
Net increase in cash and cash equivalents, and restricted cash |
|
|
7,550 |
|
|
|
(1,564 |
) |
Cash and cash equivalents, and
restricted cash, at beginning of period |
|
|
239,688 |
|
|
|
186,624 |
|
Cash and cash equivalents, and
restricted cash, at end of period |
|
$ |
247,238 |
|
|
$ |
185,060 |
|
|
NON-GAAP FINANCIAL MEASURES
The following table reconciles net income to adjusted
EBITDA:
|
|
|
|
|
THREE MONTHS ENDED MARCH 31, |
|
|
2023 |
|
2022 |
|
|
(in thousands) |
Net income(a) |
|
$ |
1,358 |
|
|
$ |
2,210 |
|
Interest expense(a) |
|
|
5,475 |
|
|
|
3,228 |
|
Interest income(a) |
|
|
(1,354 |
) |
|
|
(11 |
) |
Provision for income
taxes(a) |
|
|
1,111 |
|
|
|
1,536 |
|
Depreciation and amortization
expense(a) |
|
|
411 |
|
|
|
482 |
|
Intangible asset
amortization(a) |
|
|
13,113 |
|
|
|
12,450 |
|
Currency (gain) loss(a) |
|
|
894 |
|
|
|
(705 |
) |
Equity-based compensation
expense(b) |
|
|
8,543 |
|
|
|
7,513 |
|
Change in fair value of
contingent consideration(d) |
|
|
1,261 |
|
|
|
— |
|
Acquisition-related
expenses(e) |
|
|
1,192 |
|
|
|
272 |
|
Integration expense(f) |
|
|
102 |
|
|
|
— |
|
Transaction-related
expenses(g) |
|
|
— |
|
|
|
17 |
|
Loss on disposal of fixed
assets(h) |
|
|
4 |
|
|
|
5 |
|
Executive recruiting
expense(i) |
|
|
196 |
|
|
|
— |
|
First-year Sarbanes-Oxley
implementation costs(j) |
|
|
— |
|
|
|
653 |
|
Adjusted EBITDA |
|
$ |
32,306 |
|
|
$ |
27,650 |
|
|
The following table reconciles net income to adjusted net
income:
|
|
|
|
|
THREE MONTHS ENDED |
|
|
2023 |
|
2022 |
|
|
(in thousands) |
Net income(a) |
|
$ |
1,358 |
|
|
$ |
2,210 |
|
Currency (gain) loss(a) |
|
|
894 |
|
|
|
(705 |
) |
Equity-based compensation
expense(b) |
|
|
8,543 |
|
|
|
7,513 |
|
Amortization of
acquisition-related intangible assets(c) |
|
|
11,256 |
|
|
|
10,880 |
|
Change in fair value of
contingent consideration(d) |
|
|
1,261 |
|
|
|
— |
|
Acquisition-related
expenses(e) |
|
|
1,192 |
|
|
|
272 |
|
Integration expense(f) |
|
|
102 |
|
|
|
— |
|
Transaction-related
expenses(g) |
|
|
— |
|
|
|
17 |
|
Loss on disposal of fixed
assets(h) |
|
|
4 |
|
|
|
5 |
|
Executive recruiting
expense(i) |
|
|
196 |
|
|
|
— |
|
First-year Sarbanes-Oxley
implementation costs(j) |
|
|
— |
|
|
|
653 |
|
Income tax expense impact of
adjustments(k) |
|
|
(5,495 |
) |
|
|
(3,916 |
) |
Adjusted net income |
|
$ |
19,311 |
|
|
$ |
16,929 |
|
|
The following table reconciles diluted earnings per share to
adjusted diluted earnings per share:
|
|
|
|
|
THREE MONTHS ENDED MARCH 31, |
|
|
2023 |
|
2022 |
|
|
(in thousands except share and per share
data) |
Diluted earnings per share(a) |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
Currency (gain) loss(a) |
|
|
0.01 |
|
|
|
— |
|
Equity-based compensation
expense(b) |
|
|
0.04 |
|
|
|
0.05 |
|
Amortization of
acquisition-related intangible assets(c) |
|
|
0.07 |
|
|
|
0.07 |
|
Change in fair value of
contingent consideration(d) |
|
|
0.01 |
|
|
|
— |
|
Acquisition-related
expenses(e) |
|
|
0.01 |
|
|
|
— |
|
Integration expense(f) |
|
|
— |
|
|
|
— |
|
Transaction-related
expenses(g) |
|
|
— |
|
|
|
— |
|
Loss on disposal of fixed
assets(h) |
|
|
— |
|
|
|
— |
|
Executive recruiting
expense(i) |
|
|
— |
|
|
|
— |
|
First-year Sarbanes-Oxley
implementation costs(j) |
|
|
— |
|
|
|
— |
|
Income tax expense impact of
adjustments(k) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
Adjusted Diluted Earnings Per
Share |
|
$ |
0.12 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
Diluted weighted average
common shares outstanding |
|
|
158,177,025 |
|
|
|
155,936,953 |
|
Effect of potentially dilutive
shares outstanding (l) |
|
|
1,550,387 |
|
|
|
3,223,368 |
|
Diluted weighted average
common shares outstanding |
|
|
159,727,412 |
|
|
|
159,160,321 |
|
|
The following tables reconcile revenues to the revenues adjusted
for constant currency:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED MARCH 31, |
|
CHANGE |
|
|
2023 |
|
2023 |
|
2022 |
|
$ |
|
% |
|
$ |
|
% |
|
|
Actual |
|
CC |
|
Actual |
|
Actual |
|
Actual |
|
CC Impact |
|
Adjust for CC |
|
|
(GAAP) |
|
(non-GAAP) |
|
(GAAP) |
|
(GAAP) |
|
(GAAP) |
|
(non-GAAP) |
|
(non-GAAP) |
|
|
(in thousands) |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
$ |
33,005 |
|
$ |
33,845 |
|
$ |
29,193 |
|
$ |
3,812 |
|
13 |
% |
|
$ |
840 |
|
16 |
% |
Services |
|
|
57,296 |
|
|
58,051 |
|
|
52,358 |
|
|
4,938 |
|
9 |
% |
|
|
755 |
|
11 |
% |
Total Revenue |
|
$ |
90,301 |
|
$ |
91,896 |
|
$ |
81,551 |
|
$ |
8,750 |
|
11 |
% |
|
$ |
1,595 |
|
13 |
% |
(a) |
|
Represents amounts as
determined under GAAP. |
|
|
|
(b) |
|
Represents expense related to equity-based compensation.
Equity-based compensation has been, and will continue to be for the
foreseeable future, a recurring expense in our business and an
important part of our compensation strategy. |
|
|
|
(c) |
|
Represents amortization costs associated with acquired intangible
assets in connection with business acquisitions. |
|
|
|
(d) |
|
Represents expense associated with remeasuring fair value of
contingent consideration of business acquisition. |
|
|
|
(e) |
|
Represents costs associated with acquisitions and any retention
bonuses pursuant to the acquisitions. |
|
|
|
(f) |
|
Represents integration costs related to post - acquisition
integration activities. |
|
|
|
(g) |
|
Represents costs associated with our public offerings that are not
capitalized. |
|
|
|
(h) |
|
Represents the gain/loss related to disposal of fixed assets. |
|
|
|
(i) |
|
Represents recruiting and relocation expenses related to hiring
senior executives. |
|
|
|
(j) |
|
Represents the first-year Sarbanes-Oxley costs for accounting and
consulting fees related to the Company's preparation to comply with
Section 404 of the Sarbanes-Oxley Act, as well as implementation
cost of adopting ASC 842. |
|
|
|
(k) |
|
Represents the income tax effect of the non-GAAP adjustments
calculated using the applicable statutory rate by
jurisdiction. |
|
|
|
(l) |
|
Represents dilutive shares or
potentially dilutive shares that were excluded from the Company's
GAAP diluted weighted average common shares outstanding because the
Company had a reported net loss and therefore including these
shares would have been anti-dilutive. |
Certara (NASDAQ:CERT)
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