CERT

Certara is a category leader in Model-Informed Drug Development (MIDD), a niche the 10-K MD&A frames as central to a $290B annual pharma R&D spend. The qualitative moat is real: customers using Certara solutions have received 90%+ of new FDA approvals since 2014, software is licensed by 160,000+ users, and 20 global regulators — FDA, MHRA, PMDA, NMPA — use the platform. That regulatory embedding is hard to dislodge and is the single best reason to own this name. The MD&A's positioning of AI 'within validated scientific frameworks and expert-led workflows' is also the right framing for a regulated-software vendor — it leans into the moat rather than chasing hype.

The numbers, however, only partly back the story. FY2025 revenue grew 8.7% to $419M — respectable but decelerating from the FY2021→FY2025 trajectory ($286M→$419M, ~10% CAGR) — and operating income jumped to $21.0M from a near-zero base, lifting operating margin to just 5.0%. GAAP net income remains negative (-$1.59M) for the fourth time in five years, and retained earnings sit at -$130M. The redeeming feature is cash: $96.3M operating cash flow on minimal $1.76M capex, $189M cash on hand, manageable $290M long-term debt (L/E of 0.46x), and $42.6M deployed to buybacks in FY2025 — management is voting with the balance sheet.