Good day, and thank you for standing by. Welcome to the Certara First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Deuchler, Investor Relations. Please go ahead. Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from Certara, we have William Feehery, Chief Executive Officer, and John Gallagher, Chief Financial Officer. Earlier today, Certara released financial results for the quarter ended March 31st, 2023. 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 materials for additional information, which you can find on the company's investor relations site. In their 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 release available on the company's website. For additional information, please refer to the reconciliation tables in the accompanying materials. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 8th, 2023. 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. With that, I will turn the call over to William. Thank you, David. Good afternoon, everyone. Thank you for joining Certara's first quarter 2023 earnings call. John and I will start with prepared remarks. Then we will take your questions. We are pleased with our start to 2023, which positions us well for the remainder of this year and beyond. Our team is focused on executing Certara's mission to accelerate medicines to patients using biosimulation, software, and services. We continue to see expanded interest from customers looking to safely accelerate the drug development process through the use of biosimulation. We deliver information and analysis that informs critical decision-making that will lower the cost of development and increase the probability of success in clinical trials, ultimately improving the health and well-being of millions of people globally. Before discussing our first quarter results, I'd like to formally welcome John Gallagher as Certara's new CFO. John joined Certara a little over one month ago and has already been a valuable addition to the leadership team. John will play an important role in Certara's future growth and financial success. I am thrilled to have him on board. There's a lot to be excited about at Certara as the pace of adoption and awareness of Certara's biosimulation platform continues to expand around the world. Just a few weeks ago, we announced that Certara's Simcyp PBPK simulator has now been used to inform more than 300 drug label claims for over 100 novel drugs in lieu of conducting clinical studies. In addition, in 2022, and for the ninth consecutive year, we're proud to say that 90% of US FDA new drug approvals were received by Certara's customers who use our biosimulation software and technologies driven services. Shifting to our first quarter performance, we are pleased with our financial results, which met our revenue and profitability expectations for the quarter. Certara's total revenue of $90.3 million grew by 11% year-over-year on a reported basis, and 13% on a constant currency basis. Revenue growth was driven by software and biosimulation services as we continue to see strong demand across all customer categories. First quarter software revenue of $33 million represented 13% year-over-year growth on a reported basis, and 16% on a constant currency basis. We continue to see strong performance from our core biosimulation software, Simcyp and Phoenix, as well as Pinnacle 21. These three software platforms represent the majority of our software revenues. In early March, we announced our annual update of Simcyp, now on version 22. This year we added the ability to model more diverse populations, expanded our library of therapeutic compounds, and unveiled Simcyp Designer, a tool that will help users develop their own pharmacodynamic and QSP models. Our continued investment and commitment to innovating our core software platforms with new features to support and expand use cases is what continues to strengthen our relationships with our pharmaceutical and biotech customers. Following the close of the Vyasa transaction, our team has worked hard to integrate their cutting-edge deep learning AI technology throughout the Certara platform. We recently announced the rollout of our updated D360 software, which incorporates AI and enables the development of predictive models that are trained on both public and proprietary data. These enhanced D360 capabilities include automated property prediction, novel chemical structure generation, and analysis of unstructured data. We're excited by the speed at which our software team was able to make these upgrades, and we're encouraged by the early traction with customers. Throughout the year, our team will continue to find new applications for this deep learning technology across our software product offerings. Certara's first quarter technology-driven services revenue was $57.3 million, which grew 9% on a reported basis and 11% on a constant currency basis compared with the first quarter of 2022. Biosimulation services growth remained an area of strength, growing at comparable levels experienced throughout 2022, and we expect continued strength throughout 2023 due to an encouraging bookings trend throughout the past 12 months. We continue to see strong demand for biosimulation services as our clients expand its use across biologics, cell and gene therapies, and small molecules. Our regulatory businesses continues to be a headwind to services growth, but they are performing within the range of our expectations as we navigate a challenging market environment. The pace of recovery in regulatory is moving slower than initially anticipated, and growth is expected to be weighted more towards the second half of the year. Our regulatory team is focused on strengthening the pipeline, and we remain encouraged by the progress made so far. To close, we're pleased with our first quarter results. We believe that our team is well-positioned to continue our success throughout 2023 and over the long-term as we support and catalyze the adoption of biosimulation for drug research and development. I would like to close my remarks by extending my deepest appreciation to the entire organization of Certara for their dedication and hard work. I will now turn it over to our CFO, John Gallagher, to discuss our first quarter financial results in more detail. Thank you, William. Hello, everyone. Before reviewing our financial results, I would like to thank William and the entire team at Certara for the opportunity to join such an exciting and innovative company. Andy has been helpful to me as we work our way through an orderly transition of responsibilities, which is expected to be completed later this quarter. Moving to our financial results. Total revenue for the three months ended March 31st, 2023 was $90.3 million, representing year-over-year growth of 11% on a reported basis and 13% on a constant currency basis. As discussed, overall demand for biosimulation remains strong and thus insulated from concerns in the industry around funding. Specifically, we recently performed an analysis of our accounts receivables for 2022 and found that less than 1% of our total revenues were transferred through banks typically associated with venture or early-stage companies. Software revenue was $33 million in the first quarter, which increased 13% over the prior year period on a reported basis and 16% on a constant currency basis. Growth in the quarter was driven by biosimulation software and Pinnacle 21. Ratable and subscription revenue accounted for 59% of first quarter software revenues. Software bookings were $30.7 million in the first quarter, which increased 4% from the prior year period. We experienced timing-related delays that pushed some first quarter deals into the second quarter. There has been no impact to our annual plan due to this timing. The overall health of our software bookings remains strong and trailing 12 months software bookings were $126.1 million, up 24% year-over-year. The software aggregate renewal rate was 90% in the first quarter, which is in line with our plan. Services revenue was $57.3 million in the first quarter, which increased 9% over the prior year period on a reported basis and 11% on a constant currency basis. Biosimulation services continued to perform well, growing in the mid-to-high teens range while regulatory services remains a headwind to the overall growth rate. Technology-driven services bookings for the first quarter were $82 million, which increased 4% from the prior year period. Trailing 12 months services bookings were $287 million, which increased 8% as compared to the prior year. Biosimulation services bookings momentum continued to be robust and an encouraging indicator for the adoption of biosimulation. In addition, we are focused on improving our regulatory services performance against a difficult market backdrop. Regulatory remains a high priority for our commercial team. We are focused on strengthening our business pipeline in 2023. Total cost of revenue for the first quarter of 2023 was $34.9 million, an increase from $32.8 million in the first quarter of 2022, primarily due to employee costs related to billable headcount growth as well as software licenses. Total operating expenses for the first quarter of 2023 were $48 million, an increase from $42.6 million in the first quarter of 2022. The components of operating expenses are as follows. Sales and marketing expenses were $8 million compared to $6.1 million for the first quarter of 2022. This increase is primarily due to employee costs related to expanding the sales and marketing team. R&D expenses were $9.3 million compared to $7.5 million for the first quarter of 2022. R&D expenses were up primarily due to employee-related costs for software development. G&A expenses were $19.8 million compared to $18.3 million for the first quarter of 2022. Excluding the impact of acquisition expenses, including a change in fair value estimate for contingent consideration, G&A was flat year-over-year. Intangible asset amortization was $10.5 million compared to $10.1 million in the first quarter of 2022. Depreciation and amortization expense was $0.4 million compared to $0.5 million in the first quarter of 2022. Continuing down the P&L, interest expense was five and a half million dollars compared to $3.2 million for the first quarter of 2022 due to higher interest expense relating to our floating rate term loan. As a reminder, we have about 78% of our debt fixed at 6.38% and roughly 22% floating at LIBOR plus 350, which is about 8.5% at today's rate. Miscellaneous income was a half a million dollars compared to $0.8 million in the first quarter of 2022 due to higher interest income offset by foreign currency expenses. Income tax expense was $1.1 million compared to $1.5 million for the first quarter of 2022. Net income for the first quarter of 2023 was $1.4 million, compared to $2.2 million for the first quarter of 2022. Reported 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. Adjusted EBITDA margin was 36% in the first quarter of 2023. Reported adjusted net income for the first quarter of 2023 was $19.3 million compared to $16.9 million for the first quarter of 2022. Diluted earnings per share was $0.01 in the first quarter of both 2023 and 2022. Adjusted diluted earnings per share for the first quarter of 2023 was $0.12 compared to $0.11 for the first quarter of 2022. Moving to the balance sheet. We ended the quarter with $244.1 million of cash and cash equivalents. As of March 31, 2023, we had $296.7 million of outstanding borrowings on our term loan and full availability under our revolving credit facility. Turning to the guidance for full year 2023. We are reiterating our previously issued guidance of total revenue in the range of $370 million-$385 million, representing growth of 10%-15% compared with 2022. Our revenue guidance assumes continued strength in software and biosimulation services, where we have good visibility given our trailing 12 months bookings. The guidance also assumes regulatory services growth in the low single digits as compared to 2022, which is expected to be more second half-weighted than originally anticipated, and software subscription revenue continues to increase as a percentage of total software revenues. We expect adjusted EBITDA in the range of $131 million-$137 million, adjusted EPS in the range of $0.50-$0.55 per share, fully diluted shares in the range of 159 million-162 million, and a tax rate in the range of 25%-30%. I will now turn the call back over to our CEO, William Feehery, for closing remarks. Thank you, John. To summarize our message today, we're pleased with our first quarter results, and we believe that Certara is well positioned for growth this year and in the future as we continue as a global leader in biosimulation. We will now open the line for questions. Operator, can you open the line? Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of David Windley of Jefferies. Your line is now open. Hi. Thanks for taking my questions. Good afternoon. I wanted to start, Bill, on the customer adds and just curious about, appreciate the comments around the payment transfers from banks that John mentioned. I wondered if you could talk about what your new customer add trends have looked like and if those are predominantly small companies. I would assume typically small companies and how that, you know, how that's progressed in a more challenging funding environment for those small companies. Hi, David, this is John. As we look at the new customers that we're adding, we're seeing good contribution actually across all the categories. As I mentioned in the remarks, we had a 90% renewal rate. That's in line with plan. The net retention rate is also in line with historical averages. In fact, you know, when you look at the software growth of 13% then, and you take that apart, then it's about 10% growth in existing and expanding customers and about 3% from new logos. New logos are growing and, they're, you know, about in line with what we've seen on annual historical averages. Given that we do have the top biopharma companies as our customers already, you got a mix of sort of tier two and tier three in there for sure. Got it. Okay. Then, the comment about, maybe an off the beaten path question, but the comment about the 90% of customers, or 90% of, excuse me, approvals, coming from your customers and that being the 7th year in a row, I believe, is what you said. Is it possible to quantify or perhaps qualify, you know, talk in qualitative terms, how those customers are using more simulation in those programs as they trend to approval? Like how might we measure how biosimulation is growing in importance within those approval journeys? Yeah, David, thanks for the question. You know, a couple of points. We also gave some statistics about the use of Simcyp. The Simcyp's recently passed, if you just look at public records, 100 drugs it's been used on. That's one measure. Within that, there's been over 300 label claims. These are documented cases in which biosimulation was used to avoid some number of clinical trials during the development of an approved drug. The other thing we can point to is, you know, our, you know, the demand for our services has been, you know, quite strong, and not just recently, but over the last few years. That's a reflection of the fact that, you know, we're working, you know, biosimulation is becoming more accepted and, you know, we're playing a bigger part as in drugs that have been approved. Got it. Thanks for the answers. I'll yield the floor. Thank you. Thanks, David. Please stand by while we get our next caller. Our next question comes from the line of Vikram Purohit of Morgan Stanley. Your line is now open. Hi, good afternoon. Thanks for taking our questions. Our first one is on the regulatory services side of the business. I believe you mentioned that the recovery there has been a bit slower than you expected earlier. Could you just unpack for us in a bit more detail what has unfolded differently versus your prior expectations and what factors you think could lead to an uptick in the second half of the year? Thanks. Yeah, thanks, Vikram. Regulatory services is a bit behind what we had planned for the 1st quarter. It was, you know, roughly flat with last year, 1st quarter, and we're expecting, you know, single-digit growth for the year. We are, you know, building up our pipeline and seeing increased interest for it. We do believe that we will, we will catch up as we move through the year. As you know, we made some changes last year to the management and the sales organization there. It's taken us a little bit of time to rebuild the pipeline. We still think that it's a good business for us. It's quite profitable, and, it fits nicely in with a lot of the biosimulation software and services that we have in Certara. Got it. As a follow-up on a different topic, we wanted to ask quickly about capital allocation, particularly given the recent CFO transition. Just wanted to see if there's any changes in thinking or priorities when you think about business development or competencies you'd like to bring in, bring in-house. Thanks. You want me to start, John, and then you can, you can chime in there? Yeah. Yeah, yeah, sure, Bill. We're not expecting, you know, significant changes. We, you know, we have a healthy balance sheet that we're running conservatively, and we have a successful history of doing M&A, and we've shown, I think, that we've been quite judicious in both what we have chosen to acquire and the prices we've paid and our ability to sit and do nothing, you know, when the time isn't right. That said, you know, in cases like Pinnacle 21, we've also shown that there's interesting things in our market where, you know, if we have the ability to move that can be very valuable for our shareholders. You know, we think, our capital allocation has been, has been successful so far and, in a good place to stay. Maybe I'll turn it over to John to talk a little bit about the, you know, what he wants, how he sees the organization and what he wants to bring in. Thanks, Bill. As Bill mentioned, we're not seeing, you know, any strategic change from what you've seen here. Obviously the company has had a very good track record on the M&A front, Bill mentioned we continue to evaluate. We approach those from a position of strength, because of the healthy balance sheet. We're really pleased to have the cash on hand. We mentioned we have $244 million of cash in equivalent, at a time when the macroeconomic climate is very uncertain. We think that, it's important to have that cash at our disposal, especially with the funding environment the way that it is. The strong balance sheet, the M&A-acumen that exists and then plus the internal opportunities that we have as an organization, are sort of the keys to capital allocation as I see it coming in as well. Got it. Thank you. Please stand by for our next question. Our next question comes from the line of Jeff Garro of Stephens Inc. Your line is now open. Yeah. Good afternoon, guys. Thanks for taking the questions. Maybe start with a 2-parter on regulatory services. Just curious to what extent are large projects needed to reach that low single-digit revenue growth expectation for the regulatory and market access piece of the business. And also on that front, curious what the impact of the regulatory services market that you described on the first quarter services bookings. Thanks, Jeff. Let me just understand your question. The first part was around the bookings, is that what you're saying? The first part, you know, in the past you've talked about some kind of outsized projects, you know, really at the end of the FDA. Right. submission process and those having a, you know, a really positive impact when they've hit, but sometimes don't have the same visibility as the, you know, longer duration parts of the regulatory business. Yeah. Our regulatory business. Thanks for the question. Our regulatory business has historically been more lumpy than our biosimulation business for the reasons that you cited, because every year, we tend to do a handful of larger projects, and the timing and existence of them can kind of make the business move up and down in a quarter. If I look back over the last, you know, four or five years, every year, we generally had a couple of those projects, it's reasonable to assume that we'll probably have a couple this year. What we saw booked in the first quarter were pretty much more the normal kind of run-of-course business, which is great business and, certainly pays the bills. You know, we didn't have one of those really large ones come in in the first quarter. Maybe that answers your question. We don't necessarily cook into our assumptions too that what we're gonna get a set number of very large transactions. To the extent that we get some larger deals coming in, then that would be upside to our low single digits. Got it. Got it. That's helpful. Follow up for me on software bookings. Was just hoping for any more color on the timing impact that was mentioned around software bookings and renewal rates and maybe also how we should think about the cadence of software bookings for the rest of the year. Just, you know, recognize the strong trailsing-12-months numbers, but trying to think ahead a bit to the tough year-over-year comparison coming in Q4. Thanks. Yeah. Yeah. Oh, go ahead, John. Specifically on software and the bookings there, as you mentioned, you know, we did experience some timing. We mainly see that as timing out of Q1 into Q2 and Q3. The trailing 12 months as you reiterated is a strong 24%. When we look at that 24% and recognizing our book-to-bill ratio continues to be about 1.2, that gives us confidence that on the full year, we'll be right in the range of expectations on software revenue. Yeah. Jeff, we've, you know, something we've pointed out that, you know, the quarterly bookings can be somewhat variable. We sometimes have software customers that, you know, renewed in the first quarter last year, and we, for various reasons, didn't sign them up to the second quarter this year. That timing difference won't really affect the revenues we get this year. That's what we point to looking at the trailing 12 months as a maybe more accurate estimate of where we're going. What we saw in the first quarter was a few large customers took a little bit longer to renew than we had expected, and they slipped into the second quarter, but we didn't lose anybody significant, and we've signed them all since then. You know, I don't think we're particularly concerned about that right now. Got it. Thanks for taking the questions. Please stand by for our next question. Our next question comes from the line of Luke Sergott of Barclays. Your line is now open. Hey, guys. Good afternoon. I just want to follow up on the regulatory services and get an update there. You know, all the commentary has been helpful, but if you could help size the business and then in your guide, if you're pushing it out to the second half recovery, give us a sense of how that step-up looks? Do you want me to start, John? Sure. I mean, you know, from a size of the business, it's about, you know, it's about 20% of the business overall. As Bill had said before, you know, it's flat on the quarter, and we're expecting that in the second half, we get that recovery to growth. We didn't change the outlook on the low single digits for the full year. That does imply, as we've been mentioning, that does imply that, you know, we'll start to see that growth coming in in Q3. Okay. I get the reason for the pushout being mostly on the FDA side. Can you talk about what you're hearing from your conversations with them on then when they're going to update their regulations? Yeah, I don't. We're how do I put this? We're highly interested like the rest of the industry, but I don't think we have anything new to say on it that we've heard from them, so. Okay. Awesome. Thank you. We're waiting, right? We all are. Right. Okay. Thank you. Stand by for our next question. Our next question comes from the line of Max Smock of William Blair. Your line is now open. Hey, guys. Thanks for taking our questions. A quick one here for me. You mentioned you did a deep dive on your accounts receivable. I think last quarter you actually indicated you had an increase in bad debt reserve. Just wondering if there was anything to call out there, whether you're, you saw that trend continue here in the first quarter, maybe some of your smaller customers, being more impacted, and anything else you would call out from that deep dive of accounts receivable that you did here in the first quarter? Yeah. Yeah, sure. Just to put it in context, first of all, bad debt reserve, to put it in context, we have about $80 million of accounts receivable, and the bad debt reserve actually came down in sequential quarters, to $700,000. While in subsequent periods, we did increase it a bit, just to give you a sense of order of magnitude, it's, you know, it is relatively small. We did take a look, of course, with some of the, what's been happening with regional banks and banks exposed to some of the more emerging biotechs. We took a look through our accounts receivables, and what you heard in the prepared remarks is, you know, we concluded that any exposure that we have is pretty immaterial given that less than 1% of our receivables are running through banks that have any exposure to venture or early-stage biotech funding. Okay. Makes sense. The other thing I'd just add to that is this, we weren't surprised by this. You know, the way that Certara's business is structured, you know, we are interested in acquiring new customers, but they're, you know, the small one, you know, early-stage companies, you know, don't purchase a ton from us. You know, we tend to get over 70% of our revenues, when you're in clinical phase, which by definition means drug's got a lot of, you know, a lot of promise and a lot of, a lot of spending behind it. Okay. Yeah, makes sense. On the headcount additions over the last two years there, why have we not seen the rate at which the services bookings convert to revenue? Why have we seen that slow down or at least not pick up at all? Is that just due to some cash-conscious decision-making from customers on regulatory services? Moving forward, do you think you have an opportunity to step up productivity and drive a higher burn with the net existing services backlog moving forward, kind of more in line with what we saw in 2021? Or do you expect that to be kind of depressed here given the slowdown in demand on regulatory services in particular? A couple of comments on headcount. You know, first, you know, we are seeing growth in headcount both on a year-over-year basis and since the last headcount number that we disclosed in the 10-K. Sequentially, we're seeing growth in headcount. The people that we're adding are, you know, billable consultants for biosimulation services, as well as software developers. That, obviously is gonna help us meet the strong demand that we've been talking about as it relates to both the revenue growth and the booking in that space. To answer the second part of your question, there's a chunk of our backlog, which are basically delayed projects in regulatory. You know, sometimes the customer is waiting for an answer from the FDA before we do the next phase of work, or some of them are, you know, waiting for clinical trial data to come back. It's not always predictable by the customer, and that has tended to grow over the last couple of years. There's an opportunity at some point for it to come back. You know, a lot of those, most of those customers are still there and still active. They've already booked the work, so it's a question of when it starts. I don't wanna get in the business of trying to predict exactly when all that's gonna, you know, when all that's gonna happen. No, understood. That's really helpful commentary. Thank you again for taking our questions. Please stand by for our next question. Our next question comes from the line of Mike Ryskin of B of A. Your line is now open. Hi, this is Wolf Chan off on for Mike. Thanks for taking the questions. I kind of want to start with a bit of a bigger picture one. I think there's been a lot of notable M&A in the biotech space, primarily from larger acquirers. Given your presence among larger pharmas, I was wondering if you could walk us through the dynamics that you typically see as a result of this. Do the acquirers broadly roll out Certara's offerings to their targets? Is this something that takes a multi-year process? Just any color here would be great. Thanks. Yeah. Thanks for the question. Generally, the acquirers are the bigger companies, which are already our customers. We're not seeking to have, you know, use M&A as a way to penetrate them. We're already there. What you do tend to have happen is if we've been working on a drug, for a company that's been acquired, you know, we kinda go along with the acquisition. Usually the acquirers want, you know, wants to accelerate things and spend more, and we're part of it. Well, let's just say normally that is a net positive for us when it happens. You know, you have an asset that, basically someone's gonna invest more in and we're already involved with it. We're gonna get pulled along with that as it goes into approval. Is that helpful? Yep, that makes sense. Then just a slightly more technical question. Are there any changes to your thoughts about the EBITDA margin progression throughout the year, just given where you came in in 1Q and the fact that you've reiterated guidance? I'd love to hear how you're thinking about the balance of the year. Thanks. Right. Thanks for the question. On EBITDA margin, Q1, we were 36% on the EBITDA margin. We've stated before mid-30s is kind of our goal. I, you know, I know looking back at last year, Due to some investments, we had some imbalance on a, you know, first half, second half basis. You shouldn't expect that to happen this year. Instead, as we look at the remaining quarters in 2023 and on the EBITDA margin, we expect it to come in sort of ratably and in line with the mid-30s for each of those quarters. Great. That's super helpful. Thanks, guys. Mm-hmm. Please stand by for our next question. Our next question comes from the line of Joy Zhang of SVB Securities. Your line is now open. You guys, thanks for taking my question. I guess my first one, I think we've heard some CROs this earnings quarter calling out some higher cancellation rates than they expected. Curious if you have seen any sort of downstream impact from that. If it's not an impact that you see, would it be a sort of potential negative impact on, you know, reg business or anything else, that you would call out if things get worse? Thanks, Joy. you know, part of our business is there always are some degree of cancellations. It's just the way the drug industry works. I would say for our business in biosimulation, there are so many projects that doesn't generally affect us. In regulatory, it can move the numbers up or down a little bit, depending on how big that project is and what the exact circumstances are. I don't think we saw this as a particular impact to us in the first quarter. That's super helpful. As a follow-up, I appreciate your earlier comment about, you know, new customers coming from, you know, both the small biotech side and large pharma side. Just curious if you can dig into, you know, if there's anything to call out in terms of, you know, the lengths of sales cycles for, you know, these groups of customers, you know, any sort of trends there, just given, you know, the cash conservation we're seeing on the, sort of small biopharma side? Maybe, maybe the other thing I'd add on customers in addition to the comments already would be that, you know, amongst our larger customer account values, so this is the accounts that are greater than $1 million and the accounts that are greater than $100K. Both of those categories, we were growing the number of customers since what we reported at year-end. In Q1, we grew both of those categories. Given, you know, what we said about the revenue results, when you, when you look at the biosim services in the mid-to-high teens% and the core software products of Simcyp, Phoenix and Pinnacle 21 growing in the mid-teens%, you know, at this moment, we're not seeing the impact. Fortunately, we're, you know, we're continuing to see very strong results in adding customers and the growth rates on our revenue. If I could add on to what John said there, Joy. I think there's really two effects going on in the market right now. One is, you know, the time to close deals in software probably and services is probably lengthening a bit, and it's what we've seen with some of what companies have reported. Counterbalancing that has been the strong demand for biosimulation, which has been growing. I think, you know, when you see our results, you know, we don't see a result of it, but it's probably because the one's kind of balancing out the other one right now. That's great to hear. Thanks for adding to my question. Please stand by for our next question. Our next question comes from the line of Gaurav Goparaju of Berenberg Capital Markets. Your line is now open. Hey, guys. Thanks for taking my questions. Just two quick ones from me. You know, what would have to happen with regulatory services to help you hit the higher end of, you know, guidance that you maintained? Is reaching the top end possible, for example, if regulatory, you know, doesn't recover from levels in Q1, even if you see favorable expansion in existing customers and other segments? Just trying to, you know, see what would contribute to the top end here. What we said for REG was low single digits on the full year. In order to, you know, get to the higher end of that or exceed it, you know, based on what I was saying earlier, what we don't have coast in is a large number of the larger deals or transactions which can occur in REG. You know, if we get some alignment and we get a few of those in, that would have us at the higher end. You know, we were flattish on the quarter. You know, as we start to approach Q3, we would expect to start to see growth in the second half of the year. Got it. Then, just a quick follow-up. You know, have new products like Simcyp Discovery, you know, driven interest more so from new customers not yet on the platform, or more so from, you know, active users that are looking to expand their consumption of software? Again, this is, you know, for new modules and new products that, you know, you add to the platform. Yeah. Thanks for the question. Simcyp Discovery, the answer is both. We've seen a set of new customers come in that are using Simcyp in other parts of the organization using this product. We've also seen some of our existing customers pick it up, not as a substitute for Simcyp, but for use for basically expanding the use of Simcyp within the organization to different parts of it that didn't use it. Got it. Makes sense. Thanks, guys. Appreciate it. Please stand by for our next question. Our next question comes from the line of Joe Vruwink of Baird. Your line is now open. Great. Hi, everyone. Maybe I'll start with a question just on market opportunity. I noticed in your investor materials today the size of the biosim software TAM had increased just relative to the sizing I think you've used in the past. Maybe you could walk through, what this is a function of. You know, just mentioned a new product. Is it new products you've launched since the IPO? Is there maybe evidence that spend per account is greater, or are there some other factors at play? Yeah. Listen, on the TAM piece of your question there, then, you know, what we're seeing is you're basically seeing an expansion because of the growth and the overall adoption of biosimulation. You know, that's the answer as to why you'd see growth in the TAM. It's because, you know, we are experiencing mid-teens growth in the space. Okay. That's just normal evolution of the market, no added factor from new products or maybe going after early-stage development or discovery a bit more. That's correct. Yeah, that's correct. Okay. Still, you know, the vast majority of our revenue continues to be has been and continues to be in the clinical phase of drug discovery. It's, it's not that there's an inching into the or not drug discovery, but drug development. There's, so there's not an inching into discovery. Really what you're seeing there is just continued growth and adoption in biosimulation in the drug development and clinical phase. Okay. Understood. Just as a follow-up, I know there's been this ongoing shift within the software revenue mix towards ratable and subscriptions. Has this been impacting bookings or revenue in maybe a bigger way relative to your expectations? Obviously, subscriptions are only good for customer lifetime value, but wondering if this creates any more variability in kind of the quarterly disclosures. Yeah, sure. On software revenue, the reported revenue for software was 13%. That was impacted, as we mentioned before, by a little bit of timing on the quarter out of Q1 and into Q2. It's also a piece of the headwind there, though, is what you're describing, which is, you know, a conversion to subscription. That would impact revenue. It is a growth headwind, that conversion, and we're at the at 59% in Q1 of software revenues, and that's up from 54% in the year prior. Is that a headwind? Yes. Is it material? No, not really. It's more of a modest headwind to overall growth. Okay. Thank you very much. Thank you. Stand by for our next question. Our next question comes from the line of Kyle Cruz at Credit west Financial Services. Your line is now open. Hey, guys. Thank you for taking the question. Could you maybe provide some more color on the organic trailing 12 months software bookings, excluding the Pinnacle 21 acquisition? Yeah, sure. We've now annualized Pinnacle. We're not gonna continue to break it out and talk about ex, Pinnacle. You know, what I did say before is, hey, look, you know, the software trailing 12 months bookings are at 24%. That's a strong number. Pinnacle continues to be a good addition to the portfolio and is a driver of the overall growth that we're seeing in trailing 12 months bookings. Maybe as an unrelated follow-up, with 70% of your revenues from the clinical business, have you seen a distinction in the growth of the kind of clinical business and the other proportion of your revenues that are preclinical? I'm sorry, have we seen the distinction? What is- Yeah, I guess to maybe clarify, like, is your preclinical business, has it been kind of growing faster than the clinical part of the business, or have they been growing similarly? I would say that the preclinical is probably growing a little bit faster than it used to because we've launched a few products in that area, so we're seeing the benefits of that. I don't think we would change what we've reported as the overall mix of our revenue between the two right now. Great. Thank you. I would now like to turn the call back over to William Feehery, CEO of Certara, for closing remarks. Well, thank you, everybody, for joining our first quarter conference call. I think that we would say at Certara we had a good first quarter. We are very excited about the progress and the prospects for biosimulation as we go forward. There's a lot of interest in what we're doing, and we're very pleased with that attention that we get from the industry. We feel good about our future, and we look forward to talking to you all next quarter. Thank you very much. I think this will end the call. Yes. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.