All right. I think we're on time here. Great. Good afternoon, everyone. I'm Craig Heddenback. I cover the health tech and provider space at Morgan Stanley. Very pleased to have with us CFO John Gallagher of Certara. Thanks. I thought we'd just set the stage with a focus on your strategy, particularly from a growth perspective. If I think about the organic growth profile and mid-single digits, you know, some of the things you're looking to do to accelerate that growth profile over time. Thank you, Craig, and thanks for having me. The overall end market environment is subdued. We've talked about that through some of our meetings, and on the quarter, we talked about that, of course. That doesn't stop us from being able to accelerate growth for the company. You pointed out and cited what our organic growth is looking like, and we're making a number of investments during the course of this year. We made investments first over the last couple of years in sales and marketing to fully build out our commercial organization. The next phase of investment, which you've seen this year and will trickle over into the next year, has been in R&D. We believe that these investments—we've seen accelerated growth from the build-out of the commercial organization, and that's showing up with the results we're seeing in our tier-three customers this year. We're also in a position where the organic growth that you cited, we're not satisfied with that, and we believe we can grow even in subdued market conditions. We think we can accelerate growth, and we're doing that by investing in R&D. What does that mean? That means we're investing in the software platforms. We're excited that, in the fourth quarter of this year, we're rolling out three additional, whether it's enhancements to our existing platforms or all new software, during the fourth quarter. We can get into that some as we've talked through the questions. We're very excited about Certara IQ, which is going to be AI-enabled software for QSP, which is an emerging, fast-growing area of biosimulation. We have a cloud version of Phoenix with AI enhancements and functionality that we think is going to be very attractive to our customers and entice them into converting from on-premise into the cloud. Recently, we've come out with Pinnacle 21 for Enterprise, which is another enhancement for that important platform. All together, what that spells is new software, new software enhancements that's going to allow us, and we expect to, even in the face of these subdued end markets, to be able to accelerate growth next year on an organic basis. That's great. On the R&D side specifically, you mentioned kinda some new products coming out. Can you just discuss the feedback loop with customers? Any particular pain points you're addressing for them, and how that kinda might shape that product development side? Yeah. I mean, the most glaring pain point that exists is the fact that the vast majority of drug programs and drug trials get all the way into the clinical phase and are still failing. That is the value proposition of Certara, to save time, save money on drug development, enable our customers to understand these failures faster, to redeploy capital in areas that are going to be successes. Everything that I described with accelerating and enhancing our software platforms is going to enable addressing what is that critical pain point in drug development. Got it. You recently appointed a Chief Technology Officer. I would love to hear, just in the context of some of these things we're discussing, what's his main directives? What are some of the goals there for that role? Yeah. We're super excited to name Chris Bouton as our CTO, which Craig, as you pointed out, just did that recently. Now, Chris is not new to Certara. He came as part of the acquisition of Vyasa, which was our acquisition of AI technology, which was a company that he founded and led up through the acquisition. Of course, he's been with Certara and that acquisition was done at the tail end of 2022. He's been with us for the last few years and has done a fantastic job of enabling AI technology across the various product platforms and offerings at Certara. Now is the perfect time to elevate Chris as more and more of the product enhancements that we're rolling out, three of which I just talked about, are involving AI. We're super excited to have him named as our CTO. One of the key things that he's focused on right now is the launch of Certara IQ, which is AI-enabled software for the QSP space. Great. I did want to touch on more broadly Certara Cloud that we launched in April of 2024. What type of impact is that having on the business? How are customers responding to that? Yeah. Certara Cloud, think about Certara Cloud in the context of a single sign-on, opportunity to make our customers who may be using one or two of our software platforms aware of the breadth of software offerings that Certara has. The adoption of Certara Cloud has accelerated rapidly, particularly when you think about that single sign-on. Our Phoenix customers, as an example, are annually renewing their Phoenix license renewal rate very high on our software products. What's happening is they're automatically being ported over to this single sign-on so that they can go and use their Phoenix product. They also become aware of, if they're not already using it, of SIMCYP, of Pinnacle 21, of all of Certara's software offerings. You can imagine with the high number of seat licenses that we have for something like Phoenix, as each and every renewal rolls over to the next year, they're ported over to Certara Cloud. The adoption has been very good. The receptivity has been good. It really primes Certara from a marketing and branding perspective in making our customers aware of the breadth of the software offerings that we have. Got it. When I think about adoption and where that's at, any distinction between the type of customers, be it kind of biotech versus large pharma? In the case of Certara Cloud, I think that just purely from a renewal perspective, a lot of that's been centered in the large biopharmas. That being said, we're having a good year in the biotech space. I credit that to the commercial team. I mentioned earlier we have a fully built-out commercial team that's able to focus on the biotechs that have the funding. Even though the funding environment has picked up slightly, it's still not what it once was. In the first half of this year, it was tough. We've seen strong results there, and I think it's because we're targeting the biotech companies that are poised for adoption. Got it. Maybe just building on that in terms of how you define your customers in terms of tier one, two, and three. What are your thoughts in terms of the growth prospects kind of on a multi-year basis? How are you kind of approaching that? Yeah. Yeah. Yeah. Maybe first just to define the tiers. We have, as you just said, Craig, we have customers categorized by tier one, two, and three. Tier one customers, think big biopharma, annual customer revenue in excess of $5 billion. That category represents about 50% of our revenue. The tier three customer category, think biotechs, revenue less than $100 million or no revenue, so pre-revenue type biotechs. They represent about 30% of our revenue. Of course, the tier two is the 20% that's in between. As far as the growth and performance, I mentioned already that the tier three performance has outpaced our expectation this year. When I look at tier three bookings, we've had solid results there, even in the face of a funding environment that's continued to be challenged, although recently has gotten a little bit better. That's because we do have that strong commercial focus. We built out the commercial team, and we're able to target the biotechs that have the funding and the appetite to spend, so performance there has been good. In the tier one category, we've seen, in the second quarter, for example, we saw software bookings in the tier one category were impacted by some timing. We fully expect to realize that timing in the second half of the year and remain on track. In services, in the tier one category, we had a strong 2Q there. I'd say as we proceeded through the summer months, we saw some softness in the tier one services category, but typical to what you might expect, seasonality. Overall, we remain on track with the plan for the full year. We've had a little bit of timing in software bookings in the tier one category in the second quarter. We see that swinging back in the second half. Overall, on a full-year basis, we feel good about the plan. Great. Within the portfolio, any kind of high-growth areas that you're kind of most excited about as we exit this year and heading into 2026? Yes. Two key areas to focus on when we think about the highest growth that we're seeing this year, as well as excitement for moving into next year, would be QSP or quantitative systems pharmacology, which has been outpacing our expectations during 2025. We expect that to continue into 2026. This is a higher growth area within biosimulation. Certara is the market leader in this spot too, as keep in mind what it, what is QSP to Certara. That's the combination of an acquisition we did in 2023 of Applied Biomass combined with Certara's own QSP consulting practice, giving us the biggest QSP consulting practice in the industry. That has fared very well during 2025 so far. Now we're launching Certara IQ, which is taking what is a 100% services or consultant practice today and adding software to it. That's what gets us really excited about that product moving into next year. Then SIMCYP. SIMCYP is our core biosimulation software platform that has performed really well during 2025. We expect that to continue during 2026. Great. Maybe we can just shift for a minute to the margin side of things. Just current margin profile, how does that look relative to your longer-term targets? Yeah. Yeah. The margin guide for this year is 30 to 32% adjusted EBITDA margin, and we're on track to be able to deliver that. That's clear with the first half results. It's reflective of a low, I'll call it a low 30s EBITDA margin profile that we had last year, we have this year, and we would expect to continue in the near future given the investment profile that we have in front of us. I mentioned earlier in our discussion that we had invested in sales and marketing. That was really more of a last-year investment. This year, we're investing in R&D to drive the growth in the key product categories that we discussed, Craig. We expect to continue to invest in the R&D line to be able to roll out additional software enhancements, new product offerings in the software category, and be able to shift the focus of our services organization also. Great. Maybe just shifting gears to kind of the near-term environment. I mentioned before, no surprises, conferences, so much focus on just kind of policy, what's happening in D.C. I think on your earnings, you guys kind of characterize things as kind of stable, right? Not a ton of change. What are you seeing out there from a sales cycle perspective, and how does that shape how you're thinking about going into next year? Yeah. You're right. I mean, with the number of policy changes that have hit us this year, it is probably unprecedented, right? Some of them represent headwinds. Some of them for Certara actually represent tailwinds. I'd say overall, the market environment remains challenging. When we think about the funding environment for tier threes that we talked about, that's challenging, although we've been executing well in it. We look at our biggest customers, or the big biopharmas, have certainly been faced with a number of challenges, whether it be tariffs, MFNs, any of the potential policy changes that would slow down their decision-making, which can impact the bookings results that we see. Those are some of the challenges that are out there. Those have existed before this year. They're existing during this year. Now that we're in the middle of September, it's not long before this year will be over. It seems as though this could easily continue into 2026. That's the headwind part of it. Now, the tailwind part of what's gone on this year, of course, is the FDA put out a directive for drug companies to start to shift away from animal testing and to modeling. Certara, being the market leader in model-informed drug development, we're very well positioned, of course, in a scenario like this one. Although there are significant challenges in the market, there's also some tailwinds, such as the FDA NAMS directive, that is certainly affording additional customer discussion opportunities and is, we think, at least in part driving the strong performance that we're seeing in SIMCYP and QSP this year. Great. I definitely want to come back to that, in terms of the animal testing and FDA events more broadly. Before doing so, I would love to spend some time on AI and really starting with Certara internally, what are some of the things you're doing from a technology perspective? Yeah. I mentioned the acquisition of Vyasa, and our Chief Technology Officer, our now named Chief Technology Officer, came with that. We've spent the last couple of years since the acquisition of Vyasa utilizing AI technology internally to be able to start to work that technology into our own workflow processes, into our own modeling, and accelerate the work product and the efficiency of our employees. Of course, we also did that with a commercial mindset. We've rolled out one product, and we've got another one coming in the form of co-author, which is AI for regulatory writing that we launched last year. Of course, Certara IQ, which I've mentioned a lot today because we're very excited about offering some AI-enabled software in the QSP space. The first stage was assimilating the AI technology from the acquisition of Vyasa onto our own platform to make our own teams more efficient in the modeling and the work that they conduct on a daily basis, including in our consultancy practice. The second phase of that is commercially offering these technologies as software too. Great. On co-author, any kind of proof points you can share in terms of where that's at and how customers are responding? Yeah. I mean, co-author is able to realize about a 40% efficiency or, you know, removal of time and cost spent on a regulatory document. The way to think about that is, you can go from zero to first draft very, very quickly with the use of a software tool like co-author. It doesn't eliminate the need for regulatory writers because there's still the opportunity to review and edit, but it takes a tremendous amount of the work and time associated with that work out of the process. Clearly, that's very attractive to our regulatory customers and to our big customers. I know that some big drug companies have even come out and said that they want to use technologies like co-author to help try to reduce the amount of time and effort spent on regulatory writing. Great. More broadly, there's a lot of experimentation happening at your customers' internal development. What are they, through your interactions with them, in terms of what are some of the things they're looking for from a vendor like Certara in terms of how can you help them in the value add around technology and AI? I think that the most innovative customers are searching for ways to spend their budget dollars more wisely or efficiently. They would seek to do that, as we were discussing earlier, by understanding potential molecule failures sooner in the process or understanding where inefficiencies might exist in their existing clinical process. Anywhere across the sort of timeline of drug development, there's opportunity for us to help enable them to get more efficient. At a point in time where there's been a slowing of total biopharma R&D spending, and there's clearly been some time spent by the biggest pharma companies doing portfolio prioritization and understanding how they want to spend their dollars, Certara is well positioned to help them find those efficiencies anywhere from in the discovery phase of drug development, where we can help enable them with the use of Camaxon software, which was an acquisition we did last year, up through the preclinical phase where we offer Non-Animal Navigator, which was the result of the FDA directive to shift away from animal testing. That's our offering to help bring together our software and our services to find efficiencies in the preclinical setting. In the clinical setting, where we've had a strong presence for a long time, we're able to help them with our SIMCYP software, our Phoenix software, and ultimately pre-submission our Pinnacle software. You can see that as biopharma companies seek to become more efficient with each R&D dollar spent, Certara is well positioned across the drug development cycle to help them. Great. Maybe just circling back to the FDA. I know they use your software. What are the use cases there? What is the kind of value that they get from Certara? Yes. Thanks for bringing that up because the FDA is a big user of our software. I think SIMCYP and Phoenix, there's a couple of key software products that they've been using for years and years. There are many, many users at the FDA that have been using our Certara software for a long, long time. That's actually, you know, creates one of the key competitive moats for Certara, the fact that we've had these interactions with the FDA on a longstanding basis. There's a very good understanding by the FDA of how our software works. It really smooths the pathway for our customers and takes some of the risk off the table in using modeling when it comes to FDA submissions because they know that the folks on the other side of the table, meaning the FDA, already have an understanding and usage of the software that they have tucked into their FDA submissions. That's a key competitive advantage for Certara, the longstanding relationship, the number of people at the FDA that use our software, and the understanding that those individuals have of the submissions that are coming into them that are using our software by our customers. Great. On the animal testing front, understanding it's kinda recent, what are some things investors should be watching for in terms of how that could impact your business over time? Yeah. The key areas to watch for are higher performance in SIMCYP and QSP. On the last call, they actually mentioned, we're like, well, you know, the performance that some of the key areas of higher performance this year above our expectations has been in SIMCYP and QSP. The natural conclusion to say that's correlated to the FDA directive. I think that's fair. I wouldn't say it's the only reason that we're seeing the outperformance there. I think some of that outperformance is because we've got the biggest QSP practice in the market, and that's a fast-growing area of biosimulation to begin with. It is, but make no mistake, it is a tailwind to have the FDA put that directive out. It increases the volume and the depth of the conversations that we're having with our customers. Got it. More broadly, there's been a lot of change at the FDA and agency. I'm just curious, potential headwinds or even opportunities that might present itself as the dust settles, so to speak, at the FDA. Yeah. Certainly a lot of turbulence there this year. I wouldn't say that personnel changes, like, for example, layoffs. We have enough users, as I was just saying, at the FDA that there's not a concern that there's been a layoff that would materially impact the knowledge of the Certara software. That's not the case and has not impacted us. I certainly think moving away from potential layoffs and getting some certainty at the FDA leadership level, I think, will provide some stability to the whole marketplace, including Certara. Got it. I did wanna touch on the stat in terms of Certara supporting 90% of FDA drug approvals in 2014. That's a high percentage there. How do you think about that across biosimulation, regulatory writing, and things in terms of how you're engaged with them? It comes back to the point I was raising earlier around the breadth of our product offering. I talked about our offerings in discovery and preclinical and the clinical phases all the way through submission. When you think about the important product and services offerings that we have across the drug development cycle, it's not surprising that 90% of drugs that we have touched their program in one way or another. I think the key opportunity here, of course, is to increase adoption across all of those categories. That's really what the growth opportunity for us is, increasing adoption of model-informed drug development, the use of our software, which also gets us the opportunity to work with our customers on a services basis too. Even though that breadth of the product portfolio has enabled us to touch, as you said, 90% of the drugs that are approved, there's still a vast opportunity for us to increase the depth in how we're working with each of these customers. Great. I wanted to segue over to M&A, maybe starting with Camaxon in terms of the integration process, how that's going. Yeah. We've been very excited. I touched on Camaxon briefly during our conversation here. Just to reiterate what Camaxon is and then touch on the integration, which has been going really well. We acquired Camaxon about this time last year. They are a chem-informatics software company in the discovery phase of drug development. Think chem-informatics tools that enable drug companies that are in the business of finding new drugs, you're help enabling their processes, much like in the clinical phases Phoenix helps our customers with drug development. That's what Camaxon is. At the time that we did the acquisition, we said that it would take us about a year to get the margin up to, it's a profitable company, but it would take about a year to get the margin up to Certara's corporate average. We're almost three quarters into that. I'd say the integration is going very well according to plan. Camaxon is hitting its bookings and revenue targets that we had put out there. Because we're measuring both our reported and our organic results in bookings and revenue, then it's pretty clear what the Camaxon performance is because they're the only contributor. We've been really pleased with the performance at Camaxon so far. A little bit more work to do on the integration as far as fully what some of the opportunity with bringing on Camaxon sits with the ability to introduce them to new customers, and then enhancing some of their products, which we're working on now and will be releasing in 2026, combined with what I'd call more of the back-office integration that's going to help us get the margin to where it needs to be by the end of this year. Got it. Can we touch on just the status of the strategic review of the regulatory business, what the timeline looks like, and ultimately where you see the implications of whatever that outcome is? Yeah. The regulatory process is ongoing. We said on the call back in August that the process has gone slower than we anticipated, and we attribute that mainly to the overall market backdrop, which is choppy. I think it just creates an environment of a little bit of indecision there that's impacted the process. We are engaged in talking with multiple potential buyers, and we'll update when we have a little bit more information. The process is ongoing. It's important to remember too, and we've disclosed, I think last year, we started to disclose what the size of the reg business is and what the profitability profile looks like. It's important to remember, even though this is a business that's up for strategic review and we are in active dialogues with potential buyers, as we said, it's a business that has returned to growth in both bookings and in revenue this year and has an adjusted EBITDA margin of about 20% to 30%, which is quite high in a reg writing business. When you start to think about potential buyers, this is a profitable business that's returned to growth and has an EBITDA margin that would be immediately accretive to most organizations that would look at it. It's important that we get the right value for this asset for our shareholders too. That makes sense. When I think about your M&A strategy and the deals that you've done, and probably more so on a forward-looking basis of pipeline and companies you evaluate, what are some of the key criteria in terms of how it's a strategic fit, financial profile? Yeah. A couple of things that we look for when we're screening for M&A, one is we have had a tilt toward software. The mix, one thing we didn't touch on during this discussion is the mix shift at Certara from services toward software has been dramatic, particularly in recent years. If we look back, Certara over history had predominantly been a services business. Now we're nearly 50/50 software services. That's been a product of our organic software growth, but also M&A activity. We look towards software. We would look for businesses that are generating revenue and are profitable with a clear path, kind of like I mentioned for Camaxon, with a clear path toward getting the profitability profile up to Certara's corporate average within a reasonable period of time. That would be accretive, excuse me, accretive to our overall top-line growth. Strategically, there's a tilt toward looking at software. We want to make sure that there's an important base of revenue there to grow off of, that revenue is growing in a way that would be accretive to Certara's top line, but that the profitability profile is balanced enough that we'd be able to get it within a reasonable period of time to where Certara is. Camaxon is probably a good example of that kind of profile that we just executed on last year. Great. Just last one, bringing that together from a capital allocation perspective on a near-term basis, how do you view M&A opportunities, share buyback? You mentioned you're investing organically in R&D. What are the top priorities? Yeah. The highest priority for sure is the investment in R&D that we've outlined here. I won't repeat all the great things that we're doing, but that is a high priority, as I'm sure you could tell from our discussion. We have been an acquisitive company over our history and have done four acquisitions in the last two years even. We would continue to look to, and we have a healthy balance sheet, low leverage. We can, you know, there's a lot of opportunity to continue to deploy capital on M&A. That being said, there's a lot happening right now. We're still integrating Camaxon. We're rolling out three new software offerings. We are busy, make no mistake. We're always screening for M&A kind of against the criteria that I mentioned to you, Craig. Importantly, you said it recently and new for Certara, we do have a share repurchase authorization for $100 million. That's the first time we've had an authorization at Certara for buying back shares. We executed $25 million of that in the second quarter. The way that we view share buyback is it's another vector or opportunity for capital allocation that we've added to the toolkit for us. You can rely on us to sort of balance the, or look to balance the capital allocation according to that kind of a timeframe. Great. I think we'll wrap there. Thanks so much, John, for your time. I appreciate it. Thanks for having me, Craig. I appreciate it. All right.