Certara, Inc. 10-Q

Item 1. Financial Statements CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) MARCH 31, 2026 DECEMBER 31, 2025 Assets Current assets: Cash and cash equivalents $ 149,484 $ 189,392 Accounts receivable, net of allowance for credit losses of $ 2,300 and $ 2,235 , respectively 96,072 103,525 Prepaid expenses and other current assets 25,004 22,202 Total current assets 270,560 315,119 Other assets: Property and equipment, net 1,768 1,853 Operating lease right-of-use assets 11,305 11,939 Goodwill 770,761 773,311 Intangible assets, net of accumulated amortization of $ 433,365 and $ 415,804 , respectively 433,255 447,476 Deferred income taxes 11,115 5,242 Other long-term assets 1,604 1,642 Total assets $ 1,500,368 $ 1,556,582 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 3,691 $ 3,426 Accrued expenses 57,286 67,131 Current portion of deferred revenue 76,480 75,412 Current portion of long-term debt 2,963 2,963 Other current liabilities 3,703 4,453 Total current liabilities 144,123 153,385 Long-term liabilities: Deferred revenue, net of current portion 3,100 2,350 Deferred income taxes 34,746 34,366 Operating lease liabilities, net of current portion 7,789 8,438 Long-term debt, net of current portion and debt discount 289,504 290,131 Other long-term liabilities 4,062 5,117 Total liabilities 483,324 493,787 Commitments and contingencies (refer to note 9) Stockholders' equity Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively — — Common shares, $ 0.01 par value, 600,000,000 shares authorized, 164,005,450 shares issued as of both March 31, 2026 and December 31, 2025; 153,325,078 and 159,139,562 shares outstanding as of March 31, 2026 and December 31, 2025, respectively 1,641 1,641 Additional paid-in capital 1,262,973 1,255,653 Accumulated deficit ( 138,639 ) ( 129,876 ) Accumulated other comprehensive income (loss) ( 1,869 ) 2,040 Treasury stock at cost, 10,680,372 and 4,865,888 shares at March 31, 2026 and December 31, 2025, respectively ( 107,062 ) ( 66,663 ) Total stockholders' equity 1,017,044 1,062,795 Total liabilities and stockholders' equity $ 1,500,368 $ 1,556,582 The accompanying notes are an integral part of the condensed consolidated financial statements. 8 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) THREE MONTHS ENDED MARCH 31, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 2026 2025 Revenues $ 106,915 $ 106,004 Cost of revenues 41,618 41,521 Operating expenses: Sales and marketing 13,355 12,717 Research and development 12,286 10,522 General and administrative 29,377 19,654 Depreciation and amortization 14,582 13,967 Total operating expenses 69,600 56,860 Income (loss) from operations ( 4,303 ) 7,623 Other income (expenses): Interest expense ( 4,941 ) ( 4,806 ) Net other income 1,301 1,725 Total other expenses ( 3,640 ) ( 3,081 ) Income (loss) before income taxes ( 7,943 ) 4,542 Provision (benefit) for income taxes 820 ( 201 ) Net income (loss) attributable to common stockholders: ( 8,763 ) 4,743 Other comprehensive income (loss): Foreign currency translation adjustment, net of tax of $ 338 and $( 110 ), respectively ( 5,151 ) 8,742 Change in fair value from interest rate swap, net of tax of $ 408 and $( 208 ), respectively 1,242 ( 586 ) Total other comprehensive income (loss) ( 3,909 ) 8,156 Comprehensive income (loss) $ ( 12,672 ) $ 12,899 Net income (loss) per share attributable to common stockholders: Basic $ ( 0.06 ) $ 0.03 Diluted $ ( 0.06 ) $ 0.03 Weighted average common shares outstanding: Basic 157,754,647 160,996,258 Diluted 157,754,647 161,350,292 The accompanying notes are an integral part of the condensed consolidated financial statements. 9 CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) TREASURY STOCK TOTAL STOCKHOLDERS' EQUITY SHARES AMOUNT SHARES AMOUNT Balance as of December 31, 2025 164,005,450 1,641 1,255,653 ( 129,876 ) 2,040 ( 4,865,888 ) $ ( 66,663 ) $ 1,062,795 Equity-based compensation expense, net of forfeiture — — 7,320 — — — — 7,320 Common shares repurchased — — — — — ( 5,814,484 ) ( 40,399 ) ( 40,399 ) Change in fair value from interest rate swap, net of tax — — — — 1,242 — — 1,242 Net loss — — — ( 8,763 ) — — — ( 8,763 ) Foreign currency translation adjustment, net of tax — — — — ( 5,151 ) — — ( 5,151 ) Balance as of March 31, 2026 164,005,450 $ 1,641 $ 1,262,973 $ ( 138,639 ) $ ( 1,869 ) ( 10,680,372 ) $ ( 107,062 ) $ 1,017,044 Balance as of December 31, 2024 161,958,810 1,620 1,216,925 ( 128,281 ) ( 13,424 ) ( 949,698 ) $ ( 18,184 ) $ 1,058,656 Equity-based compensation expense, net of forfeiture — — 7,070 — — — — 7,070 Common stock withheld for tax liabilities — — — — — ( 1,493 ) ( 16 ) ( 16 ) Common shares issued for employee share-based compensation 12,744 — — — — — — — Common shares issued for contingent consideration 455,344 5 5,665 — — — — 5,670 Change in fair value from interest rate swap, net of tax — — — — ( 586 ) — — ( 586 ) Net income — — — 4,743 — — — 4,743 Foreign currency translation adjustment, net of tax — — — — 8,742 — — 8,742 Balance as of March 31, 2025 162,426,898 $ 1,625 $ 1,229,660 $ ( 123,538 ) $ ( 5,268 ) ( 951,191 ) $ ( 18,200 ) $ 1,084,279 The accompanying notes are an integral part of the condensed consolidated financial statements. 10 CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED MARCH 31, (IN THOUSANDS) 2026 2025 Cash flows from operating activities: Net income (loss) $ ( 8,763 ) $ 4,743 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 19,089 18,614 Amortization of debt issuance costs 135 144 Provision for credit losses 277 322 Equity-based compensation expense 7,320 7,070 Change in contingent considerations 7,230 ( 179 ) Deferred income taxes ( 5,901 ) 10,502 Changes in assets and liabilities: Accounts receivable 6,900 8,736 Prepaid expenses and other assets ( 2,648 ) 1,807 Accounts payable, accrued expenses, and other liabilities ( 14,201 ) ( 27,783 ) Deferred revenues 2,246 ( 5,448 ) Other operating activities, net 10 ( 1,176 ) Net cash provided by operating activities 11,694 17,352 Cash flows from investing activities: Capital expenditures ( 631 ) ( 600 ) Capitalized software development costs ( 6,150 ) ( 5,174 ) Net cash used in investing activities ( 6,781 ) ( 5,774 ) Cash flows from financing activities: Payments on long-term debt ( 741 ) ( 750 ) Common stock repurchase program ( 40,000 ) — Payments for business acquisition related contingent consideration ( 3,000 ) ( 13,230 ) Payment of taxes on shares withheld for employee taxes — ( 16 ) Net cash used in financing activities ( 43,741 ) ( 13,996 ) Effect of foreign exchange rate on cash and cash equivalents ( 1,080 ) 2,321 Net decrease in cash and cash equivalents ( 39,908 ) ( 97 ) Cash and cash equivalents, and restricted cash, at beginning of period 189,392 179,183 Cash and cash equivalents, and restricted cash, at end of period $ 149,484 $ 179,086 Supplemental disclosures of cash flow information Cash paid for interest $ 4,872 $ 4,648 Cash paid for taxes $ 2,292 $ 688 Supplemental schedule of noncash investing and financing activities Stock issuance or establish liabilities related to business acquisition contingent consideration $ — $ 5,670 The accompanying notes are an integral part of the condensed consolidated financial statements. 11 CERTARA, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) 1. Description of Business Certara, Inc. and its wholly-owned subsidiaries (together, the “Company”) deliver software products and technology-driven services to customers to efficiently carry out and realize the full benefits of biosimulation in drug discovery, preclinical and clinical research, regulatory submissions and market access. The Company is a global leader in biosimulation, and the Company’s biosimulation software and technology-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, natural language processing, and Bayesian analytics. When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle. The Company has operations in the United States, Australia, Canada, China, Egypt, France, Germany, Hungary, India, Italy, Japan, Luxembourg, Netherlands, Philippines, Poland, Portugal, Spain, Switzerland, and the United Kingdom. 2. Summary of Significant Accounting Policies There have been no changes other than what is discussed herein to the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2. “Summary of Significant Accounting Policies” to the Company’s audited consolidated financial statements included in the Company’s 2025 Annual Report. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as of and for the year ended December 31, 2025. (a) Basis of Presentation and Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2026, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2026 and 12 2025, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2026 and 2025, the condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2025 audited consolidated financial statements and notes thereto. The information as of December 31, 2025 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2025 Annual Report. (c) Recently Adopted or Issued Accounting Standards In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted ASU 2025-05 prospectively for the period ended March 31, 2026. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This ASU seeks to improve the disclosures about the types of expenses, including employee compensation, depreciation, and amortization, and costs incurred related to inventory and manufacturing activities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. In January 2025, the FASB also issued ASU 2025-01 to clarify the effective date. The Company is currently evaluating the impact of the ASU on the disclosures within its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes all references to prescriptive and sequential software development stages and clarifies that the threshold for when an entity is required to start capitalizing software costs is when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of the ASU on the consolidated financial statements. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815) - Hedge Accounting Improvements, which amends certain aspects of the hedge accounting guidance in ASC 815. The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges in the following five areas: similar risk assessment for cash flow hedges, hedging forecasted interest payments on choose-your-rate debt instruments, cash flow hedges of nonfinancial forecasted transactions, net written options as hedging 13 instruments, and foreign-currency-denominated debt instrument as hedging instrument and hedged item(dual hedge). The amendments in this ASU are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides recognition, measurement, and presentation guidance for government grants received by business entities. The ASU applies to all business entities except for not-for-profit entities and employee benefit plans that receive a government grant. This ASU is effective for public business entities for annual periods beginning after December 15, 2028, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvement. This ASU clarifies that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with GAAP. It also establishes a comprehensive list in Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP, incorporates a disclosure principle, and improves guidance about information included in and the format of interim financial statements. This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The ASU is effective for public business entities for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the consolidated financial statements. (d) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (e) Fair Value Measurements The Company follows FASB Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements” (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. 14 If the inputs used to measure fair value fall at different levels of the fair value hierarchy, the hierarchy is based on the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 4, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs. The Company's estimates of fair value are based upon assumptions believed to be reasonable but that are uncertain and involve significant judgments by management. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). The Company utilizes Monte Carlo or a series of Black-Scholes-Merton options models to estimate the fair value of the contingent consideration liabilities of business acquisitions. Significant inputs used in the fair value measurement of contingent consideration include: expected eligible revenue for the acquired businesses over the relevant measurement periods, the risk-profile of the expected eligible revenue for the acquired businesses, the uncertainty regarding the expected eligible revenue for the acquired businesses, the risk-free rate of return, the expected timing at which settlement of the contingent liabilities may occur, and the credit-adjusted discount rate associated with the risk of the Company’s future liability payments. 15 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2026: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 43,147 $ — $ — $ 43,147 Interest rate swap assets — 26 — 26 Total assets $ 43,147 $ 26 $ — $ 43,173 Liabilities Contingent liabilities $ — $ — $ — $ — Interest rate swap liabilities — 697 — 697 Total liabilities $ — $ 697 $ — $ 697 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2025: LEVEL 1 LEVEL2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 82,496 $ — $ — $ 82,496 Total assets $ 82,496 $ — $ — $ 82,496 Liabilities Contingent liabilities $ — $ — $ 21,515 $ 21,515 Interest rate swap liabilities 2,322 — 2,322 Total liabilities $ — $ 2,322 $ 21,515 $ 23,837 For the three month period ended March 31, 2026, there were no transfers between the levels within the fair value hierarchy. The Company’s Level 2 assets and liabilities are interest swap assets and liabilities and level 3 liabilities are acquisition related contingent consideration liabilities. The following table summarizes the Level 3 activity of the changes in the contingent consideration liability. MARCH 31, 2026 (In thousands) Beginning balance at December 31, 2025 $ 21,515 Transfers out of level 3 (to non–fair value liability) ( 21,515 ) Ending balance at March 31, 2026 $ — For more information regarding fair value measurements and the fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in the Company’s 2025 Annual Report. 16 (f) Cash and Cash Equivalents Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. The cash and cash equivalents was $ 149,484 and $ 189,392 at March 31, 2026 and December 31, 2025, respectively. (g) Accounts Receivable Accounts receivable include current outstanding invoices billed to customers. Invoices are typically issued with net 30 days to net 90 days terms upon delivery of the product or upon achievement of billable events for service-based contracts. Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts. Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional. The carrying amount of accounts receivable is reduced by a valuation allowance. The Company estimates the expected credit losses for accounts receivable using historical loss data adjusted for current economic conditions to estimate the relative size of credit losses to be expected. The Company has elected the practical expedient under ASU 2025-05 to assume that current conditions remain unchanged over the life of the receivables and, accordingly, does not incorporate forecasts of future economic conditions beyond those reflected in current conditions. The Company generally writes off a receivable or records a specific allowance for credit losses if it determines that the receivable is not collectible. Allowances for credit losses of $ 2,300 and $ 2,235 were provided in the accompanying condensed consolidated financial statements as of March 31, 2026 and December 31, 2025, respectively. Accounts receivable consists of the following: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Trade receivables $ 83,231 $ 94,556 Unbilled receivables 14,907 10,909 Other receivables 234 295 Allowances for credit losses ( 2,300 ) ( 2,235 ) Accounts receivable, net $ 96,072 $ 103,525 The following table presents the information regarding the allowance for credit losses: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Beginning balance $ 2,235 $ 2,164 Provision for credit losses 277 1,144 Charge-offs, net of recoveries ( 212 ) ( 1,073 ) Ending balance of allowances for credit losses $ 2,300 $ 2,235 (h) Derivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use 17 derivative instruments for trading or speculative purposes. The objective of managing exposure to market risk is to limit its impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company entered into an interest rate swap agreement in May 2022 that pays fixed, receives variable to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $ 230,000 , a fixed rate of 2.8 % and a termination date of August 31, 2025 (“Matured Swap”). As the swap approached maturity, the Company entered into two additional interest rate swap agreements (“New Swaps”) in the second quarter of 2025, each with a notional amount of $ 115,000 , to continue hedging the interest rate risk associated with the term loan debt. These new swaps also pay fixed interest rates and receive variable rates. The fixed interest rates on the two swaps are 3.62 % and 3.64 %, respectively. Both contracts became effective on August 31, 2025, and will mature on August 31, 2029. The Company designates these swaps as cash flow hedges at hedge inception. At March 31, 2026 and December 31, 2025, the Matured Swap had a fair value of $ 0 . The New Swaps had total fair value of $( 672 ) and $( 2,322 ) at March 31, 2026 and December 31, 2025, respectively. The gross fair value recognized in accumulated other comprehensive income (loss) was $( 672 ) and $( 2,322 ) at March 31, 2026 and December 31, 2025, respectively. The Company uses derivatives to manage certain interest exposures and designates all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expenses in the same period during which the hedged transactions impact earnings. The amount of derivative gains reclassified from accumulated other comprehensive income on derivative instruments recognized in the Company’s condensed consolidated statements of operations and comprehensive income (loss) was $ 33 and $ 942 for the three months ended March 31, 2026 and 2025, respectively. The notional amounts, fair values, and classification of derivative instruments in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 were as follows: Interest rate swap derivatives designated as cash flow hedging instruments: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ 26 $ — Other current liabilities $ — $ 533 Other long-term liabilities $ 697 $ 1,789 The net amount of deferred gain related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gain (loss) into earnings over the next twelve month s is $ 26 . 18 (i) Revenue Recognition In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. Identification of the contract, or contracts, with a customer ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue when, or as, the Company satisfies a performance obligation The Company’s revenue consists of fees for perpetual and term licenses for its software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses Software license revenue consists primarily of sales of software licenses downloaded and installed by our customers on their own hardware. The license period is generally one year or less and includes an insignificant amount of customer support to assist the customer with the software. Software license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software as a Service (SaaS) Revenues SaaS revenues consist of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments. The invoice is initially deferred and revenue is recognized ratably over the life of the contract. The Company’s software contracts do not typically include variable consideration or options for future purchases that would not be similar to the original goods. Software Service Maintenance services agreements on perpetual software consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year . While the transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. 19 Consulting Service Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. The Company’s professional services contracts are either time-and-materials or fixed fee. Service revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed-price services are generally recognized over time by applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and the varying lengths of time they are being paid for determine the measure of progress. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. Additionally, any training, implementation, or support and maintenance promises sold as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are less than one year such that there is no significant financing component. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one to three years . The Company records the amounts collected in advance of the satisfaction of performance obligations, usually over time, as a contract liability or deferred revenue. Invoiced amounts for non-cancelable services starting in future periods are included in contract assets and deferred revenue. The portion of deferred revenue that will be recognized within 12 months is recorded as current deferred revenue, and the remaining portion is recorded as deferred revenue in the condensed consolidated balance sheets. Contract balances at March 31, 2026, December 31, 2025 and 2024 were as follows: MARCH 31, 2026 DECEMBER 31, 2025 DECEMBER 31, 2024 (In thousands) Contract assets $ 14,907 $ 10,909 $ 13,454 Contract liabilities $ 79,580 $ 77,762 $ 78,878 20 During the three months ended March 31, 2026, the Company recognized revenue of $ 34,551 related to contract liabilities at December 31, 2025. The unsatisfied performance obligations as of March 31, 2026 were $ 152,452 . We expect to recognize $ 125,863 , or 82.6 % of this revenue over the next 12 months and the remainder thereafter. Deferred Contract Acquisition Costs Under ASC Topic 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively deferred contract acquisition costs, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight-line basis over the expected period of benefit. Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss). Capitalized contract acquisition costs were $ 1,706 and $ 1,351 as of March 31, 2026 and December 31, 2025, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. If, under these agreements, both involved parties receive and sacrifice approximately commensurate value, they are accounted for as exchange transactions, and revenue is recognized according to ASC Topic 606. The grant funding is generally provided near contract inception, so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. If these agreements involve one party nonreciprocally transferring value to another, and any benefit to the transferor is incidental to the potential public benefits, they are accounted for as contribution transactions, and revenue is recognized in accordance with ASC Topic 958. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED MARCH 31, 2026 2025 (In thousands) Software licenses transferred at a point in time $ 21,523 $ 19,863 Software licenses transferred over time 28,203 26,506 Service revenues earned over time 57,189 59,635 Total $ 106,915 $ 106,004 21 (j) Goodwill As of March 31, 2026, the Company had three reporting units – Certara Data Science Software (“CDS”), the Certara Predictive Technologies reporting unit (“CPT”), and the Certara Drug Development Services reporting unit (“CDDS”), which are within a single operating segment of the Company. Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. When testing goodwill for impairment, the Company performs a qualitative assessment to determine whether events or circumstances lead to a determination that it is more-likely-than-not that the fair values of the reporting units are less than their carrying amounts. If the Company determines that it is not more-likely-than-not that the fair values of the reporting units are less than their carrying values, no further assessment is performed. If the Company determines that it is more-likely-than-not that the fair values of the reporting units are less than carrying value, the Company proceeds to perform a quantitative goodwill impairment test. If the result of the quantitative test shows that the carrying amount of reporting units exceeds its fair values, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. As of March 31, 2026, the Company has performed a qualitative assessment to determine whether it is more likely than not that the fair value of its reporting units is less than their carrying amounts. Based on the results of the qualitative assessment, the company concluded that it is more likely than not that the fair value of each reporting unit is greater than its respective carrying value. Accordingly, no further quantitative goodwill impairment testing was necessary. (k) Earnings per Share Basic earnings per common share is computed by dividing the net earnings by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted shares are calculated under the treasury stock method. Diluted earnings per share is calculated by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period. 3. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk have consisted principally of cash and cash equivalent investments and trade receivables. The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments. At March 31, 2026 and December 31, 2025, the investments were bank deposits, overnight sweep accounts, and money market funds. The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary. Management believes that any risk of loss is significantly reduced due to the nature of the customers and distributors with which the Company does business. As of March 31, 2026 and December 31, 2025, no single customer accounted for more than 10% of the Company’s accounts receivable. No single customer accounted for more than 10% of the Company’s revenues during the three months ended March 31, 2026 and 2025. 22 4. Prepaid Expenses and Other Current Assets and Other Long-Term Assets Prepaid expense and other current assets at March 31, 2026 and December 31, 2025 consisted of the following: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Prepaid expenses $ 11,658 $ 8,335 Income tax receivable 3,620 5,388 Research and development tax credit receivable 7,914 7,352 Current portion of interest rate swap asset 26 — Other current assets 1,786 1,127 Prepaid expenses and other current assets $ 25,004 $ 22,202 Other long-term assets at March 31, 2026 and December 31, 2025 consisted of the following: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Long-term deposits $ 1,140 $ 1,157 Deferred financing cost 464 485 Total other long-term assets $ 1,604 $ 1,642 5. Long-Term Debt and Revolving Line of Credit The Company has been a party to a Credit Agreement since August 2017 that provides for a senior secured term loan and commitments under a revolving credit facility (as amended, the “Credit Agreement”). On June 26, 2024, the Company entered into the Fifth Amendment to its Credit Agreement (the “Fifth Amendment”), which primarily (1) amended the principal amount of the term loan to $ 300,000 and its maturity date to June 26, 2031; and (2) extended the termination date associated with the $ 100,000 revolving credit commitment (the “Revolving Facility”) to June 26, 2029. On October 16, 2025, the Company entered into the Sixth Amendment to the Credit Agreement (the “Sixth Amendment”), which primarily refinanced the existing principal amount of the term loan with $ 296,250 principal amount of replacement term loans with the same maturity date of June 26, 2031 and reduced the applicable rate with respect to the term loans under the Credit Agreement. The Credit Agreement is collateralized by substantially all U.S. assets and stock pledges for the non-U.S. subsidiaries and contains various financial and nonfinancial covenants. Borrowings under the Credit Agreement bear interest at a rate per annum equal to, at the election of the Company, either (i) the Term Secured Overnight Financing Rate (“SOFR”) rate, with a floor of 0.00 % plus an applicable margin rate of 2.75 % for the replacement term loans and between 2.75 % and 3.50 % for loans under the Revolving Facility, depending on the applicable first lien leverage ratio, or (ii) an Alternate Base Rate (“ABR”), with a floor of 1.00 %, plus an applicable margin rate of 1.75 % for the replacement term loans or between 1.75 % and 2.50 % for loans under the Revolving Facility, depending on the applicable first lien leverage ratio. The ABR is determined as the greatest of (a) the prime rate, (b) the federal funds effective rate, plus 0.50 %, and (c) the Term SOFR rate plus 1.00 %. Additionally, the Company is obligated to pay a commitment fee of the unused amount and other customary fees. 23 As of each of March 31, 2026 and December 31, 2025, available borrowings under the revolving lines of credit were $ 100,000 . The effective interest rate was 6.44 % and 7.33 % for the three months ended March 31, 2026 and 2025, respectively, for the term loan debt. As discussed previously, the Company entered into interest rate swap agreements and continues to use the swaps to mitigate the interest risk for the Company's debt obligations under the Credit Agreement. Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 4,754 and $ 5,470 for the three months ended March 31, 2026 and 2025, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 52 and $ 53 at March 31, 2026 and December 31, 2025, respectively, and is included in accrued expenses. Commitment fees incurred for the undrawn balance of the revolving line of credit was $ 63 and $ 94 for the three months ended March 31, 2026 and 2025, respectively. There was $ 1 accrued interest payable on the revolving line of credit as of each of March 31, 2026 and December 31, 2025. Long-term debt consists of the following: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Term loans $ 294,769 $ 295,509 Revolving line of credit — — Less: debt issuance costs ( 2,302 ) ( 2,415 ) Total 292,467 293,094 Current portion of long-term debt ( 2,963 ) ( 2,963 ) Long-term debt, net of current portion and debt issuance costs $ 289,504 $ 290,131 The principal amount of long-term debt outstanding as of March 31, 2026 matures in the following years: Remainder of 2026 2027 2028 2029 2030 Thereafter TOTAL (In thousands) Maturities $ 2,222 $ 2,963 $ 2,963 $ 2,963 $ 2,963 $ 280,695 $ 294,769 The Credit Agreements require the Company to make an annual mandatory prepayment as it relates to the Company’s Excess Cash Flow calculation. For the year ended December 31, 2025, the Company was not required to make a mandatory prepayment on the term loan. Under the Credit Agreement (as amended by the Sixth Amendment), the Company is required to make a quarterly principal payment of $ 741 on the term loans that started on December 31, 2025. The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates. 6. Leases The Company leases certain office facilities and equipment under non-cancelable operating leases with remaining terms ranging from less than one to nine years . 24 Operating lease ROU assets are included in other assets. With respect to operating lease liabilities, current operating lease liabilities are included in current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets. At March 31, 2026, the weighted average remaining lease terms was 5.8 years for operating leases, and the weighted average discount rate was 5.9 % for operating leases. For additional information on the Company's leases, see Note 13. “Leases” to the consolidated financial statements included in the Company’s 2025 Annual Report. The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at March 31, 2026 and December 31, 2025: Lease Position Balance Sheet Classification MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Assets Operating lease assets Operating lease right-of-use assets $ 11,305 $ 11,939 Total lease assets $ 11,305 $ 11,939 Liabilities Current Operating Other current liabilities $ 3,703 $ 3,920 Noncurrent Operating Operating lease liabilities, net of current portion 7,789 8,438 Total lease liabilities $ 11,492 $ 12,358 The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2026: OPERATING LEASES (In thousands) Remainder of 2026 $ 3,336 2027 3,149 2028 1,363 2029 1,177 2030 1,098 Thereafter 4,104 Total future lease payments 14,227 Less: imputed interest ( 2,735 ) Total $ 11,492 25 7. Accrued Expenses and Other Liabilities Accrued expenses consist of the following: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Accrued compensation $ 20,942 $ 36,975 Legal and professional accruals 4,986 5,608 Interest payable 53 54 Income taxes payable 4,265 1,429 Short-term contingent consideration liabilities 26,208 21,979 Other 832 1,086 Total accrued expenses $ 57,286 $ 67,131 Other long-term liabilities consist of the following: MARCH 31, 2026 DECEMBER 31, 2025 (In thousands) Uncertain tax position liability $ 3,365 $ 3,328 Derivative Liabilities - Long-term 697 1,789 Total other long-term liabilities $ 4,062 $ 5,117 8. Equity-Based Compensation The Company’s equity-based compensation programs are intended to attract, retain and provide incentives for employees, officers, and directors. The Company has the following stock-based compensation plans and programs. Restricted Stock The majority of the Company’s restricted stock awarded to its employees was originally issued on December 10, 2020 in exchange for the Class B Profits Interest Unit (the “Class B Units”) of EQT Avatar Parent LP, which was the former parent of the Company. Share-based compensation for the restricted stock exchanged for the time-based Class B Units is recognized on a straight-line basis over the requisite service period of the award, which is generally five years . Share-based compensation for the restricted stock exchanged for the performance-based Class B Units is recognized using 26 the accelerated attribution approach. As of September 30, 2025, all of the Company’s restricted stock had fully vested, and no restricted stock remained outstanding. Equity-based compensation expenses related to the restricted stock exchanged for performance-based Class B Units were $ 66 for the three months ended March 31, 2025. As of September 30, 2025, all compensation expense related to the awards had been fully recognized. Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $ 124 for the three months ended March 31, 2025. As of September 30, 2025, all compensation expense related to the awards had been fully recognized. In order to align the Company’s equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, directors, officers, and consultants or advisors of the Company. The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued. No more than the number of shares of common stock equal to the plan share reserve may be issued in aggregate pursuant to the exercise of incentive stock options. The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $ 1,000,000 in total value, except for certain awards made to a non-executive chair of our Board of Directors. Restricted Stock Units ("RSUs") RSUs represent the right to receive shares of the Company’s common stock at a specified date in the future. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. A summary of the Company’s RSU activity is as follows: UNITS WEIGHTED- AVERAGE GRANT DATE FAIR VALUE Non-vested RSUs as of December 31, 2025 3,358,181 $ 14.48 Granted 5,547 6.59 Vested — — Forfeited ( 103,369 ) 13.71 Non-vested RSUs as of March 31, 2026 3,260,359 $ 14.49 Equity-based compensation expenses related to the RSUs were $ 6,287 and $ 6,733 for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 22,655 , which is expected to be recognized over a weighted-average period of 19.4 months. Performance Stock Units ("PSUs") PSUs are issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds, including year over year revenue growth, unlevered free cash 27 flow growth, annual revenue, and annual EBITDA. The PSUs granted in 2023, 2024, and 2025 also contain market conditions. Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach. The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation costs. A summary of the Company’s PSU activity for the period ended March 31, 2026 is as follows: UNITS WEIGHTED- AVERAGE GRANT DATE FAIR VALUE Non-vested PSUs as of December 31, 2025 1,194,188 $ 13.05 Granted — — Vested — — Forfeited ( 13,019 ) 8.25 Cancelled* ( 200,263 ) 25.26 Non-vested PSUs as of March 31, 2026 980,906 $ 10.62 __________________________________ * During the first three months of 2026, the Company cancelled 200,263 PSU shares that did not meet the required performance and market conditions for vesting. Equity-based compensation expenses (income) related to the PSUs were $ 1,033 and $ 148 for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 2,594 , which is expected to be recognized over a weighted-average period of 17.82 months. The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) for each period presented: THREE MONTHS ENDED MARCH 31, 2026 2025 (In thousands) Cost of revenues $ 2,998 $ 3,134 Sales and marketing 992 834 Research and development 1,059 933 General and administrative 2,271 2,169 Total $ 7,320 $ 7,070 9. Commitments and Contingencies Contingent consideration In connection with certain of the Company's business acquisitions, the Company is required to pay additional consideration if the acquired businesses achieve certain eligible revenue thresholds for certain periods. Furthermore, the Company agreed to pay additional contingent consideration related to a business acquisition, contingent on the resolution of certain tax-related contingencies. For the three months ended March 31, 2026, 28 the Company paid cash contingent consideration of $ 3,000 . The total contingent liabilities were $ 26,208 and $ 21,979 at March 31, 2026 and December 31, 2025, respectively. The contingent liabilities are included in accrued expenses and other long-term liabilities in the Company's condensed consolidated balance sheet. Legal proceedings The Company does not have any pending or threatened litigation which, individually or in the aggregate, would have a material adverse effect on its condensed consolidated financial statements as of March 31, 2026. Assurance-type warranty The Company includes an assurance commitment warranting that the application software products will perform in accordance with written user documentation and the agreements negotiated with customers. Since the Company does not customize its application software, warranty costs have historically been insignificant and expensed as incurred. For information related to commitments for future minimum lease payments, please see Note 6. "Leases" . 10. Segment Data Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company has determined that its chief executive officer (“CEO”) is its CODM. The Company manages its operations as a single segment for the purpose of assessing and making operating decisions. The Company’s CODM allocates resources and assesses performance based upon financial information at the consolidated level. The accounting policies of the Company's single segment are the same as those described in the summary of significant accounting policies. The inter-companies balances and transactions are eliminated. As the Company operates and reports in a single reportable segment, the Company's CODM assesses performance for the segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses net income and other performance indicators to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions. Net income is also used to monitor budget versus actual results. The Company manages the business activities on a consolidated basis. The Company's operating segment provides technology-enabled services and software products to its customers. The Company’s revenue consists of fees for its software products and services. The revenue is primarily generated from Americas. See item (i) - Revenue recognition under Note 2. “Summary of Significant Accounting Policies", for a description of the Company’s revenue categories. 29 The following table summarizes revenue by geographic area for the three months ended March 31, 2026 and 2025: THREE MONTHS ENDED MARCH 31, 2026 2025 (In thousands) Revenue(1): Americas $ 70,254 $ 71,953 EMEA 28,123 25,790 Asia Pacific 8,538 8,261 Total $ 106,915 $ 106,004 ___________________________________ (1) Revenue is attributable to the countries based on the location of the customer. The following table presents information about reported segment revenue, segment profit or loss, and significant segment expenses. THREE MONTHS ENDED MARCH 31, 2026 2025 (In thousands) Revenues $ 106,915 $ 106,004 Less: Employee expense-non equity 61,964 59,565 Equity-based compensation expense 7,320 7,070 Equipment and software expense 4,926 3,820 Direct cost of revenues 1,924 1,717 Professional services expense 7,905 7,303 Change in contingent consideration 7,230 ( 179 ) Depreciation and amortization 19,089 18,614 Other segment expense (income)* ( 441 ) ( 1,254 ) Interest expense 4,941 4,806 Income tax expense (benefit) 820 ( 201 ) Segment net income (loss) $ ( 8,763 ) $ 4,743 Reconciliation of profit or loss Adjustments and reconciling items — — Consolidated net income (loss) $ ( 8,763 ) $ 4,743 * Other segment expense (income) items included in segment net income include facilities related expense, marketing, travel, insurance, foreign currency exchange gains and losses, and other overhead expense. 30 11. Income Taxes The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR"). This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes before discrete items. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, permanent differences, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end due to the changes in these factors. The Company's global ETR for the three months ended March 31, 2026 and 2025 were ( 10 )% and ( 4 )%, respectively, including discrete tax items. The current year decrease in the ETR was principally due to the combined effect of the overall increase in pre-tax book loss, the impact of non-deductible items, and the tax effect of certain discrete items. 12. Earnings per Share Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income (loss) attributable to stockholders by the weighted-average number of shares and dilutive potential common shares during the period. THREE MONTHS ENDED MARCH 31, 2026 2025 (In thousands, except per share and share data) Net income (loss) available to common shareholders $ ( 8,763 ) $ 4,743 Basic weighted-average common shares outstanding 157,754,647 160,996,258 Basic earnings per common share $ ( 0.06 ) $ 0.03 Diluted earnings per share Net income (loss) available to common shares $ ( 8,763 ) $ 4,743 Basic weighted-average common shares outstanding 157,754,647 160,996,258 Dilutive potential common shares — 354,034 Diluted weighted-average common shares outstanding 157,754,647 161,350,292 Diluted earnings per common share $ ( 0.06 ) $ 0.03 __________________________________ (a) For the three months ended March 31, 2026, the Company repurchased 5,814,484 shares of its common stock under the stock repurchase program authorized by the Company's Board of Directors on April 11, 2025. The program total authorizes the Company to repurchase up to $ 100,000 of its common stock. (b) For the three months ended March 31, 2026, the Company excluded potentially dilutive securities from the calculation of diluted earnings per share that could potentially dilute earnings per share in the future because of the anti-dilutive effect of the reported net loss. 31 13. Subsequent Event On May 08, 2026, the Company completed the sale of its global medical writing and related regulatory services business to Veristat, LLC. The transaction included cash consideration of $ 85,000 , subject to customary post-closing adjustments, as well as an additional $ 15,000 placed in escrow, which would be released to the Company upon satisfaction of certain post‑closing conditions. The Company is also eligible to receive cash earn-out of up to $ 35,000 based on the financial performance (as defined in the purchase agreement) of such business over a specified period following closing. The Company currently expects to recognize a loss on the transaction ranging from approximately $ 28,891 to $ 53,658 . The actual loss recognized may differ from this estimate due to final working capital adjustments, the determination of fair value measurements, and the settlement of the earn-out. In connection with the transaction, the Company entered into a transition services agreement pursuant to which it will provide certain services, including information technology and other administrative functions, for a defined period following closing. 32