Good day, ladies and gentlemen. Thank you for standing by, and welcome to the third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press the star then the one key on your touchtone telephone. If you require operator assistance, please press star then zero. I would now like to hand the conference over to speaker host, David Deuchler. Please go ahead.
Afternoon, everyone. Thank you all for participating in today's conference call. On the call from Certara, we have William Feehery, Chief Executive Officer, and Andrew Schemick, Chief Financial Officer. Earlier today, Certara released financial results for the quarter ending September 30, 2021. Copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.
For a list and description of the risks and uncertainties associated with Certara's business, please refer to the Risk Factors section of our Form 10-K filed with the Securities and Exchange Commission on March 15, 2021. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also, in their remarks or responses to questions, management may mention some Non-GAAP financial measures. Reconciliations of adjusted EBITDA adjusted net income, adjusted EPS and certain other Non-GAAP financial measures to the most directly comparable GAAP measures are available in the recent earnings press release, which is available on the company's website. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 9, 2021.
Certara disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. With that, I'll turn the call over to William.
Thank you, David. Good afternoon, everyone. Thank you for joining Certara's third quarter earnings call. Andrew and I will start with prepared remarks, and then we will take questions. I'm very pleased with how the Certara business performed in the third quarter of 2021, as we continue to successfully execute on our strategic and financial objectives. In the third quarter, we continued to grow our position as a global leader in biosimulation by delivering strong financial results. Revenue grew 23% compared with the third quarter of 2020. Adjusted EBITDA grew 28% compared with the same period a year ago. In the third quarter, we set a new record for the number of new customers. We experienced strong double-digit revenue growth across all geographic regions, including North America, Europe, and Asia Pacific.
Overall, we're pleased with our year-to-date performance, which has been ahead of our expectations forecasted earlier in the year. In early October, we announced the closing of the Pinnacle 21 acquisition, consistent with our previous expectations for a fourth quarter closing. The integration is going smoothly, and early feedback from employees and customers has been positive. As a reminder, Pinnacle 21 is an industry-leading data standardization software platform used by the biopharmaceutical industry and regulatory agencies for managing compliance with the CDISC standards. Pinnacle 21's advanced SaaS-based solutions are used by the U.S. FDA and Japan's PMDA to validate all incoming clinical submission data. The FDA recently awarded a five-year contract to Pinnacle 21 for software and related services for the DataFit program. The Pinnacle 21 team is now part of our biosimulation and regulatory software business.
As a newly combined entity, we see opportunities for expansion within existing customers and landing new customers worldwide. The Pinnacle 21 enterprise software is complementary to Certara's existing software and technology-driven services, and we are optimistic about cross-selling opportunities over time. As we look to the future with Pinnacle 21, we are confident that the technology's solid position in a growing market will lead not only to increased revenue and profitability, but also an advancement of our shared goal to innovate tools to accelerate life-saving therapies for patients. In other exciting news, we received our fourth FDA grant to verify and expand biosimulation models for assessing virtual bioequivalence for development of generic dermal drugs. Bioequivalence studies ensure that the rate and extent of absorption of the investigational drug is not significantly different from those of the comparable reference product, which is often a branded drug.
Demonstrating bioequivalence is a regulatory hurdle for generic drug approvals, and biosimulation can significantly enhance the efficiency of generic drug development by streamlining or even waiving some of the clinical studies. For example, Certara's Simcyp MechDermA model was used to demonstrate virtual bioequivalence for a topical gel classified as a complex generic. We are also very pleased to share that Certara's Simcyp COVID-19 vaccine model was named the winner of an R&D 100 award. Certara's COVID-19 vaccine model uses biosimulation to optimize dosing regimens and helps inform the design of clinical studies involving COVID-19 vaccine candidates. For example, the model can be used to investigate potential differences in vaccine responses associated with age and ethnicity, or to optimize the time interval between doses by predicting the expected duration of antibody response.
It was also named a finalist in the Informa Pharma Intelligence's 2021 Citeline Awards for its contribution to COVID-19 clinical activities. Citeline winners will be announced next spring. The external recognition of our Simcyp COVID-19 vaccine model is a testament to the utility of this product in the global effort to combat the COVID epidemic. More broadly, Certara's vaccine simulator covers a range of applications and is now being used to help develop vaccines in oncology and respiratory syncytial virus. As outlined in our strategy, we continue to invest in the business and to add to our expert team worldwide. At the end of the third quarter, prior to the Pinnacle 21 closing, we had more than 1,000 employees, representing growth of nearly 14% year-to-date. Following the Pinnacle 21 closing, we have approximately 1,100 employees.
We continue to expand our commercial footprint worldwide with a new chief commercial officer and additional business development hires worldwide. Nearly half of our new hires in the third quarter were scientists and subject matter experts, and now we have approximately 350 employees with doctorate degrees. In a recent study by Elsevier and Stanford University, seven of Certara's scientists were ranked in the top 2% based on standardized citation metrics. We are incredibly proud that these seven scientific leaders were featured in this list in the fields of pharmacology, toxicology, pediatrics, endocrinology, and metabolism, as well as microbiology and chemistry. It is the Certara culture and commitment to innovation and customer partnerships that attract top talent in a very competitive environment. We continue to prioritize making Certara a great place to work.
Yesterday, we announced that James Cashman will be our new chairman of the board of directors. He is succeeding Sherilyn McCoy, who has decided to step down from our board to focus on other professional commitments. On behalf of the board, I would like to thank Sherry for her contributions and to wish her all the best in her future endeavors. I'm excited to continue working closely with Jim, who's been an independent board member of Certara since 2018. Jim has a proven track record as the previous CEO and executive chairman at Ansys, the global leader of engineering simulation software. His passion for simulation-driven product development will help continue to advance Certara's innovation and global expansion. Finally, I'm pleased that we will be hosting our inaugural investment day at the Nasdaq MarketSite in New York City on December 15.
Our investor day will feature presentations from Certara's leadership team, including our business unit presidents with a focus on our proprietary technologies and positioning to further grow the company. We are excited to meet you in person next month. If you cannot join in person, you can view the live stream of our investor day online on our investor relations website. In summary, Certara had a strong third quarter, which demonstrated accelerated progress towards our goals and expectations. Looking forward, we are focused on delivering on our strategic and financial objectives. I will now turn it over to our CFO, Andrew, to discuss third quarter financial results and the financial impact of Pinnacle 21.
Thank you, William. Hello, everyone. Before getting into the third quarter, I'd like to touch on the financial highlights of our acquisition of Pinnacle 21. As William stated earlier, we are excited to work with the Pinnacle 21 team, and the integration is off to a smooth start. Pinnacle 21 is a strong financial and cultural fit with Certara, and the transaction is expected to be immediately accretive to our key financial metrics. As previously discussed, we are currently forecasting Pinnacle 21 2022 revenue to be in the range of $30 million-$32 million, exclusive of purchase accounting adjustments. We are currently forecasting revenue of approximately $6 million in the fourth quarter of 2021 out of an expected full year pro forma revenue of $23 million-$24 million, exclusive of the purchase accounting adjustments.
To that point, we will have a purchase accounting adjustment in reported revenue related to Pinnacle 21's software deferred revenue in the fourth quarter and throughout 2022. The impact of the deferred revenue valuation adjustment is expected to be in the range of $4 million-$5 million in the fourth quarter. We also expect the Pinnacle 21 acquisition to have adjusted EBITDA margins modestly higher than the Certara corporate average in the fourth quarter of 2021, and look for them to expand in calendar year 2022. Now to base Certara results. Total revenue for the three months ended September 30, 2021, was $73.9 million, representing year-over-year growth of 23%. Year-to-date bookings were $29.2 million, up 12% year over year and up 15% on a trailing 12-month basis.
The general business environment for bookings was slow during the first two months of the quarter, but the recent trends and pipeline for the fourth quarter position us well to achieve our guidance and maintain high visibility. After October results, the trailing twelve months bookings were up 18% versus the same period last year. As a reminder, I continue to look at trailing twelve months bookings as a predictor of forward twelve months bookings. On this metric, Certara is delivering in line with our long-term forecast of mid-teens organic revenue growth. Software revenue was $19.3 million, which increased 9% over the prior year period as a result of strong third quarter bookings, new logos, and expansions on renewals. Software bookings were $20.9 million, which increased 28% from the prior year period, and the aggregate renewal rate was 87%.
The aggregate renewal rate was below our target, primarily due to re-timed renewals. Year-to-date, software bookings grew 19% and the aggregate renewal rate was 90%. The growth in the quarter and year-to-date was driven by our biosimulation software, Simcyp and Phoenix, which are up 17% year-to-date. Services revenue was $54.7 million, which increased 28% over the prior year period. The growth in services revenue was driven by the recognition of delayed tech-driven regulatory services, as well as strong growth in biosimulation offerings. Services bookings were $51.4 million, which decreased 10% from the prior year period. If you recall, Q3 of last year benefited from a bolus of bookings that were delayed from the first half of the year during the start of the COVID-19 pandemic.
Year-to-date, services bookings are up 10%, and we have seen services bookings pick up in September and October after a couple of slow months during the summer. Looking forward, the pipeline is strong and Q3 performance is mostly reflective of timing. Total cost of revenue for the third quarter of 2021 was $28.8 million, an increase from $23 million in the third quarter of 2020, primarily due to increases in employee-related costs resulting from billable headcount growth and stock-based compensation. Total operating expenses for the third quarter of 2021 were $45.9 million, an increase from $26.9 million in the third quarter of 2020.
The components of operating expenses are as follows: Sales and marketing expenses were $5.1 million, compared to $3.1 million for the third quarter of 2020, due to a $1.1 million increase in employee-related costs resulting from headcount growth and $0.6 million in stock-based compensation. R&D expenses were $4.5 million compared to $3.3 million for the third quarter of 2020. The increase in R&D expenses was primarily due to a $0.9 million increase in employee-related costs resulting from headcount growth and a $0.5 million increase in stock-based compensation, both of which were partially offset by smaller reductions in other line items. G&A expenses were $26.2 million compared to $13.4 million for the third quarter of 2020.
The increase was primarily due to $7.4 million of acquisition costs, $4.5 million increase in stock-based compensation costs, and $0.7 million increase in insurance expenses. Also contributing to the increase were public company costs, which year-to-date have added approximately $4 million to our cost structure. Intangible asset amortization was $9.6 million, and depreciation and amortization expense was $0.5 million for the third quarter. There were no significant changes in either line item. Continuing down the P&L, interest expense during the third quarter was $3.3 million compared to $5.9 million for the third quarter of 2021. The year-over-year reduction in interest expense is due to the repayment of our holdco loan last year.
Income tax benefit was $1.6 million due to the tax effects of U.S. pre-tax loss, non-deductible items, the effects of tax elections made on U.K. earnings, and the relative mix of domestic and international earnings and discrete tax items. Net loss for the third quarter of 2021 was $1.8 million compared to net income of $1.2 million in the third quarter of 2020, due primarily to the increase in stock-based compensation expense and acquisition costs, which were partially offset by higher revenue and lower interest expense. Diluted loss per share for the third quarter of 2021 was $0.01 as compared to earnings per share of $0.01 in the third quarter of 2020.
Adjusted EBITDA for the third quarter of 2021 was $26.1 million compared to $20.5 million for the third quarter of 2020, representing 28% growth. We continue to perform well against our plan and have made some upward adjustments to guidance based on the year-to-date performance as well as the impact of Pinnacle 21. Adjusted net income for the third quarter of 2021 was $10.8 million compared to $3.3 million for the third quarter of 2020. Adjusted diluted earnings per share for the third quarter of 2021 was $0.07 compared to $0.02 for the third quarter of 2020. Now moving to the balance sheet.
We ended the quarter with $416.8 million of cash and cash equivalents, which includes net proceeds of $133 million from our offering earlier in the quarter. $250 million of the cash balance was planned for the Pinnacle 21 acquisition, and post-closing, our cash position and balance sheet remained strong after the effect of the acquisition. As of September 30, 2021, we had $301.2 million of outstanding borrowings on the term loan and $100 million of availability under the revolving credit facility under the credit agreement. Regarding financial outlook, we are increasing our previously reported guidance for full year 2021 revenue, adjusted EBITDA, and adjusted EPS, including Pinnacle 21. GAAP revenue in the range of $288 million-$291 million.
Adjusted revenue in the range of $292 million-$295 million, which excludes the Pinnacle 21 deferred revenue valuation adjustment of approximately $4 million-$5 million. Adjusted EBITDA in the range of $106 million-$108 million, including $2 million-$3 million from Pinnacle 21. Adjusted EPS in the range of $0.22-$0.26 per share. A fully diluted share count in the range of 155 million-156 million, which includes the impact of the 4.5 million shares sold in our secondary offering in the third quarter and approximately 2.2 million shares relating to the Pinnacle 21 acquisition. Thank you. Now I'll turn it back to our CEO, William Feehery.
Thank you, Andrew. In summary, Certara had a strong third quarter, highlighted by our robust financial results, operational performance, and we hit the ground running in Q4 with the acquisition of Pinnacle 21. Our Certara team continues to focus on our commitments to customers and to delivering strong growth for our shareholders. We believe that our end-to-end platform is well-positioned to continue benefiting from solid market trends. We expect to capture a larger share of overall biopharmaceutical R&D spend as we continue to innovate, acquire, and add new solutions to our end-to-end platform. At this point, we will open up the call for questions. Operator, can you open up the line?
Thank you. Ladies and gentlemen, at this time, if you'd like to ask a question, you will need to press the star then the one key on your touchtone telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster.
Our first question coming from the line of Dave Windley with Jefferies. Your line is open.
Hi, good afternoon. Thanks for taking my questions. I wanted to ask on Pinnacle 21. You kind of alluded to. I appreciate the guidance numbers there. Taking from those, you alluded to margins above your corporate average in the fourth quarter and then expanding in 2022. Could you talk a little bit about that trajectory of expansion? What investments do you believe you need to make in that platform, if any? Is that something that your existing sales force can sell? Things like that would be helpful. Thank you.
Yeah, thanks, David. Appreciate the question. I'll start and then maybe Andy wants to chime in on this. It's a pretty healthy company that's growing nicely. We believe that our sales force is capable of offering this more broadly to our customers than Pinnacle 21 was doing before we bought it. We are making some investments in sales training and in expanding our sales force a little bit to accommodate for additional revenues that we're putting on their plate there.
Overall, you know, we think there's a lot of opportunities to expand the product set a bit and to tie it in in a more integrated fashion to some of our biosimulation products and some of our regulatory products. I don't know, Andrew, do you have any comments you wanna bring up about their growth?
No, I would just comment that the EBITDA margins this year will be you know modestly higher than the Certara overall average EBITDA margin. We expect those margins to expand next year. It's a function of you know the complementary businesses and synergies not related to additional investments. Leveraging our broader range of resources we have for sales and marketing, et cetera.
Okay. I'd love for you to touch on maybe provide a little bit more color about the cadence of the bookings environment in the third quarter. I'm sure other people are gonna ask about that. I'll ask a little more specific. You've talked about your biologics simulator and kind of carving that out and making that available on a more standalone basis. Have you seen adoption on that yet? Is it still too early? And is that, you know, big enough or important enough to cause some of your clients to pause and evaluate that biologic simulator as an alternative to what they're already doing?
Yeah. Thanks, David. It's still early days for that product, so it was only, you know, something we announced relatively recently. We do have customers for it going forward and grow it. Well, I do think customers are gonna continue to develop their biologics. They're not gonna pause their programs because we have a new product. I do think that it provides some valuable insight that can, you know, go along with Certara's general theme of reducing the time and the cost of drug development or in this case, biologics development.
Okay.
You actually had two questions. You asked about bookings, so, maybe Andrew, you wanna take that one?
Yes. The bookings, I think we talked about it. We saw a little bit of at the end of the second quarter, but you know, coming out of the pandemic environment, we saw a lengthening of time to close on bookings. Pipeline remained healthy. Moving into September, we really saw a pick up. We maintained a TTM about you know, approximately 15% through the third quarter. Following through, the momentum continued into October, and we expanded the TTM growth to 18%, and the pipeline looks healthy for Q4.
Well, sorry, 18% is the measure through October? Is that-
Yep. That's the TTM through October.
Okay. Got it. Thank you. I'll leave it at that. Thank you.
Thanks, David.
Thank you.
Our next question coming from the line of Michael Ryskin with Bank of America. Your line is open.
Great, thanks. I wanna follow up on Dave's question on Pinnacle. Just sort of talking through some of the synergies and the growth there, obviously a very strong profile if you look at 2022. I wonder how much of it is sort of, you know, new customers or maybe different customers that are using that software versus what you're currently offering, or is it sort of just better exposed to a particular part of the market? I'm just curious. And then in terms of future investment in Pinnacle and adding more capabilities there, could you talk to any opportunities on that?
Yeah. Look, I think last quarter we talked when we acquired Pinnacle 21, they, you know, had a very small sales and marketing force. It was really just one person, which I think speaks to the strength of the product they have. You know, this is something that's very complementary to what Certara does with lots and lots of our customers. Obviously we have a sales and marketing force that's quite a lot larger than that. That's one significant opportunity for us in the near term. We, you know, expect to see some success from that as we go into next year. The second piece of it is, we do believe that there's opportunities for additional products in the Pinnacle 21 line.
Not ready to talk about that right now, but you know, look, watch as we go into next year and you know, I think we'll see some interesting developments there.
Thanks. If I heard you correctly, when you were talking about software revenue in the quarter and bookings early, I thought you said that aggregate renewal for software was 87%. I think you indicated retimed renewals. Could you clarify what you mean by that? Is that just renewals that were pushed into Q4 or happened earlier in Q2? Just, you know, how often does that happen? What gives you confidence that that's not something that, you know, a software customer that went away and that's something that's still gonna be there, later this year?
Yes. Yeah, I can take that, Will. Specifically, we have clients who over the years have acquired our products at different term end dates, and from time to time, they like to consolidate their renewals into a single period. What happened was we saw that renewals that were scheduled for Q3 were combined and renewed in Q2. This is why, you know, if you look at the year to date, we're at a 90% aggregate renewal rate, and we were, you know, a little bit above the benchmark in Q2, a little bit below in Q3.
Okay. All right. Appreciate it. Thanks.
Yep.
Our next question coming from the line of John Kreger with William Blair. Your line is open.
Hi. Thanks very much. Hey, guys. Wanted to come back to the staffing comment. How are you feeling about your staffing availability at this point? Are you able to sort of handle the work that you're trying to convert into revenue right now? Is there any constraint there?
Well, I think we said in the call, we've grown our headcount by about 14% year to date, so we're actively recruiting, as you'd expect since we're growing nicely. I'd say, you know, overall, we're pretty busy right now, but not to the point where we're turning away work or anything like that. I think, you know, it's a competitive environment out there. I'm sure lots of companies have talked about it, but I think Certara has a very good proposition for employees to join us, and so we've been keeping ahead of it.
Thanks, Will. I don't wanna steal the thunder from your Investor Day, but any sort of early comments you could give us on the 2022 outlook relative to some of the longer term targets you've talked about?
Well, Andrew, do you wanna comment on that or?
I would prefer to address that in Investor Day. What we can see, though, and we've talked about, is that we kind of look at a high visibility approach to forecasting. The way that the guidance came out, our organic growth rate, excluding, you know, Pinnacle 21 is closer to the high teens as opposed to the mid-teens. We're optimistic for next year, and we'll talk about guidance at the Investor Day.
Great. Thanks. Maybe just one last quick one. If you think about the bookings experience you had in Q3, sounds like it was a little light overall, particularly in services. As you look across the portfolio, does anything stand out to you in terms of, type of work that was awarded, type of client, any kind of takeaway beyond just sort of, lumpiness through the summer?
Uh-
Go ahead, Andrew. Do you wanna take that?
I was gonna say from my perspective, it was, you know, lumpiness from the summer. One key highlight that Will mentioned earlier is in both software and on the services side, we derive a larger percentage of our revenue from new clients than we had historically. The increasing number of new logos has been, you know, positive and was part of our plans going into the year, but we're delivering on that plan. Slightly higher mix of revenue from new clients. Both-
Yeah, I think overall we just saw a lot of clients taking some vacation in July and August. Things slowed down and then they picked up as we went into the fall.
Got it. Thank you.
As a reminder, ladies and gentlemen, to ask a question, please press star one. Now next question coming from the line of Luke Sergott with Barclays. Your line is open.
Hey, everybody. Thank you for taking my question. On the Pinnacle 21 with the new five-year contract award, the FDA, can you give us a sense of if that is really what's taking your estimated growth next year from that mid-teens% to high-teens%? If not, just give us a sense of how this work is actually gonna pace in. Just trying to get a sense of the durability of the magnitude that's available to you guys.
Well, Pinnacle 21 has a five-year contract from the FDA. The FDA uses Pinnacle 21 to evaluate all of the submissions that come in for compliance with CDISC. They've started enforcing compliance, so that's the tool that they use. It's not the, you know, it's not the majority but not even anywhere close to the majority of Pinnacle 21's revenues. The primary source of revenues are pharmaceutical companies that are using their software well before they get to the FDA. We believe that there's a bigger market in that area, right? You know, there's a lot of data that gets transmitted through the pharmaceutical development process as you move from clinical through regulatory.
You know, rather than simply try to put that in CDISC format as the last step before we go to the FDA, there's a lot of opportunity in terms of cost and labor savings for that to happen earlier in the process, and we're seeing customers that do that. We believe there's a bigger opportunity, you know, across pharma to use the software in that way. You know, it's a very attractive product they have, Pinnacle 21. It solves a problem that exists across the pharmaceutical industry. It's not an easy problem to solve from a software perspective, so it's, you know, a fairly complex piece of software that requires, you know, a pretty good team to develop and manage it.
You know, we don't believe it's fully penetrated in the industry and, you know, that's probably the first step as we complete our integration of the product.
All right. Makes sense. Last one here on the guide, the implied 4Q, can you give us a sense of the step-up here, where it's coming from, software versus services?
Fourth quarter.
Software versus services? Let me tease that out. It's coming from both. I do expect a pickup in the software growth rate in the fourth quarter to push it up into the low teens as we had you know set for our goal earlier in the year. I would say the big driver of the fourth quarter is software growth and then you know incremental growth in the services as well.
Okay.
Both.
Thanks.
Both. Yeah.
Now next question coming from the line of Vikram Purohit with Morgan Stanley. Your line is open.
Great. Thanks for taking my questions. So first, staying on Pinnacle 21, I was wondering if you could just remind us what the mix of that business is on a standalone basis across software and services. Is it primarily a software business or is there a meaningful services component to it as well?
Yeah, 90-
90 per-
Yeah, you got it?
Well, what Andrew is gonna say, it's 90% software and about 10% services. The services are, you know, things like training and installation for new-
Understood.
New customers. Yeah.
Okay. Primarily software. Got it.
Right.
Now that the transaction's closed, I was wondering if you could speak in any further detail about a couple of the more interesting areas that you're looking at for cross-selling opportunity looking into 2022.
Sorry. Just in general for Certara, is that your question?
Cross-selling opportunities between Certara and Pinnacle 21.
Certara does a lot of work where we are working early on to help design the clinical strategy for a pharmaceutical project, rather. You know, if you integrate the data strategy in with that, you can save a lot of money for our clients down the line. That's one very obvious thing that actually we were all planning on even earlier today. You know, I think we do a fair amount of regulatory work where we are working to create and then submit the full NDA, including the biostat data. There's an opportunity right there to combine Pinnacle 21's technology with the work we're doing for quite a number of clients.
I think we'll find other ones as we, you know, continue to go forward. Now, I think the thing about Pinnacle 21 is, you know, data standardization across the pharma development process would save tremendous amounts of time and money if it was really broadly implemented. I think a lot of our clients know this. The easiest way to standardize around it is to go with CDISC because everybody's gonna have to basically comply to that when you go to the FDA anyway. That's why we believe that Pinnacle 21's got a lot of opportunity beyond just that final step where they're going for that submittal to the FDA.
Okay. That's helpful. Thanks for that. Maybe one more question from my side. Related to some of the recent product updates and product launches that you've announced, I was wondering from a business cycle standpoint, could you talk to us a little bit about how long it takes in your experience for these kinds of product releases to gain some uptake and start driving new sales growth? You know, for example, you recently launched a new regulatory writing software. Base case market access software was updated several months ago. I was just curious to see how long it takes for releases like this to start generating kind of a sales lift.
Yeah. So it depends on the type of software, Vikram. For a lot of our software where we're doing you know a major update for example in Simcyp you know we have an eagerly awaited list of customers who you know want the next features and will upgrade almost immediately. That's not entirely true because when particularly in Simcyp if you do your drug submittal with a specific version you need to stay with that. So we deal with people that will not everybody will upgrade but you know people are really pushing for new features and new modalities for that.
For other products, you know, like, when we've talked about Secondary Intelligence, which is, you know, really a very innovative and new product for toxicology, that'll probably take a little bit longer because we've got to go and, you know, evangelize a new market and explain how this works. You know, those products historically have taken, you know, a year or two before they build up. It really depends. You know, the pharmaceutical industry is pretty sophisticated, but also it's a highly regulated industry. You know, you do have to, you know, demonstrate how your software is accepted by the FDA and fits with the overall process.
You know, I think over a two-year period is probably maybe the most typical number I can give you.
No, that's helpful. Appreciate that. Thank you.
Thanks, Vikram.
I'm showing no further questions at this time. I would now like to turn the call back over to Mr. Feehery for any closing remarks.
Yeah, thanks for joining our third quarter conference call. As I said earlier, Certara had a very good quarter. We're very pleased with our growth, and we're very excited about the future opportunities that we have with Pinnacle 21 and with a lot of the technology and products that we are continuing to launch and develop. Thank you for joining, and I hope everybody has a good evening. Bye now.
Ladies and gentlemen, that does end our conference call today. Thank you for your participation. You may now disconnect.