Ladies and gentlemen, thank you for standing by, and welcome to the Certara 4th Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, David Deichler, Investor Relations.
Please go ahead, sir.
Good afternoon, everyone. Thank you for participating in today's conference call. On the call from Certara, we have William Fairey, Chief Executive Officer and Andrew Shemek, Chief Financial Officer. Earlier today, Certara released financial results for the quarter year ended December 31, 2020. A copy of the press release, along with a supplementary presentation is available on the company's IR 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 the 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. You should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Actual results may differ materially from those expressed or slide 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 prospectus filed with the Securities and Exchange Commission on December 14, 2020.
Also, in their remarks or responses to questions, management may mention non GAAP financial measures. Reconciliations of certain non GAAP financial measures such as adjusted EBITDA, adjusted net income and adjusted EPS To the most directly comparable GAAP measures are available in today's earnings release and appendix to the supporting presentation,
both of which are posted
on the company's IR website. This conference call contains time sensitive information and is accurate only as of the live broadcast today, March 4, 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. And with that, I will turn the call over to William.
Thank you, David. Good afternoon, everyone, and thank you for joining Certara's 4th quarter earnings call. Andrew and I will I'll start with prepared remarks and then we will take questions. On December 11, 2020, we successfully completed our IPO and listed on the NASDAQ. We raised $768,500,000 in gross IPO proceeds, including $316,300,000 in net proceeds for the company.
On behalf of Certara, I would like to thank Everyone who is involved with the IPO. With the investment community support, we are now better positioned to deliver on our mission to accelerate the drug development process with our biosimulation software and TEC enabled services. We're also pleased to note that Certara will be joining the Russell 1,000 Index effective March 19.
In 2020,
Certara had another strong year of financial performance with 17% year over year revenue growth, including record revenue in the 4th quarter, which grew 20% over the same quarter in the previous year. We are also very pleased with our growth in profitability. Our 2020 adjusted EBITDA Increased by 28% for the full year and by 36% in the 4th quarter. Full year 2020 bookings grew 11% and we had solid bookings in the 4th quarter with 21% growth. And while it was challenging to recruit during the pandemic, we grew our employee base by 8%, surpassing 900 employees in 2020.
Certara is a global leader in biosimulation. Biostimulation is a powerful and proven technology that uses computer models to simulate and predict how a drug affects the body and how the body affects the drug. Certara's customers worldwide use our biosimulation software significant time and money, while also advancing drug safety and efficacy. Additionally, Certara's biosimulation software is used by 17 global regulatory agencies to evaluate regulatory submissions, including 12 divisions of the FDA. In 2020, there was no better example of biosimulation's impact and the global effort to develop therapeutics and vaccines for COVID-nineteen.
When many in the biopharmaceutical industry pivoted to Fighting COVID-nineteen, they chose to partner with us on more than 30 programs. We believe that the pace of development Many COVID-nineteen programs would not have been possible without the use of biosimulation. And we couldn't be prouder or more passionate about Contributing to this global effort against the pandemic. It's important to note though that COVID was only one of the many therapeutic areas that Certara worked on in 2020 with significant amounts of work in areas like oncology and rare diseases. Certara offers a differentiated end to end platform, which is powered by biosimulation and integrates technology enabled services.
Our platform spans the entire R and D continuum from drug discovery to regulatory science and market access. Key to our platform are Certara's leading scientists and experts via simulation. Of our more than 900 employees, 1 third have doctorate degrees and in 2020 they Collectively published more than 100 scientific manuscripts to help advance the biosimulation field. The technology enabled services these scientists provide significantly increased the adoption of biosimulation Due to the capability of our group and the fact that the number of biosimulation projects at Certara in the course of a year is likely larger than even the largest pharma companies work on. Furthermore, as the biotechnology industry grows rapidly, So does the demand for our technology enabled services because biotech companies may not always have the need or the ability to hire scientists with our extensive biosimulation expertise.
In regulatory science, we deliver writing and operation support to advance our customers' global regulatory submissions, often incorporating results from biosimulation analysis. We have best in class technology and global regulatory experts to improve efficiency and quality and expertly navigate regulatory pathways. Furthermore, we provide market access solutions, which are underpinned by advanced analytics. In MarketAxess, we help our customers understand the real world impact of therapies and communicate this effectively to payers and health authorities. We are proud to say that since 2014 to this past year, Customers have used Certara's biosimulation software and tech enabled services have received more than 90% of new drugs and biologics As we are known to be the industry standard for biosingulation and at the forefront of innovation, We continue to gain new customers.
We ended the year with more than 16 50 customers worldwide. We also expanded our In 2020, we had 53 customers with an annual customer value greater than $1,000,000 growing 20% year over year. Additionally, we had 261 customers with an annual customer value greater than $100,000 which was a 14% growth year over year. At Certara, the needs of our customers drive our passion for innovation. As an example, We partnered with many of the leading global biopharmaceutical companies to introduce a new version of our SimSIP simulator in 2020 to advance safer and more efficient clinical studies.
We developed additional models for testing drugs with virtual patients in complex populations such as pregnant women. We also invested in new features to As of the end of 2020, the SimSIP simulator has informed approximately 250 label claims for more than 75 FDA approved novel drugs. As Certara expands, We are focused on penetrating new markets. In the Q4, we opened our new office in Shanghai, China's epicenter for biopharmaceutical R and D. In 2020, our revenue from China more than doubled.
We also recently renewed our center of excellence partnership with Peking Union Medical College Hospital, one of the most selective medical colleges in China. They use our Pfenex platform to train their emerging We are enthusiastic about our direct presence in China so that we can fully support our rapidly growing customer base there. In addition to organic growth, Certara completed the acquisition of Insilico Biosciences modeling and simulation for neurodegenerative diseases in 2020. In 2021, we're actively looking for the right technology, Just a few days ago is Arthur, a regulatory and biostatistics services firm based in Europe. When we discuss our M and A strategy, It's important to reflect on Certara's demonstrated history of executing a disciplined acquisition process.
Our focus on technology and capabilities to help our customers has been deliberate. Shareholder value creation will continue to be the top priority at Certara. In summary, 2020 was another solid and exciting year for Certara And we're enthusiastic about the company's prospects over the coming year and beyond. I will now turn it over to our CFO, Andrew Shemek, to discuss our financial results and provide guidance for 2021.
Thanks, Liam. Hello, everyone. First, we will go through the 4th quarter results followed by the full year results, and I will finish the prepared remarks with the guidance for the full year of 2021. As William mentioned earlier, the 4th quarter was a record quarter for Certara. Total revenue for the 3 months ended December 31, 2020, with $64,600,000 representing year over year growth of 20%.
Software revenue was $17,500,000 which increased 4% over the prior year period. We saw 12% growth in revenue from subscription software, But as Certara migrates certain products from license to subscription, this growth was offset by lower software maintenance and timing of software license revenue recognition. Notwithstanding the software maintenance and timing, software revenues grew consistent with historical levels. Services revenue was $47,100,000 which increased 27% over the prior year period. The growth in services revenue reflects the trend of increased adoption of our end to end platform from both our installed base of customers and new logos.
I will provide the full year net revenue repeat rate on services later in the discussion. In addition to revenue, we also monitor 2 key performance indicators to evaluate retention and expansion: new bookings and aggregate renewal rates. Software bookings were $21,000,000 which decreased 3% from the prior year period due to several large renewals booked early during the Q3. I'll mention here that bookings can vary from quarter to quarter dependent in part on the timing of signing larger renewal contracts. Software aggregate renewal rate was 89% as compared to 95% in the Q4 of 2019.
The renewal rate, which is revenue based, was negatively impacted by approximately 200 basis points due to the increased mix of subscription revenues. Services bookings were $63,300,000 an increase of 32% from the Q4 of 2019. I categorize the growth in this area as broad based, but it's important to note that the demand was particularly strong for biosimulation solutions. Before I discuss the details of expenses, I'd like to make the general point that as a result of the IPO, we incurred $62,000,000 of stock based compensation expense in the 4th quarter, which accounts for the majority of the increase in expenses during the quarter and for the year. Total cost of revenues were $34,900,000 an increase from $22,000,000 in the Q4 of 2019, primarily due to an increase of $8,500,000,000 in stock based compensation as well as increased billable headcount and performance based compensation.
Total operating expenses were $83,300,000 an increase from $27,900,000 in the Q4 of 2019. The increase was primarily due to a $53,100,000 increase in stock based compensation expenses. Operating expenses also included a $1,400,000 increase from transaction related costs. The components of operating expenses are as follows: Sales and marketing expenses were $10,400,000 compared to $2,800,000 for the Q4 of 2019. The increase was primarily due to The increase was primarily due to a $6,900,000 increase in stock based compensation expenses.
G and A expenses were $52,400,000 compared to 12,300,000 Q4 of 2019. The increase was primarily due to a $38,700,000 increase in stock based compensation expenses. Intangible asset amortization was $9,400,000 for the 4th quarter and depreciation and amortization expense was $600,000 during the quarter. Continuing down the P and L, interest expense during the Q4 was $5,500,000 which reflects about $1,600,000 related to our HoldCo term loan, which we repaid in its entirety late in December with proceeds from our IPO. Our effective tax rate was 9.1% for the 4th quarter.
Given the complexities here, I will revisit this later during the discussion of the full year results, including a discussion of our cash tax rate. Net loss for the Q4 was $54,400,000 an increase from $6,000,000,000 in the Q4 of 2019. The increase was the result of a $61,400,000 increase in stock based compensation expense, offset by an income tax benefit of $5,500,000 Net loss per share was $0.40 compared to $0.05 for the Q4 of 2019. Adjusted EBITDA was $22,200,000 Compared to $16,300,000 in the Q4 of 2019, adjusted net income was $11,800,000 as compared to an adjusted net loss $3,700,000 for the Q4 of 2019. Adjusted EPS was 0 point 0 $9 compared to a loss of $0.03 for 2019.
Overall, we're pleased with the company's performance An improved level of profitability on a year over year basis. Turning to the full year results. Total revenue for the full year ended December 31, 2020, was $243,500,000 representing 17% growth over 2019. Software revenue was 73,500,000 which increased 7% over the prior year period due to 10% growth in software license revenue and 8% growth in subscription revenue, partially offset by a decline in software and maintenance revenue. In addition, a previously known runoff contract relating to an acquisition in 2017 expired in 2020 affecting the comparison against 2019.
Overall, we are pleased with this performance given that the organic growth rate was 11% when factoring out the runoff contracts. Services revenue was $170,100,000 which increased 21% over the prior year period, The growth was attributable to both expansion within our existing base of customers and to new logos. The expansion and impact of new clients is evident in the ACV metrics that William discussed earlier as well as in the 116% net revenue repeat rate for the year. On the performance metrics, software bookings were $73,300,000 which increased 9% from 2019. Software aggregate renewal rate was 90% for the full year 2020 as compared to 93% for 2019.
We achieved our goal of 90% plus aggregate renewal rates despite the previously mentioned runoff contracts. The full year net retention rate for software was 105%. Services bookings for 2020 were $215,000,000 an increase of 12% from 2019. As a reminder, the majority of our bookings result in revenues that will be recognized within a forward 12 month period. And in the Q2 of 2019, we recorded a large multiyear booking is that we have high visibility going into 2021.
The visibility is at a level consistent with prior years and supports our financial guidance, which I will discuss shortly. Total cost of revenues were $100,800,000 an increase from $79,800,000 for the full year of 2019, primarily due to increased billable headcount and an $8,600,000 increase in stock based compensation expense. Total operating expenses were $157,200,000 an increase from $109,100,000 in 20.19, primarily due to increases of $54,000,000 in stock based compensation expense, dollars 4,800,000 of employee related costs and $1,900,000 of transaction related costs. The components of operating expenses are as follows: Sales and marketing expenses were $19,200,000 compared to $10,700,000 for 20 19. The increase was primarily due to a $7,300,000 increase in Stock based compensation expenses.
R and D expenses were $19,600,000 compared to $11,600,000 for 20 19. The increase was primarily due to a $7,000,000 increase in stock based compensation expenses. G and A expenses for the year were $88,500,000 compared to $47,900,000 for 2019. Again, the increase was primarily due to an increase of $39,800,000 in stock based compensation expenses. Intangible asset amortization was $37,400,000 and depreciation expense was $2,400,000 during the year.
Continuing down the P and L, Interest expense was $25,300,000 which reflects about $7,600,000 related to our HoldCo term loan, which we repaid in its entirety late in December using proceeds from our IPO. Our effective tax rate was a benefit of 1.6% for 2020. Our cash tax rate was 33% for 2020. The difference between the cash and effective tax rates is driven by the impact of net operating loss and tax credit carry forwards, valuation allowance and other components of deferred tax expense that are Excluded from the calculation of cash taxes. Net loss for the full year of 2020 was 49,400,000 An increase from $8,900,000 in the full year of 2019, primarily driven by the increase in stock based compensation Net loss per share for the full year 2020 was 0 point Adjusted EBITDA was $87,900,000 compared to $68,400,000 for 20 19, representing 28% growth.
Adjusted net income was $22,000,000 compared to $800,000 for 20 19. Adjusted EPS was $0.17 compared to $0.01 for 2019. Now moving to the balance sheet. We ended the year with $271,400,000 of cash and cash equivalents. Our total debt outstanding was $298,800,000 after the voluntary repayment of $80,000,000 of our long term debt in the 4th with a portion of the proceeds from our IPO.
The current debt structure does not include any significant maturity until 2024. Now turning to our full year outlook for 2021, the following are our expectations: Revenue to be in the range of $272,000,000 to $285,000,000 representing 12% to 17% growth adjusted EBITDA to be in the range of 98 to $102,000,000 adjusted EPS to be in the range of $0.20 to 0 point 24 dollars per share the cash tax rate to be in the range of 25% to 30% the effective tax rate to be between 45% 50% and finally, fully diluted shares to range between $153,000,000 $155,000,000 at year end. Thank you. Now I'll turn it back to our Chief Executive Officer, William Fahey.
Thank you, Andrew. In summary, 2020 was a very strong year for Certara in a challenging environment. Our Certara team continues to focus on our commitments to customers and deliver strong growth for our shareholders despite the COVID-nineteen pandemic. 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 and D spend as we continue to innovate, acquire and add new solutions to our
Please stand by, we'll compile the Q and A roster. Our first question comes from Vikram Paruat with Morgan Stanley, you may proceed with your question.
Great. Thanks for taking my question. First one from me is on the topic of seasonality. Could you talk a little bit about How buying patterns trend throughout the year, both for the software business and for the services business? And how we should kind of think about Any possible lumpiness in revenues on a quarter to quarter basis going forward?
Hi, Victor. Thanks. Go ahead, Thanks, Liam. Okay. So regarding seasonality, I really look at that at three levels.
The bookings, they tend to be less of a seasonal pattern. It's more dependent on client behavior. If you look at 2019, We had 54% of our bookings in the first half, 46% in the second half. That was related to 1 large multiyear booking we had in the 2nd quarter. If you look at 2020, 45% in the first half, 55% in the second half.
We had a very strong bookings year and momentum for the second half. The revenues, we're a growing company. We grow quarter over quarter. There can be some seasonality in the software, particularly around Q1 and Q4, where we have a heavy renewal season. That seasonality is generally offset by growing tech enabled services business and the revenues for the previous 2 years have been split about 49% in the first half, 51% in the second half.
EBITDA tends to follow the revenues. Historically, in 2020, We had a lower percentage of EBITDA in the second half. That was entirely driven by the timing of our performance compensation accruals, Given the lack of visibility into the full year, the lack of uncertainty with regards to the early stages of COVID, we caught up on those accruals in the Q4 and Q3. If you put those back into the 1st and second quarter, it exactly follows the same seasonality as the revenue trend.
Got it. That's helpful. Thank you. And a follow-up if I could. I just wanted to see if you could talk a little bit about how much COVID contributed to 2020 revenues in terms of again both Software and for the services business and how much of a COVID contribution would you expect going forward throughout 2021 and beyond.
Understanding it's a bit of a fluid situation, but just any thoughts you'd have there would be helpful.
Sure. So we definitely saw an acceleration from COVID, Not necessarily overall impact on the financial statements specifically for COVID, our revenues tend to track The work that's ongoing in the industry, so if it was a priority for our clients, it was a priority for us. We did see some Yes. Serge, you worked in the Q2 at the early stages of COVID, but we don't expect a major impact And expect that going forward to kind of follow the trend of investment in R and D in the biopharmaceutical industry. William, anything to add?
Yes. It's I I think that the best way to look at this is that COVID for us was an important we're very proud of the work we did, but from a financial standpoint, it's More or less of a wash. Teams that were working on other things rolled over to work on COVID and They moved back as the pharmaceutical industry moved. So in the second quarter, we probably lost a few projects and then we gained a few COVID projects and then Those projects came back later in the year. So I don't think that it was particularly financially A big impact one way or the other really for us in 2019, although certainly did affect the projects we worked on and The mix a little bit there.
Okay, understood. Thank you.
Thank you. Thank you. Our next question comes from Michael Ryskin with Bank of America. You may proceed with your question.
Hi, guys. Thanks for taking the question. Appreciate it and congrats on quarter and nice 2021 outlook. I want to start with focusing on cross selling Between the biosimulation software and services, could you give us an update on sort of how that progressed over the course of 2020, particularly in the Q4? And some of your thoughts on how that could accelerate in 2021, is that something you're seeing any meaningful checkup?
Yes. Thanks, Michael. Appreciate the question. So, look, we've been accelerating our efforts We do cross selling. In 2020, we increased our Percentage of customers that are buying more than one solution from Certara By if you look at our top 300 customers, it moved from about 2 thirds up to about 72%, so a couple of points increase.
Obviously, we have more than 2 solutions in Certara, so there's more opportunities as we go forward. So I'd say that we think that we are tapping into an important strategy for Certara. It's been Certainly a growing opportunity through the year, but we also don't think we've quite reached the end there. So there's lots certainly A lot of customers we have that we believe would benefit from other solutions as their drugs move through the development pipeline. And we've been organizing ourselves and tapping into our Internal data systems to track drugs so that we're able to bring the right solution to the right customer at the right time.
Okay. And can I ask a follow-up? I mean, you discussed a little bit sort of the COVID impact on the revenues, but I was More curious in how we should think about your sales and marketing approach, your sales force out there, especially with new customers Outside of sort of the renewal parts of the business, what was the impact of COVID in 2020? How should we think about Potentially going back to prior ways of doing business in 2021 in terms of being able to do more visits with potential customers, Sort of were there any headwinds that you observed throughout the year and how are you able to adapt there? Yes, thanks.
Good question. And like look, like every company around the world, we've had to make adaptations and adjust. In the past, we used a number of large conferences as marketing events and marketing tools. And although a lot of them went to a virtual format, it's really not the same. So we made a much bigger investment in digital Marketing and digital meetings than we had in the past, and we saw a lot of success over that.
It's not just us migrating, obviously, It's not just us migrating how we market and how we sell, it's also customers are migrating how they learn about solutions and how they buy at the same time. So I think we've tapped well into what I think will be a continuing trend in the industry about how some of this It happens. We've also increased investment in 2020 and we're continuing to do that as Going to 2021 in our commercial footprint globally, we see opportunities to expand our sales, marketing, business development teams in software and China and in Europe in particular. And we did that through the
Particularly in the second half of twenty twenty,
because when COVID hit, we had it was There was a little bit of a slowdown in hiring, I think, in lots of industries. But in the second half, we started to accelerate that and we're continuing to Make what we think are good investments in expanding that as we go into this year. Thanks so much. Thank you.
Thank you. Our next question comes from David Whitney with Jefferies. You may proceed with your question.
Hi, thanks a lot. Thanks for taking my question. I've got a few. On the QSP models that you've talked about being in development and progressed this year, I believe Some of the at least some of those, maybe all of those are through your consortium model. And so I was wondering just Kind of an update on the progress of those, are they now kind of fully vetted, fully Commercial ready.
And are you able to immediately sell those to clients Side the consortium or is it limited to the consortium here for a while? I just kind of want to understand the cadence of that.
Okay.
So the answer is it varies as there are a number of QSP models. And in general, without getting into all the specifics, we certainly provide an advantage to the consortium members in terms of some lead in terms of accessing the technology. But in the long run, we do have the ability to sell them, and we do outside the consortium when they're ready. So generally a consortium is put together. We work on it with just those customers.
They get early access. And then When the consortium is gone a couple of years down the line and those models become available. Occasionally, some of the consortiums go on for multiple terms. We are Finding some interest in renewal in our immuno oncology consortium right now, for example. And we're putting you in the early stages of a neurodegenerative diseases consortium To give you an idea of some other different stages.
And then some of our QSP modeling is done on our own investment, And we don't do it in consortium depending on the area. We might do it with one customer or we might simply do it with our own And create products for that. So it's kind of Okay. Very exciting.
In thinking A follow-up to one of the last questions about your kind of land and expand strategy and selling multiple products to clients. I noted in Andy's prepared remarks an emphasis on BioSim. Are you seeing uptake predominantly there or are you also kind of in a pretty balanced fashion seeing Regulatory and market access uptake as well.
So we saw, particularly in the 4th quarter, particularly strong uptake In biosimulation, but our growth was pretty broad based. That included market access And regulatory as well. They both did quite well in 2020 and in the 4th quarter. So I guess the answer is, it's strong in both of them.
Okay. And then last question, I'll pass it on is, I noted I note that your bookings balance is Increasingly shifting toward your tech enabled services, I think that's fairly consistent with what You thought maybe a little bit more so than the seventythirty mix that we've seen in the recent past. Do you expect That mix shift to services in 2021 to continue And how is the labor market for the clinical pharmacologists and pharmacometricians that you hire to support that service provision?
Great. So, thanks for the question. Maybe Andy, you want to take the first part and then I'll talk about the labor market?
Sure. Happy to. So we do see slightly higher growth rate in the services relative to the software, which is causing a mix shift. We expect Our mix next year to be consistent with the mix this year based on our projections. The net effect of that though is that if you look at the numbers in a little bit more detail, our services are tech enabled services In many cases, they're related to our software in terms of customizations or implementations.
They are Leveraging our software to provide a service. We also have other technology fees. So the mix shift, while we did have a mix shift this year in bookings and also in revenue, Once you exclude the non cash stock based compensation, we had a modest decline in cost of revenues. So we had increased efficiency, See, if you will, I look at that more on a revenue per headcount basis. So we're comfortable with our forward guidance with that respect.
Is that helpful?
Yes, it is. Thank you. Right. And then just to comment a little bit on the labor market. Look, we hire You know, a fairly expert group of people and we have pretty high standards.
So, certainly It's never an easy situation in the market. However, we I'd point out we have done quite well. We believe there's A lot of room for growth. And in some ways, the new post pandemic or What we've learned through the pandemic is helping us. The increased ability to work Virtually, and have confidence in that model.
It's sort of expanded the number of places we can recruit from. We're a global company. We find people all over the world, and our ability to do that has gotten better over the last year. So I think We're never going to feel like we have I mean, no company ever feels like they've hired everybody they want. We're always going to be working on that, but I think we are feeling confident about our ability to continue to grow this model.
Got it. Very good. Thank you.
Thank you. Thank you, David. Appreciate it.
Thank you. Thank you.
And our next question comes from Erin Wright with Credit Suisse. May proceed with your question.
Great. Thanks. There's obviously various models in terms of biosimulation. I guess, how are you thinking about the long term Mixed dynamics in terms of drug development stage, is it primarily largely all going to be overweight on the clinical side longer term or do you anticipate any sort of shift in strategy there? Thanks.
Yes. Thanks for the question. Look, The roots of Certara were in, as you pointed out, were in the clinical phase. That's where we started. And I think that the original idea was that's really where Most of the dollars are spent in pharmaceutical development, so it makes sense and we're Certainly not regretting that choice, but we have made it part of our strategy to expand an end to end solution throughout all of pharmaceutical We do have solutions across, as we said, between discovery and market access.
But we think there's additional opportunity to kind of fill that out. So we're certainly going to keep investing in the development in clinical stage Part of our business, but maybe the mix will shift a bit over time as we add additional solutions going forward.
Okay, great. And on that note, M and A, our capital deployment priorities, I know you've discussed a little bit about it kind of during the prepared remarks, but anything That in particular that you would be kind of targeting here at this point or any holes kind of fill from a portfolio perspective? That'd be great. Thanks.
Yes. So as you know, the Certara has a Fairly long history of a disciplined acquisition strategy. We look at acquisitions from both From a strategic lens in terms of does this expand our end to end solution, I think it's more relevant to our customers as they move their drug through development and from a financial perspective. And I think to my knowledge looking back, we've had a very successful track record of doing that. In the second half of last year, we were effectively out of the M and A market as we focused on our IPO.
But Our business our corporate development team was still very active in monitoring things. And so we We are tracking quite a number of interesting opportunities of technologies that we think could expand our offering. We made one acquisition in the 4th quarter. It was a company called Arthur, which is a regulatory and biostatistics firm in Europe. And we'll happily report back when we have Something new to report as we go forward.
Okay, great. Thank you.
Thank you. Our next question comes from John Kreger with William Blair. You may proceed with your question.
Hi, thanks very much. Hey, Phil, could you just elaborate a little bit more on the I think you said it just closed a few days ago. Should we view that as sort of a template of the kind of things you're looking for? And Perhaps if you could give us any input on price or revenue contribution?
The Arthur deal was Small deal, so we didn't reveal those numbers. We can say is that We are interested in small bolt ons where we typically find them at very attractive prices, As well as larger more transformative deals. So this would fit basically in the former category. We think we've got a group of very smart accomplished people that will Help us expand our European regulatory and biostatistics business, which is one of our priorities.
Got it. Thank you. And then Andy, I think of the 20% revenue growth that you reported in the Q4, was that all organic or did you have any sort of an acquisition benefit in that number?
That was all organic.
Great. Thanks. And then maybe just a couple of follow ups on the guidance. I think at the midpoint here, it Sounds like you're guiding to about 15% top line growth. Should we assume services and software are kind of comparable around 15% or do you expect services to grow faster?
Yes. Based on we forecast based on kind of visibility and looking at our prior period trends. So looking back, we've seen and I think we've talked about this as software in the looking at the organic growth rate when I exclude, for The runoff contract in the low teens, low to mid teens and then the services in the mid to high teens.
Okay. So that's your expectation for 2021 as well?
Yes. Great.
And then one last one similar. If you would you expect biosimulation to grow a little bit faster than regulatory and market access in '21 or should we assume those 3 buckets are similar?
The biosimulation has been performing At a higher growth rate, we have a higher level of presold work in that area.
Okay, so that will be fast. Great,
thank you.
Thank you.
Thank you. Our next question comes from Luke Sherpa with Barclays. You may proceed with your question.
Hey, guys. Thanks for the question. So it looks like your EBITDA, The margins take a step down a bit in 2021. Can you just give us a little more color what's going on there and kind of the pacing throughout the year on that OpEx step up?
Yes.
The EBITDA margin for next year, we target mid-thirty percent EBITDA margin range, we factor in the ability to make additional investments As we see fit, one of the areas Bill discussed earlier was kind of our approach to sales and marketing, also have investments in R and D. So that can impact the EBITDA margin a bit. We also are seeing an increase This year in some costs as it relates to being a public company, so for example D and O insurance was a big change. So expecting The cost to kind of mirror that the revenue mix I discussed earlier in terms of seasonality. So we do have some Phasing up costs as
the business grows throughout the year.
All right. That's helpful. And then as you guys build out in China, is the business mix Mirror what you guys have here in the West or is there any discrepancies or not discrepancies, but just differences in demand among the different Software and Services.
Yes, Luke, thanks for the question. Well, we think that Ultimately, it will mirror this. However, the industry in China is in a slightly different stage of development. So we are seeing, I think initially, more demand on the software side. That's probably a function of we still have to build up a significant amount of capability to do the tech services side tech Services there, but we do believe that those companies are growing and There's a lot of investment going in.
There's a lot of Western pharmaceutical companies there as well. So we think that ultimately we're going to see the same needs From those companies as we see from pharmaceutical companies in other parts of the world.
All right. Makes sense. And then I guess lastly from me, you guys you put a nice stat up there, 72% of your top 300 customers are buying 2 plus solutions. Can you give us a sense of the ACV Of those customers on those two solutions or just somehow, some direction on how that ACV has grown?
Do you want to take that one, Andy?
Yes. I think The majority of the top 300 are captured in the ACV over 100,000 category.
Okay.
It's 261 of the 300.
Yes, it helps. Okay.
14% growth in count.
Okay.
See if I can pull that up. Yes, I think that's the answer.
Okay. Thank you, Luke.
Yes, sure. Thank
you.
Thank you. And I'm not showing any further questions at this I would now like to turn the call back over to William for any further remarks.
Well, I would like to thank everybody for joining Certara's first earnings call. I really appreciate you all dialing in. And with that, we will close this and say good evening. Thank you. Thank