Q3 2023 Certara Inc Earnings Call
I'd now like to hand, the conference over to your first speaker today, David dye Claire.
Good afternoon, everyone. Thank you all for participating in today's conference call on the call from Sweetheart, where blends Perry Chief Executive Officer, and John Gallagher, Chief Financial Officer earlier today, Soutar released financial results for the third quarter and it's.
30th she got some twenty-three copy of the press release is available on the company's website before we begin I would like to remind you that management will make statements. During this call that includes forward looking statements and actual results may differ materially from those expressed or implied by forward looking statements. Please refer to slide two and the accompanying materials for additional information, which you can find on the company's success.
Relations website.
Management may mention some non-GAAP financial measures and their remarks responses to questions reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in our recent earnings press release on the company's web site.
Please refer to the reconciliation tables and the accompanying materials for additional information.
This conference call contains time sensitive information and is accurate only as of the live broadcast November eight 2023.
It's hard disclaims any obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
I will turn the call over to William.
Thank you David good afternoon, everyone.
Thank you for joining <unk> third quarter 2023 earnings call.
John and I will start with prepared remarks, and then we will take your questions.
In the third quarter sitar saw sequential improvement and stabilization in overall business trends with bookings growth in both software and services.
Total company revenue in the third quarter was $85 $6 million up 1% compared with the same period a year ago.
Software revenue in the quarter was $31 3 million and grew 10% versus last year and services revenue was $54 $2 million and declined 4% versus last year.
Over the past several months, we have seen a stabilization in activity across the portfolio. So there are some areas of the business to continue to experience more near term uncertainty than we are than we're accustomed to.
We continue to see strong indications of interest for our bias stimulation software and services across all tiers of customers.
We are executing well on the operational and commercial plans outlined during the second quarter earnings call.
Our commercial alignment is beginning to take form with some early enterprise leads already converting to bookings and revenue across the platform.
As we make improvements to operating efficiency of the services organization, we continue to identify best practices, which can be implemented more broadly.
We are encouraged by initial progress towards our revised goals for the year and we remain focused on consistent execution heading into the fourth quarter and into 2024.
Our third quarter software bookings were $27 2 million, which represented 7% growth versus the third quarter of 2022.
Reported software bookings growth was impacted by the timing of certain renewals with some having booked in the second quarter and some that we booked in the fourth quarter.
Software bookings growth was also impacted in our tier one customer segment as a result of industry and macroeconomic headwinds.
Despite this the average software deal size across all customer tiers continued to rise continuing to grow at double digits.
We are encouraged by our return to growth for our bookings amongst smaller biopharma companies and.
And we continue and we continue to see broad recognition of the value delivered with Biosimilar, <unk>, which is skills us with a lot of confidence in future software performance.
Throughout 2023, our software team has continued to make progress on key business and product development initiatives.
Since its acquisition in 2021 clinical 21 has become an integral part of <unk> software strategy and.
And we have developed software features that expand upon clinical 21 initial capabilities.
Throughout 2023, we've introduced clinical 21 data exchange offering which helps customers organize and standardize their data from multiple sources using the C disc standard.
We've also introduced automation for the data management and preparation process involved an SD TM format in a key component of data submission.
Looking ahead, we believe there will be additional opportunities to expand our clinical 21 offering to complement existing applications.
We also continue to make progress in advancing bias stimulation with the newest edition to sitars by assimilation software family.
We launched Sim Sip biopharmaceutical a version of since it started targeted specifically at scientists working on formulation development.
This product continues our strategy of expanding bias stimulation by releasing tailored tools aimed at specific scientific problems.
Additionally, we continue to invest in developing artificial intelligence capability within our existing software platform.
Earlier this year, we acquired by asset to Kickstart, our AI enhanced product development efforts and in early October we announced the availability of such our AI.
So tomorrow AI as a platform designed to deploy clients specific gpt's to answer in depth questions throughout the drug development process.
So AI is unique because it is built using it by asset deep learning algorithm and the data used to include the library of over $60 million life Science research documents and and the clients' proprietary databases, yielding a powerful and proprietary model.
One recent advances our integration of AI and our regulatory writing software, which is called co author.
Co author uses artificial intelligence to aid in drafting regulatory submissions.
The product can auto populate content summarized studies craft messaging and aid the author to deliver the submission.
Use of sitar AI and co author has the potential to drive substantial documentation and writing efficiencies over time.
Co author Sentara AI and <unk> hundred 60 are all examples of products that are either be assay enhanced or developed using b asset technology relatively quickly.
While it is still the early days in AI. We are very excited about the potential that artificial intelligence and machine learning can bring this retards products and in turn our customers.
Shifting now to our technology driven services segment.
Third quarter bookings totaled $57 $6 million, representing 6% growth compared with the third quarter of 2022.
During the third quarter, we observed initial signs of a more stable spending environment, among our biopharma customers compared with our second quarter performance.
We delivered strong bookings with tier three customers.
In addition services bookings among our tier one customers improved sequentially and grew in the low double digits compared with the prior year period.
Following the consolidation of our services business. We are confident the changes being made will improve coordination in operations and commercial efforts.
So as far as regulatory bookings improved sequentially tracking slightly ahead of our revised internal expectations and grew compared with the same period last year.
We remain committed to driving improved performance in our regulatory business over the coming months and we believe the ongoing integration with a bias emulation and services business will help improve the pace of performance.
Our stimulation services also performed in line with our expectations and we saw a pickup in customer activity throughout the quarter.
Broader industry demand for our services is steadily improving and our customers continue to see substantial value in our broad offering of biasing relation services.
By bringing surcharges expert consultants onboard our clients gain significant value and efficiency for their projects.
As we drive the adoption of Biosimilars <unk> software, we expect to see increased demand for our services and we are pleased with the current momentum and trajectory of our business.
To close.
Jos.
We are confident in our ability to execute on our plan to drive long term growth in biosimilars.
<unk> platform provides a differentiated offering that continues to be prioritized by customers due to the value, we can provide and lowering costs and accelerating tight timelines to drug project completion.
As we look ahead to the fourth quarter and beyond our focus remains on driving consistent execution to best position ourselves for future growth.
I'll now turn the call over to John to review our financial results.
Thank you William Hello, everyone total.
Total revenue for the three months ended September 30 of 2023 was $85 $6 million representing year over year growth of 1% on a reported basis.
Flat on a constant currency basis.
Software revenue was $31 $3 million in the third quarter, which increased 10% over the prior year period on a reported basis and 9% on a constant currency basis.
Growth in the quarter was driven by <unk> software and political 'twenty one right.
And subscription revenue accounted for 68% for the third quarter software revenue.
Our quarterly performance is in line with past Q3 seasonality and we are pleased with the year to date performance and software, which is growing in line with expectation.
Software bookings were $27 $2 million in the third quarter, which increased 7% from the prior year period.
Ailing 12 months software bookings were $133 1 million, which increased 13% as compared to the prior year.
The software aggregate renewal rate was 86% in the third quarter and our net retention rate was 107%.
We continue to expect that our renewal and retention rates for the full year will be in line with historical company average.
Services revenue was $54 $2 million in the third quarter, which decreased 4% versus the prior year period on a reported basis and decreased 5% on a constant currency basis.
Services bookings in the third quarter were $57 $6 million, which increased 6% from the prior year period.
Trailing 12 month services bookings were $277 million.
Which decreased 4% as compared to the prior year.
Services bookings have shown signs of improvement as we have progressed through the back half.
Total cost of revenue for the third quarter of 2023 was $35 $9 million, an increase from $32 $8 million in the third quarter of 2022, primarily due to employee costs.
Ladies and Biopharma services billable head count growth.
Total operating expenses for the third quarter of 2023 were $102 $5 million, including a $47 million.
Goodwill impairment expense and increased from $41 million in the third quarter of 2022.
The components of operating expenses are as follows sales and marketing expenses were $7 2 million compared to $6 $4 million for the third quarter of 2022.
This increase is primarily due to employee costs related to expanding the sales and marketing team.
R&D expenses were $9 million compared to the $6 $3 million for the third quarter of 2022.
R&D expenses were up primarily due to employee costs for software development related to new product offerings, including the AI products William mentioned earlier.
G&A expenses were $27 8 million compared to $17 $3 million for the third quarter of 2022.
The increase was primarily due to contingent consideration expense on acquisition.
Intangible asset amortization was up to $11 2 million.
Compared to $10 6 million for the third quarter of 2022.
Depreciation and amortization expense was <unk> 4 million, which is flat from the prior year.
Continuing down the P&L interest expense was $5 9 million compared to interest expense of $5 2 million for the third quarter of 2022 due to higher interest expense related to our floating rate term loan.
As a reminder, we have about 78% of our debt fixed at 638% and roughly 22% floating at LIBOR plus 350.
Miscellaneous income was $5 1 million compared to $2 9 million for the third quarter of 2022.
We have a $4 $6 million income tax reversal due to an impairment loss compared to a $4 6 million.
For the third quarter of 2022.
Net loss for the third quarter of 2023 was $49 million compared.
Compared to net income of $3 9 million in the third quarter of 2022.
Reported adjusted EBITDA was $28 8 million compared to $32 $7 million for the third quarter of 2022.
A 12% decrease.
Adjusted EBITDA margin was 34% in the third quarter of 2023.
Reported adjusted net income for the third quarter of 2023 was $17 1 million compared to $16 $6 million for the third quarter of 2022.
Diluted earnings per share for the third quarter was negative 31 compared to <unk> in the third quarter of 2022.
Adjusted diluted earnings per share for the third quarter of 2023 was 11 <unk>.
Compared to 10 in the third quarter last year.
Now moving on to the balance sheet, we ended the quarter with $272 $3 million of cash and cash equivalents.
As of September 32023, we have $292 $2 million of outstanding borrowings on our term loan and full availability under our revolving credit facility.
As we approach the end of the year, we are reiterating our 2023 guidance as follows.
We expect total revenue between $345 $360 million.
Representing year over year growth, 3% to 7%.
We expect adjusted EBITDA in the range of $120 million to $128 million.
We expect adjusted EPS in the range of 44 to <unk> 48 per share.
Fully diluted shares in the range of $159 million to $162 million.
And then tax rate in the range of 25% to 30%.
We expect 2023 bookings to be down low single digits as compared to 2022.
I'll now turn the call back over to William <unk>, Barry for closing remarks.
Thank you John to summarize our message today, we have seen a stabilization in customer spending which is reflected in our third quarter results.
Our core growth drivers remain intact, and we are creating new products and services that will further advance the business.
The value proposition of Biosimilars, <unk>, and <unk> end to end products and services remains as compelling as ever.
We are confident that <unk> is well positioned for growth and profitability over time as the global leader in Biosimilars.
We will now open the line for questions. Operator can you open the line.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Jeff Garro with Stephens incorporated your line is now open.
Yes. Good afternoon. Thanks for taking the questions first one for me just wanted to hit on the software side of the business and maybe you could talk a little bit more about the software renewal rate in the quarter and yes.
I think in the deck I see a comment on the tier one customers and some issues related to timing. So just curious about that renewal rate and how we should also think about that in the context of the SaaS versus license mix on the software side.
Yes, Jeff This is John happy to happy to take that.
Yeah on the aggregate renewal rate of 86% this quarter it's impacted.
By some timing.
I'll pull ahead into Q2, and then some push into Q4.
So I guess, what we'd say about that too is as you look at our history. We typically do help us. So we've seen this kind of volatility before.
We typically do you have a quarter that has the aggregate renewal rate in the eighties and so Q3 for this year is shaping up to be that as we look forward to Q4, we expect the aggregate renewal rates of return into the 90.
Understood.
One more from me hit the services side of things and wanted to talk about bookings and great to hear the comments on the end market stabilizing and improving through the end of the quarter and I think positive booking results for the quarter.
Wanted to ask about that in context of Q4, which is typically a very seasonally strong services bookings quarter for you guys. So I wanted to give you the opportunity to set the right expectations as we think about how services bookings land for Q4.
Quarter over quarter versus Q3, but also year over year versus the strong Q4, you had last year.
Great. Thanks, Jeff This is bill.
As you pointed out we did have a nice recovery in our.
<unk>.
Our bookings in services in Q3 I think.
A lot of that is due to our new reorganization, having a combined sales force and.
Some very good execution by that team, which I think is hopefully a sign of a more of that to come.
I think we feel pretty good about Q I mean.
Based on customer conversations we've had we feel.
Pretty good right now about the deals in the pipeline for Q4 and services.
So we expect to.
Two.
Continue along the guidance.
Pathway that we gave you guys before.
Great. Thanks, again, I'll hop back in the queue.
One moment for our next question.
Our next question comes from the line of David Windley with Jefferies. Your line is now open.
Hi, good evening, Thanks for taking my question.
I think I heard you say John that that Youre still in the guidance commentary youre still expecting low single digit decline in year over year bookings I wanted to confirm that and then in the in the context of that last quarter you had talked about.
Yes.
Regulatory services bookings typically having some chunkier amounts that often fall in the fourth quarter and I think you were not assuming that that would happen. This time around so kind of looking for confirmation around the total but then also some color around the regulatory services traction.
Yes, sure David So, yes, we are confirming that the expectation on the full year.
Booking contract in the low single digits.
Consistent with what we said on the August call.
Specifically related to regulatory we were we were pleased with the return to growth.
And we see that as strong execution.
So thanks to the team.
For a job well done there we have said on the August call.
The pipeline for business that we have visibility to the pipeline that it was really a matter of.
Our focus on execution and that we were there to compete and we did that sharpened our pencil a bit.
On price, but still within the historic.
Norms, but nothing unusual.
From price. So we're pleased with the momentum that we generate there.
But not only in regulatory but also in biotech and services coming off of a weak Q2.
Good a good stabilization and return to growth in Q3.
Pleased with that.
Okay.
And then.
Two kind of staffing question or labor question and wondering how the.
The utilization levels of your services project billable project teams or project individuals.
It looks at the moment with with bookings, having lagged a little bit I wondered.
Yes, if the team was fully utilized at normal utilization levels, and then from a hiring standpoint.
What is the what is your hiring outlook or what's your pace of hiring and what kind of.
The labor market labor inflation environment are you seeing currently thank you.
Yes.
In addition, as we look at the services business is consistent with our expectations.
So we've got.
Utilization if of course it varies by project.
Customer, but overall utilization is performing.
In line with our expectations during the quarter and we don't we don't see any reason why that won't stop in Q4.
From a hiring perspective, recognizing the environment that we're in we have slowed hiring a bit but not related to the pockets.
Got it that are generating revenue for us so as it relates to billable head count we have continued to hire and in a.
We continue to do so.
Slowed in other pockets of the business really in non billable space.
Got it and then maybe I'll just ask that question slightly different way so.
Gross profit margin.
It was pressure just a little bit it was a little lower than we were looking forward, but then it was also lower year over year.
So what I'm digging for us the drivers of that was it a utilization issue was it a labor rate issue.
Was it a mix of business issue I'm, just trying to understand that a little bit better.
Right, Yes, yes. It is the fact that I mean look it will be.
The revenue that we had in the quarter.
Was.
Lower I, just thought with 1% growth.
We continue to invest in the business as I mentioned, we closed we closed certain pockets of hiring but we are continuing to hire we don't believe that.
A restructure of our cost base is the right thing to do.
Short term focused and we believe that in the opportunity over the long term.
Growth prospects that you heard Bill mentioned in the prepared remarks remain fully intact and so as a result of those investments.
So you do see the margin the margin was 34% on the quarter, which to your point with the awful at all from the typical 35 plus.
So this is David to that out to what John said I'll add it also utilization changed a bit during the quarter in particular and regulatory so coming out of the.
Poor bookings in Q2, we were a little light going into the quarter and then as our bookings recover we picked up.
And so there was some cost that hit a little bit in the beginning of the quarter associated with that too.
Got it Okay. That's helpful. Thank you that's all for me.
One moment for our next question.
Our next question comes from Mike Riskin with Bank of America. Your line is now open.
Hey, guys. Thanks for taking the question.
I wanted to touch on.
Some of the comments in your prepared remarks, and some of the stuff you have the other slides about early signs of market stabilization.
Stabilizing activity, some improving trends et cetera.
I mean, if we just look at the.
<unk>.
The book to Bill in the bookings.
Yes, there was some sequential improvement of what's coming off a pretty low base and.
Just one quarter makes a trend or is it is it a little too early to call that especially as you said that some of these businesses can be a little bit lumpy timing can be a little bit off. So just what gives you confidence that this isn't just.
Some of the usual noise in the business quarter to quarter and it is a more real turnaround.
Thanks.
Yes, Mike Thanks for the question it's Bill.
Think that to be fair there is a fair amount of turmoil going on in the end markets here.
Certainly decreased.
Level of funding activity in the smaller biotech space and.
Some.
The indications of some restructuring going on in some of our larger pharma companies and that probably does affect us by some amount, but it's hard to.
Quite quantify so we're working through that part of the market.
On the other side.
We have a very good position to Biosimilar <unk>, which.
Through that turmoil continues to grow.
I believe that we as a company are executing better.
As you know we did some reorganization around our service business around.
A unification of our sales force so it can cover multiple products and services to the same clients.
I don't think that transition is fully.
Okay.
Reached its peak utilization or peak efficiencies that we can we can obtain but we're getting some good traction out of that and so I think I think the execution has been better there.
As we look forward.
Looked really hard at our pipeline and our customer conversations so.
We're feeling like.
The trend line is well put it this way the way you put it it's not an isolated point this quarter.
Okay.
It's helpful and maybe if I could squeeze in a follow up.
I guess kind of follow up on Dave's question, just now on <unk> spending and things like that.
Just put it another way EBITDA percent came in a little bit lower EBIT margin came in a little lower than we had hoped.
And I know there again <unk> can often be a.
Our low point for the year and sometimes you have some quarter to quarter fluctuations, but just making sure is there anything beyond that to call out just kind of working through the adjustments.
With some of those onetime adjustments, it's a little bit trickier to parse it out just to make sure. There's nothing unique about EBITDA in the third quarter, that's worth calling out.
Yeah, Let me let me start this one and John May want to chime in but.
I would just say that we're very committed and excited about some of.
The investments, we're making in new technologies, and we Havent those investments.
Our referenced artificial intelligence.
And we're also launching.
A lot of new products and <unk> in and buy a simulation.
So despite the turmoil in the market.
We believe in the long term health of this will continue to invest through it and so that I think there is a little bit of reflection in our in our EBITDA margin for that John you might want to chime into yes, yes, Mike a couple of things to note like as you called out there's some there's some one timers in here.
So, but if you if you strip out those and you adjust for stock comp keep in mind the stock comp.
Returning to the Q1 level in Q3, so, but if you strip all those weigh on an adjusted basis, what you'd find is that.
Q3.
Expenses, whether it be sales and marketing R&D, our G&A on a percentage of sales basis are consistent with what you saw in Q1 and Q2. So the quick answer is no.
Nothing really to call out there when you strip away the adjustments.
Thanks, so much I appreciate it.
Our next question.
Our next question comes from Max Smock of William Blair. Your line is now open.
Hey, guys. Thanks for taking the questions.
I wanted to start off just by drilling down on bookings a bit more I know total bookings in the quarter were in line with your prior commentary about bookings being flat quarter over quarter, but software. It was a little weaker than we expected and services better. So I know you reaffirmed your guidance for bookings being down low single digits in 'twenty three but just wondering if the math at all has changed in terms of bookings for each segment. This year.
So maybe put it another way how are you thinking about bookings growth for software and services in Q4, and assuming things stay stable from here or does that mean, some bookings next year. Thank you.
Alright.
No.
Yes.
The software bookings on the quarter as I mentioned earlier the dynamics related to software had some Q2 polar had effects at some push into Q4.
But overall when you look on a year to date basis, we've got double digit.
Software bookings growth the trailing 12 months bookings for software are 13%. So those are all indicators of.
Strength for the software business.
As it relates to next year.
Obviously, we're not we're not going to give guidance on this call we will on the next one but.
But the thought there.
Got a focus on execution you saw that in Q3.
We believe the opportunity in bio stimulation is firmly intact.
You can see that in our results and then.
From an from an organizational standpoint, we've made some changes that will drive some acceleration and then we've got a backlog that we're working through as well.
All of those together, we think sculpt growth and 24.
Okay.
Good to hear thanks for that color I guess sticking with 24 and you mentioned the backlog last quarter, you talked about actively assessing existing.
Backlog of projects, particularly in services just wondering if you could share some key takeaways from this assessment and just any context you can provide around how much you have in your services backlog currently and how much of that backlog you feel confident taken.
Could convert to services revenue here over by the end of 'twenty two before yes, yes Max.
Good news on that front.
As we look forward our ability to convert that it's going to be more meaningful than what you saw in the quarter, but when you look at the.
We grew we grew services bookings on the quarter, which was great but services revenue.
It was a decline year on year and Thats predominantly due to what we saw happening in Q2 bookings. So we we have confidence as we move forward.
Our word that we'll be able to be converting the bookings that we've been posting in that the dynamic that we saw in Q2 and then the reversal of which we saw in Q3 is going to aid.
As we move into next year.
So just to be clear in terms of your analysis of that of that backlog have you had to ship.
In terms of like the cancellation rate have you seen an uptick in that relative to maybe what you expected and services or should we think about everything or at least the vast majority of stuff that you've booked going back over the last couple of years is still being part of that backlog and still more just a matter of not alright, sorry, good morning.
When.
That actually end up converting into revenue at some point right, yes, we have not had.
Material cancellations so.
We still maintain from our perspective.
It's a slow net.
And the delay, particularly when you look at the tier one customers.
And so we saw some of that come back certainly we saw average deal. So for example, when we looked at.
The performance in services bookings on the quarter, we see average deal sizes for tier one and tier threes were both growing double digits. So.
Positive sign as we look forward, we're not really getting cancellations, but we do continue to see.
Some delays.
And some slow net and.
And the conversion and Thats reflected in what you see in the Q3 numbers.
Got it perfect. Thank you.
One moment for our next question.
Our next question comes from Joe <unk>.
There and you May now proceed.
Alright, great Hi, everyone.
I think in years past you had mentioned October is normally I would peg monster, Tim said renewals and just engaging with the consortium members I guess, that's still true two questions one.
What did you see for software bookings, you're talking about <unk>, but I'm wondering maybe how much of that is already in hand, and then I have a follow up question.
Yes.
Momentum that we have coming out of Q3.
Sure.
What we're seeing in October is consistent and Thats what.
Yes.
The confidence too.
Keep the guidance on bookings and revenue and down the P&L impact where we are.
Where we're at so.
As we walk.
Got it.
At October that's part of what prompted us to stay where we are with the guidance ranges.
Hi, great. Thank you for that and then just thinking of kind of that caliber of consortium members. Obviously these are the type of organizations that are typically well into their budget planning for the next calendar year and I'm just wondering if anything is coming up.
Kind of what you know around that all planning process.
That makes you feel better worse entering 2024, obviously things can always change, but yes in terms of any green shoots or early impressions, maybe what your takeaway is might be.
Yes, Thanks, a lot for the question. This is bill so.
Okay.
As you know, we don't break out <unk> numbers, but I would say that the demand for <unk>.
To be quite healthy.
We have launched.
Two new.
Versions of <unk> since the discovery and then more recently aversion called Simpson biopharmaceutical.
Which are.
Enabling our customers to expand the number of use.
Users, who can potentially make good use of <unk> and so that's I think giving us some <unk>.
Some positive feeling about where that can go as we go into it.
In the fourth quarter and then into next year. These things do take some time to launch it to get out there.
The.
Sure.
But I think the underlying your question.
<unk> consortium kind of consists of mostly not entirely but biggest companies.
Active customers.
And what we're seeing is a continuation of their activity and by assimilation in and we expect further growth from that.
Okay very good thank you.
As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
One moment for our next question.
Our next question comes from the line of Vikram <unk> from Morgan Stanley You May now proceed.
Sorry.
Alright, do you hear my question I'm sorry.
So.
Thanks for taking my question. So at this point with one quarter left one other scenarios that you think can lead to the lower or upper bound of your year end guidance. Thank you.
Hi, Greg.
John.
The way to think about that.
A number of things would need to decelerate to be at the lowest end.
So do we have the very low end of our guidance range, we would need to see a reversal of the momentum that we saw in the services business as well as deceleration in the software business and to be clear, we don't see that.
So thats.
So obviously there is a couple of months left here.
And that's the reason to leave the room in place but.
But thats what would need to happen to get you to the lower end, we're not seeing that at the moment.
To be at the high end, it's really the opposite of that we'd need to see acceleration in each of those fronts versus the momentum that we've already had coming out of Q3. So that's what would push us to the higher end.
But to be clear, we reiterated the guidance.
Obviously, the midpoint, there is $352 $5 million.
And we wanted to reiterate that guidance on this call right.
Uh huh.
And to add to John's point, the one other thing I can add is that as we pushed into some of our newer products, particularly in AI, we're finding a lot of customer interest but to be.
To be honest about it we don't have past data about how long those deals take to close.
And so there is some uncertainty as we get into them about just how long does it take to close a deal for something that.
This is pretty new technology that the customers haven't bought it for and we haven't sold before so it's.
It's a very exciting field I think is good in the future, but we've left ourselves some.
Some room there in recognition that those are just sort of based on their newness harder to predict.
I see thank you.
Okay.
I'm showing no further questions at this time, so I'd like to now turn it back to William Gary for closing remarks, alright. So thank you everybody for joining US Tonight, just to kind of summarize how we see the quarter.
We're pleased that we saw a stabilization in <unk>.
In bookings.
As we went into this quarter coming out of where we were in the second quarter, obviously, we're experiencing some.
Some turmoil in the pharmaceutical market.
Im quite proud of how the company is executing and adjusting through that.
That said, we believe that that's relatively short term.
We have a very firm belief in Biosimilars, <unk>, and where that's going in the long run and the opportunity to continue to expand it and we're really really excited about what we're doing as we add in things like artificial intelligence and where that's taking us in the future. So we're continuing to invest in those we're expecting those to lead to growth in the future.
And we're looking forward to speaking with all of you next quarter. Thank you very much and good evening.
Okay.
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Okay.
Great.
Yes.
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Okay.
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