John Gallagher: Yes. So, yes. So, you’re right. What you’re seeing there, the adjustment is $12.8 million, and it is centered on Vyasa, and it’s due to the performance of the business there. So, we’re pleased with the progress, and it’s one of the key areas for investment. And I think Bill wants to make a couple of comments on it, too.
William Feehery: Yes. Just like what John said, I’d say we bought Vyasa in basically at the beginning of last year at a really good time, as AI was rolling — sort of the realization of what AI can do is really rolling out. We’ve been very pleased with the integration of Vyasa into Certara. As I mentioned on my script, we’ve already launched a couple of products. We have revenues from them and we expect that to be, although modest in 2024, we’re getting a tremendous amount of customer interest. And as we look forward, we’re feeling very encouraged by the progress and the possibilities of what we can do with our products going forward and that’s reflected in that revaluation.
Unidentified Analyst: Thanks a lot.
Operator: Thank you. Our next question comes from the line of Luke Sergott with Barclays. Your line is open.
Luke Sergott: Great. Thanks. I just want to follow-up on the M&A stuff. So, buying — you guys just acquired 500 basis points. Can you bucket kind of what the contribution from Formedix and what Biomath is, and give us any type of valuation or price paid and then give us a sense of what the margin profile is and fundamental profile of these businesses looks like?
John Gallagher: Yes. Hi. So, some of those details that you’re asking about as far as like purchase price are in the K. So, that would be something to look at. But as far as like the margin is concerned, then companies that we purchased, we’re purchasing companies that are profitable. They may operate under what our corporate margin is, but we always have a pathway to be able to get them to our corporate margin and I’d say that Formedix and Biomath will fall into that camp.
Luke Sergott: All right. And then I guess just on the guide here. Touched a little bit, I guess, when Dave was talking about. So, with the — outside of the 500 basis points from the M&A still came in pretty sizable above Street. And so I’m just — what’s the visibility right now in the demand environment from a bookings perspective, or RFPs that gives you that confidence to hit that acceleration — and anything that you can give us on the pacing of what that looks like?
John Gallagher: Yes, there’s three things I’d call out. One is around the momentum. So, I talked a little bit about momentum exiting the year. We were happy with the Tier 1s. We also saw stability in the Tier 3s as we were coming out of the year. And so that — those bookings, they didn’t they didn’t convert to revenue in Q4, of course, and that’s what we’d be looking for in 2024. So, that momentum is a solid point for us. The second point is just around the backlog conversion that we experienced during 2023 when some of the bookings conversion was slowing down, has a trickle over effect into 2024. So, that also is a tailwind for us in being able to convert into 2024. And so when you take those together, that spells growth. And then on top of that, of course, we have new products.
I was touching on some of those before. We have new products that we’re offering across the software platforms. And that — and think AI, think Phoenix Hosted, think about the Simcyp modules. When you take those three different catalysts together is why we have confidence in the organic mid-single digits.
Luke Sergott: All right. Thanks.
Operator: Thank you. Our next question comes from the line of Jeff Garro with Stephens. Your line is open.
Jeff Garro: Yes, good afternoon. Thanks for taking the questions. I want to dive into the strong software bookings a bit. I was hoping you could help parse out contributions, qualitatively from price increases adding new clients, the new products that you launched in 2023, and then the kind of standby of cross-selling existing products to your large existing customer base.
John Gallagher: I think the key thing that we’d point you to is this software net retention rate that we think is an important metric in looking at software. So, on the quarter, that was — it was 109%. And that — cooked into that is existing customers expanding. We have pricing in that, and then the build to get to the overall software growth is the addition of new logos on top of it, and that’s how you get to 15% on the quarter. So, we wouldn’t break out really by platform, what that looks like, but 15% software growth, 14% on the year, is a good spot for us to be. As I mentioned earlier, we saw a really strong Tier 1 performance in our customers in software and actually across the tiers for software as we exited the year on bookings. So, that positions us well as we approach 2024.
Jeff Garro: Excellent. I appreciate that. And then to follow up, as we think about the mid-single-digit organic growth for 2024, how would you compare that to the market growth? It seems like the commentary on the end market is improving, and that’s reflected in your trajectory. But what I’m really getting at is, with your 2024 guidance, does that kind of assume that you’re taking market share? Or is that more an upside case?
William Feehery: Thanks Jeff. The — this is Bill. The — I think a couple of things are going on in the market right now. So, one is, on the larger companies, we’re seeing some stabilization in demand as they reevaluate their portfolios last year. A lot of them — they have come out of that and decided what they want to do. So, we’ve seen, I think — and we’ve assumed that, that demand stays at least steady as we go through the year. We are hearing signs of a pickup in biotechs. There are some statistics published that indicate increased funding, I don’t think we’ve really seen that come through in our bookings so far. But based on what we’re seeing, we’re expecting that, that maybe in the second half of the year, we’ll start to see a little bit healthier market segment there than we had in 2023.
