CERT

• Strategic Portfolio & Organizational Changes

  • Completed the divestiture of the non-core regulatory and medical writing business in May 2026 to sharpen strategic focus, improve financial predictability, and strengthen the software-services growth flywheel.
  • Reorganized the business into two aligned segments: Model Informed Discovery and Drug Development (MID3) and Accelerated Clinical Evidence (ACE), to match customer product/service consumption patterns.
  • Appointed Julian Perrier as new Chief Commercial Officer effective August 1, 2026 to lead the redesigned integrated go-to-market model; promoted Eric Yan to CIO to support global scalability and internal AI system optimization.
  • Implemented a 5% global workforce reduction focused on overhead, delivering $13 million in annual run-rate cost savings to offset divestiture stranded costs and accelerate innovation investments. The $13 million figure is an increase over prior identified cost savings plans.
  • Completed the previously authorized $100 million share repurchase program in Q2; the board approved a new $50 million share repurchase program, reflecting disciplined capital allocation and confidence in the business.

• Industry & Customer Impact

  • Favorable macro and regulatory trends: rising biopharma R&D spending, growing clinical trial starts, and new global regulatory guidance backing model-informed drug development (MIDD). HHS launched Operation Trial Blazer to speed early trials, the FDA issued new QSP modeling guidance, and the shared ICH M15 standard took effect for US and EU regulators. Sitara helped shape these policies, and all 13 novel FDA approvals in Q2 came from Sitara clients.
  • The company serves 2,600+ customers across 70 countries, with 160,000 daily software users.

• AI Integration & Product Momentum

  • Sitara leverages 25 years of specialized regulated scientific data, embedded regulator/client workflows, and scientific oversight to deliver differentiated AI value that generic AI tools cannot match.
  • Operational AI gains: 85% of new software code is now AI-assisted, driving a 65% YoY increase in developer output; AI agents cut cycle times by up to 90% for internal legal/IT workflows and provide automated daily prospecting signals for sales teams.
  • AI-enhanced product offerings: CoAuthor, used in 400+ regulatory submissions, now has nearly 600 AI agents that deliver a 40% productivity gain for document drafting/QC and 90%+ accuracy for complex data summarization. The next-generation platform will integrate Sitara software with frontier AI models including NVIDIA's BioNemo Agent Toolkit. AI workflows accelerate scientific service delivery by up to 80% for specific tasks, freeing scientists to focus on high-judgment work.
  • Core product momentum: The Phoenix pharmacometrics platform secured 30 new cloud implementations in 2026 YTD; the company secured its first major SIMCITY win in China, and expanded engagements in the Middle East and Japan.

• Full-year 2026 revenue growth guidance is maintained at 0% to 4%, translating to total continuing operations revenue of $367 million to $382 million, adjusted for the regulatory/medical writing divestiture.
• Software revenue is expected to come in at or above the high end of the 0% to 4% growth range, with stronger visibility than earlier in the year as the desktop-to-cloud product mix shift continues.
• Services revenue is expected to come in at or below the low end of the 0% to 4% growth range, as the company implements go-to-market changes for the segment.
• Full-year 2026 adjusted EBITDA margin guidance was revised to 29% to 31%, down from the prior 30% to 32% range. This revision only reflects the impact of the divestiture (the divested business contributed ~$17 million in 2025 adjusted EBITDA, leaving shared infrastructure costs with no associated revenue) and does not reflect underlying performance issues for the remaining business. Workforce reduction savings will offset much of this impact, and margins are expected to improve in H2 2026 as savings are realized.
• Full-year 2026 adjusted diluted EPS from continuing operations is guided to a range of $0.31 to $0.36, with an expected effective tax rate of approximately 30% and fully diluted shares outstanding of 155 million to 157 million.

Total Q2 2026 revenue was $93.3 million, up 1% year-over-year (YoY).

• Software segment: Q2 revenue of $48.8 million, up 4% YoY. This segment contributed 53% of total company revenue, up from 40% two years prior. Software bookings were $50.7 million, up 9% YoY; trailing 12-month (TTM) software bookings were $196.4 million, up 8% YoY. Normalized for the Comaxone acquisition, TTM software bookings grew 7% exiting H1 2026, up sharply from 0.8% at the end of 2025.
• Services segment: Q2 revenue of $44.5 million, down 3% YoY. This segment contributed 47% of total company revenue. Services bookings were $47.6 million, down 6% YoY; TTM services bookings were $209 million, down 1% YoY. Book-to-bill for services was 1.07, with results impacted by the carve-out of the regulatory and medical writing business. The divested business contributed $19.2 million in revenue and $7.5 million in adjusted EBITDA to discontinued operations in Q2 2026.

No material new risks were explicitly discussed during the call. Management noted that it is still in early stages of rolling out the new go-to-market model for services, and conversion of the expanded 27% YoY services pipeline to revenue will determine when the business hits targeted growth inflection, with no guarantee of near-term improvement. Forward-looking statements are noted to carry inherent uncertainty, as actual results may differ materially from projected outcomes.

Q: Analyst asks for an update on go-to-market strategy progress, and details on the uniqueness of the recent NVIDIA partnership.

A: The full new go-to-market model rolled out in July 2026 with the new CCO, so it remains early days. Positive leading indicators include growing software future revenue accumulation and 27% YoY services pipeline growth. The NVIDIA partnership enables integration of NVIDIA's frontier AI agents into Sitara's next-generation platform, and unlocks new high-throughput use cases in drug discovery that accelerate decision-making. It also marks Sitara's first major technology ecosystem partnership, with more partnerships expected.

Q: Analyst asks for context on a sequential/YoY drop in net retention rate (NRR), and a timeline for reaching targeted sustainable double-digit growth.

A: The small NRR drop is driven by timing and product mix shifts between on-prem and ratable revenue, not underlying customer retention issues, which were actually slightly ahead of expectation in Q2. Management is taking a midterm view on the double-digit growth inflection, having already completed foundational steps including portfolio reprioritization, organizational restructuring, cost right-sizing, and go-to-market model and leadership changes. Early signs of inflection will appear in ARR growth and services pipeline conversion.

Q: Analyst asks about the significance of Sitara's first major SIMSIP win in China, and the broader opportunity in the region.

A: The win aligns with Sitara's priority of expanding global growth, as new MIDD regulatory standards like ICH M15 are global, not just limited to the US. Europe and Asia are both attractive high-potential growth markets, and Sitara has already built foundational teams and platforms across the region. While these geographies are not large contributors to current revenue, they represent significant long-term growth potential.

Q: Analyst asks for context on the 27% YoY pipeline growth: where is the growth concentrated, and how will the new CCO accelerate conversion?

A: Software pipeline growth is healthy and consistent, driven by new product focus, but the largest spike in pipeline growth comes from services. Management shifted back to a specialist, science-led services go-to-market model from the prior generalist model, getting PhD scientists and experts back in direct customer engagement, which drove the pipeline increase. The new CCO will lead a more data-driven, targeted, integrated sales and marketing approach, enabled by AI sales tools, to convert this expanded pipeline in the second half of 2026.