Simulations Plus' ( SLP ) share price plummeted after the company reported preliminary Q3 FY25 results that fell well short of expectations. While soft biopharma market conditions and Simulations Plus' relatively large services business mean that current weakness is not surprising, the companyRichard Durant is the leader of Narweena, an asset manager focused on finding market dislocations that are the result of a poor understanding of a businesses long-term prospects. Narweena believes that excess risk adju ...

Simulations Plus Inc SLP stock tanked after the company lowered its fiscal 2025 sales outlook.The company expects third-quarter sales of $19 million-$20 million, much below the consensus of $22.78 million.On Wednesday, the company cut its 2025 sales forecast to $76 million—$80 million versus a consensus of $90.26 million, down from prior guidance of $90 million—$93 million.Also Read: What's Going On With Charles River, Certara, Simulations Plus Stocks On Friday?"Market uncertainties surrounding future fundi ...

Key Takeaways SLP now expects FY25 revenues of $76M-$80M, down sharply from earlier guidance of $90M-$93M. Biotech market challenges have dampened demand for SLP's services, though software remains resilient. SLP is adopting a functional model to boost efficiency, sales effectiveness and client engagement.Simulations Plus, Inc. (SLP) has announced preliminary revenue results for the third quarter of fiscal 2025 and revised its full-year revenue guidance. The company expects third-quarter revenues to be be ...

Simulations Plus, Inc. (SLP) bolstered its flagship quantitative systems toxicology (QST) platform with the launch of DILIsym 11. This new release advances drug-induced liver injury (DILI) prediction, with cutting-edge features like pediatric representation and an enhanced T-cell model, solidifying Simulations Plus’s commitment to improving drug safety and patient outcomes.DILIsym 11 introduces several powerful enhancements to extend its predictive reach and improve simulation accuracy. The enhanced version ...

Simulations Plus, Inc. (NASDAQ: SLP ) is a software company that delivers AI-based modeling and simulation tools. These types of solutions are particularly helpful for accelerating pharmaceutical research for drug discovery and optimization. SLP uses pharmacology data to train its modelingMy name is Myriam Hernandez Alvarez. I received the Electronics and Telecommunication Engineering degree from the Escuela Politecnica Nacional, Quito, Ecuador, the M.Sc. degree in computer science from Ohio University, Ath ...

Group 1 - Simulations Plus, Inc. (NASDAQ: SLP) is a specialized provider of biosimulation and predictive modeling software, establishing a distinctive position at the intersection of pharmaceutical research and advanced computational science [1] - The mission of Grassroots Trading focuses on providing objective and unbiased research, particularly on small- to mid-cap companies, while also identifying opportunities in larger companies [1]

Core Insights - Simulations Plus, Inc. (SLP) reported second-quarter fiscal 2025 adjusted earnings of 31 cents per share, a 3% decline year over year, but exceeded the Zacks Consensus Estimate of 25 cents per share [1] - Quarterly revenues increased by 23% year over year to $22.4 million, driven by growth in software and services segments, with significant contributions from flagship solutions [2][3] Revenue Breakdown - Software revenues, accounting for 60% of total revenues, rose 16% year over year to $13.5 million, supported by new customer acquisitions and increased sales to existing customers [4] - Services revenues, making up 40% of total revenues, improved by 34% to $8.9 million, although organic growth remained flat year over year [5] - The total value of services projects handled during the quarter was $203 million, with a 13% year-over-year increase in backlog, totaling $20.4 million [6] Operating Performance - Gross margin for the quarter was 59%, down from 72% in the prior-year quarter, with software segment gross margin at 81% and services gross margin at 25% [7][8] - Total operating expenses as a percentage of revenues were 46%, compared to 48% a year ago, with income from operations reported at $2.7 million [9] Financial Guidance - For fiscal 2025, SLP expects revenues between $90 million and $93 million, indicating a 28-33% increase from fiscal 2024 revenues, with the Pro-ficiency acquisition expected to contribute an additional $15-$18 million [12][13]

Revenue and Income - Revenue increased by $4.1 million, or 23%, to $22.4 million for the three months ended February 28, 2025, compared to $18.3 million for the same period in 2024[120] - Revenue increased by $8.6 million, or 26%, to $41.4 million for the six months ended February 28, 2025, compared to $32.8 million for the same period in 2024[133] - Net income decreased by $955,000, or 24%, to $3.1 million for the three months ended February 28, 2025, compared to $4.0 million for the same period in 2024[120] Costs and Expenses - Cost of revenue increased by $4.2 million, or 83%, for the three months ended February 28, 2025, primarily due to a $1.2 million or 92% increase in software-related costs and a $3.0 million or 80% increase in service-related costs[123] - Cost of revenue increased by $8.3 million, or 85%, for the six months ended February 28, 2025, primarily due to a $2.9 million or 123% increase in software-related costs[135] - Research and development costs increased by $0.8 million, or 38%, to $2.9 million for the three months ended February 28, 2025, primarily due to the acquisition of Pro-ficiency[126] - Research and development costs increased by $1.2 million, or 28%, to $5.5 million for the six months ended February 28, 2025, compared to $4.3 million for the same period in 2024[138] - Sales and marketing expenses increased by $1.8 million, or 91%, to $3.7 million for the three months ended February 28, 2025, reflecting strategic investments to enhance brand awareness[127] - Sales and marketing expenses rose by $2.6 million, or 67%, to $6.6 million for the six months ended February 28, 2025, reflecting a 4% increase as a percentage of revenue[139] - General and administrative expenses decreased by $1.0 million, or 17%, to $4.6 million for the three months ended February 28, 2025, due to a reorganization of internal structure[129] - General and administrative expenses decreased by $1.3 million, or 11%, to $9.9 million for the six months ended February 28, 2025, corresponding to an 11% decrease as a percentage of revenue[140] Profitability Metrics - Gross profit remained consistent at $13.1 million for the three months ended February 28, 2025, with a gross margin percentage of 59% compared to 72% for the same period in 2024[125] - Overall gross margin percentage was 56% for the six months ended February 28, 2025, compared to 70% for the same period in 2024[137] Cash Flow and Investments - Net cash provided by operating activities was $4.4 million for the six months ended February 28, 2025, compared to $6.0 million for the same period in 2024, reflecting a decrease of $1.6 million[150] - Net cash used in investing activities was $2.5 million for the six months ended February 28, 2025, significantly lower than $24.4 million for the same period in 2024[152] - Cash and cash equivalents totaled $11.0 million, with short-term investments of $10.4 million and working capital of $36.0 million as of February 28, 2025[147] Taxation - The provision for income taxes was $0.5 million for the six months ended February 28, 2025, with an effective tax rate decrease to 13% from 22% in the prior year[143] - The Company accounts for income taxes in accordance with ASC 740-10, recognizing deferred tax assets and liabilities for expected future tax consequences[174] - Deferred income taxes are recognized for tax consequences in future years based on differences between tax bases and financial reporting amounts[175] Acquisitions and Goodwill - The Company completed the acquisition of Pro-ficiency for an aggregate purchase price of $100 million in cash on June 11, 2024[156] - As of February 28, 2025, the entire balance of goodwill was attributed to four reporting units: CPP, QSP, ALI, and MC[171] - Business acquisitions are accounted for using the acquisition method, with goodwill recorded as the excess of purchase price over estimated fair values of net assets acquired[172] Stock-Based Compensation - Stock-based compensation costs for the three months ended February 28, 2025, were $1.6 million, consistent with the same period in 2024[176] - For the six months ended February 28, 2025, stock-based compensation costs were $3.3 million, compared to $2.9 million for the same period in 2024[176] Market Risk and Impairment - There has been no material change in the Company's exposure to market risk as of February 28, 2025[177] - No impairment losses were recorded for intangible assets during the three and six months ended February 28, 2025, and February 29, 2024[171] Other - Total other income was $0.9 million for the six months ended February 28, 2025, down from $2.3 million for the same period in 2024[141] - As of February 28, 2025, $30 million remains available for additional share repurchases under the authorized repurchase program[160] - Research and development costs are charged to expense as incurred until technological feasibility is established[173]

Earnings Call – Q2 - FY25 April 3, 2025 1 Safe Harbor Statement Except for historical information, the matters discussed in this presentation are forward-looking statements that involve risks and uncertainties. Words like "believe," "will", "can", "expect," "anticipate" and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) mean that these are our best estimates as of this writing, but there can be no assurances that expected or anticipated res ...

Financial Data and Key Metrics Changes - Total revenue increased by 23% year over year to $22.4 million, with a 5% organic growth excluding contributions from adaptive learning and insights and medical communication business units [7][18] - Diluted EPS was 15 cents, adjusted diluted EPS was 31 cents, and adjusted EBITDA was $6.6 million, or 29% of revenue [7][27] - Total gross margin for the quarter was 59%, down from 72% in the prior year, primarily due to increased costs of revenues [24][27] Business Line Data and Key Metrics Changes - Software revenue grew by 16% in the second quarter, representing 60% of total revenue, while services revenue increased by 34%, accounting for 40% of total revenue [18][24] - The quantitative systems pharmacology (QSP) business unit saw revenue surge by 89%, driven by a model license for atopic dermatitis [12][19] - Clinical pharmacology and pharmacometrics (CPP) business unit revenues grew by 9%, while physiologically-based pharmacokinetics (PBPK) software revenue grew by 1% [13][22] Market Data and Key Metrics Changes - The company ended the quarter with a backlog of $20.4 million, up 18% compared to the first quarter and up 13% year over year [17][24] - Renewal rates for software customers remained strong at 90% based on fees and 84% based on accounts [20][22] Company Strategy and Development Direction - The company is focused on ramping up its Alley and MC business units, expanding cross-selling opportunities, and targeting an adjusted EBITDA margin of 35% to 40% [33][30] - The management emphasized a disciplined approach to executing effectively in challenging environments while being prepared to capitalize on any increase in customer spending [10][29] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains cautious, with customers taking a cost-conscious approach to spending [7][29] - The company reaffirmed its fiscal year 2025 guidance, expecting total revenue between $90 million to $93 million, with year-over-year growth of 28% to 33% [31][33] Other Important Information - The increase in total operating expenses was 46% of revenue compared to 48% last year, with R&D expenses at 10% of revenue [25][26] - The company ended the quarter with $21.4 million in cash and short-term investments, remaining well-capitalized with no debt [28] Q&A Session Summary Question: Can you talk about the software organic revenue growth and the fee renewal rate decline? - Management indicated that software organic growth was 8% excluding proficiency software contribution, and the renewal rate declined due to one large account renewal that occurred after the quarter [38][39] Question: How do you reconcile good software growth with clients being slow to start new projects? - Management explained that while clients are cautious with service budgets, they continue to invest in software infrastructure, leading to strong software performance [42][43] Question: What are your thoughts on tariffs affecting the biopharma sector? - Management acknowledged that while tariffs could impact global pharma businesses, the drug development approval process is primarily funded through fees, which mitigates some risks [47][48] Question: Can you provide more color on the services side and cross-selling opportunities? - Management noted that proficiency and medical communications had good contributions, with a focus on expanding existing client relationships through cross-selling [55][57] Question: How should we think about the timing of deliverables for the PBPK partnership? - Management indicated that the project extends over 12 months, with a six-month engagement process prior to the agreement [90] Question: How do you see the impact of FDA disruptions on biosimulation adoption? - Management stated that while FDA disruptions are distracting, they do not believe it will significantly slow down the adoption of biosimulation [81][82]