Key Takeaways Simulations Plus reported Q4 revenues fell 6% to $17.5M as software sales weakened.SLP met revised fiscal 2025 guidance and delivered 13% full-year revenue growth.Simulations Plus sees low single-digit fiscal 2026 growth with Software at up to 62% of revenue.Simulations Plus, Inc. (SLP) reported fourth-quarter fiscal 2025 adjusted earnings of 10 cents per share, matching the Zacks Consensus Estimate. The bottom line, however, compared unfavorably with the prior-year quarter’s 18 cents.Quarterl ...

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Financial Data and Key Metrics Changes - Revenue for fiscal year 2025 increased by 13% to $79.2 million, while total revenue for the fourth quarter decreased by 6% to $17.5 million [4][10] - Adjusted EBITDA grew by 8%, and adjusted EPS also increased by 8% for the fiscal year [4] - Total gross margin for the fiscal year was 58%, down from 62% in the prior year, with software gross margin at 79% and services gross margin at 30% [13][15] Business Line Data and Key Metrics Changes - Software revenue decreased by 9% in Q4, representing 52% of total revenue, while services revenue decreased by 3%, representing 48% [10] - For the fiscal year, software revenue increased by 12%, accounting for 58% of total revenue, and services revenue increased by 15%, representing 42% [10] - Specific product performance: ADMET Predictor declined by 10% in Q4 but grew by 5% for the fiscal year; GastroPlus declined by 3% in Q4 but grew by 1% for the fiscal year; MonolixSuite grew by 3% in Q4 and 14% for the fiscal year [11] Market Data and Key Metrics Changes - The external environment remained challenging, with client budgets pressured by pharmaceutical headwinds, including tariffs and pricing implementations [4] - Early signs of stabilization were noted as large pharma gained clearer visibility into pricing frameworks and biotech funding improved modestly [5][6] Company Strategy and Development Direction - The company completed a strategic reset, transitioning to a unified operating model to enhance client focus and operational efficiency [4] - The strategy includes building an integrated product ecosystem that combines validated science, cloud-scale performance, and AI capabilities [8][9] - The company aims to support clients through the entire drug development process, from discovery to commercialization, leveraging advancements in AI and cloud computing [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the upcoming fiscal year, noting positive discussions with clients regarding budgeting and proposal activity [21] - The company anticipates that the overall market conditions will resemble those at the end of fiscal year 2025, with potential upside if biotech funding continues to improve [16][43] Other Important Information - The company ended the fiscal year with $32.4 million in cash and short-term investments, remaining well-capitalized with no debt [15][16] - Guidance for fiscal year 2026 includes total revenue between $79 million and $82 million, with year-over-year growth expected between 0% and 4% [16] Q&A Session Summary Question: Update on demand environment and trends - Management noted an uptick in biotech funding and positive budgeting activity for the upcoming year, although caution remains due to potential market surprises [21][22] Question: Feedback on GastroPlus release with AI capabilities - Initial responses to the AI-infused GastroPlus have been positive, with clients eager to leverage new functionalities [24][25] Question: Factors affecting large pharma spending - Management highlighted that large pharma's budgeting cycle is in place, with a cautiously optimistic outlook for increased spending in 2026 [31][32] Question: Guidance assumptions and renewal rates - The guidance assumes continued low to mid-80% renewal rates due to client consolidations and scrutiny of software configurations [70] Question: Pro-ficiency asset performance - Pro-ficiency software revenue declined by 63% in Q4, while service revenue from the acquisition grew by 70% [62][63]

Financial Data and Key Metrics Changes - Revenue for fiscal year 2025 increased by 13% to $79.2 million, while total revenue for the fourth quarter decreased by 6% to $17.5 million [4][10] - Adjusted EBITDA grew by 8%, and adjusted EPS also increased by 8% for the fiscal year [4] - Total gross margin for the fiscal year was 58%, down from 62% in the prior year, with software gross margin decreasing from 84% to 79% [13][15] Business Line Data and Key Metrics Changes - Software revenue decreased by 9% in Q4, representing 52% of total revenue, while services revenue decreased by 3%, representing 48% [10] - For the fiscal year, software revenue increased by 12%, accounting for 58% of total revenue, and services revenue increased by 15%, accounting for 42% [10] - Specific product performance: Admet Predictor declined by 10% in Q4 but grew by 5% for the fiscal year; GastroPlus declined by 3% in Q4 but grew by 1% for the fiscal year; Monolith Suite grew by 3% in Q4 and 14% for the fiscal year [11] Market Data and Key Metrics Changes - The company noted early signs of stabilization in the market, with large pharma gaining clearer visibility into pricing frameworks and biotech funding improving modestly [5][6] - Proposal activity and conference engagement have strengthened, indicating a more confident budgeting cycle among clients [5] Company Strategy and Development Direction - The company completed a strategic reset in fiscal 2025, transitioning to a unified operating model that aligns product and technology with client-focused services [4] - The focus for fiscal 2026 includes enhancing biosimulation capabilities, integrating AI into workflows, and developing a connected ecosystem of products [8][9] - The company aims to support clients through discovery, clinical development, and commercialization with a modern, interoperable biosimulation ecosystem [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, noting that while uncertainty persists, there are positive trends in biotech funding and client budgeting [5][6] - The company anticipates a stable operating environment for fiscal 2026, with guidance for total revenue between $79 million and $82 million, reflecting year-over-year growth of 0%-4% [16] Other Important Information - The company ended the fiscal year with $32.4 million in cash and short-term investments, remaining well-capitalized with no debt [15][16] - The effective tax rate for the fiscal year was 7%, with expectations for fiscal 2026 to be in the range of 12%-14% [15] Q&A Session Summary Question: Update on demand environment and trends - Management noted an uptick in biotech funding and positive discussions with clients regarding proposals and budgeting for the next year [21][22] Question: Feedback on GastroPlus release with AI capabilities - Initial responses to the AI-infused GastroPlus have been positive, with clients eager to leverage AI capabilities [24][25] Question: Factors affecting large pharma spending - Management indicated that while there are positive trends, caution remains due to individual client circumstances and the overall budgeting cycle [31][32] Question: Guidance assumptions and potential biotech recovery - The guidance assumes continued cautious optimism in biotech funding but does not project a significant uptick in revenue from this sector for 2026 [43][44] Question: Renewal rates and factors affecting them - Renewal rates have been impacted by client consolidations and budget scrutiny, but management expects improvement as clients have already reviewed their module needs [52][54] Question: Proficiency asset performance - Proficiency software revenue declined by 63% in Q4, while Med-Com services grew by 70%, indicating mixed performance post-acquisition [62][63] Question: Cash flow outlook and acquisition interest - Cash flow remains robust, and the company is actively looking for acquisition opportunities in biosimulation and clinical operations [72][73] Question: Pricing flexibility and plans for 2026 - The company plans to implement more aggressive pricing due to new AI capabilities, with expectations for a positive impact on renewal rates [76][77]

Financial Data and Key Metrics Changes - Revenue for fiscal year 2025 increased by 13% to $79.2 million, while total revenue for Q4 decreased by 6% to $17.5 million [10][11] - Adjusted EBITDA grew by 8%, and adjusted EPS also increased by 8% for the fiscal year [4] - Total gross margin for the fiscal year was 58%, down from 62% in the prior year, with software gross margin decreasing from 84% to 79% [14][16] Business Line Data and Key Metrics Changes - Software revenue for Q4 decreased by 9%, representing 52% of total revenue, while services revenue decreased by 3%, representing 48% of total revenue [10] - For the fiscal year, software revenue increased by 12%, representing 58% of total revenue, and services revenue increased by 15%, representing 42% of total revenue [10] - Discovery products contributed 18% to Q4 software revenue, while development products contributed 77% [10] Market Data and Key Metrics Changes - The company noted early signs of stabilization in the market, with large pharma gaining clearer visibility into pricing frameworks and biotech funding improving modestly [5] - Proposal activity and conference engagement have strengthened, indicating a more confident budgeting cycle among clients [5] Company Strategy and Development Direction - The company completed a strategic reset in 2025, transitioning to a unified operating model that aligns product and technology with client-focused services [4] - The focus is on building an integrated product ecosystem that combines validated science, cloud-scale performance, and AI capabilities [8][9] - The company aims to support clients through the entire drug development process, from discovery to commercialization, leveraging advancements in AI and cloud computing [6][18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, noting that while uncertainty persists, there are positive trends in biotech funding and client budgeting [5][18] - The company anticipates a stable operating environment for fiscal year 2026, with revenue guidance set between $79 million and $82 million [17] Other Important Information - The company ended the fiscal year with $32.4 million in cash and short-term investments, remaining well-capitalized with no debt [16] - The effective tax rate for the fiscal year was 7%, with expectations for 12%-14% in fiscal 2026 [16] Q&A Session Summary Question: Update on demand environment and trends affecting bookings and revenue - Management noted an uptick in biotech funding and positive discussions with clients regarding proposals and budgeting for the next year [21][23] Question: Feedback on the AI-infused GastroPlus release - Initial responses have been positive, with clients excited about the new capabilities and how they fit into their internal IT infrastructure [25][26] Question: Factors affecting large pharma spending and potential caution - Management highlighted that each client has unique challenges, but overall budgeting for 2026 appears positive [29][31] Question: Guidance details and underlying assumptions - No significant changes have occurred since the guidance was provided in October, with expectations for a stable revenue flow [36][38] Question: Renewal rates and factors affecting them - Renewal rates have been impacted by client consolidations and budget scrutiny, but management expects improvement as clients have already reviewed their needs [48][50] Question: Proficiency asset performance and revenue contributions - Proficiency software revenue was down 63% in Q4, while services revenue grew 70%, indicating a slowdown in clinical trial starts [55][56] Question: Cash flow outlook and acquisition interest - Cash flow remains robust, and the company is actively looking for acquisition opportunities in biosimulation and clinical operations [62][64] Question: Pricing flexibility and plans for the upcoming year - The company plans to implement more aggressive pricing due to new AI capabilities, but service side pricing will remain competitive [66][68]

Revenue and Financial Performance - The software business accounted for 58% of total revenue for the fiscal year ended August 31, 2025[33]. - The services business represented 42% of total revenue for the fiscal year ended August 31, 2025, an increase from 39% in 2023[47]. - Software revenue accounted for 58% of total revenue in fiscal year 2025, down from 61% in 2023[52]. - Revenue increased by $9.2 million, or 13%, to $79.2 million for the fiscal year ended August 31, 2025, compared to $70.0 million for the fiscal year ended August 31, 2024[206]. - Cost of revenues increased by $6.1 million, or 23%, primarily due to a $3.2 million or 49% increase in software-related costs and a $2.9 million or 14% increase in service-related costs[207]. - Gross profit increased by $3.1 million, or 7%, to $46.2 million, with gross margin percentages of 58% for 2025 and 62% for 2024, indicating a decline in gross margin[208]. - The company reported a net loss of $64.7 million for the fiscal year ended August 31, 2025, compared to a net income of $9.9 million for the fiscal year ended August 31, 2024, representing a decline of 750%[205]. - The company incurred $77.2 million in impairments for the fiscal year ended August 31, 2025, which significantly impacted overall financial performance[205]. - Other income decreased by $4.9 million, or 78%, to $1.4 million for the fiscal year ended August 31, 2025, compared to $6.3 million for the fiscal year ended August 31, 2024[205]. Product Development and Innovation - Version 13 of ADMET Predictor was released in June 2025, introducing new features including OBESITYsym™ and Thales™[35]. - GastroPlus version 10 (branded as GPX™) was released in May 2024, featuring a redesigned platform with advanced models and integrated ML technology[38]. - The ADMET Predictor software predicts over 175 different properties for molecular structures, enhancing drug discovery efficiency[33]. - The company has made significant investments in improving integration of its software models and enhancing its AI/ML engine[37]. - The company supports clients in drug development from early discovery through clinical trials to commercialization[23]. - The company aims to derive more revenues from existing clients by expanding their use of products and services[100]. Strategic Initiatives and Collaborations - The company has entered collaborations for validation of ADMET Predictor models and development of new AI drug discovery offerings[39]. - The company pivoted to an account-based solution selling business model during Q4 2025, focusing on client pain points across the drug development lifecycle[55]. - The company is actively seeking strategic acquisitions to expand its pharmaceutical software portfolio and services offerings[60]. - The company has developed products internally and intends to continue licensing or acquiring technology from third parties when it makes business sense[64]. Employee Engagement and Corporate Culture - The company employed 213 people as of August 31, 2025, with over 70% having backgrounds in life sciences software, services, and R&D[71]. - The voluntary turnover rate was under 6% in fiscal year 2024, indicating strong employee engagement[72]. - The company plans to place greater emphasis on leadership development and succession planning in the coming year[76]. - The company maintains a remote-first philosophy to support employee work-life balance[89]. - The company has a paid parental leave program and increased focus on physical and mental wellness for employees[92]. Risks and Challenges - The company faces risks from increasing competition and costs in the pharmaceutical and biotechnology industries[102]. - The life science market for modeling and simulation software is highly competitive, with significant pressure from larger technology companies and open-source alternatives[105]. - The lengthy sales cycle may lead to delays in recognizing revenue, negatively impacting financial results if contracts are not finalized[110]. - Fixed-price contracts pose financial risks, including potential losses from underpricing or overrunning cost estimates[111]. - The company faces risks associated with global operations, including currency fluctuations and political instability, which could adversely affect financial results[114]. - Changes in U.S. and international tax laws could negatively impact the company's effective tax rate and overall financial results[115]. - The company is dependent on key personnel, and the loss of these employees could harm business operations[122]. - Acquisitions and strategic alliances carry risks, including integration challenges and potential undiscovered liabilities[123]. - The company faces foreign currency exchange rate risks due to international operations, which could materially affect revenues and profit margins[126]. - The reliance on a single internal hosting facility and Amazon Web Services for operations poses risks; disruptions could adversely impact business[139]. Compliance and Governance - The company is committed to strong corporate governance practices, with a diverse Board of Directors overseeing risk management[94]. - The company emphasizes the importance of data security and compliance with various data privacy laws, including the EU GDPR and China's PIPL[92]. - The company has implemented a comprehensive data privacy management program to comply with evolving data privacy laws globally[138]. - Changes in data privacy laws could impose additional compliance costs and operational complexities for the company[136]. - The company has established a comprehensive cybersecurity program to address risks and ensure compliance with legal obligations, guided by industry best practices[174]. - As of the report date, there are no known cybersecurity incidents that have materially impacted the company's financial condition[177]. Financial Management and Shareholder Value - The company has suspended quarterly dividends on common stock to reinvest in the business, with no expectation of future dividends[157]. - The company has authorized a share repurchase program of up to $50 million, with $20 million already repurchased as of May 31, 2023[165]. - The company may need to raise additional capital, which could dilute existing shareholders and impact stock price[163]. - The company's stock price may be volatile due to various factors, including market conditions and operational performance[160]. - The company’s ability to maintain effective internal controls over financial reporting may be challenged as it grows through acquisitions[156].

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U.S. equity markets commenced December on a cautious note, with major indexes retreating from their strong performance in late November. Monday, December 1st, 2025, saw a broad pullback, particularly in technology and cryptocurrency-related sectors, as investors grappled with a renewed "risk-off" sentiment and awaited crucial economic data and Federal Reserve insights. This marks a shift from the previous week's positive close, which was largely fueled by growing expectations of a Federal Reserve rate cut.M ...

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Simulations Plus, Inc. (Nasdaq: SLP) ("Simulations Plus†or the "Company†), a global leader in cheminformatics, biosimulation, clinical operations solutions and medical communications that accelerate biopharma innovation, today reported financial results for its fourth quarter and fiscal 2025, ended August 31, 2025. Fourth Quarter 2025 Financial Highlights (as compared to fourth quarter 2024) Total revenue decreased 6% to $17.5 million Software rev. ...

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