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Core Insights - Simulations Plus reported a 3% decline in total revenue to $18.4 million for fiscal Q1 2026, aligning with previous guidance [2][3] - The company maintained its fiscal 2026 revenue guidance of $79–82 million, with expected growth of 0–4% [4][17] Revenue Breakdown - Software revenue contributions were primarily from development products (81%), discovery products (15%), and clinical operations products (4%) [1] - Services revenue grew by 16%, while software revenue fell by 17%, resulting in a mix shift where services accounted for 52% of total revenue [5][10] Profitability Metrics - Adjusted EBITDA for the quarter was $3.5 million, with adjusted EPS at $0.13 [1][5] - Total gross margin improved to 59%, with software gross margin at 84% and services gross margin at 36% [13][14] Client Metrics - The company ended the quarter with 302 commercial clients, an average revenue per client of $97,000, and an 88% renewal rate [8] - The trailing 12-month average revenue per client was $147,000, with a renewal rate of 87% [8] Services Growth - The backlog for services rose by 18% to $20.4 million, driven by strong performance in medical communications [9][11] - Medical communications, stemming from the Pro-ficiency acquisition, represented 100% of commercialization services revenue [11] Future Outlook - Management anticipates stronger software performance in the second and third quarters due to seasonal renewals [18] - The company is focusing on building an integrated product ecosystem that leverages AI and regulatory-grade modeling [19][20]

Financial Data and Key Metrics Changes - Total revenue decreased by 3% to $18.4 million, with adjusted EBITDA at $3.5 million and adjusted EPS at $0.13, aligning with internal expectations [4][8] - Total gross margin improved to 59%, with software gross margin at 84% and services gross margin at 36%, compared to 54%, 75%, and 26% respectively in the prior period [10][11] - The company ended the quarter with $35.7 million in cash and short-term investments, maintaining a strong capital position with no debt [11] Business Line Data and Key Metrics Changes - Software revenue decreased by 17%, contributing 48% to total revenue, while services revenue increased by 16%, contributing 52% [8] - Discovery products accounted for 15% of software revenue, development products for 81%, and clinical ops products for 4% [8] - Services revenue from development, including biosimulation services, represented 71% of services revenue, while commercialization services accounted for 29% [9] Market Data and Key Metrics Changes - The company reported an 88% renewal rate for the quarter, with an average revenue per client of $97,000 [8] - The ending backlog for services increased by 18% to $20.4 million from $17.3 million last year, indicating a healthy pipeline of projects [9] Company Strategy and Development Direction - The company aims to advance towards an integrated product ecosystem combining validated science, cloud-scale performance, and AI-driven modeling [5][6] - Strategic acquisitions and ongoing investment in science are key to broadening the company's reach and impact in the market [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted positive trends in the macro environment, including improved biotech funding and reduced tariff threats, which are expected to positively impact client budgets [4][16] - There is optimism regarding increased spending from clients, with a backlog of projects ready to be initiated [17] Other Important Information - The company maintains its guidance for fiscal year 2026, projecting total revenue between $79-$82 million and adjusted EBITDA margin between 26%-30% [11] - The company is focused on enhancing AI capabilities within its product offerings, which is expected to contribute to pricing flexibility and license renewals [62] Q&A Session Summary Question: Can you provide more details on the positive commentary regarding Most Favored Nations and lower tariff risks? - Management indicated that stabilization in pricing agreements and reduced tariff discussions have positively impacted client budget preparations, leading to increased contract activity [16][17] Question: What is the expected mix cadence for software in the remaining quarters? - Management confirmed no change in guidance for software service mix, with expectations for stronger performance in the second and third quarters due to seasonal renewals [24][25] Question: Did consolidation in large pharma impact software renewals in the first quarter? - Management noted that while consolidation is a headwind, there was no significant impact on the first quarter results, and the outlook remains stable [27][28] Question: How is the integration of AI going with the core platform? - Initial AI features have received favorable responses, and the company plans to monetize these advancements through pricing adjustments and new modules [62] Question: What is the outlook for commercialization services? - The medical communications segment, which is part of the Pro-ficiency acquisition, showed strong growth and is expected to continue performing well in fiscal year 2026 [52][54]

Financial Data and Key Metrics Changes - Total revenue decreased by 3% to $18.4 million, with adjusted EBITDA at $3.5 million and adjusted EPS at $0.13 [4][8] - Total gross margin improved to 59%, with software gross margin at 84% and services gross margin at 36%, compared to 54%, 75%, and 26% respectively in the prior period [10][11] - The company ended the quarter with $35.7 million in cash and short-term investments, remaining well-capitalized with no debt [11] Business Line Data and Key Metrics Changes - Software revenue decreased by 17%, contributing 48% to total revenue, while services revenue increased by 16%, contributing 52% [8] - Discovery products accounted for 15% of software revenue, development products for 81%, and clinical ops products for 4% [8] - Services revenue from development, including biosimulation services, represented 71% of services revenue, while commercialization services represented 29% [9] Market Data and Key Metrics Changes - The company reported an 88% renewal rate for the quarter, with an average revenue per client of $97,000 [8] - The ending backlog for services increased by 18% to $20.4 million from $17.3 million last year, indicating a healthy pipeline of services projects [9] Company Strategy and Development Direction - The company aims to advance towards an integrated product ecosystem combining validated science, cloud-scale performance, and AI-driven services [5][6] - Strategic acquisitions and ongoing investment in science are key to broadening the company's reach and impact in the market [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted positive trends in the macro environment, including improved biotech funding and reduced tariff threats, which are expected to positively impact client budgets [4][16] - There is optimism regarding increased spending from clients, which is anticipated to lead to higher software activity following the uptick in services [4][17] Other Important Information - The company maintains its guidance for fiscal year 2026, projecting total revenue between $79-$82 million and adjusted EBITDA margin between 26%-30% [11] - The company is focused on enhancing its AI capabilities and integrating them into its product offerings, which is expected to provide pricing flexibility and improve client engagement [62] Q&A Session Summary Question: Can you provide more details on the positive commentary regarding Most Favored Nations and its impact on customer budgets? - Management indicated that stabilization in pricing agreements and reduced tariff risks are positively impacting client budget discussions, leading to increased proposals for next year [16][17] Question: What is the expected mix cadence for software in the remaining quarters? - Management confirmed no change in guidance for software service mix, with expectations for stronger performance in the second and third quarters due to seasonal renewals [24][25] Question: Did consolidation in large pharma impact software renewals in the first quarter? - Management noted that while consolidation is a headwind, there was no significant impact on the first quarter results, and the outlook remains stable [27][28] Question: How is the integration of AI features progressing? - Initial responses to AI features have been favorable, with plans for monetization through modules and new products in the future [62] Question: What is the outlook for the commercialization services growth? - Management reported strong performance in medical communications, which is expected to continue positively in fiscal year 2026 [52][54]

Financial Data and Key Metrics Changes - Total revenue decreased by 3% to $18.4 million, with adjusted EBITDA at $3.5 million and adjusted EPS at $0.13 [4][8] - Total gross margin improved to 59%, with software gross margin at 84% and services gross margin at 36%, compared to 54%, 75%, and 26% respectively in the prior period [10][11] - The company ended the quarter with $35.7 million in cash and short-term investments, maintaining a strong capital position with no debt [11] Business Line Data and Key Metrics Changes - Software revenue decreased by 17%, contributing 48% of total revenue, while services revenue increased by 16%, contributing 52% of total revenue [8] - Discovery products accounted for 15% of software revenue, development products for 81%, and clinical ops products for 4% [8] - Services revenue from development services represented 71% and commercialization services represented 29% of total services revenue [9] Market Data and Key Metrics Changes - The company reported an 88% renewal rate for the quarter, with an average revenue per client of $97,000 [8] - The ending backlog for services increased by 18% to $20.4 million from $17.3 million last year, indicating a healthy pipeline of services projects [9] Company Strategy and Development Direction - The company aims to advance towards an integrated product ecosystem combining validated science, cloud-scale performance, and AI-driven services [5][13] - Strategic acquisitions and ongoing investment in scientific engines are key to broadening the company's reach and impact in the market [13] Management's Comments on Operating Environment and Future Outlook - Management noted positive trends in the macro environment, including the stabilization of Most Favored Nation pricing agreements and an improving biotech funding environment [4] - There is optimism regarding increased client spending, which is expected to lead to higher software activity in the future [4][17] Other Important Information - The company maintains its fiscal year 2026 guidance for total revenue between $79-$82 million, with year-over-year revenue growth between 0-4% [11] - The company plans to hold an investor day on January 21st to provide more insights into its strategy and product roadmap [67] Q&A Session Summary Question: Can you provide more details on the positive commentary regarding Most Favored Nations and lower tariff risks? - Management indicated that stabilization in pricing agreements and reduced tariff threats are positively impacting client budgets, leading to increased proposals and contracts [16][17] Question: What is the expected mix cadence for software in the remaining quarters? - Management confirmed no change in guidance for software service mix, with expectations for stronger performance in the second and third quarters due to seasonal renewals [24][25] Question: Did consolidation in large pharma impact software renewals in the first quarter? - Management noted no significant impact from consolidation in the first quarter, with expectations that the current acquisition activity will not heavily affect renewals [26][28] Question: How is the integration of AI with the core platform progressing? - Initial AI features have received favorable responses, and the company is exploring monetization opportunities through new modules and pricing adjustments [62] Question: Is the growth in commercialization services mainly from Pro-ficiency? - Yes, the growth in commercialization services is attributed to the Pro-ficiency acquisition, particularly in medical communications [52][54]

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Earnings Call: Q1 - FY26 January 8, 2026 $0.03 Diluted EPS $18.4M Revenue 19% Adj. EBITDA Margin -3% Revenue Decline Current period Prior Year Comparison (1Q25) $0.13 Adj. Diluted EPS $18.9M Revenue $0.01 Diluted EPS 24% Adj. EBITDA Margin +31% $0.17 Revenue Growth Adj. Diluted EPS Trailing Twelve Months (TTM) Highlights ($3.20) Diluted EPS (1) $78.7M Revenue 27% Adj. EBITDA Margin +6% Revenue Growth Current period Prior Year Comparison (1Q25) $0.98 Adj. Diluted EPS $74.4M Revenue $0.40 Diluted EPS 29% Adj. ...

Revenue Performance - Total revenue decreased by 3% to $18.4 million compared to the first quarter of fiscal 2025[7] - Software revenue decreased by 17% to $8.9 million, representing 48% of total revenue, while services revenue increased by 16% to $9.5 million, representing 52% of total revenue[7] - The company reaffirmed its fiscal year 2026 revenue guidance of $79 million to $82 million, indicating a growth of 0% to 4%[5] Profitability Metrics - Gross profit was $10.9 million with a gross margin of 59%, up from $10.2 million and 54% in the previous year[7] - Net income increased to $0.7 million with diluted earnings per share of $0.03, compared to net income of $0.2 million and diluted EPS of $0.01 in the prior year[7] - Adjusted EBITDA was $3.5 million, representing 19% of total revenue, down from $4.5 million or 24% of total revenue in the same quarter last year[7] - Adjusted net income for the three months ended November 30, 2025, was $2,588,000, down from $3,446,000 in the same period of 2024, a decrease of approximately 25%[27] Earnings Per Share - Diluted EPS increased to $0.03 for the three months ended November 30, 2025, compared to $0.01 in the prior year, marking a 200% increase[27] - Adjusted diluted EPS guidance for fiscal year 2026 is set between $1.03 and $1.10[5] - Adjusted diluted EPS decreased to $0.13 for the three months ended November 30, 2025, from $0.17 in the same period of 2024, a decline of about 24%[27] Asset Management - The company reported an increase in total current assets to $58.1 million from $51.5 million, driven by higher accounts receivable and short-term investments[23] Market Outlook - The company is optimistic about favorable market dynamics and strong bookings in both software and services, which may enhance client spending levels[4] - Simulations Plus plans to present its new product vision and AI solutions during the Virtual Investor Day on January 21, 2026[9] Expense Management - The company incurred $10,000 in mergers and acquisitions expenses for the three months ended November 30, 2025, down from $255,000 in the prior year, a reduction of approximately 96%[27] - Stock-based compensation was $1,465,000 for the three months ended November 30, 2025, slightly lower than $1,589,000 in the same period of 2024, a decrease of about 8%[27] - Amortization expenses decreased to $1,259,000 for the three months ended November 30, 2025, compared to $2,130,000 in the prior year, a decline of approximately 41%[27] Shareholder Information - The diluted weighted-average common shares outstanding were 20,220 for the three months ended November 30, 2025, slightly down from 20,266 in the prior year[27]

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Simulations Plus, Inc. (NASDAQ:SLP) is one of the best healthcare AI stocks to buy now. On December 9, Simulations Plus, Inc. (NASDAQ:SLP) issued a press release highlighting how its technologies align with the FDA’s new regulatory direction. On December 2, the FDA released a draft guidance focused on streamlined nonclinical safety studies for monospecific monoclonal antibodies. This guidance, the FDA said, promotes a shift away from extensive animal testing by prioritizing mechanistic understanding, pharm ...