Simulations Plus(SLP)2025-04-04 11:55Revenue 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]