Simulations Plus(US:SLP)2022-07-06 23:34Financial Data and Key Metrics Changes - The company reported a 17% revenue growth for the quarter, with software growth at 16% and services growth at 19% [6][23] - Earnings per share (EPS) increased to $0.20, and adjusted EBITDA margin was 42% [7][36] - Net income rose to $4.1 million compared to $3.8 million last year, reflecting a modest increase [35] Business Line Data and Key Metrics Changes - GastroPlus revenue increased by 19%, contributing 67% of software revenue for the quarter [8][25] - MonolixSuite revenue grew by 8% for the quarter and 31% year-to-date, with 10 new commercial clients signed [10] - ADMET Predictor saw a 7% revenue growth in the quarter, with a year-to-date increase of 14% [11] - PK/PD services revenue surged by 29%, reversing recent trends [12] - PBPK revenue increased by 83% for the quarter, reflecting deeper implementation of PBPK modeling [17] Market Data and Key Metrics Changes - The company experienced growth across all client segments, particularly in smaller customer accounts, indicating deeper adoption of modeling and simulation [6] - The services backlog grew by 34% during the quarter, indicating a positive trend in project demand [17] Company Strategy and Development Direction - The company aims to expand its geographic presence and enhance cross-selling initiatives to drive software business growth [6] - There is a focus on increasing the use of modeling and simulation solutions in drug development, with a notable rebound in the service business [44][45] - The company is evaluating M&A opportunities, noting a rationalization in valuations [20][64] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive outlook for small pharma and biotech investments in modeling and simulation, despite funding challenges in the biotech segment [51][52] - The company is comfortable narrowing its revenue guidance range for the full year to $52 million to $53 million, anticipating software to represent approximately 60% of total revenue [18][19] Other Important Information - The company ended the quarter with cash and short-term investments of $122.5 million and no debt, indicating strong financial health [42] - The average revenue per customer dipped slightly but remains in line with historical trends [27] Q&A Session Summary Question: Market conditions in pharma and biotech - Management noted a positive visibility in small pharma and biotech investments in modeling and simulation, despite funding challenges [51][52] Question: Expectations for gross margins in Q4 - Management indicated that service margins have been flat, with software revenues expected to maintain a low-90s gross margin range [53][54] Question: Guidance for next year - Management expressed confidence in robust performance across both software and services, anticipating continued strength into the next fiscal year [60] Question: Softness in service bookings - Management clarified that any softness in the service side is due to seasonal vacation impacts rather than project cancellations [71] Question: Business development and acquisitions - Management stated that opportunities exist on both the software and services sides for potential acquisitions [75][76] Question: Strategy in Asia - The company is expanding its presence in Asia, hiring direct employees to support distributors and consulting opportunities [78]