/Simulations Plus Reports Second Quarter Fiscal 2025 Financial Results

NEWS

Simulations Plus Reports Second Quarter Fiscal 2025 Financial Results

BioSpace

2025/04/04

Simulations Plus Reports Second Quarter Fiscal 2025 Financial Results

Total revenue grew 23% year-over-year driven by strong growth in both software and services

Maintains full-year revenue guidance of $90 to $93 million and adjusted diluted EPS of $1.07 to $1.20

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Simulations Plus, Inc. (Nasdaq: SLP) (“Simulations Plus”), a leading provider of cheminformatics, biosimulation, simulation-enabled performance and intelligence solutions, and medical communications to the biopharma industry, today reported financial results for its second quarter fiscal 2025, ended February 28, 2025.

Second Quarter 2025 Financial Highlights (as compared to second quarter 2024)

Total revenue increased 23% to $22.4 million
Software revenue increased 16% to $13.5 million, representing 60% of total revenue
Services revenue increased 34% to $8.9 million, representing 40% of total revenue
Gross profit was $13.1 million; gross margin was 59%
Net income of $3.1 million and diluted EPS of $0.15 compared to net income of $4.0 million and diluted EPS of $0.20
Adjusted EBITDA of $6.6 million, representing 29% of total revenue, compared to $7.1 million, representing 39% of total revenue
Adjusted net income of $6.2 million and adjusted diluted EPS of $0.31, compared to adjusted net income of $6.4 million and adjusted diluted EPS of $0.32

Six Months 2025 Financial Highlights (as compared to six months 2024)

Total revenue increased 26% to $41.4 million
Software revenue increased 26% to $24.2 million, representing 59% of total revenue
Services revenue increased 26% to $17.2 million, representing 41% of total revenue
Gross profit was $23.3 million; gross margin was 56%
Net income of $3.3 million and diluted EPS of $0.16 versus net income of $6.0 million and diluted EPS of $0.29
Adjusted EBITDA of $11.1 million, representing 27% of total revenue, compared to $10.5 million, representing 32% of total revenue
Adjusted net income of $9.6 million and adjusted diluted EPS of $0.48, compared to adjusted net income of $10.1 million and adjusted diluted EPS of $0.50

Management Commentary

“We delivered strong performance in our second fiscal quarter 2025 with total revenue growing by 23%,” said Shawn O’Connor, Chief Executive Officer of Simulations Plus. “Our software revenue rose 16%, driven by outstanding execution across all of our software platforms. Leading growth this quarter, our Quantitative Systems Pharmacology (QSP) business unit expanded 89%, primarily driven by the addition of a model license in the disease area of atopic dermatitis. Additionally, our Cheminformatics revenues increased by 8%, while our Clinical Pharmacology & Pharmacometrics (CPP) business unit posted a 9% revenue increase.

“Services revenue for the second fiscal quarter grew 34%, with notable strength in our Medical Communications (MC) business unit. Services bookings in our CPP and MC business units were exceptional contributors to the 13% year-over-year increase in our backlog, which ended the quarter at $20.4 million.

“We are pleased with our solid performance in the first half of the year despite the ongoing cost constrained and limited funding environment for our biopharma customers. As we enter the second half of 2025, we believe we are well-positioned to maintain our momentum and are on track to achieve our stated guidance.”

Fiscal 2025 Guidance

Revenue

$90M - $93M

Revenue growth

28 - 33%

Software mix

55 - 60%

Adjusted EBITDA margin

31 - 33%

Adjusted diluted EPS

$1.07 - $1.20

Webcast and Conference Call Details

Shawn O’Connor, Chief Executive Officer, and Will Frederick, Chief Financial and Operating Officer, will host a conference call and webcast today at 5:00 p.m. Eastern Time to discuss the details of Simulations Plus’ performance for the quarter and certain forward-looking information. The call may be accessed by registering here or by calling 1-877-451-6152 (domestic) or 1-201-389-0879 (international) or by clicking on this Call me™ link to request a return call. The webcast can be accessed on the investor relations page of the Simulations Plus website https://www.simulations-plus.com/investorscorporate-profile/corporate-profile/ where it will also be available for replay approximately one hour following the call.

Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures,” which are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”).

A further explanation and reconciliation of these non-GAAP financial measures is included below and in the financial tables in this release.

The Company believes that the non-GAAP financial measures presented facilitate an understanding of operating performance and provide a meaningful comparison of its results between periods. The Company’s management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation. Adjusted EBITDA and Adjusted Diluted EPS represent measures that we believe are customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures that we present. Our management also believes that these measures are useful in evaluating our core operating results. However, Adjusted EBITDA and Adjusted Diluted EPS are not measures of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income, operating income, or diluted EPS as indicators of our operating performance or to net cash provided by operating activities as a measure of our liquidity. We believe the Company’s Adjusted EBITDA and Adjusted Diluted EPS measures provide information that is directly comparable to that provided by other peer companies in our industry, but other companies may calculate non-GAAP financial results differently, particularly related to nonrecurring, unusual items.

Please note that the Company has not reconciled the adjusted EBITDA or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

Adjusted EBITDA

Adjusted EBITDA represents net income excluding the effect of interest expense (income), provision (benefit) for income taxes, amortization expense, intangible asset amortization, equity-based compensation expense, loss (gain) on currency exchange, goodwill impairment, change in fair value of contingent consideration, reorganization expense, acquisition and integration expense and other items not indicative of our ongoing operating performance.

Adjusted Net Income and Adjusted Diluted EPS

Adjusted net income and adjusted diluted earnings per share exclude the effect of amortization expense, equity-based compensation expense, loss (gain) on currency exchange, goodwill impairment, change in fair value of contingent consideration, reorganization expense, acquisition and integration expense and other items not indicative of our ongoing operating performance as well as the income tax provision adjustment for such charges.

The Company excludes the above items because they are outside of the Company’s normal operations and/or, in certain cases, are difficult to forecast accurately for future.

With more than 25 years of experience serving clients globally, Simulations Plus stands as a premier provider in the biopharma sector, offering advanced software and consulting services that enhance drug discovery, development, research, clinical trial operations, regulatory submissions, and commercialization. Our comprehensive biosimulation solutions integrate artificial intelligence/machine learning (AI/ML), physiologically based pharmacokinetics, physiologically based biopharmaceutics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. We also deliver simulation-enabled performance and intelligence solutions alongside medical communications support for clinical and commercial drug development. Our cutting-edge technology is licensed and utilized by leading pharmaceutical, biotechnology, and regulatory agencies worldwide. For more information, visit our website at www.simulations-plus.com. Follow us on LinkedIn | X | YouTube.

Environmental, Social, and Governance

We focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our website to read our 2024 ESG update.

SIMULATIONS PLUS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

Three Months Ended

Six Months Ended

(in thousands, except per common share amounts)

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Revenues

Software

13,484

11,614

24,199

19,203

Services

8,948

6,691

17,157

13,602

Total revenues

22,432

18,305

41,356

32,805

Cost of revenues

Software

2,587

1,348

5,225

2,339

Services

6,718

3,736

12,786

7,397

Total cost of revenues

9,305

5,084

18,011

9,736

Gross profit

13,127

13,221

23,345

23,069

Operating expenses

Research and development

2,143

1,312

3,991

2,529

Sales and marketing

3,717

1,949

6,568

3,938

General and administrative

4,555

5,518

9,948

11,200

Total operating expenses

10,415

8,779

20,507

17,667

Income from operations

2,712

4,442

2,838

5,402

Other income

796

810

940

2,256

Income before income taxes

3,508

5,252

3,778

7,658

Provision for income taxes

(434

)

(1,223

)

(498

)

(1,684

)

Net income

3,074

4,029

3,280

5,974

Earnings per share

Basic

0.15

0.20

0.16

0.30

Diluted

0.15

0.20

0.16

0.29

Weighted-average common shares outstanding

Basic

20,097

19,975

20,082

19,961

Diluted

20,277

20,315

20,262

20,288

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustments

(26

)

(15

)

(68

)

(69

)

Unrealized gains on available-for-sale securities

—

Comprehensive income

3,048

4,014

3,216

5,905

SIMULATIONS PLUS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Audited)

(in thousands, except share and per share amounts)

February 28, 2025

August 31, 2024

ASSETS

Current assets

Cash and cash equivalents

10,992

10,311

Accounts receivable, net of allowance for credit losses of $179 and $149

16,493

9,136

Prepaid income taxes

1,375

2,197

Prepaid expenses and other current assets

7,464

7,753

Short-term investments

10,393

9,944

Total current assets

46,717

39,341

Long-term assets

Capitalized computer software development costs, net of accumulated amortization of $20,290 and $18,727

12,452

12,499

Property and equipment, net

800

812

Operating lease right-of-use assets

827

1,027

Intellectual property, net of accumulated amortization of $7,659 and $5,490

20,961

23,130

Other intangible assets, net of accumulated amortization of $3,819 and $3,177

22,910

23,210

Goodwill

96,305

96,078

Other assets

455

542

Total assets

201,427

196,639

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

1,206

602

Accrued compensation

4,431

4,513

Accrued expenses

1,399

2,043

Contracts payable - current portion

—

2,440

Operating lease liability - current portion

313

475

Deferred revenue

3,346

1,996

Total current liabilities

10,695

12,069

Long-term liabilities

Deferred income taxes, net

701

1,608

Operating lease liability - net of current portion

483

531

Total liabilities

11,879

14,208

Commitments and contingencies - note 4

—

Shareholders' equity

Preferred stock, $0.001 par value - 10,000,000 shares authorized; no shares issued and outstanding

—

Common stock, $0.001 par value and additional paid-in capital —50,000,000 shares authorized; 20,111,045 and 20,051,134 shares issued and outstanding

156,229

152,328

Retained earnings

33,634

30,354

Accumulated other comprehensive loss

(315

)

(251

)

Total shareholders' equity

189,548

182,431

Total liabilities and shareholders' equity

201,427

196,639

SIMULATIONS PLUS, INC. Trended Financial Information (1) (Unaudited)

(in millions except earnings per share amounts)

FY24

FY25

FY24

FY25

Full Year

YTD

Revenue

Software

7.589

11.614

11.908

9.913

10.715

13.484

41.024

24.199

Services

6.911

6.691

6.636

8.751

8.209

8.948

28.989

17.157

Total

14.500

18.305

18.544

18.664

18.924

22.432

70.013

41.356

Gross Margin

Software

86.9

88.4

88.2

72.4

75.4

80.8

84.2

78.4

Services

47.0

44.2

41.4

-4.0

26.1

24.9

29.7

25.5

Total

67.9

72.2

71.5

36.6

54.0

58.5

61.6

56.4

Income from operations

0.960

4.442

1.880

(1.151

)

0.126

2.712

6.131

2.838

Operating Margin

6.6

24.3

10.1

-6.2

0.7

12.1

8.8

6.9

Net Income

1.945

4.029

3.137

0.843

0.206

3.074

9.954

3.280

Diluted Earnings Per Share

0.10

0.20

0.15

0.04

0.01

0.15

0.49

0.16

Adjusted EBITDA

3.388

7.135

5.586

4.148

4.493

6.578

20.257

11.071

Adjusted Diluted EPS

0.18

0.32

0.27

0.18

0.17

0.31

0.95

0.48

Cash Flow from Operations

0.162

5.810

5.700

1.600

(1.274

)

5.669

13.320

4.395

Revenue Breakdown by Region

Americas

10.891

12.461

12.428

14.693

14.469

16.112

50.473

30.581

EMEA

2.302

4.665

4.513

2.592

2.720

4.806

14.072

7.526

Asia Pacific

1.307

1.179

1.603

1.379

1.735

1.514

5.468

3.249

Total

14.500

18.305

18.544

18.664

18.924

22.432

70.013

41.356

Software Performance Metrics

Avg. Revenue per Customer (in thousands)

Commercial

79.0

113.0

97.0

89.0

94.0

124.0

Services Performance Metrics

Backlog (in millions)

18.910

18.041

19.602

14.091

17.254

20.379

(1) Numbers may not foot due to rounding

SIMULATIONS PLUS, INC. Reconciliation of Adjusted EBITDA to Net Income (1) (Unaudited)

(in millions)

FY 2024

FY25

FY24

FY25

Full Year

YTD

Net Income

1.945

4.029

3.137

0.843

0.206

3.074

9.954

3.280

Excluding:

Interest income and expense, net

(1.292

)

(1.348

)

(1.522

)

(0.213

)

(0.159

)

(0.154

)

(4.375

)

(0.313

)

Provision for income taxes

0.461

1.223

0.753

0.020

0.064

0.434

2.457

0.498

Depreciation and amortization

1.091

1.105

1.263

2.206

2.265

2.274

5.665

4.539

Stock-based compensation

1.303

1.585

1.665

1.387

1.589

1.557

5.940

3.146

(Gain) loss on currency exchange

(0.044

)

0.098

(0.009

)

(0.431

)

0.015

(0.002

)

(0.386

)

0.013

Change in value of contingent consideration

(0.110

)

0.440

(0.599

)

(1.370

)

—

(0.640

)

(1.639

)

(0.640

)

Reorganization expense

—

0.258

0.157

—

0.415

Mergers & Acquisitions expense

0.034

0.003

0.898

1.706

0.255

(0.122

)

2.641

0.133

Adjusted EBITDA

3.388

7.135

5.586

4.148

4.493

6.578

20.257

11.071

(1) Numbers may not foot due to rounding

SIMULATIONS PLUS, INC. Reconciliation of Adjusted Diluted EPS to Diluted EPS (1) (Unaudited)

(in millions, except Diluted EPS and Adjusted Diluted EPS)

FY 2024

FY25

FY24

FY25

Full Year

YTD

Net Income (GAAP)

1.945

4.029

3.137

0.843

0.206

3.074

9.954

3.280

Excluding:

Amortization

0.991

1.122

2.059

2.130

5.163

4.260

Stock-based compensation

1.303

1.585

1.665

1.387

1.589

1.557

5.940

3.146

(Gain) loss on currency exchange

(0.044

)

0.098

(0.009

)

(0.431

)

0.015

(0.002

)

(0.386

)

0.013

Mergers & Acquisitions expense

0.034

0.003

0.898

1.706

0.255

(0.122

)

2.641

0.133

Change in value of contingent consideration

(0.110

)

0.440

(0.599

)

(1.370

)

—

(0.640

)

(1.639

)

(0.640

)

Reorganization expense

—

0.258

0.157

—

0.415

Tax effect on above adjustments

(0.417

)

(0.746

)

(0.603

)

(0.554

)

(1.007

)

0.041

(2.320

)

(0.966

)

Adjusted Net income (Non-GAAP)

3.702

6.400

5.611

3.640

3.446

6.195

19.353

9.641

Weighted-avg. common shares outstanding:

Diluted

20.279

20.315

20.433

20.338

20.266

20.277

20.301

20.262

Diluted EPS (GAAP)

0.10

0.20

0.15

0.04

0.01

0.15

0.49

0.16

Adjusted Diluted EPS (Non-GAAP)

0.18

0.32

0.27

0.18

0.17

0.31

0.95

0.48

(1) Numbers may not foot due to rounding

Contacts

Investor Relations Contact: Lisa Fortuna Financial Profiles 310-622-8251 [email protected]