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 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 . Forward-Looking Statements Except for historical information, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Words like “believe,” “will”, “can”, “expect,” “anticipate” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) mean that these are our best estimates as of this writing, but there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Forward looking statements contained in this press release include, but are not limited to, statements about expectations for the second half of 2025 and anticipated projections for fiscal year 2025. Factors that could cause or contribute to such differences include, but are not limited to: our ability to integrate our Adaptive Learning & Insights (ALI) and Medical Communications (MC) business units, our ability to meet our stated guidance, our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, general economic, political or geopolitical conditions and changes, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, market conditions, macroeconomic factors, and a sustainable market. Further information on our risk factors is contained in our quarterly, annual and current reports and filed with the U.S. Securities and Exchange Commission. 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 $ — $ — $ 4 $ — 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 Q1 Q2 Q3 Q4 Q1 Q2 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 Q1 Q2 Q3 Q4 Q1 Q2 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 Q1 Q2 Q3 Q4 Q1 Q2 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 0.991 1.122 2.059 2.130 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 slp@finprofiles.com