Simulations Plus, Inc.(“Simulations Plus”), a leading provider of biosimulation, simulation-enabled performance and intelligence solutions, and medical communications for the biopharma industry, reported financial results for its third quarter fiscal 2024, ended May 31, 2024.
Third Quarter 2024 Financial Highlights (compared to third quarter 2023)
- Total revenue increased 14% to $18.5 million
- Software revenue increased 12% to $11.9 million, representing 64% of total revenue
- Services revenue increased 18% to $6.6 million, representing 36% of total revenue
- Gross profit was constant at $13.3 million; gross margin was 71%
- Adjusted EBITDA of $5.7 million, representing 31% of total revenue
- Net income of $3.1 million and diluted earnings per share (EPS) of $0.15 versus net income of $4.0 million and diluted EPS of $0.20
- Adjusted diluted EPS excluding the impact of acquisition costs of $0.19 versus adjusted diluted EPS of $0.21
Nine Months 2024 Financial Highlights (compared to nine months 2023)
- Total revenue increased 17% to $51.3 million
- Software revenue increased 14% to $31.1 million, representing 61% of total revenue
- Services revenue increased 21% to $20.2 million, representing 39% of total revenue
- Gross profit increased 2% to $36.3 million; gross margin was 71%
- Adjusted EBITDA of $16.2 million, representing 32% of total revenue
- Net income of $9.1 million and diluted EPS of $0.45 versus net income of $9.4 million and diluted EPS of $0.46
- Adjusted diluted EPS excluding the impact of acquisition costs was constant at of $0.49
Management Commentary
“Our third quarter results reflected continued solid performance in both our software and services segments,” said Shawn O’Connor, Chief Executive Officer of Simulations Plus. “Total revenue increased 14%, led by higher software sales in our Cheminformatics and Clinical Pharmacology & Pharmacometrics (CPP) business units, with strong growth in our ADMET Predictor ® and MonolixSuite ™ platforms, respectively. Our Physiologically Based Pharmacokinetics (PBPK) business unit also performed well, reflecting higher revenues from GastroPlus ® . During the quarter, we were excited to launch GastroPlus X, the next generation of physiologically based pharmacokinetics/biopharmaceutics (PBPK/PBBM) modeling and simulation software and believe it will become a meaningful addition to our suite of leading-edge solutions. The 18% increase in services revenue was driven by strong growth in our Quantitative Systems Pharmacology (QSP) and CPP business units.
“Biotech funding is starting to show signs of recovery, most notably for companies that have drug candidates in the clinic. We continue to be cautiously optimistic about the funding environment for our biotech clients. We see a range of spending patterns among large pharmaceutical companies. Some are increasing expenditures, while others remain conservative, with most falling in between depending on various internal and external market factors. Overall, the market is in a better position today compared to a year ago.
“Our acquisition of Pro-ficiency on June 11th brings together our collective expertise in simulations, AI technologies and focus on science, creating a one-of-a-kind platform that spans across the drug development continuum. The Pro-ficiency integration and collaboration is progressing in-line with our internal plan and schedule with positive responses from our clients.
“Our performance in the first nine months of the year remains aligned with our original fiscal 2024 revenue guidance. The newly formed Clinical Simulations and Medical Communications (CSMC) business unit is expected to contribute approximately $3 million to our fiscal 2024 revenue. We are entering our final fiscal quarter of 2024 with a healthy pipeline and remain confident that Simulations Plus is well positioned to achieve its goals for the fiscal year. Going forward, we remain committed to a disciplined growth strategy that will deliver long-term returns for our shareholders.”
Fiscal 2024 Guidance
|
Fiscal 2024 Guidance |
|
|
Revenue |
$69M - $72M |
|
Revenue growth |
15 - 20% |
|
Software mix |
55 - 60% |
|
Services mix |
40 - 45% |
|
Diluted EPS |
$0.46 - $0.48 |
|
Adjusted diluted EPS |
$0.54 - $0.56 |
Quarterly Dividend
The Simulations Plus Board of Directors has determined to discontinue the Company’s quarterly cash dividend and reallocate these funds to our capital allocation strategy for investing in growth initiatives that are intended to generate long-term shareholder value. The final dividend of $0.06 per share of the Company’s common stock will be paid on August 5, 2024, to shareholders of record as of July 29, 2024.
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 2023 ESG update .
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 p.m. Eastern Time to discuss the details of the Company’s 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 will be available on our website on the investor relations page of the Simulations Plus website at www.simulations-plus.com/investorscorporate-profile/corporate-profile/ . A replay of the webcast will be available on the website approximately one hour following the call.
