Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation software and services for pharmaceutical safety and efficacy, today reported financial results for its third quarter of fiscal 2022, ended May 31, 2022.
“While the growth trend in our software business continued during the third quarter, our services business showed a strong recovery with 19% growth,” said Shawn O’Connor, chief executive officer of Simulations Plus. “The services backlog we built over the past few quarters set up this recovery, driven by PBPK and PKPD projects. PBPK was especially strong as we saw deeper penetration of modeling resulting from expanded use cases and perceived value. Looking at our software business, our efforts to expand our addressable market continued to pay off as we saw increased upsells, continued expansion in Asia, and deeper penetration of modeling and simulation with smaller biotech firms.”
Third Quarter Fiscal 2022 Financial Highlights (compared with the corresponding period last fiscal year):
- Total revenue increased 17% to $15.0 million;
- Software revenue increased 16% to $9.7 million, representing 64% of total revenue;
- Services revenue increased 19% to $5.3 million, representing 36% of total revenue;
- Gross profit increased 20% to $12.4 million; gross margin was 83%;
- Net income and diluted EPS of $4.1 million and $0.20, compared to $3.8 million and $0.18, respectively;
- Adjusted EBITDA of $6.3 million, representing 42% of total revenue.
YTD Financial Highlights (compared with the corresponding period last fiscal year):
- Total revenue increased 15% to $42.2 million;
- Software revenue increased 20% to $26.8 million, representing 63% of total revenue;
- Services revenue increased 8% to $15.4 million, representing 37% of total revenue;
- Gross profit increased 18% to $34.0 million; gross margin was 81%;
- Net income and diluted EPS of $11.5 million and $0.56, compared to $9.5 million and $0.46, respectively;
- Adjusted EBITDA of $18.7 million, representing 44% of total revenue.
Fiscal 2022 Outlook
“Now that we’ve completed our third quarter and have one quarter remaining in the fiscal year, we are reiterating our full-year revenue guidance at $52-53 million, and tightening the growth rate to 12-15%. Our fourth quarter has historically been impacted by seasonality related to our industry in the summer months and we expect this year to be no different. For services, there tends to be slower engagement on projects during the summer months. For software, growth tends to be skewed towards the first half of our fiscal year, which coincides with new calendar year budgets for many of our customers. Based on the successful performance of our software business through the third quarter, we expect software revenue to exceed 60% of total revenue for the fiscal year,” concluded O’Connor.
The company’s Board of Directors declared a cash dividend of $0.06 per share of the company’s common stock, payable on August 1, 2022, to shareholders of record as of July 25, 2022. The declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements, and other factors.
Environmental, Social, and Governance (ESG)
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 ESG Report.
Webcast and Conference Call Details
Shawn O’Connor, chief executive officer, and Will Frederick, chief financial officer, will host a conference call and webcast today at 5 p.m. Eastern Time to discuss 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 1-201-389-0879. The webcast will be available on our website under Conference Calls & Presentations. A replay of the webcast will be available on the website approximately one hour following the call.
Adjusted EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization, stock-based compensation, and any acquisition or financial transaction-related expenses. Adjusted EBITDA represents a measure that we believe is 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 Adjusted EBITDA is useful in evaluating our core operating results. However, Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income or operating income as an indicator of our operating performance or to net cash provided by operating activities as a measure of our liquidity. The company’s Adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items.