Simulations Plus 2025 Q4 Earnings Net Income Plummets 180.8% Amid Revenue Decline

Simulations Plus (SLP) reported fiscal Q4 2025 results on December 1, 2025, with revenue falling short of expectations despite reaffirming fiscal 2026 guidance. The company’s shares rose 5.85% after hours, driven by optimism around its AI and cloud integration strategy.

Revenue

Total revenue declined 6.5% to $17.46 million in Q4 2025, compared to $18.66 million in Q4 2024. Software revenue dropped 9% to $9.0 million, reflecting weaker demand for product licenses, while services revenue fell 3% to $8.4 million due to reduced consulting engagements. The 13% annual revenue growth for FY2025 was offset by quarterly softness amid client budget constraints.

Earnings/Net Income

The company swung to a loss of $0.03 per share in Q4 2025, a 180.5% decline from a $0.04 profit in Q4 2024. Net income turned negative at -$681,000, down from $843,000 a year earlier—a 180.8% deterioration. Despite sustained profitability over 19 years in the quarter, the GAAP net loss for FY2025 reached $64.7 million due to a $77.2 million non-cash impairment charge.

Post-Earnings Price Action Review

Buying SLP shares post-earnings on the report date and holding for 30 days proved disastrous, with a CAGR of -30.04% and excess return of -135.63%. The strategy underperformed the 70.26% benchmark return, compounded by a 47.26% maximum drawdown and a Sharpe ratio of -0.64, highlighting high risk and poor risk-adjusted returns.

CEO Commentary

CEO Shawn O’Connor emphasized resilience in meeting FY2025 guidance, citing 13% revenue growth and 8% gains in adjusted EBITDA and EPS. He outlined cautious optimism for FY2026, targeting low single-digit revenue growth and prioritizing cloud deployment, AI workflows, and compliance frameworks. An AI-driven product vision will be detailed at the January 2026 Investor Day.

Guidance

Simulations Plus reaffirmed FY2026 guidance: revenue of $79–$82 million (0–4% growth), software revenue mix of 57–62%, adjusted EBITDA margin of 26–30%, and adjusted diluted EPS of $1.03–$1.10. The company highlighted cloud and AI integration as key growth drivers.

Additional News

Recent developments include a $1 million investment in clinical trial tech firm Nurocor and a partnership with the Institute of Medical Biology of the Polish Academy of Sciences, validating ADMET Predictor® models for AI-driven drug design. Director Lisa LaVange filed to sell 866 shares via a Rule 10b5-1 plan. The company also announced a Virtual Investor Day on January 21, 2026, to showcase AI and cloud innovations.