Simulations Plus: Strategic Positioning in the In-Silico Modeling Boom and AI-Driven Growth Catalysts

The biotech and pharmaceutical industries are undergoing a seismic shift, driven by advancements in in-silico modeling and artificial intelligence (AI). At the forefront of this transformation is Simulations Plus, a leader in biosimulation software and services. With 2025 earnings reports underscoring a resilient revenue mix and a strategic pivot toward AI-powered tools, the company is poised to capitalize on a rapidly expanding market. For investors, the convergence of regulatory tailwinds, market growth, and Simulations Plus' product innovation presents a compelling case to act ahead of its January investor day.

Revenue Mix: Software Dominance and Services as a Steady Pillar

Simulations Plus reported total revenue of $79.1 million for fiscal 2025, with software revenue accounting for 58% of the total according to preliminary results. This aligns with the company's long-term strategy to prioritize software, which has grown at a 12% year-over-year rate to $45.8 million in 2025 as reported in Q4 results. Services revenue, while representing 42% of total revenue, remains a critical component of the business, providing recurring income and fostering client relationships. The company's 2026 guidance projects software revenue to maintain a dominant share (57–62%), signaling confidence in its product roadmap according to preliminary guidance.

The third quarter of 2025 highlighted this momentum: software revenue surged 6% to $12.6 million, or 62% of total revenue, driven by demand for tools like ADMET Predictor® and GastroPlus® as detailed in Q3 results. While services revenue growth was modest, its role in enabling software adoption-through training, consulting, and cloud integration-cannot be overlooked. This hybrid model positions Simulations Plus to benefit from both upfront software sales and long-term service contracts.

AI-Driven Innovation: A Strategic Edge in Drug Development

Though Simulations Plus has not yet quantified AI-related revenue, its 2025 initiatives underscore a clear commitment to AI as a growth driver. The company announced the launch of GastroPlus® X.2 (GPX.2), an AI-powered tool on its S+ Cloud platform, designed to enhance pharmacokinetic modeling and streamline drug development workflows according to company announcements. CEO Shawn O'Connor emphasized that AI integration across core products-such as Monolix Suite™ and ADMET Predictor®-will improve predictive accuracy and reduce time-to-market for biopharma clients as stated in earnings call.

These advancements align with broader industry trends. The in-silico drug discovery market, valued at $4.17 billion in 2025, is projected to grow at a 11.09% CAGR to $10.73 billion by 2034 according to market research. Regulatory bodies like the FDA are also advancing frameworks to incorporate in-silico evidence into drug approvals, accelerating adoption as reported in clinical trial analysis. For Simulations Plus, this creates a dual opportunity: monetizing AI-driven tools directly while leveraging regulatory tailwinds to expand market share.

Regulatory and Market Tailwinds: A Perfect Storm for Growth

The in-silico modeling sector is experiencing unprecedented momentum. The in-silico clinical trials market grew to $3.81 billion in 2025, with forecasts predicting a 9.51% CAGR to $7.25 billion by 2032 according to market forecast. This growth is fueled by AI's ability to process real-world data, optimize pharmacodynamic models, and identify novel drug-disease associations as detailed in market analysis. Simulations Plus' focus on cloud-based AI tools-such as GPX.2-positions it to capture a significant portion of this expansion.

Regulatory progress further amplifies this potential. The FDA's evolving stance on in-silico evidence, coupled with industry-wide adoption of computational approaches, reduces barriers for clients seeking cost-effective, rapid drug development as observed in regulatory analysis. For Simulations Plus, this means its AI-enhanced tools are not just competitive but increasingly essential for biopharma firms aiming to meet regulatory expectations.

Why Investors Should Act Now

With 2026 revenue guidance set at $79–82 million and adjusted EPS of $1.03–$1.10, Simulations Plus is demonstrating disciplined growth as reported in financial results. However, the company's AI monetization potential remains underappreciated. The upcoming January investor day will likely provide clarity on revenue contributions from AI-driven products, cloud adoption metrics, and long-term margin expansion.

Investors should also consider the company's strategic partnerships and R&D investments. Collaborations with biopharma firms to develop modular simulation workflows mirror industry trends, ensuring Simulations Plus remains a key player in a fragmented market according to market analysis. Meanwhile, its S+ Cloud platform-now hosting AI-powered tools-offers a scalable infrastructure to monetize recurring SaaS revenue.

Conclusion: A Catalyst-Driven Investment

Simulations Plus is uniquely positioned to benefit from the in-silico modeling and AI-driven drug development boom. Its balanced revenue mix, regulatory tailwinds, and product innovation create a durable competitive advantage. As the FDA and global regulators embrace computational approaches, the company's AI tools will become indispensable for clients seeking efficiency and compliance.

With the January investor day approaching, now is the time to act. The combination of near-term guidance, long-term market growth, and AI monetization potential makes Simulations Plus a high-conviction opportunity for investors seeking exposure to the next frontier of biotech innovation.