Simulations Plus 2026 Q1 Earnings EPS Surges 200% Despite Revenue Decline

Simulations Plus (SLP) reported Q1 2026 earnings on Jan 9, 2026, with revenue declining 2.7% to $18.42 million but EPS rising 200% to $0.03. The company reaffirmed its FY 2026 guidance, maintaining revenue targets of $79–$82 million and adjusted EPS of $1.03–$1.10.

Revenue

Total revenue fell to $18.42 million in Q1 2026, reflecting a 2.7% year-over-year decline. Software revenue, a core segment, dropped 17% to $8.9 million, while Services revenue surged 16% to $9.5 million, driven by strong demand in the biotech sector and regulatory tailwinds. The shift in revenue mix underscores the company’s strategic pivot toward high-margin services and AI-driven offerings.

Earnings/Net Income

Simulations Plus’ profitability strengthened significantly, with net income rising 228.2% to $676,000 in Q1 2026. This follows a 200% increase in EPS to $0.03, driven by cost optimization and higher service margins. The company has remained consistently profitable for 20 consecutive years, demonstrating resilience amid market challenges.

Post-Earnings Price Action Review

The stock price surged 16.18% on the day of the earnings report, with an 8.23% weekly gain. However, a post-earnings strategy of buying SLP when revenues miss and holding for 30 days underperformed the benchmark by 147.24%, returning -66.63%. The strategy’s Sharpe ratio of -0.43 highlights its high risk and lack of downside protection, despite a 0% maximum drawdown.

CEO Commentary

CEO Shawn O’Connor emphasized progress in AI integration, regulatory-grade modeling, and cloud-scale performance, citing strong demand for in silico methodologies. He noted a “robust” Services segment and optimism about 2026 growth, particularly in GastroPlus and QSP platforms.

Guidance

CFO William Frederick reiterated FY 2026 guidance: total revenue of $79–$82 million (0%–4% YoY growth), software mix of 57%–62%, and adjusted EBITDA margin of 26%–30%. Q2 revenue is projected at $21–$22 million.

Additional News

1. Investor Day Announcement: Simulations Plus scheduled a virtual investor day on Jan 21, 2026, to detail AI integration and product roadmaps, signaling long-term strategic clarity.

2. AI Product Launch: The company rolled out AI-driven features in GastroPlus, enhancing modeling workflows and pricing power, with a 2026 roadmap emphasizing regulatory-grade tools.

3. Dividend Stability: SLP maintained its quarterly dividend of $0.06 per share since 2020, reflecting financial discipline despite recent earnings volatility.