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What were the key takeaways from Simulations Plus’s earnings call?

- **Revenue Resilience**: FY 2025 revenue +13%, driven by unified operating model despite headwinds. Q4 2025 revenue $17.5M (-6% YoY), with services backlog up 28% to $18M.
- **Strategic AI Integration**: GastroPlus 10.2 AI release gains traction; clients prioritize AI-driven efficiency in biosimulation workflows.
- **FY 2026 Outlook**: Guidance for 0%-4% growth reflects cautious optimism, with Q1 2026 revenue expected 3%-5% lower YoY. Adjusted EBITDA margin 26%-30%.
- **Financial Health**: $32.4M cash on hand; no debt. FY 2025 adjusted EBITDA $22M (+8%).

**【CEO Summary Section】**
- **Fiscal 2025 Performance**: Revenue grew 13%, adjusted EBITDA rose 8%, and adjusted EPS increased 8%, driven by a unified operating model and strategic reset. Challenges included pharmaceutical headwinds, but 2026 shows early stabilization with improved biotech funding and large pharma confidence.
- **Strategic Focus**: Accelerating biosimulation adoption with AI, cloud computing, and regulatory-grade models. GastroPlus 10.2 release (Q4 2025) introduced AI capabilities, aligning with client needs for efficient, rigorous workflows. Fiscal 2026 will see portfolio-wide updates to create an integrated ecosystem for end-to-end modeling.

**【CFO Financial Commentary】**
- **Q4 2025 Results**: Total revenue $17.5M (-6% YoY), software $9.6M (-9%), services $7.9M (-3%). Full-year revenue $79.2M (+13%), software $46.3M (+12%), services $32.9M (+15%).
- **Margins**: Total gross margin 58% (vs. 62% prior year), software 79% (down from 84% due to amortization). Adjusted EBITDA $22M (+8%).
- **FY 2026 Guidance**: Revenue $79M-$82M (0%-4% growth), adjusted EBITDA margin 26%-30%, adjusted EPS $1.03-$1.10. Q1 2026 revenue expected 3%-5% lower YoY due to Pro-ficiency comps and seasonality.

**【Q&A Highlights】**
- **Market Trends**: Biotech funding improving, large pharma budgeting with cautious optimism. Proposal activity and conference engagement strengthened, but near-term uncertainty persists.
- **Product Adoption**: GastroPlus 10.2 AI release met early positive feedback; clients digesting new capabilities. Pro-ficiency software revenue declined 63% Q4, but Med Comm services grew 70%.
- **Headcount & Capacity**: Services team well-positioned for FY 2026 guidance; software side more leveraged. Cancellations baked into forecasts, with risk factors discounted.
- **Margins & Acquisitions**: Adjusted EBITDA margin expected stable; cash flow robust. Open to future acquisitions in core markets or clinical ops, pending market conditions.

Simulations Plus, Inc. (SLP) Q4 2025 Earnings Call Transcript

- **Revenue Growth**: 10% total growth ($20.4M), driven by Software (6%) and Services (17%).
- **Challenges**: Services decline 9% YoY due to budget cuts; Software renewals drop to 84%.
- **AI Innovation**: Launching AI tools in GastroPlus, with cross-product integration planned.
- **Financials**: Adjusted EBITDA $7.4M (37% of revenue), FY25 guidance for $76-80M revenue and 23-27% margin.

**【CEO Summary Section】**
- **Revenue Growth**: Total revenue increased 10% to $20.4 million, with Software revenue up 6% and Services revenue up 17%. Pro-ficiency contributed $2.4 million post-acquisition.
- **Challenges**: Services revenue decline (9% YoY) due to client budget cuts and project delays. Software renewals dropped to 84% (from 93%) due to client consolidations.
- **AI Initiatives**: Launching AI-driven features in GastroPlus (e.g., AI copilot, automation tools) and planning cross-product AI integration. FY26 outlook cautious with flat organic growth.

**【CFO Financial Commentary】**
- **Financials**: GAAP net loss of $67.3M ($3.35 EPS) vs. $3.1M ($0.15 EPS) last year. Adjusted EBITDA of $7.4M (37% of revenue) vs. $5.6M (30% of revenue) last year.
- **Impairment Charge**: $77.2M noncash expense to align assets with market value. Operating expenses declined 49% of revenue (vs. 61% last year).
- **Guidance**: FY25 revenue $76-80M (9-14% growth), adjusted EBITDA margin 23-27%, and EPS $0.93-1.06.

**【Q&A Highlights】**
- **Margins**: FY25 EBITDA margin expected mid-20s due to revenue decline and cost savings ($4M from reorg). FY26 outlook cautious with flat growth.
- **Renewal Rates**: Software renewals at 84% (fees) and 71% (accounts), down from prior quarters due to client consolidations.
- **FDA Impact**: Long-term tailwinds from FDA's NAM adoption, but short-term impact unclear. Clients cautious amid funding constraints.
- **AI Rollout**: GastroPlus AI release in late Q3, with plans to expand to ADMET Predictor and Monolix in FY26.

- **Revenue Growth Strong**: 23% YoY total revenue, 8% organic software growth, and $6.6M adjusted EBITDA.
- **Software Resilience**: 90% renewal rates, 10% increase in avg. revenue per customer, and QSP 89% surge from atopic dermatitis model.
- **Services Backlog**: $20.4M (18% QoQ growth), with MC winning a $5M multi-drug project.
- **Margin Focus**: Aiming for 35-40% EBITDA margin, despite near-term gross margin pressure from ALI/MC costs.
- **Macro Mitigation**: No NIH exposure, free academic software, and delayed project starts (H2 push).

**【CEO Opening Remarks】**
- Q2 2025 revenue grew 23% YoY to $22.4M, with 8% organic growth in software (excluding ALI/MC contributions). Adjusted EBITDA was $6.6M (29% of revenue), and adjusted EPS was $0.31.
- Software renewal rates remained strong at 90% (fee-based) and 84% (account-based), with average software revenue per customer increasing 10% YoY.
- Services bookings were robust, with a $20.4M backlog (18% QoQ growth), driven by CPP and MC business units.

**【CFO Financial Breakdown】**
- Software revenue ($13.4M) accounted for 60% of total, growing 16% YoY. Services revenue ($9.0M) grew 34% YoY, but was flat organically due to delayed project starts.
- Gross margin declined to 59% (vs. 72% last year) due to higher software amortization and service costs related to ALI/MC.
- Operating expenses increased to 46% of revenue (vs. 48% last year), driven by R&D and sales/marketing investments.

**【Business Unit Performance】**
- **QSP Software**: 89% growth from a model license for atopic dermatitis, highlighting high-ticket disease model demand.
- **CHEM Software**: 8% growth from ADMET Predictor, with 10 new customers and 7 upsells.
- **MC Services**: $2.3M in Q2, with a $5M multi-drug project signed for 2025H2.
- **GastroPlus**: 1% growth but 7 new customers, with deferred renewals closing in Q3.

**【Outlook & Strategy】**
- Full-year 2025 guidance: $90-93M revenue (28-33% YoY growth), 55-60% software mix, and $1.07-1.20 adjusted EPS.
- Focus on ALI/MC ramp-up, cross-selling opportunities, and returning to 35-40% EBITDA margin target.
- Risk mitigation: minimal exposure to NIH funding, free software for academia, and disciplined cost management.

**【Q&A Highlights】**
- **Service Delay Impact**: Clients pacing project starts to H2, causing revenue push but maintaining strong backlog.
- **Macro Environment**: Biopharma cautious on services, but software infrastructure spending stable.
- **Tariff Concerns**: Potential pharma tariffs could impact global supply chains, but current business unaffected.
- **Cross-Selling Success**: MC/ALI pipeline expanding, with examples like a $5M multi-drug project signed in Q2.


Simulations Plus (SLP)-3 Apr 25-2025 Q2 Earnings call transcript

- **Revenue Surge**: 31% YoY growth ($18.9M) with Software up 41% (18% organic), Services up 19% (9% decline organically). Backlog jumps 22% to $17.3M.
- **Software Stars**: MonolixSuite (+43%), QSP licenses, and ADMET Predictor (+15%) lead gains. Asian market Software growth 30%.
- **Guidance Confidence**: 2025 targets: $90-93M revenue (28-33% growth), 55-60% Software mix, $1.07-1.20 adjusted EPS.
- **Challenges**: Services delays due to client data issues, but strong bookings suggest recovery. Gross margin pressure from amortization.
- **Integration Progress**: ALI and MC on track for $15-18M contribution, with cross-selling opportunities emerging.

**【CEO Summary Section】**
- Total revenue increased 31% year-over-year to $18.9 million, with 18% organic growth in Software and 5% in Services. Adjusted EBITDA was $4.5 million (24% of revenue), and diluted EPS was $0.01.
- Software revenue grew 41% (18% organic), driven by MonolixSuite (+43%), QSP licenses for psoriatic arthritis and Crohn's disease, and ADMET Predictor (+15%). Services revenue rose 19% but declined 9% organically due to client-driven delays.
- Backlog increased 22% to $17.3 million, with strong bookings in CPP and MC. Fiscal 2025 guidance: $90-93 million revenue, 28-33% growth, 55-60% Software mix, and $1.07-1.20 adjusted EPS.

**【CFO Financial Commentary】**
- GAAP net income was $0.2 million (1% of revenue), down from $1.9 million last year. Adjusted EBITDA margin was 24%, in line with prior quarter. Gross margin decreased to 54% (75% Software, 26% Services) due to amortization and cost constraints.
- Operating expenses were 53% of revenue, with R&D at 10%, sales/marketing at 15%, and G&A at 28%. Cash balance remained strong at $18.2 million.

**【Q&A Key Highlights】**
- **Software Growth**: MonolixSuite expansion, QSP licenses, and Asian market (30% growth) drove Software rebound. Pricing remains mid-single digits.
- **Services Delays**: Client data delays pushed projects into Q2, but strong bookings suggest sequential improvement. Seasonality may cause back-half ramp.
- **Market Environment**: Mixed client activity, with pharma focusing on ROI. ALI and MC integration tracking well, targeting $15-18 million contribution.
- **Margins**: Historical 35-40% EBITDA target remains, with focus on cross-selling and cost control.



Simulations Plus (SLP)-7 Jan 25-2025 Q1 Earnings call transcript

Simulations Plus (SLP)-23 Oct 24-2024 Q4 Earnings call transcript

Simulations Plus (SLP)-2 Jul 24-2024 Q3 Earnings call transcript

Simulations Plus (SLP)-3 Apr 24-2024 Q2 Earnings call transcript

Simulations Plus (SLP)-3 Jan 24-2024 Q1 Earnings call transcript

- **Strong Fiscal 2023 Results**: 11% revenue growth to $59.6M, with Q4 up 33% to $15.6M. Software segment drove 12% growth, services 8%.
- **2024 Guidance**: 10-15% revenue growth ($66-69M) and $0.66-0.68 EPS, reflecting cautious optimism amid market challenges.
- **Gross Margin Resilience**: FY23 gross margin 80%, with software at 90% and services at 65%. Q4 gross margin 78%.
- **Immunetrics Integration**: 2024 earn-out targets $8M, with cross-selling opportunities in oncology and immunology.
- **Key Risks**: Biotech funding constraints, pharma budget conservatism, and M&A-related renewals impacting Q4 revenue.

**【CEO Opening Remarks】**
- Fiscal 2023 revenue grew 11% to $59.6 million, driven by 12% software growth and 8% services growth. Fourth quarter revenue rose 33% to $15.6 million, with software up 59% and services up 8%.
- Challenges remain from biotech funding scarcity and pharma budget conservatism, but contract harmonization improved visibility and reduced seasonality.
- Cautiously optimistic for 2024 with 10-15% revenue growth guidance ($66-69M) and $0.66-0.68 EPS (35-39% increase).

**【CFO Financial Highlights】**
- FY23 gross margin 80%, with software at 90% and services at 65%. Q4 gross margin 78% (software 89%, services 62%).
- FY23 adjusted EBITDA $20.6M (35% margin), up from $21.5M (40% margin) in 2022. Q4 adjusted EBITDA $4.9M (31% margin).
- FY23 net income $10M ($0.49 EPS), meeting high end of $0.63-0.67 EPS guidance. FY24 tax rate expected 20-22% vs 15% in 2023.
- Cash balance $115.5M, with $21.7M free cash flow and $20M ASR completed.

**【Q&A Highlights】**
- **Revenue Cadence**: Q1 2024 expected to be lowest quarter due to seasonality, with more even distribution in Q2-Q4. Services backlog up 25% to $20M.
- **Immunetrics Contribution**: 2024 earn-out targets $8M, with cross-selling opportunities in oncology and immunology. FY23 contribution minimal due to Q4 acquisition timing.
- **Price Increases**: 2023 saw aggressive price hikes, 2024 expected to be more moderate due to reduced inflationary pressures.
- **M&A Impact**: Q4 saw $0.5-1M revenue impact from biotech M&A-related nonrenewals, but potential for recovery as deals settle.
- **PBPK Growth**: GastroPlus bookings up 76% Q4, ADMET Predictor up 46%, MonolixSuite up 18%. Services backlog 70-80% convertible within 12 months.


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