Simulations Plus’ (SLP - Free Report) fourth-quarter fiscal 2020 earnings of 11 cents per share remained flat on a year-over-year basis. The Zacks Consensus Estimate was pegged at 10 cents.
Moreover, revenues of $9.54 million surpassed the consensus mark by 0.85% and improved 18.9% year over year. Organic revenue growth was 7%.
Software revenues accounted for 52% of the company’s total revenues and grew 24% year over year to $4.7 million. Organic software revenues remained flat at $3.8 million on a year-over-year basis. Meanwhile, Consulting revenues increased 14% year over year to $4.8 million.
Moreover, consulting backlog at the end of fiscal 2020 was more than $10 million.
However, the company witnessed difficulty in winning new business during the quarter due to disruption caused by the pandemic. Notably, software renewal rate for the quarter of 88% was lower owing to seasonality and coronavirus crisis induced business uncertainty.
Nevertheless, software renewal rate for fiscal 2020 came in at 93%.
Year-to-Date Price Performance
Notably, on a year-to-date basis, shares of Simulations Plus have surged 133.8%, compared with the industry’s rise of 31.4%.
Operating Details
Gross margin in the quarter under review was 72%, up approximately 100 basis points (bps) year over year. Software gross margin was 82% in this seasonally weak revenue growth quarter. Moreover, consulting gross margin came in at 62%.
Total operating expenses as a percentage of revenues expanded 170 bps to year over year 48.9%.
Non-GAAP operating income margin contracted 120 bps to 23.1% on a year-over-year basis.
Balance Sheet
As of Aug 31, 2020, cash and cash equivalents were $49.2 million compared with $11.4 million as of Aug 31, 2019.
Fiscal 2021 Outlook
Simulations Plus aims to sustain organic growth in the range of 15% to 20% in fiscal 2021. Markedly, the company delivered organic growth of 18% in fiscal year 2020. Management anticipates incremental Lixoft revenues to contribute 3-5% to the top-line growth over the organic growth.
Zacks Rank & Stocks to Consider
Currently, Simulations Plus has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector worth considering are Jabil (JBL - Free Report) , Cadence Design Systems (CDNS - Free Report) and NVIDIA (NVDA - Free Report) . Jabil sports a Zacks Rank #1 (Strong Buy), while Cadence and NVIDIA carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Jabil, Cadence and NVIDIA is currently pegged at 12%, 15.4%, and 20.1%, respectively.
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Simulations Plus’ (SLP - Free Report) fourth-quarter fiscal 2020 earnings of 11 cents per share remained flat on a year-over-year basis. The Zacks Consensus Estimate was pegged at 10 cents.
Moreover, revenues of $9.54 million surpassed the consensus mark by 0.85% and improved 18.9% year over year. Organic revenue growth was 7%.
Software revenues accounted for 52% of the company’s total revenues and grew 24% year over year to $4.7 million. Organic software revenues remained flat at $3.8 million on a year-over-year basis. Meanwhile, Consulting revenues increased 14% year over year to $4.8 million.
Moreover, consulting backlog at the end of fiscal 2020 was more than $10 million.
However, the company witnessed difficulty in winning new business during the quarter due to disruption caused by the pandemic. Notably, software renewal rate for the quarter of 88% was lower owing to seasonality and coronavirus crisis induced business uncertainty.
Nevertheless, software renewal rate for fiscal 2020 came in at 93%.
Year-to-Date Price Performance
Notably, on a year-to-date basis, shares of Simulations Plus have surged 133.8%, compared with the industry’s rise of 31.4%.
Operating Details
Gross margin in the quarter under review was 72%, up approximately 100 basis points (bps) year over year. Software gross margin was 82% in this seasonally weak revenue growth quarter. Moreover, consulting gross margin came in at 62%.
Total operating expenses as a percentage of revenues expanded 170 bps to year over year 48.9%.
Non-GAAP operating income margin contracted 120 bps to 23.1% on a year-over-year basis.
Balance Sheet
As of Aug 31, 2020, cash and cash equivalents were $49.2 million compared with $11.4 million as of Aug 31, 2019.
Fiscal 2021 Outlook
Simulations Plus aims to sustain organic growth in the range of 15% to 20% in fiscal 2021. Markedly, the company delivered organic growth of 18% in fiscal year 2020. Management anticipates incremental Lixoft revenues to contribute 3-5% to the top-line growth over the organic growth.
Zacks Rank & Stocks to Consider
Currently, Simulations Plus has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector worth considering are Jabil (JBL - Free Report) , Cadence Design Systems (CDNS - Free Report) and NVIDIA (NVDA - Free Report) . Jabil sports a Zacks Rank #1 (Strong Buy), while Cadence and NVIDIA carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Jabil, Cadence and NVIDIA is currently pegged at 12%, 15.4%, and 20.1%, respectively.
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Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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