Simulations Plus (SLP - Free Report) reported first-quarter fiscal 2023 earnings of 6 cents per share, down 60% on a year-over-year basis. The figure missed the Zacks Consensus Estimate by 50%.
Revenues of $12 million decreased 4% year over year, affected by lower revenues in Software business segment. The top line missed the Zacks Consensus Estimate by 3.8%.
Following the earnings announcement, shares of Simulations Plus are down 5.4% in premarket trading on Jan 5.
Quarter in Details
Revenues from software (51% of the total quarterly revenues) declined 17% year over year to $6.1 million due to changes in renewal pattern and shift in revenue seasonality. Breaking up the revenues of the segment, GastroPlus contributed 50%, MonolixSuite contributed 26%, ADMET Predictor contributed 18% and other software generated 6%.
Sales of GastroPlus, MonolixSuite and ADMET Predictor offerings declined 24%, 1% and 25% year over year, respectively.
The renewal rate for commercial customers came in at 90% based upon fees compared with 96% in the prior quarter. The renewal rate for commercial customers came in at 82% based on accounts compared with 93% in the prior quarter.
Services’ revenues (49% of total quarterly revenues) improved 17% to $5.9 million. Breaking up the services’ revenues, PK/PD represented 49%, QSP/QST was 18%, PB/PK was 25% and other services was 8%.
Services’ backlog was $16 million at the end of the reported quarter, up 6.7% year over year.
Operating Details
The gross margin in the quarter under review was 78%, unchanged on a year-over-year basis. Software segment’s gross margin came in at 85.4%, down 460 bps from the prior-year quarter’s levels. Services’ gross margin was 69.7%, down 970 bps from the prior-year quarter’s figure.
Total operating expenses, as a percentage of revenues, came in at 70% compared with 47% in the prior year quarter.
The operating income margin was 7% compared with 31% reported in the year-ago period. Adjusted EBITDA margin came in at 25% compared with 42% in the year-ago period.
Balance Sheet
As of Nov 30, 2022, cash and short-term investments were 131.5 million compared with $128.2 million as of Aug 31, 2022.
The company declared a cash dividend of 6 cents per share payable on Feb 6, to stockholders as of Jan 30.
Fiscal 2023 Outlook
For fiscal 2023, Simulations Plus expects revenue growth of 10-15% year over year and in the range of $59.3-$62 million. For the fiscal year, the company expects software to consist 60-65% of revenues and services to consist 35-40%. The company expects earnings per share to increase in the band of 5-10%.
Zacks Rank & Stocks to Consider
Currently, Simulations Plus carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Asure Software (ASUR - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.37 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 14.1% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.31 per share, rising 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.9%. Shares of JBL have declined 5.9% in the past year.
The Zacks Consensus Estimate for Asure Software’s 2022 earnings is pegged at 7 cents per share, rising 75% in the past 60 days. The long-term earnings growth rate is anticipated to be 23%.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 83.3%. Shares of ASUR have soared 36.9% in the past year.
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Simulations Plus (SLP - Free Report) reported first-quarter fiscal 2023 earnings of 6 cents per share, down 60% on a year-over-year basis. The figure missed the Zacks Consensus Estimate by 50%.
Revenues of $12 million decreased 4% year over year, affected by lower revenues in Software business segment. The top line missed the Zacks Consensus Estimate by 3.8%.
Following the earnings announcement, shares of Simulations Plus are down 5.4% in premarket trading on Jan 5.
Quarter in Details
Revenues from software (51% of the total quarterly revenues) declined 17% year over year to $6.1 million due to changes in renewal pattern and shift in revenue seasonality. Breaking up the revenues of the segment, GastroPlus contributed 50%, MonolixSuite contributed 26%, ADMET Predictor contributed 18% and other software generated 6%.
Sales of GastroPlus, MonolixSuite and ADMET Predictor offerings declined 24%, 1% and 25% year over year, respectively.
The renewal rate for commercial customers came in at 90% based upon fees compared with 96% in the prior quarter. The renewal rate for commercial customers came in at 82% based on accounts compared with 93% in the prior quarter.
Services’ revenues (49% of total quarterly revenues) improved 17% to $5.9 million. Breaking up the services’ revenues, PK/PD represented 49%, QSP/QST was 18%, PB/PK was 25% and other services was 8%.
Services’ backlog was $16 million at the end of the reported quarter, up 6.7% year over year.
Operating Details
The gross margin in the quarter under review was 78%, unchanged on a year-over-year basis. Software segment’s gross margin came in at 85.4%, down 460 bps from the prior-year quarter’s levels. Services’ gross margin was 69.7%, down 970 bps from the prior-year quarter’s figure.
Total operating expenses, as a percentage of revenues, came in at 70% compared with 47% in the prior year quarter.
The operating income margin was 7% compared with 31% reported in the year-ago period. Adjusted EBITDA margin came in at 25% compared with 42% in the year-ago period.
Balance Sheet
As of Nov 30, 2022, cash and short-term investments were 131.5 million compared with $128.2 million as of Aug 31, 2022.
The company declared a cash dividend of 6 cents per share payable on Feb 6, to stockholders as of Jan 30.
Fiscal 2023 Outlook
For fiscal 2023, Simulations Plus expects revenue growth of 10-15% year over year and in the range of $59.3-$62 million. For the fiscal year, the company expects software to consist 60-65% of revenues and services to consist 35-40%. The company expects earnings per share to increase in the band of 5-10%.
Zacks Rank & Stocks to Consider
Currently, Simulations Plus carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Asure Software (ASUR - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.37 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 14.1% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.31 per share, rising 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.9%. Shares of JBL have declined 5.9% in the past year.
The Zacks Consensus Estimate for Asure Software’s 2022 earnings is pegged at 7 cents per share, rising 75% in the past 60 days. The long-term earnings growth rate is anticipated to be 23%.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 83.3%. Shares of ASUR have soared 36.9% in the past year.
Research Chief 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.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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