Simulations Plus’ ( SLP Quick Quote 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 Quick Quote JBL - Free Report) , Cadence Design Systems ( CDNS Quick Quote CDNS - Free Report) and NVIDIA ( NVDA Quick Quote 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. Legal Marijuana: An Investor’s Dream
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