Simulations Plus ( SLP Quick Quote SLP - Free Report) reported third-quarter fiscal 2023 earnings of 20 cents per share, flat on a year-over-year basis. However, the figure missed the Zacks Consensus Estimate by 4.8%. The top line increased 9% year over year to $16.2 million. Higher revenues in Software and Services business segments resulted in this uptick. The top line beat the Zacks Consensus Estimate by 0.9%. Quarter in Details
Software (65% of total quarterly revenues) increased 10% year over year to $10.6 million. Breaking up the revenues of this segment, GastroPlus, MonolixSuite, ADMET Predictor and Other Software contributed 57%, 18%, 19% and 6%, respectively.
Sales of GastroPlus were down 2%. MonolixSuite and ADMET Predictor offerings sales saw increases of 84% and 9% year over year, respectively.
The renewal rate for commercial customers came in at 96% (based upon fees) and 87% (based on accounts) compared with 92% and 87% in the prior quarter, respectively. Services’ revenues (35% of total quarterly revenues) improved 5% to $5.6 million. Breaking up the services’ revenues, PK/PD, QSP/QST, PB/PK and Other services represented 45%, 23%, 25% and 7%, respectively. Services’ backlog was $16 million at the end of the reported quarter, down 5.9% year over year. Operating Details
The gross margin in the quarter under review was 82%, down 100 basis points (bps) on a year-over-year basis. Software segment’s gross margin came in at 91%, down 100 bps from the prior-year quarter’s levels. Services’ gross margin was 63%, down 300 bps from the year-earlier quarter’s figure.
Total operating expenses, as a percentage of revenues, stood at 57% compared with 50% in the year-ago quarter. Operating income margin was 25% compared with 33% reported in the year-ago period. Adjusted EBITDA margin came in at 40% compared with 43% in the prior-year period. Balance Sheet
As of May 31, 2023, cash and short-term investments were $122.4 million compared with $115.3 million as of Feb 28, 2023.
The company declared a cash dividend of 6 cents per share payable on Aug 7, to stockholders as of Jul 31. 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. The company projects Software and Services to consist 60-65% and 35-40% of revenues, respectively. SLP estimates earnings per share to increase in the band of 5-10% and to be between 63 cents and 67 cents.
Currently, Simulations Plus carries a Zacks Rank #4 (Sell). Stocks to Consider
Some better-ranked stocks in the broader technology space are
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