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Simulations Plus (SLP) Q3 Earnings & Revenues Beat Estimates

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Simulations Plus, Inc (SLP - Free Report) reported third-quarter fiscal 2024 adjusted earnings (excluding the impact of acquisition costs) of 19 cents per share, which declined 9.5% on a year-over-year basis. The figure, however, topped the Zacks Consensus Estimate by 18.8%.

The top line increased 14% year over year to $18.5 million, primarily due to higher software revenues in the Clinical Pharmacology & Pharmacometrics (CPP) and Cheminformatics business units. Continued momentum seen in ADMET Predictor and MonolixSuite platforms was another driver. The top line beat the Zacks Consensus Estimate by 3.4%.

SLP has also opted to discontinue the quarterly cash dividend and redirect these funds towards growth initiatives to boost long-term shareholder value. The last dividend of 6 cents per share will be disbursed on Aug 5, 2024, to shareholders on record as of Jul 29, 2024.

In the past year, SLP's shares have lost 3.4% compared with the sub-industry’s growth of 31.2%.

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Quarter in Details

Fiscal third-quarter revenues from Software (64% of total quarterly revenues) increased 12% year over year to $11.9 million.

Sales of MonolixSuite were up 13%. GastroPlus and ADMET Predictor offerings sales saw an increase of 7% and 15% year over year, respectively.

The renewal rate for commercial customers came in at 93% (based upon fees) and 86% (based on accounts) compared with 96% and 87% in the prior quarter, respectively.

Services’ revenues (36%) improved 18% to $6.6 million. The segment’s top line gained from higher revenues from Quantitative Systems Pharmacology (QSP) and Clinical Pharmacology & Pharmacometrics (CPP) business units.

Sales of PBPK unit were down 10% as the temporary delays in acquiring client source data deferred the initiation of contracted projects. QSP and CPP sales saw an increase of 49% and 27% year over year, respectively.  QSP unit is gaining from increasing immunology and cancer model projects.

Services’ backlog was $19.6 million at the end of the reported quarter, up 24.8% year over year.

Operating Details

The gross margin in the quarter under review was 71% compared with 82% in the prior-year quarter. The Software segment’s gross margin came in at 88% compared with 91% in the prior-year quarter. Services’ gross margin was 41%, down from 63%.

Total operating expenses, as a percentage of revenues, were 61% compared with 57% a year ago.

The operating income margin was 10% compared with 25% a year ago. Adjusted EBITDA margin came in at 31%, a decrease from 40% prior-year quarter.

Balance Sheet

As of May 31, 2024, cash and short-term investments were $119 million compared with $108.5 million as of Feb 29, 2024.


For fiscal 2024, Simulations Plus expects revenues to be between $69 million and $72 million. This suggests an increase of 15-20% from fiscal 2023 revenues. Earlier, the company had projected revenues to be in the range of $66-$69 million. The company expects $3 million in revenue contribution from the Pro-ficiency Holdings acquisition and the creation of the new Clinical Simulations and Medical Communications business segment.

The company projects Software and Services to comprise 55-60% and 40-45% of revenues, respectively. SLP estimates adjusted earnings per share to be between 54 cents and 56 cents.

SLP estimates GAAP EPS to be between 46-48 cents compared with the earlier guided range of 66-68 cents per share. The company’s GAAP numbers include the impact of acquisition-related charges.

Currently, Simulations Plus carries a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are NVIDIA Corporation (NVDA - Free Report) , Arista Networks, Inc. (ANET - Free Report) and Woodward, Inc. (WWD - Free Report) . While NVDA and WWD sport a Zacks Rank #1 (Strong Buy) each, ANET carries a Zacks Rank of 2 (Buy) at present.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NVDA’s fiscal 2024 EPS is pegged at $2.68. The long-term earnings growth rate is 37.6%. NVDA’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 18.4%. Shares of NVDA have soared 189.2% in the past year.

The Zacks Consensus Estimate for WWD’s fiscal 2024 EPS has increased 6.5% in the past 60 days to $5.88.  Woodward’s earnings beat the Zacks Consensus Estimate in all of the last four quarters. The average earnings surprise is 26.1%. Shares of WWD have soared 45.5% in the past year.

The Zacks Consensus Estimate for ANET’s 2024 EPS is pegged at $7.92, indicating growth of 14.1% from the year-ago levels. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.4%. The long-term earnings growth rate is 16.1%. Shares of ANET have rallied 123.2% in the past year.

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