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SLP's Q3 EPS rose 67% to $0.45 on 10% revenue growth, beating estimates on Pro-ficiency strength.
Organic sales fell 4% as biosimulation softness and cautious client spending pressured growth.
SLP slashed its 2025 revenue forecast by 15% due to delays, cancellations and weaker services.
Simulations Plus, Inc. ((SLP - Free Report) ) reported third-quarter fiscal 2025 adjusted earnings of 45 cents per share, which expanded 66.7% year over year. The figure also surpassed the Zacks Consensus Estimate of 26 cents per share.
Quarterly revenues jumped 10% year over year to $20.4 million, driven by continued momentum across its software and services business segments, along with a $2.4 million boost from the Pro-ficiency acquisition. In June 2024, SLP acquired Pro-ficiency to expand into clinical operations, leveraging its science, technology and predictive analytics to help clients reduce clinical trial failures. This deal doubled its total addressable market (TAM) and set up for strong growth, as better use of predictive tech is seen as key to improving drug development.
However, organic revenue fell 4%, mainly due to reduced QSP/QST software sales and a decline in its biosimulation services revenue. The Zacks Consensus Estimate for revenue was pegged at $19.5 million.
One of the most important developments during the quarter was the company’s strategic reorganization. Simulations Plus transitioned from a business unit structure to a functionally-driven operating model, completing a multi-year transformation aimed at streamlining operations, unlocking cross-team synergies and focusing resources on high-growth areas. This restructuring also involved adjusting staffing levels and revamping service capacity to better match current client needs, an important step toward scalability and operational efficiency.
Simulations Plus, Inc. Price, Consensus and EPS Surprise
Furthermore, SLP announced a $1 million investment in Nurocor, a cloud-based software company transforming the clinical development process for pharmaceutical companies. The investment is being made under the Simulations Plus Corporate Development Initiative, launched in 2024. This initiative targets early-stage technology companies with strong growth potential and disruptive capabilities within pharma and biotech.
The clinical trial technology and services sector was estimated at $25.7 billion in 2024, with a projected CAGR of 15.5% from 2025 to 2030. This growth is driven by the rising adoption of digital health technologies, increasing pressure to streamline trial processes and the need for faster and more efficient patient recruitment. With Nurocor's digital platform and SLP’s modeling and simulation capabilities, both companies are well-positioned to capture a meaningful share of this growing market.
Despite macroeconomic challenges affecting client behavior, the company remains committed to innovation. A major focus moving forward will be a suite of new AI-driven capabilities being integrated across its product lines. By incorporating AI into its core offerings, the company aims to differentiate itself in a competitive market and strengthen its leadership in model-informed drug development—a methodology increasingly adopted by regulators and pharmaceutical companies alike.
Following the announcement, SLP’s shares went up 3% in trading and closed the session at $17.47 on July 14, 2025. Shares of the company have lost 41.5% in the past six months against the Zacks Computer - Software industry's growth of 16.3%.
Image Source: Zacks Investment Research
SLP’s Quarter in Details
Fiscal third-quarter revenues from Software (62% of total quarterly revenues) rose 6% year over year to $12.6 million, led by continued adoption of its ADMET Predictor, with GastroPlus and MonolixSuite also contributing positively. However, the segment saw headwinds from declining QSP/QST biosimulation software usage. GastroPlus, MonolixSuite, ADMET Predictor, Pro-ficiency and QSP/QST products contributed 56%, 17%, 20%, 3% and 4%, respectively, to total software revenues. SLP added 18 new customers and had eight upsells in the fiscal quarter for MonolixSuite.
The renewal rate for commercial customers was 71% (based on accounts) and 84% (based on fees) compared with 86% and 93% in the prior-year quarter, respectively.
Services’ revenues (38%) improved 17% to $7.7 million, driven largely by Medical Communications services, despite other areas within the segment experiencing softness. These weaknesses were attributed to cautious spending, delayed projects and cancellations from BioPharma clients, reflecting broader macroeconomic uncertainty. Sales of Physiologically Based Pharmacokinetics and Quantitative Systems Pharmacology saw declines of 10% and 22% year over year, respectively.
SLP maintains a solid pipeline of service projects, though the pace of contractual commitments slowed in the third quarter. Additionally, some backlog work has been deferred to future periods. The company closed the quarter with a backlog of $20.7 million, up from $20.4 million in the previous quarter and $15.7 million a year ago.
SLP’s Operating Details
The gross margin in the quarter under review was 64% compared with 71.5% in the prior-year quarter. The Software segment’s gross margin was 80% compared with 88% a year ago. Services’ gross margin was 38%, down from 41%. The overall fall in gross margin was due to a $2 million rise in cost of revenues, with $1.1 million tied to software costs and $0.9 million to service costs.
Total operating expenses (49% of revenues) jumped 667% to $87.3 million. The rise was due to a one-time non-cash impairment charge of $77.2 million, a strategic decision to align the book value of assets with current market valuations.
Loss from operations was $74.2 million against income of $1.9 million a year ago. Adjusted EBITDA reached $7.4 million, equating to 37% of total revenue, up from 30% in the prior-year quarter.
SLP’s Liquidity
As of May 31, 2025, cash and short-term investments were $28.5 million compared with $21.5 million as of Feb. 28, 2024.
Cash flow from operations in the fiscal third quarter amounted to $8.14 million compared with $5.7 million a year ago.
SLP Cuts Fiscal 2025 Guidance
The Pro-ficiency training platform and Medical Communication services have been significantly affected by market challenges that delayed clinical trial initiations and reduced spending on commercialization, similar to the issues experienced in SLP’s biosimulation segment. As a result, the revenue outlook for these sectors has been lowered for fiscal 2025 and fiscal 2026.
SLP also faced a major client cancellation this quarter, linked to setbacks in the client’s drug programs, which reduced near-term revenue by approximately $2 million. Along with other challenges, this greatly affected quarterly results and will influence the fiscal fourth quarter and fiscal 2026. The weaker-than-expected services revenue also led to a downward revision of the full-year 2025 guidance.
For fiscal 2025, it now expects revenues to be between $76 million and $80 million, up 9-14% year over year. The prior view was $90-$93 million with an increase of 28-33%. The Pro-ficiency acquisition is now expected to contribute an additional $9-$12 million to revenues compared with $15-$18 million projected earlier. The company continues to expect the Software segment mix to be 55-60% of total revenues.
SLP now estimates adjusted earnings per share to be in the band of 93 cents to $1.06 and adjusted EBITDA margin between 23% and 27%. Earlier, it projected earnings per share to be between $1.07 and $1.20 and adjusted EBITDA margin between 31% and 33%.
SLP’s Zacks Rank
Currently, Simulations Plus carries a Zacks Rank #5 (Strong Sell).
BlackBerry Limited ((BB - Free Report) ) reported first quarter fiscal 2026 non-GAAP earnings per share (EPS) of 2 cents. The figure beat the company’s estimate of a loss of 1 cent to breakeven. In the year-ago quarter, it reported a non-GAAP loss of 2 cents. The Zacks Consensus Estimate was pegged at breakeven.
BB’s shares gained 57.4% in the past year.
Fastenal Company’s ((FAST - Free Report) ) second-quarter 2025 adjusted earnings and revenues came ahead of the Zacks Consensus Estimate and increased year over year. The company reported EPS of 29 cents, which beat the Zacks Consensus Estimate of 28 cents and grew 12.7% from the year-ago level of 25 cents per share.
FAST stock has gained 25.4% year to date.
Levi Strauss & Co. ((LEVI - Free Report) ) reported second-quarter fiscal 2025 results, wherein EPS and revenues beat the Zacks Consensus Estimate. Both metrics improved year over year. The company enters the second half of 2025 with the strength to transform into a denim lifestyle brand and top-class DTC retailer.
Shares of LEVI have risen 51.5% in the past three months.
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SLP's Q3 Earnings Top, Sales Up Y/Y, Stock Gains Despite Lowered View
Key Takeaways
Simulations Plus, Inc. ((SLP - Free Report) ) reported third-quarter fiscal 2025 adjusted earnings of 45 cents per share, which expanded 66.7% year over year. The figure also surpassed the Zacks Consensus Estimate of 26 cents per share.
Quarterly revenues jumped 10% year over year to $20.4 million, driven by continued momentum across its software and services business segments, along with a $2.4 million boost from the Pro-ficiency acquisition. In June 2024, SLP acquired Pro-ficiency to expand into clinical operations, leveraging its science, technology and predictive analytics to help clients reduce clinical trial failures. This deal doubled its total addressable market (TAM) and set up for strong growth, as better use of predictive tech is seen as key to improving drug development.
However, organic revenue fell 4%, mainly due to reduced QSP/QST software sales and a decline in its biosimulation services revenue. The Zacks Consensus Estimate for revenue was pegged at $19.5 million.
One of the most important developments during the quarter was the company’s strategic reorganization. Simulations Plus transitioned from a business unit structure to a functionally-driven operating model, completing a multi-year transformation aimed at streamlining operations, unlocking cross-team synergies and focusing resources on high-growth areas. This restructuring also involved adjusting staffing levels and revamping service capacity to better match current client needs, an important step toward scalability and operational efficiency.
Simulations Plus, Inc. Price, Consensus and EPS Surprise
Simulations Plus, Inc. price-consensus-eps-surprise-chart | Simulations Plus, Inc. Quote
Furthermore, SLP announced a $1 million investment in Nurocor, a cloud-based software company transforming the clinical development process for pharmaceutical companies. The investment is being made under the Simulations Plus Corporate Development Initiative, launched in 2024. This initiative targets early-stage technology companies with strong growth potential and disruptive capabilities within pharma and biotech.
The clinical trial technology and services sector was estimated at $25.7 billion in 2024, with a projected CAGR of 15.5% from 2025 to 2030. This growth is driven by the rising adoption of digital health technologies, increasing pressure to streamline trial processes and the need for faster and more efficient patient recruitment. With Nurocor's digital platform and SLP’s modeling and simulation capabilities, both companies are well-positioned to capture a meaningful share of this growing market.
Despite macroeconomic challenges affecting client behavior, the company remains committed to innovation. A major focus moving forward will be a suite of new AI-driven capabilities being integrated across its product lines. By incorporating AI into its core offerings, the company aims to differentiate itself in a competitive market and strengthen its leadership in model-informed drug development—a methodology increasingly adopted by regulators and pharmaceutical companies alike.
Following the announcement, SLP’s shares went up 3% in trading and closed the session at $17.47 on July 14, 2025. Shares of the company have lost 41.5% in the past six months against the Zacks Computer - Software industry's growth of 16.3%.
Image Source: Zacks Investment Research
SLP’s Quarter in Details
Fiscal third-quarter revenues from Software (62% of total quarterly revenues) rose 6% year over year to $12.6 million, led by continued adoption of its ADMET Predictor, with GastroPlus and MonolixSuite also contributing positively. However, the segment saw headwinds from declining QSP/QST biosimulation software usage. GastroPlus, MonolixSuite, ADMET Predictor, Pro-ficiency and QSP/QST products contributed 56%, 17%, 20%, 3% and 4%, respectively, to total software revenues. SLP added 18 new customers and had eight upsells in the fiscal quarter for MonolixSuite.
The renewal rate for commercial customers was 71% (based on accounts) and 84% (based on fees) compared with 86% and 93% in the prior-year quarter, respectively.
Services’ revenues (38%) improved 17% to $7.7 million, driven largely by Medical Communications services, despite other areas within the segment experiencing softness. These weaknesses were attributed to cautious spending, delayed projects and cancellations from BioPharma clients, reflecting broader macroeconomic uncertainty. Sales of Physiologically Based Pharmacokinetics and Quantitative Systems Pharmacology saw declines of 10% and 22% year over year, respectively.
SLP maintains a solid pipeline of service projects, though the pace of contractual commitments slowed in the third quarter. Additionally, some backlog work has been deferred to future periods. The company closed the quarter with a backlog of $20.7 million, up from $20.4 million in the previous quarter and $15.7 million a year ago.
SLP’s Operating Details
The gross margin in the quarter under review was 64% compared with 71.5% in the prior-year quarter. The Software segment’s gross margin was 80% compared with 88% a year ago. Services’ gross margin was 38%, down from 41%. The overall fall in gross margin was due to a $2 million rise in cost of revenues, with $1.1 million tied to software costs and $0.9 million to service costs.
Total operating expenses (49% of revenues) jumped 667% to $87.3 million. The rise was due to a one-time non-cash impairment charge of $77.2 million, a strategic decision to align the book value of assets with current market valuations.
Loss from operations was $74.2 million against income of $1.9 million a year ago. Adjusted EBITDA reached $7.4 million, equating to 37% of total revenue, up from 30% in the prior-year quarter.
SLP’s Liquidity
As of May 31, 2025, cash and short-term investments were $28.5 million compared with $21.5 million as of Feb. 28, 2024.
Cash flow from operations in the fiscal third quarter amounted to $8.14 million compared with $5.7 million a year ago.
SLP Cuts Fiscal 2025 Guidance
The Pro-ficiency training platform and Medical Communication services have been significantly affected by market challenges that delayed clinical trial initiations and reduced spending on commercialization, similar to the issues experienced in SLP’s biosimulation segment. As a result, the revenue outlook for these sectors has been lowered for fiscal 2025 and fiscal 2026.
SLP also faced a major client cancellation this quarter, linked to setbacks in the client’s drug programs, which reduced near-term revenue by approximately $2 million. Along with other challenges, this greatly affected quarterly results and will influence the fiscal fourth quarter and fiscal 2026. The weaker-than-expected services revenue also led to a downward revision of the full-year 2025 guidance.
For fiscal 2025, it now expects revenues to be between $76 million and $80 million, up 9-14% year over year. The prior view was $90-$93 million with an increase of 28-33%. The Pro-ficiency acquisition is now expected to contribute an additional $9-$12 million to revenues compared with $15-$18 million projected earlier. The company continues to expect the Software segment mix to be 55-60% of total revenues.
SLP now estimates adjusted earnings per share to be in the band of 93 cents to $1.06 and adjusted EBITDA margin between 23% and 27%. Earlier, it projected earnings per share to be between $1.07 and $1.20 and adjusted EBITDA margin between 31% and 33%.
SLP’s Zacks Rank
Currently, Simulations Plus carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances of Other Firms
BlackBerry Limited ((BB - Free Report) ) reported first quarter fiscal 2026 non-GAAP earnings per share (EPS) of 2 cents. The figure beat the company’s estimate of a loss of 1 cent to breakeven. In the year-ago quarter, it reported a non-GAAP loss of 2 cents. The Zacks Consensus Estimate was pegged at breakeven.
BB’s shares gained 57.4% in the past year.
Fastenal Company’s ((FAST - Free Report) ) second-quarter 2025 adjusted earnings and revenues came ahead of the Zacks Consensus Estimate and increased year over year. The company reported EPS of 29 cents, which beat the Zacks Consensus Estimate of 28 cents and grew 12.7% from the year-ago level of 25 cents per share.
FAST stock has gained 25.4% year to date.
Levi Strauss & Co. ((LEVI - Free Report) ) reported second-quarter fiscal 2025 results, wherein EPS and revenues beat the Zacks Consensus Estimate. Both metrics improved year over year. The company enters the second half of 2025 with the strength to transform into a denim lifestyle brand and top-class DTC retailer.
Shares of LEVI have risen 51.5% in the past three months.