Simulations Plus (SLP) Announces Second Quarter Fiscal 2025 Financial Earnings Results

Simulations Plus, Inc. (SLP) today announced its financial results for the recent quarter, revealing a mixed performance. The company reported quarterly revenue of $22.43 million, surpassing expectations with a $504,014 beat over the estimated $21.93 million. However, the earnings per share (EPS) came in at $0.15, falling short of the anticipated $0.26346, resulting in a miss of $0.11346. Despite the EPS miss, the revenue beat highlights the company’s robust sales performance during the period.

Key Highlights:

• Simulations Plus reported a 23% year-over-year increase in total revenue for the second quarter of fiscal 2025.
• Software revenue rose by 16% to $13.5 million, while services revenue increased by 34% to $8.9 million.
• The Quantitative Systems Pharmacology (QSP) business unit expanded by 89%, driven by a new model license in atopic dermatitis.
• The backlog increased by 13% year-over-year, ending the quarter at $20.4 million.
• The company maintained its full-year revenue guidance of $90 to $93 million and adjusted diluted EPS of $1.07 to $1.20.
• Management expressed confidence in maintaining momentum and achieving stated guidance despite a challenging funding environment.

Summary:

Simulations Plus, a leader in cheminformatics and biosimulation solutions, reported a strong financial performance for the second quarter of fiscal 2025, with a 23% increase in total revenue to $22.4 million. This growth was driven by a 16% rise in software revenue and a 34% increase in services revenue. The company’s Quantitative Systems Pharmacology (QSP) business unit saw significant growth, expanding by 89% due to a new model license in atopic dermatitis. Additionally, the company’s backlog grew by 13% year-over-year, reaching $20.4 million by the end of the quarter. CEO Shawn O’Connor highlighted the company’s robust performance, stating, “We delivered strong performance in our second fiscal quarter 2025 with total revenue growing by 23%.” He emphasized the company’s ability to maintain its momentum and achieve its full-year guidance despite the ongoing cost-constrained environment for biopharma customers.

The company reaffirmed its full-year revenue guidance of $90 to $93 million and adjusted diluted EPS of $1.07 to $1.20, indicating confidence in its strategic direction and market position. Simulations Plus is optimistic about sustaining its growth trajectory, projecting fiscal 2025 revenue between $90M and $93M, with a growth rate of 28% to 33%. The company remains focused on leveraging its advanced software and consulting services to enhance drug discovery and development processes for its global clientele.

Simulations Plus, Inc. (SLP) has experienced a turbulent year in terms of stock price performance, with a notable decline of 35.65% over the past year. The past six months alone have seen a drop of 19.71%, indicating persistent downward pressure on the stock. Despite a brief 3.21% uptick in the past week, the overall trend remains negative, with a 14.53% decrease over the last month and an 11.25% decline over three months. On the fundamental side, the company boasts a high price-to-earnings ratio of 58.03, suggesting that investors may have high expectations for future growth. However, the financial metrics paint a mixed picture; while the revenue has grown at a robust 18.01% over the past two years, the free cash flow has contracted by 25.32% in the same period. The net profit margin stands at a modest 11.08%, and the return on invested capital is relatively low at 3.18%, which may raise concerns about the company’s efficiency in generating returns. Overall, while there are some positive growth indicators, the significant price declines and mixed financial metrics suggest that investors may be cautious about the company’s near-term prospects.

Simulations Plus, Inc. develops drug discovery and development software for modeling and simulation, and prediction of molecular properties utilizing artificial intelligence and machine learning based technology worldwide. It operates through four segments: Simulations Plus, Cognigen, DILIsym, and Lixoft. The company offers GastroPlus, which simulates the absorption and drug interaction of compounds administered to humans and animals; and DDDPlus and MembranePlus simulation products. It also provides products based on mechanistic and mathematical models, such as DILIsym, a quantitative systems pharmacology software; NAFLDsym; IPFsym; RENAsym; and MITOsym. In addition, the company provides Absorption, Distribution, Metabolism, Excretion, and Toxicity Predictor for chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, as well as modeling and simulation products comprising MonolixSuite and PKPlus. Further, it provides population modeling and simulation contract research services; training and consulting services designed to accelerate pharmacometrics studies; and clinical-pharmacology-based consulting services in support of regulatory submissions. The company serves pharmaceutical, biotechnology, agrochemical, cosmetics, and food companies, as well as academic and regulatory agencies. Simulations Plus, Inc. was incorporated in 1996 and is headquartered in Lancaster, California.