Simulations Plus (SLP) Q3 2024 earnings summary

Executive summary

• Third quarter fiscal 2024 revenue rose 14% year-over-year to $18.5 million, with strong growth in both software and services segments and adjusted diluted EPS of $0.19.

• Net income for Q3 was $3.1 million, down from $4.0 million last year, primarily due to higher operating expenses.

• The acquisition of Pro-ficiency was completed in June 2024 for $100 million, expanding simulation-based learning capabilities and expected to be accretive to fiscal 2025 EPS.

• The Board discontinued quarterly cash dividends after August 2024 to prioritize growth investments.

• Launch of next-generation PBPK modeling software GastroPlus X and new collaborations with research agencies and the FDA.

Financial highlights

• Q3 revenue increased 14% year-over-year to $18.5 million; software revenue up 12% and services revenue up 18%.

• Gross margin for Q3 was 71%, down from 82% last year, with software gross margin at 88% and services at 41%.

• Adjusted EBITDA for Q3 was $5.7 million (31% of revenue), compared to $6.5 million (40%) last year.

• Net income for the nine months ended May 31, 2024, was $9.1 million, with diluted EPS of $0.45.

• Cash and short-term investments were $119 million as of May 31, 2024, prior to the Pro-ficiency acquisition.

Outlook and guidance

• Fiscal 2024 guidance reaffirmed: total revenue $69M–$72M, year-over-year growth 15%–20%, software mix 55%–60%, services 40%–45%, diluted EPS $0.46–$0.48, adjusted diluted EPS $0.54–$0.56.

• Pro-ficiency expected to contribute $3 million in Q4 and $15M–$18M in fiscal 2025.

• Fiscal 2025 guidance to be provided in October; Pro-ficiency expected to be accretive to EPS, offsetting lost interest income.

• Discontinuation of quarterly dividends will reallocate capital to growth initiatives.