Simulations Plus Reports Third Quarter Fiscal 2022 Financial Results

Simulations Plus Reports Third Quarter Fiscal 2022 Financial Results




Simulations Plus Reports Third Quarter Fiscal 2022 Financial Results

Total revenue growth of 17%; Software revenue growth of 16%; Services revenue growth of 19%;

Diluted Earnings Per Share (EPS) growth of 11%;

Board of Directors announces quarterly dividend of $0.06 per share

LANCASTER, Calif.–(BUSINESS WIRE)–Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation software and services for pharmaceutical safety and efficacy, today reported financial results for its third quarter of fiscal 2022, ended May 31, 2022.

“While the growth trend in our software business continued during the third quarter, our services business showed a strong recovery with 19% growth,” said Shawn O’Connor, chief executive officer of Simulations Plus. “The services backlog we built over the past few quarters set up this recovery, driven by PBPK and PKPD projects. PBPK was especially strong as we saw deeper penetration of modeling resulting from expanded use cases and perceived value. Looking at our software business, our efforts to expand our addressable market continued to pay off as we saw increased upsells, continued expansion in Asia, and deeper penetration of modeling and simulation with smaller biotech firms.”

Third Quarter Fiscal 2022 Financial Highlights (compared with the corresponding period last fiscal year):

  • Total revenue increased 17% to $15.0 million;
  • Software revenue increased 16% to $9.7 million, representing 64% of total revenue;
  • Services revenue increased 19% to $5.3 million, representing 36% of total revenue;
  • Gross profit increased 20% to $12.4 million; gross margin was 83%;
  • Net income and diluted EPS of $4.1 million and $0.20, compared to $3.8 million and $0.18, respectively;
  • Adjusted EBITDA of $6.3 million, representing 42% of total revenue.

YTD Financial Highlights (compared with the corresponding period last fiscal year):

  • Total revenue increased 15% to $42.2 million;
  • Software revenue increased 20% to $26.8 million, representing 63% of total revenue;
  • Services revenue increased 8% to $15.4 million, representing 37% of total revenue;
  • Gross profit increased 18% to $34.0 million; gross margin was 81%;
  • Net income and diluted EPS of $11.5 million and $0.56, compared to $9.5 million and $0.46, respectively;
  • Adjusted EBITDA of $18.7 million, representing 44% of total revenue.

Fiscal 2022 Outlook

“Now that we’ve completed our third quarter and have one quarter remaining in the fiscal year, we are reiterating our full-year revenue guidance at $52-53 million, and tightening the growth rate to 12-15%. Our fourth quarter has historically been impacted by seasonality related to our industry in the summer months and we expect this year to be no different. For services, there tends to be slower engagement on projects during the summer months. For software, growth tends to be skewed towards the first half of our fiscal year, which coincides with new calendar year budgets for many of our customers. Based on the successful performance of our software business through the third quarter, we expect software revenue to exceed 60% of total revenue for the fiscal year,” concluded O’Connor.

Quarterly Dividend

The company’s Board of Directors declared a cash dividend of $0.06 per share of the company’s common stock, payable on August 1, 2022, to shareholders of record as of July 25, 2022. The declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements, and other factors.

Environmental, Social, and Governance (ESG)

We focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our website to read our ESG Report.

Webcast and Conference Call Details

Shawn O’Connor, chief executive officer, and Will Frederick, chief financial officer, will host a conference call and webcast today at 5 p.m. Eastern Time to discuss details of the company’s performance for the quarter and certain forward-looking information. The call may be accessed by registering here or by calling 1-201-389-0879. The webcast will be available on our website under Conference Calls & Presentations. A replay of the webcast will be available on the website approximately one hour following the call.

Non-GAAP Definition

Adjusted EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization, stock-based compensation, and any acquisition or financial transaction-related expenses. Adjusted EBITDA represents a measure that we believe is customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures that we present. Our management also believes that Adjusted EBITDA is useful in evaluating our core operating results. However, Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income or operating income as an indicator of our operating performance or to net cash provided by operating activities as a measure of our liquidity. The company’s Adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items.

About Simulations Plus

Serving clients worldwide for 25 years, Simulations Plus is a leading provider in the biosimulation market providing software and consulting services supporting drug discovery, development, research, and regulatory submissions. We offer solutions that bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, and regulatory agencies worldwide. For more information, visit our website at www.simulations-plus.com. Follow us on LinkedIn | Twitter | YouTube.

Forward-Looking Statements

Except for historical information, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Words like “believe,” “expect,” and “anticipate” mean that these are our best estimates as of this writing, but there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, our ability to identify and close acquisitions on terms favorable to the company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission.

SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 
(in thousands, except per common share amounts) Three Months Ended  Nine Months Ended
 

2022

 

2021

2022

 

2021

Revenues        
Software

 

9,647

 

8,298

 

26,767

 

22,337

Services

 

5,312

 

4,479

 

15,405

 

14,288

Total revenues

 

14,959

 

12,777

 

42,172

 

36,625

Cost of revenues        
Software

 

730

 

800

 

2,245

 

2,448

Services

 

1,829

 

1,671

 

5,900

 

5,367

Total cost of revenues

 

2,559

 

2,471

 

8,145

 

7,815

Gross profit

 

12,400

 

10,306

 

34,027

 

28,810

Operating expenses        
Research and development

 

655

 

670

 

2,439

 

2,771

Selling, general, and administrative

 

6,799

 

5,094

 

17,371

 

14,960

Total operating expenses

 

7,454

 

5,764

 

19,810

 

17,731

       
Income from operations

 

4,946

 

4,542

 

14,217

 

11,079

       
Other income (expense), net

 

-112

 

-51

 

6

 

-169

       
Income before income taxes

 

4,834

 

4,491

 

14,223

 

10,910

Provision for income taxes

 

-747

 

-704

 

-2,701

 

-1,433

Net income

 

4,087

 

3,787

 

11,522

 

9,477

       
Earnings per share        
Basic

$

             0.20

$

             0.19

$

             0.57

$

             0.47

Diluted

$

             0.20

$

             0.18

$

             0.56

$

             0.46

 
Weighted-average common shares outstanding
Basic

 

20,212

 

20,105

 

20,180

 

20,014

Diluted

 

20,768

 

20,802

 

20,731

 

20,750

 
Other Comprehensive income, net of tax
Foreign currency translation adjustments

 

24

 

40

 

-251

 

36

Comprehensive Income

 

4,111

 

3,827

 

11,271

 

9,513

SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Unaudited)  (Audited) 
(in thousands, except share and per share amounts) May 31, 2022 August 31, 2021
ASSETS    
Current assets
Cash and cash equivalents

42,353

36,984

Accounts receivable, net of allowance for doubtful accounts of $12 and $78

18,587

9,851

Prepaid income taxes

322

1,012

Prepaid expenses and other current assets

3,472

4,846

Short-term investments

80,120

86,620

Total current assets

144,854

139,313

Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $15,376 and $14,438

8,974

7,646

Property and equipment, net

607

1,838

Operating lease right-of-use assets

1,533

1,276

Intellectual property, net of accumulated amortization of $7,585 and $6,516

9,400

10,469

Other intangible assets, net of accumulated amortization of $2,635 and $2,186

7,717

6,464

Goodwill

12,921

12,921

Other assets

217

51

Total assets

186,223

179,978

   
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable

426

387

Accrued payroll and other expenses

2,947

5,604

Contracts payable – current portion

4,550

Operating lease liability – current portion

459

382

Deferred revenue

2,083

651

Total current liabilities

5,915

11,574

 
Long-term liabilities
Deferred income taxes, net

1,680

1,726

Operating lease liability

1,069

896

Total liabilities

8,664

14,196

 
Commitments and contingencies
 
Shareholders’ equity
Preferred stock, $0.001 par value 10,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.001 par value and additional paid-in capital —50,000,000 shares authorized, 20,234,654 and 20,141,521 shares issued and outstanding  

137,556

133,418

Retained earnings

40,297

32,407

Accumulated other comprehensive loss

-294

-43

Total shareholders’ equity

177,559

165,782

Total liabilities and shareholders’ equity

186,223

179,978

SIMULATIONS PLUS, INC. 
Trended Financial Information*    
(Unaudited)         
   

2021

 

2022

 

2021

 

2022

 (in millions except earnings per share amounts)   Q1   Q2   Q3   Q4   Q1   Q2   Q3   Fiscal Year   Fiscal YTD
Software revenue                
Gastroplus  

 $

      3.3

 

 $

      4.5

 

 $

      5.4

 

 $

      3.1

 

 $

      4.0

 

 $

      5.5

 

 $

      6.4

 $

    16.3

 

 $

    15.9

MonolixSuite  

 

         1.2

 

 

         1.6

 

 

         0.9

 

 

         0.8

 

 $

      1.6

 

 $

      2.2

 

 $

      1.0

 

         4.4

 

 $

      4.8

ADMET Predictor  

 

         1.2

 

 

         1.2

 

 

         1.5

 

 

         1.2

 

 $

      1.5

 

 $

      1.4

 

 $

      1.6

 

         5.0

 

 $

      4.5

Other  

 

         0.5

 

 

         0.6

 

 

         0.5

 

 

         0.3

 

 $

      0.3

 

 $

      0.7

 

 $

      0.6

 

         1.9

 

 $

      1.6

Total software revenue  

 $

      6.2

 

 $

      7.8

 

 $

      8.3

 

 $

      5.4

 

 $

      7.4

 

 $

      9.8

 

 $

      9.6

 $

    27.7

 

 $

    26.8

Services revenue                  
PKPD  

 $

      2.2

 

 $

      2.6

 

 $

      1.9

 

 $

      2.3

 

 $

      2.3

 

 $

      2.2

 

 $

      2.5

 

 $

      9.1

 

 $

      7.0

QSP/QST  

 

         1.1

 

 

         1.7

 

 

         1.2

 

 

         1.1

 

 $

      1.5

 

 $

      1.5

 

 $

      1.2

 

 

         5.1

 

 $

      4.2

PBPK  

 

         0.6

 

 

         0.9

 

 

         0.7

 

 

         0.7

 

 $

      0.9

 

 $

      0.9

 

 $

      1.4

 

 

         3.0

 

 $

      3.2

Other  

 

         0.5

 

 

          –  

 

 

         0.6

 

 

         0.3

 

 $

      0.3

 

 $

      0.4

 

 $

      0.3

 

 

         1.4

 

 $

      1.0

Total services revenue  

 $

      4.5

 

 $

      5.3

 

 $

      4.4

 

 $

      4.4

 

 $

      5.0

 

 $

      5.0

 

 $

      5.3

 $

    18.8

 

 $

    15.4

Total consolidated revenue  

 $

    10.7

 

 $

    13.1

 

 $

    12.8

 

 $

      9.8

 

 $

    12.4

 

 $

    14.8

 

 $

    15.0

 $

    46.5

 

 $

    42.2

                 
Gross Margin                
Software  

 

86.9%

 

 

89.0%

 

 

90.0%

 

 

85.0%

 

 

90.0%

 

 

92.0%

 

 

92.4%

 

 

88.0%

 

 

91.6%

Services  

 

63.9%

 

 

61.0%

 

 

63.0%

 

 

55.0%

 

 

60.0%

 

 

59.3%

 

 

65.6%

 

 

61.0%

 

 

61.7%

Total   

 

77.3%

 

 

77.9%

 

 

80.7%

 

 

71.7%

 

 

77.8%

 

 

80.9%

 

 

82.9%

 

77.2%

 

 

80.7%

                 
Income from operations  

 $

      3.1

 

 $

      3.5

 

 $

      4.5

 

 $

      0.2

 

 $

      3.8

 

 $

      5.5

 

 $

      4.9

 $

    11.3

 

 $

    14.2

Operating Margin  

 

28.5%

 

 

26.6%

 

 

35.6%

 

 

1.8%

 

 

30.6%

 

 

37.0%

 

 

33.1%

 

 

24.2%

 

 

33.7%

Net Income  

 $

      2.5

 

 $

      3.2

 

 $

      3.8

 

 $

      0.3

 

 $

      3.0

 

 $

      4.4

 

 $

      4.1

 $

      9.8

 

 $

    11.5

Diluted Earnings Per Share  

 $

    0.12

 

 $

    0.15

 

 $

    0.18

 

 $

    0.01

 

 $

    0.15

 

 $

    0.21

 

 $

    0.20

 $

    0.47

 

 $

    0.56

Adjusted EBITDA  

 $

      4.3

 

 $

      5.0

 

 $

      5.9

 

 $

      1.7

 

 $

      5.3

 

 $

      7.2

 

 $

      6.3

 $

    16.9

 

 $

    18.7

Cash Flow from Operations  

 $

      5.3

 

 $

      1.3

 

 $

      4.3

 

 $

      8.3

 

 $

      3.6

 

 $

      2.6

 

 $

      3.8

 $

    19.2

 

 $

    10.0

                 
Revenue Breakdown by Region                
Americas  

 $

      7.1

 

 $

      8.7

 

 $

      9.7

 

 $

      7.1

 

 $

      8.5

 

 $

      9.7

 

 $

    11.2

 

       32.5

 

 $

    29.3

EMEA  

 

         2.5

 

 

         3.1

 

 

         1.5

 

 

         0.9

 

 

         3.0

 

 

         3.7

 

 

         1.9

 

         7.9

 

 

         8.7

Asia Pacific  

 

         1.1

 

 

         1.4

 

 

         1.7

 

 

         1.8

 

 

         0.9

 

 

         1.4

 

 

         1.9

 

         6.0

 

 

         4.2

Total consolidated revenue  

 $

    10.7

 

 $

    13.1

 

 $

    12.8

 

 $

      9.8

 

 $

    12.4

 

 $

    14.8

 

 $

    15.0

 $

    46.6

 

 $

    42.2

                   
Software Performance Metrics                
Average Revenue per Customer (in thousands)                
Commercial  

 $

    74.0

 

 $

    84.0

 

 $

    98.0

 

 $

    65.0

 

 $

    71.0

 

 $

  101.0

 

 $

    95.0

 
                 
Services Performance Metrics                
Backlog  

 $

    12.0

 

 $

    11.2

 

 $

    12.4

 

 $

    13.0

 

 $

    15.4

 

 $

    17.0

 

 $

    16.7

 
                 
*Numbers may not add due to rounding
SIMULATIONS PLUS, INC. 
Reconciliation of Adjusted EBITDA to Net Income
(Unaudited)

2021

2022

2021

2022

(in millions) Q1   Q2   Q3   Q4   Q1 Q2 Q3 Fiscal Year Fiscal YTD
Net Income

 $

      2.5

 

 $

      3.2

 

 $

      3.8

 

 $

      0.3

 

 $

      3.0

 

 $

      4.4

 

 $

      4.1

 

 $

          9.8

 

 $

            11.5

 

Excluding:
Interest income and expense, net

 

       (0.1

)

 

       (0.0

)

 

       (0.0

)

 

       (0.0

)

 

       (0.1

)

 

 

       (0.1

)

 

 

       (0.1

)

 

 

            (0.2

)

 

               (0.3

)

Provision for income taxes

 

         0.5

 

 

         0.2

 

 

         0.7

 

 

       (0.1

)

 

         0.8

 

 

 

         1.1

 

 

 

         0.7

 

 

 

             1.3

 

 

                 2.7

 

Depreciation and amortization

 

         0.9

 

 

         0.9

 

 

         0.9

 

 

         1.0

 

 

         0.8

 

 

 

         1.0

 

 

 

         0.9

 

 

 

             3.6

 

 

                 2.7

 

Stock-based compensation

 

         0.5

 

 

         0.7

 

 

         0.6

 

 

         0.6

 

 

         0.6

 

 

 

         0.7

 

 

 

         0.7

 

 

 

             2.4

 

 

                 2.0

 

 
Adjusted EBITDA

 $

      4.3

 

 $

      5.0

 

 $

      5.9

 

 $

      1.7

 

 $

      5.3

 

 $

      7.2

 

 $

      6.3

 

 $

         16.9

 

 $

            18.7

 

 

Contacts

Renee Bouche

Simulations Plus Investor Relations

661-723-7723

renee.bouche@simulations-plus.com

Brian Siegel

Hayden IR

346-396-8696

brian@haydenir.com