EX-99.1 2 slp-20230531xexx991x233.htm EX-99.1

Exhibit 99.1

Simulations Plus Reports Third Quarter Fiscal 2023 Financial Results

Total revenue of $16.2 million and diluted earnings per share (EPS) of $0.20

Maintains full-year revenue guidance of $59.3 - $62.0 million (+10-15%) and EPS guidance of $0.63 - $0.67

LANCASTER, CA, July 6, 2023 – Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation software and services for pharmaceutical drug discovery and development, today reported financial results for its third quarter of fiscal 2023, ended May 31, 2023.

Third Quarter Financial Highlights (Fiscal 2023 vs. Fiscal 2022)

•Total revenue increased 9% to $16.2 million

•Software revenue increased 10% to $10.6 million, representing 65% of total revenue

•Services revenue increased 5% to $5.6 million, representing 35% of total revenue

•Gross profit increased 7% to $13.3 million; gross margin was 82%

•Net income of $4.0 million and diluted EPS of $0.20, compared to net income of $4.1 million and diluted EPS of $0.20

•Adjusted EBITDA of $6.5 million, representing 40% of total revenue

Nine Months Financial Highlights (Fiscal 2023 vs. Fiscal 2022)

•Total revenue increased 4% to $43.9 million

•Software revenue increased 2% to $27.2 million, representing 62% of total revenue

•Services revenue increased 9% to $16.8 million, representing 38% of total revenue

•Gross profit increased 5% to $35.7 million; gross margin was 81%

•Net income of $9.4 million and diluted EPS of $0.46, compared to net income of $11.5 million and diluted EPS of $0.56

•Adjusted EBITDA of $15.7 million, representing 36% of total revenue

Management Commentary

“We had a solid third quarter that delivered revenue in line with our expectations,” said Shawn O’Connor, Chief Executive Officer of Simulations Plus. “Our team continued to perform exceptionally well in an environment that remains challenged by constrained industry spending. Strong execution on our strategic priorities this quarter resulted in profitable growth that keeps us on track to meet our stated goals for fiscal 2023.

“Third quarter revenue increased 9% over the same period last year, driven primarily by MonolixSuite’s strong contribution in our software segment and growth in PKPD and PBPK revenue in our services segment. Gross margins remained strong at 82%, which reflected a favorable mix of higher margin software sales as well as our ability to pass on price increases to our clients. Our renewal harmonization initiative to simplify and align software product renewals to provide procurement efficiencies is progressing as planned. Our clients are responding positively to this initiative, and we will continue the realignment process through the balance of 2023. During the third quarter, we also completed our $20 million accelerated share repurchase program. The total number of shares of our common stock repurchased under the ASR program was 492,041 shares, at an average cost of $40.65 per share.

“On June 20th, we announced our acquisition of Immunetrics, a modeling and simulation company. This acquisition expands our robust quantitative systems pharmacology (QSP) expertise into the fast-growing therapeutic areas of oncology, immunology and autoimmune diseases. Immunetrics brings proven QSP technology, a strong reputation in the market, and

an incredibly talented team that we believe will enhance our leadership in biosimulation. I am excited to welcome the Immunetrics team to Simulations Plus.

“As we enter the fourth quarter, our performance for the nine months gives us confidence in our previously stated guidance. Our customer pipeline remains solid, our profitability is strong, and our balance sheet is sound. We remain focused on continuing to drive innovative and disciplined growth that will deliver attractive long-term returns for our shareholders.”

Fiscal 2023 Guidance

			Fiscal 2023 Guidance						Annual Increase
Revenue			$59.3M - 62.0M						10-15%
Software mix			60-65%						—
Services mix			35-40%						—
Diluted earnings per share			$0.63-$0.67						5-10%

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 7, 2023, to shareholders of record as of July 31, 2023. 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 ESG website.

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 Daylight Time to discuss the 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, (gain) loss on currency exchange, and any acquisition- or financial-transaction-related expenses. Currency exchange excluded represents the exchange rate fluctuations on the foreign currency denominated transactions. The impact of transactions in foreign currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency. The Company believes that the non-GAAP financial measures presented facilitate an understanding of operating performance and provide a meaningful comparison of its results between periods. The Company’s management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation. 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 nonrecurring, unusual items.

About Simulations Plus

Serving clients worldwide for more than 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 artificial intelligence (AI)/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 successfully integrate the Immunetrics business with our own, as well as expenses we may incur in connection therewith, 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, market conditions, macroeconomic factors, 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.

Investor Relations Contacts:

John Wilfong

Financial Profiles

310-622-8248

slp@finprofiles.com

Renee Bouche

Simulations Plus Investor Relations

661-723-7723

renee.bouche@simulations-plus.com

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SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the three and nine months ended May 31, 2023 and 2022

(Unaudited)

						Three Months Ended May 31,												Nine Months Ended May 31,
(in thousands, except per common share amounts)						2023						2022						2023						2022
Revenues
Software						$	10,632					$	9,647					$	27,193					$	26,767
Services						5,602						5,312						16,755						15,405
Total revenues						16,234						14,959						43,948						42,172
Cost of revenues
Software						908						730						2,636						2,245
Services						2,053						1,829						5,616						5,900
Total cost of revenues						2,961						2,559						8,252						8,145
Gross profit						13,273						12,400						35,696						34,027
Operating expenses
Research and development						945						655						3,428						2,439
Selling, general, and administrative						8,231						6,799						23,259						17,371
Total operating expenses						9,176						7,454						26,687						19,810
Income from operations						4,097						4,946						9,009						14,217
Other income (expense), net						843						(112)						2,617						6
Income before income taxes						4,940						4,834						11,626						14,223
Provision for income taxes						(932)						(747)						(2,199)						(2,701)
Net income						$	4,008					$	4,087					$	9,427					$	11,522
Earnings per share
Basic						$	0.20					$	0.20					$	0.47					$	0.57
Diluted						$	0.20					$	0.20					$	0.46					$	0.56
Weighted-average common shares outstanding
Basic						19,972						20,212						20,123						20,180
Diluted						20,355						20,768						20,512						20,731
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments						144						24						174						(251)
Comprehensive income						$	4,152					$	4,111					$	9,601					$	11,271

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SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

						(Unaudited)						(Audited)
(in thousands, except share and per share amounts)						May 31, 2023						August 31, 2022
ASSETS
Current assets
Cash and cash equivalents						$	55,131					$	51,567
Accounts receivable, net of allowance for doubtful accounts of $49 and $12						10,214						13,787
Prepaid income taxes						—						1,391
Prepaid expenses and other current assets						4,730						3,377
Short-term investments						67,234						76,668
Total current assets						137,309						146,790
Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $16,857 and $15,672						11,000						9,563
Property and equipment, net						701						632
Operating lease right-of-use assets						982						1,420
Intellectual property, net of accumulated amortization of $8,903 and $7,928						8,007						9,057
Other intangible assets, net of accumulated amortization of $1,943 and $2,662						7,698						7,560
Goodwill						12,921						12,921
Other assets						516						439
Total assets						$	179,134					$	188,382
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable						$	357					$	225
Accrued compensation						3,818						3,254
Accrued expenses						552						931
Income taxes payable						793						—
Operating lease liability - current portion						330						461
Deferred revenue						3,172						2,864
Total current liabilities						9,022						7,735
Long-term liabilities
Deferred income taxes, net						110						1,456
Operating lease liability						612						943
Total liabilities						9,744						10,134
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; 19,926,819 and 20,260,070 shares issued and outstanding						143,666						138,512
Retained earnings						25,858						40,044
Accumulated other comprehensive loss						(134)						(308)
Total shareholders' equity						169,390						178,248
Total liabilities and shareholders' equity						$	179,134					$	188,382

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SIMULATIONS PLUS, INC.

Trended Financial Information*

(Unaudited)

(in millions except earnings per share amounts)												FY 2022																								FY 2023																		2022						2023
																														Q1						Q2						Q3						Q4						Q1						Q2						Q3						FY						FY
Revenue
Software																														$	7.4					$	9.8					$	9.6					$	5.9					$	6.1					$	10.5					$	10.6					$	32.7					$	27.2
Services																														5.0						5.0						5.3						5.8						5.9						5.3						5.6						21.2						16.8
Total																														$	12.4					$	14.8					$	15.0					$	11.7					$	12.0					$	15.8					$	16.2					$	53.9					$	43.9
Gross Margin
Software																														90.0		%				92.0		%				92.4		%				86.1		%				85.4		%				92.0		%				91.5		%				90.6		%				90.3		%
Services																														60.0		%				59.3		%				65.6		%				68.2		%				69.7		%				66.2		%				63.4		%				63.5		%				66.5		%
Total																														77.8		%				80.9		%				82.9		%				77.2		%				77.7		%				83.4		%				81.8		%				79.9		%				81.2		%
Income from operations																														$	3.8					$	5.5					$	4.9					$	0.7					$	0.9					$	4.0					$	4.1					$	14.9					$	9.0
Operating Margin																														30.6		%				37.0		%				33.1		%				5.9		%				7.3		%				25.6		%				25.2		%				27.7		%				20.5		%
Net Income																														$	3.0					$	4.4					$	4.1					$	1.0					$	1.2					$	4.2					$	4.0					$	12.5					$	9.4
Diluted Earnings Per Share																														$	0.15					$	0.21					$	0.20					$	0.05					$	0.06					$	0.20					$	0.20					$	0.60					$	0.46
Adjusted EBITDA																														$	5.2					$	7.1					$	6.5					$	2.5					$	3.0					$	6.2					$	6.5					$	21.2					$	15.7
Cash Flow from Operations																														$	3.6					$	2.6					$	3.8					$	7.9					$	4.7					$	5.5					$	8.5					$	17.9					$	18.8
Revenue Breakdown by Region
Americas																														$	8.5					$	9.7					$	11.2					$	8.4					$	8.5					$	10.6					$	10.8					$	37.7					$	29.9
EMEA																														3.0						3.7						1.9						1.7						2.1						3.6						3.4						10.4						9.1
Asia Pacific																														0.9						1.4						1.9						1.6						1.3						1.5						2.1						5.8						5.0
Total																														$	12.4					$	14.8					$	15.0					$	11.7					$	12.0					$	15.8					$	16.2					$	53.9					$	43.9
Software Performance Metrics
Average Revenue per Customer (in 000s)
Commercial																														$	71.0					$	101.0					$	95.0					$65.0						$68.0						$110.0						$97.0
Services Performance Metrics
Backlog																														$	15.4					$	17.0					$	16.7					$	15.9					$	15.8					$	15.4					$	15.7

*Numbers may not add due to rounding

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SIMULATIONS PLUS, INC.

Reconciliation of Adjusted EBITDA to Net Income*

(Unaudited)

												FY 2022																								FY 2023																		2022						2023
(in millions)																														Q1						Q2						Q3						Q4						Q1						Q2						Q3												FY						FY
Net Income																														$	3.0					$	4.4					$	4.1					$	1.0					$	1.2					$	4.2					$	4.0											$	12.5					$	9.4
Excluding:
Interest income and expense, net																														(0.1)						(0.1)						(0.1)						(0.4)						(0.8)						(1.0)						(1.1)												(0.7)						(2.9)
Provision for income taxes																														0.8						1.1						0.7						(0.1)						0.4						0.9						0.9												2.6						2.2
Depreciation and amortization																														0.8						1.0						0.9						0.9						0.9						0.9						0.9												3.6						2.8
Stock-based compensation																														0.6						0.7						0.7						0.7						0.9						1.2						1.1												2.7						3.1
(Gain) loss on currency exchange																														(0.1)						(0.1)						0.2						0.2						—						—						0.3												0.2						0.3
Mergers & Acquisitions expense																														—						—						—						0.3						0.3						0.1						0.4												0.3						0.8
Adjusted EBITDA																														$	5.2					$	7.1					$	6.5					$	2.5					$	3.0					$	6.2					$	6.5											$	21.2					$	15.7

*Numbers may not add due to rounding

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