Total revenue growth of 16%; Software revenue growth of 19%; Diluted Earnings Per Share (EPS) growth of 25%

Board of Directors announces quarterly dividend of $0.06 per share

Contacts

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 first quarter of fiscal 2022, ended November 30, 2021.

Shawn O’Connor, chief executive officer of Simulations Plus, said, “Our software business continued to deliver higher revenue and margins in the first quarter, supplemented by improving momentum in our services business, which returned the company to overall double-digit revenue growth. The reinvigorated growth enabled a 22% improvement in net income, demonstrating both the benefit of a higher software versus services revenue mix and the inherent leverage in our operating model.”

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

  • Total revenue increased 16% to $12.4 million;
  • Software revenue increased 19% to $7.4 million, representing 59% of total revenue;
  • Services revenue increased 13% to $5.0 million, representing 41% of total revenue;
  • Gross profit increased 17% to $9.7 million; gross margin was 78%;
  • Net income and diluted EPS of $3.0 million and $0.15 compared to $2.5 million and $0.12, respectively;
  • Adjusted EBITDA of $5.3 million, representing 42% of total revenue.

Mr. O’Connor concluded, “Looking forward, we remain focused on our organic growth strategy driven by key initiatives, including investing in our sales and marketing function, cross-selling products and services, and continuing to enhance our industry leading software offerings with new and improved functionality and incremental capabilities. With a software business that continues to generate consistently high growth rates, and a consulting services business that’s growing its pipeline and backlog, we remain confident in achieving our 10-15% total revenue guidance for fiscal 2022.”

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 February 7, 2022, to shareholders of record as of January 31, 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 of modeling and simulation 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, chemical, consumer goods companies, and regulatory agencies worldwide. For more information, visit our website at www.simulations-plus.com. Follow us on Twitter | LinkedIn.

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 that 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)

Three months ended November 30,

(in thousands, except per common share amounts)

2021

2020

 
Revenue
Software

$

7,362

 

$

6,212

 

Services

 

5,055

 

 

4,489

 

Total revenue

 

12,417

 

 

10,701

 

Cost of revenue
Software

 

735

 

 

812

 

Services

 

2,021

 

 

1,621

 

Total cost of revenue

 

2,756

 

 

2,433

 

Gross profit

 

9,661

 

 

8,268

 

Operating expenses
Research and development

 

882

 

 

809

 

Selling, general and administrative

 

4,988

 

 

4,408

 

Total operating expenses

 

5,870

 

 

5,217

 

 
Income from operations

 

3,791

 

 

3,051

 

 
Other income (expense)
Interest income

 

64

 

 

61

 

Change in value of contingent consideration

 

(121

)

 

(121

)

Gain on sale of assets

 

1

 

 

-

 

Gain on currency exchange

 

121

 

 

5

 

Total other income (expense), net

 

65

 

 

(55

)

 
Income before income taxes

 

3,856

 

 

2,996

 

Provision for income taxes

 

(830

)

 

(517

)

Net Income

$

3,026

 

$

2,479

 

 
Earnings per share
Basic

$

0.15

 

$

0.12

 

Diluted

$

0.15

 

$

0.12

 

 
Weighted-average common shares outstanding
Basic

 

20,150

 

 

19,930

 

Diluted

 

20,746

 

 

20,799

 

 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments

 

(237

)

 

-

 

Comprehensive income

$

2,789

 

$

2,479

SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
(In thousands, except share and per share amounts) November 30,

2021		 August 31,

2021
ASSETS
Current assets
Cash and cash equivalents

$

41,680

 

$

36,984

 

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

 

11,823

 

 

9,851

 

Revenue in excess of billings

 

1,483

 

 

3,150

 

Prepaid income taxes

 

584

 

 

1,012

 

Prepaid expenses and other current assets

 

1,676

 

 

1,696

 

Short-term investments

 

82,660

 

 

86,620

 

Total current assets

 

139,906

 

 

139,313

 

Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $14,734 and $14,438

 

8,189

 

 

7,646

 

Property and equipment, net

 

2,339

 

 

1,838

 

Operating lease right of use asset

 

1,146

 

 

1,276

 

Intellectual property, net of accumulated amortization of $6,873 and $6,516

 

10,112

 

 

10,469

 

Other intangible assets, net of accumulated amortization of $2,319 and $2,186

 

6,331

 

 

6,464

 

Goodwill

 

12,921

 

 

12,921

 

Other assets

 

50

 

 

51

 

Total assets

$

180,994

 

$

179,978

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable

$

19

 

$

387

 

Accrued payroll and other expenses

 

3,967

 

 

5,604

 

Contracts payable - current portion

 

4,671

 

 

4,550

 

Billings in excess of revenue

 

52

 

 

117

 

Operating lease liability, current portion

 

338

 

 

382

 

Deferred revenue

 

568

 

 

534

 

Total current liabilities

 

9,615

 

 

11,574

 

 
Long-term liabilities
Deferred income taxes, net

 

2,113

 

 

1,726

 

Operating lease liability

 

810

 

 

896

 

Total liabilities

 

12,538

 

 

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, 20,168,796 and 20,141,521 shares issued and outstanding

 

134,512

 

 

133,418

 

Retained earnings

 

34,224

 

 

32,407

 

Accumulated other comprehensive loss

 

(280

)

 

(43

)

Total shareholders' equity

 

168,456

 

 

165,782

 

Total liabilities and shareholders' equity

$

180,994

 

$

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

Fiscal Year

Fiscal YTD

Software revenue
Gastroplus

$

3.3

 

$

4.5

 

$

5.4

 

$

3.1

 

$

4.0

 

$

16.3

 

$

4.0

 

MonolixSuite

 

1.2

 

 

1.6

 

 

0.9

 

 

0.8

 

 

1.6

 

 

4.4

 

 

1.6

 

ADMET Predictor

 

1.2

 

 

1.2

 

 

1.5

 

 

1.2

 

 

1.5

 

 

5.0

 

 

1.5

 

Other

 

0.5

 

 

0.6

 

 

0.5

 

 

0.3

 

 

0.3

 

 

1.9

 

 

0.3

 

Total software revenue

$

6.2

 

$

7.8

 

$

8.3

 

$

5.4

 

$

7.4

 

$

27.7

 

$

7.4

 

Services revenue
PKPD

$

2.2

 

$

2.6

 

$

1.9

 

$

2.3

 

$

2.3

 

$

9.1

 

$

2.3

 

QSP/QST

 

1.1

 

 

1.7

 

 

1.2

 

 

1.1

 

 

1.5

 

 

5.1

 

 

1.5

 

PBPK

 

0.6

 

 

0.9

 

 

0.7

 

 

0.7

 

 

0.9

 

 

3.0

 

 

0.9

 

Other

 

0.5

 

 

-

 

 

0.6

 

 

0.3

 

 

0.4

 

 

1.4

 

 

0.4

 

Total services revenue

$

4.5

 

$

5.3

 

$

4.4

 

$

4.4

 

$

5.1

 

$

18.8

 

$

5.1

 

Total consolidated revenue

$

10.7

 

$

13.1

 

$

12.8

 

$

9.8

 

$

12.4

 

$

46.5

 

$

12.4

 

 
Gross Margin
Software

 

86.9

%

 

89.0

%

 

90.0

%

 

85.0

%

 

90.0

%

 

88.0

%

 

90.0

%

Services

 

63.9

%

 

61.0

%

 

63.0

%

 

55.0

%

 

60.0

%

 

61.0

%

 

60.0

%

Total

 

77.3

%

 

77.9

%

 

80.7

%

 

71.7

%

 

77.8

%

 

77.2

%

 

77.8

%

 
Income from operations

$

3.1

 

$

3.5

 

$

4.5

 

$

0.2

 

$

3.8

 

$

11.3

 

$

3.8

 

Operating Margin

 

28.5

%

 

26.6

%

 

35.6

%

 

1.8

%

 

30.5

%

 

24.2

%

 

30.5

%

Net Income

$

2.5

 

$

3.2

 

$

3.8

 

$

0.3

 

$

3.0

 

$

9.8

 

$

3.0

 

Diluted Earnings Per Share

$

0.12

 

$

0.15

 

$

0.18

 

$

0.01

 

$

0.15

 

$

0.47

 

$

0.15

 

Adjusted EBITDA

$

4.3

 

$

5.0

 

$

5.9

 

$

1.7

 

$

5.3

 

 

16.9

 

$

5.3

 

Cash Flow from Operations

$

5.3

 

$

1.3

 

$

4.3

 

$

8.3

 

$

3.6

 

 

19.2

 

$

3.6

 

 
Revenue Breakdown by Region
Americas

$

7.1

 

$

8.7

 

$

9.7

 

$

7.1

 

$

8.5

 

 

32.5

 

$

8.5

 

EMEA

 

2.5

 

 

3.1

 

 

1.5

 

 

0.9

 

 

3.0

 

 

7.9

 

 

3.0

 

Asia Pacific

 

1.1

 

 

1.4

 

 

1.7

 

 

1.8

 

 

0.9

 

 

6.0

 

 

0.9

 

Total consolidated revenue

$

10.7

 

$

13.1

 

$

12.8

 

$

9.8

 

$

12.4

 

$

46.6

 

$

12.4

 

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

$

74.0

 

$

84.0

 

$

98.0

 

$

65.0

 

$

71.0

 

 
Services Performance Metrics
Backlog

$

12.0

 

$

11.2

 

$

12.4

 

$

13.0

 

$

15.4

 

 
*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 Fiscal Year Fiscal YTD
Net Income  

$

 

2.5

 

$

 

3.2

 

$

 

3.8

 

$

 

0.3

 

$

 

3.0

 

$

 

9.8

 

$

 

3.0

 

Excluding:  
Interest income and expense, net  

 

 

(0.1

)

 

 

(0.0

)

 

 

(0.0

)

 

 

(0.0

)

 

 

(0.1

)

 

 

(0.2

)

 

 

(0.1

)

Provision for income taxes  

 

 

0.5

 

 

 

0.2

 

 

 

0.7

 

 

 

(0.1

)

 

 

0.8

 

 

 

1.3

 

 

 

0.8

 

Depreciation and amortization  

 

 

0.9

 

 

 

0.9

 

 

 

0.9

 

 

 

1.0

 

 

 

0.8

 

 

 

3.6

 

 

 

0.8

 

Stock-based compensation  

 

 

0.5

 

 

 

0.7

 

 

 

0.6

 

 

 

0.6

 

 

 

0.6

 

 

 

2.4

 

 

 

0.6

 

   
Adjusted EBITDA  

$

 

4.3

 

$

 

5.0

 

$

 

5.9

 

$

 

1.7

 

$

 

5.3

 

$

 

16.9

 

$

 

5.3