Simulations Plus Reports Fourth Quarter and Full Fiscal Year 2022 Financial Results

Fiscal 2022 revenue increased 16% year-over-year to $53.9 million

Diluted earnings per share increased 28% year-over-year to $0.60

Provides Fiscal 2023 guidance for total revenue of $59.3 million to $62.0 million (+10% to 15%)

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 fourth quarter and full-year fiscal 2022, ended August 31, 2022.

“Simulations Plus delivered a strong fourth quarter, resulting in full-year revenue growth above our guidance, which, when combined with a heavy software mix and operating leverage, led to gross margin expansion and higher income and adjusted EBITDA growth rates,” said Shawn O’Connor, chief executive officer of Simulations Plus. “Improved cross-selling and increasing industry adoption of modeling and simulation solutions contributed to sustainable growth in our software business while we built a robust backlog for services, especially for PBPK and PKPD services. In addition, we increased our global footprint by expanding our presence in Europe, Asia, and Latin America, and further penetrated smaller biotech firms with our offerings.”

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

  • Total revenue increased 19% to $11.7 million;
  • Software revenue increased 10% to $5.9 million, representing 50% of total revenue;
  • Services revenue increased 30% to $5.8 million, representing 50% of total revenue;
  • Gross profit increased 28% to $9.1 million; gross margin was 77%;
  • Net income of $1.0 million, or $0.05 per diluted share, compared to net income of $0.3 million, or $0.01 per diluted share;
  • Adjusted EBITDA of $2.3 million, representing 20% of total revenue.

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

  • Total revenue increased 16% to $53.9 million;
  • Software revenue increased 18% to $32.6 million, representing 61% of total revenue;
  • Services revenue increased 13% to $21.3 million, representing 39% of total revenue;
  • Gross profit increased 20% to $43.1 million; gross margin was 80%;
  • Net income of $12.5 million, or $0.60 per diluted share, compared to $9.8 million or $0.47 per diluted share;
  • Adjusted EBITDA of $21.0 million, representing 39% of total revenue.

Fiscal 2023 Guidance and Commentary

 

Fiscal 2022

Results

Fiscal 2023
Guidance

Increase

Revenue

$53.9M

$59.3M – 62.0M

10-15%

Software mix

61%

60-65%

Services mix

39%

35-40%

Diluted earnings per share

$0.60

$0.63-$0.67

5-10%

“Our expected revenue growth rate for fiscal 2023 is in line with our long-term organic growth rate target of 10-15%,” added Mr. O’Connor. “However, we expect seasonal revenue patterns to shift with changes in our renewal patterns due to successful and ongoing cross-selling initiatives, as well as the impact of somewhat slower renewal patterns on the part of our clients, which we have seen in the back half of fiscal 2022 and expect to continue into fiscal 2023. While this sets us up for lower-than-normal first fiscal-quarter revenue growth, roughly flat year-over-year, we do not anticipate a meaningful net impact on the full-year revenue results, and we expect full-year renewal rates to be in-line with historical patterns.”

“From a cost perspective, we are seeing a competitive market for modeling and simulation professionals, and accordingly, we expect to invest in employee growth, recruiting and retention,” concluded Mr. O’Connor. “The net impact of these investments is expected to be increased operating expense levels in fiscal 2023 as we digest these incremental costs. However, over the medium to long-term, we expect to see a return to higher levels of operating leverage and margins as we deliver on our long-term organic revenue growth targets of 10-15%.”

Environmental, Social, and Governance

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 fiscal year 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 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 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.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 

 

 

Years Ended August 31,

(in thousands, except per common share amounts)

 

2022

 

2021

 

2020

Revenues

 

 

 

 

 

 

Software

 

$

32,642

 

 

$

27,670

 

 

$

21,587

 

Services

 

 

21,264

 

 

 

18,796

 

 

 

20,002

 

Total revenues

 

 

53,906

 

 

 

46,466

 

 

 

41,589

 

Cost of revenues

 

 

 

 

 

 

Software

 

 

3,060

 

 

 

3,235

 

 

 

2,883

 

Services

 

 

7,762

 

 

 

7,365

 

 

 

7,766

 

Total cost of revenues

 

 

10,822

 

 

 

10,600

 

 

 

10,649

 

Gross profit

 

 

43,084

 

 

 

35,866

 

 

 

30,940

 

Operating expenses

 

 

 

 

 

 

Research and development

 

 

3,208

 

 

 

4,047

 

 

 

2,975

 

Selling, general, and administrative

 

 

24,965

 

 

 

20,566

 

 

 

16,360

 

Total operating expenses

 

 

28,173

 

 

 

24,613

 

 

 

19,335

 

 

 

 

 

 

 

 

Income from operations

 

 

14,911

 

 

 

11,253

 

 

 

11,605

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

204

 

 

 

(168

)

 

 

(218

)

 

 

 

 

 

 

 

Income before income taxes

 

 

15,115

 

 

 

11,085

 

 

 

11,387

 

Provision for income taxes

 

 

(2,632

)

 

 

(1,303

)

 

 

(2,055

)

Net Income

 

$

12,483

 

 

$

9,782

 

 

$

9,332

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

Basic

 

$

0.62

 

 

$

0.49

 

 

$

0.52

 

Diluted

 

$

0.60

 

 

$

0.47

 

 

$

0.50

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

Basic

 

 

20,196

 

 

 

20,045

 

 

 

17,819

 

Diluted

 

 

20,749

 

 

 

20,743

 

 

 

18,538

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, net of tax

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(265

)

 

 

(101

)

 

 

58

 

Comprehensive income

 

$

12,218

 

 

$

9,681

 

 

$

9,390

 

SIMULATIONS PLUS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

August 31,

(in thousands, except share and per share amounts)

 

2022

 

2021

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

51,567

 

 

$

36,984

 

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

 

 

13,787

 

 

 

9,851

 

Prepaid income taxes

 

 

1,391

 

 

 

1,012

 

Prepaid expenses and other current assets

 

 

3,377

 

 

 

4,846

 

Short-term investments

 

 

76,668

 

 

 

86,620

 

Total current assets

 

 

146,790

 

 

 

139,313

 

Long-term assets

 

 

 

 

Capitalized computer software development costs, net of accumulated amortization of $15,672 and $14,438

 

 

9,563

 

 

 

7,646

 

Property and equipment, net

 

 

632

 

 

 

1,838

 

Operating lease right-of-use assets

 

 

1,420

 

 

 

1,276

 

Intellectual property, net of accumulated amortization of $7,928 and $6,516

 

 

9,057

 

 

 

10,469

 

Other intangible assets, net of accumulated amortization of $2,662 and $2,186

 

 

7,560

 

 

 

6,464

 

Goodwill

 

 

12,921

 

 

 

12,921

 

Other assets

 

 

439

 

 

 

51

 

Total assets

 

$

188,382

 

 

$

179,978

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

225

 

 

$

387

 

Accrued compensation

 

 

3,254

 

 

 

3,185

 

Accrued expenses

 

 

931

 

 

 

2,419

 

Contracts payable

 

 

 

 

 

4,550

 

Operating lease liability – current portion

 

 

461

 

 

 

382

 

Deferred revenue

 

 

2,864

 

 

 

651

 

Total current liabilities

 

 

7,735

 

 

 

11,574

 

Long-term liabilities

 

 

 

 

Deferred income taxes, net

 

 

1,456

 

 

 

1,726

 

Operating lease liability

 

 

943

 

 

 

896

 

Total liabilities

 

 

10,134

 

 

 

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; 20,260,070 and 20,141,521 shares issued and outstanding

 

 

138,512

 

 

 

133,418

 

Retained earnings

 

 

40,044

 

 

 

32,407

 

Accumulated other comprehensive loss

 

 

(308

)

 

 

(43

)

Total shareholders’ equity

 

 

178,248

 

 

 

165,782

 

Total liabilities and shareholders’ equity

 

$

188,382

 

 

$

179,978

 

SIMULATIONS PLUS, INC.

Trended Financial Information*

(Unaudited)

 

(in millions except earnings per share amounts)

 

2021

 

2022

 

2021

 

2022

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

FY

 

FY

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

$

6.2

 

 

$

7.8

 

 

$

8.3

 

 

$

5.4

 

 

$

7.4

 

 

$

9.8

 

 

$

9.6

 

 

$

5.9

 

 

$

27.7

 

 

$

32.7

 

Services

 

 

4.5

 

 

 

5.3

 

 

 

4.4

 

 

 

4.4

 

 

 

5.0

 

 

 

5.0

 

 

 

5.3

 

 

 

5.8

 

 

 

18.8

 

 

 

21.2

 

Total

 

$

10.7

 

 

$

13.1

 

 

$

12.8

 

$

9.8

 

 

$

12.4

 

 

$

14.8

 

 

$

15.0

 

 

$

11.7

 

 

$

46.5

 

 

$

53.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

 

86.9

%

 

 

89.0

%

 

 

90.0

%

 

 

85.0

%

 

 

90.0

%

 

 

92.0

%

 

 

92.4

%

 

 

86.1

%

 

 

88.0

%

 

 

90.6

%

Services

 

 

63.9

%

 

 

61.0

%

 

 

63.0

%

 

 

55.0

%

 

 

60.0

%

 

 

59.3

%

 

 

65.6

%

 

 

68.2

%

 

 

61.0

%

 

 

63.5

%

Total

 

 

77.3

%

 

 

77.9

%

 

 

80.7

%

 

 

71.7

%

 

 

77.8

%

 

 

80.9

%

 

 

82.9

%

 

 

77.2

%

 

 

77.2

%

 

 

79.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

3.1

 

 

$

3.5

 

 

$

4.5

 

 

$

0.2

 

 

$

3.8

 

 

$

5.5

 

 

$

4.9

 

 

$

0.7

 

 

$

11.3

 

 

$

14.9

 

Operating Margin

 

 

28.5

%

 

 

26.6

%

 

 

35.6

%

 

 

1.8

%

 

 

30.6

%

 

 

37.0

%

 

 

33.1

%

 

 

5.9

%

 

 

24.2

%

 

 

27.7

%

Net Income

 

$

2.5

 

 

$

3.2

 

 

$

3.8

 

 

$

0.3

 

 

$

3.0

 

 

$

4.4

 

 

$

4.1

 

 

$

1.0

 

 

$

9.8

 

 

$

12.5

 

Diluted Earnings Per Share

 

$

0.12

 

 

$

0.15

 

 

$

0.18

 

 

$

0.01

 

 

$

0.15

 

 

$

0.21

 

 

$

0.20

 

 

$

0.05

 

 

$

0.47

 

 

$

0.60

 

Adjusted EBITDA

 

$

4.3

 

 

$

5.0

 

 

$

5.9

 

 

$

1.7

 

 

$

5.3

 

 

$

7.2

 

 

$

6.3

 

 

$

2.3

 

 

$

16.9

 

 

$

21.0

 

Cash Flow from Operations

 

$

5.3

 

 

$

1.3

 

 

$

4.3

 

 

$

8.3

 

 

$

3.6

 

 

$

2.6

 

 

$

3.8

 

 

$

7.9

 

 

$

19.2

 

 

$

17.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Breakdown by Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

7.1

 

 

$

8.7

 

 

$

9.7

 

 

$

7.1

 

 

$

8.5

 

 

$

9.7

 

 

$

11.2

 

 

$

8.4

 

 

$

32.5

 

 

$

37.7

 

EMEA

 

 

2.5

 

 

 

3.1

 

 

 

1.5

 

 

 

0.9

 

 

 

3.0

 

 

 

3.7

 

 

 

1.9

 

 

 

1.7

 

 

 

7.9

 

 

 

10.4

 

Asia Pacific

 

 

1.1

 

 

 

1.4

 

 

 

1.7

 

 

 

1.8

 

 

 

0.9

 

 

 

1.4

 

 

 

1.9

 

 

 

1.6

 

 

 

6.0

 

 

 

5.8

 

Total

 

$

10.7

 

 

$

13.1

 

 

$

12.8

 

 

$

9.8

 

 

$

12.4

 

 

$

14.8

 

 

$

15.0

 

 

$

11.7

 

 

$

46.6

 

 

$

53.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Revenue per Customer (in 000s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

74.0

 

 

$

84.0

 

 

$

98.0

 

 

$

65.0

 

 

$

71.0

 

 

$

101.0

 

 

$

95.0

 

 

$

65.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Backlog

 

$

12.0

 

 

$

11.2

 

 

$

12.4

 

 

$

13.0

 

 

$

15.4

 

 

$

17.0

 

 

$

16.7

 

 

$

15.9

 

 

 

 

 

*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

 

Q4

 

FY

 

FY

Net Income

 

$

2.5

 

 

$

3.2

 

$

3.8

 

$

0.3

 

 

$

3.0

 

 

$

4.4

 

 

$

4.1

 

 

$

1.0

 

 

$

9.8

 

 

$

12.5

 

Excluding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and expense, net

 

 

(0.1

)

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.4

)

 

 

(0.2

)

 

 

(0.7

)

Provision for income taxes

 

 

0.5

 

 

 

0.2

 

 

0.7

 

 

(0.1

)

 

 

0.8

 

 

 

1.1

 

 

 

0.7

 

 

 

(0.1

)

 

 

1.3

 

 

 

2.6

 

Depreciation and amortization

 

 

0.9

 

 

 

0.9

 

 

0.9

 

 

1.0

 

 

 

0.8

 

 

 

1.0

 

 

 

0.9

 

 

 

0.9

 

 

 

3.6

 

 

 

3.6

 

Stock-based compensation

 

 

0.5

 

 

 

0.7

 

 

0.6

 

 

0.6

 

 

 

0.6

 

 

 

0.7

 

 

 

0.7

 

 

 

0.7

 

 

 

2.4

 

 

 

2.7

 

Mergers & Acquisitions expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

0.3

 

Adjusted EBITDA

 

$

4.3

 

 

$

5.0

 

$

5.9

 

$

1.7

 

 

$

5.3

 

 

$

7.2

 

 

$

6.3

 

 

$

2.3

 

 

$

16.9

 

 

$

21.0

 

 
 

*Numbers may not add due to rounding

 

Contacts

Investor Relations Contacts:

Renee Bouche

Simulations Plus Investor Relations

661-723-7723

[email protected]

Brian Siegel

Hayden IR

346-396-8696

[email protected]

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