This article first appeared on GuruFocus .
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Revenue:$24.3 million, an 8% increase.
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Adjusted EBITDA:$8.7 million, reflecting a 36% margin.
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Adjusted Diluted EPS:$0.35.
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Software Revenue:Increased 9%, representing 60% of total revenue.
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Services Revenue:Increased 8%, representing 40% of total revenue.
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Discovery Revenue:Increased 19% for the quarter.
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Development Revenue:Increased 12% for the quarter.
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Clinical Operations Revenue:Declined 54% for the quarter.
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Gross Margin:Total gross margin of 66%; Software gross margin of 89%; Services gross margin of 33%.
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Cash and Short-term Investments:$41.8 million.
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Effective Tax Rate:23% for the quarter.
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Guidance for Fiscal 2026:Total revenue between $79 million to $82 million; Adjusted diluted EPS between $0.75 to $0.85.
Release Date: April 09, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Simulations Plus Inc ( NASDAQ:SLP ) exceeded top-line guidance with $24.3 million in revenue for the second quarter, showing growth in both Software and Service segments.
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The company reported an adjusted EBITDA of $8.7 million, reflecting a strong 36% margin.
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Simulations Plus Inc ( NASDAQ:SLP ) has strategic collaboration programs with three large pharmaceutical companies to advance AI workflows, indicating strong industry partnerships.
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The company maintains a high software renewal rate of 91% for the quarter, demonstrating customer loyalty and satisfaction.
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Simulations Plus Inc ( NASDAQ:SLP ) ended the quarter with a robust cash position of $41.8 million and no debt, indicating strong financial health.
Negative Points
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Clinical operations revenue declined significantly by 54% for the quarter and 58% for the trailing 12-month period.
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The company experienced a decline in software renewal rates, particularly among smaller biopharma and precommercial biotech clients.
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Simulations Plus Inc ( NASDAQ:SLP ) reported an increased effective tax rate of 23% compared to 12% last year, impacting net income.
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The company anticipates minimal AI monetization in fiscal year 2026, indicating that AI-related revenue contributions are still in the early stages.
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Despite strong performance, the company maintained cautious revenue guidance for fiscal 2026, reflecting uncertainty in the macro environment.
Q & A Highlights
Q: Could you provide more details on the collaborations with the three large pharma customers and how these contracts are structured? A: These collaborations have been ongoing for some time and involve working together to align our AI capabilities with their workflows. Each collaboration focuses on different scientific engines, covering all our platforms. Financial components are in discussion, but these relationships are crucial for aligning our product development with client needs. - Shawn O'Connor, CEO
Q: Are the new logos you mentioned competitive conversions, or are they entirely new customers? A: The new logos are entirely new customers, not existing ones. These opportunities are typically with smaller companies or those just starting with biosimulation capabilities. Some may involve competitive conversions, but they are primarily new to us. - Shawn O'Connor, CEO
Q: Can you explain the large sequential uptick in the commercial portion of the services backlog? A: The backlog is entirely service revenue-based, with 75% in development services and 25% in commercialization services. We've seen good pipeline activity and closure, leading to strong service revenue delivery. The backlog growth indicates a healthy pipeline of service projects. - Shawn O'Connor, CEO
Q: How do you evaluate progress in reaching multiple buyers within client organizations beyond the modeling department? A: We aim to access different budget pockets within client organizations. The proficiency acquisition has opened up clinical trial operations, providing more TAM and new budget dollars. Collaborations with clients help us leverage relationships and access AI budgets, which are growing alongside traditional modeling budgets. - Shawn O'Connor, CEO
Q: When can we expect AI monetization to start showing in the P&L, and what are the potential proof points? A: Discussions on AI monetization are ongoing, and while the value is recognized, the mechanics are still being worked out. We don't anticipate significant AI contribution in fiscal 2026, but it could be a contributor in fiscal 2027. Proof points will include commercial delivery and client adoption of AI functionalities. - Shawn O'Connor, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
