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Simulations Plus (SLP)
:SLP
US Market

Simulations Plus (SLP) AI Stock Analysis

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Simulations Plus

(NASDAQ:SLP)

Rating:70Outperform
Price Target:
$29.00
▲(9.68%Upside)
Simulations Plus demonstrates solid financial performance, particularly in revenue growth and balance sheet strength. However, technical analysis indicates bearish signals, and the company's valuation suggests it may be overvalued. The earnings call reinforces growth potential, but challenges in project initiation and margin compression pose risks.
Positive Factors
Financial Performance
Simulations Plus reported revenue of $22.4 million, outperforming estimates due to better-than-expected software and service sales.
Restructuring Benefits
The streamlined structure is expected to allow for a more robust sales and marketing team across both software and services, further improvement to cross-selling opportunities, and greater agility in rolling out product updates and improvements.
Revenue Growth Projections
Management reaffirmed its fiscal 2025 guidance, projecting revenue growth of 28.5% to 32.8% year-over-year.
Negative Factors
Investor Concerns
The restructuring announcement led to investor concerns about the timing of the cuts and the potential implications for the company’s demand outlook.
Macro Uncertainty
There are concerns over the visibility of service bookings converting as expected due to macro uncertainty in the biopharma space.
Service Revenue Challenges
Service revenue declined 9% year over year on an organic basis due to client-driven data delays.

Simulations Plus (SLP) vs. SPDR S&P 500 ETF (SPY)

Simulations Plus Business Overview & Revenue Model

Company DescriptionSimulations Plus, Inc. develops drug discovery and development software for modeling and simulation, and prediction of molecular properties utilizing artificial intelligence and machine learning based technology worldwide. It operates through four segments: Simulations Plus, Cognigen, DILIsym, and Lixoft. The company offers GastroPlus, which simulates the absorption and drug interaction of compounds administered to humans and animals; and DDDPlus and MembranePlus simulation products. It also provides products based on mechanistic and mathematical models, such as DILIsym, a quantitative systems pharmacology software; NAFLDsym; IPFsym; RENAsym; and MITOsym. In addition, the company provides Absorption, Distribution, Metabolism, Excretion, and Toxicity Predictor for chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, as well as modeling and simulation products comprising MonolixSuite and PKPlus. Further, it provides population modeling and simulation contract research services; training and consulting services designed to accelerate pharmacometrics studies; and clinical-pharmacology-based consulting services in support of regulatory submissions. The company serves pharmaceutical, biotechnology, agrochemical, cosmetics, and food companies, as well as academic and regulatory agencies. Simulations Plus, Inc. was incorporated in 1996 and is headquartered in Lancaster, California.
How the Company Makes MoneySimulations Plus generates revenue primarily through the sale of its software licenses and the provision of consulting services. The company offers various licensing models, including perpetual licenses, annual licenses, and subscriptions, allowing clients to choose the model that best fits their needs. In addition to software sales, Simulations Plus provides customized consulting services to support clients in addressing specific scientific challenges, which forms a significant part of its revenue. Partnerships with pharmaceutical companies, research institutions, and regulatory agencies enhance its market reach and contribute to its earnings. The company also benefits from recurring revenue streams through software maintenance and support contracts, providing ongoing customer support and software updates.

Simulations Plus Earnings Call Summary

Earnings Call Date:Apr 03, 2025
(Q2-2025)
|
% Change Since: 11.00%|
Next Earnings Date:Jul 02, 2025
Earnings Call Sentiment Neutral
The earnings call revealed a strong performance in revenue growth and software segment success, with reaffirmed guidance for fiscal year 2025. However, challenges in project initiation, decreased gross margins, and lower net income and EPS were notable lowlights.
Q2-2025 Updates
Positive Updates
Significant Revenue Growth
Total revenue increased 23% year-over-year to $22.4 million, with organic growth of 5% excluding contributions from new business units.
Strong Software Segment Performance
Software revenue grew by 16%, with renewal rates remaining at historical levels and new logo sales tracking well, despite funding challenges. QSP business unit revenue surged by 89%, largely driven by a model license for atopic dermatitis.
Service Segment Success
Services revenue grew by 34%, led by strong performance in CPP and MC business units. Ended the quarter with a backlog of $20.4 million, up 18% from the previous quarter.
Positive Financial Metrics
Adjusted diluted EPS was $0.31, and adjusted EBITDA was $6.6 million or 29% of revenue. The company remains well-capitalized with $21.4 million in cash and no debt.
Reaffirmed Fiscal Year Guidance
The company reaffirmed guidance for fiscal year 2025 with expected total revenue between $90 million to $93 million, and year-over-year revenue growth between 28% to 33%.
Negative Updates
Challenges in Project Initiation
Clients have remained slow to initiate project starts, leading to a delay in service revenue realization to the second half of the fiscal year.
Decreased Gross Margin
Total gross margin for the quarter was 59%, down from 72% in the prior year quarter. Software gross margin decreased from 88% to 81%, and services gross margin from 44% to 25%.
Lower Net Income and EPS
Net income for the quarter was $3.1 million or 14% of revenue, compared to $4 million or 22% of revenue last year. Diluted EPS decreased to $0.15 from $0.20 last year.
Decline in PBPK Services Revenue
PBPK services revenue decreased by 23%, reflecting the cautious pace of project initiation.
Company Guidance
During the Simulations Plus second quarter fiscal 2025 conference call, the company reported a 23% year-over-year increase in total revenue, reaching $22.4 million, with 5% organic growth excluding contributions from the Adaptive Learning & Insights (ALI) and Medical Communication (MC) business units. The software segment saw a 16% revenue growth, contributing 60% to total revenue, while services revenue increased by 34%, making up 40% of total revenue. The company's diluted EPS stood at $0.15, with an adjusted diluted EPS of $0.31 and an adjusted EBITDA of $6.6 million, equivalent to 29% of revenue. Software renewal rates based on fees were 90%, with average software revenue per customer rising to $124,000. The services segment faced a push of revenue to the fiscal year's back half due to delayed project initiations, although bookings were robust, ending with a backlog of $20.4 million. Looking ahead, Simulations Plus reaffirmed its fiscal 2025 guidance, expecting total revenue of $90 million to $93 million, with ALI and MC anticipated to contribute $15 million to $18 million. Adjusted EBITDA margin is forecasted between 31% to 33%, with adjusted diluted EPS projected to be between $1.07 and $1.20.

Simulations Plus Financial Statement Overview

Summary
Simulations Plus exhibits solid financial health with strong revenue growth and robust balance sheet metrics, characterized by low leverage and high equity ratio. Despite a slight decline in net profit margins and free cash flow, the company demonstrates efficient cash management and operational efficiency, positioning it well for future growth.
Income Statement
85
Very Positive
Simulations Plus shows strong revenue growth with a TTM revenue of $78.56 million, up from $70.01 million annually, indicating a positive trend. The gross profit margin is solid at approximately 55.26%, though net profit margin declined from 14.22% to 9.19% over the TTM, possibly due to increased operational costs. The EBIT and EBITDA margins remain healthy at 4.54% and 8.96% respectively, demonstrating operational efficiency.
Balance Sheet
90
Very Positive
The company maintains a robust financial position with a low debt-to-equity ratio of approximately 0.0042, reflecting minimal leverage. The equity ratio is very strong at around 94.12%, suggesting high asset backing by equity. ROE stands at a solid 3.81% in the TTM, though it has declined from 5.46% annually, indicating slightly reduced profitability per unit of equity.
Cash Flow
80
Positive
Operating cash flow to net income ratio is strong at 1.63, indicating efficient cash conversion. Free cash flow decreased from $12.75 million to $9.91 million, reflecting a decline in free cash flow growth, potentially due to increased capital investments. The free cash flow to net income ratio remains healthy at 1.37, underscoring good cash management.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
78.56M70.01M59.58M53.91M46.47M41.59M
Gross Profit
43.43M43.15M47.95M43.08M35.87M30.94M
EBIT
3.57M6.13M8.72M11.34M7.86M8.89M
EBITDA
9.31M11.80M12.56M18.48M14.70M11.85M
Net Income Common Stockholders
7.22M9.95M9.96M12.48M9.78M9.33M
Balance SheetCash, Cash Equivalents and Short-Term Investments
21.39M20.25M115.46M128.24M123.60M116.01M
Total Assets
201.43M196.64M186.10M188.38M179.98M168.42M
Total Debt
796.00K1.01M1.20M1.40M1.28M926.78K
Net Debt
-10.20M-9.30M-56.33M-50.16M-35.71M-48.28M
Total Liabilities
11.88M14.21M16.07M10.13M14.20M12.39M
Stockholders Equity
189.55M182.43M170.03M178.25M165.78M156.04M
Cash FlowFree Cash Flow
9.91M12.75M17.58M13.93M14.63M8.33M
Operating Cash Flow
11.74M13.32M21.86M17.90M19.20M10.91M
Investing Cash Flow
-32.04M-53.97M7.37M4.30M-26.74M-75.51M
Financing Cash Flow
-5.74M-6.57M-23.27M-7.62M-4.68M102.37M

Simulations Plus Technical Analysis

Technical Analysis Sentiment
Negative
Last Price26.44
Price Trends
50DMA
30.49
Negative
100DMA
30.53
Negative
200DMA
30.80
Negative
Market Momentum
MACD
-1.16
Positive
RSI
34.41
Neutral
STOCH
18.62
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SLP, the sentiment is Negative. The current price of 26.44 is below the 20-day moving average (MA) of 30.00, below the 50-day MA of 30.49, and below the 200-day MA of 30.80, indicating a bearish trend. The MACD of -1.16 indicates Positive momentum. The RSI at 34.41 is Neutral, neither overbought nor oversold. The STOCH value of 18.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SLP.

Simulations Plus Risk Analysis

Simulations Plus disclosed 44 risk factors in its most recent earnings report. Simulations Plus reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Simulations Plus Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$1.95B-0.25%9.37%95.72%
SLSLP
70
Outperform
$547.42M76.183.96%0.88%21.49%-31.23%
67
Neutral
$1.46B66.881.73%3.00%
61
Neutral
$1.92B-43.33%22.29%-32.89%
54
Neutral
$5.38B3.40-45.06%3.28%16.75%-0.02%
53
Neutral
$199.82M-60.75%4.66%11.33%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SLP
Simulations Plus
26.44
-22.11
-45.54%
OMCL
Omnicell
30.39
3.16
11.60%
SDGR
Schrodinger
26.69
5.47
25.78%
CERT
Certara
12.18
-2.46
-16.80%
SOPH
SOPHiA GENETICS
3.00
-1.84
-38.02%

Simulations Plus Corporate Events

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Simulations Plus Announces Q3 Revenue and Strategic Changes
Neutral
Jun 11, 2025

On June 11, 2025, Simulations Plus announced preliminary revenue figures for its third fiscal quarter, expecting between $19 million and $20 million, and updated its full-year revenue guidance to range between $76 million and $80 million. The company is facing market uncertainties impacting its pharmaceutical and biotech clients, leading to budget cuts and project delays. In response, Simulations Plus has reorganized its operations to a functionally driven model and made key leadership appointments to enhance client engagement and sales capabilities, aiming for long-term growth and operational efficiency.

The most recent analyst rating on (SLP) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Simulations Plus stock, see the SLP Stock Forecast page.

Executive/Board ChangesBusiness Operations and Strategy
Simulations Plus Restructures Operations and Leadership
Neutral
Jun 2, 2025

On May 30, 2025, Simulations Plus, Inc. announced a restructuring of its operations, which included reducing its workforce by approximately 10%, or 23 employees, to enhance operational efficiency and reduce expenses. This restructuring is expected to incur charges of about $0.7 million but aims to save approximately $4.3 million annually. Additionally, the company made significant leadership changes, including appointing John DiBella as Chief Revenue Officer, while other executives assumed new roles to support the company’s strategic goals.

The most recent analyst rating on (SLP) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Simulations Plus stock, see the SLP Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Simulations Plus Reports Strong Q2 2025 Revenue Growth
Positive
Apr 3, 2025

On April 3, 2025, Simulations Plus reported its financial results for the second quarter of fiscal 2025, which ended on February 28, 2025. The company experienced a 23% increase in total revenue, reaching $22.4 million, with software revenue rising by 16% and services revenue by 34%. Despite a decrease in net income and diluted EPS compared to the previous year, the company maintained its full-year revenue guidance of $90 to $93 million and adjusted diluted EPS of $1.07 to $1.20. The strong performance was driven by significant growth in its Quantitative Systems Pharmacology business unit and robust services revenue, particularly in Medical Communications. Simulations Plus is optimistic about maintaining its momentum into the second half of 2025, despite challenges in the biopharma funding environment.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.