Simulations Plus Reports Third Quarter Fiscal 2021 Financial Results

Third quarter total revenue increased 4% to $12.8 million, with software revenue up 21%;

Board of Directors announces quarterly dividend of $0.06 per share

LANCASTER, Calif.–(BUSINESS WIRE)–Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation solutions for the pharmaceutical, biotechnology, chemical, and consumer goods industries, today reported financial results for its third quarter of fiscal 2021, ended May 31, 2021.

Third Quarter Fiscal 2021 Financial highlights (compared with the corresponding period last fiscal year):

  • Total revenue increased 4% to $12.8 million;
  • Software revenue increased 21% to $8.3 million;
  • Services revenue declined 18% to $4.5 million;
  • Gross profit increased 7% to $10.3 million;
  • Gross margin increased from 78% to 81%;
  • Net income increased 29% to $3.8 million;
  • Diluted earnings per share increased 13% to $0.18 per share.

YTD Financial highlights (compared with the corresponding period last fiscal year):

  • Total revenue increased 14% to $36.6 million;
  • Software revenue increased 32% to $22.3 million;
  • Services revenue declined 6% to $14.3 million;
  • Gross profit increased 20% to $28.8 million;
  • Gross margin increased from 75% to 79%;
  • Net income increased 33% to $9.5 million;
  • Diluted earnings per share increased 18% to $0.46 per share.

Shawn O’Connor, chief executive officer of Simulations Plus, said: “Our software business continued its strong performance during the quarter, with revenues increasing by 21% versus last year as product updates and cross-selling initiatives led to an acceleration in growth rates. However, our overall growth rate was moderated due to a higher than normal number of late quarter project delays and drug development program cancellations in our services business, which has historically had periods of volatility. Despite these delays and cancellations, our services pipeline continued to expand, and backlog grew in the quarter. While these trends are encouraging and support our long-term outlook, the delays in services projects will impact the growth rates for the remainder of our fiscal year, and we now expect full-year revenue growth of 5 to 10%.”

Mr. O’Connor concluded, “The accelerating growth of software revenue and leverage in our business model continues to support strong and increasing profitability as demonstrated by our net income for the first nine months of fiscal 2021 already exceeding full-year fiscal 2020 net income. With a strong balance sheet, growing industry adoption of artificial intelligence-based simulation software and outsourced services, and an acceleration in software sales, we believe we are well-positioned for success and continue to target annual revenue growth rates above 15% over the next several years following fiscal 2021.”

Quarterly Dividend Declared

The Company’s Board of Directors has declared a cash dividend of $0.06 per share of the Company’s common stock, payable on August 2, 2021, to shareholders of record as of July 26, 2021. 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.

Investor Conference Call

The Company will host a conference call on July 12, 2021, at 4:15 p.m. Eastern Time. All interested parties are invited to join the call by registering here or by calling 1-201-389-0879. Please join 5 to 10 minutes before the scheduled start time. The call will be webcast live and will be available on the Investors page of the Simulations Plus website at https://www.simulations-plus.com/investorscorporate-profile/corporate-profile/. A replay of the webcast will be available on the website approximately one hour following the call.

About Simulations Plus, Inc.

Serving clients worldwide for 25 years, Simulations Plus, Inc., is a leading provider of modeling and simulation software and consulting services supporting drug discovery, development research, and regulatory submissions. With our subsidiaries Cognigen, DILIsym Services, and Lixoft, 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 | Read our Environmental, Social, and Governance (ESG) Report.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 – 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
For the three and nine months ended May 31, 2021 and 2020
 

Three months ended

Nine months ended

(Unaudited)

(Unaudited)

(in thousands, except per common share amounts)

2021

2020

2021

2020

 
Revenues

$

12,777

 

$

12,298

 

$

36,625

 

$

32,049

 

Cost of revenues

 

2,471

 

 

2,666

 

 

7,815

 

 

7,975

 

Gross margin

 

10,306

 

 

9,632

 

 

28,810

 

 

24,074

 

Operating expenses
Selling, general, and administrative

 

5,094

 

 

5,023

 

 

14,960

 

 

12,646

 

Research and development

 

670

 

 

752

 

 

2,771

 

 

2,026

 

Total operating expenses

 

5,764

 

 

5,775

 

 

17,731

 

 

14,672

 

 
Income from operations

 

4,542

 

 

3,857

 

 

11,079

 

 

9,402

 

 
Other income (expense)
Interest income

 

37

 

 

5

 

 

156

 

 

27

 

Interest expense

 

 

 

 

 

(22

)

 

 

Change in value of contingent consideration

 

(121

)

 

(81

)

 

(364

)

 

(81

)

Income/(Loss) on currency exchange

 

33

 

 

(1

)

 

61

 

 

1

 

Total other income (expense), net

 

(51

)

 

(77

)

 

(169

)

 

(53

)

 
Income before provision for income taxes

 

4,491

 

 

3,780

 

 

10,910

 

 

9,349

 

Provision for income taxes

 

(704

)

 

(844

)

 

(1,433

)

 

(2,205

)

Net income

$

3,787

 

$

2,936

 

$

9,477

 

$

7,144

 

 
Earnings per share
Basic

$

0.19

 

$

0.17

 

$

0.47

 

$

0.40

 

Diluted

$

0.18

 

$

0.16

 

$

0.46

 

$

0.39

 

 
Weighted-average common shares outstanding
Basic

 

20,105

 

 

17,735

 

 

20,014

 

 

17,661

 

Diluted

 

20,802

 

 

18,427

 

 

20,750

 

 

18,334

 

 
Other Comprehensive Income, net of tax
Foreign currency translation adjustments

 

40

 

 

30

 

 

36

 

 

30

 

Comprehensive Income

$

3,827

 

$

2,966

 

$

9,513

 

$

7,174

 

SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 

(Unaudited)

(Audited)

(in thousands, except share and per share amounts)

May 31,

August 31,

ASSETS

2021

2020

Current assets
Cash and cash equivalents

$

58,811

$

49,207

Accounts receivable, net of allowance for doubtful accounts of $100 and $50

 

12,962

 

7,422

Revenues in excess of billings

 

3,883

 

3,093

Prepaid income taxes

 

492

 

970

Prepaid expenses and other current assets

 

1,602

 

1,596

Short-term investments

 

60,948

 

66,804

Total current assets

 

138,698

 

129,092

Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $14,616 and $13,582

 

7,326

 

6,087

Property and equipment, net

 

1,260

 

438

Operating lease right-of-use assets

 

1,405

 

927

Intellectual property, net of accumulated amortization of $6,159 and $5,087

 

10,826

 

11,898

Other intangible assets, net of accumulated amortization of $2,054 and $1,642

 

6,596

 

7,008

Goodwill

 

12,921

 

12,921

Other assets

 

51

 

51

Total assets

$

179,083

$

168,422

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable

$

298

$

351

Accrued payroll and other expenses

 

2,598

 

2,251

Income taxes payable

 

16

 

Current portion – contracts payable

 

3,333

 

2,000

Billings in excess of revenues

 

127

 

141

Operating lease liability, current portion

 

426

 

463

Deferred revenue

 

542

 

300

Total current liabilities

 

7,340

 

5,506

 
Long-term liabilities
Deferred income taxes, net

 

2,270

 

2,354

Operating lease liability

 

980

 

463

Payments due under contracts payable

 

3,095

 

4,064

Total liabilities

 

13,685

 

12,387

 
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, 20,121,040 and 19,923,277 shares issued and outstanding

 

131,994

 

128,541

Retained earnings

 

33,310

 

27,436

Accumulated other comprehensive income

 

94

 

58

Total shareholders’ equity

 

165,398

 

156,035

Total liabilities and shareholders’ equity

$

179,083

$

168,422

 

Contacts

Simulations Plus Investor Relations
Ms. Renee Bouche

661-723-7723

[email protected]

Hayden IR
Mr. Brian Siegel

346-396-8696

[email protected]

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