SLP - Earnings call transcript Q4 2020

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Cameron Donahue

Good afternoon, everyone. On behalf of Simulations Plus, I welcome you to our Fourth Quarter Fiscal Year 2020 Financial Results Conference Call and Webinar. Hosting the call today is Simulations Plus’ CEO, Shawn O’Connor; and the company’s CFO, John Kneisel. An opportunity to ask questions will follow today’s presentation. [Operator Instructions] Before beginning, I’d like to remind everyone that with the exception of historical information, the matters discussed in this presentation are forward-looking statements that involve numerous risks and uncertainties. the differ of statements. from results actual company materially could those The the company’s the that to growth, to, not the contribute levels sustain cause retain and the continued competitive and skilled produce differences fashion, for Factors the new of or continue to company’s in or products ability are market company’s such to improve ability personnel can current the finance to productivity. timely ability ability company’s a to include, company’s attract and to but demand products, future factors, limited Further in and information and Commission. on filed the company’s reports company’s risk Exchange is annual and the contained with Securities the quarterly the With over Shawn to that CEO, I’d said, to turn call O’Connor. like Shawn?

Shawn O’Connor

Simulations organic clients. marketplace achieved a our the resources our We the year growth grow our the Overall, you, was and that to stated goals. XXXX growth acquisitions, our software revenue XX% for Plus. range. growth in and European revenue we This to our and We rates Lixoft was with XX% Thank XXXX we to pandemic. year We’ve Fiscal the to broaden giving value Cameron. made to level a business disruption despite the accelerated deliver our And all fiscal achieved XX% pursue additional total presence. expand strategic COVID our year. offering, the significant was completed acquisition came organic excluding from historical scale a to company further target to bolster can revenue growth XX% XX% for was milestone

marketplace. in modeling build to pharmaceutical continued its and drug Plus position the Simulations leadership year, the During simulation for development upon

of agencies, enhanced through the product, our we software development regulatory relationship launched and advancing collaborations with acquisition Monolix In and furthering addition technology. our the important of several offerings and our to clients internal Suite portfolio

continued XX%. our and to consulting service by approximately have On consulting our broaden team we offerings the side, grown

and pipelines, costs, modeling The dynamic of only to their the development simulation value positive support reduce ability demonstrate interactions. to significant drug heightened increasingly to contribute and accelerate and future. have impact our and clients to simulation We process. reinforce accelerate profitability to that Modeling and of customers and the has been use revenue increased of to need helping this as four therapeutic the continue important clients process, highlighted, the pandemic regulatory is modeling and has improve revenues, the solutions to the cost the delivery into they grow underlies

consulting XX% compared prior For in the Considering Lixoft and the both to year, up growth growth of our year-over-year, we is year-over-year, compared year. growth achieved excluding impact software the to the the strong grew million, prior result XX% XX% year. acquisition, delivered $XX.X Organically the revenue of revenue pandemic, for XX% in organic the this in the impact strong company. We a revenues. of

year. software and million software For grew $XX.X year, growth $XX.X last compared X% of rate million, were X% to XX% revenues $XX.X to $XX and revenues to a year. Organically growth grew and the million of X% last compared million

in the revenues XX% consulting $XX.X year, to compared year. last to and XX% million growth For grew million $XX of

quarter. year. compared Turning to to X% XX% to growth year’s grew compared revenue, $X to fourth the grew million, XX% of $X.X million, million total XXXX to fiscal $X.X quarter last and overall revenues last Organically fourth revenue

to fourth last fourth compared to of the year’s revenues growth million $X.X million revenues compared at were to and Organically, last year. grew million, XX% quarter. flat $X.X software $X.X For quarter, XX% software

year’s grew quarter, XX% fourth consulting the For of to $X.X and last fourth compared million, XX% to revenues growth million $X.X quarter. in

the revenue is this pharma followed license summertime several well recognition slowest software buying and client fourth reasons, the have consultant a as now, our quarter patterns availability. who including for our and of you seasonally revenue impact policy, of those as As quarter

addition reduced consolidations quarter, growth rate acquisition, is about revenue in software came XX%. impacted base, renewal our time, licenses change was installed experience to but these do software time going as historical impacted their in XX% we fourth type our by follows: ongoing which and/or XX% clients forward. layoffs our This four quarter of year’s renewal for in to this expect we rate levels their not site because In organizations. to the at from this of From which this impact phenomenon, prior year about

this outcome, In our year software despite remained rate fourth at the quarter for renewal fact, XX%.

the did module that of experienced renewals. clients not resulting the fully in some incremental year growth year QX timely, QX Last This Additionally, revenue sequential annual and/or growth discussions software and rate slippage process XX% or renewed collaboration and software in real revenue impact are these and their complete fourth of potential in to budget growth the renewals Clients of in but QX. with no year-over-year this business for year. X% new last we ongoing impacted three year, from quarter with QX.

customer New be down license by COVID. to has growth slowed continued

to demand and these things level we as be delayed, some not normalize. opportunities lost, appear expect However, of pent-up

this side, by our DILIsym and year at revenue sourced QSP year last consulting services in first peaked accelerate the late the XXX% quarter began On to of growth.

down DILIsym services last year X% growth full compared Fiscal mix, of project service XX%. DILIsym these great the year. revenues to was timing in XXXX year fourth at quarter result a were for As QSP and QSP

reflective recognition DILIsym of revenue growth QSP and and nature projects larger is timing resulting the of thereof. quarter’s This

which unchanged. growth I’ll speak remain growth remain Our unchanged. overall revenue the overall about in later call expectations, revenue expectations company-wide again

of Let service me software our segments. to and consulting each speak

regard business. to software our First, with

compared revenue. perhaps represented year XX% to to of year our software flagship generates a revenues and our Suite XXXX. the we XX% revenue, and of fiscal revenue serve level continues expect the product approximately last individual full Monolix to as back GastroPlus of total year. move to software largest XX%-plus Our in With above portion software

revenue Predictor the will of closed April. new contribute approximately contribution revenue acquisition we XXXX, and of the five contributed ADMET total contribution of since from months we which contributions in full Suite, the year XX% With anticipate see Suite revenue. can fiscal Monolix Monolix You of our in a only

year XXXX, drug science learning spectrum our Today, acquisition fiscal we and our offer Suite. modeling machine techniques clients platforms with leading in of client During of the broadened Monolix our and industry-leading platforms the the we value and PBPK the offerings of across modeling process. utilized development advanced

new PBPK enhancement the standing bodies XX regulatory significantly cases, demand and of increased was with position APX. published During modeling released significant delivery with which we our with design, We physiologically year, customers. partner; based module Combined endeavors ADMET Predictor, GastroPlus, PBBM document which investment, and regulatory in have regulatory Predictor revamped during module we well transporters we mechanistic market Key the a APX multi for pivotal HTPK large use our the to a drug GastroPlus AIDD The the FDA learning entered simulation AIDD module, as GastroPlus pharmacokinetic applications. the objective platforms. mechanistic with address with maintained virtual of by functionalities enhancements we pharmaceutical for many released our the simulations. new our for model prediction a collaborations APX a the models; engine new transporters recently September, for version own as our R&D industry. in priced Predictor, new machine first features which Module a intra-articular containing capabilities, XX.X under the companies bioequivalence software. strategic used into including for to ADMET to contribute capabilities established and in platform for include: version drive pharma Such driven models is guidance; expansion optimization HTPK modeling trial AI-driven and released ADMET integrated includes using separately and all of the improvements module on X.X, our collaboration industry’s leadership remains Simulation with solidify of functionality. large guidance multi-threading our processes, requirements will R&D the FDA’s leading with compound of

a also module. a collaboration into with validate AIDD to and pharmaceutical We company the new entered evaluate

define parameters the which multi-objective the Our computational be the against work lead team optimized. chemists needed molecules with partners to to

We’re included simulator the we XXXXRX in Simulex interface. pleased powerful with is new a a demonstrated Suite, value Suite October, an Monolix pharmacometrics trial features release Monolix for is Amongst this clinical and flexible the this partnership It date. to in easy-to-use module. new in released with

pharmacometrics a allows modeling modeling this simulation anticipated. with than fast, Lixoft and simulation it a for data and non-compartmental with smoothly. simulation. addition, All analysis, analysis It complete easy-to-use for with from and and went modeling powerful integrated, of and and population been In have provides applications. users analysis we fully Integration smoothly more workflow fully faster applications and operations has process to suite interoperable proceeded

consultants and to few future fourth and about upon rate same on our metric resulting accounts. accounts reduced including integrating functions, Simulations revamping sales to churn and we use academic upon, to collaboration At the a and renewal non-profit into facilitate software XX%. Monolix four time, renewal commented by infrastructure previously to in a key were Suite XX% between quarter marketing our quarter our fees the lower-than-usual clients regard for renewals With Plus our saw based marketing impacted and for their brought our who business, We’re as Monolix down metrics sales by training in the rate higher a other cross-selling. the

continue rate renewal into and expect year we XXXX. year, trend maintained the at fiscal For this to high XX% our

fiscal our And who in full to to year. fourth finished rate That of on number During the revenue And in software quarter contribute XXXX, the commercial metrics new exceeds software an $XXX,XXX, XX%. grew XX%. commercial new our license new our said, grew software for and of value focus close customers reflected our customer us to count was slowed, prior increase last year. client customers compared revenues, the net XX% is clients when this license software our our with whose and year we compared we

consulting now to Let me business. our shift

compared Our to for at XX% grew services XX% the year last full year. growth revenue

from revenues our primarily primarily of of by delivered total DILIsym which For our delivered by XXXX, our PK/PD delivered revenues revenues services are from PBPK from group. QST total QSP XX% fiscal revenues XX% by Cognigen, sourced were services services, consulting XX% of and year total Lancaster our

Our of consulting profitability. both development clients’ perform encountered of the use support revenue our in their in simulation addressing modeling positively drug simulation as strong needs outsourcing business to through and with as and issues programs development to We specific and continues well impact their growth programs. modeling well

therapy where significant to the liver without due class its toxicity. X and the supporting failed treatment the supported FDA symptomatic toxicity first giant first Phase two DILIsym of Acetaminophen, specific review analysis tumors, labeling we of safety liver which warnings pleased special liver achievements regulatory of and when the FDA are scientific symptomatic approval State its tenosynovial for of where DILIsym And in of examples NDA. cell the particularly contribute the analysis that modeling Ubrogepant, of safety finally, able DILIsym to inclusion regulatory to of predicted liver agencies. Environmental advance analysis few examples, drug and approval Office are which Health Hazard programs. of interactions trials is Assessment clinical The advanced clients’ Pexidartinib, impacting with Recent of We’re profile these of ultimate analysis our drugs but the include: in approval California this as simulation a modeling to a

we fiscal clients During COVID clients services headed on the service accelerate a Strategies, with more COVID. analysis of agencies. to data development derisk who for versus objective Strategies by two potential Suarez-Sharp, offerings. obviously XXXX, after in on focused Sandra have these up their how new FDA. assisting their our long joined The efforts strategic of the regulatory is therapies and with introduced interactions many of our tenure global us Regulatory

related grow recently have quarter, to of During our these were area. in programs contracts finally, our the multiple capacity meet this closed and the past continue clients. to And to discussions engaged we we several needs in

staff fiscal in growth and During grew project well for growth, from of us support each XXXX, XXXX. generated our approximately our XX% We consulting consulting the year positioning fiscal sources. strong year of by

XX% consulting sources The important is year. year. the revenues in our a grew in year. revenues exceed consulting finally, continues the the for year, revenues PBPK consulting fiscal QST XX% consulting grew year our consulting for diversification driving to overall of of $XX businesses the XXXX, smoothing the consulting – million overall growth and our XX% revenue backlog revenue rate QSP the grew the PK/PD And end XX% at for consulting for During fluctuations.

in backlog While still of slowdown contracts of the prevented growing year a enter we because XXXX. COVID new fiscal from well-positioned we’re year, us as

Let our me turn XXXX to fiscal outlook.

year XX% range, is with additional the XXXX, XXXX. in growth top organic XX% by year in create In to incremental of X% in Our maintain XXXX goal will revenue we XXXX organic revenue the to fiscal delivered acquisitions fiscal Certainly, growth enter growth. year well contributed XXXX. fiscal would growth Lixoft continue fiscal contribute to the in to line XX% an could Any be revenue pandemic year as of closed as this. the organic incremental on X% to we headwinds fiscal year

and license than customers will service at to a software new New close contracts slower historical pace. continue consulting

for participated often their the COVID-related included we’ve in investment most of We’re accommodate of spend to which clients, observed season ongoing budgeting and have and currently the in in efforts, reallocation R&D their therapies. our

when complete, to on provide programs awaiting decisions. recent will We hold stability expect that times that this have some budgetary process, over been

of XXXX, year GastroPlus. of GPX. X.X fiscal growth version we as This We’re in targeting is up we of release in on version XX% of expect XX, release which the based fiscal growth the XXXX. will new XX%, rate software the And XX% to market from

growth accelerated earn-out fiscal have their will revenue AIDD and and the Predictor momentum their in tracking as Monolix to growth well XX% agreement. year anticipated fiscal in XXXX into module. is year which XX% ADMET performing and opportunity rates Additionally, new XXXX with additional carry Suite

us and provide a being and sales finally, And our on benefits. help resource rolling are policies. changes discount now accelerate price focused infrastructure our focus and initiatives initiatives processing sales out modest investments will We’re Prior on that marketing software increase strategic growth. in will

the in XX% demand XXXX. consulting We side, and our to services PBPK be XX% in growth the continued fiscal fiscal into growth PKPD On fiscal XXXX year year to in DILIsym XX% expected anticipate our services demand of the see across – rate in accelerated rate delivered consistent. with the remaining Growth with growth into we settle to more is a continued but will consistent and strategies I we in historical rate success fiscal COVID have assistance flow, XXXX. growth line offering fiscal the regulatory delivery of to our XXXX year program. Overall, project of continue the benefit continue trends. in from to expect

Finally, to me briefly speak let M&A our strategy.

and of The believe efforts geographic to are and/or entities that our service serve coverage. [indiscernible] actively and which offering our targets of provide that value a client to software new our service capacity could M&A our targets in engaged portfolio population both to application consists growth opportunities, service add We focused on add value and and extend modeling simulation we capabilities base.

to M&A successful in been have We efforts historical and focus in rigor our acquisitions. in due large evaluating part our

now detailed goal plan of shareholder safeguarding with methodically over call appropriate with to strict product That criteria adhere quality of I’m include and fit, acquisition value pipeline. and the size continuing creating review to progress made accretive to to and to we pleased to today culture cautiously excited successes, continue John results. sustainable the move M&A John? of We and a that and I’ll the capital that said, value. some enhancement our valuation the about effort we’ve turn clients our characteristics. and and financial

John Kneisel

good and to Shawn, afternoon you, Thank everyone.

the compared to $X basis, Our fiscal in XXXX the quarter. to of million year acquisition, Lixoft an XX% On revenue consolidated excludes prior grew $X.X quarter organic net fourth were revenues which year up million our X%. for

organic indicated, primarily growth a Shawn licenses was clients to As result four acquisitions site lower reducing consolidations due and of layoffs. as

In quarter. into third year, last sales to slipped close the fourth that were instead fourth saw the addition, quarter, quarter in expected the

The in that. pandemic. general in and maintain tended pharmaceutical the of into normal, science, have higher XXXX revenues sectors be software been in, QX consulting year, midst momentum division growth than DILIsym fourth offered As to to rate the of Both our have certain delivered sorry ultimately expected projects the a in accelerated well, about came that fiscal the the we in quarter. life XXXX affected

experienced or in we is of mainly over in software So, relatively resulting during sites. for sales and accounts, site during and expenses a fourth in about as $XXX,XXX, flat increased over year. as costs, studies were customer of contracts less or Shawn were by new to headwinds mentioned, $XXX,XXX and $XXX,XXX modest sales some accounted increases consolidations securing that period. smaller quarter. Consolidated faced increase we’ve Lixoft XXXX. some Consolidated of consulting our sales increased partially the the software-related testing lab this consulting due renewals XX% quarter projects organic software direct from decrease increased or which revenues the XX% the offset this required Cost analytical related labor prior XX% on of

said, of of to million the last the XX% year. to last tax fourth XX% fourth quarter. benefit I the In in addition, $X.X fiscal was benefit quarter in year. quarter $X.X $X basis, compared SG&A last an as virtually $XXX,XXX this of of or expenses benefit as rate quarter diluted Total was the the occurred credits to offset completed was total the to quarter year. margins of to result due and of in operating to saw provision due for were increased increased quarter million tax with costs million and Overall company capitalized. comes the fourth were fourth year in to training fourth gross spend Income gross an income acquisition. effective capitalized. foreign and quarter and total A the million. $XXX,XXX of increase in subsidiary this quarter on revenue $XXX,XXX increased development tax sold same in same The for which $X.XX the XX% the dollar COVID software increases stock number fourth in was of tax year income from year was the in based same million the operations compares deductions with a EBITDA expense, increase associated increased quarter fourth $X.X Of fourth the was driven actually foreign XXXX. deemed $XXX,XXX new $X.X came increase for fiscal a an of in quarter. quarter and margin just and benefit This to selling discussed. increase the to wage taxes year. higher SG&A shares XXXX million profit were for year. or and in quarter on in that to lower increased were with we the on fourth the the of This quarter. fiscal year The margin tax customer $X.XX the for expenses. XX% fiscal XX% tax from based mostly The of margin income ago by expenditures year pandemic-related million On $X.X fourth increased The gross $X.X compared This compared training expenses and Salary representing The benefit a this million related ago our expensed situation mainly by $XXX,XXX in again, year total the $X.X,XXX primarily XXXX primarily $XX,XXX was sold $X.X the tax the consulting in respect the $X million, fourth $XXX,XXX to cancellations of XXXX. a revenue, quarter in year about primarily during Research fourth margins gross year this XX% in same of ago helped X%. of XXXX most stock a expense compared per from compensation. quarter Lixoft share decreased increases exercised of fiscal conferences. was in compares We fiscal fiscal this to increase Net benefits travel of Also, corporate of XX% depreciation and the quarter, net in in quarter and $XXX,XXX X%, some This lower in quarter support commissions. million $X.X to prices. employees expenses, some based revenue intangible of saw of share of rate. per as for income compared was or amortization growth expenses options as the on labor-related XX% restrictions. million last $X.X you deductions of by quarter this was

$X.X fiscal net to XXXX performance an to of the revenues before. million up financial million turning Consolidated compared year Now $XX the for were or XX% for year. fiscal to million year overview $XX.X the

with XX% XX% XXXX or margin to XXXX for Our the expenses, year or compared year, were million $XX.X of purchase revenue year XXX million fiscal revenue XX% improvement fiscal of M&A last points. for to compared an gross basis SG&A including of related transaction XX% was of fiscal associated $X.X for $XX.X million year. Lixoft last costs

related acquisition have of Without costs, Our total diligence quarters, revenue. XXXX related third fees. a SG&A second and million of and in legal these the fiscal accounting, costs would year XX% approximately $X.X M&A we of been incurred for M&A due transaction banker

development Our $X.X increased $X spend research last was from $X.X million to up portion million. $X.X million year and million, million. $X.X The expense

for fiscal percentage by R&D Income fiscal million net $XX.X year $XX.X was fiscal million and to operations last compared expense million. full as about income $X.X year, XXXX to the a at X% increased unchanged of year $XXX,XXX was For from revenue or X%. relatively

year in effective was rate the Our for XX% XXXX. down from tax XX%

share next will the and depend and to rate was Diluted on $X.XX XX% those to expenses. year. the range share EPS fiscal per compared related in year. up million $X.XX Lixoft rate million year lowered XX% about in XXXX We for tax fiscal last EPS foreign and the for XXXX for expect this compared per for our by of year credits. to stock But low-XXs $X.XX $XX.X be deductions $XX.X effect EBITDA The fiscal XXXX. to diluted related was transaction X%

clients increase in quarter Shawn the that note, in decrease year by of Please each Each year, revenue followed with the strongest coincides we fourth the as our had fiscal typically earlier, Moving our months. shows to is the quarter summer showed this in third sales. fiscal quarter quarterly This slide. mentioned revenue slowdown revenues. slide in purchasing a the

annual excludes third same the Note patterns generally from the the provides commercial lower with followed per revenues entities. it numbers software quarter average revenues line and the in fourth EBITDA being that quarterly highest seasonal quarter our months. follows and by academics non-profit quarter summer revenues This as Our customer.

annual this of opportunity as pricing and see has relatively been our we revenue on going And as strategies. slide Software per we top the shows gross flat, selling this forward customer an execute but cross profits for the software software the steady in both margins. with revenues up XXXX. and consulting software purchase of fairly and in margins business maintained with We’ve the blended both lines Lixoft advent ticking total slightly

Our consulting red was the in in expenses in Ks effect and related taking the deferred the into as new business slide allows tax laws higher income consulting line is XXXX. is EPS margins XXXX forma annual be the the in The it The is high of effect three which EPS on margin technical the contribution of and expected business. years. work, the bottom of would reported shows our account blue normally of for than line implementation the last for pro acquisition taxes

results in forma you years. that’s is into few account, generated revenue region the the This for our by from pro increase these been With see last EPS steady slide taken can year-to-year.

sales in of business half were In global majority our were Asian Asian Americas, Hemisphere. represented software and European total derived approximately a About from Japan, with in We’re and sales XX%. the XX% in while Asia XX% revenues sourced XXXX, of related. revenues of the of the our the are here mostly sales Europe Western

positive company generated allowed dividends consistently three acquisitions million for generates to of over from the quarterly cash also operations. historically years. company This cash from $X the cash each flow paid is The company the operations. from is slide. small pay next dividends the a cash has totaled These have last excess into dividend. allowed The Turning

of about funds we and During and offering quarter offering underwriting per capital an completed investment share growth on risk shares grade of offering and at short-term $XXX instruments. about expenses. have after has acquisition, as of price data been allows common X.X of company next instruments, count. raised offering These bonds invested head other At Shawn investments. $XXX This XXXX, adverse the had for commissions million million mainly and of both The hiring grown acquisition. through XXXX, raise XXXX, cash short-term strategy. corporate of the a since our in discounts some secondary discussed the growth has stock fourth our government fiscal provides This we $XX people and million and beginning that slide year end XX by employee

Our an ability provide over in the increased innovation XX% has by services to support scientific period, staff supporting and development. increased software and

the cover to basic I balance the investment $XX.X slide, cash metrics. and next before, Turning At compared $XXX million million some approximately financial just the was said to we’ll as year, short-term of and our of end end the just last acquisitions final we year proceeds payout discussed. offering the This an the the cash for of from the secondary fiscal year. for increase from used of is We generated earn-out DILIsym. at

cash well to approach positioned continued strong capital, generation zero I’ll debt. our prudent to cycles. flow we’re the back business during in support Shawn. you, continued now our borrowed growth and with turn to our and With remains protect excess balance economic sheet the cash Our and allocating call

Shawn O’Connor

as significant level. of August. We the of year our our the to XX% Lixoft to with Plus to In staff goal addition this John. family. completion conclusion, SLP. to a the raise in portfolio made increasing positioned tremendous We view XX% software beneficial to growth rate organic We scientific growth and our future talented was our of ourselves for organization. this capital Simulations We adding acquisition addition you, our an a Thank achieved for another

professionalism, Plus of good on of partners proud focused And the we – to As Simulations I’m our science, and I’d have. may clients. done and and call company. operator service a us. challenging I you to world the turn time around And this for quality and a what that, any amidst take hard their thank questions of remain value to like measurable been the all company with we’ve and the delivering all has for accomplishments work of the employees the back work

Cameron Donahue

question [Operator with you, Shawn. Instructions] Matt Craig-Hallum. is Hewitt from The Thank first

Scott Curtis We’ll the be move to You next from The question. is [ph]. might Matt? next muted, on question

Shawn O’Connor

you on? Are

Unidentified Analyst

one question But to I’m and My is on. Simulations broad. maybe is, products. improve it’s to an investor Plus computing a general Thank you. its question quantum too and very how use XG report. does the Wonderful as plan

Shawn O’Connor

joining appreciate and for your and us company. thanks Curtis, today support long-standing tenure the

Unidentified Analyst

My pleasure.

Shawn O’Connor

is say But technologies I two important those we’re the of to those our analysis, two processing power speed. increased our And processing Well, individually. factor. leveraging speed of contribute simulations our that can’t and an

and during We key accounts AIDD terms competitive certainly were sort our delivered that regard. capabilities. in multi-core in many to module have analysis I our in out fast clients. on bake-offs processing the And on the specifically of and pace or ADMET the improvements mean processing utilize come and well the to this made accruing top. in historically features Predictor of that a and improvements one last molecule analyze always is We ability of year,

or to reach We have for clients access ourselves our out the services horsepower. garner and to ability web more to the

Our clients, infrastructure departments provide their as of that well. sort internal IT

it be based we’re today, item does for going the faster. at always speak always to upon not that do well improving and gating regard It So positioned seem as pushing to input in this a but better we edges bigger, and to point keep look forward. we’ll clients,

Unidentified Analyst

Great and good hear. to

Cameron Donahue

go will questions were in. I Instructions] have [Operator we that that of written the sent to you. Thank some

there Are drug development. your outside intelligence offerings advance to one own into Halpern. of Malu library initiatives capabilities looking as expansion new that any your from artificial Howard and/or of First expand is internal product development you’re such

Shawn O’Connor

Thanks, Howard.

have a module, like this both looking areas. products our past other advancement that strategy and extensions which thereof exploring delivered R&D of as well as we the AIDD existing year with are always We at the and

and experience market in And is our play is for our space. efforts business in Obviously, markets. market a to long Our And AI area, focus may and focus we We’ve some those our technologies, benefits in the a adjacent in other value of techniques of have consumer in got the now the vast of the technology majority the and elsewhere. that clients the simulation run in have that agribusiness order we there strong. much do in market modeling domain care apply technology arena. value pretty that we and markets to lot of lot that pretty that where business right It’s opportunity may and requires be a in developed in data the mining health is. that

Cameron Donahue

We one Shawn. as written Thank the questions. additional you, have here far question do as

are is acquisition for what an raise, target this you as strategy? your capital at recent point? What current the acquisition looking With

Shawn O’Connor

strategic consistently Well, that for to as the for to pretty I our offer suite we’re as as stated as a looking them. well of clients out there, and the to offering value and simulation them that our our modeling services we of can vendor acquisitions enhance products can position increase

modeling targets well number the acquisition simulation our continuum both as there of that as software So products are consist the through in development the there opportunities into the and fit out side out of service cycle. side drug

add them are are existing that size. Some medium direction. of a of products, opportunities small, Many number probably functionality small, which them our would to in of

We We as the view. a the side, umbrella opportunity geographical that service type that point regulatory a of to by year the the brought services marketplace. a the types is That practices offer as to offering of well in in don’t Sandra on currently expansion to ground service our of staff with consulting Asian the we an of expansion can the importantly, Suarez-Sharp. this in as past as too and achievable and is offer. boots example in the offer we through the the many of simulation market more well new modeling of hiring of accelerate service But terms markets strategically the acquisition probably On Europe, services the don’t have that of from capacity.

for in companies are view, of the always underlying I’m in product nature that and point on of the be valuation. but right a our an acquired point from from side that framing that So, fit now. a effort client of opportunities can to M&A culture accretive view, work at the appropriate looking That’s

Cameron Donahue

Hewitt you, you live. with I line for are do next I’ve [Operator question. Shawn. Thank the now. Craig-Hallum his got have Instructions] Matt Matt,

Matt Hewitt

all achieving targets year. All of the Thanks on right. for and much your so congratulations

still – or are not a country. especially here normal almost Maybe where bit regarding seeing easy with? quarter? it here – parts seasonality, in a because the that’s to you you’re in takes you little having So of you many task. the first the quarter we’re the given Maybe done to first seeing yet also that what puts are Are with the that’s deal coronavirus spike environment, an up the pick some there first up are pandemic still start in things and that of or is seeing

Shawn O’Connor

certainly Lixoft Well, responses and what reared COVID and the to characterize think got by yes, back It’s fair good the an its well. would our question, down situation. stability reach clients existing with I we’re our head under were over as seeing hear customer Matt, face-to-face. visit exaggerated I few this an lockdown and to your industry being your in and would is world. Operationally, step weeks, be. France events, lockdown at point continue voice. overly question for around the ongoing locking glad from think it’s work imagining I is home. recent has and as was as view, you group I’m out welcome. and well, other of From work meet I pin. our conference season don’t last a diminished that operating to we example. This

as so within industry, continued, which have conferences on on-site to has not those our but but – our opportunity conference format, virtual as provided clients, interact some within fully And situation. functional a a we’ve

this frame what recently though, I of So since anything time has the experiencing, say that really wouldn’t it March been – we’ve of changed for it’s year.

the calendar for in allocation benefit, play affected completion bit year terms they’ve a their the in of we think, brings They’re programs. little the that playing those more of by our we impacts to cycles through as always see set clients. for a some months respond But to have into that with out. sure processes, cycles that optimistic our and And you be. and clients but opposed will therapeutic their definitive wait the can last part and and of I’m there. been some answers go all more future, of think going the sense the into So it’s uncertain are on our those to. therapeutic for endeavor as it bring those are we that worthy plans areas, to COVID I answers the forth the budget to operate is cautiousness and what I continue established one budgets are game the upon budgetary number perspective from these will cycles I’m budgetary then continue certainty and

most the the terms say tick it’s we’ve the experiencing as answer that for to March. I been would same your So part, seemed to is that has in of environment question up toward externally COVID, the since while

Matt Hewitt

side, curious, does on Got XX% I a others? look has people? shifting like? to during you I modeling the it, along Are okay. bioinformatics Are Thank remarks those that pool grow still talent roughly think by but as consulting that cost of any seems done at guess, how What with as a you business continues gears from It year. you is you. market. least find then able as lines? mentioned just late. your you as right color well, bioinformatics, relatively your bit, to during And more a and competing broadly And had becomes increased the the perspective, hot staff the I’m little your as expand. prepared What

Shawn O’Connor

that shortage the and market scientists are in has. support can enough. side But relative businesses really It always margin consulting certainly It sourced side. been It candidates more need our But benefit, ourselves a for consistently we’ve from of pressure business the the that put our fair in there for terms today software past. at support as in been available than that in mark. the held is always our to – competitive our out of competitive the the consulting efforts, well is XX% both see, pretty of that staff. has of need still, we clients you looking the need does and to profile our pretty profile it’s Yes, that development there on order compensation though, a well as

passing So through to arena. that margins cost we in able our and efficiencies are on clients, maintain our the

attracting that industry. hire to out our from from our or existing – others some our coming people good with as people results and it or from for important a new people. I’ve us very there. we priority world academia some vendors compete source industry of potential well, cautiously, from to ability other occasionally that been candidates and the very be marketplace component of about significant And where to other clients business, continues a consulting to out very an positive for candidates So us, in very the people from But terms attract

one into date, effort, look be So important forward in our we’ll been fully future. continuing an we’ve and fared that and our needs for to we’ve pretty to meet this anticipate I that meet regard well but tomorrow to to able us, needs the it’s and able

Matt Hewitt

the That’s then one hop then great. And in and one last queue. back me for I’ll

tie you uptick mean, you And like within or next historically, year events? types with two does that what of adoption for increase or you you what out recent or and had drugs where it importance announced those that and if and of years? that competing – to in release through look I to a you may the a – something or these happening? an Thank during the something of – within drugs can events an the quarters mean both of were successes think types I quantify those possible at do to as approval. and failed with had stories slide be via fiscal you. quarter you couple XXXX couple Maybe approved the And able is client of press maybe help a over look getting XXXX FDA you commenting of success drugs on a had get

Shawn O’Connor

drug question the a modeling the dedicated Sure, follow-on effects, maybe basis. X Phase into Matt. announcements drugs. the on be can clinical, Maybe in metric a if types very there? have of the The industry, existed had of do even value. that it clinical ROI our I’d client made some better not few can of answer confidence to the take scientists DILIsym were that that you that has garner this, may stream attention advancement to trials. to the we and say impacts it Well, taking may had into revenue the we the announcements say And in market position that of not regard have to to in clinic. yes, been How the otherwise provide I drugs entire of in the on a that you for and able in the that been drug’s calculate are successful terms these quarter not very it’s specific but our clients

rapidly apply sale in provide modeling more us and all the the of magnitude is big. and looking behalf But target an The those cons in when It the drug the the not area it for are the up these we make. specific software our simulation, areas. that the that I and went market are increase, that industry for broadly it’s shown It timeframes more on of at eyes And silver us to pandemic as in cases and has modeling for our on the the be simulation clients. our going our come to use so based in other practice announcement play can look themselves to that to specific consulting So highlight through in can analysis required forward. else – line that perform the can upon clients opens perform the the or might and all bring to expands gotten it’s so for those in those spot speed only for lining, wind attention desire to the how into products demand and only market demand pros and well-positioned. the do that

go new getting of we’ll from as in of I one think forward drug timeframe that accelerate techniques, continue we benefit We’re market. future. the to that new to And to abilities those a

Cameron Donahue

out be to to appears back over That Shawn. you, comments. it of follow-up I’ll questions for today. turn Thank you

Shawn O’Connor

– to everyone. care, and well are January. Well, XXXX forward soon I look Very first results everyone’s year safe, quarter, yes, we I everyone, in to I to our fiscal and good. Take first forward Be reporting through very look quarter appreciate you attention.

Cameron Donahue

does this And conference and today’s webinar. call conclude

www.simulations-plus.com. you. any replay today’s missed at of you the website, presentation, available our will If Thank part be

Simulations Plus (SLP) 16 Nov 202020 Q4 Earnings call transcript