SLP - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Simulations Plus Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

It is now my pleasure to introduce Lisa Fortuna from Financial Profiles. Ms.

begin. may you Fortuna,

Lisa Fortuna

Financial Welcome Results Simulations today Conference Executive Frederick, O'Connor, everyone. of Operating Fiscal Plus. Simulations are Third XXXX Chief Chief Will and Financial Call. Officer; and to afternoon, Chief Plus Officer the Quarter Shawn Officer Good With me

note updated earnings our Please presentation, as serve will that to supplement we a today's quarterly which prepared remarks.

commentary, questions. access Relations website After management's Investor presentation for at call our we'll on the the You can open www.simulations-plus.com.

reports may our include uncertainties. call, today statements as from As is the Securities that and results significantly these expect and a could factors Further discussed and future reminder, this Exchange risks forward-looking Words and company's contained Commission. involve information information of differ company's actual on and the anticipates risk annual best believe, like filed the in refer with statements. and to estimates quarterly

Please With Shawn turn O'Connor. to ahead. that, over go I'll

Shawn O'Connor

our you, guidance. share Lisa. diluted segments fiscal share in revenue in afternoon, thank solid call. everyone, with XXXX XXXX and Thank software and per for our XX%, Good performance delivered growth for of internal third earnings our earnings fiscal $X.XX quarter third $X.XX. adjusted and diluted line of conference were of of quarter Strong Results the services joining you per

guidance. on performance our are our acquisition to track the year we solid in Pro-ficiency, achieve revenue Given revised the first and X of months recently full

drug quarter, the Biotech notably signs last most candidates funding noted of improve year. show have funding companies clinic. we As to last continues in that for the starting market environment to is over recovery,

pharmaceutical see now, spending among patterns range pharmaceutical to be continue cautiously We of large about our a companies. client Right spending. we optimistic large

position and with market better expenditures, increasing conservative, is Some compared internal ago. between in are to remain depending in year factors. Overall, on a various today market a most falling the external and somewhere others

our software Moving segment. to

XX% the upsells for were in logo saw third the X-month quarter new XX% We up good renewals, and period. and increased revenues Software activity.

biotech churn to lag ongoing overall However, still there impact small have the been market Asian from in and market growth. some continues

in unit Our for XX% cheminformatics third the revenue quarter XX% year-to-date. fiscal the business and delivered growth

ADMET by This quarter's higher for was again once driven revenues predicted. growth

customers Additionally, were for QX. upsells new XX unit and this XX there business in

software pharmacokinetics upsells become GPx, suite fiscal reaction were the had business year-to-date. solutions. physiologically-based quarter Our next generation simulation or a unit, physiologically-based customers X% believe unit it a new excited with increase PBPK We business and addition of customers. launch will to meaningful added biopharmaceutics, PBPK positive. for existing been X% booked revenue XX very X the The to Initial and and in and the our has client modeling pharmacokinetics, leading-edge of third

quarter fiscal during business & Our the Clinical CPP XX% year-to-date. grew Pharmacometrics Pharmacology XX% unit for the or and

During the XX added and X new quarter, had we customers customer upsells.

Revenues quarter Pharmacology Systems Quantitative for unit for QSC or business XX% in fiscal year-to-date. and our XX% the increased the

the and pool quarterly end reminder, users. be results for license high on a per ticket QSP smaller based As a lumpy of price can

the Revenues segment. XX% third and Services for pipeline with during our healthy period, Turning opportunities. increased bookings active the and a to of XX% X-month quarter solid

which we third a level patterns continue is enter the clients quarter positive seeing spending lead as pharma final large cautious which was activity, Total year. the fiscal quarter but $XX.X the of we're exhibit of end robust our good Our to a at is backlog sign. million,

XX% from third model XX% third period, in quarter the up XX% CPP fiscal projects. XX% oncology and in for our immunology business unit, business were X-month revenue the quarter Services revenues unit grew QSP benefiting year-to-date. the the for In strong, services and our and in

fiscal year-to-date. third the Services decreased for the unit business quarter increased PBPK revenue for XX% our X% in and

source We initiation contracted delays to projects. the encounter continue data client of impacting

Moving providing Pro-ficiency, on AI intelligence in our and that a performance we announced XX, science, across continuum. solution collective leader and On simulations, creating acquisition of focus one-of-a-kind on brings The June expertise development technologies to commercial simulation-enabled drug platform in the recent the together development. for acquisition drug our news. clinical and a spans

internal few it's with are schedule. pleased Although in only integration a progressing been that weeks, the line Pro-ficiency we're and collaboration and our plan

customers showing learning Additionally, in are more. our interest

able We update on call October. our a provide fuller will to be year-end in

call the And over to with that, I'll turn Will.

William Frederick

total increased To XX% XX% trailing $XX.X XX%, revenue basis, Software to third strong quarter recap Services XX% revenue representing revenue; million; a revenue representing XX-month total of million; our to revenue total increased total XX%. revenue of performance, Shawn. you, $XX and XX%. revenue increased Services On Thank and increased XX%, XX% increased Software increased revenue

total XX% compared at margin QX margin to XX% year, gross software XX% XX%. XX% last versus and was with gross versus XX% at services gross margin

gross For revenue the margin of services gross was primarily driven XX%, decline to the SG&A from communicated trailing The XX previously departments XX%. and margin XX% services margin margin shift was services personnel of total cost by months, gross departments. Software was year-over-year our was gross

Turning for to the CPP was cheminformatics Software XX%, QSP revenue XX% was contribution was XX%, was X%. quarter. by PBPK and business unit

was XX% XX PBPK was QSP CPP trailing the XX%, contribution For and was months, was XX%, X%. cheminformatics

rate and XX XX% XX% renewal based trailing was fees the months, based customer on For accounts. on our

revenue average increased $XX,XXX. per XX to months, trailing the For customer

XX% revenue XX%, by was services X%. was business was was Shifting PBPK QSP our unit for the to and CPP XX%, REG contribution quarter.

quarter were XX%, XX trailing was was increased on XXX backlog For contribution Total worked PBPK QSP X%. XX% CPP was was and $XX.X the services project REG and million. XX%, end months, the to during quarter

backlog XX to approximately months increased XX%. revenue from within Anticipated

income up year; consolidated of and Pro-ficiency. from X% Income operations last X% XX% quarter was sales XX% to XX% compared expense operating quarter. last revenue, of statement marketing the up compared expenses revenue expense the last of marginally XX% year. income before expense was revenue, included G&A XX% our to of expenses for G&A And was XX% was year. the acquisition compared last of were from to to taxes year; compared R&D last XX% revenue Turning year. expense revenue and XX% of for last of was for Total $X.X from million year. XX% income XX% revenue of to transaction-related

Year-over-year to $X.X from lower quarter of $X primarily $X.X million compared increase and acquisition costs; compensation and increases primarily higher from value last million Immunetrics liability year, the due Pro-ficiency additions and last the year. expense earnout to due cash a due increases increase a were the was $X.X headcount stock-based acquisition Immunetrics income. from to Other fair interest primarily income million this to million

the and million or revenue, earnings last year. of of per were impact XX% of diluted was excluding the last to $X.X were XX% $X.XX compared million $X compared share revenue to for $X.XX compared acquisition Net costs, EPS, year, adjusted quarter income last to or Diluted year. $X.XX $X.XX

the exchange, of any acquisition or metric financial expenses EBITDA this on up compensation, compared and last income, our taxes, respectively. million year, our to currency adjusted or gain adding and calculate is quarter back The We website. $X.X adjusted million impairment in and to amortization, on interest, transaction-related net earnings of release reconciliation metric asset $X.X GAAP and XX% non-GAAP Third XX% revenue, stock-based loss depreciation was EBITDA relevant any by charges.

and third constant tax at last tax for our million rate effective expense XX%. compared the was to $X.X Income quarter remained year, $X.X million

remains XX% rate XX%. tax fiscal effective current estimate for the full between to year Our

our to investments. million sheet. quarter balance the Turning We and $XXX in with ended cash

development and cash we Following debt, flow of capitalized well June, million to strong capital investments free no the cash acquisition and in in Pro-ficiency corporate our allocation commitment a and initiative. with had $XX remain strategy and continued

we decision to determined cash dividend. that with in shareholder reflects versus the August. continuing our priority our today, invest the to growth that the announced board's initiatives of Directors payment dividend generate nominal Board final Lastly, The in has will company's long-term discontinue value quarterly

Shawn. to the turn now I'll call back

Shawn O'Connor

you, Will. Thank

both Our Services results Software and performance third reflected quarter in strong segments. our

As last revenue. to these actual before and improved quarter, have conditions require time they changes year, bookings we to translate compared but said last market

optimistic. As such, cautiously we remain

million well stated the million the XXXX targets, earnings share from the year, per diluted With $XX Medical of to our newly year-over-year and XX% Communications million; contribution our XX%; growth of strong $X.XX XX% revenue and the of mix of are XX% $XX range which software positioned business in and $X.XX Clinical between Total $X.XX. in XX%; between earnings between fiscal share months Pro-ficiency to formed performance we guidance to in and combined per with expected to Simulations include: XX%; diluted X revenue to the meet services mix unit, $X adjusted $X.XX first

adding Pro-ficiency clarity to note, EPS and transaction acquisition. Of costs profitability adjusted the of are separate operating our on we related the to impact provide

and charges the the to diluted adjustment which Our impact GAAP same reporting, guidance EPS fourth reflects of acquisition. GAAP the acquisition-related reflect to consolidates quarter an the

fiscal in our reaffirming We fiscal when be of results. our quarter interest October we full Pro-ficiency fiscal guidance will report be in year of income. year our But fourth accretive the XXXX XXXX to acquisition is expected providing factoring EPS, to the are loss XXXX year and

and trial medical communications want key CSMC Plus differentiators intelligence provider medical story. experience to analytics developed performance business and for clinical opportunity the turning Simulations of I communications. of the to new content solutions brings AI in simulation-enabled Q&A, reinforce and data with Before the simulation The biopharma take enhance to our technologies industry. the biosimulation, is to leading unit a success,

market addressable $X portfolio acquisition, phase billion to the to With total pharma commercialization. and to our through have from serve our have we clients the preclinical expanded doubled

strong barriers compelling value customer have We a proposition high with to position entry. competitive and

finally, a expertise seasoned and a attractive simulation. And with an modeling profile strong and no and have with leadership have financial management we in balance We debt. team sheet significant scientific

your time call Thank the over I'll the with today. questions. to turn And your you operator now that, for for

Operator

is first William with Blair. [Operator Instructions] Our question Max from Smock

Christine Rains

on guidance side, backlog we how and environment from we about you visibility? Services? cadence a given are should XXXX you're on inorganic how Software potential XXXX? the for Well, still current macro million in to a Smock. thinking think revenue improving $XX And think not million bookings contribution Rains and Christine between versus Max high providing I Also today growth of Pro-ficiency and should understand breakdown level, organic $XX about It's on

Shawn O'Connor

guidance perspective, exists XX% that year. rate this for that whole the the Thank we've improvement know fiscal much difficult potential a years, for last year you From growth of question. step-back market. not to contribute of biosimulation in of X see to translate XX%. bookings advancements always guidance in do But sort and XX% objective fiscal stated Yes. as to activity give for a October but in market is help year 'XX. this we're starting we've yet seen that really to into The to given XX% as we the year yes, I is In a everyone market growing And a we've 'XX. anxious,

remain we in So regard. cautious that

funding Certainly, most is of more and pharma spenders the a in base and non-spenders mixture environment, with up which has but people majority of active large our the the market, that's still biotech improved tight. holding makes much pretty client a

as we visibility to next enter giving as enter from 'XX So and that, our going cycles, that the give always October, start the in our ability contributes the their back we in budgeting year, our to and the year, into guidance fiscal we guidance clients benefits terms that through of year year. some of fact to timing half get

that. come is what No in in potential million transaction. in the for at $XX our to contribution at we XX% said to than The the that number $XX change to of the XX% Pro-ficiency 'XX. million time, better Generally, terms we've this of point in expectation. announcement said But in fiscal

Christine Rains

outperformance Great. at On revenue. in a come we EBITDA margins, makes the adjusted of software were little surprised despite little in of short expectations, margin sense. a That lot a

can some you key and hoping the quarter? takes margins impacting color So provide more puts in on

Shawn O'Connor

of with associated quickly and and down Yes, the of seeing frankly, of pretty churn bit. XX%, of incredible a recruiting software to in our range, that terms had costs the -- base. a our efforts in to year. GPx very typically, that. XX% certainly in we We XX% at globally in to quarter terms quite more be retention during And has temporary of employee been last this EBITDA target so level and more the expenses. that And XX% accumulated had We're contributions XX% we it's come hiring sort benefiting, quarters release little the terms that. of up see marketplace some of -- in significant couple We've from adjusted situations

That's even contributing of to over bit it, out little coming the the course a and quarters. we'll

announcement, And set I remain the the XX% little Pro-ficiency those but as range. we our long-term with will think, bit profile beginning, So X that a are believe bit pressure factors, contributing but said there, they targeted add to will well. of the that I as XX% in we in to a

Christine Rains

also That's helpful. Great.

Just one last one for us.

due the services with being client the On to initiation data side, PBPK contracted this of quarter source that down projects. delays impacting

delayed that materializing work if from confirming work so, and in expect or we this should Just XXXX? this not is And benefit to canceled? QX

Shawn O'Connor

to get back a business. track flow PBPK consistent hope We even with more on consulting

up, to you that a quarter-over-quarter very off. Nothing seen window caught delay and we perform tends situations for If line, terms in had We've expectations significant maybe X-quarter back part of those trend of significant to regard. X.X whether readiness through. terms be that been delay of quarters, look to there. of of delays quarters the a -- over the growth data segment. has capacity of a It the X- X were some of in to those it challenged encountered But of in we've but pushed little that late might If projects contractual quarter catches contributing fourth that all good in in experienced impacting cycle be up cancellation projects, that terms time. is they

portfolio consulting at consulting out one have seem that XX% as strong. their always practice. CPP to of this quite our has delay for challenges. was that evens practice, quarter, growth Our usually some and consulting QSP services We And

Operator

Our is Company. & next with François Oppenheimer question from Brisebois

FranÃ§ois Brisebois

first of was of wondering, pretty biotech back bit pharma, SBI little So for quarter as I and they've was IBB, after just a the the the kind a exciting space. the market in whole, terms come

Any So be Or now kind little would market of this wondering, anything? your the and in optimism, for potential feel there a exciting just we your first I was we're and where more is cautious? of cost are now? helpful. was on terms quarter you upside, after more based it seen color Have

Shawn O'Connor

very over translating quarters growth for for more there bodes And a we're that to on at translate out, you of that been certainly conversations that we've last seems experiencing the announcement the activity pipeline and I baseline Frank, that this to leveled gone have the in one but future. biotech growth, that terms the yet positive. the different X business, -- out. will, excitement But funding away, time to seeing to the contracted was really if segments, funding -- of anything side leveled the for still that not few that's well into waiting guess, from segment in come. That

contribute creates each pharma of pharma cutbacks of its large story need efforts which terms the the up to a cutback go they of and has On account at leads pushed purchasing can't side, perspective, again, window see catch those we in just internal of expenses that trial time as down, process pause in and that business activity that historical announcement simulation the from to input forward a clinical are external often just and And we new of -- into they being contracting own away. situations, where large and in still least a budget and in slows flurry oftentimes, pace. terms programs to antidotal modeling those or

X. budgetary or So decisions there or in probably framework of cautious got. us are of flow were bright continuing but the environment we continuous clients, more work some on same are quarter lines of the today? hard of mind challenging some within to terms part out that that keeps optimistic more improvements last we've the We're we in our the in There

FranÃ§ois Brisebois

should here could the related acquisition? of just terms EPS you touch be what guidance updated just on update had what on there in terms that related if that Okay. acquisition? to versus -- or announced. you EPS guidance that just call, mentioned here else clarify helpful. in maybe update to to is be you that any clarity And diluted terms Just in the we the And would the then next expecting from of lastly, all the of the updates Pro-ficiency maybe on Is

Shawn O'Connor

our results. be financial of Pro-ficiency 'XX. into quarterly quarter referring which Certainly, guidance terms Yes, contribute to our they this to in in our first will

come commentary as So will business our they our units. other into just

on in well as to bit be October, we'll little we'll up. the the its in fourth will of during of operating contribution give in included, and fiscal more integration success So terms comment progress its quarter and Pro-ficiency as a detail year coming 'XX it

On the terms going we in some the confusing breakout EPS non-GAAP change the of the of answer respond income change away there costs. and when there of transaction diluted mix the terms the announced the adjusted clarity well EPS, between to interest to the as in provide of as the more questions and impacts to EPS,

Operator

is with Craig-Hallum. Hewitt next Matt Our from question

Matthew Hewitt

first a you you the little had spoke you I think, provided are up, a the about gross when bit below how with company. those regarding time, historic Maybe commented margins Simulations expect And the Pro-ficiency, bit in particularly get little Plus' I to line you acquisition over that margins, their call, margins. think

going mentioned Is some trigger improvement Pro-ficiency? kind to a would those I that think a in that a the gradual be in that you've get snap pace? event today. is type of line there faster on Or of

Shawn O'Connor

it their little of a Immunetrics, and Matt, is, contributing similar business to both acquisition The that's call where I a you've guess. profile our like service of got of bit revenues. Yes, both, software margin

side. in in software the use impacted side, most impacted is And dollars. automate, in closer And of that function XX software both last notably, that technologies to on training are that their our XX% They've to of investment step sides continued business, so mix mapped licensed that their quite by side. XX significantly of operating versus out. Their efficiencies terms and continues in worked technology to XX% to is higher-margin accelerate And translate is is the months as the software a AI their improved margin margin lower-margin margin regard. the by between it's revenue use consulting software to the getting work being of to the into protocol by are clients. kind modules that's improvement over -- And XX% its

dollars up a see those of path overall our and to and revenues rate as rate mix, service terms margin to overall than -- so versus which we heavily the over consulting split help service so sort of level well the towards them growth software impact more that and And in time. skewed or software revenues, revenue that margin of growth they that getting XX% is catch contribute of affects XX-XX will

start at and stair we But out mostly the gradual a will through So move as they and bit improvements year we point, a a side, it year there'll as you will, release low through on technology the if be little 'XX. of beyond. probably fiscal into be next step

Matthew Hewitt

And regarding fiscal it. in call, accretive? one Got you are accretive on on just fiscal talking you've maybe on here being Again, earnings. guidance of where accretive to afternoon year? mentioned as of curious I to it's it accretive Pro-ficiency you again was Is to the off next question. then assume based GAAP I'm the the prior think referencing I what as But was base? consensus what you're 'XX, for going that. this numbers be your mentioned base to 'XX today, just And

Shawn O'Connor

those in were we've been it's lost investment in we in that while on Yes, sitting the our sheet. income script reinforced dollars of accretive the interest enjoying covering that terms balance

share earnings positively contribute to So be covering accretive interest they will income. per and

Operator

Our is BTIG. from next David Larsen question with

David Larsen

changed had model about $X.XX Was costs. the commentary? then $X.XX. is an And the we the adding because the $X.XX, adjusted. you it transaction to basis the EPS on Just XQ, I $X.XX that Can adjusted revenue June to interest or of clarify $X.XX guide the XX, we're income just to to $X.XX the fiscal by apples-to-apples June $X.XX we're But maybe relative back in on And I on not? $X.XX lower thought quarter. $X.XX were was and just at to to relative please? our you with now that thinking at, and EPS how that, Congrats about Because declined guide. if XX beat are it's $X.XX, lower the $X.XX -- transaction costs, think, GAAP, this

Shawn O'Connor

Yes. that want as here as Will, Will, to fourth terms the of that in I know contributed do coming color transaction little actuation here? and of in in going I'll quarter our But ask terms expense higher that's cost the there to to a you well. add in, well. was any contribute hit you

William Frederick

the Happy the $X.XX to well the the David. we mentioning, had The on Sure. all diluted to got there was the $X.XX now completed. $X.XX transaction price and answer, numbers to costs, apples-to-apples purchase as we have $X.XX as Shawn got we've as where allocation

quarter. then better $X.XX regards adjusted sure had visibility the $X.XX. to so would with the have costs for what We EPS make the those the into that's -- the that to And look amortization comparison we visibility just costs adjusted $X.XX. like that And we to without to to $X.XX

David Larsen

Okay.

to sounds bit it in we're $X.XX. $X.XX expected. transaction which are exclude little like nonrecurring obviously a at we came So higher If onetime costs, those, than

I Okay. And quite is $X.X $X.X in And I Am the XQ sequentially. what is reading more $X like comp, sequentially, -- think, stock up it so about I I costs fiscal million higher up G&A? a think, correctly? and that to then G&A $XXX,XXX sequentially, bit drove million, million the think, than increased from the

William Frederick

well driver we Yes. employees is brought on folks. there as as the of primary year-over-year, the Immunetrics The hiring

of we've year. we So QX in team. was employees on this Immunetrics got of last brought QX in It year, that about XX

have certainly point so year. we with at employees to about XXX last or compared So more this

costs. So most comp of it is

David Larsen

And think number that costs $X million from another G&A GAAP sequentially. I transaction it's Okay. in

Is expectation. I Okay. think correct? heard of then, Shawn, sort adjusted you the for EBITDA I longer-term XX% that to say And margin XX%

Shawn O'Connor

in that still gradually in had frame that we in the always marketplace beginning the XX% but we operated shoot the XX%. and we We've up, past, moving Yes, which accelerate to that's been had that's creep and in target. that's and our compensation target below have to the there time back programs been historically for the what XX% compensation

David Larsen

like I are guess, in just the it of things picking up. then And sounds terms environment, and broadly demand accelerating speaking, Okay.

marketing will It opinion of is proficiency more Just leader, sales -- add like that? to and type sounds like Pro-ficiency solution. a key

Just would any demand the color on great. be environment

Shawn O'Connor

-- the side business software to tied well. trial activity certainly, is They're as clinical the of

the common to So of well. some are ours drivers as there

And process also same revenue through clinical push will growth drugs the pushing so the their as terms of purse in well. strings

Operator

There at comments. time. over are hand no further questions this to back Mr. to O'Connor floor closing the I'd Shawn for like

Shawn O'Connor

Very to we good. Well, appreciate everyone's look I in speaking fiscal again year and our as close attention forward everyone. October. Take care,

Operator

conference. today's concludes This

time. You may at lines today. disconnect us your this for joining Thank you

Simulations Plus (SLP) 2 Jul 242024 Q3 Earnings call transcript