SLP - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the Simulations Plus Fourth Quarter and Fiscal Year 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.

Fortuna, you may now begin.

Lisa Fortuna

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

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

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

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

over With Shawn. to Please that, go the turn I'll call ahead.

Shawn O'Connor

fourth joining fiscal Thank XXXX thank you you, for call. afternoon, and Lisa. quarter and everyone, our Good conference

and end guidance at year. guidance range of beginning $X.XX. in the in revenue growth achieved rate the to the results provided exceeded from fiscal organic fiscal EPS Full of fourth The end strong our the of diluted of our excluding at delivered growth the rate Pro-ficiency. year XX.X% XXXX. quarter $X.XX basis, year-over-year team XXXX, increased and was on organic Total Our high contribution an XX% we high XX% the of above $X.XX

the year. highlights of to Turning key

platform user models, workflows our discovery. As tools, and machine streamlined across enhanced GastroPlus and with major supporting upgrades learning and PBPK, an interface, algorithms the significantly flagship experience platform our GastroPlus, enriches advanced an continue XXXX, GPx industry intuitive fiscal in refined during competitive processing. leader biosimulation software greatly faster integrated drug edge improve with we technology. with our PBPK to PK/PD

machine less time July, simulation release platform we we allowing predictive presets results. in and easier support on In other released software other spend included our capabilities drug accuracy May, with to and scientists and The exploring that pharmacometrics Predictor of and enhanced models run, faster features. XXXX. integrations, models new This included greater version more learning cheminformatics and on Monolix release XX, make high-throughput to released expanded amongst Sweet ADMET In upgrades the programming discovery.

year with in growth area fiscal opportunity. of clear significant growth the integration our operations, transaction supplement continue XXXX, clinical strategic leader accomplishments. company scientific 'XX. we at combined quantitative coverage During fast-growing We acquisition we June, of as doubles commercialization. us The expands Immunetrics, This our to XXXX significantly year with across our positions to pharmacology enhances a area the and in our TAM systems addition therapeutic our support the June resources Pro-ficiency, market This acquisition completed organic and clients ability XX% $X and fiscal acquired largest acquisition to most our billion affairs history. and in the

drug drive suite comprehensive uniquely of the spans to and now profitability. positions us innovative development entire growth Our continuum and solutions

a particular mixed of the budgets, provide activity including last environment, metrics others second Current a the environment pharma year biotech indicators, Spending is bag next improved and and to clinical potentially that for suggests area environment financial we cost X year. activity, pharma moment the fiscal years. Next, been trial leading a for I'll macro funding for funding focus realize of compared spend an on a for and the constrained which community. has

engaged many observe who continue among levels internal are our 'XX range process. preparation We clients a activity to budget calendar their in year wide of

we with entering are some cautious discussion Although initial we are year optimism. encouraged budget by XXXX, positive the for

year. in upon year take improvement advantage our will we during but prepared be fiscal for Our guidance of is the market continuing, any current based to 'XX client conditions spending

segment. Software our to Turning

fiscal Software an growth by 'XX, basis. revenue on XX% year grew for organic X%

Software revenue unit quarter. for growth business grew X% decreased basis. grew the an X% organic and X% the Cheminformatics fourth quarter in revenue the on fourth year for by and X%

the to base we of utilizing During XX of the have total fiscal Predictor AIDD installed module our number grown of XXX clients clients. year 'XX, ADMET

year Physiologically-based PBPK ongoing the the quarter pharmacometrics its the in market quarter. CPP X% Monolix renewal or growth business business continues markets. choice. our X% the well quarter. year super continues the to and as for and and pharmacology the revenue fiscal pharmacokinetics, decreased or PK/PD increased share displace slippage fourth and unit, during XX% in unit, grew revenue GastroPlus some grow of to main Asian platform in fourth Clinical competitor for the increase despite XX% its and

for in QST for X% the or XX% year, business pharmacology the Revenue our that decreased quantitative quarter. grew unit systems

in quarterly a upon can end expectations. Ali the QSP a with users. Revenue for As business reminder, Revenue license or high lumpy fourth Medical for price results line in million software the be adaptive ticket based our expectations. was in for line generally quarter, unit smaller the MC fourth and also of in our pool and with or our learning insights business $XXX,XXX per our Communications, unit was quarter, $X.X

in grew our segment. fiscal fourth quarter, an budget on units. impact by this external client on strong clients organic typically XX% service as QSP pleased with environments. basis. an especially funding Services business XX% grew execution measures We're organic to was eliminate may 'XX, budgets result delay Services Services Turning for revenue or XX% for work CPP year tighter by and constraint XX% Performance cost given basis. revenue the in

the X% up XX% the the and XX% unit the revenue year X% fiscal for business unit unit grew revenue XX% and XX% business quarter. in business fourth PBPK the fourth CPP revenue decreased year for fiscal was up USP and strong, in quarter. fourth quarter. the for for year

due source as Medical the some anticipated acquisition timing to projects than recognized We contracted $X.X revenue space. contribution initiation this as delays revenue This the was data to delays. well higher the fourth prior impacting project was encounter million continue our clients less in to in Communications of in quarter. quarter

Turning to update on an Pro-ficiency.

a and process in in medical analytics content regulatory confidence simulation trial As as increased regulatory in clients. both commercialization. well success success, approval provides Pro-ficiency reminder, data post-approval Ultimately, as technologies with our for AI communications, to support clinical experience developed activities these enhance the

pharma by market portfolio meaningfully reduced proficiency customer on achieve cycles, clinical addition, chain. return our offerings combined trial deviations, The helping accelerated results of expands across In protocol improved cost them investment and clinical product operations trial and reduce in the value service awareness.

include: recruitment, complex practitioners, are real-world protocol asked during retention to learners an simulations compliance uses that learning lifeline Software detailed trials. performance In scenarios, and decisions of offerings the from generated Pro-ficiency tracking increase and clarification, adaptive Pro-ficiency protocol. prior management, data platform of simulation protocol make clinical of areas and implementation to start The practice the unclear trial to the to data of education health into trials. care trial provides are clinical further enabling that insight

a fronts. but the Panorama industry. plan to by location. in therapeutic be about key process leaders, integration opinion limited not leaders, expertise, life KOL ahead is research which provides platform is professional It criteria, can information current Insights pleased of report all the tracking that We're for affiliations across geographical filtered to, including, science influential industry and

medical led clients. insights to simulations announced, for Medical led X and we and Murray business, commercialization our by Communications Alper, learning carry forward Jenny affairs support adaptive formed previously our by with to Rouse; units, As and business address clinical who

and generation and underway. go-to-market sales marketing combined the front, On lead are strategies our

we our We expect additionally, enhanced capabilities to scientific financial contribute opportunities. are claims. contribute have further efforts which development and operational efficiencies expected back-office these will we deliver expense our services, and and to to And organizations, Together, which and safety. business integrated expect to administrative -- general technological will our products we benefit

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

William Frederick

$XX.X a XX% million from $X.X To Shawn. revenue our including Pro-ficiency. you, performance, recap total million, fourth Thank quarter strong contribution increased to

representing Fiscal XX% representing Software of X%, XX% total revenue revenue revenue $XX and increased increased increased year services million. revenue. total XX% total to of XX%, revenue

of XX%, revenue increased and services XX% representing increased Software revenue revenue XX%, of revenue. total XX% total representing

quarter. Turning contribution ADMET products XX% to the MonolixSuite XX%, our other was was XX%. revenue products XX%, was were Predictor software and GastroPlus the for from

XX% Predictor and XX% ADMET For the GastroPlus and was XX%, other MonolixSuite was were products fiscal year, X%. was

based the the compared year, rate customer our and based was slightly software accounts year. increasing to on XX% on these For prior renewal XX% both

customer per by business to QSP and for CPP MC services unit the was XX%. contribution was quarter, Shifting to was $XXX,XXX. revenue year XX%, revenue our the software Average increased XX% was for XX%, PBPK

$XX.X For the Total XX%, X%. fiscal XX%, PPP by million, QSP projects services the to PBPK quarter was was during MC and Year-end year, impacted X primarily decreased was backlog was on were XXX. worked sources. XX%

in First, slipped XXXX, $X that some than there into first already weeks more the service were closed million September. fiscal contracts of of these. we've And X

still there's year this contracts resume the customers delayed, the the open backlog where the uncertainty been in quarter Second, that we regarding adjusted projects. to will have remove when fourth

with compared at backlog approximately result, months from to a As of year. the end XX last increased anticipated to XX% XX% revenue to XX%

structure, operating Pro-ficiency expenses this gross and the reorganization Total was to due Immunetrics XX%, from of full fiscal margin with margin of from of year-over-year and of gross margin the decline reclass year the with was expenses year. the XX% the impact primarily the internal The gross gross for the acquisition XX%. acquisition additional software our year expense last margin in year

The G&A was revenue to year. compared year last was and the revenue at Turning compared the of of due was of of XX% of expense expense to Sales year. variance compared the primarily structure XX% year. the expenses statement our for to our collected reclass year. reorganization internal consolidated quarter. XX% to of expense this to beginning of mentioned last cost XX% R&D expense revenue G&A last income X% marketing XX% the in was to revenues

G&A a included fourth the Immunetrics services million for year. for expenses included of expense of acquisition $X.X the for the of acquisition transaction-related expenses true-up $X.X of of international fourth transactions Pro-ficiency quarter. expenses and last this the year million related year also made related in the also for all quarter We

year primarily offset of this to to transaction the addition related included due to operating The year last expenses year. Immunetrics expense. to XX% compared expenses year the a revenue this last expenses of related Total XX% by of reclass expenses $X.X million were to compensation cost revenue Pro-ficiency of

$X $X.X due X% Loss negative revenue was this negative liability of compared from X% to of year. in was million the the this taxes was before year. income decrease Other quarter operations year income of compared X% and to income value compared Immunetrics to last fair primarily X% last a revenue last million earnout to year,

was X% the The for year adjusted Fourth was million exchange, revenue, diluted compared metric the quarter compared fourth amortization expense release million excluding of any in EPS, or this XX% or adjusted add EPS earnings year. and back asset and GAAP or We million financial impairment revenue on driven by diluted income stock-based income, primarily quarter was acquisition were by depreciation $X.X net in relevant was adding to $X.X is and EBITDA any the of year-over-year Diluted expenses revenue $X.XX transaction-related impact compared the on compared adjusted back to website. EBITDA $X.XX million transaction-related $X.X our QX interest, this $X.XX And and Net X% $X.X to of currency year. gain loss last non-GAAP charges. metric of at year. of XX% last $X.XX taxes, reconciliation compensation, respectively. than transaction-related last our EPS being to calculate last the year to change to year. QX This in costs, larger last or add-back

to was less And income the fourth to last tax than tax $X.X X% Income period. the tax rate compared compared was benefit effective million million year. prior of in XXX% quarter year our expense $X.X for

estimate rate a tax tax impacts income reminder, true our the up which the in in annual quarter we year effective each the fourth quarter. As

the XX% consolidated to to revenue to Turning equivalent expense of last primarily investment of marketing fiscal income X% Sales statement and last and was to expense due year, year. marketing. R&D was our our increased XX% for revenue year. sales in compared

before XX% XX% last was Income of to for transaction-related of included revenue, compared this XX% income of million compared year. Total down included of was G&A taxes acquisition the and was expense last last of operations were Pro-ficiency revenue transaction-related year. revenue revenue XX% compared expense income to from expenses XX% from expenses Immunetrics of $X.X expenses X% to for for XX% of $X.X the last XX% year And year, acquisition of year. operating million year. last year. the G&A

primarily year year, million the income $XX were or Other increase year revenue fiscal was was the value liability. costs during $X.X XX% due last of million compared to to last XX% previously last excluding income and $XX and income revenue to $X.XX, Net the the mentioned in compared million the diluted $X.XX Diluted $X.XX year EPS, impact decrease million the in of an of to year. compared fair Immunetrics for was $X adjusted interest or EPS earnout transaction-related to last year. of equivalent

lower to EPS diluted the to primarily transaction-related than the lower EPS in Adjusted expense diluted back quarter. was expected due add fourth

$XX.X Income fiscal compared $X.X Fiscal and million the $X.X tax was year year effective year. EBITDA our and rate respectively. at $XX.X million year, to to was was adjusted XX% last revenue, year million XX% last million of for last compared expense XX% compared to XX% tax

our year the XXXX to to fiscal XX%. range of expect effective tax in We rate XX% be

execute flow the We capitalized balance year and remain our no growth and well strategy. free We to debt cash to $XX investments. sheet. ended with Turning cash with in our million strong

back call to turn the I'll Shawn. now

Shawn O'Connor

performance, Will. Service We're the segments. is strong ahead our history company most Software in reflect our the execution the pleased you, and of XXXX integration our Also, our our significant expectations. results acquisition in progressing Thank and with both of very of

on upon 'XX. current expected growth our XX%, range in to of conditions, Moving XXXX. consistent is be fiscal the Based outlook our with market to to year fiscal for XX% organic

the consistent provided. Pro-ficiency million previously expected is $XX acquisition the we million, addition, range $XX to contribute In to with

$XX adjusted to as million in and EBITDA Our of the mix revenue $X.XX per million, XX%, adjusted $X.XX. guidance share Total XX% earnings between between growth and range is follows: $XX and XXXX XX% margin XX%, to between for fiscal XX%, revenue XX% diluted software of year-over-year

guidance We're adjusted versus guidance diluted our on diluted consistent industry. with practices EPS, EPS for providing

diluted the does impact or above diluted guidance acquisitions. adjusted 'XX guidance any our purposes, fiscal our of not $X.XX. of comparison to EPS For note, translates at year future EPS our include Of

of a quarter historically seasonality quarter fiscal revenue the streams. As due revenue our reminder, our lowest to is first our

anticipate could low the in the such, of in of remaining EPS impact. below the past, in have fiscal expect year. in adjusted quarters remaining we profitability EPS resulting above be diluted higher a still the some and EPS dip fiscal We We As our diluted breakeven the will level. as XXXX, quarters revenues had higher

the adjusted to towards integration, EBITDA correspondingly priorities XX% historical opportunities, expanding target near-term Our completing include and cross-selling our margin profitability driving XX% acquisition levels. of

value growth We positioned well our this remain stakeholders. to deliver to to year, our our are achieve executing strategy goals disciplined and focused long-term on

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

Operator

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

Max Smock

the Our recall weighing on one an hoping you was first low just give can rates on very that update staffing have been and in I margins. attrition business services.

at curious trend we to utilization basically progression hiring we what months. cadence So to look the plans get should of about this think few in if your has XXXX, and And over last XXXX? when expect improve trying like the how can in continued margin

Shawn O'Connor

to but back much we pressure of that our half that plan the year margins back attrition that question. the the impacted indicated to service call, terms Yes. QX was baked anticipated, and our into contributed QX and fourth the business Thanks as in for the Yes, into as profitability conference hired quarter. last was less we half in has some than of in continued in plan we

the side have We revenue go-forward since you will, get the the in plans in the and first matching 'XXXX. more adjusted line, of this became our capacity on half of with visible, we'll basis on -- streams anticipate back if recruiting that a fiscal service and the

our of of during be the and improvement margin the gradual guidance course into reflected track, back believe half it's So next XX% second to half on that the first half, a we but will the be of EBITDA little the XX% and in that should and year. in bit improvement of pressure through year, first I and

Max Smock

one Great. in That's terms moat. really just helpful. of on proficiency And then its competitive

as you a in seen have expectation CROs. given trend CROs, proficiency to we of run into doesn't that see for given be opportunity do by the more sell this So size your continuing space? And business and the that limiting trials

Shawn O'Connor

with mean they their are sell No, there. that in CROs and into the of association clinical in that support clients trials the no. I is out marketplace pharma

of We software you complementary offer if services, of training but that its both those the clinical competitive the to in adherence type Pro-ficiency to training development and are terms that comparable, sort it will, capabilities, platform is pretty module supports offering and its this do of unique their of in terms on the trials. impact delivery to

falls same marketplace business, favorable into proficiency and through the it a in uptick but XXXX clinical So indicator the been be that's alongside of trial in marketplace and selling succeed some that last competition would in number CROs the with it's and years. CROs, for

Max Smock

Great. modeling question. quick lastly, a then just And

you breakdown Immunetrics also, contribute contribution and it already based was said if this how quarter. the I total Pro-ficiency it. to of than sales it, missed services, seems But is thought software because lower And Sorry terms we and in versus the much would have much fourth the what like in QX? in did asking inorganic on

if is around the this? can you this the So case, dynamics discuss

Shawn O'Connor

contribute transaction, Pro-ficiency's that of in primarily $X.X the service million our time to mid-June which would those million of pick medical flow $X we communications be projects came in below the a anticipation obviously, of our revenue communications in don't revenue from the revenue, project had was the recognized close, quarter at of expectation how the the much about side, medical up frame. the until in from quarter, that where came million, terms revenue prior bit the second close in $X.X

bit the beginning at a was greater quarter recognition than anticipated. we of little that So the

being business service in secondly, we And out. across terms to the of some subject yes, they of were projects our some then pushed see that delays

terms million And of in to does contribution in change it contribution quarter. there Pro-ficiency So $XX X.X terms the fourth of $XX not million to our the expectation in

have quarter X is revenue. from 'XX. opportunities our -- the is fourth combined organizations. contribution, quarter Immunetrics And contribution integration our 'XX not well and pretty I fourth as as we're a fourth business those had revenue acquisition servicing staff quarter quarter don't fourth now that They a well in complete, of

So a don't for have breakout fourth that the of quarter.

Max Smock

helpful. That revenue inorganic, of like for at counting closing, you kind of was said all on all kind it fourth It a quarter. Pro-ficiency. the talking question just And you're despite Pro-ficiency as as similar in seems XXXX, were you like really

can you and you versus year that So services. next just software by both can, and your for organic us bridge growth fiscal hoping help expectations if inorganic

Shawn O'Connor

Yes, of to don't contribution -- range it XX% of be to than And of it, growth. XX% will $XX will organic SLP year which range, total to assumption to don't similar the except our million for of revenues. in guidance be XX% have fiscal to XX% other which that last provide of our But I Pro-ficiency, or, call let's of is business, the in our upon XXXX the about software expectation that services. then guidance versus range should $XX the like XX% software XX% in a that terms breakout at in in based XX% came we be 'XX, was for million growth year, our proficiency everything

Operator

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

Matthew Hewitt

the next could doubt to your just trying first out figure figure what -- us the help you And trying model. I'm year? was to then Maybe guidance significantly in modeled the I EPS gap out higher. up, Just Street was for there? on bridge

Shawn O'Connor

versus context some comparability. of EPS the the be diluted seems there? you differential we've of provide X diluted be so to our in some EPS terms diluted adjusted in the that -- Will, want line the with added peers of as it's do think it color adjusted EPS could to there I commonality items

William Frederick

reconciliations And in Sure. release. I the have for Thanks press Matt. question, refer the we to would that the

made diluted got part, for this most in just taking based as as have things getting to the we just net that next we're FY 'XX the And from to The past. And reconciliation feedback we've be well. be of standardize fiscal the in that exclusions really industry, 'XX, to there adjustments for on adjusted the the sense income. we've got folks transaction-related EBITDA of with of One are in items typical FY it are so to EPS, the we've year the tax communicated impact adjusted is diluted the going comparative adjusted adjustment. for adjusted diluted EBITDA we've expenses as sort EPS the did for EPS the in that well to the as same reconciliation the

with 'XX FY for just it. the So have the was approach transaction-related to simplify just expenses. 'XX do FY we will adjusted EBITDA, an adjustment a way consistent

Matthew Hewitt

for was a sure an to I'm thinking in big pretty what But acquisition-related That's just -- guess, just million $X you the I is step I'm There but from M&A big your it's adjusted about are want the looking helpful. you're that that's out expenses. on mean, bucket was I delta guidance. was to I'm -- I where basis increase. pretty new There's expenses, to everybody big expecting seeing before a And guessing up. trying make I right. figure a this

William Frederick

assumed we in M&A any expenses acquisitions. Yes. Right don't guidance, now, which excludes it any the have

increase extent intangible the FY combined amortization expense. million drivers and reconciliation, have EBITDA with you that big and look about from comp expense the to through and those are the an 'XX stock there $XX the So $XX the will amortization in acquisitions. additional million, mean Pro-ficiency were I depreciation if

of total goes $XX to that adjustments. million about million, probably So $XX

Matthew Hewitt

the for? right. then efforts. Got and trained a on And you integration been point? cross-selling are looking shifting at update teams with an it. marketing the pipeline bit little sales gears, could Are have Pro-ficiency, is provide particularly What Shawn, they those this of All -- how the if on fully

Shawn O'Connor

in business last team, into training consolidated over products speed terms capabilities out us new -- the years. to acquisition Yes. of come the transitioned Pro-ficiency bring that of into of to came development undertaken services personnel and people of up presentation the We've couple dissemination our integrated sales marketing and that for marketplace, fold to in in the our we've

so which the be that, business acquisition, are to that externally to short mean of then manage enter undertaking the been a a primarily challenging program, clinical in Predictor year, on clinical it we're modeling budget during those modeling that effort to program point, I and representative our Pro-ficiency's, simulation operations -- management to we're going our third we networks those made service of I moving out a and out keys so there. personnel pretty the think, to service within the touch the simulation into growth And that side. Previous in -- We to a on and used extending well side affairs supporting our months well. the funded of the a and the service of impact pretty has engagement drug the has drug environment, those team touch relationship into are same medical of budget. organization up the the opened been and now discovery new to expanding wins into sell-through our opportunities healthy time, in that that's our team this group that And success but the we're for has time which very the ourselves teams company. relationships X certainly clients. one perhaps it's have -- window and that simulation from area, in at been the of budgets Our positively And a been points, and consolidated clinical course opportunities think terms is that of I very challenged to department for extension start the up after would Long a ADMET of supported that invested sale clinical market table. us. points has but department into result trial is been first their of in marketplace the extending identifying I available historically through step and building think cut close has tighter. already time. modeling has cost constrained and our those environment and the little

Operator

is Our with BTIG. next question from Larsen David

David Larsen

a you Can little revenue a more year-over-year on about the talk bit basis. software growth

say it you please? correct? down what heard rate for that or internal organic does the I X% to compare that expectations? think how organically. rate was And that year, And own year-over-year growth Is growth internal I your was

Shawn O'Connor

of making Yes. remind mean, the in growth up Will, I flip XX% for as was sure year, can down growth you software but us I right. the mind, rate side right? I fourth the on just get through specific X% rates quarter the the in it organically,

William Frederick

Yes. mean, year, I for revenue yes. total the

Shawn O'Connor

if you in America It's into particular one issue. slippages past We've yes, down quite It's revenues overgrowing, were flux that. couple fourth new -- move will, Really, forward. been improvement into has challenge X as we our of fiscal that's have side. our North did the markets So going quarter we a But it's for compensating challenge year an 'XX. really been in first But One, has was there the COVID, since in been us and and for frankly. for software And Asian been twofold. on a renewal European real of out August the focus the for area quarter. market. us

David Larsen

see I It's think of gross I the XX% in the in around usually XX% And fourth quarter. margin range. Okay. software the

about we up that range as being XX% back an of and some So because think like year. of that renewal -- in to XQ unusual should you'll next quarter timing get

growth back revenue see starting So that in to organic fiscal up -- software XQ?

Shawn O'Connor

Yes.

the don't in revenue that the mid-XXs. XXs, Our I into know think impacted. way I margin went it down software was the all is

existing that we compared software the of indicated towards XX-ish business some legacy side products. earlier, of terms the in or software software And as percent to down is proficiency there, impact percent so our our XX-plus

software, improved We acquisition of of overall we in both through see the terms in move So the business on means some of service and profitability, of as tremendously side. it described overhead the terms that We through impact rationalizing unit. some there. those improving year. And we're Pro-ficiency, the I've as course just -- of the the expenses

to ourselves that less we to quarter them profitability believe percentage underlying with you in to could our than a for 'XX on probably we'll into starts through that the if a XX% that overall -- that fiscal that on course the goal in We to continue get 'XX, we line legacy term at XX%, will set little But profile to up the and start SLP, of the level with of in XX% guidance longer impacts company that EBITDA basis been year that It The a XX% XXXX. the will. model, towards but our improve profitability of have side, in profile. fourth Pro-ficiency 'XX. legacy get is

So we back question, some to some impact on there, through the quarter-to-quarter go see software I Pro-ficiency side, gradually 'XX. think we'll your as improvement from specifically

David Larsen

Great. more one. quick One

the reported, gross I assuming understanding And seeing margin that, that's you XQ. fiscal minus I'm and Pro-ficiency, think that it's X% Pro-ficiency am correctly I very is in my service from this trial on how much file. tied activity, training folks clinical basically the to basically line to in with site clinical implement basically the trial like the the trial the that's at master

funding you very example, if gene more can just supporting, environment, the that I talk seeing a perhaps, if trials, I for of in know, think mix like obesity would you're be perhaps So you're health-related good. maybe don't trials clinical there's the would therapies about because clinical slowdown

they lift that I think you on -- being just color couple And you to color are selling Just any a scientists hired margin? that, are gross -- like expect service of more last quarter there. -- more any a they

Shawn O'Connor

portfolio terms complex of clinical the terms on to in areas question. fourth to more your about more be singular valued margin? most area of Will, of, talk initiation therapeutic of specialty protocols But business of driver, Yes. tends difficult you focus, And obviously aggressive spans there. then, reclass benefits its projects proficiency therapeutic in if all trial activity can some Will, significantly. there's a in talk training past you to as of therapeutic no sort with do more want the portfolio margin No yes, clinical comprehensive supportive Two-part activities. trial their terms of adherence concentration of where ahead protocol its you They're quarter simulation the Pro-ficiency in the issues to maybe talk will. answer. areas. side primary side I'll

William Frederick

I the analyst for Sure. can answer And services. software this

mid-XXs we through bit as in So the that be mentioned there'd software certainly we basis process. was a expect mentioned in for or we at and would forward. there. XX% QX when going and XX Shawn primarily I look software we lighter. due some QX. annual has impact you some decline to we the Immunetrics to -- just see mentioned, an on But quarter where audit the do XX coming used for true-ups to range, the when That go that be to the

the for year. side, services the we through did look On QX,

$X.X during I adjustment call. it made, we There think mentioned it was was million. an I about that the

employer We did year or into through we Looking the services. for for they're international a organization professional a that We through that with those services QX. expense G&A group, PEO. and the year have worked efforts all employees from in reclassed

that is focus that, billable targeting. with total So where be range continue the we looking forward our utilization XX% as for XX% the looking business upsides again, going is leveraging and margin forward, business, year to efficiency and we'd services XX%

Operator

Our Scott with Markets. is Schoenhaus question next KeyBanc from Capital

Scott Schoenhaus

outlined next on XX% I wanted for growth to organic year. XX% the touch to

kind today, said guidance the here sit today, your clearly we're guidance depressed same As what here contemplates guidance -- had of organic last revenue from we you levels you year. which is seeing

low and is range? specifically walk the the us And that into of like to end maybe biotech expected of or also be maybe what's top for through where So think on built next that expected the end end you market year? range

Shawn O'Connor

leaves that the and of I CEO see throw too. forward, things dirt spoke into trying lot are And Thermo certainly Yes. we some tea positive in a see XXXX. the today opportunity to we positive positively very moving only we saw of We're market read of and all terms

of processes it in of lose discussions this terms Our budgetary of phenomena a it left dollars the end year. few in we spend We industry don't by clients we've that calendar late of if to our got the year. spend which

conscious. from calendar of and and we've XX% would do time time discussions in upticks We X-year and to this We've have growth But ability conservatively this quarter end our we for well. our guidance poised, next to of and based is it that in run at to with that our of prudent in organization, that executed certainly, is, 'XX what but we and 'XX upon okay, XX% great Some in year. that a last funding terms today. XX% improve, market I challenging taking growth. range, came window conservative the fourth seen for I'm to support last year terms pulled XX% confident the or market guidance and the high approach the our able our year. setting should confidence that to as it also if pretty next therefore, carry want we'll in right start take but well And set here of to be but forward -- back. approach been point But The is be short-lived of place into of now, approach in is higher uptick got being market to a take organic as perform range conditions conservative in current at I've year. of over into be range this guidance grow the that a on year. optimistic, end

Scott Schoenhaus

that of assuming return have little given or the very So all market, commentary end that you of a I'm is assumptions biotech that you're reacceleration meaning

Shawn O'Connor

No. of sort to I but from for, before happen. accrue have guidance let's a perspective, start we count hoped

Scott Schoenhaus

more was there slip renewals remarks, a follow-up, us a provide saw side? Shawn, just what there happened some pharma? give of -- What large or you you the that color color mentioned that I renewal more you to Was contract? in on renew as in you it on a decision then can on prepared the the pushout GastroPlus And maybe think the Can not GastroPlus. on your

Shawn O'Connor

closed. decision. and it's done in lot The here. just August but get by it an Yes. not to get get through things August, year and, that well that where client of acquired mix one fourth in mean challengeable renewal during the a second company on fiscal had year we one It's quarter, it's excuse, all people there sites. paperwork only closed in not get funky a a situation I have the the fact, a not purchase of vacation specific difficult a are our XX to we pushouts nonrenewal and course order of is did then their documentation a the that as the the the sometimes is in often

had license so we was come site-based. that And their company, the company, where situation original The a X original company, and was acquired configuration within that renewals up.

history consolidation. which over departing the between in look of it's And the is you when mean either bankrupt landscape or is terms what renewal mid-XX rates that situation, I so back companies in and differential our software that on XXX%, difference? and going

our so aren't And ones in of can of slippage one troublesome. we the that those results. are acquisition of only will. be and It's business, you if The scenarios fourth takeaways quarter timing had book those

Operator

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

FranÃ§ois Brisebois

Just is color step here, this two do TAM? give here. M&A? that Pro-ficiency a And of any if more color time. around not then just one play, get acquisition. to big still explanation integrated, the a just doubling more about. acquisition I can you're other at you talk us biosimulation how was on is necessarily or It's but you little Or it that This a doubling a getting know a with I wondering TAM but you

this being? the figured get for one Let's time out

Shawn O'Connor

cetera. the Frank. space, all is in incremental what pretty in all markets, for is our is the activity market estimate what that billion between phases, spent clinical the I training evenly trial mean, split X area $X of an incremental with et Sure, across Yes, TAM the clinical assessment therapies, the trials, Pro-ficiency of the of

commercialization of process And MEDCOM part on as done in work approval Of their their drug predominant process. well the bit course, is trial. medical communications post entry. and the aspect a the new is a process in preapproval skewed towards It's little more training and in the specifically, the side, clinical marketplace a market sourced that's And for agency twofold. regulatory process, regulatory business

we've market activity And there. towards that in that calculated disproportionate so same therefore, TAM regulatory the

process arise and and criteria fits at should that that terms are to in the integration of Acquisitions most those of and will come is I'd and we're little not certainly and companies that continuous but adding a on to our terms time yes, opportunity. of take to our bit point radar following unchanged a the in process we in resources your And vigor not We've in deleting there, on acquisitions. acquisition. the supplementing recent landscape say, the is of at organic any of terms working opportunity there active strategy with are and continue devoted a regarded But going acquisitions. it do breath our shelf go. in certainly growth and was an that

done from questions, last are we We've done So the a one do the going in acquisition used to we've you to gone each when get X you because years. haven't next -- of

activity could think, cadence is No that But Our one in underlying active. do guidance I there. lead certainly, good the to is, that that we'll XXXX.

Operator

is Our JMP. Citizens with Costine question from next David

Unknown Analyst

you year, increase? much look of going Shawn, in to of just how -- typically the if how this look look price. the forward how that to terms last compare wondering price is I'm would time you And this would wrong, I'm would year? me correct would flex to that

Shawn O'Connor

And year. that what XXX% list was last this call adjusted approach macro 'XX down more year. It was frame years inflationary fiscal we're comparable it, not fiscal peak gain year, not enter year. of sort to 'XX, Yes, year discount footholds. you're little around of year. on, X%-plus bit to particular year to price you outcome of large to 'XX our a similar in that If by aggressive. clients and price start 'XX, to time as X be back increase relatively environment year not, in a came and don't level. Historically, fiscal last market somewhat ago, was year of it I'll fiscal or last the our the yielding is last of can year sort Typically, segments, similar looking we

Unknown Analyst

then I follow-up operating Great on guess And just one expenses.

a more growth few line has on items? those the exceeds occurred sales kind sales and years, of 'XX start past a to bit Are going growth. R&D little leverage clip fiscal in that to For you at see

Shawn O'Connor

the and R&D. into in that reclassing past of we out beginning gross marketing and where sales in reclass beginning Keep year, G&A invested in first quarter, and We've true. mind the costs the this the of initiated year -- the We margin. at Yes.

is costs had in But marketing think incremental R&D and -- good make gone that in we and line we've and I resources development you the acquisition, items, fiscal overhead infrastructure up to the the gives I to certainly, year when leverage side When to on services to an success our double-digit look in those that 'XX, are Some forward. that that new that the in into micoproficiency execution we've built people products products us business acquisition will. the if and have and we've we part made that follow have of due that's investments development growth are off. and working that, confidence we stepping those growth paying business sales services, and those going

year collaborations R&D the So great are of delivery business side. all large side, group, the areas on that which we with of across is that already some of development we think by as leverage clients as will well regulatory get more environment. but supplemented with I benefit leverage, the pharma of significant the R&D delivered out platform getting type with the a software has And our releases been

we're a You engaged. noted may FDA have that grant collaboration FDA recent another we've had have

overall, investments and in there R&D sales So think we and I made marketing. some

and adjusted 'XX. that we'll into we've potential programs will the that beyond that as I have in the accrue levels terms getting forward. historical of to I benefit said, in level will well. benefit XX% initiated profitability EBITDA overall, I accrue That feel going particularly that in business back direction we're that it move us And of we're at good think plus think the focused and getting to benefit

Operator

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

Shawn O'Connor

conference of for and as another conferences on side. market weeks. X XXX and wrapping a the couple significant up interest well to the today Thanks and next Farm the activity One generates. Also conference at the month, BTI in investor that, us many virtual attendance again, horizon and month, off you look of again, The our it everyone, for today joining and up we're note or joining AATS terms ACOP conference type on in significant conferences of most clearing hope -- and least the is Conference the SLP. on at conference in and in conditions And a conference, our occurs to participation our by Stephen's myself call see forward With X we'll for of those biosimulation and today. is there. for I believe thanks the your I'll us next in close wrapping call.

Operator

This concludes today's conference.

your participation. at Thank may disconnect you time. this You your for lines

Simulations Plus (SLP) 23 Oct 242024 Q4 Earnings call transcript