Summary of Simulations Plus (SLP) Q4 2025 Earnings Call

1Key Financial Results and Metrics

Q4 Revenue: Decreased 6% to $17.5 million.

Fiscal Year Revenue: Increased 13% to $79.2 million.

Software Revenue: Decreased 9% in Q4 (52% of total revenue), increased 12% for the fiscal year (58% of total revenue).

Services Revenue: Decreased 3% in Q4 (48% of total revenue), increased 15% for the fiscal year (42% of total revenue).

Adjusted EBITDA: Grew 8% to $22 million for the fiscal year, representing 28% of revenue.

Net Loss: $64.7 million for the fiscal year, including a $77.2 million noncash impairment charge; adjusted diluted EPS was $1.03.

Renewal Rates: 83% for Q4 and 88% for the fiscal year; impacted by client consolidations.

2Strategic Updates and Business Highlights

Transitioned to a unified operating model to enhance client focus and operational efficiency.

Launched GastroPlus 10.2, integrating AI capabilities, with positive initial feedback from clients.

Continued investment in biosimulation technologies, with a focus on AI and cloud computing to improve R&D processes.

Strong pipeline of service projects, with a backlog of $18 million, expected to convert to revenue within the next 12 months.

3Forward Guidance and Outlook

Fiscal Year 2026 Guidance: Total revenue expected between $79 million to $82 million (0% to 4% growth), adjusted EBITDA margin between 26% to 30%, and adjusted diluted EPS between $1.03 to $1.10.

Anticipated first-quarter revenue to be approximately 3% to 5% lower than the same period last year.

Guidance assumes a stable operating environment, with cautious optimism regarding client budgeting and spending.

4Bad News, Challenges, or Points of Concern

Market Headwinds: Client budgets pressured by broader pharmaceutical challenges, including tariffs and pricing regulations.

Software Revenue Declines: Notable declines in specific products, such as ADMET Predictor (down 10% in Q4) and GastroPlus (down 3% in Q4).

Renewal Rate Declines: Lower renewal rates attributed to client consolidations and increased scrutiny on software configurations.

Impairment Charge: A significant noncash impairment charge of $77.2 million negatively impacted net income.

5Notable Q&A Insights

Demand Environment: Positive signs in biotech funding and client budgeting, but caution remains due to potential market volatility.

Pro-ficiency Performance: Software revenue from Pro-ficiency down 63% in Q4, attributed to a slowdown in clinical trial starts; however, Med Comm services grew significantly.

Pricing Flexibility: Plans to implement more aggressive pricing strategies, particularly for new AI capabilities, while maintaining competitive pricing in services.

Headcount and Capacity: Management expressed confidence in current staffing levels to support potential revenue increases, indicating flexibility to scale if needed. Overall, while Simulations Plus demonstrated resilience with year-over-year growth in fiscal 2025, challenges in the current market environment and specific product performance present notable risks as they navigate fiscal 2026.