EX-99.1 2 slp-20220831xexx991x224.htm EX-99.1
Exhibit 99.1
Simulations Plus Reports Fourth Quarter and Full Fiscal Year 2022
Financial Results
Fiscal 2022 revenue increased 16% year-over-year to $53.9 million
Diluted earnings per share increased 28% year-over-year to $0.60
Provides Fiscal 2023 guidance for total revenue of $59.3 million to $62.0 million (+10% to 15%)
LANCASTER, CA, October 26, 2022 – Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation software and services for pharmaceutical safety and efficacy, today reported financial results for its fourth quarter and full-year fiscal 2022, ended August 31, 2022.
“Simulations Plus delivered a strong fourth quarter, resulting in full-year revenue growth above our guidance, which, when combined with a heavy software mix and operating leverage, led to gross margin expansion and higher income and adjusted EBITDA growth rates,” said Shawn O’Connor, chief executive officer of Simulations Plus. “Improved cross-selling and increasing industry adoption of modeling and simulation solutions contributed to sustainable growth in our software business while we built a robust backlog for services, especially for PBPK and PKPD services. In addition, we increased our global footprint by expanding our presence in Europe, Asia, and Latin America, and further penetrated smaller biotech firms with our offerings.”
Fourth Quarter Fiscal 2022 Financial Highlights (compared with the corresponding period last fiscal year):
•Total revenue increased 19% to $11.7 million;
•Software revenue increased 10% to $5.9 million, representing 50% of total revenue;
•Services revenue increased 30% to $5.8 million, representing 50% of total revenue;
•Gross profit increased 28% to $9.1 million; gross margin was 77%;
•Net income of $1.0 million, or $0.05 per diluted share, compared to net income of $0.3 million, or $0.01 per diluted share;
•Adjusted EBITDA of $2.3 million, representing 20% of total revenue.
Full Year Financial Highlights (compared with the corresponding period last fiscal year):
•Total revenue increased 16% to $53.9 million;
•Software revenue increased 18% to $32.6 million, representing 61% of total revenue;
•Services revenue increased 13% to $21.3 million, representing 39% of total revenue;
•Gross profit increased 20% to $43.1 million; gross margin was 80%;
•Net income of $12.5 million, or $0.60 per diluted share, compared to $9.8 million or $0.47 per diluted share;
•Adjusted EBITDA of $21.0 million, representing 39% of total revenue.
Fiscal 2023 Guidance and Commentary

| Fiscal 2022 Results | Fiscal 2023 Guidance | Increase
Revenue | $53.9M | $59.3M - 62.0M | 10-15%
Software mix | 61% | 60-65% | -
Services mix | 39% | 35-40% | -
Diluted earnings per share | $0.60 | $0.63-$0.67 | 5-10%

“Our expected revenue growth rate for fiscal 2023 is in line with our long-term organic growth rate target of 10-15%,” added Mr. O’Connor. “However, we expect seasonal revenue patterns to shift with changes in our renewal patterns due to successful and ongoing cross-selling initiatives, as well as the impact of somewhat slower renewal patterns on the part of our clients, which we have seen in the back half of fiscal 2022 and expect to continue into fiscal 2023. While this sets us up for lower-than-normal first fiscal-quarter revenue growth, roughly flat year-over-year, we do not anticipate a meaningful net impact on the full-year revenue results, and we expect full-year renewal rates to be in-line with historical patterns.”
“From a cost perspective, we are seeing a competitive market for modeling and simulation professionals, and accordingly, we expect to invest in employee growth, recruiting and retention,” concluded Mr. O’Connor. “The net impact of these investments is expected to be increased operating expense levels in fiscal 2023 as we digest these incremental costs. However, over the medium to long-term, we expect to see a return to higher levels of operating leverage and margins as we deliver on our long-term organic revenue growth targets of 10-15%.”
Environmental, Social, and Governance
We focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our website to read our ESG Report.
Webcast and Conference Call Details
Shawn O’Connor, chief executive officer, and Will Frederick, chief financial officer, will host a conference call and webcast today at 5 p.m. Eastern Time to discuss details of the company’s performance for the fiscal year and certain forward-looking information. The call may be accessed by registering here or by calling 1-201-389-0879. The webcast will be available on our website under Conference Calls & Presentations. A replay of the webcast will be available on the website approximately one hour following the call.
Non-GAAP Definition
Adjusted EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization, stock-based compensation, and any acquisition or financial transaction-related expenses. Adjusted EBITDA represents a measure that we believe is customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures that we present. Our management also believes that Adjusted EBITDA is useful in evaluating our core operating results. However, Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income or operating income as an indicator of our operating performance, or to net cash provided by operating activities as a measure of our liquidity. The company’s Adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items.
About Simulations Plus
Serving clients worldwide for more than 25 years, Simulations Plus is a leading provider in the biosimulation market providing software and consulting services supporting drug discovery, development, research, and regulatory submissions. We offer solutions that bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, and regulatory agencies worldwide. For more information, visit our website at www.simulations-plus.com. Follow us on LinkedIn | Twitter | YouTube.
Forward-Looking Statements
Except for historical information, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Words like “believe,” “expect,” and “anticipate” mean that these are our best estimates as of this writing, but there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, our ability to identify and close acquisitions on terms favorable to the company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission.
Investor Relations Contacts:
Renee Bouche
Simulations Plus Investor Relations
661-723-7723
renee.bouche@simulations-plus.com
Brian Siegel
Hayden IR
346-396-8696
brian@haydenir.com
--Tables follow—
1

SIMULATIONS PLUS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

|  | Years Ended August 31,
(in thousands, except per common share amounts) |  | 2022 |  | 2021 |  | 2020
Revenues |  |  |  |  |  |
Software |  | $ | 32,642 |  |  | $ | 27,670 |  |  | $ | 21,587 |
Services |  | 21,264 |  |  | 18,796 |  |  | 20,002 |
Total revenues |  | 53,906 |  |  | 46,466 |  |  | 41,589 |
Cost of revenues |  |  |  |  |  |
Software |  | 3,060 |  |  | 3,235 |  |  | 2,883 |
Services |  | 7,762 |  |  | 7,365 |  |  | 7,766 |
Total cost of revenues |  | 10,822 |  |  | 10,600 |  |  | 10,649 |
Gross profit |  | 43,084 |  |  | 35,866 |  |  | 30,940 |
Operating expenses |  |  |  |  |  |
Research and development |  | 3,208 |  |  | 4,047 |  |  | 2,975 |
Selling, general, and administrative |  | 24,965 |  |  | 20,566 |  |  | 16,360 |
Total operating expenses |  | 28,173 |  |  | 24,613 |  |  | 19,335 |
Income from operations |  | 14,911 |  |  | 11,253 |  |  | 11,605 |
Other income (expense), net |  | 204 |  |  | (168) |  |  | (218) |
Income before income taxes |  | 15,115 |  |  | 11,085 |  |  | 11,387 |
Provision for income taxes |  | (2,632) |  |  | (1,303) |  |  | (2,055) |
Net Income |  | $ | 12,483 |  |  | $ | 9,782 |  |  | $ | 9,332 |
Earnings per share |  |  |  |  |  |
Basic |  | $ | 0.62 |  |  | $ | 0.49 |  |  | $ | 0.52 |
Diluted |  | $ | 0.60 |  |  | $ | 0.47 |  |  | $ | 0.50 |
Weighted-average common shares outstanding |  |  |  |  |  |
Basic |  | 20,196 |  |  | 20,045 |  |  | 17,819 |
Diluted |  | 20,749 |  |  | 20,743 |  |  | 18,538 |
Other comprehensive (loss) income, net of tax |  |  |  |  |  |
Foreign currency translation adjustments |  | (265) |  |  | (101) |  |  | 58 |
Comprehensive income |  | $ | 12,218 |  |  | $ | 9,681 |  |  | $ | 9,390 |

2

SIMULATIONS PLUS, INC.
CONSOLIDATED BALANCE SHEETS

|  | August 31,
(in thousands, except share and per share amounts) |  | 2022 |  | 2021
ASSETS |  |  |  |
Current assets |  |  |  |
Cash and cash equivalents |  | $ | 51,567 |  |  | $ | 36,984 |
Accounts receivable, net of allowance for doubtful accounts of $12 and $78 |  | 13,787 |  |  | 9,851 |
Prepaid income taxes |  | 1,391 |  |  | 1,012 |
Prepaid expenses and other current assets |  | 3,377 |  |  | 4,846 |
Short-term investments |  | 76,668 |  |  | 86,620 |
Total current assets |  | 146,790 |  |  | 139,313 |
Long-term assets |  |  |  |
Capitalized computer software development costs, net of accumulated amortization of $15,672 and $14,438 |  | 9,563 |  |  | 7,646 |
Property and equipment, net |  | 632 |  |  | 1,838 |
Operating lease right-of-use assets |  | 1,420 |  |  | 1,276 |
Intellectual property, net of accumulated amortization of $7,928 and $6,516 |  | 9,057 |  |  | 10,469 |
Other intangible assets, net of accumulated amortization of $2,662 and $2,186 |  | 7,560 |  |  | 6,464 |
Goodwill |  | 12,921 |  |  | 12,921 |
Other assets |  | 439 |  |  | 51 |
Total assets |  | $ | 188,382 |  |  | $ | 179,978 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |
Current liabilities |  |  |  |
Accounts payable |  | $ | 225 |  |  | $ | 387 |
Accrued compensation |  | 3,254 |  |  | 3,185 |
Accrued expenses |  | 931 |  |  | 2,419 |
Contracts payable |  | — |  |  | 4,550 |
Operating lease liability - current portion |  | 461 |  |  | 382 |
Deferred revenue |  | 2,864 |  |  | 651 |
Total current liabilities |  | 7,735 |  |  | 11,574 |
Long-term liabilities |  |  |  |
Deferred income taxes, net |  | 1,456 |  |  | 1,726 |
Operating lease liability |  | 943 |  |  | 896 |
Total liabilities |  | 10,134 |  |  | 14,196 |
Commitments and contingencies |  | — |  |  | — |
Shareholders' equity |  |  |  |
Preferred stock, $0.001 par value 10,000,000 shares authorized, no shares issued and outstanding |  | $ | — |  |  | $ | — |
Common stock, $0.001 par value and additional paid-in capital —50,000,000 shares authorized; 20,260,070 and 20,141,521 shares issued and outstanding |  | 138,512 |  |  | 133,418 |
Retained earnings |  | 40,044 |  |  | 32,407 |
Accumulated other comprehensive loss |  | (308) |  |  | (43) |
Total shareholders' equity |  | 178,248 |  |  | 165,782 |
Total liabilities and shareholders' equity |  | $ | 188,382 |  |  | $ | 179,978 |

3

SIMULATIONS PLUS, INC.
Trended Financial Information*
(Unaudited)

(in millions except earnings per share amounts) |  | 2021 |  | 2022 |  | 2021 |  | 2022
| Q1 |  | Q2 |  | Q3 |  | Q4 |  | Q1 |  | Q2 |  | Q3 |  | Q4 |  | FY |  | FY
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Software |  | $ | 6.2 |  |  | $ | 7.8 |  |  | $ | 8.3 |  |  | $ | 5.4 |  |  | $ | 7.4 |  |  | $ | 9.8 |  |  | $ | 9.6 |  |  | $ | 5.9 |  |  | $ | 27.7 |  |  | $ | 32.7 |
Services |  | 4.5 |  |  | 5.3 |  |  | 4.4 |  |  | 4.4 |  |  | 5.0 |  |  | 5.0 |  |  | 5.3 |  |  | 5.8 |  |  | 18.8 |  |  | 21.2 |
Total |  | $ | 10.7 |  |  | $ | 13.1 |  |  | $ | 12.8 |  |  | $ | 9.8 |  |  | $ | 12.4 |  |  | $ | 14.8 |  |  | $ | 15.0 |  |  | $ | 11.7 |  |  | $ | 46.5 |  |  | $ | 53.9 |
Gross Margin |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Software |  | 86.9 | % |  | 89.0 | % |  | 90.0 | % |  | 85.0 | % |  | 90.0 | % |  | 92.0 | % |  | 92.4 | % |  | 86.1 | % |  | 88.0 | % |  | 90.6 | %
Services |  | 63.9 | % |  | 61.0 | % |  | 63.0 | % |  | 55.0 | % |  | 60.0 | % |  | 59.3 | % |  | 65.6 | % |  | 68.2 | % |  | 61.0 | % |  | 63.5 | %
Total |  | 77.3 | % |  | 77.9 | % |  | 80.7 | % |  | 71.7 | % |  | 77.8 | % |  | 80.9 | % |  | 82.9 | % |  | 77.2 | % |  | 77.2 | % |  | 79.9 | %
Income from operations |  | $ | 3.1 |  |  | $ | 3.5 |  |  | $ | 4.5 |  |  | $ | 0.2 |  |  | $ | 3.8 |  |  | $ | 5.5 |  |  | $ | 4.9 |  |  | $ | 0.7 |  |  | $ | 11.3 |  |  | $ | 14.9 |
Operating Margin |  | 28.5 | % |  | 26.6 | % |  | 35.6 | % |  | 1.8 | % |  | 30.6 | % |  | 37.0 | % |  | 33.1 | % |  | 5.9 | % |  | 24.2 | % |  | 27.7 | %
Net Income |  | $ | 2.5 |  |  | $ | 3.2 |  |  | $ | 3.8 |  |  | $ | 0.3 |  |  | $ | 3.0 |  |  | $ | 4.4 |  |  | $ | 4.1 |  |  | $ | 1.0 |  |  | $ | 9.8 |  |  | $ | 12.5 |
Diluted Earnings Per Share |  | $ | 0.12 |  |  | $ | 0.15 |  |  | $ | 0.18 |  |  | $ | 0.01 |  |  | $ | 0.15 |  |  | $ | 0.21 |  |  | $ | 0.20 |  |  | $ | 0.05 |  |  | $ | 0.47 |  |  | $ | 0.60 |
Adjusted EBITDA |  | $ | 4.3 |  |  | $ | 5.0 |  |  | $ | 5.9 |  |  | $ | 1.7 |  |  | $ | 5.3 |  |  | $ | 7.2 |  |  | $ | 6.3 |  |  | $ | 2.3 |  |  | $ | 16.9 |  |  | $ | 21.0 |
Cash Flow from Operations |  | $ | 5.3 |  |  | $ | 1.3 |  |  | $ | 4.3 |  |  | $ | 8.3 |  |  | $ | 3.6 |  |  | $ | 2.6 |  |  | $ | 3.8 |  |  | $ | 7.9 |  |  | $ | 19.2 |  |  | $ | 17.9 |
Revenue Breakdown by Region |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 7.1 |  |  | $ | 8.7 |  |  | $ | 9.7 |  |  | $ | 7.1 |  |  | $ | 8.5 |  |  | $ | 9.7 |  |  | $ | 11.2 |  |  | $ | 8.4 |  |  | $ | 32.5 |  |  | $ | 37.7 |
EMEA |  | 2.5 |  |  | 3.1 |  |  | 1.5 |  |  | 0.9 |  |  | 3.0 |  |  | 3.7 |  |  | 1.9 |  |  | 1.7 |  |  | 7.9 |  |  | 10.4 |
Asia Pacific |  | 1.1 |  |  | 1.4 |  |  | 1.7 |  |  | 1.8 |  |  | 0.9 |  |  | 1.4 |  |  | 1.9 |  |  | 1.6 |  |  | 6.0 |  |  | 5.8 |
Total |  | $ | 10.7 |  |  | $ | 13.1 |  |  | $ | 12.8 |  |  | $ | 9.8 |  |  | $ | 12.4 |  |  | $ | 14.8 |  |  | $ | 15.0 |  |  | $ | 11.7 |  |  | $ | 46.6 |  |  | $ | 53.9 |
Software Performance Metrics |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Average Revenue per Customer (in 000s) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 74.0 |  |  | $ | 84.0 |  |  | $ | 98.0 |  |  | $ | 65.0 |  |  | $ | 71.0 |  |  | $ | 101.0 |  |  | $ | 95.0 |  |  | $65.0 |  |  |  |
Services Performance Metrics |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Backlog |  | $ | 12.0 |  |  | $ | 11.2 |  |  | $ | 12.4 |  |  | $ | 13.0 |  |  | $ | 15.4 |  |  | $ | 17.0 |  |  | $ | 16.7 |  |  | $ | 15.9 |  |  |  |  |

*Numbers may not add due to rounding
4

SIMULATIONS PLUS, INC.
Reconciliation of Adjusted EBITDA to Net Income*
(Unaudited)

|  | 2021 |  | 2022 |  | 2021 |  | 2022
(in millions) |  | Q1 |  | Q2 |  | Q3 |  | Q4 |  | Q1 |  | Q2 |  | Q3 |  | Q4 |  | FY |  | FY
Net Income |  | $ | 2.5 |  |  | $ | 3.2 |  |  | $ | 3.8 |  |  | $ | 0.3 |  |  | $ | 3.0 |  |  | $ | 4.4 |  |  | $ | 4.1 |  |  | $ | 1.0 |  |  | $ | 9.8 |  |  | $ | 12.5 |
Excluding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income and expense, net |  | (0.1) |  |  | — |  |  | — |  |  | — |  |  | (0.1) |  |  | (0.1) |  |  | (0.1) |  |  | (0.4) |  |  | (0.2) |  |  | (0.7) |
Provision for income taxes |  | 0.5 |  |  | 0.2 |  |  | 0.7 |  |  | (0.1) |  |  | 0.8 |  |  | 1.1 |  |  | 0.7 |  |  | (0.1) |  |  | 1.3 |  |  | 2.6 |
Depreciation and amortization |  | 0.9 |  |  | 0.9 |  |  | 0.9 |  |  | 1.0 |  |  | 0.8 |  |  | 1.0 |  |  | 0.9 |  |  | 0.9 |  |  | 3.6 |  |  | 3.6 |
Stock-based compensation |  | 0.5 |  |  | 0.7 |  |  | 0.6 |  |  | 0.6 |  |  | 0.6 |  |  | 0.7 |  |  | 0.7 |  |  | 0.7 |  |  | 2.4 |  |  | 2.7 |
Mergers & Acquisitions expense |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.3 |  |  | — |  |  | 0.3 |
Adjusted EBITDA |  | $ | 4.3 |  |  | $ | 5.0 |  |  | $ | 5.9 |  |  | $ | 1.7 |  |  | $ | 5.3 |  |  | $ | 7.2 |  |  | $ | 6.3 |  |  | $ | 2.3 |  |  | $ | 16.9 |  |  | $ | 21.0 |

*Numbers may not add due to rounding
5