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SEGMENT REPORTING | 9 Months Ended
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May 31, 2024
Segment Reporting [Abstract] |
SEGMENT REPORTING | SEGMENT REPORTING The Company applies ASC 280, Segment Reporting, in determining reportable segments. The Company has two reportable segments: Software and Services. Segment information is presented in the same manner that the chief operating decision maker (“CODM”) reviews certain financial information based on these reportable segments. The CODM reviews revenue and gross profit for both of the reportable segments. Gross profit is defined as revenue less cost of revenue incurred by the segment. No operating segments have been aggregated to form the reportable segments. The Company does not allocate assets at the reportable segment level, as these are managed on an entity-wide group basis and, accordingly, the Company does not report asset information by segment. The Company does not allocate operating expenses that are managed on an entity-wide group basis and, accordingly, the Company does not allocate and report operating expenses at a segment level. There are no internal revenue transactions between the Company’s segments. The following tables summarize the results for each segment for the three months ended May 31, 2024, and May 31, 2023:
(in thousands) |  | Three Months Ended May 31, 2024
|  | Software |  | Services |  | Total
Revenues |  | $ | 11,908 |  |  | $ | 6,636 |  |  | $ | 18,544 |
Cost of revenues |  | 1,400 |  |  | 3,887 |  |  | 5,287 |
Gross profit |  | $ | 10,508 |  |  | $ | 2,749 |  |  | $ | 13,257 |
Gross margin |  | 88 | % |  | 41 | % |  | 71 | %
Our software business and services business represented 64% and 36% of total revenue, respectively, for the three months ended May 31, 2024.
(in thousands) |  | Three Months Ended May 31, 2023
|  | Software |  | Services |  | Total
Revenues |  | $ | 10,632 |  |  | $ | 5,602 |  |  | $ | 16,234 |
Cost of revenues |  | 908 |  |  | 2,053 |  |  | 2,961 |
Gross profit |  | $ | 9,724 |  |  | $ | 3,549 |  |  | $ | 13,273 |
Gross margin |  | 91 | % |  | 63 | % |  | 82 | %
Our software business and services business represented 65% and 35% of total revenue, respectively, for the three months ended May 31, 2023. Software Business For the three months ended May 31, 2024, the revenue increase of $1.3 million, or 12%, compared to the three months ended May 31, 2023, was primarily due to higher revenues from GastroPlus® of $0.4 million, higher revenues from Monolix™ of $0.3 million, higher revenues from ADMET Predictor® of $0.3 million, and higher revenues from QSP of $0.3 million. Cost of revenues increased $0.5 million, or 54%, primarily due to $0.2 million from the acquisition of Immunetrics and a $0.1 million increase from the release of our newest version of GastroPlus®. Gross profit increased by $0.8 million, or 8%, accordingly for the same periods. Services Business For the three months ended May 31, 2024, the revenue increase of $1.0 million, or 18%, compared to the three months ended May 31, 2023, was primarily due to higher revenues from CPP services of $0.7 million and higher revenues from QSP services of $0.6 million, offset by lower revenues from PBPK services of $0.1 million and lower revenues from REG services of $0.1 million. Cost of revenues increased by $1.8 million, or 89%, primarily due to $1.0 million increase in compensation-related increases, primarily attributable to the addition of scientific headcount as well as general annual salary adjustments for existing employees, $0.5 million from the reorganization of our internal structure from divisions based on prior acquisitions to business units organized around key product and service offerings, and $0.3 million from the acquisition of Immunetrics, which contributed to our services headcount. Our new business unit structure is designed to optimize the utilization of our scientific talent in support of our revenue growth objectives. Gross profit decreased by $0.8 million, or 23%, accordingly for the same periods. The following tables summarize the results for each segment for the nine months ended May 31, 2024, and May 31, 2023:
(in thousands) |  | Nine Months Ended May 31, 2024
|  | Software |  | Services |  | Total
Revenues |  | $ | 31,111 |  |  | $ | 20,238 |  |  | $ | 51,349 |
Cost of revenues |  | 3,739 |  |  | 11,284 |  |  | 15,023 |
Gross profit |  | $ | 27,372 |  |  | $ | 8,954 |  |  | $ | 36,326 |
Gross margin |  | 88 | % |  | 44 | % |  | 71 | %
Our software business and services business represented 61% and 39% of total revenue, respectively, for the nine months ended May 31, 2024.
(in thousands) |  | Nine Months Ended May 31, 2023
|  | Software |  | Services |  | Total
Revenues |  | $ | 27,193 |  |  | $ | 16,755 |  |  | $ | 43,948 |
Cost of revenues |  | 2,636 |  |  | 5,616 |  |  | 8,252 |
Gross profit |  | $ | 24,557 |  |  | $ | 11,139 |  |  | $ | 35,696 |
Gross margin |  | 90 | % |  | 66 | % |  | 81 | %
Our software business and services business represented 62% and 38% of total revenue, respectively, for the nine months ended May 31, 2023. Software Business For the nine months ended May 31, 2024, the revenue increase of $3.9 million, or 14%, compared to the nine months ended May 31, 2023, was primarily due to higher revenues from GastroPlus® of $1.4 million, higher revenues from Monolix™ of $1.0 million, higher revenues from QSP of $0.9 million, and higher revenues from ADMET Predictor® of $0.6 million. Cost of revenues increased by $1.1 million, or 42%, primarily due to $0.7 million from the acquisition of Immunetrics and a $0.1 million increase from the release of our newest version of GastroPlus®. G ross profit increased accordingly by $2.8 million, or 11%, for the nine months ended May 31, 2024, compared to the nine months ended May 31, 2023. Services Business For the nine months ended May 31, 2024, the revenue increase of $3.5 million, or 21%, compared to the nine months ended May 31, 2023, was primarily due to higher revenues from QSP services of $2.5 million, mostly due to the addition of Immunetrics services revenues, higher revenues from CPP services of $1.3 million, and higher revenues from PBPK services of $0.2 million, offset by lower revenues from REG services of $0.4 million. Cost of revenues increased by $5.7 million, or 101%, primarily driven by $2.4 million from the reorganization of our internal structure from divisions based on prior acquisitions to business units organized around key product and service offerings, $2.3 million from compensation costs due to expanding our scientific headcount as well as general annual salary adjustments, and $0.9 million from the acquisition of Immunetrics, which contributed to our services headcount. Our new business unit structure is designed to optimize the utilization of our scientific talent in support of our revenue growth objectives. Gr oss profit decreased accordingly by $2.2 million, or 20%, for the same periods.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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