Simulations Plus dazzled investors with its second-quarter fiscal 2024 earnings, matching year-over-year earnings at 20 cents per share, yet dazzling analysts by exceeding the Zacks Consensus Estimate by 11.1%.
Robust Revenue Growth
The company achieved a 16% year-over-year revenue increase to $18.3 million, driven by soaring software revenues in the Clinical Pharmacology & Pharmacometrics (CPP) and Cheminformatics business sectors – surpassing Zacks Consensus Estimate by a remarkable 7.2%.
Market Reaction
Post-announcement, SLP’s shares surged by 9.1% during premarket trading on April 4, reflecting investor enthusiasm for the company’s performance.
Operational Performance
Revenue from Software grew by 11% to $11.6 million, with MonolixSuite sales jumping 38%, and GastroPlus and ADMET Predictor sales rising by 2% and 14% respectively.
Services Segment Growth
The Services segment experienced a revenue spike of 27% to $6.7 million, benefiting from increased revenues in Quantitative Systems Pharmacology (QSP) and Physiologically Based Pharmacokinetics (PBPK) units.
Profit Margins
Gross margins saw a slight decrease, with Software segment’s gross margin at 88%, and Services segment’s gross margin at 44%. Operating expenses reduced to 48% of revenue compared to 58% in the previous year.
Financial Position
By February 29, 2023, cash and short-term investments amounted to $108.5 million. The company announced a cash dividend of 6 cents per share scheduled for payment on May 6.
Future Outlook
SLP reiterated its fiscal 2024 revenue expectations at a range of $66 million to $69 million, signaling a 10-15% growth from fiscal 2023. The company foresees an increase in earnings per share within the band of 35-39% from the prior year, estimating between 66 cents and 68 cents.
Industry Comparisons
For investors seeking alternatives in the technology domain, considering Synopsys (SNPS), Iridium Communications (IRDM), and Microsoft (MSFT) could be prudent. These companies exhibit strong performance and favorable rankings.
