Q2 2025 Simulations Plus Inc Earnings Call Transcript
Key Points
- Total revenue increased by 23% year-over-year, with a 5% organic growth excluding contributions from new business units.
- Software revenue grew by 16%, driven by strong performance in the Quantitative Systems Pharmacology (QSP) business unit, which saw an 89% revenue surge.
- The company maintained a high software customer renewal rate of 90% based on fees, indicating strong customer retention.
- Simulations Plus Inc (SLP) ended the quarter with $21.4 million in cash and short-term investments, maintaining a strong financial position with no debt.
- The company reaffirmed its fiscal year 2025 guidance, expecting total revenue between $90 million to $93 million, indicating confidence in continued growth.
- Services revenue, although up 34%, was flat on an organic basis, with clients delaying project initiations to the second half of the year.
- Gross margin decreased to 59% from 72% in the prior-year quarter, primarily due to increased costs in software and services.
- Net income for the quarter decreased to $3.1 million from $4 million in the previous year, with diluted EPS dropping from $0.20 to $0.15.
- The renewal rate based on fees declined from 94% to 90%, impacted by a large customer renewal that was delayed until the third quarter.
- The operating environment remains challenging, with customers taking a cost-conscious approach to spending, affecting the pace of service project initiations.
Greetings and welcome to the Simulations Plus second-quarter fiscal 2025 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 begin.
Good afternoon, everyone. Welcome to the Simulations Plus second-quarter 2025 financial results conference call. With me today are Shawn O'Connor, Chief Executive Officer; and Will Frederick, Chief Financial Officer and Chief Operating Officer of Simulations Plus. Please note that we have updated our quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation on our Investor Relations website at www.simulations-plus.com.
After management's commentary, we will open the call for questions. As a reminder, the information discussed today may include forward-looking statements that
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