Simulations Plus Reports First Quarter Fiscal 2026 Financial Results
MWN-AI** Summary
Simulations Plus, Inc. (Nasdaq: SLP) reported its financial results for the first quarter of fiscal 2026, which ended on November 30, 2025. The company saw a 3% decrease in total revenue to $18.4 million compared to the same period last year. This decline was attributed to a significant 17% drop in software revenue, which accounted for 48% of total revenue, while services revenue, making up 52% of the total, rose by 16% to $9.5 million.
Despite the revenue challenges, Simulations Plus reported stronger gross profit of $10.9 million, equating to a gross margin of 59%, up from $10.2 million and 54% last year. The company achieved a net income of $0.7 million with diluted earnings per share (EPS) of $0.03, an improvement from $0.2 million and $0.01 EPS in the prior year. Adjusted EBITDA was recorded at $3.5 million (19% of revenue), down from $4.5 million (24% of revenue) last year.
CEO Shawn O’Connor emphasized that they met revenue guidance, highlighting robust performances in their services segment, particularly in commercialization offerings. Looking forward, he expressed optimism about favorable market dynamics and strong bookings in both software and services, reinforcing confidence in achieving their fiscal 2026 targets.
Simulations Plus reaffirmed its fiscal guidance for 2026, projecting total revenues of $79 million to $82 million, with anticipated revenue growth between 0% and 4%. They will host a Virtual Investor Day on January 21, 2026, to outline their new product vision and advancements in AI solutions, reinforcing their position as a leader in model-informed and AI-accelerated drug development.
MWN-AI** Analysis
Simulations Plus, Inc. (Nasdaq: SLP) recently reported its first-quarter financial results for fiscal 2026, highlighting a mixed performance. Total revenue decreased 3% to $18.4 million, primarily due to a significant 17% drop in software revenue. However, services revenue experienced a commendable 16% increase, which indicates a strong market demand for consulting offerings.
Despite the decline in software sales, which constituted 48% of total revenue, Simulations Plus achieved an improved gross margin of 59%, reflecting cost management efforts. Furthermore, the company's net income rose to $0.7 million from $0.2 million, with diluted EPS climbing to $0.03. These results suggest that operational efficiency is being maintained even amid challenges in the software segment.
Looking ahead, management reaffirmed its fiscal 2026 guidance, targeting $79 million to $82 million in revenue. The confidence in achieving these targets stems from several positive market dynamics, including better funding conditions for clients and expected gains from annual software price increases. The anticipated transition towards AI-enabled solutions could be a key growth catalyst, with the company planning to unveil its new product vision at the upcoming Investor Day on January 21, 2026.
For investors, this mixed bag of financial results suggests a cautious approach. The decline in software revenue warrants attention; however, the growth in services combined with prudent cost management indicates underlying resilience. The upcoming product vision's potential to enhance revenue streams should be monitored closely. Investors may consider accumulating shares in anticipation of positive developments from AI solutions and a rebound in client spending. Short-term fluctuations should be viewed as potential entry points, particularly if the company successfully capitalizes on emerging market opportunities.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
Investor Day on January 21, 2026, to present new product vision and AI solutions
Simulations Plus, Inc. (Nasdaq: SLP) (“Simulations Plus” or the “Company”), a global leader in model-informed and AI-accelerated drug development that advances biopharma innovation, today reported financial results for its first quarter fiscal 2026, ended November 30, 2025.
First Quarter 2026 Financial Highlights (as compared to first quarter 2025)
- Total revenue decreased 3% to $18.4 million
- Software revenue decreased 17% to $8.9 million, representing 48% of total revenue
- Services revenue increased 16% to $9.5 million, representing 52% of total revenue
- Gross profit was $10.9 million and gross margin was 59%, compared to $10.2 million and 54%
- Net income of $0.7 million and diluted earnings per share of $0.03, compared to net income of $0.2 million and diluted EPS of $0.01
- Adjusted EBITDA of $3.5 million, representing 19% of total revenue, compared to $4.5 million, representing 24% of total revenue
- Adjusted net income of $2.6 million and adjusted diluted EPS of $0.13 compared to adjusted net income of $3.4 million and adjusted diluted EPS of $0.17
Management Commentary
"We met our first quarter revenue guidance and delivered strong performance in our services segment, driven primarily by significant growth in commercialization offerings and modest gains in development projects,” said Shawn O’Connor, CEO of Simulations Plus. “In software, the expected decrease in clinical operations and development revenue was only partially offset by an increase in discovery solutions.”
“We are encouraged by favorable market dynamics, including most-favored nation pricing agreements and an improved funding environment for our clients. With strong bookings in both software and services, along with the impact of annual software price increases, we remain confident in achieving our fiscal year 2026 guidance. Additionally, we believe we are well-positioned to capitalize on any upside should client spending levels improve from current levels.”
“Simulations Plus is poised to be a leader in the next era of model-informed and AI-enabled drug development, and we look forward to sharing our integrated product vision at our virtual Investor Day later this month,” concluded O’Connor.
Fiscal 2026 Guidance
Simulations Plus is reaffirming its previously provided fiscal year 2026 guidance as follows:
Fiscal 2026 Guidance | ||
Revenue | $79M - $82M | |
Revenue growth | 0 - 4% | |
Software mix | 57 - 62% | |
Adjusted EBITDA margin | 26 - 30% | |
Adjusted diluted EPS | $1.03 - $1.10 |
Webcast and Conference Call Details
Shawn O’Connor, Chief Executive Officer, and Will Frederick, Executive Vice President and Chief Financial Officer, will host a conference call and webcast today, January 8 at 5:00 p.m. Eastern Time to discuss the results and certain forward-looking information. The call may be accessed by registering here or by calling 1-877-451-6152 (domestic) or 1-201-389-0879 (international). The webcast can be accessed on the investor relations page of the Simulations Plus website https://www.simulations-plus.com/investorscorporate-profile/corporate-profile/ where it will also be available for replay approximately one hour following the call.
2026 Investor Day
Simulations Plus will hold a Virtual Investor Day on Wednesday, January 21, 2026, from 1:00 PM ET-2:30 PM ET, to present its new product vision and AI solutions. To participate, please register here .
Non-GAAP Financial Measures
This press release contains “non-GAAP financial measures,” which are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”).
A further explanation and reconciliation of these non-GAAP financial measures is included below and in the financial tables in this release.
The Company believes that the non-GAAP financial measures presented facilitate an understanding of operating performance and provide a meaningful comparison of its results between periods. The Company’s management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes, and in the calculation of performance-based compensation. Adjusted EBITDA and Adjusted Diluted EPS represent measures that we believe are 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 these measures are useful in evaluating our core operating results. However, Adjusted EBITDA and Adjusted Diluted EPS are not measures of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income, operating income, or diluted EPS as indicators of our operating performance or to net cash provided by operating activities as a measure of our liquidity. We believe the Company’s Adjusted EBITDA and Adjusted Diluted EPS measures provide information that is directly comparable to that provided by other peer companies in our industry, but other companies may calculate non-GAAP financial results differently, particularly related to nonrecurring, unusual items.
Please note that the Company has not reconciled the adjusted EBITDA or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
Adjusted EBITDA
Adjusted EBITDA represents net income excluding the effect of interest expense (income), provision (benefit) for income taxes, depreciation and amortization, equity-based compensation expense, loss (gain) on currency exchange, impairment charges, change in fair value of contingent consideration, reorganization expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance.
Adjusted Net Income and Adjusted Diluted EPS
Adjusted net income and adjusted diluted earnings per share exclude the effect of amortization, equity-based compensation expense, loss (gain) on currency exchange, impairment charges, change in fair value of contingent consideration, reorganization expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance as well as the income tax provision adjustment for such charges.
The Company excludes the above items because they are outside of the Company’s normal operations and/or, in certain cases, are difficult to forecast accurately.
About Simulations Plus, Inc.
Simulations Plus is a global leader in model-informed and AI-accelerated drug development. We create value for our clients by accelerating the discovery, development, and commercialization of pharmaceuticals and other products through innovative science-based software and consulting solutions. For more information, visit www.simulations-plus.com .
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 .
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,” “will”, “can,” “expect,” “anticipate,” and similar expressions (or the negative of such terms, as well as other words or expressions referencing future events, conditions, or circumstances) 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. Forward-looking statements include but are not limited to statements regarding our fiscal year 2026 guidance, revenue growth, anticipated margins and profitability, demand for software and services, the impact of pricing actions, client spending levels, market conditions, the development, capabilities, regulatory acceptance and commercialization of AI-enabled and could-based solutions, the timing and content of product initiatives discussed at Investor Day, and our ability to execute our long-term strategic vision. These forward-looking statements are based on current assumptions and expectations that involve risks and uncertainties that could cause the actual results to differ materially from those expressed or implied. Factors that could cause or contribute to such differences include, but are not limited to: effectiveness of our internal operational structure, our ability to maintain our competitive advantages and commercialize AI and cloud-enabled solutions, evolving regulatory and data privacy standards governing AI technologies, 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, market conditions, macroeconomic factors, and a sustainable market. Further information on our risk factors is contained in our quarterly, annual, and current reports and filed with the U.S. Securities and Exchange Commission.
SIMULATIONS PLUS, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
(in thousands, except per common share and common share data) | November 30, | November 30, | ||||||
Revenues | ||||||||
Software | $ | 8,883 | $ | 10,715 | ||||
Services | 9,538 | 8,209 | ||||||
Total revenues | 18,421 | 18,924 | ||||||
Cost of revenues | ||||||||
Software | 1,412 | 2,638 | ||||||
Services | 6,118 | 6,068 | ||||||
Total cost of revenues | 7,530 | 8,706 | ||||||
Gross profit | 10,891 | 10,218 | ||||||
Operating expenses | ||||||||
Research and development | 2,980 | 1,848 | ||||||
Sales and marketing | 3,179 | 2,851 | ||||||
General and administrative | 4,019 | 5,393 | ||||||
Total operating expenses | 10,178 | 10,092 | ||||||
Income from operations | 713 | 126 | ||||||
Other income, net | 257 | 144 | ||||||
Income before income taxes | 970 | 270 | ||||||
Income tax expense | (294 | ) | (64 | ) | ||||
Net income | $ | 676 | $ | 206 | ||||
Earnings per share | ||||||||
Basic | $ | 0.03 | $ | 0.01 | ||||
Diluted | $ | 0.03 | $ | 0.01 | ||||
Weighted-average common shares outstanding | ||||||||
Basic | 20,140 | 20,068 | ||||||
Diluted | 20,220 | 20,266 | ||||||
Other comprehensive (loss) income, net of tax | ||||||||
Foreign currency translation adjustments | (6 | ) | (42 | ) | ||||
Unrealized gains (losses) on available-for-sale securities | — | 4 | ||||||
Comprehensive income | $ | 670 | $ | 168 | ||||
SIMULATIONS PLUS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
(in thousands, except per common share and common share data) | November 30, | August 31, | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 30,189 | $ | 30,853 | ||||
Accounts receivable, net of allowance for credit losses of $93 and $187 | 12,154 | 9,717 | ||||||
Prepaid income taxes | 1,745 | 1,777 | ||||||
Prepaid expenses and other current assets | 8,552 | 7,702 | ||||||
Short-term investments | 5,500 | 1,500 | ||||||
Total current assets | 58,140 | 51,549 | ||||||
Long-term assets | ||||||||
Capitalized computer software development costs, net of accumulated amortization of $22,604 and $21,863 | 11,290 | 11,117 | ||||||
Property and equipment, net | 793 | 880 | ||||||
Operating lease right-of-use assets | 390 | 407 | ||||||
Intellectual property, net of accumulated amortization of $9,287 and $9,021 | 5,931 | 6,197 | ||||||
Other intangible assets, net of accumulated amortization of $4,651 and $4,399 | 11,580 | 11,896 | ||||||
Goodwill | 43,717 | 43,717 | ||||||
Deferred tax assets, net | 4,606 | 4,774 | ||||||
Other assets | 1,384 | 1,399 | ||||||
Total assets | $ | 137,831 | $ | 131,936 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 863 | $ | 470 | ||||
Accrued compensation | 2,657 | 2,010 | ||||||
Accrued expenses | 922 | 1,343 | ||||||
Operating lease liability - current portion | 179 | 206 | ||||||
Deferred revenue | 5,719 | 2,696 | ||||||
Total current liabilities | 10,340 | 6,725 | ||||||
Long-term liabilities | ||||||||
Operating lease liability - net of current portion | 378 | 410 | ||||||
Total liabilities | 10,718 | 7,135 | ||||||
Commitments and contingencies - Note 4 | ||||||||
Shareholders' equity | ||||||||
Preferred stock, $0.001 par value — 10,000,000 shares authorized; no shares issued and outstanding | $ | — | $ | — | ||||
Common stock, $0.001 par value; 50,000,000 shares authorized, 20,146,585 and 20,137,480 shares issued and outstanding as of November 30, 2025 and August 31, 2025 | 20 | 20 | ||||||
Additional paid-in capital | 161,058 | 159,416 | ||||||
Accumulated deficit | (33,688 | ) | (34,364 | ) | ||||
Accumulated other comprehensive loss | (277 | ) | (271 | ) | ||||
Total shareholders' equity | 127,113 | 124,801 | ||||||
Total liabilities and shareholders' equity | $ | 137,831 | $ | 131,936 | ||||
SIMULATIONS PLUS, INC. | ||||||||
Reconciliation of Adjusted EBITDA to Net Income (1) | ||||||||
(Unaudited) | ||||||||
(in thousands) | ||||||||
Three months ended | Three months ended | |||||||
November 30, 2025 | November 30, 2024 | |||||||
Net income | $ | 676 | $ | 206 | ||||
Excluding: | ||||||||
Interest income and expense, net | (267 | ) | (159 | ) | ||||
Provision for income taxes | 294 | 64 | ||||||
Depreciation and amortization | 1,346 | 2,265 | ||||||
Stock-based compensation | 1,465 | 1,589 | ||||||
Loss on currency exchange | 10 | 15 | ||||||
Reorganization expense | — | 258 | ||||||
Mergers & Acquisitions expense | 10 | 255 | ||||||
Adjusted EBITDA | $ | 3,534 | $ | 4,493 | ||||
(1) Numbers may not foot due to rounding | ||||||||
SIMULATIONS PLUS, INC. | ||||||||
Reconciliation of Adjusted Diluted EPS to Diluted EPS (1) | ||||||||
(Unaudited) | ||||||||
(in thousands, except Diluted EPS and Adjusted Diluted EPS) | ||||||||
Three months ended | Three months ended | |||||||
November 30, 2025 | November 30, 2024 | |||||||
Net Income | $ | 676 | $ | 206 | ||||
Excluding: | ||||||||
Amortization | 1,259 | 2,130 | ||||||
Stock-based compensation | 1,465 | 1,589 | ||||||
Loss on currency exchange | 10 | 15 | ||||||
Mergers & Acquisitions expense | 10 | 255 | ||||||
Reorganization expense | — | 258 | ||||||
Tax effect on above adjustments | (832 | ) | (1,007 | ) | ||||
Adjusted Net income | $ | 2,588 | $ | 3,446 | ||||
Weighted-avg. common shares outstanding: | ||||||||
Diluted weighted-avg. common shares outstanding | 20,220 | 20,266 | ||||||
Diluted EPS | $ | 0.03 | $ | 0.01 | ||||
Adjusted Diluted EPS | $ | 0.13 | $ | 0.17 | ||||
(1) Numbers may not foot due to rounding |
View source version on businesswire.com: https://www.businesswire.com/news/home/20260108944138/en/
Investor Relations Contact:
Lisa Fortuna
Financial Profiles
310-622-8251
slp@finprofiles.com
FAQ**
How does Simulations Plus Inc. SLP plan to leverage its strong services revenue growth to offset the decline in software revenue in the upcoming quarters?
Given the reaffirmation of fiscal 20guidance, what specific strategies will Simulations Plus Inc. SLP implement to achieve the projected revenue growth of 0-4%?
Can Simulations Plus Inc. SLP elaborate on how the upcoming Investor Day will outline its integrated product vision and the role of AI solutions in that vision?
What measures is Simulations Plus Inc. SLP considering to maintain its competitive advantages in the evolving regulatory landscape affecting AI technologies in drug development?
**MWN-AI FAQ is based on asking OpenAI questions about Simulations Plus Inc. (NASDAQ: SLP).
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