Simulations Plus, Inc 10-Q for FY2025 Q2

Simulations Plus, Inc. (SLP)

10-Q 2025-04-04 For: 2025-02-28

Added on April 06, 2026

About this 10-Q

Simulations Plus, Inc filed this 10-Q on April 4, 2025, covering the quarter ended February 28, 2025 (FY2025 Q2).

Headline figures

Quarter ended February 28, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $22.43M; up 22.5% from $18.31M a year earlier
Net income: $3.07M; down 23.7% from net income of $4.03M a year earlier
Diluted EPS: $0.15; down 25.0% from $0.20 a year earlier

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California			95-4595609
(State or other jurisdiction of Incorporation or Organization)			(I.R.S. Employer identification No.)


o	Large accelerated Filer	o	Accelerated Filer
x	Non-accelerated Filer	x	Smaller reporting company
o	Emerging Growth Company


	PART I. FINANCIAL INFORMATION
		Page
Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets at February 28, 2025 and August 31, 2024	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three months and six months ended February 28, 2025 and February 29, 2024	4

	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended Febr uary 28 , 202 5 and February 29, 202 4	5

	Condensed Consolidated Statements of Cash Flows for the six months ended February 28, 2025 and February 29, 2024	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32

Item 4.	Controls and Procedures	32

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	36

Item 6.	Exhibits	37

	Signatures	38


	(Unaudited)		(Audited)
(in thousands, except share and per share amounts)	February 28, 2025		August 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	10,992	$	10,311
Accounts receivable, net of allowance for credit losses of $179 and $149	16,493		9,136
Prepaid income taxes	1,375		2,197
Prepaid expenses and other current assets	7,464		7,753
Short-term investments	10,393		9,944
Total current assets	46,717		39,341
Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $20,290 and $18,727	12,452		12,499
Property and equipment, net	800		812
Operating lease right-of-use assets	827		1,027
Intellectual property, net of accumulated amortization of $7,659 and $5,490	20,961		23,130
Other intangible assets, net of accumulated amortization of $3,819 and $3,177	22,910		23,210
Goodwill	96,305		96,078


Other assets	455		542
Total assets	$	201,427	$	196,639

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,206	$	602
Accrued compensation	4,431		4,513
Accrued expenses	1,399		2,043

Contracts payable - current portion	—		2,440
Operating lease liability - current portion	313		475
Deferred revenue	3,346		1,996
Total current liabilities	10,695		12,069
Long-term liabilities
Deferred income taxes, net	701		1,608
Operating lease liability - net of current portion	483		531

Total liabilities	11,879		14,208
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 and additional paid-in capital —50,000,000 shares authorized; 20,111,045 and 20,051,134 shares issued and outstanding	156,229		152,328
Retained earnings	33,634		30,354
Accumulated other comprehensive loss	(315)		(251)
Total shareholders' equity	189,548		182,431
Total liabilities and shareholders' equity	$	201,427	$	196,639


	Three Months Ended				Six Months Ended

(in thousands, except per common share amounts)	February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024
Revenues
Software	$	13,484	$	11,614	$	24,199	$	19,203
Services	8,948		6,691		17,157		13,602
Total revenues	22,432		18,305		41,356		32,805
Cost of revenues
Software	2,587		1,348		5,225		2,339
Services	6,718		3,736		12,786		7,397
Total cost of revenues	9,305		5,084		18,011		9,736
Gross profit	13,127		13,221		23,345		23,069
Operating expenses
Research and development	2,143		1,312		3,991		2,529
Sales and marketing	3,717		1,949		6,568		3,938
General and administrative	4,555		5,518		9,948		11,200
Total operating expenses	10,415		8,779		20,507		17,667

Income from operations	2,712		4,442		2,838		5,402

Other income	796		810		940		2,256

Income before income taxes	3,508		5,252		3,778		7,658
Provision for income taxes	(434)		(1,223)		(498)		(1,684)
Net income	$	3,074	$	4,029	$	3,280	$	5,974

Earnings per share
Basic	$	0.15	$	0.20	$	0.16	$	0.30
Diluted	$	0.15	$	0.20	$	0.16	$	0.29

Weighted-average common shares outstanding
Basic	20,097		19,975		20,082		19,961
Diluted	20,277		20,315		20,262		20,288

Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	(26)		(15)		(68)		(69)
Unrealized gains on available-for-sale securities	—		—		4		—
Comprehensive income	$	3,048	$	4,014	$	3,216	$	5,905


x			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended February 28, 2025

OR

o			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______


Title of Each Class Common Stock, par value $0.001 per share			Trading Symbol SLP			Name of Each Exchange on Which Registered NASDAQ Stock Market LLC


	Six Months Ended

(in thousands)		February 28, 2025		February 29, 2024
Cash flows from operating activities
Net income		$	3,280	$	5,974
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		4,539		2,196
Change in fair value of contingent consideration		(640)		330
Discharge of holdback obligation related to Immunetrics acquisition		(224)		—
Amortization of investment discounts		(60)		(796)
Stock-based compensation		3,416		3,147
Deferred income taxes		(907)		(885)



Currency translation adjustments		(68)		(69)
(Increase) decrease in
Accounts receivable		(7,357)		(2,913)
Prepaid income taxes		822		(560)
Prepaid expenses and other assets		376		(1,170)
Increase (decrease) in
Accounts payable		604		216
Other liabilities		(736)		1,145

Deferred revenue		1,350		(643)
Net cash provided by operating activities		4,395		5,972

Cash flows from investing activities
Purchases of property and equipment		(152)		(433)
Purchase of short-term investments		(5,000)		(48,989)
Proceeds from maturities of short-term investments		3,620		36,252
Proceeds from sales of investments		995		—
Purchase of long-term investments		—		(9,024)
Purchased intangibles		(342)		(467)

Net working capital & excess cash settlement - Pro-ficiency acquisition		(227)		—
Capitalized computer software development costs		(1,348)		(1,719)
Net cash used in investing activities		(2,454)		(24,380)

Cash flows from financing activities
Payment of dividends		—		(2,394)
Payments on contracts payable		(1,576)		—
Proceeds from the exercise of stock options		316		310

Net cash used in financing activities		(1,260)		(2,084)

Net increase in cash and cash equivalents		681		(20,492)
Cash and cash equivalents, beginning of period		$	10,311	$	57,523
Cash and cash equivalents, end of period		$	10,992	$	37,031

Supplemental disclosures of cash flow information
Income taxes paid		$	616	$	3,142
Non-Cash Investing and Financing Activities


Right of use assets capitalized		$	451	$	—


Equipment			5 years
Computer equipment			3 to 7 years
Furniture and fixtures			5 to 7 years
Leasehold improvements			Shorter of the asset life or lease term


(in thousands)
ROU assets	$	827
Lease liabilities, current	$	313
Lease liabilities, long-term	$	483
Operating lease costs	$	274
Weighted-average remaining lease term	5.20 years
Weighted-average discount rate	4.51		%


(in thousands)	CPP		QSP		ALI		MC		Total



Balance, August 31, 2024	$	7,323	$	11,776	$	31,108	$	45,871	$	96,078
Addition	—		—		—		—		—
Measurement period adjustment*	—		—		92		135		227
Impairments	—		—		—		—		—
Balance, February 28, 2025	$	7,323	$	11,776	$	31,200	$	46,006	$	96,305


(in thousands)	Amortization Period	Acquisition Value		Accumulated Amortization		Net Book Value
Trade names	None	$	12,610	$	—	$	12,610
Covenants not to compete	Straight line 2 to 3 years	100		43		57
Other internal use software	Straight line 3 to 13 years	950		78		872
Customer relationships	Straight line 8 to 14 years	10,540		3,231		7,309
ERP	Straight line 15 years	2,529		467		2,062

		$	26,729	$	3,819	$	22,910


(in thousands)
Years Ending August 31,	Amount
Remainder of fiscal year 2025	$	694
2026	$	1,264
2027	$	1,216
2028	$	1,052
2029	$	1,052


Level Input:						Input Definition:
Level I						Inputs that are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II						Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III						Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.


	February 28, 2025

(in thousands)	Amortized cost		Unrealized gains		Unrealized losses		Fair value
Level 1:
Term deposits (due within one year)	$	5,000	$	—	$	—	$	5,000
Corporate debt securities (due within one year)	5,389		4		—		5,393
Total Level 1	10,389		4		—		10,393
Level 2:	—		—		—		—
Level 3:	—		—		—		—
Total available-for-sale securities	$	10,389	$	4	$	—	$	10,393


(in thousands, except per share and weighted-average amounts)
Activity for the six months ended February 28, 2025	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2024	1,906	$	37.64	6.91 years
Granted	356	33.18
Exercised	(71)	13.50
Canceled/Forfeited	(97)	42.94
Outstanding, February 28, 2025	2,094	$	37.46	7.05 years
Vested and Exercisable, February 28, 2025	990	$	35.16	5.31 years
Vested and Expected to Vest, February 28, 2025	1,997	$	37.49	6.95 years



(in thousands, except weighted-average amounts)	Six Months Ended February 28, 2025			Fiscal Year 2024
Estimated fair value of awards granted	$	6,190		$	11,902
Unvested forfeiture rate	6.26		%	5.53		%
Weighted-average grant price	$	33.18		$	40.76
Weighted-average market price	$	33.18		$	40.76
Weighted-average volatility	46.93		%	44.63		%
Weighted-average risk-free rate	3.95		%	4.77		%
Weighted-average dividend yield	0.00		%	0.59		%
Weighted-average expected life	6.61 years			6.59 years


Exercise Price Per Share				Awards Outstanding				Awards Exercisable
Low		High		Quantity	Weighted -Average Remaining Contractual Life	Weighted-Average Exercise Price		Quantity	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price
$	6.85	$	9.77	93	0.99 years	$	9.71	93	0.99 years	$	9.71
$	9.78	$	18.76	128	1.99 years	$	10.08	128	1.99 years	$	10.08
$	18.77	$	33.40	498	8.02 years	$	31.07	147	4.16 years	$	26.05
$	33.41	$	47.63	1,101	7.90 years	$	41.36	429	7.36 years	$	41.32
$	47.64	$	66.14	274	6.32 years	$	55.65	193	5.89 years	$	57.33
				2,094	7.05 years	$	37.46	990	5.31 years	$	35.16


(in thousands)	Amount
Contingent consideration at August 31, 2024	$	640
Contingent consideration payment	—
Change in fair value of contingent consideration	(640)


Contingent consideration at February 28, 2025	$	—


(in thousands)	Three Months Ended February 28, 2025
	Software			Services			Total
Revenues	$	13,484		$	8,948		$	22,432
Cost of revenues	2,587			6,718			9,305
Gross profit	$	10,897		$	2,230		$	13,127
Gross margin	81		%	25		%	59		%


(in thousands)	Three Months Ended February 29, 2024
	Software			Services			Total
Revenues	$	11,614		$	6,691		$	18,305
Cost of revenues	1,348			3,736			5,084
Gross profit	$	10,266		$	2,955		$	13,221
Gross margin	88		%	44		%	72		%



(in thousands)	Six Months Ended February 29, 2024
	Software			Services			Total
Revenues	$	19,203		$	13,602		$	32,805
Cost of revenues	2,339			7,397			9,736
Gross profit	$	16,864		$	6,205		$	23,069
Gross margin	88		%	46		%	70		%



(in thousands)	Three Months Ended				% of Revenue
	February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024		$ Change		% Change
Revenue	$	22,432	$	18,305	100	%	100	%	$	4,127	23	%
Cost of revenue	9,305		5,084		41	%	28	%	4,221		83	%
Gross profit	13,127		13,221		59	%	72	%	(94)		(1)	%
Research and development	2,143		1,312		10	%	7	%	831		63	%
Sales and marketing	3,717		1,949		17	%	11	%	1,768		91	%
General and administrative	4,555		5,518		20	%	30	%	(963)		(17)	%
Total operating expenses	10,415		8,779		46	%	48	%	1,636		19	%
Income from operations	2,712		4,442		12	%	24	%	(1,730)		(39)	%
Other income, net	796		810		4	%	4	%	(14)		(2)	%
Income before income taxes	3,508		5,252		16	%	29	%	(1,744)		(33)	%
Provision for income taxes	(434)		(1,223)		(2)	%	(7)	%	789		65	%
Net income	$	3,074	$	4,029	14	%	22	%	$	(955)	(24)	%


EXHIBIT NUMBER						DESCRIPTION
2.1^						Agreement and Plan of Merger, dated July 23, 2014, by and among the Company, Cognigen Corporation and the other parties thereto, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K/A filed November 18, 2014.
2.2^						Stock Purchase Agreement by and among Simulations Plus, Inc., DILIsym Services, Inc., the Shareholders’ Representative and the Shareholders of DILIsym Services, Inc., incorporated by reference to Exhibit 10.13 to the Company’s Form 10-Q filed July 10, 2017.
2.3^						Share Purchase and Contribution Agreement Relating to Lixoft, dated March 31, 2020, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed April 2, 2020.
2.4^						Agreement and Plan of Merger, dated June 16, 2023, by and among Simulations Plus, Inc., Insight Merger Sub, Inc., Immunetrics, Inc. and LaunchCyte LLC, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed June 20, 2023.
2.5^+						Stock Purchase Agreement, by and among the Company, Pro-ficiency Holdings, Inc. (“Pro-ficiency”), each of the stockholders of Pro-ficiency (collectively, the “Sellers”) and WRYP Stockholders Services, LLC, solely in its capacity as the Sellers’ Representative, dated June 11, 2024, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed June 12, 2024.
3.1						Articles of Incorporation of the Company, incorporated by reference to an Exhibit 3.1 to the Company’s Form 10-K filed November 29, 2010.
3.2						Amended and Restated Bylaws of the Company, incorporated by reference to an exhibit to the Company’s Form 10-K filed November 29, 2010.
3.3						Certificate of Amendment to the Amended and Restated Bylaws of Simulations Plus, Inc., incorporated by reference to Appendix A to the Company’s Definitive Schedule 14A Proxy Statement filed December 31, 2018.
4.1						Form of Common Stock Certificate, incorporated by reference to the Company’s Registration Statement on Form SB-2 (Registration No. 333-6680) filed March 25, 1997.
4.2						Share Exchange Agreement, incorporated by reference to the Company’s Registration Statement on Form SB-2 (Registration No. 333-6680) filed March 25, 1997.





































31.1 *						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 **						Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS***						Inline XBRL Instance Document
101.SCH***						Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents




104***						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 attachments).



*						Filed herewith.
**						Furnished herewith.
***						The XBRL related information in Exhibit 101 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
^						Schedules, exhibits, and similar supporting attachments or agreements are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.
†						Refers to management contracts or compensatory plans or arrangements.
+						Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) would likely cause competitive harm if publicly disclosed.


		SIMULATIONS PLUS, INC.

Date:	April 4, 2025	By:	/s/ Will Frederick
			Will Fredrick Chief Financial Officer (Principal financial officer) and Chief Operating Officer


Dated: April 4, 2025	By:	/s/ Shawn O’Connor
		Shawn O’Connor Chief Executive Officer (Principal Executive Officer)


Dated: April 4, 2025	By:	/s/ Will Frederick
		Will Frederick Chief Financial Officer and Chief Operating Officer (Principal Financial Officer)


/s/ Shawn O’Connor
Shawn O’Connor
Chief Executive Officer
(Principal Executive Officer)
April 4, 2025


/s/ Will Frederick
Will Frederick
Chief Financial Officer and Chief Operating Officer
(Principal Financial Officer)
April 4, 2025