8-K
Simulations Plus, Inc. (SLP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
October 26, 2022
(Date of the earliest event reported)
Simulations Plus, Inc.
(Exact name of registrant as specified in its charter)
| California | 001-32046 | 95-4595609 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
42505 10th Street West, Lancaster, California 93534-7059
(Address of principal executive offices) (Zip Code)
661-723-7723
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14z-12 under Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | SLP | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging Growth Company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition
On October 26, 2022, Simulations Plus, Inc., a California corporation (the “Company”), issued a press release announcing financial results for its fourth quarter and fiscal year ended August 31, 2022. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Report”).
Item 7.01 Regulation FD Disclosure
On October 26, 2022, the Company held an investor conference call reporting its financial results for its fourth quarter and fiscal year ended August 31, 2022. The PowerPoint presentation, which was used for this investor conference call, is attached as Exhibit 99.2 to this Report.
In accordance with General Instructions B.2 of Form 8-K, the information in this Report, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Report.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Report, including the disclosures set forth herein and Exhibits 99.1 and 99.2 attached hereto, contains certain forward-looking statements that involve substantial risks and uncertainties. When used herein, the terms “anticipates,” “expects,” “estimates,” “believes” and similar expressions, as they relate to us or our management, are intended to identify such forward-looking statements.
Forward-looking statements in this Report or reports hereafter furnished, including in other publicly available documents filed with the Securities and Exchange Commission (the “Commission”), to the Company’s stockholders and other publicly available statements issued or released by us involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. Such future results are based upon management’s best estimates based upon current conditions and the most recent results of operations. These risks include, but are not limited to, the risks set forth herein and in such other documents filed with the Commission, each of which could adversely affect our business and the accuracy of the forward-looking statements contained herein. Our actual results, performance or achievements may differ materially from those expressed or implied by such forward-looking statements.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| 99.1 | Press release issued on October 26, 2022. |
|---|---|
| 99.2 | PowerPoint presentation used at the Investor Conference Call on October 26, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SIMULATIONS PLUS, INC. | |
|---|---|
| Dated: October 26, 2022 | By: /s/ Will Frederick |
| Will Frederick | |
| Chief Financial Officer |
2
Document
Exhibit 99.1
Simulations Plus Reports Fourth Quarter and Full Fiscal Year 2022
Financial Results
Fiscal 2022 revenue increased 16% year-over-year to $53.9 million
Diluted earnings per share increased 28% year-over-year to $0.60
Provides Fiscal 2023 guidance for total revenue of $59.3 million to $62.0 million (+10% to 15%)
LANCASTER, CA, October 26, 2022 – Simulations Plus, Inc. (Nasdaq: SLP), a leading provider of modeling and simulation software and services for pharmaceutical safety and efficacy, today reported financial results for its fourth quarter and full-year fiscal 2022, ended August 31, 2022.
“Simulations Plus delivered a strong fourth quarter, resulting in full-year revenue growth above our guidance, which, when combined with a heavy software mix and operating leverage, led to gross margin expansion and higher income and adjusted EBITDA growth rates,” said Shawn O’Connor, chief executive officer of Simulations Plus. “Improved cross-selling and increasing industry adoption of modeling and simulation solutions contributed to sustainable growth in our software business while we built a robust backlog for services, especially for PBPK and PKPD services. In addition, we increased our global footprint by expanding our presence in Europe, Asia, and Latin America, and further penetrated smaller biotech firms with our offerings.”
Fourth Quarter Fiscal 2022 Financial Highlights (compared with the corresponding period last fiscal year):
•Total revenue increased 19% to $11.7 million;
•Software revenue increased 10% to $5.9 million, representing 50% of total revenue;
•Services revenue increased 30% to $5.8 million, representing 50% of total revenue;
•Gross profit increased 28% to $9.1 million; gross margin was 77%;
•Net income of $1.0 million, or $0.05 per diluted share, compared to net income of $0.3 million, or $0.01 per diluted share;
•Adjusted EBITDA of $2.3 million, representing 20% of total revenue.
Full Year Financial Highlights (compared with the corresponding period last fiscal year):
•Total revenue increased 16% to $53.9 million;
•Software revenue increased 18% to $32.6 million, representing 61% of total revenue;
•Services revenue increased 13% to $21.3 million, representing 39% of total revenue;
•Gross profit increased 20% to $43.1 million; gross margin was 80%;
•Net income of $12.5 million, or $0.60 per diluted share, compared to $9.8 million or $0.47 per diluted share;
•Adjusted EBITDA of $21.0 million, representing 39% of total revenue.
Fiscal 2023 Guidance and Commentary
| Fiscal 2022<br>Results | Fiscal 2023 Guidance | Increase | |
|---|---|---|---|
| Revenue | $53.9M | $59.3M - 62.0M | 10-15% |
| Software mix | 61% | 60-65% | - |
| Services mix | 39% | 35-40% | - |
| Diluted earnings per share | $0.60 | $0.63-$0.67 | 5-10% |
“Our expected revenue growth rate for fiscal 2023 is in line with our long-term organic growth rate target of 10-15%,” added Mr. O’Connor. “However, we expect seasonal revenue patterns to shift with changes in our renewal patterns due to successful and ongoing cross-selling initiatives, as well as the impact of somewhat slower renewal patterns on the part of our clients, which we have seen in the back half of fiscal 2022 and expect to continue into fiscal 2023. While this sets us up for lower-than-normal first fiscal-quarter revenue growth, roughly flat year-over-year, we do not anticipate a meaningful net impact on the full-year revenue results, and we expect full-year renewal rates to be in-line with historical patterns.”
“From a cost perspective, we are seeing a competitive market for modeling and simulation professionals, and accordingly, we expect to invest in employee growth, recruiting and retention,” concluded Mr. O’Connor. “The net impact of these investments is expected to be increased operating expense levels in fiscal 2023 as we digest these incremental costs. However, over the medium to long-term, we expect to see a return to higher levels of operating leverage and margins as we deliver on our long-term organic revenue growth targets of 10-15%.”
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 to read our ESG Report.
Webcast and Conference Call Details
Shawn O’Connor, chief executive officer, and Will Frederick, chief financial officer, will host a conference call and webcast today at 5 p.m. Eastern Time to discuss details of the company’s performance for the fiscal year and certain forward-looking information. The call may be accessed by registering here or by calling 1-201-389-0879. The webcast will be available on our website under Conference Calls & Presentations. A replay of the webcast will be available on the website approximately one hour following the call.
Non-GAAP Definition
Adjusted EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization, stock-based compensation, and any acquisition or financial transaction-related expenses. Adjusted EBITDA represents a measure that we believe is 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 Adjusted EBITDA is useful in evaluating our core operating results. However, Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income or operating income as an indicator of our operating performance, or to net cash provided by operating activities as a measure of our liquidity. The company’s Adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items.
About Simulations Plus
Serving clients worldwide for more than 25 years, Simulations Plus is a leading provider in the biosimulation market providing software and consulting services supporting drug discovery, development, research, and regulatory submissions. We offer solutions that bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, and regulatory agencies worldwide. For more information, visit our website at www.simulations-plus.com. Follow us on LinkedIn | Twitter | YouTube.
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,” “expect,” and “anticipate” 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. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, 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, our ability to identify and close acquisitions on terms favorable to the company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission.
Investor Relations Contacts:
Renee Bouche
Simulations Plus Investor Relations
661-723-7723
renee.bouche@simulations-plus.com
Brian Siegel
Hayden IR
346-396-8696
brian@haydenir.com
--Tables follow—
SIMULATIONS PLUS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
| Years Ended August 31, | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except per common share amounts) | 2022 | 2021 | 2020 | |||
| Revenues | ||||||
| Software | $ | 32,642 | $ | 27,670 | $ | 21,587 |
| Services | 21,264 | 18,796 | 20,002 | |||
| Total revenues | 53,906 | 46,466 | 41,589 | |||
| Cost of revenues | ||||||
| Software | 3,060 | 3,235 | 2,883 | |||
| Services | 7,762 | 7,365 | 7,766 | |||
| Total cost of revenues | 10,822 | 10,600 | 10,649 | |||
| Gross profit | 43,084 | 35,866 | 30,940 | |||
| Operating expenses | ||||||
| Research and development | 3,208 | 4,047 | 2,975 | |||
| Selling, general, and administrative | 24,965 | 20,566 | 16,360 | |||
| Total operating expenses | 28,173 | 24,613 | 19,335 | |||
| Income from operations | 14,911 | 11,253 | 11,605 | |||
| Other income (expense), net | 204 | (168) | (218) | |||
| Income before income taxes | 15,115 | 11,085 | 11,387 | |||
| Provision for income taxes | (2,632) | (1,303) | (2,055) | |||
| Net Income | $ | 12,483 | $ | 9,782 | $ | 9,332 |
| Earnings per share | ||||||
| Basic | $ | 0.62 | $ | 0.49 | $ | 0.52 |
| Diluted | $ | 0.60 | $ | 0.47 | $ | 0.50 |
| Weighted-average common shares outstanding | ||||||
| Basic | 20,196 | 20,045 | 17,819 | |||
| Diluted | 20,749 | 20,743 | 18,538 | |||
| Other comprehensive (loss) income, net of tax | ||||||
| Foreign currency translation adjustments | (265) | (101) | 58 | |||
| Comprehensive income | $ | 12,218 | $ | 9,681 | $ | 9,390 |
SIMULATIONS PLUS, INC.
CONSOLIDATED BALANCE SHEETS
| August 31, | ||||
|---|---|---|---|---|
| (in thousands, except share and per share amounts) | 2022 | 2021 | ||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 51,567 | $ | 36,984 |
| Accounts receivable, net of allowance for doubtful accounts of $12 and $78 | 13,787 | 9,851 | ||
| Prepaid income taxes | 1,391 | 1,012 | ||
| Prepaid expenses and other current assets | 3,377 | 4,846 | ||
| Short-term investments | 76,668 | 86,620 | ||
| Total current assets | 146,790 | 139,313 | ||
| Long-term assets | ||||
| Capitalized computer software development costs, net of accumulated amortization of $15,672 and $14,438 | 9,563 | 7,646 | ||
| Property and equipment, net | 632 | 1,838 | ||
| Operating lease right-of-use assets | 1,420 | 1,276 | ||
| Intellectual property, net of accumulated amortization of $7,928 and $6,516 | 9,057 | 10,469 | ||
| Other intangible assets, net of accumulated amortization of $2,662 and $2,186 | 7,560 | 6,464 | ||
| Goodwill | 12,921 | 12,921 | ||
| Other assets | 439 | 51 | ||
| Total assets | $ | 188,382 | $ | 179,978 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities | ||||
| Accounts payable | $ | 225 | $ | 387 |
| Accrued compensation | 3,254 | 3,185 | ||
| Accrued expenses | 931 | 2,419 | ||
| Contracts payable | — | 4,550 | ||
| Operating lease liability - current portion | 461 | 382 | ||
| Deferred revenue | 2,864 | 651 | ||
| Total current liabilities | 7,735 | 11,574 | ||
| Long-term liabilities | ||||
| Deferred income taxes, net | 1,456 | 1,726 | ||
| Operating lease liability | 943 | 896 | ||
| Total liabilities | 10,134 | 14,196 | ||
| Commitments and contingencies | — | — | ||
| 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; 20,260,070 and 20,141,521 shares issued and outstanding | 138,512 | 133,418 | ||
| Retained earnings | 40,044 | 32,407 | ||
| Accumulated other comprehensive loss | (308) | (43) | ||
| Total shareholders' equity | 178,248 | 165,782 | ||
| Total liabilities and shareholders' equity | $ | 188,382 | $ | 179,978 |
SIMULATIONS PLUS, INC.
Trended Financial Information*
(Unaudited)
| (in millions except earnings per share amounts) | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | FY | FY | ||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||
| Software | $ | 6.2 | $ | 7.8 | $ | 8.3 | $ | 5.4 | $ | 7.4 | $ | 9.8 | $ | 9.6 | $ | 27.7 | $ | 32.7 | |||||||||||||||||||||
| Services | 4.5 | 5.3 | 4.4 | 4.4 | 5.0 | 5.0 | 5.3 | 5.8 | 18.8 | 21.2 | |||||||||||||||||||||||||||||
| Total | $ | 10.7 | $ | 13.1 | $ | 12.8 | $ | 9.8 | $ | 12.4 | $ | 14.8 | $ | 15.0 | $ | 46.5 | $ | 53.9 | |||||||||||||||||||||
| Gross Margin | |||||||||||||||||||||||||||||||||||||||
| Software | 86.9 | % | 89.0 | % | 90.0 | % | 85.0 | % | 90.0 | % | 92.0 | % | 92.4 | % | 86.1 | % | 88.0 | % | 90.6 | % | |||||||||||||||||||
| Services | 63.9 | % | 61.0 | % | 63.0 | % | 55.0 | % | 60.0 | % | 59.3 | % | 65.6 | % | 68.2 | % | 61.0 | % | 63.5 | % | |||||||||||||||||||
| Total | 77.3 | % | 77.9 | % | 80.7 | % | 71.7 | % | 77.8 | % | 80.9 | % | 82.9 | % | 77.2 | % | 77.2 | % | 79.9 | % | |||||||||||||||||||
| Income from operations | $ | 3.1 | $ | 3.5 | $ | 4.5 | $ | 0.2 | $ | 3.8 | $ | 5.5 | $ | 4.9 | $ | 11.3 | $ | 14.9 | |||||||||||||||||||||
| Operating Margin | 28.5 | % | 26.6 | % | 35.6 | % | 1.8 | % | 30.6 | % | 37.0 | % | 33.1 | % | 5.9 | % | 24.2 | % | 27.7 | % | |||||||||||||||||||
| Net Income | $ | 2.5 | $ | 3.2 | $ | 3.8 | $ | 0.3 | $ | 3.0 | $ | 4.4 | $ | 4.1 | $ | 9.8 | $ | 12.5 | |||||||||||||||||||||
| Diluted Earnings Per Share | $ | 0.12 | $ | 0.15 | $ | 0.18 | $ | 0.01 | $ | 0.15 | $ | 0.21 | $ | 0.20 | $ | 0.47 | $ | 0.60 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 4.3 | $ | 5.0 | $ | 5.9 | $ | 1.7 | $ | 5.3 | $ | 7.2 | $ | 6.3 | $ | 16.9 | $ | 21.0 | |||||||||||||||||||||
| Cash Flow from Operations | $ | 5.3 | $ | 1.3 | $ | 4.3 | $ | 8.3 | $ | 3.6 | $ | 2.6 | $ | 3.8 | $ | 19.2 | $ | 17.9 | |||||||||||||||||||||
| Revenue Breakdown by Region | |||||||||||||||||||||||||||||||||||||||
| Americas | $ | 7.1 | $ | 8.7 | $ | 9.7 | $ | 7.1 | $ | 8.5 | $ | 9.7 | $ | 11.2 | $ | 32.5 | $ | 37.7 | |||||||||||||||||||||
| EMEA | 2.5 | 3.1 | 1.5 | 0.9 | 3.0 | 3.7 | 1.9 | 1.7 | 7.9 | 10.4 | |||||||||||||||||||||||||||||
| Asia Pacific | 1.1 | 1.4 | 1.7 | 1.8 | 0.9 | 1.4 | 1.9 | 1.6 | 6.0 | 5.8 | |||||||||||||||||||||||||||||
| Total | $ | 10.7 | $ | 13.1 | $ | 12.8 | $ | 9.8 | $ | 12.4 | $ | 14.8 | $ | 15.0 | $ | 46.6 | $ | 53.9 | |||||||||||||||||||||
| Software Performance Metrics | |||||||||||||||||||||||||||||||||||||||
| Average Revenue per Customer (in 000s) | |||||||||||||||||||||||||||||||||||||||
| Commercial | $ | 74.0 | $ | 84.0 | $ | 98.0 | $ | 65.0 | $ | 71.0 | $ | 101.0 | $ | 95.0 | 65.0 | ||||||||||||||||||||||||
| Services Performance Metrics | |||||||||||||||||||||||||||||||||||||||
| Backlog | $ | 12.0 | $ | 11.2 | $ | 12.4 | $ | 13.0 | $ | 15.4 | $ | 17.0 | $ | 16.7 |
All values are in US Dollars.
*Numbers may not add due to rounding
SIMULATIONS PLUS, INC.
Reconciliation of Adjusted EBITDA to Net Income*
(Unaudited)
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | FY | FY | ||||||||||
| Net Income | $ | 2.5 | $ | 3.2 | $ | 3.8 | $ | 0.3 | $ | 3.0 | $ | 4.4 | $ | 4.1 | $ | 1.0 | $ | 9.8 | $ | 12.5 |
| Excluding: | ||||||||||||||||||||
| Interest income and expense, net | (0.1) | — | — | — | (0.1) | (0.1) | (0.1) | (0.4) | (0.2) | (0.7) | ||||||||||
| Provision for income taxes | 0.5 | 0.2 | 0.7 | (0.1) | 0.8 | 1.1 | 0.7 | (0.1) | 1.3 | 2.6 | ||||||||||
| Depreciation and amortization | 0.9 | 0.9 | 0.9 | 1.0 | 0.8 | 1.0 | 0.9 | 0.9 | 3.6 | 3.6 | ||||||||||
| Stock-based compensation | 0.5 | 0.7 | 0.6 | 0.6 | 0.6 | 0.7 | 0.7 | 0.7 | 2.4 | 2.7 | ||||||||||
| Mergers & Acquisitions expense | — | — | — | — | — | — | — | 0.3 | — | 0.3 | ||||||||||
| Adjusted EBITDA | $ | 4.3 | $ | 5.0 | $ | 5.9 | $ | 1.7 | $ | 5.3 | $ | 7.2 | $ | 6.3 | $ | 2.3 | $ | 16.9 | $ | 21.0 |
*Numbers may not add due to rounding
5
slpearningscalldeckfy224
1 | NASDAQ: SLP October 26, 2022 1 Earnings Call - Q4 - FY22
2 | NASDAQ: SLP With the exception of historical information, the matters discussed in this presentation are forward- looking statements that involve a number of risks and uncertainties. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that 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. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, 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, our ability to identify and close acquisitions on terms favorable to the Company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission. Safe Harbor Statement
3 | NASDAQ: SLP Achievements • Continued scientific leadership in biosimulation market with expanding industry and regulatory partnerships • Accelerating revenue growth and improved profitability • Leveraging software portfolio to enhance growth • Rebuilt service backlog and returned to growth 28% Diluted EPS Growth 16% Revenue Growth 24% Adj. EBITDA Growth 22% Services Backlog Growth Full Year Highlights
4 | NASDAQ: SLP GastroPlus® MonolixSuite® +55% • 7 new commercial customers • Continued strong renewal/upsell pattern Fourth Quarter & Full Year Software Highlights -8% • 6 new commercial customers in Q4 • 7 upsells in Q4 • 14 peer reviewed journal articles published in Q4 ADMET Predictor® • 5 new commercial customers • 8 upsells in Q4 +15% +15% +36% +14% Q4 Revenue Decline FY Revenue Growth Q4 Revenue Growth FY Revenue Growth Q4 Revenue Growth FY Revenue Growth General • Renewal rate in line with historical levels but impacted by delayed client process and forex • University+ program has 245 individual licenses across 53 countries
5 | NASDAQ: SLP PBPK QSP/QST PKPD Fourth Quarter & Full Year Services Highlights +9% +48% +4%+3% +29% +84% FY Revenue Growth FY Revenue Growth FY Revenue Growth Q4 Revenue Growth Q4 Revenue Growth Q4 Revenue Growth General • 22% increase in backlog compared to prior year • Dynamic market for scientific talent • Higher than usual seasonality for summer months • Rising utilization and project pricing yields • 46% growth in project compared to prior quarter • High CRO pass through revenues compared to prior quarter • Accelerating demand reflecting increased industry adoption • 83% increase in backlog compared to prior year
6 | NASDAQ: SLP FY23 Outlook FY23 Guidance: 10% to 15% Total Revenue Growth $59.3M to $62.0M Total Revenue 60% to 65% Software Revenue % of Total Revenue 35% to 40% Service Revenue % of Total Revenue $0.63 to $0.67 Diluted EPS Commentary: • Software business continues to deliver with strong momentum. • Services business improving with significant improvement in backlog entering FY23 • Consistent annual renewal rates with changing seasonality • M&A remains strategic enhancement to organic growth objectives (incremental to guidance)
7 | NASDAQ: SLP Financial Results
8 | NASDAQ: SLP Q4 Revenue (in millions) (in millions) Software RevenueTotal Revenue Services Revenue Revenue - Q4 +19% +10% +30% 4Q22 Mix 4Q21 Mix
9 | NASDAQ: SLP Q4 Revenue (in millions) Software RevenueTotal Revenue Services Revenue +16% +18% +13% Revenue - Fiscal Year FY22 Mix FY21 Mix (in millions)
10 | NASDAQ: SLP Gross Margin Trends - Q4
11 | NASDAQ: SLP Gross Margin Trends - Fiscal Year
12 | NASDAQ: SLP Software Product as % of Software Revenue Q4 FY22 Other FY22 Other Software Revenue by Product
13 | NASDAQ: SLP Avg. Revenue per Customer (in thousands) Software Performance Metrics - Q4 Commercial Customers Renewal Rates
14 | NASDAQ: SLP Avg. Revenue per Customer (in thousands) Renewal Rates Software Performance Metrics - Fiscal Year Commercial Customers University+ Customers: 245 in 53 countries
15 | NASDAQ: SLP Services as % of Service Revenue 4Q22 FY22 Service Revenue by Type PKPD QSP/QST PBPK Other PKPD QSP/QST PBPK Other
16 | NASDAQ: SLP Backlog Services Performance Metrics Total Projects
17 | NASDAQ: SLP Income Statement Summary - Q4 (in millions, except Diluted EPS) 4Q22 % of Rev 4Q21 % of Rev Revenue $11.7 100% $9.8 100% Revenue growth 19% 3% Gross profit 9.1 77% 7.1 72% R&D 0.8 7% 1.3 13% SG&A 7.6 65% 5.6 57% Total operating exp 8.4 71% 6.9 70% Income from operations 0.7 6% 0.2 2% Income before income taxes 0.9 8% 0.2 2% Income taxes 0.1 1% 0.1 1% Effective tax rate 8% 74% Net income $1.0 8% $0.3 3% Diluted earnings per share (in dollars) 0.05 0.01 Adjusted EBITDA $2.3 20% $1.7 18%
18 | NASDAQ: SLP Income Statement Summary - Fiscal Year (in millions, except Diluted EPS) FY22 % of Rev FY21 % of Rev Revenue $53.9 100% $46.5 100% Revenue growth 16% 12% Gross profit 43.1 80% 35.9 77% R&D 3.2 6% 4.0 9% SG&A 25.0 46% 20.6 44% Total operating exp 28.2 52% 24.6 53% Income from operations 14.9 28% 11.3 24% Income before income taxes 15.1 28% 11.1 24% Income taxes (2.6) 5% (1.3) 3% Effective tax rate 17% 12% Net income $12.5 23% $9.8 21% Diluted earnings per share (in dollars) 0.60 0.47 Adjusted EBITDA $21.0 39% $16.9 36%
19 | NASDAQ: SLP Balance Sheet Summary (in millions) August 31, 2022 August 31, 2021 Cash and short-term investments $128.2 $123.6 Total current assets 146.8 139.3 Total assets $188.4 $180.0 Current liabilities 7.7 11.6 Long-term liabilities 2.4 2.6 Total liabilities 10.1 14.2 Shareholders’ equity 178.2 165.8 Total liabilities and shareholders’ equity $188.4 $180.0
20 | NASDAQ: SLP Conclusion • Delivering on our commitment to scientific leadership ◦ Internal R&D investment ◦ Expanding industry and regulatory partnerships • Enhancing our client facing capabilities ◦ Growth and maturity of business development team ◦ Focus on expanding our local coverage of EU market ◦ Focus on supporting accelerated growth in distributor network • Challenges being addressed ◦ Evolving seasonality due to software renewal timing changes ◦ Continued competitive market for scientific talent ◦ General market dynamics: inflation, recession & forex ◦ Need to execute on M&A opportunities CONTINUED LEADERSHIP POSITION IN BIOSIMULATION MARKET WELL POSITIONED TO ACHIEVE OUR FY23 GOALS