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
April
6, 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 April 6, 2022, Simulations Plus, Inc., a California corporation (the “Company”), issued a press release announcing financial results for its second quarter of fiscal year 2022 ended February 28, 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 April 6, 2022, as part of the press release referenced above, the Company announced that its board of directors has declared a quarterly cash dividend of $0.06 per share of common stock, payable on May 2, 2022 to shareholders of record as of April 25, 2022.
In addition, on April 6, 2022, the Company held an investor conference call reporting its financial results for its second quarter of fiscal year 2022 ended February 28, 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 April 6, 2022. |
|---|---|
| 99.2 | PowerPoint presentation used at the Investor Conference Call on April 6, 2022. |
| 104 | Cover Page Interactive Data File (embedded within<br>the Inline XBRL document) |
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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: April 6, 2022 | By: /s/ Will Frederick |
| Will Frederick | |
| Chief Financial Officer |
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Exhibit 99.1
Simulations PlusReports Second Quarter Fiscal 2022 Financial Results
Total revenue growth of 13%; Software revenuegrowth of 25%; Diluted Earnings Per Share (EPS) growth of 40%
Board of Directors announces quarterly dividendof $0.06 per share
LANCASTER, CA, April 6, 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 second quarter of fiscal 2022, ended February 28, 2022.
“We generated solid revenue growth, improved margins and strong EPS growth during the second quarter, demonstrating the health of our business and the operating leverage in our model,” said Shawn O’Connor, chief executive officer of Simulations Plus. “Our software business continued its rapid expansion and our services business generated strong bookings and backlog growth with a large pipeline of opportunities.”
“We delivered double-digit revenue increases across our three major software platforms as a result of our increased upsell efforts and the addition of 18 new customers,” added Mr. O’Connor. “MonolixSuite® revenue was especially strong, with 43% growth, and is now our second-highest selling software product. The 25% growth in our software business offset the 5% decline in our services business this quarter and software revenue is now contributing over 60% of our revenue. The results represent an encouraging first half of the fiscal year and demonstrate that we are on-pace to achieve our full-year goals.”
Second Quarter Fiscal 2022 Financial Highlights(compared with the corresponding period last fiscal year):
| · | Total revenue increased 13% to $14.8 million; |
|---|---|
| · | Software revenue increased 25% to $9.8 million, representing 66% of total revenue; |
| --- | --- |
| · | Services revenue declined 5% to $5.0 million, representing 34% of total revenue; |
| --- | --- |
| · | Gross profit increased 17% to $12.0 million; gross margin was 81%; |
| --- | --- |
| · | Net income and diluted EPS of $4.4 million and $0.21 compared to $3.2 million and $0.15, respectively; |
| --- | --- |
| · | Adjusted EBITDA of $7.2 million, representing 48% of total revenue. |
| --- | --- |
YTD Financial Highlights (compared with the corresponding period last fiscal year):
| · | Total revenue increased 14% to $27.2 million; |
|---|---|
| · | Software revenue increased 23% to $17.1 million, representing 63% of total revenue; |
| --- | --- |
| · | Services revenue increased 2% to $10.1 million, representing 37% of total revenue; |
| --- | --- |
| · | Gross profit increased 17% to $21.6 million; gross margin was 79%; |
| --- | --- |
| · | Net income and diluted EPS of $7.4 million and $0.36 compared to $5.7 million and $0.27, respectively; |
| --- | --- |
| · | Adjusted EBITDA of $12.4 million, representing 46% of total revenue. |
| --- | --- |
Mr. O’Connor concluded, “Our performance was in line with our guidance during the first half of fiscal 2022. As we look to the second half of the year, we expect our software business to continue to deliver strong performance, combined with improved results in our services business. As a result, we remain confident in achieving our 10-15% revenue guidance for the full-year driven by a positive mix shift towards our higher-margin software offerings.”
Quarterly Dividend
The company’s Board of Directors declared a cash dividend of $0.06 per share of the company’s common stock, payable on May 2, 2022, to shareholders of record as of April 25, 2022. The declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements, and other factors.
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Environmental, Social, and Governance (ESG)
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 quarter and certain forward-looking information. The call may be accessed by registering here or by dialing 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 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 Twitter
| LinkedIn.
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 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.
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—
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SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three months ended February 28, | Six months ended February 28, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per common share amounts) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Revenue | ||||||||||||
| Software | $ | 9,758 | $ | 7,827 | $ | 17,120 | $ | 13,975 | ||||
| Services | 5,038 | 5,320 | 10,093 | 9,873 | ||||||||
| Total revenue | 14,796 | 13,147 | 27,213 | 23,848 | ||||||||
| Cost of revenue | ||||||||||||
| Software | 780 | 836 | 1,515 | 1,647 | ||||||||
| Services | 2,050 | 2,075 | 4,071 | 3,697 | ||||||||
| Total cost of revenue | 2,830 | 2,911 | 5,586 | 5,344 | ||||||||
| Gross profit | 11,966 | 10,236 | 21,627 | 18,504 | ||||||||
| Operating expenses | ||||||||||||
| Research and development | 902 | 1,292 | 1,784 | 2,101 | ||||||||
| Selling, general and administrative | 5,584 | 5,458 | 10,572 | 9,866 | ||||||||
| Total operating expenses | 6,486 | 6,750 | 12,356 | 11,967 | ||||||||
| Income from operations | 5,480 | 3,486 | 9,271 | 6,537 | ||||||||
| Other income (expense), net | 53 | (63 | ) | 118 | (118 | ) | ||||||
| Income before income taxes | 5,533 | 3,423 | 9,389 | 6,419 | ||||||||
| Provision for income taxes | (1,124 | ) | (212 | ) | (1,954 | ) | (729 | ) | ||||
| Net Income | $ | 4,409 | $ | 3,211 | $ | 7,435 | $ | 5,690 | ||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.22 | $ | 0.16 | $ | 0.37 | $ | 0.28 | ||||
| Diluted | $ | 0.21 | $ | 0.15 | $ | 0.36 | $ | 0.27 | ||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 20,177 | 20,006 | 20,164 | 19,968 | ||||||||
| Diluted | 20,745 | 20,842 | 20,738 | 20,786 | ||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||
| Foreign currency translation adjustments | (38 | ) | (4 | ) | (275 | ) | (4 | ) | ||||
| Comprehensive income | $ | 4,371 | $ | 3,207 | $ | 7,160 | $ | 5,686 |
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SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (Audited) | |||||
|---|---|---|---|---|---|
| (In thousands, except share and per share amounts) | August 31,<br><br> <br>2021 | ||||
| ASSETS | |||||
| Current assets | |||||
| Cash and cash equivalents | 60,373 | $ | 36,984 | ||
| Accounts receivable, net of allowance for doubtful accounts of 12 and 78 | 15,039 | 9,851 | |||
| Prepaid income taxes | 449 | 1,012 | |||
| Prepaid expenses and other current assets | 3,573 | 4,846 | |||
| Short-term investments | 64,192 | 86,620 | |||
| Total current assets | 143,626 | 139,313 | |||
| Long-term assets | |||||
| Capitalized computer software development costs, net of accumulated amortization of 15,062 and 14,438 | 8,529 | 7,646 | |||
| Property and equipment, net | 634 | 1,838 | |||
| Operating lease right of use asset | 1,653 | 1,276 | |||
| Intellectual property, net of accumulated amortization of 7,231 and 6,516 | 9,754 | 10,469 | |||
| Other intangible assets, net of accumulated amortization of 2,475 and 2,186 | 7,877 | 6,464 | |||
| Goodwill | 12,921 | 12,921 | |||
| Other assets | 50 | 51 | |||
| Total assets | 185,044 | $ | 179,978 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current liabilities | |||||
| Accounts payable | 414 | $ | 387 | ||
| Accrued payroll and other expenses | 2,220 | 5,604 | |||
| Contracts payable - current portion | 4,793 | 4,550 | |||
| Operating lease liability, current portion | 336 | 382 | |||
| Deferred revenue | 1,241 | 651 | |||
| Total current liabilities | 9,004 | 11,574 | |||
| Long-term liabilities | |||||
| Deferred income taxes, net | 2,150 | 1,726 | |||
| Operating lease liability | 1,314 | 896 | |||
| Total liabilities | 12,468 | 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, 20,181,784 and 20,141,521 shares issued and outstanding | 135,472 | 133,418 | |||
| Retained earnings | 37,422 | 32,407 | |||
| Accumulated other comprehensive loss | (318 | ) | (43 | ) | |
| Total shareholders' equity | 172,576 | 165,782 | |||
| Total liabilities and shareholders' equity | 185,044 | $ | 179,978 |
All values are in US Dollars.
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SIMULATIONS PLUS, INC.
Trended Financial Information*
(Unaudited)
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions except earnings per share amounts) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Fiscal Year | Fiscal YTD | ||||||||||||||||
| Software revenue | ||||||||||||||||||||||||
| Gastroplus | $ | 3.3 | $ | 4.5 | $ | 5.4 | $ | 3.1 | $ | 4.0 | $ | 5.5 | $ | 16.3 | $ | 9.4 | ||||||||
| MonolixSuite | 1.2 | 1.6 | 0.9 | 0.8 | $ | 1.6 | $ | 2.2 | 4.4 | $ | 3.8 | |||||||||||||
| ADMET Predictor | 1.2 | 1.2 | 1.5 | 1.2 | $ | 1.5 | $ | 1.4 | 5.0 | $ | 2.9 | |||||||||||||
| Other | 0.5 | 0.6 | 0.5 | 0.3 | $ | 0.3 | $ | 0.7 | 1.9 | $ | 1.0 | |||||||||||||
| Total software revenue | $ | 6.2 | $ | 7.8 | $ | 8.3 | $ | 5.4 | $ | 7.4 | $ | 9.8 | $ | 27.7 | $ | 17.1 | ||||||||
| Services revenue | ||||||||||||||||||||||||
| PKPD | $ | 2.2 | $ | 2.6 | $ | 1.9 | $ | 2.3 | $ | 2.3 | $ | 2.2 | $ | 9.1 | $ | 4.5 | ||||||||
| QSP/QST | 1.1 | 1.7 | 1.2 | 1.1 | $ | 1.5 | $ | 1.5 | 5.1 | $ | 3.0 | |||||||||||||
| PBPK | 0.6 | 0.9 | 0.7 | 0.7 | $ | 0.9 | $ | 0.9 | 3.0 | $ | 1.8 | |||||||||||||
| Other | 0.5 | – | 0.6 | 0.3 | $ | 0.3 | $ | 0.4 | 1.4 | $ | 0.8 | |||||||||||||
| Total services revenue | $ | 4.5 | $ | 5.3 | $ | 4.4 | $ | 4.4 | $ | 5.0 | $ | 5.0 | $ | 18.8 | $ | 10.1 | ||||||||
| Total consolidated revenue | $ | 10.7 | $ | 13.1 | $ | 12.8 | $ | 9.8 | $ | 12.4 | $ | 14.8 | $ | 46.5 | $ | 27.2 | ||||||||
| Gross Margin | ||||||||||||||||||||||||
| Software | 86.9 | % | 89.0 | % | 90.0 | % | 85.0 | % | 90.0 | % | 92.0 | % | 88.0 | % | 91.2 | % | ||||||||
| Services | 63.9 | % | 61.0 | % | 63.0 | % | 55.0 | % | 60.0 | % | 59.3 | % | 61.0 | % | 59.7 | % | ||||||||
| Total | 77.3 | % | 77.9 | % | 80.7 | % | 71.7 | % | 77.8 | % | 80.9 | % | 77.2 | % | 79.5 | % | ||||||||
| Income from operations | $ | 3.1 | $ | 3.5 | $ | 4.5 | $ | 0.2 | $ | 3.8 | $ | 5.5 | $ | 11.3 | $ | 9.3 | ||||||||
| Operating Margin | 28.5 | % | 26.6 | % | 35.6 | % | 1.8 | % | 30.6 | % | 37.0 | % | 24.2 | % | 34.1 | % | ||||||||
| Net Income | $ | 2.5 | $ | 3.2 | $ | 3.8 | $ | 0.3 | $ | 3.0 | $ | 4.4 | $ | 9.8 | $ | 7.4 | ||||||||
| Diluted Earnings Per Share | $ | 0.12 | $ | 0.15 | $ | 0.18 | $ | 0.01 | $ | 0.15 | $ | 0.21 | $ | 0.47 | $ | 0.36 | ||||||||
| Adjusted EBITDA | $ | 4.3 | $ | 5.0 | $ | 5.9 | $ | 1.7 | $ | 5.3 | $ | 7.2 | $ | 16.9 | $ | 12.4 | ||||||||
| Cash Flow from Operations | $ | 5.3 | $ | 1.3 | $ | 4.3 | $ | 8.3 | $ | 3.6 | $ | 2.6 | $ | 19.2 | $ | 6.2 | ||||||||
| Revenue Breakdown by Region | ||||||||||||||||||||||||
| Americas | $ | 7.1 | $ | 8.7 | $ | 9.7 | $ | 7.1 | $ | 8.5 | $ | 9.7 | 32.5 | $ | 18.2 | |||||||||
| EMEA | 2.5 | 3.1 | 1.5 | 0.9 | 3.0 | 3.7 | 7.9 | 6.7 | ||||||||||||||||
| Asia Pacific | 1.1 | 1.4 | 1.7 | 1.8 | 0.9 | 1.4 | 6.0 | 2.3 | ||||||||||||||||
| Total consolidated revenue | $ | 10.7 | $ | 13.1 | $ | 12.8 | $ | 9.8 | $ | 12.4 | $ | 14.8 | $ | 46.6 | $ | 27.2 | ||||||||
| Software Performance Metrics | ||||||||||||||||||||||||
| Average Revenue per Customer (in thousands) | ||||||||||||||||||||||||
| Commercial | $ | 74.0 | $ | 84.0 | $ | 98.0 | $ | 65.0 | $ | 71.0 | $ | 101.0 | ||||||||||||
| Services Performance Metrics | ||||||||||||||||||||||||
| Backlog | $ | 12.0 | $ | 11.2 | $ | 12.4 | $ | 13.0 | $ | 15.4 | $ | 17.0 |
*Numbers may not add due to rounding
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SIMULATIONS PLUS, INC.
Reconciliation of Adjusted EBITDA to Net Income
(Unaudited)
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Fiscal Year | Fiscal YTD | ||||||||||||||||
| Net Income | $ | 2.5 | $ | 3.2 | $ | 3.8 | $ | 0.3 | $ | 3.0 | $ | 4.4 | $ | 9.8 | $ | 7.4 | ||||||||
| Excluding: | ||||||||||||||||||||||||
| Interest income and expense, net | (0.1 | ) | (0.0 | ) | (0.0 | ) | (0.0 | ) | (0.1 | ) | (0.1 | ) | (0.2 | ) | (0.1 | ) | ||||||||
| Provision for income taxes | 0.5 | 0.2 | 0.7 | (0.1 | ) | 0.8 | 1.1 | 1.3 | 2.0 | |||||||||||||||
| Depreciation and amortization | 0.9 | 0.9 | 0.9 | 1.0 | 0.8 | 1.0 | 3.6 | 1.8 | ||||||||||||||||
| Stock-based compensation | 0.5 | 0.7 | 0.6 | 0.6 | 0.6 | 0.7 | 2.4 | 1.3 | ||||||||||||||||
| Adjusted EBITDA | $ | 4.3 | $ | 5.0 | $ | 5.9 | $ | 1.7 | $ | 5.3 | $ | 7.2 | $ | 16.9 | $ | 12.4 |
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Exhibit 99.2
1 | NASDAQ: SLP Earnings Call – Q2 FY22 April 6, 2022 1
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 Second Quarter Highlights » Strong momentum to begin year » Continued strong double - digit software performance » Continued services backlog growth 13% Revenue Growth 48% Adj. EBITDA % of Revenue 40% Diluted EPS Growth » Demonstrated scientific leadership » New software releases » Key pharma and regulatory collaborations » Results in - line with guidance 50% Services Backlog Growth
4 | NASDAQ: SLP GastroPlus® MonolixSuite® +43% Q2 Revenue Growth » Release of MonolixSuite 2021 R1 with a new bioequivalence module » 8 new commercial customers and 11 upsells » Monolix Distributor Agreement for Japan market Second Quarter Software Highlights +22% Q2 Revenue Growth » 3 new commercial customers » 8 upsells » 18 peer reviewed journal articles published in Q2 ADMET Predictor® » 7 new commercial customers » 8 upsells » Continued progress with AIDD collaboration +13% Q2 Revenue Growth +21% YTD Revenue Growth +40% YTD Revenue Growth +19% YTD Revenue Growth
5 | NASDAQ: SLP Second Quarter Services Highlights PKPD » Good underlying bookings activity - full pipeline of opportunities » Revenue cadence impacted by customer timing requirements QSP/QST » Return to pre - COVID - 19 bookings attainment » Booked $1.7M NIH grant for BIOLOGXsym TM » 2 new QSP modeling projects underway: GOUTsym and COMPLEMENTsym PBPK » Accelerating demand in this market segment » New funded collaboration with large animal health company 50% Backlog Growth 45% Projects Growth - 5% Revenue Decline - 14% Q2 Revenue Decline - 12% Q2 Revenue Decline 0% Q2 Revenue Change
6 | NASDAQ: SLP FY22 Outlook Growth Targets: 10% to 15% Total Revenue Growth 55% to 60% Software Revenue % of Total Revenue 40% to 45% Service Revenue % of Total Revenue Commentary: » Software business continues to deliver strong momentum. » Services business normalizing and long - term outlook remains positive; strong backlog growth and robust pipeline activity » M&A remains strategic enhancement to organic growth objectives
7 | NASDAQ: SLP Financial Results
8 | NASDAQ: SLP Q4 Revenue (in millions) +13% Total Revenue $5.4 $7.8 $9.8 $5.0 $5.3 $5.0 $10.4 $13.1 $14.8 2Q20 2Q21 2Q22 Software Services 60% 40% 2Q21 Mix Software Services 66% 34% 2Q22 Mix Software Services Revenue – Q2 (in millions) +25% Software Revenue - 5% Service Revenue
9 | NASDAQ: SLP Q4 Revenue (in millions) +14% Total Revenue $10.0 $14.0 $17.1 $9.8 $9.8 $10.1 $19.8 $23.8 $27.2 FY20 FY21 FY22 Software Services 59% 41% FY21 Mix Software Services 63% 37% FY22 Mix Software Services +23% Software Revenue Revenue – YTD (in millions) +2% Service Revenue
10 | NASDAQ: SLP 86% 89% 92% 61% 61% 59% 74% 78% 81% 2Q20 2Q21 2Q22 Software Services Total Gross Margin Trends – Q2
11 | NASDAQ: SLP 85% 88% 91% 61% 63% 60% 73% 78% 79% FY20 FY21 FY22 Software Services Total Gross Margin Trends – YTD
12 | NASDAQ: SLP Software Revenue by Product Software Product as % of Software Revenue 56% 23% 14% 7% Q2 FY22 Other 55% 22% 17% 6% YTD FY22 Other
13 | NASDAQ: SLP Software Performance Metrics – Q4 Avg. Revenue per Customer (in thousands) $54 $84 $101 2Q20 2Q21 2Q22 91% 88% 87% 96% 92% 96% 2Q20 2Q21 2Q22 Accounts Fees Software Performance Metrics – Q2 Commercial Customers Renewal Rates
14 | NASDAQ: SLP Software Performance Metrics – Q4 Avg. Revenue per Customer (in thousands) $67 $97 $97 FY20 FY21 FY22 93% 87% 90% 97% 93% 96% FY20 FY21 FY22 Accounts Fees Software Performance Metrics – YTD Commercial Customers University+ Customers: 124 in 39 countries Renewal Rates
15 | NASDAQ: SLP Services Revenue by Type Services Types as % of Service Revenue 44% 30% 19% 7% PKPD QSP/QST PBPK Other Q2 FY22 45% 30% 18% 7% PKPD QSP/QST PBPK Other YTD FY22
16 | NASDAQ: SLP Services Performance Metrics $13 $11 $17 2Q20 2Q21 2Q22 Backlog (in millions) 53 73 63 27 19 25 37 47 82 - 31 117 139 201 2Q20 2Q21 2Q22 PKPD QSP/QST PBPK Other Backlog Services Performance Metrics Total Projects
17 | NASDAQ: SLP Income Statement Summary – Q2 (in millions, except EPS) 2Q22 % of Rev 2Q21 % of Rev Revenue $14.8 100% $13.1 100% Revenue Growth 13% 27% Gross profit 12.0 81% 10.2 78% R&D 0.9 6% 1.3 10% SG&A 5.6 38% 5.4 42% Total operating expense 6.5 44% 6.7 51% Income from operations 5.5 37% 3.5 27% Income before income taxes 5.5 37% 3.4 26% Income taxes (1.1) 8% (0.2) 2% Effective tax rate 20% 6% Net income $4.4 30% $3.2 24% Diluted earnings per share $0.21 $0.15 Adjusted EBITDA $7.2 48% $5.0 38%
18 | NASDAQ: SLP Income Statement Summary – YTD (in millions, except EPS) FY22 % of Rev FY21 % of Rev Revenue $27.2 100% $23.8 100% Revenue Growth 14% 21% Gross profit 21.6 79% 18.5 78% R&D 1.8 7% 2.1 0 9% SG&A 10.6 39% 9.9 41% Total operating expense 12.4 45% 12.0 50% Income from operations 9.3 34% 6.5 27% Income before income taxes 9.4 35% 6.4 27% Income taxes (2.0) 7% (0.7) 0 3% Effective tax rate 21% 11% Net income $7.4 27% $5.7 24% Diluted earnings per share $0.36 $0.27 Adjusted EBITDA $12.4 46% $9.3 39%
19 | NASDAQ: SLP Balance Sheet Summary (in millions) Feb. 28, 2022 Aug. 31, 2021 Cash and short - term investments $124.6 $123.6 Total current assets 143.6 139.3 Total assets 185.0 180.0 Current liabilities 9.0 11.6 Long - term liabilities 3.4 2.6 Total liabilities 12.4 14.2 Shareholders’ equity 172.6 165.8 Total liabilities and shareholders’ equity 185.0 180.0
20 | NASDAQ: SLP Conclusion » Industry adoption of model informed drug development tools and techniques continues to expand » Scientific credibility with academia and regulatory agencies » Software business with accelerated revenue growth rates and expanded product functionality » Services business normalizing with improved backlog and strong bookings SECURE LEADERSHIP POSITION IN BIOSIMULATION MARKET