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Simulations Plus (SLP)
NASDAQ:SLP
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Simulations Plus
(NASDAQ:SLP)
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Rating:63Neutral
Price Target:
$16.00
▲(2.89% Upside)
Simulations Plus has a solid financial foundation with strong revenue growth and cash flow management. However, recent profitability issues and a negative P/E ratio raise concerns about valuation. The technical analysis suggests mixed momentum, while the earnings call reflects both growth potential and significant challenges. Strategic initiatives may improve future performance, but current market headwinds and operational hurdles weigh on the overall outlook.
Positive Factors
Revenue Growth
The 10% revenue growth, driven by acquisitions and software sales, indicates a strong market position and potential for continued expansion.
Business Model Resilience
The recurring revenue model from software subscriptions and services provides financial stability and predictability, supporting long-term growth.
Strategic Reorganization
The strategic shift to a functionally driven model aims to enhance efficiency, positioning the company for sustainable growth and competitive advantage.
Negative Factors
Organic Revenue Decline
The decline in organic revenue suggests challenges in core business areas, potentially affecting long-term growth if not addressed.
Net Loss
A significant net loss, driven by impairment charges, impacts profitability and may require strategic adjustments to restore financial health.
Market Headwinds
External market pressures, such as regulatory changes and budget cuts, could hinder growth and require adaptive strategies to mitigate risks.
Simulations Plus (SLP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$311.57M
Dividend Yield0.39%
Average Volume (3M)562.19K
Price to Earnings (P/E)47.5
Beta (1Y)1.18
Revenue Growth20.01%
EPS Growth-750.59%
CountryUS
Employees243
SectorHealthcare
Sector Strength45
IndustryMedical - Healthcare Information Services
Share Statistics
EPS (TTM)0.45
Shares Outstanding20,127,110
10 Day Avg. Volume774,108
30 Day Avg. Volume562,187
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.97
Enterprise Value/Revenue7.62
Enterprise Value/Gross Profit14.18
Enterprise Value/Ebitda-9.00
Forecast
1Y Price Target
$22.17Price Target Upside42.57% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Simulations Plus Business Overview & Revenue Model
Company DescriptionSimulations Plus, Inc. develops drug discovery and development software for modeling and simulation, and prediction of molecular properties utilizing artificial intelligence and machine learning based technology worldwide. It operates through four segments: Simulations Plus, Cognigen, DILIsym, and Lixoft. The company offers GastroPlus, which simulates the absorption and drug interaction of compounds administered to humans and animals; and DDDPlus and MembranePlus simulation products. It also provides products based on mechanistic and mathematical models, such as DILIsym, a quantitative systems pharmacology software; NAFLDsym; IPFsym; RENAsym; and MITOsym. In addition, the company provides Absorption, Distribution, Metabolism, Excretion, and Toxicity Predictor for chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, as well as modeling and simulation products comprising MonolixSuite and PKPlus. Further, it provides population modeling and simulation contract research services; training and consulting services designed to accelerate pharmacometrics studies; and clinical-pharmacology-based consulting services in support of regulatory submissions. The company serves pharmaceutical, biotechnology, agrochemical, cosmetics, and food companies, as well as academic and regulatory agencies. Simulations Plus, Inc. was incorporated in 1996 and is headquartered in Lancaster, California.
How the Company Makes MoneySimulations Plus generates revenue primarily through the sale of software licenses, maintenance contracts, and consulting services. The company offers its software products on a subscription basis, which provides a steady stream of recurring income. Additionally, SLP earns revenue from training programs and technical support services related to its software solutions. Partnerships with pharmaceutical and biotechnology companies enhance its market presence and contribute to its earnings, as these collaborations often lead to joint projects and increased software utilization. The company also benefits from a growing demand for computational modeling in drug development, which further drives its revenue growth.
Simulations Plus Earnings Call Summary
Earnings Call Date:Jul 14, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
While the company reported positive revenue growth and improvements in adjusted EBITDA, significant challenges such as organic revenue decline, large net loss due to impairment, and substantial market headwinds contribute to a mixed outlook. The strategic reorganization and AI-driven initiatives are promising, but the impact of these efforts remains to be seen.Q3-2025 Updates
Positive Updates
Revenue Growth
Total revenue increased 10% to $20.4 million, with a $2.4 million contribution from the Pro-ficiency acquisition. Software revenue increased 6% and Services revenue increased 17%.
Software Performance
Software revenue grew 6% in the quarter, driven by ADMET Predictor solution and modest growth in GastroPlus and MonolixSuite platforms.
Adjusted EBITDA Improvement
Adjusted EBITDA was $7.4 million or 37% of revenue, compared to $5.6 million or 30% of revenue last year.
Strategic Reorganization
Transitioned from a business unit structure to a functionally driven operating model, expected to improve operational efficiency and better position for sustainable growth.
Negative Updates
Organic Revenue Decline
On an organic basis, revenue declined 4%, primarily due to lower QSP/QST software revenue and a decrease in biosimulation services revenue.
Net Loss
Net loss for the quarter was $67.3 million compared to net income of $3.1 million, with a diluted EPS loss of $3.35 compared to $0.15 last year, including a $77.2 million noncash impairment expense.
Service Revenue Challenges
Services revenue was impacted by cost constraints implemented by clients, with a slowdown in Services bookings and a significant client cancellation impacting near-term revenues by approximately $2 million.
Renewal Rates Decline
Software customer renewal rate was 84% based on fees and 71% based on accounts, lower than previous metrics.
Market Headwinds
Biopharma market challenges include patent expirations, pricing pressures from the Inflation Reduction Act, and significant budget reductions at NIH and FDA.
Company Guidance
During Simulations Plus' Third Quarter Fiscal 2025 Financial Results Conference Call, the company reported a 10% revenue growth to $20.4 million, bolstered by a $2.4 million contribution from the Pro-ficiency acquisition. However, organic revenue declined by 4%, mainly due to reduced QSP/QST software and biosimulation services revenue. Adjusted diluted EPS was $0.45, up from $0.27 last year, while adjusted EBITDA reached $7.4 million, or 37% of revenue. The company revised its full-year revenue guidance to $76-$80 million, with Pro-ficiency contributing $9-$12 million. While software revenue saw a 6% increase, driven by products like ADMET Predictor and GastroPlus, services revenue declined due to market headwinds and a significant client cancellation. Simulations Plus remains committed to growth in clinical operations and AI integration, despite a challenging biopharma market and anticipates a modest improvement in fiscal 2026.Simulations Plus Financial Statement Overview
Summary
Simulations Plus shows strong revenue growth and financial stability with a low debt profile. However, recent profitability challenges, including a negative net profit margin and decreased free cash flow growth, indicate areas needing strategic adjustments.Income Statement
Simulations Plus has shown a steady revenue growth trajectory, with a significant increase in revenue over the years. The gross profit margin remains strong, indicating efficient production and service delivery. However, the recent TTM period indicates a concern, as the net profit margin has turned negative due to a substantial net loss, impacting overall profitability. This suggests potential challenges in cost management or one-time expenses affecting earnings.61
Positive
Balance Sheet
The balance sheet is robust, with a high equity ratio indicating financial stability. Simulations Plus maintains a very low debt-to-equity ratio, showcasing prudent financial management and low leverage risk. The company has consistently maintained a strong return on equity, although there was a decline in the most recent TTM period due to net losses.78
Positive
Cash Flow
The company has demonstrated strong cash flow management, with positive operating and free cash flows over the years. The free cash flow growth rate is positive, reflecting effective capital expenditure and cash management strategies. However, the recent TTM period shows a decrease in free cash flow growth, signaling potential cash flow pressures.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 80.38M | 70.01M | 59.58M | 53.91M | 46.47M | 41.59M |
| Gross Profit | 43.20M | 43.15M | 47.95M | 43.08M | 35.87M | 30.94M |
| EBITDA | -68.06M | 11.80M | 12.56M | 18.48M | 14.70M | 11.85M |
| Net Income | -63.24M | 9.95M | 9.96M | 12.48M | 9.78M | 9.33M |
Balance Sheet | ||||||
| Total Assets | 134.36M | 196.64M | 186.10M | 188.38M | 179.98M | 168.42M |
| Cash, Cash Equivalents and Short-Term Investments | 28.45M | 20.25M | 115.46M | 128.24M | 123.60M | 116.01M |
| Total Debt | 719.00K | 1.01M | 1.20M | 1.40M | 1.28M | 926.78K |
| Total Liabilities | 10.58M | 14.21M | 16.07M | 10.13M | 14.20M | 12.39M |
| Stockholders Equity | 123.78M | 182.43M | 170.03M | 178.25M | 165.78M | 156.04M |
Cash Flow | ||||||
| Free Cash Flow | 13.03M | 12.75M | 17.58M | 13.93M | 14.63M | 8.33M |
| Operating Cash Flow | 14.20M | 13.32M | 21.86M | 17.90M | 19.20M | 10.91M |
| Investing Cash Flow | -94.15M | -53.97M | 7.37M | 4.30M | -26.74M | -75.51M |
| Financing Cash Flow | -2.20M | -6.57M | -23.27M | -7.62M | -4.68M | 102.37M |
Simulations Plus Technical Analysis
Positive
15.55
Price Trends
14.26
Positive
18.38
Negative
24.33
Negative
Market Momentum
0.21
Negative
59.55
Neutral
56.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SLP, the sentiment is Positive. The current price of 15.55 is above the 20-day moving average (MA) of 14.89, above the 50-day MA of 14.26, and below the 200-day MA of 24.33, indicating a neutral trend. The MACD of 0.21 indicates Negative momentum. The RSI at 59.55 is Neutral, neither overbought nor oversold. The STOCH value of 56.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SLP.
Simulations Plus Risk Analysis
Simulations Plus disclosed 47 risk factors in its most recent earnings report. Simulations Plus reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Simulations Plus Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $815.73M | 41.30 | 5.80% | 0.44% | 3.50% | 13.99% | |
69 Neutral | $2.15B | 275.30 | 0.75% | ― | 11.61% | ― | |
63 Neutral | $311.57M | 47.47 | -41.49% | 0.39% | 20.01% | -750.59% | |
58 Neutral | $1.29B | -39.33 | -72.93% | ― | 47.99% | 44.25% | |
51 Neutral | $943.59M | -4.91 | -18.04% | ― | -6.71% | -71.40% | |
51 Neutral | $302.08M | -4.07 | -95.70% | ― | 7.31% | -7.49% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
SLP
Simulations Plus
15.55
-14.67
-48.54%
HSTM
HealthStream
27.52
-1.33
-4.61%
EVH
Evolent Health
7.89
-18.45
-70.05%
CERT
Certara
13.60
2.51
22.63%
SOPH
SOPHiA GENETICS
4.47
1.18
35.87%
OMDA
Omada Health, Inc.
22.64
0.04
0.18%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.