Simulations Plus
SLP
reported third-quarter fiscal 2022 earnings of 20 cents per share, up 11% on a year-over-year basis. The figure beat the Zacks Consensus Estimate by 17.7%.
Revenues of $15 million increased 17% year over year, driven by the strong performance of the company’s software business. The top line beat the consensus mark by 5.9%.
Since the earnings announcement, shares of Simulations Plus are down 2.5% in premarket trading on Jul 7, 2022.
Quarter in Details
Software
revenues (64% of the total quarterly revenues) increased 16% year over year to $9.7 million. Breaking up the software revenues, GastroPlus contributed 67%, MonolixSuite contributed 11%, ADMET Predictor contributed 17% and other software generated 6%.
The Lixoft buyout expanded the company’s total addressable market (TAM) and increased the mix of software revenues, which bodes well for profitability. Sales of GastroPlus, MonolixSuite and ADMET Predictor offerings increased 19%, 8% and 7% year over year, respectively.
Simulations Plus, Inc. Price, Consensus and EPS Surprise
Simulations Plus, Inc. price-consensus-eps-surprise-chart
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Simulations Plus, Inc. Quote
The renewal rate for commercial customers came in at 92% based upon fees compared with 99% in the prior quarter. The renewal rate for commercial customers came in at 87% based on accounts compared with 90% in the prior quarter.
Services
revenues (36% of total quarterly revenues) improved 19% to $5.3 million. Breaking up the services revenues, PK/PD represented 47%, QSP/QST was 23%, PB/PK was 25% and other services was 5%.
Services backlog was $17 million at the end of the reported quarter, up 34% year over year.
Operating Details
The gross margin in the quarter under review was 83%, up 200 basis points (bps) year over year. Software gross margin came in at 92.4%, up 240 bps from the prior-year quarter’s levels mainly due to higher revenues. Services gross margin was 65.6%, up 260 bps from the prior-year quarter’s figure.
Total operating expenses, as a percentage of revenues, expanded nearly 500 bps to year over year 50%.
The operating income margin was 33% compared with 36% reported in the year-ago period. Adjusted EBITDA margin came in at 42% compared with 46% in the year-ago period.
Balance Sheet
As of May 31, 2022, cash and short-term investments were 122.5 million compared with $124.6 million as of Feb 28, 2022.
The company declared a cash dividend of 6 cents per share payable on Aug 1, 2022, to stockholders as of Jul 25, 2022.
Fiscal 2022 Outlook
For fiscal 2022, Simulations Plus expects revenue growth of 12-15% year over year and in the range of $52-$53 million.
Zacks Rank & Stocks to Consider
Currently, Simulations Plus carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the broader technology sector worth consideration are
Synopsys
SNPS
,
Aspen Technology
AZPN
and
Broadcom
AVGO
. All stocks sport a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $37.03 per share, up 3.8% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.
Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 2.2%. Shares of AVGO have gained 2.5% of their value in the past year.
The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.47 per share, rising 7.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.
Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have increased 11% in the past year.
The Zacks Consensus Estimate for Aspen’s fiscal 2022 earnings is pegged at $5.50 per share, rising 1.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.4%.
Aspen’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 4.1%. Shares of AZPN have grown 32.2% in the past year.
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