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Simulations Plus reported its Q1 FY2026 financial results, revealing a 3% decline in total revenue to $18.4 million, as anticipated. Despite this, services revenue growth was strong, increasing 16%, while software revenue fell by 17%. The company maintained its FY2026 guidance, expecting total revenue between $79 million and $82 million with a moderate growth rate. Adjusted EBITDA for the quarter was $3.5 million, with adjusted EPS at 13 cents. Strategically, Simulations Plus is focusing on transforming its operations into a fully integrated ecosystem, enhancing its AI capabilities within core products, which has been well-received by clients. This strategic vision aims to streamline processes from drug discovery to commercialization. The company is capitalizing on the positive conditions in global trade and an improving biotech funding landscape, expecting these trends to further enhance its business prospects in upcoming quarters. During the Q&A, analysts were particularly interested in the software performance, impacts of M&A activity on renewals, and the outlook for AI integrations. Management emphasized stable guidance despite quarter-to-quarter fluctuations, underlining a bullish tone and moderate confidence in their strategic initiatives.
We delivered on the first quarter top line guidance with revenue decreasing 3% as expected.
Total revenue for Q1 decreased 3% to $18.4 million. Services revenue increased 16% while software revenue dropped 17%.
Software revenue impacted by market conditions, with an 88% renewal rate for the quarter.
Guidance for FY2026 remains: Revenue $79-$82 million, YoY growth 0-4%, software mix 57-62%.
Simulations Plus is transforming into a fully integrated ecosystem supporting discovery to commercialization.
Recent stabilization in tariff threats and improved biotech funding positively impacts client budgets.
As clients open up budgets, services bookings activity picks up, hinting at budget increase potential.
AI integration with core platform initially released with positive client response and monetization opportunities.
Revenue
$18.4 million
-3%
Software Revenue
17% decrease
-17%
Services Revenue
16% increase
+16%
Adjusted EBITDA
$3.5 million
Adjusted EPS
13 cents
Gross Margin
59%
from 54%
Cash and Short-term Investments
$35.7 million