Simulations Plus Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 3, 2024

There are 8 speakers on the call.

Operator

Greetings, and welcome to the Simulations Plus Second Quarter Fiscal 20 24 Financial Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. Profiles. Ms.

Operator

Fortuna, you may now begin.

Speaker 1

Good afternoon, everyone. Welcome to the Simulations Plus Second Quarter Fiscal 2024 Financial Results Conference Call. With me today are Sean O'Connor, Chief Executive Officer and Will Frederick, Chief Financial Officer and Chief Operating Officer of Simulations Plus. Please note that we updated our quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation on our Investor Relations website at www.simulationsplus.com.

Speaker 1

After management's commentary, we will open the call for questions. As a reminder, the information discussed today may include forward looking statements that include that involve risks and uncertainties. Words like believe, expect and anticipate refer to our best estimates as of this call. There can be no assurances that these will actually take place. So our actual future results could differ significantly from these statements.

Speaker 1

Further information on the company's risk factors is contained in the company's quarterly and annual reports and filed with the Securities and Exchange Commission. With that said, I'll now turn the call over to Sean O'Connor. Sean?

Speaker 2

Thank you, Lisa. Good afternoon, everyone, and thank you for joining our Q2 fiscal 2024 conference call. Results for the Q2 of fiscal 2024 played out as expected. Our team delivered solid revenue growth of 16% with strong performance in both our software and services segments and reported diluted earnings per share of $0.20 Given our strong first half results, we are confident we will meet our full year guidance. Our market continues to show encouraging signs of strength.

Speaker 2

In the 1st calendar quarter of 2024, biotech funding has been strong, especially for companies that have drug candidates in the clinic. Biotech companies of this profile can benefit from our full portfolio of modeling and simulation capabilities. For large pharmaceutical companies, funding continues to vary depending on their near term direction, drug program stability and business outlook. But the overall market is healthier compared to a year ago. For the balance of 2024, we remain cautiously optimistic that demand for our comprehensive suite of modeling and simulation software products and services will continue to gain momentum as market conditions improve.

Speaker 2

Before turning to our segment performance, want to spend a few minutes on our topic of artificial intelligence as it relates to drug discovery and development. As I've noted previously, Simulations Plus was an early developer of AI technology and tools to optimize our predictive technologies. As AI technologies continue to develop, we keep pace by improving our use of AI technology to enhance our modeling and simulation solutions. Additionally, AI accuracy is only as good as the datasets used for training and our access to accurate public and private data is a true competitive edge and a barrier to entry in our business. Our long standing partnerships and collaborations with both industry leaders regulatory agencies have granted us significant access to both private and public data essential for perfecting and refining predictive algorithms.

Speaker 2

This access to key data is critical to advancing our capabilities in AI enabled biosimulation well into the future. When you look broadly at the digital economy, our business rooted in science and data stands to meaningfully benefit from evolving AI applications. Moving on to our software segment. Software revenues increased 11% in the Q2 and were up 16% for the 6 month period with good renewals, up sells and new logo activity. Overall, we are seeing solid demand in our key markets except for Asia, which continued to lag overall market growth.

Speaker 2

Our chem informatics business unit delivered 14% revenue growth in the 2nd quarter and 10% for the fiscal year to date. This quarter's growth was due to higher revenues from Adnet Predictor, which continued to gain adoption and added another new AI Biotech customer. Additionally, there were 8 new customers and 18 upsells during the quarter. Our physiologically based pharmacokinetics or PBPK business unit had a modest 2% revenue increase in the 2nd quarter and 11% for the fiscal year to date. The PBPK business unit added 6 new customers and booked 9 upsells for existing customers.

Speaker 2

Momentum is strong for GastroPlus and our expectations for full year growth are strong. Our clinical pharmacology and pharmacometrics or CPP business unit delivered the strongest performance with revenue growth of 38% for the quarter and 21% for the fiscal year to date. Monelix continues to take market share from its primary competitor and saw another large pharma client commit to transition to the platform. During the quarter, we added 7 new customers and had 10 customer upsells. Revenue in our quantitative systems pharmacology or QSP business unit decreased 6% for the quarter and increased 77% for the fiscal year to date.

Speaker 2

As a reminder, quarterly results can be lumpy for QSP based on the high price per license and a small pool of end users. Turning to our Services segment. Revenues increased 27% during the 2nd quarter and 22% for the 6 month period with solid bookings and a healthy pipeline of active opportunities. Clients are being cautious about spending, but we're seeing a pickup in RFPs, which is a positive sign. There's still lingering volatility associated with start and stop decisions on drug programs and data delivery disruptions related to the completion of clinical trials.

Speaker 2

But we are managing through this volatility quite well to maintain a steady flow of projects, activities and utilization of our scientific staff. Total backlog at the end of the second quarter was $18,000,000 which is strong as we enter the second half of our fiscal year. Services revenue in our CPP business unit were solid, up 10% in the 2nd quarter and 11% for the full fiscal year despite the impact of volatility. In our QSP business unit, service revenues grew 78% in the 2nd quarter and 89% for the full fiscal year, benefiting from immunology and cancer model projects. Services revenue in our PBPK business unit increased 39% for the 2nd quarter and 11% for the full fiscal year, delivering strong growth after a sluggish first quarter performance.

Speaker 2

And with that, I'll turn the call over to Will.

Speaker 3

Thank you, Sean. To recap our strong second quarter performance, total revenue increased 16% to $18,300,000 software revenue increased 11%, representing 63% of total revenue and services revenue increased 27%. On a trailing 12 month basis, software revenue increased 22% and services revenue increased 14%. As we communicated last quarter, the business unit reorganization we implemented in the Q1 to improve our focus on customers also allowed us to evaluate our departmental structure with a focus on continuing to improve operational performance and profitability, while providing our investors improved visibility to our progress. As a result, we moved all services personnel into cost of revenue departments.

Speaker 3

This has no impact on our total costs or net income, but does impact the services gross margin trend compared to prior periods. Accordingly, Q2 total gross margin was 72% compared to 83% last year with software gross margin at 88% versus 92% and services margin at 44% versus 66%. Approximately $1,300,000 of the increase in cost of revenues corresponds to a $1,300,000 decrease in G and A expenses. Turning to software revenue contribution by business unit for the quarter, PBPK was 54%, CPP was 24%, cheminformatics was 18% and QSP was 4%. For the trailing 12 months, PBPK contribution was 55%, CPP was 20%, chem informatics was 19%, and QSP was 6%.

Speaker 3

For the trailing 12 months, our customer renewal rate increased to 93% based on fees and increased to 84% based on accounts. For the trailing 12 months, average revenue per customer increased to $95,000 Shifting to our services revenue contribution by business unit for the quarter, CPP was 43%, QSP was 27%, PBPK was 25% and REG was 5%. For the trailing 12 months, CPP contribution was 43%, QSP was 30%, PVPK was 22% and REG was 5%. Total services projects worked on during the quarter was 176, a slight decrease from 183 last year and quarter end backlog increased to $18,000,000 compared to $15,400,000 last year. Anticipated revenue from backlog within 12 months increased to approximately 90%.

Speaker 3

Turning to our consolidated income statement for the quarter. R and D expense was 7% of revenue compared to 8% last year. Sales and marketing expense was 11% of revenue, same as last year. And G and A expense was 30% of revenue compared to 38% last year. Total operating expenses were 48% of revenue compared to 58% last year.

Speaker 3

Income from operations was 24% of revenue compared to 26% last year. And income before income taxes was 29% of revenue compared to 32% last year. Year over year expenses increases were primarily due to the acquisition of Immunetrix, compensation related increases due to headcount additions, increases in stock compensation and general annual salary adjustments for existing employees. Other income was $800,000 this quarter compared to $1,000,000 last year, primarily due to an increase in interest income of $400,000 partially offset by an increase in the fair value adjustment of the Immunetrix earn out liability of $400,000 Net income for the 2nd quarter was $4,000,000 or 22 percent of revenue compared to $4,200,000 or 27% of revenue last year. Diluted earnings per share was the same as last year at $0.20 reflecting a decrease in diluted shares outstanding as a result of last year's share repurchase.

Speaker 3

2nd quarter adjusted EBITDA increased to $7,100,000 compared to $6,200,000 last year and both were 39% of revenue. We calculate adjusted EBITDA by adding back interest taxes, depreciation and amortization, stock based compensation, gain or loss on currency exchange, any acquisition or financial transaction related expenses, any asset impairment charges and any tax provisions or benefits related to these items. The reconciliation of this non GAAP metric to net income to relevant GAAP metric is in our earnings release and on our website. Income tax expense for the Q2 was $1,200,000 compared to $900,000 last year and our effective tax rate increased to 23% from 18% last year. The increased tax rate was primarily the result of changes in prior year estimated taxes and foreign tax related differences we benefited from last year.

Speaker 3

Now that we're halfway through our fiscal year, our current effective tax rate estimate for the full fiscal year is 20% to 23%. Finally, turning to our balance sheet. We ended the quarter with $117,500,000 in cash and investments. We remain committed to our capital allocation strategy and corporate development initiative as we continue to seek opportunities for strategic acquisitions, investments and partnerships. I'll now turn the call back to Sean.

Speaker 2

Thank you, Will. Our 2nd quarter results reflected strong performance in both our software and services segments. Market conditions have improved, but these changes require time before they translate into actual bookings and revenue. We remain cautiously optimistic. With our strong first half performance combined with market improvement, we're well positioned to meet our stated fiscal 2024 guidance targets, which include total revenue between $66,000,000 $69,000,000 year over year revenue growth in the range of 10% to 15%, software mix between 55% 60%, services mix between 40% 45%, diluted earnings per share of $0.66 to 0 point 6 $8 year over year diluted earnings per share growth of 35% to 39%.

Speaker 2

Before turning to the Q and A, I'd like to take the opportunity to reinforce key differentiators of our story. We're a clear leader in software and consulting services in a large and growing biosimulation market. Simulations Plus is a leader in biosimulation technology, leveraging AI tools since the company's inception to optimize drug discovery and clinical development through to and beyond regulatory approval. We have a compelling customer value proposition and strong competitive position with high barriers to entry. We have an attractive financial profile with a strong balance sheet and no debt.

Speaker 2

And finally, we have a seasoned management team with scientific leadership and significant expertise in modeling and simulation. Thank you for your time today. And with that, I'll turn the call over to the operator for questions.

Operator

Thank you. Ladies and gentlemen, at this time, we'll be conducting a question and answer Our first question comes from the line of Matt Hewitt with Craig Hallum. Please proceed with your question.

Speaker 4

Good afternoon. Congratulations Obviously, you're starting to see some improvement on the biotech side. You commented on that. I'm wondering on the large pharma side, how much of that is a funding versus kind of some of the reprioritization and some of the other items that have kind of hit that market over the past few quarters. Is it more just that or is there maybe some funding on the large pharma side as well?

Speaker 5

Thanks, Matt. Yes, through the last couple of years, the environment biotech versus pharma has been a little different, certainly a funding issue on the biotech side. On pharma side, it's been less funding as it has been, circumstances related to the individual company, their outlook in terms of patent exposure on revenue streams, resorting their drug programs and investments there. Their access or acquisition, I should say, of new programs have created a turn there. You've got a wide range of scenarios from Novo Nordisk at one extreme and other companies, Pfizer as an example, that's announced significant cutbacks this year.

Speaker 5

So most everyone is obviously in between those two extremes, but there's still a lot of churn and cautiousness and sorting out of drug programs that are going to be invested in or not invested in. The actual funding of those companies has been less of a less of an issue in terms of their situation.

Speaker 4

Got it. And then regarding the biotech funding, obviously, it has been, I think everyone's kind of seen the strong start to the year. But how quickly do you start to see that from a bookings perspective? I mean, is it pretty quickly or is there a little bit of a lag? So when we're seeing the IPOs and the secondary hit, is there a quarter or 2 lag historically?

Speaker 4

Or does that show up in your revenues right away?

Speaker 5

Yes, we'll see. I mean, it's anecdotal depending on where their drug candidates are when they get the funding, where are those candidates in terms of the cycle of drug development? Typical sales cycles in our industry can range to I need a new seat and I need it tomorrow. I just hired somebody to prolong the budgetary activity. So I know I'm dancing around an answer to your question because I can't give you a it's a 2 month, it's a 3 month sort of lag.

Speaker 5

It's across runs across the spectrum in terms of timing. But certainly within the Q1 or thereabouts of funding activity, you're not going to see a quick turn in terms of market volume. But in the 6 to 9 month range, I would anticipate many of these companies that are getting funded are going to be advancing their candidates, especially those that are getting funding with drugs in the clinic, looking to go to the next level, close their protocol on the next clinical trial. Those are decision points that drive purchasing decisions.

Speaker 4

Got it. And then maybe one more for me and I'll hop back in the queue. But obviously a big pop in Admed, I think you quadrupled the number of customers versus last quarter, the new wins, I should say. Your up sells were up 3x versus last quarter. Maybe a little bit more color on what drove the strong pop there?

Speaker 5

Yes. The technology is getting more acceptance in the marketplace in terms of what we're doing, the questions in this companies were focused on new generative AI solutions, the recognition that which is an Admet predictor and the contributions we make there are not displaced by many of the new technologies that are being brought to the market. I'm very Aixremu, please, yet another AI startup biotech company licensed our ADMET Predictor tool to supplement what they are building separately. I think that endorses that we're not being displaced or replaced in terms of many of technology builds, AI technology builds. And the value of what we've built and brought to the market for many years here and continue to enhance and improve has its place and value in the lead optimization process.

Speaker 4

Got it. Well, congratulations again on the strong quarter.

Speaker 5

Thanks, Matt.

Operator

Our next question comes from the line of David Larsen with BTIG. Please proceed with your question.

Speaker 6

Hey, congrats on the very good quarter. Can you talk a little bit about the sequential increase in GastroPlus revenue? I mean, it looked very good to me, especially given that you had the harmonization process last year. Just any more color or thoughts around that would be great.

Speaker 5

Yes. Growth in the specific quarter here, year over year comparison was not tremendous, but this was our step up quarter as the harmonization process that completed last year set in motion a little bit different seasonality pattern to the year. Q1 to Q2 jump was an even larger jump sequentially for us. And Casa was performing quite well. Harmonization process complete, doesn't mean that there aren't licenses that slip from 1 quarter to another quarter based upon their closure at the end of any given quarter and whatnot.

Speaker 5

And so we had some impact from that. I referenced in the prepared comments with regard to softness in the Asian market, where we're seeing, especially in China, some pullback in terms of spending related to well known issues taking place there. So momentum is very good on GasLog Plus. We're performing to our expectations for the year and look for that to continue to grow at a steady pace and continue to grow overall revenues.

Speaker 6

Okay. And then IQVIA in their research business, they showed tremendous growth. It was, I think, one of their best quarters they've ever printed. Like I think it was 2nd or maybe 3rd best for IQVIA. And I'm seeing a very good increase year over year in Monelix.

Speaker 6

I mean, is there any correlation to that? I mean, how tied is Monelix suite to clinical trial activity? Can't it create like virtual clinical trials or is there I guess what drove that huge increase there over 30% year over year, 38% year over year growth?

Speaker 5

Yes. Monelix is doing quite well, made it through its harmonization process last year. It's since our acquisition of that product line in 2020 has been a fast grower, our fastest growing software platform these last few years and continues to perform nice in the marketplace displacing the incumbent, the leading market share product there. This past quarter, we had yet another large pharma company that made the commitment to displace entirely the competitive product and go 100% to a use of monologues for their needs there. So it's momentum and progress continues quite strong into the future.

Speaker 5

It's tied to clinical trial activity. Yes, not quite so direct that, hey, we've got 10 clinical trials this quarter. We need an extra copy of MonaLEx. But generally, there is a strong indirect correlation between development programs, clinical trials and the amount of modeling and simulation work that is being performed and therefore leads to growing staff and our clients that need monoliths on their desktop, but it's not quite so immediate quarter to quarter.

Speaker 6

Okay. And then the pricing, the average revenue per customer, I think it came in at like $113,000 that's up from 79 in 1Q. I mean that looked very good to me. The fee retention though, 94%, I mean, you had a great quarter, but it was down from 100% in 1Q. Just anything going on there?

Speaker 6

What's sort of driving that?

Speaker 5

Yes. We've more typically operated at a mid-90s level, 95%, 96% in terms of fees. Our performance last quarter was quite extraordinary. And not to be complaining that I'm complaining about it, but it created a peak for which we will always be compared to. So the revenue renewal rate, I should say, this quarter was kind of the norm, even though, as I mentioned, there were a couple of renewals that slipped out of Q2.

Speaker 5

So I think we're in good shape there. The components of Red Jewel, the number of accounts that are renewing, the stickiness of our price increase as implemented. All of those seem to be performing well at this point.

Speaker 6

Okay, great. And then you recently announced a new corporate development effort. Can you maybe just talk a little bit about what that is? Have you actually made any investments yet? And it's my understanding that this may enable you to capture some of the upside.

Speaker 6

If you work with a pharma client and you help them launch a successful drug, you could potentially capture some of that very significant revenue stream long term. Is that how it works? Just any color there would be great. Thanks.

Speaker 5

Yes, Dave. Yes, down some program this year and certainly looking at a number of opportunities as we speak here. It was really borne out of our acquisition strategy, which remains 1st and foremost number one priority in terms of the use of our capital, in terms of identifying additional acquisitions to add to the Simulations Plus product and service portfolio. But in that effort, we encounter a number of situations with companies that have good technology, good capabilities, but for a whole host of reasons may not be acquisition candidates at this stage of the game. And yet their technology that they've built might have some very positive go to market strategies, technological linkage, integration into our existing technology, all things that we could get benefit from more quickly as opposed to waiting for them to mature and become an acquisition target down the road.

Speaker 5

So a number of those opportunities are being assessed as we speak and hope to find some candidates to make our first investments of this nature. Yes, I mean one profile of investment in these companies may be companies that their use of our technology, their charge mission maybe include drug development processes by which our investment in them would allow us to play in the success of their drug programs as well. Our first and foremost sort of filter though will be their technology and its value in terms of our business model, which would be software license revenue and or service revenue. But it does present an interesting scenario where we might be able to benefit from their drug development program success in the long term.

Speaker 3

Okay, great. Congrats on

Speaker 6

a good quarter. I'll hop back in the queue.

Speaker 5

Thanks, Ben.

Operator

Our next question comes from the line of Francois Brisebois with Oppenheimer. Please proceed with your question.

Speaker 7

Hi, thanks for the question. I was just wondering, has there been a little bit of a misunderstanding maybe of what differentiates you from these newer AI drug development plays? And in terms of data, is you guys have been around for a while and you have very strong data to build the algorithms on and that data has evolved. But is that something that anyone else could kind of shorten or accelerate the path to getting to product? Or is that always going to be an edge for you guys just based on the time that you guys have been in business?

Speaker 5

Good question, Frank. I mean, we always get questioned in terms of the impact of some of the new AI technology ventures in the marketplace, but it garnered great attention in funding. And so the questions abound. And our perspective here is 1 in which we participated in the development of AI technology for some time Predictor product and its use in terms of property The The technology ventures that have received this spotlight in funding are typically focused in other areas, biomarker identification, lead generation of some nature. And as I mentioned before, I'm quite pleased to endorsing our perspective that we are best of breed in what we're doing and not being displaced by these other investments in technology development is the fact that yet another one of them became a customer this quarter and are using our best in class property prediction tool to supplement what they're developing.

Speaker 5

So yes, in the context of AI, certainly feel comfortable with our position and the success we have and will have in our purpose to use of that technology. In terms of data, as far as second part of your question, yes, we've obviously been at the end of the game for an extended period of time. Public and private data are the obvious sources. The public data has improved tremendously both in terms of its volume and accessibility. But its curation is still a challenge.

Speaker 5

So we've got a leading edge in terms of years of developing a means curate that data into a meaningful format that can be used in terms of the work that we do. On the private data side, we've got years of working with collaborative clients and or partnerships with regulatory agencies that allowed us access into data that is not readily available out there to anyone. Others can make partnerships, others can improve in curation. There is always a need on our part to stay running hard in terms of keeping our advantage in this regard and believe we have the capability to do that. And again, I come back to where we apply that data in terms of our predictive capability and add that predictor as ongoing evidence of our ability to stay ahead of the curve there.

Speaker 7

And then maybe lastly, in terms of it's been talked about a little bit by previous questions here, but in terms of large pharma versus biotech, do you ever get help kind of selling the program to biotech from large pharma just because while these pencliffs are coming and so much of the revenue generation and so much of the growth with large pharma comes from acquisitions of these biotechs. I'm just wondering if for them when they're looking at biotechs, if it would help them if the biotech was actually using this software as well to compare notes. So has that ever happened where large pharma helps out with biotech clients or are they really, really separate pieces here?

Speaker 5

I'm searching for an example where it's not a separate piece, Frank. We've never been introduced and strong armed into a biotech as a result of a large pharma relationship. Our tools may be being used internally at large pharma in assessing some of in their due diligence process and assessment of their acquisition targets that could be happening out there. We occasionally get involved in evaluating investment opportunities, but it's not a great frequency. But no, I don't know that there's a lot of leverage.

Speaker 5

Probably the biggest impact is as funding goes into the biotech companies, they look to hire people, they hire people from large pharma that are pre existing SLP product users and that creates an acquisition. Probably in between there is their hiring of an individual and then that hiring leads to a knock on our door in terms of filling his toolkit to undertake the efforts internally at the new biotech, newly funded biotech.

Speaker 7

No, that makes sense. And if I can just squeeze the last one in, do you see the funding was tough for a long time with biotech and it's starting to turn definitely with the start of this year. But do you ever see ultimately if your guys is one of the big advantages with your software is to cut costs and let go programs that don't necessarily have a good chance of success. Ultimately, do you expect lower funding if this was to happen in the future to not really impact you at all because the thesis is to actually cut costs or is this too far further distant future here I guess?

Speaker 5

Yes, you're getting pretty far out in the columns on the spreadsheet of predicting the future there a little bit. I don't know that efficiency will lead to less funding. The funding ratio between funding and successful drug programs, I think it's still remaining somewhat static there, hopefully improves them in the long run and will certainly take any lead that you can provide or we can help those biotechs be more efficient in their programs. But I think it's a couple of steps removed in terms of the linkage that you're describing.

Speaker 7

Yes. I just meant like less dependent on the funding environment sort of thing for future maybe downturns or whatnot.

Speaker 5

Yes, we can we certainly have impact in terms of a more efficient spend on the funding that takes place, more efficient spend of that. But the drug program, depending on the circumstances of that entity, may or may not require even efficient spend may lead to more funding for further development.

Speaker 7

Thank you.

Speaker 5

Thanks, Craig.

Operator

Our next question is a follow-up question from the line of David Larson. Please proceed with your question.

Speaker 6

I wanted to ask Will a question about his new sort of expanded role, I think of Chief Operating Officer. Just Will, what are you seeing from that perspective? And maybe can you talk a little bit about the reclassification of some G and A costs up into COGS? Why did you do that? Just any color would be very helpful.

Speaker 6

Thank you.

Speaker 2

Sure. Happy to do that. I think one of the things it definitely allowed

Speaker 3

us to do as a company is look across the entire organization at the way that we're running our operations, both services operations and software operations. So as we've progressed since we've done the acquisitions, we've always tried to have a one company focus, I'll call it, that drives further synergies, leverages best practices throughout the organization. And this was one more step in addition to the most recent ones were sales and marketing consolidation. Certainly, the reclass that we did this year, as I mentioned, no impact on our total costs in the way that we've reported them. But give a little bit more clarity and we tried to incorporate that into the script on our cost as a percentage of revenue and really looking at what's our services organization costing us, where can we improve in utilization rates or allocations of effort to development, sales and marketing, what's our sales and marketing spend as a percentage of revenue, what's our G and A spend.

Speaker 3

So really helping the company focus on areas that we can drive future profitability, get the leverage out of the business. And most importantly, I mean, we continue to have a focus on future M and A. So having this infrastructure in place that allows us to bring in new companies and keep layering on that infrastructure should hopefully allow us to see some nice synergies in the future.

Speaker 6

Fantastic. What I just heard you say was you had a better look at the earnings per individual in each department in the organization and that's exactly what I like to hear quite frankly. And then just last one, can you just talk a little bit about your sales organization? How many FTEs do you have in sales? How many are quota carrying?

Speaker 6

And then you mentioned integration of sales force. Who is integrated into what? Was it Immunetrics? Or were there other integrations that happened recently? Just any sort of color there will be helpful.

Speaker 6

Sales is obviously very important.

Speaker 3

Sure. You want to take that one, Sean? Or you want to let me keep going?

Speaker 5

You go for it.

Speaker 2

All right. So, certainly with the Immunetrix acquisition,

Speaker 3

we do have an earn out. So there are certain constraints within where we can fully integrate it, but we've made strides in the direction to leverage our existing sales force. You've heard us talk about the cross selling, where can we leverage customers that we have to sell services software from the different business units, continue to work up that value chain within the organization, hire decision makers. We still got about the same amount of sales and marketing folks. So there's, I want to say, about 12 salespeople quota carrying about 6 or 7 folks that are in marketing, and certainly a great addition just recently this last quarter with Dan Szott as our Chief Revenue

Speaker 6

anything I missed?

Speaker 5

That sounds good. The consolidation process really started a couple of years ago. And at that time before Immunetrix was pulling the resources from the divisions at the time, the previous acquisitions and consolidating them together into 1 sales and marketing organization that internally creates some efficiencies. But more importantly, it was a focus in terms of our go to market presentation to our clients as one company. All of that leads to support to upsells and cross selling across platforms and across services to our existing customers.

Speaker 5

And I think that's been accruing benefits here for a while.

Speaker 6

All right, fantastic. Thanks a lot. Congrats on a good quarter.

Speaker 5

Thanks, Dave. Thank you.

Operator

There are no further questions in the queue. I'd like to hand it back to Mr. O'Connor for closing remarks.

Speaker 5

Very good. Well, I appreciate everyone's attention today and hope all was well on your side and look forward to speaking again soon. Take care all.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

Powered by Quartr

Key Takeaways

  • The company delivered 16% revenue growth in Q2 FY2024, with software revenues up 11% and services revenues rising 27%, resulting in diluted EPS of $0.20.
  • In the software segment, the Chemoinformatics unit grew 14%, Clinical Pharmacology & Pharmacometrics (Monolix) surged 38%, while PBPK revenues rose 2% in the quarter.
  • Services revenues grew 27% in Q2, driven by broad-based demand and a backlog of $18 million entering the second half of the fiscal year.
  • The company emphasized its early adoption of AI technology and robust public and private data access as key competitive advantages in predictive biosimulation.
  • Management remains cautiously optimistic on improving biotech and pharma market conditions and reaffirmed full-year guidance of $66–69 million in revenue and $0.66–0.68 in diluted EPS.
AI Generated. May Contain Errors.
Earnings Conference Call
Simulations Plus Q2 2024
00:00 / 00:00