Simulations Plus Reports 23% Revenue Growth in Q2 Fiscal Year 2025

Simulations Plus, Inc. reported a significant increase in financial performance for the second quarter of fiscal year 2025, with total revenues reaching $22.4 million, a 23% increase from $18.3 million in the same period last year. The growth was driven by a 16% rise in software revenues, totaling $13.5 million, and a 34% increase in service revenues, which amounted to $8.9 million. For the six months ending February 28, 2025, total revenues were $41.4 million, up 26% from $32.8 million in the prior year. However, net income for the quarter decreased to $3.1 million, down 24% from $4.0 million, primarily due to increased operating expenses.

The company's operating expenses rose by 19% to $10.4 million for the quarter, largely attributed to a 91% increase in sales and marketing expenses, reflecting strategic investments to enhance brand awareness and customer engagement. Research and development costs also increased by 63% to $2.1 million, driven by the acquisition of Pro-ficiency, which was finalized in June 2024. The overall gross profit remained stable at $13.1 million, but the gross margin declined to 59% from 72% in the previous year, indicating increased costs associated with the expanded service offerings.

In terms of operational developments, Simulations Plus has restructured its internal organization to create a more integrated platform, resulting in the formation of two new business units: Adaptive Learning & Insights and Medical Communications. This restructuring aims to enhance collaboration and identify new business opportunities. The company also relocated its headquarters from Southern California to Research Triangle Park, North Carolina, to support a remote work culture and reduce its carbon footprint.

As of February 28, 2025, Simulations Plus reported total assets of $201.4 million, an increase from $196.6 million at the end of the previous fiscal year. The company’s cash and cash equivalents rose to $11.0 million, alongside $10.4 million in short-term investments. The total liabilities decreased to $11.9 million, down from $14.2 million, reflecting improved management of current liabilities. The company’s employee headcount has also increased, reflecting its growth strategy and expansion efforts.

Looking ahead, Simulations Plus remains optimistic about its growth trajectory, driven by the integration of Pro-ficiency and the expansion of its product offerings. The company anticipates that the remaining performance obligations of $15.1 million will be recognized over the next twelve months, indicating a solid revenue pipeline. Management continues to explore strategic acquisitions and partnerships to further enhance its market position in the biopharma sector.