Simulations Plus Reports 3% Revenue Decline, Net Income Increases to $0.7 Million

Simulations Plus, Inc. reported a decrease in total revenues for the three months ended November 30, 2025, amounting to $18.4 million, down 3% from $18.9 million in the same period last year. The decline was primarily driven by a 17% drop in software revenue, which fell to $8.9 million from $10.7 million, largely due to reduced activity in Clinical Operations and Development. Conversely, service revenue increased by 16% to $9.5 million, reflecting organic growth in Commercialization and Development services. The company's gross profit rose to $10.9 million, a 7% increase from $10.2 million, resulting in a gross margin of 59%, up from 54% in the prior year.

Operating expenses remained relatively stable, totaling $10.2 million, a slight increase from $10.1 million in the previous year. Research and development costs surged by 61% to $3.0 million, reflecting the company's commitment to enhancing its software offerings. Sales and marketing expenses also increased by 12% to $3.2 million, while general and administrative expenses decreased by 25% to $4.0 million, attributed to lower corporate support costs and reduced merger-related expenses. The company reported net income of $0.7 million, compared to $0.2 million in the prior year, resulting in earnings per share of $0.03, up from $0.01.

In terms of operational metrics, Simulations Plus saw a notable increase in accounts receivable, which rose to $12.2 million from $9.7 million, indicating a growing customer base and increased billing activity. The company also reported a significant improvement in cash flow from operating activities, generating $4.2 million compared to a cash outflow of $1.3 million in the same quarter last year. This improvement was largely driven by better working capital management, including a $2.0 million increase in deferred revenue.

The company continues to focus on strategic growth, with ongoing investments in research and development aimed at enhancing its software capabilities. As of November 30, 2025, Simulations Plus had $30.2 million in cash and cash equivalents, alongside $5.5 million in short-term investments, providing a solid liquidity position to support future initiatives. The company remains committed to exploring strategic acquisitions and partnerships to further bolster its market presence in the biopharma sector.

Looking ahead, Simulations Plus anticipates continued growth in service revenues, driven by increased demand for its consulting services. However, the company acknowledges potential challenges in the software segment due to macroeconomic factors affecting the pharmaceutical industry, including pressures on R&D spending. Management remains optimistic about the long-term outlook, emphasizing the importance of innovation and strategic investments to navigate these challenges effectively.