Simulations Plus
SLP
reported first-quarter fiscal 2022 earnings of 15 cents per share, up 25% on a year-over-year basis. The figure beat the Zacks Consensus Estimate by 36.4%.
Revenues of $12.4 million increased 16% year over year driven by strong performance of the company’s software business and rebounding services’ business. The top line also beat the consensus mark by 11.2%.
Following the development, shares of Simulations Plus were up 3.3% in the aftermarket trading on Jan 6, 2022. The stock has declined 44.2% in the past year against the
industry
’s growth of 30.4%.
Quarter in Details
Software revenues (59.6% of the total quarterly revenues) increased 19% year over year to $7.4 million. The Lixoft buyout expanded the company’s total addressable market (TAM) and increased the mix of software revenues, which bodes well for profitability. Breaking up the software revenues, GastroPlus contributed 54%, MonolixSuite contributed 21%, ADMET Predictor comprised 20% and other software generated 5%.
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 company added 16 new clients for its $100,000-plus license club in the quarter.
Services revenues (40.4% of total quarterly revenues) increased 13% to $5.1 million. Breaking up the services revenues, PK/PD represented 46%, QSP/QST was 29%, PB/PK was 17% and other services was 8%.
Services’ backlog at the end of the reported quarter was $15.4 million, up 28.3% year over year and 18.5% sequentially.
The renewal rate for commercial customers came in at 96% based upon fees compared with 95% in the prior quarter. The renewal rate for commercial customers came in at 93% based upon accounts compared with 87% in the prior quarter.
Operating Details
The gross margin in the quarter under review was 78%, up 100 basis points (bps) year over year. Software gross margin came in at 90%, up 300 bps from the prior-year quarter’s levels mainly due to higher revenues. Services gross margin was 60%, down 400 bps from the prior-year quarter’s figure. The downside was caused by higher salaries and an increase in lower-margin services projects.
Total operating expenses, as a percentage of revenues, contracted nearly 200 bps to year over year 47%.
Operating income margin expanded 200 bps to 31% on a year-over-year basis.
Balance Sheet
As of Nov 30, 2021, cash and short-term investments were 124.3 million compared with $123.6 million as of Aug 31, 2021.
The company declared a cash dividend of 6 cents per share payable on Feb 7, 2022, to stockholders as of Jan 31, 2022.
Fiscal 2022 Outlook
Management maintained its earlier provided fiscal 2022 guidance. For fiscal 2022, Simulations Plus expects revenues growth in the range of 10-15% year over year.
Software revenue growth is expected in the range of 55-60% of total revenues for fiscal 2022. Services revenues are expected to be 40-45% of total revenues for fiscal 2022.
Zacks Rank & Stocks to Consider
Currently, Simulations Plus carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include
Salesforce
CRM
,
Hewlett Packard
HPE
and
Microsoft
MSFT
. While Salesforce and Hewlett Packard sport a Zacks Rank #1 (Strong Buy), Microsoft carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Salesforce’s fiscal 2022 earnings is pegged at $4.68 per share, up 6.4% in the past 60 days. The long-term earnings growth rate of the company is pegged at 16.8%.
Salesforce’s earnings beat the Zacks Consensus Estimate in all of the preceding four quarters, the average surprise being 44.2%. Shares of the company have increased 3.2% in the past year.
The Zacks Consensus Estimate for Hewlett Packard’s fiscal 2022 earnings is pegged at $2.03 per share, unchanged in the past 60 days. The long-term earnings growth rate of the company is pegged at 5.8%.
Hewlett Packard’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.4%. Shares of the company have rallied 42.8% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2022 earnings is pegged at $9.13 per share. The long-term earnings growth rate of the company is pegged at 12%.
Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.8%. Shares of the company have surged 42.9% in the past year.
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