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On Thursday, Citizens JMP analyst Constantine Davides reaffirmed a Market Perform rating on Simulations Plus (NASDAQ:SLP) following the company’s second-quarter financial report. Simulations Plus disclosed revenues of $22.4 million, marking a 23% increase year-over-year, which surpassed both the analyst’s projection of $22.2 million and the consensus estimate of $21.9 million. The company’s organic revenue growth stood at 5%, not accounting for the $3.3 million contributed by Pro-ficiency revenue. This performance aligns with the company’s strong trailing twelve-month revenue growth of 19.84%, according to InvestingPro data.
Despite the revenue outperformance, the company’s adjusted EBITDA for the quarter was reported at $6.6 million, representing an 8% decline from the previous year. This figure fell short of both Citizens JMP’s expectation of $7.7 million and the consensus estimate of $7.1 million. The shortfall was attributed to higher than anticipated research and development (R&D) and sales and marketing expenses. Additionally, Simulations Plus’s consolidated gross margin for the quarter came in at 58.5%, which was below the anticipated 59.3%.
The company’s financial results showed a mixed performance with strong revenue growth but challenges in maintaining profitability margins. The increased expenses in R&D and sales and marketing have been a factor in the reduced EBITDA, which is a key metric for assessing a company’s operating performance.
Simulations Plus specializes in modeling and simulation software for pharmaceutical research and development. The company’s software is used to predict the properties of potential drug compounds, which can help in the design and development of new medications.
The reaffirmation of the Market Perform rating indicates that Citizens JMP does not currently see the stock as outperforming the market or its sector peers. This neutral stance is maintained in light of the company’s latest financial performance, which showed robust revenue growth tempered by increased operational expenses and a dip in profitability margins.
In other recent news, Simulations Plus Inc. reported impressive financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved an adjusted earnings per share (EPS) of $0.31, exceeding the forecast of $0.26, and reported revenue of $22.4 million, which was above the projected $21.92 million. This performance marks a 23% year-over-year revenue increase, driven by strong growth in both software and services segments. Despite the positive earnings report, the company’s stock experienced a decline during regular trading hours.
Further developments include robust growth in the company’s software revenue, which rose by 16%, and a significant 34% increase in services revenue. Analysts from BTIG highlighted the cautious spending environment among biopharma clients, but noted the steady growth in software licensing as clients maintain their infrastructure investments. Additionally, the company reaffirmed its fiscal year 2025 guidance, projecting total revenue between $90 million and $93 million.
Simulations Plus continues to experience high renewal rates and strong bookings, positioning itself well for sustained growth. The company is also focused on expanding its market presence through strategic acquisitions and cross-selling opportunities.
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