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Simulations Plus (SLP) Q3 Earnings Miss, Revenues Rise Y/Y
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Simulations Plus (SLP - Free Report) reported third-quarter fiscal 2023 earnings of 20 cents per share, flat on a year-over-year basis. However, the figure missed the Zacks Consensus Estimate by 4.8%.
The top line increased 9% year over year to $16.2 million. Higher revenues in Software and Services business segments resulted in this uptick. The top line beat the Zacks Consensus Estimate by 0.9%.
Quarter in Details
Revenues from Software (65% of total quarterly revenues) increased 10% year over year to $10.6 million. Breaking up the revenues of this segment, GastroPlus, MonolixSuite, ADMET Predictor and Other Software contributed 57%, 18%, 19% and 6%, respectively.
Simulations Plus, Inc. Price, Consensus and EPS Surprise
Sales of GastroPlus were down 2%. MonolixSuite and ADMET Predictor offerings sales saw increases of 84% and 9% year over year, respectively.
The renewal rate for commercial customers came in at 96% (based upon fees) and 87% (based on accounts) compared with 92% and 87% in the prior quarter, respectively.
Services’ revenues (35% of total quarterly revenues) improved 5% to $5.6 million. Breaking up the services’ revenues, PK/PD, QSP/QST, PB/PK and Other services represented 45%, 23%, 25% and 7%, respectively.
Services’ backlog was $16 million at the end of the reported quarter, down 5.9% year over year.
Operating Details
The gross margin in the quarter under review was 82%, down 100 basis points (bps) on a year-over-year basis. Software segment’s gross margin came in at 91%, down 100 bps from the prior-year quarter’s levels. Services’ gross margin was 63%, down 300 bps from the year-earlier quarter’s figure.
Total operating expenses, as a percentage of revenues, stood at 57% compared with 50% in the year-ago quarter.
Operating income margin was 25% compared with 33% reported in the year-ago period. Adjusted EBITDA margin came in at 40% compared with 43% in the prior-year period.
Balance Sheet
As of May 31, 2023, cash and short-term investments were $122.4 million compared with $115.3 million as of Feb 28, 2023.
The company declared a cash dividend of 6 cents per share payable on Aug 7, to stockholders as of Jul 31.
Fiscal 2023 Outlook
For fiscal 2023, Simulations Plus expects revenue growth of 10-15% year over year and in the range of $59.3-$62 million. The company projects Software and Services to consist 60-65% and 35-40% of revenues, respectively. SLP estimates earnings per share to increase in the band of 5-10% and to be between 63 cents and 67 cents.
Currently, Simulations Plus carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 3.8% in the past 60 days to $3.58 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have gained 20.7% in the past year.
The consensus mark for Watts Water Technologies’ 2023 earnings is pegged at $7.27 per share, up 1.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 8%.
Watts Water Technologies’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 16.3%. Shares of WTS have increased 20.5% in the past year.
The consensus estimate for Cadence’s 2023 earnings is pegged at $5.00 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.5%.
Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 7.3%. Shares of CDNS have improved 43.2% in the past year.
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Simulations Plus (SLP) Q3 Earnings Miss, Revenues Rise Y/Y
Simulations Plus (SLP - Free Report) reported third-quarter fiscal 2023 earnings of 20 cents per share, flat on a year-over-year basis. However, the figure missed the Zacks Consensus Estimate by 4.8%.
The top line increased 9% year over year to $16.2 million. Higher revenues in Software and Services business segments resulted in this uptick. The top line beat the Zacks Consensus Estimate by 0.9%.
Quarter in Details
Revenues from Software (65% of total quarterly revenues) increased 10% year over year to $10.6 million. Breaking up the revenues of this segment, GastroPlus, MonolixSuite, ADMET Predictor and Other Software contributed 57%, 18%, 19% and 6%, respectively.
Simulations Plus, Inc. Price, Consensus and EPS Surprise
Simulations Plus, Inc. price-consensus-eps-surprise-chart | Simulations Plus, Inc. Quote
Sales of GastroPlus were down 2%. MonolixSuite and ADMET Predictor offerings sales saw increases of 84% and 9% year over year, respectively.
The renewal rate for commercial customers came in at 96% (based upon fees) and 87% (based on accounts) compared with 92% and 87% in the prior quarter, respectively.
Services’ revenues (35% of total quarterly revenues) improved 5% to $5.6 million. Breaking up the services’ revenues, PK/PD, QSP/QST, PB/PK and Other services represented 45%, 23%, 25% and 7%, respectively.
Services’ backlog was $16 million at the end of the reported quarter, down 5.9% year over year.
Operating Details
The gross margin in the quarter under review was 82%, down 100 basis points (bps) on a year-over-year basis. Software segment’s gross margin came in at 91%, down 100 bps from the prior-year quarter’s levels. Services’ gross margin was 63%, down 300 bps from the year-earlier quarter’s figure.
Total operating expenses, as a percentage of revenues, stood at 57% compared with 50% in the year-ago quarter.
Operating income margin was 25% compared with 33% reported in the year-ago period. Adjusted EBITDA margin came in at 40% compared with 43% in the prior-year period.
Balance Sheet
As of May 31, 2023, cash and short-term investments were $122.4 million compared with $115.3 million as of Feb 28, 2023.
The company declared a cash dividend of 6 cents per share payable on Aug 7, to stockholders as of Jul 31.
Fiscal 2023 Outlook
For fiscal 2023, Simulations Plus expects revenue growth of 10-15% year over year and in the range of $59.3-$62 million. The company projects Software and Services to consist 60-65% and 35-40% of revenues, respectively. SLP estimates earnings per share to increase in the band of 5-10% and to be between 63 cents and 67 cents.
Currently, Simulations Plus carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Watts Water Technologies (WTS - Free Report) and Cadence Design Systems (CDNS - Free Report) , currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 3.8% in the past 60 days to $3.58 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have gained 20.7% in the past year.
The consensus mark for Watts Water Technologies’ 2023 earnings is pegged at $7.27 per share, up 1.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 8%.
Watts Water Technologies’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 16.3%. Shares of WTS have increased 20.5% in the past year.
The consensus estimate for Cadence’s 2023 earnings is pegged at $5.00 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.5%.
Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 7.3%. Shares of CDNS have improved 43.2% in the past year.