Simulations Plus, Inc. (SLP)
SIC breadcrumb: Services > Business Services > SIC 7373 Services-Computer Integrated Systems Design
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1023459. Latest filing source: 0001023459-25-000060.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 79,179,000 | USD | 2025 | 2025-12-01 |
| Net income | -64,718,000 | USD | 2025 | 2025-12-01 |
| Assets | 131,936,000 | USD | 2025 | 2025-12-01 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-12-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001023459.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.
| Metric | 2011 | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 53,906,000 | 59,577,000 | 70,013,000 | 79,179,000 | ||||||||
| Net income | 4,950,136 | 5,787,597 | 8,934,812 | 8,583,000 | 9,332,000 | 9,782,000 | 12,483,000 | 9,961,000 | 9,954,000 | -64,718,000 | ||
| Operating income | 7,231,806 | 8,264,284 | 10,297,788 | 10,648,000 | 11,605,000 | 11,253,000 | 14,911,000 | 8,725,000 | 6,131,000 | -70,729,000 | ||
| Gross profit | 15,370,566 | 17,830,113 | 21,672,296 | 24,944,000 | 30,940,000 | 35,866,000 | 43,084,000 | 47,947,000 | 43,151,000 | 46,221,000 | ||
| Diluted EPS | 0.29 | 0.33 | 0.50 | 0.48 | 0.50 | 0.47 | 0.60 | 0.49 | 0.49 | -3.22 | ||
| Operating cash flow | 5,415,209 | 6,877,739 | 9,287,188 | 11,637,000 | 10,912,000 | 19,203,000 | 17,900,000 | 21,856,000 | 13,320,000 | 18,126,000 | ||
| Capital expenditures | 39,121 | 175,961 | 183,291 | 138,000 | 231,000 | 1,627,000 | 819,000 | 453,000 | 566,000 | 713,000 | ||
| Dividends paid | 3,413,274 | 3,448,489 | 4,161,740 | 4,197,000 | 4,250,000 | 4,811,000 | 4,846,000 | 4,809,000 | 4,796,000 | 0.00 | ||
| Share buybacks | 2,048,172 | 0.00 | 0.00 | 0.00 | 20,000,000 | 0.00 | 0.00 | |||||
| Assets | 27,814,317 | 38,512,000 | 43,279,016 | 45,196,697 | 168,422,000 | 179,978,000 | 188,382,000 | 186,101,000 | 196,639,000 | 131,936,000 | ||
| Liabilities | 5,081,723 | 12,707,581 | 11,356,391 | 7,515,093 | 12,387,000 | 14,196,000 | 10,134,000 | 16,072,000 | 14,208,000 | 7,135,000 | ||
| Stockholders' equity | 22,732,594 | 25,804,887 | 31,922,625 | 37,681,000 | 156,035,000 | 165,782,000 | 178,248,000 | 170,029,000 | 182,431,000 | 124,801,000 | ||
| Cash and cash equivalents | 8,030,284 | 6,215,718 | 9,401,000 | 11,434,000 | 49,207,000 | 36,984,000 | 51,567,000 | 57,523,000 | 10,311,000 | 30,853,000 | ||
| Free cash flow | 5,376,088 | 6,701,778 | 9,103,897 | 11,499,000 | 10,681,000 | 17,576,000 | 17,081,000 | 21,403,000 | 12,754,000 | 17,413,000 |
Ratios
| Metric | 2011 | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net margin | 23.16% | 16.72% | 14.22% | -81.74% | ||||||||
| Operating margin | 27.66% | 14.64% | 8.76% | -89.33% | ||||||||
| Return on equity | 21.78% | 22.43% | 27.99% | 22.78% | 5.98% | 5.90% | 7.00% | 5.86% | 5.46% | -51.86% | ||
| Return on assets | 17.80% | 15.03% | 20.64% | 18.99% | 5.54% | 5.44% | 6.63% | 5.35% | 5.06% | -49.05% | ||
| Liabilities / equity | 0.22 | 0.49 | 0.36 | 0.20 | 0.08 | 0.09 | 0.06 | 0.09 | 0.08 | 0.06 | ||
| Current ratio | 5.98 | 6.20 | 3.69 | 4.42 | 23.45 | 12.04 | 18.98 | 10.88 | 3.26 | 7.67 |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-10. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001023459.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2020-Q2 | 2020-02-29 | 10,349,863 | reported discrete quarter | ||
| 2020-Q3 | 2020-05-31 | 12,298,036 | reported discrete quarter | ||
| 2022-Q3 | 2022-05-31 | 0.20 | reported discrete quarter | ||
| 2023-Q1 | 2022-11-30 | 0.06 | reported discrete quarter | ||
| 2023-Q2 | 2023-02-28 | 0.20 | reported discrete quarter | ||
| 2023-Q3 | 2023-05-31 | 4,008,000 | 0.20 | reported discrete quarter | |
| 2023-Q4 | 2023-08-31 | 534,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2024-Q1 | 2023-11-30 | 1,945,000 | 0.10 | reported discrete quarter | |
| 2024-Q2 | 2024-02-29 | 4,029,000 | 0.20 | reported discrete quarter | |
| 2024-Q3 | 2024-05-31 | 18,544,000 | 3,137,000 | 0.15 | reported discrete quarter |
| 2024-Q4 | 2024-08-31 | 18,664,000 | 843,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2024-11-30 | 18,924,000 | 206,000 | 0.01 | reported discrete quarter |
| 2025-Q2 | 2025-02-28 | 22,432,000 | 3,074,000 | 0.15 | reported discrete quarter |
| 2025-Q3 | 2025-02-28 | 3,074,000 | reported discrete quarter | ||
| 2025-Q3 | 2025-05-31 | 20,363,000 | -3.35 | reported discrete quarter | |
| 2025-Q4 | 2025-08-31 | 17,460,000 | -681,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2025-11-30 | 18,421,000 | 676,000 | 0.03 | reported discrete quarter |
| 2026-Q2 | 2025-11-30 | 676,000 | reported discrete quarter | ||
| 2026-Q2 | 2026-02-28 | 24,291,000 | 0.22 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001023459-26-000016.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Overview Our clients face many challenges. Developing new therapies is time-consuming and expensive, requiring an average of 10-15 years and an average cost of approximately $2.2 billion to develop a single drug. Drug sponsors must prioritize not only efficacy and safety of the drug, but also issues like drug-drug interactions, inclusion of patients representative of the indicated population, regulatory approvals, minimization of animal testing, safety and compliance during clinical trials, and commercial success. Our clients face many macro-economic issues including the current attention on global drug pricing resulting in temporary reduction in R&D spending on the part of pharmaceutical and biotech companies. Our MIDD software and services allow clients to use modeling and simulation to accelerate drug development, reduce the costs of R&D, comply with regulatory guidance and best practices, and increase confidence in the safety and efficacy of their drugs and biologics. Our adaptive learning solutions support the success of clinical trials by accelerating recruitment of an appropriate patient population, increasing retention of participants, and by driving competency and compliance with trial protocols, while our medical communications solutions provide support in obtaining regulatory approval and commercialization of drugs. The Company is headquartered in Research Triangle Park, North Carolina, and has a European office in Paris, France. The Company has a remote work culture that supports employee work-life balance and minimizes its carbon footprint. Table of Contents Forward-Looking Statements This document and the documents incorporated in this document by reference contain forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact contained in this document and the materials accompanying this document are forward-looking statements. The forward-looking statements are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. Frequently, but not always, forward-looking statements are identified by the use of the future tense and by words such as “believes,” “expects,” “anticipates,” “intends,” “will,” “may,” “could,” “would,” “projects,” “continues,” “estimates,” or similar expressions. Forward-looking statements are not guarantees of future performance and actual results could differ materially from those indicated by the forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by the forward-looking statements. The forward-looking statements contained or incorporated by reference in this document are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements include declarations regarding our plans, intentions, beliefs, or current expectations. Among the important factors that could cause actual results to differ materially from those indicated by forward-looking statements are the risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on December 1, 2025, and elsewhere in this document and in our other filings with the SEC. Forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this document are made as of the date of this document and we do not undertake any obligation to update forward-looking statements to reflect new information, subsequent events, or otherwise. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Table of Contents Results of Operations Comparison of Three Months Ended February 28, 2026, and February 28, 2025 (in thousands) Three Months Ended % of Revenue February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025 $ Change % Change Revenues Software $ 14,635 $ 13,484 60 % 60 % $ 1,151 9 % Services 9,656 8,948 40 % 40 % 708 8 % Total revenues 24,291 22,432 100 % 100 % 1,859 8 % Cost of revenue Software 1,648 2,587 7 % 12 % (939) -36 % Services 6,500 6,718 27 % 30 % (218) -3 % Total cost of revenues 8,148 9,305 34 % 41 % (1,157) -12 % Gross profit 16,143 13,127 66 % 59 % 3,016 23 % Research and development 3,470 2,143 14 % 10 % 1,327 62 % Sales and marketing 2,930 3,717 12 % 17 % (787) -21 % General and administrative 4,113 4,555 17 % 20 % (442) -10 % Total operating expenses 10,513 10,415 43 % 46 % 98 1 % Income from operations 5,630 2,712 23 % 12 % 2,918 108 % Other income, net 256 796 1 % 4 % (540) -68 % Income before income taxes 5,886 3,508 24 % 16 % 2,378 68 % Income tax expense (1,351) (434) -6 % -2 % (917) 211 % Net income $ 4,535 $ 3,074 19 % 14 % $ 1,461 48 % Revenues Revenues increased by $1.9 million, or 8%, to $24.3 million for the three months ended February 28, 2026, compared to $22.4 million for the three months ended February 28, 2025. This increase is primarily due to a $1.2 million, or 9% increase, in software-related revenue and a $0.7 million, or 8%, increase in service-related revenue when compared to the three months ended February 28, 2025. The software-related revenue increase of $1.2 million, or 9%, compared to the three months ended February 28, 2025, was primarily due to a $1.2 million increase in revenue from Development solutions, $0.4 million increase in revenue from Discovery solutions, partially offset by a $0.5 million decline in revenue from Clinical Operations solutions. The service-related revenue increase of $0.7 million, or 8%, compared to the three months ended February 28, 2025, was primarily due to organic revenue growth of $0.8 million from Development solutions. Cost of revenues Cost of revenues decreased by $1.2 million, or 12%, for the three months ended February 28, 2026, compared to the three months ended February 28, 2025. This decrease is primarily due to a $0.9 million, or 36%, decrease in software-related costs, partially offset by a $0.2 million, or 3%, increase in service-related costs. The software-related costs decrease of $0.9 million, or 36%, compared to the three months ended February 28, 2025, was primarily due to less amortization of $0.8 million following the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025. The service-related costs increased $0.2 million, or 3%, compared to the three months ended February 28, 2025; the increase was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to revenue growth also reflected improved operating efficiency from headcount reductions implemented in the third quarter of fiscal 2025, and organizational changes that shifted certain internal resources from supporting services to research and development. Table of Contents Gross profit Gross profit increased $3.0 million, or 23% to $16.1 million for the three months ended February 28, 2026, compared to $13.1 million for the three months ended February 28, 2025. This increase was primarily driven by higher revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, improved billable utilization, and higher average yields. Software gross profit increased by $2.1 million to 89% gross margin compared to 81% gross margin for the three months ended February 28, 2025. This improvement was primarily driven by increased software-related revenue, particularly from Development and Discovery solutions, and lower software-related costs, largely reflecting reduced amortization expense following the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025. Services gross profit increased by $0.9 million to 33% gross margin compared to 25% gross margin for the three months ended February 28, 2025. The increase was primarily attributable to higher services revenue from increased client services activity within Development solutions, as well as improved operating efficiency driven by headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields. Overall gross margin was 66% for the three months ended February 28, 2026, compared to 59% for the three months ended February 28, 2025, primarily due to higher software and services revenues, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields. Research and development We incurred $4.3 million of research and development costs during the three months ended February 28, 2026. Of this amount, $0.8 million was capitalized as part of capitalized software development costs, and $3.5 million was expensed. We incurred $2.9 million of research and development costs during the three months ended February 28, 2025. Of this amount, $0.8 million was capitalized, and $2.1 million was expensed. Research and development spend increased by $1.3 million, or 46%, for the three months ended February 28, 2026, compared to the three months ended February 28, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. The increase was primarily attributable to higher personnel-related costs, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives. R&D spend as a percentage of revenue increased to 14% for the three months ended February 28, 2026, from 10% for the three months ended February 28, 2025, representing our continued investment in innovation for future growth. Total R&D cost (defined as capitalized R&D plus R&D expense) was 18% of revenue for the three months ended February 28, 2026, compared to 13% for the three months ended February 28, 2025. Sales and marketing expenses Sales and marketing expenses decreased by $0.8 million, or 21%, to $2.9 million for the three months ended February 28, 2026, compared to $3.7 million for the three months ended February 28, 2025. Sales and marketing as a percentage of revenue, decreased to 12% for the three months ended February 28, 2026, from 17% for the three months ended February 28, 2025. The decrease is attributable to the headcount reduction implemented in the third quarter of fiscal 2025. General, and administrative expenses G&A expenses decreased by $0.4 million, or 10%, to $4.1 million for the three months ended February 28, 202 [Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis is intended to assist the reader in understanding our results of operations and financial condition. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements beginning on page F-1 of this Report. This Report includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act. All statements, other than statements of historical fact, included in this Report that address activities, events or developments that we expect, project, believe, or anticipate will or may occur in the future, including matters having to do with expected and future revenue, our ability to fund our operations and repay debt, business strategies, expansion and growth of operations and other such matters, are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. These statements are subject to a number of assumptions, risks and uncertainties, including general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by us, our performance on our current contracts and our success in obtaining new contracts, our ability to attract and retain qualified employees, and other factors, many of which are beyond our control. You are cautioned that these forward-looking statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in such statements.
Executive Overview
Our clients face many challenges. Developing new therapies is time-consuming and expensive, requiring an average of 10-15 years and an average cost of approximately $2.2 billion to develop a single drug. Drug sponsors must prioritize not only efficacy and safety of the drug, but also issues like drug-drug interactions, inclusion of patients representative of the indicated population, regulatory approvals, minimization of animal testing, safety and compliance during clinical trials, and commercial success.
Our MIDD software and services allow clients to use modeling and simulation to accelerate drug development, reduce the costs of R&D, comply with regulatory guidance and best practices, and increase confidence in the safety and efficacy of their drugs and biologics. Our adaptive learning solutions support the success of clinical trials by accelerating recruitment of an appropriate patient population, increasing retention of participants, and by driving competency and compliance with trial protocols, while our medical communications solutions provide support in obtaining regulatory approval and commercialization of drugs.
The Company was previously headquartered in Southern California; however, in support of the Company's remote work culture and plan to reduce excess office space to achieve its carbon footprint reduction targets, the Company fully exited four office locations in Lancaster, California; Raleigh, North Carolina; Buffalo, New York; and Pittsburgh, Pennsylvania. As a result, the company moved its headquarters from Lancaster, California, to Research Triangle Park, North Carolina, and also maintains a European office in Paris, France.
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Results of Operations
Comparison of fiscal years ended 2025 and 2024
(in thousands)
Years ended
% of Revenue
August 31, 2025
August 31, 2024
August 31, 2025
August 31, 2024
$ Change
% Change
Revenue
$
79,179
$
70,013
100
%
100
%
$
9,166
13
%
Cost of revenue
32,958
26,862
42
%
38
%
6,096
23
%
Gross profit
46,221
43,151
58
%
62
%
3,070
7
%
Research and development
6,884
5,754
9
%
8
%
1,130
20
%
Sales and marketing
11,904
8,915
15
%
13
%
2,989
34
%
General and administrative
20,941
22,351
26
%
32
%
(1,410)
(6)
%
Impairments
77,221
—
98
%
NM
77,221
NM
Total operating expenses
116,950
37,020
148
%
53
%
79,930
216
%
(Loss) income from operations
(70,729)
6,131
(89)
%
9
%
(76,860)
(1,254)
%
Other income, net
1,352
6,280
2
%
9
%
(4,928)
(78)
%
(Loss) income before income taxes
(69,377)
12,411
(88)
%
18
%
(81,788)
(659)
%
Income tax benefit (expense)
4,659
(2,457)
6
%
(4)
%
7,116
(290)
%
Net (loss) income
$
(64,718)
$
9,954
(82)
%
14
%
$
(74,672)
(750)
%
Revenues
Revenues increased by $9.2 million, or 13%, to $79.2 million for the fiscal year ended August 31, 2025, compared to $70.0 million for the fiscal year ended August 31, 2024. This increase is attributable to twelve months of revenue or $11.7 million from the Pro-ficiency acquisition in fiscal year ended August 31, 2025, versus $2.3 million in fiscal year ended August 31, 2024.
Cost of revenues
Cost of revenues increased by $6.1 million, or 23%, for the fiscal year ended August 31, 2025, compared to the fiscal year ended August 31, 2024. This increase is primarily due to a $3.2 million or 49%, increase in software-related cost and a $2.9 million or 14%, increase in service-related costs. The software-related costs increase of $3.2 million or 49%, compared to the fiscal year ended August 31, 2024, was primarily due to $1.8 million from amortization of developed technology from the acquisition of Pro-ficiency, and $1.1 million of higher amortization of capitalized software cost driven by the release of GastroPlus in May 2024, offset by a decrease of $0.4 million of fully amortized TSRL in the third quarter of fiscal year 2024. The service-related costs increase of $2.9 million or 14%, compared to the fiscal year ended August 31, 2024, was primarily due to additional pass-through cost of $4.2 million, offset by $1.4 million of lower accrued bonuses due to Company performance.
Gross profit
Gross profit increased by $3.1 million, or 7%, to $46.2 million for the fiscal year ended August 31, 2025, compared to $43.2 million for the fiscal year ended August 31, 2024.
Overall gross margin percentage was 58% and 62% for the fiscal year ended August 31, 2025 and August 31, 2024, respectively. Gross margin decline is largely attributable to the underperformance of Pro-ficiency revenues.
Research and development
We incurred $9.8 million of R&D costs during the fiscal year ended August 31, 2025. Of this amount, $3.0 million was capitalized as a part of capitalized software development costs and $6.9 million was expensed. We incurred $9.0 million of research and development costs during the fiscal year ended August 31, 2024. Of this amount, $3.3 million was capitalized and $5.8 million was expensed. R&D spend increased by $0.8 million, or 9%, for the fiscal year ended August 31, 2025,
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Table of Contents
compared to the fiscal year ended August 31, 2024. The increase is mainly attributable to R&D spend of $1.1 million due to increased headcount in fiscal year ended August 31, 2025 compared to the fiscal year ended August 31, 2024. R&D spend as a percentage of revenue remained consistent at 8% to 9% range for both periods.
Sales and marketing expenses
Sales and marketing expenses increased by $3.0 million, or 34%, to $11.9 million for the fiscal year ended August 31, 2025, compared to $8.9 million for the fiscal year ended August 31, 2024. This corresponds to a 2% increase in sales and marketing expense as a percentage of revenue. The increase was primarily due to increased headcount costs of $1.3 million, $0.8 million increases to commissions to distributors, $0.5 million in higher event-related spending to enhance brand awareness and client engagement, $0.3 million incurred to support our business development efforts, and increased sales commission to employees of $0.2 million, offset by decrease in bonus expense of $0.3 million.
General, and administrative expenses
G&A expenses decreased $1.4 million, or 6%, to $20.9 million for the fiscal year ended August 31, 2025, compared to $22.4 million for the fiscal year ended August 31, 2024. This corresponds to 5% decrease in G&A expense as a percentage of revenue. The decrease is primarily driven by $2.7 million in mergers and acquisition expense, decrease in facility costs of $0.3 million driven by a reduction in office spaces, and a decrease of $0.4 million in bonus expense, offset by an increase in reorganization expense of $0.7 million in charges in connection with the restructuring, consisting of severance payments, employee benefits, and related costs, increase in $0.4 million of office space restructuring costs due to lease terminations, and an increase of $0.9 million from increased headcount.
Impairments
During the fiscal year ended August 31, 2025, the Company identified the underperformance of revenue at certain reporting units relative to forecasts utilized in purchase price allocations and the significant stock price decline in relative terms and comparison to peers as a triggering event as of May 31, 2025, indicating goodwill, other intangibles and long-lived assets may be impaired. As a result of the impairment test performed, the Company determined goodwill, other intangibles and certain long-lived assets were impaired for its Software and Services reporting units and recorded impairment charges of $37.1 million and $40.1 million, respectively. No impairment was recognized for the fiscal year ended August 31, 2024.
Other income
Total other income was $1.4 million for the fiscal year ended August 31, 2025, compared to total other income of $6.3 million for the fiscal year ended August 31, 2024. The decrease of $4.9 million is due to the decrease in interest income of $3.7 million, $1.0 million decrease in the fair value of the Immunetrics earnout liability, and a decrease of $0.4 million due to a foreign currency exchange.
Income tax benefit (expense)
Income tax benefit was $4.7 million for the fiscal year ended August 31, 2025, compared to income tax expense of $2.5 million for the fiscal year ended August 31, 2024. Our effective tax rate decreased to 7% for the fiscal year ended August 31, 2025 from 20% for the fiscal year ended August 31, 2024 primarily due to the permanent item associated with the impairment of goodwill made during the fiscal year ended August 31, 2025.
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Comparison of fiscal years ended 2024 and 2023
(in thousands)
Years ended
% of Revenue
August 31, 2024
August 31, 2023
August 31, 2024
August 31, 2023
$ Change
% Change
Revenue
$
70,013
$
59,577
100
%
100
%
$
10,436
18
%
Cost of revenue
26,862
11,630
38
%
20
%
15,232
131
%
Gross profit
43,151
47,947
62
%
80
%
(4,796)
(10)
%
Research and development
5,754
4,504
8
%
8
%
1,250
28
%
Sales and marketing
8,915
6,558
13
%
11
%
2,357
36
%
General and administrative
22,351
27,660
32
%
46
%
(5,309)
(19)
%
Impairments
—
500
—
%
1
%
(500)
(100)
%
Total operating expenses
37,020
39,222
53
%
66
%
(2,202)
(6)
%
Income from operations
6,131
8,725
9
%
15
%
(2,594)
(30)
%
Other income, net
6,280
2,970
9
%
5
%
3,310
111
%
Income before income taxes
12,411
11,695
18
%
20
%
716
6
%
Provision for income taxes
(2,457)
(1,734)
(4)
%
(3)
%
(723)
42
%
Net income
$
9,954
$
9,961
14
%
17
%
$
(7)
—
%
Revenues
Revenues increased by $10.4 million, or 18%, to $70.0 million for the fiscal year ended August 31, 2024, compared to $59.6 million for the fiscal year ended August 31, 2023. This increase is due to an increase of $4.5 million, or 12%, in software-related revenue primarily driven by higher revenues from Monolix™ of $1.3 million, higher revenues from GastroPlus® of $1.0 million, higher revenues from QSP of $0.5 million, higher revenues from ADMET Predictor® of $0.4 million, and incremental revenues from ALI of $1.1 million. $5.9 million, or 26%, of the overall increase in revenues is due to an increase in service-related revenues, primarily driven by higher revenues from QSP services of $3.2 million, higher revenues from CPP services of $2.0 million, offset by lower revenues from PBPK services of $0.4 million.
Cost of revenues
Cost of revenues increased by $15.2 million, or 131%, for the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023. This corresponds to an 18% increase in cost of revenue as a percentage of revenue. $6.8 million of the increase in cost of revenues is due to the reorganization of our internal structure from divisions based on prior acquisitions to business units organized around key product and service offerings. As part of this reorganization, we evaluated our departmental structure with a focus on continuing to improve operational performance and profitability while providing our investors improved visibility to our progress. Accordingly, we moved all services personnel into cost of revenues departments, moved all research and development personnel into research and development expense departments, moved all sales and marketing personnel into sales and marketing expense departments, and moved all general and administrative personnel into general and administrative (“G&A”) expense departments. These movements completed the final step toward consolidating the Company from the various acquired company divisions to a company-wide business unit structure. $6.8 million of the increase in cost of revenues corresponds to a $6.8 million decrease in G&A expenses discussed below from the reorganization reclassification. $3.0 million of the increase in cost of revenues is due to the acquisition of Pro-ficiency. $1.6 million of the increase in cost of revenues is due to a full year's recognition of expenses associated with the acquisition of Immunetrics in June 2023. $2.8 million of the increase is due to compensation-related increases, primarily attributable to the addition of scientific headcount as well as general annual salary adjustments for existing employees.
Gross profit
Gross profit decreased by $4.8 million, or 10%, to $43.2 million for the fiscal year ended August 31, 2024, compared to $47.9 million for the fiscal year ended August 31, 2023. The decrease in gross profit is primarily due to a decrease in gross profit for our services business of $6.5 million, or 43%, primarily resulting from the reorganization of our internal structure as well as additional services headcount from the Pro-ficiency acquisition, partially offset by an increase in gross profit for our software business of $1.7 million, or 5%, reflecting the strong revenue growth and operating leverage of our software
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business.
Overall gross margin percentage was 62% and 80% for the fiscal year ended August 31, 2024, and 2023, respectively.
Research and development
We incurred $9.0 million of R&D costs during the fiscal year ended August 31, 2024. Of this amount, $3.2 million was capitalized as a part of capitalized software development costs and $5.8 million was expensed. We incurred $7.8 million of research and development costs during the fiscal year ended August 31, 2023. Of this amount, $3.3 million was capitalized and $4.5 million was expensed. R&D spend increased by $1.2 million, or 16%, for the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023. The increase is mainly due to an increase of $0.5 million from the acquisition of Immunetrics, and an increase of $0.3 million from the acquisition of Proficiency. R&D spend as a percentage of revenue is consistent at 13% for both periods.
Sales and marketing expenses
Sales and marketing expenses increased by $2.4 million, or 36%, to $8.9 million for the fiscal year ended August 31, 2024, compared to $6.6 million for the fiscal year ended August 31, 2023. This corresponds to a 2% increase in sales and marketing expense as a percentage of revenue. The increase was primarily due to an increase of $0.9 million of compensation-related increases driven by an increase in stock compensation expense of $0.3 million, the addition to our team of a Chief Revenue Officer, sales commissions on the strong revenue growth year over year, and general annual salary adjustments for existing employees. Additionally, the acquisitions of Pro-ficiency and Immunetrics, increased sales and marketing expenses by $0.6 million and $0.3 million, respectively.
General and administrative expenses
G&A expenses decreased $5.3 million, or 19%, to $22.4 million for the fiscal year ended August 31, 2024, compared to $27.8 million for the fiscal year ended August 31, 2023. This corresponds to 14% decrease in G&A expense as a percentage of revenue. The decrease is primarily driven by a $6.8 million shift from G&A expense to cost of revenues, as referenced above, due to the reorganization of our internal structure from divisions based on prior acquisitions to business units organized around key product and service offerings and a decrease of $1.1 million in mergers and acquisition expense, offset by an increase of $0.7 million from the acquisition of Pro-ficiency, an increase of $0.5 million from the acquisition of Immunetrics, an increase of $1.0 million in compensation costs due to general annual salary adjustments for existing employees, an increase in professional fees of $0.3 million, an increase in software license costs of $0.2 million, and an increase in amortization of internal-use software of $0.1 million.
Other income
Total other income was $6.3 million for the fiscal year ended August 31, 2024, compared to total other income of $3.0 million for the fiscal year ended August 31, 2023. The increase is primarily due to a decrease of $2.3 million in the fair value of the earnout liability related to the Immunetrics acquisition. The decrease in the fair value of the earnout liability is attributable to a partial earnout attainment for the first earnout measurement period and more modest revenue projections for the second earnout measurement period. The earnout target for the first measurement period was $4.0 million, however, based on revenue attainment, we only paid $2.5 million in March 2024 for the first earnout measurement period. As a result of the partial attainment, there is a catch-up opportunity for the second measurement period's earnout payment to increase from the target of $4.0 million to $5.5 million. Additionally, part of the increase is due to a foreign currency exchange gain of $0.4 million for the fiscal year ended August 31, 2024 compared to a foreign currency exchange loss of $0.5 million for the fiscal year ended August 31, 2023, and an increase in interest income of $0.2 million from our investments in debt securities driven by an increase in interest rates.
Income tax expense
The provision for income taxes was $2.5 million for the fiscal year ended August 31, 2024, compared to $1.7 million for the fiscal year ended August 31, 2023. Our effective tax rate increased to 20% for the fiscal year ended August 31, 2024 from 15% for the fiscal year ended August 31, 2023 primarily due to a larger return to provision adjustment in the fiscal year ended August 31, 2023 which lowered the effective tax rate in that year. This effect was partially offset by lower state income taxes during the fiscal year ended August 31, 2024.
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Liquidity and Capital Resources
Our principal sources of capital have been cash flows from our operations. We expect existing cash, cash equivalents, short-term investments, cash generated by ongoing operations, and working capital will be sufficient to fund our operating activities and cash commitments for investing and financing activities and material capital expenditures for the next 12 months and beyond.
We continue to seek opportunities for strategic acquisitions, investments, and partnerships. If one or more strategic opportunities are identified, a substantial portion of our cash reserves may be required to complete the transaction. If we identify an attractive strategic opportunity that would require more cash to complete than we are willing or able to use from our cash reserves, we may consider financing options to complete the transaction, including obtaining loans or selling our securities. Additionally, our quest for strategic opportunities could result in a significant change to our liquidity position and/or our results of operations if any such transactions are completed.
Except as discussed elsewhere in this Annual Report, we are not aware of any trends or demands, commitments, events, or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets.
Cash, Cash Equivalents, and Investments
As of August 31, 2025, the Company had $30.9 million in cash and cash equivalents, $1.5 million in short-term investments, and net working capital of $44.8 million. Short-term investments consist of highly liquid investment-grade fixed-income securities, diversified among industries and issuers. The investments are U.S.-dollar-denominated securities. Our fixed-income investments are exposed to interest rate risk and credit risk. The settlement risk related to these investments is insignificant, given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities and can readily be converted to cash when needed.
Cash Flows
Operating Activities
Net cash provided by operating activities was $18.1 million for the fiscal year ended August 31, 2025, compared to $13.3 million for the fiscal year ended August 31, 2024. The increase was driven by an increase in working capital of $1.6 million, primarily related to favorable changes in prepaid income taxes and prepaid expenses and an increase in operating results of $3.2 million (defined as net (loss) income adjusted for non-working capital items).
Net cash provided by operating activities was $13.3 million for the fiscal year ended August 31, 2024. Our operating cash flows resulted in part from our net income of $10.0 million, which was generated by cash received from our clients, offset by cash payments we made to third parties for their services and employee compensation. In addition, $4.2 million related to changes in balances of operating assets and liabilities was subtracted from net income and $7.6 million related to non-cash charges was added to net income to reconcile to cash flow from operations.
Investing Activities
Net cash provided by investing activities during the fiscal year ended August 31, 2025, was $3.6 million, primarily due from maturities of short-term investments of $14.0 million and sale of short-term investments of $1.0 million, partially offset by the purchase of short-term investments of $6.5 million, computer software development costs of $2.6 million, and issuance of a promissory note for $1.0 million.
Net cash used in investing activities during the fiscal year ended August 31, 2024, was $54.0 million, primarily due to the acquisition of Pro-ficiency of $98.8 million, purchase of short-term investments of $67.2 million and computer software development costs of $3.2 million, offset by proceeds from maturities of short-term investments of $71.1 million, and proceeds from sales of investments of $45.2 million.
Financing Activities
Net cash used in financing activities during the fiscal year ended August 31, 2025, was $1.1 million, primarily due to payment of $1.6 million for the holdback related to the Immunetrics acquisition, partially offset by proceeds from the exercise of stock options totaling $0.4 million.
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Net cash used in financing activities during the fiscal year ended August 31, 2024, was $6.6 million, primarily due to dividend payments totaling $4.8 million and the first cash earnout payments in the aggregate amount of $2.5 million to the former equity holders and employees of Immunetrics, partially offset by proceeds from the exercise of stock options totaling $0.7 million.
Share Repurchases
For the fiscal years ended August 31, 2025, and August 31, 2024, respectively, we did not repurchase any shares of Company stock. As of August 31, 2025, $30 million remains available for additional repurchases under our authorized repurchase program. However, we are not obligated to repurchase any additional shares, and the timing, manner, price, and actual amount of further share repurchases will depend on a variety of factors, including stock price, market conditions, other capital management needs and opportunities, and corporate and regulatory considerations. The share repurchase program has no expiration date but may be terminated at any time at our Board of Directors’ discretion.
Critical Accounting Estimates
Estimates
Our financial statements and accompanying notes are prepared in accordance with GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Actual results could differ from those estimates. Critical Accounting Estimates for us include revenue recognition, accounting for capitalized software development costs, accounting for intangible assets and goodwill, valuation of stock options, business acquisitions and accounting for income taxes.
Revenue Recognition
We generate revenue primarily from the sale of software licenses, providing consulting services, and customizing a software platform tailored to the pharmaceutical industry for drug development.
The Company determines revenue recognition through the following steps:
i.Identification of the contract, or contracts, with a client
ii.Identification of the performance obligations in the contract
iii.Determination of the transaction price
iv.Allocation of the transaction price to the performance obligations in the contract
v.Recognition of revenue when, or as, the Company satisfies a performance obligation
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Contracts generally have fixed pricing terms and are not subject to variable pricing. The Company considers the nature and significance of each specific performance obligation under a contract when allocating the proceeds under each contract. Accounting for contracts includes significant judgment in the estimation of hours/cost to be incurred on consulting contracts, and the de minimis nature of the post-sales costs associated with software sales.
Capitalized Computer Software Development Costs
Software development costs are capitalized in accordance with ASC 985-20, “Costs of Software to Be Sold, Leased, or Marketed.” Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized computer software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in the Company’s software products. Total capitalized computer software development costs were $3.0 million, $3.3 million, and $3.3 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively.
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Amortization of capitalized computer software development costs is calculated on a product-by-product basis on the straight-line method over the estimated economic life of the products, not to exceed five years. Amortization of software development costs amounted to $3.1 million, $2.1 million, and $1.5 million for the fiscal years ended August 31, 2025, 2024, and 2023 respectively. We expect future amortization expense to vary due to variations in capitalized computer software development costs.
We test capitalized computer software development costs for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Intangible Assets and Goodwill
We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and recognize the assets acquired and liabilities assumed at their acquisition-date fair value. Acquired intangible assets include client relationships, software, trade names, and noncompete agreements. We determine the appropriate useful life of intangible assets by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits are expected to be consumed. Finite-lived intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. Goodwill and indefinite-lived intangible assets are tested for impairment on the last day of the fiscal year or when events or circumstances change that would indicate that they might be impaired. Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations.
Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment.
The company announced the reorganization of its internal structure at the end of the third quarter of fiscal 2025, and reorganized the internal structure to align products and services into integrated solution areas. The Company changed the composition of our reporting units under ASC 350, Intangibles - Goodwill and Other as part of our Q4 2025 reorganization. Because each former reporting unit moved in its entirety into a single new reporting unit, the related carrying amounts, including goodwill, were carried forward without reallocation. Consistent with ASC 350, we evaluated goodwill immediately before and immediately after the change and assessed the fair value to be the same.
Prior to the reorganization, the Company had nine reporting units, Cheminformatics ("CHEM") software, Physiologically Based Pharmacokinetics ("PBPK") software, PBPK services, Clinical Pharmacology and Pharmacometrics ("CPP") software, CPP services, Quantitative Systems Pharmacology ("QSP") software, QSP Services, Adaptive Learning & Insights ("ALI") software, and Medical Communications ("MC") services. Following the reorganization, management began to review operating performance and allocate resources based on two new reporting units, Software and Services.
The former reporting unit's goodwill and net assets directly combine into the new reporting units, and as such, the Company did not reassign goodwill to the new reporting units.
Former reporting unit
New reporting unit
CHEM - Software
Software
PBPK - Software
QSP - Software
CPP - Software
ALI - Software
PBPK - Services
Services
QSP - Services
CPP - Services
MC - Services
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When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired, known as Step 0. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we would calculate the estimated fair value of the reporting unit using discounted cash flows or a combination of discounted cash flow and market approaches. The Company performed a qualitative assessment immediately after the reorganization and determined that no indicators of impairment existed.
The change in reporting units did not impact the Company’s consolidated financial statements for prior periods. However, beginning in the fourth quarter of fiscal 2025, segment results and goodwill disclosures reflect the new reporting unit structure.
No impairment losses were recorded during the fiscal year ended August 31, 2024. As of August 31, 2023, we recognized a $0.5 million impairment charge for the Cognigen trade name, as management determined we will no longer use the Cognigen trade name.
Business Acquisitions
The Company accounted for the acquisitions using the acquisition method of accounting where the assets acquired and liabilities assumed are recognized based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses, and cash flows, weighted-average cost of capital, discount rates, and estimates of terminal values. Business acquisitions are included in the Company's consolidated financial statements as of the date of the acquisition.
Research and Development Costs
R&D costs are charged to expense as incurred until technological feasibility has been established, or when the costs are for maintenance and minor modification of existing software products that do not add significant new capabilities to the products. These costs include salaries and benefits, laboratory experiments, and purchased software that was developed by other companies and incorporated into, or used in the development of, our final products.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been included in the financial statements or tax returns.
Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.
Stock-Based Compensation
The Company accounts for stock options in accordance with ASC 718-10, “Compensation-Stock Compensation.” Under this method, compensation costs include the estimated grant-date fair value of awards amortized over the options’ vesting period. Stock-based compensation costs, not including shares issued to directors for services, were $6.1 million, $6.0 million, and $4.3 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively.
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