- Revenue & Profit Growth: Fiscal 2025 revenue grew 13% to $79.2M, with adjusted EBITDA up 8% and adjusted EPS up 8%.
- Segment Performance: Software revenue increased 12%, while services revenue rose 15%, despite a 63% decline in Pro-ficiency software revenue in Q4.
- 2026 Guidance: Revenue expected between $79M–$82M, with adjusted EBITDA margin of 26–30% and EPS of $1.03–$1.10, including $4M benefit from a reduction in force.
- AI & Pricing Strategy: GastroPlus AI capabilities drove client excitement; 2026 pricing increases will leverage AI upgrades, targeting long-term 35% EBITDA margins.
- Financial Position: Ended FY2025 with $32.4M in cash, no debt, and a mid-80s software renewal rate, with cautious optimism in biotech and pharma sectors.
Operational Highlights
The company completed its transition to a unified operating model, aligning product and technology, scientific R&D, strategic consulting services, and business development into a single client-focused organization structure. This transformation is expected to drive future growth, with the CEO noting that the company is evolving into a unified ecosystem supporting discovery, development, clinical operations, and commercialization.
Guidance and Outlook
For fiscal year 2026, Simulations Plus expects total revenue to be between $79 million and $82 million, with adjusted EBITDA margin between 26% and 30%. Adjusted diluted earnings per share is expected to be between $1.03 and $1.10. Analysts estimate next year's revenue growth at 1.2%, indicating a slowdown in growth momentum. The company's guidance assumes some challenges in the first quarter due to tough comps, particularly with the Pro-ficiency platform.
Valuation and Pricing
Simulations Plus' current valuation metrics indicate a P/E Ratio of -5.45, a P/S Ratio of 4.28, and an EV/EBITDA of 23.15. The company's plans to introduce more aggressive pricing next year, driven by the rollout of AI capabilities across the platform, are expected to support revenue growth. The pricing increase is part of the upgrades and new platform capabilities, with the monetization of AI functionality coming through separately priced modules and integrated technology.
Business Prospects
The biotech environment is cautiously optimistic, and if funding continues to improve, it could positively impact both software and consulting revenue. However, there is no immediate translation of funding into purchase orders. The company's renewal rate in software remains below previous years, around the mid-80s, due to consolidations and clients scrutinizing module configurations. Nevertheless, this is expected to improve as clients have already undergone scrutiny, and price increases will have a positive effect.