Simulations Plus (SLP) Q1 2026 earnings summary

Executive summary

• First quarter fiscal 2026 revenue declined 3% year-over-year to $18.4 million, with services revenue up 16% and software revenue down 17%.

• Net income increased to $0.7 million (diluted EPS $0.03), up from $0.2 million (diluted EPS $0.01) in the prior year, driven by improved gross margin and lower general and administrative expenses.

• Gross margin improved to 59% from 54% year-over-year, reflecting lower software amortization and favorable service delivery mix.

• Adjusted EBITDA was $3.5 million (19% margin), with adjusted diluted EPS of $0.13, both meeting expectations.

• Strategic focus remains on building an integrated product ecosystem leveraging validated science, cloud performance, and AI, with positive client response to new AI features.

Financial highlights

• Software revenue was $8.9 million (48% of total), down 17% year-over-year; services revenue was $9.5 million (52% of total), up 16%.

• Gross margin: 59% overall; software gross margin 84%, services gross margin 36%.

• Net income for Q1 FY26 was $0.7 million; adjusted EBITDA margin was 19%, down from 24% in the prior year.

• Cash and short-term investments at quarter-end were $35.7 million, with no debt.

• Operating expenses totaled $10.2 million, with increases in R&D and sales/marketing.

Outlook and guidance

• Fiscal 2026 revenue guidance reaffirmed at $79–$82 million, representing 0–4% year-over-year growth.

• Software revenue mix expected between 57%–62% for the year.

• Adjusted EBITDA margin guidance: 26%–30%; adjusted diluted EPS: $1.03–$1.10.

• Management expects existing cash, investments, and operating cash flow to be sufficient for operating and capital needs for the next 12 months and beyond.

• Q2 revenue expected to be $21–$22 million.