Simulations Plus (SLP) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue increased 8% year-over-year to $24.3 million, with both software and services segments contributing to growth.

• Net income rose to $4.5 million (EPS $0.22), up from $3.1 million in Q2 2025, and adjusted diluted EPS was $0.35.

• Adjusted EBITDA reached $8.7 million (36% margin), meeting or exceeding internal expectations.

• AI integration and strategic collaborations with large pharmaceutical companies remain a focus, supporting an AI-driven biosimulation ecosystem.

• Market conditions were favorable, with improved client spending, strong software renewals, and robust bookings driving performance.

Financial highlights

• Gross margin improved to 66% in Q2 2026, up from 59% in Q2 2025, with software gross margin at 89% and services at 33%.

• Software revenue rose 9% to $14.6 million (60% of total), services revenue up 8% to $9.7 million (40% of total).

• Six-month revenue grew 3% to $42.7 million, with net income up 59% to $5.2 million.

• Cash and short-term investments totaled $41.8 million at quarter end, with no debt.

• Operating cash flow for the six months was $10.6 million, up from $4.4 million in the prior year.

Outlook and guidance

• Fiscal 2026 revenue guidance is $79–$82 million (0–4% growth), with software mix expected at 57–62%.

• Adjusted EBITDA margin guidance is 26–30%.

• Adjusted diluted EPS guidance was lowered to $0.75–$0.85 due to a higher effective tax rate (23–25%).

• Q3 2026 revenue expected at $20–$22 million, adjusted EBITDA margin 27–33%, adjusted diluted EPS $0.20–$0.27.

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