Simulations Plus, Inc. (NASDAQ:SLP) Q1 2019 Earnings Conference Call Transcript

Jan 09, 2019 • 04:15 pm ET


Simulations Plus, Inc. (NASDAQ:SLP) Q1 2019 Earnings Conference Call Transcript


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Cameron Donahue

Good afternoon, everyone. Thank you for joining us. Hosting the call today is Simulations Plus's CEO, Shawn O'Connor, and the company's CFO, John Kneisel.

Before beginning, I'd like to remind everyone that with the exception of the historical information, the matters discussed in this presentation are forward-looking statements that involve a number of risks and uncertainties.

The actual results of the company could differ significantly from these statements. Factors that can cause or contribute to such differences include, but are not limited to, continuing demand for the company's products, competitive factors, the company's ability to finance future growth, the company's ability to produce and market new products in a timely fashion, the company's ability to continue to attract and retain skilled personnel and the company's ability to sustain or improve current levels of productivity.

Further information on the company's risk factors is contained in the company's quarterly and annual reports and filed with the Securities and Exchange Commission.

With that, I'd like to turn the call over to Shawn O'Connor. Shawn?

Shawn O'Connor

Thank you, Cameron. This was a strong start to what we expect to be another record year for Simulations Plus. We continued our long tradition of profitable growth and returning capital to shareholders. We delivered a record $7.5 million in revenue for the first quarter, up 6.6% compared to the same quarter in the prior fiscal year. Our software revenue growth was strong for the quarter at 10% versus the same period last year.

Our consulting revenues were up 3% for the quarter compared to last year, constrained by resource capacity and two key project initiatives that slipped out of the quarter. Overall, our 6.6% revenue growth in the first quarter of 2019 is in line with our historical annual revenue growth in the 10% to 15% range on an annual basis.

The two key projects initiations I referred to are both in our DILIsym division. The first, our RENAsym project that is funded by the previously-announced $1.7 million SBIR grant completed it's Phase 1 effort during the quarter, at which point review of the effort was required before initiating Phase 2. Work effort was suspended, awaiting Phase 2 approval, which was not received until after quarter-end. Phase 2 which includes $0.9 million of funding for 2019, has now been initiated and is fully staffed.

The second is a new contract with a large pharmaceutical company that closed just recently. Under this agreement, DILIsym will develop a QSP model that will provide the ability to predict efficacy of drugs being developed to treat idiopathic pulmonary fibrosis. The development is funded by our large pharmaceutical company partner for up to $2.7 million over the next two-plus-year time frame. Upon completion, DILIsym will retain the rights to the model to market on a software licensing or consulting service basis to the rest of the industry. We expect this project to contribute significantly to 2019 revenues.

Demand for our consulting services remained strong and these are just two examples of that demand. I