Simulations Plus, Inc. (NASDAQ:SLP) Q2 2019 Earnings Conference Call Transcript

Apr 09, 2019 • 04:15 pm ET

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Simulations Plus, Inc. (NASDAQ:SLP) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Cameron Donahue

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 historical information, the matters discussed in this presentation are forward-looking statements that involve numerous risk and uncertainties. The actual results of the Company could differ significantly from those 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 the 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 said, I'd like to turn the call over to CEO, Shawn O'Connor. Shawn?

Executive
Shawn O'Connor

Thank you, Cameron. Simulations Plus delivered another strong quarter with double-digit revenue growth at the high end of our historical annual organic growth range of 10% to 15%. The revenue growth was achieved along with good profitability and excellent cash flow. Of note for the second quarter, our consulting business accelerated its revenue growth pace after a relatively slow first quarter. Our Buffalo division delivered 23% year-over-year revenue growth for the second quarter, its highest growth quarter since 2017. In addition, as we discussed in our last call, we closed on several new business opportunities at the end or right after the close of our last quarter. Specifically, we received approval for Phase II of the SBIR grant for DILIsym's build of the RENAsym platform. After the end of the first quarter, DILIsym also closed on a $2.7 million agreement with a large pharma company for the build of an IPF mechanistic model. These two projects commenced in the second quarter and supported the achievement of 25% revenue growth in the RTP division. Demand for services remains high across all three divisions.

We're making strategic investments in our organization to drive future growth and made good progress on these initiatives in the second quarter. We added an additional business development individual to our software business and hired a senior scientific resource into our consulting practice, with business development expertise. We experienced success in our consulting recruiting efforts in a very competitive market, increasing our consulting staff by 7% in the quarter and 15% year-over-year. Additionally, we have placed three consultants in Europe during the quarter in support of increasing our physical presence in this market. Overall, we made good progress on all key initiatives and I am encouraged with the results and the team we have in place.

With regard to our financial results for the Company as a whole, our revenue increased 15% for the quarter and 11% year-to-date, both metrics are in line with our historical annual growth range of 10%