Simulations Plus, Inc. (NASDAQ:SLP) Q3 2019 Earnings Conference Call Transcript

Jul 10, 2019 • 04:15 pm ET

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Simulations Plus, Inc. (NASDAQ:SLP) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Cameron Donahue

Good afternoon, everyone. On behalf of Simulations Plus, I welcome you to our Third Quarter Fiscal Year 2019 Financial Results Conference Call and Webinar. Hosting the call today, Simulations Plus' CEO, Shawn O'Connor; and the company's CFO, John Kneisel.

An opportunity to ask questions will follow today's presentation. You may send your written questions using the questions pane on the control panel or you may use the hand-raising icon on your control panel to ask your questions directly. Please be sure to enter the unique audio PIN displayed when you join the call.

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 and involve numerous risks 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, continued 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 contained in the company's quarterly and annual reports and filed with the Securities and Exchange Commission.

With that said, let's return the call to Shawn O'Connor. Shawn?

Executive
Shawn O'Connor

Thank you, Cameron. This was a very strong quarter for Simulations Plus. We made excellent progress with regard to our key initiatives for the year and our financial results are reflective of the return on these investments with increased revenue growth and profitability during the quarter. As we have previously discussed, we have historically grown revenues in the 10% to 15% range, excluding the effects of acquisitions. We have been focused on delivering at the high-end of that range and in the long-run beyond that range.

Our third quarter revenue growth at 16% demonstrates good execution on this objective, especially compared to fiscal year '18 Q3 growth of 11% adjusted for last year's acquisition source growth.

Our software revenue growth achieved record levels in this, our largest seasonality renewal quarter. Our consulting revenue growth accelerated to 39% year-over-year, reflecting the growth of our service capacity through successful recruiting efforts and the significant projects related to RENAsym and IPF, which initiated late last quarter. We have made progress with respect to each of our key initiatives.

During the quarter, we hired another senior consulting scientist with business development skills, who is scheduled to start with us in the fourth quarter. Not including this addition, we grew the consulting staff by three during the quarter and have now increased the company's consulting staff by 22% year-over-year. This capacity growth is critical to our efforts to meet the strong demand for services across all three divisions.

I'm especially pleased with our efforts to coordinate our sales and marketing effort across each of the divisions, which is beginning to deliver