Simulations Plus, Inc. (NASDAQ:SLP) Q1 2020 Earnings Conference Call - Final Transcript

Jan 09, 2020 • 04:15 pm ET

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Simulations Plus, Inc. (NASDAQ:SLP) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Cameron Donahue

Good afternoon, everyone. On behalf of Simulations Plus, I welcome you to our First Quarter Fiscal Year 2020 Financial Results Conference Call and Webinar.

Hosting the call today are 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 written questions using the questions pane on your control panel or you may use the hand-raising icon on your control panel to ask your questions directly. Please be sure to enter your 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 that involve a number of 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 are 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 the CEO, Shawn O'Connor. Shawn?

Executive
Shawn O'Connor

Thank you, Cameron.

Simulations Plus benefited from continued strong execution on our objectives and unanticipated client driven accelerated timing on several projects to deliver growth that exceeded our plan targets in the first quarter. The 25% top line growth and $0.11 per share earnings represents a strong start to our fiscal year.

As most of you know, over the last six quarters we have increased our investments in several key initiatives, most notably, sales and marketing, with the goal of increasing our historical growth rate of 10% to 15% to a range of 15% to 20%. These investments yielded encouraging results as we navigated fiscal 2019. For the full year 2019 we delivered 15% growth, and in the fourth quarter our growth rate was 20%. We improved on that further in the first quarter of fiscal 2020, delivering 25% revenue growth. This result was largely due to the acceleration of several projects at our North Carolina operation, resulting in higher than expected revenue in the first quarter. While we are not anticipating growth to maintain these levels throughout fiscal 2020, these results validate our expectations of 15% to 20% growth for the full year.

Our increased revenue growth has been driven by both our software and consulting businesses. Software revenues grew 12% during the first quarter, with consulting growth for the quarter at 40%. Gross margins remained strong at 72%, slightly up on gross margins of 71% and 72% in the first and fourth quarters of fiscal 2019, respectively. This was achieved despite richer mix of lower-margin consulting