Simulations Plus, Inc. (NASDAQ:SLP) Q2 2020 Earnings Conference Call - Final Transcript

Apr 09, 2020 • 04:15 pm ET


Simulations Plus, Inc. (NASDAQ:SLP) Q2 2020 Earnings Conference Call - Final Transcript


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Good afternoon, everyone. On behalf of Simulations Plus, I welcome you to our Second Quarter Fiscal Year 2020 Financial Results Conference Call and Webinar. Hosting the call today is Simulations Plus's CEO, Shawn O'Connor; and the Company's CFO, John Kneisel. Our quarterly earnings release should be available momentarily and expect to have this before we get into the main details of the earnings call today. An opportunity to ask questions will follow today's presentation. [Operator Instructions]

Before beginning, I would like to remind everyone that with 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 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 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?

Shawn O'Connor

Thank you, Cameron. This was certainly an eventful and historical quarter for Simulations Plus and for all of us. I'd like to start the call by expressing my hope that you and your families are all healthy and safe in these uncertain times. While we all may be feeling a bit unbound at this point, I encourage everyone to adhere to the guidelines and precautions to keep you and your families best-protected during these times. Thankfully, the impact of the COVID pandemic on us here at Simulations Plus has been relatively minimal to date. I will elaborate on the COVID impact and our response later in the call. But first, I'd like to comment with regard to our recently announced acquisition and operating results for the quarter.

Subsequent to the end of the quarter, we acquired Lixoft of Paris, France, the developer of the highly regarded Monolix Suite. Monolix is a PKPD modeling platform that supports the pharmacometricians workflow with data exploration to model fitting through to clinical trial simulations. This acquisition does several things for us. First, it immediately expands our presence in Europe with 12 new employees and strong experienced executive management. Second, it rebalances our mix of software and consulting revenues following two acquisitions of businesses that are more weighted to consulting.

Lixoft revenues are 99% annual software licenses with consistently higher renewal rates, which we believe will benefit from our sales and marketing channels. Third, Lixoft has historically turned away consulting opportunities, and we believe that we will be able to respond to this market opportunity with our consulting resources, creating a new source of revenue. And finally, the acquisition is immediately accretive