Simulations Plus Beats Q2 Estimates but Slashes Full-Year Profit Guidance

Simulations Plus (NASDAQ: SLP) delivered a beat on both the top and bottom lines for its fiscal second quarter, though the positive momentum was offset by a downward revision to its full-year earnings guidance. The medical technology firm saw its shares edge up 0.4% following the announcement, as investors weighed strong quarterly growth against a dampened outlook for the remainder of the fiscal year. The company reported revenue of $24.3 million, an 8% increase year-over-year, significantly exceeding analyst expectations of $21.7 million. Software revenue grew 9% to $14.6 million, while services revenue also rose 8%. Non-GAAP net income climbed 13% to just over $7 million, resulting in earnings of $0.35 per share, beating the consensus estimate of $0.31. Management attributed the growth in software revenue to the popularity of its discovery and development solutions, although this was partially offset by a dip in clinical operations software. Services revenue was primarily driven by development solutions. Despite the quarterly success, management reduced its adjusted net income forecast to a range of $0.75 to $0.85 per share, down from the previous estimate of $1.03 to $1.10. The company attributed this cut to a higher effective tax rate, though it maintained its full-year revenue guidance between $79 million and $82 million.