A：For the fourth quarter and full fiscal 2025, Simulations Plus reported revenue growth of 8% adjusted EBITDA, and adjusted EPS grew 8%. The company delivered on the full-year guidance set in June despite market volatility.

A：During fiscal 2025, Simulations Plus completed its transition to a unified operating model, aligning product and technology, scientific R&D, strategic consulting services, and business development into a single client-focused, functionally oriented organization structure.

A：The external environment was challenging, with client budgets pressured by pharmaceutical headwinds like tariffs and the implementation of most favored nation pricing. However, starting mid-year, there were signs of stabilization as large pharma provided pricing visibility, biotech funding improved, and clients entered budgeting cycles with more confidence.

A：The convergence of these technologies is reshaping biopharma R&D operations by enabling advanced scientific workflows. Simulations Plus is at the forefront of this shift, having laid the groundwork with the release of GastroPlus 10.2 and plans for portfolio-wide updates in fiscal 2026.

A：Customers are seeking scientific rigor, integrated workflows, and AI-assisted efficiency in biosimilars. Simulations Plus is meeting these needs by offering a product vision that connects advanced science, cloud scale computation, AI-driven services, into a unified ecosystem supporting teams through discovery to commercialization.

A：The core strategy for fiscal 2026 is to integrate its product ecosystem, combining validated science, cloud scale performance, and AI grounded in regulatory-grade modeling. This strategy will be realized across products like GastroPlus, Monolith Suite, Admet Predictor, QSP platforms, and proficiency.

A：For the quarter, software revenue was 52% of total revenue with discovery products contributing 18%, development products 77%, and clinical ops products 5%. For the fiscal year, discovery products contributed 17%, development products 75%, and clinical ops products 8%.

A：Simulations Plus ended the fiscal year with 311 commercial clients, an average revenue per client of $94,000, and a renewal rate of 83% for the quarter, with an average revenue per client of $143,000 and a renewal rate of 88% for the fiscal year.

A：Services revenue for the quarter declined compared to the prior year, with Pbk services down 10%, QP services down 50%, PK PD services up 18%, and Medcom services up 70% for the quarter.

A：The total gross margin for the fiscal year was 58%, with software gross margin at 79% and services gross margin at 30%. This compares to total gross margin of 62% and software/services gross margins of 84% and 30% for the prior year.

A：RD expense was 9% of revenue compared to 8% last year, sales and marketing expense was 15% of revenue compared to 13% last year, and G&A expense excluding non-career information items was 25% of revenue, down from 28% last year.

A：The adjusted diluted EPS was 1 dollar 3 this fiscal year compared to 95 cents last year, and the fiscal year adjusted EBITDA was $22 million compared to $20.3 million last year.

A：The company's guidance for fiscal year 2026 is total revenue between 79 to 82 million year over year, revenue growth between 0 to 4%, software mix between 57% to 62%, adjusted EBITDA margin between 26% to 30%, and adjusted diluted earnings per share between 1 dollar 3 cents to 1 dollar 10 cents.

A：The demand environment is expected to have a mixed bag of impacts on the company's business in the upcoming fiscal year, with an uptick in biotech funding supporting their business and mixed results from large pharma. The company enters the new fiscal year on a good footing, cautious and watchful for any market announcements that may cause a pause in client activity.

A：The feedback on the Gastro Plus release, which includes AI capabilities, has been positive, and the company has provided webinars and training to clients prior to its delivery. The impact of this innovation on client discussions is still in an early stage.

A：The initial responses from clients to the new cloud and AI capabilities have been positive, and they are digesting the information and evolving in terms of their internal IT infrastructure.

A：Factors influencing the cautious approach of large pharma in increasing spending include most favored nation pricing, tariffs, and a soft funding environment. These factors are being managed within clients' specific drug programs and top line patent expirations as they budget for the upcoming year.

A：Yes, there is a positive outlook for budget preparation for the upcoming year, and if there are a few consecutive quarters without any surprises, this could lead to increased confidence and more firmly committed spending.

A：The software side of the business is leverageable, and there's capacity for growth without immediate needs in terms of headcount. However, there is some concern about the service side of the business, but the company feels comfortable with current capacity and utilization to support guidance into the next year if business volumes accelerate.

A：Since the guidance was delivered in October, nothing significant has changed in the underlying assumptions that would affect the guidance for fiscal year 2025. The back half of the year's guidance was adjusted due to lower-than-anticipated revenue in the second quarter of fiscal year 2025, resulting in a reduced expectation for the remainder of the year.

A：The guidance does not assume any biotech market recovery, and it already factors in a degree of cancellations. The biotech environment is cautiously optimistic, and any further cancellation projections or cautions for the full year would need to be significant enough to alter the current guidance expectations.

A：There is no significant uptick projected in biotech funding for the year 2026, which would likely affect the biotech revenue contribution in that year.

A：Program readouts and delays can lead to the cancellation or curtailment of programs, which in turn affects the timing and amount of revenue recognized. Bad readouts can result in significant project setbacks, impacting revenue forecasts. The company applies discount factors and risk assessments to account for these delays in their revenue recognition process.

A：Renewal rates declined due to impactful consolidations and budget constraints leading to scrutiny on configurations, resulting in reduced licensing for platforms and modules from clients. However, the absence of major consolidations and the effects of last year's module review are expected to mitigate the impact on renewal rates. Price increases have also been more aggressive this year, which should positively affect renewal fee rates.

A：The new price increase should have a positive effect on renewal fees as the uptake of the annual price increase has been more aggressive this year, which is anticipated to improve renewal fee rates.

A：The expected financial impacts include a $4 million reduction in course contributions starting in the fourth quarter, with the first three quarters of the fiscal year accounting for this benefit. Top line growth is expected to be in the range of 0 to 4%, which is not expected to provide significant leverage in EBITDA due to the rise in other expenses such as compensation and medical benefits. The adjusted EBITDA guidance is 26% to 30%, showing some improvement but requires a return to higher top line growth to reach the targeted 35% EBITDA.

A：The projected revenue decline for the first quarter of fiscal year 26 is through November and is projected to result in a year-over-year decline. Meeting the full-year guidance for fiscal year 26 will require a ramp-up in bookings. The exact impact on the full-year guidance is not detailed, but it is implied that visibility into the revenue decline is quite good.

A：The proficiency platform's revenue is split approximately 40% software and 60% services.

A：Yes, the 2026 guidance does contemplate recent renewal trends, which have been in the low to mid-80s. The increase in renewal rates and revenue guidance includes a year-over-year contribution from these recent trends and a higher price increase implemented this year.

A：Cash flow in fiscal 26 is expected to follow the revenue seasonality pattern, which is robust even during challenging times. The outlook for acquisitions is positive, with opportunities in the biosimilars and clinical operations markets. The company expects to grow through both organic contributions and acquisitions, and there is a plan to continue this growth strategy into the future.

A：The company's pricing is expected to be more aggressive due to upgrades and new platform capabilities including AI and cloud functions. This monetization strategy will come through separately priced modules and integrated technology into base platforms, supporting more aggressive price increases. The pricing flexibility also accounts for the product's stickiness and the ability to share improvements with clients, particularly with the automation and efficiency provided by AI. However, the full impact of price increases is discounted and spread over time, and there's a cautious approach to price increases in the services sector due to market competition.