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SimulationsP/us Fiscal Year 2024 Annual Report
Letter from the CEO December 23, 2024 Dear Shareholders, Fiscal 2024 was one of the most transformative years in our 25+ year history. At the forefront of our achievements was acquiring Pro-ficiency, the largest acquisition in our history a milestone that significantly strengthens our market position, broadens our software and services offerings, and doubles our total addressable market (TAM). During the fiscal year, we also launched major product upgrades and strategically optimized our business structure. Importantly, we delivered strong financial performance across both our software and services segments despite a second consecutive year of cost and funding pressures among our pharma and biotech clients, underscoring the resilience, ingenuity, and dedication of our team. These efforts expand our leadership position in the field of biosimulation and life sciences technology solutions, which now span the pharma value chain from drug discovery to commercialization. Throughout the fiscal year, we remained dedicated to our mission to create value for our customers by accelerating R&D efforts and reducing R&D costs through innovative science-based software and consulting solutions that optimize treatment options and improve patient lives. We also strengthened our collaborations with the industry, regulatory agencies, clinical research organizations, and academic institutions critical partnerships that we believe will drive our continued growth, profitability, and long-term success. Enhancing Our Product Portfolio Once again, we demonstrated our ability to continuously innovate and enhance our competitive edge with state-of-theart solutions that empower meaningful advancements in drug discovery and development. Key product upgrades during the fiscal year included: GastroPlus X, GPXTM: Our enhanced Physiologically Based Pharmacokinetic (PBPK) platform features advanced models, refined algorithms, and integrated machine learning technology. GPX delivers faster processing, streamlined workflows, and a more intuitive interface to elevate predictive accuracy. MonolixSuiteTM 2024: This release introduced new integrations and presets, allowing scientists to spend less time programming and more time analyzing models and simulation results. ADMET Predictor 12: The latest version of our AI/ML platform offers improved predictive accuracy, expanded high-throughput pharmacokinetics capabilities, and other cutting-edge features that make it the only software to incorporate PBPK and liver safety predictions into the discovery phase. Robust Financial Performance During the fiscal year, our team delivered revenue growth and diluted earnings per share in-line with our guidance. Key highlights included: Total revenue increased 18% to $70 million and 14% on an organic basis, excluding a modest contribution from Pro-ficiency in the fourth quarter. Software revenue increased 12% to $41 million, representing 59% of total revenue. Services revenue increased 26% to $29 million, representing 41% of total revenue. Gross profit was $43.2 million and gross margin was 62%. Diluted earnings per share was $0.49. Software renewal rate was 93% based on fees and 84% based on accounts, both improving over the prior year along with average software revenue per customer increasing to $129 thousand annually. Expansion Across the Drug Development Value Chain Throughout our history, our successful track record of acquisitions has been instrumental in driving our growth. Our disciplined approach is guided by a three-pronged strategy. First, we aim to address gaps in our software and services portfolio to ensure that our solutions meet the evolving needs of our clients. A prime example of this strategy was the acquisition of Lixoft in 2020, which enhanced our capabilities by expanding our population PKPD modeling functionality. Second, we focus on strengthening existing capabilities, exemplified by our acquisition of Immunetrics in fiscal 2023,
which broadened our Quantitative Systems Pharmacology (QSP) business with immunology and oncology capabilities and whose integration we successfully completed in 2024. And third, we identify adjacent opportunities to expand our TAM with additional solutions across the life sciences ecosystem. In June, we took a significant step by acquiring Pro-ficiency, the most impactful acquisition in our history. This acquisition epitomizes the third prong of our acquisition strategy. By combining innovative adaptive learning techniques with advanced medical communications to support drug development throughout pre-approval and commercialization stages, we have expanded our ability to serve our clients throughout all critical stages of clinical development. As an integral part of our organization, the Pro-ficiency business has been reconfigured into our Adaptive Learning & Insights (ALI) and Medical Communications (MC) business units. ALI empowers drug sponsors to take a more proactive approach to clinical trial training by enhancing the preparedness of sites and investigators responsible for implementing and adhering to protocol requirements. Since the success of clinical trials heavily depends on protocol adherence, these adaptive learning tools offer critical support by providing predictive analytics that allow drug sponsors to address challenges early through targeted additional training or reallocating patients to trial sites with better adherence and performance metrics. MC is designed to support our clients in stimulating awareness, discussion and utilization of their new medical devices, drugs and treatments as a key aspect of pharmaceutical marketing and education. Sponsors rely on MC for gaining insights on their markets and customers, engaging key opinion leaders, and educating researchers and clinicians. This acquisition provides us access to two additional funding sources clinical operations and medical affairs effectively doubling our TAM to $8 billion. It also enhances our ability to serve clients comprehensively across clinical operations, medical affairs, and commercialization. The integration is progressing ahead of schedule with our unified go-to-market strategies and lead generation efforts already driving business development opportunities. With a robust suite of solutions spanning the entire drug development continuum, we believe that this acquisition strengthens our position to drive growth, expand profitability, and deliver meaningful value to stakeholders. Optimizing for Future Growth We announced the optimization of our business unit and leadership structure to support future growth and better serve our clients. We formed two new business units, ALI, led by Jenna Rouse, and MC, led by Murry Alper, to further enhance customer engagement with both legacy and prospective clients. We also promoted Steven Chang to President of QSP, where he will lead the next phase of growth and innovation for this business unit. Additionally, we transitioned Regulatory Strategies into a new Regulatory Strategies Center of Excellence. We are already seeing the benefits of these changes with improved visibility, streamlined operations, and increased cross-selling opportunities. Looking Ahead Reflecting on fiscal 2024, I am proud of our strong operational and financial performance and the transformative milestones we achieved through the staunch support of our employees, clients, and partners. As we enter fiscal 2025, we believe we have the momentum to deliver on our vision to improve health through innovative solutions. We are prioritizing completing the acquisition integration, expanding cross-selling opportunities, and driving towards our historical adjusted EBITDA margin target of 35% to 40% and corresponding profitability levels. I want to extend my sincere gratitude to all who continue to make our company a success. We are excited for the future and remain committed to executing a disciplined growth strategy that delivers long-term value to all stakeholders. Thank you for your continuing trust and support. Best regards, Shawn O Connor Chief Executive Officer
 • shareholder letter icon 12/23/2024 Letter Continued (Full PDF)
 • stockholder letter icon 12/22/2023 SLP Stockholder Letter
 • stockholder letter icon More "Application Software" Category Stockholder Letters
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SLP Shareholder/Stockholder Letter Transcript:

SimulationsP/us
Fiscal Year 2024 Annual Report


Letter from the CEO
December 23, 2024
Dear Shareholders,
Fiscal 2024 was one of the most transformative years in our 25+ year history. At the forefront of our achievements was
acquiring Pro-ficiency, the largest acquisition in our history   a milestone that significantly strengthens our market
position, broadens our software and services offerings, and doubles our total addressable market (TAM). During the fiscal
year, we also launched major product upgrades and strategically optimized our business structure. Importantly, we
delivered strong financial performance across both our software and services segments despite a second consecutive year
of cost and funding pressures among our pharma and biotech clients, underscoring the resilience, ingenuity, and
dedication of our team. These efforts expand our leadership position in the field of biosimulation and life sciences
technology solutions, which now span the pharma value chain from drug discovery to commercialization.
Throughout the fiscal year, we remained dedicated to our mission to create value for our customers by accelerating R&D
efforts and reducing R&D costs through innovative science-based software and consulting solutions that optimize
treatment options and improve patient lives. We also strengthened our collaborations with the industry, regulatory
agencies, clinical research organizations, and academic institutions   critical partnerships that we believe will drive our
continued growth, profitability, and long-term success.
Enhancing Our Product Portfolio
Once again, we demonstrated our ability to continuously innovate and enhance our competitive edge with state-of-theart solutions that empower meaningful advancements in drug discovery and development. Key product upgrades during
the fiscal year included:


GastroPlus   X, GPXTM: Our enhanced Physiologically Based Pharmacokinetic (PBPK) platform features advanced
models, refined algorithms, and integrated machine learning technology. GPX delivers faster processing,
streamlined workflows, and a more intuitive interface to elevate predictive accuracy.
MonolixSuiteTM 2024: This release introduced new integrations and presets, allowing scientists to spend less time
programming and more time analyzing models and simulation results.
ADMET Predictor   12: The latest version of our AI/ML platform offers improved predictive accuracy, expanded
high-throughput pharmacokinetics capabilities, and other cutting-edge features that make it the only software
to incorporate PBPK and liver safety predictions into the discovery phase.
Robust Financial Performance
During the fiscal year, our team delivered revenue growth and diluted earnings per share in-line with our guidance. Key
highlights included:



Total revenue increased 18% to $70 million and 14% on an organic basis, excluding a modest contribution from
Pro-ficiency in the fourth quarter.
Software revenue increased 12% to $41 million, representing 59% of total revenue.
Services revenue increased 26% to $29 million, representing 41% of total revenue.
Gross profit was $43.2 million and gross margin was 62%.
Diluted earnings per share was $0.49.
Software renewal rate was 93% based on fees and 84% based on accounts, both improving over the prior year
along with average software revenue per customer increasing to $129 thousand annually.
Expansion Across the Drug Development Value Chain
Throughout our history, our successful track record of acquisitions has been instrumental in driving our growth. Our
disciplined approach is guided by a three-pronged strategy. First, we aim to address gaps in our software and services
portfolio to ensure that our solutions meet the evolving needs of our clients. A prime example of this strategy was the
acquisition of Lixoft in 2020, which enhanced our capabilities by expanding our population PKPD modeling functionality.
Second, we focus on strengthening existing capabilities, exemplified by our acquisition of Immunetrics in fiscal 2023,

which broadened our Quantitative Systems Pharmacology (QSP) business with immunology and oncology capabilities and
whose integration we successfully completed in 2024. And third, we identify adjacent opportunities to expand our TAM
with additional solutions across the life sciences ecosystem.
In June, we took a significant step by acquiring Pro-ficiency, the most impactful acquisition in our history. This acquisition
epitomizes the third prong of our acquisition strategy. By combining innovative adaptive learning techniques with
advanced medical communications to support drug development throughout pre-approval and commercialization stages,
we have expanded our ability to serve our clients throughout all critical stages of clinical development.
As an integral part of our organization, the Pro-ficiency business has been reconfigured into our Adaptive Learning &
Insights (ALI) and Medical Communications (MC) business units. ALI empowers drug sponsors to take a more proactive
approach to clinical trial training by enhancing the preparedness of sites and investigators responsible for implementing
and adhering to protocol requirements. Since the success of clinical trials heavily depends on protocol adherence, these
adaptive learning tools offer critical support by providing predictive analytics that allow drug sponsors to address
challenges early through targeted additional training or reallocating patients to trial sites with better adherence and
performance metrics. MC is designed to support our clients in stimulating awareness, discussion and utilization of their
new medical devices, drugs and treatments as a key aspect of pharmaceutical marketing and education. Sponsors rely on
MC for gaining insights on their markets and customers, engaging key opinion leaders, and educating researchers and
clinicians.
This acquisition provides us access to two additional funding sources   clinical operations and medical affairs   effectively
doubling our TAM to $8 billion. It also enhances our ability to serve clients comprehensively across clinical operations,
medical affairs, and commercialization.
The integration is progressing ahead of schedule with our unified go-to-market strategies and lead generation efforts
already driving business development opportunities. With a robust suite of solutions spanning the entire drug
development continuum, we believe that this acquisition strengthens our position to drive growth, expand profitability,
and deliver meaningful value to stakeholders.
Optimizing for Future Growth
We announced the optimization of our business unit and leadership structure to support future growth and better serve
our clients. We formed two new business units, ALI, led by Jenna Rouse, and MC, led by Murry Alper, to further enhance
customer engagement with both legacy and prospective clients. We also promoted Steven Chang to President of QSP,
where he will lead the next phase of growth and innovation for this business unit. Additionally, we transitioned Regulatory
Strategies into a new Regulatory Strategies Center of Excellence. We are already seeing the benefits of these changes with
improved visibility, streamlined operations, and increased cross-selling opportunities.
Looking Ahead
Reflecting on fiscal 2024, I am proud of our strong operational and financial performance and the transformative
milestones we achieved through the staunch support of our employees, clients, and partners. As we enter fiscal 2025, we
believe we have the momentum to deliver on our vision to improve health through innovative solutions. We are
prioritizing completing the acquisition integration, expanding cross-selling opportunities, and driving towards our
historical adjusted EBITDA margin target of 35% to 40% and corresponding profitability levels.
I want to extend my sincere gratitude to all who continue to make our company a success. We are excited for the future
and remain committed to executing a disciplined growth strategy that delivers long-term value to all stakeholders.
Thank you for your continuing trust and support.
Best regards,
Shawn O   Connor
Chief Executive Officer



shareholder letter icon 12/23/2024 Letter Continued (Full PDF)
 

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