Simulations Plus, Inc.

Greetings and welcome to the Stimulations Plus Third Quarter Fiscal 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. It is now my pleasure to introduce Lisa Fortuna from Financial Profiles. Ms. Fortuna, you may begin.

Good afternoon, everyone. Welcome to the Simulations Plus Third Quarter Fiscal 2024 Financial Results Conference Call. With me today are Sean O'Connor, Chief Executive Officer, and Will Frederick, Chief Financial Officer and Chief Operating Officer of Simulations Plus. Please note that we updated our quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation on our investor relations website at www.simulations-plus.com. After management's commentary, we will open the call for questions. As a reminder, the information discussed today may include forward-looking statements that involve risks and uncertainties. Words like believe, expect, and anticipates refer to our best estimates as of this call, and actual future results could differ significantly from these statements. 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, I'll turn the call over to Sean O'Connor. Please go ahead.

Thank you, Lisa. Good afternoon, everyone, and thank you for joining our third quarter fiscal 2024 conference call. Results for the third quarter of fiscal 2024 were in line with our internal guidance. Strong performance in both our software and services segments delivered solid revenue growth of 14%, diluted earnings per share of 15 cents, and adjusted diluted earnings per share of 19 cents. Given our solid performance in the first nine months and the acquisition of proficiency, we are in track to achieve our recently revised full-year revenue gains. As we noted last quarter, The market funding environment continues to improve over last year. Biotech funding is starting to show signs of recovery, most notably for companies that have drug candidates in the clinic. We continue to be cautiously optimistic about our large pharmaceutical client spending. Right now, we see a range of spending panders among large pharmaceutical companies. Some are increasing expenditures. Others remain conservative. and with most falling somewhere in between, depending on various internal and external market factors. Overall, the market is in a better position today compared to a year ago. Moving to our software segment, software revenues increased 12% in the third quarter and were up 14% for the nine-month period. We saw good renewals, upsells, and new logo activity, However, there has been some impact from ongoing churn in small biotech and the Asian market still continues to lag overall market growth. Our chem informatics business unit delivered 15% revenue growth in the third quarter and 12% for the fiscal year today. This quarter's growth was once again driven by higher revenues for Admin Predictor. Additionally, There were 15 new customers and 10 upsells for this business unit in Q3. Our physiologically-based pharmacokinetics, or PBPK, business unit had a 7% revenue increase in the third quarter and 9% for the fiscal year to date. The PBPK business unit added 14 new customers and booked eight upsells with existing customers. We were excited to launch GPX, the next generation of physiologically-based pharmacokinetics, biopharmaceutics, modeling, and simulation software, and believe it will become a meaningful addition to our suite of leading-edge solutions. Initial client reaction has been very positive. Our clinical pharmacology and pharmacometrics, or CPP, business unit grew 13% during the quarter. and 18% for the fiscal year to date. During the quarter, we added 13 new customers and had three customer upsells. Revenues in our quantitative systems pharmacology or QSP business unit increased 80% for the quarter and 78% for the fiscal year to date. As a reminder, quarterly results can be lumpy for QSP based on the high ticket price per license and a smaller pool of end users. Turning to our services segment, revenues increased 18% during the third quarter and 21% for the nine-month period, with solid bookings and a healthy pipeline of active opportunities. Our large pharma clients continue to exhibit cautious spending patterns, but we're seeing good lead activity, which is a positive sign. Total backlog at the end of the third quarter was $19.6 million, which is a robust level as we enter the final quarter of our fiscal year. Services revenues in our CPP business unit were strong, up 27% in the third quarter and 16% for the fiscal year to date. In our QSP business unit, services revenue grew 49% in the third quarter and 74% for the nine-month period. benefiting from immunology and oncology model projects. Services revenue in our PVPK business unit decreased 10% for the third quarter and increased 4% for the fiscal year to date. We continue to encounter client source data delays impacting the initiation of contracted projects. Moving on to our recent news, on June 12th, we announced the acquisition of Proficiency, a leader in providing simulation-enabled performance and intelligence solutions for clinical and commercial drug development. The acquisition brings together our collective expertise in simulations, AI technologies, and a focus on science, creating a one-of-a-kind platform that spans across the drug development continuum. Although it's only been a few weeks, we're pleased that the proficiency, integration, and collaboration are progressing in line with our internal plan and schedule. Additionally, our customers are showing interest in learning more. We will be able to provide a fuller update on our year-end call in October. With that, I'll turn the call over to Will.