Simulations Plus, Inc.

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 anticipate 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. In the remarks or responses to questions, management may mention some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in the most recent earnings release available on the company's website. Please refer to the reconciliation tables in the accompanying materials for additional information. With that, I'll turn the call over to Sean O'Connor. Please go ahead.

Thank you, and Happy New Year to everyone. We delivered on the first quarter top line guidance we communicated in December, with revenue decreasing 3% as expected. Adjusted EBITDA was 3.5 million, and adjusted EPS was 13 cents, in line with our internal expectations. Turning to the macro environment, the positive trends we cited last quarter continued to present themselves. At the global level, most favored nation pricing agreements are moving forward, Tariff threats have subsided, and the biotech funding environment is improving. At the regulatory level, the FDA recently issued NAM guidelines for review, as well as support of in silico methodologies. We begin to see an uptick in spending at the client level, which is reflected in good performance in our services segment, both revenue and bookings. We've experienced an acceleration in year-end spending, and this increase is encouraging since improvement in services typically precedes an increase in software activity. Our priorities in fiscal 2026 are to advance the progress we've made toward an integrated product ecosystem that combines three strengths of Simulations Plus, validated science, cloud-scale performance, and AI that is grounded in regulatory-grade modeling. Across GastroPlus, Monolix Suite, AdMet Predictor, our QSP platforms, and proficiency, we are driving innovation through advanced science, ongoing investment in the scientific engines trusted by global regulators in leading R&D organizations, a connected ecosystem, seamless interoperability across products powered by the S-Plus Cloud ecosystem, enabling end-to-end modeling workflows from discovery through clinical development. AI-driven services, intelligent tools that enhance data curation, accelerate simulation analysis, and simplify regulatory compliant reporting. AI and human collaboration, co-pilots and reusable modules that boost efficiency, consistency, and turnaround times for scientists and consultants alike. These advancements aren't theoretical. They directly address customer pain points and align with the industry's trajectory. More importantly, they position us to deliver new capabilities to the market faster and with greater cohesion than ever before. With that, I'll turn the call over to Will.

Thank you, Sean. To recap our first quarter performance, Total revenue decreased 3% to $18.4 million. Software revenue decreased 17%, representing 48% of total revenue. And services revenue increased 16%, representing 52% of total revenue. Turning to the software revenue contribution from our products for the quarter, discovery products, primarily AdMet Predictor, were 15%. Development products, primarily GastroPlus and Monolix Suite, were 81%. And clinical ops products, primarily Proficiency, were 4%. On a trailing 12-month basis, discovery products were 18%, development products were 77%, and clinical ops products were 5%. We ended the quarter with 302 commercial clients, achieving an average revenue per client of $97,000. and 88% renewal rate for the quarter. On a trailing 12-month basis, we achieved average revenue per client of $147,000, and our renewal rate was 87%. During the quarter, software revenue and renewal rates continued to be impacted by market conditions and client consolidations. Specifically, discovery revenue increased 3% for the quarter and for the trailing 12-month period. Development revenue declined 6% for the quarter and grew 1% for the trailing 12-month period. Clinical operations revenue declined 82% for the quarter and 28% for the trailing 12-month period. Shifting to our services revenue contribution by solution for the quarter, development which includes our biosimulation services represented 71% of services revenue. And commercialization, which includes our MEDCOM services, represented 29%. The revenue contributions for the trailing 12-month period were 74% and 26%, respectively. Total services projects worked on during the quarter were 186, and ending backlog increased 18% to 20.4 million from 17.3 million last year. Overall, we have a healthy pipeline of services projects. Services revenue for the quarter increased compared to the prior year, primarily due to the strong contribution in our MedCom business. Specifically, development services grew 8% during the quarter and declined 5% for the trailing 12-month period. Commercialization services grew 42% during the quarter and 191% for the trailing 12-month period. Total gross margin for the first quarter was 59%, with software gross margin of 84%, and services gross margin of 36%. On a comparative basis, total gross margin for the prior period was 54%, with software gross margin of 75%, and services gross margin of 26%. The increase in software gross margin was primarily due to the lower clinical ops revenue and the increase in services gross margin was attributable to the prior year reduction in force and the reorganization of services personnel to support product development efforts. Other income was 0.3 million for the quarter compared to 0.1 million last year, primarily due to higher interest income. Income tax expense was 0.3 million compared to income tax expense of 0.1 million last year, And our effective tax rate was 30% compared to 24% last year. Moving to our balance sheet, we ended the quarter with $35.7 million in cash and short-term investments. We remain well capitalized with no debt and strong free cash flow as we continue to execute our growth and innovation strategy. Our guidance for fiscal year 2026 remains the same as previously provided. 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 $1.03 to $1.10. We anticipate second quarter revenue to be approximately 21 to 22 million. I'll now turn the call back to Sean.