Q4 2020 Simulations Plus Inc Earnings Call
In listen only mode and oil rate for the year remained at 93%.
Additionally, discussions are ongoing with three of these software clients and the potential for incremental module and door collaboration business in their new budget budget year.
Last year, we experienced some slippage of software renewals from Q3 to Q4 clients that fully renewed but did not complete the process timely, resulting and sequential revenue growth last year of 4% and 17% and Q3 and Q4.
This impacted the fourth quarter.
Year over year growth rate this year with no real impact in annual revenue growth or renewals.
New customer license growth has continued to be slow down by Cove. It. However, these opportunities appear to be delayed not lost and we expect some level of pent up demand as things normalize.
On the consulting side.
Revenue source by our daily some Qs T services began to accelerate late last year and peaked in the first quarter of this year and 138% growth.
As a result of project timing and mix. These deli some Q.S.P. service revenues were down 4% and the fourth quarter compared to last year.
Fiscal year 20 full year growth for delay some qsb services was great at 42%. This quarter's growth is reflected of reflective of the larger in nature and timing of delay some qsb projects and resulting revenue recognition and they're up.
Our overall revenue growth expectations remain unchanged.
I'll speak later in the call about overall companywide revenue growth expectations, which again remain unchanged.
Let me speak to each of our software and consulting service segments first with regard to our software business.
[noise] are softer revenues represented approximately 52% of total revenue compared to 55% last year.
For the full year of monolithic suite revenue, we expect software to move back to and perhaps above the 55% plus level in fiscal year 21.
Gastroplus continues to serve as our flagship product and generates the largest individual portion and portion of our software revenue.
You can see the contributions of ADMET predictor, and and new contribution from monolithic suite, which contributed only five months of revenue since we closed the acquisition in April.
For the full year of revenue contribution and fiscal 21, we anticipate monolithic suite will contribute approximately 10% of our total revenue.
During fiscal year 20, we advance the science and client value of our industry, leading TV PK and machine learning platforms and broadened our offerings with the acquisition of them on a like sweet.
Today, we offer our clients leading modeling platforms across the spectrum of modeling techniques utilized and the drug development process.
During the year, we entered into 12 R&D collaborations with the FDA and large pharma companies for enhancements and features and functionalities of our software such.
Such endeavors contribute significantly to the expansion of capabilities increased use cases, which drive demand and solidify our standing with the regulatory bodies and our customers.
Combined with our own R&D investment, we have maintained our leadership position for a modeling platforms.
[noise] Gastroplus Gastroplus remains well established as the leading PBPK modeling platform and the industry.
We recently released Gastroplus version 9.8, which includes the industry's first mechanistic model for intra articular delivery and a revamped virtual bio equivalents trial simulation engine to address many of the requirements published in the FDA and new regulatory guidance document on PBB EM and.
Applications.
ADMET predictor.
During September we released version 10.0, and <unk> of ADMET predictor, which we will market as ATX.
He enhancements and in a P. acnes include.
A new AI de de module for AI, driven drug design using multi objective compound optimization integrated was physiologically based pharmacokinetic models on.
A new transporters module containing machine learning models for pivotal transporters under regulatory guidance.
Significant improvements to the H.T. PK simulation module driven by our strategic collaboration with a large pharmaceutical partner.
Multi threading capabilities for all prediction processes, including mechanistic H.T. PK simulations.
The new AI de de module was released with a P.X. is they said separately price module use with ADMET predictor functionality.
We also entered into a collaboration with a pharmaceutical company to evaluate and validates the new AI de de module on computational chemists worked with the partners team to define the multi day objective parameters against which sold lead molecules needed to be optimized we're pleased with the value demonstrated and this partnership.
To date.
[noise] monolithic suite.
October we released monolithic suite 2020, our one.
Amongst the new features included and this release is a new semi likes module.
It is a powerful and flexible simulator for clinical trial farmer could come metrics.
And then easy to use interface and.
In addition, it allows for a complete modeling and simulation work flow from data analysis, and non compartmental analysis to population modeling and simulation with fully interoperable applications.
And I'm, saying collaboration between sales and marketing functions, including integrating Malik sweet sales and marketing into the simulations plus infrastructure and training our consultants to use them on the links to facilitate future cross selling.
With regard to a few other key metrics for our software business.
It's previously commented porn or fourth quarter renewal rate on fees were impacted by the for clients, who reduce their renewals by about 25% and brought their metric down for the quarter to 88%.
At the same time, we saw lower than usual churn and our academic a non-profit accounts, resulting and a higher renewal rate based upon accounts.
For the year, we maintained our high renewal rate at 93% and expect this trend to continue into fiscal year 21.
[noise] during fiscal 20, our new software license clothes rate was slowed and this is reflected and our new customer metrics for the fourth quarter compared to last year.
That said, we finish the full year with an increase and new software <unk> customers compared to the prior year.
And when we focus on a commercial clients, who contribute 94% of our software revenues.
Our net commercial software client count and revenue grew 16%.
And our number of customers, whose license value to us exceeds 100000 grew 40%.
Let me shift now do our consulting business.
Our services revenue grew at 30% for the full year compared to 21% growth last year.
For fiscal year, 20, or consulting revenues were sourced twenty-three per cent of total revenues from P. K P. D services, which are primarily delivered by cognition.
15% of our total revenues from Q S. P. U S T services delivered by day Lisa.
And 10% of our total revenues from P. B P. K services delivered primarily by our Lancaster group.
A consulting business continues to perform well with strong revenue growth and profitability, we support our clients use a modeling and simulation to positively impact their drug development programs through both the outsourcing of their modeling and simulation needs as well as and addressing specific issues encountered and development <unk>.
Grams.
And we're particularly pleased when we are able to contribute to regulatory achievements that advanced special specific drug programs.
Recent examples of this include.
The F D a approval <unk> and which daily some modeling predicted liver safety profile supporting it's advanced to phase three clinical trials and ultimate approval without labeling warnings were the first to drugs and class failed due to significant liver toxicity.
The F D a approval of Pepsi tired and and.
The first and since the medic therapy for treatment of nomadic tennis, and <unk> tumors or daily some liver toxicity analysis supported it's N D. A.
And finally, the inclusion of daily some liver safety analysis and the scientific review of the state of California Office of Environmental Health Hazard assessment and.
And Ah set up <unk>.
These are but a few of the examples from which modeling and analysis has and simulation analysis, it's impacting our clients interactions with regulatory agents.
During fiscal 20, we introduced two new service offerings regulatory strategies headed up by Sandra swore a sharp who joined US after a long tenure with the F D. A the.
The objective of the services is more strategic versus data analysis, and assisting our clients on how to derisk and accelerate their interactions with global regulatory agencies.
Covid strategies many of our clients have obviously focus their efforts on the development of potential therapies.
And for Covid.
[noise] during the past quarter, we were engaged and multiple discussions related to these programs and have recently closed several contracts and this area.
And finally, we continue to grow our capacity to meet the needs of our clients day.
During fiscal year 20, the consulting staff grew by approximately 22% and support of our project growth and positioning as well for fiscal year 21.
We.
Weighted strong growth from each of our consulting sources during the overall and driving the overall, 30% growth rate for a consulting businesses and fiscal year 20.
P. K P. D consulting revenues grew 24% for the year Q S. P. U S. T consulting revenues grew 42% for the year and P. B P. K consulting revenue screw 30% for the year.
The diversification of our consulting revenue sources is important and smooth and consulting revenue fluctuate fluctuations.
And finally, our consulting backlog continues to exceed $10 million at the end of the year on.
The slowdown and a new contracts because of COVID-19 prevented us from growing backlog and the year, we're still well positioned as we enter fiscal year 21.
And he turned to our physical twenty-one outlook. Our goal is to maintain fiscal year 21 organic growth and the 15% to 20% range in line with the 18% organic growth, we delivered and fiscal year 20.
And physical your 21 incremental licks off revenue could contribute and additional 3% to 5% of revenue growth on top of the organic growth and.
Any revenue contributed by acquisitions closed and fiscal year 21, what is wealthy incremental to this.
Certainly the pandemic will continue to create headwinds as we and a fiscal year 21.
New software license customers and new consulting service contracts will continue to close at a slower than historical pace.
Currently and the budgeting season for most of our clients and we've observed and participate and and their efforts, which is often included reallocation of R&D spend to accommodate their ongoing investment and COVID-19 related therapies. We.
We expect that this budgetary process when complete will provide some stability to programs that over recent times have been on hold awaiting decisions.
We're targeting software growth of 20% to 25% up from the 16% and fiscal year 2020.
This growth rate is based on the new version of 9.8 release of Gastroplasty and.
And and physical 21, we expect the release version and 10, which we will market is G P X and.
<unk> add me predictor growth, which <unk>, which accelerated and fiscal year 20 will carry momentum into fiscal year 21.
And have additional revenue opportunity with the new E. I D D module.
On a like sweet is performing well and tracking to their 15 and 30% growth rates as anticipated and there are not agreement.
We're rolling out a modest price increase and changes and a discount policies and finally, our focus on cross selling initiatives will help us accelerate software growth.
Higher sales and marketing resource and infrastructure investments are now being focused on strategic sales and <unk> and initiatives that will provide benefits.
On the consulting side, we anticipate growth rate and fiscal year.
Our growth rate and fiscal year, 20, or 30% to be and the 25% to 30% and fiscal 21.
We see continued demand across the our services with P. K P D and P. B P K services remaining consistent.
Joyce and demand is expected to settle into a more consistent delivery a project flow with a growth rate and line with historical trends growth.
Growth will continue to benefit from the continued success of a regulatory assistance offering and the Covid strategies program.
Overall I expect the accelerated growth, we have delivered and fiscal 20 to continue into fiscal year 21.
Finally, let me speak briefly to R. M and a strategy. We are actively engaged and M. Any efforts focused on a population of targets that we believe could add value to our growth.
Sure and sort of value to our client base the.
The targets consist of both software entities that extend our modeling and simulation application offering portfolio.
And service opportunities, which provide new service capabilities.
<unk> and to our service capacity and geographic coverage.
We have been successful and our historical M&A efforts and large part due to our focus and rigor and evaluating acquisitions. We continue to adhere to strict acquisition criteria that include product and culture fit enhancement of value to our clients and.
Inappropriate valuation and accretive characteristics.
I'm pleased with the progress so we've made for today and excited about the size and quality of the pipeline that said, we plan to move methodically and cautiously with the goal of continuing our M&A successes safeguarding shareholder capital and creating sustainable balance.
I'll now turn the call over to John to review some detailed financial results John Alright.
Alright, Thank you, Sean and good and good afternoon to everyone.
Oh.
Arkansas All day to net revenues for the fourth quarter of fiscal your 20, we're up 19% to 9.5 million compared to $8 million and the prior year quarter and.
Organic basis, which excludes the salt.
Liquid Lick soft acquisition Ah Ah revenue grew 7% Charlotte indicated organic growth was lowered primarily due to for clients redo some licenses as a result of acquisitions site consolidations and Laos.
In addition, and the last two of the four quarters plus sales with work expected and clothes on the third quarter, and instead slipped and into the fourth quarter as well our daily from division of from Sofa revenues came on fire.
A certain projects and celebrated and to.
224 19.
Bill expected to be delivered and on the 20th 20 fiscal year.
Sorry about that folks.
Both ultimately affected the growth rate and the fourth quarter.
The general sectors, we operate and software and life science pharmaceutical attended to maintain momentum and the myths the pandemic.
So was Shawn message and we face modest headwinds and security and new accounts and we've experienced some smaller.
Renewables due to a site consolidations and some of our customer sites.
Consolidated software and software related sales increased 919000 or 24% over the fourth quarter of 19.
Looks off so you'll software sales accounting for this increase is organic sales are relatively flat during the 30th.
Consolidated consulting and analytical studies increased about 600000 or 14% over the prior year.
Cost of revenue that increased 17% or $384000, resulting mainly from increases and labor related costs, which would partially offset by a decrease and direct expenses on contract.
And less of the consulting projects required lab testing.
And during this quarter.
In addition, we saw lower customer training related cost is most training was completed virtually due to COVID-19 restrictions.
Total gross profit and increased 20% to 6.9 million, representing a 72% gross margin and and the fourth quarter of this fiscal year compared to a gross margin about 71% and the same on your last year.
Overall software margins, where 82% and consulting margins, where 62% for the quarter.
S G and a expenses were 3.7 million or 39 per cent of revenue and the fourth quarter. This year.
Dollar increase of 531000, or 17% compared to 3.2 million or 40% of revenue and the fourth quarter of just on 19.
This increase and SG&A expenses is primarily the result of increases and sullen expenses and commissions salary and wage increases and labor related benefits and supported company growth and some increased depreciation and amortization expense, mostly associated with the lit soft acquisition.
And you saw decreased travel expenses again, you said the based on pandemic related cancellations of conferences are.
A total of 291000 of this total increase came from new subsidiary during this quarter.
Research and development expenditures for the fourth quarter or 1.6 million of this total 948000 was expenses and 621000 was capitalize this compares to a million dollars.
Spend and the year ago quarter was 603000 expenses and 406 capitalized.
Income from operations was 2.2 million for the fourth quarter of fiscal year 2020, compared to 2 million for the fourth quarter of 19.
The increase was primarily driven by fire gross margin on increased revenue, which was offset by and increase in operating expenses.
The provision for income taxes, and the fourth quarter of fiscal your 2020 was actually a benefit of $150000 for it and effective tax rate benefit and 7%. This compares to a tax benefit of 72000 and and the year ago quarter.
This tax benefit comes mainly from corporate tax deductions based on and the increased number of options exercise and sold and the fourth quarter. Some employees Cole chairs based on and Krzysztof prices.
Also a four and tax credits and for N D and and tangible and some deductions help to lower our tax rate.
The same situation occurred and the same quarter last year with respect to the stock compensation.
Net income and increased by 6%.
Oh, $129000 to 2.2 million and the fourth quarter of fiscal 20.
Compared to 2.1 million and the year ago quarter, due primarily to the tax benefit I just discussed.
On a per share basis net income was 11 cents per diluted share in the fourth quarter This fiscal year.
Same as the 11 cents and the fourth quarter of last fiscal year.
EBITDA was 2.9 million and the fourth quarter this year compared to 2.6 last year.
Now turning to and overview of the financial performance for this fiscal year.
Consolidated and net revenues for fiscal year, 2020, where up 22% or 7.6 million and 241.6 million compared.
Compared to 34 the year before.
A gross margin for fiscal year, 2020, with 74% compared to 73% last year and improvement of 100 basis points.
S G and a expenses, including 1.4 million of them and a transaction related costs associated with the looks off purchase was 16.4 million or 39% of revenue for fiscal year 2020, compared to 11.8 million or 35% of revenue from last fiscal year.
Here.
And the second and third quarters and for the total of 101.
1.4 million of acquisition related costs, and the fiscal year 20 for legal accounting and due diligence and M and a banker related fees.
Without those lemonade transaction costs SG&A would've been approximately 36% of revenue.
A research and development spend.
Last year was 5.3 million.
1.1 million from 4.3 <unk>.
<unk> portion of the increase to have a million dollars to $3 million.
For the full fiscal year R. D expenses, a percentage of revenue was relatively unchanged at about 7%.
Income from operations for fiscal year, 2020 was 11.6 million compared to 10.6 million last fiscal year, and let and come in and creased by $749000 or 9% to 9.3 million.
Our effective tax rate for the year was 18% down from the 19% and 2019.
We expect our tax rate to be and the low 20th the 20th and 23% range for next year.
But this right will depend on the effect of stock and foreign related deductions and credits.
Diluted EPS was 50 cents per share for fiscal year 2020, compared to 48 cents last fiscal year. So it soft related transaction lowered diluted EPS by about six cents per share for those expenses.
EBITDA was 14.4 million for fiscal your 20, 27%.
<unk> compared to 13.4, and the 20th 19.
Moving so the revenue line the Slideshows quarterly revenues.
Please note and that was shot and mentioned earlier, a third quarter speech fiscal year is typically the strongest followed by a decrease in revenue and on the fourth quarter that coincides with the slowdown of our clients purchasing and the summer months.
Each quarter of this fiscal year, we showed increasing and Princeton and sales.
Our EBITDA generally follow the same quarterly seasonal patterns is our annual revenues with the third quarter being the highest quarter, followed by lower numbers and the fourth quarter summer months.
This line provides average revenue for commercial customer.
Nope that would exclude software revenues from academics and nonprofit entities.
Software Uhm annual revenue per customer has been relatively flat, but we see this as an opportunity to go on and forward as we execute on a cross so and and pricing strategies.
And this tapas line shows gross profits for both software and consulting revenues and the blended total software and margins. We've maintained fairly studying margins and bolt business lines with software is kicking up slightly with the advent of the lips off purchase.
And 2020 and they.
Or consulting business as high margins technical work, which allows for higher contribution margins and normally would be expected and the consulting business.
The bottom on this line shows and you'll be P. S for the last three years.
The Blue line as as it was reported and our case and the Red line is pro forma E. P. S. Taking into account the effective acquisition related expenses and 2020 and the effect of the implementation of the new tax laws on deferred income taxes and 2018.
But these pro forma results taken into account and you can see and steady increase and EPS, that's been generated from year to year.
Uhm. This line is our revenue by region for the last few years, where a global business with the majority of our revenues here on the Western Hemisphere.
2020, approximately 71% of revenues were sourced and the Americas, while Europe represented 14 per cent of the total and.
And Asia, 15%.
About half of our agent sales were derived from sales and Japan European and Asian, and sales are mostly software related.
Turning on the next line.
The company generates positive cash cash flow from operations. This cash and historically allowed for small acquisitions is also allowed the company and consistently pay a dividend.
The company is paid quarterly cash dividends from the excess cash generated.
From operations, these dividends and totaled over $4 million each of the last three years.
During the fourth quarter of 2020, and we completed a secondary offer and you have about.
2.1 million and chairs of our come and stuff and and offer and price of $55 per share that raised about $108 million after underwriting discounts and commissions and the other offer and your expenses.
This capital ready and raise allows for growth and acquisition is shown on discussed our growth strategy. These.
These offering from.
And so bad and dusted and short term and rescued first investment great instruments, mainly corporate bonds and government and instruments at.
At the end of fiscal year, 2020, and we have it $116 million of cash and short term investments.
This next slide provide some data on and play headcount Ah comes.
Company has grown by 54 people since the beginning of 2018 bolt through hiring and acquisition or scientific staff has increased by over 60% and the period supporting and increase the ability to provide services and support software elevation and development.
Turn on the next line and we'll just cover some basic financial mistress.
At the end of the year as I said before a cash and a short term and doesn't balance was approximately $160 million compared to 11.4 at the end of last fiscal year instead of creases from the proceeds of the secondary offering we just discussed.
We used cash generated from the year for acquisitions and the final pay out of and burnt out for daily So.
Our balance sheet remains strong with excess cash and zero borrow depth.
With our continued cash flow generation and prudent approach to allocate and capital we're well positioned to support our continued growth and protect our business during economic cycles on I'll turn on the call back to you from.
Thank you John.
And conclusion this was a tremendous year for S. L. P. We achieved our goal of increasing our organic growth rate to the 15% to 20% level.
We made another beneficial acquisition, adding looks off to the simulations plus family.
We view this as a significant addition to our software portfolio and in addition of talented scientific staff to our organization.
We positioned ourselves for future growth with the completion of our capital raised on August as a company remain we remain focused on delivering good science measurable value and quality service to our clients.
I'm proud of the work we've done and the accomplishments of this company and I think the employees and partners of simulations plus around the world from.
And they're hard work and professionalism all and that's what has been a challenging time for all of us and.
And with that I'd I'd like to turn the call back to the operator and take any questions you may have.
Thank you, Sean and once again, if you'd like to ask a question using the telephone and please used a hand raising icon on the control panel and be sure to enter unique audio pin. Please hold on second like polka questions.
The first question is from Matthew It was Craig Hallum.
<unk>.
Yeah and might be muted map.
Mary muted.
Okay hold on one second bullet and move on to the.
Next question next question.
Is from Curtis Scott.
Are you on I'm on thank you wonderful reports my question is a very general one as and invest your and maybe it's too broad but the question is how does simulations plus plan to use five G and quantum computing to improve its.
Products.
Okay, and thanks for joining us today and I appreciate your longstanding tenure and.
Yeah, My pleasure company, well, those two technologies and contribute to increased processing power and speed and I can't say that we're leveraging those two individually, but the speed of our processing and of our analysis or simulations.
Is an important factor we have historically delivered well in that regard and and many bake-offs and competitive sort of analysis always come out on top and during this last year one of the key features or improvements and be at me.
Predictor and specifically the a I D D module at where improvements made in terms of the processing and our ability to analyze on like your accounts on fast paced and that certainly is accruing to to our clients and we utilize you know multicore <unk>.
Yes, and capabilities, we have the ability and.
And to ourselves or for our clients the access and the web services to reach out and and and garner more horsepower our clients their internal work I T department and provide that sort of infrastructure as well so we're well positioned as we.
As we speak today and they will always look to to keep improving in that regard and going home and it just does not seem to be a dating item at this point based upon input for clients that are always pushing me I choose to do it bigger and better and faster.
And good to hear.
Thank you once again, if you'd like to ask a question and you can do the hand, raising icon on the control panel and as he pulver and an additional questions I will go to some of the written questions that we have that were sent and first one is from Howard help and are there and internal expansion issues that you're <unk>.
Looking to advance such a development of your own Malki library, and or expand your article fish on intelligence capabilities and to new product offerings outside of drug development.
Oh, Thanks out you know we have.
A R&D strategy and are looking at both and the advancement of our existing products as well as extension Sarah like that which we delivered this past year with the a T T and a module and always exploring other areas, our focus and the health care and market.
Is pretty strong and it's a market that requires a lot of domain experience at and in order to apply modeling and simulations technologies techniques and and that is where the vast majority of our business is obviously is a.
<unk> value of the AI and date and data mining technology that we develop and may I have benefits elsewhere, and and there's adjacent markets tours to our business and the consumer agribusiness area and we do have some clients and that space and there may be value for that technology, and the long run and and other.
[noise] markets, we've got a lot of opportunity and the market, we play and right now and focus our efforts pretty much in that arena.
[noise] [noise] [noise]. Thank you Sean we do have one additional question here as far as the Britain questions.
With the recent capital Reyes what is your current acquisition strategy, where you're looking for as day acquisition target at this point.
Oh, well I'd say, that's pretty consistently stated out there you know, we're we're looking and for acquisitions that can increase are offering to our clients and and and the value of the.
Modeling and simulation suite of products as well as services that we can offer to them to enhance her position as a strategic vendor for them. So our targets out there or acquisition opportunities consist of both and the software and.
<unk> sighed as well as the service side and.
And the number of products out there that so at the end of the continuum of modeling and simulations and there's a drug development cycle and.
And some of them are small arguably medium size and many of them are small which would to add functionality to our existing and products a number of opportunities in that direction and on on the service site. You know the opportunity is to accelerate the expansion of our capacity.
But probably more importantly, strategically from a geographical point of view and we don't have too many boots on the ground and Europe and have no consulting staff and the Asian markets and as well as the expansion of the types and services that that we can offer you know we.
<unk> brought a new service offerings of the market. This past year with regulatory services by the hiring of Sandra Torres sharp the that as an example is achievable through acquisition as well in terms of practices that offer a type of service and the umbrella.
Of modeling and simulation that we don't currently offer to the marketplace and.
And so I'm looking for opportunities that fit in.
From a cultural point of view from a product clamp point of view, but always underlying that companies that and.
And our accretive and nature and can be acquired at a appropriate valuation that's the framing of our of of a work out for it on the M and a side right now.
Thank you John Uhm I do have Matthew it with Craig Hallum now on to the next question and I go to his line now and just as a quick note I did send an Audi a pen and several other people that were raised a question you have to put that on your P. I N and if you do want to ask a question.
And that your life.
Alright, thanks, so much and congratulations on achieving all of your targets for the year. So that's especially given the environment that that's not an easy task.
Maybe first up and.
Regarding day, we're almost done with the first chord here yet we're also seeing a spike and Corona virus and many parts of the country. Maybe what are you seeing here and the first quarter, you're seeing that normal seasonality, where things start to pick up a little bit or because of the pandemic or is it still are there still some puts and takes that you're having to deal with.
Well, yeah, and favorite question math, and welcome and I'm glad you got dependents good to hear your voice I was imagining what your question would be.
The you know Covid, there's certainly rare that's had didn't ever saying step back and lockdown and other responses around the world you know I I would characterize this as being you know and ongoing existing situation I don't think it's overly exaggerated by.
Recent events, France, the locking down over the last few weeks as an example, operationally our group and like soft is you know with under that locked down continue to work and work well I work from home and.
From a customer point of view I think we were operating and you know diminished ability to reach out and visit and <unk> with our clients face to face. This is conference season for our industry as well and so we've there those conferences have.
And have continued but on a virtual and format and which has provided and some opportunity to enter and interact within our industry within our clients, but you know not fully as functional as a as a as a you know and on site to a conference situation.
So you know I wouldn't say that anything of recently has changed it. It's it's what we've been experienced the experiencing though for really since March timeframe of this year. So we continue for the one benefit I think is that you know the calendar year brings there's budgetary cycles and decor.
For our clients and those budgetary cycles.
And are playing out and they are affected by Covid and you know in terms of and they're allocation to therapeutic areas therapeutic programs, but it's a worthy endeavor from from our perspective, and a sense that upon and the completion of those those processes they've established and.
Set their budgets and we operate with a little bit more certainty as opposed to the last number of months I've been uncertain as to what the budget impacts are going to day always optimistic that you go through these cycles and and all the answers or are there and I'm sure. Some you know cautiousness and and wait and see what.
Continue for it and to the future, but I think it will bring and some more definitive answers and and game plans on the part of our clients force that we can we can respond to so towards the answer to your junior to your question is that well you know the environment externally has seemed to.
Pick up in terms of Covid I would say that for the most part it's it's it's the same as as we've been experiencing since since March.
Got it okay. Thank you and then shifting gears a little bit I think you mentioned you and your <unk> prepared remarks at least on the consulting side you would increase your staff by roughly 22% during the year I'm. Just curious as is your business continues to grow and expand our you know what is the talent pool look like are you still able to fire.
And the right people and and how is you know as bioinformatics I guess more broadly modeling as well, but is violent from X becomes Ah Ah relatively hot market. It seems as of late are are you competing with others. What does that done from a cost perspective any color on out on along those lines and.
Yeah fair enough. It is a competitive market for the profile of scientists that that we need in order to support our consulting efforts support our software development side of our businesses as well and has been always been competitive and you know to the benefits over there and.
And certainly are more candidates of that profile available. Today, then and then in the past, but still it's a relative shortage in terms of the need out there that need that it's.
And the source both from ourselves and our our our clients really looking for for this stuff.
It's you know does put pressure on the compensation size and it always has but as you can see we've held our margin pretty well and the consulting business pretty consistently at that 63% Mark and so we were able through efficiencies and and passing on the cost to our clients.
Maintain our marches and you're in that arena and.
So you know it continues to be a priority for us a very important component of our business, our but our ability to attract new people and but I've been very positive about her results and and attracting some very significant people from from academia and terms.
And people coming out to the marketplace from that world from and your Street, where we cautiously occasionally higher and very good candidates from existing or potential clients out there and as well others. So they compete.
With us for four and.
Candidates and and source from people from other consulting or other vendors to the industry. So with the fared pretty well in this regard and look forward to continuing that that efforts and important one for us, but we've been able to meet our needs to day Tonight and co anticipate will be able to meet our needs.
And tomorrow and and of the future.
That's great and then one last one from me and I'll hop back in the queue and I think you had a slight commenting on a couple of the successes you had during the corner, where you and you announced via press release, and you know both with the F D. A and getting drugs approved or drugs said, maybe <unk> competing drugs had failed and you're able to help on Ah client gets.
Something through and and two approval and.
And maybe what it is.
Is it possible to quantify the importance of those types of events and I mean, if you look historically.
Can you tie those types of events with an uptick or an increase and adoption within you know quarters are within a year or two or something like that happening and and what does you know disease. Recent success stories, maybe mean for physical 21 and 22 as you look out over the next couple of years. Thank you.
Sure and ma'am and.
And.
Maybe maybe if we dedicated a few of our our our scientists to modeling the announcements and the follow on affects maybe with it I'd I'd be and better positioned.
Answer to that question on a on a metric basis and I can save this that these are the types of announcements that garner the attention and industry our clients in terms of the value and yeah. It's been a very successful quarter in regard to some of the impacts.
That daily from has had on very specific drugs and the advancement of drugs to the market that otherwise may not have even made it into clinical pays for clinical trials. How do you. How do you calculate T. R. O Y there well you can take that entire drugs.
And revenue stream and say that me and now that existed and.
And and not them for the confidence that and we were able to provide the client and taking that drug into into clinic. So the magnitude magnitude can be bad it expands and those and industry that are looking to apply modeling and simulation and not only and the specific.
Target area that that you know and announcement of that my my bank, but it more broccoli opens up eyes and to how else can we apply modeling and simulation and other areas and as those use cases increase to demand for.
Our software products, so that our clients can perform these analysis themselves or the demand for our consulting practice for us to come in and provide the perform them on behalf of our clients and it all those all provide when did and a sales for us going forward and.
And the attention at speed to market has gotten based upon the pandemic is when I went through the pros and cons and look for the sofa and lining and the highlight that it's the spotlight. It's shown on the time frames that are required to bring drag to some market and the day.
Desire to do so more rapidly and you know well positioned where one of those new techniques new abilities to accelerate that that timeframe of getting a drug to market and I think we will continue to to to benefit from that as we go forward and the future.
Thank you sure that appears to be all the questions today I'll turn it back and received from all the comments.
Very good well I appreciate everyone's attention be safe, everyone and I look forward to yes, we are well through our first quarter and I look forward to reporting to you very soon first quarter of fiscal year 21 results and in January take care of everyone.
And this does conclude today's conference call and webinar. If you missed any part of today's presentation. The replay will be available on our website W. W. W. Dot simulations simulations dash plus dot com and thank you.
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