Q4 2021 Simulations Plus Inc Earnings Call
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Greetings and welcome to the simulations plus fourth quarter of fiscal 2021 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 is being recorded it is now my pleasure to introduce Brian Siegel from Hayden IR. Thank you. Mr. Siegel you may begin your presentation.
Good afternoon, everyone welcome to our fourth quarter fiscal 2021 financial results Conference call.
Hosting the call today are stimulation pluses CEO, Shawn O'connor and CFO Fredrik, an opportunity to ask questions will follow today's presentation.
Before beginning I would like to remind everyone that except for historical information. The matters discussed in this presentation are forward looking statements that involve a number of risks and uncertainties.
It's like belief expect anticipate mean that these are our best estimates at the time, but that there can be no assurances that expected or anticipated results or events will actually take place. So our actual future results could differ significantly from those statements.
Factors that could cause or contribute to such differences include but are not limited to our ability to maintain our competitive advantages acceptance of new software and improved versions of our existing software by our customers. The general economics of the pharmaceutical industry, our ability to finance growth our ability to.
To attract and retain highly qualified technical staff, our ability to identify and close the acquisition on terms favorable to the company and a sustainable market.
Further information on our risk factors is contained in our quarterly and annual reports and filed with the U S Securities and Exchange Commission with that said I'd like to turn it over the call to Shawn O'connor Shawn.
Thank you Brian.
We had an encouraging end of the fiscal year as we saw continued momentum in our software business and the decline in our services business was less than we saw in the prior quarter.
For fiscal 2021 our total growth total revenue growth came in at 12% exceeding our guidance of 5% to 10%.
Software revenue growth for fiscal 'twenty, one was 28% exceeding our guidance of 20% to 25% and the service revenue decline was 6% slightly better than our guidance of 7% to 12%.
Our software business had a good quarter, reflecting the strength of both gastro plus an advert predictor each growing by at least 20% partially offset by the expected decline in monolithic suites due to early renewals that occurred in prior quarters.
After our revenue growth in fiscal 'twenty, 'twenty, one increased to 28% compared to last fiscal year's growth rate of 17% and 11% in fiscal 2019.
Gastro plus revenues grew 20% in the fourth quarter and we attribute this strong performance to our industry, leading technology and focused upselling efforts, which produced 14, new commercial contracts during the quarter.
During the fourth quarter Gastro plus also saw 17 peer reviewed journal articles, reflecting the strength and recognition of our industry, leading PV PK platform.
I had met predictor of revenue growth in the fourth quarter was 26% as it continued to benefit from the Q3 product release that added valuable new features and functionality.
Additionally, I want to emphasize that both gastro plus an aetna predictor continue to expand their strong leadership position in the market during the year for.
For example, we saw 20 multiyear gastro plus license signed three new $100000 plus customers and 14 upsells during the year.
And our new DDI module has been very well received all of which are a strong validation of our leadership position.
As anticipated monolithic suite revenue declined in the fourth quarter due to early renewals in prior quarters.
Full year revenue growth was 20% as we continue to see both new commercial client adoption as well as displacing alternative products and taking market share from our primary competitor.
Turning to our services business.
As a reminder, our service revenue is nonrecurring accordingly, this business can exhibit volatility both quarterly and annually.
J P. D projects are typically in the one to 200000 range.
U S peak U S T projects can be significantly larger.
Sometimes these projects are accelerated delayed or even canceled by our customers based on their internal priorities or timelines and are not under our control.
While it was a challenging second half of the fiscal year due to the uncharacteristic uncharacteristic events of the third quarter with higher than normal customer project delays and cancellations. We saw signs of optimism during the fourth quarter as revenue decreased less than expected.
Our backlog grew second sequentially and our pipeline continued to build.
During Q4, we saw the number of customer project delays and cancellations returned to a normal more normal levels. We.
We also had a good bookings quarter highlighted by closing five new clients.
Which contributed to a 10% increase in backlog for the quarter and a 49% increase for the full year.
Which was about 110% of our internal targets.
During the quarter. We also provided critical support for a multi regional.
The regulatory approval and supported an FDA submission for a new COVID-19 therapy.
For the year, we took action and made several operational improvements that drove margin enhancements, leading to increased average contract value project yield and consultant utilization rates.
For the U S Peak U S. T business revenue was down in Q4 as expected. Despite this decline we saw positive signs that point to an inflection point in this business, we had one new and one renewal of daily Some consortium members during the quarter and overall overall pipeline activity.
Is it reflecting strong momentum as we enter fiscal 2022.
We are also seeing toxicology project opportunities picking up and have multiple Q S. P projects in late stage proposal status. I'm also encouraged that we have already achieved our bookings target for Q1 of the new fiscal year.
And finally, our PB BK business saw a 63% increase in backlog for the year and finished strong with two significant F. T. H funded projects announced during Q4.
Yeah.
Looking to fiscal 2020 to.
Modeling and simulation adoption continues to be strong in the pharma and biotech marketplace.
Internal modeling and simulation resources continue to grow and they are seeking out our software platforms to achieve their objectives.
Outsourcing also remains a robust part of our clients' efforts to meet their needs and we're here to support them with our service business.
Our software business carry strong momentum into the new year as we continue increasing our revenue growth rate as a result of enhancements to our technology ongoing product portfolio expansion, both internally and through acquisitions and investments in our sales and marketing efforts.
In fiscal 2021, our service business experienced the downside of what can be a volatile business.
But we saw no fundamental changes in the market that would prevent this business from returning as a positive contributor to revenue growth in the future.
Despite this decline in fiscal 2021 we entered the new year with increased pipeline activity a rebuilt backlog that should drive some sequential revenue growth on a quarterly basis in fiscal 2022.
With these positive tailwind to the financial outlook, we are providing today anticipates a recovery of our services business and growth accelerating sequentially as the fiscal year progresses, we expect to return to double digit growth in total revenue in the range of $51 million to $53 million, reflecting 10 to 15.
<unk> percent year over year growth.
We expect software to be in the range of 55% to 60% of total revenue and services to be in the range of 40% to 45% of total revenue.
And finally, we will continue our successful M&A strategy to expand our software portfolio and service offerings and grow our overall market opportunity to broaden our capabilities and further support our clients.
Any acquisition would be incremental to this outlook and with future acquisitions. We believe we can continue to grow at a pace that supports our CAGR target above 20% that we've achieved since cognizant since the cognizant acquisition in fiscal 2015.
Let me now turn the call over to our CFO will fredrik to discuss the financial results.
Thank you Sean.
Our total revenue growth rate for the quarter was 3% due to the challenges in our services business and the early monolithic suites rules that occurred in prior quarters.
Software revenue growth for the quarter was 14% and services revenue declined 7% for the quarter.
We continue to see improvement in our software and services revenue mix was software now at 55% of total revenue for the quarter.
Our total revenue growth rate for fiscal year. It was 12% software revenue growth for the fiscal year was 28% and services revenue declined 6% for the fiscal year.
For the fiscal year software is now at 60% of total revenue.
For the quarter software gross margin increased from 83% last fiscal year to 85% this fiscal year due to the increased revenue in that business the.
Services gross margin for the quarter decreased from 61% to 55% due to the revenue decline in that business.
The revenue mix trends positively affected our total gross margin for the quarter, which remained at 72% comparable to last fiscal year.
For the fiscal year software gross margin increased from 87% last year to 88% this year and the services gross margin for the fiscal year remained unchanged at 61%.
The revenue mix shift had a greater impact on total gross margin for the fiscal year and our total gross margin increased from 74% to 77%.
Okay.
For the quarter Gastro, plus represented 57% of our software revenue.
Admit predictor was 22%.
I'll, let suite was 15% and other software was 6%.
For the year Gastro plus represented 59% of our software revenue.
Avnet predictor was 18%.
Monolithic suite was 16% and other software was 7%.
We continue to enjoy solid revenue growth and diversification across our entire portfolio as evidenced with the software mix change since last year, when gastro plus was 66% of our software revenue.
Monolithic suite was only 7%.
We continue to see improvement in our average revenue per customer again, this quarter with an increase from $62000 to $65000 for commercial companies and from $42000 to $55000, including nonprofit and academic customers.
Our renewal rate for the quarter based on fees was 90% up from 88% last fiscal year and would have been higher except with five customer renewals slipped into the next quarter.
Our renewal rate this quarter based on customers with 77%.
<unk> from 93% as expected with our recently announced University plus program that offers free access to our software.
Students and educators as part of our ongoing support of academic research training and collaborations.
We believe this program will increase modeling and simulation education and help prepare the next generation of Singapore and contribute to the rapid development of safer lower cost treatments for patients worldwide.
With this program, we saw a decline in paid nonprofit and academic renewals and we'll exclude them from our reported beginning next fiscal year.
For the fiscal year, we also saw improvement in our average revenue per customer with an increase from $111000 $221000 for commercial companies and from $69000 to $85000, including nonprofit and academic customers.
Our fiscal year average revenues per customer are higher than those for the quarter due to the larger deals that occurred during the fiscal year.
Our renewal rate for the fiscal year based on fees was 92%.
Down slightly from 93% last fiscal year due to the customer renewal slippage for the five customers I just mentioned.
Our renewal rate this fiscal year based on customers was 83% down from the 89% primarily due to nonprofit nonrenewals as they transition to the University plus program.
Let me shift now to our services business for the quarter. Our services revenue breakdown was 53% from PK PD services.
25% from Q U S. P. S T services.
16% from TB, PK services and 6% from other services.
For the full year, the breakdown was 49% from PK PD services, 28% from Q U S. P. S T services.
14% from PV, PK services and 9% from other services.
With regard to a couple of key service metrics.
Total services projects completed during the year increased 36% compared to the prior fiscal year, which increased 24% compared to fiscal 2019.
We started breaking out other projects. This fiscal year that were previously reported in PK P. D. U S. P. S T or PV P. K to provide additional visibility to this increasing activity and reflect the continued expansion of our services offerings.
We ended the fiscal year with $13 million of backlog of $2 $5 million from the prior fiscal year end, reflecting a 24% increase in nice recovery from the decline we saw at the end of fiscal 2020 compared to fiscal 2019.
Now turning to our consolidated income statement.
SG&A expense for the quarter was $5 $6 million or 57% of revenue compared to $3 $7 million or 39% of revenue in the same period last fiscal year.
Approximately $700000 of this increase was a catch up this quarter as a result of switching from a semi monthly payroll to a bi weekly payroll during this fiscal year.
Part of our integration efforts and one company focus we consolidated our payroll for all U S employees and move to a biweekly payroll.
The true up was seven payroll periods in Q4 as reflected in the quarter and has no impact on our fiscal year expense.
We've also seen cost increase since last fiscal year and insurance external professional fees recruiting and stock comp expense.
Lastly, we had salary increases during the fiscal year to remain competitive with increasing mark with salaries and we increased our head count by nine employees during the fiscal year from 137 to 146.
Total R&D costs for the quarter were $2 million or 20% of revenue compared to $1 $6 million or 17% of revenue.
In the same period last fiscal year.
R&D expenses for the quarter were $1.3 million or 13% of revenue compared to $9 million or 9% of revenue in the same period last fiscal year.
Capitalized R&D for the quarter was <unk> $7 million or 7% of revenue.
Compared to $6 million or 6% of revenue in the same period last fiscal year.
Income from operations was $22 million compared to $2 $2 million in the same period last fiscal year.
This decrease was primarily driven by the higher SG&A costs I just described.
Plus increased spending on R&D to support our product development efforts.
The income tax benefit was <unk> $1 million for an effective tax rate of negative 73% compared to an income tax benefit of $2 million and effective tax rate of negative 7% in the same period last year.
We continue to see a lower effective tax rate, primarily driven by the tax benefit associated with disqualifying dispositions that we've seen throughout the fiscal year.
Net income was <unk> $3 million compared to $2 $2 million for the same period last fiscal year end.
And diluted earnings per share was one cent compared to <unk> 11 for the same period last fiscal year.
EBITDA was $1 $1 million compared to $2 $9 million for the same period last fiscal year.
For the fiscal year, SG&A expenses were $26 million or 44% of revenue.
Paired to $16 $4 million or 39% of revenue last year.
The increase in SG&A expenses was primarily the result of higher payroll related expenses due to increased compensation to remain competitive with increasing market salaries and the increased head count I just mentioned.
We've also seen cost increases since last fiscal year in contract labor insurance professional fees and stock compensation expense driven by our stock price during the fiscal year.
Total R&D costs were $6 $9 million or 15% of revenue compared to $5 $3 million or 13% of revenue in the same period last fiscal year.
R&D expenses were $4 million or 9% of revenue compared to $3 million or 7% of revenue in the same period last fiscal year.
Capitalized R&D for the year was $2 $9 million or 6% of revenue compared to $2 $3 million also 6% of revenue in the same period last fiscal year.
Income from operations was $11 $3 million compared to $11 $6 million last fiscal year.
Income tax expense was $1 $3 million for an effective tax rate of 12%.
Impaired to an income tax expense of $2 $1 million and effective tax rate of 18% for last year.
As previously mentioned, we saw a lower effective tax rate throughout this fiscal year, primarily driven by the tax benefits associated with disqualifying dispositions.
Net income increased 5% to $9 $8 million compared to $9 $3 million for last fiscal year and diluted earnings per share was <unk> 47, compared to 50 cents last fiscal year.
Adding back the $2 1 million shares of common stock issued in our follow on offering last August would result in diluted earnings per share increasing to 52 since this fiscal year compared to last year.
EBITDA also increased to $14 $5 million compared to $14 $3 million for the same period last fiscal year.
We continue to have a strong balance sheet at.
At the end of the fiscal year, our cash and short term investments balance was $123 $6 million compared to $116 million at the end of last fiscal year.
Our strong balance sheet reduces the need to secure additional capital as we're continually evaluating strategic acquisition opportunities that we believe can further position us for success and support our long term revenue targets.
We also continue to have no debt on the balance sheet.
I'll now turn the call back to you Sean.
Thank you will.
In conclusion strategic.
Strategically we continue to reinforce our leadership and our portion of the Biosimilar Asian market for Pharmaceuticals is the industry's adoption of model informed drug development tools and techniques continues to expand at a rate four to five times that of overall R&D.
We remain well integrated with both academia, academia and regulatory agencies, giving.
Giving our scientific capability as we look to the future.
As a result, our software business is doing very well with accelerated growth rates and expanded capabilities and our service business is steadily normalized as evidenced by our improving backlog and strong bookings.
This performance gives us confidence that we have clear line of sight to delivering consistent longer term growth in line with our growth expectations.
With that I'll be happy to take your questions operator.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star to cheer them move your question from the queue for participants using speaker equipment. It may be necessary for you to pick up your hand.
Before passing the snarky, one moment, while we poll for questions.
Thank you Sir our first question comes from the line of Matt Hewitt with Craig Hallum Capital Group. You May proceed with your question.
Good afternoon, and thank you for taking the questions and it's nice to see the bounce back in the services side of the business maybe to dig in a little bit. There you know last quarter. As you you called out on the last call was abnormally high in the number of cancellations deferrals and whatnot.
It seems to have bounced back very quickly what is the what are you hearing from your customers.
Have any of those contracts that were maybe deferred of those closed any incremental color on the services side it would be helpful.
Sure Matt.
Yeah, it headed back to normalization and normalization doesn't mean that.
There are no cancellations or delays or hold has peaked in the third quarter, but down to it at a level, which are as I've said before it is typical to three of these occurrences.
During a quarter is something that we can manage around.
More definitely and so a good good good outcome and in that regard.
Is there any market indicator as to why the frequency you know step back down.
Hard to hard to pinpoint them.
In the toxicology area in the U S P area and.
We are seeing some indication based upon request for proposals and a healthy increase in our pipeline that FDA responses back to companies has picked up.
And that's a good sign so certainly can point to that.
You know I would say that you know it is still a you know a market in terms of her PK PD services, where projects come under greater scrutiny I think said in the past and holds delays and ultimately cancellations.
I think I've said before are a good sign that the fail fast.
Move to the next drug opportunity with this one.
It indicates a lot less than likely success profile I think that's you know that's a phenomenon that there's good one and we're gonna have to.
Managed service business around on a go forward basis, but.
No other than that don't know no flare against from the from the marketplace.
But that's great.
Shifting to the software side a good quarter.
Then our estimates anyway, yet it sounds like you had five renewals that slipped out of any of those closed already here in Q4 and is there anything to kind of pick.
Pick out with those five or is it just a timing situation.
All five closed and the week after the end of the year.
That's great. Okay, and then maybe one last one for me and then I'll hop back into queue.
You mentioned that you are seeing.
It is continued market share gains and I'm just curious if you've seen anything from a competitive response or is this something that we should then.
Expect them as we get into 'twenty, two and into 'twenty. Three are you going to continue to take share. Thank you.
Yeah, our comments, there specifically with regard to monolithic say and there their growth is certainly well ahead of the growth.
Or N M L.
The applications out there as a whole with overall market growth. So clearly, we're taking some market share of our existing players there.
We've seen a response in that regard nothing of great significance the market.
For model X is responding very favorably to its ease of use the workflow approach and quite frankly, our clients are attracted to the same.
Benefit that we see internally, where we are completing PK PD projects more efficiently and utilizing less time to get to into the job when we use model X. So.
Very very good very good progress on the monarch side and it continues its momentum into a into next year.
Got it alright, thank you.
Our next question comes from the line of Francois Brisbois with Oppenheimer. You May proceed with your question.
Alright, thanks for the questions.
Just quickly here I was wondering what makes you so confident that 51 to 53, it's pretty tight.
What gives you confidence to give guidance you know due to the fact that it seems like this pandemic as lingering quite a bit so any any factors there.
Yeah.
Well you.
Two sides of our business on the software side with its high recurring revenue renewal rates are gives us the benefit of the.
<unk> been pretty confident in terms of the direction of that that business and it's really picked up and are in the past that cap of this year really over the last couple three years, we've seen the growth rate organic growth rate of our software business step out and continue to deliver higher growth rates.
And so our software businesses are performing very well the COVID-19 impact there even when we look back at our the brunt of the Covid impact a couple of years ago, our software business wasn't unaffected, but there was minimally affected.
So I degree of confidence on the software side still cautious on the service side.
That is where.
Covid can have it's the biggest impact was the disruption in terms of clinical trial timing drug programs.
Being altered in change and reallocated to other programs in response to things like Covid.
And there, we keep keep a little bit higher discount.
A factor in our heads as as we prepare guidance, but the.
A combination of those two gives us a high confidence in an environment that our software is performing well and on the service side of our underlying pipeline.
And building a backlog of new contracts are being closed.
Is moving quite nicely as we exited the year and began the year here in fiscal year 'twenty two.
Okay, Great and this has been touched on in the past, but I was just wondering on the M&A front.
Have you seen valuations come down a little bit and just remind us how does it change the criteria that you're looking for is it more geographical any color there on what you're looking for when you when you stay up M&A.
Yeah, I mean, all of our criteria remain unchanged.
And the targets that we seek are both software and service although software is a focus for us.
There are some geographical benefits in some locations.
That would be an attraction to a target if it was in.
In the REIT locale to support our expansion on a global basis of our service coverage.
But on the valuation side.
The financial criteria, where our M&A strategy remains unchanged, we are looking for accretive now.
The opportunities are and that enter place obviously with valuation quite.
Quite quickly.
Company has got to be performing well and the valuation S&P appropriate so that it is accretive to us.
Valuations come down boy, there discussions are a little bit easier than they were say a year ago.
It doesn't mean that they're not tough.
And I think we still see and in the health care space and certainly Biosimilar <unk> space.
That are in addition to.
The market valuation metrics that might be preferred to in valuation discussions.
We also see a lot of private companies private equity funding that comes into play and that affects valuations as well so.
The headline is no valuation discussions are.
Better than they were before.
That doesn't mean that they are necessarily easy parts of the discussions that.
So they are ongoing in terms of target candidates that are that we interact with.
Sounds good and then just quickly a quick two questions on the financial side.
It was a little jumped here on the SG&A side.
It's 57% of revenues in the fourth quarter I think you discussed maybe.
The.
Contrast, us went up or maybe the payroll went up as well and more employees added to the team can you just help us understand maybe SG&A going forward, what you're expecting.
Yeah fair enough.
A couple of factors.
Factors are in play there.
I'll, let will go through the details of the of.
The payroll we did a <unk>.
Mercury three legal entities are essentially S. L. P cognizant until he some from the acquisitions.
To roll up into one legal entity for multiple purposes that support both our consolidation integration process internal for the company as well as our external.
<unk> cost savings on a number of fronts that will now accrue to us.
That ultimately had some changes in our payroll systems coming together, but it didn't change our payroll cost overall for the year, but they're lumpy.
Lumped it into quarters are a little bit done consistent our non 20 early.
You know the other expenses that came into play in the fourth quarter.
All of which you would be looking to focus then on EBITDA, our EBITDA percentage of revenue.
Only declined a couple of points in an environment in which we saw.
<unk> revenues in the back half of the year, well below where we would be yeah, we expect it to be.
And in terms of our most precious asset.
Our employees are scientists and not only is it a compensation competitive marketplace that we need to respond to and that provides some pressure an uplift to the to.
The costs in that area, but as well while revenue in the service business was down.
It wasn't a a.
<unk> in which we were going to shave off our organization to reduce expenses to match that revenue. These are valued assets in this.
In this industry and so there's some some play there as well in terms of Opex being a little high in the fourth quarter.
Our expectations are on a go forward basis that nothing has fundamentally changed in terms of our opex and our profitability.
<unk> profile, and we expect that fourth quarter percentage of revenue on opex to be a bit of an anomaly and will return to where we've been.
The last year or two.
In the Opex on a go forward basis.
Great. That's it for me. Thank you very much and congrats on the quarter.
Take care Frank.
Our next question comes from the line of Dane Leone with Raymond James You May proceed with your question.
Hi, Thanks for taking the questions.
Congratulations on the court.
Hum.
A lot of questions here, but can you do you have an idea of how active you think youre going to be in terms of acquisitions at the coming year. You know I think we get we get that question a lot.
How you can get a bit more aggressive so is your messaging today that.
Valuation do you feel are still prohibit us from engaging in M&A or you expect some deals to get done over the next 12 months and I have a follow up.
Sure her name.
Yeah, you know, obviously, we can't pinpoint and target a predictive data in terms of the acquisition but.
I think now versus a year ago, the number of discussions that.
Our active are the nature of those discussions being a little less.
Cloudy because of valuation certainly gives me.
It's a pretty optimistic view that an acquisition can be.
<unk> achieved in the coming time frame now came out does that mean three months four months eight months nine months in the next year. We certainly are motivated to find the right target and close a deal that meets our criteria.
And added to the portfolio, so simulations plus companies.
As a as quick as we can that said, it's a market in a process that can't be.
Predicted with exact our exact clockwork. So I'm confident that we will continue to invest the resources necessary to identify and pursue appropriate targets out there confidence that they exist and that at some point in time, we will have.
And announcements in this regard too.
To bring to you.
Okay any specific.
Is a deal that you think is going to make more of life science, maybe in terms of like the target revenue generation.
[noise] Oh, you know, there's a range of Ah you know the.
The targets that we're in discussions with right now are you know like soft they'll just uses it.
Our leverage going to in response here you know were.
So you are close to $4 million and.
In revenue.
Those are sort of the target sort of that level of size.
Target is probably plentiful.
Our.
Discussions today that being said that there are you know some targets that are that would be.
The higher sizes in that higher revenue levels than that.
On the service side most of those organizations are at the look soft or below size in terms of their revenue feel flows on the service side tend to be a little bit smaller groups of our consultants are.
That would be targets, so yeah, I'd, usually soft as it as it is a good example in terms of size and maybe theres some opportunities that are a little bit larger than.
And then like soft out there.
Okay, Great and last one for me can you just clarify in terms of the response to the operating margin this quarter.
But I guess abnormal SG&A spend is that are you are you clarifying that that's a one time.
Increase or one.
Abnormality I guess per for whatever you are doing with the consolidating those businesses or.
Is there a new higher run rate that we have to expect for SG&A.
Yeah, I think I think for the most part it's a blip in the quarter.
You know obviously our growth of nine people.
Continuing.
Compensation response to the marketplace. There are some expenses that are going up.
But certainly that which is attributable to.
The payroll adjustment I think will referenced a number of about 700000.
In the quarter that expensive.
That amount is not recurring in nature.
Okay.
On there right I'm happy to add on there.
It's for Q4 tiny.
That's what I would focus on it for the year.
It's where we came out and the revenue growth with our services challenges.
If you go back and look at first half of the year and we were we were at about a 21% growth rate.
From an absolute dollar standpoint, our operating expenses will continue to go up just just driven by a higher.
Higher revenue as well as bringing more people on at a controlled pace that are keeping competitive in salaries, but if we ended up.
Where we have.
It looked at it.
At the beginning of the year I think our total R&D would have still been in the 7% to 8% range, which is about where we were last fiscal year and our SG&A in that.
<unk>, 41% to 42% range. When you look at things as a percentage of revenues are still trying to keep operating expenses.
In total below that 50% sort of number.
Tiny tiny was the Q4.
With expenses coming in this quarter versus other quarters.
Okay. Thank you very much.
Yep.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, one moment, while we poll for questions.
There are no further questions at this time I would like to turn the floor back over to Mr. Sean O'connor for closing comments.
Very good well. Thank you everyone and we are pleased that our we saw some uptick in terms of where.
We came in in the fourth quarter compared to a challenging third quarter and are very pleased with the momentum on both sides of our business both the software and service businesses as they enter our new fiscal year look forward to reporting further results are a quarter from now to you take care. Thanks a lot.
This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your day.
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