Q3 2024 Simulations Plus Inc Earnings Call

Operator: Greetings and welcome to the Simulations 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.

Unknown Attendee: Greetings and welcome to the Simulations Plus third quarter fiscal 2024 financial results conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the simulations 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.

Unknown Attendee: A brief question and answer session will call the formal presentation.

Unknown Attendee: 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.

As a reminder, this conference call is being recorded it is now.

Lisa Fortuna: It is now more pleasure to introduce Lisa Fortuna from Financial Profile. Miss Fortuna, you may begin. Good afternoon, everyone.

Speaker Change: Now my pleasure to introduce Lisa Fortunately not some financial profile.

Fortuna: Fortuna you may begin.

Lisa Fortuna: Good afternoon, everyone. Welcome to the Simulations Plus 3rd 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 have 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.

Speaker Change: Good afternoon, everyone welcome to the simulations plus third quarter fiscal 2024 financial results Conference call with me today are Shawn O'connor, Chief Executive Officer, and will Frederick Chief Financial Officer, and Chief operating Officer simulations plus.

Lisa Fortuna: Welcome to the Simulations Plus third quarter fiscal 2024 financial results conference call with me today or show on our counter 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.com. After management's commentary, we will open the call for questions.

Speaker Change: 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 Dot accumulation stashed plus dot com.

Lisa Fortuna: 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. With that, I'll turn the call over to Sean O'Connor. Please go ahead.

Speaker Change: 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.

Lisa Fortuna: 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 a. This call an actual future results could differ significantly from these statements. Further information on the company's respectors is contained in the company's quarterly earnings.

Speaker Change: 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.

Speaker Change: With that I'll turn the call over to Sean O'connor. Please go ahead.

Unknown Attendee: Thank you, Lisa.

Sean O'Connor: Thank you, Lisa. Good afternoon, everyone, and thank you for joining our third quarter fiscal 2024 conference call. Reveal results for the third quarter of fiscal 2024. We're 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. Given our solid performance in the first nine months and the acquisition of Proficiency, we are on track to achieve our recently revised full-year revenue gap.

Lisa: Thank you Lisa good afternoon, everyone and thank you for joining our third quarter fiscal 2024 conference call.

Sean O'Connor: 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%. Deluted earnings per share of 15 cents and adjusted deluded 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.

Sean O'Connor: Results for the third quarter of fiscal 2024 were in line with our internal guidance strong performance in both our software and services segment delivered solid revenue growth of 14%.

Sean O'Connor: Diluted earnings per share at 15 cents and adjusted diluted earnings per share at <unk> 19 cents.

Sean O'Connor: Given our solid performance in the first nine months and the acquisition of proficiency. We are on track to achieve our recently revised full year revenue guidance.

Sean O'Connor: 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 patterns among large pharmaceutical companies. Some are increasing expenditures, while others remain conservative, and most fall somewhere in between, depending on various internal and external market factors.

Sean O'Connor: As we noted last quarter the market funding environment continues to improve over last year.

Sean O'Connor: Biotech funding is starting to show signs of recovery, most notably for companies that have drug candidates in the clinic.

Sean O'Connor: We continue to be cautiously optimistic about our large pharmaceutical clients' spending. Right now, we see a range of spending patterns 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 we're 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 and small biotech, and the Asian market still continues to lag overall March to grow.

We continue to be cautiously optimistic about our large pharmaceutical clients spending right now we see a range of spending Panthers among large pharmaceutical companies. Some are increasing its expenditures others remain conservative.

Sean O'Connor: And with most falling somewhere in between depending on various internal and external market factors.

Sean O'Connor: 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 we're 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 and small biotech, and the Asian market still continues to lag behind all market growth.

Overall, the market isn't about that better position today compared to a year ago.

Sean O'Connor: Moving to our software segment.

Sean O'Connor: Software revenues increased 12% in the third quarter and were at 14% for the nine months period.

We saw good renewals upsells and new logo activity.

Sean O'Connor: However, there has been some impact from ongoing churn in small biotech in the Asian market still continues to lag the overall market growth.

Sean O'Connor: Our chemit-formatics 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 predicted. Additionally, there were 15 new customers and 10 upsells for this business unit in Q3. Our physiologically-based pharmacokinetics or PVPK business unit had a 7% revenue increase in the third quarter and 9% for the fiscal year to date. The PVPK business unit added 14 new customers and booked 8 upsells with existing customers. We were excited to launch GPX, the next generation of physiologically-based pharmacokinetics, biopharmaceuticals, modeling, and simulation software, and believe it will become a meaningful addition to our suite of leading edge solutions.

Sean O'Connor: Our Cheminformatics Business Unit delivered 15% revenue growth in the third quarter and 12% for the fiscal year to date. This quarter's growth was once again driven by higher revenues for ADMET predictors. Additionally, there were 15 new customers and 10 upsells for this business unit in Q3. Additionally, 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 PVPK 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.

Sean O'Connor: Our Chem Informatics business unit delivered 15% revenue growth in the third quarter and 12% for the fiscal year to date.

Sean O'Connor: This quarter's growth was once again driven by higher revenues for Avnet predicted.

Sean O'Connor: Additionally, there were 15, new customers in turn up sells for this business unit in Q3.

Sean O'Connor: Our physiologically based pharmacokinetics are P. B P. K business unit had a 7% revenue increase in the third quarter and 9% for the fiscal year to date.

Sean O'Connor: The P. B PK business unit added 14, new customers and booked eight upsells with existing customers.

Sean O'Connor: We're very excited to launch G. P X. The next generation of Physiologically based pharmacokinetics biopharmaceutical modeling and simulation software and.

Sean O'Connor: And believe it will become a meaningful addition to our suite of leading edge solutions and.

Sean O'Connor: 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 customers. 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.

Sean O'Connor: 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.

Sean O'Connor: Initial client reaction has been very positive.

Sean O'Connor: Our clinical pharmacology and pharmacokinetics or C. P. P 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.

Sean O'Connor: Okay.

Sean O'Connor: Revenues in our quantitative systems pharmacology or U S. P business unit increased 80% for the quarter and 78% for the fiscal year to date.

Sean O'Connor: As a reminder, quarterly results can be lumpy for USP based on a high ticket price per license and a smaller pool of end users.

Sean O'Connor: Turning to our services segment revenues.

Sean O'Connor: Increased 18% during the third quarter and 21% for the nine months period with solid bookings and a healthy pipeline of active opportunities.

Sean O'Connor: 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 positive. 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.

Sean O'Connor: Our large pharmac 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 PVP K business unit decreased 10% for the third quarter and increased 4% for the fiscal year to date.

Sean O'Connor: Our large pharma clients continued to exhibit cautious spending patterns, but were seeing good lead activity, which is a positive sign.

Sean O'Connor: Total backlog at the end of the third quarter was $19 6 million.

Sean O'Connor: Which is a robust level as we enter the final quarter of our fiscal year.

Sean O'Connor: 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 PPPK business unit decreased 10% in the third quarter and increased 4% for the fiscal year to date.

Sean O'Connor: Services revenues in our CPP business unit were strong up 27% in the third quarter and 16% for the fiscal year to date.

Sean O'Connor: And our <unk> business unit services revenue grew 49% in the third quarter and 74% for the nine months period.

Sean O'Connor: Benefiting from immunology and oncology model projects.

Sean O'Connor: Services revenue in our P. B PK business unit decreased 10% for the third quarter and increased 4% for the fiscal year to date.

Sean O'Connor: We continue to encounter client source data delays impacting the initiation of contracted projects.

Sean O'Connor: We continue to encounter client source data delays impacting the initiation of contracted projects. Moving on, to our recent news. On June 12, 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 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 proficiency, integration, and collaboration are progressing in line with our internal plan and schedule. Additionally, our customers are showing an interest in learning more; we will be able to provide a fuller update at our year-end call-in hours. With that, I'll turn the call over to Will.

Sean O'Connor: We continue to encounter client source data delays impacting the initiation of contracted projects.

Sean O'Connor: Moving on to our recent news on June 12, we announced the acquisition of Proficiency, a lead leader in providing simulation-enabled performance and intelligence solutions for clinical and commercial drug development. The acquisition brings together our collective expertise and 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.

Sean O'Connor: Moving on to our recent news on June 12, we announced the acquisition of proficiency.

Sean O'Connor: Lead leader in providing simulation enabled performance and intelligence solutions for clinical and commercial drug development.

Sean O'Connor: The acquisition brings together, our collective expertise and simulations.

Sean O'Connor: <unk> technologies, and our focus on science, creating a one of a kind platform that spans across the drug development continuum.

Sean O'Connor: 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 sketch.

Additionally, our customers are showing interest in learning more.

Sean O'Connor: We will be able to provide a fuller update on our year-end call in October.

We'll be able to provide a fuller update on our year end call in October.

William Frederick: With that, I'll turn the call over to Will. Thank you, Sean. To recap our strong third quarter performance, total revenue increase 14% to 18.5 million dollars, software revenue increase 12%, representing 64% of total revenue, and services revenue increased 18%. On a trailing 12 month basis, total revenue increased 20% to 67 million dollars, software revenue increased 22%, representing 60% of total revenue, and services revenue increased 17%. Q3 total gross margin was 71% compared to 82% last year, with software gross margin at 88% versus 91% and services gross margin at 41% versus 63%. For the trailing 12 months, total gross margin was 73%; software gross margin was 88%; and services gross margin was 48%.

Speaker Change: With that I'll turn the call over to well.

Thank you Sean.

William Frederick: To recap our strong third quarter performance, total revenue increased 14% to $18.5 million. Software revenue increased 12%, representing 64% of total revenue, and services revenue increased 18%. Overall, total revenue increased 20% to $67 million.

Speaker Change: To recap our strong third quarter performance total revenue increased 14% to $18 $5 million software revenue increased 12%, representing 64% of total revenue and services revenue increased 18%.

Speaker Change: On a trailing 12 month basis total revenue increased 20% to $67 million software revenue increased 22%, representing 60% of total revenue.

William Frederick: Software revenue increased 22%, representing 60% of total revenue, and services revenue increased 17%. Q3 total gross margin was 71% compared to 82% last year, with software gross margin at 88% versus 91%, and services gross margin at 41% versus 63%. For the trailing 12 months, total gross margin was 73%, software gross margin was 88%, and services gross margin was 48%. The year-over-year services gross margin decline was primarily driven by the previously communicated shift of our services personnel to cost and revenue departments from SG&A departments.

Speaker Change: And services revenue increased 17%.

Speaker Change: Q3, total gross margin was 71% compared to 82% last year with software gross margin at 88% versus 91%.

Speaker Change: In services gross margin at 41% versus 63%.

Speaker Change: For the trailing 12 months total gross margin was 73% software gross margin was 88% and services gross margin was 48%.

William Frederick: The year-over-year services gross margin decline was primarily driven by the previously communicated shift of our services personnel to cost and revenue departments from the SG&A departments. Turning to software revenue contribution by business unit for the quarter, PVPK was 56%, Kim and Formatics was 20%, CPP was 18%, and QSP was 6%. For the trailing 12 months, PVPK contribution was 54%, CPP was 20%, Kim and Formatics was 19%, and QSP was 7%. For the trailing 12 months, our customer renewal rate was 92% based on fees and 84% based on accounts. For the trailing 12 months, average revenue per customer increased to 95,000 dollars.

Speaker Change: The year over year services gross margin decline was primarily driven by the previously communicated shift of our services personnel to cost and revenue departments from SG&A departments.

William Frederick: Turning to Software Revenue Contribution by Business Unit for the quarter, PVPK was 56%, Cheminformatics was 20%, CPP was 18%, and QSP was 6%. For the trailing 12 months, PVPK contribution was 54%, CPP was 20%, Cheminformatics was 19%, and QSP was 7%. For the trailing 12 months, our customer renewal rate was 92% based on fees and 84% based on account.

Speaker Change: Turning to software revenue contribution by business unit for the quarter PV.

Kim: <unk> was 56% Kim.

Kim: Kim Informatics was 20%.

Kim: C P P was 18% and <unk>.

Kim: S P was 6%.

Speaker Change: For the trailing 12 months PV PK contribution was 54% CPP was 20% Tim.

Kim: Tim Informatics was 19% and.

Kim: In Q S. P was 7%.

Kim: For the trailing 12 months, our customer renewal rate was 92% based on fees and 84% based on accounts.

Kim: For the trailing 12 months average revenue per customer increased to $95000.

William Frederick: Shifting to our services revenue contribution by business unit for the quarter, CPP was 48%, QSP was 29%, PVPK was 19%, and RIG was 4%. For the trailing 12 months, CPP contribution was 44%, QSP was 31%, PVPK was 21%, and RIG was 4%. Total services project worked on during the quarter with 181 and quarter end backlog increased to 19.6 million dollars. Anticipated revenue from backlog within 12 months increased to approximately 91%.

William Frederick: For the trailing 12 months, average revenue per customer increased to $95,000. Shifting to our services revenue contribution by business unit for the quarter, CPP was 48%, QSP was 29%, PBPK was 19%, and Reg was 4%.

Kim: Shifting to our services revenue contribution by business unit for the quarter.

C. P. P was 48% Q S. P was 29% P.

Kim: P V PK was 19%.

Kim: And Greg was 4%.

William Frederick: For the trailing 12 months, CPP contribution was 44%, QSP was 31%, PVPK was 21%, and REG was 4%. Total services projects worked on during the quarter 181 and quarter in backlog increase to $19.6 million. Anticipated revenue from backlog within 12 months increased to approximately 91%. Turning to our consolidated income statement for the quarter, R&D expense was 7% of revenue, compared to 6% last year. Sales and marketing expense were 13% of revenue, up from 10% last year.

Kim: For the trailing 12 months C. P. P contribution was 44%.

Kim: Q S P was 31% Pvp.

Kim: PV PK was 21% and rig was 4%.

Kim: Total services project worked on during the quarter with 181 and quarter end backlog increased to $19 $6 million.

Kim: Anticipated revenue from backlog within 12 months increased to approximately 91%.

William Frederick: Turning to our consolidated income statement for the quarter, R&D expense was 7% of revenue compared to 6% last year. Sales and marketing expense was 13% of revenue, up from 10% last year, and G&A expense was 41% of revenue, up marginally from 40% last year. G&A expense for the quarter included $0.9 million of transaction-related expenses for the acquisition of Proficiency. Total operating expenses were 61% of revenue compared to 57% last year. Income from operations was 10% of revenue compared to 25% last year. And income before income taxes was 21% of revenue, compared to 30% last year.

Kim: Turning to our consolidated income statement for the quarter R&D expense was 7% of revenue compared to 6% last year.

Kim: Sales and marketing expense was 13% of revenue.

Kim: From 10% last year.

William Frederick: And G&A expense was 41% of revenue, up marginally from 40% last year. G&A expense for the quarter included $0.9 million of transaction-related expenses for the acquisition of proficiency. Total operating expenses were 61% of revenue compared to 57% last year, income from operations was 10% of revenue compared to 25% last year, and income before income taxes was 21% of revenue compared to 30% last year. Year-over-year expense increases were primarily due to the proficiency acquisition cost and cash and stock-based compensation increases due to headcount additions, primarily from the Immunetrix acquisition last year.

And G&A expense was 41% of revenue up marginally from 40% last year.

Kim: G&A expense for the quarter included $9 million of transaction related expenses for the acquisition of proficiency.

Kim: Total operating expenses were 61% of revenue compared to 57% last year.

Kim: Income from operations was 10% of revenue compared to 25% last year.

Kim: And income before income taxes was 21% of revenue compared to 30% last year.

William Frederick: Year-over-year expense increases were primarily due to the proficiency acquisition costs and cash and stock-based compensation increases due to headcount additions, primarily from the Immunetrics acquisition last year. Other income was $2 million this quarter compared to $8 million last year, primarily due to a $0.6 million increase from lower fair value of the Immunetrics earnout liability and a $0.4 million increase from higher interest income. Net income for the third quarter was $3.1 million, or 17% of revenue, compared to $4 million, or 25% of revenue last year. Deluted earnings per share were 15 cents compared to 20 cents last year, and adjusted deluted EPS excluding the impact of acquisition costs were 19 cents compared to 21 cents last year.

Kim: Year over year expense increases were primarily due to the proficiency acquisition costs.

Kim: And cash and stock based compensation increases due to head count additions primarily from the immuno tricks acquisition last year.

William Frederick: Other income was $2 million this quarter compared to $0.8 million last year, primarily due to a $0.6 million increase from a lower fair value of the Immunetrics earn-out liability and a $0.4 million increase from higher interest income. Net income for the third quarter was $3.1 million, or 17% of revenue, compared to $4 million or 25% of revenue last year. Diluted earnings per share were 15 cents compared to 20 cents last year, and adjusted diluted EPS, excluding the impact of acquisition costs, was 19 cents compared to 21 cents last year.

Kim: Other income was $2 million this quarter compared to point $8 million last year, primarily due to a point 6 million dollar increase from lower fair value of the evening metrics earn out liability.

Kim: And the point $4 million increase from higher interest income.

Kim: Net income for the third quarter was $3 $1 million or 17% of revenue.

Kim: Compared to $4 million or 25% of revenue last year.

Diluted earnings per share were <unk> 15 cents compared to 20 cents last year.

Kim: And adjusted diluted EPS, excluding the impact of acquisition costs were <unk> 19 cents compared to 21 since last year.

William Frederick: Third quarter adjusted EBIT was $5.7 million compared to $6.5 million last year at 31% and 40% of revenue, respectively. We calculate adjusted EBIT by adding back interest, taxes, to appreciation and immunization, stock-based compensation, gain or loss on currency exchange, any acquisition or financial transaction-related expenses, and any asset impairment charges. The reconciliation of this non-GAAP metric to net income, the relevant GAAP metric, is in our earnings release and on our website. Income tax expense for the third quarter was $0.8 million compared to $0.9 million last year, and our effective tax rate remained constant at 19%. Our current effective tax rate estimate for the full fiscal year remains between 20 to 23%.

William Frederick: Third quarter adjusted EBITDA was $5.7 million compared to $6.5 million last year at 31% and 40% of revenue, respectively. We calculate adjusted EBITDA by adding back interest taxes, depreciation, and amortization, stock-based compensation, gain or loss on currency exchange, any acquisition or financial transaction-related expenses, and any asset impairment charges. The reconciliation of this non-GAAP metric to net income, the relevant GAAP metric, is in our earnings release and on our website. Income tax expense for the third quarter was $0.8 million compared to $0.9 million last year, and our effective tax rate remained constant at 19%.

Kim: Third quarter, adjusted EBITDA was $5 $7 million compared to $6 $5 million last year at 31% and 40% of revenue respectively.

Kim: We calculate adjusted EBITDA by adding back interest taxes, depreciation and amortization stock based compensation gain or loss on currency exchange any acquisition or financial transaction related expenses.

Kim: And any asset impairment charges.

Kim: The reconciliation of this non-GAAP metric to net income the relevant GAAP metric is in our earnings release and on our website.

Kim: Income tax expense for the third quarter was point $8 million compared to $9 million last year.

Kim: Our effective tax rate remained constant at 19%.

William Frederick: Our current effective tax rate estimate for the full fiscal year remains between 20 to 23%. Turning to our balance sheet, we ended the quarter with $119 million in cash and investments. Following the acquisition of Proficiency in June, we had $19 million in cash and investments and remained well capitalized with no debt, strong free cash flow, and a continued commitment to our capital allocation strategy and corporate development initiatives. Lastly, today we announce that our Board of Directors has determined to discontinue the company's quarterly cash dividend with the final payment in August. The board's decision reflects our priority to invest in growth initiatives that will generate long-term shareholder value versus continuing the nominal dividend. I'll now turn the call back to Sean.

Kim: Our current effective tax rate estimate for the full fiscal year remains between 20% to 23%.

William Frederick: Turning to our balance sheet, we ended the quarter with $119 million in cash and investments. Following the acquisition of proficiency in June, we had $19 million in cash and investments and remained well capitalized with no debt, strong free cash flow, and a continued commitment to our capital allocation strategy, incorporate development initiative.

Kim: Turning to our balance sheet, we ended the quarter with $119 million in cash and investments.

Kim: Following the acquisition of proficiency in June we had $19 million in cash and investments and remain well capitalized with no debt.

Kim: <unk> free cash flow and a continued commitment to our capital allocation strategy and corporate development initiatives.

William Frederick: Lastly, today we announced that our Board of Directors has determined to discontinue the company's quarterly cash dividend, with the final payment in August. The Board's decision reflects our priority to investing in growth initiatives that will generate long-term shareholder value versus continuing the nominal dividend.

Kim: Lastly, today, we announced that our board of directors has determined to discontinue the company's quarterly cash dividend with the final payment in August.

Kim: The boards decision reflects our priority to invest in growth initiatives that will generate long term shareholder value versus continuing the nominal dividend.

Sean O'Connor: I'll now turn the call back to Sean. Thank you, Will. Our third quarter results reflected strong performance in both our software and services segments. As we said last quarter, market conditions have improved compared to last year, but these changes require time before they translate to actual bookings and revenue. As such, we remain cautiously optimistic. With our strong performance in the first nine months of the year, combined with the expected three million contribution from proficiency in the newly formed clinical simulations and medical communications business unit, we're well positioned to meet our stated fiscal 2024 guidance targets, which include total revenue between 69 million to 72 million, year-over-year revenue growth in the range of 15 to 20%.

Speaker Change: I'll now turn the call back to Sean.

Sean: Thank you will.

Sean O'Connor: Our third-quarter results reflected strong performance in both our software and services sectors. As we said last quarter, market conditions have improved compared to last year, but these changes require time before they translate to actual bookings and revenue. As such, we remain cautiously optimistic.

Sean: Our third quarter results reflected strong performance in both our software and services segments as.

Sean: As we said last quarter market conditions have improved compared to last year, but these changes require time before they translate to actual bookings and revenue.

Sean: As such we remain cautiously optimistic.

Sean O'Connor: With our strong performance in the first nine months of the year, combined with the expected $3 million contribution from proficiency in the newly formed clinical simulations and medical communications business unit, we're well positioned to meet our stated fiscal 2024 guidance targets, which include total revenue between $69 million and $72 million, year-over-year revenue growth in the range of 15 to 20 percent, software mix between 55 and 60%, services mix between 40 and 45%, diluted earnings per share Of note, we are adding adjusted EPS to provide clarity on our operating profitability and separate the impact of transaction costs related to the proficiency acquisition.

Sean: With our strong performance in the first nine months of the year combined with the expected $3 million contribution from proficiency in the newly formed clinical simulations and medical communications business unit.

Sean: We are well positioned to meet our stated fiscal 2024 guidance targets, which include.

Sean: Total revenue between 69 million to $72 million.

Sean: Year over year revenue growth in the range of 15% to 20%.

Sean O'Connor: Software mix between 55 and 60%; services mix between 40 and 45%. Deluted earnings per share of 46 cents to 48 cents. And adjusted deluded earnings per share of 54 to 56 cents. Of note, we are adding adjusted EPS to provide clarity on our operating profitability and separate the impact of transaction costs related to the Proficiency acquisition. Our gap guidance reflects an adjustment to deluded EPS to reflect the gap impact of the same acquisition-related charges. And the fourth quarter reporting, which consolidates the acquisition.

Sean: Software mix between 55 and 60%.

Sean: Services mix between 40 and 45%.

Sean: Diluted earnings per share of 46 to 48.

Sean: And adjusted diluted earnings per share of 54 to 56.

Sean: Yes.

Sean: Of note, we are adding adjusted EPS to provide clarity on our operating profitability and separate the impact of transaction costs related to the proficiency acquisition.

Sean O'Connor: Our GAAP guidance reflects an adjustment to diluted EPS to reflect the GAAP impact of these same acquisition-related charges and the fourth quarter reporting, which consolidates the acquisition. We will be providing our fiscal year 2025 guidance in October when we report our fourth quarter and full year fiscal 2024 results, but we are reaffirming that the acquisition of proficiency is expected to be accretive to our fiscal year 2025 EPS, factoring in the loss of interest income.

Sean: Our GAAP guidance reflects an adjustment to diluted EPS to reflect the GAAP impact of the same acquisition related charges in the fourth quarter reported which consolidates the acquisition.

Sean O'Connor: We will be providing our fiscal year 2025 guidance in October when we report our fourth quarter in full year fiscal 2024 results. But are reaffirming that the acquisition of proficiency is expected to be a creative to our fiscal year 2025 EPS, factoring in the loss of interest income.

Sean: We will be providing our fiscal year 2025 guidance in October when we report our fourth quarter and full year fiscal 2024 results, but are reaffirming that the acquisition of proficiency is expected to be accretive to our fiscal year 2025, EPS factoring in the loss.

Sean: Net interest income.

Sean O'Connor: Before returning to the Q&A, I want to take the opportunity to reinforce the key differentiators of our story. Simulations Plus is a leading provider of bio simulation simulation-enabled performance and intelligence solutions and medical communications for the biopharma industry. The new CSMC business unit brings experience and content simulation developed with AI technologies to enhance clinical trial success, data analytics, and medical communications. With the acquisition, we have doubled our total addressable market to $8 billion and have expanded our portfolio to serve pharma clients from the preclinical phase through to commercialization. We have a compelling customer value proposition and strong competitive position with high barriers to entry.

Sean O'Connor: Before turning to the Q&A, I want to take the opportunity to reinforce the key differentiators of our story. Simulations Plus is a leading provider of biosimulation, simulation-enabled performance and intelligence solutions, and medical communications for the biopharma industry. The new CSMC business unit brings experience and content simulation developed with AI technologies to enhance clinical trial success, data analytics, and medical communication.

Before turning to the Q&A I wanted to take the opportunity to reinforce the key differentiators of our story.

Sean: Simulations plus is a leading provider of Biosimilar <unk> simulation enabled performance and intelligence solutions and medical communications for the Biopharma industry.

Sean: The new <unk> business unit brings experience and contents emulation developed with AI technologies to enhance clinical trials success data analytics and medical communications.

Sean O'Connor: With the acquisition, we have doubled our total addressable market to $8 billion and have expanded our portfolio to serve pharma clients from the preclinical phase through to commercialization. We have a compelling customer value proposition and a strong competitive position with high barriers to entry. We have an attractive financial profile, a strong balance sheet, and no debt. And, finally, we have a seasoned management team with scientific leadership and significant expertise in modeling and simulation. Thank you for your time today. And with that, I'll now turn the call over to the operator for your questions. Thank you

Sean: With the acquisition, we have doubled our total addressable market to $8 billion.

Sean: And have expanded our portfolio to serve pharma clients from the preclinical fray phase through to commercialization.

We have a compelling customer value proposition and strong competitive position with high barriers to entry.

Sean O'Connor: We have an attractive financial profile with a strong balance sheet and no debt. And finally, we have a seasoned management team with scientific leadership and significant expertise in modeling and simulation.

Sean: We have an attractive financial profile with strong balance sheet and no debt.

Sean: And finally, we have a seasoned management team with scientific leadership and significant expertise in modeling and simulation.

Unknown Attendee: Thank you for your time today, and with that, I'll now turn the call over to the operator for your questions.

Sean: Thank you for your time today and with that I'll now turn the call over to the operator for your questions.

Unknown Attendee: Thank you, Mr. O'Connor.

Operator: Thank you, Mr. O'Connor. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2.

Speaker Change: Thank you Mr. O'connor will now be conducting a question and answer session.

Unknown Attendee: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telecom keypad. The confirmation tone will indicate your line is on the question kit. You may press star two if you'd like to remove your question.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line has been the question Kim.

Speaker Change: Press Star two if you'd like to remove your question from the queue for participants using speaker equipment and it would be necessary to pick up your handset before pressing at Barclays.

Operator: One moment, please, while we pull up a question. Thank you. Our first question is from Max Smock with William Blair. Please proceed with your question.

Unknown Attendee: Thank you.

Another place, while we poll for questions.

Speaker Change: Yeah.

Christine Reigns: Our first question is from Max Smock with William Blair. Please proceed with your question. Hi, it's Christine Reigns on for Max Smock. Thanks for taking our questions. Well, I understand you're not providing guidance today on a high level. How should we think about that?

Speaker Change: Thank you. Our first question is from Max Smock with William Blair. Please proceed with your question.

Christine Rains: Hi, it's Christine Rains for MaxMock. Thanks for taking our questions. While I understand you're not providing guidance today at a high level, how should we think about 2025 organic revenue growth potential given the current improving macro environment and bookings and backlog visibility? Also, on the inorganic side, are you still thinking about a 15 to $18 million contribution from proficiency in 2025? And how should we think about the cadence and breakdown between software and services?

Hi, it's Christina <unk> on for Max Smock, Thanks for taking our questions.

Speaker Change: Well I understand you're not providing guidance today on a high level, how should we think about 2025 organic revenue growth potential given current improving macro environment and bookings and backlog visibility also.

Sean O'Connor: About 2025 organic revenue growth potential given current improving macro environment and bookings and backlog visibility. Also on the inorganic side, are you still thinking about a 15 to 18 million dollar contribution from proficiency in 2025? And how should we think about the cadence and breakdown between software versus services? Thanks. Yeah, thank you much for the question. And yeah, I know everyone is anxious, but we do give guidance in October for fiscal year 25. You know, from a step back objective sort of perspective, we've always stated a growth rate by simulation market as a whole is growing 12 to 15% in the last few years. We've given guidance of 10 to 15% in a difficult market.

Speaker Change: Also on the inorganic side are you still thinking about a $15 million to $18 million contribution from proficient fee in 2025.

Speaker Change: How should we think about the cadence and breakdown between software versus services.

Sean O'Connor: Yeah, thank you very much for the question. And yeah, I know what everyone is anxious about, but we do give guidance in October for fiscal year 25. You know, from a step back, objective sort of perspective, we've always stated the growth rate of the biosimulation market as a whole is growing 12 to 15%. In the last two years, we've given guidance of 10% to 15% in a difficult market. You know, the potential exists for the market improvement that we're starting to see this year to help contribute to an advancement of that in fiscal year 25.

Speaker Change: Yeah. Thank you very much for the question and Yeah, I know everyone is anxious, but but we do we do give guidance.

Speaker Change: For fiscal year 'twenty five.

Speaker Change: You know from a well step back objective.

Speaker Change: Uh huh.

Speaker Change: The only state that the growth rate the biosimilar market as a whole is growing 12% to 15%.

Speaker Change: And the last two years, we've given guidance of 10% to 15%.

Sean O'Connor: You know, the potential exists for the market improvement that we're starting to see this year to help contribute an advancement of that in fiscal year 25. So we really not seen that translate into bookings and activity as yet this year. So remain cautious in that regard; certainly, the funding and biotech has improved, and that's a more active environment. But the large farmer market, which makes up the majority of our client base, still is a mixture of spenders and non-spenders, with most people pretty much holding tight. So as we enter the year in October, our timing in terms of getting guidance benefits from the fact that as we enter the back after the year, our clients are going through their fiscal year 20 budgeting cycles and we get some visibility to that, and that always contributes to our ability to give guidance into next year.

Speaker Change: Difficult market.

The potential exists for the market improvement that we're starting to see this year to help contribute to an advancement of that in fiscal year 'twenty five.

Sean O'Connor: But we've really not seen that translate into bookings and activity as yet this year, so remain cautious in that regard. Certainly, the funding for biotech has improved, and that's made for a more active environment. But the large pharma market, which makes up the majority of our client base, still is a mixture of spenders and non-spenders, with most people pretty much holding tight. So, as we enter the year in October, our timing in terms of giving guidance benefits from the fact that, as we enter the back half of the year, our clients start going through their fiscal year 25 budgeting cycles, and we get some visibility into that, and that always contributes to our ability to give guidance into next year.

Speaker Change: We're really not seeing that translate into our bookings activity has yet this year. So we remain cautious.

Speaker Change: I regard certainly the funding in biotech.

Speaker Change: It has improved and that's a more active environment.

Speaker Change: Pharma market, which makes up.

Speaker Change: The majority of our client base are still is a.

Speaker Change: A mixture of spenders in non centers with.

Speaker Change: Most people pretty pretty much holding tight so as we enter the year in October.

Speaker Change: Our timing in terms of again, giving guidance benefits from the fact that.

Speaker Change: As we enter the back half of the year, our clients start going through their fiscal year 'twenty.

Speaker Change: Budgeting cycles, and we get some visibility to that yet and that always contributes to our ability to really give guidance.

Speaker Change: Yeah.

Sean O'Connor: No change in what we've said in terms of the proficiency contribution in fiscal 25, the $15 million to $18 million we said at the announcement of the transaction. Certainly, there is potential for that number to come in better than that, but at this point in time, $15 million to $18 million is our expectation.

Sean O'Connor: No change in what we've said in terms of the professional proficiency contribution in fiscal 25, the 15 to 18 million. We said at the announcement of the transaction certainly potential for that that then would come in better than that, but at this point in time, 15 to 18 is our location.

Speaker Change: Hmm.

Speaker Change: No change in what we've said in terms of the professor proficiency contribution in fiscal 'twenty five.

Speaker Change: The $15 million to $18 million, we said at the announcement of the.

Speaker Change: The transaction.

Speaker Change: It's certainly a potential for that number to come in better than that but at this.

Speaker Change: At this point in time 15 to 18 dessert.

Speaker Change: Okay.

Unknown Attendee: Great, thanks. That makes a lot of sense.

Christine Rains: Great, thanks. That makes a lot of sense. On margins, we were a little surprised to see adjusted EBITDA margin come in a little short of expectations, despite outperformance in software revenue. So, I'm hoping you can provide some more color on key puts and takes impacting margins in the quarter.

Speaker Change: Great. Thanks that makes a lot of sense.

Sean O'Connor: On margins, we were a little surprised to see adjusted EBITDA margin come in a little short of expectations despite performance in software revenue. So I hope you can provide some more color on key puts and takes impacting margins in the quarter. So, in terms of adjusted EBITDA and certainly target that to be in the 30 to 35 to 40% range, temporary sort of situations, contributions in terms of expenses, we had a pretty significant. Software released during the quarter of GPX to the marketplace with some costs associated with that. We're benefiting, quite frankly, globally, from incredible retention and recruiting efforts and seeing very little churn in terms of our employee base. And, you know, typically we see more of that, and so are hiring up as accumulated more quickly this year.

Speaker Change: On margins, we were a little surprised that the adjusted EBITDA margin came in a little short of expectations, Despite outperformance and tougher revenue.

Speaker Change: Hoping you can provide some more color on key puts and takes impacting margins in the quarter.

Sean O'Connor: Yeah, it's, you know, it's come down a bit. We've been in the last couple of quarters at the 31, 32% level in terms of adjusted EBITDA, and we certainly target that to be in the 30 to 35 to 40% range. You know, temporary sort of situations, contributions, in terms of expenses. We had a pretty significant software release during the quarter of GPX into the marketplace that had some costs associated with that.

Speaker Change: Yeah, it's it's come down a bit.

Speaker Change: But in the last couple of quarters.

Speaker Change: 31, 32% level in terms of adjusted EBIDTA, and we certainly target that to be in the 30 to 35% to 40% range.

Speaker Change: Temporary sort of situations.

Speaker Change: Contributions in terms of expenses, we had a pretty significant.

Speaker Change: Software released during the quarter a G P X to the marketplace, but at some costs associated with that.

Speaker Change: We're benefiting quite frankly globally from a incredible retention and recruiting efforts.

Christine Rains: We're benefiting, quite frankly, globally from incredible retention and recruiting efforts and seeing very little churn in terms of our employee base. And, you know, typically, we see more of that. And so our hiring has accumulated more quickly this year. That's contributing a little bit to it, and we'll even out over the course of the coming quarters. So, you know, those two factors, I think, are contributing a bit there. But, you know, we remain targeted in the 35 to 40% range. And as I said, with the announcement, proficiency will add a little bit of pressure to that in the beginning, but we believe that it will affect our long-term profile as well.

Speaker Change: We're seeing very little churn in terms of our employee base and.

Speaker Change: You know typically we see more of that and.

Speaker Change: And so our hiring up as has accumulated more quickly this year.

Sean O'Connor: We're contributing a little bit to it, and we'll even out over the course of the coming quarters. So, you know, both those two factors, I think, are contributing a bit there, but we remain targeted in the 35 to 40% range. And, as I said with the announcement, proficiency will add a little bit of pressure to that in the beginning, but they both are long term profile as well.

Speaker Change: Repeating a little bit too much and will even out over the course of the coming quarters.

Speaker Change: So those two factors I think are contributing a book.

Speaker Change: No we remain targeted in the 35% to 40% range and as I said with Eaton announcement.

Speaker Change: Coefficient proficiency will add a little bit of pressure to that.

Speaker Change: In the beginning but we built.

Speaker Change: They both are long term profile as well.

Unknown Attendee: Great, that's also helpful.

Sean O'Connor: Great. That's also helpful. One last one for us on the PVPK services side. With that being down this quarter due to client source data delays impacting the initiation of contracted projects, just confirming that this work is delayed and not canceled. And if so, should we expect a benefit from this work materializing in Q4 or 2025?

Speaker Change: Great. That's also helpful. Just.

Sean O'Connor: One last one for us on the PVPK services side, but that being down this quarter due to client source data delays, impacting the initiation of contracted projects, just confirming that this work is delayed and not canceled. And if so, should we expect a benefit from this work materializing in Q4 or 2025? Well, we hope to get back on track with the more consistent even flow PVPK consulting business. If you look back over 4 to 8 quarter trends aligned, they were contributing a very significant growth quarter over quarter for a good part of that window of time. We've encountered, of late, some contractual situations.

Just one last one on the T V PK services side.

Speaker Change: But that being down last quarter data client source data delays impacting initiation of contracted projects.

Speaker Change: I'm just confirming that this work is delayed and not canceled and if so should we expect a benefit from this work materializes, well Q4 or 2025.

Christine Rains: Well, we hope to get back on track with a more consistent, even flow PPPK consulting business. If you look back over four to eight quarter trend lines, they were contributing very significant growth quarter over quarter for a good part of that window of time. We've encountered of late some contractual situations where the expectations in terms of data readiness to perform those projects have been pushed off. Nothing significant in terms of cancellation of those projects, but the delay, whether that delay catches up in the fourth quarter, is to be seen and experienced there.

Speaker Change: Well, we hope to get back on track with a more consistent even flow PPP K consulting business. If you look back over a four to eight quarter trend line they were contributing.

Speaker Change: Very significant growth quarter over quarter for a good part of that window up.

Speaker Change: Time, we've encountered.

Speaker Change: Late some contractual situations, but the expectations in terms of data readiness to perform those.

Sean O'Connor: But the expectations in terms of data readiness to perform those projects has been pushed off. Nothing significant in terms of cancellation of those projects, but the way whether that delay catches up in the fourth quarter, you know, is to be seen in experience there. If it all caught up, we might be the little challenge in terms of capacity in that regard. But, you know, we've had two quarters, maybe two and a half quarters of delays impacting that segment. It then the cycle through our CPP consulting practice, our QSPS consulting practice, we're seeing always have one that has some delay challenges.

The projects are has it has been pushed off a nothing significant in terms of.

Speaker Change: Cancellation of those projects that are pushed away whether that delay catches up in the fourth quarter.

Speaker Change: Is it's to be seen and experienced there.

Christine Rains: If it all caught up, we might be able to challenge in terms of capacity in that regard, but we've had two quarters, maybe two and a half quarters of delays impacting that segment. It tends to cycle through. Our CPP consulting practice, our QSP consulting practice, we seem to always have one that has some delay challenges, and that portfolio of consulting services usually evens out, and as with this quarter, their growth, at 18%, was quite strong.

Speaker Change: Yes, it all caught up we might be the whole challenge in terms of capacity.

Speaker Change: Am I right in that regard, but oh yeah.

Speaker Change: Two two quarters, maybe two and a half quarters of delays impacting there.

Speaker Change: So it tends to cycle through our C. P. P consulting about this our kiosk based consulting practice.

Speaker Change: We seem to always have one that has some delay challenges.

Unknown Attendee: And that portfolio of consulting services usually evens out, and as with this quarter, their growth of 18% was quite strong.

And that portfolio of consulting services, usually evens out and spread this quarter.

Speaker Change: Their growth at 18% was quite strong.

Unknown Attendee: Great. Thank you for taking our questions.

Sean O'Connor: Great, thank you for taking our questions.

Great. Thank you for taking our questions.

Unknown Attendee: Sure. Thank you.

Sure.

Operator: Thank you. Our next question is from Franois Brisebois with Oppenheimer & Company. Please proceed with your question.

Speaker Change: Thank you. Our next question is from Francois for a spa with Oppenheimer and company. Please proceed with your question.

Florence Laugler Spa: Our next question is from Florence Laugler Spa with Oppenheimer Company. Please proceed with your question. All right. Thanks for taking the questions. So I was just wondering, in terms of the market as a whole, biotech, pharma, the XBL and IBB, they've kind of come back a little bit after the first quarter was pretty exciting for the space. So I was just wondering, in terms of your feel for market and potential upside, your cautious optimism, is this based on where we are now? Have you seen anything, or was it kind of more exciting after the first quarter?

Franois Daniel Brisebois: All right, thanks for taking the questions. So I was just wondering, in terms of the market as a whole, biotech, pharma, the XBI, and IBB, they've kind of come back a little bit after the first quarter. It was pretty exciting for the space. So I was just wondering, in terms of your feel for the market and potential upside, your cautious optimism, is this based on where we are now? Have you seen anything? Or was it kind of more exciting after the first quarter, and now we're a little more cautious?

Alright, thanks for taking the questions. So I was just wondering in terms of the market as a whole biotech pharma, the Spi and I B b.

Speaker Change: You know come back a little bit after the first quarter it was pretty exciting.

Sean O'Connor: Any color there would be helpful.

Speaker Change: For the space. So I was just wondering in terms of your feel for market and any potential upside youre cautious optimism.

Speaker Change: Is this based on where we are now have you seen anything or was it kind of more exciting them. After the first quarter and now we're a little more cautious any any color there would be helpful.

Franois Daniel Brisebois: Yeah, Frank, you know, the two segments, one at a time, on the biotech side, boy, the excitement of seeing that funding, those funding announcements, was very positive. That seems to have leveled out, I guess, not gone away, but leveled out, and, you know, we're still really waiting for that to translate into contracted business, certainly more conversations and pipeline activity there that bodes well for the future, but in terms of that translating to, you know, anything different from the growth, the baseline growth, if you will, that we've been experiencing in that segment over the last few quarters, that's yet to come.

Speaker Change: Yeah Frank.

Sean O'Connor: The two segments, one at a time, on the biotech side, boy, the excitement of seeing that funding was funding announcements was very positive. That seems to have leveled out, I guess, not gone away, but leveled out. And, you know, we're still really waiting for that to translate into contracted business. Certainly more conversations and pipeline activity that are the both role for the future, but in terms of that translating to, you know, anything different from the growth, the baseline growth, if you will, go for the experiencing that segment over the last few quarters that you have to come.

Speaker Change: Yeah.

Speaker Change: The two segments one at a time on the biotech side boy the excitement of seeing that funding there's funding announcements.

Speaker Change: It was very positive that seems to have.

Speaker Change: That leveled out I guess, not gone away, but leveled out and.

And you know, we're still really waiting for that to translate into.

Speaker Change: Contracted business or certainly more conversations and pipeline activity, there that bodes well for the future, but the but in terms of that translating to anything.

Speaker Change: Anything different from the growth the baseline growth. If you will goes we've been experiencing in that segment over the last few quarters, that's yet to come.

Sean O'Connor: On the large pharmaceutical side, again, you know, we just each, each account is its own antidocal story in terms of budget process and cup packs and in pace and, you know, in those situations, at least from a historical perspective. We often see that for the large harm external or internal announcement to cut back in terms of expenses, you know, create a window, a pause of time in which purchasing activity, contracting new business slows down. Now, oftentimes that leads to a flurry as they catch up, and programs are still being pushed forward, and they need to contribute to the modeling and simulation input into those clinical trial efforts, but I can't just go away.

Franois Daniel Brisebois: On the large pharma side, again, you know, each account is its own antidotal story in terms of the budget process and cutbacks and pace, and, you know, in those situations, at least from a historical perspective. We often see that the large pharma external or internal announcement of a cutback in terms of expenses creates a window, a pause of time in which purchasing activity, and contracting new business slows down. Now, oftentimes, that leads to a flurry as they catch up, and programs are still being pushed forward, and they need to contribute the modeling and simulation input into those clinical trial efforts, but that can't just go away.

Speaker Change: On the large pharma side again.

Speaker Change: Each each account has its own antidotes old story in terms of our budget process and put backs and me in pace and in those situations at least from a historical perspective.

Speaker Change: Often see that are worthy of the large pharma.

Speaker Change: External or internal announcements a cutback in terms of expenses.

Speaker Change: You know creates a window a pause of time in which mm mm purchasing activity contracting new business slows down.

Speaker Change: Oftentimes that leads to a flurry.

Speaker Change: As a as they catch up programs are still being pushed forward and they need to.

Speaker Change: Contribute to the modeling and simulation input into those clinical trial efforts, but.

I can't just go away so.

Sean O'Connor: So, are we, you know, more optimistic or more cautious today? We're continuing to work hard within the environment that we've got, where there are some bright lines out there in terms of some improvements.

Franois Daniel Brisebois: So are we more optimistic or more cautious today? We're continuing to work hard within the environment that we've got. Boy, there are some bright lines out there in terms of some improvements, but a continuous flow of challenging budgetary decisions on the part of our clients keeps us probably in the same framework of mine that we were in the last quarter or two.

Speaker Change: Are we more optimistic or more cautious today.

Speaker Change: Continuing to work hard with them the environment that we've got a play there are some bright lines out there in terms of some improvements.

Sean O'Connor: But, you know, continue as a flow of challenging, challenging budgetary decisions on the part of our clients keeps us perfectly in the same framework of mine that we were in the last quarter or two.

Speaker Change: But continuous flow.

Speaker Change: A challenging challenging budgetary decisions on the part of our clients keeps.

Speaker Change: Keeps us comfortably on the same framework of money that we were in.

Speaker Change: Last quarter or two.

Sean O'Connor: Okay, thank you. And then, maybe lastly, in terms of the proficiency updates that you mentioned on the next call, is that all related to guidance, or what else in terms of updates should we be expecting here from that acquisition? And maybe if you could just touch on the guidance updates just to clarify here in terms of the EPS versus what you had announced, is that just related to the acquisition? Just any clarification there on the diluted EPS would be helpful. Yeah, referring to proficiency.

Speaker Change: Okay. Thank you and then maybe.

Speaker Change: Maybe lastly in terms of their proficiency update that you mentioned on the next call is that all related to guidance or what.

Speaker Change: You know what else in terms of updates should we be expecting here from that acquisition and maybe if you could just touch on the guidance update.

Unknown Attendee: And maybe if you could just touch on the guidance updates, just to clarify here in terms of the EPS versus what you had announced, is that just related to the acquisition? Just any clarity there on the updated diluted EPS would be helpful. Thanks. So, in October, we'll comment on progress in terms of the integration and proficiency, as well as its operating success during the fourth quarter, and it will be included and will give a little bit more detail to its contribution in fiscal year 25 coming up on the breakout of the EPS. Are we adjusted?

Speaker Change: Just to clarify here in terms of the EPS.

Speaker Change: Versus what you had announced is that just related to the acquisition just any clarity there on the updated diluted EPS would be helpful. Thanks.

Sean O'Connor: Yeah, referring to proficiency in terms of our guidance into 25, certainly this will be our first quarter in which they contribute to our quarterly financial results. So, they will come into our commentary just as our other business units. So, in October, we'll comment on progress in terms of the integration of proficiency as well as its operating success during the fourth quarter. And it will be included, and we'll give a little bit more detail to its contribution in fiscal year 25, which is coming up.

Speaker Change: Yeah Yeah.

Speaker Change: Referring to proficiency in terms of our guidance into 'twenty five.

Speaker Change: This will be our first quarter in which they contribute to our quarterly financial results. So they will come.

Speaker Change: Come into our commentary just as our other business units. So in October we will comment on our progress.

Speaker Change: Progress in terms of the integration with Christian C. As long as it's a operating mm mm success during the fourth quarter and it will be included and will give us a little bit more.

Sean O'Connor: On the breakout of the EPS, the adjusted Non-GAAP EPS, as well as the diluted EPS. Yeah, change there to answer and respond to some confusing questions in terms of when we announced the change there to provide more clarity in terms of the mix between the impacts of the interest income going away and the transaction costs.

Detailed two its a its contribution in fiscal year 'twenty coming up.

Speaker Change: Hum on the breakout of the EPS.

Speaker Change: We adjusted the mm mm.

Unknown Attendee: Non-Gap, EPS as well as the deluded EPS. They had changed there to, you know, answer and respond to, you know, some confusing questions in terms of a way to announce the change there to provide more clarity in terms of the mix between the impacts of the interest income going away in the transaction costs. Thank you.

Speaker Change: non-GAAP.

Speaker Change: E P S as long as the diluted EPS change there to.

Speaker Change: Did I answer them respond to Oh, yeah. Some confusing questions in terms of when we announced the change there to.

Speaker Change: To provide more clarity in terms of the mix between them the impacts of the interest income going away and the AR and the transaction costs.

Speaker Change: Thank you.

Speaker Change: Yeah.

Operator: Thank you. Our next question is from Matt Hewitt with Craig Howell. Please proceed with your question.

Speaker Change: Thank you. Our next question is from Matt Hewitt with Craig Hallum. Please proceed with your question.

Matthew Hewitt: Our next question is from Matthew with Craig Howell. Please proceed with your question. Good afternoon. Thank you for taking the questions. Maybe first up regarding proficiency. I think when you provided the acquisition call, you spoke a little bit about how their margins, particularly the gross margins, are a little bit below Simulation Plus's historic margins. And I think you would comment that, over time, you expect those to get in line with the company. I think you mentioned that today.

Matthew Gregory Hewitt: Good afternoon. Thank you for taking the questions. Maybe first up, regarding proficiency, I think when you provided the acquisition call, you spoke a little bit about how their margins, particularly their gross margins, are a little bit below Simulation Plus's historic margins, and I think you had commented that over time you expect those to get in line with the company. I think you mentioned that today. Is that going to be a gradual kind of improvement in proficiency? Or is there some type of trigger event that would get those people to snap in line at a faster pace?

Matthew Gregory Hewitt: Good afternoon. Thank you for taking the questions maybe first off regarding proficiency I think.

Speaker Change: When you provided that the acquisition call you spoke a little bit about how their margins, particularly the gross margins are a little bit below our stimulation pluses historic margins and I think you had commented that over time you expect the goal is to get in line with the company I think you've mentioned that today is that can it be a gradual.

Sean O'Connor: Is that going to be a gradual kind of improvement in the proficiency, or is there some type of a trigger event that would get those to snap in line on a faster pace? Yeah, Matt, a little bit of both, I guess. You know, the profile of their margin is, you know, call it, it's similar to like our acquisition of the miniatrics, where you've got a business that's contributing both software and service revenues. And so their margin is impacted by that max between our margin software and lower margin consulting revenue dollars. And their margin is impacted by operating efficiencies that are being worked in both sides of the business, most notably continued investment in the technology side, the software side.

Kind of improvement and the proficiency or is there some type of a trigger event that would get those to snap in line on that.

Faster pace.

Sean O'Connor: Yeah, Matt, a little bit of both, I guess. You know, the profile of their their margin is, you know, call it, similar to our acquisition of Emanetrix, where you've got a business that's contributing both software and service revenues. And so their margin is impacted by that mix between higher margin software and lower margin consulting revenue dollars. And their margin is impacted by, you know, operating efficiencies that are being worked into both sides of the business, most notably continued investment in the technology side, the software side.

Speaker Change: Yeah, Matt a little bit of both I guess.

<unk>.

Speaker Change: The profile of their their margin is.

Speaker Change: Call it call it similar to like our.

Speaker Change: The acquisition of <unk>, where you've got a business that's contributing both software.

Speaker Change: And service revenues.

Speaker Change: And so their margin is impacted by that mix between higher margin software and lower margin consulting revenue dollars.

Speaker Change: And their margin is impact impacted by.

Speaker Change: Now operating efficiencies that are being worked on both sides of the business, most notably continued investment and the technology side. The software side are there software margin is closer to 80% versus our 90% of them on the software side.

Sean O'Connor: Their software margin is closer to 80% versus our 90% on the software side. And you know, that's kind of a step function in terms of its improvement as it's mapped out. They've improved quite significantly over the last 12, 18 months, getting to 80% by the use of technologies to accelerate, automate, use AI to translate protocol into their training modules that are licensed. And work continues in that regard. And so we see a path getting them to our sort of 90% level in terms of software margin, and the growth rate of those revenue dollars affects that mix, which is more heavily skewed towards service than our overall 60, 40.

Sean O'Connor: Their software margin is closer to 80% versus our 90% on the software side. And, you know, that's kind of a step function in terms of its improvement. As it's mapped out, they've improved quite significantly over the last 12 to 18 months, getting to 80% by the use of technologies to accelerate, automate, and use AI to translate protocol into their training modules that are licensed to clients. And work continues in that regard.

Speaker Change: And that's kind of a step function in terms of its improvement.

As it's mapped out they've improved quite significantly over the last 12 to 18 months getting to 80% by the use of.

Speaker Change: <unk> technologies to accelerate automate use AI to translate protocol into their training modules that are licensed to two clients and work is continues in that regard and so we see a.

Sean O'Connor: And so we see a path getting them to our sort of 90% level in terms of software margin, and the growth rate of those revenue dollars affects that mix, which is more heavily skewed towards service than our overall 60-40 split of software versus consulting revenues, and service revenues. And so that growth rate will help catch up and impact the overall margin that they contribute as well over time. So we start out at a low point, if you will.

Speaker Change: Our path to getting them to are sort of the 90% level in terms of software margin.

Speaker Change: And the growth rates of those revenue dollars effects that mix that mix.

Speaker Change: Which is more heavily skewed towards service and our overall 60 40.

Sean O'Connor: School of software versus consultant revenue service revenues. And so that growth rate will help catch up and impact the overall margin that they contribute as well over time. So we start out at a low point, if you will.

Speaker Change: Split of software versus consulting revenues service revenues.

Speaker Change: And so that growth rate will help catch up and impacts the overall margin.

Speaker Change: But they contribute as well over time, so we start out at a.

Sean O'Connor: And it will be mostly gradual through next year and beyond. But as they release improvements on the technology side, there'll probably be a little bit of a stair step as we move through fiscal year 20.

Speaker Change: At a low point, if you will.

Sean O'Connor: And it will be mostly gradual through into next year and beyond, but as they release the improvements on the technology side, there'll probably be a little bit of stair step as we move through.

Speaker Change: And then it'll be mostly gradual through into next year.

Speaker Change: Beyond the but.

Speaker Change: As they release the improvements on the technology side, there'll probably be a little bit of a stair step.

Speaker Change: As we move through fiscal year 'twenty five.

Sean O'Connor: And then maybe one question. Again, I think you mentioned it on your call. You mentioned again this afternoon regarding proficiency being accretive to fiscal 25 earnings. I'm just curious; also, what base, and I assume you're referencing the gap numbers in that. But are you talking off of Fiscal 24. It's going to be a creative is that based on a creative to work consensus was prior to the day. Just just curious what the base was on the accretive guidance for next year.

Matthew Gregory Hewitt: Got it. And then, maybe, one question.

Speaker Change: Got it and then maybe one question again I think you mentioned on your call. You've mentioned again this afternoon regarding our proficiency being accretive to fiscal 'twenty five earnings I'm, just curious off of what base.

Sean O'Connor: Again, I think you mentioned on your call, and you mentioned it again this afternoon regarding proficiency being accretive to fiscal 25 earnings. I'm just curious also on what basis, and I assume you're referencing the gap numbers in that, but are you talking off of fiscal 24 that it's going to be accretive? Is it based on accretive to where consensus was prior to today? Just curious what the basis was on the accretive guidance for next year. Thank you.

Speaker Change: I mean, I assume you're referencing that the gap numbers and in that but are you talking off of fiscal 'twenty. Four it is gonna be accretive is it based on accretive to where consensus was prior to today.

Speaker Change: Just curious what the base was on on the accretive guidance for next year. Thank you.

Sean O'Connor: Thank you. Yeah, we really enforced it in the script that it's accreted in terms of covering the lost interest income that we've been enjoying while those dollars were sitting in investment on a balance sheet. So they will be accretive and contribute positively to earnings per share. Covering interest income. Got it.

Sean O'Connor: We reinforced in the script that it's accretive in terms of covering the lost interest income that we've been enjoying while those dollars were sitting in investments on our balance sheet. So they will be accretive and contribute positively to earnings per share, covering interest income.

Speaker Change: Yeah, we reinforced and we are in the script that our it's accretive in terms of the.

Speaker Change: Covering the lost interest income that we've been enjoying well those dollars were sitting in investment on our balance sheet. So they will be accretive and contribute it contributed positively.

Speaker Change: Two of our earnings per share covering our interest income.

Matthew Gregory Hewitt: Got it. All right. Thank you.

Got it alright, thank you.

Unknown Attendee: All right.

Operator: Thank you. Our next question is from David Larsen with BTIG. Please proceed with your question.

Speaker Change: Thank you. Our next question is from David Larsen with BTG. Please proceed with your question.

David Larsen: Our next question is from David Larsen with BTIG. Please proceed with your question. Hi. Congrats on the revenue be relative to our model on this quarter. Can you maybe just clarify with the EPS guide. Was that changed on an apples-to-apples basis relative to the June 12th commentary because I had thought that in fiscal 2Q we were at 66 to 68 cents. And then on June 12th, it declined by about 12 cents to 54 to 56 because of the lower interest income and the transaction costs. And now we're at I think it's 46 to 48 gap 54 to 56 adjusted.

David Michael Larsen: Hi, congrats on the revenue beat relative to our model this quarter. Can you maybe just clarify on the EPS guide? Was that changed on an apples-to-apples basis relative to the June 12th commentary? Because I had thought that in fiscal 2Q we were at $0.66 to $0.68, and then on June 12th, it declined by about $0.12 to $0.54 to $0.56 because of the lower interest income and the transaction cost. And now we're at, I think it's 46 to 48, gap 50, 40, 56 adjusted. But if the 54 to 56 is adjusted, and we're adding back. Transaction Costs: Was the EPS guide lowered or not? Just how are you thinking about that, please? Thank you.

David Michael Larsen: Hi, Congrats on the revenue beat relative to our model. This quarter can you maybe just clarify with the EPS guide.

David Michael Larsen: Was that changed on an apples to apples basis relative to the June 12th commentary because I had thought that.

Speaker Change: In fiscal <unk>, we were at 66 to 68 cents and then on June 12th declined by about 12 cents to <unk> 54 to 56 because of the lower interest income and the transaction costs.

Speaker Change: And now we're at I think it's 46 to 48.

Speaker Change: GAAP 54 to 56 adjusted.

William Frederick: But if the 50, 40, 56 is adjusted and we're adding back transaction costs, just it was the EPS guide lower or not, just how are you thinking about that please. Thank you. Yeah, well, I'll ask you to contribute here as well. I know that our expectation in terms of transaction costs was a little higher coming in, in terms of the expense that's going to hit in the quarter, and that contributed there as well. But will you want to add any color? Sure, happy to answer David. The apples to apples where we had the 54 to 56 cents on the diluted and now we've got 46 to 48 is just as Sean was mentioning the transaction costs.

Speaker Change: But if the 54 to 56 as adjusted and we're adding back the transaction costs.

Speaker Change: Just.

Speaker Change: What was the EPS guide lower or not just how are you thinking about that please thank you.

Sean O'Connor: Yeah, well, I'll ask you to contribute here as well. I know that our expectation in terms of transaction costs was a little higher coming in terms of the expense that's going to hit in the quarter, and that contributed there as well. But, Will, do you want to add any color here?

Speaker Change: Yeah, well I'll ask you to contribute here as well.

Speaker Change: That's our expectation in terms of transaction cost was a little higher coming in in terms of the expense that's going to hit in the fourth quarter and that contributed there as well, but what do you want to add any color here.

William Frederick: Sure, happy to answer, David. The apples-to-apples comparison, where we had 54 to 56 cents on the diluted, and now we've got 46 to 48, as Sean was mentioning. The transaction costs. What we got all the numbers in as well as the purchase price allocation got completed. And so we had visibility, better visibility into the amortization costs for the quarter. We just adjusted that to 46 to 48 cents. And then to make sure that we had some clarity with regard to what the adjusted EPS would look like without those costs, that is, $54 to $55.

Speaker Change: Sure happy to answer David.

Speaker Change: The apples to apples, where we had the 54 to 56 cents on the diluted and now we've got 46 to 48 as Sean was mentioning.

The transaction costs.

William Frederick: Once we had all the numbers, then, as well as the purchase price allocation got completed, and so we had better visibility into the amortization costs for the quarter. We just adjusted that to the 46 to 48 cents, and then to make sure that we had the clarity with regards to what the adjusted EPS would look like without those costs, that's the 54 to 50.

Speaker Change: Once we got all the numbers then as well as the purchase price allocation got completed and so we have visibility better visibility into the amortization cost for the quarter.

Speaker Change: Adjusted that to the 46 to 48 sets and then to make sure that we had.

Speaker Change: Some clarity with regards to what the adjusted EPS would look like without those costs. That's the 54 to 56 cents.

David Michael Larsen: Okay, so it sounds like transaction costs, which are obviously one-time, non-recurring, came in a little bit higher than expected. [inaudible] And then the G&A costs increased quite a bit sequentially, I think from like five and a half million in fiscal 2Q to I think it's 7.7 million, so up more than 2 million sequentially, I think, and the stock comp.. I think it's up about Am I reading that correctly? And what drove the higher GNA?

Speaker Change: Oh, okay.

William Frederick: Okay, so it sounds like transaction costs, which are obviously one-time non-micron, came in a little bit higher than expected. If we exclude those, where 50, 40, 56 cents, okay, and then the G&A costs increased quite a bit sequentially, I think from like five and a half million in fiscal QQ to, is it $7.7? Seven million, so up more than two million sequentially, I think, and the stock comp, I think, is up about a hundred thousand sequentially. Am I reading my correctly and what drove the higher G&A? Yeah, the primary driver there is the hiring of employees, as well as you over here. We brought on the immunetric folks, so in Q3 of this year, we've got the immunetics team. It was about 20 employees that we brought on in Q4 of last year, so we certainly have more employees, with about 210.

Speaker Change: So it sounds like transaction costs, which are obviously onetime nonrecurring came in a little bit higher than expected.

Speaker Change: Exclude those were $54.56.

Speaker Change: Okay and then.

Speaker Change: The G&A costs increased quite a bit sequentially I think from like five and a half million in fiscal <unk>.

Speaker Change: Is it $7 7 million, so up more than $2 million sequentially, I think and the stock comp.

Speaker Change: It's up about 100000 sequentially.

Speaker Change: Am I reading that correctly and what drove the higher G&A.

William Frederick: Yeah, the primary driver there is the hiring of employees, as well as year over year. We brought on the immunetrics folks. So in Q3 of this year, we've got an immunetrics team; it was about 20 employees that we brought on in Q4 of last year. So we certainly have more employees, with about 210 or so at this point compared to last year. Most of it's cost.

Speaker Change: Yeah. The primary driver there is the higher.

Speaker Change: Hiring of employees.

Speaker Change: As well as year over year, we brought on.

Speaker Change: Any metrics folks so in Q3 of this year, we've got immune metrics team. It was about 20 employees that we brought on in Q4 of last year. So we certainly have a more employees with about <unk>.

210, or so at this point compared to last year.

Sean O'Connor: So at this point compared to last year, so most of its cost. Okay, and I think there's another million from transaction costs in that gap G&A number sequentially, okay. And then Sean, I think I heard you say 35 to 40% for the sort of longer term adjusted EBITDA margin expectation, is that correct? Yeah, that's where we have historically operated in the past, and that's always been our target. We've been there in, you know, below the 35, you know, beginning in the timeframe in which we had compensation creep in the marketplace. When I do accelerate compensation programs there, and they can gradually moving that back up, but that's the target that we still shoot for 35 to 20%.

Speaker Change: So most of it is comp costs.

David Michael Larsen: Okay, and I think it's another million from transaction costs in that GAP GNA number sequentially. Okay, and then, Sean, I think I heard you say 35 to 40 percent for the sort of longer-term adjusted EBITDA margin expectation. Is that correct?

Speaker Change: Okay.

Speaker Change: Another million from some transaction costs in that GAAP G&A number sequentially.

Speaker Change: And then Sean I think I heard you say, 35% to 40% for the sort of longer term adjusted EBITDA margin expectation is that correct.

Sean O'Connor: Yeah, that's where we have historically operated in the past. And that's always been our target. We've been in, you know, below the 35, beginning in the timeframe in which we had compensation creep in the marketplace and had to accelerate the compensation programs there. And they've been gradually moving that back up. But that's the target that we still shoot for, 35 to 40.

Speaker Change: Yeah, that's what we have historically operated in the past and that's always been our target.

Speaker Change: And then in below the 35.

Speaker Change: Beginning in the timeframe in which we had compensation creep in the.

Speaker Change: In the marketplace and had to accelerate our compensation programs, there and congratulate.

Speaker Change: Moving that back up but that's the target that we are we're still shooting for 35 between or something.

David Michael Larsen: Okay, um, and then just broadly speaking, I guess in terms of the demand environment. This sounds like things are accelerating and picking up. Will proficiency add to that? It sounds like proficiency is more like a key opinion leader, sales, and marketing type of solution. Any color on the demand environment would be great.

Sean O'Connor: Okay, and then just broadly speaking, yes, in terms of the demand environment, it sounds like things are accelerating and picking up. We'll proficiency add that, adds that, it sounds like proficiency is more like a key opinion leader of sales and marking type of solution, just any color on the demand environment will be great. Yeah, you know, certainly the software say the business is tight to clinical trial activity as well, so some of the drivers there are common to ours as well. And so the same purse strings in terms of pushing drugs through the clinical process will also push their revenue growth as well.

Speaker Change: Okay.

Speaker Change: And then just broadly speaking, yes in terms of the demand environment. It sounds like things are accelerating.

Speaker Change: Accelerating and picking up.

Speaker Change: Just.

Speaker Change: Well, we'll proficiency add that add to that it sounds like proficiencies, it's more of like a key opinion leader of sales and marketing type of solution.

Speaker Change: Just any color on the demand environment would be great.

Sean O'Connor: They're, you know, certainly, the software side of the business is tied to clinical trial activity as well. So some of the drivers there are common to ours as well. And so the same purse strings in terms of pushing drugs through the clinical process will also push their revenue growth as well.

Speaker Change: Are there there are you know certainly the software side of the business is tied to a clinical trial activity as well. So some of the drivers are there are common to common to ours as well and so the same purse strings in terms of pushing drugs through the clinical process will also.

So crush a push there are no revenue growth as well.

Unknown Attendee: Okay, appreciate it. We're out on a good quarter. Thank you. We're good.

David Michael Larsen: Okay, I appreciate it. Congratulations on a good quarter.

Speaker Change: Okay. Appreciate it congrats on a good quarter. Thank you.

Speaker Change: I get it.

Unknown Attendee: Thank you. There are no further questions at this time.

Sean O'Connor: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mr. Sean O'Connor for closing comments.

Speaker Change: Thank you there are no further questions at this time I'd like to hand, the floor back over to Mr. Sean O'connor for closing comments.

Sean O'Connor: I'd like to hand the floor back over to Mr. Sean O'Connor for closing comments. Very good. Well, I appreciate everyone's attention and look forward to speaking again as we close our fiscal year in October. Together going.

Sean O'Connor: Okay, very good. Well, I appreciate everyone's attention and look forward to speaking again as we close our fiscal year in October. Take care, everyone.

Speaker Change: Okay, very good well I appreciate everyone's attention and.

Speaker Change: Look forward to speaking again as we close our fiscal year in October to Gary to go on.

Speaker Change: Yeah.

Unknown Attendee: This concludes today's conference. You may disconnect your lines at this time. Thank you for joining us today.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for joining us today.

Speaker Change: This concludes today's conference.

Speaker Change: Your lines at this time, thank you for joining us today.

Speaker Change: Yeah.

Speaker Change: Okay.