Q1 2025 Simulations Plus Inc Earnings Call
Unknown Attendee: Crohn's disease.
Unknown Attendee: As a reminder, quarterly results can be lumpy for QSP software based upon the high ticket price per license and a smaller pool of end users. Our CHEM Informatics, or CHEM, business unit software revenue grew by 15%, driven by higher revenues from AdMob Predictor. Additionally, there were four new customers and one upsell during the quarter. Our Physiologically Based Pharmacometrics, or PPPK, software revenue increased 4% for the quarter. GastroPlus added two new customers and booked four upsells with existing customers. Software revenue in our Alley business unit was $1.7 million, and software revenue in our MC business unit was $0.1 million.
As a reminder, quarterly results can be lumpy for USP software based upon the high ticket price per license and a smaller pool of end users are Tim informatics or Kim.
Business unit software revenue grew by 15% driven by higher revenues from Avnet predictor.
Additionally, there were for new customers and one upsell during the quarter.
Yeah, logically based pharmacon metrics or TPP K software revenue increased 4% for the quarter.
Gastro plus added two new customers and booked for Upsells with existing customers software revenue and our OE business unit was $1 $7 million and software revenue in our <unk> business unit was one $1 million.
Unknown Attendee: Overall, software revenue in these two new business units was in line with our expectations.
Overall software revenue in these two new business units was in line with our expectations turning to our software our services segment services revenue grew by 19% in the first quarter of 'twenty five you have declined by 9% on an organic basis.
Unknown Attendee: Turning to our services segment, services revenue grew by 19% in the first quarter of 2025, yet declined by 9% on an organic basis. This quarter, our business was temporarily impacted by client driven data delays that postponed the ramp up of certain projects into our fiscal year second quarter. PPPK services revenue decreased 9%, CPP services revenue declined 6%, QSP services revenue decreased 14%. Medical Communications Services revenue was $1.9 million, in line with our expectations. On a positive note, services bookings were very strong during especially in our CPP MC business unit.
This quarter, our business was temporarily impacted by client driven data delays have postponed the ramp up of certain projects into our fiscal year second quarter.
Pvp K services revenue decreased 9% CPP services revenue declined 6% Q O T services revenue decreased 14%.
Medical Communications services revenue was $1 9 million in line with our expectations.
On a positive note services bookings were very strong during the quarter, especially in our <unk> business units.
Unknown Attendee: We ended the quarter with $17.3 million in backlog, up 22% from $14.1 million sequentially. This was successfully achieved during a year-end quarter in which our client's existing calendar year 24 budgets were depleted and attention was turning to calendar year 25 activities. The year over year decline in services backlog was reflective of cost driven pullback by our clients during the course of calendar year 2015.
We ended the quarter was $17 3 million in backlog up 22% from $14 1 million sequentially.
This was successfully achieved during a year and quarter in which our clients existing calendar year 'twenty for budgets were depleted.
And attention was turning to calendar year 'twenty five activity.
The year over year decline in services backlog was reflected the cost driven pullback by our clients during the course of calendar year 'twenty four.
Unknown Attendee: With that, I'll turn the call over to Will.
With that I'll turn the call over to the well.
Will: Thank you, Sean. To recap our solid first quarter performance, total revenue increased 31% to $18.9 million, including a $3.7 million contribution from the newly formed ALI and MC business unit. Software revenue increased 41%, representing 57% of total revenue, and services revenue increased 19%, representing 43% of total revenue. Turning to the software revenue contribution from our products for the quarter, GastroPlus was 38%, Monolith Suite was 21%, AdMob Predictor was 12%, ALI Training Platform was 16%, and other products were 13%. For the trailing 12 months, GastroPlus was 50%, Monolith Suite was 20%, AdMob Predictor was 17%, ALI Training Platform was 6%, and other products were 7%.
Speaker Change: Thank you Sean to recap our solid first quarter performance total revenue increased 31% to $18 $9 million, including a $3 7 million dollar contribution from the newly formed E. L. I N M C business units.
Speaker Change: Software revenue increased 41%, representing 57% of total revenue and services revenue increased 19% representing 43% of total revenue.
Speaker Change: Turning to the software revenue contribution from our products for the quarter Gastro plus was 38% monolithic suite was 21%.
Speaker Change: Avnet predictor was 12%.
Speaker Change: Ally training platform was 16% and other products were 13%.
Speaker Change: For the trailing 12 months Gastro plus was 50% monolithic suite was 20%.
Speaker Change: Predictor was 17%.
Speaker Change: L. A training platform was 6% and other products were 7%.
Will: The trailing 12-month software revenue for the ALINMC business units only includes revenue since the acquisition of proficiency in June 2024. During the quarter, our software customer renewal rate was 95% based on fees and 83% based on accounts, both in line with prior year trends, recognizing the quarterly timing of renewals during the fiscal year. Average software revenue per customer for the quarter increased to $94,000. On a trailing 12-month basis, our software customer renewal rate was 92% based on fees and 83% based on accounts, also both in line with prior period trends. Average revenue per customer increased to $98,000 on a trailing 12-month basis.
Speaker Change: Trailing 12 months software revenue for the L. I N M. C business units only includes revenue since the acquisition of proficiency in June 2024.
Speaker Change: During the quarter, our software customer renewal rate was 95% based on fees and 83% based on accounts.
Speaker Change: In line with prior year trends, recognizing the quarterly timing of renewals during the fiscal year.
Speaker Change: Average software revenue per customer for the quarter increased to $94000.
Speaker Change: On a trailing 12 month basis, our software customer renewal rate was 92% based on fees and 83% based on accounts also both in line with prior period trends.
Speaker Change: Average revenue per customer increased to $98000 on a trailing 12 month basis.
Will: Shifting to our Services Revenue Contribution by Business Unit for the quarter, CPP was 37%, MC was 23%, QSP was 22%, and PBPK was 18%. On a trailing 12-month basis, CPP was 40%, QSP was 28%, PBPK was 21%, and MC was 11%.
Speaker Change: Shifting to our services revenue contribution by business unit for the quarter C. P. P was 37% M. C was 23% U S. P was 22% and P. B PK was 18%.
Speaker Change: On a trailing 12 month basis C. P. P was 40% U S. P was 28%.
Speaker Change: P. B PK was 21% and M C was 11%.
Will: The trailing 12-month services revenue for the MC Business Unit only includes revenue since the acquisition of proficiency in June. Total services projects worked on during the quarter were 183. Year-end backlog increased to $17.3 million from $14.1 million in the prior quarter. The largest driver of the backlog growth quarter over quarter was in the CPP business unit, while the backlog growth in the other business units remained relatively flat, with new bookings offset by revenue recognized during the quarter. The year-over-year backlog decline is primarily in the QSP and CPP business units, with an increase in the MC business units.
Speaker Change: The trailing 12 months services revenue for the M. C business unit only includes revenue since the acquisition our proficiency in June.
Speaker Change: Total services projects worked on during the quarter were 183.
Speaker Change: Year end backlog increased to $17 $3 million from $14 $1 million in the prior quarter.
Speaker Change: The largest driver of the backlog growth quarter over quarter was in the C. P. P business unit, while the backlog growth in the other business units remained relatively flat with new bookings offset by revenue recognized during the quarter.
Speaker Change: The year over year backlog decline is primarily in the Q S. P and C. P. P business units with an increase in the M C business unit.
Will: Total gross margin for the quarter was 54%, with software gross margin of 75%, and services gross margin of 26%. On a comparative basis, total gross margin for the prior year quarter was 62%, with software gross margin of 87%, and services gross margin of 36%. The decrease in software gross margin was primarily due to an increase in cost of revenue for the amortization of capitalized software development costs.
Speaker Change: Total gross margin for the quarter was 54% with software gross margin, 75% and services gross margin of 26%.
Speaker Change: On a comparative basis total gross margin for the prior year quarter was 62% with software gross margin of 87% and services gross margin of 36%.
The decrease in software gross margin was primarily due to an increase in cost of revenue for the amortization of capitalized software development cost.
Will: and develop technology amortization from the proficiency acquisition. The decrease in services gross margin was primarily due to the decrease in services revenue on an organic basis with relatively fixed costs of revenue.
Speaker Change: And develop technology amortization from the proficiency acquisition.
Speaker Change: The decrease in services gross margin was primarily due to the decrease in services revenue on an organic basis with relatively fixed cost of revenue.
Will: For the comparative basis reporting, the prior period reflects a reclassification of $0.8 million from G&A expense to cost of revenues in connection with the prior year business unit reorganization. Turning to our consolidated income statement for the quarter, R&D expense was 10% of revenue compared to 8% last year. Sales and marketing expense was 15% of revenue compared to 14% last year. G&A expense on a comparative basis was 28% of revenue compared to 34% last year. And total operating expenses were 53% of revenue compared to 56% last year. Income tax expense for the quarter was $0.1 million compared to $0.5 million last year, and our effective tax rate was 24% compared to 19% last year.
Speaker Change: For the comparative basis reporting the prior period reflects a reclassification of point $8 million from G&A expense to cost of revenues in connection with the prior year business unit reorganization.
Speaker Change: Turning to our consolidated income statement for the quarter R&D expense was 10% of revenue compared to 8% last year sales and marketing expense was 15% of revenue compared to 14% last year.
Speaker Change: G&A expense on a comparative basis was 28% of revenue compared to 34% last year and.
Speaker Change: And total operating expenses were 53% of revenue compared to 56% last year.
Income tax expense for the quarter was <unk> $1 million compared to $25 million last year, and our effective tax rate was 24% compared to 19% last year.
Will: Net income for the quarter was $0.2 million, or 1% of revenue, compared to $1.9 million, or 13% of revenue last year, and diluted EPS was $0.01 compared to $0.10 last year. Adjusted EBITDA for the quarter was $4.5 million, or 24% of revenue, compared to $3.4 million, or 23% of revenue last year. and adjusted diluted EPS with 17 cents compared to 18 cents. We believe both our adjusted EBITDA margin and adjusted diluted EPS are on track to achieve our fiscal 2025 guidance rate.
Speaker Change: Net income for the quarter was <unk> $2 million or 1% of revenue compared to $1 $9 million or 13% of revenue last year and diluted EPS was one cent compared to 10 cents last year.
Speaker Change: Adjusted EBITDA for the quarter was $4 $5 million or 24% of revenue compared to $3 $4 million or 23% of revenue last year.
Speaker Change: And adjusted diluted EPS was <unk> 17 cents compared to 18 cents last year.
Speaker Change: We believe both our adjusted EBITDA margin and adjusted diluted EPS are on track to achieve our fiscal 'twenty twenty-five guidance ranges.
Will: The reconciliation of non-GAAP financial metrics to the relevant GAAP metrics is in our earnings release and on our website. Turning to our balance sheet, we ended the quarter with $18.2 million in cash and investment. Consistent with prior year trends, the first quarter cash and investments balance decreased compared to the fourth quarter, primarily due to the timing of prior year annual bonus payments in the first quarter. We remain well capitalized with no debt and strong free cash flow to execute our growth strategy.
Speaker Change: A reconciliation of non-GAAP financial metrics to the relevant GAAP metrics in our earnings release and on our website.
Speaker Change: Turning to our balance sheet, we ended the quarter with $18 $2 million in cash and investments.
Speaker Change: Consistent with prior year trends, the first quarter cash and investments balance decreased compared to the fourth quarter, primarily due to the timing of prior year annual bonus payments in the first quarter.
Speaker Change: We remain well capitalized with no debt and strong free cash flow to execute our growth strategy.
Unknown Attendee: I'll now turn the call back.
Sean: I'll now turn the call back to Sean Thank you will.
Unknown Attendee: Thank you, Will. Our strong first quarter results reflected notable strength in software performance across all of our solutions. We're encouraged by our robust services backlog, which should drive sequential improvement in the coming quarters. Also, the integration of our ALLE and MC business units continues to be progressing well and is tracking in line with our expectations.
Sean: Our strong first quarter results reflected notable strength in software performance across all of our solutions.
Sean: We're encouraged by our robust services backlog, which should drive sequential improvement in the coming quarters also the integration of our Alley and M. C business units continues to be progressing well and is tracking in line with our expectations.
Unknown Attendee: Moving on to our outlook for the balance of fiscal year 2025. With our first quarter 2025 results in line with our expectations, we are reaffirming our fiscal year 2025 guidance as follows. Total revenue is expected to be between $90 million and $93 million, and we will still expect ALI and MC to contribute between $15 to $18 million, as previously provided. Year over year revenue growth is expected to be in the range of 28 to 33%. Software mix between 55 and 60%. Adjusted EBITDA margin between 31 and 33 percent. and adjusted diluted earnings per share of between $1.07 to $1.20.
Sean: Moving onto our outlook for the balance of fiscal year 2025.
Sean: With our first quarter 2025 results in line with our expectations. We are reaffirming our fiscal year 2025 guidance as follows.
Sean: Total revenue is expected to be between 90 million and 93 million and we will still expect alley, and EMC to contribute between $15 million to $18 million as previously provided.
Sean: Year over year revenue growth is expected to be in the range of 28% to 33%.
Sean: Software mix between 55 and 60%.
Sean: Adjusted EBITDA margin between 31 and 33%.
Sean: And adjusted diluted earnings per share of between $1 $1 seven.
Sean: Two $1 20.
Unknown Attendee: We also expect total revenue for our second fiscal quarter to be approximately 24% of our fiscal year guidance range, with a year-over-year growth rate of between 18 and 22%. We expect the balance of our full year revenues to be evenly split in the third and fourth quarters.
Sean: We also expect total revenue for our second fiscal quarter to be approximately 24% of our fiscal year guidance range with a year over year growth rate of between 18 and 22%.
Sean: We expect the balance of our full year revenues to be evenly split in the third and fourth quarters.
Unknown Attendee: As a reminder, our guidance does not include the impact of any future acquisitions. Our near-term priorities include successfully completing the acquisition integration, expanding cross-selling opportunities, and driving towards our historical adjusted EBITDA margin target of 35 to 40%. and corresponding profitability levels. We are well positioned to achieve our goals this year and remain focused on executing our disciplined growth strategy to deliver long term value to shareholders.
As a reminder, our guidance does not include the impact of any future acquisitions.
Sean: Our near term priorities include successfully completing the acquisition integration.
Sean: Expanding cross selling opportunities and driving towards our historical adjusted EBITDA margin target of 35% to 40%.
And corresponding profitability levels, we are well positioned to achieve our goals. This year and remain focused on executing our disciplined growth strategy to deliver long term value to shareholders.
Unknown Attendee: Thank you for your time today.
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: And with that, I'll now turn the call over to the operator for your question.
Unknown Attendee: Great, thank you.
Sean: Great. Thank you well 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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment please while we poll for questions.
Speaker Change: To ask a question. Please press star one on your telephone keypad.
Speaker Change: Information tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please for the poll for questions.
David Larsen: First question is from David Larsen from BTIG, please go ahead. Hi, the number that stuck out to me this quarter was the software revenue growth up 41% year over year. That's good. What's even better, I think, was I think you said it was 18% organic revenue growth. Can you maybe just talk about I think last quarter, the organic software revenue growth was like minus 6%. Why the huge positive rebound sequentially? Any color there will be very helpful. Thank you.
David Larsen: First question is from David Larsen from BTG. Please go ahead.
David Larsen: Hi, the number that stuck out to me this quarter was the software revenue growth up 41% year over year. That's good what's even better I think was I think he said it was 18% organic revenue growth.
David Larsen: Can you maybe just talk about I think last quarter. The organic software revenue growth was like minus 6% why the huge positive rebound sequentially any color there would be very helpful. Thank you.
Unknown Attendee: Yeah, great quarter on the software side and really healthy across all of our platforms. The highlights during the quarter sourced in our CPP platform, the Monolix platform, where we continue to see significant uptake both in the context of expanding existing license holders there, expanding the footprint with Upsell there, extending to new logos.
Sure David.
Speaker Change: Yeah, great quarter on the software side and.
David Larsen: Really healthy across all of our.
David Larsen: <unk> forms.
David Larsen: The highlights during the quarter sourced and.
David Larsen: Our C P platform them on the Wix platform.
Where we continue to see.
David Larsen: Significant uptake both in the context of the expanding existing license holders, they're expanding footprint with up sell there.
David Larsen: Extending to new logos and of note.
Unknown Attendee: And of note, during the quarter, we had a large pharma account commit 100% to the use of PK Analytics, the NCA component of the Monolix suite, which is a significant step forward, obviously, with any client.
David Larsen: During the quarter, we had a large farm out.
David Larsen:
David Larsen: 100% sold to the use of analytics the.
David Larsen: N C a T a component.
David Larsen: The mono Lake so suites, which is a significant step forward, obviously with any client.
Unknown Attendee: Also, very significant progress on the QSP front, where we had some significant license activity in two therapeutic areas that bodes well both in terms of the acceptance of those therapeutic models and the value in them in general for license to more broadly in the industry, but as well with those two specific clients, their commitment and partnership with Simulations Plus as their QSP partner and anticipate that they will expand into other therapeutic areas with us on the QSP side as well. So, certainly, those two areas were Unknown Attendee, William Frederick, Michael Raymer, Simulations Plus Inc. So, quite pleased.
David Larsen: Also very very significant progress on the kiosk deep from.
David Larsen: Where we have some significant license activity.
David Larsen: And two therapeutic areas.
Bodes well both in terms of.
David Larsen: <unk> of those therapeutic models and the value in them.
In general for a license.
License to more probably than they are in the industry, but as well with those two specific clients are their commitment.
David Larsen: In partnership with the.
David Larsen: Simulations plus as their Q S P partner on board.
David Larsen: The date that they will expand into other therapeutic areas. So I don't think you will see a side as well. So certainly those two areas are where are.
David Larsen: <unk> delivered very strong results this quarter, but across the board as well.
David Larsen: As we are identified.
David Larsen: Towards the end of the year of focus in terms of our Asian market.
David Larsen: He looked at those numbers, which I think are in the 10-Q was filed today.
David Larsen: You'll see that a 30% growth in the Asian market, which is pretty much in centrally software revenue are good results and good start to the year.
David Larsen: The team as well so quite pleased.
Unknown Attendee: Our software revenue, because of the recognition up front, can be seasonal as a result of what renewals are coming up from renewal in a given quarter. In this first quarter, the start of this year, we've kicked off the year very strong on the software side.
David Larsen: Our our software revenue because of the recognition.
David Larsen: Oh upfront can be.
David Larsen: Seasonal.
David Larsen: As a result of.
David Larsen: What renewals are coming up for renewal in any given quarter.
David Larsen: And this first quarter just started this year, we've talked to you very strong on the software side.
Unknown Attendee: Okay and just any color on maybe pricing are we thinking like mid to high single digits and then isn't isn't software sort of a more leading indicator of the overall health of the business I mean services you have consulting engagements they can be lumpy it seems to me like software is is is sort of a core metric for the for the overall health of the business just any any thoughts on pricing and those comments there Sure. Yeah, no, certainly we're focused on the software side of our business, both, both are important software and services in terms of how we support our clients.
Okay, and just any color on maybe pricing or are we thinking like mid to high single digits.
And then isn't isn't software sort of a a more leading indicator of the overall health of the business I mean services you have consulting engagements they can be lumpy.
David Larsen: It seems to me like software is is sort of a core metric for that for the overall health of the business just any any thoughts on pricing and in those comments there. Thanks.
David Larsen: Sure.
David Larsen: Yeah, No certainly where we're focused on the software side of their business.
David Larsen: Both are important South Clinton services in terms of how we support our clients.
Unknown Attendee: But, you know, our model and our strategy has always been in terms of a lean on the lean to on the on the software side, because of its obvious benefits in terms Consistency, Recurring Revenue, Profitability, Margin. So a leading indicator certainly in terms of the health of the business is the growth of our software segment of our business. In the context of price increase this year, yeah, your mid-single digits is where we typically fall in our history. And this year is going to be in that same bubble.
David Larsen: You know our model and our strategy has always been in terms of.
David Larsen: Lean on this lean too on the on the software side because of its obvious benefits in terms of.
David Larsen: Consistent recurring revenue.
David Larsen: Profitability margin.
No.
David Larsen: Well, our leading indicators certainly in terms of the health of the business because of the growth of the car.
David Larsen: Software segment.
David Larsen: All of our business in the context of the price increase this year.
David Larsen: Yeah.
David Larsen: Mid single digits is where we typically call.
David Larsen: And Oh, you know in our history and this year is going to be in that same ballpark.
Unknown Attendee: just one last quick one for me before I hop back in the queue.
Just one last quick one from me before I hop back in the queue, what was the gastro plus year over year software revenue growth it looked.
Unknown Attendee: What was the gastro plus year-over-year software revenue growth? It looked A little light, is that 3% year over year? Yeah, it's 4%, I think. Maybe we're rounding up or rounding down there, but I think it was about 4%. Yeah, you know, there, we had good results out of Asia, which is predominantly gastro plus, you know, decent uptake in terms of some upsells, relatively low in terms of new logos. It's a little bit bigger price point. And I think, you know, our view is that some of those newer clients are waiting until after the new year budgets in 2025.
David Larsen: A little light is that 3% year over year.
David Larsen: Yes, it's 4% I think maybe where we're rounding up around him down there, but I think it was about 4%.
Yeah.
David Larsen: There.
David Larsen: We had good results out of Asia.
David Larsen: Which is a predominantly gastro plus a decent uptake in terms of the some upsells are relatively low in terms of new logos, that's a little bit take a bigger price point.
David Larsen: Our view is that.
David Larsen: Some of those newer clients are waiting until after the new media budgets in 2020.
David Larsen:
Unknown Attendee: But, you know, healthy activity in terms of our pipeline and gastro plus, no, no change in our outlook.
David Larsen: Healthy activity in terms of our pipeline and gastro plus no no change in our outlook there.
Unknown Attendee: Okay, and one last quick one. When you say Asia, how much of Asia is China? China's relatively smaller portion there. Japanese market is probably the largest contributor in our Asian marketplace, India, Korea, and then probably China coming up fourth.
Speaker Change: And one last quick one when you say Asia, how much of Asia is China.
Speaker Change: China is a relatively smaller portion of their Japanese market is probably the largest.
Speaker Change: Contributor.
Speaker Change: Our Asian.
Speaker Change: Place, India Korea.
Speaker Change: Probably China coming up.
Speaker Change: Of course.
Unknown Attendee: Okay, great, because China's been under pressure. Thanks very much.
Speaker Change: Okay, great because China has been under pressure, thanks, very much I'll hop back in the queue nice quarter.
Unknown Attendee: I'll hop back in the queue next quarter. Sure, take care.
Speaker Change: Take care.
Franois Brisebois: The next question is from Franois Brisebois from Oppenheimer and Company. Please go ahead. All right, sorry for the background noise, and sorry if I missed this. I think I got disconnected from the call for a bit, but I just wanted to hear more about the Measure Pharma commitment and its impact on the quarter you just reported. Was that a commitment that you had expected, or was that a surprise? Just a little more color there would be helpful.
Bob: The next question is from Bob <unk> from Oppenheimer <unk> Company. Please go ahead.
Bob: Hi, sorry for the background noise and sorry, if I missed this I think I got disconnected from the call for a bit but I just wanted to hear more about the major pharma commitment.
Bob: Impact on the quarter you just reported was that a commitment that you had expected or was that a surprise just a little more color there would be helpful.
Unknown Attendee: Sure, Frank. The large pharma commitment in terms of Pkanalytics is what you're referring to, I presume. And boy, I wish these things came in surprises, but no. Healthy, hard work in terms of the business development team, working with them for some time leading to this sort of commitment. They were a license holder of the application, getting them over the barrier in terms of a full commitment, something we've been working on, anticipating we would get there. And that came through.
Bob: Sure Frank.
Bob: The large farmer Mac commitment in terms of PK analytics is what you're referring to I presume and.
Speaker Change: Oh Boy I wish I wish these things came in surprises but no.
Speaker Change: Okay, you got a hard work out in terms of the pet business development team working with them for some time, leading to this sort of commitment.
They were.
Speaker Change: We're a license holder of the application.
Speaker Change: With him over the Oh no the.
Speaker Change: The barrier in terms of our full commitment.
Speaker Change: Something we've been working on anticipating we would get there, but when that came through this quarter.
Unknown Attendee: Okay, great.
Speaker Change: Okay, Great and then just on the <unk>.
Unknown Attendee: And then just on the services side, the temporary postponing, is that something that affects the rest of the year, or is this kind of a lump sum in the second quarter that we expected to hit, and then everything else should be back on track? Yeah, you know, I think what we're seeing is, as we closed out the calendar year of 24, the constraints on budgets through the course of the full year there, you know, depleted their budgets for spending, what is our first quarter, but, you know, effectively, the last budget quarter of our clients 24 year, our bookings activity was, was quite robust.
Speaker Change: On the services side, the temporary postponing is that something that affects the rest of the year or is this kind of a lump sum in the second quarter that we expect it to hit them.
Speaker Change: And then everything else should be back on track.
Speaker Change: Yeah, Yeah, I think what we're seeing is as we closed out the calendar year 'twenty for that constrained some budgets.
Speaker Change: Through the course of the full year there.
Speaker Change: Depleted their budgets respond in what is our first quarter, but you know effectively.
Speaker Change: Secondly, the last.
Speaker Change: Budget quarter of the of our clients 24 year our.
Speaker Change: Our bookings activity was was quite robust.
Unknown Attendee: And, you know, our backlog is now, the metric is about 90% of it is realizable within a year. So, a lot of activity from clients, some of which was booked and some of which is ongoing discussions in terms of planning for project activity in 2025. Some of that's in the second quarter here, the first quarter of the calendar year, some of that spreads out into the third and fourth quarter. You know, the delays that we saw in the fourth quarter, similar to the delays that we've been seeing each of the last several quarters, and trying to mix and match projects that will run to time estimates and those that will be pushed off, you know, made this first quarter a bit challenging for the service side service team.
Speaker Change: And you know our our backlog is now.
Speaker Change: So I'm not sure if there's about 90% of those realized the bulk of them here. So a lot of activity from clients.
Speaker Change: Some of which was booked in some of them such as ongoing discussions in terms of planning for project activity in 2020 five.
Speaker Change: Some of that's in the second quarter here in the first quarter of the calendar year, some of that spreads out and into the third and fourth quarter.
Speaker Change: The delays that we saw in the fourth quarter similar to the delays that we've been seeing each of the last several quarters.
Speaker Change: And I'm trying to make some margin projects that are that will run at a time.
Speaker Change: Estimate some of those that would be pushed off.
Speaker Change: Maybe this first quarter a bit challenging for the service side called service team.
Unknown Attendee: But, you know, based upon the good bookings that we had in the first quarter, our visibility to that timing, factoring in that, hey, nothing goes perfectly to, to schedule, you know, no change in our outlook in terms of the service business into the second half of the year.
Speaker Change: But you know based upon the good bookings that we had in the first quarter, our visibility to that timing factor again.
Speaker Change: Nothing goes perfectly to describe.
Speaker Change: The schedule no no change in our outlook in terms of the service business them too.
Speaker Change: The second lens and backup.
Unknown Attendee: Thank you, and congrats on a solid quarter. Thanks, Ben.
Speaker Change: Thank you and congrats on a solid quarter.
Speaker Change: Thanks, Craig.
Christine Rains: Next question is from Max Smock, Franois William Blair, please go ahead. Hi, it's Christine Rains on for Max Smock. Thanks for taking our questions. Just digging a little bit more into your previous comments, you discussed some promising conversations with large pharma companies as they went through their process of setting their 2025 budgets, but also noted that all these deals haven't been finalized. Just hoping you can give us an idea of how much of this incremental business has been contracted. And now that we've closed out the calendar year, if you have any idea of how your large pharma clients in specific their budgets for modeling and simulation in 2025, compared to 2024, and how this reflects on your initial booking expectations, really just trying to get at if you think we're at a bottom for large pharma demand, or if you think there's a potential other shoe to drop this year.
Maxim <unk>: Next question is from Maxim <unk> from William Blair. Please go ahead.
Maxim <unk>: Hi, it's Christina on for Max Smock, Thanks for taking our questions I'm, just digging a little bit more into your previous comments you discussed some promising conversations with large pharma companies as they went through their process of setting their 2025 budgets, but also noted that all of these deals haven't been finalized.
Maxim <unk>: Just hoping you can give us an idea of how much of this incremental business has been contracted and now that we've closed out the calendar year. If you have any idea.
Maxim <unk>: What are your large pharma clients and specific their budgets for modeling and simulation in 2025 compared to 2024 and how that reflects on your initial bookings expectations really just trying to get at if you think we're at a bottom for large pharma demand or if you think there is.
Maxim <unk>: Potential other shoe to drop this year and if we're at a bottom.
Unknown Attendee: And if we're at a bottom, then what is kind of your sense of a timeline for a rebound?
Maxim <unk>: It's kind of your sense of the timeline for a rebound.
Unknown Attendee: Let me pull my crystal ball out and see how well I can respond on this one. You know, it was a very good quarter in terms of our discussions with our clients, a quarter in which we had, you know, a couple of our more significant conferences in our industry. So a lot of face time across the board at all levels with our clients. And I'd say the thing I walked away from those conversations with, I'll come back to the specifics of bookings and timings and all that sort of thing. But, you know, it's certainly a strong commitment on our clients and appetite to expand their use of modeling and simulation in their programs. I think, you know, we are a set of solutions that can provide efficiency and better ROI on programs. And this has been their learning lesson during this past year or two of budget crunch and trying to improve their effective delivery of ROI to their shareholders.
Maxim <unk>: Well that'd be called my Crystal ball out and to see how well I can respond on this one.
Maxim <unk>: It was a very good quarter in terms of our discussions with our clients a quarter in which we had a.
Maxim <unk>: A couple of our more significant conferences in our industry.
Maxim <unk>: Facetime are across the board at all levels with our clients and I'd say the thing I walked away from those conversations with them.
Maxim <unk>: I'll come back to the specifics of our bookings and timings and all that sort of thing but a.
Maxim <unk>: Certainly a strong commitment on our clients and appetite.
Maxim <unk>: So expand.
Maxim <unk>: Their use of modeling and simulation.
Maxim <unk>: In their programs.
Maxim <unk>: You know we are a.
Maxim <unk>: A set of solutions that can provide efficiency and better ROI on programs.
Maxim <unk>: They're learning lesson during this posture or to a budget crunch on trying to improve.
Maxim <unk>: Effective delivery.
Maxim <unk>: Or a light to their shareholders and so I certainly walked away from the last few months with discussions with clients, where our clients are.
Unknown Attendee: And so I certainly walked away from the last few months of discussions with clients. With our clients are, you know, very committed and see the strength and value of what modeling and simulation can do in improving their performance. And good discussion in terms of collaborative partnerships, something that Simulations Plus has always been very good at in terms of partnering with our clients. And a number of these discussions were, you know, quite extensive in terms of how can we form an even closer alliance and work together. So strong commitment out of, you know, our clients, the client discussions over the last three months.
Maxim <unk>: Very committed and see the strength and value of what.
Our modeling and simulation can do.
Maxim <unk>: And.
Maxim <unk>: Improving.
Maxim <unk>: Their performance.
Maxim <unk>: And good discussion in terms of.
Collaborative partnerships something that simulations plus has always been.
Maxim <unk>: Very good at it.
Maxim <unk>: In terms of partnering with our clients and a number of these discussions.
Maxim <unk>: We're a quite extensive in terms of how can we perform.
Maxim <unk>: Closer Alliance and work together.
Maxim <unk>: So strong commitment are out of the <unk>.
Maxim <unk>: Clients claims discussions over the last three months you know inevitably we worked that down to you know what's the budget isn't what's what's the project outlook what's the.
Unknown Attendee: You know, inevitably, we work that down to, you know, what's the budget and what's the project outlook? What's the modeling department need for more tools, expanding of our platform usage? And, you know, those discussions were good. Some commitments have come in already. Much of the discussion was in the context of what they were going to put into their budgets in their calendar year 25. Getting it into the budget and getting it approved is that first hurdle. That next hurdle is then their rollout. They don't roll it all out on January 1st. It's spread, they're spending through the course of the year.
Maxim <unk>: Modeling department, the need for more tools or expanding of our of our platform.
Maxim <unk>: Usage and those.
Maxim <unk>: Those discussions were good.
Maxim <unk>: Some commitments have come in already much of the discussion was in the context of what they were gonna put.
Maxim <unk>: Into their budgets are in their calendar year 'twenty five.
Maxim <unk>: Getting it doesn't have the budget and getting it approved is that first hurdle.
Maxim <unk>: The next hurdle is done their rollout.
They don't roll it all out on January 1st that's spread they're spending through the through the course of the year and.
Unknown Attendee: And so as of mid-January or first week of January, people are just getting back and we're getting, you know, good calls and conversations going in terms of now how do we roll this out. Are their budgets greater than last year? What's the relationship? Is it spending on the uptick? You know, boy, we don't get visibility to that level. Certainly our discussions with them and their planning process indicates such. But overall, you know, we're going to continue to take that cautious, optimistic outlook here that, hey, there's some some bright lights, good discussions, some promise for a pickup in the industry.
Maxim <unk>: So as of mid January or first week of January I'm equally or just getting back and we're getting good calls them.
And conversations going in terms of now how do we roll this out.
Maxim <unk>: Are their budgets greater than last year.
Maxim <unk>: What's the relationship.
Maxim <unk>: Spending on the uptick.
Maxim <unk>: Oh Boy I think we don't have visibility to that level, certainly our discussions with them in their planning process and vacates such.
Maxim <unk>: But overall, we're going to continue to take.
Maxim <unk>: That cautious optimistic outlook here.
Maxim <unk>: Some some bright lights good discussions some.
Some promise for a pick up in the air.
Unknown Attendee: We're going to live that as it as it occurs and be ready to execute at the levels that we've been operating at or step up and respond to higher spend rates in our industry going forward. I'm confident that, you know, it will be somewhat a better environment than it was last year.
Maxim <unk>: Industry.
Maxim <unk>: We're gonna live that as a as it occurs.
Maxim <unk>: <unk> be ready to.
Execute at the levels that we've been operating at or step up and respond to a higher spend rates.
Maxim <unk>: And our industry going forward.
Maxim <unk>: Competent that Oh.
Maxim <unk>: It will be somewhat.
Maxim <unk>: Better environment than it was last year.
Unknown Attendee: But let's see how it plays.
Maxim <unk>: Let's see how it plays out.
Maxim <unk>: Great. Thank you I appreciate the detail there.
Unknown Attendee: Thank you, I appreciate the detail there.
Unknown Attendee: I'm also hoping you can give the contribution from proficiency in software versus services and discuss both the total top line and margin contribution from proficiency in the quarter aligned with your expectations or if a ramp is needed to hit the 15 to 18 million sales target. And similarly, just on margins overall in services, if utilization has improved there and how that kind of plays into the cadence for the year. I'll give, I'll give Will a heads up to, to respond on some of those, some of those numbers. I'll talk in general, contribution from adaptive learning insights and medical communications, the two business units of proficiency, right in line with both expectations in general, as well as in the context of the 15 to 18 million that we've guided in terms of their revenue contribution.
Maxim <unk>: I'm also hoping you can give the contribution from proficiency in software versus services and discuss it both the total top line and margin contribution from proficiency in the quarter aligned with your expectations or if a ramp as needed to hit that 15 to 18 million sales target.
Similarly, you just talked about.
Maxim <unk>: Our margins overall.
Services utilization has improved there and how that.
Maxim <unk>: That kind of plays into the cadence for the year.
Maxim <unk>: I'll give I'll give will it heads up to respond to on some of those some of those numbers are all tuck in in general.
Maxim <unk>: Contribution from adaptive learning insights and medical communications, the two business units.
Maxim <unk>: Of course, I shouldn't say right in line with both expectations in general.
Maxim <unk>: As well as a in the context of the 15 to 18 million that we've created.
Maxim <unk>: In terms of their revenue contribution.
Maxim <unk>: They are settling in well from an internal perspective.
Will: They're settling in well from an internal perspective in terms of integration to the Simulations Plus organization. The activity level in the marketplace is very active, both in terms of the continuation of their business development efforts as part of the larger business development team, their existing accounts and pipeline, as well as cross conversations of introductions across the two entities, if you will, in terms of our introduction to our clients and their introduction of legacy SLP products into their client base. In terms of specific revenue numbers and the others, Will, you want to comment on that? Sure, and I would definitely point you to the earnings deck that we put out that has some of this detail, but the two business units for software, it was about $1.8 million for the quarter and $1.9 million for service.
Maxim <unk>: Terms of the integration.
Maxim <unk>: To the simulations plus organization the activity level in the.
Maxim <unk>: The marketplace is very active both in terms of the continuation of.
Maxim <unk>: There is this development that purchased part of the larger business development team or existing accounts.
Maxim <unk>: Pipeline as well as cross conversations.
Maxim <unk>: Introductions.
Maxim <unk>: Across the two entities if you will in terms of our introduction to our clients and their introduction of the legacy SP T products into a into their client base.
Maxim <unk>: In terms of specific revenue numbers and in the others.
Maxim <unk>: Do you want to comment.
Maxim <unk>: Sure and I would.
Maxim <unk>: Definitely point you to the earnings deck that we put out that has some of this detail, but the the two business units for software it was about a $1.8 million for the quarter.
Maxim <unk>: And one 9 million for services.
Unknown Attendee: Great, thank you both.
Maxim <unk>: Great. Thank you both and last just one quick one for me.
Unknown Attendee: And last, just one quick one for me, just hoping you can give some more color on the data delays and kind of what's behind that and a resolution timeline. You know, I don't think it ever fully resolves. I think this is the reality of drug development today, it's you know, the banner headline of fail fast and and reallocate resources to programs that have a higher likelihood of success that is going to result in terms of a higher frequency of Resource allocation decisions on the part of our clients So, you know, it's something that we encounter on a quarterly basis have in the past, we've seen that frequency increase.
Speaker Change: Just hoping you can give some more color on the data delays.
Speaker Change: What's behind that and a resolution timeline.
Speaker Change: Oh, no I don't think it ever fully resolved I think this is the reality of drug development are today. It's you know the banner headlines fail fast and and reallocated resources to programs that are they more higher likelihood of success.
That is kind of result.
Speaker Change: The higher frequency.
Speaker Change: Uh huh.
Speaker Change: Resource allocation decisions on the part of our clients.
Speaker Change: So it's something that we encounter on us.
Speaker Change: On a quarterly basis have in the past we've seen that frequency.
Unknown Attendee: And I don't think we reach an end date in which that activity, it's always kind of going to ebb and flow quarter by quarter, but it's the reality of the business model of procurement right now. So a little bit more activity than typical in the first quarter. You know, as we take a look at our backlog and our pipeline with very robust bookings quarter on the service side. And so mostly success and those projects are teed up. And naturally, there'll be some shifting of plan timing for them down the road, but certainly starts out the year with a good backlog to fuel our service expectations in fiscal year 25.
Speaker Change: Increase.
And I don't know I don't think we've reached an end date in.
Speaker Change: In which that activity, it's always kind of kind of ebb and flow quarter by quarter, but but it's it's the reality of the business model is the ultimate right now.
Speaker Change: So a little bit more activity than typical.
Speaker Change: In the first quarter.
Speaker Change: You know as we take a look at our our backlog and our pipeline.
Speaker Change: Robust bookings quarter.
Speaker Change: On the service side.
Speaker Change: So mostly success and those projects are teed up.
Speaker Change: So essentially there'll be some shifting of the planned timing for them.
Speaker Change: Down the road.
Speaker Change: Suddenly starts off the year with a good backlog to fuel our service expectations in fiscal year 'twenty.
Unknown Attendee: Great, thank you so much.
Great. Thank you so much.
Scott Schoenhaus: Next question is from Scott Schoenhaus from Key Bank Capital Markets.
Speaker Change: Next question is from Scott Schonhaus from Keybanc capital markets. Please go ahead.
Scott Schoenhaus: Please go ahead. K-team, thanks for the... Most of my questions have been asked, but I just wanted to get a sense, Sean, this back half ramp, has anything changed in the last 90 days from, you know, based on that commentary? And specifically, this is a follow-up to a previous question that was asked about the services revenue flowing into 2Q. Should it all flow back into 2Q? That was lost in 1Q. I just want to get some clarity around it.
Speaker Change: Hey team thanks for the.
Scott Schonhaus: Most of my questions have been asked but I just wanted to get a sense. Sean this back half ramp has anything changed in the last 90 days from that from that based on that commentary and specifically this is a follow up to a previous question that was asked about the services revenue flowing into two Q should it all flow back into queue.
Scott Schonhaus: That was lost Q1I just want to get some clarity around is there should be it should estimate is there an air pocket in <unk>, that's causing the back half commentary or was it always that you thought of this year as having a back half ramp.
Unknown Attendee: Is there an air pocket in 2Q that's causing the back half commentary, or was it always that you thought of this year as having a back half ramp based on what you're seeing in the industry? Thanks. Yeah, yeah, fair question, Scott. You know, our seasonality by quarter, you know, software is the bigger impact there in terms of the sequency of renewal, renewals that take place on a quarter to quarter, but some seasonality on the service side. You know, we've seen historically second and third quarter being sort of peaks and fourth quarter a little bit of step down.
Scott Schonhaus: Based on what Youre seeing in the industry.
Scott Schonhaus: Yeah, Yeah Fair question Scott.
Scott Schonhaus: Our our seasonality by quarter.
Scott Schonhaus: You know software is the bigger impact there in terms of the sequence of your front door.
Scott Schonhaus: Renewals that take place on a quarter to quarter, but there are some seasonality on the service side.
Scott Schonhaus: You know, what we've seen historically second and third quarter being sort of peaks in the fourth quarter, a little bit of a step down.
Unknown Attendee: You know, our comment there was just sort of recognizing that, hey, you know, a lot of this project activity and budgeting discussions, that's not all going to close and be handed out and driven to revenue in the first half of the year. And, you know, if budgets pick up, if the activity level picks up, it's going to go through the typical sales pipeline activity timeframe. You then get, you know, project performance that ultimately leads to revenue and probably push Some of that service revenue to the back half of the year, but you know, when we say push off here, we're talking about, you know, we've got it to 24% of our revenue being in the second quarter.
Scott Schonhaus: You know our our comment there was just sort of recognizing that hey, you know a lot of this project activity and budgeting no discussions.
Scott Schonhaus: Not all going to close and be handed out and driven to rapidly.
Scott Schonhaus: And the.
Scott Schonhaus: The first half of the year.
Scott Schonhaus: And.
Scott Schonhaus: No that'd be it.
Scott Schonhaus: But just to pick up in the activity level picks up it's going to.
Go through the typical sales pipeline.
Scott Schonhaus: Activity timeframe.
Scott Schonhaus: And then that project.
Scott Schonhaus: Project performance that ultimately leads to revenue it probably pushes some.
Scott Schonhaus: Some of that service revenue into the back half of the year.
Scott Schonhaus: When we say push out there we're talking about you know are.
Scott Schonhaus: We guided to 24% of our revenue being in the second quarter. I mean, that's that's you know in the past it's been 26%. So we're not really talking about a big push off to the back half of the year. We just wanted to make sure People's expectation in terms of the consensus revenue for second quarter was.
Unknown Attendee: I mean, that's that's, you know, in the past, it's been 26%. So we're not really talking about a big push off to the back half of the year, we just wanted to make sure people's expectation in terms of consensus revenue for second quarter was was was on target.
Scott Schonhaus: Was was on target.
Unknown Attendee: Great, thank you so much.
Scott Schonhaus: Great. Thank you so much.
Matt Hewitt: Next question is from Matt Hewitt from Craig Howell. Please go ahead. Good afternoon. Happy New Year, guys. How you doing, Matt? Pretty good. So maybe first up, so I think I heard you say total organic revenue growth in the quarter was 5%. I realize maybe not everybody's reported, but do you have a sense where the market shook out for last year? Historically, it was kind of mid teens, obviously. And you noted that the last couple years have been challenging. So below that, but do you have a sense where the market was last year? You know, we've got to wait and see some of the other reports come out to get visibility there.
Speaker Change: The next question is from Matt Hewitt from Craig Hallum. Please go ahead.
Scott Schonhaus: Good afternoon, and happy new year guys.
Speaker Change: How are you doing that.
Speaker Change: Pretty good so maybe first up so I think I heard you say total organic revenue growth in the quarter was 5% I realize maybe not everybody has reported but do you have a sense for the market shook out for last year. Historically, it was kind of mid teens, obviously and you had noted that the last couple of years have been challenging so.
Speaker Change: Hello that but do you have a sense for the market was last year.
Speaker Change: You know, we got to wait and see some of the other reports come out to get the visibility there I think the.
Unknown Attendee: I think, you know, many of the peer group reporting that I saw whittled down to, you know, our comparable modeling and simulation components, you know, while our 24 growth was significant up at 14% level organically, I think most of our peers were in the same single-digit area. You know, our organic growth in the first quarter, I think you're right, it was 5%, 6%, something like that, but, you know, essentially within our expectations and our guidance as anticipated. Got it.
Speaker Change: And many of the peer group reporting that I saw.
Speaker Change: Whittle down to you know our comparable modeling and simulation components.
Speaker Change: While our 20 core growth was was.
Speaker Change: Significant up at a 14% level organically.
Speaker Change: Most of our peers were in the single digit area.
Speaker Change: You know, our our organic growth rate in the first quarter.
Speaker Change: I think youre right it was 5%, 6% something like that.
Speaker Change: But.
Speaker Change: Essentially within our expectations and our guidance are as anticipated.
Speaker Change: Got it and then one of the opportunities when you acquire proficiency was that it.
Unknown Attendee: And then one of the opportunities when you acquire proficiency was that it expanded the market opportunity in that you basically got to move into the commercial budgets within your customer partners versus just in the modeling and simulation and kind of the earlier stage work. Are you seeing some of the benefit? I mean, some of the comments that you've made today indicate that you were still facing some headwinds in Q1, but are you starting to see some of that new budget opportunity open up to you because of the acquisition? I mean, the acquisition opened us up into two new budget areas.
Speaker Change: Expanded the market opportunity in that you basically got to move into the commercial budgets within your customer partners versus just in the modeling and simulation and kind of the earlier stage work are you seeing some of the benefit I mean, some of the comments that you've made today indicate.
Speaker Change: That you you were still facing some headwinds in Q1, but are you starting to see some of that that new budget opportunity open up to you because of the acquisition.
Speaker Change: Or the acquisition opened us up into two new budget.
Speaker Change: Budget areas, one is clinical operations and problem with that.
Unknown Attendee: One is clinical operations and The most important budget, most adjacent budget in terms of the potential to see opportunities for synergy, if you will, between the modeling and simulation by simulation solutions that we have and the training platform that is sold into clinical ops. The second budget that it opened us up into is medical affairs, both pre-approval and commercial budgets in that regard. And I think we're going to see the, you know, the play out of the opportunity and expansion in those budgets to roll in that sequence, having clinical operations first and leading ultimately on the commercial side.
Speaker Change: The most important a budget most adjacent budget in terms of the potential to see opportunities for synergy if you will between.
The modeling and simulation Biosimilar <unk> solutions that we have on the training platform and that is sold into clinical ops are the second budget as it opened us up into his medical affairs both.
Speaker Change: Both the pre approval and are in commercial budget set in that regard and I think we're gonna see the.
Speaker Change: The play out of the opportunity and expansion and those projects are.
Speaker Change: To roll in that sequence of lab and clinical operations first and leading ultimately on the commercial side.
Speaker Change: The proficiency operation of medical communications with different business units.
Unknown Attendee: The proficiency operation of medical communications business unit internally today that is selling through to that commercial medical affairs budget, very robust, had a good, good bookings quarter. And in, as we're learning a more dramatic front end budgeting process that gives visibility to their business for the for the coming year. It's a little bit played out a little bit more explicitly. And so the good first quarter bookings quarter was was a good confirmation of our expectations for medical communications in that regard into into the latter part of the fiscal year here. Got it. And maybe one last one.
Speaker Change: Internally today that is is.
Speaker Change: Selling through to that.
Speaker Change: Commercial medical affairs budget, a very robust had a good a good bookings quarter.
Speaker Change: And and.
Speaker Change: We're learning.
Speaker Change: A more dramatic.
Speaker Change: Front and the budgeting process that gives ability visibility to their business for the for the coming year. It's played out a little bit more explicit like and so it's a good first quarter bookings quarter was what's a good confirmation of our expectations for.
Speaker Change: Her medical communications in that regard.
Speaker Change: To get into the latter part of the fiscal year here.
Speaker Change: Got it and maybe one last one and I don't know if you're going to even have this handy, but I thought I'd ask them. Obviously the press release it kind of notes that there was some data delays that prevented getting some of those service contracts going pushed them into Q2 and later in the year and then on the call here, you've kind of mentioned at least earlier in the prepared remarks.
Unknown Attendee: And I don't know if you're going to even have this handy, but I thought I'd ask. Obviously, the press release, it kind of notes that there was some data delays that prevented getting some of those service contracts going, pushed them into Q2 and later in the year. And then on the call here, you've kind of mentioned, at least earlier in the prepared remarks, that there was some budgetary constraints. Is there a way to kind of parse out the delta between the two? How much of it was budgets versus data backlog or data delays? Difficult to quantify there for you, Matt, and as I said before, on the budget constraint side, that is just, we're operating our first quarter and the last quarter of the calendar year budgets for our clients, and like my son sometimes, when it gets to the end of the year or the end of the month, he spent all his money in the beginning of the month or the beginning of the year, the end of the timeframe becomes a little bit more difficult and that would characterize, on the budget constraint side, the activity level.
Speaker Change: There was some budgetary constraints is there where are the way to kind of parse out the delta between the two how much of it was budgets versus data the backlog or a data delays.
Speaker Change:
Matt Hewitt: You know it's difficult to quantify for you Matt.
Speaker Change: Yeah, and as I said before on that.
Speaker Change: The budget constraints side.
Speaker Change: You know that is just you know we're operating our first quarter in the last quarter of <unk>.
Speaker Change: The calendar year budgets for our clients and.
Speaker Change: And like my son, sometimes when it gets to the end of the year or the end of the end of the month.
Speaker Change: He spent all this money in the beginning of the month or the beginning of the year, we entered into the timeframe becomes a little bit more difficult in that I would characterize the on.
The budget constrained side.
The activity level.
Speaker Change: With regard to project delays I've also commented in that regard, but oh, it's something that's in China has encountered every quarter. Some quarters are going to be a little bit more populated with with project delays and changes in the others. That's what took place here in the first quarter for us.
Unknown Attendee: With regard to project delays, I've also commented in that regard that, hey, it's something that is encountered every quarter. Some quarters are going to be a little bit more populated with project delays and changes than others. That's what took place here in the first quarter for us, but it's an operating environment or phenomena that we will have to become adept at on an ongoing basis because it doesn't go away. That quarter in which there are no data delays or project delays in any of our expectations from the beginning of the quarter, I think that may be in the rear view mirror.
Speaker Change: But I'd say operating environment or phenomena that we will we will have to become adept at on an ongoing basis because it doesn't it doesn't go away that quarter that Oh in which there are no no data delays or project delays in any of our expectations from the beginning of the quarter.
Speaker Change: Yeah, I think that may be in our rearview mirror, where we're always going to have that sort of the sort of big systems.
Unknown Attendee: We're always going to have that sort of big... Got it. Thank you very much.
Speaker Change: Got it thank you very much.
Speaker Change: Yeah.
Jeff Garrow: The next question is from Jeff Garrow from Stevens, please go ahead. Yeah, good afternoon. Thanks for taking the questions. I want to ask a little bit further on the ALI and MC contributions being in line with your expectations and doing the math there that annualizing the contribution you saw here in your fiscal first quarter will put you at the low end of the range you've set. But I'd like to think about that whole range of outcomes that you've outlined.
Speaker Change: Our next question is from Jeff Garro from Stephens. Please go ahead.
Jeff Garro: Yeah. Good afternoon. Thanks for taking the questions I wanted to ask a little bit further on the E. L. I N and M. C contribution has been in line with your expectations and doing the math there that annualize into contribution you saw here in your fiscal first quarter would put you at the low end of the range, you've said, but you know I like to think.
Jeff Garro: About that that whole range of outcomes that you've outlined and was hoping you could comment a little bit further on the seasonality of that business catalysts, you you might see for the rest of the year and then maybe outside the revenue contribution is just next steps for the integration of that piece of the business with the broader operation.
Unknown Attendee: And I was hoping you could comment a little bit further on the seasonality of that business catalyst you might see for the rest of the year. And then maybe outside the revenue contributions, just next steps for the integration of that piece of the business with the broader operation. Sure, Jeff. You know, the ALI side, the clinical simulation side, probably, you know, patterned similar to biosimulation project support for clinical trials. So, you know, when are those clinical trials going to take place? And so the seasonality for that side of the business kind of mirrors ours and, you know, the year-end quarter, calendar quarter, our first quarter, not the robust, most robust quarter for that.
Speaker Change: Sure Jeff.
Speaker Change: You know the alloy side to the clinical simulation side.
Speaker Change: Probably you know pattern.
Speaker Change: Similar to <unk>.
Speaker Change: Bio simulation projects support for.
Speaker Change: Clinical trials so.
Speaker Change: When are those client clinical trial is going to take place and so the seasonality for that side of the business kind of mirrors ours.
Speaker Change: And.
Speaker Change: The year end of the quarter calendar quarter, our first quarter not the robust most robust.
Speaker Change: For that they'll be peaked in the.
Unknown Attendee: They'll, you know, be peaked in the, you know, first three quarters of the calendar year, so our second through our fourth quarter. Medical communications, as I commented before as well, most of their program efforts are not going to take place in November, December, you know, sort of timeframe. So they're probably similar but maybe even a little bit more skewed towards the, what would be our fiscal year third and fourth quarter.
Speaker Change: First three quarters of the calendar year, so our second through our our fourth quarter.
Speaker Change: Medical Communications is as I commented before as well most of their program efforts are not going to take place on November December you know sort of sort of time frame. So they're they're probably similar but maybe even a little bit more skewed towards the what would be our fiscal year third.
Speaker Change: And and fourth quarter.
Unknown Attendee: Next steps in terms of the integration there, you know, settle into, you know, operating regimen within the greater SLP company. You know, we've undertaken most of the major steps to achieve internal integration. We've got the business development team integrated and, you know, a comprehensive go-to-market with regard to all of the solutions on a combined basis now. Putting those feelers out and beginning that networking of the proficiency spiderweb of relationships within clients and our spiderweb and trying to increase the number of conversations that lead to leads that fuel the pipeline for future business down the road.
Speaker Change: <unk>.
Speaker Change: Next steps in terms of the integration there.
Speaker Change: Yeah settle into.
Speaker Change: Operating.
Speaker Change: Regimen with them within the greater that's healthy company.
Speaker Change: We've undertaken most of the major steps to.
Speaker Change: Achieved internal integration.
Speaker Change: We've got the business development team.
Speaker Change: <unk> integrated parent and.
Speaker Change: A comprehensive go to market are with regard to all of the solutions on a combined basis now.
Putting those feelers out in beginning of that working.
Speaker Change: The proficiency a spa.
<unk> web of relationships within clients and our Spider web and trying to.
Speaker Change: Increase the number of conversations that lead to leads that.
Speaker Change: I feel the pipeline for future business from the birds. So next steps are really more market driven as opposed to internal growth.
Unknown Attendee: So next steps are really more market-driven as opposed to internal. Understood that helps.
Speaker Change: Understood that helps.
Unknown Attendee: And then want to ask one around the the macro environment, you know, you said the funding challenges and cost constraints and the press release. And then here in your remarks, you said a wide range of activity levels, wide variance by client. So we want to ask if there's any pattern by customer size or therapeutic area or stage of clinical development work or any other vector there. Well, I think you can, you know, the answer, basic answer is no, it kind of is all over over the map. There are some, you know, trends, if you will, but probably obvious.
Speaker Change: Wanted to ask one around the macro environment. You you said that the funding challenges and cost constraints in the press release and then here in your remarks, you said a wide range of activity rival fly wide variance by client. So I wanted to ask if there's any pattern by customer size or therapeutic area.
Speaker Change: Or stage of clinical development work or any other factor there.
Speaker Change:
Speaker Change: I think you can you know I don't know.
Speaker Change: The the answer basic answer is no it kind of goes all over over the map there.
Speaker Change: There are some trends if you will but probably obvious.
Unknown Attendee: In terms of on a company perspective, look at those companies that are being a little bit more aggressive, a little bit better financial position out there, Novo Nordisk type of scenario versus some that may be still struggling in terms of their own financial reporting. From a therapeutic area, you know, oncology still is singing loudest out there. And so activity level and that therapeutic is area is up. Obesity is is up, but, you know, it's still, you know, sort of a trickle down in terms of clinical trial activity in the space. A lot of attention, a lot of early program start, but clinical trial activity is still to follow.
Speaker Change: In terms of the on a company perspective to look at those companies that are being a little bit more aggressively.
Speaker Change: Better financial position are out there novo nordisk type of scenario versus some that maybe are still struggling.
Speaker Change: Terms of their own.
We'll report them from a therapeutic area.
Speaker Change: You know oncology still has a singing wildest out there.
Speaker Change: So activity level in that therapeutic kids.
Speaker Change: He is up the obesity is is up but.
Speaker Change: It's still you know sort of the trickle down in terms of clinical trial activity in the airports that we spend a lot of attention.
Speaker Change: Our early programs start that clinical trial activity is is still to follow them. So yeah. There's you know there's some trends in there.
Unknown Attendee: So, yeah, there's, you know, there's some trends in there, but it's pretty sporadic. I walked into a customer meeting wondering what's going to be the tone of this one with some ability to predict, but not perfect. Appreciate that. Thanks for taking the questions. Thanks, Jeff.
Speaker Change: But but it's pretty sporadic I walk into a customer meeting.
Speaker Change: Wondering what what what's what's going to be the tone of this one.
Speaker Change: With with with some ability to protect its not perfect.
Speaker Change:
Speaker Change: I appreciate that thanks for taking the questions.
Speaker Change: Thanks, Jeff.
Speaker Change: Yeah.
Unknown Attendee: This concludes the question and answer session. I'd like to turn it forward back to management for any questions. Very good.
Speaker Change: This concludes the question and answer session I would like to turn the floor back to management for any closing.
Speaker Change: Yeah.
Very good thanks again for joining our call today and for your interest in <unk> and S. L. P.
Unknown Attendee: Thanks again for joining our call today and for your interest in SLP. In the next few months, we'll be attending a few key events. In early February, the company will be at SCOPE, a flagship conference for clinical operations executives, so a top conference for our ALI and MC business units. For the financial community, in January, we'll be holding meetings during the JPM Annual Healthcare Conference next week. And in February, we'll be attending the BTIG MedTech and Digital Health Life Science and Diagnostic Tools Conference and the Oppenheimer Annual Healthcare Life Science Conference as well. Hope to see you there or speak to you soon.
Speaker Change: And the next few months, we'll be attending a few key events in early February the company will be at scope our flagship conference for.
Speaker Change: Preclinical operations, our executives so top conference for our Alley in M. C business, our business units put in financial community in January we'll be holding meetings during.
J P M annual Health care Conference next week.
Speaker Change: And in February we'll be attending the DTA G Med Tech and digital health.
Speaker Change: Life Science and diagnostic tools conference.
Speaker Change: And the Oppenheimer annual healthcare Life Science conference that is well hope to see you there.
Speaker Change: Or speak to you soon thanks for your attention take care.
Unknown Attendee: Thanks for your attention.
Unknown Attendee: Take care.
Unknown Attendee: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation. And I think that is all.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.
Speaker Change: Yeah.
Speaker Change: Hum.
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Speaker Change: Yeah.
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Speaker Change: Yeah.
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