Simulations Plus Inc. (NASDAQ:SLP) shares climbed on Tuesday after the company reported better-than-expected fourth-quarter 2025 earnings and reaffirmed annual guidance.
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The company reported sales of $17.5 million, representing a decline of 6% year-over-year, slightly edging higher from the consensus estimate of $17.09 million.
Simulations Plus reported adjusted earnings of 10 cents per share, beating the consensus loss of five cents, down from 18 cents a year ago.
Revenue breakdown showed a 9% decrease in software revenue to $9 million and a 3% decrease in services revenue to $8.4 million.
The company's gross profit stood at $9.8 million, achieving a 56% margin.
Adjusted EBITDA of $3.5 million, representing 20% of total revenue, compared to $4.1 million, representing 22% of total revenue.
Guidance
Looking ahead, Simulations Plus reaffirmed its fiscal 2026 adjusted earnings guidance to $1.03 to $1.10, in line with the expectations provided in preliminary earnings, compared to the consensus loss of $3.22.
The company expects 2026 sales guidance of $79 million-$82 million versus the consensus of $78.797 million.
Simulations Plus expects a 2026 adjusted EBITDA margin of 26%-30%.
Analyst Take
William Blair notes the management said demand appears to be stabilizing as biotech funding improves and tariff and drug-pricing concerns ease for large pharma, which has helped boost recent proposal activity ahead of customer budget cycles.
However, the company remains cautious and wants clearer signs of a sustained recovery before calling a rebound.
Notably, the company's 2026 guidance contemplates a stable demand and pricing environment.
While the timing of the biosimulation demand inflection remains unclear, William Blair says Simulations Plus is well-positioned to capitalize on the eventual rebound, especially as the company invests to incorporate more AI solutions across its product portfolio as well as unify its product ecosystem to more seamlessly support clients' end-to-end model-informed drug development needs.
William Blair remains confident in the company's ability to return to driving consistent double-digit organic revenue growth and meaningful margin expansion over time.
The analyst reiterates the Outperform rating.
SLP Price Action: SLP stock is up 18.38% at $20.26 at publication on Tuesday.
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