With the exception of historical information the matters discussed in this presentation are forwardlooking statements that involve a number of risks and uncertainties Words like believe expect and anticipate mean that these are our best estimates as of this writing but that th ID: 1029621
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1. April 5, 20231Earnings Call - Q2 - FY23
2. With the exception of historical information, the matters discussed in this presentation are forward-looking statements that involve a number of risks and uncertainties. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, our ability to identify and close acquisitions on terms favorable to the Company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission.Safe Harbor Statement
3. Second quarter results in line with guidance Revenue seasonality impacted by expected shift in software renewal timingContinue to see slower pace of sales cycles due to customer budget constraintsChurn in small biotech accounts$0.2M constant currency negative impact on revenueEPS ahead of guidance; EBITDA back to historical levels$0.20Diluted EPS$16MRevenue40%Adj. EBITDA as % of Revenue$15MBacklogSecond Quarter Highlights
4. New AI/ML drug discovery collaborationspKa collaboration with large agrochemicals company extending ML models4 new FDA grant submissionsCritical PBPK service support to multiple clientsSupported multiple high profile regulatory submissions with pharmacometric modeling and simulation supportInitiated additional projects with investment groups following prior quarter successSupporting Client Success
5. GastroPlus®MonolixSuite®-8%5 new customers6 upsells to existing customersImpacted by renewal harmonization and forexSecond Quarter Software Highlights+18%6 new customers 6 upsells to existing customers25 peer reviewed journal articles published in Q2ADMET Predictor®1 new customer8 upsells to existing customersImpacted by Biotech churn-2%Q2 Revenue GrowthQ2 Revenue DeclineQ2 Revenue DeclineGeneralOverall software revenue growth of 7%Renewal pattern and revenue seasonality shifting as anticipatedSlower pace of new sales with new customers delaying purchasesUniversity+ program has 278 individual licenses across 54 countriesGood yield on price increase-1%YTD Revenue Decline-5%YTD Revenue Decline-12%YTD Revenue Decline
6. PBPKQSP/QST PKPD Second Quarter Services Highlights+19%-32%+29%Q2 Revenue GrowthQ2 Revenue DeclineQ2 Revenue GrowthGeneral Overall service revenue growth 4%Total backlog $15.4M – projects to be performed within 12 months increased from 70% to 78%Successful recruiting quarter despite continued competitive market (2 new hires)188 total projects worked on during the quarterShift to higher margin time and materials contracts vs fixed priced projects with positive margin impactMultiple new client relationshipsNature of QSP/QST projects more volatilePrior quarter included significant CRO pass through revenueReflects deeper implementation of PBPK modeling – expanding use cases and perceived value/impact4 FDA projects in process+21%YTD Revenue Growth-30%YTD Revenue Decline+50%YTD Revenue Growth
7. Capital Allocation Strategy UpdateAcquisitionsStrategic investments and partnerships$50M share repurchase program authorized$20M accelerated share repurchase (ASR) implementedMaintain current level$0.06 per share paid Feb. 6th$0.06 per share payable May 1stProduct R&DEmployee Recruiting and RetentionEnterprise TechnologiesCorporate DevelopmentShare RepurchasesDividend PaymentsInternal Investment
8. Maintaining FY23 GuidanceTotal Revenue $59.3M to $62.0MTotal Revenue Growth 10% to 15%Software Revenue Mix 60% to 65%Service Revenue Mix 35% to 40%Diluted EPS $0.63 to $0.67
9. Financial Results
10. Q4 Revenue (in millions) (in millions)Software RevenueTotal RevenueServices RevenueRevenue - Q2+6%+7%+4%2Q23 Mix2Q22 Mix
11. Q4 Revenue (in millions) Software RevenueTotal RevenueServices Revenue+2%-3%+11% Revenue - YTDFY23 MixFY22 Mix(in millions)
12. Gross Margin Trends - Q2
13. Gross Margin Trends - YTD
14. Software Product as % of Software RevenueQ2 FY23OtherYTD FY23OtherSoftware Revenue by Product
15. Avg. Revenue per Customer(in thousands)Software Performance Metrics - Q2Commercial CustomersRenewal Rates
16. Avg. Revenue per Customer(in thousands)Renewal RatesSoftware Performance Metrics - YTDCommercial CustomersUniversity+ Customers: 278 in 54 countries
17. Services as % of Service RevenueQ2 FY23YTD FY23Service Revenue by TypePKPDQSP/QSTPBPKOtherPKPDQSP/QSTPBPKOther
18. BacklogServices Performance MetricsTotal Projects
19. Income Statement Summary - Q2(in millions, except Diluted EPS)2Q23% of Rev2Q22% of RevRevenue$15.8100%$14.8100%Revenue growth6%13%Gross profit13.183%12.081%R&D1.38%0.96%SG&A7.849%5.638% Total operating exp9.158%6.544%Income from operations4.026%5.537%Income before income taxes5.132%5.537%Income taxes(0.9)6%(1.1)8%Effective tax rate18%20%Net income$4.227%$4.430%Diluted earnings per share (in dollars)0.200.21Adjusted EBITDA$6.240%$7.248%
20. Income Statement Summary - YTD(in millions, except Diluted EPS)2Q23% of Rev2Q22% of RevRevenue$27.7100%$27.2100%Revenue growth2%14%Gross profit22.481%21.679%R&D2.59%1.87%SG&A15.054%10.639% Total operating exp17.563%12.445%Income from operations4.918%9.334%Income before income taxes6.724%9.435%Income taxes(1.3)5%(2.0)7%Effective tax rate19%21%Net income$5.420%$7.427%Diluted earnings per share (in dollars)0.260.36Adjusted EBITDA$9.233%$12.446%
21. Balance Sheet Summary(in millions)February 28, 2023August 31, 2022Cash and short-term investments$115.3$128.2Total current assets131.5146.8Total assets$173.2$188.4Current liabilities6.07.7Long-term liabilities2.62.4Total liabilities 8.610.1Shareholders’ equity164.6178.2Total liabilities and shareholders’ equity$173.2$188.4
22. ConclusionDelivering on our commitment to scientific leadershipInternal R&D investmentExpanding industry and regulatory partnershipsMIDD+ – 3rd annual SLP sponsored conferenceEnhancing our client facing capabilitiesGrowth and maturity of business development teamFocus on expanding our local coverage of EU marketFocus on supporting accelerated growth in distributor networkChallenges being addressedEvolving seasonality due to software renewal timing changesSmall biotech churnContinued competitive market for scientific talentGeneral market dynamics: inflation, recession & forexFocus on Capital AllocationACR program near completionCONTINUED LEADERSHIP POSITION IN BIOSIMULATION MARKETWELL POSITIONED TO ACHIEVE OUR FY23 GOALS