Simulations Plus Reports Q2 Fiscal 2026 Financial Results and Guidance Update
Simulations Plus, Inc. Announces Q2 Fiscal 2026 Results: Revenue Growth, Margin Expansion, and Updated Guidance
Key Financial Highlights for Investors
- Revenue Growth: Simulations Plus, Inc. (Nasdaq: SLP) reported revenue of \$24.3 million for the second quarter ended February 28, 2026, representing 8% year-over-year growth. Both software and services contributed to this increase.
- Services Revenue: Services revenue increased 12% to \$19.2 million, now accounting for 45% of total revenue.
- Gross Profit and Margins: Gross profit rose to \$27.0 million for the first half of FY26, with a gross margin of 63% compared to \$23.3 million and 56% in the prior period—a notable expansion reflecting improved operational efficiency and pricing.
- Net Income and EPS: Net income for Q2 was \$5.2 million, with diluted earnings per share (EPS) of \$0.26, up from \$3.3 million and \$0.16 in the prior year’s comparable period.
- Adjusted EBITDA: Adjusted EBITDA for the quarter was \$12.3 million, demonstrating strong cash generation and profitability on a non-GAAP basis.
Updated Fiscal 2026 Guidance—Important for Shareholders
Shareholders should note a significant guidance update: The Company has revised its adjusted diluted EPS guidance downward from \$1.03 – \$1.10 to \$0.75 – \$0.85 for the full fiscal year 2026. This adjustment reflects a higher expected effective tax rate, now anticipated to be between 23-25%, compared to the previous estimate of 12-14%. All other guidance metrics, including revenue and margin outlook, remain unchanged.
Fiscal 2026 Updated Guidance
| Metric |
Guidance |
| Total Revenue |
\$79M – \$82M |
| Total Revenue Growth |
0% – 4% |
| Software Revenue Mix |
57% – 62% |
| Adjusted EBITDA Margin |
26% – 30% |
| Adjusted Diluted EPS |
\$0.75 – \$0.85 (down from \$1.03 – \$1.10) |
Strategic and Market Insights
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Favorable Market Conditions: The company noted that ongoing most-favored-nation pricing agreements, reduced tariff threats, and an improving funding environment are supporting client activity and contributing to strong bookings and renewals.
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Guidance Catalysts: Recent supplemental regulatory guidance on new approach methodologies is believed to be driving increased client engagement, and management is encouraged by the positive momentum in both software and services.
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Conference Call and Webcast: Management (CEO Shawn O’Connor and CFO Will Frederick) hosted an investor call on April 9, 2026, to discuss results and forward-looking information. The presentation and replay are available on the company’s investor relations page.
Balance Sheet Position
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Liquidity: Cash and short-term investments increased from \$32.4 million (August 31, 2025) to \$41.8 million (February 28, 2026), reflecting solid cash flow generation.
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Total Assets: Total assets grew from \$131.9 million to \$146.5 million over the six-month period.
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Shareholders’ Equity: Increased from \$124.8 million to \$133.8 million, highlighting retained earnings and capital strength.
Non-GAAP Financial Measures
The company emphasizes the use of non-GAAP financial measures (Adjusted EBITDA, Adjusted Diluted EPS) to provide investors additional insight into operating trends and performance. These measures are adjusted for items such as amortization, equity-based compensation, currency effects, acquisition-related charges, and other non-recurring items. Full reconciliations were provided in the release.
Forward-Looking Statements and Shareholder Considerations
Key price-sensitive information for shareholders:
- The downward revision in adjusted diluted EPS guidance due to a higher tax rate is a material update and may affect share value in the short term.
- However, the company’s continued growth in revenue, margin expansion, and strong bookings suggest underlying business strength.
- Management’s commentary on favorable market conditions, client engagement, and sustained demand for AI-accelerated modeling solutions may support confidence in long-term prospects.
Investors should monitor: Execution against revised EPS targets, ongoing margin trends, and the impacts of tax rate changes on future earnings.
Contact and Additional Information
Investor Relations:
Lisa Fortuna, Financial Profiles
[email protected] | +1-310-622-8251
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. Investors should review the company’s filings with the SEC and consult their financial advisor before making investment decisions.
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